Strategy Sold Bitcoin. Polymarket Can't Agree on When

Transcript

Let's talk about one other big news item before we start to wrap up here and that is the controversy surrounding uh strategies uh selling of uh of of Bitcoin for the first time I don't think it was the first time in its history but the first time in years and years and years and uh we'll we'll sidestep because I know this is not your role the the impact on the market which although this was sort of pre-telegraphed during I think sellers Q1 earnings uh call the the market is obviously reacting poorly to Right. But there is a real debate about how a contract on Poly Market tied to the timing of that sale is resolving and and it creates a whole another it opens up a whole another suite of issues

that we haven't even touched on when it comes to the operation of these platforms. So So why don't you walk us through that really quickly? So I believe the issue is that the there was a a market on Poly Market where you could place a trade as an expressive view on whether or not by a certain date um >> through the end of May. It was through the end of May >> Micro Strategy would sell. >> Yeah. >> And the there was a disclosure that they filed an SEC filing. The SEC filing was ma was made in June, but it revealed that prior to June in May, a sale had taken place. And so there there is a

dispute right now with you know big money at stake on whether or not who is correct for purposes of this trade. Is is the controlling date the date of the trade the date of the sale of the Bitcoin or is it when it was made public through the SEC file? >> Yeah. and and like you said, big money. I think um like like tens of millions of dollars have been bet on this market and uh and yeah, it really comes down again to like how these things how these contracts are are written, how they're structured, how they're designed to resolve. And then we didn't even get into the oracles. And then they use a a relatively smaller oracle provider called UMA to actually vote on the outcome of of these events. And I think

I've seen some analysis that ultimately nine people control enough voting power on UMA to actually decide which is not quite as decentralized as I I would imagine many people would want. And and this is just I I see it as another risk as it relates to prediction markets. I mean we're excited about the technology. It it does um I I can certainly understand the value of it in sort of crowdsourcing intelligence for important events. Uh I I mean there are certain vices I mean gambling and betting on like like trivial items that maybe we need may maybe we don't but I can certainly see the the viability of of certain markets. Uh but at the same time like this is another thing people have to account for when it comes to uh

participating in these platforms and and this doesn't even get into necessarily some of the other issues or risks. Uh and again I know this is not your purview Sam but I mean there's been a lot of reports the Wall Street Journal had one. There was an academic study really showing how the vast majority of participants lose on these platforms. And and just like a casino, the house the house always wins in a certain way. Uh, a lot of the people that make money are the the professional market makers, the ones running sophisticated algos and and they prey on on retail uh, traders to a large part trying to find like long odds that that could pay off and and just fundamentally misunderstanding risk, which frankly we all I think we all do from from a certain time to time.

But that's a lot of there's a lot of different things for traders to be careful about when it comes to participating in these markets. Um, I'd love for you because we have to start wrapping up to just what to to the extent you are able to share and from your vantage point as a former prosecutor and just someone who intimately understands the way these markets operate in a not official financial advice point of view like what are some of the things that you for instance would look at look for try to understand before you might want to put a bet on one of these markets.

>> Sure. I think what I would look at first it as you point out it's very important to diligence how is the bet who determines how the bet is one what are the rules for that you you need to understand that's kind of part of understanding counterparty risk right is understanding the mechanics of it so that if there you don't want to you want to make sure you're playing on a level playing field right that's part of understanding the the level playing field the second thing is um why am I placing this bet? Am I placing this bet because I believe I have better information or better judgment? Is this for fun? What am I what am I I doing here? If this is a

serious uh bet, then I need to to understand whether I really have some kind of asymmetric advantage that is legal. In other words, I'm not I don't have an asymmetric advantage because I have um inside information, but I have an asymmetric advantage because I am smarter at analyzing the signal than the rest of the market. Or maybe it's a hedge, but frankly, I personally find that the the the greatest use of prediction markets is the information, not >> not as a better, but as a source of information.

>> Yeah. Um and obviously that happens because other people are placing bets, right? But um it is an entirely new category of data signal. You know 5 years ago this is not something that was regular, you know, pervasively available. But now when I'm thinking about an issue, I always look at polyarket or cow sheet to see what are they saying about it if there is anything. Yeah, I think those are really good points and and frankly it's it can be difficult for people to understand the way certain things resolve. I'm sure you remember and I'm sure plenty of people listening here remember the debate over Zalinsk's suit I think when he came to I guess meet President Trump another time because of what happened when he went to

the Oval Office. Was it in February of of this year? Was that or was it last year? This point I I can't remember. Um but there was a whole debate as to whether or not what he wore was actually a suit. And it came down to again like um these people nameless people behind an oracle to kind of decide and I remember that um that resolution was also unsatisfactory to a lot of people and it's hard sometimes to due diligence those types of things because these are very esoteric topics that um that that very few folks are are experts in. But I think your point is is very well taken and and again because this is a a trader show. This was a tremendous kind of walk through all the different issues pertaining to these markets. uh for people participating, retail people participating because there is a lot of

incentive to participate in these markets given how altcoins and crypto in general are are are going down a little bit and uh if you're not going to put money into AI stocks which are which are booming, prediction markets is an area where you can kind of get that risk on uh fix for for lack of a better term. So yeah, really understanding like what is the advantage that that you have and yeah is it is it legal? there are plenty of legal ways to get for these types of markets to get um to to get um like anformational advantage and in that way it's very different and perhaps a little superior to securities markets. But um you need to understand kind of what that um what your advantage really is or if nothing else make sure you don't bet

money that that you can't afford to lose because uh especially as some of these markets are now going to start offering like leverage trades and and so on and so forth. um it there's a rule of possibility to um to to really go up or or go down depending on what happens. >> Yeah, for sure. And I think one other point which in addition to the rules, I think you're hitting on this with the suit example suit example is what exactly is the phrasing, right? I went to Hebrew school. We can debate the Talmud both ways. All right? And litigators, I make a living splitting hairs on what the the meaning of words is. What does it mean?

Is this ambiguous? Is it not ambiguous? Um, and so you definitely have to be, is this clearly a binary? Is there going to be a clear winner to this? >> Heads up everyone. We'll now be fully transitioning Bits and Bibs to its new dedicated Bits and Bibs channels starting next week. So, if you're not yet subscribed to the Bits and Bibs channels on X, YouTube, Spotify, Apple Podcasts, or wherever you get your podcasts, then go there now and subscribe. After that transition for a few weeks, we'll play segments of the full interviews on Unchained as a reminder. But head there now and subscribe so you don't miss an episode.

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