Scott (4:54)

In the same exact way for years.

Tony (4:55)

Exactly the same way.

Dave (4:57)

And that was really my long, rambly point. Anyway, I see you have three different hands up, so let other people talk.

Scott (5:03)

Yeah, go ahead. Tony, good to see you.

Ryan (5:06)

Hey, Scott, Great to be here to follow up on Dave's point. You know, it is not a crypto specific issue, but we have the solution. So I'm a bit disappointed on Coinbase's part. We got to start putting data on the blockchain. They should be innovating some sort of solution here, be leading to charge. It can't be the excuse. Well, this happens in every industry. We have the solution and I would expect more from Coinbase as a publicly traded company, the largest exchange in the United States.

Scott (5:34)

So we got to figure out a.

Ryan (5:35)

Solution here because how can crypto, which has all these solutions and we talk about data ownership and data on chain, still be facing these problems?

Scott (5:47)

It's interesting, Tony, and I'm going to go next to Ryan and then to Douglas, but I had. I know Yago is actually joining later. Bitcoin os and we just happen to be talking about this this morning on YouTube. To your point, this technology exists, whether on Bitcoin or elsewhere in crypto, obviously with ZK proofs that you can effectively prove data without sharing all of it. Right. You can give a yes or no answer. Yes, this person is who they say they are. Yes, they're of age. Yes, their credit score is yes, they're viable to open an account, whatever it is, without giving all that data using crypto. But to, like I said before, you can't do even in the United States. If Coinbase tried that, I don't think they can because legally the KYC AML regime would never allow that. At least for now. Go ahead, Ryan.

Douglas (6:34)

Yeah, I mean, we do have the technology in the space, but everyone has to remember that Coinbase is not a blockchain company. Coinbase is a centralized entity that is essentially a bank. And if someone hacks into my Coinbase account, they're going to get access to my $15 of mudang coin. And I'd be like, oh, well done. But I don't keep anything in centralized exchange specifically for that reason is it's not a blockchain company. I wanted to give a quick shout out to Naomi Brockwell who does NBTV because she's been scouting this from the rooftops for years, making great viral videos about personal security and cybersecurity and how to protect your data and we need way more education on that because a lot of people are thinking like this is a general banking system and it's not, it's digital cash and when people get access to it, it's gone.

Clinton (7:25)

Right.

Scott (7:27)

It's interesting. And yeah, Naomi has made great content around this. I think my first knee jerk reaction was self custody solves this. Right. That's a kind of a brainless thought about it when you consider that if you are in the United States certainly at some point you have to assume that people need an on and off ramp. They need to and sell their assets somewhere. They need a way to get cash out and that puts you squarely into all these centralized exchanges, whether you like it or not and that KYC AML regime. Right. So I mean you can try to self custody and live only on Bitcoin, but it's very, very difficult. Most people need an off ramp.

Douglas (8:04)

It is difficult and it's a problem people are trying to solve. Ledger has been trying to solve it, trying to make more user friendly applications. There's a handful of wallets out there that are trying to be better at self custody but no one's really created that general use. No one has that technology where it makes the general public feel safe to hold their life savings and the majority of their net worth in a single key. I know Bobby Lee has his hardware wallets and there's lots of different types of wallets out there, but I don't think anyone's really figured out, you know, even tying it to biometrics. I don't think anyone's really figured it out yet for that mass adoption.

Scott (8:50)

Yeah, and even beyond that, for the simplicity part once again you also need to somehow be able to get cash. Right. So at some point you're attaching to the bank. Yeah, I know we're agreeing, I'm saying, but at some point you need to attach to the banking system and that may be more or less difficult depending on the jurisdiction that you're in. Tony, go ahead.

Ryan (9:09)

Just a quick follow up. I feel if this type of situation keeps happening to the crypto industry, it's going to force more people to go to ETF route. They're going to go to the BlackRock's fidelities and as they build more crypto products, ETFs and you know, the ad staking and all these things, we got to solve this because you know, I'm a big believer in self custody and I feel like we're going to lose that aspect to crypto and that great benefit if we don't solve this.

Scott (9:35)

Douglas, I'm sorry, I forgot you had had your hand up and I said you were next. Go ahead.

Gary (9:39)

First, great points, obviously, from Dave. Tony, Ryan. I think that one of the most entertaining parts about today was that I thought that the Coinbase response came directly from the Mel Gibson movie Ransom, it's so Good, where essentially he turned around and he said, listen, we're not going to pay your ransom. Instead, what we're going to do is we're going to pay that to people who find out who you are. And it was almost a direct rip off from that 1996 movie. So that's really the biggest thing I took from it. Obviously. I think I agree with Scott and that I think every day we get multiple phone calls, texts from Coinbase and lots of other exchanges that we have no relationships with whatsoever. And that seems to be the nature of the game and it's a shame that it has to be the nature. And it'd be great if someone came up with a solution where we could just blow it all off.

Scott (10:33)

Yeah, it's interesting, Tony, I. I agree with your point about ETFs and obviously people going with the quote, unquote, more secure products. But to what, David, I were discussing earlier, you know, people can still socially engineer access to your swap account, right? Or your bank account or, or others. But I think that you definitely do have probably better insurance and systems in place to protect you from that after it happens. If it does.

Dave (10:58)

It's not. Not really. I mean, I mean, it depends. At a big level, you know, at a large level. Yeah, probably because, you know, it takes as long as you recognize it within a few days. It takes so long. But here's the funny part. You know, be careful what you ask for. Once we finally get. Once we finally get stable coins done and stable coins are underlying all the banking rails, then that's gone, you know, once the actual transfers of money within the banking system speeds up, because they're using newer, better technology and it's huge benefits. This, I'm not suggesting they do anything about it, but it does make transfers and electronic payments far harder to reverse. And so, you know, right now they're not that easy to reverse. And in fact, with Zelle, they tell you they won't reverse it, but that's generally limited to like 5000 bucks a day or something. But, you know, people do need to understand that it's just as big of a deal in the banking system as it is with anything else. And as stablecoins come in it's going to blur the line. So this, as I said, it's not a crypto thing, it is a thing and it's something that is very important.

Scott (12:06)

Brian.

Douglas (12:07)

Yeah, I can see us going down the route where as a technology gets better and better and better and these agents get better and better, better we start hearing the mantra that, you know, they can be trusted more than your own brain, where you're going to misplace things, you're going to forget things, but these agents will never forget. So once we start having personal security agents to handle our keys for us, I think that's going to be a big shift in the industry.

Dave (12:36)

Yeah, I was just going to say I am not shilling and frankly, I think I'll be one of the last people to put my eyeball on, you know, on the World Coin scanner, on the orb or anything like it. I, I don't trust it and it's going to be a long time before I even think about trusting it. But one doesn't. It doesn't take a rocket scientist to realize that at some point you're going to end up using biometric encryption for everything that you do. And that's where the real hack, the real danger is, right? Because at that point, you know, all bets are off. So it really becomes a question of can it be, you know, can this thing be secure that way? But you know, I'm, I'm kind of going down that rabbit hole, so I'm going to let.

Scott (13:19)

Well, Dave, and I think that's a good point. It's funny because I think everyone's once again knee jerk reaction about the World Coins and the identity verifications by biometrics is just that this is dystopian. But I'm not, I'm also not like, I'm well aware of the irony of that as I stare right now into my iPhone that I just unlocked with face ID right after getting off of my webcam while live streaming to YouTube. Right. There's once again, it's like when we go back to Coinbase, I don't think Coinbase could have prevented this because you're always going to have human beings that are not getting paid much protecting data that can be incentivized to do it. I, I also like don't know that World Coin and these things or whatever iteration of biometric data is avoidable as we all give our biometric, biometric data intentionally and, you know, voluntarily, all day, every day, everywhere with our devices. So I don't really know what the final answer. There is, but I do think that biometric verification is what's, what's coming. Does anybody have any more specific thoughts on this? Because I want to, I want to pivot, if not, any more thoughts on the Coinbase situation? Quite a few more news stories. But Clinton, since we have you here, and obviously you are a, you're the CEO of Crypto Tax Audit, you deeply understand something that just because you're here, I want to ask you about. I've heard from three people in the last week, basically, that they've recently gotten very vague letters from the sec, from the irs. This is under the Trump administration, which I didn't think was necessarily going to happen, saying you may have under reported your crypto taxes. If you'd like to file an amendment, please feel free to. But with no direct evidence or claims that that was the case, it seems like there's this widespread letter potentially going out just to people who had some sort of sufficient significant exposure to crypto, saying, hey, fishing for more taxes. I don't really understand what the letter is. I'm curious if you've heard of this.

Naomi (15:21)

Oh, it's big. It's big. Scott, thank you for asking about it. This, these are letters. They're, they're identified as an IRS letter number 6173 and 6174 and 6174A. So if you get a letter, that's what it says it is a real letter from the irs. It does feel like a phishing letter. It feels like a phishing letter because as you said, it's a very vague, we know you had crypto accounts. You might want to check your tax returns and amend them. And it's, you know, and who, who isn't afraid of the irs? Who isn't insecure? I've had our phone, we get calls all day long. Several of my staff all day long, people asking about this. Who's not afraid they didn't do something right in a previous year, or they didn't trust their accountant, or they didn't even file at all. So it's a big fear. Now, let's break this down. Why are you getting these letters? Most of we've identified them. The primary reason is that the IRS has information from Binance and the former Poloniex Exchange that if you had a Binance account, they've been able to link it back. And the way we imagine this is they kind of, they looked at what addresses you were shipping things really quickly.

Scott (16:36)

Clinton Finance us or literally a Binance Account because in theory, Americans International. Oh, wow. Okay. Because that's interesting because we weren't supposed to be able to use it as Americans. Go ahead.

Naomi (16:45)

Well, you weren't in 2019, they said no, no more. Right. But they, they hadn't really started KYC and a lot of people were going in through VPNs looking like they're outside the US so I think what, what happened, because, you know, the US sued finance, they put CZ in prison, and this is why he only got four months in jail, because he turned over all this data. They've linked it back. Okay. You shipped from a Coinbase account to finance that Coinbase account or that was linked to Scott. Oh, go to Coinbase.

Clinton (17:16)

Oh, Sky.

Naomi (17:17)

Here's the Social Security number. Bingo. You're getting a letter. So you can kind of see how they're, they're putting this up. What, they've done this before. Back in 2019, the IRS sent these letters. What they do is it's basically a scare letter because they do not state what year is in question like a typical audit. And what. The second thing that's extremely offensive to me in the US Government, engaging in just bald face fear is that you can only amend a tax return for three years.

Scott (17:46)

That's right.

Naomi (17:46)

So if you're filing on April 15 each year, you can't even amend your 2021 tax return. Turn, it's already been three years since you filed it in 2022. So in 22 and 23, you know, we're down years 24. Not a lot of people didn't sell. So most people are afraid of 2021, 2020, 2017, the big money years. And they're terrified if you call the phone number on there. Everybody should know that the IRS records the fact that you called from that number and anything you say in the background, it's all recorded, attached to your account. Our advice is, in general, you should do ignore it.

Scott (18:28)

You're not going to go out of your way to prove that you were wrong when you made your best effort.

Naomi (18:33)

Right. So. But a lot of people's, everybody's situation is different. And it always surprises me. I talked to so many people that different trading styles, people got in at different times, did different things. So if you feel like maybe you're exposed because they could initiate an audit afterwards, if that's their bail threat, then I would suggest calling our office, talk to your personal situation and see what makes sense for you. One thing that we're recommending for people is we have a service we Call Tax Shield, where we actually pull the irs, your IRS information on a weekly basis under power of attorney so that it's not used against you. And we monitor for flags. We can see these flags occurring actually as much as six to 12 months in advance.

Scott (19:21)

You mean the IRS flagging you for a potential audit basically, or.

Naomi (19:25)

Right. They flag your tax return. The way they have a whole group that decides who's going to audit and when they decide they're going to audit you, they put a flag on, you know, Scott's 2022 tax return. And then the examination department, they, it goes into their hopper and eventually it gets assigned to an auditor and the auditor gets around to it when he can. So and then because they're having a little bit of a shortage of auditors right now because of the recent layoffs, you know, you're really looking at about a six month time frame. But we can see that and let you know about it ahead of time. We can amend the tax return and prevent the audit from happening in the first, because the last thing you want is your face on an auditor.

Clinton (20:01)

Yeah.

Scott (20:02)

Another question. I think there was a sentiment that with the quote, unquote new irs, it was effectively being gutted and they wouldn't even have the resources for these type of audits. And listen, I know technology and AI will make that very easy, but I think a lot of people thought we were in a Cinderella. I think a lot of people thought we were in a Cinderella period right now where they were somewhat safe.

Naomi (20:23)

Well, hey, look, there's, there's, there's been a lot of layoffs. Most of the people that mean, I saw a recent news article, 31% of all auditors laid off. That's probably true. And they were probably all new auditors. All right, so it takes several years before an auditor's, you know, beginning to get capable of doing a complex audit. Secondly, the IRS has shifted their focus to just going after big rollers. They used to audit small taxpayers a lot because there's an immense amount of fraud with child tax credits, earned income credits, but they've laid off. They're not doing that anymore. They're focused on high end people. And this is actually very newsworthy right now. We have just seen the first audit initiated on people who have moved to Puerto Rico to take advantage of the tax incentives there do not have to pay capital gains tax. We're seeing our first audit on this.

Scott (21:11)

Come through of a single individual or the group in general, sort of a single individual.

Naomi (21:16)

It's a single individual. You Can Puerto Rico that it's happened. Well, Puerto Rico is the US Tax haven. If you live in Puerto Rico, your capital gains that you experience after you've moved to Puerto Rico, if you get the right approvals, are no longer taxed by the US Government. So there's a lot of whales down there. Okay. And they have massive holdings.

Scott (21:41)

And Ryan's giving you the fist because he's a Puerto Rico guy down there.

Dave (21:46)

Exactly.

Naomi (21:46)

So. No, but I mean, I've been to Puerto Rico several times. I've talked to people and there's an immense. There's a complex set of residency rules that you have to comply with if you're going to satisfy this. They're US Residency rules, not Puerto Rican so much. And this is what the IRS audits. If you violate those rules, then they can deny you the Puerto Rican tax exempt status and they can then tax all those gains. So there's a. There's a lot of money there that they can go after the big rollers. This particular guy, you know, was, you know, he was into eight digits in sales, earn gains that year. So this is in it. They're looking on. It's. It's very interesting. So I. Anybody who is a Puerto Rican resident wants to talk about that, they should schedule a call. We can debrief on. On how to prepare, how to transition, how to protect yourself. But this particular audit is going. When you live in Puerto Rico, you're subject to audits for up to 10 years. Actually, if you live outside the United States, it's 10 years.

Scott (22:49)

You're a massive target when you make the move. I think people understand that. And you have to do it in a very, very compliant way. Ryan. Yeah, go ahead. No one's going to speak on this.

Douglas (22:57)

Better than you guys. I was having such a great morning. You know, the birds are chirping, the sun is out. Like, man, this conversation took a turn. Yeah. People in Puerto Rico, this is a conversation we get into so much. Everyone is highly aware of the auditability or the audit risk. And people have GPS trackers on their phones to track exactly where they're at when they're there. There is a constant discussion going around of the closer connections and what do your ties to the US look like? What properties do you. It is well on everyone's radar when they move down there. That being said, the incentives are insane. And I even got to tour a research and development facility the other day where they had a $40 million build out on it and they got $20 million back in research and Development credits. The tax incentives are just mind boggling, but it is a sacrifice. You do have to cut a lot of ties to the, to make the move.

Scott (24:09)

Yeah. That didn't even end. I think it used to be a lot more casual. Now it's just become exceptionally strict and everybody's aware of it. I was actually, of all people, I was having a conversation last time I was there with Peter Schiff at a, at a bar in Dorado. He was breaking down to your point, the length she had to go to prove like any time he left Puerto Rico that he wasn't working.

Douglas (24:29)

Yeah.

Scott (24:29)

That he wasn't earning a single dollar of income when he stepped off the island to make sure that he was being compliant. It's pretty, it's, it's pretty wild. Just circling back Clinton really quickly. Just as a tldr, these letters are very real. They're going out. But in your opinion, they're purposely vague, targeted at largely people who were exposed via Binance data becoming public or at least becoming available to the United States government. And getting a letter doesn't mean you did anything wrong. They're effectively trying to get you to call in, get on their radar and maybe see what you cough up.

Naomi (25:05)

Good summary. And you know, back in 2017, everybody had a Binance account. And you know, everybody has a lot of fear. I mean, we know that 3/4 of taxpayers aren't reporting all their crypto income. So, you know, there's a lot of fear there. But the key thing is don't, don't be bluffed into disclosing problems in prior years by calling up and talking about anything further than three years back, because you're, then you're opening yourself up for them to come after you. But if anybody has a concern about their case, they should call me.

Scott (25:35)

But I know this was never meant to be the topic today, but I find this so interesting. So they have the fact that you had an account probably in 2017. 18. But like, how savvy are they in actually calculating what you theoretically owe based on what you actually did on those exchanges back then? The rules were so even unclear at that time.

Naomi (25:56)

There are tools that the IRS is using and they're called cluster, cluster analysis, where they can look at your addresses and start to tie together a picture of the total amount of Bitcoin that you have. This is described in the court case that was filed against Bitcoin. Jesus, I forget his name off top of my head.

Douglas (26:16)

Roger.

Naomi (26:17)

Roger Vere. They describe exactly how they do this, but they basically build A connection chain of all the different networks that are addresses, that are talking to the same one, and then can analyze the behavior, determine is this a transfer between your own accounts or maybe an income. They can also see when you're disposing, so they can get a general size of how much money you're moving. They don't really know how much is profit. Right. But they can see how much you're selling. So the more higher frequency you are in your movements, you will look like a bigger target to the irs.

Scott (26:51)

Really, really interesting. Gary. Listen, I got you on stage. You actually, you and Clinton should be friends. But with node 40, this is something you're looking at actually all day with a company that you're heavily invested in. Right? Is that fair to say?

Clinton (27:06)

Yeah, yeah, for sure. I mean, it's a huge area that, you know, you can't. And I'm glad Clinton's up here because I wanted to actually get to this capital gains thing, but we can get to that. I think that's a horrible idea, by the way, that we would treat crypto differently than any other commodity.

Scott (27:23)

Good reason to sell your crypto.

Dave (27:24)

Yeah, try to.

Clinton (27:26)

Oh, totally. I think you'd have a major sell off. Major. Like somebody's got 3,000 bitcoin at 300 bucks and there's no capital gain. Like they're going to sell that bitcoin right then and there because they're not going to wait for the next administration to change that rule. Makes no sense to me. Nonetheless, to Clinton's point, very few people have actually paid much attention to this. They've been almost like off the irs, like, hey, this is bitcoin. We don't have to pay taxes. That's just not, you know, going to fly. And I don't think we want that either. You don't want bitcoin to have some kind of special allocation or treatment. But most certainly the guys in Puerto Rico, for instance, Clinton, what do you think an audit cost guy's got a million dollars of crypto or whatever. Well, two questions. What do you think the threshold is? What do you have to be to hit the radar? Is it a million dollars? Is it 10 million? And then what does an audit cost? Because I think people in Puerto Rico, they just need to determine part of their cost, is going to be buckled up, buttoned down high, details. You provide more information than the IRS can, can give you more clarity. And I think the case goes away because I don't think the, the IRS today has the tools to actually prove in court the Damage done on very complex high frequency trading. And if they do, it will cost him so much money, I'm not sure it's worth it. Clint, you got any, any response to that?

Naomi (29:08)

Yes. The cost of an audit is there's two phases of it. One is the actual audit where you're talking to an examiner who's making a determination of how much you owe. And then from there, once they decide you owe them big bucks, then you're basically off to tax court. There's an appeals branch, but we usually go straight to tax court. We've defended numerous people there, five people. We win all the time in tax court, but the stakes are much higher. So you're, You're. I mean, we've. We're defending one guy who had 2. $2 million in the IRS, claimed he had $2 million in gains in 2017. And we said, no, he had $36,000 of refunds he should have coming to him. And they have gone back to, you know, your friend tax bit. They've gone back to them five times to calculate the gains. And they come. A tax bit comes back with a number. And my in house forensic accountants just destroy the numbers and totally going every time forever. Yeah, every time we, we beat them.

Clinton (30:09)

Y' all need to understand what he's saying. These systems, they weren't built for scale. They were built to do taxes. And this is not really tax preparation. This is large scale transactional monitoring and making sure each piece connects to the other piece to allocate, hey, what was the actual tax loss or gain minus fees? Right. Like these are. There's so much data. I mean, there was 30, 000 coins launched in one month.

Scott (30:42)

Gary, I don't even mean to interrupt, but. And it's, I think important to note that a lot of these are crypto to crypto transactions, which makes it even more complicated because you're selling one asset into another not via a dollar, which means that you have to peg at that exact moment the price of both of those things.

Naomi (30:57)

Yeah, that's what gets debated with the, with the irs. I mean, a typical audit, like you said, you're in easily into 60 to $100,000 during the audit phase. And then you could easily be up to another 100,000 in the tax court phase. But it's important to realize that you have to have a strategy for the IRS is definitely just focused on the high income rollers. And the way you asked about a threshold, I think the IRS has visibility to tax filings at Puerto Rico. I think they see Those tax filings, I think they know who and when you're in Puerto Rico, you want to report all your capital gains from trading. You want to put your biggest number in there because it's taxed at 0%. And you want to show that you reported it. You can't claim that. If you. That way you can say, I claimed it as a. I already claimed it and paid tax on it. Tax is zero. So they can look at the IRS filing filings at. Or pardon me, the Puerto Rican tax filings, see who deducted the most, and then that drives it. Like I said, this guy was, you know, it was. He's enormous.

Douglas (32:05)

And.

Naomi (32:06)

And that's it. But he was highly compliant with the residency rules. He was extremely compliant, but so we think. Why was he selected? Because he was a. He's a big fish. From the information from the Puerto Rican tax authorities.

Douglas (32:23)

Yeah.

Scott (32:23)

And gary, how does node40 specifically handle this?

Clinton (32:29)

Our job is to provide granular details down to the penny. I mean, you got to remember, we focus on exactly the type of guy that Clinton's talking about. Big players, wholesale players. How frequent. Like, we got a guy that does a billion transactions a year, man, he's under audit. See, this is the problem, though. Once the audit starts, most of these sophisticated traders, they're like, okay, we're putting our pencils down. We're not going to trade. We're going to get through the audit. And the good ones, the good ones don't buy tax bit $99 software. Like, how could you possibly imagine buying software for 99 bucks? And you're trading a billion transactions a year. You want to have information that the other side like. Like my goal is settle it to zero. We have an account, a billion transactions, $589 million worth of transactions, and we settle it to 98 cents, man. Now if you can settle something, meaning that we showed all the ins and outs down to 98 cents. So that's just, you know, a little friction. It's very hard to walk into a courtroom or into an auditor and go, hey, by the way, I settled a billion transactions to 98 cents. Why don't you guys figure out where I made a mistake or I cooked the books. Because you can't cook the books that, that perfectly. And that's the beauty of crypto. Like, this should all get settled down to zero. We just have not built between node 40 and. Fucking tools for this stuff, dude. We don't even have dashboards. Y' all still don't. Most of the people in the Speaker Panel do not know their average cost of Bitcoin for last year's purchases that that all changes in the future. We'll have dashboards that show us exactly what we're doing. That's fast, but it requires investment, man.

Scott (34:25)

Hey, Gary, by the way, I owe you a text. Were you around this afternoon?

Douglas (34:30)

All right, I'll give you a call.

Clinton (34:31)

Yeah, I know.

Douglas (34:32)

Thank you.

Scott (34:32)

Now. Yeah, no problem, Ryan, go ahead.

Douglas (34:35)

Yeah. It's funny. Gary and I had this exact conversation in Nashville last year. And you know, I've been under audit by my ex wife for the last five years, so I've been prepared for this stuff under like intensive scrutiny. But the reality is going through all these transactions and doing all the accounting once you get to a programmatic layer is not difficult. It's just a matter of building the systems to do it. It's all on chain, it's all accounted for, all the ins and outs, all the cost basis. It's just people have to write the software for it. I don't think the IRS is skilled in that area, but there are a lot of homegrown private solutions in a lot of these capital management firms that have built their own stuff. But a widely accessible, like what Gary was saying, a highly in tune that what's going to settle all the way down to 98 cents, I don't know of very many that are publicly available. I started my little side startup on the side of some engineers called Crypto Sleuth specifically for divorce lawyers because I realized this was such a big thing in the divorce cases where you have these lawyers going after crypto assets and no one knows how to make heads or tails of the audit system. But we're going to start seeing services like this pop up all over the place for crypto asset asset forensics.

Clinton (35:59)

Gary, hey. Yeah, Ryan, I'm so glad you brought that up because I'm the only guy that talks about divorce in the crypto space. 46% of you guys holding crypto will get divorced. And I went through this, okay? And I like, I, I actually should probably do a, a little show on this because literally I had somebody going after everything I had when the market was down 76%. So I look like a complete idiot, but when I walked in with node 40 against 10 lawyers and auditors for a nine hour deposition, my deposition lasted one hour because I removed any questions from the opposing team. Really worth noting that that divorce would take three years to settle. Not one question was asked to me about crypto. After that deposition, when I showed Them, the detail, they were like, fuck, we ain't going there, dude. There's nothing to squeeze, no juice. Very powerful message.

Scott (37:08)

Yeah, it is a powerful message, Nick. I saw you down there giving the thumbs down. So is that to the divorce?

Nick (37:16)

I. The, so the, the divorce stat of 50% of divorces or 50 of marriages, end of divorce is actually. That's 50% of marriage is not 50%. That does not take into account people who have remarried, which, the likelihood of you getting a divorce if you're remarrying is higher than first time marriage.

Clinton (37:38)

72Nd. 72%.

Nick (37:41)

Yeah. So it's, if you look at the actual divorce rate, it's in like the 20s, that's all.

Scott (37:48)

So guys, 28% of you, the whole bitcoin. Sorry. Yeah, brutal, brutal. So listen, let's, let's pivot. The tax conversation wasn't meant to be it, but I think that was exceptionally valuable and actually really, really important. So I'm glad we discussed it. There were a few other large sort of stories. Obviously Metamask saying they could potentially have a token is one and I think they're actually going to be full, fully integrating Solana Layer one. I think that's big news. We talked about this next topic a bit yesterday, but I want to go into it more because of how successful it was. Etoro obviously had their public offering. It started at about $45 a share. I think they ended up raising at 52 and then I think it closed yesterday if I'm not wrong, at 67. I, I think that this is wildly eye opening because a, we haven't seen an IPO perform well in general in America that I can remember in a long time especially. And we didn't even have them because of the environment with the last administration. But Etoro, I mean this is like an exceptional, exceptional performance, exceptional appetite for this on the listing. I mean, David, we kind of did talk about this yesterday, but now today, after a full day of trading that it continued up another 10 or more percent, that should be a pretty big green flag for the industry and public offerings, right?

Dave (39:14)

I mean, look, if you're, if you're a financial advisor and you've been restricted, you know, from what you can offer clients and there's Coinbase's success, it's added to the S and P. It's a sector that matters and there's an IPO and your clients are going to ask you about it, the likelihood that you're going to be against it and risk being labeled a Luddite, a Dinosaur or whatever, it really is vanishingly low. And so Etoro is a consumer based company with great margins in crypto. In a world where there's literally only one competitor in a comp and people go, you know, it's just like, I hate to say it, it's the unit bias problem, but it's, it's, you know, you're coming to market at the exact right time, right? You know, where people say, well you know, should I buy the expensive thing, you know, how much more, how much higher can coinbase go? Or should I buy the cheaper thing which could continue to expand and is part of the market at the same time is it's clear proof, proof that there's retail demand and institutional demand to be exposed to, you know, our economy. And so yeah, it's, it is kind of a big deal. But these are all like little proof points for what's going on and you know, it's, it makes sense. I mean it's not, it's not illogical in any way, shape or form and it's sort of predictable if you think about it.

Scott (40:47)

Anyone else thoughts on this? If not, we'll move on to the market because I think interesting day we're having here. I haven't actually checked most of the morning. Bitcoin trading around 101,965 at the moment. All coins obviously seeing a bit more downside than bitcoin in this case. And I did see this morning that gold was having a really nice bounce, which is usually a pretty good signal. Dave, your mic's lifted. I don't know if you had a comment or a, if your mic was just up, but talk market, I mean Follus, we got you here. What are you looking at right now in the crypto market?

Tony (41:24)

Hey, Scott. Hey guys. Yeah, I mean look, it's one of those things where I was just seeing so many guys on my timeline, so many, so many traders adding risk after BTC had been up only for 30 days and many alts were like some old like random thing, random coins like mu dang and like some of the, the AI agent coins were like 2, 3, 4, 5x off the lows and guys were, you know, saying this is where you should be, you know, long your longs. We're going to be trading higher and, and that might be true but in my experience, you know, top longing, top blasting, entering late with high leverage is never really the play. And some of those guys are kind of feeling the pain now. There's a lot of coins on my watch list that are down like 30, 40% from the highs. Now, admittedly they're up big off the lows, but I think that anyone trying to enter those coins late with leverage has been washed. And probably rightly so. With these kind of rallies, you're almost, it's almost never worth it to try and chase the move. If you haven't, if you haven't caught a nice entry, don't, don't settle for a substandard entry in order to just participate in the move. Right? That's like, that's like textbook fomo. That's exactly what you want to try and avoid doing. As with all things in trading, patience pays. And that's the same in a trending market, it's the same in a ranging market. It's the same in an up, it's the same in a market with lots of upside. It's the same in America with lots of downside. Patience always pays. Right now, that doesn't mean you, you sit, you know, you sit and kind of look idly as, as price action passes you by. You don't execute. I mean, patience isn't, isn't just about sitting there and, and waiting endlessly, but it is about waiting for the right time to execute your plans. So, I mean, I've been saying to my guys for the last few days, you know, BTC looks a little bit overextended. All coins look crazy overextended here. And I'm looking at coins like we saw Jelly Jelly yesterday. Dumped like 50. There's another coin on my watch list layer which everyone was super bullish on earlier in the month and kind of back into April. I mean, it had a huge run up. It's now down 70 from the highs. I mean, there's a lot of manipulation going on there. Obviously that's not organic.

Scott (43:40)

PA yeah, what does it say about me that I've never heard of these things?

Tony (43:45)

It says that you're a sensible trader who avoids trading crappy meme coins and, and, and, and manipulated projects. But there's a lot of coins that guys are entering late. They're entering with leverage. They're trying to, they're trying to, you know, they're trying to catch the last, last five, 10% of a move when in fact they're far better off just waiting for, for retraces. So in terms of like, what I'm looking at going forward. Sorry, go on.

Scott (44:10)

No, I was gonna say perhaps a way to frame this is like the mental model, but you're about to just jump into it. I think for a very long time, people were obviously smart, people were selling rips, you know, you would sell every bounce, whatever. Now, at least for me mentally, like I see ethereum making a 40 something percent move. I'm not buying Ethereum there. Right, exactly. I looked at the chart. There's like massively overbought. I use rsi. I look at bearish divergences. It's on every single time frame. Most fortuitous topping signal. That doesn't mean top forever. So me, my mental model has now been awesome. Let me buy the next big dip on a lot of these things as opposed to this was the time to sell for lower lows.

Tony (44:51)

Exactly. So this is where, as I said, patience will pay. You set your levels, you pick the altcoins that you think are going to have a strong, you know, remainder of May, they're going to have a strong summer. You, you set your levels, you say, this is where I'm a buyer on these coins. And you enter gradually. That for some people that means you enter in two or three goes. For some people it means you DCA with, you know, 10 orders or more. There's a lot of different ways to do it. But the guys who are feeling the pinch now are the guys who entered late, they got bad entries and now the market is pulling back a bit and they're called a little bit offside. I do think that the market looks fantastic here. I think a lot of coins are breaking structure to the upside, including bitcoin, including Ethereum. A lot of coins are reclaiming key support levels and they're looking really hot. That doesn't mean that you start top blasting stuff on 10x20x leverage and hoping to catch, you know, another up only move. Set your levels, wait patiently, execute when the time comes and you'll do pretty well over the coming weeks and months, I think.

Scott (45:54)

Yeah. Nick, you had your hand up.

Nick (45:57)

I did. I was actually looking. It was interesting to see the VIX come down as precipitously as it has. It seems really risk offy right now. Excuse me, Risk ony right now because the VIX is down to levels that we haven't seen, gosh, in like well over a year, I think. And then gold, there's, there's talk about like the gold pullback. Like last time, gold dropped 9%, Bitcoin went up 60%. People are saying gold could correct 20 now and then what would that mean for bitcoin? That's kind of what I'm looking at right now. But I, I echo what follow Says like, yeah, don't, don't be top blasting the moodangs guys.

Scott (46:41)

Every 90 people. I would personally say don't be blasting moodangs period, bottom or otherwise, because it's just stupid.

Nick (46:51)

98 of everyone in this room should just be sitting on their hands and dcaing into bitcoin if we're keeping it 100%. Like, if you actually want to change your life, don't. Unless you're looking at charts the way Fallis or, or Scott does or even Tom Crown, then don't. Just, just, just set it up on Kraken or whatever you want to use and just dca and pray and that's it. So, yes, but I, I, it does look it, I mean, gosh, the Trump speech in Riyadh is, was kind of like a level set for the global economy. It was him, he, he shook everything. He shook the refrigerator.

Scott (47:35)

Right.

Nick (47:35)

And everything fell out back in, you know, March and April. And now everything's calming down. And I really think that this Middle east situation that's going on right now is him just like, hey, let's, let's all just chill. Let's all just make money right now. So I'm, I'm phallus is saying it structurally looks good. I think on the macro it looks even better.

Dave (47:57)

Yeah, well, I was going to talk about the macro, but the first thing I want to give a plug for. Follow us. Because, you know, if you're trading and you're not listening to the advice you just heard, you better check, look at yourself in the mirror and say, what the am I doing? You know, people who use leverage and are trying to and are top blasting are. It might work once or twice, but by the third or fourth time, you're going to lose everything that you draw that you put in. You know, it's a fairly classic pyramid scheme. And the funny part is, is that's what all the doomsayers, and I see them every day are saying is what Saylor is doing. And yet that is not at all what he's doing. There's no 10x leverage, it's barely two or three, and it's with a huge balance sheet, et cetera. So you see that there's this incredible dichotomy. There's almost two markets now. I mean, yes, Bitcoin leads the altcoin markets, but what Falas was telling you about is how much volatility is in the altcoin market markets. Bitcoin's volatility. I mean, it's almost like a damn Stablecoin. Right. You know, for weeks at a time. And it's been doing this now for a while. You get these, you know, we had eight months of a trading range last summer. You know, the last two or three weeks it's been in a few thousand, a few percent range. I mean the volatility you say with the VIX collapsing. I don't know if you measured a B vix you would see that collapsing as well. And it's important to understand why. And you know, you've talked to, you've had multiple guests on this Week, Scott, where they've talked about it, which is there are patient long term buyers who have gotten progressively less patient, but only incrementally so. And all the chart signals, all the charters in the crypto world continue to say ah, it looks weak here, I'll be able to buy it back in lower. And it just doesn't seem to be happening. And so you get this market and you know, we're sitting at 102. You know, the fact that we haven't seen a pullback below 100,000 in the week and a half since I joked that we may never be able to buy it below 100,000 again. Hahaha. I'm actually stunned by. Right. Not even a candle. It's just simply that there's demand and the demand is participating and you're going to start to see this stuff happen. If you look at the liquidations over the last day, it's fascinating. Again, ether had a pretty big move down 150 bucks. So there's 100 million in ether liquidated people trying to top blast that Bitcoin is less than 60 million of liquidations. And we know that that's from people who are doing it on 100x leverage and just oops, it dropped 1000 bucks, which is 1%. And in a 1% move they get wiped out. But it's all these, this really disperse altcoins where people are playing. So it's effectively the last day. It almost completely resembles a casino, which it often does, but really specifically so that you see 330 million in liquidations. It's really dispersed. I mean long liquidations, it's really dispersed. And what is that telling you? That's telling you that people get bored when you get into ranges. And what happens after that is anybody's guess. Although I would say that if you look at what's going on in the world on the macro side, it looks like it will resolve to the upside more like the downside. One last point I don't know how many people here are on Arthur Hayes's mailing list, but his missive yesterday was really a masterclass in understanding where the liquidity is going to be. He likes to tactically trade and will tactically trade, but his commentary on why the liquidity situation is shaping up the way it does is extremely accurate to me and feels right. So we'll stop it there. His basic point is the rally in bitcoin will happen because of the global liquidity flows and that this cycle will be substantially larger than what people are expecting it to be. That.

Scott (51:53)

That.

Dave (51:53)

That's sort of the, the tldr. But there's a lot in there and I encourage everybody to read it.

Scott (51:59)

I literally giggled when I saw the title. I mean, it was Fatty, Fatty something and it had a picture of Lizzo.

Dave (52:06)

Yeah, you know, his. What he was. He made a few plugs in there about the health crisis crisis. And it is funny. Look, he's always funny. But his point is they tried tariffs, didn't work. Politically, it's a loser. They're going to pivot to capital controls in a very small way, in a way that is virtually guaranteed to be politically popular, and they're going to use other tools at the same time. But it all boils down to liquidity. And, you know, he, he just sees all road looking to, and he's actually calling for bitcoin a million by 28, which is. Is. Is more. More optimistic than me and I've been more optimistic than him over the last year. And now, now it's flipped. So it's, It's. I, I find that interesting.

Scott (52:53)

That was fatty, fatty boom, boom. I just went and looked. Zach, go ahead.

Zach (52:57)

Yeah, hilarious. Yeah, I mean, my takes on, you know, bitcoin versus everything else is, is kind of really that, like, it's bitcoin and then everything else. And I think what I've been trying to kind of, you know, talk about to, to some of my people is you've got to have a bitcoin strategy. For me, that's buy and hold. You know, I don't trade bitcoin, but I literally trade everything else. Right? So, like, when you see like these two days of green, what I like to do is kind of go back in there and say, okay, what move the most? Because chances are they're going to come down, but they're also going to move like that again when you get that, you know, 2448 at, you know, 48 hour move. So, I mean, you saw Ethereum move a Great way to fast track your ethereum holdings or get exposure to Ethereum without ethereum itself. I mean, just go look. Pepe and Brett were like those two meme coins. But again, I think the biggest thing is you got to look at, like, what meme coins are for, what they are. Some people just look at it and say, oh, this is my next chance at Bitcoin. It's like. Like, as long as you're looking at it for what it is and you look at it as a trade and it's a way to acquire more, whatever. Bitcoin or you want to put that money in the stock market or real estate or whatever, that. That's the way I kind of approach it. You just got to be real with yourself and what it is. And so, yeah, I mean, that's kind of my take right now. Bittens or Tao is another one. Like the whole AI thing. The SWE ecosystem. I've been trading the hell out of the SWE ecosystem assets like Deep and Walrus. If you go look at this most recent push, that's where the liquidity is. So you just kind of, you know, liquidity moves around in the altcoin market. A lot of this stuff is just recycled right now. We obviously aren't seeing a ton of new retail money coming in. So when the market decides to pump and all coins go up like that, what moves the most? Chances are they're going to move the most again, you know, the next time you get. You get that move.

Scott (54:48)

Walrus so lost. I love that you guys are so deep in the weeds and understand and can do this, that I used to aggressively trade all coins, you know, seven, eight years ago, but, man, I'm just too old for this. Like, I wouldn't even know how to trade something in the SUI ecosystem. But I do own some sui, so at least I've got that going for me, which is nice. I think we're pretty much at wrapping time here, guys, so we're gonna go ahead and shut it down. Give everybody on stage a follow. Don't get fished into sending funds to any idiot who's texting you about Coinbase or Gemini or 2fa. And speaking of idiots, not to get phished by do not get. I shouldn't say this out loud. Don't get phished by the IRS sending you a letter telling you that you might vaguely, potentially maybe in some world owe them money, but they don't know for sure, but maybe you should tell them that you do. Don't do any of that either. Ignore those letters. Unless, of course, you just haven't paid the taxes in a few hundred years. Maybe then you should call Clinton. Otherwise, everybody in the audience. Give everybody on stage a follow, and we'll see. Be back here tomorrow, 10:15aM Eastern Standard Time, later.