1 00:00:05,040 --> 00:00:08,520 Welcome back everyone. I am Cass PNC. 2 00:00:08,520 --> 00:00:13,480 I'm joined, as usual, after a long time by my partner in 3 00:00:13,480 --> 00:00:15,640 crime, Mr. Bennett Tomlin. How are you today? 4 00:00:15,880 --> 00:00:17,720 I'm glad to be here. How are you, Cass? 5 00:00:17,840 --> 00:00:20,680 Hanging in there, it's we picked a hell of a day to record. 6 00:00:20,720 --> 00:00:24,520 It's possibly the worst storm of the of the year. 7 00:00:24,600 --> 00:00:27,840 So that's had power outages and all that. 8 00:00:27,840 --> 00:00:31,560 But for now we're good and we're just going to try to get through 9 00:00:31,560 --> 00:00:32,520 this. Today. 10 00:00:32,759 --> 00:00:37,960 We're talking about what is known as essentially our 11 00:00:37,960 --> 00:00:41,680 favorite topic or our least favorite topic depending on how 12 00:00:42,320 --> 00:00:46,080 you view it. We are talking about Tether and 13 00:00:46,080 --> 00:00:50,200 we're talking about Tether. I think more just to review how 14 00:00:50,200 --> 00:00:54,880 far we've come or how little we've actually gone since the 15 00:00:54,880 --> 00:01:02,320 very beginning because Tether is nearing or has surpassed roughly 16 00:01:02,320 --> 00:01:07,840 100 billion at market cap. I guess we'll say that there are 17 00:01:07,840 --> 00:01:11,480 100 billion tethers which are you know equivalent to $100 18 00:01:11,480 --> 00:01:15,560 billion. So yeah, we're talking about 19 00:01:15,560 --> 00:01:17,320 that and we're talking about how we got here. 20 00:01:17,320 --> 00:01:21,600 So, so Bennett, I think it's important the Q4 attestations 21 00:01:21,600 --> 00:01:23,960 just came out. Can we kind of talk about that 22 00:01:24,000 --> 00:01:26,200 before we even delve into the 100 billion number? 23 00:01:26,280 --> 00:01:28,760 The quarter for attestation shows that Tether is one of the 24 00:01:28,760 --> 00:01:31,720 most systemically important financial firms in the entire 25 00:01:31,720 --> 00:01:34,840 globe, making billions of profit every single quarter. 26 00:01:34,840 --> 00:01:38,200 Going directly into their control, they are making massive 27 00:01:38,200 --> 00:01:40,960 investments across a wide variety of industries. 28 00:01:41,240 --> 00:01:46,040 Energy, Mining, payment, Tron staking through Luganodes, tons 29 00:01:46,040 --> 00:01:48,800 of these different ventures. All of which they expect to 30 00:01:48,800 --> 00:01:52,120 pretty immediately drive financial results for this firm 31 00:01:52,120 --> 00:01:53,840 and the overall ecosystem as a whole. 32 00:01:54,080 --> 00:01:57,040 Besides that, they've been able to direct hundreds of millions 33 00:01:57,040 --> 00:01:59,640 of dollars directly into Bitcoin. 34 00:02:00,800 --> 00:02:03,080 It's it's it's the perfect storm. 35 00:02:03,080 --> 00:02:06,320 Crypto grows, Tether grows, Tether buys Bitcoin. 36 00:02:06,320 --> 00:02:09,840 Bitcoin grows. Crypto grows, Tether grows. 37 00:02:09,840 --> 00:02:13,120 Tether buys Bitcoin. It's a virtuous cycle. 38 00:02:13,400 --> 00:02:19,440 It is the Super cycle maybe? Well they they just lost their 39 00:02:19,440 --> 00:02:21,760 shirts again so. So I don't know, I don't know or 40 00:02:21,840 --> 00:02:23,800 I guess not. They didn't really lose their 41 00:02:23,800 --> 00:02:28,200 shirts, but they're they are shutting down the you're talking 42 00:02:28,200 --> 00:02:32,560 about Suzu and Kyle Davies, obviously A3 AC who got caught 43 00:02:32,560 --> 00:02:37,000 up in the Super cycle, which is pretty much what Bennett was 44 00:02:37,000 --> 00:02:41,000 just describing, however. Suzu wasn't wrong. 45 00:02:41,040 --> 00:02:43,120 He was just early. Early, yeah. 46 00:02:43,480 --> 00:02:46,360 OK, well, what is it? Isn't the isn't the others the 47 00:02:46,360 --> 00:02:48,800 second part of that phrase that if you're early you might as 48 00:02:48,800 --> 00:02:51,280 well be wrong. Anyway, there was a tweet that I 49 00:02:51,280 --> 00:02:58,400 saw that had stated that Tether had earned more in quarter four 50 00:02:59,480 --> 00:03:06,120 than Goldman Sachs, which is just such an interesting. 51 00:03:06,120 --> 00:03:08,760 Categorical here. It's such an interesting 52 00:03:08,760 --> 00:03:10,960 categorical air. Is that what you were about to 53 00:03:10,960 --> 00:03:14,960 say? It's such an interesting example 54 00:03:14,960 --> 00:03:17,240 of fallacious reasoning. Is is that where you? 55 00:03:17,360 --> 00:03:18,760 Can you get in? Let's get into that. 56 00:03:18,760 --> 00:03:20,920 Can you talk about why? Why you're saying that? 57 00:03:20,920 --> 00:03:23,640 These types of firms like Goldman Sachs, generally, when 58 00:03:23,640 --> 00:03:25,920 they're discussing their profits, they're discussing the 59 00:03:25,920 --> 00:03:30,320 corporate profits accrued to Goldman Sachs itself, not the 60 00:03:30,320 --> 00:03:34,680 appreciation of whatever funds or activities Goldman Sachs has 61 00:03:35,560 --> 00:03:38,560 their hands in. When Tether says profits, they 62 00:03:38,560 --> 00:03:42,160 mean our money market fund. That's not a money market fund 63 00:03:42,360 --> 00:03:47,360 went up by this many dollars, their assets under management 64 00:03:47,360 --> 00:03:51,000 effectively kind of increase that much Goldman Sachs. 65 00:03:51,000 --> 00:03:54,160 When they say profits, they mean the Goldman Sachs shareholder 66 00:03:54,160 --> 00:03:57,920 entity earned this much money. So the right metric really 67 00:03:57,920 --> 00:04:00,920 wouldn't be to look at Goldman or something. 68 00:04:00,920 --> 00:04:04,360 The real metric would be to look at like money market. 69 00:04:05,200 --> 00:04:08,440 And to be clear, Tether by that categorization is still fucking 70 00:04:08,440 --> 00:04:11,720 massive. A $100 billion money market fund 71 00:04:11,720 --> 00:04:13,640 is a fucking massive money market fund. 72 00:04:13,840 --> 00:04:19,120 And we've talked about on here before back in like 2865 billion 73 00:04:19,120 --> 00:04:22,520 was systemically important for the reserve primary fund when 74 00:04:22,520 --> 00:04:25,000 Lehman Brothers was unable to roll their commercial paper, 75 00:04:25,200 --> 00:04:28,880 right. And so that was 65% of the size 76 00:04:28,880 --> 00:04:31,960 Tether is currently. So even in the categories that 77 00:04:31,960 --> 00:04:35,480 Tether exists and Tether is massive and important, I just 78 00:04:35,480 --> 00:04:39,720 think that there's a bit of a categorical error categorization 79 00:04:39,720 --> 00:04:42,840 error when people try to compare what Tether calls profits to 80 00:04:42,840 --> 00:04:47,160 what some audited and recognized firms call profits. 81 00:04:47,200 --> 00:04:51,640 I think that's that that is a really fair acknowledgement and 82 00:04:52,000 --> 00:04:55,000 and important I think also when you reflect on like just the 83 00:04:55,000 --> 00:04:58,520 numbers of employees that I'd like, Goldman has I think like 84 00:04:58,520 --> 00:05:02,920 70,000 employees and Heather has like 11 or something. 85 00:05:04,160 --> 00:05:07,480 So yeah, there's just really they're not the same kind of 86 00:05:07,480 --> 00:05:08,440 business. You're right. 87 00:05:08,440 --> 00:05:13,840 And that was an unfair comparison. 88 00:05:13,840 --> 00:05:16,560 But it is still a comparison that was made and one that kind 89 00:05:16,560 --> 00:05:20,720 of gave everyone pause, I think. It does show that Tether is 90 00:05:20,720 --> 00:05:24,240 massive, Tether is important, and Tether is a new type of 91 00:05:24,240 --> 00:05:26,480 financial firm. And I was being a little bit 92 00:05:26,480 --> 00:05:29,400 glib and I was quickly summarizing Tether's recent 93 00:05:29,400 --> 00:05:32,000 assurance results and some of their investments and stuff like 94 00:05:32,000 --> 00:05:33,640 that. But there's a little bit of 95 00:05:33,640 --> 00:05:35,480 stuff there that's worth digging into. 96 00:05:35,480 --> 00:05:39,760 A little bit like Tether's more recent investment activities. 97 00:05:40,640 --> 00:05:45,120 Tether has been investing in doing venture type investing for 98 00:05:45,120 --> 00:05:47,400 years, right? They were one of the investors 99 00:05:47,400 --> 00:05:51,600 in Samson Mao's Exhortium token sale for the developers of the 100 00:05:51,600 --> 00:05:55,600 Infinite Fleet video game. They led the Series A round for 101 00:05:55,600 --> 00:05:59,480 Celsius and if you believe Jason Stone would later step in to try 102 00:05:59,480 --> 00:06:04,600 to bail it out as well. What's new is now Tether is much 103 00:06:04,600 --> 00:06:08,280 more public about announcing when they're doing various 104 00:06:08,280 --> 00:06:12,680 investments, and they claimed in their newest blog post that 105 00:06:12,680 --> 00:06:16,240 there is a new segregated VC umbrella that they're doing this 106 00:06:16,240 --> 00:06:18,440 under. They didn't disclose the name, 107 00:06:18,440 --> 00:06:22,240 the executives, the structure or anything about that structure, 108 00:06:22,240 --> 00:06:26,240 but we were told it exists. So that's one of the things 109 00:06:26,240 --> 00:06:29,160 Tethers doing recently and they're also still playing games 110 00:06:29,160 --> 00:06:33,600 with words like one of Tethers commitments was that in 2023 111 00:06:33,600 --> 00:06:36,560 they were going to remove secured loans from their 112 00:06:36,560 --> 00:06:38,440 reserves. Now you may look at their most 113 00:06:38,440 --> 00:06:41,120 recent assurance and say, wait a second, there's still over $4 114 00:06:41,120 --> 00:06:44,400 billion in secured loans and Tether would say 5. 115 00:06:44,400 --> 00:06:45,520 Billion, yeah. Yeah. 116 00:06:45,520 --> 00:06:48,320 Tether would say, aha, you've fallen for our trick. 117 00:06:48,320 --> 00:06:50,720 You see, because we don't call those reserves anymore. 118 00:06:50,960 --> 00:06:53,640 Those are excess reserves, a whole new thing. 119 00:06:53,720 --> 00:06:58,680 They don't count anymore. Now you may say tether excess 120 00:06:58,680 --> 00:07:03,480 reserves has reserves right there in the name, but alas, 121 00:07:03,640 --> 00:07:05,400 here we are. It's funny how our first 122 00:07:05,400 --> 00:07:10,640 episodes were about Tether and the issues that we saw with 123 00:07:10,640 --> 00:07:13,160 Tether at the time. People have made points about 124 00:07:13,160 --> 00:07:17,280 these, you know, auditors reports, which I think that's 125 00:07:17,280 --> 00:07:19,320 another thing we should point out, like these are called 126 00:07:19,320 --> 00:07:22,120 independent auditors reports. They're not audits. 127 00:07:22,240 --> 00:07:24,120 They don't say audit, They're not an audit. 128 00:07:24,120 --> 00:07:26,480 They're not. They're not even like an 129 00:07:26,480 --> 00:07:29,160 attestation really. Like these are auditors reports. 130 00:07:29,160 --> 00:07:33,680 It's a completely different categorization. 131 00:07:33,760 --> 00:07:36,040 We've talked about this before, but it's probably been over a 132 00:07:36,040 --> 00:07:38,720 year since we've talked about Tether audits and things like 133 00:07:38,720 --> 00:07:41,360 that. And they're still not audits and 134 00:07:41,360 --> 00:07:44,320 they still fall to the same criticism then, which is Tether 135 00:07:44,320 --> 00:07:47,640 management provides a set of documents to the auditors which 136 00:07:47,640 --> 00:07:51,720 are tasked with a relatively narrow question. 137 00:07:52,320 --> 00:07:55,360 Are there assets in these accounts that seem to match up 138 00:07:55,440 --> 00:07:58,320 at this time with the number of tethers in circulation? 139 00:07:58,680 --> 00:08:01,760 And the auditors say, according to the documents we got, yes. 140 00:08:02,560 --> 00:08:04,240 Right. And that's that's what those 141 00:08:04,240 --> 00:08:06,680 assurances have been since the New York Attorney General 142 00:08:06,680 --> 00:08:08,560 settlement and before that too. But. 143 00:08:08,560 --> 00:08:12,080 And so there's still pretty big limitations to that. 144 00:08:12,560 --> 00:08:16,480 We still haven't gotten the audit that Stew was promising in 145 00:08:16,480 --> 00:08:19,440 2021. And Paolo, the new CEO of 146 00:08:19,440 --> 00:08:22,400 Tether, has kind of stopped promising that as much. 147 00:08:22,680 --> 00:08:26,640 They're still working on it, but in the kind of ambiguous way 148 00:08:26,640 --> 00:08:29,200 that involves not mentioning who's doing it, when they're 149 00:08:29,200 --> 00:08:31,320 doing it, or what's it going to look like. 150 00:08:31,320 --> 00:08:37,360 I mean would you say it's fair to say that at least we have I 151 00:08:37,360 --> 00:08:39,919 guess not right because we don't, this is not an audit, 152 00:08:39,919 --> 00:08:41,799 this is not an actual attestation. 153 00:08:42,280 --> 00:08:46,240 This is just these auditors taking their taking the word of 154 00:08:46,560 --> 00:08:50,440 management at tether. So do we have more insight than 155 00:08:50,440 --> 00:08:54,280 we used to have, or is this just us feeling like we do because 156 00:08:54,920 --> 00:08:56,320 they're saying this is what they have? 157 00:08:56,320 --> 00:08:59,440 I think we do have more insight than when we started this 158 00:08:59,440 --> 00:09:02,960 podcast. We started this podcast like 159 00:09:03,120 --> 00:09:05,400 shortly after the New York Attorney General settlement is 160 00:09:05,400 --> 00:09:08,320 when we started it. We didn't know at that time who 161 00:09:08,320 --> 00:09:11,000 Tethers Partners were beyond Deltech. 162 00:09:11,320 --> 00:09:14,760 We hadn't gotten any of the assurances they started issuing 163 00:09:14,760 --> 00:09:16,240 after that settlement. Really. 164 00:09:16,320 --> 00:09:22,840 Now Cantor Fitzgerald is willing to make statements that suggest 165 00:09:22,840 --> 00:09:24,840 they hold lots of Tethers reserves. 166 00:09:26,400 --> 00:09:29,520 We know some of their banking partners. 167 00:09:29,960 --> 00:09:35,240 We have a better idea of some of their structure and there is a 168 00:09:35,320 --> 00:09:39,120 plausible mechanism now by which Tether would be making the money 169 00:09:39,120 --> 00:09:43,280 they claim to be making, right? And so some of that part makes 170 00:09:43,280 --> 00:09:46,200 more sense now than it did when we started this podcast. 171 00:09:46,720 --> 00:09:50,360 However, there are still a bunch of outstanding questions that 172 00:09:50,360 --> 00:09:52,240 were issues when we started this that are still issues, right? 173 00:09:52,240 --> 00:09:55,000 There's still no audit. There's still like the open 174 00:09:55,000 --> 00:09:59,200 question of at what times did Tether have what assets and how 175 00:09:59,200 --> 00:10:03,560 did that like, how did those assets arrive under tethers 176 00:10:03,560 --> 00:10:05,960 general control. Since we started this podcast, 177 00:10:05,960 --> 00:10:08,920 some of the statements that were still questions then later 178 00:10:08,920 --> 00:10:14,080 resolved as us being right like the CTC settlement illustrated 179 00:10:14,080 --> 00:10:19,120 that Tether was backed only one day out of four in the 26 month 180 00:10:19,120 --> 00:10:21,520 period that they looked like according to like tethers own 181 00:10:21,520 --> 00:10:24,960 statements and stuff and we gained greater insight into like 182 00:10:26,080 --> 00:10:27,880 to be. To be clear, fully backed. 183 00:10:28,040 --> 00:10:30,040 Like they they're. Backed as there. 184 00:10:30,040 --> 00:10:32,000 Were there were assets there but they they? 185 00:10:32,040 --> 00:10:33,800 Were backed as fully. Backed one to one. 186 00:10:33,800 --> 00:10:36,240 Yeah, yeah, yeah. The tension for me with Tether 187 00:10:36,240 --> 00:10:40,000 now is that I think it is plausible to say that Tether and 188 00:10:40,000 --> 00:10:44,160 Tether related entities control somewhere close to 100 billion 189 00:10:44,160 --> 00:10:47,040 in assets valued somewhere close to fairly. 190 00:10:47,160 --> 00:10:50,400 Which means the outstanding questions are how did those 191 00:10:50,400 --> 00:10:53,920 assets get there? Like why are those assets there? 192 00:10:54,160 --> 00:10:57,880 And is the core business being run in a way where it can 193 00:10:58,000 --> 00:11:01,400 continue to operate? Meaning have they found a way to 194 00:11:01,400 --> 00:11:03,800 avoid regulator and law enforcement pressures? 195 00:11:03,800 --> 00:11:07,840 Avoid or comply with right when we started this. 196 00:11:07,840 --> 00:11:12,440 I think a lot of the the pushing from people like us and you know 197 00:11:12,440 --> 00:11:16,560 others bit Fenix and other others who were trying to be 198 00:11:16,560 --> 00:11:20,520 pretty precise with what they wanted to see from Tether and 199 00:11:20,520 --> 00:11:24,280 Bitfinex largely centered around audits. 200 00:11:24,720 --> 00:11:28,320 And one of the things I keep thinking about is how they've 201 00:11:28,320 --> 00:11:31,280 repeatedly promised those those audits. 202 00:11:32,320 --> 00:11:34,800 So they promised them, I think they promised them ultimately 203 00:11:34,800 --> 00:11:37,320 like six or seven times over all these years. 204 00:11:37,320 --> 00:11:40,920 What I think is really interesting about that is the 205 00:11:41,000 --> 00:11:43,640 the constant excuse that they use when they can't get the 206 00:11:43,640 --> 00:11:47,080 audits is auditors just won't do it. 207 00:11:47,240 --> 00:11:50,040 They won't work with us to get these audits done. 208 00:11:50,240 --> 00:11:53,320 They're being too, I think you you've mentioned recently about 209 00:11:53,320 --> 00:11:58,760 the Friedman LLP audit that was going to happen where they they 210 00:11:58,760 --> 00:12:02,520 were like they're being just they're digging in way too much. 211 00:12:02,680 --> 00:12:05,320 They're they're checking too much stuff out, which is like 212 00:12:05,440 --> 00:12:07,880 that doesn't make sense, right. That's how an audit works. 213 00:12:08,240 --> 00:12:10,240 They keep saying they're going to get the audits. 214 00:12:10,640 --> 00:12:12,440 Then when the audits don't happen, they keep saying it's 215 00:12:12,440 --> 00:12:14,120 the auditor's fault. It's not our fault. 216 00:12:14,360 --> 00:12:16,920 But then I keep thinking, why are you promising the audits 217 00:12:16,920 --> 00:12:19,560 over and over again then? And, like, it gets even more 218 00:12:19,560 --> 00:12:22,360 frustrating than that when you pay attention to the specifics 219 00:12:22,360 --> 00:12:24,240 of what Tether executives will promise, right? 220 00:12:24,480 --> 00:12:26,880 Let's go to Let's talk about Stuart Hogner for a second. 221 00:12:26,920 --> 00:12:33,040 Everyone's favorite bald lawyer. In 2021, Stuart Hogner took to 222 00:12:33,040 --> 00:12:36,560 Twitter to again assure everyone that they were working on audits 223 00:12:36,880 --> 00:12:39,080 and that they would be coming soon, although he could not 224 00:12:39,080 --> 00:12:42,920 provide an exact timeline. And what angers me the most is 225 00:12:42,920 --> 00:12:47,320 that he said that the audits would start with the 2018 226 00:12:47,640 --> 00:12:51,080 financial year. And the reason this makes me so 227 00:12:51,080 --> 00:12:53,920 mad and again go back to those early episodes to really 228 00:12:53,920 --> 00:12:57,840 understand this is that 2018 would be a year in which 229 00:12:57,840 --> 00:13:00,800 Bitfinex would take hundreds of millions of dollars from tethers 230 00:13:00,800 --> 00:13:04,480 reserves in undisclosed related party transactions in order to 231 00:13:04,480 --> 00:13:06,480 cover up their own effective insolvency. 232 00:13:06,680 --> 00:13:10,120 After giving over $1 billion to an unlicensed money transmitter 233 00:13:10,120 --> 00:13:13,120 operated operated out of Panama and Colombia. 234 00:13:13,560 --> 00:13:17,200 After this undisclosed transaction to cover up 235 00:13:17,200 --> 00:13:20,240 Bitfinexes, insolvency left Tether unpacked. 236 00:13:21,160 --> 00:13:23,520 The New York Attorney General would begin investigating and 237 00:13:23,520 --> 00:13:26,120 when the New York Attorney General reached out, Bitfenix 238 00:13:26,120 --> 00:13:28,640 and Tether would then enter into a revolving line of credit 239 00:13:28,640 --> 00:13:31,720 agreement where Tether would extend almost a billion dollars 240 00:13:31,720 --> 00:13:35,000 of of credit to Bitfenix to cover up this effective 241 00:13:35,000 --> 00:13:38,040 insolvency. And the same executives signed 242 00:13:38,040 --> 00:13:40,080 this loan agreement for both sides. 243 00:13:40,280 --> 00:13:45,400 And Stuart Hogner in 2021, after the New York Attorney General 244 00:13:45,400 --> 00:13:49,880 settlement took to Twitter to assure people that this that 245 00:13:49,920 --> 00:13:53,360 specific year is the year in which their audits would start. 246 00:13:53,640 --> 00:13:56,040 That they would be able to provide full financial audits 247 00:13:56,040 --> 00:13:59,600 for that year that would definitively show Tether was 248 00:13:59,600 --> 00:14:02,440 continually backed. During a year when we already 249 00:14:02,440 --> 00:14:08,000 objectively know Tether was 100% not backed. 250 00:14:08,720 --> 00:14:13,160 That is a offensive that the lawyer thought that that was a 251 00:14:13,200 --> 00:14:17,120 believable line to tell in public and that no one fucking 252 00:14:17,120 --> 00:14:19,520 cares. Yeah, well, that's the part that 253 00:14:19,520 --> 00:14:21,960 I think is the most interesting is that they've actually been 254 00:14:21,960 --> 00:14:27,120 able to repeat the same lie, right. 255 00:14:27,120 --> 00:14:30,160 And and or maybe it isn't a lie. Well, like, one part of this is 256 00:14:30,160 --> 00:14:33,120 absolutely a lie. The the idea that the audit is 257 00:14:33,120 --> 00:14:37,120 always months away for about seven years or whatever is 258 00:14:37,120 --> 00:14:40,560 clearly a lie, right? Like clearly that is simply not 259 00:14:40,560 --> 00:14:41,360 true. Sure. 260 00:14:41,400 --> 00:14:41,920 And the. Truth. 261 00:14:42,400 --> 00:14:45,560 But then the alternative. Like when I think about it, I'm 262 00:14:45,560 --> 00:14:49,680 like okay if the auditors really cuz they're well, I guess 263 00:14:49,680 --> 00:14:53,200 There's Coinbase, but Coinbase doesn't operate a business like 264 00:14:54,480 --> 00:14:55,800 Tether does. Certainly. 265 00:14:56,040 --> 00:14:59,640 I think everyone will admit that that is at least true and that a 266 00:14:59,640 --> 00:15:02,560 lot of what Tether has done, whether you like them or not, 267 00:15:02,560 --> 00:15:05,920 because I'm sure there's plenty of people out there who listen 268 00:15:05,920 --> 00:15:09,840 to us and feel like, you know, tether's not so bad. 269 00:15:11,600 --> 00:15:15,320 I think it's worth noting that a lot of the stuff they've done is 270 00:15:15,320 --> 00:15:19,880 unsavory at best and even illegal at best, right? 271 00:15:19,880 --> 00:15:23,680 Because they've been fined and slapped down for the for the 272 00:15:23,680 --> 00:15:25,640 stuff that they've done. They were monitored by the New 273 00:15:25,640 --> 00:15:30,200 York Attorney General for years because of how they behaved. 274 00:15:30,440 --> 00:15:34,000 So whether you like them or not, you can admit that they're 275 00:15:34,000 --> 00:15:37,640 unsavory characters doing illegal things and the reason 276 00:15:37,640 --> 00:15:40,360 they can't get these audits isn't because they're trying 277 00:15:40,360 --> 00:15:42,840 desperately to get them. And the auditors are just like 278 00:15:42,840 --> 00:15:46,000 oh, sorry, can't do it. I I really don't. 279 00:15:46,480 --> 00:15:49,080 I we haven't seen any proof that they've been seeking out 280 00:15:49,080 --> 00:15:52,680 auditors in any realistic way whatsoever to get an audit. 281 00:15:52,720 --> 00:15:55,360 And I I don't think they have ever. 282 00:15:55,600 --> 00:15:57,800 I think that is the reality. I don't think they want to get 283 00:15:57,800 --> 00:15:59,560 an audit. I don't think they've tried to 284 00:15:59,560 --> 00:16:04,560 get an audit really. And I wish they would. 285 00:16:04,560 --> 00:16:07,920 I like these are the lies that they utilize to just fool 286 00:16:07,920 --> 00:16:11,080 people. They gaslight like the entire 287 00:16:11,080 --> 00:16:14,040 public and it works. You know where they're just like 288 00:16:14,560 --> 00:16:17,480 we're we're trying desperately to get an audit and it's like, 289 00:16:17,480 --> 00:16:20,000 how could you be trying desperately for seven years and 290 00:16:20,000 --> 00:16:23,160 it doesn't happen? What especially makes me angry, 291 00:16:23,480 --> 00:16:27,000 going back to that, like Stew thing I just said, is he could 292 00:16:27,000 --> 00:16:31,800 have simply stated, having resolved these previous issues, 293 00:16:31,960 --> 00:16:35,160 we intend to, like, start an engagement going forward from 294 00:16:35,160 --> 00:16:39,400 this date covering this period or whatever that was like, deal 295 00:16:39,400 --> 00:16:42,600 with the future, right? Let the past be past. 296 00:16:42,800 --> 00:16:48,760 I say discussing 2014 on a podcast in 2024, let the past be 297 00:16:48,760 --> 00:16:51,280 past. And but instead he didn't. 298 00:16:51,280 --> 00:16:53,280 He said no. Actually, you know that year 299 00:16:53,280 --> 00:16:56,360 where you just heard we were doing all that unsavory stuff we 300 00:16:56,360 --> 00:16:59,640 had to pay millions of dollars to settle lawsuits about yet. 301 00:16:59,640 --> 00:17:02,120 No, actually, the lawsuit's going to cover that period. 302 00:17:02,360 --> 00:17:06,560 Cool, huh? You recently discussed how it's 303 00:17:06,560 --> 00:17:10,160 not even just tether, right? It's Bitfinex as well, which by 304 00:17:10,160 --> 00:17:12,880 the way, I don't know. There's really no separation 305 00:17:12,880 --> 00:17:15,319 between these entities. I think it's fair to say that 306 00:17:16,000 --> 00:17:18,760 while they conduct themselves differently, they're different 307 00:17:18,760 --> 00:17:22,040 businesses. This gets back into the Friedman 308 00:17:22,040 --> 00:17:23,520 audit that you were kind of talking about in a way that I 309 00:17:23,520 --> 00:17:28,480 think is really compelling. Because back in 2017, Bitfinex 310 00:17:28,480 --> 00:17:31,600 had been promising an audit after the 2016 hack because they 311 00:17:31,600 --> 00:17:35,840 had come up with this cockamamie scam to give everyone a bunch of 312 00:17:35,840 --> 00:17:38,680 BFX tokens instead of the money they were actually owed. 313 00:17:38,880 --> 00:17:41,440 And you can go back again to our early episodes to really get 314 00:17:41,440 --> 00:17:44,320 into the weeds on that. But as a byproduct to this 315 00:17:44,320 --> 00:17:47,280 process, there was a bunch of Bitfenix users who accused 316 00:17:47,520 --> 00:17:51,160 Bitfenix of either keeping back some corporate funds or not 317 00:17:51,160 --> 00:17:52,680 giving everyone the same haircut. 318 00:17:53,000 --> 00:17:56,040 In order to assuage these fears, Bitfenix agreed to a full 319 00:17:56,040 --> 00:17:58,760 financial audit and that they would publish their haircut 320 00:17:58,760 --> 00:18:01,840 methodology to prove that every user got the same haircut. 321 00:18:01,840 --> 00:18:04,360 Initially. They would retain Ledger Labs to 322 00:18:04,360 --> 00:18:07,520 do this analysis. Ledger Labs is not a financial 323 00:18:07,520 --> 00:18:10,480 auditing firm and never could have done a financial audit, but 324 00:18:10,480 --> 00:18:13,920 did seem to do a security report that would leak I think last 325 00:18:13,920 --> 00:18:17,480 year and would show that it was Juan Carlo Davassini's keys that 326 00:18:17,480 --> 00:18:19,200 seem to be responsible for the hack. 327 00:18:20,200 --> 00:18:22,560 Sorry, we don't technically know that it was just a key named 328 00:18:22,560 --> 00:18:24,120 Juan Carlo. It could have been a different 329 00:18:24,120 --> 00:18:31,120 Juan Carlo working there maybe. Can't say it was the Davassini 330 00:18:31,120 --> 00:18:36,920 Juan Carlo, but there was also, around the same time, reporting 331 00:18:36,920 --> 00:18:39,280 from Nathaniel Popper that showed that not everyone got the 332 00:18:39,280 --> 00:18:43,680 same haircut, but Bitfinex couldn't get their financial 333 00:18:43,680 --> 00:18:46,600 audit from Ledger Labs. Tether announced that they had 334 00:18:46,600 --> 00:18:50,360 retained Friedman LLP to do an audit for them and then Bitfinex 335 00:18:50,360 --> 00:18:53,680 announced that they had retained Friedman LLP to do an audit of 336 00:18:53,680 --> 00:18:55,400 them. Cass, you were talking about how 337 00:18:55,400 --> 00:18:57,480 there was no separation between the firms and I think that was 338 00:18:57,480 --> 00:19:00,800 especially true back here in this period in 2017. 339 00:19:00,960 --> 00:19:03,720 We've talked about before Tethers redemption window was 340 00:19:03,720 --> 00:19:07,320 not open from April 2017 until November 2018. 341 00:19:07,640 --> 00:19:10,440 All redemptions and issuances of Tether were primarily done 342 00:19:10,440 --> 00:19:13,000 through Bitfinex. And so, especially in this 343 00:19:13,000 --> 00:19:17,040 period, I think if Tether wanted to get an audit, they was going 344 00:19:17,040 --> 00:19:20,400 to need to be an audit of Bitfinex for the auditor to feel 345 00:19:20,400 --> 00:19:23,960 confident that they had adequately audited Tether, you 346 00:19:23,960 --> 00:19:29,040 know, And So what we eventually get to is the manipulated 347 00:19:29,040 --> 00:19:31,960 Friedman report, where Tether moves a bunch of money into a 348 00:19:31,960 --> 00:19:34,600 bank account, has Friedman check it, money comes back out. 349 00:19:34,960 --> 00:19:40,240 And the eventual news that the Tether relationship with this 350 00:19:40,240 --> 00:19:43,760 auditor dissolved because of the excruciatingly detailed 351 00:19:43,760 --> 00:19:47,560 procedures they wanted to do. My intuition is that the 352 00:19:47,560 --> 00:19:50,960 excruciatingly detailed procedures they insisted on was 353 00:19:50,960 --> 00:19:54,200 auditing the sister firms of Tether that were holding Tether 354 00:19:54,200 --> 00:19:56,960 assets in order to make sure that there was no other, like, 355 00:19:56,960 --> 00:19:59,920 encumbrances or liens against those assets. 356 00:20:00,280 --> 00:20:04,480 And the reason we've never seen audits of either of these firms 357 00:20:04,640 --> 00:20:08,480 is there has not been a period where their financial situations 358 00:20:08,480 --> 00:20:11,920 have been disentangled enough that they've been able to 359 00:20:11,920 --> 00:20:14,040 cleanly get an audit on either firm. 360 00:20:14,640 --> 00:20:18,400 That's my intuition about what happened then, and one of the 361 00:20:18,400 --> 00:20:20,400 barriers that still prevents them from getting it. 362 00:20:20,400 --> 00:20:23,560 I mean, we're getting into the weeds of the auditing and the 363 00:20:23,560 --> 00:20:26,040 not auditing and the attestations and what they 364 00:20:26,040 --> 00:20:29,120 promised and what they haven't done. 365 00:20:29,440 --> 00:20:31,880 Earlier you said or collaborating with law 366 00:20:31,880 --> 00:20:35,520 enforcement and I or. Yeah, complying, Complying with. 367 00:20:35,520 --> 00:20:38,320 Complying and I thought that was an interesting direction. 368 00:20:38,320 --> 00:20:40,720 Do you have any thoughts in recent complying they've done? 369 00:20:40,760 --> 00:20:44,720 You and I had a discussion recently where I people forget 370 00:20:44,720 --> 00:20:48,200 about this, but there was a gentleman named Peter Warwick 371 00:20:48,440 --> 00:20:53,360 who came from the Bank of Montreal bank, Bank of Montreal 372 00:20:53,360 --> 00:20:56,920 or I I don't remember which Bank of Canada something some 373 00:20:56,920 --> 00:21:01,040 Canadian banks that he had worked at when he went in as the 374 00:21:01,040 --> 00:21:07,320 Chief of Compliance. I think there were 222 mindsets 375 00:21:07,840 --> 00:21:10,880 when that occurred and one was this is BS. 376 00:21:10,880 --> 00:21:14,680 They're just getting this guy there to make it look like 377 00:21:14,680 --> 00:21:17,080 they're trying to do some sort of compliance. 378 00:21:17,640 --> 00:21:21,560 And then there was the other end of that which was, oh, it's so 379 00:21:21,560 --> 00:21:25,360 over for Tether because if there actually is a compliance officer 380 00:21:25,360 --> 00:21:28,920 who's doing his job, no one will want to use Tether anymore. 381 00:21:29,000 --> 00:21:31,920 I don't think that made a huge difference necessarily. 382 00:21:32,120 --> 00:21:39,120 I, I, I tend to side with the, he certainly was a big name to 383 00:21:39,120 --> 00:21:41,400 bring in and that looked good side. 384 00:21:42,640 --> 00:21:45,760 But also, as you're kind of alluding to here, is that 385 00:21:46,480 --> 00:21:49,480 throughout the past year or two, Tether has really been pushing 386 00:21:49,480 --> 00:21:52,160 this narrative that they're constantly complying with any 387 00:21:52,160 --> 00:21:54,320 law enforcement request. They're complying with them, 388 00:21:54,360 --> 00:21:56,080 they're working with law enforcement hand in hand. 389 00:21:56,360 --> 00:21:59,280 They're suggesting that they're freezing addresses that are 390 00:21:59,280 --> 00:22:05,120 being asked to be frozen, the sanctioned, any OFAC sanctioned 391 00:22:05,120 --> 00:22:07,360 addresses they're now complying with. 392 00:22:08,480 --> 00:22:12,560 There's a bunch of things that they're moving towards, but at 393 00:22:12,560 --> 00:22:16,120 least to make it sound like they're trying to comply with 394 00:22:17,720 --> 00:22:20,400 U.S. Federal laws to a degree. 395 00:22:22,040 --> 00:22:27,680 What do you think though? I think that back in 2021, it 396 00:22:27,680 --> 00:22:30,760 was reported that Tether executives received target 397 00:22:30,760 --> 00:22:33,880 letters from the Department of Justice related to possible 398 00:22:33,880 --> 00:22:37,880 indictments for bank fraud. Since that time, there's been 399 00:22:37,880 --> 00:22:40,560 additional reporting. Specifically, I'm thinking of 400 00:22:40,560 --> 00:22:44,600 like the Wall Street Journal piece that targeted Harbourne's 401 00:22:44,600 --> 00:22:46,200 activity, its signature for Tether. 402 00:22:46,440 --> 00:22:50,920 That gave further credence to the idea that Bitfenix, Tether, 403 00:22:50,920 --> 00:22:54,040 and Friends of Bitfenix and Tether were engaged in a 404 00:22:54,040 --> 00:22:59,400 conspiracy to defraud the banks. But it's also been 2 1/2 years 405 00:22:59,400 --> 00:23:02,600 since those Target letters were initially reported, and no 406 00:23:02,600 --> 00:23:04,400 indictments have been revealed publicly. 407 00:23:05,240 --> 00:23:08,040 There's also, in somewhat of a different track, always been 408 00:23:08,040 --> 00:23:15,040 this false perception that Tether was less likely to freeze 409 00:23:15,040 --> 00:23:19,600 your tethers than like Circle would be to freeze your USDC. 410 00:23:20,000 --> 00:23:23,000 That Tether was in some sense more censorship resistance 411 00:23:23,440 --> 00:23:27,600 because they were more aligned with the ideals of the type of 412 00:23:27,600 --> 00:23:30,800 individuals needing censorship resistance would be using stable 413 00:23:30,800 --> 00:23:34,360 coins. However, that was always false. 414 00:23:35,200 --> 00:23:38,880 Tether always froze more addresses and more coins than 415 00:23:38,880 --> 00:23:41,920 Circle at any point during their existence. 416 00:23:41,960 --> 00:23:46,680 More recently, in like November of 2023, Tether onboarded the 417 00:23:46,720 --> 00:23:51,040 Secret Service and the FBI onto their platform, and since then 418 00:23:51,040 --> 00:23:55,080 we've seen even more of an acceleration in the rate of 419 00:23:55,080 --> 00:23:58,840 Tether freezing. I think that if Tether was 420 00:23:58,840 --> 00:24:06,360 previously useful for less than legal activities ranging from 421 00:24:06,480 --> 00:24:09,600 money laundering to capital flight to gambling to 422 00:24:09,920 --> 00:24:14,840 speculation that some of those activities are going to become 423 00:24:14,840 --> 00:24:20,920 meaningfully harder going forward as the as Tether finds 424 00:24:20,920 --> 00:24:25,240 it harder and harder to say no to various U.S. government 425 00:24:25,240 --> 00:24:27,880 fixtures. What I'm curious about is 426 00:24:27,880 --> 00:24:32,720 whether there was like a formal agreement that will eventually 427 00:24:32,720 --> 00:24:36,600 be revealed in which this access was provided as part of like a 428 00:24:36,600 --> 00:24:39,760 good faith negotiation, as part of like a deferred settlement 429 00:24:39,760 --> 00:24:42,800 agreement, or if it was more informal, whereas, like a 430 00:24:42,800 --> 00:24:46,360 response to growing regulator and law enforcement pressure. 431 00:24:46,560 --> 00:24:49,680 Tether thought this collaboration would serve as 432 00:24:49,680 --> 00:24:55,040 like a relief valve, because it's been a long time since the 433 00:24:55,040 --> 00:24:57,480 target letters and no one's been indicted. 434 00:24:57,560 --> 00:25:01,360 This word, I think is a loaded word that I'm going to say. 435 00:25:01,360 --> 00:25:05,920 So I don't want to, I don't want to propose it like I believe it 436 00:25:06,320 --> 00:25:11,960 in any meaningful sense. But I think for a long time the 437 00:25:11,960 --> 00:25:15,160 word honeypot has been thrown around when it comes to tether. 438 00:25:15,600 --> 00:25:21,080 And this idea that criminals have utilized Tether because 439 00:25:21,080 --> 00:25:27,240 they think that it's safe and it's it has that has that, oh, 440 00:25:27,240 --> 00:25:29,960 we don't give a shit what authorities say to us, kind of 441 00:25:30,720 --> 00:25:36,600 executives who seem like they're like Wild West figures. 442 00:25:36,600 --> 00:25:42,840 But maybe that has been a misperception on all of our 443 00:25:42,840 --> 00:25:46,640 parts. And perhaps they really, as as 444 00:25:46,640 --> 00:25:50,160 you're pointing out, especially in the past few years, have been 445 00:25:50,160 --> 00:25:53,480 doing everything they can to work with authorities not only 446 00:25:53,480 --> 00:25:58,720 to save themselves, but to get rich doing it at the same time. 447 00:25:58,720 --> 00:26:00,600 And not and not lose that money either. 448 00:26:01,080 --> 00:26:03,760 I mean, all of these executives could now walk away from this 449 00:26:03,760 --> 00:26:09,880 project probably I had like 100 sent a millionaires like they 450 00:26:09,880 --> 00:26:10,840 could have. They could have hundreds of 451 00:26:10,840 --> 00:26:14,520 millions of dollars walk away forever at this point, I would 452 00:26:14,520 --> 00:26:17,480 suspect. Wasn't it Zeke that reported 453 00:26:17,480 --> 00:26:21,760 that Phil Potter's buyout from Tether in 2018 was worth 300 454 00:26:21,760 --> 00:26:23,080 million? Yes. 455 00:26:23,360 --> 00:26:26,240 And that was when Tether was, what, $3 billion? 456 00:26:26,960 --> 00:26:28,520 Yes. OK. 457 00:26:29,320 --> 00:26:30,720 Right. Yes. 458 00:26:30,960 --> 00:26:33,560 So you're absolutely right. Like there's a lot of money in 459 00:26:33,560 --> 00:26:35,480 there. The other thing to remember is 460 00:26:35,480 --> 00:26:39,520 the Sam Bankman freed of it all. He's now been found guilty of 461 00:26:39,520 --> 00:26:43,400 seven different felony charges. His firm, Alameda Research, was 462 00:26:43,400 --> 00:26:46,120 the single largest issuer of Tether. 463 00:26:46,560 --> 00:26:49,360 One of the primary things they used with those tethers is 464 00:26:49,360 --> 00:26:53,040 directed them into like the, I'm going to call it, the Chinese 465 00:26:53,040 --> 00:26:57,200 market, but that's that market through like Genesis blocking 466 00:26:57,200 --> 00:27:02,080 entities like that. And so now there's also a lot of 467 00:27:02,080 --> 00:27:05,400 additional attention on some of those parts of Tether's use 468 00:27:05,400 --> 00:27:07,760 case. And if you want to give Tether 469 00:27:07,760 --> 00:27:10,760 the very most benefit of the doubt, or at least want to allow 470 00:27:10,760 --> 00:27:14,160 them to preserve that benefit of the doubt in public, perhaps you 471 00:27:14,160 --> 00:27:16,800 say, well, Tether was an unwitting tool. 472 00:27:16,960 --> 00:27:19,040 This was a company of unwitting tools. 473 00:27:19,360 --> 00:27:23,200 And now we have the opportunity for them to come in and help us. 474 00:27:23,400 --> 00:27:25,320 They can be productive tools instead. 475 00:27:26,720 --> 00:27:30,080 And so Tether potentially has this opportunity under this 476 00:27:30,080 --> 00:27:34,440 pressure to be like to begin collaborating, sharing, pointing 477 00:27:34,440 --> 00:27:37,560 out addresses they know and don't know, and in doing so, 478 00:27:37,560 --> 00:27:39,720 perhaps avoid their own prosecution. 479 00:27:39,760 --> 00:27:43,720 Another thing I want to mention here as well is that I think a 480 00:27:43,720 --> 00:27:49,880 lot of people discuss us and others who criticize Tether. 481 00:27:51,440 --> 00:27:54,440 We have this kind of blanket name that we've been given, 482 00:27:54,440 --> 00:27:57,400 which is Tether truthers with the idea being that we're 483 00:27:57,400 --> 00:28:01,000 conspiracy theorists the same way that the people who say, you 484 00:28:01,000 --> 00:28:03,760 know, Bush did 9/11 are or whatever Jeff you. 485 00:28:04,000 --> 00:28:06,120 Can't melt commercial paper. Right, right. 486 00:28:06,240 --> 00:28:08,760 Yeah, There you go. That's true. 487 00:28:08,760 --> 00:28:14,360 Actually, I just want to say that we've been right on most of 488 00:28:14,360 --> 00:28:17,880 the criticisms that we've given. Like almost all of them, I think 489 00:28:18,000 --> 00:28:23,000 were fair and accurate. Tether being unbacked, it was 490 00:28:23,000 --> 00:28:25,040 unbacked. I mean, that's provably the 491 00:28:25,040 --> 00:28:26,560 case. The idea that there was a 492 00:28:26,560 --> 00:28:30,640 solvency issue and that they were saved and bailed out by the 493 00:28:30,640 --> 00:28:33,600 cryptocurrency community, I mean, that is provable. 494 00:28:33,600 --> 00:28:36,920 They work with money launderers, people like Jiao Dong who've 495 00:28:36,920 --> 00:28:39,120 been arrested. All of this is provable. 496 00:28:39,120 --> 00:28:40,760 None of this is something that we're making up. 497 00:28:41,000 --> 00:28:44,120 There's no conspiracy needed for most of the statements that 498 00:28:44,120 --> 00:28:46,840 we've ever claimed. As time has gone forward, we've 499 00:28:46,840 --> 00:28:49,200 also shifted our perspectives. For instance, I think you and 500 00:28:49,200 --> 00:28:51,480 me, there might be others that disagree with this, but you and 501 00:28:51,480 --> 00:28:55,880 me generally think that Tether is likely fully backed like 502 00:28:56,240 --> 00:28:58,960 that. They have all the assets that 503 00:28:59,240 --> 00:29:04,600 they need to cover the tethers that they have minted. 504 00:29:04,960 --> 00:29:07,960 I used to think there's a chance there's some encumbrance or 505 00:29:07,960 --> 00:29:11,840 other rehypothecation going on at the edges, but broadly they 506 00:29:11,920 --> 00:29:14,360 have lots of assets. They have many many assets. 507 00:29:14,440 --> 00:29:17,640 Realistically, they could probably cover nearly any kind 508 00:29:17,640 --> 00:29:20,640 of near. I'm saying nearly. 509 00:29:20,640 --> 00:29:23,360 There's always exceptions to every rule, but nearly any kind 510 00:29:23,360 --> 00:29:26,480 of major withdrawal? I suspect they could meet most 511 00:29:26,480 --> 00:29:30,080 of those withdrawals, I suspect. At least 24. 512 00:29:30,280 --> 00:29:33,520 Hours worth the question. The questions remain for a lot 513 00:29:33,520 --> 00:29:37,320 of things like how did they, how did they get all this money in 514 00:29:37,320 --> 00:29:40,360 those years, how did they, how did they make things work when 515 00:29:40,360 --> 00:29:44,560 they when they had a much riskier portfolio and markets 516 00:29:44,560 --> 00:29:47,720 would go down or whatever. Like the when they got hacked. 517 00:29:47,720 --> 00:29:51,240 When all these things have happened that have thrown their 518 00:29:51,240 --> 00:29:55,680 business model up in the air and thrown the ability for them to 519 00:29:55,680 --> 00:29:58,200 continue up in the air and they have had some really strange 520 00:29:58,200 --> 00:30:03,200 ways of maneuvering through those moments, all of that is 521 00:30:03,200 --> 00:30:06,680 real. There is no conspiracy. 522 00:30:07,040 --> 00:30:09,640 And I I guess I'm like, I'm tired of being gaslit by the 523 00:30:09,640 --> 00:30:13,360 public who love to be like, see, tether's fine. 524 00:30:13,360 --> 00:30:16,120 It was fine all along. They're like, well, no, that's 525 00:30:16,120 --> 00:30:18,280 not true. And I don't appreciate that 526 00:30:18,280 --> 00:30:22,320 moving of the goal posts where I do I our our criticisms were not 527 00:30:22,320 --> 00:30:26,160 only valid, but good. They were good criticisms and 528 00:30:27,000 --> 00:30:30,600 our concerns and are concerns that remain for Tether. 529 00:30:30,640 --> 00:30:33,320 Things like the fact that they cannot get an audit, they cannot 530 00:30:33,320 --> 00:30:36,560 get an attestation, they won't share their real data with 531 00:30:36,560 --> 00:30:42,240 anyone about any of this stuff. Those are real concerns to have. 532 00:30:42,240 --> 00:30:45,520 There's nothing wrong with feeling concerned about those 533 00:30:45,520 --> 00:30:51,600 things, especially when it's $100 billion supposedly asset 534 00:30:51,680 --> 00:30:54,960 that everything in cryptocurrency relies on. 535 00:30:55,120 --> 00:30:58,320 Like you should be looking at it very, very closely. 536 00:30:58,320 --> 00:31:01,160 And if you think it's conspiratorial to do that, I 537 00:31:01,160 --> 00:31:05,040 would say you're not reflecting enough on how important Tether 538 00:31:05,040 --> 00:31:07,480 is. And at the most basic level, you 539 00:31:07,480 --> 00:31:09,840 go back to one of our least popular episodes. 540 00:31:09,840 --> 00:31:13,000 Stable coins can fork your chain if they want to fork. 541 00:31:13,000 --> 00:31:16,160 Layout the argument that basically these stable coins 542 00:31:16,160 --> 00:31:20,240 being this powerful effects every single cryptocurrency that 543 00:31:20,240 --> 00:31:22,480 these stable coins like have an interaction with. 544 00:31:22,840 --> 00:31:26,600 Stable coins like Tether can be the arbiter of an Ethereum fork, 545 00:31:26,600 --> 00:31:29,760 a Bitcoin fork, all of these different things because of how 546 00:31:29,760 --> 00:31:33,960 important its role is. And they just onboarded the 547 00:31:33,960 --> 00:31:39,080 Secret Service and the FBI. You crypto folks are giving a 548 00:31:39,080 --> 00:31:44,720 lot of power to the US Secret Service and the FBI, and none of 549 00:31:44,720 --> 00:31:47,560 you seem to care. That's weird. 550 00:31:47,720 --> 00:31:52,040 As we as we approach 100 billion tethers, it has been a real 551 00:31:52,040 --> 00:31:55,160 learning experience following this for so long. 552 00:31:56,520 --> 00:32:00,880 I guess this is going on going on six years now that we've been 553 00:32:00,880 --> 00:32:07,040 following the tether saga 6-7 years which is yeah like a it's 554 00:32:07,040 --> 00:32:09,360 actually like a significant portion of my life. 555 00:32:11,360 --> 00:32:14,960 So I I I have learned a lot of things and I part of my 556 00:32:14,960 --> 00:32:19,920 disappointment over the past few months where we we haven't been 557 00:32:19,920 --> 00:32:24,680 we haven't been doing we haven't been doing episodes and I I was 558 00:32:24,680 --> 00:32:28,560 kind of Mia. And I think part of that had to 559 00:32:28,560 --> 00:32:37,320 do with the fact that I, I, I saw FTX and SBF, you know, in a 560 00:32:37,320 --> 00:32:39,280 sense, get crucified, rightfully so. 561 00:32:39,840 --> 00:32:44,680 Not like they they deserved what they deserved that they deserved 562 00:32:44,680 --> 00:32:52,480 their comeuppance. But I think when you reflect on 563 00:32:53,000 --> 00:32:58,000 like finance and and CZ and how many laws they've broken, I mean 564 00:32:58,000 --> 00:33:01,520 you'd probably be it'd be easier to list the financial rules and 565 00:33:01,520 --> 00:33:04,800 regulations they've complied with than the ones that they've 566 00:33:04,800 --> 00:33:08,120 broken. Like they've probably broken 567 00:33:08,120 --> 00:33:10,880 every fucking financial law in the books. 568 00:33:10,880 --> 00:33:13,560 They didn't trade onion futures. That's the important. 569 00:33:13,560 --> 00:33:15,360 One, that's where Casquin comes in. 570 00:33:15,640 --> 00:33:19,280 I think when I saw that CZ was going to walk away from that 571 00:33:20,680 --> 00:33:25,160 with a slap on the wrist. We've seen this before like EOS 572 00:33:25,160 --> 00:33:31,520 offering like acquiring so many billions of dollars and being 573 00:33:32,040 --> 00:33:35,320 again a slap on the wrist of what was it like a, a $55 574 00:33:35,320 --> 00:33:39,400 million fine or something crazy $80 million, whatever it was. 575 00:33:39,400 --> 00:33:42,720 But you like what? So you're going to, you're not 576 00:33:42,720 --> 00:33:45,160 going to stop any criminal from illegally raising funds if 577 00:33:45,160 --> 00:33:48,600 you're going to just take a percentage, a tiny percentage of 578 00:33:48,600 --> 00:33:53,600 what they raised. And if you think CZ getting 579 00:33:53,600 --> 00:33:56,480 sentenced, he's not even going to, he's not even going to go to 580 00:33:56,480 --> 00:33:57,960 prison. Probably he might. 581 00:33:58,360 --> 00:34:00,160 Yeah, I'm. I'm not holding my breath. 582 00:34:00,400 --> 00:34:04,280 He can appeal if. If he does get sentenced, he can 583 00:34:04,280 --> 00:34:07,160 appeal. To over 18 months, he can 584 00:34:07,160 --> 00:34:08,400 appeal. Right. 585 00:34:08,400 --> 00:34:11,840 He can appeal, which that tells you everything you need to know. 586 00:34:11,880 --> 00:34:14,880 He's going to do probably almost no time in prison. 587 00:34:14,880 --> 00:34:16,280 This is my that's what I'm trying to say. 588 00:34:16,280 --> 00:34:21,280 And he's like if you think SPF broke laws and was a not 589 00:34:21,280 --> 00:34:24,040 necessarily yeah a pretty bad guy. 590 00:34:25,320 --> 00:34:29,560 The only thing that CZ maybe didn't do or probably did do, 591 00:34:29,560 --> 00:34:32,159 but just was smarter about it is utilize customer funds in the 592 00:34:32,159 --> 00:34:37,159 same way. And he he didn't have to deal 593 00:34:37,159 --> 00:34:42,120 with a bank run. So he which again shouldn't 594 00:34:42,120 --> 00:34:44,120 happen at a cryptocurrency exchange. 595 00:34:44,639 --> 00:34:46,520 But he's not going to do much time. 596 00:34:46,520 --> 00:34:50,560 I think you and I, after all these years of following tether, 597 00:34:51,040 --> 00:34:52,920 I I don't think they're going to. 598 00:34:53,199 --> 00:34:54,400 I don't think anything is going to. 599 00:34:54,400 --> 00:34:58,120 If it does ever go away, it will be just because it's not it's a 600 00:34:58,120 --> 00:34:59,720 honeypot and it's not useful anymore. 601 00:35:00,600 --> 00:35:05,320 But if if it doesn't go away, I'm not going to be surprised. 602 00:35:05,320 --> 00:35:08,440 And if all these billionaires or these executives are 603 00:35:08,440 --> 00:35:11,560 billionaires at the end of it and they get to be rich and 604 00:35:11,560 --> 00:35:15,320 influential, that also won't surprise me. 605 00:35:15,480 --> 00:35:20,280 So I guess I'm disappointed in regulators. 606 00:35:20,280 --> 00:35:23,240 I'm disappointed in the way the government has handled this 607 00:35:23,240 --> 00:35:25,320 stuff. I understand the wheels of 608 00:35:25,320 --> 00:35:30,600 justice grind slowly but always increasingly fine or whatever 609 00:35:30,600 --> 00:35:32,200 the phrase is. But I don't think that's always 610 00:35:32,200 --> 00:35:34,600 necessarily true. Sometimes they let certain 611 00:35:34,600 --> 00:35:37,000 people go just because they think they can get bigger fish 612 00:35:37,000 --> 00:35:40,760 or they can catch more fish and you just never know. 613 00:35:40,840 --> 00:35:43,680 You never, ever know what the government is going to do. 614 00:35:43,720 --> 00:35:46,240 And the other thing we should remind people, and I know we've 615 00:35:46,240 --> 00:35:49,360 talked about this before in the context of Tether, but these 616 00:35:49,440 --> 00:35:55,200 international finance cases are not easy for the United States 617 00:35:55,200 --> 00:35:59,840 to prosecute. Like even FTX where it had more 618 00:35:59,840 --> 00:36:03,160 obvious next side to the United States than some of these other 619 00:36:03,160 --> 00:36:07,040 cases still represented in some respects some challenging 620 00:36:07,040 --> 00:36:10,520 jurisdictional issues. Firms and executives who spend 621 00:36:10,520 --> 00:36:13,880 more and more time outside the United States makes that more 622 00:36:13,880 --> 00:36:17,120 difficult, makes the calculus look a little bit different. 623 00:36:17,120 --> 00:36:20,320 If they can get cooperation and we talked about this like a 624 00:36:20,320 --> 00:36:23,080 little bit, I think that's kind of what happened with Arthur 625 00:36:23,080 --> 00:36:26,640 Hayes and Bitmex, right, is not that there weren't wasn't rule 626 00:36:26,640 --> 00:36:28,880 breaking, but that eventually they got to a point where 627 00:36:28,880 --> 00:36:31,800 they're like, well, we can definitely get them on this rule 628 00:36:31,800 --> 00:36:34,520 breaking and they'll cooperate and we can record a win. 629 00:36:34,800 --> 00:36:37,320 And then you see by Nance and they do the same thing again. 630 00:36:37,520 --> 00:36:40,560 There was definitely other rule breaking, but we can prove this. 631 00:36:40,560 --> 00:36:43,720 We get the win, we get the cooperation, we get insight into 632 00:36:43,720 --> 00:36:47,680 their business going forward. I could see a point in the next 633 00:36:47,680 --> 00:36:52,320 year where the where SDNY or EDNY, whoever is leading it at 634 00:36:52,320 --> 00:36:55,960 this point comes out and says we negotiated A deferred settlement 635 00:36:55,960 --> 00:36:59,480 agreement with Tether Holdings Limited, Juan Carlo Davisini and 636 00:36:59,480 --> 00:37:02,640 Paulo Arduino as long as they agreed to our monitor these 637 00:37:02,640 --> 00:37:05,640 terms, whatever, no one goes to prison, right? 638 00:37:06,160 --> 00:37:09,120 I I think that's a logical end point for this still. 639 00:37:09,400 --> 00:37:13,560 And part of that comes from issues with like political will 640 00:37:13,560 --> 00:37:15,920 in the prosecution. Part of it is these are just 641 00:37:15,920 --> 00:37:20,400 hard cases, and part of it is just like they want to get a lot 642 00:37:20,400 --> 00:37:23,480 of people And so if you can find out how a whole bunch of people 643 00:37:23,480 --> 00:37:25,640 are moving their money, maybe you let those 3 go. 644 00:37:25,720 --> 00:37:29,680 And also just to to drive one other point home, with FTX you 645 00:37:29,680 --> 00:37:35,640 had a ton of American citizens running the the exchange for bit 646 00:37:35,640 --> 00:37:40,920 Max, you had two, you had one UK citizen, one American citizen 647 00:37:41,200 --> 00:37:44,640 and one Bermudan citizen for Binance. 648 00:37:44,800 --> 00:37:49,880 I think maybe part of the reason they were able to feel Get CZ is 649 00:37:50,000 --> 00:37:52,760 that he's. Canadian and Well and Catherine 650 00:37:52,760 --> 00:37:55,440 Coley gave up the game. And Catherine Coley? 651 00:37:55,600 --> 00:37:59,760 Yeah, yeah. Spoke up very loudly to people 652 00:37:59,760 --> 00:38:03,480 that she needed to, I guess. Speculating, of course we're 653 00:38:03,480 --> 00:38:06,240 speculating that she's the one who did that, and that's why we 654 00:38:06,240 --> 00:38:07,320 haven't earned it from her could. 655 00:38:07,320 --> 00:38:10,240 Have been, could have been anybody good. 656 00:38:11,320 --> 00:38:14,160 If anyone, who was Chief Executive Officer of Finance US 657 00:38:14,160 --> 00:38:16,760 during the exact period she was Chief Executive Officer. 658 00:38:16,920 --> 00:38:21,880 Even though it certainly wasn't Brian Brooks Anyway, there's 659 00:38:21,880 --> 00:38:28,040 reasons that certain people are able to be apprehended by US 660 00:38:28,040 --> 00:38:32,440 authorities ultimately. Like even do Quan, where South 661 00:38:32,440 --> 00:38:35,000 Korea is the one that are they want the US. 662 00:38:35,000 --> 00:38:41,800 They want to ship him to the US. So I I think those ones all have 663 00:38:41,800 --> 00:38:46,480 reasons I can't necessarily fathom. 664 00:38:47,440 --> 00:38:51,920 Which government or why would give up the executives for 665 00:38:51,920 --> 00:38:55,280 Tether and why they would ever be shipped to America? 666 00:38:55,280 --> 00:38:58,720 These people are not in any way, you know they're not coming to 667 00:38:58,720 --> 00:39:01,200 America, right? These people are not making 668 00:39:01,200 --> 00:39:02,360 their way over here. Ever. 669 00:39:02,480 --> 00:39:05,560 On that point, not to interrupt you, but going back to Phil 670 00:39:05,560 --> 00:39:08,840 Potter's buyout, it happens during a period where if you 671 00:39:08,840 --> 00:39:13,120 believe John Betts, Juan Carlo came to John Betts at Noble and 672 00:39:13,120 --> 00:39:15,600 says, how do we take all this money we have now and start 673 00:39:15,600 --> 00:39:18,880 making more money with it? And Phil Potter and John Betts 674 00:39:18,880 --> 00:39:21,520 were like, I don't think we can do that, especially with what 675 00:39:21,520 --> 00:39:24,560 we've been telling people. And Juan Carlo's like, yeah, but 676 00:39:24,560 --> 00:39:27,760 I bet we can do it. And then Phil Potter gets bought 677 00:39:27,760 --> 00:39:28,800 out. They leave Noble. 678 00:39:28,800 --> 00:39:30,960 Noble shuts down. They end up at Deltec, and they 679 00:39:30,960 --> 00:39:34,120 start more aggressively investing their reserves. 680 00:39:34,120 --> 00:39:36,400 Right. And so Phil Potter during this 681 00:39:36,400 --> 00:39:40,440 period was like the executive, like you're talking about with 682 00:39:40,440 --> 00:39:44,680 the strongest ties to the United States, the tether executive who 683 00:39:44,840 --> 00:39:48,240 most definitely wants to be able to come to the United States at 684 00:39:48,240 --> 00:39:50,280 some point during the remainder of his life. 685 00:39:51,360 --> 00:39:53,760 The others? That's perhaps less true. 686 00:39:53,840 --> 00:39:58,440 Right. I don't think Paolo or Juan 687 00:39:58,440 --> 00:40:04,480 Carlo or even maybe Stewart, maybe Stewart comes to the US 688 00:40:04,480 --> 00:40:06,200 regularly. I don't, I, I don't know. 689 00:40:06,200 --> 00:40:08,440 But also, he's a lawyer, so it's a little bit different. 690 00:40:09,720 --> 00:40:12,480 Yeah. Just in general, the major 691 00:40:12,960 --> 00:40:15,600 executives that we know, they have no reason to come here and 692 00:40:15,600 --> 00:40:18,040 they have no reason for the countries they reside in. 693 00:40:18,040 --> 00:40:23,320 I think a lot of them reside in places like Switzerland where 694 00:40:23,320 --> 00:40:25,400 like why would the Swiss government? 695 00:40:25,880 --> 00:40:28,520 Send these people to America. They wouldn't. 696 00:40:29,360 --> 00:40:34,520 And I've seen personally how like Ravid and Oz Yosef, these 697 00:40:34,520 --> 00:40:37,960 two criminals who were associated with Crypto Capital 698 00:40:37,960 --> 00:40:41,920 Corp, which, yeah, again, we've discussed you. 699 00:40:41,960 --> 00:40:44,240 You did mention this company already today. 700 00:40:44,800 --> 00:40:46,960 Reggie Fowler was also a part of this. 701 00:40:46,960 --> 00:40:51,920 But regardless, these two Ravid and Oz made their way back to 702 00:40:51,920 --> 00:40:54,240 Israel after stealing all this money. 703 00:40:54,720 --> 00:41:00,040 And well, like, I don't even know if the US bothers to ask to 704 00:41:00,040 --> 00:41:03,200 extradite these criminals. But if they do Israel says 705 00:41:03,240 --> 00:41:06,040 couldn't possibly care less. These guys have hundreds of 706 00:41:06,040 --> 00:41:08,080 millions of dollars and they live in Israel now and they're 707 00:41:08,080 --> 00:41:11,040 spending their money. So why would we extradite them? 708 00:41:11,680 --> 00:41:14,000 And I think that's how most countries operate when it comes 709 00:41:14,000 --> 00:41:16,400 to financial. I'm not suggesting Israel is 710 00:41:16,400 --> 00:41:19,920 particularly like the worst country about this. 711 00:41:20,280 --> 00:41:23,440 I think Switzerland does things like this and France and the UK 712 00:41:23,640 --> 00:41:27,240 like financial crimes are lower on the totem pole for some 713 00:41:27,240 --> 00:41:30,560 reason. So you know, I I just wouldn't 714 00:41:30,560 --> 00:41:34,360 expect anything from the US in regards to these guys. 715 00:41:34,360 --> 00:41:37,440 But as you said, you never know. And maybe there's going to be 716 00:41:37,440 --> 00:41:39,360 some backdoor deal that we find out about later. 717 00:41:39,400 --> 00:41:41,800 Who knows not. Me. 718 00:41:42,480 --> 00:41:45,440 Yeah, until the $200 billion mark. 719 00:41:45,440 --> 00:41:51,720 Then I guess that's that's our our summary of seven long years 720 00:41:51,720 --> 00:41:54,480 of following Tether. Unfortunately, thankfully 721 00:41:54,480 --> 00:41:58,000 though, I do want to announce that with my return, Cast Coin 722 00:41:58,000 --> 00:42:01,400 is starting up again and obviously we're looking forward 723 00:42:01,400 --> 00:42:04,200 to working with Tether to get Tether on Cast Coin. 724 00:42:05,080 --> 00:42:08,800 I think it's going to be a huge boon to our ecosystem and that 725 00:42:08,800 --> 00:42:12,600 way you can stake your Cast Coin or stake your Tether on Cast 726 00:42:12,600 --> 00:42:18,800 Coin, which I think is going to be really huge for just for the 727 00:42:18,800 --> 00:42:22,200 whole ecosystem in Cast X, the Exchange. 728 00:42:22,800 --> 00:42:25,560 Again, sorry about the bankruptcy, I know I'm sending 729 00:42:25,560 --> 00:42:30,000 out new tokens to for old token holders and I appreciate all of 730 00:42:30,000 --> 00:42:33,240 your patience everybody. You know we're Cast Coins back.