← The Wolf Of All Streets
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- [00:01]
Scott
Morning everybody. Welcome to Crypto Town hall every weekday 10:15am Eastern Standard Time here on X, where we gather the best and most credible and interesting voices in the industry to talk about the news of the day in crypto. Seemingly the biggest piece of news that we have is Binance Tokens in freefall. What's happening for those who weren't paying attention? Number of altcoins. Tom on Binance had basically the exact same dump at the exact same time across the board earlier this morning. Up to 50% drops in less than 30 minutes, leaving many wondering what happened and how this could possibly happen on an exchange like Binance. Some of the other main stories before we dig into that and I know we have some guests here who understand it obviously better than I would. Some of the other stories obviously. Tether buying 8888 Bitcoin in the last quarter. Mike, a Strategy buying another $1.9 billion worth of Bitcoin yesterday. Seems we have a lot of companies buying bitcoin. Meta Planet also bought more bitcoin. The Trump brothers are now starting a company with Hut 8 called American Bitcoin as a bitcoin miner. Bitcoin, Bitcoin, Bitcoin. Clearly seeing that trend increasing. But let's zoom back out and talk about what's happening on Binance. For the guests who haven't been here before, who I don't know, feel free to just ra your hand. If any of you can break down exactly what happened, that would be certainly helpful. BC I think you probably know Gotham. If I'm pronouncing your name right, I know that you're here to speak on this specific topic. So either of you that can jump in and kind of give us the tldr, that would be great.
- [01:50]
Gautam
Hey. Hi, I'm Gautam. Yes. So today what happens was multiple tokens experience massive dump. Like there was a token act, it had a 50% dump. So the timeline of events is Binance announced that they are decreasing the leverage or margin changes for ACT and there was around 3 million or more. Liquidation was triggered and this led to a cascade of selling. And so ACT price went from 0.19 to like 0.09 in like a minute or something. So you can see like a sharp drop in the price. And initially people were speculating it's Windermute and dwf, but both the teams founders have commented that they have nothing to do with it. That is something that we need to do. But I think the real thing over here is like it is cascaded because of Binance announced leverage tier changes and all these over leveraged positions are like having a problem. And you can closely relate it with what happened with Hyperliquid a week back where like liquid meme coin jelly jelly was used to make hyper liquid, like make a large loss. So I think like everybody is delisting all these meme coins which are very liquid and to make sure the markets are performing correctly and it's going to most likely have more meme coins in the future. So in this case there are multiple meme coins affected, like five, six of them. And so that is the main thing that is happening. So it's going to be more. There are multiple meme coins that crash today and their leverage is decreased and it's going to lead to more of them happening.
- [03:50]
Scott
All of the tokens affected were not meme coins though, right? I mean there were some legitimate altcoins that dropped as well. I mean I was just kind of going over the list but identified a number that weren't necessarily meme coins.
- [04:04]
Gautam
Yeah, I think the common thing around all of them is spot liquidity is very low and so if the spot liquidity is low and if the perp is listed it is possible for someone to attack like how hyper liquid had an attack a week back, essentially pumping up the spot and manipulating the prices. So I think that is why Binance delisted these markets. But this has led to a liquidation cascade and you can see on chain there are a lot of transactions by Intermute, DWF etc, which are the market makers of this token, which they claim they are doing like arbitrage between the sex and the tax prices.
- [04:50]
Austin
Interesting.
- [04:50]
Scott
B.C. go ahead. B.C. go ahead.
- [04:55]
Dave
Yeah, thanks. Thanks Scott. So not educating the on chain side as much as my friend here, which was really interesting to hear, but something that did come across the desk early was about Wintermute. Right. So dumping two and a half million orca tokens saw that kind of big kind of hit to the market. I think looking a little bit of research, I think they've got a little bit of previous for this as soon as back in February. Right. And obviously, please correct me here, you know, obviously running a trading desk doesn't, doesn't certainly make me like an on chain analyst. I'm obviously taking, you know, what's kind of coming in at the moment. But I think February 25th they withdrew about 40 million in Solana we saw a really big, you know, I think between 7 and a half, 10% correction that happened in there. I know they came under Scrutiny for market manipulation as well, around a similar kind of time. Which is why I found it really interesting. Interesting to look at obviously what's going on with Binance. And while friend, he was discussing in terms of the liquidity issues and obviously looking at changing those leverage positions, which has obviously caused this. But do we think that this was any part of the catalyst? I mean, when you look at the kind of previous history they've got, it doesn't seem, I mean, it was under $10 million worth, wasn't it? But then it was a huge amount of the orca tokens. Do you think this was something that was wrapped up within that kind of, you know, that liquidity purge, if you like, or do you think that this is kind of like a separate incident? Because this really stood out for me as a little bit of a red flag when we look at the previous that's obviously been reported on Wintermute as well.
- [06:29]
Scott
Maybe Gotham can speak more clearly to that. I have no idea.
- [06:34]
Gautam
I mean, it's a bit speculative, right? Like you can't really say for sure, but. Because it's too early. But yes, there have been like massive dumps on the side as well. But only common thing I can see is Binance delisted and there was a sharp decline, like a very big lack of liquidity on chain for this spot though market cap might be high. It's like they don't have much liquidity and it's more like, is it like, can you do price manipulation? What matters there is more how much depth the liquidity has. Right. And for, for that, like from Binance's side, it does make sense to delist these markets in that sense. I guess there are like rumors like, you know, some market maker is going under the hood or anything like that. But I don't see any conclusive evidence on that because that just leads to market panic. I think everything is fine. I think market has dumped a lot as it is.
- [07:36]
Scott
And yeah, I think this begs the natural question. And Dave, I have a feeling I know what you're going to say, but you said that these should be delisted probably by Binance. I think it begs the question of whether these things should be listed at all and certainly whether these things should be listed with leverage. Absolutely insane. The things this illiquid are listed with high leverage when we know that they're going to last a week at best. But go ahead, Dave.
- [08:00]
Folis
Yeah, I mean you are directionally correct in what I'm going to say. I mean, look, it's not about Delisting there's no reason for Binance to delist any of these things. But it is absolutely something that if I were running a perp exchange the first thing I would do is I would be charting spot liquidity on every single perp that I have and make sure that the leverage that's allowed on those spot per on the perps is scaled to where the spot liquidity is. I can tell you that that that 10x is probably too high for a lot of these. God, forget the 50-100x that they allow. It's literal insanity. And yesterday I was talking in the context of major markets about something that pros call liquidity arbitrage. And I'm sure that BC knows what I'm talking about where you can have significantly differential liquidity between the same asset in different types. So whether it's futures and stocks or options and stocks options in the futures or perps and futures, whatever it is, it doesn't matter. Liquidity is vastly different. Then there are games that can be played that are manipulative. But there's a couple of features here. First, in all likelihood with these, you know, with between Dexes and perp exchanges, the market makers are mostly getting victimized, not the, the perpetrators. They could be perpetrators I suppose because they're in the. In the name. And there have been allegations about some market makers not Winter Mute but others of them doing. Doing this in illiquid tokens for years. I'm not going to mention who but you know, everyone in the industry knows, you know where the rumors have come from. Ghettos. Alameda did this. They're no longer with us thankfully but you know, etc. But what happens is market makers are persuaded to put up two sided quotes. They are in liquidity pools and liquidity pools don't have enough liquidity. And somebody manages to get a big enough position in the perps to make it worth their while to lose a pile of money by pushing the price one way or the other in the liquidity pool or in the spot market. And that's what where all of this comes from. So you make a lot of money, you lose a lot of money on the spot but you make double, triple, quadruple or 10x that amount of money in the purse. And so it's a successful manipulative attack. I don't know for sure that that's what happened here today. Anyone who heard the buzzing in the background yesterday, my. I've been chased away from my desk because of ongoing fire alarm maintenance. So I can't see all my screens to figure out, but that's what it sounds like. And so you know, when you get these situations, it doesn't matter. It begs the question of should exchanges actually scale the leverage they offer per product? Now I have lots of criticisms about the CME in futures compared to perps. I think perps are generically or generally a much far superior product or a risk etc. Perspective. But the CME 100% will scale the margin requirements based on the individual contracts characteristics. And one of those characteristics is liquidity of the underlying which is something that if I were running Binance or I were running okx or I running PI Bid or I were running any of these exchanges, that's exactly what I would do. And if any of them is listening to this and would like to understand how my DMs are open and I'm happy to explain it.
- [11:19]
Austin
Austin yeah, I'll pile in after Dave here because we've traded some similar markets and echo the same like this is something crypto writ large has been bad at. There are call it basic risk management practices that don't happen. So if you're thinking of spot markets versus derivatives markets in general, you've really got to think about a couple of variables. Leverage is definitely one of them, but also aggregate position size, right. If you've got a token with call it 100 million market cap, right? And let's talk even market cap because FDV is a whole different issue. And then you allow 500 million of futures positions against that thing. Well, what did you guys think was going to happen? Of course weird is going to happen when you could use one side of the market to manipulate the other. Especially when spot cannot easily scale. Because one of the other things about like commodities, spot markets is they can be demand responsive when futures get really out of whack. But with tokens that's often not the case. So one, I really do think there are some structural issues with how perps are listed. If you look at open interest across all of the exchanges versus underlying, clearly things are a little bit out of whack. 2 Exactly as was said, this leads to spot versus perp manipulation issues. And you see those in a lot of ways, right? So one of them is the previously referenced AMM pool thing. One of them is short squeezing people in perp positions by simply buying a crapload of the spot and forcing a market to move. Another one that you see that I think people are not always hip to is you can manipulate things like the lending protocols if we Go back to mango markets. Fundamentally again, another very basic tradfi failure was what the heck are you doing lending in size against a highly volatile spot price. Right. Like at a bare minimum, guys, can we use like a 24 or 48 hour rolling average price you would never like in repo markets and traditional finance have a rate rip 60% in two minutes and then massively lend against that term at size. Right. This again is a core problem. So when I see incredible volatility like this, I'm looking at some of the problems we've had in overall crypto market structure of people have very rapidly deployed a lot of technology to make trading very efficient from just a click button perspective, but have not spent a lot of time and quite frankly have redone some of the pre 2008 mistakes in traditional markets. Right. Most of what's happening here is stuff that are known problems that we have seen break before and there are also known solutions to them.
- [13:54]
Scott
Austin, Dave, you guys are way too smart for the rest of us.
- [13:58]
Folis
So you know, we'll, we'll play tag team here. So I would say this, I mean look, I was on the original SIP committee on limit up, limit down, which is in response. You didn't mean 2008, you meant the Flash crash. But that's okay. I think in terms, terms of. Well, actually you probably did mean 2000.
- [14:15]
Austin
I meant 08 fixed income markets. But you're also.
- [14:18]
Folis
Yeah, I'm an equity, I'm an equity guy. So yeah. So look, there are things you can design. I mean, weirdly, you know, had FTX done what Sam said they were doing in terms of the way they were handling their liquidation engine, it would have. And the way they were handling leverage, it was actually a slightly better model. Of course he wasn't doing that, so it was like, well, whatever. But he talked to good game. I think the point here, the underlying thing here is in the United States when you hear those of us like me and I get shit from a lot of the crypto community for saying, you know, that regulators have a time and a place to do things. One of the things we're talking about is very basic rules of the road that are well understood and effectively being able to surveil for things like market manipulation. So we talk about fair and equitable markets as a concept and we have for years. One of the reasons us is the biggest capital markets in the world is because people felt they weren't going to get ripped off as often here. Now if you listen to day traders and Gamestop and Shit, you know, you'll, you'll, others. But they're wrong. I mean, yeah, there are still problems in the market. I'm not saying GameStop was handled perfectly or MMLP or whatever the hell that thing is called was handled perfectly. But in general, you don't have daily or weekly occurrences like we're talking about in crypto because of all the things that Austin said and these things are solvable. The good news is they're going to end up getting solved. And what you'll find is as the US market structure bill progresses over the year and you see people who want principles based regulation running the sec, like Paul Atkins and Brian Kin, friends of the cftc, what you'll end up with is some very basic rule frameworks and those rule frameworks will then get adopted by all the majors. I mean, you know that Binance is going to adopt it because the DOJ is crawled so far up them. Well, let's not be gross here, but the DOJ is there and OKEx has shown a significant compliance commitment and given rules, they'll, they'll want to play ball and I'm pretty sure BYBIT will also. So you, and of course the US Exchanges are gonna have no choice. That's really the, the message here. It's not panicking about it, but it from a listener perspective. Just if you're going to trade perpetual swaps on an illiquid instrument, do what yourself a favor and do what Austin just talked about. Check the open interest compared to what's going on in the spot market and the market cap and the volume. Because if it's dramatically higher, it means you are massively vulnerable in both directions. So if I, I don't want to give investment advice here, but I can definitely give risk management advice. Be very careful. At a bare minimum, have very tight stops so that you won't be swept up in the liquidation cascade which could execute the price dramatically farther from where you want to be.
- [17:03]
Scott
The better advice is don't touch them because with a tight stop, you're getting stopped out every single time just by the natural volatility of any of these assets.
- [17:11]
Folis
Even if you know my correct. You know, I agree, Scott. I just. Look, people are, what do you always say? Humans are going to human. So yeah, I'm just giving advice for those who are going to human.
- [17:22]
Scott
Yeah, I agree. I mean, it just seems crazy to even have leverage on these. Right. And that is something that still remains unique, I guess to what we would in America call offshore exchanges, although I hate that term because off who Shores. But yeah, I just Also Dave, important to note this happened across the board on multiple assets. Right. It's not like this was just one token that somebody took advantage of an opportunity on. It was a lot of tokens. They all did it at the exact same time. Full of. Again Dave, go ahead and then follow us.
- [17:54]
Folis
I was just going to ask, you know, the previous speaker the question did Binance do a notice, a leverage change on a list of tokens and if that was the case then and that was the correlation of the list, then maybe, you know, they should do it a little bit, I don't know, give more advanced notice or do something. But that might have been the cause.
- [18:13]
Scott
I think that question was for you, Gotham.
- [18:17]
Gautam
I think they didn't do anything like I think as far as I know there hasn't been like that advanced notice because even when you give the notice it will dump kind of similar. I think Binance just said at 8:32 and they just like delisted it wild. It was like not that much of update. They did inform like two hours before the update.
- [18:54]
Scott
Crazy. Yeah. I mean you could be in a position in asleep. Right. So it's just, it's a wild scenario. Folis, go ahead.
- [19:03]
Gautam
I. I think what you said earlier was correct. Right. Like when you are in a meme coin and you are leveraged and it's completely liquid, things like this is expected to happen.
- [19:12]
Folis
Yeah.
- [19:13]
Gautam
And people are trading it should know that it is expected to happen.
- [19:16]
Scott
Right. But again they're not all meme coins. Like I, I agree with you 100. I mean there were some tokens that have been around for years that are sitting there and suffered the same fate. So follow Scrat.
- [19:30]
G
Hey Scott. Yeah, look, I was just going to jump in there and make the point. At the, at the expense of kicking the hornet's nest. I mean the issue isn't necessarily leverage and it's, it's. It feels like I make this point a lot on my streams. Like leverage is just a tool. Right. And I think that it, it often becomes this, this weird scapegoat for market participants who have no concept of good risk management. I think the issue when you talk about this and this is just a broader kind of, I guess, nitpick of mine, leverage isn't the thing that we should be vilifying. Leverage is just a tool and actually in the right hands it's a fantastic tool because it allows you effectively to, to use less margin to store less money on an exchange and therefore less counterparty risk with the exchange. Right. And I mean that, that has become, that, that should be, I mean, I know it's a while ago now, but that should be fresh, still fresh in everyone's mind in the aftermath of the FTX fiasco. Not your keys, not your crypto. Right. So I mean, you can, you can, you can keep just enough margin that you need on the exchange and trade by, you know, by levering up and people like, if you're, if you're managing your downside, if you're trading with a stop loss, right. And you're, and you're using leverage correctly, it's just a tool. It's just any other tool. It's, it's, it's, it's, there's nothing inherently bad about it. And I feel like the vilification of leverage is from people who have no concept of risk management and just seems like an easy tool or an easy scapegoat just to look at it and say, well, that's the thing that's causing all these issues. Yeah, it's not, I don't disagree.
- [21:09]
Scott
But I think on some of these there's, you know, you can't get enough size or you should be using such low leverage that it can't be used as a risk management tool. On some of these assets, I agree with you as a whole concept, I've said that for years. But I mean on some of these, because there's absolutely no liquidity, you have no business even touching any leverage that's higher than, you know, a couple percent and it's not really saving you that much counterparty risk. But I agree, I think, with the sentiment.
- [21:42]
Folis
Yeah, yeah, I want to pile on here because I've had the discussion with Caitlin Long where I'm team leverage and she's. The whole market should be unlevered. And look, there's, there's, the only place where she and I agree is I don't think it should be outlawed. But I think that free competition will ultimately be the end of fractional reserve banking or damn close to it because we don't need it anymore. But that's a totally different philosophical conversation as far as Folis, you and I 100% agree that it's like fire. And fire is great if you're cooking your food or warming your house. Not so good if it's burning the walls. And that's really the situation with leverage. My point isn't that leverage is evil, because it is not. And in fact, you can't have well functioning financial markets with market makers who can't leverage individual exchanges or across board to be able to make, you know, be able to provide pricing in a risk controlled manner. But what is a problem, and what Austin and I were talking about specifically is when you allow an amount of leverage that is dramatically in excess of the underlying liquidity available in that underlying. Because in that particular case you set up very bad structural issues. And that's the issue. And, and you could make the argument, and I know the argument that, that you don't, it's not, you shouldn't stop it. You should let people get their fingers burned constantly and they'll learn that, oh, putting my hand in that fire is really dumb because it's going to burn my fingers and it's going to hurt. That's true, but we don't tend to regulate that way because, and as an industry, the problem is all these black eyes for the industries. You then see the next day that newspapers or whatever, people, crypto people burned by stupidity and then everybody gets afraid of it. And so if what we're striving for is mass adoption and we're striving for building things that will mesh, that will help us create the Internet of value, then I think that sucking it up and saying, you know what, having some rules and some, some guidelines is probably not a bad idea.
- [23:41]
G
So yeah, 100%. I just think, yeah, that's a really important point. It's educating and onboarding. But I do think that it comes back to that, that point I made where the, the principled approach should be to talk about risk management, right? Talk about position size, talk about downside risk, right? Don't just, don't just say to newbies like, oh, leverage will get you wrecked. Because that's such an oversimplification and it really misses the point. I guess that's the, that's the only qualm I have. I feel like, feel like that's my mission on CT is to, is to make that point. Any chance. I get it.
- [24:13]
Scott
Very, very, very good point. Yeah, 100%, Austin, go ahead.
- [24:18]
Austin
Yeah, I think part of what we need to think about too is not what's the right way to say this, thinking of all of the market participants as a monolith, right? Because like let's take two extremes of the market. One literally, JP Morgan, right? Like I know banks are banned right now, but if you trade swaps, futures, repo, anything, they've got 24 hour trading coverage globally at all times with like a small army of professionals looking at every single market. So for something like you know, the binance markets with 247 like very leveraged, like highly volatile, your totally exposed to drawdowns and liquidations. That sort of setup is fine for them. But Scott, as you said earlier, I believe like individual two legged human beings have to, you know, sleep sometimes. And so the rules of the market as you would apply them to an individual are going to be very different than you would apply them to an institution. And like this is for instance one of the things the CFTC is thinking about with 24, 7 like margining is that's actually a very different proposition from a legal standpoint and a risk standpoint for an individual human who cannot have 24, 7 coverage versus an institution. And that's still only when we're thinking about people who do this professionally. Right. If we zoom out even further, you know, a good example of somebody here is literally my father, he was an oncologist, he worked 80 hours a week in the hospital telling that guy, yo, yo, yo, maybe treat less people with brain cancer and spend more time thinking about your crypto portfolio would be self evidently insane from like a world perspective. And so we need to think as we look at market structure, what is the right way to do this for a market that will be sufficient across many types of investors and rules that could either sort people into the right buckets, provide the right privileges or provide the right structure. And part of what I worry about with the current crypto market is because we've just completely like taken a pass at that and not tried it invites over time as you get more and more negative experiences and headlines, both very adverse regulation and a lot of people just refusing to adopt in the mainstream after they got burned. As Dave said, touching the stove.
- [26:29]
Scott
Before you jump in, I'll go ahead, go ahead.
- [26:32]
Folis
Yeah, I was just going to say listen, you know the CME argument, that argument is, and it's rare that I call bullshit on you Austin, so I want to be careful. We always assume that we have to have a market structure that suits every individual the same. And that is absolute. It does not need to be the case. There is, you could easily have a layer of FT CMS futures contract merchants who can smooth out the risk curve for people as a service so that you don't have to be monitoring it 24 7. You pay a small amount for a professional to, you know, do treat you like margin calls like the CME does. At the same time others who want that 24. 7 risk management can have the 24. 7 risk management. I just, I really hate when people make that argument, I've heard Duffy make it and it's self serving clap trap. The fact is we in crypto know like there's businesses that have grown up around this in a different area. So you have. Mike Belshi at Bitco has built a great business providing custodial services in a world where any human being can concussi their own Bitcoin if they want to. The issue is, is if you do it through a custodian, additional levels of service. You don't have to have the market structure be monolithic and everyone acts at the same way. There can be varied levels of service. That said, everything else you said I totally agree with.
- [27:53]
Austin
Well, just, just to pile in, I think what you're saying is part of what I'm saying about market structure. Right. That is to say we haven't done a good job of developing the ability for the average two legged human to have these services. I'm totally fine with the structure you described, but the problem is for most people that's currently not a realistic option. Fair.
- [28:12]
Scott
Interestingly, I don't know how long people have been in this market or trading, but I started in 2016 so I guess I was sort of a range for probably most people participating. And the exchanges didn't even have stop losses. I don't know if people remember those days. I remember the launch of Binance, but I remember trading on Coinbase and Bittrex where you literally were trading something illiquid with or without, without leverage at the time. And if you fell asleep you risked going to zero because you couldn't even put a stop loss on your order, on your position.
- [28:46]
Folis
Don't, don't forget Scott, they also at the same time when they first introduced stop losses, they were totally prone to flash, the flash events and people manipulated living crap out of them so that you could be trading something that was trading at 500 bucks and you have a stop loss at 450 and you go to sleep and you wake up and your position's gone and you notice that on all the other exchanges that ever traded below 490, but on your exchange it wicked down for a nanosecond to 425 and you were flushed.
- [29:19]
Scott
Yeah, I mean in 2017 when Bitcoin hit an all time high, there was moments where it was trading $4,000 higher on one exchange than another, literally 20, 25%.
- [29:30]
Folis
Well, it was, we were starting coin routes at the time. It was structurally closer to 2000 for days and weeks at a time. And that's just within the U.S. and if you get to the Kimchi premium. Yeah. Then you get to the 4,000.
- [29:44]
Mr. Anderson
Let's not forget 99 of the time, whenever the market moved higher or lower, you would, you were not able to log into the exchange. I mean 20, 15, 16 with the most liquid exchange at that time, Poloniex. As soon as the market started to move and no matter which one it was in the top five, the exchange would just crash on your face. You wouldn't be able to log in, the prices would show up right after you were like either lost or not able to exit. I mean having a stop loss I think was the least of the concern. If you were only, only if you were KYC'd in one and a half years. Like we were the fourth or fifth largest traders. And I remember meeting the CEO randomly in consensus Times Square Marriott and telling him that I've been in the waitlist for eight months for kyc. Absolutely, absolutely. But yeah, about what Austin said, I would actually back Austin. Not that I'm against entirely what Dave's saying that there are tools. But Dave, let's not forget Austin's talking about average two legged human. They're not aware of these tools. Most of the times they're not aware about the complexities of these tools. I mean we ended up creating most of our trading strategies and most of our trading engine by ourself while everybody in my company that was institutional and not a degen crypto like me was laughing at me behind my back. Of course they can't laugh at me in my face. I was a boss that in the average institutional world they create all of this like they have fixed APIs and they have smart order router protocols and products and infrastructure and come what may, everything was available. And in crypto we were like busy bloody droplets around the world. Building droplets around the world only to retrieve the original order book of Bitmex. They used to throttle the APIs, they used to mask the orders on directional location and account basis. It was as bad as that. So. And it's not good today, it's not that good today if you're not just trading on Binance and Coinbase and you have to move out to let's say smaller exchanges to build your alt portfolio and God forbid if you're in memes, I mean you're already dead. But if, in case you think you're alive and you still want to trade, you have to go to the likes of Gates and, and I don't actually want to name names, git is actually the better one, the better of the best one of the league. They don't even. Their APIs stop responding. Smaller exchanges tell you to take the dump every one second. They don't give you web hooks like it's that bad. And I don't want to get into jargons, but it is, it is terrible, terrible, terrible. So the infrastructure doesn't exist is my. Is the bottom line I want to mention here.
- [32:53]
Folis
Yeah.
- [32:53]
Scott
I mean we often joke about how there's a meme Coin casino happening on Pump Fun and Solana where you know, the house edge would make the mafia blush. Blush. Right. 98 to the house. But also true on a lot of, I guess, less regulated or lower volume centralized exchanges where you think it wouldn't think that was the case where you're still gambling in a casino with like.
- [33:21]
Mr. Anderson
Yeah, let me make you two good points that might be amusing as well as informational and might bring a little shame to crypto, but let it be so. One, one of the best tactics of these tier three exchanges that you will start to observe if you haven't already observed, is till the time the token does not actually hit the range of Bybit, Kucoin and Binance, you'd see these absolutely shitty exchanges doing the maximum volume on the shittiest token. And the reason of doing that is because as soon as a new buyer goes on to CoinMarketCap or CoinGecko and wants to buy this token, the obvious choice is to go to the most liquid exchange. Right. So if they're making like 80% of the volume, which is of course absolutely fake wash trading. Yeah, yeah. Oh, I mean being a market maker, I tried to steer myself from those.
- [34:15]
Scott
Words.
- [34:19]
Mr. Anderson
So you see them flashing on the top. And of course the retail wants to go to these exchanges because it looks like the best place to be. And then the moment the token goes on to, let's say a slightly better exchange, all of a sudden the volume, let's say from 90 million goes to 90k on the same shitty exchange. Right. So that's one amusing part, the second part about Pump Fund and the Solana mafia. Call it whatever may you may. I think that has already started to happen on Binance. Coming back to the topic of today's town hall, you have started to see Alpha 2 wallet accumulating broccoli and I think ARKOM has already published a thread on the same. You're looking at $300 million of per volume of a BNB token on Binance while the volume around Dexs and all the Other sexes collectively on spot is less than 3. Right. So I don't know who is trading those perps, but let it be whatever it is. Second. So I've already started. Third. So first sign, Alpha 2 wallet, like the official Alpha 2 Binance wallet is accumulating tons of tons of memes. Two I told you volumes on perps. Three Binance trades across smaller exchanges have increased insanely. Right. If you look at the number of trades now, transfers happening between, between the BNB listed tokens and the BNB listed memes in particular. And to Binance wallets have increased to a whole new level. And that's why I've already announced and I want to make that announcement once again, maybe to inform people that we're getting ready for a BNB meme run. And again, this is for your own research to do. I'm not a market predictor or anything, but I'm just telling you these are the signs that give me a hint that we are getting ready for. BNB has taken their lessons from Solana. They don't want to be left alone in the race against base and Sol. And that's happening. So yeah, maybe tokens are taking a free fall because somebody wants to accumulate before the run begins. But you'll see a similar Casino Royale, my favorite movie of James Bond. You'll see a big casino starting up in Binance.
- [37:02]
Scott
That was a lot to process before.
- [37:05]
Mr. Anderson
Should I give you one last.
- [37:07]
Scott
I mean, why not while you're on a roll.
- [37:09]
Mr. Anderson
Okay. Yeah, yeah. I mean, so funny. Incidences also have started to happen in the last I think two months. Binance did this sort of arrangement to look organic, but they listed like five tokens on the voting to list. And out of those five, the one that had least vote but was on BNB chain got the listing, something with less than 2 million in volume.
- [37:45]
Scott
Right.
- [37:45]
Mr. Anderson
And all of a sudden, you know, it went on to $200 million of volume on perps and getting spot listing. So I think those four hints are my, you know, my direction are forming my direction towards BNB run a lot.
- [38:03]
Scott
I do want to pivot since we've talked about finance so much, just to the other biggest topic of the day, which is obviously Liberation Day tomorrow, which I guess we could rename Tariff Palooza or anything you want, but looking for the clarity on the United States's tariff policies and what other countries are going to do to react and what that might mean for markets. Mr. Anderson, you haven't had an opportunity to talk, man. Great to have you here. I Mean, you're generally always on top of market direction here. So I jumped down literally right when I went to him. Do you like that?
- [38:41]
Folis
Perfect.
- [38:42]
Scott
Okay, so fullest, maybe, since you're watching the market so closely and, and, you know, publicly trading, how are you approaching Liberation Day? Or at least the volatility we're expecting tomorrow as the tariffs become clear?
- [38:58]
G
Yeah. So, I mean, it's, it's a point I've made on this show before is that it feels like the, the market conditions currently are so prone to headline risk that you really need to be accounting for that when you're trading or else you're gonna, or else you're gonna have a bad time, effectively. It's something that I've mentioned to my guys. It's something I've mentioned to my team, more so than the previous instance I can think of that was particularly news driven was last year, around the time the ETFs were being kind of approved, or at least towards the time at which it started looking like those were going to be approved. This last two, three months between the election, all the hubbub around the strategic reserve, the tariff situation, the various ongoing geopolitical situations. I mean, we have a new one with Iran now with Trump threatening to bomb Iran, which is, I believe those are the exact words he used. You know, an ongoing NATO situation, ongoing tensions in Ukraine. There's just, there's a lot of, there are a lot of news headlines that can come out and destroy the chart. That's effectively it. I mean, and I, I don't, I don't just mean to the downside. It's, it's, it's headline risk that goes both ways. And I think you really need to be accommodating for that from a technical point of view. I really do think, and this is something I've spoken about before, I really do think that we're seeing this breakdown of the, the previous range, the kind of November to February range that we had, which was, it seemed like it was anticipatory price action. It was price action that was in a holding pattern in anticipation of what felt like, to me, it was in anticipation of a bullish version of the strategic reserve. Trump was going to come out, he was going to say, we're going to have a bitcoin reserve. It's going to be like the American gold reserve, and we're going to be buying this much bitcoin. And that was kind of, I mean, it was always doomed to fail. It was always going to be because, no, no, the Actuality of the thing was always going to fall short of that.
- [41:11]
Ali
Right.
- [41:12]
G
So we had this kind of holding pattern where BTC was kind of bouncing between 90k and 100k or 105k. And then when the soft version came out, or when it started looking more and more likely that a soft version was going to come out, you know, initially it was just going to be assets that they had confiscated and then it was going to be, you know, they were going to buy some, but it was only going to be select, you know, with controls in place and only going to be on certain assets. I think now we're seeing a retracement of that, that kind of, that, that, that Hopium pump we got in the aftermath of the election of, you know, the first pro crypto president. Not just the first, this wasn't just the first election where crypto was a main talking point, but actually the first election where we actually got a pro crypto president voted in. So now we're in this kind of this, this funny part in the market where there's just, it's like, what's the catalyst? Right? That's the, the key question, like people talking about, you know, oh, we're gonna, it's gonna be like the, the, it's gonna be like what we got in 2021, right? We're just pulling back and then we're gonna put in a new high final exit pump and then you're gonna get to sell it. But like, what's the catalyst? What's the fundamental driver that's gonna take us back to 100k to go? It's gonna take us back to 110k, that's maybe even gonna push us to 120k. I think the market was waiting for Trump, for this pro crypto president to enact a bullish version of the strategic reserve or various other pro crypto policies. And so far we've seen, realistically, I mean, he's been a net negative for crypto, mostly by virtue of the fact that he's escalated, introduced and escalated this tariff situation. As everyone knows, markets, especially risk on markets, do not like tariffs for reasons that I've explained a number of times before. Basically comes down to discretionary spending for consumers. Right? But all of that has kind of led to this situation now where I feel like the markets are just de risking. We spoke to equities guys, Scott, on this show maybe three or four weeks ago, or rather you said that one of your friends who worked at a desk that you couldn't name was they were short from like 100 510. Exactly.
- [43:24]
Scott
Shit, Adele, exactly.
- [43:28]
G
I mean, you said that those guys, like once Libra came out, they all got on a call and they were like, okay, we're shorting this market because it's going to 70K. And I mean, so far it looks like they were pretty bang on. I think at the time the price of bitcoin was like 105k. And we're seeing this mass retracement now because instead of the idealistic version of what was going to happen during Trump's presidency. Right. Pro crypto policy, a bullish version, etf, bullish market conditions, stable market conditions. Instead we have market uncertainty, escalating geopolitical situations, and arguably an environment that, while not necessarily hostile to crypto, is not conducive to risk on assets flourishing. So it's a funny one. I can't be bullish here. As much as I would love to be. I just don't see the fundamental driver that's going to take us to new highs this year. I know a lot of people saying that if that doesn't happen, then it means the cycle's over. I'm not sure I ascribe to the cycle, the cycles being existent anymore, actually, in light of what's happened in the last kind of 12 to 24 months with the ETFs and etc. So, look, I don't know. I mean, that's, that's my main, I, I kind of ranted there a little bit. But my main, my main point here is that, you know, I think that I think this market goes down a little bit before up. And I really do think that it's one of those situations where it's very difficult for me to be risk on here. When Trump can say anything he wants and send the market.
- [45:02]
Scott
That'll be the case for four years.
- [45:06]
G
I think so. I think so. But I also think that at the moment, I think that the market will find equilibrium at some point in the next six to 12 months and then the headline risk will be less than it is now. I think at the moment there's just, there's too much movement and the like. It really feels like people are still waiting for that, for that thing, waiting for that, that catalyst that's going to send us higher. And I think once, once, you know, it's one of those classic things, once all the hope is drained out of the market, speculators, once everyone's saying it's over, once we go back to 70k and once price starts, starts Crabbing around. That's when. That's when there'll actually be some fantastic opportunities, I think, to buy Buzz.
- [45:51]
Ali
Yeah, we do have a sponsor today. And just before we get started, I want to make a note that Mario's company, ibc does marketing, incubation and investing. And sponsors on the show are working with IBC specifically. Not necessarily Crypto Town Hall, Scott, or even myself. And IBC is also hiring for writers, journalists and moderators. So if you are looking to join a great team or you're a project that wants to get up here, just like Expand, just DM Mario, or even the Crypto Town hall account up here and somebody on the IBC team will get in touch with you. So we have the Expand account up here in a speaker spot. They have the beautiful black and silver logo here. Why don't we start with just an introduction of yourself and an elevator pitch on the project?
- [46:39]
Expand Representative
Hey, sure. And let me. You guys can hear me well, right?
- [46:43]
Ali
Yeah, loud and clear.
- [46:45]
Expand Representative
Great. And I need to say before I begin that you guys have been doing some great work here and I'm very happy to be here today and introduce Expand. I know I've met with some of you guys before, like at token 2049 and some online meetings, meetings we had. So let me just briefly introduce Expand first. Expand is a trustless authentication layer for AI ZK agents. It basically introduces a new approach to data access for AI agents by utilizing Zero Knowledge Proofs, ZK proofs. Basically, by integrating ZK proofs, Expand enable AI agents to become ZK AI agents and verify sensitive data without exposing it. This enables ZK agents to securely access a broader range of high value data and data sources, while of course maintaining privacy and security, which is the main objective to hear.
- [48:00]
Ali
So for people who are tuning in, if you could really just summarize, why is this needed for AI agents and where AI agents are right now.
- [48:15]
Expand Representative
Basically? Well, as I said, Expand leverages ZK proofs and this allows AI agents to access and verify sensitive data without directly exposing the underlying raw information. Actually, the AI agent doesn't even need to access the raw information. It can just verify the information from the ZG proofs. Those of you who are already familiar with how zgay proofs 0 knowledge proofs work, we'll know what I'm talking about. And Expand avoids risks by enabling AI agents to verify data through ZK proofs, minimizing data exposure. Because current AI agent authentication methods also pose some security risks. They hinder access to sensitive data and they limit the Agent's potential basically expand minimizes data exposure as we said, it eliminates also centralized dependence and it ensures efficient, secure and scalable AI interactions. And let me just also add that this breakthrough promises to basically expand AI agents use cases across industries like healthcare, like finance and many, many fields we can think of. While it will be ensuring compliance with.
- [50:10]
Ali
Privacy regulations, healthcare definitely makes a lot of sense with compliance with HIPAA regulations. But we we've had some really good conversations on this show just regarding how comfortable people are with sharing sensitive data with with AI like, like even things that are not agent related like using ChatGPT or whatever LLM people are using. Some people are just willing to give it their their banking information, their any information required for taxes and stuff like that. So it's been a hot topic recently just regarding the comfortability of people with sharing anything with an LLM to have it analyzed or work with them. So what other types of sensitive personal data can these ZK agents handle? And are there other fields other than finance and healthcare where you see this being really applicable?
- [51:06]
Expand Representative
Absolutely. So ZK agents can handle a wide range of sensitive personal data across many many fields. This includes medical history, diagnosis results in healthcare as you mentioned, bank account details and credit scores in financial services, for example, client privacy data and trade secrets in legal in business context. Also household routines, device usage in smart houses. We all know how weird it is how we feel in our houses having to use an AI agent and give out all our data. So this also tackles that also there are more fields where it's applicable like student grade and psychological assessments in education, personal identity details of course, criminal records in public safety, payment details and browsing history for digital footprints. All the ways that today data is collected, chat history, geolocation data on social media, all that that can be tackled through ZK and be safely stored and you don't have to actually expose all these data.
- [52:42]
Ali
So a lot of people are who are in the audience are probably vaguely familiar with zero knowledge proofs, but there's probably a lot of terminology that that would be helpful to define for them. So can you maybe give an overview of why zero knowledge proofs are very secure when doing this type of product?
- [53:06]
Expand Representative
Well, I know it's a bit technical, but I can give you a very simple way to understand how zero knowledge proofs work. Basically it's like you are enclosing information inside an envelope and outside of the envelope you only need to add some tags which the agent will use to verify that this piece of information actually includes what I wanted to find. This is a simple way to understand how ZK works. The info is actually always encrypted inside the envelope. In our example, it's not an envelope and the agent only will access access the tags to verify the info. So basically, ZK proofs allows ZK agents to verify properties or characteristics of data without revealing the data itself. For example, a ZK agent can verify that the user's credential its score is above 700 without knowing the exact score. This ensures that sensitive information remains private while still allowing AI agents to utilize the necessary data for decision making and for providing personalized services. And this is of course applicable to any of the fields we mentioned before.
- [54:49]
Ali
Yeah, that's a great example. I love the envelope analogy. I also find when talking about technologies that can be highly technical for some users, using a specific example can really help them understand. Could you maybe dive into a specific industry and a specific data challenge that this could solve? I know before you referenced credit scores. Perhaps that's a good place to start.
- [55:22]
Expand Representative
Well, let me bring a simple example we all understand. For example, in healthcare, Expand can allow patients to provide Zika proofs like age over 50 for example, without ever revealing a detailed medical history. Allowing AI to generate personalized treatment plans without actually having the exact information. It will have the thing it needs to have and it can provide a better outcome. Or in finance, users can submit ZK proofs such as credit score above 700 like we mentioned before and they don't need to expose further account details. But this way they will enable AI to provide tailored investment suggestions with enough ZK proofs. Of course, similar obligations also Expand to hr, to legal, to education, to public safety, commerce, social media, even autonomous driving each leveraging ZK proofs to balance data accessibility with user privacy.
- [56:52]
Ali
Those are great examples because fundamentally a lot of those examples that you use suffer from centralization of data as well. So in which is obviously a very hot topic in blockchain. Can you maybe touch on how this makes the data storage and security process more decentralized as well?
- [57:13]
Expand Representative
Right, so basically traditional identity verification often relies on centralized institutions, right? Like banks, like governments, which of course creates vulnerable related to data misuse, privacy breaches. I'm giving up all my information to centralized institutions. Expanse trustless authentication layer allows ZK agents to verify data fertility in a decentralized environment without relying on these third parties. Basically this greatly reduces the risk of data exploitation and it enhances user control over their own data and information they give.
- [58:16]
Ali
I love that Ali and I do want to make A call out in the audience just here as we're we're wrapping up. The Expand Profile is up here at ExpandZK, so definitely give that account a follow. You can access its discord and the website directly in the Expand ZK bio. So on April Fool's Day make sure that everyone is being safe and trusting. Verified links there. But I'll also give Ali a follow as well. And as we're so we're wrapping up, is there any call to action or anything coming in the near future for Expand that you wanted to let everyone know about?
- [58:56]
Expand Representative
Right. I want to first ask everyone to go to our Twitter to expand the gate Twitter and give a follow. At the moment we are working actively with our whole ecosystem and we will be rolling out activities soon. So make sure to follow and check out the information on our Twitter because enough things are coming soon. Also some of our partners, for example, the Camel Wallet is about to launch some bug bounty program these days. So yeah, there is a lot of things going on and will be announced shortly. So make sure to follow. I want to thank you for inviting us here today. It was great to talk to you guys.
- [59:51]
Ali
Thanks for coming and if people are tuning in, make sure that you're giving that Expand Profile a follow. Appreciate Expand ZK for coming today and give all the other speakers a follow as well. These are people who take their time to to give their opinion on what's going on in the market and and of course builders in the space who are are teaching us about their products as well. So everybody have a great Tuesday, Happy April Fool's Day and remain safe on X because this is definitely one of the days where the most scams are active. So make sure that you're following official links, click on that Expand Profile and follow all the links directly from their profile. So everyone have a great day and hopefully we get some green candles in the market. Thanks everyone.