Part 2: Brian Armstrong, Erik Voorhees, & Ryan Selkis on Binance’s Acquisition of FTX

In Part 2, Ryan and David are joined by Brian Armstrong, Erik Voorhees, & Ryan Selkis to discuss what transpired today, how it’ll impact our industry, and what it means moving forward. In case you missed it, we’ve already released Part 1 where Ryan and David recap everything that happened leading up to today, what’s unfolded thus far, what happens next, and what it means for the crypto space writ large. ------ Earnifi | Check For Your Unclaimed Airdrops, POAPs, & NFTs https://bankless.cc/earnifi ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/?utm_source=banklessshowsyt ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave NEXO | CRYPTO FINANCIAL HUB https://bankless.cc/Nexo LEDGER | NANO HARDWARE WALLETS https://bankless.cc/Ledger ️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/Fuelpod ----- Timestamps: 0:00 Intro 4:04 Ryan Selkis 11:45 Takes & Prices https://twitter.com/brian_armstrong/status/1590088673726717952 https://www.coingecko.com/ https://ultrasound.money/ 20:32 Erik Voorhees 42:00 Brian Armstrong 1:00:25 New CZ https://twitter.com/cz_binance/status/1590103159506341888 1:02:45 Ultra Sound Money https://ultrasound.money/ 1:04:45 Closing & Disclaimers ----- Resources: SBF Announcement https://twitter.com/SBF_FTX/status/1590012124864348160 CZ Announcement https://twitter.com/cz_binance/status/1590013613586411520 ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. 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.

• 0:03Ryan Sean Adams?

  Bankless Nation, wow, we've got an emergency episode for you. David, you and I had scheduled a different episode today for State of the Nation, but we got to pivot because something massive is happening in crypto. Last time I felt like this, it was during the DoKwon days and the collapse of Luna and Terra. This is another one of those pivotal days. Something shocking, something surprising happened in crypto. Some questions I think people want to know. Is FTX and Alameda going bankrupt? Is CZ causing a bank run? Is that what just happened? And is Binance about to acquire FTX? David, what are we going to talk about in today's emergency bankless update episode?

• 0:44David Hoffman?

  This feels like it's the final season of game of centralized exchanges. There can't be that many left for like really big contagion events to happen.

• 0:57Ryan Sean Adams?

  Because they're all dying.

• 0:58David Hoffman?

  Yeah, they're all, there's, there's, there's few, we're at the very end. And so this is a story of contagion. I don't think it goes further beyond FTX and Alameda, but, but we'll see. But the relationship between Alameda and FTX seems to have actually played out in a negative fashion. CZ, we'll, we'll figure out how much of a chess move CZ was actually playing, or if he was just taking the opportunity as it was given to him. But a feud, a very short feud between SBF and CZ that started on Monday has resulted in the letter of intent being signed by Binance to acquire FTX

• 1:39David Hoffman?

  as a, as a result of perhaps, we do not know, but a under the table relationship between Alameda Research and customer deposits in FTX that caused weakness in FTX. And it was CZ that lit the match. So we're going to cover all these details, recap the last 48 hours in crypto, which some people are saying are crazier than the Luna debacle, even though the Luna debacle was pretty damn crazy. Some people are saying it's the craziest thing to happen all of, all of this bear market.

• 2:07Ryan Sean Adams?

  That's a big question, right? It's like with FTX, what happens when the thing, the entity that is bailing out other entities? I mean, they helped bail out BlockFi, they helped with some of the Voyager debt. Now they need to bail out? Is that what's going on? I mean, that is pretty massive. And just when I think, David, I can no longer be surprised in crypto. Wouldn't every people tell, you know, tell me about things? I'm always like, hey, you can't surprise me. I've been in crypto for like five years. And it always goes back to like, uh, no, I just got surprised again today. Like, I did not see this one coming.

• 2:36David Hoffman?

  Yeah, it's crazy that Ether, Bitcoin, Ether went down to like $800. Bitcoin went down to $15,000 or something. And that's not what triggered the destruction of Alameda. It's weird that we went down so low earlier and they made it through. But today of all days, this week of all week was the week when the, the bubble finally popped for Alameda Research and FTX. There's a lot of things that are still being speculated on. We're still waiting for facts to come out. It is alleged, the TLDR, that it is alleged that customer deposits in FTX were sent to Alameda Research. Alameda traded those customer deposits in an attempt to make money. They didn't, they didn't make money.

• 3:19David Hoffman?

  Uh, and as a result, FTX became insolvent and stopped processing customer withdrawals. We don't know if that is true. We do know that FTX stopped processing customer withdrawals. We do not know if they actually did send money to Alameda Research. But there's, all of the facts and all of the actions seem to line up with this speculation. Uh, and so we're going to go through that story as to why people are alleging that

• 3:42David Hoffman?

  less than good activity was up, was going on at FTX that caused ultimately a run on the bank at FTX.

• 3:50Ryan Sean Adams?

  Guys, uh, David and I are going to take you through all of the facts. We're going to take you through the timeline. We're going to show you some takes and get into the details to see if we can put a, uh, analysis on this as well. But before we do, we want to thank the sponsors that made this episode possible.

• 4:06David Hoffman?

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• 4:51David Hoffman?

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• 5:34David Hoffman?

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• 6:15David Hoffman?

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• 6:38Ryan Sean Adams?

  Finance acquiring FTX, that is the question. It seems to be the case. We've got a bank run, possibly. We've got bailouts from CZ. We've got Binance coming to the rescue. There's a three Bs there. And of course, this is bankless that you're watching. We're going to cover everything that we know from a timeline perspective. There's going to be two parts to what we're doing today. So the first part is David and I are going to go through a timeline and the takes to break this story down for you and how it unfolded. And the takes, hopefully we learn something from this episode as we've learned from every single episode, event in crypto that has happened over the past couple of years.

• 7:14Ryan Sean Adams?

  So we want to walk away with some lessons. And then the second part of this is we're probably going to ask some people in that we know in kind of the community to join us, maybe for a conversation at the end. I have no idea who those people are going to be. It just all depends.

• 7:27David Hoffman?

  We're doing it live.

• 7:28Ryan Sean Adams?

  Doing it live. David's got tweets out to like Erik Voorhees and people like this. So we'll open up the conversation a bit later. But first things first, David, we got to talk about this incredible story, something that a lot of people didn't think could happen, including myself. I mentioned in the intro, I was surprised by this. It looks like FTX is on the brink, insolvent, needs a bailout. FTX, the second largest, maybe the largest by some measures, exchange in the US and certainly one of the top three. Binance, Coinbase and FTX, these are the world's largest crypto exchanges right now. And FTX about to go bust. That's what it's looking like.

• 8:12Ryan Sean Adams?

  David, why don't we unpack this story by talking about some of the stakeholders, some of the entities and people involved?

• 8:19David Hoffman?

  Because it would be helpful. In the game of Thrones.

• 8:22Ryan Sean Adams?

  Yeah, it'd be helpful, I think, to get some.

• 8:24David Hoffman?

  Yeah.

• 8:24Ryan Sean Adams?

  So you mentioned one, Alameda, Alameda Research. Who is Alameda Research when we get to them and they're part of the story? What are these guys about?

• 8:34David Hoffman?

  So Alameda Research was SBF's first endeavor. I believe he started-

• 8:38Ryan Sean Adams?

  SBF, Sam Bankman-Fried, right?

• 8:39David Hoffman?

  Sam Bankman-Fried, yes, exactly. And so it was a trading firm. It is a trading firm and has been trading since 2017. Has done very well for itself. SBF, Sam Bankman-Fried, led Alameda until he started SBF, oh, excuse me, FTX. And so this is where SBF really got his big claim to fame by starting Alameda Research. I don't know why they call it research, but it's a trading firm. They just trade. They do-

• 9:08Ryan Sean Adams?

  Hedge funds?

• 9:09David Hoffman?

  Yep, exactly.

• 9:10Ryan Sean Adams?

  If he deals-

• 9:11David Hoffman?

  Made a ton of money during the 2021 bull market and seemed to be one of the few trading firms, hedge funds, that were able to survive up until this point. It survived Three Ours Capital. It survived the Luna debacle, but I guess perhaps its time has come. Anyways, they've been around for a while.

• 9:31Ryan Sean Adams?

  So that's Alameda. And then, so how are they linked to this other entity that is also owned by, controlled by primarily Sam Bankman-Fried? That is SBF. The entity FTX, that's the exchange. Are Alameda and FTX, they're separate entities, are they not? But how does FTX enter this story?

• 9:51David Hoffman?

  Yeah, it's really just association through Sam Bankman-Fried. So in November of 2017, SBF founded Alameda Research. He later founded FTX. He founded FTX in, when was that? I think 2018. And so started with Alameda, then created FTX. As FTX became the bigger organization, he distanced himself from Alameda and mainly focused on FTX. However, there's always been this loose unofficial association between Alameda Research and FTX. And so- Alameda Research would market make on the FTX exchange.

• 10:32David Hoffman?

  And so there was a significant overlap between the assets, just overall, the social connections between Alameda and FTX. One of the reasons why FTX became such a dominant place to trade is because they got early liquidity. And a lot of that early liquidity came because of the relationship to Alameda Research. The form, I don't think the relationship was really codified or formalized. It's just, there's this guy, SBF, he's at the head of both of them. He can kind of steer both ships at once. We don't really know how much symbiosis synergy between these two things he really leveraged. But we do know that there was overlap, there was association. Basically, all of Alameda's assets, they would hold in FTX and they would trade on FTX. And they would just prop up the support of FTX as a marketplace.

• 11:17Ryan Sean Adams?

  So there may have been some co-mingling between these two entities, but one is clearly an exchange. The other is a hedge fund, all sort of led, directed, founded, co-founded by this figure, SBF, Sam Bankman-Fried. Maybe a bit of background on Sam Bankman-Fried. So is he like the world's youngest multi-billionaire?

• 11:36David Hoffman?

  Billionaire, yeah. Well, maybe not anymore, but he once was.

• 11:39Ryan Sean Adams?

  Okay, but like prior to this, like by reputation, effective altruism was the thing. He planned to give away 99% of his, of his wealth, that is, give that away to altruism, not, not watch it drop to zero. Different things, but very successful kind of figure in the crypto space, kind of rising star. And it was an incredible story how FTX kind of, I mean, he started an exchange in 2018.

• 12:04David Hoffman?

  Excuse me, 2019, April 2019, yeah.

• 12:07Ryan Sean Adams?

  That's even later. So, well, Gemini and Coinbase and Kraken and Binance were already established. He had the audacity, started an exchange in 2019 and rocketed that exchange to growth. So quite an impressive figure. You, you guys may have seen him on a recent Bankless livestream where we're talking about crypto regulation with Erik Voorhees. He had kind of a different take from Erik Voorhees, but he's been involved in the regulatory, the DC regulatory scene. So that is on one side, we've got Alameda Hedge Fund, we've got FTX exchange, and we've got SBF at the center. In our other corner, we have-

• 12:42David Hoffman?

  The other corner.

• 12:43Ryan Sean Adams?

  We have Binance, all right, the kingdom of Binance. Who is Binance? And talk a little bit about Binance's leader CZ.

• 12:50David Hoffman?

  You know, in the same way, FTX just rocketed in 2020 and 2021. Binance had that same story in 2017. Binance was my first exchange back in the ICO days of Ethereum. It was an exchange, I believe it started out of China, but quickly became more supranational. I don't really think it's domiciled anywhere in particular. I think it does have a base in Singapore, but it's really all across the world. It's the most decentralized centralized company of all time. Started by CZ, who I believe used to work at OKCOIN or another different, another, another exchange. And then CZ decided to make Binance and just Binance just saw a gangbuster success in 2017

• 13:32David Hoffman?

  by being the place to launch ICOs, get ICO liquidity. The user experience was great. I remember using it all the time in 2017 to 2018. And it has just turned into a gargantuan empire in the East. It has, it is the dominant crypto exchange by legitimate volume. I think Binance is somewhere between like 75 to 80% of all.

• 13:53Ryan Sean Adams?

  Particularly outside the US. I mean, it just dominates, right?

• 13:56David Hoffman?

  Yeah. And it got there because for the longest time you did not need to do KYC on Binance. And so it was kind of, kind of pushing the, into the gray area legally. But just has, by and large, by far, the most massive gargantuan beast of a centralized exchange that's in the room, even compared to Coinbase, even compared to FTX. And it's been around for a while. And so like, not only, of course, we all know Binance Smart Chain is one of its projects. There's many other affiliate products out of the Binance ecosystem. They have some of the most adoption in the developing world, in Africa, in South America. Highly, just massive. And so these are the two players. You got CZ and Binance, you got SBF and FTX. Yeah.

• 14:44Ryan Sean Adams?

  Last thing we'll say in introducing kind of names and definitions, there are also two assets coming from each of these kingdoms. So we've got the SBF Kingdom with an asset called FTT behind it. And then we've got from the Binance Kingdom, CZ's corner, BNB, a different asset. How are these assets similar and what's their link to their respective exchanges and empires?

• 15:06David Hoffman?

  You might call these things pseudo-equity. They have no legal connection to these exchanges. They are not claims on equity or ownership. They unlock services inside of the exchange. So if you own FTT in your FTX account, you get reduction in fees when you trade. You can open up stronger services. Same thing with BNB. It's the token, it's the access token that makes perks happen on the exchange. BNB is also special in that it is also the staking coin for Binance Smart Chain, for BNB Chain. So it's got that extra ecosystem. But it seems to be a lot of exchanges, other than Coinbase, seem to launch these pseudo-equity

• 15:49David Hoffman?

  tokens that just enhance your powers on the exchanges. And they come to be associated with the value of the exchange itself. And so when we see these token prices go up and down, it's kind of the public opinion on like, how much is this exchange worth? These are very relevant, especially FTT. The FTT token of FTX is a very significant player in this story. It's one of the big pieces of ammo that these exchanges, that these billionaires have to throw at each other to engage in billionaire economic war games.

• 16:19Ryan Sean Adams?

  They're really tethered to the fates of their respective empires. So we'll get into some pricing conversations. Okay, definitions aside, and we've gotten that out of the way. Hopefully you know the players. We've got these two opposing crypto banker empires. Now let's talk about the timeline, David. Timeline of events. Take us back, if you will, to November 2. I think our timeline events probably goes from November 2 to November 8, which is today when we're recording. I'm sure there's more coming.

• 16:47David Hoffman?

  There's gonna be more by the time we're done here.

• 16:49Ryan Sean Adams?

  This is an unfinished episode. There's plenty more to talk about, but I think we've seen Some major milestones and events that take place during the course of this last week or so. But take us back to the start, November 2nd. SBF talking a lot about regulation. This actually ties into a little bit of the Bankless story. We played a minor role in this as well, but what are we looking at? What tweet are we looking at here?

• 17:14David Hoffman?

  Yeah, so this is this is pre-November 2nd. The bulk of this story started on November 2nd. But the context for this starts with Sam Bankman-Fried, his DCCPA bill, and also the Bankless episode of SBF versus Erik Voorhees at public debate. Really, it's Sam Bankman-Fried going to DC and lobbying for things that seem to really benefit FTX in particular. And so that was kind of the concern and the claim that not CZ, but all of the industry was concerned that Sam was doing. He was going to DC to lobby for a regulation that would primarily benefit FTX to the loss of any other competitor. So that is the context, that is the background. And we all know that the Bankless episode with SBF and Erik Voorhees

• 17:59David Hoffman?

  that really accelerated this conversation into the mainstream. This is the background. So while this story starts, this specific story of what we're talking about today starts with November 2nd, a CoinDesk report. The context of what SBF is doing in DC is extremely important to keep in mind as we go through this story. So let's fast forward to more recent times, November 2nd. That was last week. A report comes out of CoinDesk that states that leaks the Alameda balance sheet. And so this leaked document discloses a lot of what's on Alameda's balance sheet. And this perks the attention of a lot of people in the crypto industry. There was some conversations, some back and forth. Some people were saying this report's not that big of a deal. Some people were saying this report's massive.

• 18:45David Hoffman?

  Basically, a quote from the document says, "CoinDesk claims to have reviewed a private financial document, which shows that on June 30th, Alameda had $14.6 billion in assets. $3.6 billion was unlocked FTT, and $2.6 billion of that was FTT collateral against $8 billion in liabilities." That's not too much information. So if you take $14.6 billion in assets and subtract $8 billion of liabilities, you'll get something like $7.4 billion in assets that they have. So positive $7.4 billion.

• 19:20David Hoffman?

  3.6 billion of that is FTT tokens, 2.6 in additional to that is FTT collateral.

• 19:28Ryan Sean Adams?

  So that's 6.2 billion right there.

• 19:30David Hoffman?

  Yes.

• 19:31Ryan Sean Adams?

  In FTT, the value of their own tokens.

• 19:34David Hoffman?

  Exactly. The concern is that, so not their own tokens. Alameda Research, this is Alameda Research.

• 19:38Ryan Sean Adams?

  Sure, not their own tokens.

• 19:40David Hoffman?

  Not their own tokens. Alameda Research had a bunch of its total balance sheet was this FTT token.

• 19:48Ryan Sean Adams?

  Well, that's already a tie there. That's already massive amounts of co-mingling between the organizations, is it not?

• 19:53David Hoffman?

  Yes, a huge tie, massive tie. But like, anyone can own FTT. I can own FTT. You can own FTT. You'll own a little bit less in value today. But the concern is that FTT is not that liquid. Owning billions of dollars of FTT tokens should not feel good and secure because you will not be able to liquidate a billion dollars of FTT tokens. There's not enough liquidity there to support that. We're watching this happen. I'm looking at the FTT chart. We'll get there later. There's a lot, let me tell you, Ryan, billions of dollars have left the FTT ecosystem.

• 20:26Ryan Sean Adams?

  But even if you just add that up, we have 14.6 billion in assets, 8 billion in liabilities. But if you subtract like the 6.2 from the 14.6, right? We're already at like just over 8 billion, which kind of matches the amount of liabilities. It doesn't seem like there's much room there in the balance sheet for anything. That does not indicate like a, that's not a strong statement of solvency.

• 20:51David Hoffman?

  Yes.

• 20:52Ryan Sean Adams?

  But I guess, I guess this is not FTX, we should remember. This is just Alameda.

• 20:55David Hoffman?

  Alameda Research.

• 20:56Ryan Sean Adams?

  So that thing could go to zero and presumably shouldn't affect FTX at all?

• 21:02David Hoffman?

  Presumably, presumably, yes. And this is what the Twitter conversation, again, this was on November 2nd. So this was six days ago. This was last week. And so up to this point, this was just mere Twitter conversation. I was kind of expecting it to die off. I kind of expected it to turn into a nothing burger, but.

• 21:19Ryan Sean Adams?

  Why?

• 21:20David Hoffman?

  Just because, I mean.

• 21:22Ryan Sean Adams?

  They survived so far.

• 21:23David Hoffman?

  Alameda Research, they're a hedge fund. They don't have customer deposits that they have to honor. They're just a hedge fund. Hedge funds can blow up, that's fine, so long as there's no contagion. But as we learned, we'll get into that. We did know, of course, SBF did have close ties to the trading firm. But overall, this report started to get people piqued as to whether or not FTX would be caught up in any sort of Alameda related contagion. So if the big question was, could Alameda go under and FTX be okay? And the problem was, no one knew the answer to that question. Dylan Leclerc did a deeper dive on the balance sheet.

• 22:06David Hoffman?

  And the balance sheet gets even unhealthier the more we unpacked it. So he said, "Other significant assets on the balance sheet include 3.37 billion of crypto held and a large amount of Solana's blockchain native token." 220, 292 million dollars.

• 22:23Ryan Sean Adams?

  So over a billion in Solana.

• 22:25David Hoffman?

  In Solana, right. Again, like not liquid, decently liquid, still not super liquid. And again, a lot of that is locked. So actually, technically, some of that is very, very illiquid, as in Alameda would not be able to access that. So Alameda is already feeling the squeeze. And it's also worth noting that DeFi apps like Abercadaabra had $100 million in FTT collateral as well. So that's what Ryan is showing on the screen here. The point is, is that FTT was in a very precarious position, as in Alameda was using it as collateral to backstop a lot of their loans. And so.

• 23:01Ryan Sean Adams?

  Why?

• 23:02David Hoffman?

  Yeah, yeah. Well, that's because they had those assets on hand. That's what they had. And so of the $8 billion that Alameda had as liabilities, 7.4 billion of that were loans, presumably US dollar-denominated loans.

• 23:17Ryan Sean Adams?

  Wait, run that by me again?

• 23:20David Hoffman?

  So this is reading in the CoinDesk report. So there are more FTX tokens among its $8 billion of liabilities, $292 million of locked liabilities. The liabilities are denominated by $7.4 billion of loans. If it's US dollar loans, that's bad. If it's crypto asset loans, that's a little bit better because those things move price in tandem. But if they're dollar loans, they have dollar loans, but FTT collateral. And FTT collateral goes down, that's bad. And this is why, this is why we brought up Abercadaabra also having $100 million in FTT collateral. A lot of people are using FTT as collateral to backstop loans. That is precarious, especially for Alameda Research, who has billions of dollars of FTT as collateral.

• 24:04David Hoffman?

  Again, 2.6 billion in FTT collateral.

• 24:07Ryan Sean Adams?

  Oof. Okay, so, so Alameda is not looking good. I mean, some people dismissed that as FUD last week. Others were saying, hey, this could also have an effect, ripple effects on FTX, given how close these entities are together. But, but people were dismissing that as FUD. That was, that was last week. So that report came out November 2nd. Now we can fast forward to November 6th. That was, I guess, Sunday, when things started heating up a little bit more over the weekend. What is this tweet that we have displayed?

• 24:36David Hoffman?

  So this is the Alameda CEO who tweets out, "A few notes on the balance sheet. If you are a hedge fund manager and you have to tweet out about the state of your balance sheet, we're already not off to a great start. A few notes on the balance sheet info that has been circulating recently. The specific balance sheet is for a subset of our corporate entities. We have over $10 billion of assets that aren't reflected there. The balance sheet breaks out a few of our biggest long positions. We obviously have hedges that aren't listed. Given the tightening in crypto credit spaces here, we've returned most of our loans by now." Basically saying, "We're totally solvent. We have more assets that are off the books that aren't listed there, but like, we're good."

• 25:15Ryan Sean Adams?

  It was fun. Don't worry about it.

• 25:15David Hoffman?

  It's FUD, we're good.

• 25:16Ryan Sean Adams?

  Point des article, whatever.

• 25:19David Hoffman?

  A lot of people, this, this allegedly reminded a lot of people of Do Kwon, saying,

• 25:26David Hoffman?

  what, what did he say? "Steady lads deploying more capital." It was, and also Alex Mashinsky did the same thing. He's like, "Celsius is totally solvent, we're totally good, like, everything is FUD."

• 25:38Ryan Sean Adams?

  You have, I'm not saying you have to. I mean, you could be honest with people, but like, if you are in the midst of insolvency or some sort of bank run, right? You have to project confidence, you have to project strength, which is why this is always the strategy employed by, by those who are trying to fend off some kind of a bank run. But, but when did CZ enter the story here? Because I feel like it was the same day.

• 26:03David Hoffman?

  Yeah, so that is, yeah, that's where we're going next. So this Alameda CEO tweeted this out at 9:30 a.m. on November 6th on Sunday that, "Hey, everything is FUD, we're good, don't worry about our balance sheet." An hour and 13 minutes later, at 10:47, 12 minutes later, CZ says he's going to liquidate $2.1 billion of FTT. Now, first, how did CZ and Binance get their hands on $2.1 billion of FTT? I'm so glad you asked. Binance is actually an early investor in FTX. So Binance invested in FTX, so they own FTX equity, and as a result of that, also got a bunch of FTT tokens.

• 26:44David Hoffman?

  And so since FTT has, the price of FTT has actually done pretty damn good, pretty damn well, they had $2.1 billion of FTT. CZ says, "Due to recent revelations that have come to light," he's talking about the Alameda report and CoinDesk, "we have decided to liquidate any remaining FTT on our books." And so he says, "We will do so in a way that will minimize market impact. Due to market conditions and limited liquidity, we expect this to take a couple of months to complete." FTT at the time was trading $25, $27, $28. Binance has always encouraged collaboration between industry players regarding any speculation as to whether this is a move against a competitor. It is not. Our industry is in its nascenty, and every time a project publicly fails,

• 27:28David Hoffman?

  it hurts every user and platform, saying, "Hey, we're liquidating FTT. It's not a play against FTX. We just have a bunch of FTT on the balance sheet, and the precarious nature of FTT makes us want to remove that from our balance sheet." He finished to saying, "We typically hold tokens for the long term. We have held on to this token for this long. We'll stay transparent in our actions." So one part of CZ is saying, "Hey, I'm just being responsible, and I'm liquidating this thing that's precarious." Other people who are assuming that CZ is more of a shark than he's letting on is like, he is publicly stating he is dumping $2.1 billion of FTT on an asset that he knows

• 28:12David Hoffman?

  does not have $2.1 worth of liquidity.

• 28:15Ryan Sean Adams?

  David, isn't that obviously what it is? I mean, coming from CZ, who is someone who is generally kind of diplomatic and knows exactly what he's doing, definitely a strategic thinker, the timing of this, the communication style, right? And by the way, we'll read some subsequent tweets as well, so you can kind of decide. But publicly saying you're going to dump $2.1 billion and then saying things like, "We typically hold tokens for the long run. We've held this token for a long time. We're just trying to stay transparent," this sort of thing. I feel like CZ knew exactly what he was doing here.

• 28:52Ryan Sean Adams?

  And this was like a mob boss mafia-style Game of Thrones power move to like check a competitor. Now, he was obviously phrasing it, saying, "This is just normal course of business." But the timing of it, right? He didn't have to tweet it. He didn't have to be public about this. He didn't have to time it as such. This looks to me like it was all very strategic, but I guess maybe some people still doubt that.

• 29:17David Hoffman?

  I think that is a perfectly fair take, especially the raw number that is in the first line of the first tweet, $2.1 billion. Like, if you're going to liquidate $2.1 billion of something, like, you don't disclose that if you're trying to optimize for the price. If you're trying to optimize for being front-run by other people, you disclose that you are going to market sell $2.1 billion. If you want to cause a panic, you tweet that you are going to sell $2.1 billion. And so I think it's a fair assumption to say that CZ was using this tweet as leverage.

• 29:51Ryan Sean Adams?

  Here's some back and forth, too. Somebody asked him in this thread, by the way, I think this thread will be kind of legendary in terms of the annals of crypto history, where it's just kind of precipitated the downfall of an enemy or a competitor. Someone asked him, "If you don't mind me asking, if the tokens weren't locked, why'd you wait until this long to sell? Issue with FTX or liquidity providing during the bear?" CZ goes, "Not locked. We usually just hold. It removes any doubt that we would attack a competitor. Not financially sensible. We want the industry to go together, but there is a limit to hold." Comma, lol.

• 30:26Ryan Sean Adams?

  Yeah, so he's kind of saying, look, this is normal course of business, but we're not going to hold on tokens forever. So he's kind of playing that game back and forth. What's this tweet?

• 30:37David Hoffman?

  I think that the end of that line, there is a limit to hold lol is important because he's what he's implying is that Sam SBF has crossed a line with Alameda is using FTT as collateral. And we'll also get into some other things as well. He's implying that there is a limit to what Binance and CZ will go up to before they are feel like they must be compelled to sell FTT. So that's what he meant by that.

• 31:05Ryan Sean Adams?

  So he is saying, he is implying, he is hinting that maybe SBF FTX crossed a line somewhere.

• 31:12David Hoffman?

  Yes, correct. Yeah. So back to the CEO of Alameda. She goes, if you're looking to minimize the impact of the market price on your FTT sales, Alameda will happily buy it from you all today at $22. And you'll notice Anthony Sazano's tweet below that saying.

• 31:28Ryan Sean Adams?

  That's a reply to CZ.

• 31:29David Hoffman?

  That's a new tweet to CZ. She's just saying, hey, mention it to CZ. Anthony Sazano going, Doquan, is that you? This is actually what I meant earlier. This was actually the tweet that people were referencing saying, you need to project like an air of strength because if FTT price goes down seemingly below $22, that's really bad news of for Alameda because they have so much of their capital locked up in FTT.

• 31:57Ryan Sean Adams?

  So reminds me of something is the take here. Feels a little bit Doquan-ish. What is this from Dylan Leclerc?

• 32:03David Hoffman?

  Dylan Leclerc again with a great, great graphic. He tweets out, deploying more capital, steady lads. Again, the famous, the famous Doquan meme.

• 32:11Ryan Sean Adams?

  Which is just months, months previous. I mean, was it like six months ago this happened?

• 32:17David Hoffman?

  So the top line is the volume of FTT and you can see that volume just taking a nude all time highs. Well, I guess since like October. So the volume's going up, big volume going up. And then on the bottom, you see price going down. So selling pressure is significant. We are at that $22 threshold. That $22 number seems to be important because that's what Alameda CEO said that they'll buy it all at. So this $22 number becomes like kind of a meme line. And so you can see it starting to like ram into that $22 level. It's being defended. Alameda Research is buying FTT in bulk with their remaining funds on FTX. But if you look at the price of FTT now, you know that that didn't last.

• 33:02Ryan Sean Adams?

  That 22 did not last, but this is Alameda trying to hold the line here at $22.

• 33:08David Hoffman?

  Exactly.

• 33:09Ryan Sean Adams?

  Wow. So now it's just a kind of a game, a bank run game, I guess, back and forth. What is the CZ tweet that we're looking at?

• 33:16David Hoffman?

  Yeah, back to CZ being very publicly dog whistling about his intentions. He says, "Liquidating our FTT is just post-exit risk management, learning from Luna."

• 33:27Ryan Sean Adams?

  Wow.

• 33:28David Hoffman?

  Yes. So we are liquidating our FTT because they made money on FTX. They made an investment that investment became liquid. And now they are doing risk management and liquidating some of their successful investments. Learning from Luna.

• 33:44Ryan Sean Adams?

  That is such a triggering word for people in crypto.

• 33:48David Hoffman?

  Yeah. "We gave support before," CZ continues. "But we won't pretend to make love after divorce. We are not against anyone, but we won't support people who lobby against other industry players behind their backs onwards." So this is what I was saying earlier when CZ is claiming that SPF crossed the line. "We won't support people who lobby against other industry players behind our backs onwards." And this is why we started the show with the context of SPF going to DC to lobby for regulation that seemingly really supports FTX and kind of throws everyone else under the bus.

• 34:22Ryan Sean Adams?

  CZ is calling on the whole industry with this. Everyone who's against Sam's legislative views as well should pile into this. That's what he's saying. This is quite the escalation. So this is hours later from that 10:30 AM tweet where he was saying, "Hey, normal course of business. We don't hold tokens forever. We're just selling some tokens." Now this looks like a clear escalation. Learning from a Luna?

• 34:44David Hoffman?

  Learning from Luna. Biggest dog whistle of all time. Because what, what, what does that do? That just puts Luna into the minds of everyone.

• 34:53Ryan Sean Adams?

  Yes.

• 34:54David Hoffman?

  For, for, for me, Ryan, I don't have any money in FTX, so I don't really feel too scared. But if, imagine, Ryan, if you are somebody who uses FTX that you have-

• 35:03Ryan Sean Adams?

  Oh, I'm getting out.

• 35:04David Hoffman?

  You are, right.

• 35:04Ryan Sean Adams?

  On the back of Celsius, on the back of Voyager.

• 35:07David Hoffman?

  Because CZ is learned from Luna and doesn't, and so people get fearful, especially when we know that runs on the banks happen. That's what Luna was, basically, a big run on the bank. So he just invoked fear into the minds of anyone who has money inside of FTX.

• 35:22Ryan Sean Adams?

  Yes. I mean, lest you had any doubt from the, from the 10 o'clock or 10:30 tweet from, from that morning. This is fully knives out. This is like, you know, we're, we're coming for you, stabbing the back. Like, like we, this is, this is blood right here.

• 35:36David Hoffman?

  Right. So if you are a centralized exchange operator, the biggest insult that you could have invoked upon you is being compared to Terra Luna.

• 35:44Ryan Sean Adams?

  A Quandt scheme.

• 35:45David Hoffman?

  Oh, yeah. A Quandt scheme. Nice. And so they actually start, Binance CZ starts to move FTT tokens on chain to Binance, their own exchange, to liquidate. And so this is, in hindsight, this is crazy. So this is a bot, a bot Twitter account that says 23 million FTT tokens, which are 584,000, oh, excuse me, $584 million transferred to Binance. CZ then retweets it and says, yes, this is part of it. And again, he, he started off saying, we're just being fully transparent. We're being super transparent. This is us being transparent. We're so, so transparent. Like, yeah, I bet you are, CZ. You're trying to nuke the price of FTT.

• 36:31Ryan Sean Adams?

  What are we looking at here, David?

• 36:32David Hoffman?

  So this is not, this is not the current price of FTT. This is a screenshot of an older price of FTT. This was at the moment that the, the transfer to Binance was made. This is, I think, maybe got 12 more hours of data from the last time we looked at the FTT chart. And it's just ramming into that $22 number over and over and over again. Again, we're saving the current FTT chart for later in the show, so stay tuned. But FTT just not looking good.

• 37:03David Hoffman?

  Here's a tweet from the data nerd, says, actually, if you scroll up, Ryan. Yeah, Alameda Research is sending stablecoins to FTX in size. Just 15 minutes ago, they received 56 million USDC and then deposited that into FTX. Within the last 24 hours, they have sent a total of $257 million, Alameda Research, to FTX. And then if you scroll down to that next tweet. Meanwhile, the stablecoin outflow from FTX is the largest among all exchanges in the last seven days, down $300 million to a balance of $261 million excluding FTX US. If we exclude the inflow from Alameda, I'm sure the number would get much uglier. And then, Ryan, this is where a very important nuance comes in.

• 37:47David Hoffman?

  Alameda Research is not sending stablecoins to their FTX account. They are not like you and me when you send money to Coinbase or Gemini. They're not sending stablecoins into their own accounts. They are sending it to Alameda, or see, Alameda is sending it to FTX because FTX is needing to facilitate user withdrawals.

• 38:07Ryan Sean Adams?

  What?

• 38:07David Hoffman?

  And they're sending it to the hot wallet, to the FTX hot wallet, so that there's enough money to facilitate user withdrawals.

• 38:15Ryan Sean Adams?

  But I thought these entities were separate, not co-mingled, independent.

• 38:19David Hoffman?

  But Alameda Research sent money on-chain to FTX, to the wallet that FTX was using to facilitate user withdrawals.

• 38:28Ryan Sean Adams?

  This is crazy. So what's happening is, that's what Alameda is doing, is it's trying to kind of, I guess, bolster reserves into FTX.

• 38:36David Hoffman?

  Seemingly, seemingly, you would think that FTX has deposits in Alameda, as in, they sent Alameda money once, and now they are recalling that money so that they can facilitate user withdrawals. And Alameda is sending them the last of their stablecoins because it's FTX's money.

• 38:55Ryan Sean Adams?

  And by the way,

• 38:55David Hoffman?

  Allegedly, allegedly, we're just seeing this on chain. We need more. This is the thing that the entire industry is speculating on.

• 39:01Ryan Sean Adams?

  Well, what's crazy about this, what's crazy about this is you can see all of this on chain, right? I mean, we're watching a bank run unfold in an immutable ledger on on chain publicly with the conversation among these crypto bankers happening over Twitter. It's just crazy. Like, I mean, this doesn't happen in traditional finance. And meanwhile, that that dog whistle, that bank run that you're talking about, that's what this looks like. FTX getting its account drained by customers. We're like, I don't want, I don't want to keep my money there. I'm going to exit. I saw what happened to Celsius. I, you know, I know what happened with Luna and Voyager and all of these examples. And I'm getting out of there before something breaks and I can't get my money back. So that all happened on Sunday, November 6th. Well, take us to Monday, November 7th.

• 39:45Ryan Sean Adams?

  So I guess the start of the business week here, SBF comes out with his own tweet that morning. I remember I woke up and I read this, but this is SBF's response. David, what does he say?

• 39:58David Hoffman?

  He starts off the tweet thread saying, "A competitor is trying to go after us with false rumors. FTX is fine. Assets are fine. Details to follow." And so he makes a thread of details and he says, "FTX has enough to cover all clients' holdings. We don't invest client assets, even in treasuries. We have been processing all withdrawals and will continue to process all withdrawals. Some details on withdrawal speeds." Then there's some update about how, why withdrawal speeds are slower. And then it continues and says, "It's heavily regulated. Even when that slows us down, we have GAAP audits." I'm assuming that's some standard with

• 40:34Ryan Sean Adams?

  That's GAAP accounting, yeah.

• 40:35David Hoffman?

  "With over a billion dollars of excess cash, we have a long history of safeguarding clients' assets and that remains true today." And then concludes, "I love it, CZ Binance, if we could work together for the ecosystem." Interesting, interesting tie-off tweet. I love it, CZ, if we could work together for the ecosystem.

• 40:52Ryan Sean Adams?

  Please help me. Is that what that was?

• 40:53David Hoffman?

  Help, help, please stop.

• 40:57David Hoffman?

  And, and so, and then I saw this tweet and then where, where I saw this tweet, Ryan, was interesting. This is Patrick Hillman, who I'm actually not familiar who he, who he is, but he tweets out, "Let's be clear." Binance did not, one, define FBS's stance on DCCPA. As in, did not, what Binance did not do is help SBF and FTX create the DCCPA.

• 41:23Ryan Sean Adams?

  What's the DCCPA?

• 41:24David Hoffman?

  That is the regulation, the law that we are still waiting to get the details of that is in Capitol Hill being drafted that we are worried, goes after DeFi and really just instantiates FTX in ways that is like-

• 41:37Ryan Sean Adams?

  Centralized exchanges, maybe more generally, right?

• 41:39David Hoffman?

  Perhaps, perhaps, yes. And so, so this Patrick Kilman guy is saying, hey, Binance didn't do that. Also, Binance didn't debate Erik Voorhees on the merit of FTX's stance on the DCCPA. Binance did not get into shitpost Twitter fights with KOLs, nor did they manage to leak Alameda's balance sheet or write the CoinDesk story about Alameda's balance sheet, or fail to address the concerns around FTT. So, Binance is just not taking part on all of these things. You know where I found this tweet, Ryan?

• 42:08Ryan Sean Adams?

  Where?

• 42:09David Hoffman?

  CZ retweeted it.

• 42:10Ryan Sean Adams?

  CZ retweeted this?

• 42:12David Hoffman?

  CZ retweeted this, yeah.

• 42:13Ryan Sean Adams?

  So, this, this person is making the claim that, don't blame Binance, because people at this-

• 42:17David Hoffman?

  Don't blame Binance, yeah.

• 42:18Ryan Sean Adams?

  People at this point were coming to Sam's defense, I think, SBF's defense, after especially, you know, Sam said, "Look, assets are fine, FTX is fine, and I'd rather CZ be collaborative and work together for the ecosystem." So, people piled on and said, you know, CZ, you're knocking a competitor when they're down, you're spreading FUD, you're trying to cause a bank run, this is bad for our industry. And this person is, I guess, coming to Binance's defense and saying, "Hey, you gotta, you gotta like make SBF and FTX, hold them accountable for some of their actions and the reason why Binance sold."

• 42:51David Hoffman?

  He's basically saying, SBF and FTX dug their own grave and all CZ did was like, "All right, get in."

• 42:59Ryan Sean Adams?

  Well, I don't know. And so, so that's where the take was like, I guess, yesterday. And Bankless put together an article about this, and this was like a battle of the billionaires. I saw a lot of crypto publications talking about kind of like knives out in crypto drama between CZ and SBF, right? This kind of like scene of like- Is that Donald Trump, by the way? WWF wrestlers writing? Vince McMahon and Donald Trump punching each other. That's kind of where things fell on Monday. So people didn't think that there was, I think, very few people thought there was the possibility that this could actually take FTX down as early as yesterday. But the story has continued to unfold, which I guess brings us to November 7.

• 43:44David Hoffman?

  Yes, okay. So this was the FTT price last night. So last night, FTT broke down before $22 after pounding up against the $22 threshold for almost 24 hours, breaks down and immediately drops to $16, hits a low of $15, and starts to find a new floor between $15 and $17. This, Ryan, might be the moment that Alameda Research officially became insolvent.

• 44:13Ryan Sean Adams?

  Because 22 didn't hold. Very publicly, they said, "We'll buy all FTT."

• 44:19David Hoffman?

  Right. And they needed FTT to be above a certain number. Is that number 22? Well, it was the number that was being defended across markets by a significant capitalized player, and then it fell. And then it fell down. So this might be the moment, yesterday, about 24 hours ago, this might be the moment that Alameda officially went from running on fumes to being completely insolvent.

• 44:43Ryan Sean Adams?

  No more ammo. We couldn't fight this.

• 44:46David Hoffman?

  We can only assume. I'm sure the truth will eventually come to fruition, but if we are just inferring based off all of these dots, this would be the conclusion, that this was the moment that Alameda went to zero.

• 45:00Ryan Sean Adams?

  I mean, judging by how fast this timeline has moved, it won't take long, I think, for us to find this out. But then what happened to FTX, the exchange?

• 45:08David Hoffman?

  Yeah, so that was this morning. That was last night. This morning, The Block, a researcher and news journalist at The Block, tweeted out that it seems to be that FTX stopped processing withdrawals three hours ago, according to on-chain data, as in no outbound FTX withdrawal has been seen in three hours, and that when That was at 8:53 a.m. So, starting around, and this is Eastern time, so starting around like 6 a.m. ish, FTX stopped processing user withdrawals. There seemed to be some confusion, and so the same Doug Toshi, Stephen, they says as the block started writing and publishing the story, the withdrawal started ramping up again. Turns out that was actually a mistake. They just mixed inbounds for outbounds. So inbound

• 45:53David Hoffman?

  money were still coming in, but outbound still not being processed. So, yes, just kidding, withdrawals had not been processed. So, FTX officially, Ryan, and I don't think anyone has seen a withdrawal since about 6 a.m. this morning from FTX Eastern time.

• 46:09Ryan Sean Adams?

  Well, that's when things get really scary, because we're beyond a hedge fund blowing up, because at the end of the day, that's investor money. It's highly risky. Who cares? Now, we're talking about FTX customer deposits.

• 46:20David Hoffman?

  Not being there.

• 46:21Ryan Sean Adams?

  Not being there, not being able to withdraw. Like, I don't know if the money's there. And like, this just happened to us in crypto. It's Celsius. It's like, I mean, people still have money there. They're never going to get it back out. This is all fresh in our minds, and that's what started to happen this morning. What is, what is this tweet?

• 46:41David Hoffman?

  Yeah, this is just the summary tweet, which I thought was pretty funny. Number one, FTX appears to have stopped processing customer withdrawals on chain data shows. Then, FTX started processing withdrawals again after republished. And then the third one, the block never mind withdrawals not being processed.

• 46:57Ryan Sean Adams?

  Oh, my God. Wow.

• 46:59David Hoffman?

  That's pretty funny. So, this is the TLDR, says, "The block team saw FTX stop processing withdrawals on Ethereum, went to confirm on Solana and Tron, published a story, saw withdrawals being processed, panicked. People smarter than me confirmed it was only movements to approve tokens." No panic and get clout. Anyways, whatever.

• 47:19Ryan Sean Adams?

  You gotta collect your clout.

• 47:20David Hoffman?

  Gotta collect your clout. And then-

• 47:21Ryan Sean Adams?

  Now, this is SBF finding way in on things.

• 47:24David Hoffman?

  SBF has been silent, silent all morning, silenced it for a while. And then finally, and this is the drum roll moment, finally speaks. And when was this tweet? This was tweet was at-

• 47:36Ryan Sean Adams?

  November 8.

• 47:37David Hoffman?

  Yes, 11:03 a.m. So, about five hours of FTX basically running out of money to process customer withdrawals. And he goes-

• 47:44Ryan Sean Adams?

  At that, at that point, the gig is like, it's, it's over, right?

• 47:47David Hoffman?

  Once you know that an exchange, which, an exchange, Ryan, as you know- Should always have customer deposits. They never should lose customer deposits if they are just being normal. Customers come and deposit money, they trade with that money with other customers. And so there's no one, it's impossible to lose money. So if you see an exchange not facilitating withdrawals, it's because it means that they went and did something with that money and now they don't have that money anymore.

• 48:16Ryan Sean Adams?

  It's like a bank. I mean, if you go to the bank and you're like, hey, can I have my money? And they say, no, we don't have your money. It's not here. You can't withdraw. Come back tomorrow. Right? Like you can't, um, then that rumor spreads and you get more and more people trying to withdraw their money and that escalates. So he had to say something at that point. That was kind of the pressure that SBF was on at 11:00 AM this morning. So what does he say?

• 48:42David Hoffman?

  Well, it's also how we know that FTX was up to some shenanigans. What are those shenanigans? I don't know, but why was Alameda transferring FTX money directly to their hot wallet? That is a data point that is now people are speculating on. So SBF says, hey y'all, I have a few announcements to make. Yeah, I bet you do.

• 48:59Ryan Sean Adams?

  Super friendly sounding. Hey y'all, hey, what's up?

• 49:03David Hoffman?

  Things have come full circle and FTX's first and last investors are the same, which is the punchline. We have come to an agreement on a strategic transaction with Binance for FTX.com, pending due diligence, et cetera. So that's, that's my drop. What does that mean? That means the FTX's first and last investors are the same. He kind of says it without saying it. FTX just bought Binance is what he's saying.

• 49:30Ryan Sean Adams?

  Reverse that.

• 49:31David Hoffman?

  The last.

• 49:32Ryan Sean Adams?

  Binance just bought FTX.

• 49:33David Hoffman?

  Excuse me. Yes. Yeah. Are the same. So Binance seeded FTX with capital. Now they are buying FTX. So Sam continues and says, Our team is working on clearing out the withdrawal backlog as is. This will clear out liquidity crunches. All assets will be covered one to one. This is one of the main reasons why we've asked Binance to come in. It may take a bit to settle. We apologize for that, but the important thing is that customers are protected. A huge thank you to CZ, Binance and all of our supporters. This has been a user centric development that benefits the entire industry. CZ has done and will continue to do an incredible job of building out global crypto ecosystem, creating a freer economic world. I know there has been rumors in media of conflict between our two exchanges.

• 50:17David Hoffman?

  However, Binance has shown time and again that they are committed to a more decentralized global economy while working to improve industry regulations, industry relations with regulators will be on their best of hands. Brian, this doesn't sound like SBF. This sounds like a PR person.

• 50:31Ryan Sean Adams?

  Oh, this sounds like someone who's just bent the knee for sure. I mean, this is somebody who was desperate, needed some cash for those withdrawals and just needed to make a deal with CZ. I mean, yeah, this is a different SBF coming out. Like, that's crazy how quickly this happened. And you have to wonder, so did CZ know that this was a possibility, an inevitability? When he tweeted, when he started tweeting about this on Sunday?

• 50:59David Hoffman?

  Did he create the opportunity that he then took intentionally and knowingly? I don't think we'll ever know that, ain't right.

• 51:06Ryan Sean Adams?

  Well, I mean, I know one thing is like, do not cross CZ.

• 51:11David Hoffman?

  GG, GG CZ.

• 51:14Ryan Sean Adams?

  Wow, crazy. And this is, this is Sam Bankman Fried, who was, I would say, one of the top three crypto. Like there's SBF, there's Brian Armstrong and there's CZ. I mean, these are kind of the three. And SBF seemed like it was a legitimate competitor to Binance. And now this is SBF fully capitulating. And we have to mention that this does not mean that Binance has acquired SBF yet. This is just a letter of intent. And I think what is happening is Binance is providing the funds, liquidity so that, you know, people, customers of FTX can. Withdraw their funds, which is of course very important. That's the main thing we want to protect is is customers.

• 51:58Ryan Sean Adams?

  But who knows if this is actually like, there could be more drama ahead for us if this deal doesn't close. If CZ asks for unreasonable terms, like all sorts of things could could could be happening. I think CZ has since tweeted out that they are now doing due diligence to investigate FTX. And it's basically like

• 52:18David Hoffman?

  He's giving himself the option.

• 52:20Ryan Sean Adams?

  He's giving himself the option and he's like, my role is now, you know, I'm the captain. Sit right here. We'll look at it and you know, maybe we'll make a deal afterwards. But like Sam is no longer in the in the captain's seat with respect to negotiation. He'll take whatever deal CZ gives him at this point.

• 52:37David Hoffman?

  Yeah. In the thumb war of crypto exchanges, CZ definitely pinned Sam down. So CZ had his own version of the same tweet that came out five minutes later and and said, what did he say? This afternoon, FTX asked for our help. And yeah, so if you want to go to that sync tweet, Ryan, and zoom up. There is a significant liquidity crunch to protect users. We are signing a non-binding letter of intent. Again, CZ picks his words to put in the first tweets very carefully. We are signing a non-binding letter of intent intending to fully acquire FTX to help cover the liquidity crunch. We will be conducting a full DD in the coming days.

• 53:19David Hoffman?

  Basically, they are going to audit FTX and see how big the hole is. How big the hole that Alameda Research created in the FTX balance sheet? If it was indeed Alameda Research, which it probably is. And then we have this meme of CZ walking in with a sink into Alameda Research. This is a playoff of Elon Musk walking into Twitter after he bought Twitter. Because he threw the kitchen sink at it. And now we have CZ doing the same thing for Alameda Research. But again, it's actually not Alameda Research, it's FTX. But again, where are the lines?

• 53:52Ryan Sean Adams?

  Where are the lines? Maybe all the same. Seems like they both fell together. What's this take?

• 53:57David Hoffman?

  Yeah, so this got leaked, a quick and dirty article, saying that FTX scoured Wall Street, sourcing emergency fundings for a billion-dollar lifeline. And so before FTX went to CZ and Binance, they were going back to TradFi to ask for a billion dollars in emergency funding so that they could prop up the exchange. And so that was before. And that's actually, further down in this article, they say they were looking for a $1 billion lifeline, but they had a balance sheet hole of $5 to $6 million, right?

• 54:30Ryan Sean Adams?

  Oh my god. Yeah, so they were hurting. This was kind of a desperation move. And CZ pulling this into his camp for the win.

• 54:39David Hoffman?

  CZ's like, hey, you know who's got $5 to $6 billion? I've got $5 to $6 billion.

• 54:44Ryan Sean Adams?

  Wow, the Binance empire, just totally checked a competitor. These are the crypto banker wars. And I've certainly never seen a chapter like this. What's also ironic to me is, of course, FTX and SBF, they were the bailout kings.

• 54:58David Hoffman?

  Yeah, they were bailing out left and right. So this is one of the big claims, is that FTX spent all of its ammo acquiring the bloody carcasses of the Luna and A3 Arrows capital crash. And then they ran out of ammo to save themselves.

• 55:12Ryan Sean Adams?

  I wonder, were they acquiring these things to cover something else up? I wonder if there was some sort of intent to acquire these things. I wonder if it was for other reasons that we'll see in the weeks to come. We have some more takes, and I think we want to give some analysis on this.

• 55:28David Hoffman?

  Crypto Twitter is on fire today, Ryan. I know you've been busy, but I've been enjoying it.

• 55:33Ryan Sean Adams?

  Yeah. So we're going to get to all of those, and the memes, and the takes, and the analysis of what we do in the aftermath of this. We'll also take a closer look at some of the markets from a pricing perspective. We'll get to all of that and more. But before we do, we want to thank the sponsors that made this episode possible.

• 55:52David Hoffman?

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• 56:36David Hoffman?

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• 57:20David Hoffman?

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• 58:05David Hoffman?

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• 58:23Ryan Sean Adams?

  Okay, it's gonna take a while to digest all of that, David, but let's get some crypto Twitter takes and also look at some charts, the after effects of today's events. So this is a chart from Luke Martin comparing two coins, BNB and FTT. Of course, these are the the main assets in play from both of the kingdoms, the Binance Kingdom and the FTX and Bankman Fried Kingdom. What are we looking at here?

• 58:48David Hoffman?

  Yeah, so these two tokens, and Luke Martin says this, typically trade in lockstep with each other. Like, they're highly correlated, same kind of sector, same kind of asset, except for November, except for all of November, FTT starts to go down. And it's interesting that this happened so early. I guess this really became very obvious November 2nd, when that report about Alameda Research came out. But you could see the decoupling before that. You can see the decoupling starting around October 30th, maybe 29th. But BNB-

• 59:20Ryan Sean Adams?

  So people knew something was gonna happen?

• 59:22David Hoffman?

  Yeah.

• 59:22Ryan Sean Adams?

  Do you think, like insiders knew?

• 59:23David Hoffman?

  Markets always know. Markets know first. And so BNB performs great, starting all throughout November. FTT has performed absolutely terribly, starting in November. And so you can, you can, here is the winners, Ryan. You can see it in the market. BNB is up big, FTT is down big. This is one empire winning the war against another, and it's being reflected in the market.

• 59:47Ryan Sean Adams?

  Can we just look at FTT real quick? Like, what's the FTT price?

• 59:50David Hoffman?

  Oh, wait, wait, no, don't do CoinG.

• 59:51Ryan Sean Adams?

  Are you saving that?

• 59:52David Hoffman?

  You already have it pulled up. Go click the Trading View tab, the black one.

• 59:55Ryan Sean Adams?

  Oh, this one?

• 59:56David Hoffman?

  Yeah. Okay, so here's where we are. Remember that $22 line, Ryan?

• 1:00:00Ryan Sean Adams?

  Uh, where's that? Up here?

• 1:00:02David Hoffman?

  Yeah, so that's that big red candle, that's when Alameda Research ran out of money.

• 1:00:06Ryan Sean Adams?

  This is, and that, that, that is Tuesday the 8th. That is this morning. Is that this morning?

• 1:00:11David Hoffman?

  That was last night. That was last night.

• 1:00:12Ryan Sean Adams?

  Last night. Late last night.

• 1:00:14David Hoffman?

  Yep.

• 1:00:15Ryan Sean Adams?

  Wow.

• 1:00:15David Hoffman?

  And so $22 down to where we are now at $5.40. And so that puts FTT down at, uh, let's see, negative 77% in 24 hours, down 77%.

• 1:00:29Ryan Sean Adams?

  80%. Now, this thing, uh, isn't gonna go to zero like Luna. It's not an algo-stablecoin.

• 1:00:35David Hoffman?

  It's not a recursive algorithmic stablecoin that hyperinflates, but I mean, it's giving it a run for its money for what it's worth.

• 1:00:42Ryan Sean Adams?

  80% in one day. Even by crypto standards, uh, that, that, that means you got wrecked.

• 1:00:48David Hoffman?

  I mean, it's 80% in one day. It's, it's 80, it's seven, it's, yeah, it's like 85% over seven days, like, pretty bad.

• 1:00:57Ryan Sean Adams?

  This is, uh, the, the, a similar chart, but with, um, the timestamp of when CZ tweeted this out, liquidating our FTT. Uh, and this is, I believe, um, FTT, uh, FTT chart.

• 1:01:10David Hoffman?

  Remember, remember when he said that it's going to take months to fully liquidate this position and we're going to do it in a way that disturbs the market as little as possible? Is that, is that what this looks like in this chart, Ryan?

• 1:01:20Ryan Sean Adams?

  My god. Absolutely.

• 1:01:21David Hoffman?

  I, I wonder if CZ actually sold any FTT. I think there's a chance. He probably, he probably did. There's also a chance that this is just the run on the bank that you're seeing.

• 1:01:33Ryan Sean Adams?

  I mean, why wouldn't he sell? I mean, why would you want to hold FTT for an 80% drop? He probably sold as fast as he could too. Uh, but probably not over months, or I don't know, maybe.

• 1:01:42David Hoffman?

  Doesn't matter now. Who, who, doesn't matter if whoever has FTT, it's like, oh, we actually only have 20% left.

• 1:01:47Ryan Sean Adams?

  CZ is playing the 4D chess game right now. Like, this is what this is happening. Uh, and our old friend, an old friend came back. GM, he says, is this his first tweet in like?

• 1:01:57David Hoffman?

  Months.

• 1:01:59Ryan Sean Adams?

  What? So he's been following? Like, what does this mean, GM?

• 1:02:01David Hoffman?

  I think, I think he's just saying, hey, I'm, I'm here for this.

• 1:02:05Ryan Sean Adams?

  Is he saying it wasn't just me?

• 1:02:07David Hoffman?

  I don't know. I don't know.

• 1:02:10Ryan Sean Adams?

  Can I have my money back, please? Mike Dudas replying to Suzu here.

• 1:02:14David Hoffman?

  Here's Do Kwan, our other friend, who was also on Up Only earlier today. Uh, this is, uh, a painting. I think this is, uh, again, a reference to Game of Thrones of somebody bending the knee to probably House Targaryen.

• 1:02:26Ryan Sean Adams?

  Yeah, one of the Targaryens here.

• 1:02:27David Hoffman?

  Yeah, so this, this is bending the knee in no short order. Yeah. Oh, he's, he's retweeting SBF as he does it. Yeah.

• 1:02:36Ryan Sean Adams?

  Okay, so our old friends are coming back, huh?

• 1:02:38David Hoffman?

  It's this anti-seri, just doing the kiss the ring. Like, it, yeah. Sam Trubuco, so here's Sam Trubuco of Alameda Research. He's one of the, like, SBF's, I think, like, right-hand mans at Alameda. He goes, "Much love to everyone. I'm sure the past few days have been dark for many. I hope the road ahead is brighter." What does this mean? Brian, he's just waving the white flag. He's like, "It's over. I'm done here. I got nothing left." This is, this is him capitulating.

• 1:03:05Ryan Sean Adams?

  Uh, it's all similar from some of the, the big Luna Terra bulls in the aftermath of this. This is what capitulation looks like on Twitter. This is that tweet again.

• 1:03:15David Hoffman?

  Oh, yeah. Okay, I guess we included it twice.

• 1:03:18David Hoffman?

  I thought this was from Jameis at Pleaser Dow, where we have SeFi main characters who are warring with each other, and then DeFi main characters who are like, "If you're in DeFi, if you were in DeFi during Terra Luna, as long as it wasn't Terra Luna, if you were on Ethereum DeFi, or even Solana DeFi..."

• 1:03:32Ryan Sean Adams?

  Like, like, actual DeFi?

• 1:03:34David Hoffman?

  Actual DeFi, yeah, real DeFi. You've been fine. If you were during DeFi, during the three hours capital liquidation, you were fine. If you were in DeFi during just now, you were fine. And in fact, if you were lending out Ether, you're getting some, some strong yields right now. So I thought this was a great meme.

• 1:03:50Ryan Sean Adams?

  Do you know, does it, do you find this ironic that, um, we had this whole conversation with, with SBF and Voorhees a couple of weeks ago about how to protect retail from DeFi? And, um, talking about, like, having user interfaces for DeFi have to register with different states or, you know, the, the feds, for example. And what's interesting about everything that we've seen in 2022 is the problem is coming from SeFi primarily.

• 1:04:19David Hoffman?

  Yes.

• 1:04:20Ryan Sean Adams?

  I mean, they're, they're like, quote unquote, DeFi, Quanzy-type schemes that are going on, algorithmic stablecoins that are, um, not even, you know, collateralized. We don't even know the assets are. It's not, it's not on-chain. It's not real DeFi. But then it was like Celsius and Voyager, uh, and even BlockFi had quite a time of it. SeFi is the thing that we need to be protected from, it feels like, as, as retail. I don't understand how regulating a front-end user interface is going to help solve this problem. And I think it's somewhat ironic that, uh, in, one of the individuals pushing for that now, like, days later, finds his own crypto exchange on the brink of insolvency.

• 1:05:04Ryan Sean Adams?

  DeFi has been doing pretty well in comparison to that and you know, I hope regulators pay attention.

• 1:05:10David Hoffman?

  Here's another meme out of Dylan Sinclair. This is the find out fuck around and find out chart and it's CZ that's pointing to like, this is what happens when you fuck around, you find out.

• 1:05:23David Hoffman?

  Level seven find out.

• 1:05:24Ryan Sean Adams?

  That's the equilibrium.

• 1:05:25David Hoffman?

  Yeah, and this is a can't can't ring Clark saying the game of chess that CZ just played was possibly one of the greatest of all time. I don't think I've seen like there, there was like conspiracies and allegations that somebody, some entity, triggered the collapse of Luna. I don't really think anything has come of that. We know that CZ just triggered the collapse of FTX. Maybe they put themselves into precarious position to begin with, but it was CZ was the one that that lit the fuse and then capitalized on that.

• 1:05:53Ryan Sean Adams?

  And now, now SPF has to work with him.

• 1:05:57David Hoffman?

  Yeah.

• 1:05:57Ryan Sean Adams?

  SPF has to kiss the ring after that.

• 1:06:00David Hoffman?

  Big time.

• 1:06:01Ryan Sean Adams?

  SPF has to call him boss and do what he says. And like, that has to be a, a humbling position to be in right now, but CZ is the one making the rules for sure.

• 1:06:11David Hoffman?

  Big time, big time. Uh, next, here's another tweet from Will Clemente saying next cycle CZ will be the richest man in the world. I think he's already breached top five richest men at the top of the market. Uh, yeah, uh, like see this, see, we already knew that CZ was the, the chief of an empire. That empire just got twice as big because they just, they, they already had like 75 to 80% of total crypto exchange volume. They just acquired number three, maybe it was number two. FTX passed Coinbase in volume at times. So now the number one just gobbled number two. And they also gobbled up everything that, that FTX acquired over the last six months.

• 1:06:51David Hoffman?

  All the blockFi's assets, like everything, like all the, the bleeding hedge funds that, that BlockFi or that FTX acquired. Now CZ just acquired it.

• 1:07:00Ryan Sean Adams?

  It's just massive consolidation.

• 1:07:01David Hoffman?

  Huge consolidation. And so see, we already knew that CZ was like this massive, just mogul of a massive empire. And that empire just became so much bigger. This guy goes from being insanely powerful. It's to, to top five most powerful men in the world.

• 1:07:19Ryan Sean Adams?

  By the way, he owns a $500 million stake in Twitter. Like, fun fact, he was in on that deal too. Are you worried about this? Should we be worried about this? So, so in general, like, I prefer like, you know, a duopoly or an olig- what's that word? Oligopoly versus just like a monopoly, right? And so this is, I mean, at least there was-

• 1:07:41David Hoffman?

  A duopoly instead of a monopoly?

• 1:07:42Ryan Sean Adams?

  Yeah. I mean, that would be better. It would be better to- a triopoly, it would be- it would be better to have more crypto bankers. Now CZ is just kind of consolidated, knocked a key competitor out of the ring. And it's just, I guess it's kind of like Coinbase and Binance? I mean, by the way, Brian Armstrong's looking pretty good in the back of all of this. Just playing it straight-

• 1:08:03David Hoffman?

  Doing nothing. Just, just doing nothing. Whoever does nothing is- has won. If you have done- well, CZ did something and definitely won.

• 1:08:11Ryan Sean Adams?

  CZ won big, but you know, the Coinbase kingdom still stands as well. But anyway, I guess the point of like consolidation, crypto bankers getting powerful, like, this worries me. I think some people, some people in crypto and DeFi are like, taking a short-term view and thinking that, you know, SBF was an enemy of, of maybe DeFi, maybe he was, maybe some people, you know, think he was, but like CZ is also a crypto, crypto banker, right? Are we worried that he has now consolidated more power and doesn't have a competitor to, to check him? Should we be worried about this? Or do we just say, you know, CZ, crypto values? Hopefully he doesn't do anything nefarious in our industry. What's your take on this?

• 1:08:56David Hoffman?

  Yeah, I think we should always be wary of people in power. Always. Why wouldn't you be? I don't, I don't think that there's anything specific about CZ that I'm specifically worried about, although the sharpness and the level of execution is extremely intimidating. I, I trust ZZ more than I trust SBF, definitely. He and Binance has done fantastic things to promote the crypto industry.

• 1:09:28David Hoffman?

  Smart Chain is a real bankless technology for a lot of people out in the world, even though it's not completely bankless on the bankless spectrum. It's more bankless than most things and it's more self-sovereign and user-sovereign than most things. And Binance has done a great job of onboarding many people into crypto. He has 100% made a net positive impact upon the crypto industry. I am worried that one person has so much goddamn power and reach. But I'm not worried to be, I'm not too, I don't know, man, I, it's hard, it's hard.

• 1:10:06Ryan Sean Adams?

  I would like to see some more competition, to be honest. I would like to see a little bit of disruption, but I mean, who's close? Who's close right now? Just Coinbase?

• 1:10:15David Hoffman?

  Just Coinbase. But like it's, Binance is like the offshore unregulated one and Coinbase is the onshore regulated one. Like if that's, if that's the binary star system that is the end result of all of this, and I guess that's just the way that it is.

• 1:10:30Ryan Sean Adams?

  I do think that, you know, when you think of kind of the crypto tribes left standing, who are they? What are the crypto tribes left standing? It's kind of like the Bitcoiner tribe, for sure. There's still sort of the Ethereum type, type tribe out there, DeFi tribe.

• 1:10:45David Hoffman?

  I would say the largely like unscathed tribe, at least that's what it feels like.

• 1:10:49Ryan Sean Adams?

  Yes, but it feels very much like this other tribe of like FTX and I might throw Solana in there. I mean, SBF was a big Solana supporter.

• 1:10:58David Hoffman?

  We have to look at this.

• 1:10:59Ryan Sean Adams?

  For example.

• 1:11:00David Hoffman?

  Yeah, that's very.

• 1:11:01Ryan Sean Adams?

  We'll get to that, but like it feels like that tribe has maybe taken a big hit here.

• 1:11:04David Hoffman?

  DY in the YouTube chat, it's like Hoffman's kissing the ring.

• 1:11:09Ryan Sean Adams?

  Are you kissing the ring, David?

• 1:11:11David Hoffman?

  I don't want to go up against CZ, Jesus.

• 1:11:14Ryan Sean Adams?

  I mean, but like.

• 1:11:15David Hoffman?

  It's gonna liquidate me.

• 1:11:16Ryan Sean Adams?

  Here's the thing, we can't trust crypto. Here's the thing, we can't have power consolidated in kind of the centralized app layer, right? Binance Smart Chain is ultimately, it's, you know, kind of CD controls the validator set. It's sort of like fintech with an API. It's not, it's not pure true DeFi, right? I mean, there's a lot of negative things to say about it, but I guess we'll have to see what CZ does with his power. I mean, there is a way you can. Use that power to the good of crypto and to support decentralized values. And like, I hope he chooses to do that, but to be determined. I think we should all be skeptical as well and hold them accountable. Here's a take just based on that. What's that tweet?

• 1:11:59David Hoffman?

  CZ owns the biggest sex, see centralized exchange, the second biggest chain by TVL, the third biggest asset by market cap BNB, the third biggest stablecoin BUSD. Everything CZ touches just becomes like the biggest, the biggest one. This is funny now. CZ says, "All crypto exchanges should do Merkel proof, proof of reserves. Banks run on fractional reserves. Crypto exchanges do not. Binance will start to do proof of reserves soon. Full transparency." If CZ, great, great tweet. We love proof of reserves. I'm sure this is not how Nick Carter thought proof of reserves was going to get rolled out, but if this is how it happens, fine. This is an interesting tweet that this is happening.

• 1:12:43David Hoffman?

  This got tweeted out like an hour or so ago. This is CZ's most recent tweet. "Banks run on fractional reserves. Crypto exchanges should not." He is calling out the fact that, and this is my interpretation, that he just sniped the hell out of FTX. It's like, oh, FTX, you're running fractional reserves? I'm going to trigger a run on the bank, put you in a corner and then buy you. And then if the next step that happens is that Binance implements proof of reserves, next, it's the most Chad move of all time because not only did he snipe an underwater bank, he then just proves that his bank is unsnipeable because you can't trigger a run on the bank on a bank that has proven to have full reserves.

• 1:13:25Ryan Sean Adams?

  Look, I do think proof of reserves would be a big step forward for centralized exchange. Here's the thing, though, is like, you can't, you can't prove all of your reserves unless they're, unless they're on chain, right? So, I mean, at some level, one response to this would be like, that's great. Binance is doing this. This is what DeFi is doing, though, from like the base layer on up.

• 1:13:47David Hoffman?

  If you're going to be put on your DeFi maximalist hat, yeah, DeFi is proof of reserves.

• 1:13:50Ryan Sean Adams?

  Well, that's what I am, is a DeFi maximalist. And so DeFi is already doing that. So I'm glad Binance is taking a step towards that. But I will say, these are the types of actions that would make more centralized exchange providers a bit more decentralized. And this would be, I think, a win for all consumers, right?

• 1:14:08David Hoffman?

  Hundred percent.

• 1:14:08Ryan Sean Adams?

  Here's the thing with FTX is like, we had no idea whether the thing's insolvent or not. Compare that to AVE, like loans on AVE, for example. Entire stack, traceable on chain. No one has to worry. Like, we can look it all up. We could see every asset, what's backing it, right-click, view source, you get to see it. And we don't have that visibility with FTX. So we'll see what CZ does on that. But yeah, no question, he's made a huge move today.

• 1:14:35David Hoffman?

  So this is, so these are some questions that I have, and I had some tweets like paired up with this. There's to conclude what the, some of the most important questions that I think we are have left to answer as a result of this event. Did Alameda blow up? We don't know that, but people probably.

• 1:14:52Ryan Sean Adams?

  Seems very likely that it blew up under 22, right?

• 1:14:55David Hoffman?

  Yes, exactly. How big is the regulatory impact going to be on this? Is a, is an interesting question to unpack. DeFi is strong. We've already talked about that. This is the question of, is SBF in legal trouble? So FTX allegedly took customer deposits, sent it to Alameda Research to go make money with customer deposits. Alameda lost money, and then therefore FTX also lost people money. If people who invested in FTX or customers who might not get their money back, if they cannot be made whole, that might trigger legal concerns. And Dylan Leclerc says, call it what it is, it's fraud.

• 1:15:40Ryan Sean Adams?

  Fraud. What SBF was doing is fraud, is the claim that this is making. Can we talk about the regulatory impact? Because I think that's related to this.

• 1:15:50David Hoffman?

  So I believe Ryan Selkis is in the waiting room.

• 1:15:53Ryan Sean Adams?

  Why don't we have that conversation with him?

• 1:15:55David Hoffman?

  Yeah. All right. You want to stop sharing the screen, Ryan?

• 1:15:58Ryan Sean Adams?

  Yeah.

• 1:16:01David Hoffman?

  What's up, Mr. Selkis? You with us?

• 1:16:04Speaker 02

  I am. How's it going?

• 1:16:05David Hoffman?

  Hey, how's it going? So you're on a stream, by the way.

• 1:16:10Speaker 02

  I'm on a stream. I'm live.

• 1:16:12David Hoffman?

  Oh, yeah. You're live with 3,000 people watching. So we just got off of a rant all throughout about everything that's going on. And the conclusion that we want to unpack is, is there, how big of legal trouble do you think SPF is in?

• 1:16:31Speaker 02

  Um, well, I think everybody's speculating off the same public information right now. So I actually think that's a secondary issue, to be honest with you. I think the bigger issue is what's going on with the DCCPA and the legislative agenda for the rest of the year.

• 1:16:47David Hoffman?

  Okay.

• 1:16:49Speaker 02

  And in my mind, you know, this should be a killer for the DCCPA for this year. It's difficult to envision a scenario where this gets pushed through before the end of the year, given how influential FTX and their team has been in these conversations. The flip side is, I don't know if this really did us any favors in terms of,

• 1:17:13Speaker 02

  you know, urging caution and restraint and a kind of balanced, comprehensive approach to, to whatever legislative package could be pushed next year. So there is an argument to be made that this actually pushes us in the wrong direction and that there might be some more urgency to put something through, almost like as an immediate measure, an emergency measure to make sure that there's a little bit more oversight of the exchanges in short order. So we'll have a little bit more color, I think, after we see the results of the election tonight in terms of which way the balance is going to shift.

• 1:17:49Ryan Sean Adams?

  Ryan, is it fair to say that this definitely makes the crypto industry, crypto community look bad? Is this another black eye for us?

• 1:18:00Speaker 02

  Well, yeah. I mean,

• 1:18:08Speaker 02

  any other questions? Yeah.

• 1:18:11Ryan Sean Adams?

  I mean, how bad?

• 1:18:14Speaker 02

  I mean, the way that this went down was...

• 1:18:19Speaker 02

  I mean, I don't, I don't know exactly what the thought process was over the weekend. But this certainly could have been handled a little bit differently. My, my honest transparent guess is that

• 1:18:38Speaker 02

  CZ wanted to take Sam down a peg, given how much time and energy FTX has been spending on the lobbying fronts and, and frankly, doing some things that might have been net unfavorable to Binance. But maybe the reaction today was trying to kind of stem the negative effects of that weekend action. Because I, I, I think that there's a good chance that CZ didn't realize how damaging those comments would be over the weekend. And the goal was to kind of jab, not name

• 1:19:17Speaker 02

  FTX and, and it just kind of spiraled. That, that's my, you know, kind of poor man's speculation, which I think is the same thing that everybody's playing a guessing game around. But that, that seems to be the thing that makes the most sense. From my vantage point, just having watched this play out and, and having kind of known what some of the political issues are right now.

• 1:19:38Ryan Sean Adams?

  How does this look though to like a, a typical legislator? You know, um, I mean, what, what would they make of this? And we, we, we on SBF was very kind of tied into kind of the regulatory scene and was somewhat of a key contributor and champion for the DCCPA. And now we're looking at the collapse, the bailout of FTX, his entire exchange. How does a legislator interpret this?

• 1:20:07Speaker 02

  Well, let me, I mean, yeah, I mean, let's just clarify. We don't actually know that this is a bailout, right? This is a non-binding LOI and this could have been what I just said, which is to just prevent contagion and kind of hysteria from taking hold. But there's still plenty of opportunities for, you know, both sides to walk away. FTX to line up other financing. Figure out the duration issues on their on their books that that could be causing some of this. And and eventually, you know, these these could, you know, both continue to be independent kind of going concern exchanges, both internationally and domestically. So let's not conflate like a binding purchase agreement and a non binding LOI. That's number one. But from a from a

• 1:20:50Speaker 02

  your second point, the policymakers, I don't think the policy priorities have changed. It's still, let's have oversight of the exchanges. Nobody disagrees with that. Let's make sure that the stable coins are well regulated and properly integrated in the financial system. So you don't have a Luna situation and you have fully reserved stable coins that don't give you tether like vibes. That's still a no brainer and that's still something that's on everybody's mind. But the third thing that wasn't really solved by DCCPA and and that hopefully would be better integrated in comprehensive legislation or kind of a third act, if you will, third pillar to this is where do we draw the line between digital commodities and securities, right? And then how do we classify tokens?

• 1:21:34Speaker 02

  And I think what's opened up now is the opportunity for us to have a serious conversation about what do you disclosures, safe harbors? And and you know, kind of fit for purpose regulation look like for that broad bucket of assets. And the the story that was buried today, that's just as important as what happened with library. So that third issue is only getting more pronounced in its importance and it's it's something that has to be solved regardless of DCCPA. So I think exchange oversight before and after what happened today. It's it's still the same priority and I think it's maybe more urgent from policymakers perspectives.

• 1:22:15Speaker 02

  Stable coins, same thing, but but the hard work and the kind of standard setting that's going to happen over the next few months. And maybe some self regulatory efforts for a change that we've discussed, but have never really got momentum. Now there's probably a little bit more industry wide urgency to get that right. And and I think that's, you know.

• 1:22:34Speaker 02

  On the margin, I think it's a good thing and we could still come out of this in a healthier position, even though this is an immediate term setback. But all this really means is that it's going to have to be a more coordinated industry response versus one firm pushing the envelope.

• 1:22:54Ryan Sean Adams?

  Brian, thanks so much for cluing us in on the regulatory impact here in the DCCPA. I appreciate the work you're doing. And I guess, do you have any other concluding thoughts from today's events? Recognizing it's all still early, there's a lot more to play out. Anything else you'd leave us with?

• 1:23:11Speaker 02

  Leverage is bad.

• 1:23:14David Hoffman?

  Trading customer deposits also bad.

• 1:23:18Ryan Sean Adams?

  Ryan, thanks so much, man. We'll see you around.

• 1:23:21Speaker 02

  We'll do it again soon. Thanks, guys.

• 1:23:22Ryan Sean Adams?

  All right. Take care.

• 1:23:25David Hoffman?

  David? We have more to cover, Ryan. So that was a nice little break for Ryan to come in and talk, so I could peruse Twitter. So there are things to discuss. Here's a tweet from Brian Armstrong. But before we read this tweet from Brian Armstrong, I just wanted to say thank you to the 3,000 people we got watching the show. If you are not liking the video yet, please do. If you are not subscribed to Bankless, please subscribe. We kind of cover these events whenever we can, and we have a fun time doing it. So make sure you like and subscribe to the video. Brian Armstrong, "The one other exchange founder left standing, the most humble of all exchange founders, the least mean character, perhaps, put out a tweet thread." Ryan, you want to walk us through the tweet thread?

• 1:24:05Ryan Sean Adams?

  Yeah. Brian goes, "Number one, first off, I have a lot of sympathy for everyone involved in the current situation with FTX. It's stressful anytime there's potential for customer loss." That's right, Brian. It's very stressful. "Number two, Coinbase doesn't have any material exposure to FTX or FTT and no exposure to Alameda. Thank God." Also, "Number three, I think it's important to reinforce what differentiates Coinbase in a moment like this. This event appears to be the result of risky business practices, including conflicts of interest between deeply intertwined entities and misuse of customer funds." This is interesting. So what he's already established First, I have sympathy. Second, we don't have exposure, not us. We have nothing to do with this.

• 1:24:49Ryan Sean Adams?

  Third, I feel like David, he's starting to tee up making the case maybe for some independent, some separation between sort of a hedge fund and an exchange. You can't be both. Maybe he's tilting the conversation towards that. Four, Coinbase has always strived to be the most trusted player in the space. We don't engage in this type of risky activity. Five, we don't do anything with our customers' funds unless directed to by the customer. We hold all assets dollar for dollar and users can withdraw their money anytime. Number six, we are incorporated in the US and publicly listed in the US. Because we believe that transparency and trust are so important, every investor and customer can see our publicly audited financials, which show how we hold customer funds. We've never issued an exchange token.

• 1:25:32Ryan Sean Adams?

  Interesting, never issued an exchange token. I could see Brian laying down some best practices here, right? You shouldn't have a fund and you shouldn't have an exchange. They shouldn't be part of the same family of businesses. You shouldn't have an exchange token.

• 1:25:45David Hoffman?

  It's crazy that we have to say this.

• 1:25:49Ryan Sean Adams?

  Well, we have to learn the hard way, everything, I think, in this industry. Part of the issue, number seven, here is that regulators have been forced onshore in each of their respective markets, while customers have moved offshore in companies with more opaque and risky business practices. Oh, now this is a shot across the bow to regulators, David. So he's saying, hey, regulators, you know what? Customers are getting hurt because you're not allowing us to keep their funds safe. So they're seeking these services in other shadowy jurisdictions. They still want the services this market needs, but you're pushing them outside. And so they're still getting, they're getting the worst of our worlds. They're getting the risk. To take the US as an example, 95% of crypto trading has developed overseas.

• 1:26:32Ryan Sean Adams?

  Did you know that? I didn't know that. I thought it was like, like 80%. 95% has developed overseas, he said, because crypto regulation in the US has been hard to navigate. That's bad for the US and Americans are still losing money in these overseas blowups. Number nine, the temptation from events like these is to call for more heavy-handed regulation. This would just make the problem of crypto companies and crypto users going overseas worse. This is a very fair point. Number 10, we should continue to work with policymakers to create sensible regulation for centralized exchanges, custodians in each market, as we've been doing for some time. But then we need to see a level playing field in force, which hasn't happened to date.

• 1:27:11Ryan Sean Adams?

  Long term, the crypto industry has an opportunity to build a better system with DeFi and self custodial wallets that don't rely on trusting third parties. Instead, you could trust in code math, everything can be publicly audible on chain. Sounds like DeFi, David. This is a topic for another day. Strong tweet thread from Brian laying out his case for Coinbase and the long term direction for the space. By the way, David, you know what? I think in the aftermath of this, we should really get Brian on the podcast.

• 1:27:39David Hoffman?

  I think it would be refreshing to hear from Brian. I put out this tweet. It's funny, I saw you put out this tweet right after I put out the same tweet. This is just, you know, why I enjoy you as my co-host, Ryan. We both tweeted out like, thank God for Brian Armstrong. It's just like, and it's not to say that anything that CZ is doing is, maybe it's, maybe it's less than neutral. It's not inherently bad, but I'm just glad that there is a centralized crypto exchange founder who isn't playing and is just focusing on himself.

• 1:28:12Ryan Sean Adams?

  A little lawful good category.

• 1:28:14David Hoffman?

  Lawful, lawful, good category, which is exactly what we need as the US onshore exchange.

• 1:28:20Ryan Sean Adams?

  Absolutely. What's this other tweet?

• 1:28:22David Hoffman?

  Yeah, so while I was doing, writing some notes for the show, Up Only was live streaming and they were, they were trying to get people on. They of course wanted to get SBF on, they wanted to get CZ on, they're not going to come on, but and so who did they get? They get Doquan, who's not, the one with your cursor in the top right is the guy at Wintermute. I don't know who the guy is below them. Also, Martin Scurelli also showed up and then there's Kobe just like laying on the ground is like, what the hell is going on?

• 1:28:51Ryan Sean Adams?

  Yeah, it's crazy, crazy times. Crypto is never boring. I gotta say that, David.

• 1:28:57David Hoffman?

  All right, I feel like the last thing I think we want to do is pull up CoinGecko. Let's pull up CoinGecko.

• 1:29:02Ryan Sean Adams?

  The impact is?

• 1:29:04David Hoffman?

  Markets down bad, Ryan. Markets down bad.

• 1:29:06Ryan Sean Adams?

  How bad? I haven't looked at this.

• 1:29:07David Hoffman?

  Yeah. And so Ether.

• 1:29:10Ryan Sean Adams?

  20% down ETH?

• 1:29:12David Hoffman?

  Yes, yeah, so Ether was at 1220, it bottom ticked at 1220. And as soon as I saw that, I opened up Coinbase. Coinbase was having trouble keeping up with server load, and so I kept on having to refresh it. I sadly did not make a sub $1,300 buy. I bought about 13.

• 1:29:29Ryan Sean Adams?

  Wait, that's what you're buying? You're buying ETH on a day like this? You're not buying BNB?

• 1:29:33David Hoffman?

  I'm not buying BNB, no. You can, uh, we'll, we'll go to BNB later. I, but I'm just saying, I bought today, I bought at 1310. I really wanted that 1250, but they jumped back up too high. Look at that, let's open up BNB, let's open up the BNB chart.

• 1:29:47Ryan Sean Adams?

  It's still down 7% today, David.

• 1:29:48David Hoffman?

  Yeah, it's down 7%, where everything else, look, it jumped up as soon as the news happened, it jumped up to 375. All-time, all-time highs? Not, not quite all-time highs. Um, uh, but, uh, since then, the whole market has nuked. Uh, I'm wondering where that sell pressure came from? Definitely a lot of fear. I'm worried that Alameda liquidated whatever it's got. Um, but a lot of sell pressure.

• 1:30:14Ryan Sean Adams?

  Could it be any worse? Is this worse than 3Aris Capital, David?

• 1:30:16David Hoffman?

  Uh, I, I mean, this is, we're at the bottom of this local liquidation event. I don't, I don't think there's any more contagion. The contagion is just between Alameda and FTX. I think this is a local bottom.

• 1:30:27Ryan Sean Adams?

  These are pretty big parties, though. Let's not discount them. Like, uh, how's, by the way, how's, uh, Solana holding?

• 1:30:32David Hoffman?

  Solana is caught in the crossfire. So Solana has gotten hit particularly bad because, uh, it's a big asset of SAM and probably, presumably, uh, Alameda. It's kind of associated with all of them. So Solana has gotten hit particularly bad. This is, uh, Solana is at lows for the year, where, you know, Ether is almost 2X its lows, Bitcoin is like 50% up on its lows, Solana is at its lows for the year. Um, but, I mean, I kind of think this, this is a fair bottom to call. Um, I'm not one for calling bottoms.

• 1:31:03Ryan Sean Adams?

  A Solana bottom?

• 1:31:04David Hoffman?

  A Solana bottom, yeah. I could call a Solana bottom here. Um, you know what else is bottoming, Ryan?

• 1:31:09Ryan Sean Adams?

  Uh, tell me.

• 1:31:11David Hoffman?

  Ether supply.

• 1:31:13Ryan Sean Adams?

  Oh my God. Why are we really doing this?

• 1:31:17David Hoffman?

  We're doing this right now.

• 1:31:18Ryan Sean Adams?

  Wait, first of all, but first of all, we forgot to talk about Bitcoin, just briefly. 12% down, huh?

• 1:31:23David Hoffman?

  Yeah, so Ether down 70%, Bitcoin down 12%, yeah. We are so close, and I've been waiting for this moment. We are so close. Look at that straight line down. Gas has been between 1 and 400 Gua. We're at 50 Gua. It got up to 400 Gua, Ryan, and we are burning Ether like crazy. Look at that, 600 Gua! 600 Gua! And we are burning Ether like crazy right now, more than we've ever burned-

• 1:31:46Ryan Sean Adams?

  Wait, we are at 600 Gua? Where's the gas?

• 1:31:48David Hoffman?

  We peaked it. Yeah, live down, just there, you can see the peak. Yep.

• 1:31:51Ryan Sean Adams?

  That was, oh my God.

• 1:31:52David Hoffman?

  Some blocks hit 600 Gua. I'm sure we burnt something like 10, 20, 30 Ether per block.

• 1:31:57Ryan Sean Adams?

  Because when stuff happens in crypto, a lot of blocks are getting demanded, things on-chain get expensive.

• 1:32:04David Hoffman?

  Yeah. I bet you if we hang out here, Ryan, for a little bit, oh, except Erik Voorhees is in the room, so here comes Eric. And, but we are at 0.02% of Ether supply. What's up, Eric?

• 1:32:15Speaker 03

  Hey, can you hear me?

• 1:32:17David Hoffman?

  Hey, how's it going?

• 1:32:18Ryan Sean Adams?

  How's it going?

• 1:32:19Speaker 03

  It's going all right. What a fucking day.

• 1:32:21Ryan Sean Adams?

  Yeah. What do you make of this, man? What's happening?

• 1:32:25Speaker 03

  So I was out this morning, and my phone starts blowing up, and I was like rushing to get back to see what was happening. And I've been watching all the drama between CZ and SPF over the last few days.

• 1:32:41Speaker 03

  And then to see that CZ might be buying FTX is crazy. It's just crazy.

• 1:32:49Ryan Sean Adams?

  You've seen a lot, you've seen a lot in crypto. There've been a lot of crazy days in crypto, right? I mean, we've had some even this year. How would you rank this one? I mean, did this one get you by surprise? I was telling David at the beginning of the show, I like to say now when people ask, like, you know, "What'd you think of this event?" I'm like, "I'm never surprised." And then crypto continues to surprise me. Like, a day like today was surprising to me. But you've been in crypto for longer than I, Eric. What, you know, how do you rank today? Like, what's on the surprise meter?

• 1:33:22Speaker 03

  I mean, this is a 10 on the surprise meter. This is like the most dramatic soap opera event that I've seen. There have been more, there have been days that were more calamitous, for sure. Like Mount Gox going down, or Three Arrows or something, but um- This is definitely the weirdest. This one seems like the most, like it was written into a script.

• 1:33:47David Hoffman?

  Yeah.

• 1:33:47Speaker 03

  To just fuck with everyone.

• 1:33:48David Hoffman?

  Yes.

• 1:33:50Ryan Sean Adams?

  Well, is CZ like the mastermind that people in crypto Twitter are making him out to be?

• 1:33:59Speaker 03

  Um, so there's definitely like an Icarus phenomenon in crypto, right? You get these people that they come in and build up some momentum and traction and then they get super popular and everyone loves them and they're like a god. And so many of those people have been destroyed or destroyed themselves, sometimes very quickly.

• 1:34:24Speaker 03

  CZ, I think, gets the the crown for being in such a high position for so long. Um, and doing it so well. So it does not, I mean, yeah, I don't know inside of his head, but he's clearly executing at a level that is impressive and um, who knows how much of this was pre orchestrated or not? But it certainly looks like a masterful move in hindsight. Um, I guess we need to be careful not to assume what's going to happen, right? All that's happened is a, of a letter of intent. Um, an actual deal could fall apart for a thousand reasons. Uh, and the whole thing may end up being a huge black mark on the industry.

• 1:35:08Speaker 03

  But right now it looks like CZ is in the position of the kingmaker.

• 1:35:14David Hoffman?

  This is the meme, right? Where their crypto Twitter's got the meme of you never want to be the main character. Because if you're the main character, you're about to be killed off. Uh, CZ has been the main character for, a main character for a long time. He's made it through all the seasons.

• 1:35:30Ryan Sean Adams?

  He's on season eight.

• 1:35:32David Hoffman?

  And now, now like there were like a collection of main characters at times, like Do Kwon took front stage and center for a while. Uh, Thiero's capital were front center for a while. CZ's been a main player, but never really like in the same limelight as Do Kwon or all of them until now. Now he is the main character. Uh, I hope, I hope he continues to be around.

• 1:35:57Speaker 03

  Yeah, it's um, it's wild that I, I was just talking last night with someone about this how like, yes, these, these spats and these feuds are kind of immature, kind of unprofessional, maybe very unprofessional. And they kind of make our industry look a little childish, granted. But I would so much rather have this world of like honesty and hyper capitalistic competition out in front of everyone versus the banking system, which has all sorts of corrupt nonsense happening behind the scenes. But they put on always this like professional face, a suit and tie, super slick, you know,

• 1:36:42Speaker 03

  um, marketing brochures and press releases. And it's also fake, right? Like, it's also fake. And you, you look at one of these like banking CEOs and there's no way anyone should trust these people. They're, like, they, they rise to that occasion, sure, on their skill, but also on their ability to be completely opaque about their real intentions. And so I like the raw energy and the genuine nature of crypto, even if it may look kind of immature and, and Wild West.

• 1:37:14Ryan Sean Adams?

  As content creators, so do David and I, that's for sure. It gives us a lot to work with.

• 1:37:19Speaker 03

  Yeah, you, you guys have probably had your schedule full, I guess, since our interview with SPF.

• 1:37:24Ryan Sean Adams?

  Well, I, I want to ask you about that, Eric. So like, um, you know, some people are saying that this was the first domino to get tipped over, kind of, they, they hearken back to the conversation that you and SPF had, um, I guess, two weeks ago now, this debate. And in fact, uh, even, even CZ, you know, mentioned it as a maybe part of a reason for, for selling FTT. Uh, you mentioned, you know, SPF's work in DC maybe going contrary to the industry, something to this effect.

• 1:38:01Ryan Sean Adams?

  Do you think that this is all related? Or how do you think this regulatory conversation ties in, if at all? And, and how do you think maybe lawmakers, those working on the DCCPA, might respond as they're, as they're witnessing the last two days of events unfold?

• 1:38:17Speaker 03

  Yeah, I'm still, I'm still trying to process all this. It does seem that SBF was inviting or encouraging some regulation which

• 1:38:31Speaker 03

  much of the community, as in like the authentic crypto people that really care about what we're doing, we're not happy about. And I don't, I don't know this and I don't want to like make up rumors, but I would not be surprised if someone like SBF had been throwing a company like Binance under the bus, like, like in some ways, Binance is, is, is the living, breathing ethos of crypto. It is this renegade company and, and the best one, like the, the best renegade company in crypto that has built something so impressive and, and successful. And you, you just know that it gets trashed like in, in the policy circles because

• 1:39:15Speaker 03

  it is not, it does not play by the normal rules that a US regulated financial institution would. And thank goodness for that. Right? So

• 1:39:26Speaker 03

  I wouldn't be surprised if SBF had used Binance as the example of how exchanges should not operate and hey regulators, let's fix that. Right? And he would find lots of allies in, in DC with that message. So, um, yeah, this whole thing has just been really wild and I think most important of all is for people to recognize yet again, the dangers of opaque intermediaries that are custodians. This lesson has been learned over and over and over and over and over. And people keep leaving all their funds with these counterparties. Some of them are very, very trustworthy, right? Like I think Coinbase absolutely falls into that category. I think Kraken falls into that category.

• 1:40:10Speaker 03

  But, but people need to recognize that like DeFi being audible all the time, open source all the time, provably verifiable all the time, operating exactly as the code says. This is such a step function improvement over centralized intermediaries. Any, anyone in DC who actually cares about protecting people needs to pay close attention to that lesson.

• 1:40:32Ryan Sean Adams?

  I hope they see that lesson, Eric. And I think there's a certain irony in the conversation that you and SBF were having a couple of weeks ago, this debate about protecting retail by having registration, by registration being required for all DeFi front ends, right? But the story throughout 2022 has not been a story of like DeFi failing. It's been centralized exchange and centralized institutions failing due to opaqueness, due to lack of transparency. And DeFi is a way out of that. But one hopes that they'll learn the lessons. I'm just, I'm just worried that our industry crypto might come out of this with yet another black eye

• 1:41:14Ryan Sean Adams?

  and with lawmakers not learning the actual lessons they should be learning. I mean, a simple view of this is like, oh, there it goes again. Crypto is the Wild West. They screwed up again. This is why we need the cops on the beat to breathe down their neck and bring some law to this nefarious industry. I hope that's not the takeaway.

• 1:41:34Speaker 03

  It will be the takeaway by everyone who wants to regulate the industry, which is probably most of the regulators. So that's unfortunate. You know, let's hope this doesn't become a black eye. Let's hope that this actually ends up as an example of the industry settling its own issues and perhaps something insolvent being A, exposed by the market, B, resolved by the market. That would be wonderful. And that's all on CZ right now. So let's hope it goes there.

• 1:42:04Ryan Sean Adams?

  A lot of responsibility on CZ right now. Eric, do you have any parting thoughts for us? You know, this, this, this day, November 8th, anything you, you, you want to say to the crypto community on the back of this?

• 1:42:18Speaker 03

  No, just, this is so much more interesting than the election.

• 1:42:23Ryan Sean Adams?

  Wait, there's an election today? Okay.

• 1:42:24Speaker 03

  Yeah, apparently there's an election here. So everyone make sure to go vote so that the government can get bigger tomorrow.

• 1:42:32Speaker 03

  Yeah, I thought I was gonna like be sitting around watching CNN and drinking myself to death in misery, which is usually what I do on election day, just because it's kind of fun to do that. But this has been so much more interesting, I gotta say.

• 1:42:46David Hoffman?

  Yeah, this is a certainly people are going back and forth as is this the biggest thing since Luna? Or is it's even bigger than Luna? Some people-

• 1:42:56Speaker 03

  We don't know how it'll turn out yet, right? So-

• 1:42:59David Hoffman?

  Yeah, so how much? My take is that the contagion is largely contained between FTX and Alameda. I don't can't really think of a world where it escapes that, but like I think-

• 1:43:11Speaker 03

  The risk is that a deal does not happen.

• 1:43:14David Hoffman?

  That a deal, oh, that a deal does not happen, right?

• 1:43:16Speaker 03

  Yeah, what's what's been exposed? So yesterday, it was reasonable to believe, as I did, that FTX is fine. All these rumors are just rumors. There's no reason to think that they're insolvent.

• 1:43:30Speaker 03

  And then this morning, it's like, oh, boom. Not only are they insolvent, but they're being acquired by by CZ. So what's been revealed is that there was an insolvency.

• 1:43:40David Hoffman?

  Right.

• 1:43:40Speaker 03

  People are assuming that this deal fixes it. And if the deal happens, it probably does fix it. But if the deal doesn't happen, which could happen for all sorts of reasons, then where is this insolvency? And what are the consequences of that?

• 1:43:53David Hoffman?

  Right. That we saw that report that SBF went to Wall Street to immediately emergency finance $1 billion, but that the hole in the balance sheet could be as large as $5 to $6 billion, which is a huge hole. I don't know if those numbers check out.

• 1:44:10Speaker 03

  Did he try borrowing from Ave? Or did he not get through the-

• 1:44:13David Hoffman?

  Well, you need collateral to borrow from-

• 1:44:16Ryan Sean Adams?

  You need a little bit of collateral and FTT wasn't gonna cut it.

• 1:44:18David Hoffman?

  I'm wondering if this has, from what I've gathered, Binance is immediately establishing some sort of line of credit to allow for customer withdrawals so that customers can get their money out of FTX. Unsure, again, unsure is the details of that. I'm wondering if this has given SBF the time to go actually to Wall Street and put a more sophisticated deal together to have competing offers rather than just being under the thumb of CZ.

• 1:44:44Speaker 03

  Do we know where this insolvency came from? I mean, I dismissed this as rumors because I was like- A properly run centralized exchange takes customer deposits and then even if everyone withdraws their deposits, that just means the exchange is empty. It should not in and of itself cause some kind of run. What is it that actually was the deficiency? Like, is that a rumor or does anyone know like where actually this came from?

• 1:45:09David Hoffman?

  So this is, we only have speculation, but the association between FTX and Alameda Research, the idea, the speculation is that FTX sent customer deposits to Alameda Research to leverage in their trades. And then Alameda Research returns to them less money than they received.

• 1:45:28Speaker 03

  What the fuck, like, really?

• 1:45:30David Hoffman?

  We don't know that that is true. We just see Alameda Research sending stable coins to FTX to their hot wallet so that FTX can facilitate outbound withdrawals. So people are just connecting dots, but without any sort of real substantial evidence.

• 1:45:47Speaker 03

  If that is true, this needs to be, if that's true, and I don't want to judge people before things are clear. If that's true, this needs to be the center example of the compliant exchange actually being riskier with customer money than what the unregulated, non-compliant DeFi apps would be doing. To be loaning customer deposits to a risky counterparty to such a degree that a decline like this, which is very foreseen, right? Like a 10, 20, 30% drop in crypto prices is not unheard of, that they would do that

• 1:46:26Speaker 03

  while going to Washington DC to beg for more regulations to protect people is unforgivable if that's what happened. So let's reserve judgment on that until we know, but the fuck?

• 1:46:41David Hoffman?

  I mean, there's, Sam has been in DC. He's, there's not like this, it's not like this hole in FTX's balance sheet just magically showed up recently. He's been in DC lobbying for the DCCPA while this whole in FTX balance, the balance sheet has existed. Like, that feels like a safe bet, a safe claim to make.

• 1:47:05Speaker 03

  I mean, yeah, I don't, I don't have a better explanation. It's not, none of this is proven yet again, but man.

• 1:47:14Speaker 03

  So bad.

• 1:47:15David Hoffman?

  Yeah, it's as bad as it gets.

• 1:47:18Ryan Sean Adams?

  So what would you say, Eric, to somebody who says, all right, how do we fix this? Is the answer just like DeFi? Is that kind of the bottom line answer?

• 1:47:29Speaker 03

  So.

• 1:47:30Ryan Sean Adams?

  Is there more to it?

• 1:47:31Speaker 03

  So one way to fix it is for centralized intermediaries to be more responsible. And there are some. Coinbase has done an amazing job of that over a very long term. Kraken has done an amazing job of that over a very long term. But the bigger important point here is that we don't want to have to trust people. People fail. People are wrong. People can be malicious. People make mistakes. People are subjective. We don't want people running the financial system. We want the hard laws of code running the financial system. That's how you fix it.

• 1:48:10Speaker 03

  So that is the lesson here.

• 1:48:14Ryan Sean Adams?

  I definitely hope the industry learns this lesson.

• 1:48:16David Hoffman?

  Yeah, I wonder how many more times you have to learn.

• 1:48:18Speaker 03

  They won't. They won't. Some people will, like each time this stuff happens, some cohort among the unwashed masses gets bathed in blood and learns the lessons that we try to talk about all the time.

• 1:48:34Speaker 03

  And then they're like, oh, I see. I see why self custody is important. I see why sound money is important. I see why DeFi and open permissionless systems are important. But before that, these were just like bullet points on a white paper and they didn't. They didn't quite get it. These trials and these tests like teach people through the breaking of bones, why the financial system that we have today is bad and how to make a better one.

• 1:48:57Ryan Sean Adams?

  I mean, one example of that, I think, is, you know, from the time CZ tweeted what he originally tweeted about selling FTT and started making some comparisons between FTX and Alameda and Luna. There was a mass exodus of withdrawals from FTX. And this, I think, is investors and retail actually like. Learning the lessons from Celsius. I mean, I guess if they totally learned the lesson, they wouldn't have their money on there in the first place. But they were quick to get it off, that's for sure. And I think this also contributed to the spiral downward we saw where, as of this morning, FTX was no longer able to honor withdrawals. And I

• 1:49:42Ryan Sean Adams?

  mean, just thinking about that, Eric, is just like, that should not be the crypto experience. Like, it should not be the experience of a retail user to be able to go and try to access their blockchain-secured coins, crypto coins, and told that, like, "Sorry, delays. We don't have your money. We can't give it to you. Come back tomorrow. Wait until we sort it out. We don't know where the money is." Like, for that to be a first experience is not why we're here, and it's not why, like, we call this a bankless financial system.

• 1:50:18Speaker 03

  Yeah. It's not bankless if you use a custodian. Yeah, I mean, it's just atrocious. And like, when we created, when we created Shapeshift, you know, in 2014, it was in response to Mt. Gox. Like, how do you let people trade cryptocurrencies without taking custody? So the people don't need to trust us. Doesn't matter if they know me. They can just use the system, and we're not holding billions of dollars of customer money. And then, to have these regulators, like, you know, going after us for years, under the banner of protecting people, when this kind of tomfoolery is going on, is ironic and

• 1:51:00Speaker 03

  just makes me so livid. But here's Brian. Hey, Brian. It's good to see you, man. Hey, Eric. Good to see you. What a day. I'll see the floor to you, sir.

• 1:51:12Ryan Sean Adams?

  Hey, Brian. Welcome. Welcome to Bankless. Thank you for joining us. We were just talking about the tweet thread you put out, and we're hoping to get some insight on that. So what do you think of today's events? What's kind of going through your mind?

• 1:51:27Speaker 04

  Yeah, a lot of stuff. Well, I mean, first of all, it's kind of a difficult moment, obviously, for everybody involved in the markets. The market's going to be down. There's potential for customer losses across a variety of areas, so we got to start with that. And then, you know, I think it's also, it's not a great day for crypto. Let's just be honest. You know, this kind of reminds me a little bit of Mt. Gox back in the day. There's folks of us that that went through that time period and it was not pleasant and it left a, you know, it left a memory for people for many years just about what it was like to be in crypto and what's going well and what's not. So, I think my hope is that people remember going through this moment that not all companies out there are like this, right? It's not a

• 1:52:11Speaker 04

  criticism of crypto writ large. It's really, there's certain actors that are going to do well or do poorly in any kind of environment and we need to wait to see what all the, until all the facts are in about what exactly happened in this case. But, um, yeah, I guess the other thing I'm just thinking about is whether this, you know, the temptation is that this is always leads to sort of, sort of overreaction of regulation. And I don't know if this is Eric, what you were just talking about when I came in, but I think the other thought I have top of mind is the regulatory environment has not helped this situation, right? There's, as there's been a lack of clarity, um, or trying to move towards more clarity with regulation, many customers have kind of gone towards these offshore unregulated exchanges.

• 1:52:52Speaker 04

  And we're seeing these blowups happen. Um, whereas if I think if we'd had more regulatory clarity in the US for the centralized exchanges and custodians,

• 1:53:02Speaker 04

  you know, customers wouldn't have gone offshore and gotten into even bigger issues.

• 1:53:08Ryan Sean Adams?

  Brian, that was one of your, uh, your tweets in your thread that I actually didn't know the stat behind, but you said, uh, to take the US as an example, 95% plus of crypto trading has developed overseas. And you say that's because crypto regulation in the US has been hard to navigate. 95% plus. So you're making the case that, um, crypto regulation as we have it in the US is actually putting investors and, uh, folks that want to trade in retail in a worse position because we're driving them offshore into entities that engage in, in riskier practices.

• 1:53:44Speaker 04

  Yeah, that's correct. So that 95% stat is looking at both spot trading and futures. And yeah, it's pretty stark if you look at it. Even if you just look at spot trading alone, I think at the beginning of this year, the US market was maybe like 23% of global spot for crypto. It's now about 13%. So spot went down, but of course, futures and derivatives and all that really developed offshore because of the lack of regulatory clarity and that market's even bigger. So if you take those in, at least from a trading volume point of view, so if you take those in aggregate, over 95% of the trading volume really moved offshore outside of the US. And of course,

• 1:54:24Speaker 04

  you know, we want crypto to be a global thing. So offshore is not necessarily a bad thing. It should be developing in every country of the world, but where it becomes a problem is that if you, if you have a, you know, a foreign company that's sort of jurisdiction hopping or trying to find one place that's the least regulated and serve the whole world from there. You know, that's where you kind of get to some of these issues.

• 1:54:45Ryan Sean Adams?

  So what do you think the takeaways for regulators and lawmakers should be from this event over the last couple of days?

• 1:54:53Speaker 04

  Yeah. I think number one, it's again, it's not an indictment of all crypto. It's by the way, these kind of blowups happen in the traditional financial system, you know, as well. Look at 2008 and all kinds of situations, right? So that's not, we don't say, oh, let's do away with the whole traditional financial system that, you know, so that's, that's the first point. The second is let's keep working towards regulatory clarity for centralized exchanges and custodians and stable coins and things like that while preserving the innovation potential for DeFi and self custody because those have the opportunity to actually create an even better system, which we can come back to in a minute. Don't resist the temptation to say, oh, we're, you know, we need more and more heavy regulation. No, we need to push forward the regulation we were already contemplating, but then actually create a level playing field and don't allow,

• 1:55:36Speaker 04

  you know, citizens of these countries to go offshore to, to other products. Like right now, the incentive system is actually kind of backwards where the companies that are trying to do the regulated approach often end up with a worse product, fewer features, higher costs, and they're almost incentivizing the companies that are less regulated to go. To draw these customers offshore. I'm here in Japan, actually, right now, where I've been meeting with our team in Japan and the regulators here, and it's actually a very similar story here as in the US. Companies that have gotten locally licensed in Japan, and there's some regulatory clarity emerging, have had a very hard time making compelling products, whereas,

• 1:56:18Speaker 04

  you know, we've seen Japanese customers go offshore to these unregulated exchanges, and, you know, we're starting to see some of the results of that.

• 1:56:27Ryan Sean Adams?

  Brian, you mentioned this in your thread as well, that this talk of tokens as well, and, you know, something that Coinbase has not done. Famously Coinbase has IPO'd, but tokens, these sort of, I don't know what we'd call them, what we'd classify them as, loyalty token, not sure what they are, but they were actually at the center of the story, part of the center of it, like leverage on tokens like FTT, for example, and we've seen massive price swings. What role do you think tokens play in this story? And, you know, what would you say the learning lessons for exchanges or centralized intermediates are from, you know, from a token perspective?

• 1:57:07Speaker 04

  Yeah. So, you know, I'm basically, there's a number of conversations I've had, and I don't want to reveal anything out of turn. So I would say, just high level, we need to wait until all the facts are in and let other people kind of share some of these stories as they come to light. But I do think that there's certainly a risk, just broadly, of, there's nothing wrong with companies creating tokens, right? There's various types of tokens, there's reward tokens, there's some that are clearly non-securities. I think if companies want to create tokens that are securities, there should be a regulated path to do that in the future and kind of register those in various markets around the world. So the issue is not tokens writ large. In fact, I think there should be more and more companies creating tokens and have regulatory

• 1:57:50Speaker 04

  clarity around that. It seems like, and again, the facts are not all in, that in these cases, these tokens may have been used to kind of, you know, inflate the assets on paper, where there may not have been true liquidity there or true use cases. And, you know, we're seeing that come back in a negative way. You know Coinbase, we would have liked to have done something like this. I think there's a lot of interesting tokens that could have been created. But again, we looked at the regulatory environment and we didn't find a way to do it that we felt was within the current regulatory frameworks. So we decided not to do that. And I think obviously in moments like this, it looks like the right choice.

• 1:58:31Speaker 04

  But ideally, we would be able to create tokens in a clear regulatory environment going forward. And I think it would prevent some of this activity.

• 1:58:39David Hoffman?

  Brian, one thing I'm concerned about is that Binance, this huge empire that's been built out in the east, has an insane amount of market share of centralized exchange volume. And FTX and Coinbase have just been like neck and neck, kind of tied for second in volumes over the last like six months or so. And now if this deal goes through with Binance, Binance will just gobble up the next biggest centralized exchange that exists on the market. Just an insane amount of consolidation. And CZ is a person that plays a particular game. We started this episode talking about like, kind of, it's like a game of thrones. It's a game of centralized exchanges.

• 1:59:20David Hoffman?

  And a certain, I feel like if you are a centralized exchange that issues an exchange token, you are playing in that game of thrones. Coinbase doesn't seem to play, it plays a different game. And we, both Ryan and I were saying while we were going through the stream, like, thank God for the differentiation between Coinbase and the rest of the market. So first off, thank you for being different and being what we called lawful good. But are you worried that there is this Binance empire that is offshore, that is this massive player, that is playing in a different game, that is like now, like, just so entrenched into this industry? Like, I'm kind of worried about just the insane monopoly risk that is now happening to this industry.

• 2:00:04David Hoffman?

  When you see the growth of Binance, are you concerned for this industry?

• 2:00:10Speaker 04

  Yeah, I mean, a lot of questions there, and I like the lawful good framework, by the way. That's a good one.

• 2:00:18Speaker 04

  Look, I think it's good to have a variety of different companies with different approaches in most markets. And I agree with you, centralization is bad, so there is a there is a place that the industry can get to where any one player has too much of any particular metric. You know, trading volumes is the one people look at a lot, but there's there's lots of different ones you could look at.

• 2:00:37Speaker 04

  I do think Coinbase and Binance are following pretty different approaches. And look, I it's not my place to kind of say anything about what they're doing. I can just tell you what we're doing. And we're we're trying to follow a regulated trusted approach. We're trying to think long term. We're trying to enable people not just to do crypto trading, but to actually go use crypto. Like what I'm really passionate about is not just I'm not really a trader by background. I'm a tech guy. I want to see a more free and have have an economy for the world that has more economic freedom. So I want to see people using crypto for earning earning a living and buying stuff and commerce and remittance and peer to peer payments. And then all kinds of new stuff in Web three and DApps and whatnot.

• 2:01:18Speaker 04

  So, you know, trading, we I think we have really good trading products and good trading tools. Sometimes it definitely feels like our hands are tied because we can't offer some of the same products that we want. Other times, it's just our own execution is getting in the way, right? So I, you know, I think to intellect, look at it very intellectually, honestly. I think like 50% of it is we could be executing better, and that's where we have our own work to do. The other 50% of it is that we're choosing to follow the rules. And, you know, it's just like a very different, it's a more difficult path and like sometimes your hands are tied. So I but, you know, I think that's the right long term strategy.

• 2:01:57Speaker 04

  And I don't know if that's gonna what it looks like short term, but long term, I think that's definitely the right way we're gonna go.

• 2:02:04David Hoffman?

  At the center of this story was SBF's approach to regulation and engagement with Capitol Hill. CZ, whether or not he actually meant it, cited Sam's approach in regulation in DC and how CZ felt that Sam was really going to DC and then shutting the door behind him and leaving Binance out to dry. Allegedly, this is what CZ, it was one of the motivating factors behind CZ. And also, the industry at large kind of voiced their opinion, especially with our episode with Erik Voorhees and SBF when we had that debate. No one really seemed to have appreciated Sam's approach to regulation. And that also seems to be one of the differentiators that I see out of Coinbase and your guys' approach

• 2:02:46David Hoffman?

  to regulation and how to interface with regulators on Capitol Hill. If you were in Sam's position, which you are because you are the CEO of a centralized exchange, what's the right way to approach regulators? Like, how should he have been doing it, in your opinion?

• 2:03:06Speaker 04

  Yeah, so, you know, I'm trying to make sense of this too because I actually think Sam's approach with regulators and policymakers in DC was actually pretty good, I thought. You know, he clearly had a passion for it. I think he was smart and he advanced some of the issues in a meaningful way, which I give him credit for. I think that where he went on the DeFi side obviously was not like fully in line with what some of the values we have as an industry. And so that, I think you guys did a great job of sort of bringing that stuff to light. I don't know, the most interesting story from my point of view is, you know, he gave a lot of money to various politicians in DC and had built these really strong relationships.

• 2:03:47Speaker 04

  And I guess I worry a little bit what's happening in their mind right now where they think, oh, well, I've got to go distance myself from this person who is now sort of persona non grata or something like that. Or maybe they're thinking, you know, we have to be careful, why did I trust this person? And I don't really know what's going through their head, but I do, I do think that DC is going to be a little more skeptical of people coming in and talking a good game if they admit, they might feel like they got a little bit burned in this situation. You know, our approach to DC and just policymaking generally is We're a little bit more behind closed doors, you know, sometimes these people appreciate having like dialogue and back and forth that doesn't, you know, emerge on Twitter. And so we've basically been behind the scenes trying to just be quiet and

• 2:04:32Speaker 04

  we try to give them all the credit and like not take any credit on our own. And I think we've done reasonably well advancing some of these conversations and defending the industry. Once in a while, if there's something we feel like we need to speak out on like tornado cash, we'll actually, you know, take a stand and try to protect our customers from bad policy. But 95% of the time, it's it's just us working with, there's like a lot of reasonable people in government and we can find common ground with them. And that's what we do most of the time.

• 2:04:58Ryan Sean Adams?

  So Brian, you alluded to this earlier and you actually end your tweet thread with it, which is a like, I think in a really important place to go is is just kind of what's next? How we actually solve this? You talk about Coinbase taking the long-term approach and you said about the long-term, long-term, the crypto industry has an opportunity to build better systems with DeFi and self-custodial wallets that don't rely on trusting third parties. Instead, you can trust in code, math, everything can be publicly audible on chain. This is a topic for another day. Can you tease us a little bit about what you think the real solution to the problems that we've seen today or the last couple of days are? And how is DeFi part of a solution of the solution in your mind?

• 2:05:43Speaker 04

  Yeah. Well, you guys know this better than I do. I mean, you've been preaching this for for a long time. And I'm a true believer. I mean, I think this is the real opportunity that crypto has to create a more transparent and fair and free financial system. I'm a real believer in that. So, you know, I think people have to bifurcate these two things in their mind. Like a lot of the activity happening today is still on centralized products, exchanges, custodians, you know, that with stable coins. And that's fine. I mean, that stuff needs to exist as a bridge between the traditional financial world and the crypto financial world. And I think we can play a really important role there. And that stuff's going to be very regulated. It probably should be. It's a financial service business.

• 2:06:26Speaker 04

  But Coinbase is also helping in, you know, the crypto to crypto world, the true crypto economy with DeFi and everything. We've done that with Coinbase Wallet, you know, hopefully people have been realizing and seeing a lot of, we've been pushing a lot of updates this year. I think it's, I think it's like an incredibly good place. Um, and we're enabling, for instance, people to access Web three from directly in the Coinbase app, whether using Coinbase Wallet or our main retail app.

• 2:06:51Speaker 04

  We invested in a bunch of MPC technology to make that kind of stuff work. Um, and we've, we've started to build some decentralized apps ourselves, like for instance, some of this stuff is Web two point five, you know, you're kind of getting closer and closer to Web three. But with, you know, for instance, Coinbase NFT and things like that, we're doing more and more on chain, we're introducing ENS into our products. So, you know, I think Coinbase can basically help in both areas. We're going to help, we make a lot of our revenue from the custodian exchange brokerage piece. But we're also starting to generate revenue in the Web three piece. And I think over time that'll become a bigger and bigger. I hope, I hope someday, by the way, the majority of our revenue or user base are accessing Coinbase through self custodial, using web apps and Web three.

• 2:07:31Speaker 04

  Um, that would tell me that we've actually succeeded in creating this new crypto economy. It's not just about trading anymore.

• 2:07:40Ryan Sean Adams?

  So the entire crypto community and everyone watching has been through quite a tumultuous day and there've been a few of those this year. Um, how do you summarize this? What do you, what do you, what message do you want to share with the crypto community who's tuning into Bankless right now?

• 2:07:53Speaker 04

  Yeah. Well, I would say, you know, it's never as good as it seems, it's never as bad as it seems in crypto. So, um, this is not, this is not unlike, we've been through things like this before, right? We, we went through Mt. Gox, we've been through crypto cycles up and down, we went through, um, Three Arrows Capital and Celsius and Voyager and, um, Terra Luna. So, look, in any kind of. Any kind of marketplace or economy or in capitalism in startups, right? Like, you know, a thousand ideas are going to be tried. And some of them aren't going to work, but others really will. And they'll rise to the top. And that's, that's what capitalism is about. It's about trying many different ideas and seeing which ones work. And those grow and they get to allocate more capital into the next things.

• 2:08:37Speaker 04

  So this is incredibly painful. Um, I know that some people are probably in experiencing financial hardship due to it. And they are in the traditional economy as well with down markets. So I, I want to be very sympathetic to that and also send out a reassuring message that, you know, crypto is, is resilient. We're going to get through this and we're going to build the future in an even more powerful way.

• 2:08:59Ryan Sean Adams?

  Brian, we appreciate you coming on and talking to the crypto community on days like this. I think it's particularly important. Um, you know, uh, I'm glad that Coinbase has always taken the, the, the approach that's taken of, um, you know, establishing a firm foundation, building strong and being there for the crypto industry when we need it. And also we certainly need it.

• 2:09:17David Hoffman?

  And also what Brian said, the strategy of following the rules, which is crazy that that's a strategy.

• 2:09:24Ryan Sean Adams?

  Yeah, we appreciate you and thanks for coming on, Brian.

• 2:09:26Speaker 04

  Yeah, thanks, guys. I appreciate what both of you have done for the, the industry as well. So have a good day.

• 2:09:31Ryan Sean Adams?

  See you later. Uh, Bankless Nation, uh, as always, if you were tuning in, of course, and you have not hit the like or the subscribe button, please do so. Um, we're trying to keep you up to date on the latest that's going on today was, uh, quite the day. Occasionally we have days like this where we just jump on the live stream. Uh, and, um, I don't know if we're going to have any other guests here, David, but I do know something important might be about to happen.

• 2:09:57David Hoffman?

  We'll, we'll, we'll get there. There's a one last tweet, a new CZ just dropped, if you will.

• 2:10:02Ryan Sean Adams?

  Oh, okay.

• 2:10:03David Hoffman?

  Send that to you, Ryan. You want me to send that, send you the, the link to that?

• 2:10:06Ryan Sean Adams?

  Sure, I got it. Here it is.

• 2:10:07David Hoffman?

  Here we go. Uh, two big lessons, CZ says, he tweeted this out, uh, let's see, uh, 10 minutes ago. Never use a token you created as collateral, number one. Number two, don't borrow if you run a crypto business. Don't use capital efficiently, have a large reserves. Finance has never used B and B for collateral and we have never taken on debt. Say Safu, say Fu. Um, I, I, I just, I can't read this, Ryan, and think that CZ is taking a victory lap and also just like. He definitely just sniped the hell out of FTX. He's like, "You guys opened up a weakness using your token that you created as collateral, and I sniped you, and now here's my victory tweet." That's how I interpret this.

• 2:10:52Ryan Sean Adams?

  Yeah, but I, yes, and I also think that these are good and obvious takeaways, right? Never use a, it's, it's interesting how you, you know, the faster they rise, the faster they fall, kind of thing. It's just, I think part of the reason that FTX, it seems like in Alameda, rose so fast is because they were taking excess risk. So borrowing while running a crypto business, not having a large reserve, leveraging the token that they created. I mean, Brian Armstrong's approach we just heard is like, "Don't create a token in the first place if you don't need it," right? CZ pushed that a little farther, "We're gonna have a token."

• 2:11:33Ryan Sean Adams?

  And then CZ said, and then FTX said, "We're gonna have a token, and we're going to use it as collateral." So just kind of juicing up the growth, growing a little faster, but at the cost of risk. This is what things like, like margin give you, and certainly tokens give you superpowers in these areas.

• 2:11:52David Hoffman?

  And I think that'll bring us to the final slide that we want to bring up, because this is the ETH maxi show, so we do the ETH maxi things.

• 2:11:59Ryan Sean Adams?

  It's not an ETH maxi show, David. This is not, why do you say that? Now people say it.

• 2:12:04David Hoffman?

  I'm making fun of people who make fun of us. Anyways.

• 2:12:07Ryan Sean Adams?

  And yet, still, we're here at the ultrasound money chart.

• 2:12:09David Hoffman?

  Yeah, here we are. So Ether is below 100 Ether issued since Merge. This is what happens when volatility hits the markets. And this is why I'm always super bullish on the burn, because this, the burn rate that we've seen thus far has been a bear market burn. This straight line down in the last, like, hour or so, has, I think something like 2,000 or 3,000 Ether has been burnt in one or two hours.

• 2:12:33Ryan Sean Adams?

  Wait, wait, wait a second. I just want to underline this. Are we 90 ETH away? From Ultrasound Money.

• 2:12:41David Hoffman?

  Ultrasound, yes, correct.

• 2:12:42Ryan Sean Adams?

  90 ETH away.

• 2:12:43David Hoffman?

  90 ETH away.

• 2:12:44Ryan Sean Adams?

  I remember, was it last week, we were about like 2,500?

• 2:12:48David Hoffman?

  Yes.

• 2:12:48Ryan Sean Adams?

  3,000?

• 2:12:49David Hoffman?

  Well, it was today. It was today we were 2,500.

• 2:12:51Ryan Sean Adams?

  This morning.

• 2:12:52David Hoffman?

  This morning, yeah. 1,800, excuse me. And so depending on, the gas is coming down. It peaked around 500 or 600. We're now at 36. So we're still burning ether, but the rate of burn is going down. I think it's going to be at this rate, an hour, Ryan, or so before we go ultrasound. It's also a chance that we touch the bottom and don't actually go through it at the rate that gas is calming down.

• 2:13:15Ryan Sean Adams?

  But we are so, so close. David really, really wanted, he really, really wanted this to happen on the livestream.

• 2:13:19David Hoffman?

  Yeah, really.

• 2:13:20Ryan Sean Adams?

  But I don't think it's gonna happen.

• 2:13:21David Hoffman?

  What I'm saying is it might be one to three to four hours, perhaps.

• 2:13:24Ryan Sean Adams?

  Yeah, I'm not, I'm not hanging out for that long.

• 2:13:28Ryan Sean Adams?

  But yeah, at least we showed you ultrasound money website at the end. And we're real close. I mean, it's got it. It's gotta be.

• 2:13:36David Hoffman?

  One more liquidation and ETH is ultrasound. That's the rules.

• 2:13:41Ryan Sean Adams?

  So look for the tweets, I guess. We're not coming back in the livestream to stream that after, after that epic livestream that, wow, man, we had Erik Voorhees on, Brian Selkis on, Brian freaking Armstrong on. We covered the event. I hope you guys enjoyed this. We'll be putting this out on the podcast feed as well. David, is there anything else we should share with the Bankless Nation?

• 2:14:01David Hoffman?

  Ryan, I'm kind of, I'm sad for you because you don't get to engage with the chat as much as I do while we do these live streams.

• 2:14:09Ryan Sean Adams?

  Oh, is that a happy thing?

• 2:14:10David Hoffman?

  The chat is just so fun, man. Especially it's like the Bankless community. So thanks for, again, the 4,000 people that showed up and all the people hanging out in the chat. So shout out to, shout out to all the people in there. And so we definitely enjoy you guys and definitely appreciate you being here. So, you know, make sure to like and subscribe so you get notified whenever we go live.

• 2:14:28Ryan Sean Adams?

  Well, guys, I'm gonna, I'm gonna end it as we always do. Risks and disclaimers on days like this. These risks and disclaimers should mean a little bit more. Crypto is risky. All of it is. DeFi is risky, but so are centralized exchanges. Maybe especially centralized exchanges. You'd lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.