Welcome back everyone. I am Caspian Sea.
I'm joined as usual by my partner in crime.
Mr. Bennett Tomlin, how are you today?
I'm exhausted. It's been a busy few days.
It's been a busy week plus four for both of us.
I think we should start just by talking about what we've been
busy with. So what you and I both went to
this past week was consensus, which if you're unfamiliar with
consensus it is I believe this is still true.
The Largest cryptocurrency related conference in the world
and it's hosted by coin desk. And yeah this was our first time
going to it it's been going on for a long time.
How long, 20, 2016 2015? I don't know, maybe even at
least 2015, it might have started even before then because
the wing disc, this was Quinn, Des 10th year, but it wasn't
consensus its 10th year. So I think it might have been
like 2015. So yeah, this is a big deal to
the Crypt. Currency industry.
And it was our first time going there Bennett.
You got there before I did. Why don't you talk about the the
first day at consensus for you sure?
Which was actually the second day of consensus, I made it in
on Wednesday afternoon, but I'd been up since like 3 a.m. in the
morning and just could not bear walking into a conventional full
of cryptocurrency. People, it would have put me
right over the edge. And so instead, I came in on
Thursday morning and set through quite a few sessions that Day
trying to get an understanding of what this is like, and it is
an utterly strange experience. Like, as I was walking into
consensus, I had two pieces of paper.
Shoved into my hand. One was a card, Donna wallet,
full of a dog themed shit coin called husky, presumably named
after, Charles hoskinson, who only, sometimes pretends to be
Satoshi Nakamoto and the other piece of paper was for a
multi-chain event headlined by been.
Also known as B boy, you get past that through the metal
detectors and finally into the exhibition Hall.
And the very first thing you see is a protocol advertise, a
product advertising, how their proof of SQL is going to
revolutionize cryptocurrency, if you finally push back there and
through the rest of the booths that are similarly ridiculous,
you can make your way to the stages and the very first
session I decided to see was one entitled, remember why?
We're here kryptos true purpose. This was led by Michael Casey of
coin desk and included Erik Voorhees of shape-shift Neha,
narula of the digital currency initiative, out of the MIT media
lab and Caitlin Long of custodian bank, and it was a
disaster. Mia had to fact-check both
Caitlin Long and Erik Voorhees during the session of it
Caitlyn. Because she said right now,
eight billion people could download, lightning software and
start transacting and fee it back by SATs and he had to go
know the network cannot handle that.
We cannot on board that many users.
We cannot open that many channels.
That's not how this works. People in the world could
download the lightning Network software and start transacting
in Fiat currencies. That are collateralized my SATs
it's easy to do. There are there are likely
channels right now that anyone in the world could use to create
US dollar and transact in a u.s. dollar without permission.
Just something I want to point out really fast maybe a lot of
people don't know this. Then networks as they exist
today cannot handle eight billion people.
Using them in a non-custodial fashion.
We need real serious engineering, breakthroughs to
make that work. And Eric got fact check because
he said oh what was it? It was the etherium thing, he
got the wrong year for a theory. Yeah.
Eric was saying that the 2017, I co bubble was a good thing
because at least etherium came out of it.
For those that don't remember the etherium Ico started in like
late, 2014 in the chain actually launched in 2015.
Is not 2017, whatever, whatever. Regardless it, the entire
session was supposed to be about why we're here.
And there couldn't even seem to be during this consensus.
Any kind of agreement on why that is Eric cared about the
Austrian money. Part Caitlin kept talking about
an honest Ledger, whatever. That means Neha, the spent half
of her speaking time fact-checking the other people
on the panel like and there was no like real thrust to it and
like that was kind of the pattern 3 out.
Many of the sessions were disappointing in a lot of
different ways. Well, we're going to have plenty
of time during this whole entire conversation to rag on some of
these totally irrelevant discussions with.
Yeah, we'll get there. I think you were tweeting about
probably the most important one so why don't you go ahead and
get into that instead? So FTX was a crypto currency
exchange as none of, you know, and there was a panel on it
called FTX what? Have been moderated by Polk
award winning journalist, Tracy Wang and including Brett
Harrison and Anthony Scaramouche Brett Harrison for those who
don't know is the former president of FTX u.s. in the
current CEO and founder of architect a firm doing crypto
currency trading infrastructure. I think, doesn't matter, Anthony
Scaramouche. He of course, is the former
Trump guy who now runs skybridge capital and they were talking
about and TX. And there were several
interesting parts will start the one that happened earlier on.
And then we'll get to the really big one.
Scary Meucci was asked about FTX Ventures investment in skybridge
capital, which I had largely forgotten about, like it was
included on the list of Investments that the financial
times had been able to compile, but like it's scary.
Meucci who cares? But apparently, I've TX
Ventures. Had purchased a 1/3 stake in
sky. Which capital with the
understanding that eventually, they would acquire the whole
firm. Sakura Mochi also revealed
during that question that as a condition of that deal, he had
to buy ten million dollars in ftt in FTX token.
And like when he was being asked by Tracy, are you worried about
these funds being clawed back? He's like our lawyers are
talking to the bankruptcy. Court will do what we need to
do. We ended up losing money on our
ftt token. Which again I was not aware, was
a condition of their deal that they had to like basically it
was like a mini round trip like the FTX Sequoia one, right?
But done through skybridge instead and so that was
interesting if we want to talk about that.
What kind of afraid of that skybridge state?
Are you trying to unwind with you?
But the problem is, the bankruptcy.
Proceedings are always take a long time.
I don't want to be cynical about it, but there's a tremendous
amount of legal fees to get running in a bankruptcy
proceeding. And so there's an incentive to
slow things down. We contacted the investment
bankers and Bankruptcy lawyers related to the stake.
I've talked about this before so it would be pretty open about
it. What?
Sam bong was a 30% interest with an understanding that he would
have to go right there by the remaining part of the company,
over a two-year period. And so I think the good news for
us there was less of a concern about having minority
shareholder, right? So there's no economics
associate with that piece. He's not the bankruptcy States.
Not entitled to Preferred income or anything like that, and It
had no management control or board seat.
So it's really that valuable to anybody other than us and I
guess at some point will be able to buy it back or frankly not
buy it back. And so if we don't buy it back,
it's okay with me as well because, you know, we took
capital on to our balance sheet, some of it, we lost in the ftt
token, I sold that token at a loss, but I just to clarify some
of the portion of the funds that Sam gave.
As part of the assessment, we got cash.
We agreed by 10 million dollars of the ftt token.
But I also, you know, bought a pretty large position in
Bitcoin. Yeah.
I think I think there's a yeah, there's some crazy criminal shit
goin on there that is being admitted to which is wild.
And I'm just if anyone is unfamiliar with Sky Britt and
Scaramouche be like these guys were accumulating a ton of money
and I am just looking at his Wikipedia page and This is just
beautiful. As of March, 20 23 Sky, Bridges
assets. Had dwindled to about 2 billion
dollars from a peak of nine billion dollars in 2015.
So, despite the market in general going only up between
2015. And now, I mean, that's wild,
right investors? Lost about thirty percent of
their value from the beginning of 2020 through 2023, 39% in
calendar 2022. The fund had reduced the
ability. You have investors to withdraw
funds and reduced Staffing. So if you need just a basic
summary of Scaramouche cheese investment strategy and how good
he is with other people's money. I think that kind of just Gets
You Through the basics. But yeah, go into kind of yeah.
Like the details of why and Bert.
Yeah. Yeah.
So apparently I'm like November 6 or November 7th a few days
before they were like really getting ready to declare
bankruptcy. Apparently our friend Anthony
skier, Meucci the mooch, got a call from Joseph, Blankman Sam
Bateman fried's father in which sandbank manfred's.
Father, Joseph Blankman a Stanford law, professor
convinced scare Meucci. That there was currently an
asset. Liability mismatch was the word
that scary mooji used at FTX somewhere around a billion
dollars is what he initially got the impression of and so scary
Meucci decided to take this information.
Shouldn't from say embankment fried's.
Father and fly down to the Bahamas to hang out in the war
room with Karry Wang, sandbank manfried and ishod sing, Carolyn
Ellison in the rest of the friends to help them with their
fundraising for their emergency, liquidity money, what happened
to me is? I was actually speaking in
Sarasota Florida, there was Rumblings that day.
I think it was November the 6th or something like that or
seventh the Monday was the seventh.
And that I got back to New York and I spoke to Sam's dad about
the problem. And it was intimated to me that
it was a, an asset liability mismatch that they were meeting
redemptions. And there were assets available,
but they weren't necessarily liquid and they needed time to
get the liquidity and they were looking for some rescue things.
And so at that time I was a good citizen and a partner in the
business effectively, the only piece my business.
I'm certainly trying to help them on their fundraising round.
And then I talked to his dad later in the day, how much money
were there. They were talking about and I've
said this, we're talking about a billion dollars which seems a
lot of money, but certainly would be manageable in the
context of the size of the business.
But later in the evening that number went from a billion of
for naplan and then I said, okay, there's obviously a
problem and it's a bigger problem that they want to admit
to And so I made the decision that evening, I just got on my
phone, I booked myself a JetBlue flight down to the Bahamas, and
I wanted to see for myself, what was going on?
You know, listen, I put my name and reputation at stake, I could
introduce and a lot of me, Paul bread and I one short year ago
and I believe you were there with us.
We had crypto Bahamas at the bottom are o, tell Brett and I
were going to as the dinner for the likes of Tony Blair and Bill
Clinton and a whole host of luminaries.
Sure, here ago, invest forward sort of stole hard to believe
that where we are right now and so I need needed to see it for
myself. And so I went down there and I
would say that the War Room was despondent and I would say that
it was clear to a few people that there was a very small
group of people that had done some things that they didn't let
the other group of people into. Now, there's a few interesting
pieces of this story one, Joseph bank, man, By knowing the
finances of FTX specifically enough to know that there was a
whole Joseph Batman, being empowered to reach out to
advisors about FTX to potentially bring in assistance
to deal with the whole Scaramouche.
He decided he should be in the fucking war room in the Bahamas
for his expertise and fundraising money.
And the fact that they were trying to fundraise money with
this still developing story about this hole in there.
Balance sheet mascara, Meucci also during that section said,
like I heard 1 billion. When they called, by the end of
the day, it was 4.5 billion and then it was whatever.
And so like during this period, apparently scare Meucci was
still down there in the Bahamas. Helping them try to fundraise to
deal with this asset liability mismatch.
There's also probably a bad way to phrase it, right?
And he tried to cover it up quickly like some of the assets
just aren't liquid. But we've talked about this a
little bit on here before. There's a Difference between
illiquidity and insolvency, right?
And often when it comes down to is like a duration issue, if you
have certain assets that take a certain amount of time to reach
their value, you can end up in cases where you are a liquid but
not necessarily in solve it. That should never happen for a
crypto currency exchange. Right, none of these assets
really have that type of duration risk.
If there was an asset liability mismatch, that means when scare
Meucci got that news, he knew there was some bigger issue.
They were running fractional-reserve, there'd been
a hack, there'd been funds or ass.
It's what's that were not obtainable.
And so he knew that information for days before they declared
bankruptcy. Well, they were fundraising.
Yeah, really. Not a good look and, you know,
to me, it sounds like there's a lot of illegal things going on
there, who knows? Maybe nothing illegal happened.
Maybe there was nothing unsavory.
It was all totally moral and aboveboard.
It's definitely gonna make it more Awkward for Joseph Bank.
Men in any of his conversations with Regulators or prosecutors,
Now, have to explain why this person is making these claims
about his knowledge, because I believe his public claims so far
have been like, I was just helping out with some of the
charity stuff and filled out a couple contracts.
I didn't know what was going on. Yeah, yeah.
Yeah. So that I, yeah, I think that
was probably the most interesting thing.
I know that, I know that also what happened on that day was or
maybe it was on the first day was I was told a story about
Laura Shin with and Dan Horovitz.
Whoo. Dan.
Horvitz what has worked for the SEC and the cftc, Dan horovitz,
and flourish in were having a discussion about something
related to Securities and supposedly Dan horovitz got
booed and heckled by a bunch of people who were claiming that he
had helped them lose a bunch of money, which just shows you how
people own up and acknowledge and take responsibility.
Leti for their own actions. In this industry where you know,
you're supposed to do, don't trust verify and do your own
research and all that. So glad to see people taking
responsibility for their actions and not blaming government
Regulators for cryptocurrency stuff.
But yeah, so then what else did you go to before?
I arrived what else happened? Sure, I listen to Phillip,
Davis, the Prime Minister of the Bahamas, talk about the Dare act
and how great it is. And how wonderfully it is helped
put and really how even at this point they're glad FTX came to
the Bahamas because it put the Bahamas on the crypto regulatory
map and that's what they wanted. More than anything else.
Heard that then I went to listen to in a 16z general partner.
So you're in Christendom talk about how web 3 can fix social
media and consumer apps. And apparently the answer to
that is ownership let people make money.
Also don't have Financial incentives because it means you
can't scale. Also wasn't part of.
The wasn't part of the question. Like what role VC's play in this
and how they don't harm? Decentralized Finance.
If the goal is for it to be decentralized Finance like
aren't there aren't there bad that wasn't touch done?
Oh, I thought that that was part of it that there was like the
wrong incentives for venture capital and I was like, I just
thought it was so. So yes, there was kind of a
question about this. Like because Christian had made
this claim that like in order for these web three social
networks to scale you needed to be very careful about putting
Financial incentives in early, which is also a crazy thing to
say when your portfolio includes D.
So right where the entire point of that this bit clout was to
have these massive Financial incentives in right away as your
way to bootstrap the network, right?
What's your thesis here? That includes both bit clout and
not having In Tibbs, why are you investing in all these tokens
social media things if you don't want Financial incentives.
But yes, Angela who was the one from forecast, Labs, who was
basically asking these questions of Christian asked about, like,
if that's true that you don't want to include these Financial
incentives. How do you build it in a way
where it still matches with the VC expectations of an eventual,
eventual hundred or a thousand x times return, right?
And Christian kind of dodged the question and said, oh it's not
that Financial Incentives are bad or returns or bad, you just
gotta wait you gotta scale you got to figure it out first and
like yeah sure but that net and like the most frustrating thing
during this is during this entire session, this 20 minute
long session at no point. Did they ever actually answer
the title of the session? How web three can help fix
social media and consumer apps. Web three was never even really
defined except that web 3 means ownership.
And I Just reminds me also of when we were watching there was
like a little point. We went to the coin desk TV area
and they were discussing the metaverse.
He and like one of one of the things they explicitly said,
he's a real Global Network of thought leadership, that was the
worst definition I've ever heard.
But I also heard someone say, well, we can't really Define it,
which is like. So both of these answers are
terrible because either you can't Define it at all, or your
definition makes me think it should immediately be Burn to
the ground. Like, I don't want a
decentralized network of thought leaders.
Um, so yeah, it just sounds very, very similar to it is.
Convergences of thought, leaders, right?
These are real phrases that were used.
By the way. You guys are not making me some,
I'm not that creative, but when after that, after hearing this,
a 16z partner, say nothing for 20 minutes.
After promising, it was going to be the most entertaining, 15
minutes, I had that day. Day, it wasn't.
The music was far more entertaining.
Sorry. Christian and you can't measure
up to the mooch. I then listen to Paul Gray Wall
from coinbase. Talk about their Wells notice
and basically they're mad because the SEC, let them go
public and they set and he said how in the world.
How in the world? Because the SEC let coinbase go
public. Why is Chief legal officer?
Clearly having a good? Ellen, what's going on around
him and his the general thrust of their argument is that this
was our business back. When we filed, our S1 to go
public context. Here, let me sit down for a
second. The s-1 is the registration
document you file with the SEC in preparation for public.
Issuance of Securities, it has a certain amount of things you
need to disclose that were established initially in the
1933 Securities act and have been expanded as part of the
rulemaking process. Since then coinbase is, We
thrust is that we said, this is our business back, then why did
they say rs1 was okay. And we were good to go public.
If we were breaking the law and this gets into, and we've talked
about this with the SEC before the SEC is primarily a
disclosure and enforcement regime.
And what I mean when I say that is their role is to make sure
the companies they regulate are filing their, for their required
disclosures. And then when they find a
breach, to enforce against the actors, they are not, they do
not Prevent things, they are not set up for that.
That's not in their mandate and the 1933 Securities act itself
said neither, the fact that the registration statement for
security has been filed or is an effect nor the fact that a stop
order is not in effect with respect there, too shall be
deemed a finding by the commission that registration
statement is true and accurate on its face or that it does not
contain an untrue statement of fact or omit to state of
material fact. Or be held to mean that the
commission has in any way passed upon the merits of or given
approval to such security. It shall be unlawful to make, or
caused to be made to any prospective purchaser.
Any representation. Contrary to the foregoing
provisions of this section. That's the 1933 act, that
defined like that the role of the SEC at this point.
We talk about this back in our episode on the SEC and
apparently, and like, this is my frustration is Paul knows that.
Paul Gray will knows that, that's the fcc's role what
they're trying to do with the video release and playing to the
media is to muddy. The waters is to make it seem
like there's ambiguity there. I even went back to coin basis
S1 just to make sure and they had like a thousand words in
total of risk, factors related to potentially changing legal,
or regulatory risks, that was disclosed to investors.
And that's the scc's like stance on disclosure if it's in the
risk factors, the investors new, right?
And so like the the entire thrust of their argument was why
were we allowed to go public? Because you filled out the form
accurately and I, I don't know. This, this goes back to the
lawsuit that they're bringing against the SEC or the filing
that they played, it doesn't, it doesn't right.
Because like there's the, there's the coinbase has
received a Wells notice. This was their Wells submission.
Basically their argument back to the SEC saying, here is why it's
not worth suing us separate from that they had previously filed,
an administrative requests related, 2 SEC rule making and
they now filed a request in a Delaware Court to try to compel
the SEC to either say, they will create a new rule or explicitly.
Say no, we are not going to create a new rule for you
coinbase. And so all the SEC is going to
do is say okay this went from pending to denied.
Congratulations lawsuit over so that that's most that's but like
it's still like you're saying part of their broader media,
Strategy. They're trying to flood the
plane and muddy the whole thing with this kind of conflicting
information and make it seem one way.
Even if that's not reality, they also just like their entire art
to me. Their entire argument is
baseless and like I hear a lot of cheerleaders and people who I
respect to like I don't want to suggest.
That only cheerleaders are the ones saying that coinbase stands
a chance here. I don't think they do.
Maybe I'll be proven wrong. I've seen lawyers say there's
they have a chance here, maybe I'm wrong.
I'm not a lawyer but like To me, their argument seem trivial and
baseless and destined to fail, but, you know, we'll find out, I
don't know. Yeah.
Yeah, there was one. Last session.
I was able to handle that day before.
I just had to leave the convention center before I did
something rash and that was in the compliance trenches with
Finance, which was Danny Nelson, interviewing tigran Jamboree in
the head of Investigations for finance.
And again, this was a couple of interesting statements coming.
I'm from one of these people with the end of investigation,
saying, one point that he helped kick off the North Koreans who
were trying to use by Nance to launder funds, which does give
the impression they were there before also, when asked so the
cftc lawsuit in some of the supporting materials revealed
that by Nancy Angels had told Mainland Chinese users where by
Nance was supposedly, not operating that if they got the
pot. Wow.
Paulo is citizenship they could still use that to verify it by
Nance. Do you run was asked about this
and basically said, kyc is only a piece of our compliance work
and he repeatedly called these IDs fake IDs like four separate
times during the course of this brief question.
And the reason I'm highlighting these things here is because I
think they are potentially challenging Changing if they're
found to be untrue. So, for example, if in the near
future, prosecutors in western Washington where to file an
indictment against someone that happened to include that Finance
was serving Lazarus group money launderers, or something like
that. It would be embarrassing.
If you had just been on stage saying you would kick them all
off or if you kept referring to something as a fake ID, it would
be embarrassing. If it turned out that there was
a bunch of people using that ID on the exchange.
Look for and so I thought those two comments during that we're
really the most interesting to me.
Yeah, yeah. Either way.
Oh yeah. Not looking good.
And what was it did? Yeah.
What did he say? If someone is going to jail?
It's not me. I yeah, that's a, that's
something, you know? Yeah.
And they also like reiterated and talked again about how they
collaborate with law enforcement, like some of the
funds seized in the recent, indictment of some of those
North Korean money launderers, were funds by That they had
helped turn over to the feds and they talked about how they go
around and help train law enforcement and that like, their
team of 200 investigators or whatever is mostly former law
enforcement in some former chain analysis.
So they were, they spent part of their session bragging about
that as well. I am curious because, you know,
the ones that get shut down that we hear about, you know, Silk
Road or Liberty reserve. I suspect that there they never
cooperate with law enforcement or never, did you know?
And I do wonder if these guys get brownie points for for
playing ball a bit. So yes, we talked about this a
little bit in our recent finance and trouble episode.
I think it was 114 about the cftc case and basically my
thought then was, and this was in part based on the finance,
spokesperson response, right? Is that we've been working with
the cftc for two years in, this was very unexpected, we know
that they have the former Chief of em Lars, the money, less
money, laundering and asset recovery, he's inside the doj
negotiating on their behalf in Washington, my gut instinct.
With the way, the whole by Nance thing ends up playing out is an
agreement for a deferred prosecution, possibly with some
agreement that Chang Chen Zhao has to divest or something, but
I expect that by Nance will still be able to continue
operating in some form of conditional and them actually
doing the things they say they do like kyc and every user like
kicking people off for wash. Eating like not trading against
their customers know, all the things they say they're already
doing. They'll have to actually do it
at that point. Like we seen every other time in
exchange adds mandatory kyc the volume will go somewhere else.
So that was the that was the first day.
I think it's worth saying, it's worth mentioning to people that
we didn't pay our employer didn't even have to pay for our
tickets. Yeah, thankfully we were
speaking. So we got free tickets in there
but normally the kind of tickets that we were granted would cost
cost. I think you told me three
thousand dollars. Yeah, I think that's what it was
for the pro passes, so it's not cheap.
Let me put it that way. This event is not cheap to get
into, I think you're right in the idea like the badges where I
was like, wow, these people are awkward and this is sad.
If your whole goal, some kind of takes their cast our listeners,
don't necessarily know why, the badges were said, hey, yeah,
well, I mean, to me, there's, it's just this, like bright pink
badge that you did wearing while walking.
Around in public. That was screaming.
Look, I met a cryptocurrency conference.
I'm I'm one of the cool kids, I don't know.
It just was incredibly sad to me, but I'm going to caveat this
with if you were there to network like you said and you
know, if you're paying three thousand dollars or fifteen
hundred dollars or two thousand dollars or whatever it costs,
you know to go there, I guess you better be networking because
that's expensive then, you know I guess I get It.
I still think it's a little unforgiving forgivable, but
whatever, and I'm just commenting on some of the basic
stuff here really quick, which is yeah, getting kind of I
fucked. As soon as you walked into the
convention center, by all of those booths, that made no
sense. I mean, most of the stuff was
stuff that we probably hadn't even heard of, but then, there
was always stuff like, you know, Tron, Dow and circle and You
name it. It was probably there.
Well. And and again, some of these
booths were like explicitly deceptive.
I tweeted about it where they said, like they had this chart
that had them appearing to have like 80% of the spot volume of
by Nance. When in actuality they have like
12 percent of the spot volume of by Nance, right?
But they couldn't show that on the graph because it would look
bad. So they're bar instead looks
basically the same as by Nance's, and that's Yes, that's
a massive exchange. That's just fucking lying
deceiving. I don't know because they were
they were honest on the graph. It was just deceitful chart
making it was chart crimes. It was not not necessarily that
they lied. It was two thousand dollars for
the pro passing out three. I was off okay.
Two thousand dollars still I mean two thousand dollars is a
very expensive ticket and you know we didn't have to pay for
that. So I assume that skews our
perspective of it. Yeah.
It just wandering into the convention hall was kind of a
trip especially for us being no coiners and having very little
like, you know, there was a booth for bullish and a booth
for new lending platforms and nft related stuff like stuff.
We just, I mean, I didn't go up to a single booth and ask
questions or do like I don't know if you did but I like that
was not something I didn't. Okay.
Yeah. That was not something I partook
in maybe that would be worth it. If I went back again till I kind
of push and see what what these people are saying about their
stuff. If the CME have named be that
was like, what are the odds? That interesting.
Yeah. But like, what are the odds that
the people working the booth are people who are going to be able
to answer the type of questions we're going to have?
I mean that might be part of the reason to ask, right?
I don't know. But anyway we didn't do that the
second the the day I arrived second day for Bennett third
day, five nation, and third day for the convention, the last day
for the convention. I we the first thing Into was a
thing hosted by Yachts, you and Anand Anand venkatesh God, I'm
gonna fuck this up. I'm so sorry Anon for for
screwing your last name of Vanka tests, Warren think it's Warren
and yet see you is a in nft guy. He founded and is the CEO of an
omocha Brands which is like one of the largest nft related
companies. He's in the cryptocurrency
industry. Most people, I know have not
heard of it. They do.
They were they like they did the sandbox and they were investors
into Central and, and I don't know you name, you name a
cryptocurrency related project. They probably have invested then
and I know about them because they were listed on the
Australian stock exchange and then you got delisted because
they didn't provide their the proper paperwork.
And since then there, Brand has only grown in value and it's
just kind of other otherworldly an unbelievable.
But anyway, we went to this talk with these two guys.
And, you know, I don't mean to be rude and I know this is gonna
sound fucked up, but it was just completely vapid.
It was absolutely just the most vapid discussion I've ever heard
and that was my introduction to consensus was like these two
guys who were supposed to be some of the richest people
involved with n ftes. And They were saying nothing for
a half hour, they said yapping like the the name of the session
was who are you in web three, exploring tokenized identity,
and their thesis initially presented during this and I'm
doing my very best to like steal, man.
What they were trying to say here is that the power of
tokenize pseudonyms is that, you can wear it like an exosuit and
then later someone else can wear it.
You can sell it and someone else can borrow The Beneficial
aspects of that identity but Anand when he was talking about
it because he used to be to bird or dot eith part him and meta
kovin with the two who bought people's 69 million dollar nft.
He was talking about how he hasn't like he no longer uses
that to bedoya Identity and it's supposedly for sale, but he
really isn't ready to part with it.
He grew attached to his identity because of course he fucking
did. That's what a night.
Identity is you dumb motherfuckers like the idea of
putting enough of yourself into an identity that people like
connect to and relate to, and then thinking you can just sell
that to another person and that the identity will persist in
the, that will be a good transaction for everyone
involved. Is something I can't wrap my
head around and like, even during the course of it, they
never really strongly supported that.
Yeah, I do want to. Yeah, I like, I might as well
get into The details of this one because then I think we can just
skip the other stupid ones that we that we heard for the most
part I don't think we should talk briefly about the cftc.
No, no. I want to talk about some of the
better ones that I gotcha. But the I don't we don't need to
touch on any other stupid ones because I think that this
instant kind of sums up the bad ones in like imperfection and
and some of the stuff I remember hearing and I wrote this down,
they brought up, they brought up Harry Potter as an example of
Like and as an example of a movie, not of a book guys, as an
example of a movie, where no one remembers the person who played
Harry Potter. But they all remember Harry
Potter, buddy. I hate to break it to you.
Everybody remembers who played Harry Potter.
It was Daniel Radcliffe, like he is one of the most famous actors
of Our Generation. Now, you know that like, I, it's
a very, very odd suggestion. But okay, it was also a book
first. So, I don't know, I don't know
what we're talking about here. Like you're talking about the
separation of Between Harry Potter and Daniel Radcliffe.
Harry Potter was a fictional character invented by JK
Rowling. So I like very odd comparison
there. When the other contenders, the
same thing with Iron Man. Yeah the other comparison by
Anand was with was with Iron Man and Robert Downey jr.
And how oh, Robert Downey. Jr.
Is Iron Man. And he can't separate from his
associate is actually making the opposite point, which was that
Robert Downey jr. Can't separate from the Iron
Man. Identity and Iron Man.
Can't separate from Robert Downey jr.
But then again Uh yeah Iron Man existed like 50 years before.
Robert Downey jr. Played him so very odd.
Again like just really strange suggestions, didn't make any
sense and then they just did more and more of this quoting
Hamlet but one of my favorite out was the wedding rings.
When yeah, yeah, that was good. Said that and FTS or that like
profile pics in some of these tokenized identity markers are
like wedding rings because they Part of your identity, he wasn't
wearing a wedding ring just as an aside and he said that you
wouldn't buy a second-hand wedding ring and you wouldn't
sell your wedding ring. And I just need to say I messed
up because I bought my wife's diamond on consignment and
apparently, according to yatsu, who wasn't wearing a wedding
ring, I'm not allowed to do that.
Yeah. Yeah.
It's bad luck according to him or something and and you can't
sell them even though obviously there's a market for wedding
rings. So I like, yeah.
And again, it's not Not a particularly great market,
right? Like often when you can actually
get for a diamond will be far less than what it's Appraiser
for. But that's because it's an
illiquid specialty market like NF tease, you dumb
motherfuckers. Yeah.
Which they also, that was the only point they kept suggest
they kept without really giving any reason why they kept
suggesting, that illiquidity was great and that you don't need
liquidity for these markets. I mean, okay, I don't know what
to say about that. And then my favorite quote from
that was culture is the biggest TV L of any economy.
Sorry for anyone who's under the total value locked of any
economy. I forgot that what are you?
What the fuck? Are you talking?
Like I just don't even know how to respond to that kind of shit.
So we're just going to move right past it anyway.
Yeah, one of the worst talks I heard for sure and I oh, and I
hope everyone else in the audience at the time, felt the
same way, but I'm not sure. I don't, I don't think they
necessarily did also in betrays. No number hands that went up
when they asked how many of you own multiple profile picture?
Tease. I think that crowd might have
felt differently than we did about some of that gas.
Sure. Sure.
And then in between the other one that we went to, there was a
boat. I'd was it was that the one with
bow, tie out, whatever that was bow-tied Bull.
Somebody said we only saw something along the couple
minutes of that. But yeah, that guy was talking
about building Degen Island and then the moderator talked about
just moving between Canada and the US to avoid taxes.
Totally unhinged weird shit. But let's get to the good one
now, so our buddy, Nick, can we talk about it?
So sorry, so sorry, before you get to the good one, we need to
be a little more specific about this tax scheme.
The moderator for this session at consensus standing up on
stage says, I have this great tax trick, I live on the border
of Canada and the United States and I make sure to spend less
than six months in either country and that way I owe taxes
to no one. And sir, I'm not a lawyer.
I'm certainly not a tax lawyer, but I have to tell you, I think
both the United States and Canada are going to disagree
with you on that. Yeah he owes a lot of taxes.
Here's a lot but whatever man, he'll figure that out and do
time on his own. Let's get to the font the the
more interesting discussions that were had.
So our boy Nick over at coin desk, who we've had on here
before I think we had a moment to talk about jernt like doing
Journalism in cryptocurrency and how you know how difficult it
can be the you know the accusations that can't be just
being a coin desk. Gets you as a journalist I think
we talked about some of that stuff with him but he got to
interview Christy Goldsmith, Romero from the cftc and I wrote
down some quotes. But why don't you go ahead and
get us started? I'm right about a lot of things.
A lot of the time and Christy Romero helped back that up.
Like I suggested earlier last year that At some point
exchanges were basically going to start blocking deposits from
mixers. And one of the first things that
Christie talked about was, how regulated entities need to
distance themselves from mixers then added.
It's a national security risk to not be able to verify like the
identity in the chain through it and that these exchanges.
And these Regulators have a national security interest in
making sure they're distant from these mixers.
And what's Wild is she pushed this?
Through the discussion about defy as well.
So when they started talking about defying, the defy
contracts, like that there was the same recommendation that
these protocols should not be allowing things associated with
mixers. And there was even kind of the
implication that these protocols have a responsibility to know
who is using them. So it seems like at least one
commissioner at the cftc. Things defy should be doing kyc,
she specifically said, because I have some good quotes from her,
she She specifically said that Financial privacy is good, but
it's not the same as anonymity which I thought was like a
really interesting point to make like she makes a good point.
I don't know how you solve for that in the in the dystopian
future that we are quickly quickly approaching, but is a
really interesting. And, and I think true statement
she's right, you know, I'm not sure she is, I think she's nine.
I'm not releasing data anonymizing data is different
than doing it. Okay.
Wise Here, Am L and I think that's right.
That's yet. Tell you the point that she's
trying to make. I don't maybe maybe I'm speaking
too much for her, I don't know but like as I look through her
comments here, you know, like they're not they're just not
that silly like enforcement proof.
So is following all the laws like that is a pretty damn solid
statement of fact, right? Enforcement proof does not mean
like oh we're going to make it so that that SEC and the cftc
you'll never know who did this like what connects Satoshi
Nakamoto like good fun. Fucking luck.
Dude, you're probably not the next Satoshi Nakamoto and like
that, the best advice you could possibly give as a regulator is
to say, like if you don't want us to come down on you, make
sure you dot your I's and cross your t's.
It's reasonable. Almost.
Everything is commodity, it can be a security to a lot of these
things are going to be Securities.
I just, I heard a lot of stuff that was very reasonable and
rational, yeah, so, yes, the the enforcement prove actually was a
specific reference to a specific cftc case.
We've talked about on here be 0 X / Cookie Dough because in some
of their internal Communications when they preparing to hand over
the bzx protocol to what was originally in the bzx Dow later.
Cookie dough, was that this will make us enforcement proof and
the cftc press release. When this came out was like,
look at this isn't enforcement proof and none of this is, and
in the discussion surrounding who keyed out, there were some
interesting comments made, she talked about how it will come
down to the markers of decentralization.
But then added even if it's like fully decentralized, where
perhaps, the individual members can't be held accountable, the
cftc will still attempt to hold the organization accountable.
So I thought was an interesting comment and then added that
these defy protocols need to register if they're doing
activity that requires registration.
And so like this in combination with the comments around privacy
and anonymity in defy makes me think that her conception Defy
is not really defy, right? Like what the cftc is imagining
here is privacy in the sense of like a bank.
Offers you Financial privacy, they don't share your
transactions with most people but when the government when I
transactions, they can effortlessly get them.
So you're not Anonymous, but you're relatively private.
I think that's the standard she was reaching for.
I think that she I maybe am. Yeah again, maybe I'm putting
too much emphasis on what I think she was trying to
emphasize, but I do think she was mostly talking about
centralized. Actors exchanges we're talking
about lenders exchanges, like people spinning up their own
cryptocurrencies and doing icos and you know or Dows doing it
under the umbrella of a corporation.
Like at some point these people have to acknowledge like they
are not sufficiently decentralized at all and then
something is going to happen. Regulators will do something but
they absolutely will. Yeah, we've talked about this a
little bit on here before. Like inner Wookie do episode.
I was referring to before but like these cases have a serious.
He's in for many doubts and especially their governance
token holders because in the case of Uki, do they held it as
an unincorporated association? And each of the governance,
member participants were potentially liable for the
actions of the doubt even if they voted against the law
breaking action, right? That was the like thrust of the
cftc case against cookie dough. And their version of holding the
organization accountable, there was also a class action lawsuit
against cookie dough in. Nia and recently a judge there
held o governance chokin holders potentially liable for the
actions of the organization even if they did not participate in
voting. So if you have the token, even
if you never vote it or even if you vote against law-breaking,
you can still be liable for the law-breaking that occurs.
And so, if those cases end up being seen through to the end,
the implications on like token-based Governance and dowse
is massive. And my impression almost
entirely unappreciated by people who participate in dowser.
Hold governance tokens. That's that's right.
Yeah, the last one I want to personally discuss and you know
feel free to bring one up. After this I went to a talk
called Turf War cftc versus the SEC.
I apologize. I got the name wrong earlier.
It's Dan Burke of, it's not horrible.
It's Dan berkovitz. Who has worked for the cftc and
the SEC. Brian Quinn tense who worked for
the cftc and now is the one of the I don't know general counsel
for a 16 Zedd and then Ryan vondrak, who is a, I don't know
like a Securities related executive.
At Citadel, I went in thinking that it was just going to be a
bunch of people talking about how Regulators have been doing
this entirely wrong but I think I was surprised in a really nice
way. For once.
Brian Quinn tense, did the classic like a 16z bullshit.
He was very much driving the narrative that there's no
Clarity only enforcement and and that this would ultimately hurt.
So many businesses. One of his examples was, if
ethos is security than the Futures contracts trading on the
CME are illegal. The SEC is not for Right.
And what the law is that got Applause.
But then thankfully what I appreciated was that berkovitz
Dan berkovitz said until the SEC says ether is a security.
It's legal for it to be traded on the CME.
And then Ryan, Ryan vondrak came in and said until the SEC
officially weighs in, it's a commodity.
So it was like you have this. You have this guy at a 16z
trying to spin this narrative that like, the SEC isn't doing
their job their Miserably. And then you had both people who
had worked with the SEC worked with the cftc or for this, both
of those government agencies saying, like, dude, that is not
true. Like they're not going to get
hurt if this changes, they're just going to have to change
their product. Like they're going to have to
change things, register things differently and do things
differently. It's not like they're doing
anything illegal right now and I appreciated that.
Dan berkovitz also said the legislative solution won't
solve. Securities laws, the agency's
role has been consistent across administration's, it isn't
partisan, which I thought was interesting, I guess I don't
know you and I think Jay Clayton appeared to not do much the
feeling they say. Listen, listen saying, any part
of the executive branch that is led by someone who is
politically appointed is, nonpartisan is fucking stupid.
Of course, it's fucking partisan.
Of course, it's fucking political Politically appointed
and they depend on their political patrons in order to
maintain their positions. Of course, it's partisan.
I guess part of why he's saying that is because oops is because
if I look at this, he got appointed by Donald Trump do
serve as commissioner of the cftc in 2018.
And then he announced he would serve as general counsel for the
SEC in October. Or of 2021.
So he's working for these two different administration's and
it doesn't seem to him. I am sure.
It doesn't seem to be a partisan issue because clearly he's able
to work for both parties. I mean good for him, I don't
think you're right. That's like generally not the
case but okay and then I think one of the other huge things
that was said during that talk that I think people might want
to give some thought to was that vondrak said, we're going to be
seeing an additional wave of Forcement actions more
meaningful enforcement actions. Legislation isn't close to being
materialized. There isn't a lot of oxygen in
the air to compel a legislative solution.
So now through 2023 will be enforcement actions dictating
The Narrative. I thought that was very
interesting and if he's right bummer, you know, bummer for a
bunch of a bunch of people launching their their
cryptocurrency stuff right now because they might be getting in
trouble. And so yeah that was the last
one I went to. Is there any more that you
wanted to go into know? No, I mean, right after that,
bowtie Bowl. When you were talking about you
and I both thought about sitting through yatsu of an omocha
Brands. Oh, and just for anyone whose
fans at some of my videos on the channel Fred should best
invested in an omocha Brands. That'll be a fun fact, for like
the few temasek started, temasek.
Yes. Be real.
Like, I'm some kind of SEC is the Singapore like one of the
national. I don't know what to call it.
National Venture funds. So Sovereign wealth fund,
Sovereign wealth funds. Fred is a bad investor but like,
maybe an omocha clearly is wooing.
A lot of people, I don't, I don't know.
Oh, no sure. I'm just chilling.
My videos. The other session that I thought
about going to was where is web three-headed which featured
yatsu again. But I sat there for like two
minutes and he started making almost the exact same point.
Points word for word as he did in the tokenized identity
session. And so then I stood up walked
away and found someone I enjoyed talking to talk to you for the
next 45 minutes because that was far better than sitting in the
session. Yeah.
And around this out, I do want to say that we got to hang out
with some really awesome, wonderful individuals.
We spent time with David Z Morris who moderated a panel.
We were on. That was really wonderful our
co-panelists. It was humans son wasn't yes.
Former employee for Tara We had a blast talking to him and
opening his eyes up to the corrupt, corruption and gross
nature of American politics. He was having his mind melted,
it was great. We got to hang out with Nick, we
got to hang out with Leo, Schwartz from 4chan.
We got to hang out with David Jaffe, Bellamy from The New York
Times got to spend time some time with James safer, over at
Bloomberg blue Brew. We got to hang out with a bunch
of journalists and cool people who we burb from cryptocurrency
Twitter. We we had, we had a good time.
We got to spend a lot of good nice moments with people.
We liked. So the conference had that going
for it and I liked that about it.
Yeah. The final thing I want to add
were closing in on an hour here. So I want to get this out of the
way quickly. I also attended another separate
conference hosted by offshore alert, which is, if you're
unfamiliar with it, I recommend everybody check it out.
It's a really great service offshore, alert.com will put it
in. Our description of the episode
David March and two runs it. He's an English dude who lives
out in. I don't know if it's the BVI or
we're in the Caribbean, but he basically is constantly
monitoring Caribbean, corporate corporate stuff, legal action,
exit scams, all sorts of stuff, he's keeping a pulse on the
Caribbean because that's where a lot of this corporate
malfeasance goes on. And he did a conference in Miami
this this year. And I got invited again to speak
which was lovely. I was sitting on a panel with
Dirty Bubble media and been foldy from The Wall Street
Journal from The Wall Street Journal.
And yeah, again, I got to meet some wonderful people and sit
through some crazy. Interesting talks.
One of the ones that I hope I can get a chance to delve into
deeper that I thought was fascinating and if any of it
pans out the way they think it will is going to be a wake-up
call for cryptocurrency enthusiasts.
I'm not sure I buy into it but it Interesting to hear there
were all these asset recovery folks, lawyers Etc.
And I raised my hand and I asked them a question because their
talk was about how about asset recovery and cryptocurrency and
and one of the things they were saying was that it eventually
will be cheaper and more efficient than traditional asset
recovery. And so I kind of wanted to push
back on that. I wasn't sure about it and I
said hat like how can you make that?
How can you make that assumption when When there's so many
examples of asset recovery, taking a long, insane amount of
time and people still not getting their assets back and
oftentimes the assets being like gone forever.
I if we look at Mount Cox like they push back and said, well,
the assets are worth far more than they were at the time of
the loss. And I'm like, okay.
Like that's pure luck. But okay, what about not to
nominated against whatnot? A nominated against actually
Queen the lost. A bunch of their money though,
right? Exactly, so, There was Mount Cox
and then I brought up quadriga CX, which I don't know if anyone
if they've listened to our quadriga episode or if they're
familiar with quadriga crypto currency exchange based out of
Canada, the founder died in India under strange mysterious
circumstances. But outside of that his exchange
was insolvent before he died. And the reason part of the
reason it was insolvent was because he had sent 60,000 a
theory, I believe, it was 60,000 aetherium to the wrong address.
And yeah, that kind of cost him everything.
And those those will never be. You can't get those etherium
back. That's what I was saying.
I was like, those are theorem are gone forever and and the
asset recovery lawyers were like, well, that's just not
true. And I was like, well how do you
mean that's not true? Like, it's sent to the wrong
address. How could you possibly get it
back? How are you going to, you going
to wake up the address? Or so, like, what are you
talking about? And they were like, well no, you
just compel the government to force, the note, operators, to
To make sure that those assets are essentially sent back to
where they're supposed to be and hand it out to the people,
they're supposed to be handed out to, I mean, look if the
government can compel every node, operator of every
cryptocurrency to do their will you know, like I'm going to be
fascinated if that's something that happens.
It kind of destroys the entire use, case for cryptocurrency.
So, do you guess, do you? Remember our episodes table
coins? Wilfork your chain.
If they went to fork or my article goddamn before King
stable Queens because like basically what they're proposing
is effectively a dowel level hard Fork each and every time
they need to recover these assets, right?
And my thesis in that episode of, this is back in like the 30s
or something like that. Was that it's actually easier to
force a hard for it now because you don't pressure the note
operators. What you do is you press your
circle You tell Circle, you need to move to this new version of
the chain. This is the version of the chain
that you will recognize. And on this version of the
chain, we made this change. And then the other note,
operators need to follow Circle because circle is so important
to the ecosystem. Built on top of etherium Circle.
Collateralized Maker. Dow circle is built into so many
protocols that if that circle is basically the deciding factor in
a fork and So but I don't think they can compel every note
operator, but circles are u.s. domiciled company.
Sure circles, the exception to the rule here.
And I think what you're suggesting would ultimately we
would see the same kind of thing that we see with crypto currency
exchanges when they have to enforce rules finally.
Right. Which is not that like oh well
now now all the exchanges are following the rules, awesome.
No, of course not dude. Everybody please bit Max.
When bit, Max has to Institute kyc, am everyone flees Bitfenix
when bitfenix starts instituting KY, caml Finance was so afraid
to Institute KY C, ml properly that was on these emails.
They're like we don't want our customers to just leave.
So I like you can see how this plays out and I think that like
yeah, you can compel Circle to do it.
But then you just have tether getting stronger and stronger
and stronger don't you? And you're going to have some
other operator that's going to if tether starts to obey the
rules. Then you're going to have some
Other stable coin come in that's going to be willing to bend and
break them. I mean.
Well, usd's already really I think you are really missing
that fundamentally what? I think this leads to is the
conclusion that stable coins. Fundamentally undermine.
The censorship resistance of any chain there on and since
censorship resistance is the fundamental value add for
cryptocurrency, is that if your chain has stable coins on it, it
is worse than it would be otherwise.
Yeah, I think Probably an opinion.
I've felt about cryptocurrency. I do think that stable coins
from the very beginning have introduced an unnecessary risk
to the entire cryptocurrency industry and I'm I'm much more
keen to to see them disappear for the most part.
I know you're going to have people trying to use them and
they're going to continue to exist.
No matter what. But I do think that the industry
would be better off without them.
That's fine. That's just my opinion.
Well, it doesn't really that is matter but that is except for
That is except forecast, coin cash, if you have a chain out
there and you want to make your chain better cast coin, cash is
the way to do it. That's the one fully legit and
censorship resistance table coin.
It's an algorithmic stable coin though.
I mean cast coin cash. Only the only way cast coin
cache operates is because it's collateralized with Cass coin
and the Oracle system that we have called Cask or well and
sometimes sometimes we have to call up, jump to help.
But they'll always help us out so that they found a big deal.
I mean help everybody out. So and you know, while we did
lose one of our major backers who's now under house arrest,
unfortunately we don't have to get into detail details about
that cast. Coin is been fine.
Like we don't even think the price and I do think deal
liquidity. I think a liquidity is a good
thing. And that's part of why I cast
going is done. So, so well, despite the crypto
winter and ya next year, not only are we going to be at
consensus? I think I think ask when is
probably going to end up sponsoring the whole entire
thing if we can, well, will be one of the will be one of those
top sponsors. Like Justin said, was this year.
Yeah, I'll be at the sponsor, the sponsor stage the entire
conference anyway. Hey, I haven't said this in a
while, you know, fucking like subscribe leave a review because
without it cast, coin fails and if cast coin fails, the future
fails, be future proof.