← The Wolf Of All Streets
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- [00:00]
A
Well, yeah, so we put the title about this CoinDesk article, I don't know if everyone read it, about the world Liberty Financial and the kind of self referential loop where they effectively extracted fiat from pledging their own token as collateral. Effectively freezing. Okay, good. Yeah, Carla. Thank you, Carla. Putting, effectively freezing. The Defi protocol, other participants, the Defi protocol from doing anything. And you know, I'm not speaking about this.
- [00:34]
B
Those people didn't know that, by the way.
- [00:36]
A
What'd you say?
- [00:37]
B
But those people didn't really know that.
- [00:40]
A
Those people meaning the people participating in the protocol.
- [00:43]
B
Correct. The other people, I don't think were aware that the pool is, you know, 93% collateralized effectively by one entity.
- [00:49]
A
But yeah, right. And that's my point on this is not so much the obvious. This isn't about Trump bashing or any other crap. This is about the fact that, that the entire DEFI ecosystem has enormous issues that are undisclosed to people who participate in it. And this is going to be meat to the, you know, meat to the lions on the regulation, the regulatory side, because it is exactly the sort of thing that good regulators care about. I mean, if you've, you know, if you've been watching, reading, etcetera, you know, Hester Peirce's commentary over the last seven years, you would know that what she cares about and accurately so I think I totally agree with her is disclosure and the ability for people to understand what they're involved with, understand the risks and make sure they are disclosed. And that will allow the market to, to, to, to work effectively. You know, this is a classic example of yet another part of the DEFI ecosystem and the crypto ecosystem that people just don't really understand. And things can happen. Carlo, I hopefully I teed you up.
- [01:58]
C
Yes, you did. Good morning, Scott. Good morning, Dave.
- [02:01]
B
Good morning, Carlo.
- [02:02]
C
So I put out a piece this morning because I think it's a broader problem. You're absolutely right, Dave. But I think it goes beyond that because this could not have been timed worse as we're on the verge of trying to land the Clarity Act. You've got Besant, you've got the sec, everyone saying we need to pass the Clarity Act. Everyone seems to be hopeful that this mysterious markup, which we've still yet to see, is going to be the fix. But this raises three major problems. Number one, it reignites the debate about the ethics conflicts with respect to the Trump family and crypto. It opens up the debate about yield on Defi because remember, the consumers who put their stablecoins in this protocol can't get it out because the liquidity has been drained. So they went from getting a very nice yield on their World Liberty stablecoin to now potentially not being able to get out. And the third problem is defi. Exactly that. Issue disclosures. And these are all debates that are being currently hashed out. And now we're a week away from having the floor debate and markup on this thing to leave the Senate. And this is going to give the Democrats in the Elizabeth Warren camp three major talking points to kill this thing. And this is like the most incredible unforced error.
- [03:26]
A
Well, hold on a minute, hold on a minute. I actually take the other side of it. This doesn't give the Democrats. This is something that any sane person. Republicans. Yeah, okay. No, I'll give you. No, no, no, no. Let me finish my point. This, this cuts out Elizabeth Warren at the knees. Because the point is, is these things are happening because there is no clear providential, prudential regulator involved. And so what is needed is to delegate authority to regulate regulators in the US that actually can require companies like World Liberty to do X, Y and Z in terms of. And, and the defi protocols to disclose. These problems happen because of. Of a lack of regulation. You know, not all regulation is bad. A lot of it is. A lot of regulation is written by the companies to create moats and, you know, and competitive weapons for them. But basic disclosure sort of rules are good. And without clarity, this is exactly the sort of thing that would happen. In fact, if I were trying to persuade Democrats, I would point to this case. That's the difference. And I don't really understand the other side. I mean, what am I getting wrong, Carl?
- [04:38]
C
I'm concerned and you make a valid point and I like it. I like that you see that angle. My primary concern when I saw the news break was that this is going to put this potential legislation in protracted debate now about the things that we all have worried would be the killers of this bill, including now really having a case to box Trump in on an ethics clause in this thing. So my broader concern is. Yeah, I think I like your point that it may give the Republicans some high ground to say, yeah, this is exactly why we need clarity. But I also am concerned it's going to give the opportunity for people who don't want to see crypto adoption to kill this bill because they'll say, look, see what they did? They extracted all this money, they send it to Coinbase. The blockchain has revealed all this. You know, Fuckery. This is another Luna type event. And that's already the narrative I'm seeing flying around the timeline. That's what concerns me, that they're gonna use this as a reason to completely kill the bill.
- [05:40]
A
Yeah, it boggles my mind. I don't think I'm that smart of a human being. I mean, I'm intelligent, okay, fine, but it's so fricking obvious that that take is a terrible take. I mean, you know, we watched FTX be the only place, the only person to have access to the regulators, and they were. And we watched them steal and leave back doors for their own trading. None of which would be possible if they were under any rational regulator. Look, I've run multiple broker dealers, okay? I know how FINRA operates, knows the SEC operates now the CFTC operates. There is no chance you could get away with the sort of thing they did if they were even under the most basic, what they're called, TAMS exam, TMMS exam, you know, where they trace. There's just no basic regulatory audit where they could have gotten away with it. And yet people use that to say, well, that proves how fucked up crypto is. Well, I'll tell you what's fucked up. What's fucked up, Carlo, is when you allow people to make money and you don't, and they can do so in a way that is damaging to the public, is not really informed. They're taking advantage of people by what they're not telling them. We generally tend to call that fraud. But it's very hard to prove intent. Right.
- [06:59]
C
In fact, I'd love to see you write that piece, Dave. I think it's very timely and important that you write that piece.
- [07:04]
A
Yeah, I guess I will. I think it. I think it's time for. I think it's time for another video, you know, that's all right. So I'll do that. David, we got another hand. So it's not just the Carlo and Dave show. Yes. Since it's Friday and. And we should have a little bit of humor. I think we should just collectively launch an Epstein token because anybody holds, it's going to get screwed. I mean, does anybody else, you know, think. I mean, I. I've made the joke before, but I actually think it's possible. I mean, you know, having met Gary Gensler and knowing how smart he is. I mean, I. I think he's malevolent, but I do think he's very smart. I actually think that, that him opening the door to allow people to invest in meme coins was Intentional. To try to, you know, kind of push out, you know, the shit to basically collapse the altcoin market. In the end, I actually think that that's. That that was intentional.
- [08:01]
B
And I know that's, that's interesting because you think that he intentionally. It's not like they ever issued guidance saying you can do meme coins. As I remember, the industry basically said, well, we can do meme coins, so we're going to.
- [08:14]
A
No, no, they did. They issued guidance that says meme coins are not securities. They absolutely did. So it's interesting. I mean, look, he is a bitcoiner, and in a sense, I mean, he's all. When he was teaching mit, he talked about it that way. I mean, of course he wasn't all that great for the bitcoin industry either. But the truth is, is he did help the alt industry, you know, kind of self immolate. Lou, I see a new hand. I know that's a new one. Hey.
- [08:39]
D
Yeah. I mean, I, I think there's another side to this argument that is not being talked about, and that's for a bunch of people who I think are libertarians, is I generally think that people should be allowed to buy what they want to buy. And I think the less the government is in my face telling me what I can buy and what I can't buy, I think that's better. And if people want to buy meme coins, I think people should be allowed to buy meme coins. And, you know, and, you know, sitting here and seeing what we need is more government in our, you know, telling us what we can do and can't do, I think that's a bad take.
- [09:18]
A
Well, but here, here's the, here's the thing, Lou. I think of it this way because, look, I. I am a libertarian at my core. Free speech at my core. The one thing that, that disturbs me the most are externalities, right? You know, things that people can't do anything about. So, like you go into a supermarket and you buy beef now, you care about the. You don't want to have to worry, are there toxins in this meat? You don't, you know, you want to understand, you know, that labels, if it says it's organic, that these weren't hyped up, you know, cows that were fed all sorts of steroids. I mean, you literally care about that. So in investing, you want to know what's behind it. You want to understand what you're investing in, not just because your buddy down the street told you so. The truth is, most people don't care. Most people won't even look, but some people will. And so if you're forced to disclose, we could create 10 billion of these things. You think you're buying something that's scarce, but it isn't like the difference of buying like a lithograph. And it says 1 of 100. If the artist actually made 10,000, you would have a real good cause of action. Well, in the mean coin world, we don't know. And I think it's not about stop.
- [10:42]
D
Well, that's actually. That's not true. That is not true. You can go into the code and you can actually see what they can do and what they can't do. You can see, if they want to, they can issue a trillion coins. And, you know, if you're invested in that, you are investing that, you might not know that. You might not go in and read the code. You might not know that code even exists. And again, what we're talking about now is, you know, is the balance of how much do we want to allow people to buy what they want to buy. And if somebody wants to buy something because their neighbor down the street told them to, I think that's a fine reason for them to buy if they want to.
- [11:19]
A
Well, you and I are never going to agree on that. I think that I am very much against paternalism in the sense I'll never forget Bloomberg lost me when he started when he wanted to ban 32 ounce Cokes.
- [11:32]
D
But that's exactly, Isn't that exactly what you're doing? You're telling the people down the street, don't take that Coke that your neighbor's trying to sell?
- [11:39]
B
No.
- [11:39]
A
Telling people that understand how much sugar is in that Coke is very different than saying you can't buy it. Sorry, I have something going on in my throat.
- [11:49]
D
But you are saying they can't buy it. You want the government to come in and tell people that they cannot buy Meme coins?
- [11:55]
A
No. A hundred percent? No, I just want to know. I just want there to be standards, by the way.
- [12:00]
D
So people, people went in and bought meme coins. And you said that's a bad thing?
- [12:05]
A
No, I said, I think you're dumb. But I did it too. I mean, I didn't lose much, but, you know, I don't think my, my investment in smoking chicken fish is doing too well. I haven't looked at it in about a year, but, you know, so be it. No, what I'm saying, Lou, is, is not to ban it. I never, never in a billion years would I Say that. What I'm saying is that there should be like, if you invest in a defi protocol and you, you know, you're getting a yield, you should know a, where the yield comes from and maybe they do. Dave? Yeah, what respect.
- [12:36]
B
I, I, I, I did say something earlier, but I, I'm assuming actually to, to lose points, even in this case, like if you are putting liquidity into a pool, you should actually, I'm assuming you can transparently see what's in there. So it is, the onus still is on the individual to decide what defi protocol to use or not to. So I'm not sure if that's the issue here for disclosures as World Liberty Financial or if it's just, you know, taking a look at the risk that they're taking on, which probably is entirely legal and the way that they're doing this, I mean, I don't want to take for granted that people have even seen the story.
- [13:11]
A
Right, yeah, no, I, I think that's right, Scott. And it's entirely possible here, let's be clear. It is entirely possible. No one's going to lose a penny, right?
- [13:21]
B
I think, and even, you know, Carlo,
- [13:24]
D
you kind of gave, oh, they're going to lose money.
- [13:27]
B
Yeah. Carlo, you gave the Luna example. The, the corollary I've been seeing most often was people using FTT, obviously FTX's token as collateral, or FTX using FTT as collateral, which I think, I'm not saying there's anything criminal here, I'm just saying I think it's a better sort of comparison. I mean, just so people understand what happened here, I guess in the tldr, like layman's terms, is that there's a protocol called Dolomite Lending Borrowing Protocol. And the founder of that is on the advisory board of World Liberty Financial. World Liberty Financial has been moving billions of tokens to Dolomite and taking out loans against it in USDC and USD1. And we've seen that those tokens, the stable coins, have been moved to Coinbase prime. That could be for custody, for liquidation. We don't want to get into, I guess, the speculation on what that's being used for. But the bottom line here is that they're taking a token that they created that still has 80% locked and the early investors actually have not gotten a roadmap yet for when those will be unlocked. So there's been an entire other controversy there. It's a governance token, but to a large degree it favors insiders. We've known that from the beginning and this is basically a circular economy for free money for them as long as the music doesn't stop. And, and when World Liberty Financial responded, which they did with effectively like the most gratuitous chatgpt AI slop response that you've ever seen, which just seemed odd, they basically said this is how it's designed. We have a platform where people are earning exceptionally high yields and that's because we are the main borrower and we're creating those yields and there's no liquidation risk because if price of Moral Liberty Financial goes down, we, we'll just add more collateral. Right. And that's just kind of a scary assessment coming from them. And then they went on to say how USD 1, which by the way should be completely unrelated is great for the agentic economy and all these things. It just sounded like we got a whole lot of the normal things that you would hear from someone but that they didn't quite understand. I mean, if World Liberty Financial goes to zero, obviously there's a major issue. There is a point at which you can't add more collateral if it drops too much in price. And those are tokens, much like FTT was with FTX that they created in control that they're going to create. And so this pool that had these tokens, or at least one of them, is basically at 93% collateralized. Right. If you went to one of our friends here, who we have Mauricio from Leden up here all the time and you went to loan your Bitcoin to borrow against your Bitcoin in stablecoins, they would recommend a 50% LTV or lower. Right. And if you start getting at 60, 70, you start to get margin warnings, please add more collateral. This is getting dangerous. They're at 93%. Right. So I mean it doesn't take hard math to know that nobody's going to be able to get their money out of that unless World Liberty Financial themselves pay off the loan. So like I said, maybe nothing nefarious here. If you understand that the yield that you're getting, I don't know, the rate's 20, 30, 40%. I have no idea. Is because they're manufacturing it through financial engineering using their token, then Godspeed, you understand the risk and you decide what you want to do. I mean, is that a pretty accurate summary as I understand it?
- [17:01]
A
Seems accurate to me.
- [17:03]
B
Yeah. So that's the issue. So it's Gary, you had your hand up first.
- [17:10]
E
Yeah. Slightly different conversation. I think I've heard the best Idea I've heard in months on this platform. Scott Melker's platform. I don't know who was saying it, but an Epstein coin.
- [17:23]
B
I think there was one already.
- [17:25]
E
Dude, I think we ought to launch 2.0. Okay. Because I think that would be. I am quite serious, actually. I think it would be an. Maybe we call it the Epstein class coin. And you build this momentum of people that just get sick and tired of. Like somebody said earlier, our regulations are failed. Our country has failed. Guys like my investment. Right.
- [17:48]
D
I think Iran or I think Iran already launched that coin.
- [17:51]
E
Yeah. Well, anyway, I think it would be spectacular PR campaign and it might actually hold value because you. You can't possibly have this continue and not people now get more and more and more angry. So anyway, that's all I have to say today. Gentlemen, welcome to the free world we live in.
- [18:12]
B
Epstein token 2. You heard it here first.
- [18:15]
A
Well, I mean, if all. If 100% of the proceeds are used to fund public service ads or whatnot to try to put pressure on the. On those assholes to release the files, that would actually be good. If people got rich on it. That would not be so good. If the question of founders. But you know, can we put Pam Bondi's face.
- [18:34]
E
Hey, listen, I would fund that token and be willing to lock up my coins for 10 years.
- [18:41]
B
Yeah, that's longer than Epstein ended up locked up.
- [18:44]
C
Exactly.
- [18:45]
E
I think people would buy that too.
- [18:52]
A
Well, we could. We could pivot off of. Off of this particular topic. But I think that it is an interesting story and we know, and Carlo's right in terms of what it could do. It looks like we lost Carlos, so I can't talk about it, but whatever. I don't know if anyone's noticed, markets continue to grind higher here. As long as oil stays under 100, it seems like you can't keep things down. Bitcoin in particular is sitting over 73,000 now. And so we're getting very close to that mythical 74 level. Or is that the one, is it 74 or 75 that McGlone always talks about?
- [19:28]
B
74 ish. Yeah. I mean, 74 is kind of a consensus level because it was a previous high and, you know, was kind of tested as the low back on the, you know, April tariff shake.
- [19:37]
A
I will continue to say the same thing as long as. If it continues to advance with very low volatility. That is not the kind of. That is not the place where people are going to lean on a level to short it. Just remember that. So, you know, it's like it changes. Chart dynamics change based on how you get there, not not only when you get there. Right. And people should remember that. I think that matters. I mean, we don't have any chartists up here right now. But you understand what I'm. Well, other than you, obviously, Scott.
- [20:07]
B
Yeah, I mean, that's the level. There's no question. You can just draw one line on a bitcoin chart right now. Doesn't mean that, you know, and that doesn't mean that we'll respect them. But, you know, any meaningful move above 74 and staying there for a while, it's kind of a big air gap, as many have pointed out, through the rest of the 70s, because it didn't take long to go down to 74 and break it. Right?
- [20:28]
A
Yep. No, absolutely right. But I think it is relevant. I mean, we don't have any idea, you know, what the hell is going on geopolitically. I cannot explain, you know, the gas prices staying at these elevated but not crazy levels. I mean, it's weird, you know, and
- [20:45]
E
they're managing to keep it right under 100. Yeah, that's.
- [20:50]
A
It feels pretty manipulated to me, but I'm not an expert. What do you think, Gary? You think it's manipulation?
- [20:56]
E
Well, I'll tell you, I have, you know, I've said multiple times, I don't think there's long term manipulation going on in markets, but I have completely changed my mind. What is happening is so, it's so obvious. Someone has a. Someone's able to manage this. I don't even know how you can manage it. I would think that you have prices moving, you know, 8, 10% a day, dude. Like, this is crazy. I mean, I wouldn't possibly short. I wouldn't, I wouldn't short crude right here. And I think crude at 100 bucks is a dumb, dumb sale, but I mean, a dumb sale in that it's too high, but like the whole market seems to be managed. It's very difficult to make a decision on what to do here.
- [21:39]
A
And I think that people are finding that. I think that you're seeing that in volumes. You're seeing that in volatility. I mean, it's. We all, we've all been trained as traders to look at, to say that there's a huge causal relationship between uncertainty and volatility. Right. I mean, that's how I learned it. And now we're seeing the inverse.
- [22:00]
E
Exactly, exactly, man.
- [22:03]
A
So the markets themselves are kind of crazy. I mean, but we saw something today. I'm Actually trying. I wish we had ran or someone who is into it. You know, if someone pointed out that we should talk about Bittensor now, Bittensor, for those who don't know, is a number 30 coin, whatever. So it's kind of small. It's an AI token. I own a small piece of it. I've talked about it before, not that I know very much about it, but it looks like one of the one major player sold $10 million worth of the token, which given the fact that it's pretty small and it dropped 18% overnight, boom. And it didn't die, but it dropped 18%. And when you look at that sort of thing, that's the sort of thing that happens in crypto when those sorts of things happen. If the fundamentals aren't changed, then it's a great buy. If it's the start of an exodus, it's a great sell. And it leaves people saying, well, this is what happens. And the point that I'd make is liquidity is relative. So it's no different than if a large wallet or a large seller in bitcoin sells. That tends to always spark a sell off. And it's not catastrophic, but it's a sell off and these things happen. But it's interesting how the crypto market is particularly susceptible to this. Because of the on chain nature, people get to see it, whereas in equity markets you generally don't find out about it until the quarter afterwards. And then of course it sparks the exact same thing. But it is interesting. I mean, I don't know what people have to make about that. In terms of the market, I don't think it's anything particularly surprising, but it does happen. And it is the kind of the dynamic of the market. I don't think there's anything to be done on it on a regulatory basis, but I thought it was an interesting story. Does anybody care? If not, we'll move on.
- [23:57]
D
Dave? I'm sorry, I didn't understand what the difference was between regular markets and crypto markets. In a regular market, but in a regular market you would know the volume, right? And to the degree that there's. You wouldn't know volume, you wouldn't know it, and sellers driving down the price, but you'd still see significant.
- [24:17]
A
There's two things. So in equity markets, like I spent most of my career trying to figure out building algorithms to hide what was going on so you could finish what you were doing before it sells. Here's the thing, in the equity world, because you don't have to report sales or meaningful positions until, you know, changes. It depends. There's differences whether you're a controlling shareholder or not, et cetera, but for the most part there's always a delay. The delay could be longer if you're not a controlling shareholder. People will see Bloomberg holdings update on major funds and that sort of thing. You generally have more than enough time to finish whatever you're selling before the market knows a damn thing. And so what you'll see is some impact as you're selling it. Because of course you can't sell a large position without impact. But you don't have the effect of people looking and saying, oh look, if that, if that insider sold or that large holder sold, maybe I should sell also. Whereas in crypto you see that right almost immediately. So if a Satoshi era wallet, one of those 20,000 wallets, moved their Bitcoin to an exchange, that would trigger, without any more, without selling a coin that would trigger the market to drop because people would all want to front run it. And the same thing happens throughout the crypto ecosystem. It's much more transparent. And so a large part. So I'm actually moderating a panel and there are two panels at our Security Traders association conference of the New York Stock Exchange on Monday. I'm moderating one and we're talking a little bit about differences in market structure between tokens and non. And one of the points that people are making is that the tokenized market structure is too transparent and causes front running and more impact. And this is a perfect example of that. That's all I was saying. Does that make sense, Lou?
- [26:14]
D
Not really. This wasn't like a special wallet like the Satoshi era wallets, right? This was just some random wallet that had $10 million worth of Tao in it.
- [26:24]
A
No, no, it was, people knew it belonged to Covenant AI's founder, so they knew.
- [26:30]
D
Ah, okay, so it's belong to somebody and somebody is out or somebody is
- [26:35]
A
out and that somebody then commented about.
- [26:37]
D
Ah, okay, right.
- [26:39]
A
And so that that mattered. But the point is there, there's more. Everyone is trained to think transparency is always good and in general, certainly it is. But there's certain circumstances where transparency before the fact versus transparency after the fact matters. That's all because, and that's something that people are trying to come to grips with with the whole rush toward tokenization. Right, because there's, there's good to quote you know, someone on our, on the panel, better, cheaper, faster is great, but there's certain issues, and this is just one of those issues that's all I was pointing out.
- [27:13]
D
And you think that this is. I'm sorry, it seems that this transparency, I mean there was, the information was going to be out there eventually if it was public. Right. They'd have, have to file. So the only difference is the time of when we know that's right. And it seems the earlier we know,
- [27:29]
A
the better you could make that argument. And I don't disagree necessarily. I don't have an opinion. I'm just, just, I'm just reporting the facts. I'm just saying that we in the crypto world.
- [27:40]
D
Is there an argument for the other side? Well, for the later the better.
- [27:43]
A
I'll tell you the argument for the other side. The argument for the other side is if somebody is trying to acquire a controlling stake in a company, they don't want to disclose that fact until they have to because this price will go higher.
- [27:57]
D
Right. But that's, that's better or worse for the individual. But we're, I'm talking about for the markets at least that's what I was talking about.
- [28:02]
A
Well, I don't know. I mean, you know, is to traders who are looking for a quick buck, able to front run large institutions. Is that good or bad societally? I mean, it's an interesting question. I don't know how you want to consider the answer. Generally speaking, I think that markets will evolve. No matter how you do it, markets will evolve differently. So if in fact everything on chain is seen and everything has to be on chain, you're going to see omnibus accounts spring up and things spring up that are neutral. Like if every time you move coins to an exchange, for example, or an exchange wallet, you are selling them. Yeah, that's impossible. But if coins were just kept there specifically so people couldn't tell, that's, that's where you'd end up with, you'd end up with a lot. Because markets exist. Like people like talking about dark pools. I mean, I helped invent a couple of them, right? And you know, people say, oh my God, these things are terrible because they obfuscate. But the reason they exist is specifically so that companies that are either buying or selling, doesn't matter, can hide what they're doing until after they've done it so that they don't have to, you know, allow. They don't, it doesn't cost them extra money. And so all this stuff is happening. I'm a geek when it comes to market structure, I admit that. But I do think it's important because there are lots of trends and lots of things happening that are making the markets, quote, mature, unquote. But as these things get hashed out, it will undeniably be good for liquidity. It's just a question of when I see these things, it's like, okay, it's interesting and people should know what it is. Honestly, I don't think it's a big story. I think this stuff happens, that's all. But, yeah, it's a question of regulation. I mean, Carlo, you talk a lot about stablecoins. Do you think as smaller stablecoins evolve, that the transparency of what's going on under the hood is problematic? I don't think so, but I think that there could be some.
- [30:11]
C
It is in one respect, if the fine print of the stablecoin issuer has potential delays in getting your tokens out in the event of a mass exodus. We saw that to a limited extent with the silvergate debacle. And there is actually a paper that was written by a couple of Texas professors that talk about you. No matter what's in the genius act, you still are. You still are liable or at least have exposure in the terms of use of the stablecoin. So you really want to read them, especially in the event of a liquidity crunch where people are trying to all get their stable coins out at once and they can't.
- [30:56]
A
Okay, Scott, you want to pivot to one of the other stories?
- [31:01]
B
I'm so fascinated with World Liberty Financial that I'm still reading about it as we're talking. It's a pretty astounding.
- [31:07]
C
I hope, guys, I hope they come out with a statement soon. And what the hell is going on here? I don't know. They did. What does it say?
- [31:16]
B
You know what? Let me find their tweet. This will make life a lot easier because that's important.
- [31:20]
C
I mean, they need to come out and get in front of this, especially with.
- [31:23]
B
They did. And it was horrid. It was horrid. AI slope. I'm gonna find it. But I mean, you know, like how chat GPT, like the dashes it uses and the. It's pretty bad. I'm just trying to find the actual account.
- [31:37]
A
So.
- [31:37]
B
One second. That's not it. You guys keep.
- [31:43]
C
The other thing that's interesting to talk about, Dave, while. While Scott's looking at that is this. This threat vector that caused this emergency meeting with Fed and Treasury and the financial sector about what this new anthropic release may do as far as exposing threats within these finance protocols?
- [32:04]
B
Yeah, let's move to that in a second. I got this thread. Should I just read it? It's worth reading. Honestly. Do it. This is from World Liberty Financial. Let's talk about the FUD going on going around our WLFI Markets lending position. It's wrong. Here's what's actually happening, why the real story is a lot more interesting. Holy chat.
- [32:21]
C
GPT.
- [32:22]
B
We are one of the largest suppliers and borrowers on WLFI markets. So they're admitting it right there. Yes, we supplied World Liberty Financial as collateral and borrowed stablecoins. No, we are nowhere near liquidation. And frankly, even if markets move dramatically against us, we'd simply supply more collateral. That's not a risk. That's how this works. Here's what the FUD crowd is missing entirely. By being the anchor borrower, we're generating the yield that makes World Liberty Financial Markets compelling for everyone else. Everyday users are earning outside stable, outsized stablecoin yields right now at a time when traditional markets are offering very little. That's the whole point. Numbers matter. Let's get into them. USD 1 is currently at a 159.5 million annual revenue run rate. Quiet. Compounding, accelerating. My God, the three words from ChatGPT. But world liberty. I don't understand how USD1 has anything to do with it, by the way, but we'll keep going. Over the last six months we have bought back 435,301,344 WLFI tokens at an average price of 15 cents, totaling 65 million in open market purchases. Not because we had to, because we believe in where this is going. For early token holders, a governance proposal to unlock lock tokens will be posted to the forum next week for community input and will go to a formal vote shortly after. This is the project showing up for the people who showed up first. Now mind you, 80% are locked and people don't know when they're going to be unlocked. And that's their response to that. Okay, I'm not going to even go into this whole USD one tweet that they have as part of it and how it's going to be used in the agentic native putting spot in the first sentence. Yeah, it's so bad. So bad. Yeah, it's like Carolyn Ellison saying I'll buy all of the FTT and got 22 cents or whatever it was. But so to recap, no liquidation risk users earning exceptional stablecoin yields 65 million in token buybacks Governance proposal Incoming to unlock lock tokens for early holders USD 1 built for the AgentIC economy. The critics are looking at the wrong thing. We're building something that compounds.
- [34:21]
C
Yeah, that's.
- [34:22]
B
As I said in my summary before. As I said in my summary before, we are using our own tokens to manufacture a high yield for customers. That's it. Right. They're saying it. What am I missing here as to how this is not wild?
- [34:41]
C
I don't think it went through the legal department.
- [34:44]
B
I don't think they have a legal department.
- [34:46]
A
Well, I, you know, it's, it's. I, I find this funny. I mean, I told you, Scott, actually I sent it to you. I hope you got it.
- [34:57]
B
I started.
- [34:58]
A
I've written a manuscript. The, the. I forgot Chapter 17 is called Adventures and Compliance. And one of the points in the book that people will know is that the reason you have compliance and legal departments is to make, to draw the line so that you know as a business person where to go so that you don't go over the lines. Right. I mean, it's kind of important, but in crypto there are no lines. You're trying to predict future lines. So there's two ways you can handle that. Well, where you can handle it, number one, which is how the most legacy firms are handling it, is saying, oh, wait a minute, I don't know where the lines are. I'm not stepping in the pool at all. Or I'm going to keep it really small where you handle it. Number two is guess where you think the lines are going to go and have a legal department that's kind of trying to interpret that. I mean, Carlo, that's probably your practice is for handling people who do the second thing. Right. You know, whether or not WLFI thinks that they're, that, you know, that they can take it. I'm sure they have some legal advice. I'm sure their legal advice, however, is what we would call on the aggressive side. And so I think that's what it is. But it is interesting, right? Carly, surely you care about, surely you have an opinion upon that.
- [36:06]
C
Yeah, I do. I mean, obviously you want to have this strategy and your boundaries laid out at the design of the token. So you're not putting out last minute slop with FUD in the first sentence. Let's dispel the fudge is not exactly the way you want to, you want to portray your compliance mechanisms. I just don't think that that's a good, that's a good strategy.
- [36:37]
A
Yeah. Generally when you use the word fud, it's. I try to be careful about that. I think like quantum is not quantum fud. I mean, there is fear, uncertainty and doubt. So I guess to some degree that's true. But we have used that word, that new word, fudge, to, to imply that it's not true, right? Imply that it's well understood that it's not true. And when you. There's no way that applies in this case.
- [37:02]
D
Sorry.
- [37:03]
A
I mean, you know, it's just, it is interesting. So I think you're right there.
- [37:06]
B
I mean, but the thing is, it's not fud, right? I mean, it's a statement of exactly what they're doing. And then they're saying we're doing it, you just shouldn't.
- [37:13]
C
And it's supported by the on chain data.
- [37:16]
B
But they're saying it, we do it, you just shouldn't care because we're doing it on purpose. That's what they're saying. Right?
- [37:21]
A
So the answer isn't there's a lot of FUD out there. Their answer is there's reporting out there, it's accurate, it doesn't matter. That's very different than saying it's fud. They're saying, listen, this is not a big deal. If you are getting your yield, you're still getting your yield, your funds are safe, don't worry about it, it's fine. You know, this is how it was designed to act. I mean, that's not. But once you use the word FUD in your response, that's how you know it's AI slop. It also shows that there's someone who doesn't have a fucking clue.
- [37:51]
C
And it's giving off some serious FTX vibes.
- [37:55]
A
Yeah, well, that's right. And why is it. It's giving off the serious ftx? Because of the way they're, they're expressing it. I mean, it is what it is, right? You know, you're, you participate in a platform, you're getting yield. If you read the fine print, you would know that, that there is a reasonable chance that you won't be able to. You'll be frozen from withdrawals at times. Doesn't mean your money's lost, but it means your money is stuck there that you could get gated. It's like when you buy into private credit, you knew there was a chance that you knew there were gates and how much you could withdraw and you knew there's a chance you could get gated. Now people don't like to believe it, but we've seen that played out in real time. No one's calling Blue Owl a fraud. They're saying, okay, maybe it wasn't a great investment. They're not calling it a fraud though. But it's more akin to that than anything else, don't you think?
- [38:43]
C
So I guess the force, the postmortem on this is going to be in the terms of use
- [38:50]
A
to the extent there are any.
- [38:51]
C
Yeah, that's right, exactly. I mean if you're, if you're backloading the terms of use and saying you knew what you were getting into, but there aren't actually terms of use on the front end and yeah, it goes back to the very premise of the whole conversation.
- [39:06]
A
Yeah, I think that's true. I think that's true. Scott, you still reading
- [39:15]
E
largely?
- [39:15]
B
Yes, I literally am. I'm just, I'm trying to find more data because I've actually been diving now. I've been diving into the wallets. What I'm trying to figure out is unclear. I literally have done like a super deep dive with my open cloth since like 4:30 in the morning when I woke up to it. I just find it fascinating but is trying to figure out, Super Nerd is trying to figure out what the tokens, where the tokens that are being used as collateral are coming from as far as which wallets and because the place where I doubt they're doing it, but the place where this would really cross over is if like those locked tokens that the 80% that people are waiting for are being used as collateral in lending protocol.
- [39:56]
A
Yeah.
- [39:57]
D
I think the interesting thing would be to understand why the people who are investing in WLFI are investing in it.
- [40:06]
B
Right.
- [40:06]
D
Are they investing to get a return or are they getting other benefits than the financial return?
- [40:12]
B
Well, you're talking about your average retail person who bought the pre sale. You're talking about the insiders that I
- [40:18]
D
don't know who's buying it.
- [40:19]
B
Right.
- [40:19]
D
Why, I mean quite. Why would anybody buy it?
- [40:22]
A
Right.
- [40:22]
D
Everybody on here has got to be questioning. You know, I, the day that, the day that Terra Luna collapsed, I was, I actually went on CNBC and the very first question they asked me was, was Terra Luna a Ponzi scheme? And I responded absolutely not. I said Terra Luna was a Ponzi strategy. If you went in and read the code, you would understand what it did. And in my view if people want to invest in a Ponzi strategy, they should be allowed to, but I'm certainly not going to. And I don't know who's investing in these things. Right. If they're a Trump fan and they're investing it for that reason, then maybe they're not even unhappy about it. Maybe they're happy that they gave the money to Trump and he used it in good ways.
- [41:05]
B
Yeah, I mean, I, I don't know who's buying the token now, and it's gone down massively. Right. So I don't know that anybody's buying any tokens at the moment, but if you just look at the comments under this, it's just all outrage when people are like, okay, cool story, bro. Where's my eight tokens? You know, like, Lou, I mean, you've invested in hundreds, of course. I'm sure, I'm sure they're out one where, like, there's no room when you're going to get.
- [41:32]
D
I've been lied. I've been lied to many times.
- [41:34]
B
Same.
- [41:35]
D
And I hate the people on the other side and I hate myself for being stupid enough to believe them.
- [41:43]
C
And that's why I think this is more damaging for the Clarity act than helpful for the conversation about regulation, because this is what's going to catch fire. It's always the negativity that trends.
- [41:59]
B
It's a wild story.
- [42:01]
A
Could be. It is. And obviously it's like you're going to need time to go down the rabbit hole and figure out everything about it, but it feels to me like a feature, not a bug, and it was there. And whether or not the people who invested knew is very, very up to debate. I mean, look, I will keep pointing it out. I will, I will say this until I turn. I turn blue in the face. But FTT is still trading 200 million. Now, his market cap is still. It's under 100 million. So FTT has finally fallen to under $100 million. Understand that, that if you're at $100 million, you are close and you're a stock, you are very close to being included in the Russell 2000. You know, these are considered investable assets. $100 million for what should have doge is 14 billion.
- [43:04]
D
And FTTS. FTT's got to be worth more than Doge, by your account.
- [43:11]
C
It's one pardon away from mooning.
- [43:13]
A
No, it's not exactly that. That's what people think, but it's not fttt.
- [43:19]
C
Yeah, I'm joking, I'm joking. To be clear.
- [43:22]
A
No, no, but, but it's important. People are dumb. Look, I've seen this many times, you know, when I was running Two Sigma securities, often companies.
- [43:30]
D
But are the people investing in Doge dumb?
- [43:33]
A
That's a, that's a matter of opinion, right? You know, you can. Doge is one of those things. It's one Elon Musk tweet accepting it as the payment vehicle inside his entire company that, you know, and that's what people still are hanging their hat on as. As memes that there's a way, you know, that it could. You know, that. Look, Doge actually has a blockchain behind it, right? I mean, you know, it's not. It's not. It's not sitting on Solana, right? It's not just pure meme. And I'm not. Look, I don't own any, right? Or if I do, it's in some snippet in some, like, dead wallet that I. That I don't, you know, that I don't really care. Give a shit about. You know, it's like we all have. We all have the cr. The crumbs that fell behind the coins that fell behind the couch cushions. You know, but the truth is that. That it's a inapt comparison. I mean, FTT is a remnant.
- [44:22]
D
It's an epic comparison. It's an app comparison. All I'm saying, Dave, is that people should be allowed to invest in what they want to invest in, ftt. But why are you looking down and calling people who invest in FTT stupid? Because they're calling them stupid.
- [44:36]
A
Because they're stupid.
- [44:37]
D
Okay?
- [44:38]
A
Because there's no state, there's no terminal state of FTT. FTT's entire purpose, it was around an exchange that will never come back, that is gone. Gone. Look, I'm.
- [44:52]
D
I'm.
- [44:52]
B
I'm not.
- [44:52]
D
I'm not invested in. All I'm saying is I've called lots of people stupid who ended up not being so stupid, so I stopped calling.
- [44:58]
A
Oh, I didn't say that. You can't make money trading things that are absolutely worthless. And when the music stop, as long as you're not holding it when the music stops. What I'm saying about FTT is unlike memes, unless you're saying that the FTT token is some sort of weird meme that people will pay for because they want to own something that reminds them of the worst bank of the worst fraud in crypto history. I guess. But I think of it differently. So maybe here's my experience. My experience is in watching companies that are going bankrupt, getting delisted, knowing the bankruptcy court is going to wipe out the equity shareholders when it's finally concluded, and getting bid up and down, up and down, up and down into the hundreds of millions because of various news stories that people don't understand. And I've seen that in tokens, there's no bankruptcy court, right? These things live on as zombie assets. That's the difference. Whereas in equities, the equity class is literally wiped out at some form in bankruptcy. And so that's the difference here. But that's why we have so many zombie things in the crypto world, because there's no cost to maintaining it. Company you want to maintain stock, it costs you every year. And when you're not paying, goes poof. There's nothing that does that in crypto. And so, yeah, maybe you're right. Maybe you're right, Lou. Maybe you're right. Maybe the answer is it becomes, when they go to zombie, it becomes a meme. And if people want to own it for some inexplicable reason, they should be able to do so. Of course they should. I never. I'm not saying they shouldn't, but I'm saying it is, it does. But $100 million a lot for something that will never exist. That's all. That's all I'm trying to say. But I hear your point.
- [46:37]
D
It makes sense and I hear yours.
- [46:41]
A
Right? So that's where we're at. So we have world Liberty, we have, you know, we have markets kind of not knowing which way, which way is up. We have bitcoin performing relatively well, quite correlated with silver continually. There were a few other stories and I lost what I wanted to talk about. I mean, I guess that's probably my fault. Yeah, no, no, it's okay. Where else?
- [47:09]
B
There was some big news in Japan, by the way, that crypto will be treated as a financial asset rather than just payment rails that reduces, I think it was 55% was their taxes to a flat rate of 20% like other assets and gives the same disclosures and all the around crypto that they have for the rest of their financial markets. Kind of big story in a major economy.
- [47:31]
E
Is that the same as the Meta Planet tax treatment? Because that'll put pressure on Meta Planet. Right,
- [47:40]
B
that's actually, I didn't think about that, but the reason people were buying metaplanet was to avoid that tax. You're correct.
- [47:46]
E
Absolutely.
- [47:46]
A
Yeah.
- [47:47]
E
Yeah.
- [47:47]
A
Metaplan is exactly the same thing, Gary. That's exactly where my brain was going. I wish. I don't know the answer, but I think you're absolutely right. But that is interesting. I mean I did have a conversation with a reporter the other day and he was asking me about the difference between paper products and I said most of the Paper products that exist exist for one of two reasons. One is going to disappear and the other is going to stay. The disappearing is pure access or getting around legal or tax implications of native crypto. And Meta Planet is one of those the most obvious examples of that. And as those things normalize those products, eventually any premium goes out of it. So I think it is important to understand that when you're buying those products. I mean, the other reason is if new financial primitives could be created, if you can actually create money, if you can actually create value by utilizing the crypto in this product. And that's what strategy is trying to do with digital credit. And I don't want to. We could go down that rabbit hole if anyone really cares. But because every day we still see there. There is weird fud about strategy and there's also weird cheerleading. It's always been in my mind in between the two extremes. I don't think there's no such thing as a perpetual money glitch or infinite flywheel or any other crap. That's nonsense. And there is a limit to how much you can borrow based off of your Bitcoin or there's a limit to how much you could continue to buy based upon people's desire to get yield. When you're paying above market yield. I don't think that it's right on either side. I mean, Scott, are you tired of that story? But it's a big story. TRC is continuing to buy more is allow them to buy more than is being mined. And so that's the one way to buy more market. But that's important. We used to actually think it mattered mining supply. Now imagine when all the miners that have bought in the past or have sold out what they have in their pivot to AI are done. You can't tell me that having a tap from the fixed income markets that is creating a natural upward bias in the price isn't going to show up in the price. I'm sorry, but it will, right?
- [50:07]
B
Yeah. It's the biggest story. If you can assume or extrapolate for that STRC will continue to be this popular or grow like that because you. We don't know where, we don't know where the fixed supply is coming from. But this is basically a floor of demand that you can actually take a transparent look at every single day. Even if nobody else bought anything.
- [50:31]
E
I mean, I gotta tell you, that product, I'm. I just moved a chunk of money into SDRC because I am confused right now as to what the market's gonna do. And I was like, okay, I could buy Bitcoin at 68, or I could put it in strc and get some yield monthly. That's very interesting, right? That I can come and go. I can use it as a sweep account. And I mean, it was a chunk of money and I feel very comfortable with it sitting there until I can figure out what the heck this market's doing. But 11.
- [51:04]
C
I did the same thing, Gary.
- [51:06]
E
Yeah, dude.
- [51:06]
C
I mean, same thing, Gary.
- [51:08]
E
I had a couple of companies the other day. I'm like, you guys should be sweeping your cash into SGRC, dude. Like, these people are making 2% on their corporate funds. And the guy was like, wow, I didn't know I could do that. These are really smart people too. And I think there's a ton of cash sitting in corporate accounts, small business accounts, 2 million here, 4 million there, that are just sitting there, dead money. And they just don't know this tool's there. Very few bankers know that. Tools there. Now, to me, that's a really cool product. Contrary to why I think a great question was asked. Why would anybody pay 8 cents for world liberty Financial? What do they do? Like, I, I don't understand any of these businesses other than it's a political contribution.
- [51:57]
B
And that's what the Trump token was supposed to be though, right?
- [52:00]
E
Yeah. Oh, yeah. How many are there Clubs within clubs?
- [52:07]
B
Yeah. Doesn't make much sense when you look at it, Dave. I mean, it's the same question every time. Time I interview someone who is, you know, a founder or a president, I get a text from you that says, ask them how they value accrues to the token holder.
- [52:22]
A
I'm sorry, that would be a broken record.
- [52:24]
B
No, it's valid. It's so valid.
- [52:26]
A
It is the question. And you know, it is. It's. It's maddening, you know, because, look, the biggest thing. What. Ask yourself what happens. What happens to the notion of tokens if startups have a route to be able to get instant liquidity for equity in the startup, Ask yourself what would happen. And if you can't, if you can't justify the token as an asset or a methodology other than equity. And you took the legal out of it and you said, okay, I want to be able to get instant funding so that I can fund my project based off of an idea and get. And attract a wide pool of initial investment. And that's my reason for launching a token. If you're able to do that for equity, what investor would buy a token instead of equity at that point. And I think the answer in the vast majority of cases is they wouldn't. And so that tells you something right now, if the token itself has equity features, meaning it provides you a clear percentage of revenue or whatever, even if it doesn't provide ownership. Because, look, the equity world people ignore the fact that. And everyone points to Zuckerberg, but it's not just him. The equity world has voting rights shares and non voting shares. Well, if tokens effectively become non voting shares because they don't give you any part of the capital structure, but they do give you a right to, to dissolution value and. Or revenue, then yeah, you know, people would. Would buy tokens and that's fine. But the problem is when you have a token and there's always the first question I ask is, why is there a token? Oh, well, we need it for that. No, bb Honest, right. And you get the honest is we need immediate liquidity. That's what you get, right? That's what happened. I mean, I, I wish there were other. I wish Gaurav was up here today because he would.
- [54:31]
B
Well, it's fine. We ran right into time and you made a great point. So, you know, we've, we've seen what it is.
- [54:37]
A
But.
- [54:38]
E
Well, also, Dave, it's not just liquidity, though. It's that they're able to bypass the. The regulatory thresholds that, you know, cause takes a year cost you $10 million to get one of these companies minimally.
- [54:54]
A
But the answer to that should be fix it. I mean, Lou is 100% right. We have a lot of regulation that is designed to do nothing other than enrich people involved in the process with the effect of blocking people from doing what they should legally be allowed to do. Right. Did I get that right? Lou
- [55:14]
B
stepped out, but it's a perfect. We can wrap. I think we unpacked it all.
- [55:19]
A
Have a great weekend, everybody.
- [55:20]
B
Yeah, everybody have an amazing weekend. We'll talk to you on Monday. Thanks, Dave. Thank you, guys.
- [55:24]
A
Take care. Ciao.