#1492 Anthony & Polina Pompliano | Why Bitcoin Is CRASHING?

Polina Pompliano, Author of ‘Hidden Genius’ and Founder of The Profile, and Anthony Pompliano, Author of ‘How To Live An Extraordinary Life’ and CEO of Professional Capital Management, discuss the bitcoin crash, what’s going on, Coinbase, Ken Griffin jumping into the crypto trading game, regulation, and what is going on with the Bybit hack.=======================Ledger has been trusted for 10 years to secure 20% of the world’s digital assets. Their latest devices, Ledger Stax and Ledger Flex, feature secure touchscreens for safer, easier crypto management. Go to ledgerpomp.com to take control of your digital future=======================Meanwhile is the world’s first licensed and regulated life insurance company built for the Bitcoin economy. Protect your loved ones with sound money built to manage life’s uncertainty and a broken financial system. Their BTC-denominated Whole Life Insurance policies allow HODLers to pass more BTC on to their loved ones and a tax-advantaged way to access BTC for liquidity during their lifetime. Visit their website at https://meanwhile.bm/ to join the waitlist for a policy and to learn more.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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

• 0:02Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's going on guys? Today we've got a great episode with Polina Pompliano. She is the founder and CEO of The Profile, great publication. Go to ReadTheProfile.com to check it out. In this conversation, we talk about the Bitcoin crash. What's going on? Should you be worried? No, you shouldn't. I'll tell you why. On top of that, we go

• 0:47Anthony Pompliano?

  ahead and we look at what is going on with Coinbase? What's going on with Ken Griffin jumping into the crypto trading game? Senator Lummis, she is diligently working, trying to figure out what's going to be all this regulation. And then also, what's going on with the Bybit hack? $1.4 billion stolen? The Bitcoin network, it's never been hacked? And will it ever actually have any issues? All this and more in today's episode with Polina Pompliano.

• 1:08Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:32Anthony Pompliano?

  Today's episode is brought to you by Ledger. They're celebrating 10 years as the most trusted name in crypto security. With over 7 million users and 20% of the world's digital assets secured, Ledger continues to lead the way in protecting your crypto and digital ownership. Their latest devices, Ledger Stacks and Ledger Flex, feature the world's first secure touchscreens, making managing your assets easier and safer than ever. Plus, the new Ledger Security Key App offers a secure alternative to traditional passwords, enhancing your digital security. Go to LedgerPomp.com to take control of your digital future. That's LedgerPomp.com. L-E-D-G-E-R-Pomp.com.

• 2:11Anthony Pompliano?

  Today's episode is brought to you by Meanwhile. Meanwhile is the world's first licensed and regulated life insurance company built for the Bitcoin economy. Operating on the Bitcoin standard, they do everything in Bitcoin. You pay in Bitcoin, they pay claims to your family in Bitcoin, you take out policy loans entirely in Bitcoin when you need liquidity. Meanwhile, Bitcoin life insurance has redefined what it means to hodl. Protect your family from life's uncertainty and a broken financial system. Build intergenerational Bitcoin wealth while the cost of living skyrockets in dollar terms. Get all the tax and legal benefits of life insurance now in Bitcoin. They are actively binding policies today. Whether you are a long-term Bitcoiner or are just considering it for the first time, a Bitcoin whole life policy could make sense for your wealth plan.

• 2:55Anthony Pompliano?

  Visit their website, meanwhile.bm, to join the waitlist and to learn more about the world's first Bitcoin life insurer. Again, that's meanwhile.bm. Go check them out today. All right, Plaid, what's the first topic?

• 3:08Speaker 02

  This morning Bitcoin, Bitcoin's price dropped down to $87,000 with $300 billion of market cap erased in 24 hours. Poof, gone.

• 3:19Anthony Pompliano?

  Why is everyone so worried about this?

• 3:21Speaker 02

  Gone, I know, I was telling, I was telling someone earlier how I was like, I'm not worried until it's down to like 6K.

• 3:27Anthony Pompliano?

  6K?

• 3:27Speaker 02

  That's in my mind, that's where, when somebody says Bitcoin crashed, I imagine $6,000.

• 3:32Anthony Pompliano?

  That's because you started paying attention when it was at 6K.

• 3:35Speaker 02

  Or 2K when it crashed.

• 3:37Anthony Pompliano?

  Right. I think people should stop worrying so much about this price drawdowns. If you understand what Bitcoin is, when the price goes down, it means you get to buy more Bitcoin. It's a gift. It is, somebody is saying to you, hey, this asset is trading for, right now, $20,000 cheaper than it was a couple of weeks ago.

• 3:55Speaker 02

  It's Black Friday today for Bitcoin.

• 3:57Anthony Pompliano?

  So if you like Bitcoin and the price is $20,000 cheaper than it was a couple of weeks ago, then you're probably buying. There are plenty of people though, who either one, don't understand Bitcoin, and so they bought at the top like, ah, this thing's only going down, I thought it only goes up, this is a problem, not, doesn't feel good. The second is, there's a lot of people who get greedy and they use leverage. If you go, when you start using leverage and the price goes down, it goes against you, that can cause a lot of pain. And the third thing is, there's a lot of people who have been trying to come up with all kinds of weird ways to use their Bitcoin or take their Bitcoin, borrow against their Bitcoin, all these things. If you just buy spot Bitcoin and you hold it, it's kind of like real estate, right?

• 4:41Anthony Pompliano?

  Go back to 2020. Think about real estate in a lot of markets. You had bought a piece of real estate. It sits there. There's no stock ticker to it. There's no price every single day. But all the COVID thing happens, all of a sudden in March and April, real estate prices are crashing. Everyone's worried. Then by the end of the year, everything's come back. Now all of a sudden, real estate prices are up. That volatility, you really didn't see unless you're a weirdo and you're going on like Zillow or LoopNet every single day. The problem here is that everyone sees it every single day because it trades 24/7. And so what you have to understand is control your emotions. That is one of the hardest things to do in investing. I know people, and sometimes it happens to me. You wake up, you see green, prices are up, you feel good. Hey, we're having a great day. We're making money.

• 5:26Speaker 02

  I love seeing green.

• 5:27Anthony Pompliano?

  Wake up the next day, you see red, prices are down, dang, we're losing money. The truth is that you're not making or losing money until you actually sell and capture that value. And given that most Bitcoiners are not going to sell, then you own a certain number of Bitcoin. Don't spend your mental energy focused on how do I go in and kind of handle the fact that the dollar exchange price is going up or down. Focus your time and energy on how do I make more money so that I can buy more Bitcoin? And I think that if people can channel their energy towards that, it's much better. It is obvious, but it's worth stating. The more that you look at your portfolio, the more that you look at the prices, the less happy that you will end up being. And so what you have to train yourself to do is say, look, I own what I own.

• 6:12Anthony Pompliano?

  It's going to be good or it's going to be bad. I don't know. All I know is that I'm going to keep trying to make more money so that I can go and I can buy more in my portfolio. And I'll let the process take care of itself. I am focused on decades for my portfolio, but I'm focused on hours and days for my work. That to me is the best strategy.

• 6:28Speaker 02

  Yeah. Polina's worry barometer starts pinging when it hits 6K. Okay, so let's talk about Jim.

• 6:36Anthony Pompliano?

  That's not true, by the way.

• 6:37Speaker 02

  Why?

• 6:38Anthony Pompliano?

  Because people, you forget that on March 12th, 2020, is one of those days, you know, like when you first get in a relationship with someone.

• 6:47Speaker 02

  No, I remember you were worried.

• 6:48Anthony Pompliano?

  No. When you get in a relationship with someone, you're like, yo, I think that this person, you know, they're the type of person I want to be around. They've got, you know, certain attributes, all this stuff. One attribute that I did not think that you had was cool, calm, collected, emotional control in financial markets.

• 7:07Speaker 02

  Yeah, everything else I'm like, woo, but financial markets?

• 7:10Anthony Pompliano?

  That was not on my, like, if I was to create like a rubric of evaluation, you were not getting an A plus on that. I would have been, I should probably like average, whatever. March 12th, 2020, Bitcoin dropped 50% in a day. I dropped 20%, I bought more, dropped, you know, whatever, 30% I bought more, 40% bought more. When it crossed over 50% drop, I remember sitting on the couch staring into the abyss, being like,

• 7:36Speaker 02

  He was staring.

• 7:37Anthony Pompliano?

  We may watch, at the time, 96% of our net worth evaporate today.

• 7:43Speaker 02

  It was March 2020.

• 7:44Anthony Pompliano?

  It was March 12th, 2020. And you said something to me, you said, what's wrong?

• 7:52Speaker 02

  It closed at 4,009.

• 7:54Anthony Pompliano?

  And it started the day at over 8,000.

• 7:56Speaker 02

  Yeah, 79.

• 7:58Anthony Pompliano?

  And so I remember sitting there and you said to me, what's wrong? And I said, we may watch this all go to zero today. And you said to me, we're already all in. So like, just buy more.

• 8:09Speaker 02

  We were all in.

• 8:10Anthony Pompliano?

  And I remember being like, that's the most gangster shit I ever heard.

• 8:14Speaker 02

  Sunk time cost theory, whatever it's called, out the window, out the window. Time sunk cost, money cost?

• 8:22Anthony Pompliano?

  Take the, uh, the, uh, congratulations you were getting and run.

• 8:28Speaker 02

  Okay. Well, I, I was just.

• 8:30Anthony Pompliano?

  Don't stick around, you know, till people figure out that you don't know what the time value of money is.

• 8:34Speaker 02

  I've known you for almost 10 years now. I've never seen you like that.

• 8:38Anthony Pompliano?

  Yeah, that day was bad.

• 8:40Speaker 02

  And now we're saying it crashed to 87,000? Please.

• 8:44Anthony Pompliano?

  All right, what's the next topic?

• 8:45Speaker 02

  The next top, well, we didn't talk about, um,

• 8:48Anthony Pompliano?

  I think that's the only day ever in financial markets where I've been like,

• 8:53Anthony Pompliano?

  This is bad. But that day was, this is bad.

• 8:56Speaker 02

  So Jim Bianco's Mar-a-Lago Accord is pointing out that the dollar is too strong. Tell us what this is.

• 9:03Anthony Pompliano?

  So the dollar is too strong. And the idea of the Mar-a-Lago Accord is basically taking out of the playbook of, there's something called the Plaza Accord. There's obviously people know about Brenton Woods. These are different meetings that people have had where various countries have come together and they basically have made an agreement where they literally signed an agreement, take a picture with each other, you know, thumbs up, okay, let's go do this. And they're essentially changing the economic environment or the economic order across countries. Usually the Federal Reserve is only making changes to the US dollar, the US economy, US interest rates.

• 9:39Anthony Pompliano?

  But this is kind of a more planned global thing. And so in both of those situations, one, we obviously, you know, really focused on the dollar and another, we basically tried to significantly weaken the dollar. And there's a whole bunch of stuff in terms of US exports and imports from Japan, Japan, et cetera. So these things have happened throughout time. I'm not going to get into all the detail though. This idea of a Mar-a-Lago Accord is not to be taken literally. They didn't have a meeting. They didn't all come together. But it is this idea that there's a group of people who came together virtually in terms of President Trump,

• 10:17Anthony Pompliano?

  Treasury Secretary Scott Bessent, Elon Musk, and a couple of others. And they basically are now implementing a completely new economic order. But this is one that is being unilaterally implemented by the United States on the world. And so the question is, will it work? Now, the desired outcome from this is that they would like to reduce the national debt. They would like to weaken the US dollar and they would like to get interest rates down. Those three things, weaken the dollar, get the debt down, get interest rates down. Now, the way that you do that is you can't take a single solution and try to have multiple outcomes. So you need to have multiple inputs, have them impact each other to be able to get

• 11:02Anthony Pompliano?

  multiple outcomes. So there's three main pillars to this idea of a Mar-a-Lago Accord. The first is that what they want to do is they want to establish a sovereign wealth fund. Obviously, that's being done. They've announced it. They're putting it in motion. The second thing is tariffs. That also is being implemented. And then the third thing is that once you have more revenue, and also, once you have the tariffs, and then also, once you have the sovereign wealth fund, then you've got to be able to cut a lot of costs. That's where you see Doge and other things coming in. But cutting cost is trying to get after the debt, but that's, you can't just do cutting costs through Doge. You also have to make an agreement in Europe. We're providing security for the world. Pay us money.

• 11:46Anthony Pompliano?

  Why are we providing all this security, but y'all ain't paying for it? Hmm. Right? And so it goes back to this idea that the countries know that they should be paying for it. We just have never had somebody who goes to them and says, To enforce it. Pay us the money. Yeah, yeah, yeah. So this idea of payment for security agreement is being implemented in Europe is definitely going to happen. They're going to pay more money. On top of that, you see the Doge stuff, and then there's this idea of what people are calling a century bond. In a very generalized manner, the idea would be that if other countries are holding debt, we would do a debt swap with them, and we would essentially swap the debt for these 100-year bonds. That would be much more advantageous for the United States, for their debt holders to hold these 100-year bonds. Now, the reason why I describe all that,

• 12:30Anthony Pompliano?

  that's a lot of stuff going on. And so it can feel kind of chaotic when you're trying to evaluate stuff, you're trying to implement things, you got the tariffs, you got the sovereign wealth fund, oh, let's run over here for security for agreement, etc. But the general idea is we have to weaken the dollar, we have to get interest rates down, and the interest rates in particular maybe are one of the most interesting parts, because Trump's first presidency was completely focused on the stock market. And people who have watched these episodes for months now have heard me say, Trump measures the US economy by the stock market. That's what he did in the entire first Uh, term. That's what he's always done. But now Trump is actually changing his mind. It's when we get new information, we have to change our understanding of what people are actually paying attention to.

• 13:09Anthony Pompliano?

  Trump, obviously, as we see some stocks are coming down, is willing to trade a lower stock market for a lower interest rate. And so what he's not worried about is the US stock market. He is fully focused on the 10-year Treasury bond yield. And he wants to get that down because if you get the bond yields down, now all of a sudden it's cheaper for people to borrow money to be able to go buy homes. Cheaper for corporations to be able to borrow money and you should see a surge in economic growth and activity. And so it goes back to this idea of creating an economic environment where we can actually grow our way out of the problem. Weaker dollar, less debt and get those interest rates down. That's the whole idea of this Mar-a-Lago accord is can you remake the US economic policy?

• 13:53Anthony Pompliano?

  In a way that should have an impact globally where the United States ends up in a better position than where they started. Big, bold idea, but we need a big, bold idea to address the problems that we have right now. And so the debate, the controversy is all about can it actually work or not? We're going to find out.

• 14:09Speaker 02

  Okay, those are all good points, but there's still market uncertainty. And I think what's interesting is that Ken Griffin of Citadel is making a big play on crypto. He, so Citadel is looking to become a liquidity provider for cryptocurrencies, betting that President Donald Trump's embrace of the industry will usher in a boom for the asset class. And you wrote in your newsletter, "The big boys are entering the crypto market now that regulators have given them the green light. There will be pros and cons to this institutional participation, including less volatility, I'm assuming for Bitcoin over time. But you need institutional adoption if you want true mass adoption. All right, tell us about the pros and cons of this.

• 14:53Anthony Pompliano?

  Well, it's just night and day difference. If, think about how crazy this is. Citadel. Who has gazillion lawyers,

• 15:01Speaker 02

  Yeah.

• 15:01Anthony Pompliano?

  unlimited money essentially, they couldn't figure out how to participate in the retail crypto market without the regulators coming after them.

• 15:09Speaker 02

  Right.

• 15:10Anthony Pompliano?

  That's crazy.

• 15:11Speaker 02

  Yeah.

• 15:11Anthony Pompliano?

  That's insane. And so now that it looks like there's going to be a clearer regulatory kind of apparatus, they are now going to start to participate. So they want to do market making on Coinbase, Binance, crypto.com and others, but it's kind of insane that they couldn't do it before. And so the reason why I say it's a night and day difference is pretty much now that the regulatory environment has flipped, we are going to see a ton of these firms come into the market.

• 15:36Speaker 02

  My question is, how many of these institutional players do you think wanted to participate before, but they didn't because they were scared of the regulators?

• 15:43Anthony Pompliano?

  Citadel, so there's Citadel, the hedge fund, there's Citadel Securities. Citadel Securities does more of the market making stuff. Citadel Securities was participating in crypto, but only with institutional investors, right? They were doing something called EDX Market, which was a bunch of like, kind of, you know, big financial firms got together and like, hey, we'll service each other and only institutions.

• 16:02Speaker 02

  Securities or the other one?

• 16:02Anthony Pompliano?

  Citadel Securities, right? And so the problem though, is everyone wants to do the retail. So that's where all the flows are. That's where all of the, the assets are. And so they couldn't go and work with Coinbase. Citadel Securities was worried about working with a publicly traded US company because they thought the regulators may come after them.

• 16:24Speaker 02

  Yeah.

• 16:25Anthony Pompliano?

  And so now all of that fog, all of that has been lifted and, you know, we've talked about it before, but it's like, uh, somebody once said to me, it's like holding a beach ball underneath the, the water in the pool and all of a sudden you let your hands go. What's that? Here goes the water. Doesn't mean the price does that, but the is the participation of all these people coming into the market and that ends up being a really, really big deal. And so I think Citadel Securities doing this is a kind of a watershed signal. On top of that, we saw Coinbase, we saw Robinhood, the SEC dropped investigations and/or lawsuits there. And then on top of that, look at what Citadel is actually doing. They're not saying we're going to take directional bets on, because we think Bitcoin's going up or down. They said, we're going to do market making.

• 17:07Anthony Pompliano?

  They essentially want to have as little risk in the market, be as, uh, you know, non-directional as possible, but they want to drive revenue or profit. And so this is how institutions play the game. They don't come in and say like, let me lick my finger, stick it in the sky and hope that I pick correctly whether Bitcoin's going up or down. They look and they say, I hope that I can figure out a way to make money in up or down markets. Citigroup is one of the best firms in the world at doing that. And they're going to continue to try to figure this out. And crypto, because it has more volatility than other markets, there's wider spreads in terms of the retail trading. That is where I think that they're going to end up actually getting a lot of revenue and profit. And so obviously, they want to go there. Now regulators are going to let them do it where there's clarity.

• 17:47Speaker 02

  Yeah, that's what I was gonna, I mean, that kind of leads into the next thing because around regulation, but Senator Lomas tweeted, so it begins as the US Senate Banking Committee says it'll oversee a subcommittee hearing on digital assets legislation. So it is reasonable to expect that there will be more regulatory, regulatory clarity soon. My God, tongue twister.

• 18:10Anthony Pompliano?

  Well, definitely there's going to be more regulatory clarity. We have a, you know, maybe not even a pro crypto SEC chairman, but Paul Atkins is going in, he understands this stuff, right? He's not going to be anti. That's the thing is like, I don't think that it's good for an industry to have, you know, a hyper bullish proponents as the regulators. I actually think what you want is you want kind of skeptical optimism. That's what you want in regulators, right? You want people who say, this is interesting. We want to have the positive impacts of the industry. We don't want the negatives. We don't want to empower the fraud, the waste, all the nonsense. So we need to come up with a clear set of rules that everyone understands that have the desired impact. We want to have rules that create

• 18:51Anthony Pompliano?

  a safe market, but we also want to embrace the ideas of a free market, of capitalism, democratic participation, et cetera. So what you need is you need kind of rational people there. And the rationality really shows in what I consider skeptical optimism. If you have somebody who's too bullish, then they just open the doors and they're like, hey, everyone run wild. That's not good. And then if you have people, it's just, it's just people are going to do the things that they've done for hundreds of years, which is they're going to take advantage of the system. If you also have people who are too bearish, then they end up suppressing innovation, suppressing technology, pushing things offshore, et cetera. And that's really what I think we saw for the last four years or so. And so it feels like we're ending up in a much better place. The question now is just what the rules gonna be.

• 19:36Anthony Pompliano?

  And so the Senate Banking Committee is a big part of this. There's many other regulatory organizations, individuals, the companies will have, you know, some input into this. Like, that's what you want is you want a lot of different stakeholders at the table. You want a bunch of people to go and try to say, hey, this is what I think we should do. And my guess is that the best regulations are where a lot of people walk away from the table, being like, I got like 90% of what I wanted.

• 19:58Speaker 02

  Well, 90%.

• 19:59Anthony Pompliano?

  Well, if you go and you talk to the companies, most of them actually have more rational views than some of the regulators.

• 20:08Speaker 02

  Yeah.

• 20:09Anthony Pompliano?

  Right? So if I've gone all around the world, I've talked to some of these regulators, some of these markets, regulators are just like, do whatever you want. But the companies, I think, understand for the long-term viability of their business and for the industry, you need to have that clear set of rules that, again, has the desired outcome. And so you want people to walk away from the kind of negotiating table of regulations. Nobody should get 100% of what they want.

• 20:28Speaker 02

  Yeah.

• 20:29Anthony Pompliano?

  Right? It's kind of like, you know, how do you know you did a good business deal? Both sides walk away saying, I left a little on the table for the other guy.

• 20:37Speaker 02

  Are you worried about the types of people that are gonna have input? Or if it's the right key players of the industry or?

• 20:47Anthony Pompliano?

  There's always gonna be people who, I think, infiltrate these circles and have a hand and you're always kind of skeptical of, you know, their participation. But for the most part, I think it's the biggest companies in the industry, the biggest investors in the industry, right? And people will say, oh, like all the big guy, well, yeah, they kind of have, you know, the best understanding, right? If you, if you have the biggest portfolio, you have the most data points. If you have built one of the largest companies, you've probably been building for a really long time. And look at Coinbase. Coinbase got started in 2012. It's, you know, 12, 13-year-old company. And if you look at their understanding, they've seen a lot of this stuff. They've been working on this stuff longer than the regulator's been working on it. And so those are the types of people.

• 21:32Anthony Pompliano?

  You want people who are experienced, you want people who are knowledgeable, you want people who kind of have the right, you know, mentality in terms of that skeptical optimism at the table.

• 21:44Anthony Pompliano?

  People won't get it 100% right, but they tend to get it more right than wrong, I think.

• 21:47Speaker 02

  Yeah. And then this is off of that Coinbase says that the SEC will drop crypto lawsuit. Coinbase has argued that the SEC has been applying existing securities laws to digital assets, prompting a need for a wide ranging rules. And then the CEO Brian Armstrong revealed that the company spent $50 million on lawyer fees. Not as many other companies had deep pockets like we did, he said, and ultimately we had to spend $50 million defending this case. Coinbase's legal clarity comes after four years in the crypto industry under the guidance of former SEC Chairman Gary Ginsler. This dropping of the case signifies a changing of the guard in the crypto space.

• 22:27Anthony Pompliano?

  Completely agree. If you look at them dropping it, it's not a settlement.

• 22:33Speaker 02

  Yeah.

• 22:33Anthony Pompliano?

  No fine. They just dropped it. It feels like we turned a page.

• 22:39Speaker 02

  Yeah.

• 22:40Anthony Pompliano?

  And moving forward, the regulators, they're gonna regulate the industry. They're going to go and they're gonna evaluate what people are doing. They're not going away. They're not, you know, gonna say, oh, we're gonna be, you know, uh.

• 22:51Speaker 02

  Handle this with like kid gloves. Yeah.

• 22:54Anthony Pompliano?

  No, the regulators, they're gonna say, look, we're here to regulate. But I do feel like there's kind of a clean slate. And so people are saying to themselves, okay, again, skeptical optimism. The relationship between the industry and the regulators is gonna be better. The regulators hope that and the industry hopes that. Now, both sides got to work hard to be able to show that that's actually what ended up happening.

• 23:19Speaker 02

  I have a question. Do you think that in four years, if the administration changes from Republican flips back to Democrat, do you think that like it could change a lot of like the crypto regulation that was put in place? Or is it hard to do?

• 23:34Anthony Pompliano?

  No, I think that the nice thing about the regulations being worked on now is very bipartisan effort, right? There was a cohort of Democrat politicians.

• 23:47Speaker 02

  Yeah.

• 23:47Anthony Pompliano?

  I think we're very anti crypto.

• 23:51Anthony Pompliano?

  But they are quickly becoming outnumbered. Now, some of the anti crypto Democrat politicians also happen to be people who are quite powerful. So it's not just a numbers thing, it's also kind of an influence thing. But you have, you know, majority of the Republican Party and you have majority of the Democrat Party, I think at this point that are like pro crypto. And so doesn't mean we're going to get the perfect rules, doesn't mean whatever, but just it's going to be really hard to, again, turn that page and then like turn it back.

• 24:23Speaker 02

  Yeah.

• 24:24Anthony Pompliano?

  Especially given how much time, energy, effort is going to go into creating these rules to then roll them back may take twice as much time and energy. Right? And then from a regulator's standpoint, I also think that they're trying to shoot at a moving target. That's the other thing people don't talk about here. So you have, take something as simple as the regulators overseeing the public equity market. Okay, I know what a stock is, I know what the rules are, great. Now all of a sudden, if the stock gets tokenized, what rules have to change? How do they evolve? How do you write in certain edge cases that you need to address, right? Like, like it's constantly evolving. Now all of a sudden, stocks trade 24/7. Oh, technology is available. Now we go from a US-based, you know, investor base mainly to a fully global base.

• 25:08Anthony Pompliano?

  Okay, what happens now if somebody can use stable coins? Oh, what happens when platforms show up that start to say, you know what? We don't manage money. We simply allow people to get exposure through copy trading. All these things start to show up, right? And it makes it much, much more difficult, but it also means the regulators will always have to kind of keep their pulse on this stuff because the technologists are trying to run. Regulators have to run at the same speed to keep up with them.

• 25:38Speaker 02

  Got it. Um, Bybit got hacked in a, in, in the hackers, I guess, stole 1.4 billion dollars. The breach occurred during a routine internal transfer when Bybit was moving funds from its offline cold wallet to the warm wallet. And during that transfer hackers exploited security gaps, intercepting the transaction, redirecting the funds to an unknown address. Wow. So what happened here?

• 26:03Anthony Pompliano?

  Biggest hack in crypto history.

• 26:05Speaker 02

  Bigger than Mt. Gox?

• 26:07Anthony Pompliano?

  And nobody outside of the hardcore crypto world even knows about it.

• 26:10Speaker 02

  Why is that?

• 26:12Anthony Pompliano?

  Because crypto is so big now.

• 26:14Speaker 02

  Interesting.

• 26:14Anthony Pompliano?

  Right? Think about it. 1.4 billion dollars can get hacked and nobody even realizes outside of, you know, the industry itself.

• 26:24Speaker 02

  Yeah.

• 26:24Anthony Pompliano?

  You would think a billion and a half dollars gets hacked, it would be all over front page of every newspaper. It would be, you know, the, the world's ending, whatever. It's a two trillion dollar industry now.

• 26:32Speaker 02

  How on earth did Bybit remain solvent after this?

• 26:35Anthony Pompliano?

  So that's the most impressive part to me is the 1.4 billion got stolen. Then the users of the platform showed up and they said, oh no, I've been through this rodeo before. Give me my money back.

• 26:45Speaker 02

  Yeah.

• 26:46Anthony Pompliano?

  And they withdrew four billion dollars worth of crypto.

• 26:49Speaker 02

  And they had the money.

• 26:51Anthony Pompliano?

  They had it all.

• 26:51Speaker 02

  Wow.

• 26:52Anthony Pompliano?

  So they lost 1.4, then they were able to do another four billions. That's 5.4, almost 5.5 billion dollars in stolen or withdrawn funds. Cool as a cucumber.

• 27:06Speaker 02

  It is pretty remarkable that if you think about it, Bitcoin has never been hacked.

• 27:10Anthony Pompliano?

  Never. Right? That's the other thing is a centralized exchange got hacked here, but we've never seen a decentralized protocol like Bitcoin, you know, or the Bitcoin protocol get hacked before. And so the example I always use with people is the treasury and the Fed, where they are like, quote unquote, the creation points of money, right? The closest to the, the creation point. They've never been hacked before. But you take that money and you put it in an armored car, a lot of those have been hacked, right? Robbed. If you take it and you put it in a bank, there's been plenty of bank robberies. If you take the money out of the bank in an ATM, put it in your pocket and walk down the street, people get hit over the head all the time and wallet taken from them. So the further you get away from the creation point of the money, the less secure it becomes. But if it's sitting inside the treasury or the Fed, it's super secure.

• 27:54Speaker 02

  Interesting. But that's so centralized now.

• 27:56Anthony Pompliano?

  But if you think about Bitcoin, same thing. Bitcoin on the, like the Bitcoin blockchain has never been hacked, creation point of Bitcoin. If you take the Bitcoin out and you put it into an exchange, exchanges get hacked. If you put it into a wallet, wallets get hacked, right? The, the further you get away from that blockchain, the less secure it becomes. And so Bitcoin has never been hacked, which is the key piece to this. And so, yes, did some people lose? Now, what's interesting here is that these people stole Ether or Ethereum token. My guess is less because they were like, let's go get Ether and more because that's just the asset that happened to be, uh, being moved, um, into that wallet.

• 28:39Anthony Pompliano?

  But I think that that's the type of stuff that people just need to, you know, kind of pay attention to is you're watching a world where these organizations realize there's a bearer asset. I think if I take it, I own it. It's mine. You know, possession is not only nine tenths of the law, with a bearer asset, possession is like 10 tenths of the law. And so I think that there's a lot of people who are constantly trying to do this and, you know, they got them.

• 29:04Speaker 02

  Wow. But I do, I mean, if Bitcoin ever gets hacked, it's over.

• 29:09Anthony Pompliano?

  I don't know if it's over. I do think that there would be a significant impairment to the price for sure. The Bitcoin network was hacked.

• 29:15Speaker 02

  But that's the whole premise of it, no?

• 29:17Anthony Pompliano?

  It would be very detrimental. Again, it's hard to tell, like, would Bitcoin go to zero? Or would it go to, you know, a couple thousand dollars? Well, I don't know, but it would be very detrimental. The difference here is that the network, though, is the strongest computer network in the world. So if you take all of Google Cloud, all of Microsoft Azure, or Microsoft's Azure and Amazon's AWS, and you put all that computing power together, it's less than 1% of the Bitcoin network. So the Bitcoin network is so strong because it is decentralized and it's so large that this decentralized network is super secure. And so for the ability for

• 29:59Anthony Pompliano?

  someone to hack the actual blockchain, again, never say never, but merely impossible, right? It's just, the amount of computing power you would need to be able to do that would be next to impossible. And then people say, well, like, what are the other protocol risks? Like, the bigger risk, in my opinion, is that in the development process, a bug could accidentally get introduced. Now, the development process is very methodical, slow and intentional. So there's test nets and various checks and like all these things. So again, I think it's a near 0% chance that that would happen. But to me, that's the bigger risk than the actual network itself for Bitcoin getting hacked, just given how decentralized and how strong the computer network is.

• 30:45Speaker 02

  Amazing. Thank you so much.

• 30:47Anthony Pompliano?

  All right, guys. Thanks for watching today.