ROLLUP: China's $500B Stimulus | Kamala's Pro-Crypto Pivot? | Gary Gets Grilled | EIGEN Unlock Incoming

This week we break down China’s massive new economic stimulus package, its biggest move since the pandemic and what it could mean for the global markets. Gary Gensler faced intense bipartisan grilling in Congress, and Nic Carter dropped shocking new insights on ChokePoint 2.0’s legal implications. Plus, Eigenlayer’s token unlock is finally here after months of non-transferability. We’ll also dive into the key moments from Solana’s Breakpoint Conference. Buckle up. ------ 📈 INDEX COOP | LEVERAGE TOKENS https://bankless.cc/IndexCoop ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle ⚡️ CARTESI | LINUX-POWERED ROLLUPS https://bankless.cc/CartesiGovernance 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ ✨ Mint the episode on Zora ✨ https://zora.co/collect/zora:0x0c294913a7596b427add7dcbd6d7bbfc7338d53f/69?referrer=0x077Fe9e96Aa9b20Bd36F1C6290f54F8717C5674E ------ TIMESTAMPS & Resources 00:00:00 Kamala's Pivot? https://www.theblock.co/post/318216/kamala-harris-says-us-should-become-dominant-in-blockchain-reiterates-digital-assets-in-economic-plan https://twitter.com/standwithcrypto/status/1838327263953326469 https://x.com/EleanorTerrett/status/1839041447007342919 https://www.theblock.co/post/317636/vp-harris-says-shell-encourage-crypto-business-while-protecting-consumers-at-wall-street-fundraiser-bloomberg https://x.com/TrustlessState/status/1838578494462189990 https://x.com/mcuban/status/1838667484905578704?s=46 https://www.axios.com/2024/09/23/harris-embraces-crypto-overture-young-men https://x.com/Zachary/status/1839260651614568845 00:14:17 Markets https://pro.kraken.com/app/trade/btc-usd 00:16:39 ETH Options Approved https://x.com/EricBalchunas/status/1837240128588169587 https://x.com/kellyjgreer/status/1824168136637288912 00:19:16 Movers Of The Week https://www.coingecko.com/en/coins/sei https://x.com/VitalikButerin/status/1838809754002690403 00:22:10 The Beijing Bazooka https://x.com/JustDeauIt/status/1839152089718538572 https://finance.yahoo.com/news/what-chinas-biggest-stimulus-since-the-pandemic-means-for-us-investors-morning-brief-100039804.html https://x.com/deitaone/status/1839235182294913315?s=43&t=2ZINVXJQKx6xO_6Wiiu_2g https://x.com/deitaone/status/1839235182294913315?s=43&t=2ZINVXJQKx6xO_6Wiiu_2g 00:29:55 The Roast Of Gary Gensler https://x.com/BanklessHQ/status/1838602362841374762 https://x.com/BanklessHQ/status/1838613533061230618 https://x.com/BanklessHQ/status/1838621580546425045 00:38:25 Jail Updates https://www.reuters.com/world/us/bankman-frieds-ex-girlfriend-ellison-be-sentenced-over-crypto-fraud-2024-09-24/ https://x.com/autismcapital/status/1838661563663945804 00:44:23 Crypto Bank Crackdown Exposed https://x.com/nic__carter/status/1836858969241100776 00:54:25 EIGEN Unlock https://x.com/eigenfoundation/status/1838270195246170553 https://x.com/JimmyRagosa/status/1839272870809076003 00:55:55 Solana Breakpoint Recap https://x.com/solana/status/1837035324587028567 https://x.com/solanamobile/status/1836614409613119632 https://x.com/solanafloor/status/1837038360101007577?s=46 00:59:05 Telegram Founder Updates https://www.bbc.com/news/articles/cvglp0xny3eo 01:00:32 Raises https://blog.celestia.org/celestia-foundation-raise/ https://x.com/infinex_app/status/1838730410710446144 01:03:57 David Fight Updates https://polymarket.com/event/hoffman-vs-warwick 01:08:26 Meme Of The Week https://x.com/spreekaway/status/1837128008169095172?s=46 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  So I will recommit the nation to global leadership in the sectors that will define the next century. We will invest in biomanufacturing and aerospace, remain dominant in AI and quantum computing, blockchain and other emerging technologies.

• 0:17David Hoffman?

  Was that it? Was that, was that a pivot? Does that count as a pivot?

• 0:23Ryan Sean Adams?

  I don't know, David. I don't know.

• 0:25David Hoffman?

  These are the first words out of Kamala Harris's mouth about, well, blockchain.

• 0:32Ryan Sean Adams?

  It's not nothing. It may be barely more than nothing, but it is something.

• 0:37David Hoffman?

  It is something more than nothing. It is certainly something more than nothing.

• 0:41Ryan Sean Adams?

  We'll talk about that. I think that's maybe the first thing we want to talk about. But we also have on the weekly roll up, the Beijing bazooka. David, I want to tell you, this week China might be dropping its biggest economic stimulus since the pandemic. Remember Raul Paul's banana zone that we were promised? Beijing bazooka banana zone. It's all Bs.

• 0:59David Hoffman?

  We also got Gary getting grilled in front of Congress by both sides of the aisle. And also our favorite Hester Purcey and other SEC commissioners at his side, giving a little different kind of responses to some of this grilling. Also, Nic Carter has revealed some of his findings related to choke point 2.0. Turns out choke point 2.0 was even more illegal than we knew about. And also Eigenlayer, the Eigen token finally getting unlocked after first getting released back in April 30th with a non-transferability status. And Eigenlayer's token is now going to become transferable.

• 1:33Ryan Sean Adams?

  And you got to do the highlights of the Salon and Breakpoint conference. A lot of things coming out of there. And I want you to tell me about those things, David, as a big soul maxi. I know that you are, so I can't wait to hear it. But let's start with the clip that we played at the beginning of this. So Kamala Harris's words, this is, I think, the second thing she's ever said about crypto, blockchain, that sort of thing, because the first was actually-

• 1:59David Hoffman?

  Two times in one week.

• 2:00Ryan Sean Adams?

  Okay, okay. So can you give us the first? And then we'll give the context for the clip. So what is the first thing that she said earlier in the week about crypto?

• 2:07David Hoffman?

  So two days earlier on- Tuesday, I believe Kamala said that she would encourage innovative technologies like AI and digital assets while protecting our consumers and investors as precedent. And these are comments that she made at a Wall Street fundraiser, reported by a Bloomberg reporter, also releasing her economic plan. Eighty pages, digital assets were mentioned once. And so this was on Tuesday. And this kind of made the rounds on crypto Twitter, not because of what Kamala Harris said, but because the Stand With Crypto Twitter account took this statement and gave Kamala Harris a rating of a B as being somewhat pro crypto.

• 2:50Ryan Sean Adams?

  Upgraded from, we don't know.

• 2:53David Hoffman?

  From nothing, from no statements. So it was the first statement that Kamala Harris has ever said about crypto. And Stand With Crypto gave her a B, as in saying she has made a somewhat supportive statement about crypto, which caused kind of an uproar because Donald Trump is given an A for strongly supports crypto. And this one single statement where Kamala Harris says she would like to encourage innovative technologies like AI and digital assets while protecting our consumers and investors, somehow earns her a B. And so crypto Twitter did not accept that. That was like, this doesn't feel right at all.

• 3:27Ryan Sean Adams?

  You gotta say Donald Trump earned that A with respect to at least rhetoric.

• 3:31David Hoffman?

  I mean, he's. It's gotta be honestly, A+, A+, gotta be an A+.

• 3:36Ryan Sean Adams?

  Yes, or something. This is like, you know, for all of the patting on the back Donald Trump gives to himself. I actually think he can pat himself on the back for his rhetoric and talk and the folks he's surrounding himself and commitment with respect to crypto. But Kamala Harris, a B?

• 3:52David Hoffman?

  A B did not feel right.

• 3:55Ryan Sean Adams?

  Okay, so she didn't maintain a B because there was an uproar about this, yes?

• 4:00David Hoffman?

  Yeah, so a bunch of people pushed back. Tommy from Delphi put out a statement saying that this just is not deserved. I put out a statement saying like, hey, like. Like I want Democrats to be pro crypto, just like the next guy. But like, come on, that's not, that's not what this is. Just because we have technically a statement that could be interpreted to be pro crypto does not earn her a B. And also, I think Jesse Eckle put a thread together that I think really drives the point home, saying that we want to be supportive of digital assets while protecting investors is like the same thing that Gary Gensler says. And he puts on like, just going through the receipts and saying all the times that Gary Gensler has said, I want to like, serve digital assets and protect consumers.

• 4:43David Hoffman?

  Like, and so like, this could be super veiled, super vague, and actually mean something totally negative.

• 4:49Ryan Sean Adams?

  Okay, so for all of the folks that have been looking for the Democratic and specific, the Democrat and specifically the Kamala Harris pivot, right? We got, Kamala Harris prior to this week, hasn't said a thing about crypto. And by the way, she still hasn't used the C word.

• 5:06David Hoffman?

  Hasn't used the C word.

• 5:06Ryan Sean Adams?

  That's kind of a mantra of me, like, like for me, is it, say crypto, all right?

• 5:10David Hoffman?

  Say Bitcoin, say crypto, say Ethereum.

• 5:12Ryan Sean Adams?

  Give us that signal. Yeah, we need to hear crypto. When you say things like digital assets with consumer protections, we don't know exactly what you're talking about. Regardless, the first time she has weighed in on this at all, herself as a candidate, was this week, and she did it in three ways. The Wall Street fundraiser that you mentioned, where she said she would encourage innovative technologies like AI and digital assets while protecting our consumers and investors. Who knows what that means?

• 5:38David Hoffman?

  Right.

• 5:38Ryan Sean Adams?

  And then she also said it in the clip, where in the context of remaining dominant, we have to remain dominant in AI and quantum computing and blockchain, she said. And then it was also in the, in the policy document, there was, there was one phrase, digital assets in conjunction with AI in the, in her, you know, Democratic platform policy document that she mentioned. First time ever.

• 6:04David Hoffman?

  Three, three times in one week. And I think this is the reason why I think you can be allowed to get excited. That first statement, ambiguous. I'm not really giving any sort of credence to the legitimacy of the first statement on Tuesday. The statement that she gave on Wednesday, which was the one in the clip, to me, that is unequivocally a pro crypto statement. Remain dominant in blockchain means it's like, we have the industry. It is, it is not a lot, Brian, but on the side of the fence about pro crypto, neutral or anti crypto, it is pro crypto. That is a pro crypto statement.

• 6:39Ryan Sean Adams?

  It is pro something, maybe. I don't know if it's pro crypto. Again, this use of digital assets and pairing that with consumer protection. It's similar to statements-

• 6:48David Hoffman?

  She didn't, she didn't, not in the second statement. In the, in the second statement, she just said blockchain, which again-

• 6:53Ryan Sean Adams?

  She said blockchain.

• 6:54David Hoffman?

  Not our words, but it was-

• 6:54Ryan Sean Adams?

  Slightly better.

• 6:55David Hoffman?

  Dom- remain dominant in blockchain. That is a pro industry stance.

• 7:00Ryan Sean Adams?

  Okay, so I am not saying that it's nothing.

• 7:04David Hoffman?

  Uh huh.

• 7:04Ryan Sean Adams?

  It, but it is ever so slightly more than nothing.

• 7:08David Hoffman?

  Yes.

• 7:08Ryan Sean Adams?

  It is a couple of grains of sand.

• 7:10David Hoffman?

  Yes.

• 7:10Ryan Sean Adams?

  It is like in the, in the journey of a thousand miles. She's maybe thinking of putting on her shoes to go out the door and start that journey.

• 7:18David Hoffman?

  Okay.

• 7:18Ryan Sean Adams?

  Like, that's how small and insignificant it feels in the context of, you know, the last two years of a Biden administration just coming after crypto with everything they got.

• 7:30David Hoffman?

  I think people's interpretation of the significance of these statements really matters on what you think about how Biden has treated the crypto industry and whether or not you carry that forward into your interpretation of Kamala. My interpretation of a vice president is that they have no power. They are just along for the ride. We all completely forgot about the existence of Kamala Harris while Biden was president. She had, she was not on the steering wheel. And so like whether you not or not you want to carry forward Biden's policy and apply them to Kamala's is like your choice. I don't think that's completely intellectually honest to just say Biden is equivalent to Kamala. Like this is a new slate. Once, if, if she gets elected, she will have nothing to, she owes nothing to the Biden administration.

• 8:12David Hoffman?

  So it is a legitimate chance at like an actual reset. And the context, the data points that we have, it's not just these three statements that have come out in this last week. It's also Mark Cuban, who, you know, Mark Cuban, very Democrat, wants Kamala to win, very biased. He says, "I talked to the Harris team today, who told me in no uncertain terms that they are against regulation through litigation." And then he says, "See you later, Gensler. You're, you leaving is worth a point growth in GDP." Also, this Axios article has this interesting title, "Harris Embracing Crypto in Overture to Young Men."

• 8:50David Hoffman?

  I think the claim here, the claim here, I think, is that the Kamala administration is seeding the media with preparation to fully pivot, quote pivot, if, if there was going to be a pivot, these, in my opinion, would be the signs. And not just that, Maxine Waters also turning around and trying to get stablecoin legislation. All of this is happening at once. And to me, this is positive signaling that the Democrats are now finally caving to the power of the crypto industry and need to do something, need to answer to something.

• 9:28Ryan Sean Adams?

  Okay, so I will say it's gone beyond like, they're a little bit farther than they're not trying at all. And now they're at this stage where they're like barely trying. I do think that a lot of Democrats in Congress have actually pivoted. The Maxine Waters statement, we even heard her yesterday, I mean, or earlier this week, she was talking in a congressional hearing, hey, I want to do a stablecoin bill, right? We got some deal making to do. Let's get a stablecoin bill done. I think that is starting to thaw. I also totally know that the Harris campaign has seen the polls and they need young male voters. And many of these young male voters are disproportionately crypto advocates, right? You know that 20 to 40 age demographic of males that she just doesn't have. So I can totally understand why she's

• 10:13Ryan Sean Adams?

  like edging into it. But when you start using the P word and pivot, like that is a bridge too far to, like, maybe, maybe this is pre pivot.

• 10:21David Hoffman?

  It is a technical pivot, as in like, the Democratic Party has been hammering crypto. Them doing nothing is a huge change of direction already. Them like going from hammering crypto to doing nothing is a change of direction. Doing the most marginally positive statements is so incredibly different from what is currently happening, which is we are being smothered by them.

• 10:45Ryan Sean Adams?

  But in order to earn the P word, I think it's kind of like stand with crypto, where you gotta earn your B if you're supportive of crypto.

• 10:53David Hoffman?

  I do not think that Kamala deserves a B right now.

• 10:57Ryan Sean Adams?

  Okay, but I don't think she deserves a pivot at all. Because in order to like, she said she wanted to remain dominant on blockchain. In order to do that, what you need to do, fire Gary Gensler, stop Operation Choke Point, unwind Sab 121, fix Fit, sign that, rescind the SEC Wells notices to six of our US-based crypto company, support stablecoin legislation, rein in this anti IRS DeFi rulemaking that's happening right now, draft pro crypto DNC policy, and stop sanctioning smart contracts like Tornado Cash. Do you think she is prepared to take any of those actions? Because that's what it requires to remain dominant in blockchain, as she said.

• 11:35David Hoffman?

  I'm mostly focused on the change in trajectory, where first we had nothing, now we've had three things out of the Kamala campaign in the last week, and then you also get this Maxine Waters pivot-ish. And the change in trajectory is kind of like what I'm focused on. We definitely need more, like it can't just like stop here. But like, come on, like that's three data points, four data points, all in a very short amount of time, that is something.

• 12:03Ryan Sean Adams?

  I do think that the Mark Cuban, by the way, there was another clip, I don't know if you saw him on CNBC, but he was like, I want to be, I want Gary Gensler's job, I want to be the SEC chair. I don't know if you saw that. That has to be coordinated. I know he's working like directly with kind of like Kamala Harris people. It's got to be coordinated in some way, so maybe there's some signal there. But bottom line for me is it's going to depend on who she surrounds herself in her administration.

• 12:28David Hoffman?

  100%. She can say pro crypto words, but if she puts Barat, I can't remember how to pronounce his last name, we're going to talk about it later. If she puts Barat back in power, then like... I don't care about your pro crypto words, like that's an anti crypto action.

• 12:41Ryan Sean Adams?

  All right, well, okay, we'll leave that as the line for like, like sort of what a true pivot means. Because if she takes the Operation Choke Point Biden administration and forklift and puts them in the same place, and that's her new administration, so she takes Biden's choke point people and she's like, this is mine now, and it's the exact same people running the show, you're going to get the exact same results.

• 13:02David Hoffman?

  I agree with that. I agree with that. Getting into the markets this week, which are very, very green. And if you were using the products that we talked about last week from our friends and sponsors over at Index Co-op, they are even more green for you, sir. Index Co-op is producing these leveraged ETH tokens, this 2X ETH. So the 1.73% that ETH is up in the last 24 hours, it's up more on the week. You would have gotten 3% using the Index Co-op ETH 2X token. This is a leveraged token that just uses AVE and Uniswap in the background. It makes a leveraged position in AVE, and you can buy that as basically a tokenized position. And so you can get some leverage with ETH because, you know, it feels, we're feeling bottomy. Prices don't feel exuberant, prices feel low.

• 13:47David Hoffman?

  This is my take, this is not anyone else's take, you shouldn't follow my take, but that's kind of how I feel. And so since this is a leveraged AVE position, the fees are lower generally than when you are using herps, but not always.

• 13:59Ryan Sean Adams?

  And this is for non-US citizens, we should emphasize, because of the administrative state.

• 14:04David Hoffman?

  Because of the Democrats, because of the Democrats.

• 14:07Ryan Sean Adams?

  Thank you. Because we are still in very much a pre-pivot scenario with the administration that's in place right now. So Americans cannot use this tool, unfortunately. David, tell me about the markets this week.

• 14:20David Hoffman?

  Bitcoin.

• 14:21Ryan Sean Adams?

  Yeah.

• 14:22David Hoffman?

  Starting the week, 63,700 was where we started, up 3.5%, a solid 3.5% to 65,300. Yeah, that's right. Good week, good week, good week. ETH price, starting the week, 2,480, up. Ryan, are you ready?

• 14:39Ryan Sean Adams?

  I'm ready.

• 14:40David Hoffman?

  8.2%. Well done Ether, well done Ether.

• 14:44Ryan Sean Adams?

  I've been ready for months, okay?

• 14:47David Hoffman?

  We got one week.

• 14:48Ryan Sean Adams?

  8%.

• 14:49David Hoffman?

  One week of really good gains on Ether, currently clocking in at 2,650 US dollars.

• 14:55Ryan Sean Adams?

  You think, you think we get to 3K in October, that's coming up?

• 14:58David Hoffman?

  I think 3K could come real fast. I think we could honestly see 3K by this weekend. That's like totally within the cards.

• 15:05Ryan Sean Adams?

  Do you know what? Especially David, if we see these flows. You see the ETH ETF flows the last two days prior to recording this?

• 15:12David Hoffman?

  Okay, so I was actually paying attention to this. There's some really interesting shenanigans going on. And I think, I mean, we already kind of know that this is happening, but there's some parallels with both the Bitcoin and the Ether flows. On September the 23rd, we had net outflows of $79 million, which was basically all coming out of grayscale. Bad day. The next day, we had $62 million of inflows into IBIT, into BlackRock. And if you flip over to the Bitcoin ETFs, you see something very similar. You saw $40 million out of grayscale on the 23rd, and then $99 million into BlackRock on the 24th. This is like one dude, one institution, one organization.

• 15:52Ryan Sean Adams?

  Whales moving their money.

• 15:53David Hoffman?

  Whales moving, just like yonking it out of BlackRock, yonking it out of grayscale, paying their taxes. That's why there's a little bit less there because.

• 16:01Ryan Sean Adams?

  You don't think they're just bearish? You don't think they sold? They paid taxes. That's what we'll say.

• 16:05David Hoffman?

  I think they, I think they paid taxes.

• 16:06Ryan Sean Adams?

  For selling.

• 16:07David Hoffman?

  And then they put, for selling, and then they put it back into BlackRock. And so the last two days of the Bitcoin ETFs, plus 136 million, plus 105 million. And then with the Ether ETFs, plus 62 million, followed by plus 43 million. I think two of the biggest days of inflows into the Ether ETFs. Ether ETFs still have a lot of catch up to do, coming in negative 581 million, even after the $100 million of inflows over the last two days. But man, some real big days, real, real big days.

• 16:39Ryan Sean Adams?

  Do you think this will help, David? So more news this week. This is a pretty big deal. The SEC approved options for BlackRock's bit, uh, spot Bitcoin ETF. The first time ever, has never happened, never had SEC approval of options for a Bitcoin ETF. So what is this? Why is it significant?

• 16:58David Hoffman?

  This is the first ever actual physical delivery of an options product for TradFi. I think we already had options on CME, but I don't know how popular those are, at least in comparison to just like whatever Black. BlackRock is going to be able to service you in like the normal places that you get options.

• 17:15Ryan Sean Adams?

  It's physically settled, which is the big differentiator from the same price.

• 17:19David Hoffman?

  You get real Bitcoins from your options trading. And so this is, this will all happen on regulated US exchanges. And this will also just produce net demand for IBIT, for BlackRock. And so this is part of when we said like, oh, these, you know, these ETFs are going to go live. And then they're going to like age like wine. This is another just module. This is, this is why the ETFs are the money Legos for TradFi. We just are climbing on the options money Lego onto the ETF money Lego. And now all of the demand for options, which is way larger than spot, by the way.

• 17:52Ryan Sean Adams?

  Oh, yeah.

• 17:53David Hoffman?

  At least in volume terms.

• 17:54Ryan Sean Adams?

  Right, like derivatives are like 10 to 20x the size of underlying market caps in a lot of different of these types of assets, right?

• 18:02David Hoffman?

  Yeah, I don't know what that means for like TVL or in boomer speak, AUM. But still, it's more.

• 18:09Ryan Sean Adams?

  Well, one thing we know that it means is when you have, when you have devices like this, you have a lot more liquidity, right? So large institutions can now feel much more comfortable buying in size, which is sort of what large institutions like to do. Because they could buy in size and they can also exit in size at any time. So they're not kind of hemmed in. So it's a, it's a pretty big deal.

• 18:31David Hoffman?

  Keeping an eye on the ETH Bitcoin ratio these days, 0.040 is where it's at. So keeping it, keeping it the head above 0.04, which is also still very goddamn low.

• 18:43Ryan Sean Adams?

  Was this the bottom? Did we see it last week?

• 18:45David Hoffman?

  That could, honestly, that looks like a fair bottom to me. I don't know, man. Can't, can't go to zero.

• 18:50Ryan Sean Adams?

  Are you keeping up with our friend Ben Cowan?

• 18:53David Hoffman?

  Yeah, he put out a pretty long video about like.

• 18:55Ryan Sean Adams?

  He's bottom calling, right?

• 18:56David Hoffman?

  He's, he's basically bottom calling. He's saying like, don't ever try and time the bottom. That never works, but like, we're pretty goddamn close. So again, 0.04 on the ratio, low as fuck.

• 19:08David Hoffman?

  Total crypto market cap clocking in at 2.39, almost at 2.4 trillion dollars. Very, very healthy. And we also have some movers of the week. Say, congrats to all Say holders because you are up 45% in the last seven days. Wow, nice one. Also, Say is part of like the Say, Sui, Aptos, kind of conglomerate of vibes.

• 19:32Ryan Sean Adams?

  Superfast Alwin.

• 19:32David Hoffman?

  Superfast chains, yeah. Aptos is up 25%, Sui is up 25%, Say, the big one, up basically 50%. But 50% puts Say at 4.8 billion dollars market cap, liquid. Aptos is at nine and Sui is at 17. So there's actually a pretty like far gap between the valuations of these things.

• 19:54Ryan Sean Adams?

  Yeah. Do you think, so are these the Solana killers? Is that kind of the news?

• 19:58David Hoffman?

  This is this set of the people that are now vying for fourth place. If you believe that Solana has clinched third, these are all now going for four.

• 20:06Ryan Sean Adams?

  A lot of tweets, right? Basically like, okay, for everyone who missed the Solana trade, the Sol trade, what do you do next? And people are saying, at least this week it was Say. That's the week to be in.

• 20:18David Hoffman?

  Right. And then, and then once one of these, one of these three projects clinches fourth, then it's like, all right, who's going to be the Say killer? And then that person is going to clinch it and then like, all right, who's going to be the Say killer killer? And then we've been doing this for so long.

• 20:32Ryan Sean Adams?

  Euthanasia roller coaster. Around we go. I can't wait. That's what the bull market's all about. It's bullish though. You start to see these alts going crazy. Something else that's bullish, Vitalik was bullish on this. He said, "This is amazing to see. Improving worldwide access to basic payments and finance has always been a key. It's great to see Cello getting traction." Okay? So Cello apparently just passed Tron in daily active addresses for stablecoin usage. So Tron has been a killer with respect to actual real world usage of stablecoins, particularly in emerging markets. Tron has just been crushing it. And this is Cello actually passing them. I don't know if it was a sustained pass, but at least for a few days in daily active addresses for stablecoin usage.

• 21:18Ryan Sean Adams?

  So not total volume, but like small mini transactions. They're saying a lot of this growth, growth looks like it's coming out of like Africa, places like Nigeria, potentially, and Vitalik weighing in. Now, is Cello, David, is this a fully fledged Layer 2 yet? Like, are we at stage anything?

• 21:35David Hoffman?

  No, not yet. It is currently an EVM-compatible Layer 1. It's had this governance vote to turn itself into a Layer 2. But that's not like a trivial thing to do. So that is in process, but it will eventually one day become an Ethereum Layer 2.

• 21:52Ryan Sean Adams?

  Of course, thanks to Mantle for this nice Layer 2 update. And I forgot to thank Kraken for the charts early in the episode. Just beautiful charts, especially when, you know, E is up 8% on the week.

• 22:01David Hoffman?

  Yeah, keep them, keep them green, Kraken. Can Kraken just yoink the sell button?

• 22:05Ryan Sean Adams?

  Yeah.

• 22:06David Hoffman?

  Why don't they do that?

• 22:07Ryan Sean Adams?

  Yeah, just, just for a little while.

• 22:09David Hoffman?

  Just for a little, just for fun, just a day, you know?

• 22:11Ryan Sean Adams?

  Yeah, just see what happens, see what happens. Okay, you ready for the bazooka now? The Beijing bazooka?

• 22:16David Hoffman?

  Did you make that term?

• 22:17Ryan Sean Adams?

  No, I stole this term. Okay, great artist steal. That's what I'm doing here. This is Mike NATO saying, "The Fed started its easing cycle." That's what we talked about last week. Was it, was it last week that rates went up or the week before? Something like that.

• 22:30David Hoffman?

  It was between those two things, yeah.

• 22:32Ryan Sean Adams?

  Okay. Powell, you know, cranking up rates. So this has ripple effects all over the world. One of those ripple effects, it appears to be, is China. A lot of compounding factors going on that's giving us potentially this Beijing bazooka. So this is Michael NATO. "The Fed started its easing cycle, which had given China the permission and runway to go into high gear with quantitative easing." China, quantitative easing? Hey, that was our term. We do QA, QE in the US. Looks like they're going to do it as well. So here's what's happening. The context is China is currently mired in deflation right now. Okay, so not inflation. Deflation and growth is slowing at a standstill.

• 23:17Ryan Sean Adams?

  Hard to get good data metrics out of China, but like everything that people can see. Close sourced economy. Okay, so what do you do when you have deflation? And when you have slow growth? Well, you start printing money, David. That's what you do. Generally, deflation comes from a lack of supply of monetary in the economy. Easy solution. Yeah, you're like, oh, we can just add money to the economy and it grows more? Like, why wouldn't you do that? So this is an article on Yahoo Finance, Wednesday, September 25th. What China's Biggest Stimulus Since The Pandemic Means For U.S. Investors. The biggest stimulus since the pandemic? That's what they're calling this. And so let's talk about the monetary stimulus here.

• 23:56Ryan Sean Adams?

  So on September the 24th, the People's Bank of China, that's their Fed, announced a few things. They were going to cut the reserve requirements for banks by 50 basis points. They were going to lower interest rates by 1.5%. 150 bips? I don't know. It's like, maybe it's a different thing, but yes, 150 bips, David, if we want to convert that into bippage. Reducing interest rates on existing mortgages by an average of 0.5%. There's a few other, 0.5%. There's a few other things, but it all amounts to basically injecting more monetary supply into the Chinese banking system. So that is full on QE.

• 24:38Ryan Sean Adams?

  That is full on growing the treasury on the balance sheet of the People's Bank of China. And we call that money printing, David, and that's the Beijing bazooka. Are you ready? Because that's not all, but have you absorbed that? I have absorbed the bazooka, yes. Okay, so fiscal stimulus too might be coming. So everything we just talked about is on the monetary side. So that's the central bank side. We also have the fiscal side to talk about, which is government dispense, Chinese government spend. So equivalent in the U.S. of like, you know, Congress approving some infra plan to just like inject a trillion dollars in the economy, whatever. So this is a message from Walter Bloomberg saying China to issue 284.

• 25:23Ryan Sean Adams?

  Of a billion of sovereign debt as part of fresh fiscal stimulus, according to sources, some of the fiscal stimulus support measures could be unveiled as early as this week. So the QE is in process, the fiscal stimulus is still developing. We don't know all of the details, but it looks like we're not getting just one bazooka. We're getting two bazookas, one on the monetary side.

• 25:45David Hoffman?

  Dual wielding bazookas?

• 25:47Ryan Sean Adams?

  Dual bazookas from China. So, I mean, I don't, it sounds like, I feel like, it feels weird to be excited about all of these, like this money printing. So I don't want to get listeners, you know, get them confused by the tone of this conversation. But, I mean, it's bullish for our crypto assets, David, because they are scarce, they are not sovereign instruments, and because it points to a new era of money printing. So, you know, like fiat's going to continue to inflate.

• 26:19David Hoffman?

  This has been Micah Palito's takes about like, why the L1 trade will always be a thing, because L1s are always like commodity monies. And even your most highly inflating layer one asset is inflating much less than your respective fiat currency. And when the second biggest economy on the world is just doing, you know, quantitative easing, easy money, inflation, lowering interest rates, like this is just good for crypto across the board. This is what our industry is supposed to protect against. Is it really this easy? Like, we just have to hold until they print money?

• 26:54Ryan Sean Adams?

  You know what? It's right on track with Ralph Paul's banana zone conversation, right? Which is like, you know, money printing, money supply, global liquidity is now on the uptrend, and now we're seeing China, you know, throw their hat in the ring. And so other economies may follow. Maybe this positions us perfectly for October and a strong crypto Q4.

• 27:15David Hoffman?

  Wait, oh yeah, I thought September was supposed to be the worst month in crypto, and then October was the best month in crypto. September wasn't that bad.

• 27:21Ryan Sean Adams?

  It wasn't that bad. But maybe this was the worst month.

• 27:25David Hoffman?

  Maybe this was the worst.

• 27:26Ryan Sean Adams?

  And the next months will be glorious.

• 27:29David Hoffman?

  Maybe it'll be the banana zone.

• 27:32David Hoffman?

  What do we got next? Coming up next, the SEC, the entire SEC, all five chair commissioners and the chair, Gensler, appeared at Congress. It was pretty good. I was thoroughly entertained. Yeah. Hester, getting a voice was awesome. Richie Torres just hit it out of the park. We're gonna play some clips so you can catch up on all that. And also some jail updates. Caroline Ellison, going to jail. We got the number. She has to forfeit a bunch of money. So all of this and more, but first, we'll talk about some of these fantastic sponsors that make this show possible. Especially Kraken, our preferred crypto exchange in 2024. If you do not have an account with Kraken, consider clicking the links in the show notes to getting started with Kraken today. If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most-secure crypto

• 28:17David Hoffman?

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• 29:01David Hoffman?

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• 29:43David Hoffman?

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• 29:55David Hoffman?

  The gift that we have always wanted, at least I've always wanted, is hearing Hester Purse give her own independent statements while sitting right next to Gary Gensler. Let's go, let's go hear from Hester Purse right now.

• 30:08Speaker 03

  I think what's happening is that we're trying to be ambiguous because the legal precision carries with it real implications. And this is why people have been coming to us and saying we need clarity. Is the token itself a security? Or is it part of an investment contract? Is it being sold together with an investment contract? If it is, what is that investment contract? And how long does it track along with the token? By using imprecise language, we've been able to sort of suggest that the token itself is a security apart from that investment contract, which has implications for secondary sales. It has implications for who can list it. And I think this is absolutely, we've fallen down on

• 30:51Speaker 03

  our duty as a regulator not to be precise. And so, talking into a footnote that yes, we admit that now actually the token itself is not a security. That's something that we should have admitted long ago. And then just sort of wrestling with the difficult questions.

• 31:04David Hoffman?

  Dude, look at the smile on her face.

• 31:06Ryan Sean Adams?

  Give her a mic to drop. Absolute boss. She just destroyed it. This is

• 31:12David Hoffman?

  The words that we have always wanted.

• 31:14Ryan Sean Adams?

  Yeah, she is two seats down from Gary Gensler as she's saying this, right? Like he's like, they're separated, I think, by two other commissioners, basically, and Gary's the side. And right in front of Congress, just like, yeah, we're doing a terrible job.

• 31:27David Hoffman?

  Yeah, we're fucking up. Sorry.

• 31:30Ryan Sean Adams?

  And by the way, she kept going on, like, this was one of many fantastic clips of Hester Purse. And she kept just being like, telling it like it is, like, we're falling on our duty. It's the chairman's fault, by the way. He has, they kept asking, is it Chairman Gensler? Is the existing leadership that's bringing you down this path? And she was like, yeah, that's what's happening. I loved it. And by the way, Bankless listener, that was David and I live streaming this. That's why you heard us kind of laughing in the background. So we were watching this whole circus live, right? It was fantastic.

• 32:03David Hoffman?

  And then I think our second favorite part, or maybe our actual most favorite part, was Richie Torres. After his first homerun against Gary Gensler, talking about the tokenized Pokemon card, is that a security? I think he went back and, you know, did some trading, did some imaginary sparring against Gary Gensler and came back even more prepared to ask the following question, which you're going to hear right now.

• 32:32Speaker 04

  See, here's the danger I see with the Gensler theory of investment contracts.

• 32:37David Hoffman?

  It's actually the Supreme Court's theory.

• 32:39Speaker 04

  Well, your idiosyncratic interpretation of the Supreme Court's theory. The expectation or promise that an object could appreciate in value or that an object could be sold at a profit in the secondary market, that expectation of profit could be retrospectively attributed to just about any collectible or any consumer good or any piece of art or any piece of music. The trouble with the Gensler theory of investment contracts is that it's so open-ended that it lacks anything resembling a limiting principle. It blurs the line between collectible and security, between art and security. Ms. Crenshaw, does requiring artists and musicians to register art and music with the Securities

• 33:22Speaker 04

  and Exchange Commission raise a First Amendment concern?

• 33:29Speaker 05

  I'm not a First Amendment expert, but I would think the only thing that have to be registered with the Securities and Exchange Commission are securities. And so that's what I would look to determine whether they have to register.

• 33:42David Hoffman?

  Dumb answer.

• 33:43Speaker 04

  Now, in the Stotter Katz case, the SEC not only prohibited the creators from selling NFTs, the SEC ordered the creators to destroy the NFTs.

• 33:53Speaker 05

  Did they really?

• 33:54Speaker 04

  Destruction of artistic expression by government fiat. Raise a First Amendment concern?

• 34:05Speaker 05

  Again, I

• 34:06Speaker 04

  You're not a First Amendment expert?

• 34:07Speaker 05

  I'm not a First Amendment expert.

• 34:08Speaker 04

  Do you need to be a Do you think artistic expression is protected under the First Amendment? Do you need to be a First Amendment expert to answer that question?

• 34:16Speaker 05

  I think the ins and outs of First Amendment law are actually very nuanced, so I would not want to opine on them.

• 34:21Speaker 04

  Do you think the SEC has an obligation under the First Amendment to take care not to have a chilling effect on artistic expression on the blockchain?

• 34:31Speaker 05

  I think we can work together to advance the interests of the industry. And I think our markets are the highlight and of the world because of the laws that have been in place for 90 years.

• 34:45Speaker 04

  You're not answering my question. In a September 12 court filing, the SEC had to apologize for using a term it invented out of thin air, "digital asset security." The fictional term "digital asset security" perpetuates the false narrative that digital assets in themselves are securities. And the Howey case, as you know, Mr. Genzer, the Supreme Court never held that orange groves in themselves were securities. The Supreme Court held that orange groves can be part of investment contracts, which are securities.

• 35:15David Hoffman?

  That's such a good point.

• 35:16Speaker 04

  The same logic applies to digital assets. In my view, using the term "digital asset securities" is as intellectually dishonest as using the term "orange grove securities." Mr. Genzer, would you ever use the term "orange grove securities"?

• 35:32David Hoffman?

  I don't believe I have.

• 35:34Speaker 04

  Or would, right. Because it gives the impression that orange groves in themselves are securities, and that would be misleading.

• 35:40David Hoffman?

  Damn.

• 35:40Speaker 04

  My time is expired.

• 35:42David Hoffman?

  Woo! God, that was good! Oh, no! I love that we are watching our own reaction video. There's something inception about this. There's something self-referential in Ponzi schematic. But I believe in all of my reactions that I did, but I gave live. I want to do them again.

• 35:58Ryan Sean Adams?

  You emphasize it. That was great.

• 36:00David Hoffman?

  That was so good. Orange Grove Securities.

• 36:03Ryan Sean Adams?

  Yeah. I mean, that's kind of the summary. That's what we were there for. You saw Richie Torres actually asking Caroline Crenshaw these questions. He's another commissioner.

• 36:12David Hoffman?

  Right.

• 36:13Ryan Sean Adams?

  Who's pretty much towing the Gary Gensler line around all of this. So anything Gary supports, she's like, "Yep, me too." And it was so good to see someone else in the hot seat. Did not have a reply on whether NFTs are artistic expressions, or how in the world a JPEG or a Yankees ticket could be a security in any form. And then just taking them to task for inventing terms like crypto asset securities don't even exist. And like, just completely like hammering on that. He did it. He just did a fantastic job. There were others too, David. Tom Emmer just went absolutely-

• 36:48David Hoffman?

  Oh my god, Tom Emmer would just nail them.

• 36:51Ryan Sean Adams?

  Yeah. But there was no response, right? He was just like, "I'm gonna say this to you."

• 36:55David Hoffman?

  Yeah.

• 36:55Ryan Sean Adams?

  I've rescinded my time.

• 36:57David Hoffman?

  I've rescinded my time. Yeah, he's pro at rescinding his time.

• 37:00Ryan Sean Adams?

  Yeah.

• 37:01David Hoffman?

  It is a little bit frustrating that like, when Richie Torres started, he started talking to Gary Gensler. And Gary Gensler said, he did the whole like, the thing that you just heard, basically. And then Gary Gensler was like, "I think I know where this is going." Gary Gensler knows who he's going to be bullied by when he comes into this here.

• 37:20Ryan Sean Adams?

  Oh, yeah.

• 37:21David Hoffman?

  He knows Tom Emmer is gonna slam him. He knows Patrick McHenry's gonna slam him. He knows Richie Torres is gonna slam him. And all he has to do is kind of just survive. And then he gets to go and walk home at the end of the day.

• 37:32Ryan Sean Adams?

  Oh, yeah.

• 37:32David Hoffman?

  Which is a little bit frustrating. Like, he just has to make it through these like, five minutes of beratement from very good points. And this is why Caroline Crenshaw is like filibustering. Like, I'm not a First Amendment expert. Like, that's not, you're just saying words now.

• 37:47Ryan Sean Adams?

  Yeah.

• 37:47David Hoffman?

  Like, it's a little bit frustrating.

• 37:48Ryan Sean Adams?

  Things we're not playing, of course, but that were also present is there are some members of Congress, like the Brad Shermans of the world, who are completely high-fiving Gary Gensler on what a fantastic job he's doing cracking down on crypto. It's like, I just can't bear to listen to that again.

• 38:04David Hoffman?

  It's so cringe, yeah.

• 38:05Ryan Sean Adams?

  So Gensler was there for the berating, but he was also there for like the high fives and the cheerleading from other members of Congress.

• 38:11David Hoffman?

  Maxine Waters was just like, the SEC has like done such a great job recouping billions in dollars of fines from people, yeah.

• 38:19Ryan Sean Adams?

  Yeah, it was good. It was entertaining. It was my favorite congressional hearing that I've seen so far, mostly because of Hester Purce.

• 38:24David Hoffman?

  Top five congressional hearings.

• 38:26Ryan Sean Adams?

  All right, tell me, give me the jail updates, David. You promised some jail updates.

• 38:29David Hoffman?

  Jail updates, okay. So I know it's no Sam Bankman-Fried, but Caroline Ellison, the lieutenant of sorts, also ex-girlfriend of Sam Bankman-Fried, has been sentenced. So she is getting two years for her role in the FTX case. She was also ordered to forfeit $11 billion, which she definitely does not. She doesn't have, she doesn't have $11 billion. There's no way she just has $11 billion.

• 38:52Ryan Sean Adams?

  Yeah.

• 38:53David Hoffman?

  The crimes which she pled guilty to carried a maximum sentence of 110 years in prison. Her lawyers argued for no prison time due to her cooperation. Same judge as the SBF case, Judge Louis Kaplan, said at the sentencing hearing that he wasn't comfortable with remorse and cooperation being a get out of jail free card in one of the biggest financial frauds in history. Caroline said, "Not a day goes by when I don't think about all the people that I hurt, my brain can't even truly comprehend the scale of the harms I've caused. This doesn't mean I don't try."

• 39:25Ryan Sean Adams?

  Yeah, a lot of people were upset by this, like only two years versus SBF. And what was the other guy, Brian? I think like it's something got near 10 years or something like this. And you know, like I don't necessarily disagree with that, given the severity of her crimes. But I will say, this is basically plea bargain stuff. Do you know that whole, like game theoretical prisoner's dilemma, right? Where there's that box outside of the, you know, when you're trying to calculate the Nash equilibrium of the defect box.

• 39:52David Hoffman?

  Yeah, the defect is always bad, but not that bad.

• 39:55Ryan Sean Adams?

  Yeah, and if you defect, you know, you only get two years. Right? And it's literally what she got. So she defected. It was prisoner's dilemma. And Sam Bankman Freed was on the wrong, in the wrong quadrant.

• 40:07David Hoffman?

  Yeah, he was on the don't defect, don't cooperate.

• 40:11Ryan Sean Adams?

  Well, he had no choice. He's gonna defect on himself. He had like no choice, but um.

• 40:15David Hoffman?

  Yeah, that's true.

• 40:16Ryan Sean Adams?

  Yeah, so.

• 40:17David Hoffman?

  Well, he could have like, he could have like pled guilty. He could have not taken a stand and then hopefully have just like, like, he just did not cooperate. He like did witness tampering and all that kind of stuff.

• 40:28Ryan Sean Adams?

  Well, I think if Caroline didn't cooperate, they probably would have both gotten like 10 or 15 years.

• 40:33David Hoffman?

  Yeah, she would be, she would be 10 plus years.

• 40:35Ryan Sean Adams?

  Yeah, so now.

• 40:36David Hoffman?

  I would have, I would have defected so fast.

• 40:40Ryan Sean Adams?

  The jilted ex-girlfriend? What do you think's gonna happen, Sam? You know your game theory, buddy. Oh, by the way, do you hear this? It wasn't even in the agenda. Sam Bankman, in a weird twist of fate in the universe, Sam Bankman Freed is now in the same jail cell as P Diddy?

• 40:56David Hoffman?

  P Diddy? I have intentionally not looked at any P Diddy related news. I don't care about P Diddy news. I don't know what parties he's gone at. Not my story. Don't care about it.

• 41:06Ryan Sean Adams?

  Well, he is.

• 41:06David Hoffman?

  Yes, SBF is.

• 41:07Ryan Sean Adams?

  In jail. I'm sure they're talking about, you know, crypto and what, you know, like what assets to buy and like, how do we all get in here? Can you imagine that? All right, that's not the only.

• 41:16David Hoffman?

  Third update, third jail update.

• 41:18Ryan Sean Adams?

  More jail.

• 41:18David Hoffman?

  CZ is getting released from jail because it's been four months. So after four months in prison after pleading guilty, he will be out of jail. This does not mean that he gets to return to Binance. He is forever gone from Binance. But he is indeed getting out. I hope he continues up with that education startup. I was really excited about that.

• 41:37Ryan Sean Adams?

  I would, I would, I would love to talk to him. CZ, if you, well, can you get podcasts? As someone on CZ's team, we'd love to have, you know, kind of your crypto exit interview. So come on, Bank, let's just talk about it.

• 41:48David Hoffman?

  How, also, how was jail?

• 41:50Ryan Sean Adams?

  Yeah, different jail experience. No P Diddy over there. Coming up next, Nic Carter says the feds murdered, murdered. It wasn't suicide, some banks. As part of Choke Point 2.0. David, you're gonna have to give me the details on that one. And the Solana breakpoints announcements, what were the most interesting ones? We'll get to all that, but before we do, we want to.

• 42:08David Hoffman?

  Thank the Layer 2 that made this episode possible. That is our friends over at Mantle. They have yield-bearing ETH tokens. Go check it out. New projects are coming online to the Mantle Layer 2 every single week. Why is this happening? Maybe it's because Mantle has been on the frontier of Layer 2 design architecture since it first started building Mantle DA powered by technology from EigenDA. Maybe it's because users are coming on to the Mantle Layer 2 to capture some of the highest yields available in DeFi and to automatically receive the points and tokens being accrued by the $3 billion Mantle Treasury in the Mantle Rewards Station. Maybe it's because the Mantle team is one of the most helpful teams to build with, giving you grants, liquidity support, and venture partners to help bootstrap your Mantle application. Maybe it's all of these reasons all put together.

• 42:52David Hoffman?

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• 43:36David Hoffman?

  Download the Uniswap Wallet today on Chrome, iOS, and Android, and don't forget to claim your free uni.ETH username directly in the mobile wallet. Start swapping smarter with Uniswap. Launching a token? Don't let complex legal and tax issues slow you down. Toku provides specialized support to optimize your launch and ensure that you as a founder, and your team, and your investors, get the most tax-efficient outcomes. The Toku team understands the crypto space inside and out, and will ensure your token launch is fully compliant while maximizing tax efficiency. Toku can connect you with the best attorneys if you need them to make sure that you have the best advice, and Toku can help to optimize your taxes so you pay the least possible amount of taxes while still maintaining legal compliance. With Toku's guidance, you can concentrate on building your company while Toku handles the logistics.

• 44:18Ryan Sean Adams?

  Token launches don't have to be complicated. Talk to Toku today to get a free initial token valuation.

• 44:23David Hoffman?

  Ryan, we need to go back down into history, into memory lane, back into March of 2023, to the Silicon Valley banking crisis that also took down Silvergate and Signature Banks. The focus of this story is going to be Silvergate, but I think the other banks that also shuttered during that time are also highly relevant here. What do you remember about March of 2023? What do you remember about that story?

• 44:47Ryan Sean Adams?

  So there was a bank crisis, right? Of sorts, and a lot of people, like the narrative was basically that it was the Silicon Valley bros and also the crypto bros, maybe disproportionately the crypto industry that was doing risky nefarious things. You know, go look at Stan Bank, Medfreed and FTX. They're doing more of that only in our banking system. That's what Silvergate is doing, Signature Bank is doing. They're doing all of these risky loans. And so withdraw your funds, there's a run on the bank, there, you know, a fraud going on. Elizabeth Warren was saying things at the time about the, you know, these nefarious banks and how people should withdraw funds from them. Later, I believe there were actually charges by the SEC dropped against Silvergate Bank.

• 45:33Ryan Sean Adams?

  So it's basically like these banks were, these crypto banks were engaging in risky behavior and fraud, and they needed to be shut down. And they did shut down in the aftermath of that.

• 45:43David Hoffman?

  They did shut down, yeah. And notably, Silvergate, Silicon Valley Bank, Signature Bank, Silvergate especially, and also Signature especially, were crypto banks. They had over 65, 70% of their depository base coming from crypto customers.

• 45:59Ryan Sean Adams?

  And why was that?

• 46:01David Hoffman?

  Because they were the only banks that would satisfy crypto customers, like all of the big banks, Bank of America, which they wouldn't, they don't serve us, they kicked Bankless out. They kicked most people out. And so that opportunity of serving crypto customers was taken up by Silvergate, Signature and Silicon Valley, and again, primarily Silvergate.

• 46:20Ryan Sean Adams?

  And that's, so at the time, it caused all sorts of chaos, like USDC even wobbled, right? Had to get different banking customers, it caused all sorts of chaos. But anyway, that's the official narrative, that these banks were engaging in shenanigans, in particular Silvergate Bank was.

• 46:34David Hoffman?

  Yeah, and also notably FTX Alameda Research banked with Silvergate. And so there's a bunch of just like unfortunate proxy facts that don't put Silvergate into like the best light. And so this narrative is like not hard to spin. Silvergate voluntarily liquidated their bank, and that actually raised a bunch of eyebrows because like voluntary liquidation implies that you actually don't need to liquidate. And so this is kind of the story that I think Nic Carter was investigating. And this is the article that he published, he revealed in Pirate Wires after some new statements, some new evidence came to light that this voluntary liquidation was perhaps

• 47:13David Hoffman?

  due to unconstitutional choke pointing by our regulators. New evidence suggests.

• 47:20Ryan Sean Adams?

  He said that the regulators came in and murdered the bank. He said it didn't die from suicide, it died from murder.

• 47:26David Hoffman?

  Okay, so let me run through some of the the highlights of this article. So, March 8, 2023, Silvergate leadership announced its intention to voluntary liquidate the bank, an unusual move. Normally failed or failing banks are sent into receivership, then sold off to larger sounder banks. But given the risk of criminal liability from the FTX fiasco hanging over the banks, maybe it just made sense to shut down completely. That was the thought at the time. Sources are saying that a newly imposed 15% crypto deposit limit rendered Silvergate's core business model unviable, contributing significantly to its demise. That's one of the new things that is being unearthed, that the regulators came in, all of them, FDIC, the SEC, the Federal Reserve, saying, hey, unofficially,

• 48:10David Hoffman?

  if you guys have more than 15% of your deposit base coming from crypto customers, you can't. You gotta stop. You gotta get it down below 15%. Having a 15% cap on crypto deposit limits would render SEN, S E N, Signet, and CBIT as products, which would render them useless. What are these things? Silvergate Exchange Network, SEN, is a crucial piece of infrastructure for crypto's institutional players for inter-exchange settlements. So imagine, just like all these crypto exchanges, being able to actually send banking dollars instantaneously beyond business hours. This was just infrastructure to allow all of their KYC'd customers to send money between each other. So Signature had one of these things, Silvergate had one of these things, and also Customers Bank had one.

• 48:55Ryan Sean Adams?

  These networks were like the lifeblood between the traditional banking system and crypto, basically.

• 49:00David Hoffman?

  Exactly. So this newly 15% crypto deposit limit just renders that useless because you need to have a critical mass of crypto customers under the same banking roof. This is an internal banking infrastructure. It's an internal product. Additionally, following the liquidation, Silvergate faced regulatory actions, $20 million fine from the California Department of Financial Protection and Innovation, $43 million fine from the Federal Reserve, $50 million settlement with the SEC. All of these fines, settlements, enforcement actions coming in and being not a good look. But notably, after paying these fines, Silvergate had over $100 million remaining on its balance sheet. And then also, it weathered the storm of the banking crisis.

• 49:43David Hoffman?

  So post-banking crisis, Silvergate had paid fines and was also sound. They made it maybe by the skin of their teeth, but they were having inflows back into their bank as Bitcoin appreciated, crypto deposits appreciated, they had an incoming inflows into their bank. And that's when they decide to voluntarily liquidate. Critics argue that these regulatory actions and fines were attempts to establish a public narrative of mismanagement rather than acknowledging the impact of the behind-the-scenes regulatory pressures. The situation raises questions about the true motivations behind the regulatory approach to crypto-friendly banks and the potential for regulation by bullying in the financial sector.

• 50:25David Hoffman?

  So the claim here is that these fines and these enforcement actions are like just kind of painting Silvergate in a really bad light to cover up the fact that the real reason that they had to shutter was that a crypto bank who serves crypto customers, who gets their revenue and profits from crypto customers cannot be a crypto bank if they are imposed upon a 15% limit on the depository base.

• 50:50Ryan Sean Adams?

  The 15% thing kills the banks. It's like going to Smoothie King and saying, you guys can only, smoothies can only be 15% of your revenue moving forward. It's freaking Smoothie King. That's what they do. They sell smoothies. If you do that and you impose that, you don't have a Smoothie King.

• 51:07David Hoffman?

  I've never heard of Smoothie King.

• 51:10Ryan Sean Adams?

  My kids love it. They sell smoothies. That's all they do, right?

• 51:14David Hoffman?

  I figured.

• 51:15Ryan Sean Adams?

  And you destroy the entire revenue source. So that's why they shuttered. Now, in all of this, Silvergate may not have been perfect through all of this. I don't think that's what Nick is necessarily implying. He is implying, though, that... When Silvergate got through this crisis with the skin of their teeth, the regulators came in and gave them a beat down, an absolute beat down, to the extent that they just like could no longer survive. It was no longer worth it for them to survive. So they basically murdered the bank. They caused it to cease to exist. And regulators can't do that to private companies, can they?

• 51:49David Hoffman?

  Yeah, it's unofficial guidance of like, hey, you're 15%, stay below 15% or else. And so like coming out of this banking crisis, which a part of the story is the inciting of that banking crisis by Senator Warren's comments and also potential collusion with infamous short seller Mark Cahodes, who created this fake but convenient story and also apparently sent it around Congress and the Senate to be like, hey, look at this, like, look at all the fraud that's going on over there. Like, these people should go. And then also doing the short selling. And so like Elizabeth Warren and her comments are being incited as like part of the reason why there was a bank run in the first place. But Silvergate made it through all of that.

• 52:33David Hoffman?

  It was maimed, it was harmed, it had fines to pay, it had a diminished depository base, but it was alive. But it was so weak that the regulators just were able to take it out back and shoot it. And I was like, oh, everyone is like, well, that thing was gonna die anyway. So it makes sense that it's dead.

• 52:50Ryan Sean Adams?

  I get it. It's a compelling story. There's some facts and evidence on the Nic Carter take here and then the counter narrative take that I think should be. What I think we need, David, is what I would support is a congressional hearing on this. So you should be doing. If the government does something that is constitutional, it's like not totally proven, the facts aren't out there, then do a congressional hearing. I think that's where this should go.

• 53:12David Hoffman?

  Nick's final notes in his article, killer article, not just because of just the evidence and the analysis, but the prose is also, he's such a good writer. Yeah. So his final notes, even when I was initially investigating Silvergate and Signature, a number of bankers sympathetic to my cause told me it wasn't worth publicly supporting Silvergate, muttering ominously that the bank may have indeed done some reprehensible things. But this ended up not being the case. Silvergate was a victim of a scathing and unconstitutional regulatory crackdown, an imperfect victim, but a victim nonetheless. Ultimately, it's precisely these marginal cases, the ones that no one wants to stick up for, where we have to draw the line. What happened to Silvergate was a travesty, and the public deserves to know the truth.

• 53:57David Hoffman?

  Sympathetic members of Congress should hold a hearing and give executives at affected banks the chance to testify with a waiver on criminal liability for sharing confidential supervisory, uh, supervisory information. Let's get a hearing.

• 54:13Ryan Sean Adams?

  Let's do it.

• 54:14David Hoffman?

  Let's get a hearing. There are members of Congress, there are senators who listen to this podcast. Let's get a hearing.

• 54:20Ryan Sean Adams?

  Let's get Richie Torres to ask some questions there.

• 54:22David Hoffman?

  Let's get some Richie Torres to ask some questions. That's right.

• 54:25Ryan Sean Adams?

  Uh, David, Eigenlayer, uh, the airdrop, well, no, not the airdrop, the tokens become transferable. When does that happen?

• 54:32David Hoffman?

  Uh, very, very soon. The transfer restrictions on the Eigen token will be removed on the 30th. That is in, uh, three days. So if you are staking your Eigen, uh, that there is a seven day withdraw cooling period. So if you, uh, want to get liquidity on your Eigen tokens, you actually need to go press that button because you won't get the tokens unstaked for seven days. The current valuation of Eigenlayer on Perps, trading at $6.5 billion valuation, which I think is a lot lower than I think people once upon a time, uh, hypothesized about Eigenlayer.

• 55:03Ryan Sean Adams?

  Were you in the double-digit Billy Club?

• 55:05David Hoffman?

  There's a lot of double-digit Billy, Billy calls for Eigenlayer. I think 6.5 is much, obviously, much more, much closer, closer to earth. Uh, I thought this, you want to explain this meme?

• 55:16Ryan Sean Adams?

  No, I have never seen this meme.

• 55:18David Hoffman?

  This is, uh, Jimmy, Jimmy Rag, uh, Jrag on Twitter has like become one of my favorite, uh, Ethereum, it's not just memes, it's just like really good takes, uh, but he's got this, uh, Jesus, take the wheel, uh, meme, but, but it's not Jesus, it's Sury Ram. Uh, and he says, because of the seven day withdraw period, I'm strapped in on the roller coaster for the first few days of Eigen trading. Sury Ram, take the wheel. Yeah. And then, and then the quote is like, I'm not riding Eigen to zero Sury Ram. And then Sury Ram is saying, haha, do it, it'll be fun, Maul.

• 55:51Ryan Sean Adams?

  There's no way Agon's going to zero, but you know, good meme. Tell me what happened at Breakpoint, David.

• 55:58David Hoffman?

  No, you tell me. You tell me what happened.

• 56:00Ryan Sean Adams?

  You want me to tell you?

• 56:01David Hoffman?

  Yeah, I want you to tell me.

• 56:02Ryan Sean Adams?

  You're right, because you are the soul bull, so it'd be more neutral coming from me, right? It's like I'm going to temper it a little bit.

• 56:08David Hoffman?

  Am I the Bitcoin bull or the soul bull?

• 56:09Ryan Sean Adams?

  I don't know.

• 56:10David Hoffman?

  Why do I get the non-Eth bull labels?

• 56:13Ryan Sean Adams?

  Okay, so three things I think are worthy of highlighting. The first is this, this is a client upgrade and a client that the Solana community has been very excited about, FireDancer. So the early version of a new Solana client called FireDancer is now live on mainnet. They're calling this FrankenDancer, because I think it's not, it's fully formed, so there's some Frankenstein elements to it, it appears. So this is going to be an incredibly fast Solana client and really crank up-

• 56:42David Hoffman?

  This is the merge for Solana.

• 56:44Ryan Sean Adams?

  Yeah, it's, yes, it's a big deal, like if you're from, you try to ETH and Ethereum merge was a big deal. This is a thing that the Solana community has been excited about for a very long time, because it's fulfilling the social contract, which is like, you just jack up, max up transactions per second on Solana.

• 57:01David Hoffman?

  All other things are secondary.

• 57:03Ryan Sean Adams?

  Just do that, just do that. So the key benefits are improved performance, the idea, and testnet results achieve 1 million transactions per second in synthetic tests on the 100 nodes, that's what they showed. So FrankenDancer-

• 57:17David Hoffman?

  Synthetic tests, synthetic tests, I love that.

• 57:19Ryan Sean Adams?

  FireDancer now running on testnet, they don't know when it's going to hit the mainnet, so the Solana community hopes next year. I think this will be pretty competitive with some of the other really fast Layer 1s, like Monad, for instance, that are going to be coming online. And also the Layer 2 community, like Mega ETH, the, you know, etc. Sui and Say are also doing this.

• 57:38David Hoffman?

  The Layer 2 giga gas movement, yeah.

• 57:39Ryan Sean Adams?

  Yeah. All right, why don't you take the second? So that was the first, what's the second?

• 57:42David Hoffman?

  Solana Mobile has introduced Seeker, a new version of the phone, a new phone.

• 57:47Ryan Sean Adams?

  New phone.

• 57:48David Hoffman?

  So lighter, more affordable, better camera and battery, of course.

• 57:52Ryan Sean Adams?

  But does it come with airdrops? That's what I want to know.

• 57:55David Hoffman?

  Yeah, because that was the whole reason by buying the first one.

• 57:58Ryan Sean Adams?

  That was, it was a great investment for people who bought the original.

• 58:01David Hoffman?

  Yeah. Okay, so there's a seed vault wallet. So I'm assuming there's some like relationship between the security of the hardware and the seed phrase that comes out of the phone. Just optimizing for security. That's pretty cool. Some other things, DAP store improvement, ZK compression on the phone somehow. And then integrated deep in apps like Helium Mobile, so you can get free four months of internet from Helium. And then also lastly, Franklin Templeton plans to launch a mutual fund on Solana. Cool.

• 58:29Ryan Sean Adams?

  It could be anything. I actually don't know. I haven't looked into the details. Could be like bonds, equities, you know, you know, your mutual funds. So that's, you know, TradFi coming to Solana. Overall, I would say Breakpoint sounded fantastic. There's a lot of buzz coming from there.

• 58:42David Hoffman?

  The, aside from the actual specific announcements, I think just the big news is just like, apparently there's just a flux on the people there.

• 58:49Ryan Sean Adams?

  It was alive and well, and they timed the announcements. They had TradFi there.

• 58:56Ryan Sean Adams?

  PayPal representation, talking about PayPal, a stablecoin. So well-executed conference. And I think the Solana community came back incredibly excited about the future there. A quick follow-up on the Pavel Durov story that we started, I guess that was, you know, weeks ago now at this point, where Pavel Durov, the founder of Telegram, was arrested by authorities in France. And we went through those charges there. The update this week is Telegram has said it will hand over users' IP addresses and phone numbers to authorities who have search warrants or other valid legal requests. Pavel Durov said this, "To further deter criminals from abusing Telegram's search, we have updated our terms and privacy policy.

• 59:36Ryan Sean Adams?

  We've made it clear that the IP address and phone numbers who violate our rules can be disclosed to relevant authorities in response to valid legal requests." So basically, he wasn't cooperating as much as authorities wanted him in terms of revealing IP addresses and phone numbers. So Pavel Durov and Telegram, rather than being arrested, rather than being banned from various nation-states, he's just going to hand over the data to the authorities. This is kind of the conclusion I expected, to be honest. If they are centralized, if they do collect this data and the authorities say, "Give us this data or else we'll throw you in jail." If you're a large tech company, you will give them the data because you don't want to go to jail. So.

• 1:00:20Ryan Sean Adams?

  Kind of an expected outcome here from my perspective.

• 1:00:25David Hoffman?

  Yeah, if it can be regulated, it will be regulated. Kind of reemphasizes the point of a signal, I think, in this day and age. All right, moving on to two raises of the week. Celestia raised $100 million in a new round, led by Bain Crypto Capital, along with 1KX Robot Ventures and Placeholder. And so this was a token sale from the foundation at some discount, I think some undisclosed discount for the actual current liquidity of the token. Because the idea here is if they just sell it on the open market, then they'll suppress the price and Celestia's just not sufficiently liquid. So selling $100 million of Celestia token to all of these crypto venture firms at some sort of discount.

• 1:01:06Ryan Sean Adams?

  I gotta say, I think Celestia is a pretty interesting project, like overall. And they're kind of like executing something similar to the Ethereum roadmap. It's like, I saw a tweet this week on this news that was just basically like, Solana actually isn't Ethereum's number one competitor. It's not even close. Celestia actually is.

• 1:01:22David Hoffman?

  Yeah, I tweeted that same tweet out forever ago. Celestia is the only other Layer 1 blockchain that is explicitly on the rollup-centric roadmap.

• 1:01:30Ryan Sean Adams?

  Yeah, it's a module chain thesis and they're going all in on data availability, which is basically Ethereum strategy right now. So that's gonna be something, we'll have to see how that, all that plays out. There's another raise on the week that was pretty exciting, Infiniti. So this is Kane Warwick. Are you sure you want to talk about Kane Warwick's project when you are like, dazed from getting into a literal, physical, like punching match?

• 1:01:54David Hoffman?

  Physical altercation.

• 1:01:55Ryan Sean Adams?

  With the founder of this app? Choose your words carefully, my friend. They just raised $64 million. Why is this interesting?

• 1:02:03David Hoffman?

  So this is a, call it an ICO. They're calling it a patron sale because you are buying these NFTs. There's actually no like explicit connection to these NFTs and like. Ownership of Infinix. I think it's kind of just like a big

• 1:02:15Ryan Sean Adams?

  Should Gary Gensler cover his ears right now? Like, are we saying something?

• 1:02:18David Hoffman?

  Yeah, Gary Gensler, don't listen to this. Fuck off. But yeah, so you, the, the patron sale has been opened up to people who have been like users of Infinix, some of the yield farmers of Infinix. There's been things to do on Infinix. And so, and there's also been kind of a whitelist. It hasn't been completely open to the public, but if you wanted to get in, if you were motivated to get in, there were ways to get in. You could play this one game on the website.

• 1:02:39Ryan Sean Adams?

  That's the sale, but what is this? What is Infinix?

• 1:02:42David Hoffman?

  So Infinix is basically trying to go after basically Coinbase, Kraken, Binance, all the centralized exchanges that also run their own infrastructure. But Infinix instead just uses DeFi in the backend. So it's taking, the claim here is that DeFi is feature complete

• 1:03:01Ryan Sean Adams?

  It's ready.

• 1:03:01David Hoffman?

  With centralized exchanges, except it's just fragmented and it's got a shitty UX. So Infinix is this thin centralized front end that you can use to do all of the things that you're familiar with on Coinbase, Kraken, Binance. But it just uses the best offerings that DeFi has in the backend and it takes care of that gap. So it's not chainy. Like, you're not approving transactions. You're not, you know, using a wallet. When you sign in, you don't use a wallet. You use a pass key. So I use my, like, my password manager to manage that.

• 1:03:30Ryan Sean Adams?

  It's pretty cool, right?

• 1:03:31David Hoffman?

  It's very cool.

• 1:03:32Ryan Sean Adams?

  It's very cool. Yeah. And we should do a disclosure too. Bankless Ventures is going to be an investor in this. So we're bullish on this, but we are bearish Kane Warwick's

• 1:03:42David Hoffman?

  We are bearish Kane Warwick.

• 1:03:42Ryan Sean Adams?

  David Hoffman versus Kane Warwick fight. Bearish that, but bullish this.

• 1:03:46David Hoffman?

  It's really good that there's this very competent man named Igor, who is leading this Infinix thing, because when I destroy Kane, there won't be a Kane left over to lead this, like, Infinix project.

• 1:03:57Ryan Sean Adams?

  All right. Well, I gotta, now I gotta go check on Polymarket. So what, what are the polymarket ads between the David Hoffman Kane Warwick fight? We are looking at, wow, the, the markets, David, it's a, they're giving you a 35% chance.

• 1:04:10David Hoffman?

  Underpriced, underpriced.

• 1:04:12Ryan Sean Adams?

  This is what, I'm reading this right. Hoffman wins at a 35% chance. So Kane wins at a 65% chance.

• 1:04:18David Hoffman?

  Yeah, that's how math works. That's, that's underpriced. Buy. You should buy that.

• 1:04:24Ryan Sean Adams?

  It was, I was actually lower. So there's opportunity to buy.

• 1:04:27David Hoffman?

  Yeah, I got down to 23%, which is just stupid.

• 1:04:31Ryan Sean Adams?

  Give us the case. Why should we be net buyers of these odds here?

• 1:04:35David Hoffman?

  Well, they're, okay, I typed in a full analysis because a bankless employee is like, "How do you think about your odds here?" Do you also want me to give you the full analysis of this whole thing?

• 1:04:43Ryan Sean Adams?

  All right, so give me the full download. I made my decision in my heart, David. Let me just say that, okay? I know who's gonna win in my heart.

• 1:04:50David Hoffman?

  You already have a fuck-ton of Hoffman exposure.

• 1:04:52Ryan Sean Adams?

  But I have not invested in this market yet, so give me the bull case for Hoffman win here.

• 1:04:58David Hoffman?

  Oh, I'm giving you my fair calculus. I'm not giving you the bull case.

• 1:05:02Ryan Sean Adams?

  Oh, yeah.

• 1:05:02David Hoffman?

  I'm giving you my fair calculus. You can do with the analysis that you see fit.

• 1:05:07Ryan Sean Adams?

  Okay.

• 1:05:07David Hoffman?

  So Kane Warwick has allegedly not had any fighting experience.

• 1:05:13Ryan Sean Adams?

  True.

• 1:05:14David Hoffman?

  And so, like, he's coming from the same blank slate that I came from when I started training versus Nick back in, like, March or April. And so, I've got two months of pretty hardcore, five to six days a week of training during my lead-up to my fight with Nick. And so, that was sparring twice a week and coach time twice a week, and then also a boxing coach twice a week. I didn't tell Nick how much, how fucking serious I was taking that because I kept that, I kept that, like, under the radar. Right before, when I broke my rib, I was doing a mock fight of six rounds of three minutes with two, the two, like, very competitive fighters who were my size at the gym. They were, they were definitely, like, kinda like going easy on me because if it was a

• 1:05:57David Hoffman?

  true fight, I'm sure they were going, they were probably going at, like, 80, 85%, and I was going at, like, 90, 95%. Six rounds of three minutes, whereas my fight with Kane is two rounds of two minutes with an optional third tiebreaker round of one minute. So already, like, the gas tank is, like, way bigger than that. And that's also when I, that's also when I broke my rib, when I was doing that.

• 1:06:19David Hoffman?

  Kane has had two months to prepare because I challenged him, like, two months ago. And I also did, made a gentleman's agreement with him of just, like, "Hey, only two days a week of either one-on-one coach time or, or actual sparring time," just because I didn't want it to take over my life. By the end of my time with Nick, I was like... My affect was very bad because I was doing one thing. After Bankless, I was doing one thing, which was training. Training and eating. And so I didn't want to like, repeat that. I wanted to have a life. If he's honoring that, okay. If he's not, whatever. I didn't train for the first month. So Kane started training two months ago because that's when I challenged him. I started training one month ago because I was in Argentina for a whole month. And there's like.

• 1:07:00Ryan Sean Adams?

  Points to Kane on that.

• 1:07:01David Hoffman?

  Points to Kane. Points to Kane. I was doing some cardio stuff, but not like a whole lot.

• 1:07:07David Hoffman?

  Kane has to come down 15 pounds. I have to go up 15 pounds and that always benefits the person going up in weight. Because if it's, yeah, because like you just don't have the same gas tank. You can't maintain strength and cardio while going down. That's a harder thing to do than going up in weight. So I'm clocking in at 173 right now, which is like, I'm going to come in at like 175, 176 for the weigh in. And that's going to be the heaviest I've ever been.

• 1:07:31David Hoffman?

  Thick boy. And let's see, Kane has a massive ego and is extremely competitive. So he's highly motivated to win. Got to take that into account.

• 1:07:39Ryan Sean Adams?

  Points to Kane.

• 1:07:40David Hoffman?

  And even before I challenged him, Kane said that he was in the best shape of his life. But inside of the context of freediving, so like swimming deep into the ocean, like really good at like, holding your breath and oxygen efficiency. Unsure how well that carries over into fighting. There's no real like level, comparable level of fitness to like being fight ready. Being fight ready is like, you are the most possible version of fit possible. And so that's kind of my analysis.

• 1:08:05Ryan Sean Adams?

  That's a tough one. It's a tough one, you know? I think you definitely made the bull case. That was actually very objective, though. We saw some bull bear case there, you know, like on both sides of it. So I guess Bankless listeners can do what they will with that information. And the markets on Polymarket are always open.

• 1:08:20David Hoffman?

  35% is so low, so low. I definitely have edge. I definitely have edge.

• 1:08:26Ryan Sean Adams?

  All right, let's end with this. This is the meme of the week. David, what are we looking at?

• 1:08:29David Hoffman?

  The myth of the consensual airdrop. Two people, the issuer and the receiver are consenting to airdrops. But is there somebody you forgot to ask? It's Gary Kinsler.

• 1:08:39Ryan Sean Adams?

  Did not approve of you getting that airdrop. He certainly did not consent to your airdrop. Got to remember to ask Gary Gensler if he can claim that airdrop. Got to end with this, of course. You know crypto is risky. You could lose what you put in, but we are headed west. This is the frontier, not for everybody, certainly not for Gary Gensler. But we're glad you're with us on the Bankless journey. Thanks a lot.