David Friedberg: all right everybody welcome back we gave lon the day off today but we're back with vinnie and sunny for our first crypto roundtable of 2023 and we have an exciting episode for today vinnie gives us an update on bitcoin and then we have a great discussion about the overall economy we predict whether bitcoin's going to hit 30 or 16 000 next we chop it up about the ongoing controversy involving dcg genesis and gemini and on top of that the sec has charged both gemini and genesis with selling unregistered securities we deconstruct all that and what's going on there plus we talk about porsche's nft job that got criticized heavily but we started talking about hey what could brands do the next time up at bat when entering the web 3.0 ecosystem it's going to

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SPEAKER_07: i'm alive thank you molly for running the show yesterday i feel like a live is doing a lot of work

SPEAKER_08: here but we are happy to see you i'm in miami i i just had the worst two weeks sickness of my life but i'm coming out of it it's not covet they took over tests no not covet but uh is it the rsv i think

SPEAKER_12: i think i might have got an rsvp yeah rsv rsvp yeah unscheduled rsvp in fact um but uh somebody wrote

SPEAKER_04: a really nice comment i i really like molly without jason it's like why read the comments

SPEAKER_18: wow like never better just have molly do it okay great thank you youtube problems

SPEAKER_04: but of course it's uh it's been a couple of weeks it's the new year molly and we thought we got to get back to this crypto thing it's been like we gotta get back it's been a month it's been a minute i

Jason Calacanis: know we missed you guys and there was all this crypto news anyway yes we are delighted to welcome back the crypto roundtable sunny madra co-founder of definitive intelligence if you're just joining us here in 2023 we're gonna do the full intros because you never know who just stumbled on your show for the first time so sunny of definitive intelligence which lets users view on and off chain data to understand and grow their web through user base vinnie lingam co-founder of civic a startup that encrypts identity information on the blockchain also started weight room for one-on-one video conferencing at weight room.com we are delighted to break down all the hot goss yeah in the crypto

SPEAKER_25: world there's a lot going on i mean the two things i guess is this gemini thing and then i i guess bitcoin came back so i don't know where do you where do you guys want to begin let's do the vinnie do bitcoin

SPEAKER_30: first then we'll come around to gemini much longer but vinnie break down the price action on bitcoin

SPEAKER_31: yeah so so bitcoin's a a risk on asset as we all know so when the market goes risk on people start buying bitcoin um i guess there was some some technicals that apply but the general broader

SPEAKER_34: market's becoming a little more bullish and you know just everyone's expecting the fate to slow down um stop the rake hikes etc etc maybe go to 25 i think the market's pricing in 98 chance that we get a a 25 uh basis point hike in next week now well like i'm not sure that i agree with this by the

SPEAKER_36: way this this is like the market consensus and the market's often wrong as we've seen when we when you see these big crashes and whatever else let's just zoom out and talk about macro right now we're heading into um earnings earnings multiples we already had the compression and now we may have uh you know downgrade earnings look at microsoft's guidance today um we've got a lot of headwinds because what we're finding is that the economy is actually pretty robust when it comes to labor uh it's still growing and inflation is still high and we have to see inflation come down so pce numbers come out on friday and if those are not very very strong on the way down you're going to see powell you know continue the playbook what is the playbook for powell front load rate hikes as much as possible um higher for longer and then keep you know and when when inflation goes down don't turn off the relief valve too soon because of what happened in the 70s he's communicated this over and over again four months and the last thing he wants to see is a bull market take the pressure off inflation and so if he sees stocks running too much crypto running too much etc he's going to go out there and not fire a 25 basis point hike he's gonna do 50. now he might do 20 he might do 25 but that's because cpe numbers come on really strong and other parts of the economy start to weaken the only part of the economy that's really weakened so far is housing because of interest rates and maybe vehicle sales as well so anything that's interest rate specific but you know if you look at what's happening from a macro perspective there's a lot more on-shoring happening a lot more production coming into the u.s manufacturing setting up chip plants etc the the you know china taiwan debacle's playing out

SPEAKER_34: you've got ukraine we're sending tanks in there today this is a very dynamic situation i'm pretty

SPEAKER_36: sure powell is still hawkish and still going out there saying we need to keep a little inflation we need to be higher for longer we inflict some pain on the economy we have to get job job numbers up uh or unemployment numbers up and this is an important point which um i saw from i have a hedge fund guy who showed me a whole bunch of stats you know prior to covert u.s immigration was about 3 million a year 2.5 to 3 million a year net net immigration it's currently sitting on 500 000 due to

SPEAKER_41: covert immigration policies whatever else so when we're sure we're just extended yeah yeah exactly so we're short 2 million laborers a year coming into the u.s to build the economy the labor market the the cuts we've seen to date have been let's be honest they weren't really cuts they were like you know sprinkles of dust like when someone when a company of you know 100 000 drops like a thousand people it doesn't

SPEAKER_36: matter right so we're not really seeing widespread job losses and cuts that are going to be meaningful significant enough to take unemployment to four percent five percent where you know that's where i i think he starts to get concerned i think we're in for more pain i think we're in for

SPEAKER_48: maybe it's risk on or it's risk off well you're saying it's risk on the market is taking a risk

SPEAKER_51: on approach because they think that powell is gonna is gonna risk on means buy risky assets everybody

SPEAKER_52: the party's on let's buy speculative stuff therefore bitcoin is part of that it's speculative risk off means hey let's buy things that have dividends let's buy things that have revenue

Jason Calacanis: yeah yeah yeah so you're saying people there's been a flight to blockchain there's been a flight to bitcoin on the assumption that it's the year of the rabbit things are going to be better i was telling jason i was like nope i'm i'm telling you that the sentiment in the market right now is no more of this bs like we want things to be better and we are talking ourselves into it including maybe

SPEAKER_59: buying bitcoin but vinnie it sounds like you're not buying it though you're like you know i'm right now

SPEAKER_61: i'm i'm in a sentiment it's it's the sentiment is good the fundamentals are this is be frank

SPEAKER_41: okay sentiment the fundamentals do not look good fundamentals are that bad no no no the recession

SPEAKER_61: hasn't hit yet we we are we are heading for a recession manufacturing has been in a recession for

SPEAKER_65: yes but the over economic growth numbers are still good the economy is still growing a recession

SPEAKER_08: we're still growing two negative quarters right is uh i guess the the definition so now we've got this

SPEAKER_04: very weird situation sunny we're like even how do we define what a recession is and when you're in tech or a capital allocator or a capital allocator in tech you mean during something like this it's

SPEAKER_08: you're you're going to have a certain viewpoint of that because this is a clear depression this is a

SPEAKER_70: crash for us but but the broader people seem to be doing okay fine they're fine what's your take on

SPEAKER_74: this sunny you know i kind of um line up with what vinnie's saying here i think like look

SPEAKER_30: i think it's very easy to just to maybe take a step back i think within tech we're definitely seeing a slowdown in purchasing right i i saw a tweet this morning where you know someone was saying hey they cut out 66 of their saas services and so um you know you think about that and i think even at twitter jason i don't know if you can comment on it but i heard something about like a big cut out of saas services there and so we're starting to just see sort of there was this mentality you know for the last five plus years where you know a new saas service comes out break out the corporate credit card sign up for it and then it just you know runs forever and it's great and now we're starting to see everyone kind of cut back and you're you're seeing that impact through the ecosystem where people are definitely a lot more diligent around the services they're using or they're asking their teams to you know build those things internally or you know consolidate those type uh there we go exactly great one and uh you know so we're starting to see a lot of this you know where i kind of you know line up with vinnie i think this stuff trickles its way through the rest of the economy right where you know it's sort of um you know things start at the top and where you know if the tech folks were making all the money and then they kind of use and um they use that to then you know go out and buy services homes and things like that you're starting to see the slowdown so i think we're gonna uh really see towards us you know maybe the third quarter of this year like a bigger slowdown in the rest of

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SPEAKER_59: moody's apparently is calling it a uh predicting a slow session not all the way to recession in 2023 i mean there are sort of these conflicting feelings about how bad this could get there's sort of hope for a hope for

Jason Calacanis: a soft landing there are lots of exogenous things that could happen i guess but i guess when we bring it back to bitcoin there has been this brief rally i just checked my teeny tiny portfolio weather bane i consider it and it's down a little bit today like are you do you feel that it's too soon for this rush to to bitcoin like in terms of that risk portfolio there's still more winter ahead i i think

SPEAKER_31: that it's it should be a slower grind up than it has been over the past two or three weeks i think if

SPEAKER_36: bitcoin goes up by a slow you know at an even pace it's fine these two big sort of jumps and step ups it's it's again it's a risk on money it's like money going hey you know everyone here is betting on power slowing down the rate of hikes i think there's a 50 basis point hike coming and and and you know it might be 25 and then another 25 but he is he has like broadcast this loud and clear the real rates have to go positive across the entire curve he doesn't want to have any situation where you know we have negative interest rates effectively on inflation versus uh fed funds rates um and i don't think he cares about the stock market at this point and all he cares about is the unemployment numbers and that inflation gets under control and it's higher for longer he said this many times and every and the market by the way is making the mistake of pricing cuts in q3 it's not going to happen

SPEAKER_86: there's no way well yeah it would be some people you know my reading of it is some people would like to

SPEAKER_04: buy some of these assets ahead of the good news and so there'll be some more bad news so if you were going to build a position in some of these companies which i started doing when i started j trading you know like as it's bouncing along the bottom this non-investment advice would be the time to get in and so the question is sunny 16 000 bitcoin or 30 000 bitcoin which will we see

SPEAKER_74: next well you know i i maybe nick can pull it up but like we should we see next oh before i answer that i sent i sent a tweet if you can pull it up nick you know vinnie you have to answer this question

SPEAKER_75: too you guys got this thing for your suffering i need to i need us predictions here for sure but like one of the things that you know i've been saying a lot of people is like reversion to the mean and so

SPEAKER_30: just this is just one example and you know i think what would be an awesome chart to create is like look at this like across multiple industries you know we're and i think um you know vinnie touched on this thing it was like we just kind of scratching the surface there's been so much growth in these businesses right um you know post uh you know i guess like covid we still have to revert back to

SPEAKER_75: the mean and so what i would say and i don't have the chart in front of me but i think if you pull up the bitcoin chart i would say it really yeah great i i think we kind of revert back to where things were

SPEAKER_30: before the huge run-up that happened through 20 you know i would say really 2018 2019 2021 so i i would kind of even pull back there i know like that's not gonna be a maybe a popular 2017 time frame i

SPEAKER_29: think that's more like you think we go back to 2017 i think so like you know what you know he's kind of pulling it on here i i think it's like yeah like maybe five or six thousand like you could end up

SPEAKER_30: there before everything resets but that's that's and i'm just going by reversion of the meat reversion

SPEAKER_101: to me you think we see 16 before 30. what do you think this 16 or 30 which should we see next first

SPEAKER_102: because that'd be like kind of equidistant here here here's the thing i don't think that it's an

SPEAKER_34: independent you know like i don't think bitcoin flies independently i think it's linked to the macro

SPEAKER_36: situation so you know 26k is the key resistance level to get through here on this run if we want to see a bitcoin or crypto bull market start if it hits 26k and holds it it's going to run to 30 plus okay so so just on the technicals sunny is right in the sense that the reversion to the mean could happen but that's not going to be that's not going to be like here's an example if the rest of the market flies bitcoin is not going to 16k or 6k that's not going to happen if the market so it's really dependent on macro the most likely scenario right now is that how the inflation doesn't go away we get stuck in the five to six percent zone and he has to jack up rates to maybe six percent and because he has to get it down to like three percent soon it's not happening fast enough i don't think we're going to see it soon enough and i think it's inflation has just become persistent there was just too much money being printed guys let's just be frank and they printed even more money this earlier this year like this is more money coming out last last year like there's too much money in the system

SPEAKER_34: households got too much cash there's too much cash on the sidelines so you think we said 16 before

SPEAKER_107: we hit 30 that's your bet i think which do we see next i think we probably see 16 before 30 because i think the 26 resistance is going to be really hard i'm going with 16 as well what do you think yeah

SPEAKER_111: yeah yeah i'm going with 16 i don't think i don't see it i mean i think it's like too big to fail i

Jason Calacanis: think it is correlated to your point vinnie enough with institutional investing that we will probably see moves that are similar to the broader market but i don't i don't so and almost as a result i don't

SPEAKER_34: see it taking off and having some like might be too low it might be too low but i i just think that maybe we'll probably see it go below 20k again listen if you want to be an entrepreneur or you

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Jason Calacanis: will say is i actually see i think we are going to see kind of ongoing inflation in some areas however and this is where i have a disagreement with the people who think that this was all about money printing we are about to experience a real glut of goods because we had a shortage of goods and then and there was pretty you know production production production production just try to get it there and like all of the stuff that's still on the cargo ships is about to come off you're already seeing like chip prices as a bellwether start to tank you see it in cars you see it in electronic goods yep you 100 do and we produced and again this is like this is all sort of businesses making the mistake of thinking that the pandemic conditions which were a series of black swan conditions right not just a pandemic but a pandemic and the invasion of ukraine a pandemic and the kind of manufacturing like the china shutdown related to the pandemic the sudden china reopening a manufacturing made the mistake of thinking that the conditions of the pandemic would last forever also where everybody would just want stuff because you couldn't leave your house and so you ordered more and more and more stuff so production has actually increased to meet the idea that we're stuck at home and not wanting to travel again or not being able to travel again so i actually imagine a universe in which prices really start

SPEAKER_126: to greater it's the opposite of inflation at least it's actually possible for vinnie to get an urus

SPEAKER_133: vinnie could get a urus right now urus is haveable well no he can't you know why you can't no you can't

SPEAKER_41: like no jokes i've been looking i've been looking for no i'm looking for a new sme and i looked across

SPEAKER_36: the range and and the waitlist on those things are like 18 months 24 months still wait we're talking

SPEAKER_139: about a lamborghini suv yeah yeah anybody who buys a lamborghini suv is a fool that is like the urus is

SPEAKER_141: i didn't buy one i was just looking i was just looking i'm just trying to buy a lamborghini you

SPEAKER_144: buy a lamborghini you don't buy a lamborghini you don't buy it it's like when they made the porsche

SPEAKER_147: cayenne i mean it's not which is awesome i mean i guess it is awesome but all the tie can the take hand that is an awesome that is a hot car there's one on my street and i'm always like coming back to

SPEAKER_75: reality guys if you pull if you pull up for a second that i just shared around savings it's

SPEAKER_30: just highlights molly's point because i think morgan stanley put this out this this morning which is savings are declining across all income groups right and basically you know this is this combined with that glut that you were mentioning molly i think this is when we're really going to see the like an actual impact on the economy so this is starting to and i think it's close what's

SPEAKER_49: misleading about this by the way and i'm misleading it's very it's in front of us excess savings right so this we haven't started digging into the existing savings this is excess savings from income

SPEAKER_36: and so when people start losing their jobs or salary cuts happen or you know inflation goes up

SPEAKER_34: this excess number goes down which is what we've seen now there was no people people people still

SPEAKER_159: have reserves well there were savings before there really wasn't there was like that stat about how

SPEAKER_59: 70 some percent of americans could not come up with four hundred dollars in an emergency yesterday

SPEAKER_113: i know i know but there was credit card debt before and then credit card debt went down and people were like hot damn i finally am in the black for a minute let me go by the fed believes that

SPEAKER_163: households are sitting with a trillion dollars worth of extra savings i know rich guys think that and

SPEAKER_166: it pisses me up that's what that's what they believe that's what they believe right and they and they might be true in aggregate but it might not feel that way so when people answer a survey

SPEAKER_07: the survey the survey came out today yeah yes when people answer a survey i discount that information

SPEAKER_04: a little bit i think you know how they feel they're looking at a lot of different uh buckets of expenditures and there's a lot of emotion that comes into that and i think that's why the spending is actually going to come down as people are fearful right now and when they see the layoffs happening even if it's not impacting them they're going to just kick in austerity measures and i think that's what's happening is all at once people are um starting to just say you know what maybe i shouldn't buy this

SPEAKER_25: uh lamborghini what did you call it a zuzu a rezu urus urus maybe i shouldn't be driving around in

SPEAKER_52: that maybe i get an f-150 maybe i get a cybertruck maybe i'll be reasonable and i don't want to have

SPEAKER_92: no that's ridiculous they're not buying it please don't buy that if you i'm not drunk

SPEAKER_182: i'm just giving you a fact i'm just giving you a fact point because i i was you know if you're not

SPEAKER_185: buying it why did you make this image of yourself in it for your vision board because that was me a

SPEAKER_189: few seconds ago right yeah that's solana 150 right when salon hits 150 for the for the for the record i

SPEAKER_199: drive a tesla of course yeah um all right for the record i i i i think i've come to the conclusion

SPEAKER_04: that oh he wants a nice car paul star's cool but i've come to the conclusion that bitcoin actually has utility in the world for some group of people and that's why it's got this foundational um kind of uh longevity it has like some foundational value for people people like to keep just like some people like to have gold or a home they'd like to have a store of value somewhere and for some people this one is the one that they trust most and that seems to have put a floor into it in terms of value

SPEAKER_24: totally and i maintain there's still a lot of institutional money in it too which is why i think

Jason Calacanis: that i mean i think it will always be propped up on seven level because there's so much institutional investment there at this point like potentially counterintuitively to the ultimate aims of

SPEAKER_25: bitcoin but 100 percent except peter was was uh was uh passing his bag the whole time he was telling everybody that bitcoin was the one you know so so here's the thing all this marginal excess savings

SPEAKER_36: goes somewhere right people buy stocks they buy whatever they invested if marginal savings excess savings is going down people aren't buying things they're selling things so they're going to sell some bitcoin which is some of these savings whatever in there they're going to sell some crypto so that's why i'm bearish because i don't think that people who are living on the on the sort of bread line or even with like small amounts of savings can withstand you know anything right now which which takes money out of their pockets and they're going to have to have expenses to meet so i'm i'm like you know you you want to be in a situation where there's where there's um you know economic growth and jobs are you know the job market's pretty tight and it comes people don't feel like that like people are losing

SPEAKER_204: their jobs they're losing money the free money is over so what do you do when you don't have money you sell stuff you know what about this right now this is where i wonder if we will see an uncoupling

SPEAKER_59: and institutionals will then head to bitcoin because we are likely to see more stock drops like if the stock market itself is not performing could we see as opposed to you're talking mostly about retail investors i wonder if we start to see institutionals say actually we're going to flee to bitcoin because the stock market is not the producer we thought it was we can get our like four percent in treasuries but bitcoin has worked in the past well that's only if it's a risk on asset

SPEAKER_36: because remember the marginal buyers for bitcoin are going to be retail right it's always it's always retail like institutions will get in there first and then you know retail comes you get the retail hype you get the blow off top you get the whole the whole cycle so if re if retail doesn't have

SPEAKER_211: money where do you where do you like look this is what i'm saying i'm just saying maybe institutions

Jason Calacanis: go there and it's no longer volatile and it actually is right like you start to see it as

SPEAKER_75: it's a good it's a good this is a good segue molly um if you guys want to do it because we can use this to jump into the dcg genesis and now gemini and so the last time we spoke you know um the the story was still unfolding and it's gotten a lot more interesting and it actually plays into your point around the demand around bitcoin and we can get some thoughts around the table here so should we run through a quick update on where we're at so we recall dcg um you know kind of digital currency group a big holding company of a bunch of digital assets or crypto related assets from from uh coindesk to gbtc to bitcoin miners um you know they one of their entities was a prime broker called genesis

SPEAKER_30: and genesis basically got caught in this ftx scandal and their big issue um is that they had a bunch of loans that they had put out one of the more interesting ones which we'll dive into today is one that you know there was a product called uh gemini earn gemini different business is what one of the ones set up by the the winklevoss twins uh product that was you know you'd put your savings there they would guarantee you i think you know eight to ten percent and how they would generate that

SPEAKER_75: would be they would go and take advantage and we talked about this before about this gbtc arb that existed right the price between gbtc and bitcoin and there was a arb there that existed for many many many years the fountain of life exactly the the perpetual money machine as uh some people have been calling it online and so um now what's happened is genesis has filed for bankruptcy protection and what this has done is they've had to publish some um creditors and they've now we can now see all the monies owing and we can see the hundreds of thousands of people that either you know directly or indirectly in the case of gemini that are sort of creditors to to genesis as this all unfolds and so um this i think continues to be very interesting because this has its um kind of a reach back all the way into dcg and the gbtc grayscale bitcoin trust and i think that's an interesting factor when it comes to institutional money demand for bitcoin and what ends up happening with all that bitcoin because the question of the you know the the week now is as genesis has filed for bankruptcy there was a lot of loans between dcg and genesis and do those loans allow for a reach into dcg um to are where they callable now i think the consensus is they weren't callable but you know i think we have to see how this plays out so i'll pause there and kind of let you guys ask questions let me just see if i can

SPEAKER_04: understand this you got the winklevii twins yes they run something called gemini correct they take a bunch of retail people's money to buy bitcoin correct they take that bitcoin then which they are the custodians of and they give it to something called genesis which is run by barry silberts dcg genesis gives them an incredible return on that bitcoin that bitcoin return is owned by the winklevii the winklevoss twins get that money they're sweeping that while they're holding all that bitcoin for consumers but genesis takes custody of that bitcoin because they're giving the loans against it then dcg gives themselves loans against that same currency

SPEAKER_226: and then it's a matter of who gets the remaining bitcoin when this whole thing unwinds well let's

SPEAKER_75: make a couple clarifications there jcal yeah so um the money you were putting into gemini which is the

SPEAKER_30: the company run by the winklevoss twins it could be cash it could be bitcoin doesn't have to be bitcoin right they they basically had a savings account saying hey you know we'll pay you this high apy

SPEAKER_74: um so you could put your cash there you could also put your bitcoin and that was like eight percent exactly how do they give that to you well they went over to to genesis and genesis says hey we have a

SPEAKER_75: pretty cool trade if you if you give us bitcoin um we will basically return you you know let's say ten percent we don't know what the exact numbers were how they were doing that was they were then taking that bit they would take bitcoin so either gemini would turn into bitcoin or they'd collect bitcoin from their customers it would go over into into genesis genesis would then work to get it into um like gbtc gbtc had this premium that we've previously talked about and that's where the yield would come from and everyone's great once that has all stopped and um you know there's there's loans that genesis has made which has made them insolvent right because they were making loans to people that were also trying to do so not only were they taking the money in they were they were lending money out to folks as well that were trying to do this trade very clearly they were lending it to like three arrows capital and a bunch of other folks the the big big one that ended up on the dcg balance seat is they had lended i think they had sorry they had lent two billion dollars to uh three arrows capital and they were only able to get one billion back and there was about a billion left outstanding and that had created a hole on the balance sheet of genesis and then dcg picked that loan up in back into the the parent entity and and basically made it uh repayable over 10 years and so there's a lot of this kind of back and forth that that exists between these companies and now since these bankruptcy proceedings are starting we're going to see how like how far into these companies are people going to reach to go and get their assets right and at what point are they going to discover that they were

SPEAKER_59: in fact all the same company this is how it's increasingly starting to feel that's what it's

SPEAKER_235: starting to at minimum it was all the same pool of money that was sort of being like me on that pool

SPEAKER_75: again being the gbtc arb trade that everyone was going for and all the bitcoin that's locked up in there and so that's the that's sort of you know everyone keeps circling around that and i think that'll have some serious price action on on bitcoin because if let's it will come up with a hypothetical scenario if through these bankruptcy proceedings it makes it all the way it makes it all the way to gbtc and it's determined that the only way to get people their money back is to sell that bitcoin well

SPEAKER_30: that's gonna that's gonna create a lot of sell pressure on the in the market if that's if we get to

SPEAKER_238: that point you know i've been on a health kick over the past year and part of that health kick

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Jason Calacanis: here we should probably note that also as all of this is happening on top of this back and forth and they've been like smack talking each other on twitter gemini and genesis and the winklevi are coming out shooting and whatever but on january 12th both entities were charged by the sec for the unregistered

SPEAKER_59: offer and sale of ding ding securities to retail investors through the gemini earn crypto asset lending

SPEAKER_04: program yeah and you know the sec is never in my experience a very principled group of individuals um i saw this quote from tyler winklevoss but the lawsuit is manufactured parking tickets

SPEAKER_244: um yeah i the sec in their complaint alleged that the earn program constitutes an offer and sell of securities under actual applicable law and should have been registered with the commission obviously um so there's that what you're taking on this vinnie like these two guys are fighting with each other over customer deposits and the sec is coming in and saying hey what you're doing here may be illegal

SPEAKER_249: so this is a very very like i i want to be careful because like i'm friends with thailand cameron

SPEAKER_34: in particular as well so so i want to you know and and i don't want to be biased either way um and barry is actually barry is actually one of my investors in civic as well so so it's just you know

SPEAKER_07: this is one of those those look i would like to turn his video off no no no no no i think i think like

SPEAKER_18: this is like one of your favorite couples gets divorced and like you're having like one to come to

SPEAKER_39: new year's one to come to christmas the only the only question i've had since this whole this whole

SPEAKER_36: thing blew up with ftx and you guys we want to we were on the emergency um emergency part we did um was that the solana that ftx was holding was hedged most more than likely by someone and the question is who who did the hedging and no one could answer the question and solana kept dropping and dropping and dropping to eight bucks and the more it dropped the more optimistic everybody was that genesis was going to come through the moment solana spiked to 25 bucks they filed bankruptcy why was that so someone figured out in my opinion this is my my hypothesis proving out that they're short solana and when the price went up so much there's no way they could save the company because they can't market by the missing solana to to repay the hedge and that's my working thesis which i think

SPEAKER_41: is still true for genesis for genesis yeah genesis was running yeah i mean they weren't short no they

SPEAKER_49: weren't shorting it they were lending the soul to ftx or or somebody else who was shorting it against the

SPEAKER_154: lots uh the lots we don't see this in the bankruptcy filings benny like basically the the problem when

SPEAKER_75: you look through like i mean when you see it their creditors are like they've um you know they've got a

SPEAKER_30: bunch of money out there that they've lent to folks and then they owe to folks right like so in the

SPEAKER_271: case like gemini is one like it's like 900 million dollars right i haven't seen the one thing i haven't

SPEAKER_36: seen yet there was at some point there was this undisclosed 300 million dollar liability but they didn't say it was nominated in crypto they didn't say which cryptos yeah but 300 million wouldn't

SPEAKER_90: tank them vinnie like they've got billions of uh they've got to cover a short that's going good yeah

SPEAKER_273: yeah exactly so it would have to go up 3x from that from eight bucks uh that would be a billion

SPEAKER_274: dollars this whole thing needs to be regulated right i mean this is what it comes down to it's

SPEAKER_41: it's not about regulations it's about people being like being silly about transparency there's

SPEAKER_36: no the issue isn't you you can regulate as much as you want the moment you take a decentralized network of assets and you create these centralized entities on top of it and then you obfuscate all the information like with celsius and everything else this is what happens the mo like no matter how decentralized crypto is unless we're all doing peer-to-peer trading and peer-to-peer transactions where it's fully visible the moment you add a level of obfuscation this is going to happen and

Jason Calacanis: it's going to happen again and again and again i mean this is what we keep i think what we keep coming back to is that every time you have something that again looks like a banking product yeah that's where it all goes wrong it's once they financial i mean we've said this now so many times it should be like a drinking game with only don julio um but it's once you tried to financialize this product people were like no problem we can make a ton of money i will loan the same asset six times and then i will go back to the fountain of life which just magically produces yield i don't really know why i'm not even sure i understand it but i can make money off of it like it's it's all of the none of it actually underlies and i don't know what at what point that or ever or if this message will ever make it through to investors or you know future vcs or anybody who's looking at this space but like all of the financialization of crypto is seemingly somewhat different from crypto ironically since they're you know fundamentally financial products

SPEAKER_75: created out of i think you made a great point molly is that like a lot of people whether it was

SPEAKER_30: investing in ftx and we saw the like the looseness around the diligence there right or whether it was understanding what these products were doing like people weren't just you know doing that diligence to get to the core of like what what is it that's driving this right like money isn't magically made obviously you know a place like the us we've talked about this earlier in the pod but like the us fed can offer interest right but they have lots of things behind that to make that happen

SPEAKER_283: right yeah i think faith and credit of the united states exactly world's greatest military yeah when

SPEAKER_75: we when we have like an arb which is fine you know we have to understand arbs disappear and when they dis and then they go negative that's a real problem and the problem again people are lending against it people are putting into it like the issue that i see with the gemini earn product right is that if if

SPEAKER_30: you're running that product and this is maybe where the sec is coming in you know you probably need to fully disclose to your um i guess the depositors right what not just the interest rate but where is that coming from right because we you know when we go and buy a t-bill or whatever it is like we know where that's coming from or we buy a stock that has a dividend i think in this case mortgage-backed or real estate

SPEAKER_287: back you have some idea of where the interest who's paying the interest if it's a loan to somebody

SPEAKER_289: the asset is yeah i mean it goes back to like it's a wonderful life when jimmy stewart explains like oh

SPEAKER_293: you know your your money you see it's in it's in susie's house and susie you know how much do you need dear remember that scene yeah amazing actually yeah we should teach that in school we gave to them

Jason Calacanis: for their mortgage yeah exactly exactly it's all the same stuff it will always happen when you have when you have the opportunity to arbitrage to earn you know unrealistic interest like literally yeah

SPEAKER_24: i don't know why we don't start teaching in second grade that if somebody comes to you and says you can get a return that's two to ten times the market you say no yeah yeah or you ask questions

SPEAKER_303: or you use one percent of your net worth you know like you fully understand the risk like you can

SPEAKER_75: get it but because you may not get paid back right that's the right this is where the sec could really

SPEAKER_04: do some great work in the world towards their mission of protecting these retail investors is by having an accreditation or a sophistication test and if you just had this test where you said to people like here is historically what the stock market is returned bonds have returned etc somebody comes to you with a new opportunity that pays this amount here are the questions you should ask right here's how you should uh you know and if you don't get these questions maybe you should report it to the sec at this url sec.gov report whatever um and instead of just taking action after people are misbehaving or creating weird things i this to me is starting to listen and i know some people are friends with certain people this is starting to seem like you know this is looking very dark i'm going to leave it at that this is looking dark because when i think you do the post-mortem on this stuff i think you're going to see different principles having swept lots of money out of the system and when people sweep money out of the system and they're doing these kind of arbitrage games it's not going to look

SPEAKER_30: good um yeah yeah i mean i think that's spot on jake ellen and the other thing is like look i i think there was a time and place where you know taking advantage of the arb was okay like there was it was hard to get bitcoin and you know gbtc offered that as a as a real path and then there was you know people that were you know doing the work to fulfill the institutional demand that was coming and buying that

SPEAKER_75: through their you know morgan stanley accounts and whatever else it was it was great i think you just have to be fully aware of what it is and that's that transparency that bit and and again like you

SPEAKER_30: know this revert to them we've seen it everywhere whether it's on hiring whether it's on interest rates and all this kind of stuff and so i think we had a lot of things that were too good to be true

SPEAKER_75: and that's part of that test should be there hey if something is like this like really understand how

SPEAKER_310: long is it going to last it's not going to last forever right yeah of course didn't nft drop

SPEAKER_312: yeah speaking of trying to take advantage of a market that had long since passed them by even i

SPEAKER_258: know about this i'm like getting amazing i've blocked all crypto keywords on twitter i just have like a block list of you did no i don't know you're gonna miss the next big thing yeah no i mean this i

SPEAKER_18: literally saw a bunch of nft folks deriding this i don't know why yeah here's what happened

SPEAKER_59: yeah which is amazing just as a level set so porsche decided to mint an nft uh in honor of the 9 11

Jason Calacanis: sports car so they were going to drop a 7 500 piece collection each car came as a blank slate and over time with user inputs 3d artist patrick vogel would customize each nft and presumably like a cool new

SPEAKER_59: 911 would be built even though we all know that the air cooled targa is where they should have stopped but

Jason Calacanis: they just could not have gone more poorly first porsche sent an extremely high mint price it was like something like 1500 and 0.911 eth which cute funny um then it seems like the sales were not going very well they minted a little over 2300 of them um they were already being resold for less than the mint price and then porsche it sounds like came out and said okay well we're going to stop the mint but then they didn't stop it immediately so then that caused some fomo so then the price went up briefly and then they stopped and so people felt like it was like almost like a double

SPEAKER_24: rug pull and also what do you do we're trying to launch like a 1500 nft in today's market do you not

SPEAKER_75: even read the news yeah um i think great summary molly so let let's let's kind of look at like let's look at the positives and negatives i think like you know we've talked about this before like from a collectible standpoint the idea of like a porsche nft for you know the collectors and you know porsche isn't a high volume manufacturer is is really neat right um the utility that they were coming up with is that it'll evolve over time there'll be some artists involved i think that was really cool i think the real challenge that emerges in in the space still is that um i don't think it was particularly easy for like a porsche collector or like a porsche you know like a regular porsche owner to go and get these

SPEAKER_30: things uh and then they really sort of uh run out into like the general crypto market and i think this is where like the space has to continue to evolve and we're actually seeing a lot of stuff happen here as like you know um the infrastructure starts coming from places like shopify and salesforce salesforce has something called nft cloud shopify has something as well where they make it easy for regular people to kind of get involved in it right and the actual fans and so i think i overall really

SPEAKER_75: like the idea of continuing to you know for brands to do this make it a collectible add some utility to it i think you have to be careful when it crosses over into like the the core web 3 market and crowd and then it doesn't kind of it doesn't get out to the the regular folks and so that's my take of it it's a good experiment i think people will learn from it as smart for them to cut it off so that it retains some value it creates some scarcity around it to people who bought the car

SPEAKER_12: like they should have just if you bought a car they should have given you one for free

SPEAKER_334: with it and then they should have dropped some on the public exactly and this is the kind of thinking

SPEAKER_74: well look you know that the data around this will show right and so you know using platforms like

SPEAKER_30: ours you can look at who the buyers of this were and what happened and you can go back and do a post-mortem and you don't this doesn't have to be the you know the first and last time but i think this really talks about when you're going to do these things you need to look at who your buyers

SPEAKER_75: are who the mentors are where is it coming from how do you get in front of people what can you do

SPEAKER_04: i've got an even better idea take a picture of your porsche 911 whoever you are in the world take a picture of your vin number send it to us we will make you a one of one custom and uh it'll cost you know this amount uh but you'll always have it right so it could be to be a hundred bucks like something really cheap but then you could resell it if you wanted to or you give it to the next owner of the

SPEAKER_08: car or you could just make it your avatar or make it your you know profile picture on twitter or

SPEAKER_274: instagram i mean it seems like ways to do it like exactly this would be a way to collect information

SPEAKER_04: on your user base that you don't have because of course not 11 has traded hands five times and then you get that person emailing you the vin number pictures of it you know why they love

SPEAKER_343: it you know you could do something really funny so so mclaren did that um i i got airdropped a um

SPEAKER_345: a mclaren nft and i got the option to buy one as well wait you order mclaren yeah oh okay well

SPEAKER_349: that's why he needs to get oh not the original million dollar one you are you own the uh it was

SPEAKER_41: 720s but uh 720s but i actually got rid of it a few months ago so but i i started coming in no actually the new ferrari uh the gt the gts is looking good okay yeah i'm switching sides and then i have a physical nft mclaren huh it's blurring yeah there you go yeah yeah yeah so that's anyway i i think i think mclaren did a pretty good job on the way they did this

SPEAKER_66: so if you bought one you got one you're saying yeah i've gotten completely distracted shopping for

Jason Calacanis: 1987 portion 911 targets but i found one in naples for like 55 grand these things are usually going for 200 desa see that's the that see that's an investment this right here cost you twice as much to keep on the road is the porsche superfan investment that i would much rather make than an nft no what i was going to say though is that it sort of seems like brands like people are going to want brands to treat nfts and they probably should do this like to your point a value add but like roll them out for free or attach some utility in a loyalty way the way that starbucks did but that to try to sell them to sort of try to to operate them as like a little short-term cash grab like this isn't that's not the vibe like that's just not the right way to roll this out to your brand or if you're going to roll it out you do actually have to target fans of your brand to your

SPEAKER_75: point yeah yeah i and i think there's some good learning here look i i give them credit for adapting right and i think they they what hopefully they do is don't do this as a one and done that's the worst thing they can do i think they should do this they should understand what happened take the feedback from the pod here some great ideas right yeah and look it's it's a great aspirational thing like growing up right yeah exactly you know growing up i had a poster of a of a porsche in my room and so like i would love to have like a digital version of it right and you know kind of build that up into your ecosystem so i think i think this is like this is the kind of stuff that we need in the ecosystem we're we're kind of ragging on it for failing and the market loves to do that and all the news has been negative but like the more that brands do these type of things and they start tying into real utility that's what will continue to drive the ecosystem the way we want it to i mean we're all

SPEAKER_274: talking about it we are yeah i think it's it's for a 1.0 yeah it seemed like a reasonable attempt maybe they price a little high but you learn and you keep going i still think nfts with functionality

SPEAKER_04: and that really becomes the key thing because i know the functionality that tim ferris and kevin rose put into their projects are what are tracking their fan base to you get some sort of facetime or even gary vander chuck you get some sort of facetime or conference time or affiliation with them and that's why people who are buying it uh i think feel good about it you don't hear like i'm not hearing complaints from those three people doing it and i know those three individuals very well well

SPEAKER_75: they're they're really big on the community side right what a lot of people don't see is you know the proof collective or you know v friends these are big communities like to your point they have conferences they have events they have active discord they're they have deals for different folks that are associated with it like you know actually you know vinnie and i did something with kevin you know we co-owned one of these big three basketball teams and we brought moonbirds in as our sponsor and we basically would make tickets available through that sponsorship to the or the

SPEAKER_233: owners of the moonbirds uh nft so we you know we were kind of driving that kind of utility that you're

SPEAKER_31: talking about there yeah before i i uh just uh breaking news right now kevin rose's wallet just got compromised and people it's been drained oh my gosh i feel terrible for him oh my gosh

SPEAKER_271: multiple wallets though yeah he's trying to salvage it in real is that being real time i'll send you guys

SPEAKER_376: the the link quickly wow that's crazy he's always squiggles are gone it's just like insane so now are we

SPEAKER_254: going to see the hack era begin like the the kind of additional fallout i guess i don't know i think

SPEAKER_74: the hacker is always there molly right in every ecosystem you know just uh you know that one was

SPEAKER_75: very terrible that this has happened but like look if if can we just say something here vinnie for everyone if you have crypto wallets um you know please be careful to have your stuff stored across

SPEAKER_30: different wallets and uh you know use security measures as as uh like you know hard wallets as well um like ledger and things like that like you know really really dangerous to have your dot ens address tied to your hot wallet where all your assets are like it just takes one bad link from someone that can look like a friend um you know people can send you like an sms right and they can make it happen i've heard of someone that got hacked through a pretty elaborate scheme where

SPEAKER_75: the hacker pretended they were apple support and then apple support has a way to allow you to

SPEAKER_30: um like allow your ipad or phone to be controlled i've never used it but apparently this exists

SPEAKER_213: and through that they were able to basically go into their wallet and you know drain it out and the whole thing was legitimate so it's it's the hacks are very very elaborate now these days so even

SPEAKER_34: even like in this case from what from this tweet storm we're seeing right now what you know what happened was he signed a it looked like you're using his hardware wallet he signed a um a fake phishing contract and it just drained his wallet and that was he thought it was i think he thought

SPEAKER_388: it was something open c but he got phished there are a lot i mean there are a lot of people and

SPEAKER_273: that's what the hardware wallet that's what the heart so you should everyone should use um revoke dot cash um to go in and and check your um permission your wallet to permissions and just make sure that no one's got permissions like that's the first thing secondly when you have a hardware wallet i'd be very very careful with it like the one thing you should use a hardware wallet for is to transfer from your heart from that's it yeah it's cold you don't use it for transactions exactly and that's the thing

SPEAKER_281: like i mean who is ever supposed to be expected to figure this out honestly you're it's a good

SPEAKER_75: point molly and it's one of the challenges that people talk about the ecosystem right it's very like first of all the whole idea around just a wallet and dealing with all these authorizations and all that is pretty scary two to then say well no really you should have a hardware wallet and store stuff in there and then move it to a hot wallet and you know make sure there's only one thing ever in your hot wallet and only sign transactions with that this is what has to improve in the ecosystem i

SPEAKER_113: mean i completely agree with you and i'm seeing a lot of comments to that effect on this twitter

SPEAKER_59: like a lot of the replies on this twitter thread are we have to figure out web3 security yeah and yeah i mean there's actually a really big thing i don't have time for all that wallet stuff like

SPEAKER_75: i'm like no and most most people don't and it's one thing that even vitalik talks a lot about right i think you know from a theory and perspective of like how you know right now there's there's a scenario like it's not a drain scenario but um if you lose your your secret key basically the wallet is done and we actually have a friend j cal that had lost his secret key um and he's actually funny enough any holding render in it oh they'll tell you after and uh and basically uh he was holding render in that wallet lost the key because he never you know wrote it down um luckily it wasn't a giant amount of money but like a decent amount and that's it so this would be the equivalent you having like

SPEAKER_383: a morgan stanley account for getting your password and morgan is like sorry you can never get your

SPEAKER_213: money again so we really have to fix some of these things it's really really scary and a large portion

SPEAKER_04: of the original bitcoin is in wallets that have never traded it with the theory that it's lost

SPEAKER_101: forever right it's lost dead money all right listen this has been another amazing episode for our crypto roundtable thanks sunny thanks vinnie and you heard from them short bitcoin they were

SPEAKER_405: explicit about it they said they told them they said short bitcoin and you're good oh no no no i'm

SPEAKER_274: chairman short bitcoin not financial advice if you want to play roulette do not ask us what numbers

SPEAKER_409: to put your money on you can pick the number yourself but uh another great crypto roundtable well

SPEAKER_411: well done boys thanks thanks thanks for having us thanks guys yep bye