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Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,

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Speaker 1: and this is Bloomberg Crypto and new Daily Bloomberg I

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Speaker 1: Heart Podcast. It's Wednesday, June. Em Did you know that

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Speaker 1: both Madonna and Justin Bieber own expensive digital images of apes?

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Speaker 1: It's true, board apes and other non fungible tokens are

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Speaker 1: must have celebrity accessory these days. But should you put

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Speaker 1: your trust in movie stars, pop singers or athletes when

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Speaker 1: it comes to crypto? What are some of the legal

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Speaker 1: questions that play with these kinds of celebrity endorsements. Today

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Speaker 1: I'm joined by Bloomberg Reporto Mr Lena a gulf of

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Speaker 1: Polo for a look at what's behind the buzz with

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Speaker 1: celebrities interests in crypto investments. Mr Lenna, thank you so

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Speaker 1: much for joining us. It is such a delight to

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Speaker 1: have you here. Thank you for having me. I am

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Speaker 1: gonna ask you abou to questions about non fungible tokens,

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Speaker 1: starting from what exactly isn't an f T? So the

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Speaker 1: simplest way to describe an n f T would just

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Speaker 1: be to say that it's a digital image, uh that

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Speaker 1: someone can purchase, uh. And own on the blockchain, and

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Speaker 1: so there is an address that you own as the

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Speaker 1: owner of the n f T And it essentially started

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Speaker 1: with images JPEG's um but you know, it's now something

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Speaker 1: that you can find in the form of a song

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Speaker 1: or an animation or really any sort of art. I

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Speaker 1: would say, so an n f T if I'm if

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Speaker 1: I'm hearing you correctly, there's a couple of parts. There

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Speaker 1: is the address and then there is the assets at

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Speaker 1: the end of that address. Is that fair? Yep, that's

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Speaker 1: exactly it. And what you've been reporting on is that

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Speaker 1: some of these assets that are largely images, largely illustrations

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Speaker 1: have been selling for tons of money, millions millions. Why well,

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Speaker 1: I think it's most easily explained as demand and supply.

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Speaker 1: There is a lot of demand for particular collections of

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Speaker 1: n f t s that we're the first sort of

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Speaker 1: collections to launch, and so Crypto Punks is one of them,

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Speaker 1: which is this digitized avatar that you can purchase board

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Speaker 1: Eate Yacht Club is another collection that was among the originals.

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Speaker 1: And you know a lot of these communities of n

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Speaker 1: f T s sort of always are backed by a

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Speaker 1: lot of hype, right, So the more hype you can

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Speaker 1: create for an n f T collection, the more its

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Speaker 1: value will go up. And that's where we've seen a

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Speaker 1: lot of celebrities play a very crucial role, because you know,

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Speaker 1: if Justin Bieber buys a board eate yacht club, which

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Speaker 1: he did, I think a lot of the community takes

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Speaker 1: that as a stamp of approval, as this legitimizes the

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Speaker 1: collection in some sense, because if someone as important as

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Speaker 1: Justin Bieber to the eyes of so many people, to

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Speaker 1: the followers, to the millions of followers that he has

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Speaker 1: joins in, then that means this is an asset that's

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Speaker 1: worth something. So it's almost like you know, a Sneaker

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Speaker 1: drop or a supreme drop or somebody else where you're

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Speaker 1: like this, this person who is influential in my life

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Speaker 1: and what I consider to be interesting and what I

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Speaker 1: consider to be valuable. We're seeing the dynamic play out

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Speaker 1: in n f T s. That's exactly it. It's very

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Speaker 1: much the same. I think the problem with n f

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Speaker 1: T s is no one really knows how to define them, right,

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Speaker 1: Like are they just a picture or are they a

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Speaker 1: security security? A financial asset funded by a pool of

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Speaker 1: investors who intend to profit from that assets managers given

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Speaker 1: the fact that they do trade in a market and

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Speaker 1: its price goes up and down based on several factors

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Speaker 1: you know, that impact it. And so I think that's

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Speaker 1: one thing that's really become a challenge for a lot

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Speaker 1: of regulators, but also for celebrities that are jumping in

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Speaker 1: on this. What is an n f T and if

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Speaker 1: it is a security which hasn't been defined in any

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Speaker 1: cases yet by the SEC, but if it is the

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Speaker 1: security because it's price goes up and down, you know,

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Speaker 1: does this mean that celebrities who are jumping in on

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Speaker 1: n f T s should be subject the same rules

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Speaker 1: that they would be if they were promoting, uh, you know,

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Speaker 1: a stock. Right, So you mentioned something that's really important

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Speaker 1: to understand, which is, like many other parts of crypto,

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Speaker 1: the regulatory framework is shall we say, ambiguous at best.

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Speaker 1: But in that context, you know, I don't think in

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Speaker 1: general celebrities who are surrounded by PR people and lawyers

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Speaker 1: are the most risk tolerant people out there, necessarily, like

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Speaker 1: they get a lot of guidance on this is good

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Speaker 1: for your brand, this is bad for your image, given

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Speaker 1: you know, some of the shadier parts of crypto why

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Speaker 1: are so many celebts so comfortable getting involved in these

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Speaker 1: endorsement deals? Yeah, I mean because no one really checks

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Speaker 1: up on them. I think that's a reason, right, Like

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Speaker 1: I know you said managers, And I want to bring

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Speaker 1: in the example of Madonna here, right, I mean, Madonna

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Speaker 1: has an agent and the same agent represents her, but

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Speaker 1: also the board at Yacht collect Action a parent company, um,

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Speaker 1: and here she is sort of jumping in and buying

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Speaker 1: one of her own. I think it's really important that

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Speaker 1: people know that a lot of thought, on conversation went

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Speaker 1: into creating these videos, and you know it really we're

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Speaker 1: not saying she did anything wrong, but it really does

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Speaker 1: raise that sort of um conflict of interest. Is Madonna's agent,

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Speaker 1: who's representing both her and the company that she invested

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Speaker 1: in sort of giving her guidance on the back end

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Speaker 1: that we don't know about, and she really doesn't have

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Speaker 1: to disclose it. Neither does does he, because again the

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Speaker 1: regulation has not caught on. And so if Justin Bieber

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Speaker 1: buys a board at yacht Club, which he did for

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Speaker 1: one point five million dollars at the time, the um

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Speaker 1: it's around that now as well? You know, does this

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Speaker 1: mean that he essentially paid it for it himself or

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Speaker 1: did he get the money from somewhere else. And if

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Speaker 1: you look at the wallet transactions that we found that

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Speaker 1: are open in the black chain, you'll see that there

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Speaker 1: was a really big amount of money that was transferred

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Speaker 1: into his account before he made this purchase. So the

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Speaker 1: money he used to buy the n f T was

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Speaker 1: actually given to him by another n f T collection.

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Speaker 1: And when we asked that n f T collection, their

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Speaker 1: spokesperson to tell us why they were paying Justin Bieber,

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Speaker 1: what they said was because he was a promoter of

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Speaker 1: the n f T collection it's called the in between Ers,

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Speaker 1: and that wasn't really disclosed to anyone before we sort

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Speaker 1: of reported on it, and so I think that's, you know,

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Speaker 1: we're a conflict of interest here becomes very crucial because

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Speaker 1: if Justin Bieber is posting this n f T project

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Speaker 1: called in between Ers all over his Instagram, all over

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Speaker 1: his Twitter, making people believe that he believes in the

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Speaker 1: project but is actually being paid on the back end

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Speaker 1: to do so, that should be disclosed. But it actually

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Speaker 1: shouldn't because the regulation doesn't expire him to do it. Yeah,

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Speaker 1: So when when we talk about while it's you know,

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Speaker 1: I find fascinating that crypto exists in the space both

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Speaker 1: of as you accurately describe, intense transparency and intense obfuscation

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Speaker 1: at the same time, because looking at a crypto walls

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Speaker 1: is like being able to look directly into someone's bank account,

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Speaker 1: at least for crypto, like this is what's going in,

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Speaker 1: this is what's going out, unbelieve double amounts of transparency.

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Speaker 1: What you don't necessarily know is who the people are

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Speaker 1: that I'm moving money in into into walls and out

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Speaker 1: of something they don't even necessarily have to disclose, whether

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Speaker 1: they're the actual owners of a wallet or not. So

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Speaker 1: I might think that this wallet is justin Bieber's wallet

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Speaker 1: because it's called justin Bieber's n f t S, And

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Speaker 1: when I go into it, I can see that, you know,

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Speaker 1: it has a lot of the n f t s

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Speaker 1: that he's been posting about. But is he the one

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Speaker 1: that is actually managing that wallet behind you know, the

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Speaker 1: computer and is actually doing the transactions, or is it

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Speaker 1: a team of his that is managing his sort of

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Speaker 1: entire portfolio. And so there's no way to know. But

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Speaker 1: what we do know is that they have major influence

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Speaker 1: and so every time they decide to jump in on

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Speaker 1: one of these projects, it influences the way consumers also

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Speaker 1: decide what to jump in on. And I know when

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Speaker 1: we look at whenever we have intense periods of volatility

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Speaker 1: like we did when Luna and and Tear crashed. You know,

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Speaker 1: that is also another really big example of a large

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Speaker 1: community of cri don't influencers coming in and telling people, hey,

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Speaker 1: look at this really cool project that you should invest

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Speaker 1: in a lot of investors got into it, and you know,

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Speaker 1: after the stable coin crash, I think it was a

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Speaker 1: learning lesson for a lot of people. I hope it's

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Speaker 1: a learning lesson. We hope it's a learning lesson for

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Speaker 1: a lot of people that you know, first of all, influencers, celebrities,

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Speaker 1: whoever has power in the crypto community in the form

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Speaker 1: of followers has some responsibility um but also investors, individual

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Speaker 1: crypto investors who look to these people for tips on

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Speaker 1: what to buy next should just be very cautious to

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Speaker 1: use the crypto phrase do your own research. Do I

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Speaker 1: are exactly back in a moment with miss Relina and

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Speaker 1: to look at how the company moon Pay is carving

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Speaker 1: out its space within the n f T market ms Relina.

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Speaker 1: There's a company that comes up a lot when celebrities

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Speaker 1: and a f T S are mentioned in the same sentence,

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Speaker 1: and it's moon Pay. Why are they always in the conversation?

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Speaker 1: What's their relationship to this market? Yeah, So, I think

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Speaker 1: the easiest way to explain what moon Pay is trying

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Speaker 1: to do is when it comes to celebrity culture in Hollywood,

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Speaker 1: is to really redefine what royalties mean. And so what

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Speaker 1: moon Pay, which is essentially a platform where you can

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Speaker 1: buy and sell n f T s, is hoping to

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Speaker 1: do is to help celebrities take rid of the middlemen

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Speaker 1: that have often sort of existed between artists and consumers

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Speaker 1: and make sure that any artwork, movie song that they

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Speaker 1: produce can be directly sold and purchased on a platform

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Speaker 1: without middlemen. And this is where a moon Pay sort

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Speaker 1: of comes in and promises Hollywood to change the way

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Speaker 1: it has functioned for for a really long time. And

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Speaker 1: there is a lot of promise to that, and you know,

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Speaker 1: there are benefits to consider darring how artists can take

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Speaker 1: ownership of their own work and really be the ones

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Speaker 1: controlling what it should cost and how it should be sold.

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Speaker 1: And this is a big argument in favor of what

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Speaker 1: folks like coal Web three right. It is giving creators

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Speaker 1: a much more direct relationship to their ability to monetize

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Speaker 1: their work exactly. And here's you know, moon Pay, this

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Speaker 1: company that is trying to sort of center itself in

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Speaker 1: the middle of this debate. And so in their recent

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Speaker 1: funding round that they announced, we saw a long list

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Speaker 1: of celebrities come in and say I will back you.

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Speaker 1: And so a lot of the people that they actually

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Speaker 1: raised money from were artists, producers, actors, even some athletes

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Speaker 1: in their musicians, rappers, you have the whole list. When

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Speaker 1: I spoke to the CEO of Moon Pay for this

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Speaker 1: story and I asked him, you know, how are you

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Speaker 1: guys making sure that everything that's happening is sort of

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Speaker 1: on par with regulation. They you know, they don't necessarily

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Speaker 1: have an answer yet, and I think for them, it's

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Speaker 1: also part of the broader Web three argument is we

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Speaker 1: don't really want regulation. We we don't really want to

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Speaker 1: be told by the government what to do, and so

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Speaker 1: they don't even really want the government to come in

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Speaker 1: and tell them how to run. Uh, these ideas that

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Speaker 1: they have out there. We've talked a lot about consumer protection.

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Speaker 1: But there is a degree to which regulation also protects

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Speaker 1: the creators right, because one of the things is that

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Speaker 1: the very baseline of royalties is the idea of copyright

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Speaker 1: and trademarks and the ability to say I made this,

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Speaker 1: this is mine, and therefore I should be able to

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Speaker 1: derive value from it. And I find it so fascinating

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Speaker 1: that something that is saying, hey, we'll get creatives pay

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Speaker 1: it is simultaneously averse to a regulatory framework that could

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Speaker 1: enforce the mechanism to make sure those creators are paid.

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Speaker 1: If you know, a hundred different copyright um copycats pop

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Speaker 1: up overnight, Yeah, I mean it's it's it's crazy to

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Speaker 1: see so much uh sort of power and influence congregate

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Speaker 1: in these companies and all these sort of new ways

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Speaker 1: of doing business popping up, and you see that across

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Speaker 1: the crypto community. Yet again, the regulation isn't there to

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Speaker 1: necessarily guide the way these businesses are being handled and

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Speaker 1: the way these transactions are formed. But again, you know,

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Speaker 1: it's the centralized right, it's supposed to be um untouched

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Speaker 1: and sort of left alone to be managed by the community.

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Speaker 1: That is a part of it. I think that it's

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Speaker 1: only a matter of time before we see how this

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Speaker 1: is actually going to pan out. And you know, and

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Speaker 1: I think going back to the Tara Luna meltdown, that

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Speaker 1: is a great example of of a situation that could

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Speaker 1: prompt more oversight. And I wouldn't be surprised if we

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Speaker 1: see that, um, you know, regulators coming in and taking

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Speaker 1: in a closer look at stable coins. And maybe that's

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Speaker 1: what needs to happen in the next sort of celebrity

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Speaker 1: and f t up pairing some sort of to Mike

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Speaker 1: meltdown that finally gets people to think about, you know,

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Speaker 1: ways to better manage this. One of the things I

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Speaker 1: find so there's so many things about crypto that you're like,

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Speaker 1: this directly contradicts what you just said five minutes ago.

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Speaker 1: And so an example of that is these folks were

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Speaker 1: buying into you know, Terra and Luna. We're partly doing

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Speaker 1: it because they're like, this is not like other currencies.

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Speaker 1: It has none of the disadvantages of central banks and etcetera, etcetera.

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Speaker 1: And then when it collapsed, partly because it had none

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Speaker 1: of the advantages of central banks, various folks who lost

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Speaker 1: money are you know, sending Twitter messages, etcetera to some

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Speaker 1: of those influencers that you mentioned saying how are you

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Speaker 1: going to help me get my money back? Right, and

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Speaker 1: that the idea of getting your money back is something

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Speaker 1: baked into traditional finance, right, that there there's deposited insurance,

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Speaker 1: there are ways to make claims, and you know, the

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Speaker 1: crypto has this sort of have its cake and eat

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Speaker 1: it two vibes sometimes where they only want the best

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Speaker 1: of the things and the and are unwilling to accept

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Speaker 1: any of the constraints. Definitely, I think that when you

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Speaker 1: invest in something that has the word you know, stable

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Speaker 1: in it, you assume that there is some sort of

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Speaker 1: stability in it. And I think that, you know, I don't.

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Speaker 1: I think that's okay. I think that a lot of

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Speaker 1: people go into a lot of these investments not necessarily

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Speaker 1: understanding the way they function. And hey, I get it.

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Speaker 1: It's not easy. I mean, understanding the way Tara and

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Speaker 1: Luna actually functions is quite complicated for your average investor,

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Speaker 1: even for sophisticated one. Yeah, I mean I had to

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Speaker 1: report on this story and just to get to the

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Speaker 1: bottom of like what it actually all is and how

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Speaker 1: it functions, I mean, was a challenge just for us

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Speaker 1: trying to do our jobs, you know. And so I

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Speaker 1: think that um, going into different investment or asset classes

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Speaker 1: that you don't necessarily understand, uh is a very sort

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Speaker 1: of difficult um part of investing in crypto. And I

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Speaker 1: think that you know, you have a lot of these

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Speaker 1: influencers that have remained quiet since the Terra Luna meltdown,

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Speaker 1: which I think is you know, again something you're gonna

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Speaker 1: have to see change eventually because there needs to be

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Speaker 1: you know, repercussion. There's no accountability right now or accountability

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Speaker 1: for anyone who has openly said like, hey, this is

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Speaker 1: the coolest project that you should be investing in right now,

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Speaker 1: you do so, and and then when it all goes

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Speaker 1: you know, down the drain, um, where what is the

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Speaker 1: accountability that these people should be facing and how responsible

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Speaker 1: are there um? And so I think those are things

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Speaker 1: that investors going into the space should be considering. And

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Speaker 1: going back to n f t s, you know, if

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Speaker 1: your favorite celebrity buys an n f T UM know

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Speaker 1: that it could go well, but it also couldn't. So

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Speaker 1: one of the things I hear in crypto is there's

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Speaker 1: this kind of difference between like crypto kick statas, which

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Speaker 1: is a bunch of people get together and they try

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Speaker 1: to buy the Constitution. And then there is you know,

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Speaker 1: I remember a story. There's this group of writers who

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Speaker 1: are you know, trying to create an n f T

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Speaker 1: of a novel. Yeah, Jenks, Jenkings is really cool. That's

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Speaker 1: a great example of an n f T And so essentially,

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Speaker 1: the easiest way to explain it is, these two former

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Speaker 1: writers bought one of the Board eight Yacht Club um

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Speaker 1: n f T s made it into this character called Jenkings.

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Speaker 1: They really thought he looked like a valet because of

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Speaker 1: his accessories, so they named him Jenkings the Valet. And

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Speaker 1: then essentially they started selling more n f t s

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Speaker 1: that were adjacent to to Jenkings, and whoever bought an

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Speaker 1: n f T um of that Jenkings collection sort of

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Speaker 1: based on how much money they spend, became a writer

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Speaker 1: into a broader Jenkings the Valet book that is meant

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Speaker 1: to come out later on in a few years, I think,

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Speaker 1: And based on how much money they spent would have

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Speaker 1: voting power that would help sort of take the plot

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Speaker 1: of the book in a certain direction. And so you

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Speaker 1: choose your own adventurous exactly. And so here's how you know,

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Speaker 1: you are, your fans are able to sort of purchase

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Speaker 1: something that they think is valuable because it's something you created,

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Speaker 1: their owners of something that you created, and they're able

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Speaker 1: to participate in it in a way that they haven't

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Speaker 1: been able to before. Right. And so there's obviously that

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Speaker 1: part of n f t s that's extremely interesting for

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Speaker 1: celebrities and for artists, which is transforming the way they

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Speaker 1: do business. But I would argue another one is just,

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Speaker 1: you know, the popularity of it. I mean, these are

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Speaker 1: n f t s that are being talked about across

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Speaker 1: the world, that are the constant talk of town, across

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Speaker 1: social media platforms, and so it's essentially being part of

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Speaker 1: the cool club, right, And they want to show that

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Speaker 1: they're on top of Web three, they want to show

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Speaker 1: that they know how the world is evolving. And so

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Speaker 1: this is both, you know, something that not only raises

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Speaker 1: their profile in terms of awareness and in terms of

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Speaker 1: coolness level, but also it helps them understand the way

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Speaker 1: that they can do business in the future. Thanks so much,

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Speaker 1: miss really enough for joining us. You can find more

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Speaker 1: of her porting on the Bloomberg terminal at Bloomberg dot

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Speaker 1: com and on Twitter at ms Relina that's m I

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Speaker 1: S Y R L E n E. Thanks again for

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Speaker 1: joining us on the next episode of Bloomberg Crypto. In March,

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Speaker 1: hackers stool about six hundred million dollars from a crypto network.

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Speaker 1: It was one of the biggest exploits to hit the

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Speaker 1: asset class to date and left many investors shaken. Tomorrow

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Speaker 1: a roundtable discussion with Bloomberg reporta Olga Karif and Bloomberg

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Speaker 1: opinion writer Pommy Olson on what these massive hacks might

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Speaker 1: mean for the market. I'm Stacy Marie Ishmael and this

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Speaker 1: is Bloomberg Crypto, a daily podcast from Bloomberg and I

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Speaker 1: Heeart Radio. For more shows from I Heart Radio, visit

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Speaker 1: the iHeart Radio app, Apple Podcasts, or wherever you get

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Speaker 1: your podcasts. Email your comments, questions or suggestions to Crypto

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Speaker 1: at Bloomberg dot net and follow us on Twitter at Crypto.

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Speaker 1: The producer and editor of this episode is Vicky Vergelina.

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Speaker 1: Our engineer is Desto wonder At. Original music by Leo Sidron.

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Speaker 1: Bloomberg's head of Podcasts is Francesca leav