Genesis & DCG Meltdown? | Was 2021 Just a Gigantic PONZI?

Transcript

bankless Nation we've got another segment for you something special today something different something um I guess we need to talk about we had a regular state of the nation planned but uh events overtook it once again it's been the story of the last three weeks I think what people want to know in today's episode is what's happening with Genesis this large institutional crypto lender is this the next Domino to fall if that happens what happens next and then higher level as David was pitching me this episode I don't know if you guys have ever seen that picture of Charlie from Always Sunny in Philadelphia and he's got like uh let me show the picture as I'm talking he's like in front of some kind of a board like a half crazed detective um this is David coming into this

episode yeah all right because um I think David you feel like this has linked this last series of events with Genesis has linked a whole series of things in your mind and is helpful to explaining and you for for you to explain um what happened everything last two years in crypto everything I mean the question is like I'm coming to this episode and David's like yo I think the last two years solid 12 to 18 months at least have been a ginormous Ponzi game dude the whole 2021 bull market was a gigantic Ponzi scheme can you make the Charlie face yes the whole thing dude what's going on a

thumbnail the whole thing the whole thing was a Ponzi scheme and now we're at the end it's completely unraveled and now we're at the final conclusion and so I was going to make a show about all right is is Genesis insolvent what's going on with grayscale what's going on with Barry Silver and and digital currency group uh and like answering that question what's going on in the last seven days has been the final puzzle piece that fits over the broad category of 2022 contagion contagion contagion why was there so much contagion we now know episode you'll leave with the answer to

your question but really I think this is uh we're gonna walk through it we're gonna end with the last Domino we we hope is one of the last dominoes to fall which is Genesis um a digital currency group what's going on with kind of it even ties into retail products like like Gemini earn people stealth funds uh stuck on that what's going to happen all that we end with that but in order to explain that we're going to take you through 2021 2022 and the series of dominoes that led to this final Domino following so this is going to be an interesting episode and guys I just gotta like I looked over some of David's notes real quick coming into this but at some level I'm along for the ride with you too all right because I think David's gonna unpack his brain and I'm just here ask some questions before

we get in I want to tell you about our friends and sponsors at uh consensus more specifically at infuria um if we're going to rebuild crypto which we absolutely are going to do we have to build it on decentralized infrastructure and in Fiora is an ethereum infrastructure provider that is doing God's work to make sure that all of our defy tools uh load in the pages and in the ways they're supposed to to load they are taking steps to further decentralize this infrastructure as well and they wanted us to let you know that there's an opportunity to find out more about what they're doing David uh take it from here what does inferior want to

communicate to the bankless nation yeah so inferior has been this critical uh uh infrastructure provider for all of ethereum like running a node if you just want to easily build something you would just plug into a theory inferior in order to access ethereum well they themselves want to decentralize their own stack so they want you to help them Foster a brand new decentralized infrastructure ecosystem and so we can get this journey done we need all these people we need more people to come and help inferior in this role of decentralizing themselves so there is a link in the show notes so you can plug into the inferior stack as an independent infrastructure provider so we can decentralized a core piece of hearing

uh good stuff there all right let's um let's talk about the high level of the episode that we're about to get into kind of the daisy chain of events and I'm going to bring up a tweet from Barry silbert who's kind of I guess the first player in the story but also uh one of the last players of this story why did you want us to look at this tweet and this is from June 24th 2021 a tweet from Barry silbert who of course will introduce the actors in a little bit but he is the leader of digital currency group um Genesis um uh what else David I guess I'm going to bring the gdbc and the eth trust that people can buy in their

retirement accounts what is Barry saying here and why is this relevant to the story yeah so this was June 24th 2021 which if you remember was this first big crash in crypto after a meteoric rise of basically all crypto asset prices ether hit four thousand three hundred dollars Bitcoin hit like sixty thousand dollars uh and then in one or two days we lost like 50 to 60 of the crypto market cap uh and then as the dust settled we the bull market actually resumed again this was in the middle of 2021 and Barry silbert tweets out there is a daisy chain of borrowers and lenders in the crypto space most well capitalized but some are not lots of Leverage still in the ecosystem including in some

non-obvious places important to understand counterparty risk and where the weak links are in the chain now this tweet was like the most was the indication of all things to come over the next it's foreign Shakespearean tragedy story this is the flashlight this is foreshadowing uh this was the Tweet to pay attention to at this moment no one really wanted to no one really knew how to unpack these things because all of these were centralized lenders so it's a black box so we didn't have that information but this creep became true in fantastic fashion and the irony Ryan is that Barry silbert tweeted it and we that that

daisy chain of borrowers and lenders has come full circle back to his own his own trading desk Genesis which is part of his company digital currency group okay the full circle nature of this story is absolutely insane back to Barry this with the story starts this is where it's actually going to end when we get into it I'm gonna pull out a few phrases here daisy chain of borrowers and lenders he says most well capitalized some aren't lots of leverage he says important to understand counterparty part counterparty risk and where the weak links are in the chain uh what do we have here David this is a diagram I think you put together for

this uh for this episode and maybe is um kind of the different sections all of these layers maybe represent dominoes explain this for us okay so I stayed up like late last night because I was going down this Rabbit Hole so I made this pyramid Brian Happy Thanksgiving this was this was the 2021 bull market what was so like the 2017 bull market was determined by icos printing tokens out of out of thin air to fundraise and they would buy ether and USC and that and it was a bunch of printing tokens out of thin air and that's what the Ico Mania was I regret to inform you Ryan that the 2021 bull market was the same damn thing we had these yield farming defy yield farming pool twos remember pool twos

with like 500 apys if you were like willing to take the risk of like other yield Farmers to to dump on you so like pool twos with incentivize apys and Farmers would play chicken after they uh after like everyone would want it to farm and then and that was like you know crazy 100 to a thousand percent apis that rested on top of the pool ones uh where it was lower risk you weren't providing liquidity you were just incentivized to stake your tokens whether it's like you know whatever defy yield Farm you just take your tokens uh and you get a yield you didn't really have to have as much risk moderate 10 to 90 percent apys that was the top of the pyramid that was do you find Summer it was defy summer and also like that and

then uh Solana Avalanche Phantom that was their game as well after ethereum took it over okay hold up hold on you're saying top of the pyramid but actually the way you're describing it I almost think that this pyramid should be flipped on its head do you know what I mean like so the top should be kind of the like the weakest part and but that's where it really starts right it's like uh pull two twos and pool ones the D5 summer is actually kind of like the start of the pyramid and what the full 2021 bull market builds into is that right sure it depends on your perspective okay what we are looking at here is a risk Spectrum as well where if you are at the top of the pyramid you are on the highest end of the risk curve uh you are the things with the most apys

with the most risk and then the risk actually gets lower as you go down which is the perceived risk gets lower no no the real risk like it's just like this is why people are concerned about Genesis and digital currency group because they are the foundation of all yield all that yield all that crazy speculation all fell down at the end of the day to Genesis and that's why we are talking about Genesis today and why we feel I feel confident that this is like the last big Domino okay so pool twos pool twos and D5 yield Farms were supported by pool ones uh pool ones which were the basic yield Farm that's where Alameda and thrier's capital got a lot of their money in the second half of the bull market hedge funds maxed out lines of credit from anyone that would allow them to borrow

from them this is what Alameda and three areas capital Did and this is where so much contagion came from because three hours capital in Alameda borrowed from as many different lending desks as possible block fi Voyager Celsius uh and and then when three hours capital and Alameda went under they took all the lending desks with them except for Alameda and FTX found a way to print a bunch of ftt to support all the lending desks But ultimately all of that money all the capital to block five Wars or Celsius where were they getting their yield they were getting their yield from Genesis the gbtc Arbitrage and ultimately the whole entire digital digital currency group system and that Ryan was the 2021 bull market all of

these high high risk yield Farms ultimately was supported by the largest player in the game which was Genesis and also the Arbitrage for the grayscale premium so you're telling me everything that happened in 2021 all of the price appreciation that we've now by the way walked back and reset was just smoke and mirrors was almost like a Ponzi scheme of stacking risk and stacking like interest that wasn't really real yes and it was all in the whole reason why this whole thing worked was because we were able to print tokens out of thin air which is the way that every single crypto Bull Run has gone since its Genesis so like you want to go to then click on that tweet remember remember

this tweet that caused a bunch of like yeah uh uh like crypto Twitter murmurings because this was the one that like Richard Hart responded to and Richard Hart like I I tweeted out okay three hours capitals and solvent Alameda is liquidated FTX is insolvent if all these people are insolvent I asked them who made all the money Richard Hart comes in like hello there it was me well it wasn't him Ryan uh the actual answer is the next tweet the actual answer is this guy who used this illustration of a neighborhood with a hundred houses and has one sale for a million dollars therefore the collective houses are worth 100 million dollars but then they'll remaining 99 ounces only sell for uh like 10 percent of that so actually like 91 million dollars of

equity is actually gone this is what happens when all these E-liquid [ __ ] coins all the defy yield farming all of the degeneracy high apy pool one and pool twos when all of those tokens go down in price the entire system gets wiped out because of all of the systemic risk that got built up by players like three hours capital and Alameda and so that's what happened Ryan that's where the money went we printed all these the money the money was just not real it was just money was not real fabrication it was just just numbers on a pit and there there may have been some people by the way that cashed out close to the top based on those valuations few people walked away with with some amount of of

money but what you're saying is the price if they walked away with Bitcoin ether usdc yeah yeah the real monies like hard monies yes uh and left everyone else kind of holding the bag and that's where we are um so now here we are Genesis has what's reported to be like a one billion dollar hole people are now worried about the solvency of grayscale and digital currency group Empire we're going to talk about that and uh when we get back David I want you to walk us through this whole story I think we just we just saw the the Preamble if you will uh and I think what we're gonna go through is a show you Domino by Domino how these pieces were stacked and what caused to to

um what caused their fall and what's going to happen next so guys stick with us we'll be right back but first we want to tell you about the Fantastic sponsors that made this episode possible arbitrim1 is pioneering the world of secure ethereum scalability and is continuing to accelerate the web 3 landscape hundreds of projects have already deployed on arbitrum 1 producing flourishing defy and nft ecosystems with a recent addition of arbitrum Nova gaming and social dapps like Reddit are also now calling Arboretum home both arbitrim1 and Nova leverage the security and decentralization of ethereum and provide a builder experience that's intuitive familiar and fully evm compatible on arbitrum both Builders and

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with a fuel network was the 2021 bull market just a gigantic Ponzi scheme in crypto that is the uh the central question we're raising in today's episode and David has brought some of the receipts uh going to take us through the timeline here all the way back in January 2021 when this Shakespearean tragedy started to First unfold I think in order to set this story up David and do it justice we should do a couple of things first we should set the stage where we were in January 2021 the feeling of the market uh the prices that sort of thing and then we should talk about the key players as any good uh I guess tragedy does we have to lay out

the background and the Actors and The Players the characters that are going to be in this uh that are somewhat reoccurring as well so let's talk about where we were and I remember it actually coming out of December 2020 um eth was low uh in December 2020 or we had a show four to seven hundred dollars four to seven hundred dollars we had a show that was kind of like the bull case for eth and what's really interesting is um defy had had its moment back the previous summer this was a summer that came to be known as D5 summer this is Summer of 2021 where people realize that D5 tokens were are real things previous to that all tokens were kind of dead there was Bitcoin and there was a little

bit of eth but then all of the other tokens nothing mattered uh D5 summer 2020 showed people that no tokens did matter and talk about yield farming that sort of thing but eth was still kind of lingering in the 400s Bitcoin had seen a moment and there was this move of of to say all we need is Bitcoin and D5 tokens and there's no real use case for for each so eth had not yet popped at the end of December 2020. um so take us back to that feeling as as we start this story in December uh in January 2021 what had the market done with D5 what was the price of Bitcoin what was the price of eth yeah so I at the time D5 summer compound really announced the governance token and that

was the new primitive that everyone was super stoked about uh this is how we're gonna decentralize ownership and control over these systems to as many people as possible that was the shiny new object that really incurred defy Summer and the the concept of yield farming to begin with like I said at the beginning yield yield farming liquidity mining was this era's Ico and before the Ico era there was the proof of work fork and fair launch phenomenon which like almost zero tokens made it through uh so like we had the 2013 bull market was the proof of work fork and fair launch we just made a bunch of tokens 2017 bull market was the Ico Mania where we just made a bunch of token the 2021 bull market Ryan was the

D5 yield summing era where we made a bunch of tokens this time with yield this was the thing yield was the thing that identified the 2021 bull market not just at the very high risk end of the spectrum but down all the way into how regular institutions got involved in crypto and why they got involved is because there was demand to borrow assets and this is the story of how everything got built up and how everything fell apart so if we're injecting ourselves into this story in January of 2021 which is kind of when the star uh story starts ether began January at about 900 it ended January at Seventeen hundred dollars Bitcoin started January around two thousand five hundred twenty five

thousand dollars it ended that January somewhere around thirty five to forty thousand dollars uh and so it's on the bull market is on 2021. people felt like the bull market was fully on and uh they were also hungry I feel like maybe maybe like we could start to inject terms like greedy and they're certainly hungry for more yield right things were frothy like oh let's do that 2020 uh D5 summer thing again that felt great let's do it all over again yeah uh and this starts to inject I think this idea that we've seen in in many cycles David is uh the concept of a metaphor we call it the euthanasia of roller coaster this is a picture of the euthanasia roller coaster and it's a it's a theoretical construct

but the physics of it would actually work basically you start the roller coaster and by the end of it after all of the loops kind of dead yeah like it's just been a one-way ride um there's no life left in you but each of these Loops like describe this in some more detail and what's where's the analogy fit because we've seen this in previous Cycles as well yeah so again proof of work for confer launch what happened uh somebody Charlie uh Charlie Lee made Litecoin uh by forking Bitcoin and that created like a like a billion dollars in market cap people saw that and they did that on repeat they did that over again another another loop like oh if that worked for Charlie with Litecoin let's make 17 other forks and then this makes

17 Forks of that fork eventually it it created a Mania and then eventually people got fatigued uh and people just got done and so they left they left the the bull market same thing with icos what was the great big Ico that that triggered the 2015 uh Ico Mania it was the 2015 ethereum Ico followed by the very successful 2016 auger ice SEO and all of a sudden people realize that they could do icos to Min tokens and that would generate a bunch of hype and that's how you could do things so it started off legit it ended in tragedy uh and so as the Ico Mania went on uh icos got the loops got faster and faster and faster until people just got fatigued these things were just way too scammy

retail investors just lost all their money and no new inflows of money came into the system and then we had a bear Market this was of course defy summer the first OG yield Farm the first the first liquidity mining event was compound followed by every other defy app that had yet to issue a token followed by copycats on ethereum think about sushi swap which I mean it literally was sandbank and freed and then we had Avalanche Solana Phantom all these ethereum uh ethereum Killers show up and then start doing yield Farms on their chains and eventually people got fatigued uh people stopped making money and the energy ran out of the system um but this is this is the pattern of every single bull market so far the the

first few Loops in the euthanasia look coaster are fun and the last couple actually kill you yeah that's right that's how all bull cycles end including this one so we're gonna talk about some of those Loops but um as we get into this the other thing to introduce is I think the players here the reoccurring actors that are important I want to talk about a few of them first is the house of Barry silbert okay this is like the montagues and the capulets right in their Shakespearean tragedy the house of Barry silbert so um Barry has been a crypto OG from the very beginning of crypto I don't know he might be have been in crypto as long as like Eric Voorhees and some people like this early Bitcoin holder for sure

um but he decided to go the institutional route behind things so he formed this company called digital currency group there's a group Within that called Genesis which maybe you can explain some details also grayscale which is a trust type product maybe you can explain that to us and there are some other products including media so like coindesk is actually owned by digital currency group so talk about the house of silbert and who who's grayscale and who is Genesis so grayscale is this trust that what allowed people to have Bitcoin exposure on the traditional stock market if you didn't want to go and set up an exchange that maybe you didn't trust maybe coin coinbase is too sketchy for you because you are an

Institutional Investor you could just buy access buy exposure to bitcoin via the grayscale Bitcoin trust the thing is it doesn't trade one for one and so the gbtc share on the on the traditional stock markets are a subject to Market forces in the same way all assets are even though that they are backed by Bitcoin they do not represent a one-to-one redeemable share for Bitcoin why not because we weren't we aren't able to have a Bitcoin ETF that an ETF would have solved this problem but we don't have one of those so we have to have the next best thing which is a grayscale trust there's a BTC trust there's The Ether trust there's a few other trusts but the Bitcoin and ether are are the very big ones so that's grayscale that is owned and operated by

digital currency Group which is where Barry stillbert started uh also part of digital currency group is Genesis and Genesis is cryptos only like full service Prime brokerage what is a brokerage it's a custodian it's an OTC desk it's a it's a lending desk uh basically every all Financial Services all Under One Roof it's like like a Fidelity account or an e-trade account or Charles Schwab account except for big institutions not for for everyday users not for Mom and Pops not for retail but for big institutions it performs all of those Services yes correct uh and so these are the two big players the coindesk is also related here because they were actually the ones that published The Alameda report um but not not really a key player here

but that's the house of Barry silbert that's the house of digital currency group Ryan this story starts there it also ends there because that is where the contagion has finally come home to roost back to where this whole thing began but we'll we'll get into how it began in a second because how it began was some players in this game the next house we're going to talk about are the house of the hedge funds three hours Capital Alameda both came into Fame in 2019 2020 and these are the people that spread out of the contagion they are the things that connect everything because of how this bull market progressed they ultimately borrowed from whoever they could get their hands on money that wherever they could get their money from they would borrow and borrow and borrow

and they are the middlemen of all the contagion and so we'll get to that story as well there's also of course the house of dokwan and Terra Luna which probably started the Cascade was probably the first Domino to fall there's the heath Killers I think you remember the acronym solune avex so lunavax if you remember that uh and then and then of course there's the house of Sam Bateman freed also Alameda FTX and all of the Sam coins ftt SRM Solana and also Ryan the last player in this game is the SEC and Gary Gensler or what they chose to not do rather than do so these are all the players the house of The Regulators those are the cops the cops

on the beat okay so um we've got our players we've got our background people hungry for yield a traveling on that euthanasia uh roller coaster uh take us to um Domino one right now I think what we're gonna do is we're going to lay out the major dominoes I haven't fallen yet but that are being stacked in a row yep and they're being set up right now so the first Domino is in Back to December 31st basically January 2021 um three are is capital and the gdbc premium let's talk about this and I think it begins with the SEC or cop on the beat we're looking at an SEC filing for the grayscale Bitcoin trust for this

product called gdbc why are we looking at this why does our story start here so this is actually a filing by three arrows Capital at the start of 2021 and if you scroll down you'll see that three hours capital is declaring that they have become an owner of 6.1 percent of the total gbtc Supply as in they own 6.1 of the trust how did they get 6.1 percent of the gbtc trust they bought it right they they put up some money okay but not with grayscale uh they put they had some money they had investors three hours Capital got investors somewhere they probably put up some of their own money

uh and what did they do they gave their they gave that money to Genesis as collateral to borrow Bitcoins because they could take those Bitcoins because at this moment in time Ryan the gbtc like I said it doesn't trade one to one it does it's not equivalent to one Bitcoin it is a at a premium or at a discount to bitcoin based off of the net present value of all the assets in the trust uh and so for a long time gbtc traded at a significant premium to actual Bitcoin and so what we what could you do you could take one Bitcoin you could deposit it into the trust six months later you could receive and redeem a gbtc share which had a premium

associated with it versus the Bitcoin that you deposited and then you could sell that premium and pocket that Arbitrage okay so far this is an Arbitrage opportunity for three years capital and it seems like a riskless Arbitrage opportunity right and with six months of time but yes the context of this is three years Capital just made a boatload of money a D5 summer and all the yield products and degening Away over there and now they're like where's our next hit gonna come from and they're seeing this big juicy ARB opportunity in between the spot price of Bitcoin and GB uh gbdc and by the way they're the only ones that can kind of access this and when I say the only ones I mean large institutions like three hours Capital are the only ones because retail

investors cannot buy this product from groups like uh grayscale OTC over-the-counter that is they cannot they cannot produce this Arbitrage they can only buy gptc on the secondary market right now Mint new gbtcs okay so the Suzuka Davies are like uh licking their lips here's another Arbitrage opportunity that's what our fund is set up to do is make money through those Capital it goes in and buys six percent right but it's not it's not like this coming in like eight into six point one percent what do they do they take they take whatever winnings they got throughout 2020 and 2019 yeah and I mean you know starting at February 2020 after the covet crash it was up only from there so if you were in at 2020 February 2020 you're you're making money

especially D5 summer was probably the most lucrative time in the last like three years okay so three hours Capital takes all their money and they gives it not again not to grayscale but to Genesis they put up their capital capital in Genesis as collateral and they buy as many Bitcoins as I borrow as many Bitcoins as possible and they take it and they give it back to grayscale to produce so they're buying this on margin they are borrowing Bitcoins on margin from Genesis however the thing that is crazy is that uh grayscale and Genesis again are both under digital currency group uh and so hang on let me open up a document and make sure I get this right uh uh since they are both owned by digital currency

group there's this unique position that Genesis has because Genesis is like the only Genesis is it the only authorized participant AKA in crypto native speak the only party that can mint and burn shares of gbtc so when three hours Capital borrows Bitcoin from Genesis they're actually giving it straight back around to Genesis because Genesis is the one that's minting gbtc in the first place and so it's this very incestuous relationship between Genesis and grayscale that is the linchpin of this whole thing and why there's so much contagion because what Genesis yeah Genesis would do is they would just like

hey grayscale come put up capital and then and then have this free Arbitrage opportunity and why why is uh Genesis incentivized for this well when you can take and Genesis is like giving out people for depositing their Bitcoins or giving them a yield Gemini earn for example if you come and deposit your Bitcoin in Gemini earn Gemini gives it to you that's how it flows down to retail right these yields so retail gives their Bitcoins to Gemini earn Gemini and pays retailer yield the Gemini gives that Bitcoin to Genesis and Genesis pays Gemini and earned Gemini takes a percentage passes that on to retail Genesis allows three arrows Capital to take that Bitcoin and then convert it into gbtc through uh their

sister subsidiary company grayscale and the thing is when that happens grayscale takes 2.5 percent yearly fees of all assets under management and so there is this huge question as what are the incentives of Genesis why does Genesis think about this like as a system part of this overall system it's digital currency group digital currency group makes more money the more assets are under grayscale's management so if Genesis can get all the Bitcoins into grayscale that means Revenue engine Revenue engine right and so all they have to do all Genesis has to do is create this Arbitrage opportunity that allows people like three hours Capital

to come in and Arbitrage and so they do and so fears Capital milked the absolute F out of this premium and so at some point uh in the early 2021 that premium which is what we're looking at here that us all premium and you can like all of that premium opportunities it's the Arbitrage opportunity at some point in the very early 2021 it gets milked and the premium goes to a discount this is because everyone's doing the same trade basically everyone's doing the same well the three hours capital is like leading this trade but everyone starts to follow them because of how incredibly lucrative and profitable it was and so it's actually a big problem when the premium goes to a discount because this was Ryan the original yield Farm

the gbtc premium Arbitrage opportunity was three hours Capital yield farming as much possible out of this premium who and who is buying that on the other side it's any retail investor or anyone who's buying gbtc on the other side of the trade uh and so that is who three areas retail is doing this because like um their money is generally it's stuck inside a retirement account for instance or some sort of locked institution that doesn't have access to to spot um this is not a real ETF type product it's just a trust type product so they kind of have to buy if they if they want to buy here what um what are we looking at here David what is this chart yeah so this is uh well this is the the Barry Silver that we talked tweet that we

talked about earlier this is when after this week we go from January to May and we have that first crash and Barry silbert starts to see why why is Barry silbert the one that has all this information about this daisy chain of borrowers because he created it digital currency group incentivized the creation of this daisy chain that's why Barry silbert can see it and so when uh going back to like the discount versus premium on the gptc this was the first Domino to fall but it actually didn't cause too many problems in that moment where all of the gbtc that through errors capital and others that held as collateral under Genesis or block Phi or whoever when that turned into a discount that was bad because they start to become underwater but at the same time Bitcoin is up only ether

is up only like the part this part of the market is like up only and so this is the second part of this this whole like I said yes let's talk about that so that's the first Domino but like three hours Capital um they're feeling good right now right and so what do they do this is the second Domino um to get to get put up there which is three hours Capital they're taking their winnings and they're actually deploying it into crypto and some of maybe what we might call at this point in the rotator's rotation which is what three years Capital are they just rotate in and out of things the Blue Chip assets like yes and Bitcoin so what are we looking at here this tweet yeah so Domino number two is three hours Capital gwent takes their winnings from this and they go long on on ether and Bitcoin uh

and then this tweet in particularly fast forward to November where we actually skip into Domino number three where after 2021 yeah November 2021 where uh they they take their Bitcoin and ether winnings and they start to go even further out on the risk curve and so they the 2020 for them was milking the gbtc premium that premium turns into a discount in February of 2021 so 2020 they were milking the gpdc premium 2021 that premium turns into a discount uh and they but they've made enough money to go long on ether and Bitcoin and that was the first half of the year that was the first half of 2021 uh but then they start to go out on the risk curve uh and

so this next tweet is uh thrios Capital leading a 230 million dollar investment into Avalanche tokens and so that happened on September 16 2021 I think that's the next link Ryan if you want to click that one yeah no this is yep poly chain three hours Capital lead 230 million dollars investment into Avalanche importantly Ryan locked avax tokens illiquid avex tokens uh the next two the next two tweets here says suzu being bullish on solunavax uh and this was a a tweet uh like hashtag that got really really popular uh and it's because they were going out on the risk curve they they were done with ethereum and they were going on to the ethereum killers uh that this next tweet is Kyle Davis Davey's

being bullish on Luna uh when was this next tweet um you want to click on next week uh yeah this is from March 20 March 28th at the beginning of 2022 right and so three hours capital went out on the risk curve they borrowed a bunch of money from Genesis they won with ether and Bitcoin they started to go out on the risk curve with solune avax right remember all this remember this phase in the bull market yeah are you guys seeing that euthanasia roller coaster of the circles getting small like we just went through the the so um what's happening is throws capital and you know other Degen hedge funds like them are doing similar kind of Trades but they just made a whole bunch of money on D5 summer they're coming in right now they're coming back and

they're arbitr uh using an Arbitrage opportunity on gbtc right they're making money at the beginning of uh 2021 in that way and then and they're going margin and long by the way and then they're pouring that into blue chips like Bitcoin and eth right and then that's not enough they've kind of milked that and then they rotate down the risk curve or up the risk curve I suppose we might say into the soluna avax communities and then by the time we get to uh this tweet from Kyle Davies in March of uh 28 2022 all of the previous things have not been enough so now you can see they're getting ready to rotate into Luna and you can just it's so transparent because what they are doing as DJ hedge fund managers of course is they want to

um you know what they're saying is Phil then Jill so anytime you see a Kyle Davies or a Isuzu tweeting something like this Kyle Davies goes Grandpa what would the world look like when Luna was less than three digits it's less than three digits now Kyle um definitely a lot less and he's tweeting that because he's hyping up a fill that they had previously made and he's hyping up the Luna rotation that they're in but also remember Ryan their Foundation is underwater they are gpdc collateral which is their collateral in Genesis is below when they bought it for they're not installed that's right so this whole time gbtc is supporting their loans and that they don't want to pay back because they'll take the loss on it

so they got the one they got they got the dub on bitcoin and ether and then they got the dub on Salute uh Solana uh well actually they miss Alana Ava Avalanche and Luna but they need to go out on the risk curve because they don't want to sell their gbdc because it's underwater yeah well so far they're getting the wins right they're so far they're getting their they have one big loss because they didn't sell their gbdc but they're still stacking wins okay and then take us to so this tweet is March 28th of 2022 and guys I just want you to remember that time time frame we were in it was basically like alternative layer ones were kind of kings and boss uh you know Luna was kind of the the next ethereum killer and people like Kyle Davies and and suzu and three hours

Capital were Trader Gods okay everybody else was wrong all the holders were wrong the bitcoiners were wrong the ethereum people were wrong and these were traitor Gods where they're like top of their game like pristine reputation of the last couple of years of making money every single cycle that's where we left things in March uh 2022 but David we've got these three dominoes that I think we've we've kind of stacked up and then something happens with um old Jerome Powell around this time right tell us about the macro story because if we're looking for an outside actor the one that actually pushes these dominoes over and starts to cause the Cascade that we now see up to November 2022 you

have to like I think Jerome Powell was the finger behind this initial push of the Domino uh what are we looking at here what's the story this is in February inflation surges 7.5 percent on an annual basis up highest since 1982. and so not long after that the Federal Reserve starts hiking interest rates remember that that uh episode we did with macro elf Ryan where uh interest rates and bond market volatility are at the bottom of the pyramid well in the bottom of the crypto pyramid it's all about low rates because this bull market was a bull market on yields we were printing free money because risk was free and these yield were like there were zero yield in the

normal markets because that's because interest rates were set to zero but as soon as the Federal Reserve gets into the game of in jacking up interest rates that shifts the whole entire crypto pyramid because this was a bull market on rates on yields and when the Federal Reserve increases interest rates it pulls down yields from the whole rest of the stack this is uh what starts to happen and this is the federal funds rate a historical chart and we could see right um this is what we're starting to see in April 18th so the federal funds rate April 18th was about point three three percent then of course now we are here we are today about four percent one of

the fastest uh steepest inclines in history on that rate so the risk on days are over for crypto and for the cost of capital and we are now moving to a risk-off regime guys this is the first part of the story this is the part of the story where Powell tips over the first Domino and the rest of them start to collapse we're going to tell the rest of that story when we come back but before we do we want to thank the sponsors that made this episode possible sequence is the all-in-one developer platform you need to build web 3 games and applications for your users sequence is a smart wallet and it's the easiest most intuitive onboarding your users will ever experience and comes with all the features users need to feel empowered in the web3 world multi-chain

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bolster their reserves Beyond Bitcoin an interesting choice because of how illick wood and and non-collateral like avax was um on May 5th the Luna Foundation guard if you guys remember that buys 1.5 billion dollars in Bitcoin 500 million dollars of that came from three hours capital and it would be later revealed Ryan that 200 million of that purchase that got sent from Luna to tiro's Capital 200 million of that was UST of course went to zero uh and so so Genesis bought that uh throughout Capital so Genesis today and OTC swap uh and they also did an OTC swap with Rio's

Capital through his Capital out of the 500 million dollars of Bitcoin that threw airs capitals sold to the Luna guard Foundation career's Capital agreed to take 200 million dollars as UST for compensation for that now remember look at this the OTC swap includes 1 billion UST for 1 billion worth of bitcoin imagine uh trading UST which is on its way towards zero just people don't know it yet for a billion worth of real assets which is Bitcoin yep uh and then it actually and so people this was the event that actually triggered the collapse of UST where UST liquidity was sold off for Bitcoin and so there was not much to prop up

there's not much included left to prop up UST and so this happened on May 5th May 5th Luna Foundation guard buys 1.5 billion dollars of Bitcoin May 13th Luna UST collapses so just eight days later uh and this was also Ryan the beginning of the end for FTX uh so if you want to go go to the next link uh this is where the contagion really starts to hit and this was a there's an article out of decrypt uh that was had a ton of analysis from nanson nanson has been going on chain trying to track all the money that happened as a result of this and so it in 4 billion this has been four billion dollars in ftt token trash from Alameda to FTX aligns with a report of fgx loans to Alameda using customers

funds and so this is where the house of Sam enters the story in the house of Alameda and the second hedge fund to trigger a bunch of contagion enters the game okay so where are we in this story so we've got um the fourth Domino which is the collapse of Tara now that has tipped over again Powell is kind of the finger at the one end of The Dominoes that that tips over and at by the this point in the story has three hours Capital gone under yet uh they are about to I'm so happy you've asked they are about to is that what's next yeah so I would say like Domino number five if we want to add on dominoes ether and Bitcoin are about 50 off of their highs in this present moment right okay uh the federal this is when you and I are doing

a bunch of macro shows we're understanding interest rates we're understanding inflation everyone's kind of learning about interest rates for the first time uh ether picked out at four thousand eight hundred dollars Bitcoin peaked out at sixty nine thousand dollars and by this moment right at the end of that red square Ryan which goes from about middle of November to the start of June was all of that like this was pre-terra Luna collapse uh and so pre-terra Luna collapse Bitcoin and ether are 50 off of their excuse me about 60 off of their highs and that is the collateral base for three errors capital for Alameda but not only that because solunavax which I think is at the next link no no it's not it's just

like this is suzu just talking about the super cycle right so Luna avax which was the other collateral base for three hours capital is off 80 off the ties no way in this moment before the before the Terra Luna collapse happens so at this moment Trio's capital is in an extremely tough spot so if you're in a tough spot Ryan as a hedge fund with a bunch of uh illiquid collateral that you can't sell what do you do do you narrative and narrative Spin and yeah you also borrow from any lender that will give you money you also Forge documents and defraud investors to give you more Capital so that you don't have to sell anything because suzu and Kyle Davies were so goddamn delusional that they were doing

the whole super cycle thing that the entire industry fell for so they were pounding their super cycle chests while they had what is the super cycle for people who don't know the super cycle Ryan was the cycle of crypto that we get two cycles instead of just one uh and so while it might have felt like we were off on at the end of one cycle uh we were actually going to go on and begin a second Bull cycle that was a narrative that three years Capital LED and they needed that narrative to be true because they were locked up in a liquid [ __ ] coins basically the way I remember it is um you know we we've always had boom and bust Cycles in crypto like forever right and so um The Narrative around the super cycle was like those days are over and

now we're mainstream now we have like suits we have like FTX we have Wall Street here and like and so that's not going to happen anymore where we've matured and so we'll get blips down but gone are the days where you see a down 83 Bitcoin like that was the last cycle stuff gone are the days where you have uh ether off 90 all-time highs right this is kind of a new era and uh boy were they wrong they got a lot of people on that though yep um you know would you count yourself among one of the people that was kind of seduced by the super cycle dude it was intoxicating the super cycle idea was super intoxicating it's like oh yeah like the one cycle to to rule them all like yeah I'm on board with that sounds nice right uh and but

and so like that turned out to like start to become threatened right and this is where three errors Capital started to increase the level of contagion that they had they borrowed from anyone that would ever give them money like the big lending desk like block fi and Genesis down to like the C tier lending desk that we're would give them any amount of money down to the money that they stole from people that traded on their accounts right so this is one of the rather than becoming humble and selling for a loss they doubled down they brought as much money as possible and they increased the amount of contagion in the system and that was just as a result of the Terra Luna collapse which was a big part of their position uh but that was just the start of it

um yeah let's see where are we at where are we at here okay so this was in June 1st interestingly June 1st well the well the whole entire industry is on fire FTX passes coinbase in market share while the next day Gemini lays off 10 of its staff to prep for winter so FTX somehow doing great yet coinbase starts to beat coinbase and market share and while in in contrast Gemini is starting to laying off people and this is when you and I when we were reporting on the Thursday weekly or the Friday weekly roll up you're like yeah FTX is coming to save the day FTX is just like this huge story of just like it seems like it was it's

basically seemed like um okay so at this point in the story we were at what like June or June of 2022 and there was uh more there was contagion right obviously from the Terra Luna collapse and um through his Capital went completely down a whole bunch of other funds were completely wiped by this whole mess and what it looked like like is the the the exchanges and the funds left standing were the ones that were responsible with their funds uh they were the ones that um made it through the storm and came out stronger and Alameda was among those look at FTX as like surging on the back of this uh relative to coinbase whereas Gemini is like laying off 10 percent of

its staff so it looks like there's a changing of the guards here of the the move move fast kind of exchanges and um like uh funds are the ones that have made it out but that was all a facade as we later learned but what's this tweet from grayscale here yeah so we're going to take a quick Rabbit Hole here because in this moment grayscale had previously uh or grayscale yeah they uh hired this guy Donald b v really who's a former solicitor general of the United States as an illegal counsel uh and they put a thread together as to why and basically if you just want to skip forward to the Jake Jake travinsky tweet Jake is uh uh oh I guess I didn't I don't know if I have that uh basically uh I'll just read

it out because I have it in front of me uh somebody asked Hey Jake just to check my reasoning on this uh they are hiring this individual because they want to uh sue the SEC when in a few days there the grayscale request to turn the gbdc trust into an ETF well the the SEC has to give an answer in like two or three days uh and grayscale is predicting that the SEC is going to give them a no so they are hiring This legal counsel to take them to the Supreme Court and Jake Stravinsky is like yeah this is exactly what they're doing okay but but so grayscale wants to convert their gdbc product to a real ETF right it's like kind of Pinocchio wants to become a real boy and this trust product is not a real ETF and they

want to convert it to a real ETF by the way that would be great wouldn't it because this would be a more uh Capital efficient uh retail friendly product and their retail is already buying these trust products which are trading off of like nav are not like necessarily um uh you know you're getting ripped off potentially if you're buying this product you don't know how it's just trading off the The Spot market price of Bitcoin and eth and so they want to convert this so the entire industry is cheering them on is there some other ulterior motive towards converting this or do you think this is a a real sort of pure motive from from grayscale saying just like let's make this thing an ETF what would that solve for the kind of

contagion story here the timing of this is really interesting because in this present moment gbtc is the collateral for three arrows capital and so many others in this space smaller people that you know we don't say their names because they're just not as big as through errors Capital but gbdc is the collateral that is backstopping a lot of these loans also the loans coming out of Genesis a big player here in this moment in where when is this June 7th of 2022 the discount on gbdc is negative 30 percent as in there is 30 of Bitcoin collateral that is not being accounted for because it's not an ETF as in anyone that is using gbdc as collateral is only accessing 70 of the

total potential collateral that is there in Bitcoin but they aren't able to tap into all that collateral because of the discount on the gbdc trust because it's not an ETF and so that that's a lot of problem if you're using um gbdc as your margin as your collateral source for a loan that you take against it so huge problem right I mean like you cannot have the gbtc price go down especially when it's when Bitcoin is going down but the gbdc token price is going down even more than that right uh so like in January when Bitcoin was like 69 000 uh then back into moving forward into July it was something like twenty five thousand dollars that's bad but the

gbtc price went from above 30 to negative 30 percent so it had a an additional negative 60 Move versus Bitcoin and so grayscale is preparing to sue the SEC to get the grayscale gbt trust to turn into an ETF and fix this discount that is sucking up so much Capital out of the industry anyways we'll come back to that later first we have to get to this first round of contagion so a bunch of dominoes have started to fall The Block 5 valuation goes from four or five billion dollars down to just what is it one billion dollars in their attempted raise in June 7th that one billion dollar valuation does not last uh and let's see what's the next one and then as a result of this as there's and

this is the middle of three hours Capital has uh this is the title out of coindustria's capital faces possible insolvency after unforeseen liquidations right uh and so this is Tara Luna going to zero this is their ether and Bitcoin like losing 60 percent they have a locked Avalanche tokens uh if they were in Phantom that thing's at zero uh and so they don't have any money left uh and so this is they are getting liquidated because they borrowed all this money to backstop uh any of their loans so you couldn't have to sell uh but then the final the final nail in the coffin which is Sarah lunacops is and they start to get liquidate one of the others that liquidated them um yeah so uh lingering on that for a

moment it's actually unknown how big of a whole three hours Capital left in Block fi um but this is definitely when the block five troubles start so three hours Capital it's liquidated by block Phi at the same time block five becomes significantly insolvent well it's the story of this like at the at the far end at the at the tail of this Human Centipede of like greed and yield is like retail um which is like if you if you wonder where not in all accounts but like say for example block Phi how is it generating the yield on Ethan and and BTC it's this whole process of Arbitrage between ddbc and Bitcoin and large funds and Genesis they're all kind of tied up in this and Retail is kind of like just

Downstream of these yields they just get a smaller cut than the big guys right so three hours capital is making a lot of money on this Arbitrage and this shows up in like maybe a three to four percent yield in Block Phi at the other side of this but when that opportunity goes away the yield goes away too and uh so does some of the margin that has been kind of um protected against this the same story before you move on Ryan in that in that uh article right there there's a line here that says a substantial amount of the Bitcoin that customers deposited at block five was directed to gbtc or three hours Capital as a result a large number of block buys Bitcoins are a liquid so where was in addition for Brio's Capital was paying block fi to borrow from them

block five was also taking customer funds and working the gbtc premium just like everyone else but they could once the net asset value went Negative they couldn't redeem that because it was underwater so not only through it was Capital needed this the uh trust to turn into an ETF blockfi also needed that too they were doing the same thing that three hours Capital was uh so here's a voyager of course we all remember Voyager gave ethereal's Capital an uncollateral uncollateralized three 660 million dollar loan uh so that's not bad so that went to zero uh but then Alameda comes in with 200 million dollars in cash and a usdc revolver uh 200 million dollars

in usdc as a line of credit along with 15 000 BTC intended to help Voyager Meet customer needs during this liquidity thank you Alameda in the day well that's why at this point in the cycle you were like well if Alameda is bailing companies out like they must be doing okay right must have cash while everyone else is like underwater and so that seemed to be bullish for uh Sam's Empire in the house of uh Sam coin here and you know that that's the only the first of two uh FTX also backstops blockfi to keep them solvent so block five valuation drops down to as low as 25 million dollars after being as high as 5 billion dollars just a year prior and FTX gives block five four million dollar

line of credit to keep customers liquid uh and uh the quote from this article FTX CEO Sam bankman freed has been seen as the lender of Last Resort in the space in addition to block five Sam bankman freeze company Alameda research also provided a five million loan to Voyager so this is where SPF really like rose and saved the day like everyone else was insolvent FTX seemed to be the one solvent one in the room and he just bought up and backstopped of the entire industry turns out that that was not the case turns out that he was not the lender of Last Resort that turned out to be Genesis which we'll get there this is a the Zach Prince's thread announcing very happily announcing that

he was going to be able to restore customer deposits uh thanks to FTX so it's really a Lifeline at that time we've gone on there without it uh meanwhile uh The Dominoes continued to fall through those Capital files for bankruptcy in the British Virgin Isles this was announced on July 1st on July 18th Genesis was uh discovered to have lent 2.36 billion dollars to three hours Capital using only an 80 collateral margin requirement uh and so uh 20 20 of 2.4 billion dollars that that hurts uh and then of course they are seeking repayment of the outstanding debt through arbitration in New York a spokesperson told for dcg told the block that both dcg and Genesis balance sheets

remain strong with no remaining exposure to three hours Capital Genesis continues to be well capitalized and its operations are a business as usual that might have been true um here's Michael Morrow which I I found this tweet while I was staying uh he is at dcg uh former CEO of Genesis trading I found this to a tweet which says since then we worked with dcg to find the optimal strategy to further isolate the risk dcg has assumed certain liabilities of Genesis related to this counterparty that's through its capital to ensure we have the capital to operate and scale our business for the long term basically dcg bailed out Genesis and that's where one of the big holes in Genesis comes to be or dcg as a whole you know so much was going on in July

that I don't think I really noticed this so much right we were all like okay we didn't know what I mean it blew up there was Capital blew up um you know our is retail gonna be okay Celsius we missed Celsius but of course they were long gone yeah Celsius I actually went through this agenda and deleted all the Celsius mentions because they just went under under their own steam it actually didn't have any contagion he didn't even blame anybody on The Institute it was just Alex machinski was like DJs okay um and then what's this this is this is the summary right July 22nd suzu says that Tara and gbdc led to three arrows Capital insolvency this is like their retrospective interview right and it's like why did things go wrong and they

point to what gdbc trades yes gbtc and Terra Luna as the big ones but of course they never sold they never took profits they were up only it was a super cycle uh and yeah they just got okay they Icarus too hard so I think we're a domino five now that has fallen all right and this is where um so things are like starting to like settle out the dust is starting to settle and we're like was that the bottom like are we just crab marketing wait was it in July or was it late it was the end of July when things started to calm down and we didn't really make new lows prices were low like if price was down to like new lows did it Spike down to 800 that's 850 was the low but

that was that wasn't that was in like July or June or something yeah so that's where we are okay so now Domino six enter FTX the FTX fraud which we have now uncovered which people didn't know about at the time nobody knew about this but there was some um I guess records some things on the blockchain because of course all of your transactions all of your fraud is um when you put it on chain right it's always on chain uh this is uh from nanson I think you have some like maybe stats readout about uh FTX and some of the the things that they've they were tracking retrospectively this is a report they put out uh last week so recently yes okay tell me about this okay so three big transactions uh on the 12th of May FTX transferred 90 000 ether

2. 211 million dollars and 6.8 million ftt tokens 224 million dollars to Alameda uh the Alameda address 0x780 which was then transferred to Genesis that same day FTX sent another 155 000 ether 320 million dollars to Alameda which then eventually was transferred to Genesis once more May 26th of this year FTX sent 3.5 million ftt tokens 1.0 103 million dollars to Alameda research which was eventually transferred to Genesis once more this was in May I noticed all of these transfers are only going in One Direction This is FTX to Alameda and then Alameda to Genesis why

to Genesis because Alameda had loans from gen they were about to be margin called this was the FTX bailout this is how FTX plugged the hole temporarily we were the whole industry was just like gushing flesh wound and ftt or excuse me FTX and sandbankment free she says I know what can plug that hole ftt tokens is it ftt tokens yes it's a bunch of ether and also ftt tokens okay where's that ether coming from those are probably customer deposits right so those are the customer deposits yeah so Alameda gets a a whole blown in it like a bazooka hole and then uh and then Sam is doing the the thing where like

here's the Band-Aid over that and what am I going to do ftt tokens which is a basically a valueless token that I can mint and have you know unlimited access to and then depositor funds very likely through probably investor money to like wherever they could get their hands on so like the big question was where did Alameda get all the money to be able to bail out the bail out the industry and the same rules to answer this question apply to where three arrows Capital got their money to try and uh plug their holes when they were under water right before Tara collapsed which was wherever they could get their hands onto cash customer deposits on FTX which Sam made sure that he was able to do with that

custom back door uh in the accounting system in the accounting system they also minted Funny Money ft CT that they use as collateral to borrow from anyone who would take it regardless of its liquidity profile uh Genesis then took that ftts collateral and the two billion dollars that they raised from investor money so this was the capital that fttftx and Alameda were using to plug the holes of the Luna collapse is it very strange too that Genesis is using all of these weird like Funny Money tokens as collateral like to me I would be like my collateral is dollars it's Bitcoin and it's eth yep anything else I don't even know about like don't even come to me with your ftt tokens I don't I wouldn't accept that as collateral I

guess they they thought that maybe they hedged against these things but of course they didn't um is this uh where do we go to next uh yeah so this is just a summary uh Genesis received over a billion dollars of ftt tokens from Alameda and FTX within the last three months surprisingly the whole in Genesis is about one billion dollars weird meanwhile uh on the SEC side versus grayscale uh what are we looking at here what's um the house of Gary Gensler doing at the SEC yeah so this is the June 29th announcement that grayscale initiates a lawsuit against the SEC because the SEC denied their request to turn the gbtc trust into an ft into an ETF uh and so uh the in this thread they

they say through the ETF application review process We Believe American investors overwhelmingly voice a desire to see GPC gbtc convert to a spot Bitcoin ETF which would unlock billion dollars of investor Capital while bringing the world's largest Bitcoin fund further into the U.S regulatory perimeter the SEC is failing to apply consistent treatment to a similar investment vehicles and is therefore acting arbitrarily and capriciously in violation of the administration procedure acts and Securities Exchange Act of 1934. why the timing of this to me Ryan is really interesting I think because you know how we we started this whole thing with Barry Silber saying hey there's a daisy chain of borrowers and lenders some are capitalized some are not yeah the timing of this win is they sue the

SEC the moment that the industry needs the gbtc trust to convert to an ETF the most right the thing that would bail out most of the industry and would actually plug the hole rather than a liquid exchange tokens like ftt would be the unlocking of all the capital that would that is lost because right now gdbc is way underwater it's trading at a massive discount to nav and what's happening is this is making all of the collateral on Genesis basically underwater and it is kind of like rocking the entire foundations of this uh crypto lending and borrowing institutional market and um Sean and sign shine here's is maybe it's like obviously the whole crypto

industry can get around this because we want a ETF product rather than having trust products but also selfishly they kind of need it to bail out Genesis and all of the large institutions that are kind of underwater on their gdbc collateral and youth collateral is that right yeah that's right meanwhile what's the SEC doing charging Kim Kardashian for touting crypto Securities that's what in this same time frame that's what the SEC was up to going after Kim Kardashian do you think gensler's playing 4D chess here where he like knows how much pain the crypto industry is in it's like I'm not doing this right now like get crushed the conspiracy hat is on right now man like who knew about this this whole

thing seems like Gary genser is like hey if I don't allow for the gbtc trust to convert to an ETF the whole crypto thing will will like the whole thing you probably didn't but man is it just like the scripting on this is insane yeah the scriptwriters have outdone themselves in season 2022 of crypto all right so that's the sixth Domino and then the seventh Domino is when we start to see the fraud this is the most recent Domino to follow and this takes us to I think like maybe three weeks before that Domino fell so right now we're coming we're in October we're like oh that was tough wow uh whatever yeah that's over

glad that's over we had all of the like underwater funds they're out of here the algo stable coins are out of here now we have the players that are remaining which is like Finance coinbase the responsible exchanges the responsible funds like Alameda good job guys you're bailing people out thank you so much oh and FTX of course uh you know Thomas already thanks to you so thankful you're still here and then Sam starts to weigh in this is Sam bankman freed on crypto regulation that's where we're picking up the story with uh Domino number seven so this is the the famous tweet thread on his current thoughts on crypto regulation yeah this is of course where a lot of people started to pay attention to Sam bankman freed what's he doing over there and of course the FCX blog

possible digital asset industry standards uh I thought DC investor had a pretty good take which I put next which was SPF is the most Val effective value extractor in crypto he's very transparent that he wants to siphon value out of your account into whatever causes he claims to care about couldn't care less about decentralization meanwhile NPCs and Sims worship him like a hero this was in October 19th Ryan this was before all the people uh we all realized that FTX was insolvent uh what's interesting is when I saw this tweet from DC investor and of course like um silently I'm nodding my head being like this could very well be true this is probably true and yet you want to give people the benefit of the doubt right and so how do you steel man Sam

bankman Freed's argument uh around uh regulation so you know uh DC October 19th is is painting him as a pure villain and that was not at all clear at the time that he was uh of course he turned out to be I think the the wording siphon and money out of your account it's just like so prescient man like that's exactly what happened and remember how I said like when three hours Capital went under the last thing that they did was they maxed out out the contagion of the system they were underwater on gptc they were down bad on bitcoin and eth they were down even worse on soluna avax and so wow borrow money from where every deposited

unsecured from Voyager block five like investors wherever you can get like forged documents so you don't have to sell well you know you know Sam was like when this recovers I'll pay all the depositors back I mean like you know that's true it wasn't a long-term plan to to just be in a a constant state of like not having a one-to-one backing of all of the Bitcoin and youth on these exchanges uh this is kind of the gamblers play when you're down bad you borrow and then double down some more right and so yeah this is the exact same there's like the through line between SBF and three areas Capital was that in their last moments they levered up instead of Levering down instead instead of saying sorry instead of saying sorry screwed up but we don't want to make it

worse got in the way they loved their personalities and they were refused to take the L it was wind it was going to be a win or destruction that is the commonality between both of these parties there is a as a result of their ego Ryan they made choices that maxed out the contagion in the system which we are now feeling to its massive effect today but we're still not there yet okay so so this is uh FTX at this point in time and Sam was you know weighing in on crypto regulation as if everything in his house was like fully in order and he's just helping the crypto industry have a seat at the table with with Regulators meanwhile this was the first

big report that came out of coin uh desk right and so many dismissed it as fud as fear uncertainty and doubt at the time but um this report really revealed that Alameda and S and FTX were kind of interlinked and the balance sheet between these organizations was not looking too healthy that came out on November the 2nd this is because what happened was that all the real money the uscc The Ether the Bitcoin and FTX was paid back to they're all their margin calls and all they had left was ftt and so they were minting ftt to backstop Alameda uh and this was also when like a lot of the confusion as to like all

right where's the line between Alameda and FTX I don't really know they're just like swapping ftt tokens between each other uh and so CZ as a result of this report and a bunch of launching analysis I'm sure realizes that he's like the last big bag holder of ftt that is where ftt is BU being used as collateral everywhere and so CZ is like well I'm not going to be like sbfs like exit liquidity exit liquidity right like I'm going he's going to be my exit liquidity so if he's gonna do this to me no I'm gonna front-run him I'm gonna dump all of my ftt because I'm not going to be a very public very publicly right and so because binance invested in FTX they had a bunch of ftt tokens and so at

once this report that came out that showed that ftt was being used across the Sam universe as collateral for all of these loans he's like well that puts ftt in extremely precarious position I would like to actually cash in on my investment into FTX before it goes to zero and so I'm going to start selling that is where the FTX Empire gets punctured here he is like tweeting out like here here's me moving to almost 600 jobs of ftt tokens to move to binance uh and then I really like this tweet this next tweet which of course uh CZ retweeted let's be clear binance did not Define SPF stance on the bill that's going to regulate D5 or debate Eric Voorhees on the merits of FTX dance and

regulation or ship post on Twitter or like ruin alameda's balance sheet or fail to address the concerns of ftt liquidity basically all of this was Sam bankman's reads doing right this was his contagion this was his responsibility uh and then CZ really just drives a point home two big lessons never use a token you created as collateral don't borrow if you're going to run a crypto business don't use Capital efficiently have a large reserves uh and then Biden says binance has never used BNB for collateral we have never taken on debt this is the the Striking point of uh this is November 9th when we realized uh we were first realizing that there was an absolutely massive hole in FTX and Alameda balance sheet and it just struck

me because out of that original regulatory post that um Sam begmanfried laid out we actually invited him onto bankless to have a debate with Eric Voorhees on the merits and the path forward for crypto regulation and of course you guys will remember SBF was giving the case for why D5 should be much more harshly regulated including D5 front ends and he was saying that if we don't do this far worse things will happen this debate was going on in the midst of a 10 to 16 billion dollar hole on the FTX and Alameda balance sheet well this guy in the background knows he has tried to um cover the Alameda Hole by uh taking

taking depositors funds mixed exchange and he has the audacity the audacity to argue for greater defy uh you know regulation uh it was just an incredibly bizarre uh you know episode to have happened and I tweeted this 11 days ago we hosted a debate in crypto values with a billionaire who was secretly gambling away billions of dollars at depositors funds this guy was lecturing us David on crypto regulation while committing the biggest fraud in crypto history in that same day it finds out that ftxt into customer funds to try and plug its 10 billion dollar hole that was actually where it created the whole uh crazy crazy timeline back to the SEC uh resume

that rabbit hole here's a tweet that I really liked uh by failing to create an ETF for Bitcoin the the SEC one allowed the grayscale GPT gbtc trade to rip retail investors for five plus years it's created a gbtc negative premium forced most crypto trading outside of the U.S jurisdiction and let ftx's fraud hit millions of Americans it shouldn't have ouch this is what I just get onto like this simulation scripting like conspiracy theorist like you could not as the SEC created a worse environment to protect retail investors in 2021 and 2022. they created what like one of the biggest reasons why the contagion was so bad is

the essay is a it's three hours it's ftx's fault and it's also the sec's fault yeah they certainly created the the circumstances that led to this and for kind of the the Arbitrage and greed and I guess closed room meetings to kind of happen right I mean if we just had an ETF product from the beginning this this gdpc Arbitrage would not have been there in the first place I do think they play a role but but certainly we can't say that um they are the reason that this happened to crypto they were a significant player well obviously the the the the greed the margin uh trading the yield chasing all of the things uh happening out of 2020 in this effort to

get more and more and more right um you can't you can't just blame the SEC for like FTX and what Sam bankman freed was doing with Alameda versus like um there there are so many um unethical players involved in this at this point in time that it's just um yeah it's a it's a it's a house of actors um this is uh this was interesting too why'd you include this this piece here the story of coinbase dropping its lend program yeah so coinbase which uh didn't have like an earned program with Genesis in the background I think and they wanted to make this lend program where you could get yield on your deposited assets and they would get yield via their own routes asynchronous independent from grayscale from from

gbdc from Genesis but the SEC denied them the SEC said hey if you guys do this land program we're going to see you Sue you and so like we had this systemic like lending desk daisy chain of borrowers and lenders that that Barry silbert talked about and coinbase wanted to make this onshore U.S regulated lending program and the SEC said if you guys do that we're totally gonna sue you and so coinbase had to drop it it's absolutely insane and then remember Brian Armstrong's tweet Thread about like how they want to go toe-to-toe with the SEC and he starts off the street threads like really sketchy Behavior out of the SEC and so like come on like all the onshore regulated stuff we can't do pushed it all offshore pushed it all

unregulated allowed for the FTX fraud to happen allowed for the three hours Capital to defraud investors and just created this extremely toxic situation outside of the jurisdiction that they were able to regulate yeah you're muted it's interesting about this though David is like I'm not sure why coinbase lend got the ax but like Gemini's uh earned program didn't for example and uh blockify was still able to exist and some of the other institutional lenders are still able to exist it does feel very um arbitrary I guess uh what's this tweet showing us this is uh Colin wilham says Gensler who is pressed on CNBC as to why the SEC had

gone after lower hanging Targets in the crypto space and if he was Hoodwinked by FTX after meeting with him in March uh ganja replies building the evidence building the facts often takes time okay this is a response to you Elizabeth Warren who of course this is November 9th blame the crypto industry for the largest collapse in history shows how much crypto she says the industry is uh spoken mirrors and Brian Armstrong replies FTX was an offshore exchange not regulated by the SEC and he said the problem is this that the SEC failed to create regulatory Clarity in the U.S so American investors going need to go offshore as well as 95 of trading

activity punishing U.S companies for this makes no sense so Regulators created this a loophole for uh some of the the big villains in this story to uh to exploit retail Anyway by not approving things and not letting the good guys have a path forward um so now are we here now we're at present times present time okay so we've just sped around through all of this we're almost here this the contagion started to feel like it was spreading Beyond just the the Sam FTX Empire and other things of course um when I think my first inkling of this here's a tweet before this but when Gemini earn paused

um their accounts and so if you were part of Gemini earn you could no longer well that happened that happened later so this is November 9th this tweet that we're looking at and Gemini earned paused on November 16th okay so they paused November 16th so I wasn't even paying attention to this because so much was going on and just like following Sam's tweet threads but what is this tweet from Genesis in November 9th yeah so November 9th tweet from Genesis and that date's important because the timeline events start to speed up we want to provide an update on where things currently stand with our lending business in anticipation of the extreme Market volatility yesterday we hedged and sold collateral resulting in a loss of seven million dollars across all counterparties including Alameda so Genesis saying hey we took a seven million dollar haircut but it was to

control risk uh the next day Genesis tweets out and says we also had 175 million dollars in locked funds in our FTX trading account this does not impact our Market making activities uh fast forward six more days uh Genesis halts withdrawals in the wake of the FTX collapse uh and so their lending desk is shut Gemini earn is now unable to do a facilitate customer redemptions because they use Genesis in the back end uh and so getting closer and closer and then this is grayscale tweeting out on the 16th so four uh six days ago in the wake of recent events our uh our investors should know that the Safety and Security

of the Holdings underlying grayscale digital asset products are unaffected this is basically saying hey there's grayscale there's Genesis there's a firewall between these things unlike Alameda and FTX so I can see how you guys would get that confused but the assets inside of grayscale did not go to Genesis it's actually the other way around um and this is where we come to today or just more recent times uh it's apparent from the rumor mill we haven't really seen this confirmed that dcg owes 1.1 billion dollars to Genesis via an undisclosed promissory note that has been hidden from potential investors uh which should now indicate why digital currency group is doing a one billion dollar raise which apparently that they cannot find investors for uh and so this

timeline of events is kind of kind of a big oof uh so November 8th no material net credit exposure November 9th we lost seven million dollars November 10th okay we actually lost 175 million dollars November 16th sorry no new withdrawals uh November 17th okay we need to borrow and raise a billion dollars uh November 21th we'll go bankrupt without the money uh it is now Ryan November 22nd that was yesterday Let's uh let's start looking has uh CZ tweeted anything has Barry silbert tweeted anything have any of these people weighed in on things yeah so Barry silbert recently uh tweeted out something uh I haven't had the time to uh to look at it yet should I pull that up yeah okay so yeah so that was the last two

years okay I mean we're gonna summarize this uh right now but this looks like a very long deer shareholders um uh message from Barry Scott tweeted out about an hour ago yeah tweeted out an hour ago that brings us to the current time so current time when everyone wants to know is is Genesis going under right um is uh gdbc backed uh all the grayscale products is that is that backed by assets somewhere and there's some kind of um shakiness as to whether like gdbc and and uh eth the Youth products from grayscale are backed and coinbase has has come out and said they're in a coinbase custody it's all good here

um but there's some like fud going on about that I don't know what's true and what what's not and the big question is is Genesis going to get a bailout here are they going to be able to raise uh funds or not word on the street uh recently is that CZ looked as he looked at uh sbf's balance sheet and FDX Empire's balance sheet and said nope I ain't touching it also did so with the Barry silbert Empire and stepped away uh so now here we are have you as I was talking had a chance to scan through this uh letter from Barry what's it saying yeah the the line they're basically going through a recap and saying hey uh we are we borrow dcg borrowed a loan from Genesis alongside

of hundreds of other crypto investment firms it's a normal thing that we did normal business operations and in that third paragraph that third big paragraph he goes aside from the Genesis Global Capital intercompany Loans due in May 2023 and the long-term promissory note dcg's only debt is a 350 million dollar credit facility a small group of lenders led by Eldridge and so the chatter that I've heard on crypto Twitter as well I've seen my notifications pop up is that the contagion is perhaps not as bad as people thought however I will remind people that this is a picture of text and not a verifiable on-chain view source that is defy so we are still just trusting people uh but right now people

seem to be like okay the contagion's not so bad um but I don't think we will really know until time so we don't know if Genesis is going under yet uh for for those that have deposits in Gemini earn it's very it's contingent upon happens with with Genesis I think you're not going to have any answers until the market knows what to do with Genesis it seems like the gdbc products and e-products I mean they're all likely fully backed by The Ether and Bitcoin behind them and the big question is if this is the last Domino to fall um is this going to take down the digital currency group Empire the house of Barry silbert with it or is the house of silbert going to survive another bull

bear market and what will become of Genesis David what kind of contagion do you think will come falling out of this and by the way I've seen the chat as we've been talking about this um also ask about a few other things that like in these types of markets everything is in question right because like people are saying let's get all of our funds out of all of the exchanges people are saying usdc is not safe people are saying tether's not safe all of these other things everywhere fear is everywhere so by the way what I would would say it's general practice I hope we have learned at this part in the cycle is don't keep your funds on exchanges people bankless for a reason go bankless as soon as you can so that goes without saying and is at any stage in the market use an exchange like a

public bathroom get in do your stuff get out okay so that now like we're gonna Hammer that home uh as long as we can but do you think this is the last Domino to fall or do you think that there are other landmines here waiting for us like in a stable coin God forbid tether could it explode what do you think about this well I mean we if we don't have as much clarity as defy will give us then we just don't really know uh but there's a reason why I put that pyramid structure at the very beginning uh with like the pool twos at the top and grayscale Genesis gpdc at the bottom uh I the Gen this is the epicenter in my opinion and this is why uh I started off this this whole entire thing stating

that uh I can't remember what the term for this Ryan is but there's this term in musical composition where you start like a musical piece you take the end and you place it at the beginning and then you play that you play the beginning which sounds like the end this sounds like the outro uh but then then it starts so you start the whole song with the outro and that's what it feels like is going on right now we started this conversation talking about how three errors Capital was the missing was the link between grayscale and Genesis and they would borrow a Bitcoin from Genesis and they would give it to grayscale and that would prop up the gbtc trade the reason why the gbtc premium is negative is because

so many people did this including through OS Capital this is where uh the Genesis started making a ton of money and it's because they were able to facilitate these trades but they were also able to incentivize the siphoning of money out of retail investors out of Gemini earn out of FTX out of whoever wanted to get yield because again Ryan the marker of the 2021 bull market was yield where did that yield end up going into the grayscale Bitcoin trust which they could then charge two percent of the AUM as a yearly fee and that was printing money for digital currency group and so all of this yield that we got from ten thousand percent like ten

thousand ten thousand percent defy yield Ponzi pool twos with stacked on top of pool ones stacked on top of Alameda and three hours Capital stacked on top of you know Gemini earn uh like all of these lending desks block five voyage was stacked on top of Genesis which was an umbilical cord to the grayscale Bitcoin trust and that was the foundation of all of the yield that happened over the last 18 months and why Ryan I feel like this is there's this is the foundation this is the all of that collapse the collapse of illiquid high-risk assets because the Federal Reserve turned on interest rates that all of that came collapsing down and now

we're at the bottom This Is the End you're muted so Genesis was the tube connecting this whole Human Centipede Contraption together basically and this this kind of does go back to like The Dominoes right it turns out the dominoes were stacked but they're kind of in a circle I think this might be the last Domino to follow in the circle and we certainly hope that's true but it goes back to the the tweet that we started with Barry silbert the prophet um why did Barry silbert see this before everyone else 2021 uh that summer there's a daisy chain of borrowers and lenders in the crypto space some are not well capitalized lots of Leverage in the ecosystem including some non-obvious places important to understand the weak

links in the chain the weak links in the chain and so that brings us to I think the question we uh we started this episode with and maybe the realization that that we now have which is like if you look at all of the gains of 2021 and even early part of 2022 it now looks like all of those games were a scam what I mean it's just like 2021 bull market was a Ponzi scheme Ryan what the hell is our industry nothing real happened probably post uh January 2021 yes in terms of fundamental value and utility and this is how markets go by the way this is also how 2017

happened there was a point at which um like the price of crypto and particularly ethereum kind of caught up to the hype and then after that it was all kind of Ico raises and smoke and mirrors and nothing nothing do you remember the euthanasia roller coaster okay the first couple loops feel pretty fun they're actually valuable by the ninth Loop or so you're dead you're actually dead G-Force is killed well you're dead I mean you will be dumped off right so this is this is essentially how these Cycles go and it's it's what's interesting to me is like remember we started this episode trying to explain all of this with January 2021 what was the price of Heath that was a thousand dollars right now well where are we

we're back to Ethan a thousand dollars and that the reason I say eth is because um it's kind of like for me anyway it's sort of like that blue chip asset of like it kind of is yeah it's the Benchmark asset for me it's really what I denominate in uh like to a lesser extent Bitcoin but much more Ethan Bitcoin for me and look we've just erased all of the gains from 2021 Ford but now maybe there's some hope in that okay because we there was fundamental value from uh back from like 2016 uh you know up up up to now we didn't even have defy in the 2018 cycle when when when the bull market Came Crashing to a halt we were propelled into another bear

market now we have all the stuff maybe a fair price for that is around very low for digit eth maybe that's the fair price and we just hit the rewind button and now we're in a rebuild phase again that's what this is telling me as well and so much has evaporated um but also the feeling that like David um I'm buying eth this week um you know it's not quite triple digits so I'm not deploying like everything all the dry powder for that but like we are approaching Lowe's I think we're approaching the engineers right no more pool twos was the last time you heard the phrase pool two it's all gone

um so wow I guess we could have like stopped the podcast in January 2021 and then just resume now and been okay without all of the pain and learning stuff the other big takeaway that uh that I've gotten from this is like one of vitalik's takes was that he was really glad that we haven't had ETFs approved because if we did all of our ponzi's shenanigan games would have gone into retail investors even more like that that's what he said like the world we are as an industry not ready for an ETF because look at the games that we play but they still did that's the thing is they still did they still found their way and squeezed in

there you can't actually um plug that you know there's no way to kind of plug that because the way they found their their way to retail was through like three steps of the human centipede if you had to go through um Genesis and then three hours capital and then ultimately you got your yield in gen in Gemini earned so retail still found these things so I don't think I don't even think that would have protected us it's just if you're playing the crypto game right you have to kind of protect yourself don't invest more than you afford to lose um careful when you look at that yield where does it come from uh do you know um look man crypto is volatile enough like maybe don't go after yield

um take like stake your eat just hold it there's all sorts of lessons coming out of that that we've learned but um do you feel somewhat defeated like yeah dude it's like two years have been a second bull market that I've been through where both of them are just gigantic Ponzi schemes and like is that just what crypto Cycles are is like we just find a new way to find a new Ponzi scheme and then like dude what how many times like the reason it was real it was real until um it was real and look it was real until it wasn't it was real until the end of 2020. that was all legitimate and like yes uh we have built something real here and then it stopped being real and it's no mistake to me like there's no accent to me that um we see people like

Chris uh berninski like kind of check out you know sometime early 2021 be like this is stupid this has gone too far and start to get bearish it's because he saw the signs of just the kind of Ponzi game smoke and mirrors that happened after that but that doesn't mean David that each cycle we haven't built you know things that didn't exist the previous cycle and just kind of added like our our um our bottoms are are lower right and um I mean our last bottom was 80 eighth we're not even going to touch that this cycle like look I you know I don't trademark like but like we're not going there not even close um so yeah that timing of that Molly White episode where she's like yeah but like

the what crypto brings to the table versus the harm that it creates like it's not worth it but she's gonna be right she's gonna be right in the short run but wrong in the long uh run I think is the kind of the Arc of critics so how many more Cycles are Ponzi schemes versus when we actually have sustainable real world use cases how many more what if it's every cycle what if it's every it's every cycle I've been in I mean it's kind of the Bitcoin Fork Mania is that like our new branding it's like hey guys come in during the bear Market stick around for the bull market make sure that you exit at the top of the Ponzi scheme and don't don't go on Loops four through ten get off at loop three of the euthanasia roller coaster oh just

dollar cost averaging the whole time and just don't play the games and just like back to I remember the the like the first bankless post uh we wrote about like Bitcoin and ether are the only assets that matter and that was a thesis about like crypto money and value accrual in the base protocol right um there's other assets that are going to be importance productive assets but like those are and I'm back to like what am I excited about right now primarily ether like I'm kind of back to that post from uh you know 2019. it's a full it's a full reset um so yeah that's I guess that's the other lesson from all of this um wow waste of time I don't know I don't know

what the last uh two years have been David but um they've been something I feel older I remember I remember like getting so optimistic and just happy about like nfts and how they were gonna come and like Revitalize human culture and like like allow artists to like create and like and like oh crypto's finally here like we made it through the 2018 to 2020 bear market and we're finally mainstream now and then I look at all like the shenanigans that we got up to in 2021 I'm like dude we are so far away I'm just reminded of two things one thing is uh something that Vance Spencer said on their podcast which is like you measure the success from cycle to cycle not by the not by the Peaks but by the troughs right and so what's kind of the

lowest point that's the actual value measure trough to trough rather than Peak to Peak okay that's the way you make sense of these markets so that's kind of the investor tip and the other thing is um somebody asked me uh earlier this week um hey this this Market's pretty bad like the 2022 bear Market is pretty bad um like have we ever been through something comparable do you still think because they heard me say that you know 2018 was still worse do you still think 2018 was worse and I I just want to come back and say having been through these Market Cycles I I think I speak for many of the veterans is um yeah 2018 was still a whole lot worse than this I don't know and the difference I'll push back on that because so let me State my case then you

can give me the pushback the difference for me is 2018 felt like we might not make it like we might not recover so the difference to me was like um ether still then ethereum didn't have product Market fit Bitcoin did I knew Bitcoin would recover but I didn't know that there'd be a future in crypto for smart contract platforms for anything beyond Bitcoin uh and ether was just like I don't know it could actually die it might not be able to scale it might not be like do all of these things and so that was existential this time I am not at all worried about the existential risk of the core crypto assets like um like ethereum for example and last time

was much different than that so last time I was a little uh it was a much harder to press the buy button in the depths of the 2018 bear Market it is not so hard now in 2022 and that's why I I kind of measure it but yeah what's your perspective on this do you think it's worse I 100 agree with that take whether or not this current bear Market is worse than the 2018 uh like uh yeah so like crypto peaked at December of 2017 and a bottomed in like December of 2018. which one was worse uh ether and Bitcoin went down way more in last bull market than this bull market 83 for Bitcoin 95 for eth right and so by that measure this bull market or this

bear Market's not as bad however in 2018 well I guess we had icos and icos kind of went down 99 maybe that was pretty damn bad people cardano like um all sorts of things went down that hard came back actually so I did yeah like substratum like remember those like stupid Ico tokens those went to zero so maybe maybe that was worse um but the things I don't remember in uh 2018 was uh an exchange as equivalently large as FTX go to zero and take all use customer deposits with it same thing with Celsius uh same thing with block fi same things yes it's affected more innocence people

that owned Bitcoin and ether like oh we're only down 60 versus the 85 to 95 but some people of Ryan are down 100 and a lot of them are retail yes I I see when you when you invest your money like you think you're putting your money into a centralized exchange you think that's a bank type experience remember Luna like Luna defy it's great 20 yield oh no I feel like it's a little bit like more dgn on the Spectrum but like but no they had they had centralized lending to like hey come and just like wire US money and we'll give you like 12 yield and that's that sucked up so much money out of Asia I see yeah I I get it from that perspective so

your argument is that 2022 is worse in that it impacted more kind of like I guess innocence let's just call them like people that weren't playing the pure Degen game there was more Capital destructed certainly because like the total there's way more Capital destructed and so by that measure like this bear Market has been like two to four times before in terms of capital destroy yes I think that's true I think that's another way to look at it my way of looking at it was more like um you know because now what's going to be look guys the next if you're listening still not now is the next few months of your life in crypto if you're still here if you if you want to be that seller not that tourist it's just going to be complete it's going to be crypto is dead Never Gonna recover FTX

um like was the end of crypto scam the entire industry like and this will be month after month after month coming from here right and so you'll feel like it really is dead once we get six more months into this nine more months into this you'll feel like it's dead and um I guess the difference there when I compare that to 2018 is like I kind of felt like maybe it was possible that the bankless future was actually going to die this time I know there's no effing way I'm confident that we will recover and we won't we won't build back in the fragile way that we've built this industry which is like the Genesis Lending and kind of the the center

exchange and the custodial like we'll learn the lessons and we'll build back stronger in 2018 I was not sure that that would happen in 2022 I sit here even though the impact is greater in terms of total Capital affected and innocence and all of these things I am much more confident that we're going to come back like close approaching 100 uncertainty again look this is just me again we're going to end this episode with all the usual disclaimers which I could like we could be wrong could drop to zero like we could be completely wrong in all of these things but that's the way I'm feeling versus 2018 it's much different yeah I think uh in 2018 can people go bankless was in question

in 2022 can be people go bankless seems like the most simple and logical and Justified and supported path forward in fact how do we build back better it's by not doing centralized lending and doing bankless lending so actually I think where like previously we thought like oh maybe maybe this thing won't really work now I'm like this is the only way that that works yeah there's no other option well that's it guys I hope you enjoyed the episode uh David thanks so much man for doing all the research to put this together and put these pieces in play I do think that this is um yeah this is a really good analysis of what the heck happened the last 18 to 24 months I don't think anyone's actually put this

full comprehensive story together because like we we needed the dcg grayscale piece piece of the puzzle to map everything together and now we know yeah yeah and whether grayscale whether was sorry whether Genesis Falls or not I think this is still like probably the last dominance to fall in this guys of course thanks for hanging with us risks and disclaimers gotta remind you once again none of this has been Financial advice this entire asset class could drop to zero we have no idea uh what we're doing ether's risky crypto is risky D5 is risky as well you could lose what you put in but we are headed west this is the frontier it's not for everyone but we're glad you're with us on the bank list Journey thanks a lot