ROLLUP: Ethereum Foundation Sells $100M? | Telegram Founder Arrested | SEC Targets Opensea

Welcome back to the Bankless Friday Weekly Rollup. First up, why Telegram founder Pavel Durov was arrested in France and what it means for the future of privacy. Then, drama at the Ethereum Foundation as they sell $100M worth of ETH. And finally, the latest Wells Notice from the SEC, which company got it? ------ 🌊 KELP | Deposit ETH with Gain today https://kelpdao.xyz/gain/?utm_source=Bankless ------ BANKLESS SPONSOR TOOLS: 🐙KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://k.xyz/bankless-pod-q2 ⁠ 🦄UNISWAP | BROWSER EXTENSION https://bankless.cc/uniswap ⚖️ ARBITRUM | SCALING ETHEREUM ⁠https://bankless.cc/Arbitrum https://%E2%81%A0https//bankless.cc/Arbitrum 🛞MANTLE | MODULAR LAYER 2 NETWORK https://bankless.cc/Mantle 🌐 OBOL | STAKE ON DVs, SCALE ETHEREUM https://bankless.cc/obol 🗣️TOKU | CRYPTO EMPLOYMENT https://bankless.cc/toku ------ TIMESTAMPS & RESOURCES 00:00:00 Start 00:02:22 Markets https://pro.kraken.com/app/trade/btc-usd https://pro.kraken.com/app/trade/eth-usd https://farside.co.uk/?p=1518 https://x.com/tokenterminal/status/1828049589305319792?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g https://x.com/tokenterminal/status/1828049589305319792?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g https://www.growthepie.xyz/fundamentals/total-value-locked 00:06:23 Rate Cuts Incoming https://www.federalreserve.gov/newsevents/speech/powell20240823a.htm https://x.com/RyanSAdams/status/1829156259062501574 00:08:41 Stablecoin ATH https://defillama.com/stablecoins https://x.com/PayPal/status/1828161802208985462 00:13:14 When Pump? https://x.com/2xdog/status/1826460239090385028/photo/1 00:18:42 Telegram Founder Arrested https://x.com/WatcherGuru/status/1827450423608795287?t=9gT6e4AmQL8qHc5gDA0Rrw&s=19 https://x.com/WatcherGuru/status/1827450423608795287?t=9gT6e4AmQL8qHc5gDA0Rrw&s=19 00:21:01 What Are The Charges? https://x.com/Cointelegraph/status/1828915121823068476 https://x.com/RyanSAdams/status/1828122303047033327 00:24:03 Encryption 00:27:47 Takes On This Issue https://x.com/EmmanuelMacron/status/1828077245606342672 https://x.com/VitalikButerin/status/1827602680388239582 https://x.com/Kasparov63/status/1827819652535489007 https://x.com/NoelleInMadrid/status/1827798993017127243 00:30:45 TON's Reaction https://x.com/ton_society/status/1827753299736674599 https://x.com/ton_society/status/1828446248841441467 00:36:36 Mark Zuckerburgs Letter https://x.com/boblatta/status/1828516974269472936/photo/1 00:39:46 Roman Storm's Battle https://x.com/RyanSAdams/status/1828906357723955378 00:46:34 Ethereum Foundation Sold $100M? https://thedefiant.io/news/blockchains/ethereum-community-rattled-by-foundation-s-eth-sales-and-vitalik-s-defi-hate https://x.com/0xstark/status/1828416178194104342 https://x.com/defiignas/status/1827287094705701318?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g https://x.com/defiignas/status/1827287094705701318?s=46&t=2ZINVXJQKx6xO_6Wiiu_2g 00:52:26 Does Vitalik Hate DeFi? https://x.com/VitalikButerin/status/1827583576751181961 https://x.com/kaiynne/status/1821020189594669398 https://x.com/RhettShipp/status/1827911788488487047 https://x.com/haydenzadams/status/1828452122385424718 https://x.com/VitalikButerin/status/1828448417585971661 01:01:51 Sony's Layer 2 - Soneium https://x.com/soneium/status/1826832581897126367 01:03:34 MakerDAO Rebranded To SKY https://x.com/SkyEcosystem/status/1828405625828843710 https://governance.aave.com/t/temp-check-buidl-gsm/18775 01:05:47 Trump Harris Debate https://x.com/disclosetv/status/1828505848504819978 01:06:42 RFK Drops Out https://x.com/watcherguru/status/1827059890549862600?s=46&t=iahr7Lh5v08SSM_Ery-bGw https://x.com/watcherguru/status/1827059890549862600?s=46&t=iahr7Lh5v08SSM_Ery-bGw 01:07:45 Trump NFTs https://x.com/mdudas/status/1828575205276459258 01:09:29 SEC Threatens To Sue Opensea https://x.com/dfinzer/status/1828791832009953706?s=46 01:12:37 Chainbound Raises $4.6M https://x.com/chainbound_/status/1828047583090016308?s=46&t=dAxCjT2P_GIrJMvMgWIpfA https://x.com/chainbound_/status/1828047583090016308?s=46&t=dAxCjT2P_GIrJMvMgWIpfA 01:13:22 Most Unattractive Hobbies... https://x.com/nic__carter/status/1827862983034245338 01:14:50 Moment Of Zen https://x.com/songadaymann/status/1828885208227332591?s=46 ------ Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures⁠

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

• 0:03Ryan Sean Adams?

  Bankless Station, it is the last week of August. It's time for the Bankless Weekly Roll-Up.

• 0:07David Hoffman?

  Telegram founder Pavel Durov was arrested in France. Why? What are the charges? What happened? And what does it mean for the future of privacy with encrypted messaging apps? Also, does the Ethereum Foundation need to be a little bit more transparent when they send $100 million of ETH to Kraken? And why does Vitalik hate DeFi? Or does he maybe not? We'll shed some light on all of this drama.

• 0:28Ryan Sean Adams?

  Also, another week, another nasty gram from our friend at the SEC, Gary Gensler. What lucky company is joining the ranks of companies that are in the targets of Gary Gensler and the SEC?

• 0:41David Hoffman?

  Somebody got a Wells notice? Place your bets. Consider which awesome, compliant, US-based company is now receiving a Wells notice. Place your bets. Think about it. And we'll come back to this later in the show.

• 0:52Ryan Sean Adams?

  Also, consider Gary Gensler's feelings on Pokemon cards and NFTs. Does he think they're securities? And speaking of NFTs, you know, Trump's got a new NFT program he's rolling out. It's like the fourth edition of the Trump card. We'll talk about that.

• 1:04David Hoffman?

  And the maker DAO rebranded into Sky is underway, so we will give our takes and all the information about the change from DAI to USDS and MKR to Sky. Also, Sony introducing their Ethereum Layer 2, built on the OP stack. Where did this come from? Why does Sony need a Layer 2? And also, really bad news for men in the crypto dating department. Yikes, you guys aren't doing so hot.

• 1:30Ryan Sean Adams?

  What do you mean, you guys?

• 1:32David Hoffman?

  You guys.

• 1:34Ryan Sean Adams?

  I'm married, okay? Are you talking to like...

• 1:38David Hoffman?

  I don't want to talk about it. I don't want to talk about it. Moving on.

• 1:41Ryan Sean Adams?

  You don't want to be included in that department. All right. Before we begin, we got a message from our friends over at Kelp Dow. What are they up to?

• 1:48David Hoffman?

  Yeah, Kelp Dow is introducing Gain, a brand-new product to maximize rewards. If you're in the business of points farming, yield farming across all of these different apps, maybe just let Kelp do that for you with their new product, Gain. You can deposit ETH, RSEETH, or other LSTs. You get access to rewards from multiple different Layer 2 networks, other re-staking platforms, DeFi opportunities with a single click. Maybe you're in the trenches and you would like to be a little bit less in the trenches. Gain from Kelp can do that for you. There is a link in the show notes, so you can get started. It's all non-custodial, so you have full control over your assets. You can withdraw at any time. All right, shall we get into prices, Ryan?

• 2:24Ryan Sean Adams?

  Oh heck yeah. So Bitcoin price in the week, what are we looking at?

• 2:27David Hoffman?

  Bitcoin price $60,700, up a half a percent. So call that flat. Currently at $61,000 at the end of the week. ETH price started the week $2,600, down 1% to $2,590. Also lost $10.

• 2:42Ryan Sean Adams?

  Flat.

• 2:43David Hoffman?

  Call it whatever.

• 2:44Ryan Sean Adams?

  So flat.

• 2:45David Hoffman?

  Call it whatever. And on the ETF inflows or outflows, we are actually on inflows as of the last, yesterday. So for the first day in two weeks.

• 2:55Ryan Sean Adams?

  We got, you're celebrating one day of inflows, net inflows for Ethereum?

• 2:59David Hoffman?

  We are on a one day streak.

• 3:02Ryan Sean Adams?

  Okay.

• 3:02David Hoffman?

  Could be also two at the end of today. Could be two. The day of recording on Thursday. So yesterday, the 28th, we had $5.9 million of net inflows, 8.4 million into BlackRock, 3.8 million out of Grayscale. Fidelity got 1.3 and everyone else is basically still.

• 3:21Ryan Sean Adams?

  I mean, there's no way to sugarcoat this. No way to sugarcoat this. The ETH inflows haven't been great. ETH ETF inflows have not been great yet. So we're still at negative.

• 3:29David Hoffman?

  Still turning around. I'm still, I'm still holding up hope.

• 3:31Ryan Sean Adams?

  Still early.

• 3:31David Hoffman?

  It's still, it's under a month.

• 3:33Ryan Sean Adams?

  So early.

• 3:33David Hoffman?

  Still under a month.

• 3:34Ryan Sean Adams?

  Did you check out Bitcoin this week too? It had some pretty red days, like the 28th and 27th this week.

• 3:39David Hoffman?

  Bitcoin is at a zero day streak. Yeah. Well, okay. So for the last four days, the 23rd, 250 in, 26, 200 in, 27, 127 out, the 28th, 105 million out.

• 3:52Ryan Sean Adams?

  Yeah. So some rough days. Maybe those diamond hand institutional buyers aren't so diamond hand, David. They're, they're getting a little bit weary.

• 4:00David Hoffman?

  Turns out all of the ETF buyers are just us in our retirement accounts. Turns out that's just our money.

• 4:06Ryan Sean Adams?

  Well, thanks to Kraken for those charts. Obviously we use Kraken Pro and the Kraken Exchange for all of our crypto trading, don't we? And thanks to Kraken for sponsoring Bankless for as long as they have. Let's turn it to layer twos for a quick update. Base is absolutely running away with layer twos from, from this metric, which is monthly active user addresses. So this blue line is base and it is just climbing.

• 4:32David Hoffman?

  It's the only one that's going up.

• 4:34Ryan Sean Adams?

  Yeah. Hockey stick growth. What are some of the stats here? Let me see. So.

• 4:39David Hoffman?

  13.4 monthly million active addresses, up 20% month over month, up 1,300% year over year. That 13.4 million monthly active is compared to Arbitrum's 3.5, Linnae's 1.3 and Optimism's 1.

• 4:54Ryan Sean Adams?

  There was a question of how much of this is like Sybil. So Travis Kling asked in this chart, isn't this skewed by Sybil farming, industrial grade Sybil farming, airdrop farming? What if I told you 10 entities controlled more than half the wallets? And Token Terminal replies-

• 5:10David Hoffman?

  That has been the entire paradigm of all address-based metrics.

• 5:14Ryan Sean Adams?

  Sure.

• 5:14David Hoffman?

  We've always known. It's all been like that since I've ever gotten into crypto. We've known this.

• 5:17Ryan Sean Adams?

  Yes, yes. And also, the data that we just quoted is from Token Terminal. That tries to screen some of that noise out. So the reply here-

• 5:24David Hoffman?

  I did not know that they did that.

• 5:25Ryan Sean Adams?

  Yeah. Good old Token Terminal, the building behind the scenes. The above chart takes into account unique fee-paying addresses, does not consider whether those addresses are controlled by one or many IRL entities. So they do unique fee-paying addresses, but like, I guess, they, they, you know, they don't always know. Oh, but they do say, please share a list of the 10 entities and we'll disclude them. So if they find out that you're Sybil farming-

• 5:49David Hoffman?

  They're calling Travis out, so he's like, oh, so you know those 10 addresses? Send them our way.

• 5:52Ryan Sean Adams?

  Yeah, yeah, yeah, yeah. That's monthly user addresses, which is one metric. Another, though, is total value locked. And here Arbitrum still reigns supreme. They're crushing it.

• 6:03David Hoffman?

  Yeah, gargantuan. Yeah, $15 billion in Arbitrum, followed by Basis 6, followed by Optimism's 5.5, followed by Blast 1.5.

• 6:13Ryan Sean Adams?

  Yeah. So, you know, another metric to look at, of course. Where's our friends over at Mantle?

• 6:18David Hoffman?

  There are five, there are five Layer 2s with $1 billion. Mantle's the next one at $1.1 billion.

• 6:23Ryan Sean Adams?

  All right, let's talk about Trad Markets for a second. Jerome Powell is signaling that rate cuts are all but inevitable. This is kind of what we expected, but he made a speech this week, and he noted a few things, that inflation has dropped from a peak of 9.1% in mid-2022. Do you remember it was at 9.1%? That was crazy. To 2.9% last month. And both are edging closer to the 2% target, of course. And he adds this, "We will do everything we can to support a strong labor market." So notice that, the strong labor market. I think that indicates that they're shifting their focus from inflation to jobs reports and jobs numbers, the labor market. He also said this, this is a direct quote, "With an appropriate dialing back of policy restraint..."

• 7:07Ryan Sean Adams?

  There is good reason to think that the economy will go back to 2% inflation while maintaining a strong labor market. He's basically saying, I'm going to dial things back. Inflation's going to be fine and also jobs will be fine. So that's next. That's going to happen in September. It's all but inevitable. I think a lot of macro folks are saying inflation is no longer the thing that you should be looking at with respect to Fed policy decisions. You know, everyone's trying to prognosticate and try to predict what Powell and the Fed are going to do next. But really, the numbers we should be looking at are coming out of the jobs reports. So jobs numbers are now the new inflation, like more important in determining the Fed's next move. So I feel like we might need to incorporate some jobs numbers into this TradFi update macro section moving forward.

• 7:52Ryan Sean Adams?

  So I asked, like, what are the best job numbers to track? So maybe we'll include some of that moving forward. So that's what's happening on the Fed side. Looks like easy money is back on the menu.

• 8:01David Hoffman?

  Also, this happened towards the beginning of this week, which is where we saw like some price increases across the board. Like each got almost up to $2,800. Bitcoin got up to like $65,000. So we saw the price action respond here, both in equities and in crypto markets. But I think people are like, my suspicion is that they are going to cut slowly. It's going to be a slow move, not whiplash, because they learned their lesson last time. It's going to be a slow cut. So people got really excited, but then they realized that, you know, okay, it's going to be the easy rate cut cycle era, but it's going to not happen all at once. That's my indication of the market. Anyways, more into the crypto side of markets. Stablecoin. Stablecoin supply is almost, almost at all time high.

• 8:46David Hoffman?

  It almost grew a whole 1% over the past week to $169 billion, almost there. USDT tether has grown 28% this last year from 91 and a half billion to 117 billion. USDC grew 44% this last year from 23.8 to 34.4. Stablecoin supply, to me, paints the floor for fundamentals and valuation for all our other crypto assets. As this number goes up in price, to me, the floor price of crypto assets also goes up in price. So just really strong growth out of stablecoins.

• 9:23Ryan Sean Adams?

  Yeah, it's good for DeFi. David, you want to hear a fun fact?

• 9:27David Hoffman?

  Always.

• 9:28Ryan Sean Adams?

  So, okay, Warren Buffett, you know, he's been selling his stocks and stacking, you know, dollars, basically. He sold more B of A stock, Bank of America stock, yesterday. He has now, now he has about two stablecoin market caps worth of cash, sitting on the Warren Buffett balance sheet.

• 9:45David Hoffman?

  That is not a fun fact. That's not a fun fact. I don't enjoy that fact at all.

• 9:48Ryan Sean Adams?

  Almost $300 billion Warren Buffett has.

• 9:52David Hoffman?

  I thought you were gonna tell me he was gonna say he had just started buying stablecoins for some reason. I was like, that is a fun fact.

• 9:57Ryan Sean Adams?

  He could. He could convert all of that to stablecoins and like, and tokenize treasuries and Bittelfund.

• 10:03David Hoffman?

  He could corner the stablecoin market.

• 10:07David Hoffman?

  Okay, here's what an actual fun fact is.

• 10:09Ryan Sean Adams?

  Okay.

• 10:10David Hoffman?

  PayPal's PYUSD hit $1 billion in market cap. Congratulations to PayPal's PYUSD. Well done.

• 10:17Ryan Sean Adams?

  What if people don't know what PYUSD is? It's a stablecoin, right, from PayPal?

• 10:21David Hoffman?

  Yeah, PayPal, yeah, PayPal's stablecoin. It has doubled its supply since June. Monthly active wallet addresses of PYUSD was at 25,000 in July, and it's been up from 9,400 in May. So getting some traction, actually mostly on Solana. It went from zero to $650 million of stablecoin supply on Solana in the last three months, which is closing in on Tether's supply on Solana. Mostly, apparently allegedly caused by incentives, Commando Drift and MarginFi introduced boosted rewards for PYUSD. So when you incentivize things, it happens. But yeah, PayPal, PYUSD, cornering part of the stablecoin Solana market.

• 11:03Ryan Sean Adams?

  David, I've heard Nick Carter say this.

• 11:05David Hoffman?

  Why are you laughing?

• 11:06Ryan Sean Adams?

  Oh, just because you said, when you incentivize things, they happen. And I just thought, that's brilliant.

• 11:16Ryan Sean Adams?

  Also, I was gonna bring up the fact, so Nick Carter has told us, and so did Austin Campbell, when we had him on the podcast, by the way, that episode's gonna come out later with Austin Campbell. It's a great episode.

• 11:26David Hoffman?

  Super good episode. So good.

• 11:28Ryan Sean Adams?

  More than stablecoins, it was just like about, yeah, how to talk-

• 11:31David Hoffman?

  Going back to the roots.

• 11:32Ryan Sean Adams?

  Yeah, how to talk to sort of like the normie on the street in the US, and you know, like, explain- Why crypto is actually good. Anyway, that aside, they both have said things like PY, PY USD, PayPal's stablecoin is actually better in some ways than USDC. Certainly not from a liquidity profile.

• 11:48David Hoffman?

  Better from like an investor protections, consumer protections point of view.

• 11:52Ryan Sean Adams?

  Yeah, and they can explain this better, but it's because it's like segmented in a trust. And so like it's, it's, it's, it has the settlement guarantees almost like cash in your pocket. It's like a true bear instrument. And if PayPal goes bankrupt or anything else going like bankrupt, unless the US government literally goes bankrupt and then we're all screwed, it's redeemable, right? So which is maybe it's not as clear what would happen in the case of like a circle bankruptcy or something crazy of what would happen to USDC. I think that's some of the additional settlement guarantees that you get with PayPal's stablecoin.

• 12:26David Hoffman?

  Yeah, to further illustrate that point, like your dollars in your Wells Fargo or your dollars in fintech PayPal are an IOU. This is how banking works. We know this. Stablecoins are better than the, those banking in terms of a bankless life, like using bankless tools, it's pure like USDC tether. Stablecoins are better because they're one to one backed, right? Like there's not risky lending going on in the background. But PY USD is even better than the typical stablecoin because of an additional like legal protection wrapper in how it becomes tokenized in the first place.

• 12:59Ryan Sean Adams?

  Yeah, it's even better according to them than FDIC insured like dollar in your bank account.

• 13:03David Hoffman?

  It's like the most bank minimized stablecoin on existence, other than DAI, which DAI this week actually became a little bit less bankless. We'll talk about that later.

• 13:14Ryan Sean Adams?

  Yeah. All right. So people are getting this point of the episode and they're like another flat week, you know, another bankless roll up. When? Pump David. Okay.

• 13:23David Hoffman?

  Another bankless roll up.

• 13:24Ryan Sean Adams?

  Here's, here's some optimism for you. Hunt for green October. So historically, I guess we got to skip all the bankless roll ups in September. But historically, you come back in October, we're going to be up. All right. We're going up in October because historically the most bullish month for Bitcoin has been October. Average price performance, second half of the year, 20% for October. It's negative 6% in September and then plus 6% in November and then plus 10% in December. So really where you want to be is the back quarter of the year. The last three months of the year is going to be good for crypto. You believe this?

• 14:05David Hoffman?

  I mean, I think so. This isn't like my kind of like charting, but like I'm not going to disagree with the facts here.

• 14:12Ryan Sean Adams?

  Why would you ever disagree with something bullish, right?

• 14:15David Hoffman?

  I'm just looking, I'm looking back at 2017, dude, when I got into crypto. I got into crypto in June, July of 2017. In June, July, it was 9% and 15%, so pretty green months. That's where I like got into it. In October, October, it was up 50%, 53%. In November, it was up 51%. And in December, it was up 45%. 53, 50% months in a row. I just remember that time and I was like so euphoric and just like high on crypto, learning about crypto, like smart contracts and blockchain. I remember the very distinct time in my life.

• 14:50Ryan Sean Adams?

  You think you'll ever feel that euphoria again?

• 14:52David Hoffman?

  No, that's a one, that's like, you only get to do college once. You only get to play Dark Souls for the first time once and you only get to get in crypto for the first time.

• 15:01Ryan Sean Adams?

  Yeah, there's only, for me, it's only one viewing, the first viewing of Lord of the Rings, you know, and then after that.

• 15:06David Hoffman?

  You only get to do it for the first time once.

• 15:07Ryan Sean Adams?

  Second and third viewings annually, of course, in my case. David, we got a lot more coming up. So France has accused the Telegram founder of helping with organized crimes and arrested Pavel Durov. So what does this mean for digital privacy? What does this mean for digital rights? Also, there's some drama around the EF Foundation selling 100 million Ether. You were talking about it in the intro. And there's this rumor, there's this idea that suddenly Vitalik hates DeFi. We'll get into all that and more.

• 15:35David Hoffman?

  Suddenly. It just happened out of nowhere.

• 15:39Ryan Sean Adams?

  All that and more, but before we do, we want to thank the sponsors that made this episode possible, including our recommended exchange and the place to get prepared for a Q4 of 2024 that's going to be absolutely explosive. That is Kraken. If you don't have an account, go get yourself an account.

• 15:55David Hoffman?

  If you want a crypto trading experience backed by world-class security and award-winning support teams, then head over to Kraken, one of the longest-standing and most secure crypto platforms in the world. Kraken is on a journey to build a more accessible, inclusive, and fair financial system, making it simple and secure for everyone, everywhere, to trade crypto. Kraken's intuitive trading tools are designed to grow. With you, empowering you to make your first or your 100th trade in just a few clicks. And there's an award-winning client support team available 24/7 to help you along the way. Along with a whole range of educational guides, articles, and videos. With products and features like Kraken Pro and Kraken NFT Marketplace and a seamless app to bring it all together, it's really the perfect place to get your complete crypto experience. So check out the simple, secure, and powerful way for everyone to trade crypto,

• 16:40David Hoffman?

  whether you're a complete beginner or a seasoned pro. Go to kraken.com/banklist to see what crypto can be. Not investment advice, crypto trading involves risk of loss. The Obol Collective is up and running and is maybe one of the most important collectives that you've never heard of. Obol is bringing Distributed Validators, or DVs, to the Ethereum staking stack. Distributed validators allow multiple parties of people running multiple nodes to create a single virtual Ethereum validator together. This makes participating in Ethereum consensus more accessible, more affordable, and more inclusive. It is a strict improvement to the Ethereum staking tech stack. With collaboration from Lido, EtherFi, Eigenlayer, and 50 other entities and thousands of individuals, the Obol Collective is working to scale and decentralize Ethereum using DVs.

• 17:22David Hoffman?

  And now you can get involved, introducing the Obol Contributions Program. Visit obol.org/banklist to stake on DVs either through a partner staking protocol or at home. Earn access to future governance and ownership in Obol while contributing to retroactive funding for projects that are actively decentralizing Ethereum. This is your opportunity to secure inclusion in one of the most important projects, working to scale Ethereum's foundation for future growth. Visit obol.org/banklist to get started. That's O-B-O-L dot org slash banklist. The Uniswap extension is here. The self-custody wallet, created by the most trusted team in DeFi, Uniswap Labs, designed to make swapping feel effortless. This extension lives in your browser's sidebar, letting you swap, sign transactions, and send or receive crypto without ever losing your place on the internet.

• 18:07David Hoffman?

  Plus, with human-readable transaction messages, you'll always know exactly what you're signing. Navigate a multi-chain world effortlessly with support for 11 chains like Ethereum Mainnet, Base, Arbitrum, and Optimism. No more chain switching or token importing. All your assets are right where you need them to be. The Uniswap extension is designed to level up your swapping. Experience with other Uniswap Labs products as well. Easily onboard to the extension using the Uniswap Mobile Wallet to begin managing your assets across platforms. And take advantage of smooth seamless synergies with the Uniswap web app. So go and download the Uniswap extension today by clicking the link in the show notes. Just another way Uniswap is helping you swap smarter. Telegram founder Pavel Durov arrested in France this week, Monday this week. Pavel was placed in custody by agents of France National Anti-Fraud Office.

• 18:51David Hoffman?

  According to French News, this TF1, he was arrested at the airport and was subject of a search warrant for OFMIN. Sounds like some France, you know, alphabet agency. It's an investigative agency which combats child exploitation in France. Okay, so what are the charges? The French judge put Durov under formal investigation in a probe into organized crime on the messaging app Telegram. He was granted bail, which he used on the condition that he pays 5 million euro, reports twice a week to police and does not leave French territory.

• 19:24Ryan Sean Adams?

  This is getting out of jail on bail right now. I'm showing that on screen. It looks like he's being asked for it.

• 19:30David Hoffman?

  He can totally afford 5 million dollars. That is not a concern for him.

• 19:34Ryan Sean Adams?

  It's like 15 billion dollars net worth. Anyway, go on.

• 19:37David Hoffman?

  Yeah, yeah, he's doing great. The charges: complicity in selling child sex abuse material, drug trafficking, fraud, abetting, organized crime transactions, refusing to share information or documents with investigators when required to by law. The French judge said in the statement that Telegram has been used in various criminal cases but almost entirely ignored judicial requisitions. Other French investigation services and public prosecutor offices, like the Belgian ones, shared a very similar observation. This prompted the Paris Prosecutor's Organized Crime Office to open a probe into possible criminal liability of the managers of this messaging service in the commission of these offenses. This probe began in February. Okay, so what does it mean for Durov now? He is being placed under formal investigation in France.

• 20:23David Hoffman?

  It does not imply guilt? Or does it necessarily lead to a trial? The only thing that we know is that the judge has considered that there is enough evidence to proceed with a probe, so the probe shall go on. This investigation could perhaps last years or sent to trial or shelved. But that's kind of where we are.

• 20:42Ryan Sean Adams?

  This really surprised me. I was shocked. I think a lot of people were shocked by this. We actually had reached out and tried to get Pavel on the podcast not too long ago. You know, apparently he's a very difficult person to contact, I think, because he has these types of security.

• 20:58David Hoffman?

  Perhaps, yeah, when you're getting probed, yeah, you don't want to go on a podcast.

• 21:01Ryan Sean Adams?

  Did you read? So this is the English translation of the actual letter for the prosecution of Pavel. So I don't know how many, there's like, I don't know, 13 or so charges here, these complicity charges. Like complicity in fraud in an organized group, but some of these last ones, like, you know, you mentioned the child sex trafficking, child pornography type things, illegal drugs, all of the sales complicity in those things, not him actively doing it. But because Telegram hosts rooms where people were allegedly doing these things, then he is culpable according to these charges. And also just generic things like this, David, providing cryptographic services designed to ensure confidentiality functions

• 21:45Ryan Sean Adams?

  without proper declaration in accordance with the laws? What the hell does that mean? You're just providing encryption?

• 21:52David Hoffman?

  They're trying to regulate math is what that sounds like.

• 21:55Ryan Sean Adams?

  It sounds like a Gary Gensler, just come in and like register your encryption service. What?

• 22:00David Hoffman?

  Serge, you have a license for that math?

• 22:02Ryan Sean Adams?

  Seriously, providing cryptographic services ensuring only authentication functions or integrity control functions without prior declaration in accordance with the law to use encryption? What is this? Another charge, importing cryptographic services ensuring only authentication functions or integrity control functions without prior declaration in accordance with the law? I mean, this seems like it's more than just like, you know, drugs and like money laundering charges of people. People, by the way, not Pavel, but people using his app doing these things. And the charge is basically that Telegram should be present and monitoring all of the Telegram users or cost a billion different users in all of the groups and making sure that this stuff doesn't happen.

• 22:46Ryan Sean Adams?

  It's also, it seems like some of these charges are specifically about Telegram using some encryption type services. And it should be told that Telegram does not use end-to-end encryption on all of its chat rooms, right?

• 22:59David Hoffman?

  It's not perfect secrecy. It's not perfect encryption.

• 23:01Ryan Sean Adams?

  Yes, and this has been a criticism of Telegram, I think is like, um, pretty valid and, and, um, like, pretty warranted. Like Signal, for, for instance, does provide end-to-end encryption. So this means that if there was a-

• 23:12David Hoffman?

  Signal does not know what you're saying inside of Signal. They don't know.

• 23:15Ryan Sean Adams?

  Right. So this is a criticism, but yet, but yet, when I read those generic charges, right? The concern here is that, um, this seems to be a throw everything at them, see what sticks. And these same charges could be applied to like any Messenger app, like a Signal, for instance.

• 23:31David Hoffman?

  Anything, anything with encryption, yeah.

• 23:33Ryan Sean Adams?

  Yeah. I mean, did Signal come in and like register, provide cryptographic services designed to ensure confidentiality? Like, did they do that in France?

• 23:42David Hoffman?

  Providing cryptographic assurances to, uh, services to provide confidentiality? If that was like listed in like this iOS app, like feature button, I'd be like, oh, sick, download, like, use it.

• 23:54Ryan Sean Adams?

  It's, it's scary. It's, I, I think it's scary. I think that this is a, like a major sort of war on encryption, uh, prong. And a lot of people see it as such.

• 24:03David Hoffman?

  Just a little bit more about, uh, the architecture of Telegram. For those that don't use it, much of, much of the crypto industry runs on Telegram, like, I have so many Telegram groups, I use it every single day. It allows for one-to-one conversations. It also allows for group chats that lets, uh, it also allows for chats that have channels for one-to-many broadcasting. Up to 200,000 people, uh, compared to the maximum of a thousand for WhatsApp. And so there have been some concerns that you can spread misinformation this way. End-to-end encryption is not available for group chats and channels. End-to-end encryption. There is a privacy mode in Telegram where you can start a, uh, an encrypted chat, a private chat with you and whoever's on the receiving end.

• 24:43Ryan Sean Adams?

  Just private DMs, me and you, we could do that, right?

• 24:45David Hoffman?

  Private DMs, yeah. Not, not end-to-end encrypted, uh, uh, but, uh, that it is, it is possible. But then the default mode of Telegram is, uh, I think, I'm, I, the way I think this works is like, default mode is actually like, they do, are able to see the contents. Like they can review-

• 25:03Ryan Sean Adams?

  So Telegram, the company can, or any government agency that's spying on Telegram and like requesting their data set and Telegram submits it to them, can like see all of the chats in Telegram, basically. That's not, you know, like encrypted.

• 25:16David Hoffman?

  So generally, my rule of thumb when it comes to subjects like this is that if it can be regulated or controlled, then it should be regulated or controlled. And this is what differs from Signal, in my mind, where Signal has built a structure where they literally cannot see what is going on there on the inside of the conversation. And so in my mind, Signal and Signal founders are not beholden to the activity of the people using their tech platform. If you, as a organization, can see conversations and see image files being sent around and then it's child porn, to me, that's a different story. How do you feel about that take?

• 25:53Ryan Sean Adams?

  Okay, so I think part of that take is reasonable and part of it's not. All right, so here's the part that's not reasonable from my perspective is like, okay, so the answer is just they yoink the guy and just like go directly to jail and here's all of these charges?

• 26:06David Hoffman?

  Yeah.

• 26:06Ryan Sean Adams?

  Like, that's a piece.

• 26:07David Hoffman?

  Yeah, I'm not agreeing with that at all.

• 26:09Ryan Sean Adams?

  And now they're also saying, like, he hasn't been cooperative and all of these things. So it's just like, I don't know, maybe this is the last escalation, so you could kind of defend that. But also, look at the charges, David. Look, some of these are just, some of these charges could be directly applicable to what you just said, which is the use case of Signal.

• 26:27David Hoffman?

  Right.

• 26:28Ryan Sean Adams?

  And also, there's the broader context of this. If you step back and look at the components of a free society, right? We need some sort of chat function between citizens that allows us to share information. There's all sorts of, ignoring the illegal activity, there's all sorts of information that's being shared, front lines of the war, for instance, things that get censored in other places, things that maybe the state doesn't want you to say. I mean, in any free society, you need cloisters that are hidden from the eyes of the government. Like, I think that that's an important function. And so... I don't know. If not Telegram, then where?

• 27:13Ryan Sean Adams?

  I mean, a billion, basically, the inverse of this. Basically, the government's saying, no, Pavel should have had a watcher, spies, inside of every private Telegram group inside of its app, reporting illegal activity to us. That's kind of the inverse of that. When you say it like that, I mean, that doesn't sound like a good equilibrium either, does it? So I hear what you're saying, and I hear that argument. And also, I don't like where this is going, is what I would say.

• 27:44David Hoffman?

  Yeah, the trend is not, is not healthy, for sure.

• 27:47Ryan Sean Adams?

  Let's get to some comments. So this is the president of France, Macron. He says, "I have seen false information regarding France following the arrest of Pavel Durov." So there's a lot of bad press. He says, "In a state governed by the rule of law, freedoms are upheld within a legal framework, both on social media and real life, to protect citizens and respect their fundamental rights." He says, basically, this is the judiciary, fully independent. This is not political. This is not driven by France for some sort of, you know, like, political means to arrest him.

• 28:18David Hoffman?

  Here's a funny tweet that we read. "Imagine you own a large apartment complex. France says, 'is a legal requirement for you to put microphones in every room and let us listen.' And you say, 'No, people should be able to have private conversations,' and then you become arrested." That is the digital equivalent to what just happened to Pavel Durov. Vitalik, who says, "I've criticized Telegram before for not being serious about encryption, but, given the info available so far, the charge seems to be just being unmoderated and not giving up people's data. This looks very bad and worrying for the future of software and comms freedom in Europe."

• 28:54Ryan Sean Adams?

  This is Gary Kasparov with an alternative take. He says, "There's much to learn about Durov's arrest, but my first thought is not dependent on supposition or motivations. As admitted by Kremlin propagandists, Telegram is widely used by the Russian bureaucracy and military, so it has been used for acts of war and war crimes in Ukraine." He goes on and says, a full thread, but it's basically, "Durov is not the person you think he is. Don't hold him up as a martyr or a hero." And by the way, we don't know. Maybe he was working with like the Russians. Maybe he's a KGB agent, right? There's some of that that's being injected here as well in the conversation. Like, who knows at this point?

• 29:32David Hoffman?

  An interesting tweet from Noel Atchison says, "This is not about Telegram censorship. It's worse. It's about privacy. Durov's arrest is the latest and perhaps most blatant example to date of the role of layers in narrative misdirection." And she makes a couple of points here. "Authorities want to suppress certain channels and contributors, but reports suggest that the investigation was focused on the lack of moderators. This suggests that the issue is not about censorship, but responsibility." And also second, "Authorities insist on having access to chats of political activists and military groups so that their intentions can be known ahead of time and their actions diverted." What's more, it's starting to feel blatant. The authorities don't seem bothered by how this looks. They're counting on the majority not caring as much as long as they feel safe.

• 30:11Ryan Sean Adams?

  That's sad.

• 30:12David Hoffman?

  So kind of calling out the French like leadership, saying like, "This is bullshit. You guys are doing this for your own political motives."

• 30:21Ryan Sean Adams?

  Yeah. And before, by the way, we throw France too under the bus. There was also speculation that some of this could be motivated by the US. The US basically saying, "Hey, like, go do this." Like, who knows what goes on behind closed doors? But the broader point here is like, sometimes when you hear moderation, right? That can just be state speak for censorship. And it's like, some of these things are like, used one in the same. Telegram has a blockchain. They have a Layer 1 blockchain called Ton. What was the Telegram chain's reaction to this? What happened?

• 30:54David Hoffman?

  So the Ton community rallied, of course. There is a Ton Society Twitter account, which is like, call it the Telegram blockchain community. "We've updated the Ton coins logo and profile picture across the Ton community channels to the global symbol of the digital resistance, the resistance dog." Why a dog? "In 2011, Pavel Durov was ordered to eradicate the posts of liberal thinkers and dissidents at his previous company, which was a social media platform in Russia." I can't pronounce the name. It's basically the Facebook of Russia. "In response to this, Pavel posted a picture of his dog refusing to silence anyone on his platform." The Ton Society announced an open letter mini-app. They issued an open letter to French authorities requesting the immediate release of Pavel

• 31:39David Hoffman?

  Durov. Anyone can sign it on the Telegram app. And it's accrued 1.48 million signatures so far. So that's kind of cool when you have the distribution to do that.

• 31:51Ryan Sean Adams?

  I mean, that's a good point earlier. Like Pavel's history, my impression was always that the Russians were kind of out to get him. I mean, that's why he had to sort of like free Russia. He became a citizen of France.

• 32:00David Hoffman?

  He made a social media platform in Russia. He made a social media platform, had to leave Russia in 2011 because if you, if you get too much power in Russia and you're not part of like the inner circle.

• 32:13Ryan Sean Adams?

  Yeah. If you're not censoring things, like that's a problem for the Russian oligarchy.

• 32:18David Hoffman?

  Yeah. Like to capture power in Russia, you need to have that like approved by the oligarchs. And so I think he was like more or less an outsider, not kind of playing by these rules. And so he had to leave. He now is based in Dubai. Part of the story was that he was traveling to France with this like model that was like, babe, let's go to France.

• 32:37Ryan Sean Adams?

  He was like catfished, posting location kind of thing. I saw this.

• 32:41David Hoffman?

  Well, that's the conspiracy was that she was posting like, you know, pictures of them and it had all the geolocation data. And so like she was just like allowing him to be traced all around France. He was arrested at the airport. So like they were going to get him there anyways. But yeah, the joke is like, he just fell in love with his like model who was like, babe, let's go to France. And then he gets arrested in France.

• 33:01Ryan Sean Adams?

  And there's also conspiracies wrapped in the conspiracy. Like maybe he intended to get arrested for some reason.

• 33:06David Hoffman?

  I have not heard of those.

• 33:07Ryan Sean Adams?

  Oh, you've not heard that? Okay. Like you gotta go deeper, David. There's always a level deeper. So we don't know yet. But we do know, back to the Ton community and the Ton chain. Unfortunately, the Ton network stopped producing blocks a couple of times this week.

• 33:21David Hoffman?

  Probably, probably completely unrelated. I am pretty sure this is completely unrelated.

• 33:26Ryan Sean Adams?

  Yeah, this was result. Well, maybe it was related in a way. This was the result of network overload caused by high number of dog transactions. Maybe the dog transactions were related to the new like dog insignia and Stan.

• 33:37David Hoffman?

  A meme coin launched on Tong called Dogs as a result of the founder getting arrested. The Ton validators were overloaded, causing them to elude consensus, took the chain down. So I guess it is related. It is not coming from like, this is not a state sponsored attack of Telegram. This is just a brand new, brand new blockchain with, you know, like not perfect consensus.

• 33:58Ryan Sean Adams?

  Are you sure about that?

• 33:58David Hoffman?

  And doesn't have much Lindy.

• 34:00Ryan Sean Adams?

  We could go deeper in the conspiracy.

• 34:03David Hoffman?

  I'm the conspiracy one. I lead us, I lead us down the holes. You don't lead me down the conspiracy holes. I lead you down the conspiracy holes.

• 34:09Ryan Sean Adams?

  I think Macron decided to launch this meme coin at just this time to take down the Ton network. Stop it producing blocks. One learning lesson from this is like, hey, layer ones are hard. Keeping them up is very difficult, right? I mean, so, you know, like Ton is-

• 34:24David Hoffman?

  Especially if you don't have a spec or you're a single client blockchain.

• 34:28Ryan Sean Adams?

  Hey, now's not the time, David. I'll save that for another week. Let's talk about the Ton-

• 34:32David Hoffman?

  The importance of multi-client blockchains is always the time to talk about multi-client designs. It is always okay to talk about that.

• 34:40Ryan Sean Adams?

  Ton price is down as well on the week as you'd expect. I mean, like, not a massive cut. I mean, we're back to-

• 34:46David Hoffman?

  25%?

• 34:47Ryan Sean Adams?

  Yeah, okay.

• 34:48David Hoffman?

  I mean, that's just like, it's one bad day, you know?

• 34:51Ryan Sean Adams?

  I've seen worse.

• 34:51David Hoffman?

  What's one bad day?

• 34:52Ryan Sean Adams?

  We're back to April. That's where we're back to, from a price perspective. I think something that's related to this is the question of like, who's next? So I tweeted this out, it was on my mind, arresting Pavel is just a step or two removed from arresting Elon Musk, or Mark Zuckerberg, or Sam Altman, or Talib Buteran? I said a step or two removed, before you think I'm going to hyperbole, because there are still some steps that need to be completed there. But, we're getting closer, we're getting into that vicinity, and-

• 35:23David Hoffman?

  So Elon on X is like blatantly pro-right, pro-MAGA, pro-Trump, anti-Kamala, anti-Democrats. And then like, something like this happens, and I'm like, oh, that makes sense.

• 35:36Ryan Sean Adams?

  Well, look at the charges, right? So like, you could say, I'm sure there's somebody in some dark corner of Twitter, it probably wouldn't take long to find, that is doing like, quote-unquote, illegal stuff, right? Maybe sharing like, images they shouldn't, maybe doing like, drug deals. I'm sure there are corners-

• 35:51David Hoffman?

  There's plenty of porn on Twitter.

• 35:52Ryan Sean Adams?

  Right? Okay, but like, there could be stuff that Elon's not monitoring, right? And if it just takes this- I mean, you have a, Balaji made this point. He's like, Emmanuel Macron has a, you know, like, population of France of what, I don't know, population of France, you could look this up. I'm gonna say 70 million people, something like this. Does he know what's going on in the dark corners of, like, Paris streets? Is he monitoring that? Or is there illegal activity going on? You know, it's kind of like a network state thing of, is it unreasonable to expect the monitoring, the continuous monitoring of every single chat, every single tweet that's going on inside the platform? I think that's a, that's a question for, like, that all open societies need to go, like, think about and consider. Anyway, related

• 36:37Ryan Sean Adams?

  but unrelated to this, maybe, Mark Zuckerberg sent a zinger to the Biden-Harris administration.

• 36:43David Hoffman?

  Oh my god, this was so good.

• 36:45Ryan Sean Adams?

  Okay, so, did you read this letter? This is to Jim Jordan, the chairman. Yeah, why don't you summarize this for us? This is from Mark Zuckerberg.

• 36:53David Hoffman?

  Yeah, so he was talking, he was reflecting on some decisions that he made in 2020 and 2021 about Facebook and the pandemic and COVID, like, well into the pandemic after it had started to become very politicized. He said, "In 2021, senior officials from the Biden administration, including the White House, repeatedly pressured our teams for months to censor certain COVID-19 content, including humor and satire, and expressed a lot of frustration with our teams when we didn't agree. Ultimately, it was our decision whether or not to take content down, and we own our decisions, including COVID-19-related changes we made to our enforcement in the wake of the pressure. I believe the government pressure was wrong, and I regret that we were not more outspoken about it. I also

• 37:36David Hoffman?

  think that we made some choices that, with the benefit of hindsight and new information, we wouldn't make today. Like I said to our teams at the time, I strongly feel that we should not compromise our content standards due to pressure from any administration in either direction. We are ready to push back if something like this ever happens again."

• 37:52Ryan Sean Adams?

  Wow.

• 37:52David Hoffman?

  And then he also cited, "In a separate situation, the FBI warned us about a potential Russian disinformation operation about the Biden family." In the lead up to the 2020 elections, that fall when we saw a New York Post story reporting on corruption allegations involving then Democratic presidential nominee Joe Biden's family, we sent that story to fact checkers for review and temporarily demoted it while waiting for a reply. It has since been made clear that the reporting was not Russian disinformation. And in retrospect, we should not have demoted the story. We've changed our policies and processes to make sure that this doesn't happen again. For instance, we are no longer temporarily demoting things in the United States while we wait for fact checkers.

• 38:32Ryan Sean Adams?

  Wow. I mean, this is hard, right?

• 38:33David Hoffman?

  Yikes.

• 38:34Ryan Sean Adams?

  Basically, like that word that you used earlier, like misinformation, right? That's another like state speak type word, which is like, if they don't like something, it could be misinformation, basically.

• 38:46David Hoffman?

  Right. Yeah.

• 38:47Ryan Sean Adams?

  And so when you start having the nation state and White House officials telling social media companies what should be censored or like demoted and what shouldn't be, I mean, that's a...

• 39:04David Hoffman?

  Yikes, bro. Yikes, bro. And it's one thing for the United States to have that happen inside of the United States because I believe in our court system eventually to slowly come to like agreement with truth and the Constitution. But I have no such assurances for like France. I don't have any assurances that France will do that.

• 39:23Ryan Sean Adams?

  He's also, this is also a shot across the bow, I think, for Mark Zuckerberg, where he's basically, he's, I think this is, I'm done with...

• 39:31David Hoffman?

  Yeah, I'm done with you guys. I don't want to play with you anymore.

• 39:33Ryan Sean Adams?

  I'm done with the Democratic Party, maybe. This is what you could interpret this to believe. Like, I'm not willing to play ball anymore. So like, come at me, bro. Maybe he's saying that as well as part of this.

• 39:44David Hoffman?

  And now, now he wears a chain and has like sick jujitsu.

• 39:48Ryan Sean Adams?

  So you believe it. So you want to believe it. Look, this is the fight that's going on. It's a big one. It's an important one in the digital right sphere. We've got our own pavel that's happening right now in the United States. This is a court case we've talked about on Bankless for a while. And I just wanted to bring, both Dave and I wanted to bring your attention to it. This is... Roman Storm, so you recall, tornado cash developer was arrested out of his home last year by the FBI for deploying open source privacy code tornado cash. Lots of people in the crypto ecosystem used to protect their cryptocurrency transactions and to make them private.

• 40:29Ryan Sean Adams?

  Of course, some bad actors also use this tool. As with any tool, it can be used by the good guys and it can be used by the bad guys. This is fundamental to encryption. If encryption is an open source technology that's available to everyone, good people will use it and to protect themselves and also bad people will use it. That seems obvious. Anyway, you've heard us mention his court case. That's coming up. It's on December. I put the tweet wrong. It's December the 2nd and Roman.

• 40:55David Hoffman?

  That's gonna come real soon. It's gonna come real fast.

• 40:57Ryan Sean Adams?

  Real soon. And unfortunately, I just learned this this week because I knew there's ongoing fundraising for Roman Storm's case. He's basically, it's out of money. He's $2 million short. It costs a lot of money. There's a full budget attached to this. Costs a lot of money to get the S tier legal team to protect him. Okay. Like we're talking millions of dollars and he's $2 million short. He's raised like 500K. He still needs $2 million in order to get the S tier legal team on this. This court case, the US versus Storm, will be a defining historic court case for digital property rights in the United States. It's like going to determine, David, if we have the right to private cash in any form, it's going to determine like even if.

• 41:39David Hoffman?

  It's going to determine whether or not smart contracts can be made illegal by our government. This is the court case that says that tornado cash is allowed or not allowed. Is the notion of a smart contract able to be made illegal? That this is that court case. It just so happens there's this one guy that is either going to go to jail or not based on the outcome of this. But the precedent is perhaps the most critical crucial precedent that this industry has ever had. Fuck Gary Gensler, fuck the SEC's insecurities. We'll fight those court cases too. But this is the the final boss. There's, this is probably the most high leverage court case that is going to exist, has ever existed as it relates to the crypto case.

• 42:22Ryan Sean Adams?

  Yeah, and if we don't fund it as a community, like hugely disappointed, right?

• 42:26David Hoffman?

  So we're just gonna bend over backwards and be like, okay, well, we'll just have the illegal smart contracts.

• 42:32Ryan Sean Adams?

  But you know what he get? You know what he gets if we don't fund this fully is a private attorney, defense attorney, just randomly assigned by like whoever's available, right? Instead of the S tier, like we need to have the, we need to have the A team on this in order to actually have a shot at winning this case. Anyway, we'll include a donate link in the show notes. David and I, Bankless has donated to this in the past. We're prepared to in the future.

• 42:57David Hoffman?

  We're gonna up it. We're gonna up it.

• 42:59Ryan Sean Adams?

  Yep, and we'll have more information about this in the weeks to come because like we can't leave this deficit out there.

• 43:05David Hoffman?

  This is the most important thing. This is, this is, it's, it's, I don't want illegal smart contracts. That is antithetical to why I am here.

• 43:12Ryan Sean Adams?

  And I know.

• 43:13David Hoffman?

  And we have like, we have the biggest super PAC ever, apparently, like $130 million in the fair shake or however large that is. Let's get $2 million into Roman Storm's defense so that we can have permanently legal smart contracts. That's, that's how I see this.

• 43:29Ryan Sean Adams?

  I agree. All right. We have more to talk about, David. What's next?

• 43:33David Hoffman?

  Sony introduced a brand new Ethereum Layer 2 called Sonium. Yes, that's Sony, perhaps the maker of the TV that you might have in your living room.

• 43:41Ryan Sean Adams?

  Walkman.

• 43:41David Hoffman?

  That Sony. Yeah, yeah, Walkman, yeah. Trump launched another NFT collection, so we're gonna go listen to that. And Gary Genzer, Gary Genzer does his job and takes down another scammer in crypto. Yes, wait. No, just kidding. It's a very legitimate, compliant, United States-based company that employs hundreds of United States-based employees. And they just got issued a Wells notice.

• 44:07Ryan Sean Adams?

  Gary.

• 44:07David Hoffman?

  Last, last time to place your bets about what that company is. Try to imagine it, think who it is. We'll see if you get it right. But we're gonna go ahead and talk to some of these fantastic sponsors that make this show possible, and then we'll be right back. New projects are coming online to the Mantle Layer 2 every single week. Why is this happening? Maybe it's because Mantle has been on the frontier of Layer 2 design architecture since it first started building Mantle DA, powered by technology from EigenDA. Maybe it's because users are coming. Onto the mantle layer two to capture some of the highest yields available in DeFi and to automatically receive the points and tokens being accrued by the $3 billion mantle treasury in the mantle reward station. Maybe it's because the mantle team is one of the most helpful teams to build with, giving you grants, liquidity support, and venture partners to help bootstrap your mantle application. Maybe it's all of these reasons all put together.

• 44:52David Hoffman?

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• 45:37David Hoffman?

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• 46:22David Hoffman?

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• 46:34Ryan Sean Adams?

  Some backlash to the Ethereum Foundation this week after somebody identified on-chain a $100 million coming from an EF wallet. To Kraken, our lovely exchange and sponsor. And people were like, is the EF about to dump 100 million ETH on us? Like, is that about to happen? Like, what's going on? Where are they getting this, like, money? What's it going to? All of these things. So what's the story? What were the concerns here?

• 46:59David Hoffman?

  So this, first off, is a semi-regular activity. The Ethereum Foundation has Ether all the way back from Genesis. They fund things and they semi-regularly send Ether to Kraken. And then they sell Ether, not all at once. They sell it, you know, on an as-needed basis so they can distribute funds to a bunch of different things that they have, like, committed to funding. And we're going to go through, like, what those things are in a second. This happens every now and then.

• 47:22Ryan Sean Adams?

  But sometimes they batch send it all, right? It doesn't mean necessarily, it's according to what they said, that 100 million is being marketed sold.

• 47:30David Hoffman?

  Yeah, the last time they sent 35,000 Ether to Kraken was however long ago. And then they have been trickling, selling that until now. And then like, oh, we ran out of Ether. We need to pay more people, so let's send another 35,000 Ether and then we'll slowly sell that. This is just what foundations do. This is why we have foundations. They pay for support. And I think it has always been, since my time in crypto, like, a cry of the Ethereum community. Not that this is happening. I think we're all in support of some of the things that they're funding. It's the lack of transparency of, like, when, or how, and where this is going. It just happens randomly. And then all of a sudden, everyone wakes up and like, oh, we're 35,000 ETH just got sent to Coinbase. There's like a little bit of a sticker shock phenomenon, a bit like, yo, whoa.

• 48:12Ryan Sean Adams?

  It's that. And there's also a cry for transparency. It's just like, oh, where's all this money going to?

• 48:17David Hoffman?

  Yep, yep, yep. So Aya Miyaguchi, who's the director at the Ethereum Foundation, she tweeted out, "This is part of our treasury management activities. The EF has a budget of $100 million a year, largely made up of grants, salaries, and many of those recipients are only able to accept fiat. This year, this lately this year, we were advised to not do any treasury activities due to regulatory complications. And so we were not able to share the plan in advance." Also, this transaction is not equal to a sale. They always planned in gradual sales from here on out, like I said.

• 48:51David Hoffman?

  So here's Eric Connor, who's been one of the ones who's always asked for ETH transparency. He says, "The lack of transparency from the Ethereum Foundation 10 years in is both shocking and extremely frustrating. It's really not a lot to ask for simple financial reports or clarity around fund movements and usage." Anthony Sodano says, "I understand that people want more transparency around where the money goes, but it is not just being spent on bullshit. It is being used to further steward the development of the Ethereum ecosystem and fund many critical projects that otherwise would not get any funding. Let's keep on pushing for more transparency from the Ethereum Foundation, but let's also do it in a constructive way that benefits the ecosystem. Trashing the EF for spending $100 million a year, which is absolutely relatively tiny to the Ethereum's $320 billion market cap, is not constructive."

• 49:36David Hoffman?

  Okay, so Josh Stark, who is a member at the EF, actually put out a fantastic thread about some of the fundings that the Ethereum Foundation does. And so he says, "In 2023, out of the total costs of 2023, Layer 1 Research and Development was 25% of the total cost. This includes grants to external client teams, which is 62% of that 25%, and internal Ethereum Foundation researchers' salaries, that's 38% of that 25%. This is teams working on cryptography and zero-knowledge proofs, execution layer and developer tooling like Geth, privacy and scaling explorations, solidity, and more." And there's also a new institutions section, which is 35%, 37% of that total amount.

• 50:21David Hoffman?

  This is including the Nomic Foundation, the Decentralized Research Center, the Decentralization Research Center, Layer 2 BEAT, who we all love, ZeroX Park, who's doing, in my opinion, some of the sickest work in cryptography and smart contracts that we have. Shout out to the episode that we did on Autonomous Worlds not too long ago. And there's some other things as well. Layer 2 Research and Development, Applied Zero-Knowledge Cryptography, Community Development, Developer Platform, Internal Operations. And so that's all of it. There is a link in the show notes if you would like to get some of this report. And then he said that also, there is going to be another report that comes out at the end of November to update all of this.

• 51:00Ryan Sean Adams?

  I thought this was a solid answer to kind of more transparency. Like, here it is. And I think this called a lot of the concerns that folks had. I think zooming out.

• 51:10David Hoffman?

  To be clear, a lot of the concerns that folks had was like, meh, somebody's selling $100 million. Meh.

• 51:16Ryan Sean Adams?

  I think, I think so. I think, but like also transparency is valid, but now.

• 51:21David Hoffman?

  Transparency is super valid.

• 51:22Ryan Sean Adams?

  So, you know, call off the dogs a little bit.

• 51:24David Hoffman?

  Yeah.

• 51:25Ryan Sean Adams?

  This is a, you know, a wider scope take on the Ethereum Foundation. So the EF holds 845 million in ETH, which sounds like a lot, but realize that represents only 0.25%. So a quarter of 1% of the total ETH supply. Now, I see that amount. I'm like, kind of worried about the sustainability if they're spending a, you know, 100 million a year. I'm a little more worried on the other side of it.

• 51:48David Hoffman?

  Eight years left.

• 51:49Ryan Sean Adams?

  This is just a tiny sliver of ETH supply as compared to like other foundations and other ecosystems.

• 51:55David Hoffman?

  Right.

• 51:55Ryan Sean Adams?

  I mean, like, we have to get, we are not comparing all the details of like the Solana Foundation, the Tezos, you know, like Foundation, the New Year Foundation, all these things, which have a much chunkier percentage of supply.

• 52:08Ryan Sean Adams?

  I don't know. My take is the EF does like, could improve some transparency, but like, does a pretty reasonable job in this whole ecosystem. And they funded things like Uniswap, David, in the very early days from grants, which wouldn't have been possible.

• 52:21David Hoffman?

  With a $10,000 grant. Like, come on.

• 52:24Ryan Sean Adams?

  Anyway, so that's the part of the market, people are a little bit mad. And that's not the only thing that people got mad about this week. There is also talk of Vitalik not liking DeFi, kind of a chant of Vitalik hates DeFi. Where did, where did this come from?

• 52:43David Hoffman?

  I was having trouble like actually finding the source of why this became a, like, what was like patient zero or tweet zero of this? I think maybe it was Kane Warwick mentioning on Steady Lads, which is a podcast from Jordy Alexander and company, that says that Vitalik discourages and doesn't like DeFi.

• 53:01Ryan Sean Adams?

  Doesn't really support it.

• 53:03David Hoffman?

  Yeah. Doesn't support DeFi. And in Kane's position, because DeFi is such a critical component of blockchains. Which I agree with, like the number one thing to come out of a blockchain is primarily DeFi.

• 53:14Ryan Sean Adams?

  Also agree with.

• 53:15David Hoffman?

  Yeah. And so his position is that like, if you don't support DeFi, then you're actually like against DeFi. And Vitalik has in the past like been critical of like, and the way I read these tweets or statements is that he is, in his personal opinion, he is personally critical of some of these structures of DeFi that we have seen. Very similar to like his, but do we deserve it tweet about ICOs in 2017, when she was like, what the hell is going on on Ethereum? These ICOs aren't like, aren't doing anything. And he's like similarly saying that like, the loans from Maker Abbe Synthetics aren't like real loans. They're capitalized collateral based loans to help people speculate and gamble. These are not helping like low income, like developing countries gain access to capital.

• 54:00David Hoffman?

  And therefore it's only part of this like circular economy. He's not interested in it.

• 54:03Ryan Sean Adams?

  He's the word Ouroboros.

• 54:05David Hoffman?

  Ouroboros, which I also have an Ouroboros ring that I liked because I love the concept of Ouroboros. Snake eating his tail, yeah.

• 54:13David Hoffman?

  Whenever Vitalik has said this, I've always read this as this is his personal interests. Many people were ascribing this as like the stance of the EF as a whole. And maybe there's no like way to parse Vitalik away from the EF. Maybe that's fair. But that's been like, kind of the stance here.

• 54:28Ryan Sean Adams?

  Yeah. I think in particular, that that sort of term Ouroboros was triggering to people because they're like, yeah, that's crypto. That's money. That's, you know, like the entire purpose. That's how we bootstrap things. This was Kane's original tweet that we were referencing. He said, if the only thing propping up your chain for the last five years is DeFi, and the best you can muster is begrudgingly tolerating it, you are anti-DeFi. So he wants just more than like, eh, DeFi is good and I'd prefer better use cases. He wants, I think Vitalik and the EF, like his expectation is to have them be overwhelmingly positive towards DeFi and just being like, it's, it's the greatest thing ever, which like, I don't know. I don't think that's entirely unfair, but there's also like.

• 55:10David Hoffman?

  It's not a crazy take.

• 55:13Ryan Sean Adams?

  I mean, for us, for bankless, the reason we actually started this podcast and this entire movement was because to put the focus on DeFi. We think that is the killer. Going bankless is the killer use case of crypto, but it's not the only use case. And I get that's fair game, I think, to be Vitalik, to have Vitalik be interested in other things. Anyway, here's another take on the Ouroboros thing. This is a retship. My opinion, you could just as easily say ETH is downstream of DeFi. It accounts for the major, the majority of usage and gas fees on the chain, usage of the primary value driver of Ether. Ether is used heavily in DeFi as collateral. There's also a major value driver for ETH. This is sort of what Justin Drake has said in

• 55:53Ryan Sean Adams?

  the past, which is like ETH is pristine collateral. It's where the whole ultrasound money meme came. I feel like for someone like Drake, who also works at the EF, he is probably more bullish than Vitalik on some of the ETH is money and ETH is DeFi use cases, though I don't want to put words in his mouth. Anyway, this ret is making the point that if you remove DeFi from ETH, its value would be 80% less. I also think that's true.

• 56:18David Hoffman?

  Hayden's take is Vitalik is driven by his interests and values. Personally, I think DeFi is the most important and impactful area of Cordova by far. I am not in the least bit upset that he wants to see use cases beyond DeFi, where he asks where the yields come from. It's not his job to pump your bags. DC Investor, he also said Vitalik and many core devs will literally never talk about ETH as a sore value or as a meaningful programmable money. This has been true since inception, and I think it's tied to public comments on DeFi. Yet, it is super obvious that ETH must be a desirable sore value in order for Ethereum to operate securely and proof of stake, to which Vitalik responded, "If I did not believe in ETH as a sore value, I would not hold 90% of my net worth in it," which makes, I think, both you and me,

• 57:01David Hoffman?

  Ryan, more bullish on Ether as a portion of our bags than Vitalik.

• 57:06Ryan Sean Adams?

  But that statement from Vitalik makes me also very happy, because I think DC Investors had a long history, as long as you and I have in Ethereum and crypto. And he's kind of right.

• 57:17David Hoffman?

  The Ethas money camp?

• 57:17Ryan Sean Adams?

  Yeah, the Ethas money camp, right? And I remember, David, it was like four years ago when Ether, you know, like 2019, maybe 2020, 2019, when Ethereum was still kind of finding itself and everyone was saying Ether had no value. It was just a stupid gas token. It was like worthless. And there was this growing chant in the Ethereum community, no, Ether is a monetary unit. ETH is money, right? And I remember you at a conference in Israel, I don't even remember what the conference was, but you were actually-

• 57:46David Hoffman?

  It was a Ethereal from Consensus, yeah.

• 57:48Ryan Sean Adams?

  Yeah, you actually, this is recorded somewhere in the Internet archives, probably. You asked Vitalik, you were like, hey, is ETH money? And his answer, this is the kind of the first indication, right? His answer was, if the Ethereum community wants it to be money, then it is money, right? And-

• 58:04David Hoffman?

  And then I heard that, I was like, great, therefore it is.

• 58:08Ryan Sean Adams?

  So that's been like a history of what he's said about this. I don't think he started Ethereum to create Ether as a monetary asset. But like, I think he also recognizes its role. So this is why I was so pleased to hear this, why I retweeted it is, this is the clearest I've ever heard him say, Ether is a store of value asset. And by the way, his bags back his belief here, which is 90% of his net worth is in Ether right now. I like, I like this tweet.

• 58:36David Hoffman?

  Yep. Also, I think the broader conversation here is what is the role of the foundation and Vitalik? And their relationship with the application layer? Because to me, Ethereum has always been trying to build in this kind of like intellectually pure, true north direction, regardless of what happens on the application layer. So like people like Kane and maybe like greater Ethereum are asking for a little bit more of like BD and growth out of the things built on the app layer, things like AVE, things like Synthetix.

• 59:09Ryan Sean Adams?

  Or support in general.

• 59:10David Hoffman?

  It's more just support, whatever that unspecified word means. I don't really think there was any specifics offered of like what they're really looking for here. Maybe just better public statements about DeFi. But it's always been Vitalik and the EF's stance to be neutral about what happens on the app layer and not- Not bias any one application over another or any sector over another. And that has, that's always been how I've thought that they would like take a stance towards the app layer. And I think people these days are kind of just like, we know DeFi is useful. Like, we know this is benefiting your chain. Like, why wouldn't you support this? And like, I think Solana actually does this well. When we had Kyle on, this is what he talked about. It was just like, Mark Zeller from AVE said that like, the EF has never really talked to anyone from AVE.

• 59:56David Hoffman?

  Like, what's up with that? And I think the Solana, like, growth, marketing, BD, like, go-go-go mentality would be one that would like, yeah, let's, let's talk to people, let's talk to the builders, and let's help them build what they want.

• 1:00:09David Hoffman?

  And I think that's valuable because, because that's not what Ethereum is doing. But I prefer what Ethereum is doing, which is building the most credibly neutral, open, center-to-potency protocol possible. Because that's as, that's how you get as massive, the massive scalability and social support as possible. Like, what if we, like, what if we started benefiting app layer behavior at the wrong time? Like, what if we started incentivizing like the ICO mania when that was happening? Like, that would be wrong. And so I've always believed in the stance that the Ethereum protocol should be as credibly neutral as possible. And it's also not like, like, all of these, like, projects, Synthetix, MakerDAO, AVE have, like, insanely valuable market caps with VC investors. Like, they have support. They have support.

• 1:00:54Ryan Sean Adams?

  I mean, like, my take on this is Ethereum's awesome, Vitalik's done a fantastic job, the EF has done a great job as well. Everyone is saying these things because we're kind of in a mood, you know? Ethereum's in kind of like ETH price is low, especially on the ratios, and there's kind of a vibe session going on. And so we're all kind of like, eh, at each other, particularly on social media. So some of this, to me, is noise. By the way, Bankless faced some of this this week as well, for that Kyle Simone episode that you mentioned, but you're like, I guess, spread some of the angst around to the EF and Vitalik. David?

• 1:01:34David Hoffman?

  This is so, this is so funny. We were talking about the hate of the, of the community on like Vitalik and the EF. And I think you put out a tweet that was like, usually it's directed at Bankless.

• 1:01:43Ryan Sean Adams?

  Yeah.

• 1:01:43David Hoffman?

  And then three days later, we released the Kyle episode, and then it was like, it was directed at Bankless.

• 1:01:50Ryan Sean Adams?

  All right, we got some more stuff to talk about. This is cool. Sony has a Layer 2 now. Sony is deploying a Layer 2 and it's gone to testnet. So when PS5 on Ethereum, David, is that what's going on? What is this?

• 1:02:04David Hoffman?

  Okay, Sony, Sonium, a public Layer 2 that aims to connect Web 3 with everyday internet services. And so this is backed by Sony, the Sony Block Solutions Lab, that's the company. Along with this merger, acqua hire of this Astor network, which is built with a Polygon CDK on Polkadot? I don't know where that came from, but apparently this Astor network is going to roll into Sonium, which is going to be built on the OP stack and eventually will join the superchain. And Phase 2, there's two phases here. Phase 1, onboard crypto people, normal Layer 2 stuff.

• 1:02:44David Hoffman?

  But then Phase 2 is onboard Sony products such as Sony Bank, Sony Music, Sony Pictures, and so on. Quote, "We would like to integrate Web 3 and blockchain technology into Sony's product. And in 3 years, we would like to onboard not only Sony, but also all enterprises and general apps on top of it." Interesting. I don't think this is just another Layer 2, just trying to split the current user base into another chain, but I think they have enterprise plans.

• 1:03:12Ryan Sean Adams?

  It sounds like an enterprise IP chain, almost. You know what we were talking about?

• 1:03:15David Hoffman?

  The second in 2 weeks. Did you see, right after Story released, an IP restaking protocol on Story got announced?

• 1:03:26Ryan Sean Adams?

  No.

• 1:03:26David Hoffman?

  So you can restake your IP?

• 1:03:28Ryan Sean Adams?

  That's actually ridiculous. I can't wait to restake our podcast.

• 1:03:32David Hoffman?

  Restake our podcast. Okay, Sky, this is the MakerDAO rebrand. So this has always been a part of the MakerDAO endgame. The rebrand is finally here. The rebrand is called Sky. @skyecosystem on Twitter. Sky, the best and easiest place to get rewarded for savings without giving up control. And so, DAI and MKR is now turning into USDS and Sky. So, Sky is now USDS. This is happening on September 18th. It's voluntary, so both Maker and DAI in its current form will remain in existence as legacy tokens. This is where the stock split of MKR is getting, one MKR is getting split into 24,000 Sky tokens.

• 1:04:12David Hoffman?

  So, MKR is going to go from like $2,000 to like 20, 10 cents or something. If I did my math right. I probably didn't. And then Maker Dow SubDow, like the Spark Protocol, will become Sky Stars. So, independent decentralized projects will connect to the Sky ecosystem. Each Sky Star SubDow will have its own governance token, manage the treasury, governance community. One of them is Spark, like I said.

• 1:04:39Ryan Sean Adams?

  I'm gonna miss Maker. I'm gonna miss Maker. I got my start in DeFi, back when it was called, actually not DAI, it was Psy. Single Collateral DAI, right?

• 1:04:48David Hoffman?

  Single Collateral DAI.

• 1:04:49Ryan Sean Adams?

  Now, DAI is going, now Maker is going. I guess, you know, Sky's cool, but I'll miss Maker. But, you know. What's wrong with Maker and DAI, bro? I thought that brand was fine. Wait, didn't you tell me their Twitter account got like taken over, right? The Maker Twitter account, they released it and some guy picked it up?

• 1:05:07David Hoffman?

  If you were once following Maker Dow on Twitter, you are now following Sky Ecosystem. They just swapped their handle, but then some guy just picked up the empty Maker Dow handle. So, some guy is just, his name is not Maker Dow and it's @maker Dow on Twitter. There is one important difference that I would like to highlight. DAI does not have a freeze function, which has been one of the best properties about the Maker Dow system that I've enjoyed and espoused. It's the most bankless stablecoin that exists because there's no freeze function. USDS has a freeze function.

• 1:05:40Ryan Sean Adams?

  Does it really?

• 1:05:41David Hoffman?

  Which is, yes. Yes.

• 1:05:45Ryan Sean Adams?

  All right.

• 1:05:46David Hoffman?

  Well, it's why I don't enjoy it.

• 1:05:47Ryan Sean Adams?

  All right, well, you know, speaking of disappointment, David, politics.

• 1:05:53Ryan Sean Adams?

  Trump and Harris have agreed to debate on ABC News. So they got the date. It's September 10th. That's gonna happen. My question to you is, what do you think the probability that crypto comes up? Either in the form of a question, or Trump somehow injects it. It's like- Zero. Zero percent? I asked this on Twitter- Less than 5%. I asked this on Twitter. Same question on Twitter. Again, my followers crypto natives. My followers say 46% yes versus 53%. Basically 50/50. Yeah. Yeah, I voted no on that poll. I'm voting yes on this poll. I think it's gonna, I think- Didn't we already do this? Yeah, the Biden debate, and I lost that one, remember? Yeah. But so did- Yeah, you did. Biden also lost that debate.

• 1:06:36Ryan Sean Adams?

  In a big way. And so I'm hoping to be right on this. If there's a polymarket spun up, David, maybe I'll bet against you. Also, in political news, RFK Jr., you guys know this, it was national media news here. He suspended his presidential campaign and endorsed Trump. Of course, RFK Jr., we had him on Bankless. Very pro crypto candidate. Maybe even more pro crypto than Trump? I think who's more- Yeah, he was more pro crypto first. Yeah. And I think it came from a place of, deeper place in his heart. Yeah, a deeper place in his heart. If that makes sense. So I was kind of wondering, I mean, this is sort of in exchange for becoming probably like a cabinet member in Trump's administration, were he to get elected, like what cabinet, would he be a crypto czar? Would he be pro crypto?

• 1:07:22Ryan Sean Adams?

  I think he's really gunning for Health and Human Services. Yeah, something health, yeah. But it would still be a good thing, obviously, to have another pro crypto member of the executive branch if Trump gains power. And speaking of Trump, David, you wanna- You're gonna make us, you're gonna make us watch this? Should we watch this? I don't know how long, how much of it I can watch, but let's play a little bit of it.

• 1:07:45Speaker 02

  This is your favorite president, Donald J. Trump, with some very exciting news. By popular demand, I am doing a new series of Trump Digital Trading Cards. You all know what they are. We've had a lot of fun with them. It's called the America First Collection. Fifty all-new stunning digital trading cards. It's really something. These cards show me dancing and even me holding some Bitcoins. Here's the best part. I'm doing great things for my Trump Digital Card collectors. First, there's the real, physical Trump cards. Purchase 15 or more of my Trump Digital Trading Cards, and we'll mail you a beautiful, physical trading card. It's really, I think, quite something. Each physical trading card has an authentic piece of my suit

• 1:08:30Speaker 02

  that I wore for the presidential debate. And people are calling it the knockout suit. I don't know about that, but that's what they're calling it.

• 1:08:37Ryan Sean Adams?

  All right, so David, people calling it the knockout suit. This is Trump's latest release of the Trump NFTs. That's what's happening. So that was real. That was not AI-generated. That is Trump talking about his fourth NFT collection here.

• 1:08:51David Hoffman?

  Everyone rushed to go get them.

• 1:08:54Ryan Sean Adams?

  Do you know how much they cost? He says $99. But if you spend, he's adding some utility to his NFTs.

• 1:09:01David Hoffman?

  For one?

• 1:09:01Ryan Sean Adams?

  Yeah, $99 for one.

• 1:09:02David Hoffman?

  For one card?

• 1:09:02Ryan Sean Adams?

  Yes. But, let me tell you. If you spend $25,000 on the cards, you get utility. You get Trump utility. You get access to Trump sneakers, Trump cocktail dinner, Trump National Golf Course in Jupiter, Florida with Trump. It's kind of the Gary V play. You know, like, I got these NFTs, and if you buy certain NFTs of a certain amount, then, like, you can meet me in person, and we'll do things together. It's utility. Utility to the NFTs.

• 1:09:30David Hoffman?

  Okay, right. We are getting towards the end of this episode. Every listener who has placed their bets about which United States company...

• 1:09:38David Hoffman?

  Not everyone.

• 1:09:39Ryan Sean Adams?

  Okay.

• 1:09:40David Hoffman?

  Not everyone. Like, what, 20, 30, 40,000 people listen to these things? Not everyone is on Twitter. At least have them.

• 1:09:46Ryan Sean Adams?

  Tell us.

• 1:09:46David Hoffman?

  Maybe less than half of them.

• 1:09:47Ryan Sean Adams?

  What's Gary doing?

• 1:09:47David Hoffman?

  Okay, sorry. Okay, so which United States domiciled crypto company that's extremely compliant and legitimate has received a Wells notice from the SEC? You have your last five seconds to think about this. It is OpenSea. Okay, so Devin Finzer, the CEO of OpenSea, has tweeted out, "OpenSea has received a Wells notice from the SEC, threatening to sue us because they believe NFTs are on our platform, our securities."

• 1:10:10Ryan Sean Adams?

  Yeah.

• 1:10:11David Hoffman?

  "We are shocked the SEC would make such a sweeping move against creators and artists, but we're ready to stand up and fight. Cryptocurrencies have long been in the crosshairs of the SEC's, and companies like Coinbase, Uniswap, Robinhood app, Kraken, and Consensus." Wow, that list keeps on growing longer. "Has been fighting against the SEC's single-track approach of regulation by enforcement." So, well done, OpenSea. Congratulations on joining the ranks of some of the best and most legitimate companies, United States companies in crypto. Honestly, you guys deserve to be there. For some reason.

• 1:10:40Ryan Sean Adams?

  That's a badge of honor. You've done well. You've done well, OpenSea. You're really making an impact, and you can tell because you've got a nasty gram about Gary Gensler trying to sue you. Let's remember what NFTs are. Art, collectibles, video games, trump cards, domain names, event tickets. All of these are NFTs.

• 1:10:57David Hoffman?

  Dude, Trump is selling illegal securities.

• 1:10:59Ryan Sean Adams?

  Well, by the way, do you think there's something to that? Is that why the executive branch and Gary Gensler are prosecuting it? There's another conspiracy for you, if you want to go down that route.

• 1:11:10David Hoffman?

  It's certainly interesting timing and a terrible look for the Democrats. Not that they needed any more terrible looks.

• 1:11:15Ryan Sean Adams?

  Look at this. DC Investor goes, "Holy shit, they're selling illegal securities on eBay." And he's tweeting a picture of eBay of a Magic the Gathering card on eBay. If you want to get on this now.

• 1:11:26David Hoffman?

  A $2 million Magic the Gathering card.

• 1:11:28Ryan Sean Adams?

  Yeah. That's more than CryptoPunks right now. That's a nice, that's a nice card right there. Oh, wow. Don't remind me, bro. Um, you remember when Richie Torres asked Gary Gensler whether he's like, what, what happens if I take a Pokemon card? Is that a security? And then he was like, what if I tokenize that Pokemon card? He asked Gary Gensler this. Is that a security? And Gary was like, oh, well, facts and circumstances. We don't know. How we test, blah, blah, blah. I guess he does think that Pokemon cards, when tokenized, suddenly become securities. This is what this means. Jake Chervinsky, the SEC has fully lost the plot. The idea that a financial markets regulator established in the 1930s would have jurisdiction over digital art defies common sense.

• 1:12:11Ryan Sean Adams?

  And also, the SEC's actual authority to do this, Hayden Adams, saying what you said, David, which is like, hey, OpenSea, welcome to the fight. You're one of us now. Devin Fizner is planning to fight this, which is fantastic. So more legal bills that we as taxpayers are paying for Gary's, you know, senseless crusades to stop you from buying digital art on the internet. Like, that's where we are in 2024.

• 1:12:37David Hoffman?

  All right, one Bankless Ventures raise on the week. Chainbound raised $4.6 million in a seed round with participation from us over at Bankless Ventures. What is Chainbound? They are working on software to issue pre-confirmations from staking pools. This is a staking pool like Lido, Rocketpool, anything else, led by Cyberfund, who is the kind of the, um, the Lido adjacent venture capital firm. The idea of this is like you can issue pre-confirmations for layer twos to have faster settlement times to the layer one. Also very beneficial for base rollups. The big vision here is to allow proposers to do sequencing. So it's a pretty interesting infrastructure that kind of ties layer one and layer twos together much more intimately, I would say. So congratulations to Chainbound for the raise.

• 1:13:22Ryan Sean Adams?

  And unfortunately, as we end this episode, David, I got some bad news for you, man. As a single dude in crypto, uh, some- What could this, what could this possibly be? Some bad data just came out. This is Nick Carter tweeting out a chart of a data around the unattractiveness of male nerd hobbies. So it's basically plotting which male nerd hobbies are the least attractive to women.

• 1:13:47Ryan Sean Adams?

  We've got a lot on here. We've got video games. We've got comic books. We've got cosplay. We've got Magic the Gathering. We've got Dungeons and Dragons. Unfortunately, crypto ranks as the second most unattractive male nerd hobby out there. And it only loses to one, which is Funko. What is Funko?

• 1:14:08David Hoffman?

  Funko, Funko Pops, the little Funko Pop collectibles things.

• 1:14:11Ryan Sean Adams?

  Dude, I don't even know what that is.

• 1:14:14David Hoffman?

  Well.

• 1:14:14Ryan Sean Adams?

  Second place. Very unattractive, apparently.

• 1:14:18David Hoffman?

  You said this is bad news for me, but actually, this is just not related to me. Because this is for nerd hobbies. Crypto is a lifestyle.

• 1:14:28David Hoffman?

  And so it's just not relevant. It's not a hobby.

• 1:14:31Ryan Sean Adams?

  Yeah, it's not a hobby. It's more than a hobby. It's crypto's life. Yeah, so there you go. I can't believe, though, that it's worse than cosplay. That hurts.

• 1:14:41David Hoffman?

  Yeah, but boys just aren't allowed to have fun, you know? Your hobbies are unattractive.

• 1:14:46Ryan Sean Adams?

  I guess, I guess you got a date in crypto if you want to get something to happen. David, we got a moment of zen. This is Song of Day Guy.

• 1:14:54David Hoffman?

  Song of Day Man.

• 1:14:55Ryan Sean Adams?

  Yeah, Song of Day Man. You have some context here, because you did an episode while I was out with him. He has a lawsuit against the SEC right now, too, right? What's the lawsuit about?

• 1:15:04David Hoffman?

  Highly related to the SEC's Wells Notice versus OpenSea. They are suing the SEC for setting the precedent that NFTs are securities, basically. Song of Day Man releases an NFT every single day of his songs, that you could buy it. And because of the Stoner Cats legal case, where Mila Kunis and Austin Kutcher release their Stoner Cats thing, they had to settle with the SEC. That precedent determines that artistic creations in the form of an NFT are therefore securities. So he's suing Gary Gensler, and he's suing the SEC to break down that precedent. And so, of course, since the SEC is now going after the NFT marketplace OpenSea, he makes a song about it. And you can go buy that illegal security

• 1:15:49David Hoffman?

  that he may or may not be issuing with a link in the show notes, if you are so interested.

• 1:15:53Ryan Sean Adams?

  So Gary Gensler, this is who you're up against. A moment of zen in just a minute, but risks and disclaimers first.

• 1:15:58David Hoffman?

  When you serve a Wells Notice, this is who you're serving.

• 1:16:01Ryan Sean Adams?

  Crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's certainly not for Gary Gensler. But we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:16:15Speaker 03

  So we're clapping back at the bell that he's inciting. He's a bad boy. Screw it, let's just do it. Let's sue the FCC and make them prove it. Shh, prove it. Gary, please hear me. Your institute don't scam me. We've had enough of your unjust thrust coming after us unfairly. Oh, Gary, we're through. Out of options to choose. It never ends. You attack my friends, that's why I'm suing you. This is why we're fighting. Want to get it and ride it? So we're clapping back at the bell that he's inciting. He's a bad boy. Oh, screw it, let's just do it. Let's sue the FCC and make them prove it.

• 1:17:00Speaker 03

  Shh, prove it.