ROLLUP: FTX Contagion | SBF Tweet Thread | Genesis Trading | Gemini Earn | StarkNet Token | Cosmos ATOM 2.0

3rd Week of November, 2022 ------ 📣 Infura | Join the New Decentralized Infrastructure Network Early Access Program www.bankless.cc/infura http://www.bankless.cc/infura ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/?utm_source=banklessshowsyt ------ Bankless Sponsor Tools: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 👯 DESO | DECENTRALIZED SOCIAL BLOCKCHAIN https://bankless.cc/Deso 🦁 BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave 📡 TRUEFI | CRYPTO FINANCIAL HUB https://bankless.cc/TrueFi 👾 SEQUENCE | ALL-IN-ONE PLATFORM https://bankless.cc/Sequence ⚡️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/fuel ----- Topics Covered 0:00 Intro 3:30 MARKETS 5:30 Bitcoin Miners https://twitter.com/caprioleio/status/1591024605640019968 7:30 Burniske Calls Bottom https://newsletter.banklesshq.com/p/5-reasons-this-could-be-the-crypto 13:30 CeFi Ded https://twitter.com/haydenzadams/status/1592188164218707969 16:00 SBF https://twitter.com/SBF_FTX/status/1593014949487730688 23:20 Vox Interview https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy 27:45 Summary Thread https://twitter.com/GRDecter/status/1593272102047580161 31:05 Alameda Mentality https://twitter.com/PetrifyTCG/status/1591802968940199936 32:40 Company Slack https://twitter.com/AutismCapital/status/1592563378408796165 34:40 New FTX CEO https://twitter.com/kadhim/status/1593222595390107649 36:30 It’s Bad https://twitter.com/Dogetoshi/status/1593233836867194880 CONTAGION 38:20 Genesis https://twitter.com/genesistrading/status/1590836594382032896 39:00 Fallout https://twitter.com/DylanLeClair_/status/1592960066293927937 42:20 BlockFi https://twitter.com/BlockFi/status/1590875997351866368 43:30 FTX Bailout https://twitter.com/autismcapital/status/1591569275642589184 44:20 Other Fallout Galois - https://twitter.com/autismcapital/status/1591302842639593473 Multicoin - https://twitter.com/TheBlock__/status/1592169646568144897 Circle Yield - https://blockworks.co/news/gemini-circle-genesis-exposure/ 45:45 Lazy DD https://twitter.com/fintechfrank/status/1591656860276457472 LEGAL 47:10 Committee Hearing https://twitter.com/WatcherGuru/status/1592901815481249792 47:50 Lawsuit https://www.reuters.com/legal/ftx-founder-bankman-fried-sued-us-court-over-yield-bearing-crypto-accounts-2022-11-16/ REACTIONS 48:44 Proof of Reserves https://decrypt.co/114482/binance-be-guinea-pig-vitalik-buterins-proof-reserves-protocol-cz 50:30 Mainstream Reporting SBF Donator - https://twitter.com/ryaneshea/status/1592403915718656000 Blaming CZ - https://twitter.com/ColdBloodShill/status/1591850165446791168 https://twitter.com/ColdBloodShill/status/1591850165446791168?s=20&t=prs_ViZ5KPrI0jgyogKwng COVID - https://twitter.com/Crypto_McKenna/status/1593190965917126657 55:30 Twitter Coverage https://twitter.com/brian_armstrong/status/1592689928038912000 Hsaka - https://twitter.com/HsakaTrades/status/1592947452478656512 57:50 3AC Redemption Arc Kyle - https://twitter.com/KyleLDavies/status/1591704172600397824 Su - https://twitter.com/zhusu/status/1590189369834758144 Bali - https://twitter.com/SquawkCNBC/status/1592880370344919042 1:02:00 StarkNet Token https://medium.com/starkware/starknet-token-is-deployed-on-ethereum-f27f0000b00c 1:03:15 USDC Apple Pay https://thedefiant.io/usdc-apple-pay 1:03:38 Solana Deprioritized https://www.theblock.co/post/187970/binance-halts-solana-usdc-usdt-deposits 1:04:25 NFTs Yuga Beeple - https://www.theblock.co/post/187970/binance-halts-solana-usdc-usdt-deposits Nike - https://www.coindesk.com/web3/2022/11/14/nike-sprints-into-web3-with-new-swoosh-platform/ Sony - https://www.ign.com/articles/sony-patent-for-nft-and-blockchain-technology-uncovered 1:05:55 Bankless Podcast Collectibles https://collectibles.bankless.com/ 1:09:30 Cosmos ATOM 2.0 https://blockworks.co/news/no-with-veto-cosmos-community-rejects-atom-2-0-white-paper 1:10:06 CBDC Trial https://thedefiant.io/as-skeptics-dance-on-cryptos-grave-the-fed-and-big-banks-launch-digital-ledger-project 1:10:30 Releases DeFiLlama - https://defillama.com/aggregator Permissionless - https://newsletter.banklesshq.com/p/discount-to-permissionless-2022 1:13:00 Matter Labs https://thedefiant.io/layer-2s-defy-market-angst-as-matter-labs-raises-200m 1:13:37 CZ Investing https://twitter.com/cz_binance/status/1592894516457279488 1:14:00 Jobs https://pallet.xyz/list/bankless/jobs TAKES 1:16:00 The Only Path https://twitter.com/jchervinsky/status/1591236973347627010 1:17:30 Stay Vigilant https://twitter.com/ErikVoorhees/status/1591151576680652800 1:18:50 Free Wizards https://twitter.com/cburniske/status/1591183041837559808 1:20:05 What David’s Bullish On https://imgur.com/v8C9UnF 1:25:00 What Ryan’s Bullish On 1:26:50 MEME of the Week https://twitter.com/sassal0x/status/1590865451420389376 Moment of Zen https://twitter.com/songadaymann/status/1592963492713492481 ——— Not financial advice. Do your own research. https://www.bankless.com/disclosures

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

• 0:00David Hoffman?

  And this is a 36 hour long endeavor of people trying to figure out, reading SBF tea leaves of what the hell he is doing with this tweet thread.

• 0:10Ryan Sean Adams?

  Who does this, David?

• 0:14Ryan Sean Adams?

  Bankless Nation, happy third week of November. David, what time is it?

• 0:18David Hoffman?

  Oh, Ryan, it's the Friday Bankless Weekly roll up and Ryan, I have never been so intimidated by an agenda that we have to get through today.

• 0:27Ryan Sean Adams?

  Is it the content or the length?

• 0:28David Hoffman?

  It's a little bit of both. Definitely the content, the craziness of the content. Yet, Ryan, we persevere into the frontier nonetheless.

• 0:35Ryan Sean Adams?

  I know we do. You know what happens when you plug in Bankless and Twitter in the search box right now?

• 0:40David Hoffman?

  Oh, my God.

• 0:41Ryan Sean Adams?

  Bankless crying is number one.

• 0:45Ryan Sean Adams?

  What a week, what a roll up. How are you feeling this week, David? You feeling a bit better?

• 0:48David Hoffman?

  Uh, yeah, yeah, yeah.

• 0:51Ryan Sean Adams?

  If the theme last week for you was like, this sucks, I'm disappointed, what's the theme this week? What's David Hoffman feeling like?

• 1:00David Hoffman?

  The theme this week, I think, is good riddance.

• 1:05David Hoffman?

  Good riddance for sure. And like, because this is turning out to not just be like, oh, another drama in the crypto world. No, this is like one of the greatest frauds of all time.

• 1:14Ryan Sean Adams?

  Yeah.

• 1:15David Hoffman?

  And I think like for better or worse, like, we're going to be able to like move forward from this in a progressive way. So my, yeah, if there's a theme of the week, it's good riddance.

• 1:25Ryan Sean Adams?

  Well, you gotta admit, when SBF does something, he does it big. He goes all out. Not only the number two exchange, but also maybe the number one fraud of all time. We'll have to see when the dust settles. But topics of the week, we're going to be talking about three things. Number one, SBF. Number two, FTX. Number three, Alameda. I mean, it's pretty much the agenda, right?

• 1:45David Hoffman?

  That's the whole thing. There are some other things that happened this week, but we're going to have to wait until the second half of the episode to hear all the normal things that went on.

• 1:52Ryan Sean Adams?

  And the high level is the fraud that is SBF continues to get. To get bigger, this is kind of Enron, this is Theranos, this is Bernie Madoff. We got it all, a little bit of it all. So we're going to talk a little bit about how bad the contagion was. David, before we get into the episode, we have a message from our friends and sponsors at Infura. And I think there's really good news coming out of Infura because we need to build this entire space on decentralized rails. This is what we've, we've learned here again recently, it's been reinforced and Infura is taking a big step towards that. What are they up to?

• 2:27David Hoffman?

  So Infura is calling for all Web3 infrastructure providers who are interested in being a part of this new decentralized infrastructure network that Infura wants to lead. So they need help, they need you to help foster their decentralized infrastructure ecosystem because they are working on decentralizing a very important part of the Ethereum stack, the RPC endpoints, the nodes and all of this stuff. And so this is a, this is a pretty big centralization vector of Ethereum and overall any chain, how user wallets and just broadcast transactions and spinning up nodes. And so this has always been a part, a moderate problem in the Ethereum ecosystem. And Infura is tackling that centralization problem head on and also needs help decentralizing

• 3:10David Hoffman?

  their own stack and they want you to take a part in that. So there's a link in the show notes, banklist.cc/infura for you to sign up for the, for the early access of their new decentralized network infrastructure. So go do that, go click that link.

• 3:24Ryan Sean Adams?

  Yeah, it's really cool. We all use Infura.

• 3:27David Hoffman?

  Whether you know it or not.

• 3:28Ryan Sean Adams?

  Yeah, behind MetaMask, behind a lot of the wallets that we use. Not the only one, but it's one of the larger ones for sure. All right, David, let's get to the markets. Bitcoin, what are we looking at on the week after this two week disaster here?

• 3:38David Hoffman?

  Yeah, Bitcoin is down on the week, down 5%, $17,500, down 5% to where it is now at $16,600. Cool.

• 3:49Ryan Sean Adams?

  We expected a down. How about ETH?

• 3:51David Hoffman?

  Down again, 8% on 8%. So Bitcoin down 5%, ETH down 8%. Ether started the week at 1320, currently at 1270.

• 4:00Ryan Sean Adams?

  1270, you know what?

• 4:02David Hoffman?

  Nope, it's down 1210. My numbers are wrong.

• 4:06Ryan Sean Adams?

  Okay, 12, but 1210, 1270, it's been hovering around 1200.

• 4:09David Hoffman?

  Yeah.

• 4:10Ryan Sean Adams?

  I actually am surprised that it's as high as it is.

• 4:13David Hoffman?

  Yeah.

• 4:13Ryan Sean Adams?

  Some people are saying, "Oh, that's low," right? Like, no, this, given what just happened,

• 4:18David Hoffman?

  Yeah.

• 4:18Ryan Sean Adams?

  like, the nuclear bomb that just detonated in crypto, and we're in the 1200 range?

• 4:24David Hoffman?

  Mm-hmm.

• 4:24Ryan Sean Adams?

  Um, I don't know if that makes me weirdly bullish.

• 4:27David Hoffman?

  Yeah, it's like, it doesn't seem to want to go down anymore. It's down resistance.

• 4:34Ryan Sean Adams?

  Maybe we'll talk a little bit about why that is when we get to some of Chris Berninski's takes, but, um, park that in your mind, Bankless listener. Why is ETH not down more than, um, you know, than you might think it should be, given the sentiment?

• 4:47David Hoffman?

  Knocking on the wood.

• 4:49Ryan Sean Adams?

  Yes. By, by the time you hear this, we'll, we'll have triple-digit ETH, I'm sure, tomorrow morning. Um, ETH Bitcoin, what are we looking at in the ratio?

• 4:56David Hoffman?

  The ratio is down just a little bit. It's down from .075 to .072.

• 5:00Ryan Sean Adams?

  There we go, crypto market cap.

• 5:02David Hoffman?

  Down, down from 920 billion to 860 billion. Surprise.

• 5:06Ryan Sean Adams?

  860. Do you remember the lows of, well, what, the highs of the last, uh, bull market?

• 5:12David Hoffman?

  The highs of last, oh, the 2017 bull market? Yeah, yeah, it looks like it's kind of, we're a little bit above that right now, but not that much.

• 5:18Ryan Sean Adams?

  The highs of the last, in January 2018, were about, uh, 760 billion dollars, and we're just above the highs, but not very much above the highs. Uh, that's interesting to take note of. Uh, David, let's do some takes on the crypto markets right now. Um, first, maybe a quick scan by Bitcoin miners. I don't think very often about Bitcoin miners, but they're in a lot of pain right now. What's, uh, this tweet showing us?

• 5:42David Hoffman?

  Yeah, so there's a tweet that's showing a new metric that this guy created. Uh, it says, "A free, open-source indicator which tracks on-chain data to highlight when Bitcoin miners are selling more of their reserves than usual." So, uh, I'm guessing the inputs to this indicator are the Bitcoin price and probably average, uh, electrical cost to produce a single Bitcoin. Uh, and, uh, according to this indicator, uh, we are bad. It's bad.

• 6:07Ryan Sean Adams?

  They're not profitable. They're losing money.

• 6:10David Hoffman?

  Bitcoin miners are making less, uh, underwater in terms of revenue, a significant percentage of them. I mean, this is just like, kind of a global average, but it's basically saying that, like, it's really hard to be a profitable Bitcoin miner right now, so they are running on reserves, which means they are selling.

• 6:25Ryan Sean Adams?

  I've always wondered about this. Like, so if you're bullish on Bitcoin, like the asset itself, why would you try to get exposure in Bitcoin mining facilities and Bitcoin mining companies? Why would that make sense relative to just like purchasing Bitcoin OTC?

• 6:41David Hoffman?

  Yeah, because a single ASIC in theory, a single ASIC is meant to be like a discount on a Bitcoin over the long term. So if you buy an ASIC, it's like you, if you spend like a hundred dollars on an ASIC, you get like a hundred and fifty dollars worth of Bitcoin over the long term. But a ton of variables go into that. So.

• 6:59Ryan Sean Adams?

  But do you though, you have energy costs and you have like, you know, ASIC

• 7:04David Hoffman?

  degradation.

• 7:05Ryan Sean Adams?

  obsolescence, degradation. There's all sorts of other things. Anyway, I've not understood it, but I'm not in that space. What is Dylan McLaren showing us on Bitcoin miners? What's this chart?

• 7:15David Hoffman?

  Yeah, these are just like the equity prices of all these Bitcoin mining companies. Negative, negative 10%, negative 9%, negative 6%, negative 13%, negative 9%.

• 7:24Ryan Sean Adams?

  These like publicly traded companies.

• 7:25David Hoffman?

  Yeah, publicly traded Bitcoin miner companies. Yeah. All down bad. All down.

• 7:29Ryan Sean Adams?

  Riot, Irin, BitF, Mara, Hunt, Sdig, Hive. Interesting. Berninski's take on the bottom. All right. Give us some context for Berninski because I know you had a conversation with him a little bit earlier in the week on Twitter, which actually the entire conversation, I think it's like a 30, 40 minute long conversation.

• 7:48David Hoffman?

  50, yeah, 50 minutes.

• 7:49Ryan Sean Adams?

  50 minutes is available to bankless premium members right now on the RSS feed. We're not releasing that to the, the regular RSS feed. Chris wanted to keep that a little more private. So just bankless premium members only have access to that. And David, I haven't listened to it yet, but I want to.

• 8:05David Hoffman?

  You're missing out, man. You're missing a tree of a conversation.

• 8:07Ryan Sean Adams?

  No, no, I'm not going to be because I'm scheduling this for my weekend. I'm going to be listening because you know why?

• 8:11David Hoffman?

  Relaxes.

• 8:13Ryan Sean Adams?

  Well, well, it's probably relaxing because I think Chris is flipped bullish is my understanding, my sentiment. And I just want to provide some context for, for this individual. First of all, this is the individual, probably second to Andreas Antonopoulos, but I actually count him first. That got me into crypto. I read his original book on crypto assets. When did he publish that? 2016, 2017, something like this? Got me really excited about the world beyond Bitcoin. Not only that, Chris, he's a VC. He's got ethics that I align with in this space. I respect him a lot. He developed a lot of the original kind of on-chain analysis that we see today. And others have carried that forward further. So he's got that piece.

• 8:58Ryan Sean Adams?

  Then he's a VC, but somehow he finds a way to like call the markets fairly well. And he does it in a different way, not as like a trader. So different than an Arthur Hayes, all right? Much, much different than somebody doing TA. He does it based on kind of long-term, I don't know, fundamentals. It's this mix of a thesis, fundamentals, and actually like observing the space. And he has been bearish on crypto for like over a year.

• 9:29David Hoffman?

  He turned bearish sometime after May of 2021. And he was bearish and he was bearish even as like we hit new all-time highs. And he was like saying, this is too.

• 9:40Ryan Sean Adams?

  Contrarian bullish.

• 9:41David Hoffman?

  Yeah, he was a big, big, yeah, big contrarian. And he, in my opinion, has just been proven right in fantastic fashion.

• 9:49Ryan Sean Adams?

  Well, he was the anti-super cycle. You know, there's this whole like super cycle crypto assets, never going to go fully down again.

• 9:54David Hoffman?

  He was the sober one in the room.

• 9:56Ryan Sean Adams?

  No, that's BS. And he actually got more and more, I don't want to say shrill about it, but like loud about it. To the extent that others in the space just started like in some of the life circles that I hang out with, started to get annoyed at him. Why is Chris always bearish?

• 10:14David Hoffman?

  He's Chris the bear, Chris bearish again.

• 10:17Ryan Sean Adams?

  Yeah, I was not annoyed by that at all. It's just like, it's his take. And I know Chris is not like thinking he's trying to manipulate markets here, right? He's not just, I think he actually believes it. Anyway, give us the context for the tweet that we're looking at and what Chris's take on the markets is right now.

• 10:31David Hoffman?

  Yeah, so Chris tweets out, "It may be a crawl upwards, but I still think the capitulation bottom is in." And so as a result of all of this FTX drama, as a result of all the liquidations, Chris is saying that that was the signal that he's been looking for to. Confirm to him that the bottom is in. And I remember him tweeting out after the Three Arrows Capital liquidation in that event. And he tweeted out something along the lines of the Lehman of crypto is out there lingering. And I was like, in my mind, I was like, ah, Chris is being bearish again.

• 11:10David Hoffman?

  Well, yeah, it's like, how can we go down even more than that, Chris? And then, but he called it, man. He called it just off of his gut instincts.

• 11:17Ryan Sean Adams?

  There's literally a Lehman out there.

• 11:18David Hoffman?

  Yeah, and there was literally a Lehman out there. It was through, it was FTX and Alameda. They just found a creative way to plug the hole temporarily. But that Lehman has been discovered. We are now dealing with that contagion. And now Chris is, one of the conversations that we had in the Twitter spaces was that he just can't find any more big sellers. Genesis is the one that comes to mind in the moment, but we are watching that play out as we speak. And so.

• 11:46Ryan Sean Adams?

  Particularly, and I, again, I'm just, I haven't listened to the episode, so you correct me if I'm wrong. But I'm particularly, he probably means the large cap assets that don't have unlocks, like Bitcoin and ETH.

• 11:58David Hoffman?

  Yeah.

• 11:59Ryan Sean Adams?

  Who's gonna sell Bitcoin and ETH at this point?

• 12:02David Hoffman?

  Yeah. So just to kind of preview the conversation with him, he talked a lot about like these indicators that he uses. And I'll actually not tease, I'll not say which ones those are. So you have to read the article that comes out of Bankless today, but like Bitcoin indicators.

• 12:16Ryan Sean Adams?

  So we're doing an article on this too.

• 12:17David Hoffman?

  Yes, this should also come out as an article on the newsletter. Yeah, and comparing and contrasting the turning points of the last bear market, like whatever four sellers we have last. But then also like, we talked about the crypto markets showing strength. We talked about like the merge and how like the ether price is up 50% from the May lows where Bitcoin is down 10%. And we talked about like how he's calling the bottom on crypto, also with equities. And so equities are down 80% a comparable amount to the dot com bubble. But these equities, in contrast to the dot com bubble, are real like money printing organizations. And so like that, he thinks that that's oversold. And then also inflation is turning over.

• 12:59David Hoffman?

  And so like these aligning of the stars is like convincing him that the bottom is in. But all of those details and more are available in the Bankless newsletter. And then if you are a premium subscriber, you get access to the audio for the Twitter space as well.

• 13:11Ryan Sean Adams?

  You're such a tease. What a tease you are.

• 13:13David Hoffman?

  Big tease.

• 13:14Ryan Sean Adams?

  So is Chris Berninski here. Here's his new pinned tweet. Bullish from near the bottom. Hope to see y'all at 10 trillion. Remember, David and I just read out, we're at 850 billion, 10 trillion. A little 10x here, he's expecting.

• 13:26David Hoffman?

  Yeah.

• 13:26Ryan Sean Adams?

  And we'll see you there.

• 13:27David Hoffman?

  This is the tweet that I retweeted and I said, Chris Berninski flipping bullish. It's like a changing of the seasons for crypto. And this makes me so happy.

• 13:36Ryan Sean Adams?

  I actually think that's true. All right, Hayden Adams, this is some interesting stats coming out of the FTX collapse of CFI debacle. I tweeted this out early in the week because I think it's true. CFI dead. CFI dead. Like right now, when you talk about centralized finance beyond kind of exchanges, right? Centralized lending and borrowing, like it's down bad. I mean, they're not all going to go out, like out of business and go bankrupt. But like, who's trusting them at this point? The question is, who are the beneficiaries of that, of that trust? Does it completely flow out of crypto and back in traditional finance? Or does it go somewhere else? I think Hayden is making the case that maybe it's going somewhere else. We're starting to see some numbers. What tweet are we looking at here?

• 14:19David Hoffman?

  Yeah. So Hayden says, DEX starting to replace centralized exchange? Question mark. Total ETH USD volume. And then he lists off the three biggest exchanges, Binance, Uniswap and Coinbase. Binance commenting at 1.9 billion, Uniswap at 1.1 billion in volume and Coinbase at 0.6 billion. So Uniswap has now taken the spot of the number two most liquid exchange for ETH USD.

• 14:42Ryan Sean Adams?

  David, that makes me so damn happy.

• 14:44David Hoffman?

  Very happy.

• 14:45Ryan Sean Adams?

  Do you know why? You don't have to give your private keys to Uniswap, but we're going to make a trade.

• 14:49David Hoffman?

  Self custody.

• 14:50Ryan Sean Adams?

  No one can stop it. It's uncensorable. This is DeFi. These are the types of exchanges we need to base this entire system on. All right. Well, we've got a lot more to talk about. I just almost clicked over. Almost all about FTX, the contagion, the Genesis halts. Genesis is a large trading firm. We've got to talk about that. They halted withdrawals. Also talking about mainstream media where they dropped a ball, so much more to cover. We'll be right back, but first we want to tell you about the sponsors that will help you go bankless.

• 15:19David Hoffman?

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• 16:00David Hoffman?

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• 16:44David Hoffman?

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• 17:08Ryan Sean Adams?

  All right, Dave, we gotta start here with this crazy tweet thread from SBF.

• 17:13David Hoffman?

  What?

• 17:14Ryan Sean Adams?

  Yeah, it started, this was November 13th, so this was, was this Monday night? I don't know, all the days are a blur. There was the 14th, Monday evening, and SBF just tweets out, "What?"

• 17:25David Hoffman?

  What? So SBF always writes a thread, like he's a thread-ore, it's kind of his meme. And so he always writes these threads with like, one parenthesis, like, you know, kind of like a bullet fashion, like one parenthesis, two parenthesis, just to like label the threads.

• 17:37Ryan Sean Adams?

  As in, "My first tweet, my second tweet, my third tweet."

• 17:40David Hoffman?

  A common thread etiquette to do that. This one was weird, because he goes, "One parentheses, what?"

• 17:48David Hoffman?

  And then followed by two parentheses, H, the letter H, followed by three parentheses, A. And he is tweeting these out with hours of space.

• 17:58Ryan Sean Adams?

  Not in rapid fashion.

• 17:59David Hoffman?

  Not in rapid fashion. You're supposed, when you write a thread, you write all the tweets and then you send them all at once so that people can go through the thread.

• 18:06Ryan Sean Adams?

  Like a normal person does.

• 18:07David Hoffman?

  Like a normal goddamn person. So what he does is he goes, one parentheses, what? Waits two hours, three hours, and then goes two parentheses, H, the letter H, three parentheses, three hours later, A. And he ends up spelling over the course of like a 24 hour period, what happened over like 10 tweets? And then the 10th, it goes in parentheses, not legal advice, not financial advice. This is, as I remember it, my memory might be faulty in parts. And then 11, I'll get to what happened. But for now, let's talk about where we are today. And this is a 36 hour long endeavor of people trying to figure out, reading SBF

• 18:49David Hoffman?

  tea leaves of what the hell he is doing with this tweet thread.

• 18:53Ryan Sean Adams?

  Who does this, David?

• 18:55David Hoffman?

  Who the fuck does this?

• 18:56Ryan Sean Adams?

  Like, who does this? Like, why would you do this? What, what, what? Is he trying to get attention? Is he just like toying with us?

• 19:03David Hoffman?

  Yes.

• 19:04Ryan Sean Adams?

  I mean, he stole like 10 to 16 billion dollars worth of our money.

• 19:09David Hoffman?

  And he's just like being a meme lord on Twitter, dude.

• 19:12Ryan Sean Adams?

  Why? I mean, this can't be. So I had, I had thought like another thing a normal person would do is like, uh, here's my Twitter account. Give it to the lawyers. Like, um, PR team.

• 19:23David Hoffman?

  Put me in handcuffs.

• 19:24Ryan Sean Adams?

  No, this is him tweeting this out. Some people, do you hear some of the early speculation? There's always conspiracy theories around this that he was like, um, tweeting out some sort of codes, Dead Man's Switch, something that would unlock, I don't know.

• 19:38David Hoffman?

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

• 19:39Ryan Sean Adams?

  I don't even know what the...

• 19:40David Hoffman?

  There's so much. I mean, he didn't, let's let crypto Twitter run its imagination as to what he was doing.

• 19:45Ryan Sean Adams?

  I mean, but this is, uh, it's more than what happened.

• 19:48David Hoffman?

  Yeah.

• 19:49Ryan Sean Adams?

  And more than tweet number 10. Is the rest of this thread worth reading? He goes through 11 to 21. Is there anything here that we really care about? 18 says truth and beauty? What?

• 19:59David Hoffman?

  It do, I do. It's all weird, man. And like, he says a lot. He says a lot. And everyone is like, Kobe is like, dude. Shut the F up until you tell us how you lost $10 billion. Like, everyone is saying, dudes, just stop, just shut the hell up, just like, go away.

• 20:14Ryan Sean Adams?

  24ish.

• 20:15David Hoffman?

  He's saying a lot, yeah. I mean, so like, like, the other conspiracy was that, like, he's going for an insanity plea.

• 20:23Ryan Sean Adams?

  Yeah.

• 20:23David Hoffman?

  He's like, I'm just gonna be insane on Twitter so I can plead insanity later. And then I remember Jake Stravinsky was like, uh, you don't get to plead insanity for becoming insane after you commit a crime.

• 20:34Ryan Sean Adams?

  Those lawyers, they'll get you on the technicalities.

• 20:37David Hoffman?

  Okay, so like, this is not the most insane thing that he did, right? Did you see the Vox article?

• 20:43Ryan Sean Adams?

  I saw some of that.

• 20:45David Hoffman?

  The Vox article, oh my god.

• 20:46Ryan Sean Adams?

  Okay, before we get to the Vox article.

• 20:48David Hoffman?

  Okay.

• 20:48Ryan Sean Adams?

  There's a theory of like, uh, you know, ego, um, there's a theory of insanity. I've also read a lot about, you know, pharmacological influence.

• 21:00David Hoffman?

  Amphetamine use, yeah.

• 21:01Ryan Sean Adams?

  Amphetamine use in this whole scenario. In fact, the, uh, the weightless wrong guy, um, did a whole post about this. And, uh, you know, there's a, there's a lot of evidence that not only SBF, but the entire team is on some sort of combination of amphetamines. I'm not talking about meth, I'm probably talking about.

• 21:19David Hoffman?

  Adderall.

• 21:20Ryan Sean Adams?

  Yeah.

• 21:20David Hoffman?

  Adderall and, and stronger versions of Adderall.

• 21:23Ryan Sean Adams?

  Basically, and maybe cocktails of all of the above. And so there can be side effects with meth, I'm sorry, with meth. I don't, again, they're not on meth.

• 21:32David Hoffman?

  There are side effects with meth.

• 21:32Ryan Sean Adams?

  Yes. Don't do meth, kids. Um, amphetamines, though, which, which, which can increase your, uh, prickly to shopping sprees and gambling and risk-seeking type behavior. And it doesn't have to turn you into an all-out gambler, but it can kind of move the risk curve even a little bit. And you have to imagine, somebody like SBF, he's a trader in cryptocurrency, right? He already is pretty far alongside.

• 21:58David Hoffman?

  Podcasts.

• 21:59Ryan Sean Adams?

  Well, that's the other thing. But he's already pretty far on the right side of the risk curve in, in terms of the, you know, 0.01% of the population who engages in this type of risk-seeking behavior. If you're on this sort of drug influence, maybe it moves you even further. You know, on the side of riskiness. So could that have been a factor? Is that, is that something do you think he's easy been trying to push as a legal defense?

• 22:25David Hoffman?

  I have no idea. I don't think we, anyone can think that they can step into the mind of SPF. But also just to double down on that point, like all of that stuff is true. And then also imagine having like your gang of similarly aged cronies who are also engaging in that behavior. Apparently like it was common at FTX to like as for, for new, new employees. They, they would get like, I don't know indoctrinated into this weird cult. And they would be like, okay, here's like this slew of amphetamines that you can increase performance with. And so it became a part of culture to do amphetamines. And, and so like when you were on amphetamines all the time, you're already, your mind is going to get shifted. But when all of your friends are also doing that too, and that's just like the company culture that you have.

• 23:09Ryan Sean Adams?

  Yeah.

• 23:09David Hoffman?

  Like you just totally lose touch with reality.

• 23:12Ryan Sean Adams?

  It creates a whole.

• 23:12David Hoffman?

  That's really what's, what's happened here with SPF. He has just completely lost touch with reality.

• 23:16Ryan Sean Adams?

  Yeah. And those around him too, because let's, let's, let's remember he, he couldn't do this alone. He had to create this kind of cult, this reality distortion field in order to do this. Okay. Now tell me about the Vox article. So is this the one with the texts back and forth?

• 23:28David Hoffman?

  Yes.

• 23:29Ryan Sean Adams?

  Oh, it's the text back and forth. Okay. So there's a reporter.

• 23:32David Hoffman?

  Yes. There's this reporter at Vox, Kelsey Piper, I guess is the reporter that, that SPF was texting with. And like, no, SPF knows that this person's a reporter for Vox and SPF just DMs this guy pages and pages and pages of communications, just talking about everything.

• 23:50Ryan Sean Adams?

  And Kelsey's, Kelsey's not a guy, but yes.

• 23:54David Hoffman?

  Oh, pardon me. And so yeah, DMs Kelsey, like all of these things that you would just as a lawyer, would not want your client to say, things like, I was like the effective altruism was just like a PR move. For example, like the number of incriminating things that he gave to this reporter in DMs, who then they took, the screenshot, took screenshots and then posted them into the article is insane, man. It's absolutely.

• 24:21Ryan Sean Adams?

  Let's go through some of them. So Kelsey asks SPF this question. You said a lot of stuff about how you want to make, wanted to make regulations, just good ones. Was that pretty much just PR too? And he goes this, yeah, just PR, F regulators. They make everything worse. They don't protect customers at all. What?

• 24:41Ryan Sean Adams?

  Eleven days, he went on a debate talking about like regulators and how much we needed to work with them and go to the table. Like, this is somebody who is also a pathological liar, quite clearly. Here he's saying to Kelsey, "F regulators, that was all just PR. All of my participation was just PR in the whole regulatory fiasco."

• 25:05David Hoffman?

  Kelsey asks, says to Sam, "You were really good about talking about ethics for someone who kind of saw it all as a game of winners and losers." And SBF replies, "Yeah, hee-hee, I had to be. It's what reputations are made of to some extent. I feel bad for those who got effed by it. By this dumb game we woke Westerners play where we say all the right shabola eff, I don't even know what that word is, and so everyone likes it." Basically saying, "Yeah, the effective altruism thing was just a front."

• 25:32Ryan Sean Adams?

  Yeah, I mean, it continues. "You kind of don't believe in like, 'doing unethical shit,' in quotes, as anything other than a judgment we bestow upon the losers." And then SBF replies and goes, "A month ago, CZ was a walking example of, 'Don't do unethical shit, or your money is worthless.' Now he's a hero. Is it because he's virtuous, or because he had the bigger balance sheet, and so he won?" That's what he thinks. There's like, there's just not a base level of taking responsibility, and there's not a base level of ethics. This is not the type of person you want to entrust your money to.

• 26:10David Hoffman?

  Okay, so here's one. SBF says to Kelsey, "I effed up big, multiple times, but you know what was my biggest single eff up?" He's actually saying the word. And then Kelsey responds, "Oh?", question mark, "The one thing everyone told me to do." I'm trying, and then Kelsey responds, "I'm trying to guess, but I have no idea." And then Sam goes, "Chapter 11." So, of all of his regrets, it was filing for bankruptcy that SBF regrets the most.

• 26:38Ryan Sean Adams?

  Also, if you read more of the text messages, he actually still thinks there's a chance. He's like, "I didn't want to go bankrupt, because I can still raise $10 billion, like, right now. I used to be the best..."

• 26:49David Hoffman?

  That is lunacy.

• 26:50Ryan Sean Adams?

  Yeah, it's lunacy. It's just off, like... It's completely.

• 26:56David Hoffman?

  Cut off from reality.

• 26:58Ryan Sean Adams?

  Yeah, yeah, detached, completely detached from any form of reality. And there's delusions of grandeur there, maybe. I don't know. I'm not a psychologist, but like.

• 27:05David Hoffman?

  Dude, that's what we saw with Eric Voorhees. Like, that's how I would describe that debate with Eric Voorhees. Detached from reality.

• 27:12Ryan Sean Adams?

  But the fact that he still thinks, yeah, at the end of this, that he can still just like save the depositors' money. I don't even know if he thinks that. I don't know what he thinks because he doesn't have any ethics. And he could, this could be another PR thing, but all of his tweets recently, David, even this week, have been all about. My number one priority is saving customers' money and protecting the customers and depositors. And so at the end of this, he still thinks he can raise $10 billion. Someone's going to sink $10 billion into this failing ship and this broken empire.

• 27:46David Hoffman?

  So here is a fantastic summary thread from Genevieve. And she tweets out, "I read the 30-page FTX bankruptcy court filing. How bad were FTX's internal controls? Here are the worst examples. Example number one: Employees submitted expense reimbursements over chat. A random manager would accept or reject these reimbursements with an emoji. Number two: Related party loans. Alameda Research FTX hedge funds gave Sam Bankman-Fried a $1 billion personal loan. They also loaned Director of Engineering $543 million."

• 28:19Ryan Sean Adams?

  They loaned him money?

• 28:21David Hoffman?

  Loaned, yeah. "Three very few records were kept. Most decisions were made over chat with the message automatically deleted after a certain time." So apparently, Sam largely communicated with his employees over Signal because you can delete messages in Signal.

• 28:35Ryan Sean Adams?

  Okay, but go back to that. So they gave SBF a billion-dollar personal loan. They just gave him a billion dollars and one of his Director of Engineering, half a million dollars.

• 28:47David Hoffman?

  Yeah, so, and that's actually not all of it because, and so in this, the picture that Genevieve is tweeting, it says, "Related party loans receivable of $4.1 billion at Alameda Research consisted primarily of a loan by, to Paperbird Inc., a loan of $2.3 billion, and a loan to Mr. Bankman-Fried of $1 billion." You know who owns Paperbird Inc.? Right?

• 29:12Ryan Sean Adams?

  I'm gonna guess it's Mr. Sam Bankman-Fried.

• 29:15David Hoffman?

  It's Mr. Sam Bankman-Fried. So actually, it was $3.3 billion that he got a loan from FTX.

• 29:21Ryan Sean Adams?

  Well, well named. It really was a paper bird, wasn't it?

• 29:23David Hoffman?

  Jesus, dude. Oh, my god, man. FTX, number five, FTX had no cash management system. Management had no idea how much cash was on hand at any given time, or even where their cash was at all. Number six, FTX did not keep proper records of who they employed. Employees and contractors co-mingled throughout the different companies without proper documentation of how their time was spent. Certain employees can't be located. Seven, corporate funds were used to purchase personal use real estate, and employees and executives put their names on homes purchased with company funds. Eight, crypto deposited by customers weren't even recorded on the balance sheet. Presumably, all crypto assets went to one central slush fund used for whatever.

• 30:04Ryan Sean Adams?

  What?

• 30:04David Hoffman?

  Nine, the filing makes it clear that Sam Bankman-Fried does not speak for the company, and that his erratic and misleading public statements should be disregarded.

• 30:11Ryan Sean Adams?

  Yeah, I guess so.

• 30:12David Hoffman?

  Yeah. So like, this is just a house of cards, like, sticks and, like, constructed business with a bunch of amphetamine-riddled kids who are like, "Oh, sweet, we got a billion dollars. Let's do stuff."

• 30:26Ryan Sean Adams?

  You know what's crazy? But you know what's crazy is the amount of VCs. Like, they raised, what's it, $2 billion from, like, notable VC firms this year? A number of which are coming out and apologizing, distancing themselves this week. Maybe we'll get to some of that. But the fact that this was going on, I guess, shows you the level of, I don't know, due diligence some of these firms are doing, or the lack of it, or the fact that they are... I think some of these VC firms are just like, they bet on people. They bet on individuals. And so they don't vet the core mechanics of the business. They don't look at the books. They're just making a bet on SBF, and he was able to con them.

• 31:05David Hoffman?

  Yep.

• 31:06Ryan Sean Adams?

  What's this next tweet we're looking at?

• 31:08David Hoffman?

  So this is a thread I thought was pretty interesting from this Petrify TCG Twitter account that documents a lot of Sam Tribuco, who was the former head of Alameda. And Sam Tribuco put a thread together back in 2021, and he kind of just did some forensics. And basically, he documents the going from Alameda at the very beginning of Alameda, which was a delta-neutral trading hedge fund, which was just like a normal thing, where they just market make, they don't take any risk, they don't take positions in the market. But then they decide to take more risk with like DeFi yield farming, which is more risky, but you can still kind of control your losses to some extent if you're good and sophisticated.

• 31:50David Hoffman?

  And then as it goes on, they just totally take directional bets on the money, on the market. And again, totally fine if you're not using customer deposits, which they were. And so you kind of see the documentation of Alameda going more and more and more risk on as the bull market went on, because like everyone's a genius, right? Everyone's a, I was a genius in 2021, not as smart, Brian, in 2022, but I wasn't using customer deposits, so that's fine.

• 32:18Ryan Sean Adams?

  That is pretty smart, that.

• 32:19David Hoffman?

  Yeah. And so like, it's basically like, you can see the degeneracy of Alameda go higher and higher and higher as the bull market continues, and then just like not position themselves at all for the turning around of the market.

• 32:31Ryan Sean Adams?

  It sucks. It's brutal. This is so ugly when you look into this. There's definitely a case, I mean, it's very obvious right now that Sam knew exactly what was going on.

• 32:42David Hoffman?

  And it's not even like he was like, knew about it him, it's like, he definitely like orchestrated it. There was a message, so remember all of those crazy tweets from Sam that we started off with? We saw, there was a leaked photo of the company Slack of FTX that I'll read out. Inside of the company FTX, somebody says, "Why is Sam trolling on Twitter? As if this isn't a serious situation?" Question mark, exclamation point, question mark. "Did we not learn that trolling on Twitter got us here?" And Sam replies in Slack, "I'm sorry, exclamation point, maybe it's wrong. I took the approach because something needed to break through the mob mentality, but I'll likely be more straightforward going forward." What mob mentality? Anyways, the employee responds, "Sam, respectfully, this is not helping.

• 33:25David Hoffman?

  Nothing broke through the mob mentality. In fact, your tweets just made the people more mad that you had the audacity to tweet something cryptic when people's lives have been destroyed. I don't think anyone understood the cryptic nature of your what happened tweet thread. If there's more meaning behind it, please enlighten us because we are lost. Your employees lost everything they had on FTX.

• 33:43Ryan Sean Adams?

  Wow.

• 33:43David Hoffman?

  FTX users lost everything that they had on FTX. Everyone that chose to believe in you lost everything. You tweeting what happened in 10 tweets spread out over 24 hours is just peaking everyone's anxiety. In addition to the money that they have lost, I was personally also super anxious after every tweet you sent, hoping for some positive outcome. I request you to only tweet if you think you are adding value to your users, investors, employees, and if you have any plans of making us whole. Anything else would infuriate people even more. A lot of us idolized you, Sam, and you have let us down. In my opinion, you don't have anything of value for your users, investors, employees. Please refrain from tweeting." It's insane that this has to come from an employee of FTX inside of Slack.

• 34:28Ryan Sean Adams?

  It's sad. It's brutal. Man, good riddance, right? Back to the theme. Thank God this guy is out of here. But it's been a slow train crash, I guess, toward the end. All of this week felt like this. We're looking at some court documents, I think, and there is a new CEO at the helm. So of course, FTX goes under bankruptcy, Chapter 11. That means SBF no longer has power. Governance power the organization. He has to step aside. Bye-bye. New CEO John Ray came in and he writes some scathing reviews of what was going on. This is somebody who's coming externally and helping to, I guess, organize this company for bankruptcy.

• 35:13David Hoffman?

  And so in these Chapter 11 bankruptcy documents, this new CEO says, "I have over 40 years of legal and restructuring experience. I have been the chief restructuring officer or CEO of several of the largest corporate failures in history. I have supervised situations involving allegations of criminal activity and malfeasance, Enron. I have supervised situations involving novel financial structures, Enron and residential capital, and cross-border asset recovery and maximization. Nearly every situation in which I have been involved has been characterized by deficits of some sort of internal controls, regulatory compliance, human resources, and system integrity." So that's the, that's the, he's setting himself up for a punchline, and here it is. Never in my career have I seen such a failure of corporate controls and such a complete

• 35:57David Hoffman?

  absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated, and potentially crump compromised individuals, this situation is unprecedented. This is the guy that oversaw the Enron restructuring, saying that this situation is unprecedented. Oh my God.

• 36:22Ryan Sean Adams?

  My man's been doing this for 40 years, and he's like, this is the worst I've ever seen in my whole career of seeing terrible things. Like, Enron doesn't even hold a candle to this. Here's another tweet thread of the Chapter 11 First Day affidavit. This is the affidavit filed by that John J. Ray. Anything we could take from this?

• 36:43David Hoffman?

  It's so bad, Ryan. Like, we've talked a few about the things already, like the reimbursing with emoji codes. There's some other crazy stuff, like employees were paid through online chat. Like, SBF and Gary Wang controlled all of FTX's digital assets personally using a group email account to share private keys. Oh my God, dude. Like, it's, if you want to read the train wreck, just like, the link's in the show notes.

• 37:09Ryan Sean Adams?

  Well, here's one. Alameda had basically special privileges. They had kind of root access of the FTX exchange. And Alameda, of course, was Sam's private hedge fund, DGEN trading firm, right? There was a secret exemption, this is from the court documents, the secret exemption of Alameda from certain aspects of FTX.com's auto liquidation protocol. Alameda was exempt from getting liquidated automatically on FTX.

• 37:38David Hoffman?

  So Alameda could leverage long on FTX without fear of liquidation, so basically have no risk.

• 37:44Ryan Sean Adams?

  Last in line for liquidation, everyone else gets risk. Why would you ever come to this platform to trade? What a terrible...

• 37:51David Hoffman?

  This is insane.

• 37:52Ryan Sean Adams?

  Yeah, it just, everything stacked against you. They're literally preying on their users. Now ultimately, they've stolen all the monies. Doesn't surprise me.

• 38:01David Hoffman?

  Well, I think this is like one of the reasons why the whole thing fell through is Alameda took a leveraged long position, then the market turned over, and then they were never liquidated. So who's paying, who's paying for that hole? Oh, well, it was FTX, AKA customer deposits, because they didn't liquidate their own trading firm on their own exchange.

• 38:22Ryan Sean Adams?

  Okay, let's get to contagion. Here's the big story. Genesis. Who is Genesis? And what's happening with Genesis right now?

• 38:28David Hoffman?

  Okay, Genesis is like the biggest lending and trading desk in all of crypto. They're kind of the heartbeat. And this is, this was the contagion that Chris Bernisky was saying that he was looking for, right? And so if Genesis is impacted, then you kind of know we're at the center of things. So Genesis, they tweeted out that they had $175 million in FTX, which is now gone. And as a result of that, they have had to suspend withdrawals in their lending business. And so they, their lending desk is closed. I'm sure they have plenty of money on the table. Do they have all the money? I think we're still, we're still waiting to hear as a result of that. But this, of course, bleeds into Gemini and

• 39:09David Hoffman?

  anyone else that has like an earned product. So Gemini Earn has paused withdrawals. And so of course, this bleeds into anyone that gets yield out of Genesis. Gemini Earn, for example, Gemini Earn has paused withdrawals out of the Gemini team. And they say they were working closely with the Genesis team to help customers redeem their funds from the earned program as quickly as possible. I think they just need to wait for the dust to settle and like see where their accounts are. This does not impact any other Gemini products or services. The Gemini exchange is responsibly firewalled from Gemini Earn because of, you know, good common sense and regulation. And I actually withdrew, like I had like 0.1 ETH on Gemini, and I was able to withdraw that yesterday. So I can

• 39:52David Hoffman?

  speak from experience here. But this leads us back to kind of how like Genesis was the biggest lending desk in the space. So we'll pull up a tweet from Dylan Leclerc here that gave their Q3 market activity snapshot. $8.4 billion in Q3 loan originations.

• 40:11David Hoffman?

  Eight billion dollars in active loans, 18.7 billion dollars in derivatives traded, and then 9.6 billion dollars in Q3 spot volume traded. And Dylan continues after putting out some of these numbers, he goes, "Not only does this perpetuate the contagion domino effect, but this also will further the liquidity crunch being felt across the space as institutional players reach for additional financing." And so, we don't really know, I don't really know the knock-on effects of this.

• 40:37Ryan Sean Adams?

  Yeah, so the bottom line is Genesis paused, withdrawals paused, which means they're clean out of liquidity. That doesn't necessarily mean they're underwater, and their liabilities exceed their assets. Doesn't necessarily mean that, but they've run out of liquidity. We don't know, it doesn't seem super healthy. And because Gemini Earn's program was based on Genesis, essentially, now withdrawals are frozen on Gemini Earn. By the way, David, guess who had some funds on Gemini Earn too?

• 41:07David Hoffman?

  No way!

• 41:08Ryan Sean Adams?

  This guy right here!

• 41:09David Hoffman?

  Wow!

• 41:10Ryan Sean Adams?

  Alright, I'm collecting all the crypto banks.

• 41:12David Hoffman?

  Dude, have you missed? You've gotten all of them!

• 41:13Ryan Sean Adams?

  I haven't missed yet. And fortunately, a very, very small amount, because again, it's just like me testing these things. But yeah, now, I will say-

• 41:26David Hoffman?

  Wow, congrats, you got to collect all those deposits, man.

• 41:27Ryan Sean Adams?

  So Celsius is gone, obviously. I mean, like, dead, right? BlockFi, eh, probably dead unless it gets a CZ bailout, right? And that would be sort of the hail mary miracle shot. My take on Gemini Earn, I think there's a chance.

• 41:44David Hoffman?

  I think, I'm feeling pretty good about that. I can give over 50% chance.

• 41:47Ryan Sean Adams?

  I think that Genesis going under would be a really big freaking deal. And Gemini, and then the combination of Genesis going under, and then Gemini saying, "Sorry, all Earn customer..." Like, that would be very damaging for Gemini's business, right? So- It feels like they're going to probably find a way, or they could. I don't know. I'm giving it like 50/50 odds, and that is not based on any data or any science. It's just Ryan's gut feeling right now, having been through them all right now. I've got some experience on this. So, not good. And of course, this is BlockFi. They sent out an email earlier this week. "We are shocked and dismayed by the news regarding FTX and Alameda.

• 42:31Ryan Sean Adams?

  We, like the rest of the world, found out about this situation through Twitter." Isn't that fun? And basically, they're saying they're trying to protect client funds. They have no clarity. Everything's frozen. I don't know what BlockFi is going to do. It's a really bad situation to be in, especially because they're getting double dunked here, right? They basically went underwater over the summer as a result of... It was a trade. It was the GDPR C trade. When that kind of fell, the floor fell out from that as a result of Three Hours Capital. They got wrecked there. And then they got a bailout, but who'd they get a bailout from? FTX, the Ponzi king himself, comes and bails them out. And now they're back underwater again.

• 43:15Ryan Sean Adams?

  So, pretty brutal situation to be in. I'm not sure that they're going to make it out of this, but maybe there's hope.

• 43:21David Hoffman?

  Well, so I feel bad for BlockFi because like this, they got bought up and just like subsumed into the Ponzi.

• 43:27Ryan Sean Adams?

  Why? Why did Sam buy them? It wasn't out of the good graces of his heart, was it?

• 43:32David Hoffman?

  No, not at all. So, this is Autism Capital tweeting out...

• 43:35Ryan Sean Adams?

  This Twitter account is something else. They did a great job reporting this week. It's despite the name. "From a BlockFi employee, 'The only reason FTX bailed us out was to get our users' funds onto their platform to use in their shell game. They applied immense pressure to get BlockFi funds migrated to FTX custody. Employees were told by executives to not ask questions about the move.'" Wow.

• 44:00David Hoffman?

  Oof. Bad.

• 44:01Ryan Sean Adams?

  Yeah, very bad. Yeah, so this is a Wall Street Journal again saying Block 5 prepares for potential bankruptcy as the crypto contagion spreads.

• 44:10David Hoffman?

  It's more contagion than that, though.

• 44:12Ryan Sean Adams?

  Yeah, I'm not going to call the end to the contagion either, even after this week. I think this will take a few, like, few weeks to pan out fully.

• 44:19David Hoffman?

  Yeah.

• 44:20Ryan Sean Adams?

  But we're getting close. I think we're getting close.

• 44:22David Hoffman?

  The news will be about this for all throughout 2023.

• 44:24Ryan Sean Adams?

  Yeah.

• 44:25David Hoffman?

  Galwa Capital had 50% of its funds on FTX. MultiCoin Capital.

• 44:30Ryan Sean Adams?

  100 million. That's 50% of their holdings.

• 44:33David Hoffman?

  Yeah.

• 44:34Ryan Sean Adams?

  This entire fund got wrecked.

• 44:35David Hoffman?

  Yeah, MultiCoin Capital lost 10%. It was 50% of their assets. Not all of their deployed capital, but yeah, 50% of MultiCoin assets were lost.

• 44:44Ryan Sean Adams?

  Well, they're down. It's not, so I think they got at least 10%, maybe more, actually stuck in FTX.

• 44:51David Hoffman?

  10% of the fund, yeah, so like of their liquid assets that they had, it was like 10, 50% of them. But they had a lot of other investments.

• 44:59Ryan Sean Adams?

  This 55% number is their, the drop in the fund's value, including the write down of like all the FTT tokens and Sol and everything else that they had in their fund was a 55% down.

• 45:11David Hoffman?

  Oof.

• 45:12Ryan Sean Adams?

  Yeah, so pretty, pretty brutal. And that, I'm not talking about over the year, I'm talking about over like the week, like a two week period, and you're down 55%.

• 45:21David Hoffman?

  Yeah, so Circle also had some contagion with Genesis. I actually haven't been able to like get some numbers on this one, but Circle's yield, the yield that you get with Circle goes from 0.25% down to 0 because Genesis was one of the few places that they were getting yield in the first place.

• 45:38Ryan Sean Adams?

  To be clear, USDC is fine.

• 45:40David Hoffman?

  Do, USDC is fine.

• 45:41Ryan Sean Adams?

  Yeah.

• 45:41David Hoffman?

  USDC is not going anywhere.

• 45:42Ryan Sean Adams?

  Yeah.

• 45:43David Hoffman?

  And so like, why was this?

• 45:45Ryan Sean Adams?

  I hate not going anywhere. Like, that's hard for, to say right now, but.

• 45:48David Hoffman?

  I've always.

• 45:49Ryan Sean Adams?

  To our knowledge.

• 45:49David Hoffman?

  Yeah. So like, we have to ask ourselves, like, why was this at the center of contagion? It kind of was reminiscent of like, the Three O's Capital, where like, Three O's Capital is just taking loan from anyone that would give it to them. Well, FTX and Sam was kind of in the same position. Everyone was like, Sam, take my money. You're like this money-making god. Please take my money. And so, because he's a sociopath con artist, he would say, yes. So this is Frank Chaparro that said, "Just spoke with an LP in several crypto funds." He said when he asked funds why they did lazy due diligence on FTX, they responded with basically, "He was on the cover of Fortune magazine. He was a big name."

• 46:28David Hoffman?

  That was why they invested in FTX. And so Frank concludes, "There's going to be a lot of lawsuits and a lot of funds will shutter." Basically saying that if funds didn't do enough due diligence to investigate what's going on with FTX, then they might get sued.

• 46:44Ryan Sean Adams?

  They just gave him a pass because he had the social proof and he had the credentials. And they just fomod right in, because everything to that point that Sam had touched turned to money. So they needed to be part of that. That's why they did the lazy due diligence.

• 46:57David Hoffman?

  And Frank continues with a quote like, "It's just like Theranos." But then also responds, "Even Theranos had a board of directors, which FTX did not." Absolute insanity.

• 47:10Ryan Sean Adams?

  Like Theranos, but worse. All right. So what's going on in sort of the legal side of things? A few things. Number one, the US House Committee just announced that they are scheduling a hearing on the FTX collapse.

• 47:22David Hoffman?

  Great.

• 47:22Ryan Sean Adams?

  That hearing is apparently happening in December at some point in time. That will be an eventful hearing, I'm sure. That will be crypto being scrutinized. I don't expect to see a lot of distinction between C-Fi and DeFi. I don't know. That's going to be an absolute mess, David. We're obviously going to talk about a lot, talk a lot about that as it comes. But I'm not looking forward to that. It's, um, yeah, pretty terrible for the industry. Also, what's happening to the influencers who supported FTX and advertised for them?

• 47:58David Hoffman?

  Yeah, so Tom Brady, Larry David, a few other supporters, Chef Curry also, oof. They are, there's a class action lawsuit against other celebrity promoters who promoted FTX, which I kind of like. Larry David was just in the commercial, like he was just hired to do a commercial. Tom Brady? Why is Tom Brady getting sued? Just because like he was like, he was a paid spokesperson? Like, Tom Brady is the person you trust to do due diligence? I don't really understand this one, but people are mad and they're just trying to sue people.

• 48:30Ryan Sean Adams?

  Yeah, I don't know what'll happen with these types of lawsuits, but yeah, people are very mad. But don't take Larry David from us. He is a national treasure, please.

• 48:40David Hoffman?

  So, okay, so there's a bunch of like reactions, of course, the entire crypto world is reacting, but I mean positively. So Binance has announced that their intent to do a what? A Vitalik Buterin flavored proof of reserves system. So CEO of Binance, CZ, reveals plans to implement a new proof of reserve system protocol developed by Vitalik Buterin. So that's a nice, healthy response. Also, in line with Binance, Crypto.com also intends to audit their reserves using a proof of reserve system as well. And then also, we kind of alluded to this earlier with the Uniswap volumes at all time high. Self custody is at

• 49:20David Hoffman?

  all time highs. And so Gnosis Safe saw almost a billion dollars of inflows into the Gnosis MultiSig. Ledger, the Ledger hardware wallet, sales at all time high. Trezor hardware wallet, sales up 300%. And so this tweet is just saying the flight to self custody is here. And then, of course, this is Andrew Thurman, who's saying, "Most DeFi protocols are up double digits in users and transactions, while exchanges have huge outflows. Crypto, as measured by on-chain activity, is doing great despite FTX fraud." And he's actually retweeting some of Joe Weisenthal's tweet that says a lot of like-

• 50:02David Hoffman?

  Joe Riesenthal is making fun of crypto, being like, oh yeah, but this isn't real crypto, making a claims like, yeah, it's not real communism, uh, which is-

• 50:09Ryan Sean Adams?

  He's always so cynical about it.

• 50:11David Hoffman?

  Yeah, he's always cynical.

• 50:12Ryan Sean Adams?

  Doesn't ever grab the nuance of it, but-

• 50:14David Hoffman?

  Right. Anyways, we have the data to prove that we are doing the responsible reactions to this, to this event.

• 50:21Ryan Sean Adams?

  Cynics won't believe me, but like, this is, this is good for crypto. This is healthy. And this is good for bankless money systems overall, that we detox and get this centralized, you know, flaw in our system out right now.

• 50:34David Hoffman?

  Addiction out of us, yeah.

• 50:35Ryan Sean Adams?

  It wasn't addiction, it really was. Um, all right. So we had some mainstream reporting about this entire situation. Uh, some pretty bad mainstream reporting.

• 50:45David Hoffman?

  Pretty bad.

• 50:46Ryan Sean Adams?

  We also had, we also had, um, democratic, uh, Democrat influence, of course. So SBF was the number two largest donator to the Democratic Party. Uh, and some other folks within FTX organization contributed a great deal to Republicans as well. What tweet are we reading from Ryan Shea?

• 51:06David Hoffman?

  Yeah. So Ryan Shea says, "This is crazy. Elizabeth Warren is known for being the anti-crypto senator who helped her draft the tax legislation bill in 2016, none other than Joseph Bankman, father of SBF." Uh, here's, and then he follows up, uh, "Here's a reference to the bill on her website where she thanks Joe for the endorsement. Uh, this legislation has been endorsed by dozens of law professors and economists, including Joe Bankman of Stanford University."

• 51:30Ryan Sean Adams?

  Wow.

• 51:30David Hoffman?

  And then he follows up with a tweet from Elizabeth Warren, and Elizabeth Warren tweets out, "The implosion of FTX must be a wake-up call for Congress and financial regulators to hold this industry and its executives accountable. Too much of the crypto industry is smoke and mirrors. It's time for stronger rules and stronger enforcement to protect ordinary people." Hmm. Okay.

• 51:50Ryan Sean Adams?

  That's an interesting tie. Uh, how about this?

• 51:54David Hoffman?

  So cold blooded Schiller tweets out, honestly, this headline and write up is awful for from the FT from the Financial Times, CZ's actions, this is a quote from the article, CZ's actions left Sam Bankman Freed's FTX filing for bankruptcy. As in CZ, the consequences of CZ's actions forced Sam to file for bankruptcy. No, it's FBS actions that left FTX and hundreds of more filing filings.

• 52:18Ryan Sean Adams?

  Yeah, they have to correct that. That's a major.

• 52:20David Hoffman?

  Pointing at the finger at CZ is a weird angle for the media to take. And there was this weird like caricature of CZ in a very not gracious illustration of CZ. It's a bad look. It's a bad look. And this is at the FT, man. Another one saying bankrupt FTX gave $18.2 million to early COVID researchers who cast doubt on ivermectin and hydro quox, the queen. This is like, I just butchered that pronunciation. But this was like these like non vaccine like solutions that were really supported by the right. And the claim here is that FTX gave $18 million to researchers who were able to cast doubt on like these right conservative aligned solutions to COVID. Dude, and like, there's another one.

• 53:05Ryan Sean Adams?

  Why does this headline matter? I don't understand this.

• 53:07David Hoffman?

  So like, go to the next one where where the title is FTX collapsed dooms founders effort to prevent another pandemic. And the sub line is flush with crypto cash. Sam Bankman Freed spent 10 to millions of dollars on campaign donations and projects intended to bolster public health

• 53:24Ryan Sean Adams?

  How is he doing this?

• 53:25David Hoffman?

  And track emerging viruses. What? This is what we're focusing on? How like Sam tried to stop the pandemic? Are you serious?

• 53:34Ryan Sean Adams?

  I don't even understand, actually.

• 53:36David Hoffman?

  It's because like the mainstream media doesn't is like he's he's a darling and they can't they can't.

• 53:42Ryan Sean Adams?

  Are you sure? They mainstream media is still reporting out that he's a like, I don't consume much mainstream media.

• 53:48David Hoffman?

  Okay, so go to go to Balaji's tweet because Balaji's tweet will summarize it pretty well. The net result of FTX is that billions of dollars was stolen from crypto investors to give to Democrat aligned politicians, nonprofits and journalists. This is why there may be no prosecution.

• 54:04Ryan Sean Adams?

  Are you serious? Is there really not going to be like this man should be in a jumpsuit, right? Like this is very like.

• 54:10David Hoffman?

  The fact that he's not already is insane.

• 54:12Ryan Sean Adams?

  Well, this is very like, this is very. This is very clearly like fraud, a scam, like the biggest financial heist that we've seen since a Bernie Madoff. And in Bernie Madoff's case, it was investors at least. This is literally the guy stealing from depositors. He's like operating a bank and stealing the savings accounts. And he's not going to go to jail for this? There's not going to be like responsibility? I can't believe that's true, David.

• 54:42David Hoffman?

  I hope it's not true, but like some of the takes from mainstream media that missed the ball, like CZ triggered FTX's collapse. FTX collapse founder tried to stop the pandemic. Just like some insane headlines, man. It's crazy. And remember, Bellagio always goes after the New York Times for being like woke media. And so like if SBF is donating $70 million to like the woke political party, then all like the woke media like don't go after the actual point of the whole thing.

• 55:15Ryan Sean Adams?

  Well, see, I want to give it some more time. I can't believe mainstream media is coming out on SBF's side. How is that even a tenable position in any case?

• 55:22David Hoffman?

  I don't know if they're coming off on SBF's side. They're just missing the point. They're missing the point about how he should be in a jumpsuit.

• 55:29Ryan Sean Adams?

  Okay, how about, how about this from Brian Armstrong? I'll read this out. Twitter's broken just about every piece of this FTX story using blockchain analytics, while New York Times is writing puff pieces on a criminal. Feels like a turning point for citizen journalism and loss of trust in mainstream media. Yeah, I totally agree. The coverage from what I just saw now and have been seeing has not been good. I hope we get, I don't know that I have a lot of hope other than, look, we, public blockchains give us accountability into financial systems like this. And so anybody on chain can see what's going on and report out. And they're actually doing the work.

• 56:11Ryan Sean Adams?

  I mean, individuals are doing the work. They're uncovering where the money is flowing and what's actually happening. And it feels like mainstream media is just off on another planet at, you know, at worst and like. Three steps behind at best.

• 56:26David Hoffman?

  So, Hasco Trade summarizes this nicely where he just says, "Lost count of the number of mainstream media articles since recently that have focused on CZ's role in this, SBF's ambitions, and also SBF's sleep schedule, while failing to address Alameda FTX relations, backdoors, misuse of customer funds, the convenient hack, constant lies, reasolvency." Like, again, missing the point.

• 56:50Ryan Sean Adams?

  David, did we even cover the hack? Were we even talking about the hack?

• 56:53David Hoffman?

  I don't even know what to do with the hack because like, yeah, so FTX got hacked. We don't know who's got the money. It's like now the 30th largest ETH holder. I don't even know what to do with that information.

• 57:04Ryan Sean Adams?

  So, there was some sort of hack that even kind of the new owners, Chapter 11 owners of the people trying to reorganize, restructure FTX, agree was a hack by some sort of third-party employee insider.

• 57:19David Hoffman?

  I'm pretty sure a rogue employee. I think it was a rogue employee.

• 57:21Ryan Sean Adams?

  And we don't know all the details. And how much did they come out with? It's like hundreds of millions of dollars, right?

• 57:26David Hoffman?

  It was like almost a billion dollars, right?

• 57:27Ryan Sean Adams?

  And we were seeing this on-chain as it was happening. This is earlier in the week, right? And they were converting from like different stablecoins and ultimately into ETH. And now they, last I saw, they were like the 36th largest ETH holder.

• 57:40David Hoffman?

  Yeah.

• 57:41Ryan Sean Adams?

  And so, we don't know who this hacker is. Because of all of the mismanagement and the complete utter lack of security at FTX, a whole bunch of people could have done this, including someone rogue and external from the organization. So, no idea.

• 57:56David Hoffman?

  Remember, they were sharing private keys over email, right?

• 57:58Ryan Sean Adams?

  Oh, my God.

• 57:59David Hoffman?

  It could have been anyone.

• 58:00Ryan Sean Adams?

  Meanwhile, there is a redemption arc, starting from our friends at Three Arrows Capital. David, fill us in here.

• 58:07David Hoffman?

  Yes. Yeah, so like, a number of people came out of the woodwork. A number of like destroyed reputations came out of the woodwork in the last like two weeks. So like, DoKwon showed up on Up Only, and then both Kyle Davies and Suzu started tweeting again. And so, like, people are like saying like, "Now is the time that you guys just return to crypto Twitter."

• 58:28Ryan Sean Adams?

  Well, because they don't look so bad relative to what they just did.

• 58:30David Hoffman?

  Yeah, because there is a bigger, somebody lost more money than they did. And so like both Kyle Davies and like three and Suzu are like saying like, oh, like, here's my like story. Like Suzu put this like tweet thread together about this metaphor for surfing, then how he like crashed on the waves because he traded. And then like, and everyone was like, shut the hell up. You like lied fraudulently about the state of your balances. So you could borrow more money.

• 58:56Ryan Sean Adams?

  You know, something else is who does CNBC mainstream media finance decide to put on their show to talk about to comment on SBF and FTX fiasco? Kyle Davies, Three Ours Capital.

• 59:11David Hoffman?

  Yeah. Wait, but did you, did you hear the question that that she asked?

• 59:14Ryan Sean Adams?

  I did. Yeah.

• 59:15David Hoffman?

  It's okay. Let's play it.

• 59:17Speaker 02

  Andrew, it's Becky. I take it you're not in Bali because of the G20. Are you there? Because Indonesia is one of seven countries that won't extradite you back to the United States?

• 59:28Speaker 03

  Uh, no. Um, well, for one, I haven't lived in the United States for like a decade. I've been in Asia, but for two, no, it's just a good place to be.

• 59:40David Hoffman?

  So Ryan, why do you think Kyle Davies is in Bali?

• 59:43Ryan Sean Adams?

  Well, I think we all know the answer. Like what I'm shocked at is Kyle appears on TV and he doesn't expect to be asked that question.

• 59:49David Hoffman?

  Right.

• 59:50Ryan Sean Adams?

  I'm like, it should not be a surprise. But part of me wonders, do you think CNBC is like, I mean, why would they have Kyle on Davies to comment on this? Do you think that they are actually just mocking crypto? Is this like a subtle, like, let's bring on some of the biggest scammers of 2022 and get these crypto people to comment on SBF to embarrass the industry.

• 1:00:14David Hoffman?

  So you guys know how to scam, right? Can you comment about like the state of SBF?

• 1:00:18Ryan Sean Adams?

  I don't get it. Uh, yeah. So anyway, look, we're still probably going to be talking about this sadly next week. Um, we'd rather be talking about other things. In fact, after we come back.

• 1:00:30David Hoffman?

  We're not talking about FTX. We're not talking about it.

• 1:00:33Ryan Sean Adams?

  Yeah, for a little bit. Anyway, maybe towards the end we will again. But coming up next, want to talk about L2s because they are coming in hot, still building. Starkware has a new token, the Starknet token. Also, Bankless doing an NFT release?

• 1:00:48David Hoffman?

  What?

• 1:00:49Ryan Sean Adams?

  A little something. Not a big one, but a little something. Really cool.

• 1:00:52David Hoffman?

  I didn't know that.

• 1:00:52Ryan Sean Adams?

  We'll tell you more about that.

• 1:00:53David Hoffman?

  I didn't know that.

• 1:00:54Ryan Sean Adams?

  Right when we come back after these fantastic sponsors that made this episode possible.

• 1:00:59David Hoffman?

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• 1:01:43David Hoffman?

  lending opportunities and portfolio tooling. Explore the diverse financial opportunities available on TrueFi, or launch your own portfolio at truefi.io. If you've been listening to Bankless, you know that we're fans of the modular blockchain thesis. The idea that blockchains will separate execution from data availability and consensus, allowing all three to become the best versions of themselves. And Fuel has built the fastest modular execution layer in the industry. By supporting parallel transaction execution, Fuel unlocks significantly faster throughput for the web3 world. Fuel also goes beyond the limitations of the EVM with its own Fuel VM, which is more efficient and optimized, opening up the design space for developers. And lastly, Fuel brings a powerful developer experience with its own domain-specific language,

• 1:02:26David Hoffman?

  Sway, and a supportive tool chain called Fork. With Fuel, you can have the benefits of smart contract languages like Solidity while adopting the improvements made by the rest tooling ecosystem, letting the Fuel development environment go beyond the limitations of the EVM. If you want to learn more, there's a link in the show notes to see how you can get involved with a Fuel network. We all love tokens, Ryan. I know you like tokens. Did you know that the Starknet token is now deployed on Ethereum?

• 1:02:51Ryan Sean Adams?

  That is cool. The Starknet token is called STRK.

• 1:02:54David Hoffman?

  It's a good name.

• 1:02:55Ryan Sean Adams?

  Now deployed on mainnet Ethereum. So I actually haven't even had a chance to kind of look at the price or any of the details around this. Do you have anything?

• 1:03:05David Hoffman?

  There is not much. They just have a token and they said that they are going to work on distribution.

• 1:03:13Ryan Sean Adams?

  All right, work on it, work on that distribution. Businesses can now accept USDC with Apple Pay. That's a pretty big move.

• 1:03:21David Hoffman?

  Yeah.

• 1:03:22Ryan Sean Adams?

  So USDC now getting into wallets like Apple Pay. It feels like some stablecoin saturation here.

• 1:03:28David Hoffman?

  Yeah, still waiting on the actual details of like how that actually shows up in my wallet. If I can put USDC on my phone and pay with Apple Pay, that is a huge unlock, but I would, I would like to see how that actually gets shown up. Anyways, Solana actually sadly is getting USDC taken away from it. So this was interesting. Both Binance and OKX have halted USDC and USDT deposits onto the chain. So Binance says, Binance has temporarily suspended Tether and USDC deposits until further notice. And also OKX did it too.

• 1:04:03Ryan Sean Adams?

  This is FTX Fallout stuff, right?

• 1:04:05David Hoffman?

  I think so. I think it's because Alameda was the large like market maker on Solana using these stablecoins. And now that since there's no market maker, there is less liquidity. I, that's the rumor that I've heard. I don't know why they made this choice, but the fact that both of them made at the same time, it was interesting.

• 1:04:22Ryan Sean Adams?

  Solana is definitely taking a hit from this. I think they'll recover, but yeah, it's, it's gonna take a while for this wound to heal. Let's talk about some NFT stuff. So Yuga Labs are buying some Beeple stuff? Beeple's getting involved with Yuga Labs? What's this?

• 1:04:36David Hoffman?

  So Yuga Labs has acquired Beeple's platform, We New, along with its flagship NFT collection, 10KT F, which I actually didn't know existed. And Beeple, Mike, AKA, will also become an advisor to Yuga Labs. So, cool. Interesting development. Didn't see that one coming. Also didn't see this one coming, Nike swoosh platform to allow users to buy digital wearables and build a community around these digital wearables, AKA Nikes. Ryan, are you gonna line up to buy a digital Nike?

• 1:05:13Ryan Sean Adams?

  You know, I don't, I don't really, I'm not a shoe guy in real life, so I won't be in the metaverse either.

• 1:05:19David Hoffman?

  And surprise, it's on Polygon.

• 1:05:21Ryan Sean Adams?

  Yeah, Nike and Polygon partnership, biz dev from Polygon continues to absolutely crush it. Sony just got a patent for NFTs and the blockchain, so Sony doing some things. I guess all companies are still doing things in crypto, even despite this bear market.

• 1:05:38David Hoffman?

  Yeah, so they say the patent is for tracking in-game assets in video games, and it lays out mechanics for tracking changes in ownership, visual appearances, or metadata of digital assets. Kind of seems like it would, it's a skin kind of thing. It's like, oh yeah, it changes as you wear it, and if you trade it, it goes, I don't know, something like that. That's what I imagined.

• 1:05:58Ryan Sean Adams?

  We are experimenting with NFTs too, so we promised this before we cut to sponsors. Bankless is actually doing collectibles for some of our podcasts. So these are sound collectibles. I know you and I, David, have been on a little bit of a kind of a music sound NFT binge where we've acquired some of our own, at least I have. I don't know if you have, but you've certainly been bullish about them. So we thought, why not try our hand at this and convert some of the historic legendary Bankless podcasts into collectibles? So we are actually releasing the first mint, the first Bankless collectible podcast today. If you were listening to this, I think at 12:00 PM East, it will go live.

• 1:06:43Ryan Sean Adams?

  And the first episode that we're releasing as a collectible NFT, so a sound collectible NFT, is actually the SBF and Eric Voorhees debate. Now, all of the proceeds from this collectible, we have decided to allocate towards Coin Center. So it's already tuned up so that anytime one of these NFTs is minted, or any of the royalties on a resale goes directly, all the proceeds from that go directly to the Coin Center ETH address. So if you buy one of these NFTs, or if you sell it, percentage of the transaction fee on the sale, the royalty fee will go to Coin Center. And the idea here, David, is We're going to be doing more collectibles in the future, but this episode in particular,

• 1:07:28Ryan Sean Adams?

  I mean, some people have said this episode sort of almost was the prick that popped the balloon here.

• 1:07:34David Hoffman?

  It was the start of the fall of the House of Cards, yeah.

• 1:07:37Ryan Sean Adams?

  Yep, it helped us uncover everything with SBF. And we all know that not only in the conversation, all of the regulatory actions, all of the smoke-filled rooms and meetings that SBF was having with regulators, with lawmakers behind the scenes, he's done a lot of damage to crypto in DC, particularly, I think, damage to DeFi protocols. And your donation to Coin Center, I think, through this NFT, it's not going to undo the damage overnight, but it can help. It's something. Coin Center is doing fantastic work. They are educating our lawmakers, they are fighting for our legal rights.

• 1:08:17David Hoffman?

  And their jobs are a lot harder now, so we kind of owe it to them.

• 1:08:20Ryan Sean Adams?

  Their jobs just got a whole lot harder. So, anyway, the starting price of this, I believe, is 0.05 ETH. There's only 100 of these, and then they're all sold out. So we'll see how this goes, but we're pretty excited about it.

• 1:08:35David Hoffman?

  And if you are a holder of 35,000 bank, that price is actually 0.04 Ether. We took that snapshot today. And the other cool thing about this is SBF talked a big game about effective altruism, Ryan, but with this, the donations to Coin Center are in the code. The money goes from you to them because of the code. And so you don't got to trust us, the way it's meant to be.

• 1:08:59Ryan Sean Adams?

  Absolutely. And of course, this is going to be the first of many collectibles. This first, like I said, 100% of the proceeds are going to Coin Center. We'll be doing more in the future, too.

• 1:09:09David Hoffman?

  All legendary bankless podcasts.

• 1:09:12Ryan Sean Adams?

  Yeah, this is called the Genesis Collection. So this is the first of four others that will be released. There's five in total in the Genesis Collection. We're not going to tell you what the next podcasts will be, but there's some of our favorites. These are the legendary podcast episodes that you can begin collecting if you're into that kind of thing. It could be a fun way to experiment with NFTs as well.

• 1:09:33David Hoffman?

  Meanwhile, moving on to different ecosystems, Cosmos, the community, has voted on the Atom 2.0 proposal and rejected it, actually. Interesting. But basically, the community has largely vocalized support for the general direction, but they wanted more clarity and refinement on some of the finer details. So just taking a little bit back to the drawing board with the Atom 2.0 white paper.

• 1:09:57Ryan Sean Adams?

  They're still gonna do it, right? They're still gonna improve the monetary economics or pieces of it?

• 1:10:01David Hoffman?

  There's general support for the vibe of the white paper, but they want more specifics. So they voted no for now.

• 1:10:07Ryan Sean Adams?

  Chop it into parts, maybe, something like this?

• 1:10:09David Hoffman?

  Yeah. And you know how we usually joke about like how the Fed is like researching CBDCs? Well, the private markets, Citigroup, HSBC, Wells Fargo, Mastercard, and a few others have actually joined forces with the Federal Reserve Bank of New York to actually explore a CBDC trial. We will see what comes up out of that.

• 1:10:29Ryan Sean Adams?

  Yeah, absolutely. Neither am I. David, some cool releases this week. The first from Defi Llama. What are they up to?

• 1:10:37David Hoffman?

  Oh, they have an aggregator. So they are joining Matcha, One Inch, now Defi Llama.

• 1:10:42Ryan Sean Adams?

  Exchange aggregator. Oh, very cool. And how about this? This is really exciting, actually.

• 1:10:47David Hoffman?

  I'm so excited!

• 1:10:50Ryan Sean Adams?

  Permissionless, 2023.

• 1:10:51David Hoffman?

  We're doing it again!

• 1:10:53Ryan Sean Adams?

  It was a great conference, probably, definitely the best crypto conference I've ever been to, David.

• 1:10:58David Hoffman?

  I'm sure it was. I'm sure. I can also say it was one of the best. It was definitely in the top three crypto conferences that I've been to in the last two years. And I've been to basically all of them.

• 1:11:08Ryan Sean Adams?

  Well, this is one that we are helping to throw. We helped to throw it last year with the team at Blockworks, and we're doing it again this year. And this year, it's gonna be bigger, better, better. Yeah. And when I say this year, by the way, I don't mean 2022. Sorry. I'm talking about September 2023, Austin, Texas, September 11th through the 13th, more precisely. Yeah, so we're going to Austin because we need a bigger venue for this. And the news is that right now, you can get tickets at the lowest possible price that you'll ever be able to get it. Because in 13 days, the price of this thing increases. General admission pass, the Permissionless Conference is $199. You buy that now.

• 1:11:49Ryan Sean Adams?

  So if you know you're still going to be crypto in September of next year, if you're a settler, not a tourist, you're going to want one of these tickets. And the big benefit, of course, is if you are a Bankless Premium subscriber, you get another 30% off on this. So Bankless Premium members, not only do you get that fantastic Chris Berninski episode in your Premium RSS feed, but you get 30% off of the general admission pass at Permissionless. There's a link in the show notes where you can click and actually redeem that 30% discount if you are a Bankless Premium member. So dude, I'm so excited. And you know what? David, you and I get to plan the agenda. We get to plan all of the speakers. Oh, only if people like the agenda, then we did it. If not, it was block work.

• 1:12:36Ryan Sean Adams?

  But that's so fun. I just love pouring all of the Bankless content into that agenda and getting the entire community together for this.

• 1:12:43David Hoffman?

  Yeah, people were surprised that Permissionless 2022 was a year one conference. But yeah, that was the first year that we did it, and it was a huge success. I'm really looking forward to doing this again in 2023. Ryan, I'm looking forward to seeing you, man.

• 1:12:57Ryan Sean Adams?

  For the second time? Dude, I gotta get up to New York. I'll come up to New York before that. That'll be embarrassing if that's the second time. No, I'm not doing my Layer Zero. It's too much.

• 1:13:07David Hoffman?

  Matter Lab ZK Sync raises $200 million. So in their CRC, led by Blockchain Capital and Dragonfly Ventures, ZK Sync raised $200 million, which leads to the total funding of $458 million. And a lot of that going ultimately into the ZK Sync ecosystem. So congratulations to ZK Sync on the raise. And also, Ryan and I are advisors to ZK Sync.

• 1:13:34Ryan Sean Adams?

  There's also an episode on ZK Sync that we dropped in the Bankless YouTube channel. You can catch up and find out more about that raise and what they're doing more recently. CZ is also still investing, I guess, the only guy left with money. I hope it's real money. You think it is, David?

• 1:13:48David Hoffman?

  I think yeah.

• 1:13:48Ryan Sean Adams?

  Not like the FTX Sam Bankman-Fried money, it's real?

• 1:13:50David Hoffman?

  I think it is. I think it is.

• 1:13:52Ryan Sean Adams?

  He says this-

• 1:13:52David Hoffman?

  I don't know though, because, you know, you just don't really know.

• 1:13:54Ryan Sean Adams?

  I just signed eight investment deals, all small amounts, but good projects, we think. I guess, trying to bolster the strength of this industry while everyone's panicking. A good time to invest, I think, if you're CZ, though, for sure.

• 1:14:07David Hoffman?

  Good, good time to buy companies and stuff.

• 1:14:09Ryan Sean Adams?

  It's also still a good time to get a job in crypto. I mean, when you have Layer 2 doing a $200 million raise, you know ZK Sync is hiring. What do we got on the job board this week? Shall I read some out?

• 1:14:20David Hoffman?

  Yeah, do it.

• 1:14:21Ryan Sean Adams?

  All right, bankless.pallet.com, of course, you can find out about a senior smart contract engineer at Swell, senior front-end engineer at Swell as well, and a backend engineer. Uniswap Labs, they need a developer relations lead, a senior front-end engineer, and more. There's all sorts of jobs still on the Bankless job boards. OpenHedge, Optimism is hiring, Rabbit Hole, CoinShift, Ribbit Capital, Chainlink Labs, and more. Find that out, link in the show notes, or bankless.pallet.com/jobs. Guys, we're going to be back with some hot takes from crypto Twitter, and you know they're going to be hot this week, pretty spicy. Some takes from Eric Voorhees, Chris Berninski, Brian Armstrong, and more. But before we do, we want to thank the sponsors that made this episode possible.

• 1:15:06David Hoffman?

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• 1:15:50David Hoffman?

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• 1:16:34David Hoffman?

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• 1:16:54Ryan Sean Adams?

  All right, guys, we're back. Takes of the week, Jake Trzewinski, number one. What's he saying here? A lot of people think the collapse of FTX is evidence that crypto doesn't have a future. For me, it's the exact opposite. This proves why crypto, trustless, permissionless, uncensorable crypto is the only path forward for the future. This week we grieved, next week we build. Good words from Jake Trzewinski. I think we've made this point earlier this week that crypto is kind of bifurcated into two paths. We're going to have the centralized path. We'll always have that. That will be more tightly regulated from here on going forward. The other path, the bankless path, is the DeFi path. And I'm hopeful that we continue to build on these permissionless, uncensorable, trustless protocols,

• 1:17:38Ryan Sean Adams?

  the DeFi protocols from the base layer up. The space in the middle that FTX tried to occupy no longer exists, no longer exists and was not a good space to occupy. To begin with, what's this tweet from Eric Voorhees?

• 1:17:53David Hoffman?

  Eric Voorhees says, "Crucial lesson to DeFi builders: Do not take a victory lap. Do not let your guard down. Do not cede an inch to complacency in your code. Audit often and from multiple parties and assume the audits failed. Use guardrails to scale cautiously. DeFi wins with vigilance." I think this is just emblematic of like this state of mind of just like he's just being more just militant and mission driven about why we're here in the first place. And when somebody like SBF and FTX comes and crashes our party, what do we do? We get better in spite, out of spite. And I feel like that fits into the theme of this week, which is good riddance.

• 1:18:38Ryan Sean Adams?

  Yeah, I really, I love having the ability to view source on these assets and some of these decentralized protocols, right? It's like, and that's the way all crypto should be, right? The fact that we had no idea what was going on in FTX's balance sheet. That is so anti crypto. That is so anti DeFi. What's this from Chris Berninski talking about the Dark Lord? Read this out.

• 1:19:02David Hoffman?

  Chris says, "Everywhere I look, there are muggles who don't know the Dark Lord has fallen and the wizards are free." I think it's just like emblematic of just like, yeah, the wizards. What does he mean? The wizards are like crypto natives, right? And we're free from because the Dark Lord is dead.

• 1:19:17Ryan Sean Adams?

  Yeah, basically. Basically, we just Voldemort just is gone now to a better place. And so, you know, it seems like, it seems like everyone's sad and upset because, you know, I guess there's this blight on crypto, but Chris is looking at the removal of a cancer from the system and he's saying, no, this is actually the best news. I mean, Chris almost seems from his tweets and even what we read earlier in the episode, he definitely seems jubilant about all of this. And not, not obviously the events and the people impacted, you know, nothing like that. But just the fact that he felt very-

• 1:19:54David Hoffman?

  It's up only from here.

• 1:19:56Ryan Sean Adams?

  Yeah, it, we have felt the necessary pain.

• 1:19:59David Hoffman?

  Can't be down bad any worse.

• 1:20:00Ryan Sean Adams?

  No, and we've, this is the right kind of pain to feel like. These are tough lessons, but we're learning them. And, you know, through learning these lessons, we can, we can make it out and to the other side. All right, David, I could ask you, what are you bullish on this week? I think you've got something to show us today.

• 1:20:16David Hoffman?

  Yeah, yeah, yeah. So last week, I was down bad. I was very sad. I was a sad boy, as listeners of the weekly roll up would remember. And like, the amount of just like hate and flack I got out of that on Twitter was like surprising. Like, people are just like, I think, not

• 1:20:34Ryan Sean Adams?

  You were the poster, you were like the a poster boy for all of kind of the down bad crypto people, I think. Even like in, so there was two groups that I saw, because David, you almost became a meme last week, right? There was definitely the internal crypto who are familiar with Bankless, familiar with the show, like know who you are. And these are people like from, I don't know, the hex community.

• 1:20:57David Hoffman?

  The communities that I have offended previously.

• 1:20:59Ryan Sean Adams?

  Yes, or that, I don't know, they have some beef maybe with Bankless or something that you've said. And so there was a lot of, and you know, even the strong Bitcoin maximalist communities. Like, there was a lot from there. But then I also saw you in kind of outside crypto cultures. Like, there was this mega streamer with like, I don't know, 3 million subscribers to his Twitch channel.

• 1:21:19David Hoffman?

  Let's watch these crypto bros cry.

• 1:21:21Ryan Sean Adams?

  He was watching you over and over on a cycle. I watched like 30 minutes of this where he was just talking about it. And it was just like, and I think he was using that as, you know, all the crypto, all the crypto bros are crying right now. Look at this guy, ha, ha, ha.

• 1:21:36David Hoffman?

  He's legitimately crying, yeah.

• 1:21:38Ryan Sean Adams?

  That piece probably, I mean, that's outside of the, you know, the crypto tribe, and they don't know you, right? It's just like, whatever.

• 1:21:45David Hoffman?

  Okay, so the part that people didn't see, and this is what I'm bullish on, Ryan, is just the Bankless family. I felt like there was a family here. And the just insane amount of outpouring of messages that I got, and I think you got a bunch of them too, just in my Twitter DMs, inside of the inner circle Discord, was just like, it was pages, Ryan, of like, and I took a screenshot, some screenshots of them and sent them to you, just be like, dude, look at, look at like all of these people, like, like saying like how much they've just appreciated Bankless and like all this stuff that we've been doing over the last year, and especially over the last week. And I didn't, not any one of them was really emblematic of all of them, but until I got this one, Ryan, which was, somebody wrote out an entire letter entitled "Peptalk from a Long Time Listener."

• 1:22:32David Hoffman?

  You and Ryan have put your hearts and souls into helping make the crypto space more accessible and meaningful to the average non-technical user, and you've done it tirelessly, week after week. You are to the space what Andreas Antonopoulos was for Bitcoin back in the day, only you're operating at the bleeding edge, and I'm sure it must feel exhilarating at times and futile at times like now. If anyone gives you shit for emotion you displayed in the video, that's their issue. In a space that can become so incredibly mechanical, toxic, mercenary, and seemingly devoid of humanity, you guys have constantly been the light that brings the human element back into the focus, and it's heartbreaking to see one of the good guys in despair. And this goes on. I just want to thank the Bankless community and everyone who's listening

• 1:23:14David Hoffman?

  and everyone who's just like, it's always nice to know that you guys are there. And it was a nice moment just to know that we're doing the right thing, and we have people that are along the Bankless journey with us. So, thank you for everyone who's been listening to these things, these weekly rollups, over and over and over again, and thank you for your words of support. I definitely appreciate it.

• 1:23:37Ryan Sean Adams?

  Yeah, 100%, I appreciate it. David, I'm not gonna lie, I was feeling pretty down, like, this past weekend, about everything, right? Just like, just SBF, crypto getting a black eye, but then also just some of the infighting in crypto, like-

• 1:23:53David Hoffman?

  Yeah, it got toxic.

• 1:23:54Ryan Sean Adams?

  A lot of the blame, they were looking for people to kind of burn at the stake, and, you know, anybody who had a YouTube channel, anyone who had a podcast, like, sometimes we were sort of thrown under that bus too. But what more than compensated for it was letters like this and messages like this, and-

• 1:24:13David Hoffman?

  Dude, hundreds. My DMs were filled.

• 1:24:15Ryan Sean Adams?

  Yeah.

• 1:24:16David Hoffman?

  I did not expect that.

• 1:24:17Ryan Sean Adams?

  Yeah, and this is kind of just, I don't know, the silent majority, I think, of good people in crypto. And I just want to say, we appreciate you guys. We appreciate the Bankless community and the Bankless nation. And, I mean, ultimately, you guys are why we do this.

• 1:24:32David Hoffman?

  Yep.

• 1:24:33Ryan Sean Adams?

  You know, I don't think I would have the energy to continue doing this. I mean, god, how many episodes have we recorded over the past two weeks?

• 1:24:40David Hoffman?

  Over 500.

• 1:24:41Ryan Sean Adams?

  All-time highs.

• 1:24:42David Hoffman?

  Oh, in the last two weeks, yeah.

• 1:24:44Ryan Sean Adams?

  Well, over 500, my god. And by the way, podcasts just hit 30 million downloads too, which is really cool. And we just appreciate knowing you guys are there for us and listening in, week to week, and you guys are the silent ones that reach out when we need help and when we're in crisis. So, we're doing this for you. Wow, I don't have another one to top that, David. I don't know what I'm bullish on compared to that. I'm definitely bullish to the bankless community. I think I'm bullish about an opportunity to rebuild, though. Sort of like, you know, the Dark Lord is Dead kind of idea with Berninski here.

• 1:25:20Ryan Sean Adams?

  I think that SBF and that circle of trader finance, I'm gonna call it finance bros as shorthand, but that whole culture was sort of the last distraction for me that I felt. Like, now it's very clear what's in front of us. We've got decentralized finance, Ethereum and related communities. And then we have, on the other side, we have some of the crypto banks, like the Binance's of the world. And it's these two camps. And not say Binance is always doing bad things, of course. I think they have some crypto values, but they're not building on, yet anyway,

• 1:26:05Ryan Sean Adams?

  on base layer protocols like Ethereum and Bitcoin. And so I feel like the last distraction is gone and we know very clearly what we need to do and how we need to rebuild this industry and revitalize it. That doesn't mean it's going to happen overnight, but you know, I know where I'm gonna be. And I'm just excited to get the last remaining toxicity out. I do feel like we've cut out kind of the final cancer and we are on the road to recovery. And we're in remission right now and you know, things are looking good. Our chances look very good from here on out. So that's what I'm excited about.

• 1:26:44David Hoffman?

  Yeah, and that's what I'm optimistic about. Like, and this is exactly what kind of Chris Berninski was saying. It's like, yeah, we're down bad, but like, it's up only from here. Any worse.

• 1:26:54Ryan Sean Adams?

  That's right.

• 1:26:55David Hoffman?

  So you can only be optimistic.

• 1:26:57Ryan Sean Adams?

  All right, meme of the week. What are we looking at?

• 1:26:59David Hoffman?

  Oh my God, the big short number two, Sam Bankman-Fried, Do Kwon, CZ and Michael Saylor. Oh my God, I hope Michael Saylor actually doesn't get liquidated. That'd be bad for all of us.

• 1:27:09Ryan Sean Adams?

  Oh no.

• 1:27:09David Hoffman?

  Anyways, coming soon to a theater near you. I hope not, but it's a good meme.

• 1:27:14Ryan Sean Adams?

  Guys, you gotta stick around for the moment of zen. It's another song by The Song of Damon. I think he captures the SBF fiasco pretty perfectly. So you're gonna enjoy this. Of course, as always, risks and disclaimers. Crypto is risky, so is DeFi, so is ETH. All of this stuff is, you could 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.

• 1:27:35Speaker 04

  Okay, Sam was having meetings with Gary. Gary used to work for Glenn. Glenn is the papa of Caroline, and she was stripping Sam. It's regulatory capture of the highest degree. Assisted by the New York Times, a congressman at MIT.

• 1:27:56Speaker 05

  Bilateral bespoke, non-reported transactions happening, um, of TX. No one knew how much risk was in that system, um, until it all fell apart. Um, until it all fell apart. Um, until it all fell apart. You've never had, um, customer losses, um, um, until it all fell apart.

• 1:28:17Speaker 04

  Sam was having meetings with Gary. Gary used to work for Glenn. Glenn is the papa of Caroline, and she was stripping Sam. It's regulatory capture of the highest degree. Assisted by the New York Times, a congressman at MIT.

• 1:28:37Speaker 05

  Um, until it all fell apart. Um, until it all fell apart. You've never had, um, customer losses, um, um, until it all fell apart. Um, until it all fell apart. Um, until it all fell apart. You've never had, um, customer losses, um, um, until it all fell apart.