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- [00:05]
Laura Shinn
Hi, everyone. Today's episode is a special two parter.
- [00:08]
Podcast Host / Announcer
First, I'm joined by Lawrence Lepard, a longtime sound money advocate, gold investor, and.
- [00:14]
Laura Shinn
The author of the Big Print. We talk about why he believes the current monetary system is headed toward a.
- [00:19]
Podcast Host / Announcer
Breaking point, why bitcoin could be the.
- [00:22]
Laura Shinn
Fastest horse in a currency crisis, and.
- [00:24]
Podcast Host / Announcer
How he sees gold stock, stocks and the dollar fitting into that bigger picture. Then in part two, filmmaker James Craig joins me to discuss his new documentary.
- [00:35]
Laura Shinn
Code is Law, which looks at some.
- [00:37]
Podcast Host / Announcer
Of crypto's most infamous hacks, from the.
- [00:40]
Laura Shinn
DAO to indexed finance, Kyberswap and Manko markets.
- [00:44]
Podcast Host / Announcer
We'll start with Lawrence, but first a.
- [00:46]
Laura Shinn
Quick word from Binance.
- [00:48]
Podcast Host / Announcer
Binance is the world's number one crypto exchange, trusted by over 290 million users. Binary with industry leading liquidity, security and a wide range of digital asset products, Binance is the place to buy, sell, trade and earn crypto. Download Binance today to get started.
- [01:06]
Laura Shinn
Welcome, Lawrence.
- [01:07]
Lawrence Lepard
Hey, Laura, welcome. Nice to see you.
- [01:11]
Laura Shinn
I'm excited to chat with you. So for those in the audience who may not know you, you are an investment manager and at Equity Management Associates and you're also the author of the Big Print.
- [01:23]
Lawrence Lepard
I am sound money advocate for many, many years.
- [01:27]
Laura Shinn
Yeah. So I really enjoyed reading your book. You know, as I mentioned, you wrote this book called the Big Print, which was published earlier this year and you recently went viral for a tweet in which you told gold proponent Alasdair McLeod, you stupid fucking fossil. In response to comments that he made that bitcoin is run by shysters, crooks and Ponzi schemers. So before we get into the details around all your views and everything, why don't you just tell people how you became interested in bitcoin in the first place?
- [01:59]
Lawrence Lepard
Yeah, sure. By the way, that tweet, I kind of regret that tweet. He triggered me, but there's one thing I get triggered by, it's questioning my honor. And when he said we're all shysters and Ponzi schemers and I've known Alistair for a long time, he's been a big gold guy and I was just like, I'd had enough, you know, it was just like, come on, man, you know, wake up. I mean, you can say you don't like bitcoin, that's fine, but you know, this is a legitimate asset class and he of anybody should know that. But I got into bitcoin a long time ago. I came to it as you know, and that's partly you Know why I was so mad about a gold guy taking a shot at bitcoiners as a gold and silver guy? You know, pre 2008, if you believed in sound money, as I have for 30 years, really your only choices were gold and silver. And I got into that through the Ron Paul movement and libertarian economics and Austrian economics. And I recognized that fiat system was broken many, many years ago. And so I expressed it, you know, through gold silver ownership and gold silver stock ownership. The white paper came out. I wasn't aware of it when it came out. I. I heard about it a little bit in 09 and 00:10. I was kind of skeptical because there had been other attempts to do digital currency, e gold and hash cash, and there were other things and they'd all failed. None of them the Liberty Dollar, none of them had really worked. And so when somebody said, well, there's this digital currency called bitcoin, my initial reaction was, well, that's nice, but great idea, but it's not going to work. Of course I was wrong. But I was generalizing from prior experience. Then when it got to be a couple bucks, max was trying to tell me to buy it, and I still didn't believe. You know, when it hit $100, I was kind of like, you know, maybe there's something going on here. I started paying attention. I was close to buying some through Mount Gox. Then they failed and I didn't. And I actually bought my first coins in 2013 when Coinbase came public. So I was paying around $300 a coin. And, you know, since then, I obviously learned a lot about what it is and the design of it, the architecture of it and the immutability of it, and my confidence level in it actually being a sounder form of money than gold just kind of grew progressively through the years. As you know, it continued to work and the problems got resolved. I mean, as we all know, there were some hard forks, there were block wars, you know, there were potential security threats, etc. And every one of them got addressed. And of course, near the end, the biggest issue was, oh, the government's going to shut it down, of course, and then they approve the ETO. So, you know, we're now 16 years down the road, and, you know, I'm quite convinced that it is the future of money and that we will all be. My grandkids will be paying for things measured in satoshis, not dollars. And, you know, gold and silver, while they're nice, they're inferior by comparison to bitcoin. Although they Are. They are still sound money. And I, you know, I respect people who don't want the volatility of bitcoin. Decide to buy gold and silver, that's fine. But I get pretty angry when they call us shysters and Ponzi artists, because that's just not what we're about.
- [04:58]
Laura Shinn
Yeah, I find that usually people who do that are people who are financially privileged and don't know how financially privileged they are. And I found it interesting in your book where you talked about some personal experiences that your family had. And I realized, oh, this is why he was able to kind of understand the promise of bitcoin early. So can you tell those stories?
- [05:24]
Lawrence Lepard
Sure. Well, there were a lot of them as I grew to understand Austrian economics. I mean, my grandfather had a business in Michigan in the 1920s that over expanded using debt because the bubble that led to the Great Depression was being blown. And the Federal Reserve blew that bubble, as we all know. And then when the depression hit, he spent the next 10 years begging the bank not to foreclose on him. And it really scarred my grandmother. My father had the same business in 1979-80, and Volcker took interest rates at 20%, nearly put my father out of business. I mean, 20% interest rates, really. And then in my case, I was an investor in the great financial crisis, and I had the Michael Burry trade on. I was short all the financial stocks, or I mean, all the housing stocks, because you could see the bubble that was created there. And so I was short a lot of the stocks that ultimately ended up failing. And as you may be aware, some people are aware, the government actually outlawed the short selling of financials on September 21 after Lehman failed. And so I was forced to cover all those short positions which would have provided me with a very large profit. I covered them all at losses or small losses, and I spent the year down 6%. I should have been up 200%. And it's all because they changed the rules in the middle of the game. And I think the point I try and make throughout the entire book is I just try to explain to people how this, you know, capitalism as we have it now isn't true capitalism. Because the price of something very important, which is money, is being set by a committee of 12 people at the Federal Reserve. This is crony capitalism. And it's been set up to benefit the government, the bankers, the Keynesian economists, and the people who figured out how to game the system. And it makes me very angry that the average American has been gaslit into thinking that they're doing something wrong or they're not working hard enough when they go to the grocery store and have a hard time buying groceries. In fact, really, it's a very conscious strategy on the part of the government, the banks, rich people and the people who control the Federal Reserve for them to benefit and for the rest of us to lose by paying higher prices. And we're not going to fix it until we return to a form of sound money. And the only way we're going to do that is to get a political movement as big as the American Revolution or such, you know, to, to really demand that we go back to sound money. And, you know, I think our best bet at doing that is for Bitcoin to overwhelm the system. I mean, gold and silver carried the ball for quite a time. I'm very happy to see bitcoin come along because I think it's better and I think it's harder for them to suppress. And I think that they're going to, they're going to lose basically. You know, the, the current Keynes, the broken Keynesian fiat system is in my opinion going to fail. The only issue is how quickly, and I kind of put it at the midpoint of probably 20, 32 or 23 or 4 somewhere in there. But we're headed that way quickly, in my opinion.
- [08:23]
Laura Shinn
Yeah, I thought your book was very well argued. I mean, you go through a lot of history and it's interesting because I feel like even if maybe I'd read it like a year or two ago, I might not have really understood it. The more that I've experienced in my life, the more I am starting to see like all the things that you're talking about, about how a few people who have control design things in a way that benefits them.
- [08:53]
Podcast Host / Announcer
Staying in control.
- [08:54]
Lawrence Lepard
Exactly.
- [08:55]
Laura Shinn
And this theme, yeah, like it's, it's something that actually you see in many areas of life. It's not just around central banking or money. But, you know, one of the hypothesis you have in the book, which you sort of just alluded to, is that you think the brink, the US is on the brink of some kind of currency crisis. You talk about this debt doom loop. Explain your views on that.
- [09:17]
Lawrence Lepard
Yeah, absolutely. I mean, I think it's very important for people to understand that this started a long time ago with the Federal Reserve. It got worse than 71 when we went off the gold standard. And it's really accelerated since 2008. Prior to that point in time, the Fed wasn't actively involved in printing Money the way they do now. You know, the balance sheet went from 800 billion to 3 plus trillion. And then the COVID example took them from that three up to nine. It's come back into the high sixes. You know, the debt doom loop is something that's important for people to understand. As long as the government continues to run large deficits and they've kind of been normalized now that leads to them having to sell debt to pay for those deficits. And that debt creates more interest costs that they then have to pay, which in turn then makes the deficit bigger. And so you can see that you've got a circular reference here where more debt sold, more interest costs, more interest cost, more deficit, more deficit, more debt sold. And eventually it spins out of control to where there won't be enough buyers for the debt. And so what they'll have to do is what they did in World War II, which is yield curve control where the government is the buyer of the debt and the government's already kind of the buyer of the debt because Secretary Bassett has been selling short term debt to buy the longer term in order to keep the longer term interest rate suppressed. And, and again it's just, you know, they, it's, it's peas and shells. The monetary plumbing is, is made complicated by them so that the average person can't see what's going on. But in my book I tried to explain it in terms that the average person could understand and really the conclusion is that all roads lead to Rome, which is money printing. And it's just mathematical. If they don't print the money, they can't service the existing debts and the whole thing will collapse. What I believe we're in is what I call the everything bubble. And when the everything bubble bursts, it's going to lead to a sovereign debt crisis. And the reason that is is that Bernanke told us with his speech way back when, this helicopter speech, that the deflation is death. But we have a technology called a printing press and we can prevent deflation. And of course they've demonstrated that and proven that. And so, you know, this is a 1929 style bubble in terms of the valuation levels of stocks and a lot of things, housing, etc. All driven by cheap money and the monetary distortions of the last 20 years. And it should collapse and it probably will get burst and start to collapse, but then the Fed will step in as they have, as they did in 08 and as they did in 2020 and just print like crazy. And you know, that's that's fine. It keeps the system running, but it's why, you know, after the COVID example, they grew, it's, it's no coincidence that money supply grew 40% in the COVID example and our grocery costs went up 40% in the, in the example. So you can print the money to keep the system going, but it's the same amount of groceries and goods and services, more money chasing them, your prices are going to go up. It's pretty simple. So that's really what's going on. And sadly it's getting worse, Laura. I mean, each one is happening more quickly and each one is bigger. You know, Bernanke printed 3 trillion over three or four years. You know, Powell printed 4 over 5 trillion over the course of 18 months or maybe a tad longer, maybe two years. So, you know, it's like, it's like childbirth contractions. You know, they get more and more, you know, intense and so forth. And so I, you know, I think that the next big print which the book alludes to is going to have to take the balance sheet to 15 trillion or 20 trillion and you know, it's going to unleash another wave of inflation. And it's interesting to me that with inflation really not tamed yet, you know, we're still at 2.9 stated and it's actually higher without it even tamed yet. Powell started cutting rates and made statements like they might start to trim the balance sheet runoff. And to me, that's all because the debt burden is bearing down on them. And they know that if they don't grow the money supply further, they're going to run into this deflationary collapse that they fear, and we all fear it. I mean, nobody wants a deflationary collapse at this stage. It would be so painful to make the 1930s look tame. And the solution to this inflation is to take interest rates up to a high enough level that people trust the currency again. And that's what Paul Volcker did in 1979 and 80 when he almost bankrupted my dad. But back then you could do it because debt to GDP was 35% and it didn't blow out the federal government deficit. Whereas today debt to GDP is 124%. And so if we took rates up to some high rate, whole world would go bankrupt. So they've really, they've really painted themselves into a corner. And, you know, there's a way out. The way out is inflation and the, the proper, you know, fix for the whole longer term problem. I mean, some accuse Me of being a doomer. And I'm not, I'm a very optimistic person about the long term trend of humanity. I mean, you know, look all, look at the technology we're using right now, look at all the great things going on. Look at AI. I mean, know the world's going to get to be a much, much better place. But, but we have to solve this monetary problem. And until we do, inflation is going to be a persistent issue, in my opinion. So, you know, we've got to, we've got to address it. There's a chapter in the book that talks about how I would address it if I were President.
- [14:42]
Laura Shinn
Yeah, yeah, why don't you go into that? Because I was going to ask you, you know, I saw in your book you said that you thought one of the ways out would be to embrace deflation. Yes, yeah. So go ahead and talk, let's talk.
- [14:54]
Lawrence Lepard
About that for a moment. Because it's important. I mean, deflation is what happens when people and things get more efficient. You know, Keynesians believe, Keynesian economics is what runs our system. Keynesians believe in unlimited growth and growth is good. And you know, just think about the math of growth, of growth, of things on a, on a resource limited planet doesn't work. I mean, you can't keep compound growth going forever if your resources are limited. So you know, what we really need is efficiency. And efficiency is doing things better, cheaper, faster, which is what these computers and technology have taught us. And you know, notice how computers, TVs, phones, everything, it's all gotten cheaper and better over time. And that's good. And that could happen throughout the entire society with respect to everything as productivity improvements flow through to society. But because we've got a monetary system that's built on debt and built on credit and built on those things expanding, we've got these two systems that are in conflict with each other. A monetary system that needs constant growth and a financial system that's getting more, ever more efficient. And of course, what the monetary system is doing is it's allowing the people at the top to rake off all the benefits of that efficiency. And so it's all because the price of money is not correctly set. I mean, the classical economic theory, interest rates are the price of money, right? You borrow money, if you think you can do something with it, it'll give you a better return. And the, that price, that interest rate price, should be set at a level in a free market way, at a level which balances the supply of savings against the demand for investment needs. So Somebody has a project and they say, I want to do this thing. I think it'll give a 20% return and I can borrow from you at 5. I'm going to keep the 15. Well, that's an economic market transaction. But when you start messing around with what that interest rate is, you screw everything up. And everyone starts making wrong calculations. And we don't get more efficient, we get less efficient. And so we should all be living much better lifestyles than we're living even now, even as good as they are. And the wealth should be much more evenly distributed because this system allows the people who are at the top, who know how to play the game of inflation, to steal from the rest of us because they can borrow cheaply. Like there's a story in the book about the Real Housewives of Wall Street. There's a. The wife of the chairman of Morgan Stanley, in 2008, she borrowed $200 million non recourse at a low interest rate to buy troubled assets. And the Federal Reserve backed her in doing that. I mean, if that's not corruption, I don't know what is. I mean, it's complete crony capitalism. And so, you know, you and I can't borrow $200 million from the federal Reserve at low interest rates. And the average, certainly the average, you know, working guy can't do that. So it's just, it's just a really badly broken and unfair system that needs badly to be reformed. And probably more than anything else, that's why I wrote the book. I mean, I looked at, you know, the blue red debate, and I'm neither. I'm a libertarian. I believe, you know, Ron Paul's the only politician I really like. You know, the, the. I looked at that debate and I said, you guys are all missing the really central issue, which is the, the money is just broken. You know, the title of Lynn's book. I mean, it's just broken. And until we return to a sounder form of money, you're going to have bad economic outcomes. And that's what we're getting, these really unfair outcomes where poor people are getting killed by inflation, the rich are getting richer every single year, and government gets more power and more control over our lives because inflation allows them to basically do what they want to do. And so it's a mess.
- [18:29]
James Craig
Really.
- [18:29]
Lawrence Lepard
The only way to capture it as a mess. Did I answer your question? Because I rambled on a little bit there.
- [18:34]
Laura Shinn
Well, I mean, you started about embracing deflation. And something that I wanted to say is, this is so funny. But back in, I think it was like roughly 2008 or 2009, I learned about steady state economics and I learned about that through a totally different political way, like a more leftist side, like through environmentalism. And it feels like the same thing because you were talking about like we're on this resource constrained planet. So the notion that like, you know, the economy could just grow and grow it anyway, it just, it's funny because, like the same ideas arrived at from totally different angles.
- [19:09]
Lawrence Lepard
It doesn't work. Yeah, I mean, the way for human beings to enjoy better lives is to get more efficient. You know what I mean? To do things. Engineering really more than anything else drives human prosperity. And, you know, when you have the money pricing set incorrectly, as we do with the Federal Reserve running the show, the wrong things get funded. You know, the government becomes too big and powerful. Just all kinds of the incentives just become all wrong. I mean, you know, why do we pay, you know, 18 cents a kilowatt hour here in the United States for power when China, or 14, I think it's the average nationwide when China has it for 5 cents? Well, because, you know, they're building nuclear power plants and they're thinking, they're thinking forward and then the same timeframe where they were building nuclear power and making their grid more efficient, we were wasting $8 trillion on wars in the Middle East. I mean, you know, we. And that was. And that occurred because the government has a lot of power and Dick Cheney and Halliburton and other people who profit from those wars were able to, you know, gin up the notion that Saddam had, you know, weapons of mass destruction. And off we went. And so, you know, again, this is all just, it's just a. These are all functions of the same core problem, which is the broken monetary incentives. And I think that one of the great hopes of bitcoiners is that if we fix the money, a lot of these problems will go away because, you know, government won't be able to print the money to do the things that make no sense. And government does a lot of things that make no sense. Right?
- [20:43]
Laura Shinn
Yeah. So you wrote in your book that. Because we were just talking about war, you wrote in your book that you feel like bitcoin defunds war, which I thought was super interesting. I'd love to hear more about that. And just generally, you know, you compare it to a number of other traditional investments such as real estate, stocks, precious metals, etc, and you know, you talked about why you feel like it shines amongst that group. So I'd Love to hear about those two things.
- [21:08]
Lawrence Lepard
Yeah, well, let's, let's go to the Defunds war thing first. I mean, so, you know, think of what a country is. It's a group of people all living together under kind of a common set of beliefs and rules. In our case, the Constitution, theoretically. And, you know, war is one of the stupidest things human beings can do, right? It kills people, it destroys property, it wastes money on munitions, et cetera. It's just a bad idea. And unless you're defending yourself against people who are trying to attack you, I get that. And if you look at the history of the United States, the history of countries in general, wars are very, very expensive. And so if you go to the populace of a country and say, hey, let's run this war, and by the way, you got to send half your income into me or two thirds of your income into me to pay it. The population is going to go, no way. We're not doing that. We don't want to fund it. And so. But the government's figured out a workaround. It even started with the War of 1812 because they suspended specie payment to fight that war. And the war before that, the Revolutionary War, we had a hyperinflation event because the currency that we printed, we printed to excess. And so the point I'm making is it's very hard. War is expensive. It's very hard to fund them. And it generally involves inflation is involved. And so Civil War Lincoln issued greenbacks, huge inflation as a result of them, and they lost all their value. The Federal Reserve got founded in 1913, World War I, and we had 100% inflation coming out of that war. The price level between pre war and Post World War I in the United States doubled. And you had all kinds of strife. You had a rise in lynchings, a rise in labor unrest, et cetera. It was a very bad period of time. Inflation pulls at the, you know, the strings of society. A lot of, lot of costs to do. We actually did it well in World War II. A lot of cost to run that war. And we printed the money and we grew the Federal Reserve balance sheet and we put in yield curve control. And the reason it didn't result and we had very high inflation. Most people don't know it. There were some months in the 1947, 48, you know, 50 area where inflation was running 20% year on year. Okay, it was really bad. And bondholders just got totally annihilated. I mean, they, they had the yield curve control in place and the long term bonds were paying 2.5 and short bonds are paying 3.8of a percent. So they all got killed. But the point I'm making is that, you know, what got us out of that without, you know, that debt burden is that over time we had a much better demographic situation. We had the automobile or we had, you know, growth in the country expanding in terms of both housing and interstate highway system. And we grew out of that hole. But the reason to answer your question, why it defines wars, because the average person, knowing what a war is going to cost them, would vote against it and would push their congressmen and congresswomen to vote against it and stop it. Although many wars have been undeclared, they're supposed to be declared by the Congress. They're not. The point, again is if the government doesn't have the money, they can't fight the war. And it's the money supply inflation that allows them to have the money. If the money were sound and they wanted to have a war, they couldn't afford it because the people wouldn't give them the money and they wouldn't have the money to pay for it. No soldier or nobody's going to build you ammunition or weapons if not getting paid for it. So. So I think that's what, that's how, you know, it defines war. To address your question of Bitcoin, then.
- [24:34]
Laura Shinn
Sorry, just to connect, the last is the last that the government has adopted bitcoin as a currency, or I think.
- [24:41]
Lawrence Lepard
That'S right, to get there, the government will have to adopt Bitcoin as a currency. I mean, my view is that currency and the government should be separated very much like religion and the government. I mean, I think we need, you know, my view, I'm a very classical economic, classical economist, libertarian point of view, or classical liberalism actually was the original school of thought. You know, we need a government, in my opinion, to build the roads and enforce, you know, laws of justice. I mean, I want to see criminals and thieves put in jail just as much as the next guy. And, you know, my estimation is that we could, you know, if we all paid a 10% tax on everything we bought, flat tax, that would probably pay for those two functions. Everything else the government does, I don't think we need, you know, and I really do think that as we go, as we, as we grow as a species and we get more and more enlightened, you know, the notion of countries fighting other countries, it's just not going to happen. I just don't think, you know, I don't I don't imagine the average Chinese peasant wants to kill Americans. I don't, I don't imagine the average American wants to kill Chinese people or Russians. I mean, you know, most average people aren't psychopaths. People who want to, people who are warmongers, in my opinion, are psychopaths. And so if we defund them, then we won't have wars, in my opinion. So I, I think it's, I think it's a beautiful thing. And sound money makes it a lot harder for a government to figure out how to conduct a war. So that in my view, when we go back to, when we go to a bitcoin standard, which I think we will, wars are going to be a much less common thing, if not extinct entirely. To your second question about bitcoin versus the alternatives. So, you know, basically, sound money is all about scarcity and stock to flow. I mean, Safedine taught us this with his seminal book. And, you know, there is no sounder money than bitcoin. The supply is fixed, it's algorithmically set. It's currently, you know, stock to flow is half that of gold. It's got 8, 8/10 of a percent dilution. Your gold's 1.7, and every four years that gets cut in half again. So, you know, this is the soundest money that's ever existed. It solved a problem it's been with mankind for thousands of years. I mean, you know, gold and silver, they were the soundest money. But even in the case of silver, when, you know, when the Spanish found South America and they brought all that silver back from South America, grew the money supply enormously and there was super high inflation. So, you know, here you've got. By creating digital scarcity, what Sadoshi did was he gifted us with a form of money that is mathematically limited. And, you know, I've been waiting a long time time to say this. You know, that's why it's going up forever, Laura. It really is. I mean, it's a fixed supply. And, and you know, as, as more and more demand emerges for it, the price will never stop going up. So, you know, it's, it's a really elegant and beautiful solution to a problem that all of humanity has. And, you know, I wrote the book because I think that, you know, I care about my kids, I care about my grandkids, I care about, you know, average people in the country. I see a lot of people hurting and I just, I think that, you know, and I see a lot of people being gaslit and Arguing about things that in my opinion aren't nearly as important as this fundamental issue of sound money. And so that's why I've been such a loud advocate for sound money. And then of course I'm a self defender. When guys like Alistair trigger me, I couldn't bear it. I mean I am about as far away from a shyster as anybody can imagine, I think. And to be called that, I couldn't bear it.
- [28:39]
Laura Shinn
Yeah, well, this is the perfect segue because I did want to ask about the fact that we're seeing gold near these all time highs. And you know, there's this kind of moment where we are, where we're seeing like the US dollar is slowly devaluing the, you know, gold is just on this precipitous tear. Bitcoin, you know, has been at all time highs recently. It's, it's kind of faltering now. But you know, when you look at this moment in time, how are you, how are you invested? Are you invested more in bitcoin? More in gold?
- [29:15]
Lawrence Lepard
In terms of my personal, I mean I have a house, but other than that, in terms of my personal savings, I'm much more heavily weighted to bitcoin. I don't know.
- [29:23]
Laura Shinn
You know, and why Explain like why that's your.
- [29:26]
Lawrence Lepard
Well, because I think it's the fastest horse in the race and, and I think it ultimately will become money. And so I think it will demonetize gold. But, but it's not to say that gold is bad because that demonetization process will take some years, arguably decades. And I come at it from a gold point of view and I haven't sold any of my gold because I still believe in it. The weighting is, I think I'm about 70, 30 now, Bitcoin gold. But that weighting is really, it's gotten there because the bitcoin's gone up a lot, not because I've sold any gold. And so in terms of the two right now, bitcoin is incredibly cheap versus gold. It's against the bottom trend line of the bitcoin gold ratio and it's about to launch. I mean if somebody had a new dollar today to invest, I would strongly encourage them to put it into bitcoin. And I've actually even been selling a few things that are somewhat related to gold, gold stocks and using those proceeds to buy bitcoin related things like either bitcoin or microstrategy, which I believe in. So you know, they're both going up and to the right. But bitcoin's going there much quick, more quickly, because gold is fully distributed and bitcoin's being adopted. And so that adoption curve, I mean, the gold market now is about 27 trillion. Bitcoin's about 2 trillion. Total fiat assets, according to Jesse Myers, are about 900 trillion. And I think bitcoin will ultimately pass gold. And so to me, bitcoin has got more alpha and more asymmetry than gold, but they both have merit. The thing that's useful about gold is for really old people who don't want big volatility or drawdowns. It'll protect you against debasement without, you know, it won't go up as fast as bitcoin, but it won't go down as fast either. So some people like that. This period, interestingly, Laura, kind of reminds me of the 2018, 19, 20 period. If you go back, I've got a chart on this. I mean, happy to share it, actually, if you want, but I that shows that gold tends to. It's more widely distributed, more held by more people, and it tends to smell out the monetary debasement before. Before bitcoin does. And so bitcoin tends to sit back for a while. Gold moves first. And this big move in gold, in my view, is coming because Jerome Powell is out at the end of the year. The Doge program failed. Everybody knows they can't stop spending as much as they're spending. The big beautiful bill got passed. We just bailed out Argentina for 20 billion. Oops, no, it's 40 billion. Right. And so everyone can kind of see that, you know, it's Lyn's point. Nothing is going to stop the train. And so, you know, with that in mind, people are saying, hey, you know what? I need something to protect me against this money printing in inflation. And the easiest obvious choice for most people because they don't know about bitcoin or understand bitcoin is to buy gold. And then what tends to happen is bitcoin lags behind it a little bit, and then it just comes racing by it. And so I remember in the early 20, 19, 20 period when, you know, when the repo crisis hit, gold started going up quite a bit, smelling what was coming. And bitcoin was on flatline in 2020, you know, Covid hit and, you know, Powell came in with this big money printing operation. Gold took off like a rocket. Bitcoin flatlined for a while. About two or three months later, Bitcoin woke up and it went from 10 to 60. So it went up, you know, gold went up 40%. Bitcoin went up 6x. It crushed gold, but there was a lag. And the chart I'm referring to shows that we've got, it's on my Twitter feed. You know, that chart shows that. And so I think what we're looking at here is when bitcoin wakes up on this next Money print, which I think we're close to being at, I see bitcoin, it's going to go to 2, 3, 400,000 sometime in the next 18 months. Probably on the sooner side of that. I mean, I expect, I expect 150, probably within six months.
- [33:21]
Laura Shinn
Oh, wow.
- [33:22]
Lawrence Lepard
Yeah. So it's.
- [33:23]
Laura Shinn
People heard it here first.
- [33:24]
Lawrence Lepard
Yeah, it's coming. I mean, well, look, I've been wrong about a lot of things, so don't. I mean, I offer you my opinion and do with it what you will. I could be dead ass wrong, but you know, I have been. It is what I do and it's what I wrote the book about. I have been watching this stuff for a long time, so. And it is my strongly held opinion.
- [33:42]
Laura Shinn
Yeah, yeah. Again, you know, as we've said on the show plenty of times, nothing here is investment advice.
- [33:46]
Lawrence Lepard
It's not investment advice.
- [33:49]
Laura Shinn
Lawrence, we're a little bit past time, but I did want to see if you're available just for last couple questions.
- [33:53]
Lawrence Lepard
I can take as much time as you like. Sure.
- [33:55]
Laura Shinn
Okay, great. So as you mentioned earlier, you're a fan of strategy, formerly microstrategy. And as I'm sure you're very well aware, we're in this period where there's this trend with all these DATs, these digital asset treasuries. And strategy is essentially the first dad. It's very, very successful. I wondered what you thought of the category overall. Do you think any other dats will be successful? You know, do you feel like only strategy could be successful? You know, that's a great.
- [34:24]
Lawrence Lepard
Yeah, that's a great question. It's a great question. Yeah, I'd like, I'd like to weigh in on that. It's a great question. So first of all, I think they're a good thing. They're really like closed end mutual fund holding companies buying bitcoin. And because they're corporations, they're able to use some leverage in terms of either debt or preferred stock. And so really what they, in my mind, what they represent is a levered form of bitcoin. They're kind of bitcoin on steroids. And the question that I think the market is in the process of sorting out, you know, is, is what do you pay for that leverage and how much leverage should you have and how good are these management teams? And so, you know, we saw a lot of excitement as they all came out. We saw a lot of people thinking, okay, you know, these guys can, you know, issue stock at the market above, you know, above the underlying price of their Bitcoin. And therefore they're catching a premium. They can put that into the bitcoin, they can grow the M Nav per share. And that's a perpetual money machine. And while there's some truth to that, eventually that growth slows down and the M Nav collapses closer to, in some cases now in some of it's below, you know, the, the bitcoin that they hold. And I, I don't know what the right M Nav multiple is longer term. I mean, this is kind of like banks. You know, banks tend to sell at kind of 1 1/2 to 2 times book value. And the reason they do that is because they have assets and liabilities that they put to work and they earn a spread on them. And it's kind of similar with bitcoin treasury companies. And I'm guessing the Bitcoin treasury premium should be somewhere between 1.3 and 2 times MNAP, depending upon who's running it and how good a company is. I think Saylor right Now is at 1.4. I could be wrong on that, but it's, it's close enough. And, you know, they, they have merit. I mean, you know, what he's done with the stretch product, I think is very interesting. I own it. You know, he's issuing a perpetual preferred stock. It's very well covered by the underlying value of the Bitcoin that the company holds. And he's committed to paying 10% on it. And the Bitcoin he owns, he believes will appreciate. Right now the ARR is 38% a year, but he believes it'll be north of 30 for several more years, quite some time. And so he's really just earning his shareholders the spread, right? He pays out 10%. You know, the value of the underlying asset grows by 30. Well, he's got a 20% spread and that goes to a shareholder. So. So it's a logical strategy. And as long as he doesn't get too levered and suffer through an incredibly bad bear market. But even if, you know, as we've seen, these bear markets generally don't last more than four years, and I don't see how he really gets in any trouble or it doesn't work. Unless we're just fundamentally wrong about bitcoin. If the price of bitcoin goes down and stays down and all the adoption that we've seen somehow reverses, well then obviously this isn't going to work and it'll fail quicker than anything else because it's levered in terms of how many of them there need to be and where, you know, I can see quite a few of them. I mean, there's an argument for different countries. I mean, Meta Planet took advantage of Japan. You know, there's one now called Orange which is taking advantage of Brazil. You know, there. And there are different categories. I mean some, some use debt, some use preferred, etc. But you know, do I think they will all survive? No, not all the management teams will be, you know, prudent and smart and do the right thing and some of them will probably get over levered and so in a downswing they might lose their access to capital and you know, have to sell coins to pay the dividend. I mean, you know, there, there will be, you know, look, my, my personal view and I own some strategy, okay, not a lot, I mean, compared to my bitcoin only, but I own some because I think Michael's doing the right thing and I, I do think it will outperform the underlying coins. But my personal view is this is an asset that is really performing better than any other asset in history and has an enormous irr. Don't be stupid and try and lever it up. Don't be greedy. I mean, sit with a calculator and compound something at 30% a year for five years, 10 years, 20 years, 30 years, it gets nuts. And that's what bitcoin is. I mean, it's a compounding machine for the next five decades or more. And so in light of that, why do you need to add leverage? I mean, I see these kids on Twitter and other places who talk about, well, yeah, I know it's going up higher, faster and this 38% a year is not enough for me. I'm going to add some leverage or I'm going to take all my bitcoin, sell it and buy Meta Planet. A meta planet selling at an M nav multiple of seven. And I'm kind of like, oh my God, you're not thinking about this correctly. Do you know what I mean? I mean, if you get, you know, you don't need to be so greedy and you don't need to lever yourself up with bitcoin. Bitcoin is the best performing asset out there by far. Just holding it, just huddling it and forgetting about it is probably what 9 out of 10 investors should do. If you want to play the treasury, you know, the bitcoin treasury companies, fine, but just be aware of the risks you're taking, you know.
- [39:12]
Laura Shinn
All right, so last question. You kind of answered parts of it already, but so far, you know, we kind of have these like four major assets that we've been talking about throughout this episode. You know, bitcoin, gold, the US Dollar and stocks I think would be the other one. And you, you kind of talked about how you think bitcoin is sort of poised for a breakout over the next like year or two. I just wondered if at the same time you could talk about how you think those other three assets, you know, grow.
- [39:40]
Lawrence Lepard
Absolutely. Look, I think we're in a sovereign debt crisis and so I think gold, bitcoin and silver are all going to do well to varying degrees. I think bitcoin will probably lead silver actually right now, probably be number two because it's coming out of a long suppression period and it's been held below its peak of 50 for a number of years. I could see it going to 100, 150 really easily. I think gold's going to continue to go up just because they're going to continue to debase the dollar and central banks are going to buy it. So stocks are a really tricky and interesting question, Laura. If you look at any historical metric, they're extremely overvalued. You know, market cap to gdp, pes. You know, I looked at recently. In fact, it's in my most recent quarterly letter. You know, I think the, the mag seven stocks are selling like a 40 something average, you know, multiple. I mean, that's nuts. That's so high, so extreme. Now some of those businesses are monopolies, I get it, but that's pretty expensive. But I'm not here calling for a crash because with easy money and more and more money and credit being fed into the system, the stock market has kind of proven that it's an Energizer bunny. But having said that, and if you look at cases of very high inflation and hyperinflation, stocks have to a degree protected you. I mean, look, the thing that we know is absolute death in high inflation environments are bonds, right? The notion that you're going to get 3% interest or 4% interest and get paid back your principal in 10 years, that's a bad deal. You know, the principle is not. It is, it's just a terrible, you know, or 30 years. 20 years.
- [41:17]
James Craig
30.
- [41:17]
Lawrence Lepard
It's ridiculous. You just, you know, yeah, you'll get paid back. The principal, it just won't buy as much. So, so bonds are the big loser. Stocks, you know, they represent the earnings power of businesses and they, if you look at stocks in hyperinflationary countries like Weimar Germany or Venezuela, they went up a great deal in nominal terms compared to the value of the currency. They didn't really gain that much. If you look at the last inflationary period of the 70s, stocks kind of, they flatline, they didn't go down well, they had a dip in 73,4. But in general throughout the end of that 10 year period they're kind of flat. Bonds got killed. And actually the two best categories for stocks in the 70s were gold stocks and oil stocks which kind of went up 30% a year compound annually. So stocks that aren't commodity related and that are very overvalued. I'm not a big fan, but I don't, you know, but I get it. They've worked and people think they'll keep working and maybe they will. And you know, I don't know if you've heard the term crack up boom, which is when they just keep printing so much money that the value of everything goes up. I mean it kind of feels a little bit that way to me. And so I wouldn't, you know, I've tried, let me say this, the last five years I've lost a lot of money trying to short the stock market and now I've stopped doing that. So they'll probably crash, you know, but it's kind of like they're the Energizer bunny. I mean, and they just are. I do think, I have to say though, honestly, if you ask me my gut, gut feeling, I think we will have it because I see, I see cracks in the system right now that remind me of, of 2007 and 8. You know, these big bankruptcies, you know, these auto related bankruptcies that have just happened. You know, the first brands and the other one Tricolor, you know, this is, this has a little bit of a housing bubble feel to it. When the Bear Stearns funds failed and, and you're starting to see the unemployment numbers just got revised downward very steeply. And you know you're, you're just starting to see the economy cool off a little bit. And stocks right now, they're priced for perfection. And so if we do have an economic downturn, you know, I, it wouldn't surprise me at all to see a pretty severe correction in the stock market. I mean, I'll say this in terms of general stocks, which I've been exposed to throughout most of my career, I don't have any exposure right now. I mean, I have silver and gold stocks because those are related to the precious metals, which I think are going to go up a lot. But. And I own a couple of commodity related stocks. But general stocks, I'm not a big fan. So I, but I can't, you know, it's not the worst place to be. It kind of, they kind of fit with real estate, by the way. I mean, real estate, at least it's a real asset, right? They can't print real estate. But the thing I don't like about real estate is you can't move it and they can tax it. And you know, I think we probably had a little bit of a bubble there too. I mean, we built a lot of McMansions. I'm not sure who's going to buy them, you know, so we'll, we'll just have to see. I mean, for my, you know, for my savings, my two favorite, my three favorite buckets are gold, silver and Bitcoin.
- [44:19]
Laura Shinn
All right, well, Lawrence, it's been such a pleasure chatting with you. For anybody who hasn't read his book, I recommend it. It's. Yeah, yeah. Let me just show it on screen.
- [44:31]
Lawrence Lepard
I just told you the copy of it there, so.
- [44:33]
Laura Shinn
And it's orange.
- [44:34]
Lawrence Lepard
Yeah, it's orange. It's on. It's available on Amazon, you know, hard copper, paperback, digital, and there's an audio version too, so. Yes, and I'm working. Anyone international is wondering about the transit? I'm working on all those. It takes time, but I'm working getting it out in Portuguese, German, Spanish, et cetera.
- [44:54]
Laura Shinn
Oh, great.
- [44:56]
Podcast Host / Announcer
Nice.
- [44:57]
Laura Shinn
All right, well, Lawrence, it's been a pleasure. Thanks so much for coming on Unchained.
- [45:01]
Lawrence Lepard
Oh, thank you, Laura. Very nice to talk to you. Take care.
- [45:03]
Laura Shinn
Yeah.
- [45:04]
Podcast Host / Announcer
Binance is the world's number one crypto exchange, trusted by over 290 million users globally. With world class liquidity, security and a wide portfolio of digital asset products, Binance makes crypto easy for everyone. Whether you're new to crypto or a professional, Binance offers a simple user experience. Learn with Binance Academy. Browse hundreds of tokens and track your portfolio on an easy to use dashboard. For experienced users, Binance Pro provides industry leading services and bespoke trading products with some of the lowest prices, fees and deepest liquidity in the market. It's no wonder over 290 million users choose Binance for everything. Crypto Buy, sell, trade, earn Live Crypto. Download Binance today and begin your journey into the future of finance. Disclaimer Binance is not available in certain countries, including the U.S. check its terms for more information. Binance.com en/terms My guest is James Craig, founder, director and producer at Encrypted Films.
- [46:07]
Laura Shinn
And he's here to talk about his.
- [46:09]
Podcast Host / Announcer
New movie, Code is Law. Welcome, James.
- [46:12]
James Craig
Yeah, thanks a lot for having me, Laura. It's great to be here.
- [46:14]
Laura Shinn
Yeah.
- [46:15]
Podcast Host / Announcer
So you just released your new film.
- [46:17]
Laura Shinn
Code is Law, and it was great. It was pretty riveting. And it's interesting because even though I was very familiar with at least one of the stories, I just found myself on the edge of my seat.
- [46:32]
Podcast Host / Announcer
So just tell me, you know, about.
- [46:35]
Laura Shinn
The film, how you came to do it, you know, how you got the idea and you know what, what all is in there?
- [46:41]
James Craig
Yeah, sure. Yeah. So I'll give you a quick rundown of what the film's about. So it's a feature length documentary. It's. It's really about the. The smart contract exploits that have shaped the the Code is Law philosophy. So right from the way it was when it was first a meme to what it is now essentially a courtroom defense. So it takes you inside some of the really well known smart contract exploits like the Dow Index Finance, Kyberswap, Mango markets, and it tells you the story of the developers, the investigators and the victims that are at the heart of those cases. And then at the center of the film is this teenage hacker, Andy and Medjenovich, who is responsible for $65 million worth of hacks and has been on the run from the FBI now for a while. So we.
- [47:22]
Laura Shinn
Oh, go ahead.
- [47:23]
James Craig
No, I was just. Yeah. In terms of how we came to the story. So we, me and my co director, Louis Giles has two directors on this project, Louis as well, who's. Who's not here. And we came across that we were looking for stories to make independently and he was at ETC a couple of years ago and spoke to the founder of Euler Finance, Michael Bentley, just after they'd been hacked. They'd been hacked for, I think $200 million. And Louis mentioned the story and we were both amazed by the fact that kind of nobody in the mainstream press even knew about this. The numbers are insane. And then we, I went on to Rekt and saw the list of defi hacks with all these crazy figures and numbers and I was like, wow, we have to, we have to make a story about this. So that's how we got interested. And then through the work of people like yourself, we came to understand what the DAO hack was and kind of understand about the coders law idea. And that's really the genesis of where the whole thing came from.
- [48:12]
Laura Shinn
And was there any particular message that you wanted to get across with the movie?
- [48:17]
James Craig
No, I think actually the opposite in a sense, that we really wanted to try and not make it a kind of polemical film that was strongly putting forward one view or another. I think I had a massive amount of sympathy and understanding for the people that were at the heart of the story. So the founders who had actually been through these hacks and been at the center of things while kind of millions of millions of dollars of people's money were being threatened, I had a lot of sympathy for those people. But I didn't want the film to kind of be a code as law or an anti coders law film. We wanted to try and walk the line of kind of just bringing forward the debate without taking a strong stance either way.
- [48:52]
Podcast Host / Announcer
Interesting.
- [48:52]
Laura Shinn
Yeah, I mean, I get that also, as somebody who does this type of thing as well, but yeah, through watching it, my feeling was it's titled Code is Law, but the message is that it's not law. That's my personal takeaway.
- [49:11]
James Craig
Yeah, I think the fact, I mean, I would have loved if we could have got one of the hackers to actually be in the film giving the opposite point of view. It's actually surprisingly hard, as you probably know yourself, to find people who put forward the opposite point of view. And I think. But I think that's that slightly changed over the course of making the movie when we. So I've started work on this maybe two, two and a half years ago and at that point it seemed to be the complete consensus that, you know, like this idea is just a meme that was kind of quite prominent some years back. But now as the industry has progressed and matured, it's kind of been put into the past. But I think especially with the Eisenberg case and what's happened around that, there's more of a, kind of. There's more of a sense that actually maybe the idea holds water and has some relevance to real life now. So I think, yeah, it may be easier nowadays actually to find people willing to put forward the opposite view.
- [49:55]
Laura Shinn
Yeah, and you're talking about the Avi Eisenberg case, Mango markets, where he manipulated the, or allegedly manipulated the price of a Token to do, like an economic exploit. Well, so as you mentioned, you go in depth on a few major hacks. The dao, Index Finance, Kyberswap and Euler. How did you choose these? Like, why. Why did they make the cut out of many that you could have chosen from?
- [50:20]
James Craig
Totally. So the.
- [50:21]
Laura Shinn
The.
- [50:22]
James Craig
Really. I think the. The process started mainly with Index Finance, because when I. When we came across that story and there was this hacker that had very publicly kind of made the case for Cody's Law. So Medjedovich is one of the few who had been actually publicly identified and had stated, you know, not. Not in as many words, but kind of said, you know, what I did was within the rules of the smart contract, I should be allowed to keep the assets that I've stolen. That was. That was the start of it. But then as we started to look into cases to bring out and we started to research this code is law idea and understand better where it came from, that's when we started really delving into the dao and we kind of felt like, okay, to explain to viewers where this idea actually came from and tell the whole story so that people, viewers, really understand we need to tell that story as well. And then it was while we were doing. While we were making the film then, so. So we started shooting kind of late in 2000, 2023, about three months into filming was when the Kyberswap hack happened. So we didn't initially know for certain that it was Medjedovic that hacked Kyberswap. We kind of. There were suspicions at the. Out at the outset, and there were people that. Telling us that it could well be him, but it was. Wasn't until we were further down the line that we're like, okay, we definitely have to tell this story as well, because it seems like he. He definitely hacked Kyberstop as well.
- [51:30]
Laura Shinn
Yeah. And actually, before you go on with.
- [51:33]
Podcast Host / Announcer
That, so just explain a little bit.
- [51:34]
Laura Shinn
More about who Indian Medjedovich is and.
- [51:37]
James Craig
Yeah, yeah, yeah. So Andy and Mjedovich is the. Is the. A kid who hacked Index finance back in 2021. So he was 18 years old at the time, and he was an exploit that resulted in about $16 million wor been taken. Like I said, he actually doxxed himself. So the Indis Finance team did an investigation, managed to manage to unearth who he was, identified him publicly. So he justified what he did. He kind of started the process of trying to legally defend himself, but then disappeared, went on the run from justice. As this is back at the end of 2021. And then.
- [52:12]
Laura Shinn
And by the way, that. That bit about how they identified him was kind of hilarious, in my opinion. He had used a very specific username that they tracked down to a Wikipedia page, and then that username had only made one edit or something. And it was to add himself as one of the notable graduates of a high school. And he, like, named himself, like, what was it? Notable mathematician or something like that.
- [52:38]
James Craig
That's exactly right. Yeah. It was the notable alumni of this high school trivia contest called Reach for the Top. Yeah. So it was. It was pure kind of ego silliness that ended up in him getting caught. Yeah. Is kind of hilarious. And. And so he. Yeah, so he was publicly known, but then he'd been on the run for a couple of years. He actually lost that money. So he. He hacked Index finance. He had $16 million. Then he used the profanity tool. You know, it's a. It's a tool that you can use to change to. For a vanity wallet address. So he used it to have a specified wallet address because he used that tool. There was a. There was a flaw in that. There was a vulnerability in that tool. So he ended up losing all the money he'd hacked from Index Finance. So he lost the money. And then a couple of years after this, while he was on the run, he then did another much larger hack, three times as big from Kyberswap, so stole $48 million. He's never admitted. He's admitted to the Index hack. He's never admitted to the Kyberswap hack, but he was charged for both back in February of this year by the FBI.
- [53:30]
Podcast Host / Announcer
And so.
- [53:30]
Laura Shinn
Yeah, explain kind of the status of that case or both those cases.
- [53:35]
James Craig
Yeah, yeah. So. So as of now, he is still. So the FBI charged him in February, So he's. As of now, he's wanted by the FBI in connection with those cases. There's. There's several charges outstanding against him, but they. They haven't arrested him yet. So either they don't know where he is, he may be country where it has no extradition agreement with the US or they just may simply not know where he is. So as it stands, he's been on the run now for four years from some civil charges in Canada, which he initially faced in relation to the Index Finance case, and for over eight months from the FBI in relation to federal charges for both cases.
- [54:10]
Laura Shinn
Yeah.
- [54:10]
Podcast Host / Announcer
And I found it interesting, you all, or I don't know who it was.
- [54:14]
Laura Shinn
I guess maybe the hacker team went and or somebody went or not the hacker team, sorry, the next finance team went and talked to his parents and they discovered at the family home that he had left. But the parents, they seemed kind of okay with that.
- [54:31]
James Craig
So not loads and loads is known about the. About what the parents. I think that as far as I know his mum hasn't ever spoken up but his dad. There is a little bit of. In the, in the case files related to the, the civil case there were some details of a voicemail that was left by the dad, by Andy and dad for the Index Finance legal team. And I think the phrase he used was that there was a hole in the contract that he'd been used. So the dad essentially in as many words made the code as law defence for his son when the Index Finance legal team contacted him to try and resolve the case. And yeah, as you say, when the court actually dispatched officers to Andean's parents house to try and either arrest him or recover his devices so that they could try and recover the assets. Andyn had been on the run and he's been on the run ever since.
- [55:14]
Laura Shinn
So as you mentioned earlier also it.
- [55:16]
Podcast Host / Announcer
Starts with the Dao, which is a.
- [55:18]
Laura Shinn
Hack that I'm very familiar, familiar with. You know I honestly the movie for me was a little bit of a nostalgia tour because I know Griff and Lefteris and Kristof and all those guys affiliated with the DAO hack, or not affiliated I should say, who lived through the Dao hack, I know them quite well. Talk a little bit about that particular hack and you know why you chose to start with that one.
- [55:43]
James Craig
Yeah, I think, I think the Dao hack was so fascinating because, I mean not just because of how new everything was at that stage and how. So what was really interesting talking to those guys compared to a lot of the people in Defi that I spoke to was just how kind of idealistic they were. They had this amazing kind of belief in the technology and in Ethereum. And I think the Dao hack was such an interesting story because it was the kind of, it was a kind of distortion of perversion of that whole idea. So it was this beautiful moment with this fundraise where I think at the time it was the record fundraise, the record crowdfund of all time. They raised $160 million, was it for investment in the Dao. And then there's this terrible hack that happens and then what it reveals is that there's this paradox at the heart of the technology which is that you would expect maybe the community Members, the investors who lost money. When the huge amount of money has been taken by this hacker, for there to be this kind of universal, well, you know, we need to get it back. What the hack has done is wrong. But that's not what happened at all, is that there's this huge schism in this community with actually many people saying, well, no, it shouldn't even be called a hack. It's just a feature of the code. This person just used the code as it was written. This is really what this technology mean. This is the whole ethos behind this technology, is that we shouldn't be calling this person a hacker. So I think that was the kind of moment. I know that the Code is Law didn't originate in that moment, but it was the first moment where it kind of came into conflict with the reality of, like, what it actually means when a hack happens, that these two competing voices that really can't be resolved, that are right at the heart of the kind of philosophy of crypto.
- [57:16]
Laura Shinn
Yeah, I mean, that story was also fascinating to me because, you know, you ended that portion in the.
- [57:23]
Podcast Host / Announcer
In the film.
- [57:24]
Laura Shinn
And then we move on to these other hacks. And what was interesting was then I realized, oh, actually what happens, you know, years later is people are still calling Lifteris and asking him for help when they get hacked. So talk a little bit about that. Like, why do you think that's happening? How does he feel about it?
- [57:42]
James Craig
Yeah, I mean, actually, Left Eris was one of one of the really key parts in tying this all together, I think, because that was one of the real challenges in the movie was, especially for viewers who aren't familiar with crypto, was explaining the link between these cases. And I think that left one of my favorite bits from it. And one of the favorite lines we got while we were filming was when Left Terrace talks about how it was like a ghost of the past re emerging when he was investigating the Index Finance hack because he thought this idea that was dead and buried, this idea of Code is Law, which. It was a huge part of his life. I think it was trying to take this down and fight against this idea when the DAO hack had happened and then when the Index hack had happened. And Laurence Day, who's one of the members of the Index Finance team, who's very prominent in the film, had asked Left Eris to get involved, like, left errors in the film. It was a huge personal thing for him to try and defeat this ghost from the past that had come up again. So, yeah, I think that's I don't know whether the leftovers is still pulled into Orems as much as he was at the time, but I know that in that case, like I said, he was determined to help and do whatever he could because he wanted to fight against the voices in the community that are saying that it's justified.
- [58:48]
Laura Shinn
Yeah. Something else that was interesting was so Andy and Medjedovich had not only been in contact with the Index Finance team, but he actually seemed to be like a contractor for them. And then, at least in my book, when I uncovered who I believe was the DAO hacker, Toby Honesh, he had also reached out to the Slockit group. So why do you think it is that these are people who actually have had personal contact with these groups that they end up, you know, whose smart contracts they end up hacking?
- [59:20]
James Craig
Yeah, I thought a lot about this as regards Andean, because I think there's two possibilities that kind of fit with his character. I think one of the possibilities, I think is simply that he was. That he'd spotted that there was a potential vulnerability or he believed that there was a way in which he could exploit Index Finance and he was in contact with the team as a way of trying to kind of test the theory that he was trying to have a closer look at the code. He was trying to kind of see if there were other backdoors that he could use to basically improve his chances of successfully exploiting the protocol. I think that's. That's one of the things. The reasons it may have been. I think another possibility, given what we know about Andean's character, is that it may have. It may have been slightly more perverse than that. It may have been more of a power thing and a control thing, a bit of getting close to the people that he knew that he was about to defeat in this kind of this digital battle, which I think is. Is really how he sees it, because this is the thing with Andine, is that he could have. He could well have done this hack and made a good attempt to just disappear into the. Just like a phantom, as Lawrence puts it in the film, which lots of other defi hack, which most other defi hackers do. But I don't think that's how he's built. I think that he is. He wants the spotlight when he does one of these hacks, in spite of the fact that it's cost him an awful lot at this stage. And it's the same with what we see with the. With the Kyber Swap hack, is that he definitely, with that One, he, he. I mean, he'd given himself away with the Index Finance hack because of this Wikipedia entry that you spoke about. But with the Kyber Swap hack, he definitely, definitely could have. I mean, there was no reason for anybody to know that it was Andean that had done the second hack. But he left breadcrumbs, just as he did with the Index Finance one.
- [60:47]
Laura Shinn
Yeah, help me if I am misremembering it, but essentially what he did was he left an address that was the same address, like, Sorry, in relation to the Kyberswap hack, he left. He left an address that was the same address that he had used to request payment as a contractor for indexed finance.
- [61:08]
James Craig
So this is. So that, that, that was. So basically what he'd done with the. Getting the two parts mixed up there slightly with the, with the Kyberswap one, what he'd done is that he'd. So he'd hacked the Kyberswap and money had landed in this wallet that was a different wallet, completely not associated with the Index Finance hack in any way. And then he decided to send $2 million worth of assets from the wallet that contained the stolen Kyberswap funds over to one of the wallets that had been used to steal funds from the Index Finance protocol. So essentially he made this public signal that it could be the same person. And I think the thing was, at the time when this happened, I, my, In my, My reaction was, it can't possibly be him. It must be somebody trying to frame him and make it seem as if it's him, because nobody could be that arrogant to be sending out a message that he'd done this huge. Essentially a very serious federal crime. But he was, he was publicly putting it in the spotlight. I think he wanted the acknowledgment from the community that he'd done it.
- [62:02]
Podcast Host / Announcer
Wow.
- [62:03]
Laura Shinn
Well, so, you know, now you have this movie out there. First of all, tell people where they can ca.
- [62:11]
James Craig
Yeah, sure, yeah. So it's on Amazon, Apple, YouTube and Vimeo. So it's only in selected territories, including the United States, on Amazon. But anybody in the world can watch it through Vimeo on Demand. And lots of countries, I think around 70 countries can watch it on Apple TV as well.
- [62:28]
Laura Shinn
Great. And are you working on anything else yet? Maybe it's too early or do you have your eye on anything?
- [62:34]
James Craig
I do, yeah, Yeah, I do. It's still early days, but I'm. There's. There's several projects that I'm working on at the moment. I'm. I'm looking into. I've got ongoing film I'm developing about North Korean IT workers that I'm working on and I'm also doing some work on the case of the three teenagers who did the heist last year where they stole $250 million worth of Bitcoin. It's one of the, I think, the largest theft from a single person. So there's a couple of stories that I'm working on at the moment.
- [63:02]
Laura Shinn
Okay, great. Well, it's been such a pleasure learning.
- [63:05]
Podcast Host / Announcer
About you and your film and everybody.
- [63:06]
Laura Shinn
Should go see this because it's riveting and if you're into crypto, you'll find it fascinating.
- [63:11]
Podcast Host / Announcer
So thank you so much, James.
- [63:12]
James Craig
Thank you, Laura. Thank you for your time.
- [63:15]
Podcast Host / Announcer
Welcome to this week's news recap. Let's begin. Trump Pardons Former Binance CEO Changpeng Zhao President Donald Trump has granted a full pardon to Changpeng CZ Zhao, the founder and former CEO of Binance. The pardon follows months of lobbying efforts and continues a major policy shift toward digital assets under the Trump administration. White House Press Secretary Caroline Levitt said Trump exercised his constitutional authority to end what she called the Biden administration's, quote, war on cryptocurrency. She added, quote, the Biden administration's war on crypto is over. Zhao, who served four months in prison after pleading guilty in 2023 to anti money laundering violations, thanked Trump on X, writing that he would, quote, help make America the capital of crypto. The decision could clear the path for Binance's return to the US market, though regulatory monitorships remain in place. Polymarket targets $15 billion valuation as prediction Market boom Heats up Prediction market leaders Polymarket and Kalshi are seeing investor enthusiasm soar as both startups race to dominate a fast emerging financial frontier where gambling meets traditional markets. According to Bloomberg, Polymarket is in early talks to raise funds at a valuation between $12 billion and $15 billion, a tenfold jump since June when Peter Thiel's Founders Fund led a $200 million round, valuing the firm at $1 billion. Earlier this month, the Intercontinental Exchange, parent company of the New York Stock Exchange, said it would invest up to $2 billion in polymarket at an $8 billion valuation, a move that made CEO Shane Coplin the youngest self made billionaire. Meanwhile, Kalshi is fielding offers, valuing it at over $10 billion just weeks after securing $300 million in a round co led by Andreessen Horowitz and Sequoia Capital. Both platforms have seen record activity with combined weekly trading volumes exceeding $2 billion in mid October, surpassing their previous peak during last year's U.S. presidential election. The two competitors also struck major commercial deals this week, with Polymarket becoming a clearinghouse for DraftKings and securing a multi year partnership with the National Hockey League, which also signed a similar agreement with Kalshi, marking the first major US Sports league to collaborate with prediction markets. Despite the momentum, regulatory challenges loom the Commodity Futures Trading Commission has allowed limited expansion of Kalshi's markets markets, but state gaming regulators have pushed back in court, raising unresolved questions about market manipulation and Insider Trading. Crypto CEOs meet US senators to revive stalled market structure bill Top crypto executives, including Coinbase CEO Brian Armstrong, Chainlink's Sergey Nazarov, Kraken Co CEO David Ripley and Uniswap founder Hayden Adams met with US Senators from both parties on Wednesday to push forward long delayed crypto market structure legislation. The group first met with Senate Democrats led by Senator Kirsten Gillibrand to discuss how to reconcile policy gaps on issues such as decentralized finance and illicit finance. Nazarov said more than 10 Democratic lawmakers attended and that there was, quote, sufficient support to keep the bipartisan bill alive. The meeting was briefly joined by Senate Majority Leader Chuck Schumer. A second meeting with Republican lawmakers, including Senate Banking Chair Tim Scott, reaffirmed GOP backing for the bill, which aims to define how digital assets are classified and regulated. Scott's office urged Democrats to, quote, return to the negotiating table, end quote, to finalize language ahead of markup. Armstrong later posted that the industry is, quote, keeping the pressure on in D.C. end quote, to advance the legislation to President Trump's desk. Lawsuit alleges Meteora founder orchestrated Libra and Melania meme coin scams A newly amended class action lawsuit accuses Benjamin Chao, co founder of Solana based DAP Meteora, of engineering a network of fraudulent meme coin launches, including the high profile Libra and Melania tokens promoted by Argentine President Javier Milei and first lady Melania Trump. The case Herlock vs. Kelsier Ventures, claims Chao led a team that created at least 15 tokens through a coordinated scheme involving Kelsier Ventures headed by Hayden Davis and Meteora collaborator Ung Ming Yao. According to the complaint, the group quote, borrowed credibility, end quote, from public figures to legitimize what plaintiffs call a, quote, coordinated liquidity trap. The filing emphasizes that Malay and Trump were not responsible for the alleged fraud, serving only as, quote, window dressing end quote for Chao's operation. Both the Libra and Melania coins surged before collapsing shortly after launch, wiping out millions in investor funds. Chao resigned from Meteora in February, denying on X that here the firm profited from the projects. Coincidentally, Meteora had its token generation event on Thursday, launching at a $650 million fully diluted valuation. AAVE DAO considers $50 million annual token buyback program the Decentralized Lending Protocol AAVE is considering a major new initiative to make its token buybacks a permanent fixture of its economic model. The proposal, introduced by the aavechan Initiative, a governance group led by Mark Zeller, seeks to allocate $50 million annually from AAVE's protocol revenue toward repurchasing its native AAVE tokens. According to the plan, the AAVE finance committee and TokenLogic would jointly execute weekly buybacks ranging from $250,000 to $1.75 million, with flexibility to adjust based on liquidity, market conditions and available revenue. The Initiative builds on AAVE's previous buyback program, which the ACI described as a strong success and aims to reinforce the protocol's long term framework known as Avonomics. With approximately $169 million in annual revenue, AAVE is among DeFi's most profitable projects. The protocol recently surpassed $25 billion in outstanding loans, expanded into real world asset lending via its Horizon platform, and launched its first non EVM deployment on Aptos. AAVE currently ranks second among DeFi protocols in monthly fee generation, according to data from the block. Coinbase acquires Echo an up only NFT in $375 million deal Coinbase has announced a $375 million cash and stock acquisition of Echo, a crypto fundraising platform founded by trader Jordan Coby Fish along with Kobe's up only nft, signaling the exchange's expansion into on chain capital markets and crypto media. Eko's platform enables both private and public token sales through its Sonar product and has facilitated over $200 million in funding for crypto startups since its 2023 launch. Coinbase said the acquisition will make capital raising more transparent and accessible, with plans to extend support to tokenized securities and real world assets in the future. As part of the transaction, Coinbase paid $25 million in USDC for the up only NFT, which contractually requires Kobe and co host Brian Ledger Krogsgaard to produce eight new episodes of their talk show. CEO Brian Armstrong confirmed the purchase on X, writing quote just burnt the nft. Your move. Ethereum insiders criticize foundation overpay leadership and favoritism A wave of public criticism has yet again erupted against the Ethereum foundation after former Geth lead developer Peter Silagi released a year old letter accusing the organization of poor compensation, favoritism and overreliance on founder Vitalik Buterin's influence. Silaghi revealed he earned roughly $625,000 over six years, saying that the foundation's pay structure pushed key developers to seek income elsewhere. Quote Ethereum's direction always boiled down to your relationship with Vitalik, he wrote, claiming that most major projects are steered by a small group of insiders backed by a handful of venture firms. His comments sparked widespread debate across the Ethereum community. Polygon CEO Sandeep Nailwal said the letter made him, quote, start questioning his loyalty to Ethereum, citing a lack of support from the foundation. China halts tech giant's stablecoin ambitions amid regulatory pushback Major Chinese technology firms have suspended their stablecoin initiatives in Hong Kong after receiving guidance from Beijing regulators, according to the Financial Times. Officials from the People's bank of China and the Cyberspace Administration of China instructed companies including ant Group and JD.com, to halt participation in Hong Kong's pilot program for digital currencies. The decision reflects growing unease in Beijing over privately issued currencies, which some officials view as competing with China's digital yuan project. The real regulatory concern is who has the ultimate right of coinage, the central bank or private companies, one source told the paper. The Hong Kong Monetary Authority had opened stablecoin Licensing earlier this year, positioning the city as a testing ground for tokenized finance. However, former PBoC governor Zhou Xiaoquan warned in August that stablecoins could fuel speculation and financial instability, prompting regulators to take a more cautious approach. Mega Eth confirms MYCA compliant token sale and reveals novel sequencer design Ethereum scaling platform Mega Eth has confirmed the authenticity of a leaked MICA format whitepaper, revealing plans for a regulated public sale of its Mega token and outlining new technical features. The sale, starting Oct. 27 on Coinbase owned sonar, will auction 5% of total supply about 500 million tokens through a three day English auction that begins at a $1 million valuation and caps near $999 million, according to founding contributor Namik Muduroglu. The project chose this model to attract participants who show conviction rather than rely on airdrops. The MICA approval allows EU investors to participate, but requires KYC verification and licensed custody via okcoin Europe. Mega ETH's whitepaper also introduces a rotating sequencer system and proximity markets, which link token staking to network access for low latency trading. The document allocates 9.5% of tokens to the team, 14.7% to investors, and more than half towards staking rewards aimed at building long term on chain activity. Last Friday, Mega ETH repurchased 4.75% of its equity and token warrants from early backers who were exiting before its token launch, signaling confidence ahead of its upcoming mainnet debut. Unchained is produced by Laura Shinn with help from Juan Aranovic, Margaret Curia and Pam Majumdar. The weekly recap was written by Juan Aranovic and edited by Steven Ehrlich. Thanks for listening.