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Speaker 1: All right, welcome back. You are listening to another episode

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Speaker 1: of The Mark Moss Show where we talk about bitcoin.

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Speaker 1: We talk about the decentralized revolution the world is going through,

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Speaker 1: and we look at it through the lens and the

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Speaker 1: convergence of politics, finance, and technology to try to understand

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Speaker 1: what the heck is going on in this crazy, crazy world. Um,

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Speaker 1: you know, I try to bring to you some education

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Speaker 1: so you can understand really what's going on behind the scenes,

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Speaker 1: because of course you were never taught it and you're

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Speaker 1: being misled all the time. Try to bring to you

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Speaker 1: the latest breaking news, and of course I try to

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Speaker 1: bring some interesting guests on so you can hear from

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Speaker 1: some other people. But me talking all the time. And

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Speaker 1: I am joined in the studio right now with one

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Speaker 1: of my good friends, Mike Alfred. Mike, thanks so much

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Speaker 1: for joining me today. Yeah. Thanks Mark. It was good

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Speaker 1: to meet you in Miami. Yeah. Yeah, we just got

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Speaker 1: to meet each other recently. We've been kind of following

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Speaker 1: each other on Twitter for a while and we got

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Speaker 1: to hang out there in uh in Miami, go to

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Speaker 1: go to go to some some of the parties together.

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Speaker 1: That was That was a fun way to get going.

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Speaker 1: I enjoyed that. Um. I think we met at the

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Speaker 1: unchained cab little party and then the Gemini party or whatever.

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Speaker 1: But you know what's cool about that is um social media.

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Speaker 1: You know. UM, I have a daughter who's just graduated

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Speaker 1: high school and all her friends parents are like, UM,

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Speaker 1: so eager to send their kids off to college. And

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Speaker 1: I'm just not a big believer in that. And there's

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Speaker 1: certainly things you need to college degree for, but unless

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Speaker 1: you need that, I'm just not a big believer in it.

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Speaker 1: And I'm I would ask them, like, you know, okay,

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Speaker 1: what's you know, what do you see as big benefit?

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Speaker 1: And most of them would always go back to not

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Speaker 1: the education, um, the experiences. They lean on that, but

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Speaker 1: then they lean on the connections. They're gonna get the connections.

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Speaker 1: And I'm like, dude, have you heard of Twitter? Because like,

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Speaker 1: I've like met everybody in the world on Twitter, Like

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Speaker 1: Mike and I we were like friends on Twitter before

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Speaker 1: we were like friends in real life. You know, pretty amazing.

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Speaker 1: I'm sure you use it the same way. I thought

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Speaker 1: it was overvalued for most of the time I use it.

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Speaker 1: It wasn't until last summer when I left Nideck that

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Speaker 1: for the first time I tried to actually engage with

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Speaker 1: the platform every day, And now I see how valuable

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Speaker 1: it is because I've met maybe hundreds of people through

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Speaker 1: Twitter just over the last twelve months. It's opened up

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Speaker 1: a whole bunch of doors. It's allowed me to invest

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Speaker 1: in a couple of new bitcoin companies. I joined a

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Speaker 1: couple of boards all from Twitter, and that surprised me

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Speaker 1: because I used to think it was kind of a

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Speaker 1: foo fou thing that people did. It was sort of

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Speaker 1: a waste of time for CEOs to be engaging with

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Speaker 1: social media. But I've seen the light now, Mark, and

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Speaker 1: you came right up to me at a at a

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Speaker 1: party and you you knew who I was. I knew

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Speaker 1: who you were. And it's all because of Twitter. So yeah,

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Speaker 1: do you think do you think it's changed? So like, um, obviously,

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Speaker 1: like you have network effects, right, So the bigger than

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Speaker 1: network gets, the more valuable it gets. And so maybe

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Speaker 1: it was kind of more foofy as you in your words,

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Speaker 1: or not not as usable. But now today since everybody's

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Speaker 1: on there using it more, it's it's become more viable.

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Speaker 1: I think it depends on your interest graph. So before Bitcoin,

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Speaker 1: you know, Twitter was less interesting. I think the bitcoin

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Speaker 1: community is one of the most rapid communities on the Internet,

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Speaker 1: and Twitter is sort of like one of the primary

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Speaker 1: places where people involved in bitcoin come together and share

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Speaker 1: information and build relationships. And so I think for me,

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Speaker 1: a lot of it was just becoming kind of a

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Speaker 1: full time bitcoiner in a sense, like really embracing that

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Speaker 1: as part of my identity is something I wanted to

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Speaker 1: talk about and think about every single day. Um, and

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Speaker 1: when I when that switch flipped, Twitter all of a

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Speaker 1: sudden made more sonse right, and the community here has

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Speaker 1: been incredible. I mean, look, I I sometimes get in

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Speaker 1: battles with with people. I mean that just seems to

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Speaker 1: be part of the space. It's funny how many friends

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Speaker 1: I have that are like enemies of each other. But

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Speaker 1: that's just sort of the fun part of of of

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Speaker 1: using Twitter. Yeah. Well, I think it's important to battle,

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Speaker 1: uh you know, not not in a bad way, but

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Speaker 1: in a good way, because good ideas are one through discussion, right,

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Speaker 1: and so we need to kind of I call it

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Speaker 1: like verbally sparring, right, if we need to spar back

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Speaker 1: and forth and in a in a good way. And um,

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Speaker 1: we learned from that a lot of times, I'll see

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Speaker 1: somebody's post and I'm like, oh, wow, that's that's that's

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Speaker 1: that's so good, that's that's that that's right. I hadn't

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Speaker 1: thought of that. And then I'll just read the comments

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Speaker 1: of people sparring back and forth, the baiting if you will, right,

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Speaker 1: and I'm like, oh, I didn't think about that. I

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Speaker 1: didn't think about that. So you know, it's important to

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Speaker 1: be able to have that discussion, and it's worked good

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Speaker 1: for that. I I didn't start using Twitter until um

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Speaker 1: I was in I was in Hawaii. It was January

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Speaker 1: and um I was on the north shore of Oahu.

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Speaker 1: Were there for a month and I woke up in

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Speaker 1: the morning and my phone was like making this like

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Speaker 1: weird alarm and uh, I think it was seven in

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Speaker 1: the morning and something like pretty early, And I grabbed

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Speaker 1: my phone and I looked at it and it says

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Speaker 1: imminent threat inbound missile alert. This is not a test.

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Speaker 1: I'm like what. And then like I look at my

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Speaker 1: wife and like she's got the same alert on her

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Speaker 1: phone and we're like like and this was right at

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Speaker 1: the height of like the whole North Korea thing with

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Speaker 1: Trump and the Korea is going to fire this missile

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Speaker 1: and here we are and it's like alert inbound missile,

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Speaker 1: imminent threat, not a not a you know, not a

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Speaker 1: not test and uh and then that was it. And

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Speaker 1: then there was like no news about it. You could

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Speaker 1: turn on the TV, jump on the internet. There was nothing.

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Speaker 1: And people were freaking out. All the neighbors were jumping

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Speaker 1: in their cars and taking off all the where you're

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Speaker 1: gonna go hide in the island, right. Um, And my

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Speaker 1: business partner at the time, um, he was on Twitter.

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Speaker 1: I wasn't, and so he jumped on Twitter. And then

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Speaker 1: all the information was on Twitter, right, and like I

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Speaker 1: couldn't find any information, and so I was like, okay,

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Speaker 1: I started on Twitter. And that's great how the information goes.

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Speaker 1: But let's uh, let's jump past that. That's some fun stuff.

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Speaker 1: But um, some of the things that's been going on

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Speaker 1: in the bitcoin and cryptocurrency space the last couple of weeks,

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Speaker 1: it's been fun to see happening on Twitter. Well, fun

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Speaker 1: depend on what side of the ball you're on. But

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Speaker 1: we're starting to see crazy liquidity crisis happening and almost

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Speaker 1: like this domino effect, uh, maybe starting with Tera Luna

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Speaker 1: and now going through into other platforms, um Celsius, Voyager.

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Speaker 1: I don't know, maybe Genesis Block Fi next, so and

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Speaker 1: we don't know how far this gets. Let's talk about

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Speaker 1: that for a little bit. I know you've been like

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Speaker 1: pretty vocal and outspoken on that, Like what's your take

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Speaker 1: on that on the big picture, and then we can

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Speaker 1: kind of dive into that. At a very high level,

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Speaker 1: I think we're at the tail end of like a

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Speaker 1: ten to twelve year kind of fed fueled bowl market

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Speaker 1: where interest rates have been held at a very low

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Speaker 1: level for too long. There's been too much money creation,

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Speaker 1: there's been too much risk taking, everybody's way out on

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Speaker 1: the risk spectrum. Um. And so even before you get

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Speaker 1: to crypto, I mean, you just look at what happened

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Speaker 1: to Tiger Global, uh this year. You look at the

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Speaker 1: decline and some of these large cap technology stocks, including

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Speaker 1: some like Facebook and Netflix that were viewed as kind

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Speaker 1: of teflon up until about the last kind of call

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Speaker 1: it nine to twelve months, um. And so I just

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Speaker 1: think we're seeing what happens at the end of every

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Speaker 1: liquidity cycle, where there's this cascade of folks that get

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Speaker 1: liquidated because they convinced themselves, um that the world was

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Speaker 1: going to continue on in the same trajectory that it

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Speaker 1: had been on for the last ten or fifteen years.

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Speaker 1: And that's the problem with an unstable monetary policy. I mean,

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Speaker 1: I do fault the Fed and politicians. I mean there

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Speaker 1: they didn't see inflation coming, and then they don't understand

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Speaker 1: that all of the activities that they've engaged in, including

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Speaker 1: zero interest rate policy, quantitative easing, stimulus, etcetera. You can

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Speaker 1: give out checked you know, six hundred bucks or bucks

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Speaker 1: to people and then you can lie to them and

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Speaker 1: say that won't cause inflation. But the reality is they've

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Speaker 1: basically hauled out the middle class and and and the

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Speaker 1: poor in this country um through this policy, um. And

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Speaker 1: so that that's filters over into crypto. You know, people

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Speaker 1: can't get a yield because interest rates or zero, they

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Speaker 1: can't put their money in a savings account, and so

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Speaker 1: they become deluded into thinking that it's okay to deposit

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Speaker 1: money into a platform like Celsius, which is essentially an

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Speaker 1: unregulated shadow bank offering unsustainable yields in an environment where

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Speaker 1: yields are basically zero. And so the first red flag

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Speaker 1: for something like Celsius is just that if you see

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Speaker 1: yields of sevent when your bank is offering twenty BIPs

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Speaker 1: like you might want to ask yourself how much risk

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Speaker 1: is I am I taking? And then when you see

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Speaker 1: a CEO that engages um and essentially weakly uh, you know,

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Speaker 1: conversations with the community where he repeatedly lies about the

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Speaker 1: risk that we're taking, fails to disclose risks, irresponsible risk

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Speaker 1: that lead to loss of client capital, and then consistently

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Speaker 1: makes sort of irresponsible decisions across the business. You know,

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Speaker 1: you shouldn't be surprised. My current view on this mark

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Speaker 1: is that Celsius is probably one of the worst actors

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Speaker 1: in this entire ecosystem. It's completely it was completely predictable

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Speaker 1: in my opinion, that it eventually was going to have problems.

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Speaker 1: I also knew that Block five had had made bad,

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Speaker 1: poor decisions as well. The difference seems to be that

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Speaker 1: the investor community completely lost respect uh and trust in

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Speaker 1: Alex Mashinsky and the Celsius team. Somehow, some way, the

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Speaker 1: the sort of inexperienced team at Block five managed to

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Speaker 1: hold onto some credibility in the market, and therefore they're

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Speaker 1: able to kind of get bailouts at this point. Yeah, yeah,

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Speaker 1: that's a good breakdown. I want to I want to

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Speaker 1: break that down a little bit more and dig into

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Speaker 1: some of this, including like the short squeeze that's like

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Speaker 1: maybe they're trying to warm up, and the credit extension

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Speaker 1: that's been thrown to block Fly. What that consolidation means. Um.

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Speaker 1: I got a quote from Lenin that I want to

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Speaker 1: read to you as well that I think helps some

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Speaker 1: up kind of where we're at um and maybe talk

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Speaker 1: about you know who swimming naked and kind of like

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Speaker 1: a warm Buffett type type of quote. So anyway, listen

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Speaker 1: to the Mark Mo Show. We're talking about the decentralized

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Speaker 1: revolution the world's going through. We're talking about bitcoin and cryptocurrencies.

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Speaker 1: Of course, I'm in the studio with Mike Alfred. You

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Speaker 1: can find them on Twitter at Mike Alfred and uh,

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Speaker 1: we got a lot more to cover when we get back,

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Speaker 1: so don't go away, all right, Welcome back. You are

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Speaker 1: listening to the Mark Mo Show. We're talking about the

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Speaker 1: decentralized Revolution. We're talking about bitcoin, we're talking about what's

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Speaker 1: happening in the cryptocurrency space, and I'm in the studio

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Speaker 1: with Mike Alfred. You can find on on Twitter. At

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Speaker 1: Mike Alfred and uh, you're explaining Mike, how Um, you know,

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Speaker 1: this is basically kind of the the the end effects

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Speaker 1: of this long term bowl market, the long's bowl market

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Speaker 1: we've been in history and what happens, and um, it

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Speaker 1: made me think of this Lenin quote that I wanted

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Speaker 1: to pull up real quick. Um, Vladimir Lenin from Russia,

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Speaker 1: not someone that we should model after, but he said, quote, Um,

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Speaker 1: the the best way to destroy the capitalist system was

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Speaker 1: to debouch the currency by a continuing process of inflation.

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Speaker 1: Governments confiscates secretly and unobserved an important wealth of their

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Speaker 1: citizens by this method not only confiscate, but they confiscate arbitrarily,

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Speaker 1: so through inflation and deflation. And then and then at

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Speaker 1: the end, he says, as the inflation proceeds and the

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Speaker 1: real value of the currency fluctuates wildly from month to month,

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Speaker 1: the ultimate foundation of capitalism becomes so utterly disordered as

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Speaker 1: to be almost meaningless, and the process of wealth getting

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Speaker 1: degenerates into a gamble and a lottery. And so I

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Speaker 1: think that's kind of where we're at. Where it's like, um,

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Speaker 1: you know, at the end of this long term death cycle,

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Speaker 1: through all this inflation. That's happened. Um, there's no yield

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Speaker 1: left anymore. Right, the interest rates are down at zero.

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Speaker 1: They've pushed everybody out on this crazy risk risk of

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Speaker 1: to try to get any kind of yield they hand

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Speaker 1: they can, but ultimately they've turned it into a generation gamble.

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Speaker 1: And so now everybody has to gamble. And I think

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Speaker 1: to your point, they think everything just goes up in perpetuity,

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Speaker 1: and it doesn't and they and they find out, unfortunately,

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Speaker 1: they find out the hard way. Yeah. And if you

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Speaker 1: were raised in the nineteen fifties or sixties, right, um,

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Speaker 1: you were told, hey, save money by government bonds, put

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Speaker 1: in the bank, right, or earn more than you spend.

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Speaker 1: And that whole model was flipped on his head because

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Speaker 1: the FED change the rules. The rule for the last

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Speaker 1: twelve years was big bar and steal as much capital

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Speaker 1: as you can get, take as much risk as possible,

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Speaker 1: use as much leverage as possible. It doesn't matter because

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Speaker 1: if you mess up, we will bail you out. So

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Speaker 1: that FED put incentivized increasingly risky behavior, and only some

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Speaker 1: people understood the rules of the game. Right, So when

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Speaker 1: people were overlevered going into the COVID situation, in the

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Speaker 1: spring of guess what the government did. They basically bailed

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Speaker 1: those people out with p PP loans. So these companies

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Speaker 1: got five million, ten million, twenty million dollar p PP

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Speaker 1: loans that were forgiven. And yes, some of the employees

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Speaker 1: got to keep their fifteen dollar an our job for

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Speaker 1: an extra six months, but the owners of those firms

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Speaker 1: should have been wiped out by that irresponsible leverage that

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Speaker 1: was on those firms. So look, I think when the

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Speaker 1: Fed manipulates the market like this, nobody knows which prices

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Speaker 1: to trust, nobody knows which rules of the game to follow,

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Speaker 1: And so people got sucked into things like Celsius, where, yeah,

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Speaker 1: if you can't get a reasonable return in your bank,

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Speaker 1: you might you might be convinced that, even though it

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Speaker 1: makes no sense, something like Celsius might work. Yeah, what

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Speaker 1: about um, what about the Wall Street raiders whatever we

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Speaker 1: want to call them, right, I mean, they've been they've been,

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Speaker 1: They've been at this game for a long time. George

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Speaker 1: Soros became infamously rich, making a billion dollars a day

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Speaker 1: by breaking the peg of the Bank of England. And

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Speaker 1: so it seems like Wall Street traders or raiders, they're

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Speaker 1: gonna want to always want to go after these you know,

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Speaker 1: they smell a little blood in the water. They want

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Speaker 1: to attack, and so, um, I don't want to dig

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Speaker 1: into this, but it looks like that's there's some big

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Speaker 1: Wall Street fund, Blue Street or Boost Blue guys going

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Speaker 1: after the bo g A right now, which is pretty interesting,

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Speaker 1: but they want to be a George Soros. But back

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Speaker 1: to the crypto space, it's almost like they spot these

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Speaker 1: things like Tera Luna or Celsius, see how they're over leveraged,

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Speaker 1: understand their over leverage, and they can start to see

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Speaker 1: where their liquidation levels are, and they just start hunting

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Speaker 1: those liquidation levels. Um. I think that's what happened with

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Speaker 1: Terry Luna. It looks like that was what's happening with Celsius,

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Speaker 1: and they keep trying to lower their liquidation levels, but

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Speaker 1: of course everybody knows where they're at, so it's like

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Speaker 1: the raiders want to keep pushing that down. Do you

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Speaker 1: do you see something like that happening? You think that's

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Speaker 1: what happened. Yeah, I mean, look, that's the essence of capitalism, right.

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Speaker 1: Markets systematically hunt down and kill any sort of weakness.

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Speaker 1: So if you're you have weakness in any form the

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Speaker 1: full extent of any capital cycle, right if it's allowed

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Speaker 1: to happen, which again, the FED is sort of this

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Speaker 1: sort of put a pause on normal cycles in some senses. Right,

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Speaker 1: we're supposed to suspend disbelief and believe that bowl markets

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Speaker 1: can go on forever with no interruption. But in a

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Speaker 1: typical cycle, all of the week as players at some

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Speaker 1: point get taken out. When times are good, right, you

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Speaker 1: can get away with all kinds of shenanigans, But as

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Speaker 1: soon as the tide goes out, you find out who's

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Speaker 1: swimming naked. And I think that's what happened with Tara Luna, right,

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Speaker 1: Like it was a weak system. It was sort of

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Speaker 1: designed to fail from the beginning, and so it only

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Speaker 1: took uh one powerful actor who identified the risk in

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Speaker 1: that system and put a little bit of pressure. You

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Speaker 1: just lean a little bit on the weakest part of

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Speaker 1: that system, and the whole thing collapses. Um, and you know,

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Speaker 1: Japan's in a tough spot. I mean, the yen actually

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Speaker 1: used to be a safety trade. If you remember, back

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Speaker 1: in the last financial crisis, last major one, people bought

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Speaker 1: the yet and it actually went up, uh you know,

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Speaker 1: over a five or ten year period recently. Now they've

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Speaker 1: got to print a lot of you and just to

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Speaker 1: protect their bond market, and their bond market may go

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Speaker 1: down before our bond market. And obviously we have huge

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Speaker 1: advantages in terms of being the global reserve currency that

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Speaker 1: they don't have. But we'll see what happens there. I

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Speaker 1: actually hope that that doesn't happen because I think it'll

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Speaker 1: end up being bad for everybody. Yeah, well, I I

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Speaker 1: think it's inevitable. I mean, it's it's only a matter

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Speaker 1: of time. It's it's uh, I think more um if,

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Speaker 1: I'm sorry, more when not if? But back to back

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Speaker 1: to kind of the crypto space a little bit. So

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Speaker 1: obviously Terry Luna got taken down. You know, you said

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Speaker 1: it's a capitalism doing this thing, which which it is,

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Speaker 1: and um, I agree with that. I'm not super happy

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Speaker 1: about it because, like you know, some rich Wall Street

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Speaker 1: guy made an extra couple of bucks and he ruined

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Speaker 1: the life of a lot of people. But that's that's capitalism.

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Speaker 1: It's more, it's it's not their fault. Don't hate the player,

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Speaker 1: hate the game, right, it's the game that enables them

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Speaker 1: to play that. Um, it's this fiat money system and

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Speaker 1: it's the FED behind them that's enabled them to get

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Speaker 1: to this point, and so I think we have to

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Speaker 1: put the blame where the blame is due. Um. But uh,

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Speaker 1: you know, back to Celsius. You know, they they froze Withdraws,

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Speaker 1: which was kind of the death kneel. Right. They were

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Speaker 1: getting a run on the bank, which is always going

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Speaker 1: to happen when you're overleveraged. It's kind of like the

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Speaker 1: free banking era that we had in the late eighteen

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Speaker 1: hundreds of the United States. Right, each of these banks

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Speaker 1: were over levered. There wasn't enough mone me there. Um

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Speaker 1: they had they had to they had to shut down

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Speaker 1: with Draws. Um. Have you seen did you see this

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Speaker 1: week they started getting a little short squeeze. They were

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Speaker 1: trying to organize a rally on the cell token. Yeah.

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Speaker 1: I mean there's a guy named the Real plan C

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Speaker 1: who is an influencer on Twitter or a hundred thousand

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Speaker 1: plus followers, who told everybody it was safe to use

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Speaker 1: uh Celsius. Up until the last moment. There were other

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Speaker 1: influencers like this invest answers guy who literally had Maschinsky

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Speaker 1: on days before the withdraw all shut down, basically giving

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Speaker 1: him a platform to continue to spew all kinds of

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Speaker 1: potentially definitely misrepresentations but potentially fraudulent misrepresentations about the state

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Speaker 1: of the platform to customers, and so that's that's bad stuff.

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Speaker 1: These same people who um did that are now trying

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Speaker 1: to organize a short squeeze on an essentially worthless token,

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Speaker 1: which is fine, that's the free market too, But like

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Speaker 1: the token has nothing to do with whether or not

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Speaker 1: people are gonna get their money back. So I'm really

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Speaker 1: more focused on the underlying solve and see and liquidity

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Speaker 1: issues experienced by the corporate entity Celsius network, and whether

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Speaker 1: or not the sort of half a million or so

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Speaker 1: depositors into that institution ever see any of their money back.

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Speaker 1: My current view is unless there is a bailout, unless

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Speaker 1: there's some sort of acquisition of all of the assets

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Speaker 1: and liabilities of Celsius, that it almost certainly will go

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Speaker 1: into Chapter eleven over the next call it a month

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Speaker 1: or two, and then it will take at least a

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Speaker 1: year to start distributing assets to the underlying customers. That's

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Speaker 1: what I'm focused on. I think the short squeezes a

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Speaker 1: total side show. Yeah, I would agree, and uh, you

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Speaker 1: know that that sounds like the most probable outcome. Right,

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Speaker 1: they've already brought on the people to kind of help

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Speaker 1: that wind down. I think there's a difference of money

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Speaker 1: they had in custody versus money that was being earning yield,

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Speaker 1: so then they'll probably get divided up between that a

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Speaker 1: little bit better. Um, there's a chance there's a chance

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Speaker 1: you might get some of your money back. I wouldn't

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Speaker 1: hold your breath, but there's a chance it might be

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Speaker 1: pennies on the dollar. Um, we'll see how that shakes out.

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Speaker 1: I want to talk more about this block fine this

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Speaker 1: credit from ft X. I think that's kind of interesting.

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Speaker 1: I want to talk about in a minute. I'm in

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Speaker 1: the studio with Mike Alfred. You can find him at

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Speaker 1: Mike Alfred on Twitter. You listen to the Mark Mo

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Speaker 1: Show talking about bitcoin and the decentralized Revolution. Be back

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Speaker 1: with that and more in a minute, So don't go away,

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Speaker 1: we'll be right back, all right, Welcome back. You are

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Speaker 1: listening to the Mark Mo Show talking about bitcoin. We're

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Speaker 1: talking about cryptocurrencies, we're talking about the decentralized Revolution, and

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Speaker 1: I am in the studio with Mike Alfred. You can

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Speaker 1: find them on Twitter. At Mike Alfred and we've been

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Speaker 1: talking about, you know, the capitalistic system, how the FED

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Speaker 1: kept things too low too long, and we ended up

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Speaker 1: here and some of the damna is being done in

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Speaker 1: the cryptocurrency space. We were talking about Celsius. Uh, maybe

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Speaker 1: maybe someone gets some of their pennies back. We'll see

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Speaker 1: what happens with that. But with Block five, maybe they're

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Speaker 1: in the same boat. Of course, the problem with all

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Speaker 1: these companies is we don't know. When I was at

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Speaker 1: the Bitcoin conference in Miami a couple of months ago,

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Speaker 1: I met with one of the one of the head

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Speaker 1: guys over at Celsius, and I told him as much.

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Speaker 1: I said, look, I said, I can't give you money

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Speaker 1: because I have no way to quantify the risk. I said,

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Speaker 1: if you could give more transparency over the assets and

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Speaker 1: where they're at, etcetera. I said, then I could quantify

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Speaker 1: the risk and I could decide if I wanted to.

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Speaker 1: And I said, I thought, I think if you would

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Speaker 1: give more visibility or transparency, that would help your business.

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Speaker 1: Apparently they didn't do that, but blocked fire. Kind of

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Speaker 1: same thing. We don't know right, it's like this black box. Um.

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Speaker 1: Maybe they handled credit or or risk better. We don't know, um,

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Speaker 1: but it looks like they just got an credit line

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Speaker 1: from f t X. I'm sure you saw that. Yeah, Yeah,

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Speaker 1: that was what two or fifty million, Yeah, which which

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Speaker 1: is probably a drop in the bucket, I would imagine, right,

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Speaker 1: considering what funds they have. Yeah. Well, I mean Sam

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Speaker 1: Bankman Fried is personally worth over twenty billion dollars, right,

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Speaker 1: and he personally did a half a billion dollar investment

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Speaker 1: into a company that I was involved with last year,

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Speaker 1: and so like, the guy seems to have almost unlimited

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Speaker 1: liquidity at this point in to his credit I mean,

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Speaker 1: FTX only has like two or three dred employees, so

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Speaker 1: they're far smaller than most of the other venues and

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Speaker 1: exchanges that have done the same amount of volume. And

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Speaker 1: he's an exceptional entrepreneur. Nobody's perfect. I'm not lionizing him.

427
00:20:09,640 --> 00:20:13,520
Speaker 1: I'm not saying that, like everything he's doing is right right,

428
00:20:13,560 --> 00:20:16,359
Speaker 1: like necessarily good for space and long term. But you've

429
00:20:16,359 --> 00:20:19,240
Speaker 1: got to give him credit for helping both Voyager and

430
00:20:19,920 --> 00:20:21,960
Speaker 1: block Fight at this point, because both of those firms

431
00:20:22,040 --> 00:20:24,919
Speaker 1: might have already gone out of business without some support

432
00:20:24,960 --> 00:20:27,720
Speaker 1: from him. Did he also extend a credit line to Voyager?

433
00:20:27,720 --> 00:20:31,080
Speaker 1: As well previously. Um, yes, I don't know the exact

434
00:20:31,200 --> 00:20:33,600
Speaker 1: numbers there, but I've seen a lot of figures flying around.

435
00:20:33,640 --> 00:20:36,520
Speaker 1: But all that said, I mean Voyager lost so much

436
00:20:36,560 --> 00:20:39,520
Speaker 1: money with three a c that the stock was down

437
00:20:39,560 --> 00:20:42,840
Speaker 1: to was down like at some point um this morning,

438
00:20:42,880 --> 00:20:45,040
Speaker 1: it was under fifty cents. So I mean the markets

439
00:20:45,080 --> 00:20:48,640
Speaker 1: basically saying Voyager could go to zero at any point. Yeah,

440
00:20:48,680 --> 00:20:51,800
Speaker 1: the stock. If the stock goes to zero, does that

441
00:20:51,840 --> 00:20:54,760
Speaker 1: mean the company goes out of business? Stocks barely go

442
00:20:54,840 --> 00:20:58,080
Speaker 1: to zero in the absence of bankruptcy. But remember, even

443
00:20:58,119 --> 00:21:00,000
Speaker 1: in a bankruptcy scenario of the stock can still trade

444
00:21:00,000 --> 00:21:03,600
Speaker 1: above zero for a period of time because sometimes during

445
00:21:03,600 --> 00:21:07,199
Speaker 1: a reorganization, people still managed to get something out of

446
00:21:07,200 --> 00:21:09,640
Speaker 1: the company depending on what the what the balance sheet

447
00:21:09,720 --> 00:21:12,479
Speaker 1: looks like. But I'd much rather be a senior secured

448
00:21:12,560 --> 00:21:16,240
Speaker 1: lender to those companies than an equity shareholder. You know.

449
00:21:16,240 --> 00:21:18,800
Speaker 1: Block Fight was one of the first companies in this

450
00:21:18,840 --> 00:21:22,760
Speaker 1: space to to really show cracks, So I think at

451
00:21:22,800 --> 00:21:25,840
Speaker 1: this sort of beginning of one there was no substantive

452
00:21:25,840 --> 00:21:29,440
Speaker 1: difference in my view. Uh and qualitatively between the risk

453
00:21:29,520 --> 00:21:32,480
Speaker 1: books of Celsius and block Fire and block five got

454
00:21:32,520 --> 00:21:35,560
Speaker 1: caught in that gray scale bitcoin trust trade, which looked

455
00:21:35,560 --> 00:21:37,520
Speaker 1: like a no brainer, right, you buy the trust and

456
00:21:37,680 --> 00:21:39,280
Speaker 1: n a V. As long as you hold it for

457
00:21:39,320 --> 00:21:41,199
Speaker 1: six months, you can dump it back on the market

458
00:21:41,400 --> 00:21:44,199
Speaker 1: at that premium. And for most of the history of

459
00:21:44,280 --> 00:21:46,480
Speaker 1: g BTC up until that point, it traded at a

460
00:21:46,520 --> 00:21:49,399
Speaker 1: twenty plus percent premium, so it looked like free money,

461
00:21:49,800 --> 00:21:52,840
Speaker 1: and so kids with no risk management experience in a

462
00:21:52,840 --> 00:21:55,919
Speaker 1: Wall Street experience probably would think that's fine, and they

463
00:21:55,920 --> 00:21:58,280
Speaker 1: piled into that trade. They locked up a huge chunk

464
00:21:58,320 --> 00:22:00,720
Speaker 1: of the deposits in block FI in that trade, and

465
00:22:00,720 --> 00:22:03,120
Speaker 1: then when that premium discount flip negative during the draw

466
00:22:03,160 --> 00:22:05,280
Speaker 1: down in the spring of last year, all of a sudden,

467
00:22:05,280 --> 00:22:07,920
Speaker 1: they were completely upside down. So if they had experienced

468
00:22:07,920 --> 00:22:11,600
Speaker 1: a similar bank run to what Celsius just experienced over

469
00:22:11,640 --> 00:22:14,160
Speaker 1: the last month or so, they would have gone bust.

470
00:22:14,160 --> 00:22:17,640
Speaker 1: Oh last brick um. But again, they had such good

471
00:22:17,680 --> 00:22:19,840
Speaker 1: equity backing that they were able to continue to raise

472
00:22:19,880 --> 00:22:22,520
Speaker 1: equity and plug the hole in their balance sheet. Celsius

473
00:22:22,520 --> 00:22:24,400
Speaker 1: did a similar thing. They raised a round of equity

474
00:22:25,040 --> 00:22:26,920
Speaker 1: last summer, they didn't announce it until the fall, and

475
00:22:26,960 --> 00:22:29,199
Speaker 1: they used that to paper over their balance sheet. So

476
00:22:29,280 --> 00:22:31,840
Speaker 1: I think the only difference today, Mark, honestly, is that

477
00:22:32,240 --> 00:22:35,560
Speaker 1: block Fire grew up faster. Somebody on the board or

478
00:22:35,600 --> 00:22:38,879
Speaker 1: somebody in that investor base said, listen, Zach and team,

479
00:22:39,000 --> 00:22:41,199
Speaker 1: you guys need to grow up. You guys need to

480
00:22:41,200 --> 00:22:43,800
Speaker 1: have put your big boy pants on and actually developed

481
00:22:43,800 --> 00:22:46,719
Speaker 1: some adult level risk framework so you don't lose all

482
00:22:46,720 --> 00:22:49,359
Speaker 1: of the positors money and go bankrupt. And they listen,

483
00:22:49,720 --> 00:22:52,000
Speaker 1: and they stopped doing the same types of crap that

484
00:22:52,040 --> 00:22:54,239
Speaker 1: Selsie's was doing all the way up until now. I mean,

485
00:22:54,240 --> 00:22:57,199
Speaker 1: you can see on chain Celsie's continues to gamble with

486
00:22:57,280 --> 00:23:02,040
Speaker 1: the positive money even as they've frozen the customers assets. Yeah, yeah,

487
00:23:02,200 --> 00:23:05,120
Speaker 1: I think. I mean, you know, the narrative that I've

488
00:23:05,160 --> 00:23:07,119
Speaker 1: always kind of believed, and I guess maybe I was

489
00:23:07,240 --> 00:23:09,800
Speaker 1: naive although I wasn't using these services, but um, I

490
00:23:09,840 --> 00:23:13,520
Speaker 1: always believe that they were doing over collateralized loans and

491
00:23:13,560 --> 00:23:15,199
Speaker 1: so it was supposed to be risk free because they

492
00:23:15,240 --> 00:23:18,440
Speaker 1: had overclatteralized loans. But then it turns out like Celsius

493
00:23:18,400 --> 00:23:21,040
Speaker 1: is losing money and there's like Badger Dow attack, Like

494
00:23:21,040 --> 00:23:23,040
Speaker 1: what the heck are they doing in something called badger

495
00:23:23,119 --> 00:23:25,520
Speaker 1: Dow in the first place? Right, um, and so they

496
00:23:25,560 --> 00:23:27,719
Speaker 1: were like way out on the risk curve, it sounds like,

497
00:23:27,920 --> 00:23:29,320
Speaker 1: and that's just the tip of the iceberg. I mean,

498
00:23:29,359 --> 00:23:32,600
Speaker 1: they lost seventy five million in stay count because the

499
00:23:33,160 --> 00:23:36,719
Speaker 1: protocol team managing that protocol lost the keys. They put

500
00:23:36,800 --> 00:23:38,919
Speaker 1: a whole bunch of money into a mining business at

501
00:23:38,960 --> 00:23:41,040
Speaker 1: the peak of the market when they have no expertise

502
00:23:41,040 --> 00:23:43,680
Speaker 1: in mining. They would run around the market telling everybody

503
00:23:43,760 --> 00:23:45,520
Speaker 1: they were one of the biggest North American miners. I

504
00:23:45,520 --> 00:23:46,879
Speaker 1: mean those of us in the space just kind of

505
00:23:46,960 --> 00:23:48,920
Speaker 1: chuckled and said, what the hell are these guys doing.

506
00:23:49,480 --> 00:23:51,720
Speaker 1: Then they put out an s one about a month

507
00:23:51,720 --> 00:23:53,800
Speaker 1: ago to take a mining business public. It is a

508
00:23:53,800 --> 00:23:57,119
Speaker 1: waste land in the publicly traded bitcoin mining space. I mean,

509
00:23:57,160 --> 00:24:00,359
Speaker 1: there are stocks that are down, some of them are

510
00:24:00,359 --> 00:24:02,000
Speaker 1: going to go to zero. I know of at least

511
00:24:02,000 --> 00:24:05,720
Speaker 1: one publicly traded mining company that's already about the default

512
00:24:06,119 --> 00:24:08,199
Speaker 1: on some of their loans. And so this is not

513
00:24:08,240 --> 00:24:10,480
Speaker 1: an environment to take a mining business public. But it

514
00:24:10,560 --> 00:24:13,359
Speaker 1: speaks to the desperation of the Celsis management team because

515
00:24:13,359 --> 00:24:16,800
Speaker 1: they had made so many poor decisions compounded on top

516
00:24:16,840 --> 00:24:18,960
Speaker 1: of each other that they literally had to file on

517
00:24:19,080 --> 00:24:21,520
Speaker 1: us one for an liquid mining business at the worst

518
00:24:21,520 --> 00:24:23,840
Speaker 1: time in human history to do that. Um, so it's

519
00:24:23,880 --> 00:24:27,360
Speaker 1: just an absolute disaster. I really think the people who

520
00:24:27,400 --> 00:24:29,680
Speaker 1: lost money in this, they need to accept that they're

521
00:24:29,680 --> 00:24:33,159
Speaker 1: probably going to lose a big chunk, probably up to

522
00:24:33,200 --> 00:24:37,200
Speaker 1: fifty of the money at the low end. Right, they're

523
00:24:37,240 --> 00:24:39,480
Speaker 1: lucky they'll get eighty cents on the dollar back. But

524
00:24:39,600 --> 00:24:42,800
Speaker 1: instead of attacking the people who pointed out the risk here,

525
00:24:42,880 --> 00:24:46,159
Speaker 1: maybe maybe spend more time looking at all the management

526
00:24:46,800 --> 00:24:49,280
Speaker 1: decisions that led to this so that you can avoid

527
00:24:49,320 --> 00:24:51,800
Speaker 1: it in the next for future times, right, because I

528
00:24:51,800 --> 00:24:54,080
Speaker 1: think if you learn from this, great, maybe you won't

529
00:24:54,119 --> 00:24:55,800
Speaker 1: make the same mistake again. If you spend all your

530
00:24:55,800 --> 00:24:58,520
Speaker 1: time attacking folks that were just trying to call out

531
00:24:58,960 --> 00:25:01,760
Speaker 1: the misdeeds. Um again, I think people are wasting their

532
00:25:01,800 --> 00:25:06,160
Speaker 1: time on that. Yeah, I mean it's uh it again.

533
00:25:06,160 --> 00:25:10,920
Speaker 1: It's a capitaliststs capitalistic system, right, So, um in any market, right,

534
00:25:11,000 --> 00:25:13,879
Speaker 1: you have short sellers, and then um they might decide

535
00:25:13,880 --> 00:25:15,720
Speaker 1: to put big short positions, and then of course they're

536
00:25:15,760 --> 00:25:18,160
Speaker 1: going to start talking about how bad that that position

537
00:25:18,240 --> 00:25:20,240
Speaker 1: is that company is to try to drive it lower.

538
00:25:20,520 --> 00:25:22,359
Speaker 1: And it's just part of the capitalist system. And so

539
00:25:22,480 --> 00:25:25,359
Speaker 1: you have to identify the risk. Um, all this leverage

540
00:25:25,400 --> 00:25:27,120
Speaker 1: builds up, and if you're going to put your money

541
00:25:27,200 --> 00:25:29,760
Speaker 1: there and you don't know that the celsis is going

542
00:25:29,800 --> 00:25:32,000
Speaker 1: into Badge or Dow or whatever this other one here

543
00:25:32,040 --> 00:25:34,119
Speaker 1: is talking about it, then if you're not paying attention

544
00:25:34,160 --> 00:25:35,680
Speaker 1: to that, then why do you have money there? Right?

545
00:25:35,720 --> 00:25:37,520
Speaker 1: And so you kind of have to figure that out.

546
00:25:37,640 --> 00:25:39,080
Speaker 1: To your point, they think they have to kind of,

547
00:25:39,240 --> 00:25:41,080
Speaker 1: um take this lesson and learn. What is that saying?

548
00:25:41,119 --> 00:25:43,119
Speaker 1: I never lose either either win or I learned, and

549
00:25:43,160 --> 00:25:45,359
Speaker 1: so hopefully they'll learn from that. I was thinking about

550
00:25:45,359 --> 00:25:48,760
Speaker 1: Block five just in regards to this and to your point, Um,

551
00:25:48,800 --> 00:25:50,520
Speaker 1: you know Sam Makmun freed, but he's got a lot

552
00:25:50,520 --> 00:25:52,760
Speaker 1: of money. I mean f t X. You know, between

553
00:25:52,840 --> 00:25:55,919
Speaker 1: f t X and Alameda they seem to be pretty

554
00:25:55,960 --> 00:25:59,960
Speaker 1: much in bed with Tether as well. Um, big big,

555
00:26:00,040 --> 00:26:03,840
Speaker 1: big pockets. I would imagine if um, he's putting two

556
00:26:04,000 --> 00:26:06,320
Speaker 1: d fifty million in, he's probably not gonna want to

557
00:26:06,320 --> 00:26:08,680
Speaker 1: lose that two million. So we might have done a

558
00:26:08,680 --> 00:26:10,679
Speaker 1: little bit due diligence and he might be prepared to

559
00:26:10,680 --> 00:26:14,000
Speaker 1: do whatever it takes to keep them afloat. Do you

560
00:26:14,000 --> 00:26:15,800
Speaker 1: think they might have dodged a bullet with it. Was

561
00:26:15,840 --> 00:26:18,679
Speaker 1: that was that kind of like a vote of confidence

562
00:26:18,720 --> 00:26:22,479
Speaker 1: from SPF? Yeah? I think so. And you know, if

563
00:26:22,480 --> 00:26:24,960
Speaker 1: you've got SPF on your side, there's a good chance

564
00:26:25,000 --> 00:26:27,760
Speaker 1: that you won't go out of business, right And the

565
00:26:27,800 --> 00:26:29,240
Speaker 1: other thing to keep in mind is they were already

566
00:26:29,240 --> 00:26:32,240
Speaker 1: out raising a down round in Oliver raising a billion

567
00:26:32,240 --> 00:26:34,120
Speaker 1: dollar valuation. I don't think they were finding a lot

568
00:26:34,119 --> 00:26:37,480
Speaker 1: of success with that. But after an equity investor sees

569
00:26:38,160 --> 00:26:40,959
Speaker 1: a vote of confidence on the debt side from an SPF,

570
00:26:40,960 --> 00:26:42,439
Speaker 1: they're going to be more likely to put equity in

571
00:26:42,520 --> 00:26:45,560
Speaker 1: because they can underwrite it with a lower risk of

572
00:26:45,640 --> 00:26:48,240
Speaker 1: losing all of the capital that goes on. I want

573
00:26:48,240 --> 00:26:50,600
Speaker 1: to make one quick distinction though, mark On if we

574
00:26:50,600 --> 00:26:52,720
Speaker 1: can just go back real quick, I think there's a

575
00:26:52,720 --> 00:26:56,679
Speaker 1: big difference between Tara Luna and Celsia's Tara Luna. You

576
00:26:56,800 --> 00:27:00,920
Speaker 1: actually had a somebody, some sort of chanization or trader

577
00:27:01,000 --> 00:27:04,000
Speaker 1: attacking Tara Luna directly. In the Celsius case, it was

578
00:27:04,080 --> 00:27:08,240
Speaker 1: literally just mismanagement. There was no particular single incident, There

579
00:27:08,280 --> 00:27:11,880
Speaker 1: was no particular single actor that that precipitated that situation,

580
00:27:11,920 --> 00:27:15,520
Speaker 1: whereas Tara Luna was very clearly one actor that was

581
00:27:15,520 --> 00:27:18,520
Speaker 1: was moving on the on the against that tokens. That's

582
00:27:18,720 --> 00:27:20,479
Speaker 1: that's that's a that's a really good point to bring up.

583
00:27:20,520 --> 00:27:22,960
Speaker 1: So I appreciate that. I'm listening to the Mark mo Show.

584
00:27:23,000 --> 00:27:25,520
Speaker 1: I'm in the studio with Mike Alfred. We are talking

585
00:27:25,600 --> 00:27:28,280
Speaker 1: about bitcoin. We're talking about the cryptocurrency space. We're talking

586
00:27:28,280 --> 00:27:30,719
Speaker 1: about the state of the markets with the Federal Reserve

587
00:27:31,160 --> 00:27:33,359
Speaker 1: driving them to a level never seen in the last

588
00:27:33,520 --> 00:27:36,000
Speaker 1: well the longest ball run in history, and here we

589
00:27:36,080 --> 00:27:38,919
Speaker 1: are de levering the system. I want to talk a

590
00:27:38,920 --> 00:27:41,040
Speaker 1: little bit more about who swimming naked when we come

591
00:27:41,040 --> 00:27:43,840
Speaker 1: back in a minute, So don't go away, all right,

592
00:27:43,880 --> 00:27:45,800
Speaker 1: Welcome back. You are listening to the Mark moa show.

593
00:27:45,840 --> 00:27:50,240
Speaker 1: We're talking about bitcoin and the decentralized revolution, specifically in

594
00:27:50,280 --> 00:27:53,520
Speaker 1: the studio with Mike Alfred, and we are talking about um,

595
00:27:53,560 --> 00:27:55,760
Speaker 1: the blow up in the I don't know what we

596
00:27:55,840 --> 00:27:59,399
Speaker 1: call it, se FI central heist finance world if we

597
00:27:59,480 --> 00:28:02,400
Speaker 1: call it that, talking about Celsie is talking about block fire,

598
00:28:02,520 --> 00:28:05,760
Speaker 1: talking about Voyager. Um. You know a couple of people

599
00:28:05,800 --> 00:28:09,359
Speaker 1: that I haven't heard a whole lot about. Maybe you

600
00:28:09,400 --> 00:28:13,120
Speaker 1: have is a genesis that seems to probably be behind

601
00:28:13,280 --> 00:28:16,320
Speaker 1: all of these people. And then NEXTO as well, what

602
00:28:16,640 --> 00:28:19,480
Speaker 1: have you heard about them? So, I mean, Genesis is

603
00:28:19,520 --> 00:28:22,919
Speaker 1: a digital currency group company, it's Barry Silbert, and that

604
00:28:23,080 --> 00:28:26,919
Speaker 1: is probably one of the best financed funded organizations in

605
00:28:26,960 --> 00:28:33,000
Speaker 1: the entire space. Barry systematically buys back stock every single

606
00:28:33,080 --> 00:28:36,119
Speaker 1: year and also pays a dividend, which is very unusually

607
00:28:36,160 --> 00:28:38,840
Speaker 1: for a non public growth company. And they have some

608
00:28:38,880 --> 00:28:41,840
Speaker 1: of the strongest equity shareholders in the world. And so

609
00:28:42,280 --> 00:28:46,120
Speaker 1: Genesis probably the last lender that would ever fail in

610
00:28:46,160 --> 00:28:49,800
Speaker 1: the space. And from what I hear, they terminated three A,

611
00:28:49,880 --> 00:28:53,520
Speaker 1: C and and UH some of the other bad counterparties

612
00:28:54,040 --> 00:28:58,160
Speaker 1: alongside block Fire others right pretty early. And even if

613
00:28:58,200 --> 00:29:00,440
Speaker 1: they took losses, they have a big enough on sheet

614
00:29:00,440 --> 00:29:03,160
Speaker 1: across DCG that like probably not going to go anywhere.

615
00:29:03,600 --> 00:29:06,560
Speaker 1: The rumors about next are much worse. Right, there's a

616
00:29:06,560 --> 00:29:10,360
Speaker 1: lot of conversation about whether or not NEXTO is actually solvent.

617
00:29:10,480 --> 00:29:13,920
Speaker 1: I don't have any smoking gun or particular issue to

618
00:29:13,960 --> 00:29:16,040
Speaker 1: take with NEXTO like I did with Celsius, where with

619
00:29:16,040 --> 00:29:18,920
Speaker 1: Celsie's I felt like it was definitely going to collapse. Uh,

620
00:29:18,920 --> 00:29:22,040
Speaker 1: and I said that multiple times on the record. I'm

621
00:29:22,080 --> 00:29:23,600
Speaker 1: not gonna say that about Next because I don't have

622
00:29:23,680 --> 00:29:26,200
Speaker 1: enough information, But if I was a depositor there, I'd

623
00:29:26,240 --> 00:29:29,720
Speaker 1: be thinking about pulling my assets out based on based

624
00:29:29,760 --> 00:29:32,880
Speaker 1: on just the chatter that I'm I'm hearing in the market. Yeah,

625
00:29:32,960 --> 00:29:36,320
Speaker 1: I was. I was always skeptical of Next. So just

626
00:29:36,400 --> 00:29:40,800
Speaker 1: because one there European company, if forget exactly what country

627
00:29:40,800 --> 00:29:44,480
Speaker 1: they're from, um, and their founder has some you know,

628
00:29:44,640 --> 00:29:47,840
Speaker 1: rumors about where he's from and maybe some nefarious things

629
00:29:47,840 --> 00:29:50,480
Speaker 1: that he's done in the past, and that lack of transparency,

630
00:29:50,920 --> 00:29:54,560
Speaker 1: the lack of US regulation concerned me. But I saw

631
00:29:54,600 --> 00:29:57,520
Speaker 1: it today. They came out with this UH post talking

632
00:29:57,520 --> 00:30:01,280
Speaker 1: about how they're partnered up with City to do some

633
00:30:02,440 --> 00:30:03,959
Speaker 1: I don't know if they're going to try to provide

634
00:30:03,960 --> 00:30:05,960
Speaker 1: liquidity to the space. They put out a press release

635
00:30:05,960 --> 00:30:07,640
Speaker 1: talking about how they ad buy Celsious. I think it

636
00:30:07,680 --> 00:30:10,320
Speaker 1: was just like a press release. UM. It wasn't like

637
00:30:10,360 --> 00:30:14,240
Speaker 1: an actual you know, l o I or anything like that. Um,

638
00:30:14,280 --> 00:30:16,440
Speaker 1: so it looks like they're trying to make some noise,

639
00:30:16,520 --> 00:30:18,760
Speaker 1: kind of trying to prove that maybe they're above all that.

640
00:30:18,880 --> 00:30:21,920
Speaker 1: But yeah, I would probably pretty skeptical of that as well, yeah,

641
00:30:21,960 --> 00:30:25,080
Speaker 1: my impression is that City is quite desperate to be

642
00:30:25,160 --> 00:30:27,040
Speaker 1: in the space all of a sudden. I'm not sure

643
00:30:27,080 --> 00:30:29,560
Speaker 1: where that's coming from at the executive level within City,

644
00:30:29,560 --> 00:30:32,600
Speaker 1: but somebody gave a directive that they need more exposure,

645
00:30:33,040 --> 00:30:35,240
Speaker 1: and so they seem to be thrashing around trying to

646
00:30:36,240 --> 00:30:39,080
Speaker 1: get into the custody space, trying to back certain companies.

647
00:30:39,120 --> 00:30:42,160
Speaker 1: Their their analysts keep making comments about how high bitcoining

648
00:30:42,200 --> 00:30:44,240
Speaker 1: can go, even though they knew nothing about bitcoin like

649
00:30:44,280 --> 00:30:46,920
Speaker 1: three weeks ago. Um So, I wouldn't read too much

650
00:30:46,920 --> 00:30:49,560
Speaker 1: into anything related to any of the banks because frankly,

651
00:30:49,640 --> 00:30:51,960
Speaker 1: none of the banks have proven the big US banks

652
00:30:51,960 --> 00:30:54,160
Speaker 1: at least have proven to have any real expertise in

653
00:30:54,160 --> 00:30:57,000
Speaker 1: the space. They'll come when the hedge funds are clamoring

654
00:30:57,440 --> 00:30:59,760
Speaker 1: for services, but the moment the price goes down, they

655
00:30:59,760 --> 00:31:02,720
Speaker 1: seem to disappear. Um so I wouldn't read into that.

656
00:31:02,760 --> 00:31:04,800
Speaker 1: I would focus more on whether next To itself is

657
00:31:04,840 --> 00:31:07,760
Speaker 1: actually solvent and what kind of lending they've done behind

658
00:31:07,840 --> 00:31:10,760
Speaker 1: the scenes, and if there's real risk there. Again, um,

659
00:31:10,760 --> 00:31:13,680
Speaker 1: my vote would be to remove your capital from all

660
00:31:13,680 --> 00:31:16,880
Speaker 1: of these centralized landing platforms if you haven't already. Yeah,

661
00:31:17,120 --> 00:31:19,400
Speaker 1: I would agree with we agree with that statement. And

662
00:31:19,440 --> 00:31:21,840
Speaker 1: what about the big news that broke this week with

663
00:31:22,000 --> 00:31:27,520
Speaker 1: UM the first UM short et F that Ginsler just

664
00:31:27,560 --> 00:31:29,800
Speaker 1: approved on bitcoin. What's your thoughts on that? Is that?

665
00:31:30,440 --> 00:31:33,400
Speaker 1: Is that bullish or is that barish? Or is it neutral?

666
00:31:33,760 --> 00:31:36,520
Speaker 1: I mean it could be it could be bullish, right, Uh,

667
00:31:36,800 --> 00:31:41,440
Speaker 1: just because usually by the time a short ETF comes out, right,

668
00:31:41,640 --> 00:31:44,080
Speaker 1: most of the move is is sort of over. Uh.

669
00:31:44,200 --> 00:31:46,600
Speaker 1: Michael Sonenshein, the CEO of Gray Scale, actually put out

670
00:31:46,680 --> 00:31:49,760
Speaker 1: a tweet store arguing that was actually bullish. But I

671
00:31:49,760 --> 00:31:52,640
Speaker 1: think the SEC regulation angle is actually the more interesting one,

672
00:31:52,680 --> 00:31:55,760
Speaker 1: and just that the SEC is allowing these futures based

673
00:31:56,480 --> 00:32:01,120
Speaker 1: what I call garbage products with ten percent fully loaded cost.

674
00:32:01,240 --> 00:32:03,480
Speaker 1: When you when you look at the cost of rolling

675
00:32:03,760 --> 00:32:07,640
Speaker 1: those contracts every month, UM, it's it's just kind of

676
00:32:07,720 --> 00:32:11,200
Speaker 1: ridiculous that they would allow those products to exist. But

677
00:32:11,240 --> 00:32:14,200
Speaker 1: they wouldn't allow the biggest bitcoin fund, the Great Skill

678
00:32:14,240 --> 00:32:17,120
Speaker 1: Bitcoin Trust, to just convert to an ETF and remove

679
00:32:17,200 --> 00:32:19,560
Speaker 1: the discount from n a V that the fund is

680
00:32:19,600 --> 00:32:21,280
Speaker 1: currently trading out. I mean, that would help so many

681
00:32:21,280 --> 00:32:25,400
Speaker 1: more people than giving the general public another vehicle to

682
00:32:25,640 --> 00:32:29,680
Speaker 1: speculate with and to trade. Yeah, you know, it's crazy,

683
00:32:29,760 --> 00:32:32,360
Speaker 1: it's absolutely I almost I'm starting to think the SEC

684
00:32:32,880 --> 00:32:36,000
Speaker 1: is trying to hurt the public through some of these actions,

685
00:32:36,000 --> 00:32:38,360
Speaker 1: because it actually makes no logical sense why you would

686
00:32:38,360 --> 00:32:41,720
Speaker 1: allow a futures based short product before you'd allow us

687
00:32:41,760 --> 00:32:45,320
Speaker 1: body t F. Well, I think you could look at

688
00:32:45,320 --> 00:32:47,840
Speaker 1: most of the SEC's actions and probably draw that conclusion.

689
00:32:48,080 --> 00:32:50,880
Speaker 1: Just look at the credit investor rule for example, right,

690
00:32:50,920 --> 00:32:53,200
Speaker 1: so they can't get into the early round deals, but

691
00:32:53,240 --> 00:32:55,360
Speaker 1: they can get dumped on by retail as soon as

692
00:32:55,400 --> 00:32:57,520
Speaker 1: it goes public. I mean it's uh, I think you

693
00:32:57,520 --> 00:32:59,400
Speaker 1: could probably draw that conclusion with most of them. And

694
00:32:59,440 --> 00:33:01,640
Speaker 1: I think if you look at um Gary Ginsler, head

695
00:33:01,640 --> 00:33:04,360
Speaker 1: of the SEC, I mean, he obviously knows bitcoin, he

696
00:33:04,440 --> 00:33:07,080
Speaker 1: was teaching at m I T he gets it. He's

697
00:33:07,120 --> 00:33:09,600
Speaker 1: you know, he's quoted Satoshi. He seems like he gets it.

698
00:33:09,880 --> 00:33:11,000
Speaker 1: So then you kind of have to look at that

699
00:33:11,040 --> 00:33:15,640
Speaker 1: and then look at his actions, and then I think, like, um,

700
00:33:16,000 --> 00:33:19,200
Speaker 1: with these synthetic you know, degenerate gambling, you know, naked

701
00:33:19,200 --> 00:33:21,440
Speaker 1: shorting for example, that they're bringing out, or even this

702
00:33:21,560 --> 00:33:24,600
Speaker 1: these long synthetics or whatever, it's like almost like it

703
00:33:24,680 --> 00:33:28,959
Speaker 1: hurts the cryptocurrency space more and even potentially hurts bitcoin,

704
00:33:29,000 --> 00:33:30,640
Speaker 1: So like, are they doing it maybe as the way

705
00:33:30,760 --> 00:33:33,320
Speaker 1: for the government to kind of attack bitcoin and crypto

706
00:33:33,880 --> 00:33:37,400
Speaker 1: potentially um or maybe he doesn't want to have a

707
00:33:37,400 --> 00:33:40,400
Speaker 1: physical so he can encourage people to buy the physical.

708
00:33:40,560 --> 00:33:42,600
Speaker 1: I don't know. It's a it's interesting either way, I

709
00:33:42,600 --> 00:33:47,560
Speaker 1: guess yeah. I mean, I actually think it's probably more ineptitude,

710
00:33:48,200 --> 00:33:51,840
Speaker 1: um than than conscious effort to destroy bitcoin, Like, I

711
00:33:51,880 --> 00:33:53,840
Speaker 1: honestly don't think the government is smart enough to do that.

712
00:33:55,000 --> 00:33:58,800
Speaker 1: What about for somebody like myself and probably yourself as well.

713
00:33:59,280 --> 00:34:00,880
Speaker 1: I'm not trying to put words in your mouth, but

714
00:34:01,160 --> 00:34:04,400
Speaker 1: you know, Michael Sailor type right, I'm long bitcoin. I'm

715
00:34:04,440 --> 00:34:06,920
Speaker 1: gonna hold bitcoin. I want my grandkids to own my bitcoin.

716
00:34:07,000 --> 00:34:09,040
Speaker 1: I'm never going to sell, so I'm not trying to

717
00:34:09,080 --> 00:34:10,799
Speaker 1: trade it. I'm not trying to sell the peaks and

718
00:34:10,800 --> 00:34:13,400
Speaker 1: re buy back at the dips, etcetera. You think having

719
00:34:13,480 --> 00:34:16,359
Speaker 1: a shorting et F could be beneficial in that type

720
00:34:16,360 --> 00:34:18,840
Speaker 1: of environment where I don't want to sell my bitcoin

721
00:34:19,160 --> 00:34:20,840
Speaker 1: m at the top, but I could take a little

722
00:34:20,920 --> 00:34:23,520
Speaker 1: leverage on the short to protect myself on the downside.

723
00:34:24,040 --> 00:34:27,840
Speaker 1: I think net of all the expenses and the potential

724
00:34:27,880 --> 00:34:30,600
Speaker 1: taxes on that. You'll find most people over a ten

725
00:34:30,680 --> 00:34:34,520
Speaker 1: year period come out behind. Any trading at all generally

726
00:34:34,600 --> 00:34:37,560
Speaker 1: is going to be a drag on long term returns,

727
00:34:37,719 --> 00:34:40,080
Speaker 1: especially for an asset like bitcoin that has the potential

728
00:34:40,120 --> 00:34:44,840
Speaker 1: to compound at a year across the decade. So my

729
00:34:44,880 --> 00:34:47,759
Speaker 1: advice is never going to change on that. No matter

730
00:34:47,800 --> 00:34:50,839
Speaker 1: how many new fangled products that Wall Street comes out

731
00:34:50,840 --> 00:34:52,960
Speaker 1: with and try to tempt people to trade more, tend

732
00:34:53,000 --> 00:34:55,560
Speaker 1: people to hedge more, or whatever, the vast majority of

733
00:34:55,560 --> 00:34:57,920
Speaker 1: people will not use those products properly no matter how

734
00:34:57,920 --> 00:35:00,719
Speaker 1: hard they try, and they'll end up poorer and worse

735
00:35:00,760 --> 00:35:04,080
Speaker 1: off by even using them at all. Yeah, So for

736
00:35:04,120 --> 00:35:06,760
Speaker 1: the listeners, what Mike's referring to is that I believe

737
00:35:06,840 --> 00:35:10,120
Speaker 1: on this short fund, they recalculate on a monthly basis

738
00:35:10,200 --> 00:35:12,480
Speaker 1: and then they put the fees about two percent per month,

739
00:35:12,680 --> 00:35:14,280
Speaker 1: So over the course of the year cost you between

740
00:35:14,280 --> 00:35:17,240
Speaker 1: ten and fifteen percent in fees, and so you're gonna

741
00:35:17,239 --> 00:35:19,480
Speaker 1: have to beat that just to break even on that.

742
00:35:19,719 --> 00:35:21,240
Speaker 1: And then on top of that, if you have profits,

743
00:35:21,280 --> 00:35:23,360
Speaker 1: you have to pay taxes on that as well. So

744
00:35:23,400 --> 00:35:25,359
Speaker 1: when you let out the fees and the taxes, like

745
00:35:25,400 --> 00:35:26,960
Speaker 1: it's pretty hard to get ahead. I guess is that

746
00:35:27,000 --> 00:35:29,000
Speaker 1: kind of we're referring to. Yeah, I'm saying the stated

747
00:35:29,040 --> 00:35:31,200
Speaker 1: expense ratios are always lower, right, They're not going to

748
00:35:31,280 --> 00:35:34,640
Speaker 1: tell you center fient. But the cost of rolling because

749
00:35:34,680 --> 00:35:38,840
Speaker 1: the futures contracts and the contango, right, that that happens

750
00:35:38,880 --> 00:35:42,359
Speaker 1: sometimes in these contracts as the prices change across those

751
00:35:42,360 --> 00:35:44,960
Speaker 1: months as you look out, and just the trading fees

752
00:35:44,960 --> 00:35:47,359
Speaker 1: that are internal to the fund, the market impact of

753
00:35:47,400 --> 00:35:50,760
Speaker 1: those trades, um, that's what creates the real cost versus

754
00:35:50,800 --> 00:35:54,759
Speaker 1: just holding spot bitcoin. Most people should just buy bitcoin, uh,

755
00:35:55,040 --> 00:35:57,399
Speaker 1: put it in cold storage, leave it alone, don't try

756
00:35:57,400 --> 00:35:59,399
Speaker 1: to lever it, don't try to earn yield on it.

757
00:35:59,600 --> 00:36:02,440
Speaker 1: Don't you any other products. Just hold bitcoin and leave

758
00:36:02,440 --> 00:36:04,640
Speaker 1: it alone for five or ten years. That's the only

759
00:36:04,680 --> 00:36:08,480
Speaker 1: way that I can sort of make sort of assurance

760
00:36:08,520 --> 00:36:10,560
Speaker 1: to somebody that I think they'll do pretty well. As

761
00:36:10,560 --> 00:36:15,520
Speaker 1: soon as they start bringing in options, leverage, uh ets

762
00:36:15,600 --> 00:36:18,000
Speaker 1: with futures, etcetera, there's a good chance they're gonna mess

763
00:36:18,000 --> 00:36:21,040
Speaker 1: something up. Yeah. Brings me back to a quote from

764
00:36:21,080 --> 00:36:23,399
Speaker 1: Warm Buffet's partner, Charlie Munger. He says that the big

765
00:36:23,440 --> 00:36:26,319
Speaker 1: money isn't made in the buying and the selling. The

766
00:36:26,400 --> 00:36:29,120
Speaker 1: big money is made in the waiting. So you wait

767
00:36:29,120 --> 00:36:30,799
Speaker 1: for the right opportunity, and then you wait for that

768
00:36:30,840 --> 00:36:34,000
Speaker 1: opportunity to come to fruition. And to what Mike is saying,

769
00:36:34,239 --> 00:36:36,839
Speaker 1: bitcoin is average, I mean it had been average annual

770
00:36:36,880 --> 00:36:39,439
Speaker 1: compounding growth rate. Even if that slows down to half

771
00:36:39,440 --> 00:36:42,080
Speaker 1: of that or even a quarter of that fifty times,

772
00:36:42,080 --> 00:36:44,520
Speaker 1: I mean, it's still still amazing. And so just wait,

773
00:36:44,920 --> 00:36:48,080
Speaker 1: just waited out. Um. That's that's been my approach as well,

774
00:36:48,200 --> 00:36:50,320
Speaker 1: and it seemed to work out pretty good. Sometimes it

775
00:36:50,320 --> 00:36:53,279
Speaker 1: doesn't look perfect, but like right now, but over the

776
00:36:53,280 --> 00:36:54,799
Speaker 1: long run of you zoom out, it's been pretty good

777
00:36:54,840 --> 00:36:57,719
Speaker 1: of buying. So it's worked out. Um. You listen to

778
00:36:57,719 --> 00:36:59,719
Speaker 1: the Mark Moss Show. We're talking about bitcoin. We're talking

779
00:36:59,719 --> 00:37:02,440
Speaker 1: about the decentralized revolution. I've been in the studio with

780
00:37:02,520 --> 00:37:04,280
Speaker 1: Mike Alfred. You can give him a follow on Twitter

781
00:37:04,360 --> 00:37:09,439
Speaker 1: at Mike Alfred talking about the the contagion that we've

782
00:37:09,440 --> 00:37:12,160
Speaker 1: seen in the scripto lending space. Word of the word

783
00:37:12,239 --> 00:37:14,719
Speaker 1: word to you from Mike is get your money out

784
00:37:14,760 --> 00:37:16,640
Speaker 1: of those platforms around there. That's what I got for

785
00:37:16,680 --> 00:37:18,560
Speaker 1: today Thanks for listening to The mark Ma Show. Until

786
00:37:18,600 --> 00:37:18,960
Speaker 1: next time,