1 00:00:04,440 --> 00:00:12,320 Speaker 1: Welcome to tech Stuff, a production from iHeartRadio. Hey there, 2 00:00:12,360 --> 00:00:15,880 Speaker 1: and welcome to tech Stuff. I'm your host Jonathan Strickland. 3 00:00:15,880 --> 00:00:18,880 Speaker 1: I'm an executive producer with iHeart Podcasts. And how the 4 00:00:18,920 --> 00:00:21,920 Speaker 1: tech are you? Now? As we're about to head into 5 00:00:22,239 --> 00:00:26,920 Speaker 1: Thanksgiving here in America, the huge tech news stories just 6 00:00:27,720 --> 00:00:30,400 Speaker 1: won't stop. So earlier this week I talked about what 7 00:00:30,480 --> 00:00:34,200 Speaker 1: happened at open ai and how the board of directors 8 00:00:34,440 --> 00:00:38,839 Speaker 1: fired CEO Sam Altman and how that had massive and 9 00:00:39,000 --> 00:00:44,960 Speaker 1: immediate consequences. There's already another update to that. After being fired, 10 00:00:45,320 --> 00:00:49,720 Speaker 1: Altman reportedly received an offer from Microsoft to become CEO 11 00:00:49,880 --> 00:00:54,920 Speaker 1: of some advanced AI division. But now it is reported 12 00:00:54,960 --> 00:00:58,560 Speaker 1: that he is in line to return as open AI's 13 00:00:58,600 --> 00:01:02,480 Speaker 1: CEO once again. So you know, if you listen to 14 00:01:02,520 --> 00:01:05,199 Speaker 1: the stories, you know that he was fired, the board 15 00:01:05,319 --> 00:01:08,760 Speaker 1: reversed its decision, begged him to come back. He demanded 16 00:01:09,000 --> 00:01:12,399 Speaker 1: that the members of the board stepped down, you know, 17 00:01:12,440 --> 00:01:14,399 Speaker 1: the ones who had voted him out, that they have 18 00:01:14,600 --> 00:01:16,759 Speaker 1: to step down, and they refused, and it went back 19 00:01:16,800 --> 00:01:19,440 Speaker 1: and forth. Well, now it looks like he is on 20 00:01:19,520 --> 00:01:23,000 Speaker 1: track to come back as CEO of open Ai, and 21 00:01:23,080 --> 00:01:25,080 Speaker 1: the board was really kind of forced into this because 22 00:01:25,120 --> 00:01:27,440 Speaker 1: there were a lot of staff members who were ready 23 00:01:27,480 --> 00:01:31,880 Speaker 1: to just walk out if the decision had not been reversed. 24 00:01:32,319 --> 00:01:35,440 Speaker 1: Greg Brockman, the former president of open Ai, who also 25 00:01:35,760 --> 00:01:39,520 Speaker 1: resigned in the wake of that event, is also set 26 00:01:39,560 --> 00:01:42,600 Speaker 1: to return to the company. All of the old board 27 00:01:43,040 --> 00:01:46,600 Speaker 1: of open Ai is now on the outseas, with the 28 00:01:46,600 --> 00:01:50,080 Speaker 1: exception of Adam DiAngelo. He's the sole holdover from the 29 00:01:50,160 --> 00:01:54,480 Speaker 1: board that fired Sam Altman, and he's supposed to be 30 00:01:54,520 --> 00:01:59,080 Speaker 1: there to kind of help with transition this new board 31 00:01:59,120 --> 00:02:01,120 Speaker 1: of directors, which is very small. I think it's like 32 00:02:01,360 --> 00:02:03,840 Speaker 1: three or four people. They're going to be in charge 33 00:02:03,880 --> 00:02:07,720 Speaker 1: of actually creating an expanded board of directors, and I'm 34 00:02:07,760 --> 00:02:10,000 Speaker 1: pretty sure that at least one of those seats will 35 00:02:10,040 --> 00:02:13,880 Speaker 1: be taken by somebody from Microsoft, because, as I mentioned 36 00:02:13,919 --> 00:02:17,680 Speaker 1: in the earlier stories, Microsoft has invested billions into open 37 00:02:17,720 --> 00:02:23,240 Speaker 1: Ai and was mightily miffed that the open Ai board 38 00:02:23,280 --> 00:02:26,960 Speaker 1: made this decision without first talking to its partner. I 39 00:02:27,000 --> 00:02:30,480 Speaker 1: also guess that Emmett Sheer, the former CEO of Twitch 40 00:02:30,639 --> 00:02:35,040 Speaker 1: who was serving as CEO of open Ai, is going 41 00:02:35,120 --> 00:02:38,000 Speaker 1: to count his tenure at the company in hours rather 42 00:02:38,080 --> 00:02:40,880 Speaker 1: than you know, like weeks. Or months or whatever. This 43 00:02:41,080 --> 00:02:45,079 Speaker 1: is a wild story, but that's not what we're here 44 00:02:45,120 --> 00:02:47,520 Speaker 1: to talk about today. We're going to talk about a 45 00:02:47,600 --> 00:02:50,919 Speaker 1: different and equally wild story. We're going to talk about 46 00:02:50,960 --> 00:02:53,960 Speaker 1: a different CEO, one who has played a really important 47 00:02:54,000 --> 00:02:59,160 Speaker 1: part in the crypto community and who yesterday, on November 48 00:02:59,200 --> 00:03:03,680 Speaker 1: twenty first, twenty twenty three, pled guilty to a host 49 00:03:03,760 --> 00:03:07,679 Speaker 1: of charges that include things like money laundering and sanctions 50 00:03:07,800 --> 00:03:10,920 Speaker 1: violations and that sort of stuff, among other things. So 51 00:03:10,960 --> 00:03:13,280 Speaker 1: today we're going to learn a bit about the crypto 52 00:03:13,600 --> 00:03:18,080 Speaker 1: exchange Binance, and it's soon to be former CEO Chong 53 00:03:18,200 --> 00:03:22,960 Speaker 1: Peng Xiao Akacz. In fact, I guess now he really 54 00:03:23,080 --> 00:03:27,320 Speaker 1: is the former CEO. I believe he's already formally stepped down. 55 00:03:27,760 --> 00:03:30,840 Speaker 1: All right, this time last year CZ was coming up 56 00:03:30,880 --> 00:03:34,800 Speaker 1: in the news because of another crypto bro Fond of 57 00:03:34,840 --> 00:03:41,840 Speaker 1: Initialisms SBF aka Sam Bankman freed, and that was when FTX, 58 00:03:42,240 --> 00:03:46,760 Speaker 1: the second largest cryptocurrency exchange in the world, was starting 59 00:03:46,840 --> 00:03:52,640 Speaker 1: to fall apart. Well. CZ's company, Binance was the largest 60 00:03:52,920 --> 00:03:56,360 Speaker 1: cryptocurrency exchange in the world still is, so it was 61 00:03:56,480 --> 00:04:00,560 Speaker 1: number one and FTX was number two. Or a short 62 00:04:00,560 --> 00:04:03,400 Speaker 1: time it looked like Finance was gonna swoop in and 63 00:04:03,560 --> 00:04:07,120 Speaker 1: acquire FTX in an effort to head off catastrophe, but 64 00:04:07,320 --> 00:04:11,800 Speaker 1: then CZ changed his mind, and well, now FTX is gone. 65 00:04:12,360 --> 00:04:16,359 Speaker 1: It's sister company, Alameda Research, is gone. SBF is a 66 00:04:16,360 --> 00:04:19,200 Speaker 1: waiting sentencing after he had been found guilty of multiple 67 00:04:19,200 --> 00:04:23,440 Speaker 1: white collar crimes, and now CZ has pled guilty to 68 00:04:23,839 --> 00:04:27,720 Speaker 1: white collar crimes. It is a wild roller coaster ride, 69 00:04:27,760 --> 00:04:29,760 Speaker 1: and we will touch on all of that a bit 70 00:04:29,839 --> 00:04:32,760 Speaker 1: more as this episode goes on, but first, let's back 71 00:04:32,839 --> 00:04:36,760 Speaker 1: up and just learn a little bit about Finance and 72 00:04:36,800 --> 00:04:42,280 Speaker 1: about CZ himself. His story, in many ways, really exemplifies 73 00:04:42,360 --> 00:04:47,760 Speaker 1: the mythology that perpetuates throughout the tech sphere that, you know, 74 00:04:47,800 --> 00:04:52,040 Speaker 1: a person can come from humble beginnings and then end 75 00:04:52,160 --> 00:04:54,280 Speaker 1: up being one of the richest people in the world. 76 00:04:54,800 --> 00:04:56,680 Speaker 1: You know, at one time, CZ was worth more than 77 00:04:56,720 --> 00:04:59,920 Speaker 1: twenty billion dollars. In order to do that, you might, 78 00:05:00,120 --> 00:05:04,160 Speaker 1: you know, along the way, have to ignore some illegal 79 00:05:04,240 --> 00:05:08,919 Speaker 1: stuff in order to maintain the Disney version of the 80 00:05:09,040 --> 00:05:12,279 Speaker 1: Rags to Richest story, because, as it turns out, a 81 00:05:12,279 --> 00:05:15,560 Speaker 1: lot of billionaires got their billionaire status by doing things 82 00:05:15,560 --> 00:05:22,039 Speaker 1: that you know aren't necessarily legal. So in nineteen seventy seven. 83 00:05:22,640 --> 00:05:27,120 Speaker 1: Cizi was born in the Jiangsu province of China. Both 84 00:05:27,160 --> 00:05:31,479 Speaker 1: his parents were teachers, but China in the nineteen seventies 85 00:05:31,560 --> 00:05:35,279 Speaker 1: and the nineteen eighties was a tumultuous place for people 86 00:05:35,279 --> 00:05:39,880 Speaker 1: who were dedicated to educating others. The Chinese Communist Party 87 00:05:40,080 --> 00:05:43,000 Speaker 1: wanted very much to have a direct hand in how 88 00:05:43,320 --> 00:05:48,640 Speaker 1: China's citizens thought, which meant educators were potentially enemies of 89 00:05:48,680 --> 00:05:51,680 Speaker 1: the state, because it turns out teaching folks how to 90 00:05:51,760 --> 00:05:56,920 Speaker 1: think critically tends to be bad for authoritarian regimes. It 91 00:05:56,960 --> 00:06:01,600 Speaker 1: doesn't work well with their motives oppa, So, according to 92 00:06:01,600 --> 00:06:05,600 Speaker 1: cz his father had been identified as a potentially dangerous 93 00:06:05,680 --> 00:06:09,280 Speaker 1: individual and his family was forced to move to a 94 00:06:09,360 --> 00:06:14,120 Speaker 1: more rural province. On June fourth, nineteen eighty nine, student 95 00:06:14,240 --> 00:06:19,120 Speaker 1: led protests in Tianamen Square in Beijing reached a tipping point. 96 00:06:19,279 --> 00:06:23,719 Speaker 1: After months of demonstrations, the Chinese government deployed troops against 97 00:06:23,760 --> 00:06:27,720 Speaker 1: the protesters and commanded the troops to tell the protesters 98 00:06:27,760 --> 00:06:31,560 Speaker 1: to vacate the square and use force if necessary. Violent 99 00:06:31,600 --> 00:06:35,840 Speaker 1: clashes followed, and a whole bunch of people died in 100 00:06:35,880 --> 00:06:38,360 Speaker 1: the process. To the point where it's often referred to 101 00:06:38,400 --> 00:06:41,679 Speaker 1: as the Tianaman Square massacre. Now, how many people actually 102 00:06:41,760 --> 00:06:45,080 Speaker 1: died is still a matter of conjecture. The Chinese government 103 00:06:45,440 --> 00:06:48,680 Speaker 1: isn't exactly forthcoming with the figures, and in fact has 104 00:06:48,760 --> 00:06:53,760 Speaker 1: tried many different approaches to either dismiss or downplay or 105 00:06:53,839 --> 00:06:57,920 Speaker 1: recontextualize the event. At one point, they even referenced it 106 00:06:58,000 --> 00:07:03,080 Speaker 1: as a vaccination against future political turmoil, which is about 107 00:07:03,120 --> 00:07:06,880 Speaker 1: as chilling a description as I can think of. So 108 00:07:07,080 --> 00:07:11,280 Speaker 1: this environment in China was obviously really dangerous for people 109 00:07:11,320 --> 00:07:15,840 Speaker 1: who were in the education sector. So Cez's family chose 110 00:07:15,880 --> 00:07:18,080 Speaker 1: that to leave China, and a couple of months after 111 00:07:18,160 --> 00:07:22,840 Speaker 1: the massacre, Cz and his mother immigrated to Canada and 112 00:07:23,040 --> 00:07:28,200 Speaker 1: he became a nationalized citizen of Canada. Sez said he 113 00:07:28,240 --> 00:07:30,720 Speaker 1: took several jobs as a teenager to help his mother 114 00:07:30,840 --> 00:07:35,280 Speaker 1: cover family expenses, including working at a McDonald's. So again, 115 00:07:35,360 --> 00:07:40,360 Speaker 1: this plays into sort of that mythology of the tech space, 116 00:07:40,400 --> 00:07:45,600 Speaker 1: where you have people from these pretty humble beginnings reach 117 00:07:45,800 --> 00:07:49,440 Speaker 1: incredible heights. He also dedicated himself to his schoolwork. He 118 00:07:49,560 --> 00:07:53,080 Speaker 1: proved to be adept at mathematics, and he decided to 119 00:07:53,280 --> 00:07:57,760 Speaker 1: enroll in McGill University in Montreal and focus on computer science. 120 00:07:58,320 --> 00:08:02,240 Speaker 1: After he graduated college, Cz took a gig first as 121 00:08:02,280 --> 00:08:05,960 Speaker 1: a subcontractor and he was developing software for the Tokyo 122 00:08:06,000 --> 00:08:09,400 Speaker 1: Stock Exchange. Then he took a job with Bloomberg trade 123 00:08:09,440 --> 00:08:13,560 Speaker 1: Book and was again developing software that was related to 124 00:08:14,040 --> 00:08:17,200 Speaker 1: making trades on stock markets. And in two thousand and five, 125 00:08:17,280 --> 00:08:19,760 Speaker 1: Cz made the decision to head back to China in 126 00:08:19,800 --> 00:08:23,920 Speaker 1: an effort to create tech startups in China itself. So 127 00:08:24,040 --> 00:08:28,119 Speaker 1: for years, China has represented a large and for quite 128 00:08:28,120 --> 00:08:33,400 Speaker 1: some time, largely untapped market. You've got a country that 129 00:08:33,480 --> 00:08:35,680 Speaker 1: has more people than any other country in the world. 130 00:08:35,760 --> 00:08:39,720 Speaker 1: Right there's like one point four billion people in China, 131 00:08:40,400 --> 00:08:44,880 Speaker 1: and so that's an enormous potential market to tap into 132 00:08:45,040 --> 00:08:49,199 Speaker 1: if you can. And it's really tricky, not just because 133 00:08:49,280 --> 00:08:53,680 Speaker 1: the Chinese government is very much an authoritarian presence, but 134 00:08:53,800 --> 00:08:57,320 Speaker 1: also there are international sanctions that you have to deal 135 00:08:57,360 --> 00:09:00,040 Speaker 1: with where other countries have put sanctions upon China, and 136 00:09:00,640 --> 00:09:02,760 Speaker 1: it made it a lot harder to do certain types 137 00:09:02,760 --> 00:09:06,160 Speaker 1: of business. Meanwhile, China went through a phase in which 138 00:09:06,200 --> 00:09:10,760 Speaker 1: the government began to encourage tech companies in particular to 139 00:09:10,800 --> 00:09:15,720 Speaker 1: start business in China, both natively, like encouraging native Chinese 140 00:09:15,760 --> 00:09:21,160 Speaker 1: businesses and to encourage international companies to create a position 141 00:09:21,320 --> 00:09:24,240 Speaker 1: or an office in China, as China was looking to 142 00:09:24,840 --> 00:09:28,000 Speaker 1: not just catch up, but to surpass other countries in 143 00:09:28,080 --> 00:09:32,000 Speaker 1: the tech space. So Cz worked in China for several 144 00:09:32,120 --> 00:09:34,880 Speaker 1: years trying to hit it big with various startups, and 145 00:09:34,920 --> 00:09:38,080 Speaker 1: that's how things went. He built businesses that bridged the 146 00:09:38,120 --> 00:09:41,000 Speaker 1: gap between tech and finance. He continued to focus on 147 00:09:41,080 --> 00:09:44,440 Speaker 1: things like high frequency trading platforms, that sort of stuff. 148 00:09:44,679 --> 00:09:47,480 Speaker 1: And in two thousand and eight, you had a famous 149 00:09:47,520 --> 00:09:51,000 Speaker 1: white paper publish which was called Bitcoin, a peer to 150 00:09:51,080 --> 00:09:55,240 Speaker 1: peer electronic cash system. This introduced the world to concepts 151 00:09:55,240 --> 00:10:00,280 Speaker 1: like blockchain and cryptocurrency. And Cz said he first heard 152 00:10:00,280 --> 00:10:02,040 Speaker 1: about all of this when he was playing in a 153 00:10:02,160 --> 00:10:05,080 Speaker 1: poker game in Shanghai and there was another guy at 154 00:10:05,120 --> 00:10:07,960 Speaker 1: the table, a guy named Bobby Lee, who at that 155 00:10:08,080 --> 00:10:12,480 Speaker 1: time was the CEO of a cryptocurrency exchange company that 156 00:10:12,600 --> 00:10:17,079 Speaker 1: was called BTC China. So Bobby Lee turns to Cz 157 00:10:17,440 --> 00:10:19,960 Speaker 1: in the middle of this poker game and apparently says 158 00:10:20,360 --> 00:10:23,600 Speaker 1: that Cz should really invest like ten percent of his 159 00:10:23,720 --> 00:10:26,679 Speaker 1: wealth into bitcoin because it was going to be the 160 00:10:26,720 --> 00:10:30,000 Speaker 1: next big thing. CZ said that instead of doing the 161 00:10:30,080 --> 00:10:32,640 Speaker 1: ten percent deal. He's like, well, if ten percent is good, 162 00:10:32,920 --> 00:10:36,000 Speaker 1: all of it should be better. So reportedly he then 163 00:10:36,559 --> 00:10:40,640 Speaker 1: sold his apartment and then invested everything he had in bitcoin. 164 00:10:41,000 --> 00:10:43,120 Speaker 1: But at first things did not go so well. The 165 00:10:43,280 --> 00:10:46,320 Speaker 1: value of bitcoin took a hit. Cz saw his personal 166 00:10:46,360 --> 00:10:49,360 Speaker 1: wealth diminish as a result. I want to say that 167 00:10:49,360 --> 00:10:52,640 Speaker 1: that bitcoin's value dropped to just a third of what 168 00:10:52,760 --> 00:10:55,880 Speaker 1: it had been when he made his initial investment, and 169 00:10:56,440 --> 00:11:00,839 Speaker 1: that looked bad. But Cz practiced the old crypto mantra 170 00:11:01,040 --> 00:11:06,360 Speaker 1: of hoddle hodl hold on for dear life and eventually 171 00:11:06,440 --> 00:11:10,200 Speaker 1: saw bitcoin rebound. He also thought that the entire crypto 172 00:11:10,240 --> 00:11:14,720 Speaker 1: community would benefit if it were easier for normal folks 173 00:11:14,800 --> 00:11:18,320 Speaker 1: to get into cryptocurrency, because even in twenty thirteen, which 174 00:11:18,360 --> 00:11:22,080 Speaker 1: is already half a decade after the initial concept of 175 00:11:22,120 --> 00:11:25,679 Speaker 1: bitcoin and blockchain had been unveiled, the folks who were 176 00:11:25,800 --> 00:11:30,880 Speaker 1: into crypto mostly consisted of wealthy folks who were tech nerds, 177 00:11:31,120 --> 00:11:34,120 Speaker 1: or maybe people who had aspirations of being wealthy but 178 00:11:34,240 --> 00:11:37,760 Speaker 1: already were a tech nerd. But outside of that group, 179 00:11:38,080 --> 00:11:42,880 Speaker 1: cryptocurrency was still largely not really understood or known. So 180 00:11:43,559 --> 00:11:46,440 Speaker 1: Cz thought it might make sense to build a more 181 00:11:46,480 --> 00:11:51,000 Speaker 1: accessible platform to allow investors to get into cryptocurrency, and 182 00:11:51,040 --> 00:11:54,400 Speaker 1: that this in turn would benefit the entire crypto community, 183 00:11:54,760 --> 00:11:58,640 Speaker 1: like it becomes a rising tide situation, you have more 184 00:11:58,679 --> 00:12:03,920 Speaker 1: people getting into this and then actually potentially making cryptocurrency 185 00:12:04,040 --> 00:12:06,040 Speaker 1: live up to what it was supposed to be, which 186 00:12:06,120 --> 00:12:09,760 Speaker 1: was a digital means of exchange that would offer up 187 00:12:09,880 --> 00:12:12,800 Speaker 1: opportunities that you just could not realize if you were 188 00:12:13,040 --> 00:12:16,240 Speaker 1: dependent upon stuff like fiat currency. But nor for that 189 00:12:16,280 --> 00:12:17,960 Speaker 1: to work, you got to get people to adopt it. 190 00:12:18,240 --> 00:12:22,199 Speaker 1: If it's just this one small, insular group using the technology, 191 00:12:22,720 --> 00:12:25,480 Speaker 1: it doesn't really go anywhere. So he started to build 192 00:12:25,520 --> 00:12:27,640 Speaker 1: up resources that he would need to launch his own 193 00:12:27,640 --> 00:12:31,920 Speaker 1: cryptocurrency exchange, which he would call Binance. He named it 194 00:12:32,000 --> 00:12:36,079 Speaker 1: after a portmanteau. Essentially he was combining the words binary 195 00:12:36,640 --> 00:12:40,959 Speaker 1: and finance, and he would essentially launch Binance out of 196 00:12:41,080 --> 00:12:45,480 Speaker 1: China in July twenty seventeen. So I guess we need 197 00:12:45,520 --> 00:12:50,560 Speaker 1: to actually talk about what a cryptocurrency exchange is. Essentially, 198 00:12:50,640 --> 00:12:52,840 Speaker 1: it does what it says on the ten. So these 199 00:12:52,880 --> 00:12:56,120 Speaker 1: are businesses that facilitate the exchange of money from one 200 00:12:56,200 --> 00:13:01,000 Speaker 1: form of currency into another. I'll explain more about how 201 00:13:01,040 --> 00:13:04,720 Speaker 1: this happens. But first we need to take a quick 202 00:13:04,760 --> 00:13:17,480 Speaker 1: break to thank our sponsors. Okay, so how does a 203 00:13:17,520 --> 00:13:22,440 Speaker 1: cryptocurrency exchange work? Well, in some ways, it's similar to 204 00:13:22,920 --> 00:13:27,720 Speaker 1: how an establishment, like a currency exchange in a country works, 205 00:13:27,800 --> 00:13:32,960 Speaker 1: except those are offshoots of like nationalized financial systems. But 206 00:13:33,040 --> 00:13:34,520 Speaker 1: you know, you would walk up to one of these 207 00:13:34,559 --> 00:13:40,000 Speaker 1: places and you would exchange your home currency for whatever 208 00:13:40,040 --> 00:13:42,040 Speaker 1: the native currency was. So if I were going to 209 00:13:43,280 --> 00:13:48,000 Speaker 1: the UK, I would be exchanging US dollars for British 210 00:13:48,080 --> 00:13:51,800 Speaker 1: pounds sterling. But in the process, I would also be 211 00:13:51,800 --> 00:13:57,000 Speaker 1: paying a small fee to the institution itself on top 212 00:13:57,080 --> 00:13:59,800 Speaker 1: of this, so I'm not getting a one to one 213 00:14:00,120 --> 00:14:03,800 Speaker 1: value exchange here. I'm losing some because I'm paying the 214 00:14:03,840 --> 00:14:08,120 Speaker 1: institution for the process. Cryptocurrency exchanges are similar, except what 215 00:14:08,200 --> 00:14:11,400 Speaker 1: they're really doing is they're matching up buyers and sellers. 216 00:14:11,920 --> 00:14:15,200 Speaker 1: So let's say that you want to get into bitcoin 217 00:14:15,559 --> 00:14:17,280 Speaker 1: and you're doing it for the first time. You would 218 00:14:17,440 --> 00:14:20,280 Speaker 1: use a cryptocurrency exchange. You would open up an account there, 219 00:14:20,800 --> 00:14:24,040 Speaker 1: create a digital wallet, transfer some of your money into 220 00:14:24,080 --> 00:14:27,120 Speaker 1: this digital wallet. Then you would use the exchange to 221 00:14:27,400 --> 00:14:32,920 Speaker 1: purchase bitcoin from somebody who already holds some and it 222 00:14:32,960 --> 00:14:35,720 Speaker 1: would be at an agreed upon price. Typically the exchange 223 00:14:35,720 --> 00:14:37,440 Speaker 1: handles all of this for you, so you don't have 224 00:14:37,480 --> 00:14:40,560 Speaker 1: to like go through negotiations or anything, and then you 225 00:14:40,880 --> 00:14:44,600 Speaker 1: purchase your bitcoin by quote unquote exchanging your US dollars 226 00:14:44,920 --> 00:14:49,040 Speaker 1: for the bitcoin, and the crypto exchange takes a cut 227 00:14:49,160 --> 00:14:51,880 Speaker 1: of that transaction. There's a transaction fee that goes to 228 00:14:51,960 --> 00:14:56,120 Speaker 1: the exchange itself. Now, these exchanges can and often do, 229 00:14:56,840 --> 00:15:02,160 Speaker 1: have their own cryptocurrency or token associated with the exchange. 230 00:15:02,280 --> 00:15:06,720 Speaker 1: For example, the now defunct ft X exchange had its 231 00:15:06,760 --> 00:15:12,440 Speaker 1: token called FTT. Binance has a unit that is shortened 232 00:15:12,560 --> 00:15:16,080 Speaker 1: down to B and B, but it is called the 233 00:15:16,120 --> 00:15:20,440 Speaker 1: binance coin. There are a few reasons that cryptocurrency exchanges 234 00:15:20,560 --> 00:15:24,560 Speaker 1: could mint their own crypto coins their own tokens. One 235 00:15:24,600 --> 00:15:27,760 Speaker 1: big one is just to raise money. You attract investors 236 00:15:27,800 --> 00:15:30,760 Speaker 1: to your platform and you tell the investors, in return 237 00:15:30,800 --> 00:15:34,360 Speaker 1: for your investment, you will get x number of native tokens, 238 00:15:34,760 --> 00:15:37,640 Speaker 1: and those tokens will be useful in different ways. So 239 00:15:37,720 --> 00:15:40,560 Speaker 1: one of those ways is that can reward those investors, 240 00:15:40,720 --> 00:15:45,200 Speaker 1: obviously just to give them a return on their initial investment. 241 00:15:45,840 --> 00:15:47,720 Speaker 1: But this is somewhat tricky, right, because if you're an 242 00:15:47,800 --> 00:15:52,000 Speaker 1: early backer of a crypto exchange like Binance and you 243 00:15:52,400 --> 00:15:56,520 Speaker 1: get this huge number of binance coins in return for 244 00:15:56,560 --> 00:15:59,760 Speaker 1: your investment, really all you have is a whole bunch 245 00:15:59,760 --> 00:16:04,760 Speaker 1: of right. It's not magically worth anything. I mean, it's 246 00:16:04,800 --> 00:16:09,720 Speaker 1: worth whatever the initial coin offering or ICO says it's worth, 247 00:16:10,040 --> 00:16:13,240 Speaker 1: but it's not pegged to that value. The value can 248 00:16:13,280 --> 00:16:16,680 Speaker 1: actually drop below that ICO. So let's say that bidance 249 00:16:16,760 --> 00:16:19,800 Speaker 1: coin launches with a value of one US dollar per 250 00:16:19,840 --> 00:16:24,160 Speaker 1: binance coin. There's nothing that magically ties those values together 251 00:16:24,720 --> 00:16:27,360 Speaker 1: on their own, So it could be that the binance 252 00:16:27,360 --> 00:16:31,400 Speaker 1: coin falls to seventy cents instead of a dollar. That 253 00:16:31,440 --> 00:16:33,840 Speaker 1: could happen, or it could go up. It could be 254 00:16:33,920 --> 00:16:37,680 Speaker 1: that it suddenly is worth five hundred dollars. So at first, 255 00:16:37,880 --> 00:16:39,720 Speaker 1: it feels like you're being handed a big old pile 256 00:16:39,760 --> 00:16:42,640 Speaker 1: of monopoly money, right, because the bills say they're worth 257 00:16:42,680 --> 00:16:46,000 Speaker 1: certain amounts, But you can't actually spend monopoly money anywhere 258 00:16:46,520 --> 00:16:49,160 Speaker 1: other than in a game of monopoly. But as people 259 00:16:49,240 --> 00:16:51,760 Speaker 1: join the exchange and they put some money into the 260 00:16:51,800 --> 00:16:56,360 Speaker 1: exchange's own currency, either to facilitate trades for other currencies 261 00:16:56,640 --> 00:16:59,520 Speaker 1: or just as an investment, the crypto coin starts to 262 00:16:59,560 --> 00:17:03,520 Speaker 1: take on a value that's determined by the market. So 263 00:17:04,280 --> 00:17:06,680 Speaker 1: let's say that you are an early investor in finance. 264 00:17:07,320 --> 00:17:11,360 Speaker 1: As a result, Binance gives you like a million Binance coins, 265 00:17:11,920 --> 00:17:15,320 Speaker 1: and then after a while your Binance coins are worth 266 00:17:15,560 --> 00:17:18,200 Speaker 1: two hundred bucks apiece. You've now got two hundred million 267 00:17:18,320 --> 00:17:21,760 Speaker 1: dollars worth of Binance coins. That's kind of like how 268 00:17:21,800 --> 00:17:25,680 Speaker 1: these cryptocurrency exchanges get off the ground is just through 269 00:17:25,720 --> 00:17:29,399 Speaker 1: this group hallucination that the token is going to be 270 00:17:29,440 --> 00:17:32,560 Speaker 1: worth something, and maybe it will and maybe it won't. 271 00:17:32,800 --> 00:17:35,760 Speaker 1: It's a gamble. Now. On top of all that, often 272 00:17:35,800 --> 00:17:39,400 Speaker 1: in exchange will also extend certain benefits to people who 273 00:17:39,680 --> 00:17:44,280 Speaker 1: are holding and using the native tokens for that exchange. So, 274 00:17:44,359 --> 00:17:47,840 Speaker 1: for example, if you're using binance coins on Binance, you 275 00:17:47,880 --> 00:17:51,680 Speaker 1: might get a discount on those transaction fees, so you'll 276 00:17:51,680 --> 00:17:53,760 Speaker 1: still have to pay a transaction fee, but it won't 277 00:17:53,760 --> 00:17:56,399 Speaker 1: be as much, so you'll be able to keep more 278 00:17:56,480 --> 00:18:01,240 Speaker 1: of the value associated with that currency change. So in 279 00:18:01,280 --> 00:18:04,600 Speaker 1: a way, it almost becomes something like a loyalty program. 280 00:18:04,720 --> 00:18:07,840 Speaker 1: You can maximize your profits by investing in and trading 281 00:18:07,920 --> 00:18:11,240 Speaker 1: with the native tokens of the exchange. All right, So 282 00:18:11,320 --> 00:18:15,600 Speaker 1: back to binances in particular. So Caz holds this initial 283 00:18:15,640 --> 00:18:19,000 Speaker 1: coin offering, he attracts investors to pour money into supporting 284 00:18:19,040 --> 00:18:24,120 Speaker 1: finance by essentially buying up these tokens, and he launches 285 00:18:24,160 --> 00:18:28,399 Speaker 1: it in the summer of twenty seventeen. However, that was 286 00:18:28,480 --> 00:18:31,119 Speaker 1: around the same time that the Chinese government was starting 287 00:18:31,160 --> 00:18:35,560 Speaker 1: to grow really leery of cryptocurrency. Now you could argue 288 00:18:36,119 --> 00:18:40,440 Speaker 1: this was China being stereotypically suspicious of any entity that 289 00:18:40,520 --> 00:18:43,520 Speaker 1: the government did not have direct control over, and so 290 00:18:44,119 --> 00:18:46,600 Speaker 1: they treated it like it was a potential threat to 291 00:18:46,640 --> 00:18:50,800 Speaker 1: their authority. If the Chinese government can't control it, then 292 00:18:51,040 --> 00:18:53,560 Speaker 1: there's always the possibility it could grow to a point 293 00:18:53,640 --> 00:18:57,200 Speaker 1: that means it could defy the Chinese government. Now, you 294 00:18:57,240 --> 00:19:00,000 Speaker 1: could also say that the Chinese government saw the potent 295 00:19:00,480 --> 00:19:03,879 Speaker 1: for cryptocurrency to be the funding mechanisms for all sorts 296 00:19:03,920 --> 00:19:08,160 Speaker 1: of illegal activities, and that could include things like money laundering, 297 00:19:08,640 --> 00:19:13,840 Speaker 1: funding terrorist organizations, all this kind of stuff, And there's 298 00:19:13,840 --> 00:19:16,080 Speaker 1: a legitimate argument for that. In fact, that's part of 299 00:19:16,119 --> 00:19:20,679 Speaker 1: what the Binance has pled guilty to have done. But 300 00:19:20,720 --> 00:19:23,080 Speaker 1: however you want to frame it, China began to pass 301 00:19:23,160 --> 00:19:27,080 Speaker 1: more and more restrictive laws that essentially were muscling crypto 302 00:19:27,119 --> 00:19:29,879 Speaker 1: companies out of the country. It was becoming harder and 303 00:19:29,920 --> 00:19:33,800 Speaker 1: harder for them to do business in China, particularly with 304 00:19:34,040 --> 00:19:37,280 Speaker 1: the level of freedom that they needed to operate in 305 00:19:37,480 --> 00:19:40,880 Speaker 1: if they wanted to grow. So Cz chose to have 306 00:19:40,920 --> 00:19:45,399 Speaker 1: a change of venue and he relocated the headquarters for Binance, 307 00:19:46,000 --> 00:19:49,639 Speaker 1: and what would follow was a kind of global game 308 00:19:49,720 --> 00:19:54,399 Speaker 1: of hopscotch. Cz would pull up roots and relocate Binance's 309 00:19:54,480 --> 00:19:57,439 Speaker 1: headquarters to a different country. Then he would do it 310 00:19:57,480 --> 00:20:00,280 Speaker 1: all over again once that new country became and to 311 00:20:00,320 --> 00:20:04,200 Speaker 1: pass more regulations around cryptocurrency. So he went from China 312 00:20:04,320 --> 00:20:07,679 Speaker 1: to Japan, then he went from Japan to Malta. Then 313 00:20:07,720 --> 00:20:11,080 Speaker 1: he went from Malta to the Cayman Islands. You'll often 314 00:20:11,119 --> 00:20:15,399 Speaker 1: hear that Binance's headquarters are quote unquote offshore here in 315 00:20:15,440 --> 00:20:19,080 Speaker 1: the United States, because there is a US branch of Binance, 316 00:20:19,520 --> 00:20:23,640 Speaker 1: but the actual main company of Binance is always referenced 317 00:20:23,640 --> 00:20:26,880 Speaker 1: as being offshore, and that's partly because the company has 318 00:20:26,920 --> 00:20:29,639 Speaker 1: been rather fleet footed when it comes to making tracks 319 00:20:29,640 --> 00:20:32,720 Speaker 1: when regulations start to pop up. Well within a year, 320 00:20:33,280 --> 00:20:37,160 Speaker 1: Binance became the largest cryptocurrency exchange as far as trading 321 00:20:37,240 --> 00:20:41,040 Speaker 1: volume is concerned. So twenty eighteen, it already had made 322 00:20:41,040 --> 00:20:44,919 Speaker 1: a name for itself. In twenty nineteen, Binance launched a 323 00:20:45,040 --> 00:20:50,440 Speaker 1: stable coin backed by the US dollar called Binance USD. Originally, 324 00:20:50,480 --> 00:20:54,600 Speaker 1: the Binance coin was trading on the Ethereum blockchain, but 325 00:20:54,680 --> 00:20:59,720 Speaker 1: in twenty nineteen, Binance migrated all of its tokens onto 326 00:20:59,760 --> 00:21:04,000 Speaker 1: its own blockchain, called the Binance Chain. That year also 327 00:21:04,400 --> 00:21:08,160 Speaker 1: saw a big problem. Binance was the target of hackers, 328 00:21:08,680 --> 00:21:12,080 Speaker 1: so some hacker or hackers were able to siphon a 329 00:21:12,119 --> 00:21:17,000 Speaker 1: way around seven thousand bitcoin from the exchange as a whole. Now, 330 00:21:17,040 --> 00:21:20,600 Speaker 1: in twenty nineteen, that amount of bitcoin had a value 331 00:21:20,640 --> 00:21:24,040 Speaker 1: of somewhere in the neighborhood of forty million US dollars. 332 00:21:24,040 --> 00:21:29,280 Speaker 1: That's a pretty big bank heist. Binance ultimately covered all 333 00:21:29,359 --> 00:21:33,160 Speaker 1: the losses. The company had already established a fund specifically 334 00:21:33,200 --> 00:21:37,240 Speaker 1: for those kinds of emergencies. Cz had that foresight. He 335 00:21:37,359 --> 00:21:40,080 Speaker 1: knew that there needed to be a safety net there 336 00:21:40,240 --> 00:21:45,040 Speaker 1: because cryptocurrency is inherently risky for various reasons. This was 337 00:21:45,080 --> 00:21:48,600 Speaker 1: a reminder, in fact, that cryptocurrency is not inherently safer 338 00:21:48,640 --> 00:21:52,000 Speaker 1: than other forms of currency. It's different, but it's not 339 00:21:52,040 --> 00:21:55,359 Speaker 1: necessarily better, at least not when it comes to things 340 00:21:55,400 --> 00:21:59,959 Speaker 1: like risk. Then Binance launched its own smart chain or 341 00:22:00,080 --> 00:22:03,800 Speaker 1: smart blockchain if you prefer so. The initial Binance chain 342 00:22:04,400 --> 00:22:07,439 Speaker 1: was a pretty straightforward and simple blockchain, so it allowed 343 00:22:07,440 --> 00:22:12,920 Speaker 1: for stuff like transaction validations and overall governance of the blockchain. 344 00:22:13,200 --> 00:22:17,240 Speaker 1: But the smart chain that Binance launched carried the capabilities 345 00:22:17,240 --> 00:22:21,600 Speaker 1: of supporting smart contracts. Now, smart contracts are a technology 346 00:22:21,600 --> 00:22:24,600 Speaker 1: that allows for all sorts of different implementations on the 347 00:22:24,600 --> 00:22:28,240 Speaker 1: blockchain that have really yet to be realized in a 348 00:22:28,280 --> 00:22:32,280 Speaker 1: way that has been seen as practical, but it allows 349 00:22:32,280 --> 00:22:35,320 Speaker 1: for stuff like NFTs. NFTs are built on top of 350 00:22:35,400 --> 00:22:38,760 Speaker 1: smart contracts, and they can only exist on blockchains that 351 00:22:38,880 --> 00:22:42,160 Speaker 1: have that support for them. So Binance launches its own 352 00:22:42,320 --> 00:22:47,280 Speaker 1: smart blockchain technology. This also allowed Binance to provide an 353 00:22:47,280 --> 00:22:52,760 Speaker 1: alternative to Ethereum, which was really the premiere smart blockchain solution. Like, 354 00:22:53,359 --> 00:22:57,000 Speaker 1: when you say smart blockchain, you don't necessarily just mean Ethereum, 355 00:22:57,480 --> 00:23:01,080 Speaker 1: but practically that's what a lot of people did mean 356 00:23:01,200 --> 00:23:04,080 Speaker 1: when they talked about smart blockchains. They were talking specifically 357 00:23:04,119 --> 00:23:07,960 Speaker 1: about the Ethereum blockchain. Because it supported those kinds of transactions. 358 00:23:08,480 --> 00:23:11,199 Speaker 1: It also complicates matters when it comes to things like 359 00:23:11,280 --> 00:23:15,040 Speaker 1: discussing NFTs in a way that is genuine and meaningful 360 00:23:15,200 --> 00:23:18,600 Speaker 1: and accurate, because one of the arguments about NFTs is 361 00:23:18,640 --> 00:23:22,160 Speaker 1: that you can move them to other blockchains and they 362 00:23:22,160 --> 00:23:26,919 Speaker 1: will remain relevant. And that's only true if the blockchain 363 00:23:26,960 --> 00:23:29,800 Speaker 1: supports smart contracts in the first place, and even then 364 00:23:29,840 --> 00:23:33,679 Speaker 1: it gets tricky to migrate stuff, but that's for another 365 00:23:33,840 --> 00:23:38,840 Speaker 1: podcast entirely. Binance also offered lower transaction fees and faster 366 00:23:39,000 --> 00:23:42,679 Speaker 1: transaction speeds than you could find on ethereum, so you 367 00:23:42,720 --> 00:23:45,840 Speaker 1: could say that Binance was trying to drink Ethereum's milkshake 368 00:23:46,200 --> 00:23:48,840 Speaker 1: in some ways. Now this leads up to a point 369 00:23:48,840 --> 00:23:51,600 Speaker 1: where the US government begins to pay a bit more 370 00:23:51,640 --> 00:23:56,199 Speaker 1: attention to cryptocurrency in general and Binance in particular. For 371 00:23:56,280 --> 00:23:58,679 Speaker 1: a few years, the crypto world was operating kind of 372 00:23:58,680 --> 00:24:01,520 Speaker 1: like the wild West. There were very few laws and 373 00:24:01,600 --> 00:24:04,040 Speaker 1: regulations that could get in the way, and there were 374 00:24:04,080 --> 00:24:07,680 Speaker 1: lots of opportunities to make money and to grow, and 375 00:24:08,280 --> 00:24:11,639 Speaker 1: even more opportunities if you weren't terribly picky about, you know, 376 00:24:12,240 --> 00:24:15,280 Speaker 1: operating in a legal way and that kind of stuff. 377 00:24:15,280 --> 00:24:17,560 Speaker 1: If you weren't if you didn't mind getting your hands dirty, 378 00:24:17,600 --> 00:24:21,199 Speaker 1: you could grow real fast in the crypto world. But 379 00:24:21,280 --> 00:24:26,880 Speaker 1: in twenty twenty, Forbes published an article that essentially implicated 380 00:24:26,960 --> 00:24:31,560 Speaker 1: cz As building a business that was specifically structured to 381 00:24:31,720 --> 00:24:37,399 Speaker 1: deceive US regulators while still profiting from US based investors. Essentially, 382 00:24:37,440 --> 00:24:42,320 Speaker 1: they were saying cz was designing Binance to confound US 383 00:24:42,440 --> 00:24:48,400 Speaker 1: regulators and keep the business from being restricted by regulations 384 00:24:48,400 --> 00:24:53,160 Speaker 1: and laws. The US government moved to investigate Binance, specifically 385 00:24:53,240 --> 00:24:56,160 Speaker 1: looking into the possibility that finance was guilty of things 386 00:24:56,240 --> 00:25:00,159 Speaker 1: like tax avoidance as well as money laundering. A lot 387 00:25:00,160 --> 00:25:04,760 Speaker 1: of this came down to the differences between Binance dot Us, 388 00:25:05,720 --> 00:25:10,639 Speaker 1: the United States face of Binance, which was supposed to 389 00:25:10,680 --> 00:25:14,720 Speaker 1: operate within the laws and regulations of the United States, 390 00:25:15,359 --> 00:25:20,199 Speaker 1: and Binance overall right like so, Binance Overall operated with 391 00:25:20,960 --> 00:25:25,440 Speaker 1: far fewer restrictions, but investors in the United States were 392 00:25:25,440 --> 00:25:29,320 Speaker 1: supposed to be interfacing with Binance dot Us, which was 393 00:25:29,359 --> 00:25:33,879 Speaker 1: supposed to be the more tame and legal version of Binance. 394 00:25:34,280 --> 00:25:40,439 Speaker 1: The investigation uncovered information that implicated Binance as allowing certain 395 00:25:40,560 --> 00:25:45,919 Speaker 1: US investors to engage with the more untame, wild and 396 00:25:46,040 --> 00:25:49,720 Speaker 1: wooly version of Binance, in other words, to operate without 397 00:25:50,160 --> 00:25:53,560 Speaker 1: obeying those regulations and laws, which was a huge no no. 398 00:25:54,160 --> 00:25:57,680 Speaker 1: Cz at the time maintained that the investigation was unwarranted. 399 00:25:57,960 --> 00:26:02,960 Speaker 1: He said, this is all totally baseless, and we will 400 00:26:03,000 --> 00:26:06,959 Speaker 1: come out proving that Binance hasn't done anything illegal and 401 00:26:07,000 --> 00:26:10,440 Speaker 1: we've been operating within the law. So that investigation starts 402 00:26:10,480 --> 00:26:13,320 Speaker 1: and it continues for a couple of years. And while 403 00:26:13,359 --> 00:26:16,880 Speaker 1: that was going on, there was also massive drama happening 404 00:26:17,520 --> 00:26:21,600 Speaker 1: within the crypto community at large, and to go into 405 00:26:21,840 --> 00:26:25,399 Speaker 1: all of it would actually require a mini series of 406 00:26:25,440 --> 00:26:30,280 Speaker 1: episodes to really dive into what happened in twenty twenty 407 00:26:30,320 --> 00:26:34,639 Speaker 1: two in the crypto community, it's very complicated. Part of 408 00:26:34,680 --> 00:26:38,640 Speaker 1: it is precipitated by stuff that happened years earlier, right 409 00:26:38,680 --> 00:26:41,960 Speaker 1: because in twenty twenty the crypto community saw a big boost. 410 00:26:42,160 --> 00:26:45,800 Speaker 1: The pandemic had lots of effects throughout all of culture 411 00:26:45,880 --> 00:26:49,280 Speaker 1: and the economy. One of those effects was that a 412 00:26:49,320 --> 00:26:53,560 Speaker 1: lot of people, once confined to their own home, started 413 00:26:53,560 --> 00:26:56,080 Speaker 1: to look into things like, huh, I wonder if it 414 00:26:56,080 --> 00:26:59,200 Speaker 1: would make sense to invest in cryptocurrency, and a ton 415 00:26:59,240 --> 00:27:02,720 Speaker 1: of people who had never really been involved in cryptocurrency 416 00:27:02,840 --> 00:27:06,639 Speaker 1: at that point, started to get involved, and this began 417 00:27:06,720 --> 00:27:10,000 Speaker 1: a series of events that would start to drive the 418 00:27:10,480 --> 00:27:14,000 Speaker 1: value of various crypto coins higher and higher, sometimes too 419 00:27:14,640 --> 00:27:18,600 Speaker 1: unsupportable amounts. Like look at doge coin, a coin that 420 00:27:18,680 --> 00:27:21,520 Speaker 1: was made as a joke and essentially was made in 421 00:27:21,560 --> 00:27:25,040 Speaker 1: a way to flaunt how ridiculous the cryptocurrency world could be. 422 00:27:25,560 --> 00:27:29,119 Speaker 1: Even dosee coin, the joke coin, the trash coin, became 423 00:27:30,040 --> 00:27:32,960 Speaker 1: very valuable compared to what it had started out as, 424 00:27:33,359 --> 00:27:36,080 Speaker 1: but only for a short while before it collapsed in 425 00:27:36,119 --> 00:27:39,880 Speaker 1: on itself when the perception could no longer support itself. 426 00:27:40,359 --> 00:27:43,320 Speaker 1: Things like that were happening leading up to twenty twenty 427 00:27:43,320 --> 00:27:47,320 Speaker 1: two that would allow for an enormous rug pull, not 428 00:27:47,400 --> 00:27:49,959 Speaker 1: necessarily an intentional one, but one that just kind of 429 00:27:49,960 --> 00:27:54,680 Speaker 1: happened because of a confluence of events. I'll explain more, 430 00:27:55,200 --> 00:27:58,240 Speaker 1: but first we're going to take another quick break to 431 00:27:58,320 --> 00:28:11,919 Speaker 1: thank our sponsors. In twenty twenty one, cryptocurrency was having 432 00:28:12,119 --> 00:28:16,960 Speaker 1: a banner year, right like, driven by the increase in 433 00:28:16,960 --> 00:28:20,600 Speaker 1: interest in twenty twenty twenty twenty one was huge. In 434 00:28:20,680 --> 00:28:23,840 Speaker 1: November of twenty twenty one, just two years ago, the 435 00:28:23,960 --> 00:28:27,679 Speaker 1: value of bitcoin hit a high of around sixty nine 436 00:28:27,720 --> 00:28:32,200 Speaker 1: thousand dollars per bitcoin, a value it has not hit since, 437 00:28:32,240 --> 00:28:36,120 Speaker 1: although while it took a massive dive over the course 438 00:28:36,160 --> 00:28:40,480 Speaker 1: of the next year, it has recovered significantly since then. However, 439 00:28:41,040 --> 00:28:45,880 Speaker 1: after this huge high, investors started to back off of cryptocurrency. 440 00:28:46,160 --> 00:28:48,240 Speaker 1: This was due to a lot of different reasons. Part 441 00:28:48,240 --> 00:28:51,840 Speaker 1: of it was that the traditional financial systems around the 442 00:28:51,840 --> 00:28:56,520 Speaker 1: world saw interest rates growing. Right, so like the regular 443 00:28:56,600 --> 00:28:59,720 Speaker 1: banking industry, you start to see interest rates go up, 444 00:29:00,040 --> 00:29:03,120 Speaker 1: which means it becomes more expensive to take out a loan. Now, 445 00:29:04,240 --> 00:29:07,120 Speaker 1: this was something that kind of shocked me because I 446 00:29:07,160 --> 00:29:10,640 Speaker 1: don't know, I just take a much more conservative approach 447 00:29:10,960 --> 00:29:13,640 Speaker 1: when it comes to investment. I don't believe in investing 448 00:29:13,680 --> 00:29:16,400 Speaker 1: money I don't have. But as it turns out, I 449 00:29:16,440 --> 00:29:19,040 Speaker 1: am in the minority. A lot of people believe in 450 00:29:19,040 --> 00:29:21,520 Speaker 1: investing money they do not have in an effort to 451 00:29:21,560 --> 00:29:24,880 Speaker 1: make way more money, and that will involve things like 452 00:29:24,960 --> 00:29:28,200 Speaker 1: taking out a loan in order to make massive investments 453 00:29:28,200 --> 00:29:30,360 Speaker 1: and stuff. But when you take out a loan, you 454 00:29:30,360 --> 00:29:32,080 Speaker 1: have to pay the loan back, plus you have to 455 00:29:32,080 --> 00:29:34,800 Speaker 1: pay back the interest well. As the interest rates go up, 456 00:29:35,080 --> 00:29:40,040 Speaker 1: it becomes an inhibiting factor on investing. Right, Investors are 457 00:29:40,240 --> 00:29:44,960 Speaker 1: less likely to pour money into stuff because now they're 458 00:29:44,960 --> 00:29:47,440 Speaker 1: going to have to pay much higher interest rates on 459 00:29:47,520 --> 00:29:49,400 Speaker 1: the loans they take out in order to make those 460 00:29:49,440 --> 00:29:52,440 Speaker 1: investments in the first place. Whereas I was of the 461 00:29:52,520 --> 00:29:55,360 Speaker 1: naive opinion that you take the money you actually have, 462 00:29:56,080 --> 00:29:59,000 Speaker 1: not money that you have taken a you know, not 463 00:29:59,080 --> 00:30:01,480 Speaker 1: a loan you've taken out the rather money you actually have, 464 00:30:01,720 --> 00:30:04,640 Speaker 1: and then you invest that I'm a sucker. That's not 465 00:30:04,720 --> 00:30:08,040 Speaker 1: how you're supposed to do it, apparently, But that explains 466 00:30:08,080 --> 00:30:11,720 Speaker 1: why I'm not a financial genius or anything. But anyway, 467 00:30:11,760 --> 00:30:14,120 Speaker 1: the point being that because of these higher interest rates, 468 00:30:14,160 --> 00:30:18,760 Speaker 1: there was a slowdown in investing in cryptocurrency. That was 469 00:30:18,840 --> 00:30:22,280 Speaker 1: just one of the factors that was having an impact 470 00:30:22,440 --> 00:30:26,800 Speaker 1: on the crypto community. In twenty twenty two. Another happened. 471 00:30:26,920 --> 00:30:30,000 Speaker 1: In May of that year. There was a cryptotoken called 472 00:30:30,080 --> 00:30:33,200 Speaker 1: tara USD that was supposed to be pegged to the 473 00:30:33,280 --> 00:30:37,000 Speaker 1: US dollar. Now, pegged means that the value of the 474 00:30:37,080 --> 00:30:42,080 Speaker 1: cryptotoken is tied to the value of something else, in 475 00:30:42,120 --> 00:30:45,600 Speaker 1: this case, the US dollar. But in May of twenty 476 00:30:45,720 --> 00:30:51,520 Speaker 1: twenty two, because of some pretty complex issues. Tara USD 477 00:30:51,680 --> 00:30:55,800 Speaker 1: became unpegged to the US dollar and its value collapsed, 478 00:30:56,320 --> 00:30:59,640 Speaker 1: and that collapse became kind of like the first domino 479 00:30:59,760 --> 00:31:02,840 Speaker 1: to fall in a chain, so it's like a chain 480 00:31:02,880 --> 00:31:07,760 Speaker 1: reaction was initiated. The collapse undermined the security of several 481 00:31:07,800 --> 00:31:12,480 Speaker 1: other crypto organizations that held units of this digital currency 482 00:31:12,680 --> 00:31:15,880 Speaker 1: that suddenly had become worthless. So it was like if 483 00:31:15,920 --> 00:31:19,320 Speaker 1: the dollar or whatever your native currency is suddenly became 484 00:31:19,360 --> 00:31:21,960 Speaker 1: worth nothing, it wouldn't matter how much of it you had, 485 00:31:22,480 --> 00:31:24,880 Speaker 1: it's still worth nothing. You would just have a whole 486 00:31:24,920 --> 00:31:26,560 Speaker 1: lot of nothing if you were you know, if you 487 00:31:26,560 --> 00:31:30,120 Speaker 1: had a bank account filled with millions of dollars or 488 00:31:30,280 --> 00:31:33,240 Speaker 1: pounds or euro or whatever it might be, but the 489 00:31:33,320 --> 00:31:36,480 Speaker 1: value of each individual euro or dollar or whatever fell 490 00:31:36,560 --> 00:31:41,480 Speaker 1: to zero, you're still penniless, effectively. So this happened to 491 00:31:41,520 --> 00:31:45,920 Speaker 1: a lot of cryptocurrency companies, whether they were crypto lenders 492 00:31:46,400 --> 00:31:50,360 Speaker 1: or crypto exchanges or whatever, and you started to see 493 00:31:50,400 --> 00:31:54,160 Speaker 1: a lot of these crypto companies go under FTX, which 494 00:31:54,240 --> 00:31:57,240 Speaker 1: at this point in twenty twenty two was not yet 495 00:31:57,360 --> 00:31:59,800 Speaker 1: known to just be a house of cards, at least 496 00:31:59,840 --> 00:32:04,560 Speaker 1: not from anyone who wasn't already inside the company, FDx 497 00:32:04,640 --> 00:32:08,040 Speaker 1: moved to help cover some of these companies that were 498 00:32:08,040 --> 00:32:12,280 Speaker 1: affected by the collapse of tara USD, So FTX was 499 00:32:12,320 --> 00:32:14,680 Speaker 1: doing this in an effort to try and stabilize the 500 00:32:14,720 --> 00:32:19,160 Speaker 1: overall crypto community. However, this also meant that FTX itself 501 00:32:19,600 --> 00:32:23,520 Speaker 1: was over extended. And remember at this point, FTX was 502 00:32:23,560 --> 00:32:29,440 Speaker 1: the second largest crypto exchange in the world behind Binance. Now, 503 00:32:29,840 --> 00:32:33,480 Speaker 1: when you get to November of twenty twenty two, FTX 504 00:32:33,480 --> 00:32:38,520 Speaker 1: itself is in major trouble. So at first, before the 505 00:32:38,560 --> 00:32:41,840 Speaker 1: full extent of what was going on at FTX was known, 506 00:32:42,080 --> 00:32:46,280 Speaker 1: CZ indicated that Binance was going to essentially cover for 507 00:32:46,480 --> 00:32:50,520 Speaker 1: FTX again in an effort to ensure the stability of 508 00:32:50,560 --> 00:32:54,760 Speaker 1: the overall market. Then, as more information came out about 509 00:32:54,880 --> 00:32:59,600 Speaker 1: ftx's questionable practices, CZ reversed course and said that Binance 510 00:32:59,640 --> 00:33:04,680 Speaker 1: would instead liquidate all of its holdings in FTT tokens. 511 00:33:04,800 --> 00:33:10,160 Speaker 1: So remember FTT was the native token of the FTX exchange. 512 00:33:10,520 --> 00:33:13,040 Speaker 1: So Binance is saying, you know what, we're cashing out, 513 00:33:13,280 --> 00:33:15,960 Speaker 1: We're getting out of it entirely. Instead of rescuing them, 514 00:33:16,160 --> 00:33:19,680 Speaker 1: we're walking away, and that signaled a mass sell off 515 00:33:19,760 --> 00:33:25,120 Speaker 1: of FTT, and meanwhile it became clear that FTX didn't 516 00:33:25,160 --> 00:33:28,400 Speaker 1: actually have the money to cover all of that. See, 517 00:33:28,680 --> 00:33:33,000 Speaker 1: these exchanges are supposed to have the resources to cover 518 00:33:33,720 --> 00:33:37,320 Speaker 1: a mass withdrawal of the native token. If they don't 519 00:33:37,360 --> 00:33:39,440 Speaker 1: have that, then you have a run on the bank. 520 00:33:39,520 --> 00:33:42,440 Speaker 1: And then suddenly the bank reveals it doesn't have the 521 00:33:42,480 --> 00:33:45,600 Speaker 1: ability to cover all the withdrawals, and you get a 522 00:33:45,680 --> 00:33:49,160 Speaker 1: scene like the one from It's a Wonderful Life where 523 00:33:49,240 --> 00:33:51,520 Speaker 1: you find out, oh, no, no, no, no, your money's 524 00:33:51,560 --> 00:33:56,160 Speaker 1: not here. It's a it's an old Wilson's barn and 525 00:33:56,240 --> 00:33:58,000 Speaker 1: it's in, you know, like that sort of thing. That's 526 00:33:58,120 --> 00:34:00,760 Speaker 1: terrible Jimmy Stewart, But I did that for my friend Shay, 527 00:34:00,800 --> 00:34:04,640 Speaker 1: who loves Jimmy Stewart and hates my impression. So FTX, 528 00:34:05,240 --> 00:34:10,160 Speaker 1: it turns out, had been secretly funneling customer holdings FTX 529 00:34:10,239 --> 00:34:14,040 Speaker 1: customer's money to cover bad investments that were made by 530 00:34:14,080 --> 00:34:19,680 Speaker 1: its sister company, Animator Research. That was why FTX could 531 00:34:19,719 --> 00:34:23,120 Speaker 1: not handle the situation that found itself in. It was 532 00:34:23,200 --> 00:34:28,640 Speaker 1: already not just overextended, but it was hollow because of 533 00:34:28,719 --> 00:34:32,520 Speaker 1: this issue of funneling billions of dollars worth of funds 534 00:34:32,560 --> 00:34:38,160 Speaker 1: of FTX customer money to a different sister company. Now, 535 00:34:38,200 --> 00:34:41,920 Speaker 1: you could make the argument that CZ's move of saying 536 00:34:42,120 --> 00:34:45,320 Speaker 1: he would first support FTX and then withdrew that support 537 00:34:45,880 --> 00:34:49,040 Speaker 1: made the situation even worse. You could say, Okay, CZ 538 00:34:49,800 --> 00:34:53,120 Speaker 1: kicked SBF while he was already down. And in fact 539 00:34:53,280 --> 00:34:57,399 Speaker 1: CZ and SBF definitely do not like each other. They 540 00:34:57,480 --> 00:35:02,840 Speaker 1: have feuded a in public throughout things like Twitter posts 541 00:35:02,880 --> 00:35:05,759 Speaker 1: and stuff, you know, the way mature people do, and 542 00:35:06,360 --> 00:35:08,480 Speaker 1: there has been a long history of the two of 543 00:35:08,520 --> 00:35:11,359 Speaker 1: them sniping at each other. So you could say that 544 00:35:11,400 --> 00:35:14,520 Speaker 1: what CZ did was he saw that SBF and FTX 545 00:35:14,560 --> 00:35:16,759 Speaker 1: were in a bad position and he just decided to 546 00:35:16,800 --> 00:35:19,239 Speaker 1: kind of twist the knife and make it worse. I 547 00:35:19,320 --> 00:35:22,000 Speaker 1: would say that, in the wake of all the information 548 00:35:22,080 --> 00:35:27,560 Speaker 1: we learned through the various trials involving FTX executives, that 549 00:35:27,640 --> 00:35:30,680 Speaker 1: the company was doomed. Whether CZ got involved or not, 550 00:35:31,360 --> 00:35:34,800 Speaker 1: CZ's involvement was salt on the wound, but the wound 551 00:35:34,880 --> 00:35:38,520 Speaker 1: was already deadly. Whether CZ said anything or didn't say anything, 552 00:35:38,760 --> 00:35:44,719 Speaker 1: FTX had sealed its own fate with some truly terrible decisions. Meanwhile, 553 00:35:44,800 --> 00:35:48,520 Speaker 1: Binance itself still was in the crosshairs of the US government. 554 00:35:48,560 --> 00:35:51,080 Speaker 1: It's not like it was free and clear of its 555 00:35:51,080 --> 00:35:55,120 Speaker 1: own investigation. And during the course of that investigation, US 556 00:35:55,120 --> 00:35:58,920 Speaker 1: authorities determined that Binance was failing to comply with various 557 00:35:59,040 --> 00:36:02,839 Speaker 1: US laws, like the Bank Secrecy Act, which the Bank 558 00:36:02,920 --> 00:36:09,000 Speaker 1: Secrecy Act requires financial institutions to investigate and to reveal 559 00:36:09,520 --> 00:36:13,759 Speaker 1: suspicious transactions. So if a series of transactions indicate that 560 00:36:13,840 --> 00:36:18,160 Speaker 1: perhaps someone is trying to launder huge amounts of money, 561 00:36:18,640 --> 00:36:22,000 Speaker 1: maybe because of the drug trade or some other illegal activity, 562 00:36:22,320 --> 00:36:25,279 Speaker 1: they are required by law to report that. And so 563 00:36:25,880 --> 00:36:29,239 Speaker 1: the investigation was saying Binance was failing to do this, 564 00:36:29,400 --> 00:36:33,520 Speaker 1: even though the Bank Secrecy Act would cover Binance's activities 565 00:36:33,520 --> 00:36:37,280 Speaker 1: within the United States, because again, Binance is a global company. 566 00:36:37,400 --> 00:36:39,680 Speaker 1: It's not like the United States has jurisdiction over the 567 00:36:39,800 --> 00:36:43,640 Speaker 1: entire world, although sometimes our country behaves that way. It 568 00:36:43,760 --> 00:36:47,360 Speaker 1: is still, however, operating within the United States, and at 569 00:36:47,440 --> 00:36:50,799 Speaker 1: least for those operations it is meant to comply with 570 00:36:50,840 --> 00:36:53,719 Speaker 1: the US law. But as I mentioned earlier, the investigators 571 00:36:53,719 --> 00:36:57,919 Speaker 1: had already determined that at least some US customers were 572 00:36:57,920 --> 00:37:02,400 Speaker 1: making use not of the US based version of finance, 573 00:37:02,840 --> 00:37:07,360 Speaker 1: but by the global less regulated version of finance. So 574 00:37:07,719 --> 00:37:11,319 Speaker 1: the authority said Finance failed to put in even rudimentary 575 00:37:11,400 --> 00:37:14,799 Speaker 1: systems to do things like check on suspicious transactions or 576 00:37:14,840 --> 00:37:17,240 Speaker 1: to even be able to detect them in the first place, 577 00:37:17,719 --> 00:37:21,799 Speaker 1: Like not only was Binance not investigating transactions that could 578 00:37:21,960 --> 00:37:25,600 Speaker 1: lead to criminal activity, but didn't even have the system 579 00:37:25,640 --> 00:37:27,799 Speaker 1: in place to do it, despite the fact that it 580 00:37:27,840 --> 00:37:31,280 Speaker 1: was legally obligated to do that. As such, the authorities 581 00:37:31,360 --> 00:37:34,440 Speaker 1: argue that Binance had become a haven for money laundering. 582 00:37:34,760 --> 00:37:37,800 Speaker 1: The illegal drug trade could lean on Binance to launder 583 00:37:37,840 --> 00:37:42,279 Speaker 1: funds and hide the financials for massive illegal operations, and 584 00:37:42,400 --> 00:37:45,399 Speaker 1: not just the drug trade. There were lots of other accusations, 585 00:37:45,400 --> 00:37:50,840 Speaker 1: including things like funding of terrorist organizations or people trading 586 00:37:50,960 --> 00:37:56,520 Speaker 1: in child abuse material. We're talking terrible grim stuff. And 587 00:37:56,560 --> 00:38:00,840 Speaker 1: according to the investigation, even Binance's own staff had commented 588 00:38:00,920 --> 00:38:04,960 Speaker 1: and joked about this problem. Within Binance, there was one 589 00:38:05,080 --> 00:38:08,800 Speaker 1: joke being referenced about how Binance should put up web 590 00:38:08,800 --> 00:38:11,920 Speaker 1: banner ads across the web, telling drug dealers that if 591 00:38:11,920 --> 00:38:14,440 Speaker 1: they're having trouble laundering their money, they should come to 592 00:38:14,440 --> 00:38:17,399 Speaker 1: Binance because you can do it there and you'll get cake. 593 00:38:17,920 --> 00:38:23,000 Speaker 1: So like arguing that Binance not only allowed for money laundering, 594 00:38:23,560 --> 00:38:29,080 Speaker 1: but welcomed it and profited mightily from it. So, just yesterday, 595 00:38:29,160 --> 00:38:31,719 Speaker 1: which again was November twenty first, twenty twenty three, for 596 00:38:31,800 --> 00:38:34,600 Speaker 1: all of those who are listening from the future, Binance 597 00:38:34,640 --> 00:38:37,840 Speaker 1: pled guilty to several charges relating to money laundering and 598 00:38:37,960 --> 00:38:42,680 Speaker 1: similar crimes. CZ himself also pled guilty as part of this, 599 00:38:43,080 --> 00:38:44,920 Speaker 1: And it's kind of like a settlement, you know, it's 600 00:38:44,960 --> 00:38:50,000 Speaker 1: a or a plea bargain deal. CZ will be forced 601 00:38:50,040 --> 00:38:53,200 Speaker 1: to pay a fine of fifty million dollars. Now, fifty 602 00:38:53,200 --> 00:38:55,880 Speaker 1: million dollars is a princely song, Don't get me wrong. 603 00:38:56,280 --> 00:38:59,600 Speaker 1: Fifty million is a lot of money. If someone gifted 604 00:38:59,600 --> 00:39:05,000 Speaker 1: me fifty fifty million dollars, I would essentially retire and 605 00:39:05,440 --> 00:39:08,000 Speaker 1: run off to the woods to live a quiet life 606 00:39:08,040 --> 00:39:12,840 Speaker 1: of isolation and video games. So fifty million is a 607 00:39:12,880 --> 00:39:16,080 Speaker 1: huge amount of money. However, you have to remember CZ 608 00:39:16,320 --> 00:39:20,360 Speaker 1: is a billionaire. In fact, his current net worth is 609 00:39:20,400 --> 00:39:24,080 Speaker 1: somewhere in the neighborhood of ten billion dollars, so fifty 610 00:39:24,120 --> 00:39:26,959 Speaker 1: million is a fine that he can certainly afford to pay. 611 00:39:27,560 --> 00:39:30,880 Speaker 1: He has also been forced to resign as CEO of Binance, 612 00:39:31,200 --> 00:39:34,040 Speaker 1: his part of the agreement means that he will never 613 00:39:34,120 --> 00:39:37,480 Speaker 1: be allowed to hold an executive position with a cryptocurrency 614 00:39:37,520 --> 00:39:42,440 Speaker 1: exchange again. However, he is allowed to remain an advisor 615 00:39:42,800 --> 00:39:46,880 Speaker 1: to Binance and a shareholder the majority shareholder in the company, 616 00:39:47,239 --> 00:39:50,000 Speaker 1: So while he can't be the CEO, he can be 617 00:39:50,040 --> 00:39:54,160 Speaker 1: the shareholder. And you know, we know major shareholders often 618 00:39:54,600 --> 00:39:58,680 Speaker 1: in fact always direct where a company goes because they're 619 00:39:58,719 --> 00:40:01,959 Speaker 1: the ones who hold the money. Technically, he could also 620 00:40:02,200 --> 00:40:07,000 Speaker 1: face jail time. The Bank Secrecy Act holds a maximum 621 00:40:07,040 --> 00:40:10,280 Speaker 1: sentence of five years for people who are found guilty 622 00:40:10,360 --> 00:40:14,200 Speaker 1: of violating the law, so he technically could face five 623 00:40:14,280 --> 00:40:17,880 Speaker 1: years for that, as well as other prison sentences for 624 00:40:17,960 --> 00:40:22,560 Speaker 1: the other crimes he admitted to, but that's probably not 625 00:40:22,640 --> 00:40:26,680 Speaker 1: going to happen. Since he pled guilty, chances are he's 626 00:40:26,719 --> 00:40:30,160 Speaker 1: going to avoid any significant prison time. In fact, I 627 00:40:30,680 --> 00:40:33,919 Speaker 1: would guess I would bet that he doesn't spend any 628 00:40:33,960 --> 00:40:36,680 Speaker 1: time behind bars. At most, he might have house arrest 629 00:40:36,760 --> 00:40:39,239 Speaker 1: for a while or probation or something, but I don't 630 00:40:39,239 --> 00:40:42,239 Speaker 1: think he's going to see any jail time. Unlike his 631 00:40:42,840 --> 00:40:47,240 Speaker 1: colleague SBF. SBF is looking at potentially some very serious 632 00:40:47,320 --> 00:40:50,600 Speaker 1: jail time, So that's an interesting contrast there. But then again, 633 00:40:50,719 --> 00:40:56,120 Speaker 1: SBF pled not guilty and put up a big fight 634 00:40:56,239 --> 00:40:58,560 Speaker 1: to suggest that he was not at fault for the 635 00:40:58,560 --> 00:41:03,719 Speaker 1: crimes he committed, So there are lots of differences there. Binance, meanwhile, 636 00:41:04,200 --> 00:41:06,640 Speaker 1: is on the hook to pay a whopping four point 637 00:41:06,719 --> 00:41:11,560 Speaker 1: three billion with a B dollars in fines collectively. It's 638 00:41:11,600 --> 00:41:13,960 Speaker 1: actually a couple of different fines that the company will 639 00:41:14,000 --> 00:41:16,399 Speaker 1: be paying, but when you add it up, it's four 640 00:41:16,440 --> 00:41:20,400 Speaker 1: point three billion dollars. In addition, the company has agreed 641 00:41:20,400 --> 00:41:24,000 Speaker 1: to a monitorship, so essentially that means that representatives of 642 00:41:24,160 --> 00:41:28,040 Speaker 1: US authority will watch over Binance to make sure that 643 00:41:28,080 --> 00:41:30,560 Speaker 1: Binance is following the law. It's not that the US 644 00:41:30,640 --> 00:41:32,839 Speaker 1: is going to have control of finance, but they are 645 00:41:32,840 --> 00:41:36,120 Speaker 1: supposed to get full transparency into Binance's operations to make 646 00:41:36,160 --> 00:41:39,680 Speaker 1: sure that you know, it's not still engaged in money 647 00:41:39,760 --> 00:41:43,120 Speaker 1: launtering and such. This case is huge. It follows in 648 00:41:43,160 --> 00:41:46,000 Speaker 1: the wake of other instances in which US authorities have 649 00:41:46,080 --> 00:41:49,480 Speaker 1: gone after various crypto companies for playing fast and loose 650 00:41:49,520 --> 00:41:54,120 Speaker 1: with the law, or, as US Attorney General Merrick Garland 651 00:41:54,120 --> 00:41:57,520 Speaker 1: has put it, quote, using new technology to break the law. 652 00:41:57,560 --> 00:42:00,520 Speaker 1: Does not make you a disruptor, It makes you a criminal. 653 00:42:00,840 --> 00:42:04,600 Speaker 1: End quote. Considering that SBF was found guilty of several crimes, 654 00:42:05,040 --> 00:42:08,440 Speaker 1: that CZ has now pled guilty to other crimes and 655 00:42:08,480 --> 00:42:11,400 Speaker 1: has agreed to no longer hold an executive position with Finance, 656 00:42:11,440 --> 00:42:15,759 Speaker 1: and that numerous other cryptocurrencies or crypto companies rather have 657 00:42:15,840 --> 00:42:19,680 Speaker 1: found themselves in similar situations, including one called Kraken that 658 00:42:19,840 --> 00:42:23,279 Speaker 1: is currently part of a massive investigation. This really could 659 00:42:23,360 --> 00:42:27,000 Speaker 1: just be part of a very nasty and painful growing 660 00:42:27,040 --> 00:42:30,680 Speaker 1: process for the crypto world in general, because it turns out, 661 00:42:31,040 --> 00:42:34,920 Speaker 1: unlike what the ideals suggested back when it was first 662 00:42:35,120 --> 00:42:38,200 Speaker 1: announced back in two thousand and eight, cryptocurrency is not 663 00:42:38,400 --> 00:42:43,520 Speaker 1: able to operate wholly separate from established financial practices and institutions. 664 00:42:43,560 --> 00:42:47,480 Speaker 1: It just can't. That's not how the world works, and 665 00:42:47,520 --> 00:42:50,200 Speaker 1: that means that ultimately it will be held accountable, at 666 00:42:50,280 --> 00:42:55,279 Speaker 1: least in some part, when those crypto companies fail to 667 00:42:55,280 --> 00:42:59,440 Speaker 1: follow the rules. How or if these specific criminal cases 668 00:42:59,440 --> 00:43:02,640 Speaker 1: are going to impact cryptocurrencies as a whole remains to 669 00:43:02,640 --> 00:43:06,120 Speaker 1: be seen. I imagine we might see some short term volatility, 670 00:43:06,440 --> 00:43:09,759 Speaker 1: I mean more volatile than what we already see in 671 00:43:09,760 --> 00:43:14,960 Speaker 1: cryptocurrency but I'm not convinced that it's like the death now. 672 00:43:15,440 --> 00:43:18,239 Speaker 1: I've long been a critic of cryptocurrencies. I mean even 673 00:43:18,320 --> 00:43:21,560 Speaker 1: in the early days. I remember I said I objected 674 00:43:21,560 --> 00:43:24,440 Speaker 1: to the being called cryptocurrencies because they weren't being treated 675 00:43:24,480 --> 00:43:28,040 Speaker 1: as currency. They were being treated like commodities or securities. 676 00:43:28,480 --> 00:43:31,480 Speaker 1: They weren't being treated like a currency. You wouldn't dare 677 00:43:31,640 --> 00:43:35,120 Speaker 1: spend it because the value of the currency was so 678 00:43:35,400 --> 00:43:39,480 Speaker 1: volatile and the transaction time was so long that the 679 00:43:39,960 --> 00:43:43,439 Speaker 1: value that you spent at the beginning of transaction could 680 00:43:43,440 --> 00:43:45,880 Speaker 1: be very different than the value at the end of it. 681 00:43:46,200 --> 00:43:49,520 Speaker 1: Like imagine going up and buying a stick of gum 682 00:43:49,680 --> 00:43:52,319 Speaker 1: for like five cents, but then by the time the 683 00:43:52,360 --> 00:43:56,359 Speaker 1: transaction's over, that five cents has the equivalent value of 684 00:43:56,360 --> 00:43:58,839 Speaker 1: what used to be one hundred dollars. You're like, well, 685 00:43:58,840 --> 00:44:01,000 Speaker 1: that was the most expensive state of gum I've ever 686 00:44:01,239 --> 00:44:04,400 Speaker 1: bought in my whole life. That's a ridiculous example, except 687 00:44:04,440 --> 00:44:06,880 Speaker 1: that's how it really works with stuff like bitcoin, Like 688 00:44:06,960 --> 00:44:09,840 Speaker 1: it can really vary that much from the beginning of 689 00:44:09,840 --> 00:44:13,080 Speaker 1: a transaction to when it's validated. So I've always been 690 00:44:13,120 --> 00:44:16,840 Speaker 1: a critic of cryptocurrencies that doesn't even get into things 691 00:44:16,840 --> 00:44:21,759 Speaker 1: like the environmental impact and how it has engendered a 692 00:44:21,760 --> 00:44:25,719 Speaker 1: lot of really unfair systems, and it has created a 693 00:44:25,760 --> 00:44:30,360 Speaker 1: whole class of crypto bro evangelists who are desperate to 694 00:44:30,360 --> 00:44:33,799 Speaker 1: get more people into cryptocurrency because that means that they 695 00:44:33,880 --> 00:44:36,040 Speaker 1: can get a payout, and it starts to look more 696 00:44:36,040 --> 00:44:39,239 Speaker 1: and more like a pyramid scheme. I still have all 697 00:44:39,280 --> 00:44:43,920 Speaker 1: these criticisms of cryptocurrencies. However, I do not think this 698 00:44:44,040 --> 00:44:46,439 Speaker 1: is the beginning of the end of cryptocurrency. I don't 699 00:44:46,520 --> 00:44:50,200 Speaker 1: think it's going to find the foundations crumbling and come 700 00:44:50,239 --> 00:44:53,920 Speaker 1: crashing down. I don't think that's happening. There's no shortage 701 00:44:53,960 --> 00:44:56,600 Speaker 1: of other crypto exchanges out there that are looking at 702 00:44:56,600 --> 00:44:59,319 Speaker 1: this as an opportunity to maybe make a bigger move 703 00:44:59,400 --> 00:45:03,760 Speaker 1: in the space. Binance is still the largest cryptocurrency exchange 704 00:45:03,760 --> 00:45:06,880 Speaker 1: in the world. It's not even close by orders of 705 00:45:06,920 --> 00:45:11,280 Speaker 1: magnitude larger than the second largest cryptocurrency exchange out there. 706 00:45:11,640 --> 00:45:15,120 Speaker 1: That's kind of like how Google holds a dominant position 707 00:45:15,200 --> 00:45:18,440 Speaker 1: in web search, like it's undeniable. They have almost a 708 00:45:18,520 --> 00:45:22,040 Speaker 1: monopoly on that. Well. Binance is not quite at a 709 00:45:22,080 --> 00:45:25,480 Speaker 1: monopoly level in cryptocurrency exchanges, but they're certainly the biggest 710 00:45:25,480 --> 00:45:27,480 Speaker 1: player in town, but I bet a lot of other 711 00:45:27,520 --> 00:45:31,000 Speaker 1: cryptocurrency exchanges right now are saying this is our chance 712 00:45:31,040 --> 00:45:34,560 Speaker 1: to get a larger slice of the pie. It's just 713 00:45:34,600 --> 00:45:37,400 Speaker 1: that a lot of them are still operating in areas 714 00:45:37,440 --> 00:45:40,400 Speaker 1: that got Binance into trouble in the first place. So 715 00:45:40,480 --> 00:45:46,040 Speaker 1: I think we're just through a very tumultuous phase in cryptocurrency, 716 00:45:46,080 --> 00:45:48,160 Speaker 1: and that we're not close to the end of that 717 00:45:48,200 --> 00:45:52,040 Speaker 1: phase yet, where there's going to be this reckoning between 718 00:45:52,480 --> 00:45:57,320 Speaker 1: the cryptocurrency community and various legal establishments around the world 719 00:45:57,680 --> 00:46:00,800 Speaker 1: that are trying to make sure that crypto currency doesn't 720 00:46:00,840 --> 00:46:05,400 Speaker 1: become a tool for criminals to use to get around 721 00:46:05,400 --> 00:46:07,440 Speaker 1: the law. I think that's just going to be the 722 00:46:07,520 --> 00:46:10,719 Speaker 1: continuing story for the next few years. And I don't 723 00:46:10,760 --> 00:46:13,600 Speaker 1: want cryptocurrency to just collapse because I don't want people 724 00:46:13,680 --> 00:46:17,279 Speaker 1: to lose all their savings. I would much rather see 725 00:46:17,280 --> 00:46:23,840 Speaker 1: people extricate themselves from cryptocurrencies and perhaps find other ways 726 00:46:23,880 --> 00:46:27,400 Speaker 1: to invest their money, and then maybe once everyone is safe, 727 00:46:27,440 --> 00:46:30,160 Speaker 1: then I wouldn't mind seeing cryptocurrency collapse because I really 728 00:46:30,239 --> 00:46:35,239 Speaker 1: do think ultimately it's more harmful than helpful. I think 729 00:46:35,239 --> 00:46:40,120 Speaker 1: it has created a very toxic kind of environment, but 730 00:46:40,880 --> 00:46:42,960 Speaker 1: I don't want to see it go away and also 731 00:46:43,080 --> 00:46:47,200 Speaker 1: bankrupt lots of people who were desperately hoping that this 732 00:46:47,440 --> 00:46:51,799 Speaker 1: was their ticket to real stability. That I don't want 733 00:46:51,840 --> 00:46:55,160 Speaker 1: to see that happen. All Right, that was another very 734 00:46:55,200 --> 00:46:59,560 Speaker 1: long episode about a very crazy sequence of events that 735 00:46:59,600 --> 00:47:03,360 Speaker 1: happened this week. Who knows what will happen tomorrow. I don't, 736 00:47:03,400 --> 00:47:05,680 Speaker 1: and I also won't be talking about it because I'll 737 00:47:05,680 --> 00:47:11,400 Speaker 1: be busy stuffing myself with turkey and lots of side dishes. 738 00:47:11,600 --> 00:47:13,520 Speaker 1: For those of you in the United States who are 739 00:47:13,640 --> 00:47:18,000 Speaker 1: celebrating Thanksgiving, I wish you a safe and happy and 740 00:47:18,200 --> 00:47:21,400 Speaker 1: healthy holiday. For everyone else out there, I wish you 741 00:47:21,680 --> 00:47:25,719 Speaker 1: an absolutely wonderful week. We will have a rerun tomorrow, 742 00:47:26,080 --> 00:47:29,440 Speaker 1: and of course Friday is the day for classic episodes, 743 00:47:29,760 --> 00:47:31,960 Speaker 1: but we'll be back next week with all new episodes 744 00:47:32,000 --> 00:47:35,160 Speaker 1: before I go on holiday again, because the end of 745 00:47:35,160 --> 00:47:38,600 Speaker 1: the year is crazy like that. I wish you all 746 00:47:38,640 --> 00:47:41,759 Speaker 1: the best, and I'll talk to you again really soon. 747 00:47:47,960 --> 00:47:52,640 Speaker 1: Tech Stuff is an iHeartRadio production. For more podcasts from iHeartRadio, 748 00:47:52,960 --> 00:47:56,680 Speaker 1: visit the iHeartRadio app, Apple Podcasts, or wherever you listen 749 00:47:56,680 --> 00:48:00,680 Speaker 1: to your favorite shows, me