Why Crypto's Riskiest Assets Are Suddenly Exploding

Transcript

It's Friday, September 11th, and it's time for the Bankless Weekly rollup. The AMC CEO declares war on Robin Hood tokenized stocks, calling them contemptable outrageous disgusting detestable, inexcusable, and vile. Wow, did he really use all of those words? Uh Vlad Vlad Tenn from Robin Hood simply replies, "What's the concern spawning a war on Twitter?" We got some other news as well. What else are we talking about this week, Ryan? >> Uh Treasury, David, while you're gone. There was some war in the Treasury markets and Bessant has continued to up the stakes on that war. Now he has tripled the longdated bond buybacks to 6 billion yet yields are still increasing.

Anyway, we got to discuss that also. David, I want to ask you about maybe a potential altcoin season, like a baby altcoin season. We have Zcash, we have Venice, we have Near. All of these things are up. Robin Hood chain is going wild. Some people are asking whether this is altcoin season and whether it's way ahead of schedule and why. One of the reasons why VVV, at least of all the tokens, is up big is because OpenAI was caught red-handed stealing the work of a million dollar math prize that had gone unsolved for decades. It has been solved and OpenAI is taking credit. Did they actually do the work or was it one of Open AAI's customers doing the work and

they merely just crossed crossed the finish line with the work that somebody else did? We're going to talk about all about all this drama and more. We also got some frame transactions out of the Ethereum landscape. This is account abstraction once again coming online as a discussion and now people are fighting ETH because if Ethereum does anything, some people will choose to FUD ETH about it. And Hunter Biden, the the story of the year launches a memecoin called Laptop. It's the exact movie that you would expect to happen. You don't need to watch it. So, we'll just speedrun it for you. I know I know everyone is waiting on baited baited breath to talk about the Hunter Biden laptop, but you're going to have to wait till the end. We're going to start talking about markets. Bitcoin and Ether, the blue chips of the industry, flat on the week.

Meanwhile, the following tokens all hit all-time highs. Lighter, VVV, and Zcash all hit all-time highs this week. Near up 30%, Arbitum up 40%. Which brings Ryan asking the question, are we in an altcoin season? >> Is this altcoin season? Ryan, is this altcoin season? >> That was a hypothetical question. And I know the answer to that already, but I want to get your answer to that question. Okay, I know the real answer. So, what do you think? I mean, this is >> this is doesn't usually happen, or at least that's part of the narrative, right? Bitcoin's supposed to pump first.

That's supposed to confirm the early bull. I guess we got a little bit of a pump, right? When you left two weeks ago, where was Bitcoin? It had already jumped to close to 80K, right? when you left. >> Bitcoin pumped from like 65,000 up to 77,000 three weeks ago. And so we have actually Bitcoin has been ranging between like 76 and 82 81 for 3 weeks now without actually going in any direction. >> We got to 81K but we didn't get to the May highs actually above 82 which is somewhat interesting. So, we were higher in May, but anyway, we got a bit of a bump and now we have all of these non- Bitcoin assets pumping. So, what do you think? Is that altcoin? Are we in kind

of a mini micro altcoin season? I'm kind of reminded of a conversation I had forever ago with Micah Belo where he was telling me about one of the macro commentators that he likes the most who pays attention to the Fed, you know, pays attention to macro but also invests in crypto. And it was like a it was like a a funny bit where he was saying like, "Oh yeah, I think the Fed needs to ease." This is like two to three years ago. The Fed needs to ease. We're going to into an easy money era and therefore I'm buying pudgy penguins. >> And like I kind of think that's what happened in the crypto industry recently. Like we are like Bessant is going to war against the bond market. we are doing, you know, quote unquote quantitative easing in our own new way and therefore crypto industry

participants are buying memecoins. Yeah. And so like the dens are just going straight to the end >> and Bitcoin moves slowly, Ether moves slowly, but some of these tokens that hit all-time highs like Lighter, Venice, Zcash, you know, like I said, Ner and Arbitum are up big. Uh memecoins are printing new highs in terms of DEX volume. And I think that's just like a lot of the crypto deents seeing the same pattern of just like, "Oh, we're going into an easy money era. Let's go to the riskiest table in the casino cuz that's the spinal reflex that we have."

>> You know what I call that? Um the den debasement trade because it's like it's basically the debasement trade what you just described except it's like going way down market where you can get the the 10x, the 25x, the 100x style returns. Um, but I do think it's too early to call altcoin season for anything. >> I'm worried about us getting ahead of our ski tips here. >> Yeah, it's like look, Bitcoin dominance is still almost as 60%. So like, have you seen, look at this chart. Do you see anything that has shaken up Bitcoin dominance, >> you cannot call a bit, you know, altcoin season when Bitcoin dominance is near 60%. But uh and Michael NATO actually

reminded me of this in 2023, which I don't think any of us would think of as a particularly bullish year for crypto. It was like we were sort of rebounding. There was like we were just trying to get over 2022 and FTX. It turned out to be sort of an early bull, but there were pockets. >> It was it was a repair year. >> It was a repair year. It did not feel particularly bullish, right? Not until we got kind of the Black Rockck ETF did things really start to feel bullish in crypto. >> Like October 2023, I think. Yeah. >> Yeah. But do you remember all of these pockets of speculation back in 2023? So we had Blur. Do you remember that? That was uh February 2023. In March 2023, the ARB token actually launched. So we got

an L2 kind of revival. We had Bitcoin ordinals that was also in March. We had Oh, interesting. World Coin launching in 2023 as well. That was in July. We had, do you remember 2023 summer friend? Remember when that came on the scene? >> Oh my lord. >> Just a pocket of pure speculation and the speculation bubble kind of like moved from thing to thing throughout 2023. Toward the year end, we had the Jetto airdrop and the TIA airdrop. And there there were all these >> the Jetto and Tia airdrops were absolutely the starting pistol for the following year.

>> They were. But it was this moving bubble of speculation because it was just the crypto natives who were here. I still think it's that I still think it's crypton natives are here and this is a bubble, you know, a pocket of air of speculation that's moved to kind of Robin Hood chain, but too early to call a full altcoin season. Do you think as well that there can be an altcoin season without Ether the asset, David? Without Ether getting its due? Okay, this was a >> Yeah, I do actually. We had that last time that we've already seen that.

>> Okay, but maybe this time is different. Uh this was a post from Michael Dato as well. He said, "Robin Hood buying a ton of ETH seems like an obvious move at this point. They'll likely make money on it." And he says, "As I think more about ETH this cycle, this is probably the bullcase nobody's talking about. Not the store of value narrative, just institutions deploying and buying and then signaling to the community with ETH purchases." So he's saying Robin Hood potentially they have the success of the Robin Hood chain. How do you get in good with the crypton natives who are buying all the memecoin assets in the Robin Hood chain? Well, you buy some ETH and you put it on the balance sheet. You'll probably make money on that trade alone, particularly when you get behind it and that could be a catalyst for ETH. He's

also big in this idea of like uh new wealth creation, you know, and I I know you've talked about this in the past, which is like ICO, wealth creation, NFT, wealth creation, memecoin, wealth. Yeah. >> Yeah. You have to have some wealth creation episode in order for the full bull to get running. Well, the question is, who are the memecoin traders on Robin Hood right now? And if they are getting wealthy right now, where are they going to deploy that? And Mike's thesis is it's actually coming from parts of the ETH community who missed out on pump fun and all the Salana memecoin shenan.

>> Yeah. The unc plumbers won the last battle. >> Yeah. You think of the archetype of someone like Eric Connor for instance who's sort of like a Ethaxi of Maxi. >> He didn't do much with respect to >> not as much anymore aligned but he is >> what's he trading now? What's he trading on Robin Hood now? bonercoin is like okay >> boner >> right so he thinks that wealth creation event might actually feed back into ether the assa anyway there's there's a little speaking of bon >> I don't know if I want to consider this a wealth creation event uh I I would like to throw a soft flag at meme coins being wealth creation event like ICOs which in hindsight were terrible I'm not excusing them at least had a semblance

of hey we are going to create something that is going to be good for the world and memecoins are just it's a memecoin called boner. It doesn't pretend to be anything. It's not. That's the whole point. And so I would like to not perfectly equate meme coins with the pattern of generative startups even though history of generative startups are terrible. >> No, no one's I'm not making any moral claims on these things or any even utility type claims or any good for society claims. I'm just saying it's wealth creation. And if you look over on Robin Hood chain, there is wealth being created. There are market caps and coins going up right now. And so, >> you know, are they going to keep all of

their wealth in bonercoin or are they going to move that into some other asset? That's the wealth creation event. The Ryan, the last thing I said to you before disappearing for Burning Man at the end of the weekly roll up before I logged off was, "Hey, there's this like meta happening that's kind of like early, but it's like these weird paired tokenized stocks with a memecoin thing." And so people are like putting a memecoin in an LP pool with a tokenized stock. And that was it. And that was the end of the weekly rollup. And then I was gone for two weeks. The last thing I did before I logged off was I bought $1,000 of boner at a $370,000 market cap. And then >> 5 days later, I look at my phone connected to Starlink and I'm up

$120,000. >> Wow. >> And Eric Connor is up 2 million. >> Congrats on that trade. >> My god, that was wild. >> What What enticed you to buy that specific uh coin at that time? >> Yeah. Like how did I pick out Boner? I was I was like thinking about this. Oh, is that the one that's like that's paired against the the him stock, right? Which is like >> stock erectile dysfunction, you know, stock or something. >> Yeah, there's like there's like boner advertisements all over New York City and it's all kind of like ED coded, like soft coded cuz it gives like a a male buying this product, you you get some sort of like >> deniability by is like it's it's like not actually speaking the words into

existence. It's like only it's like a wink wink nudge nudge kind of thing. >> Okay. uh like a health product. >> Uh your question was like of all the meme coins that I bought, how did I how did I choose to buy boner of of all >> and also what does that say about you? That's my question. >> I'll get to that. >> We'll put that on the premium feed. >> Um boner, it makes sixth graders laugh. So that's good. That's bullish. >> Yeah, >> it kind of was reminiscent of Fartcoin of just like it's so simple. It's so mimemetic. Like why did fartcoin run like two years ago? Because fart, it's fart. It's like such a mimemetic. You like you laughed at farts so many times when you were in middle school and high

school. So same kind of same kind of category. It's very simple, very mimedic. Uh and then it also fit into the category that I was telling you about like before I logged off, which was like it's paired with a tokenized stock. It's very simple. It's very mimemetic. Like fartcoin ran because we hadn't tokenized farts yet. uh boner ran because we hadn't tokenized boners yet and it was those things like came together and it's like okay I think I think this is like valid enough. >> A brilliant logic David I think you should you know go full full-time memecoin trading with this type of insight. I think um I think you'd do really well in this market.

>> Unlike most people who bought Boner, I I I I Okay, I'm kind of think that this is a local top on the casino, if you will. And like one of the reasons why I think that's true is like if you look at the Pawns token, which is like the new memecoin launchpad, that thing is down uh like 50% off of its highs. Robin Hood REV activity is down off of its highs. Uh, I was writing an email to the HIMS CEO inviting him to come on the podcast just because he was in >> the meta. Yeah.

>> And I was like trying to like think about this from the receiver side cuz like sometimes stretch guests you need to like put a lot more effort. You know the deal. You have to put more effort into like enticing them to come on the podcast. And so I'm trying to like put myself into the position of the HIMS CEO because he followed the Boner Twitter account because again Boner is paired with HIMS and so like even be him is going up as a result of of Boner at least you know short >> I'm not sure I'm not sure is Hims tokenized stock on Robin Hood like dislocated because there was so much demand for it and so the theory is of this tokenized stock memecoin LP thing is that this is going to be really helpful for the equity on the public

market because you have a new set of buyers coming in for the speculative memecoin reasons. And so I go and pull open the data. I got to go look at the receipts. And HIMS is a $6.5 billion company. It has a 30% outstanding short supply. So it's heavily shorted and so the idea is that these tokenized uh stock memecoin things will help short squeeze the stock because there's enough demand to buy the tokenized version. And so they will those with the enough buying pressure will do a short squeeze on the hedge fund. Same thing as GME. There is $3.5 million of tokenized him stock on Robin Hood chain on a $6.5 billion stock.

>> Yeah. It's not even worth his time. >> That is not happening. There is no short squeeze that is happening. Yeah. >> And so I think that whole narrative is very far-fetched. We're seeing a this is just this week. So this could be very shortterm. We may be just doing a break before chips go back on the table. But I think this is like a kind of a I think we're kind of toppy on this current iteration of the casino. And same thing with the kind of the flag that I was throwing earlier. So like memecoins are not wealth generative activity. This is not new. The to the tokenized stock memecoin LP positions are is like kind of novel in memecoin land. But broadly this is still memecoins. This is still the same movie that we've seen. This is

not going to escape reach escape velocity out of the crypto industry in the same way that NFTs did. I kind of think that the memecoin speculative frenzy that we have seen in the last like 6 weeks is about to be over. I don't know if I want to say that so confidently, but it kind of feels that way. Anyways, I sold most of my boner. >> I was going to say I was going to say I hope you've sold your boner. I sold most of my boner. If this this is your true opinion, uh we'll discuss a bit more about this including the AMC stock trade. But on more serious matters, let's talk about the global bond market, shall we? So I think when you left, >> let's pivot. Let's pivot into the bond

market. >> A hard pivot, shall we use that term? >> Okay. So the bond war, this is like week four. I think as you were leaving um the Treasury put the Bessant put was starting that trade was starting to be put on. At the time you left it was $2 billion. You're going to buy longdated bonds 2 billion per week. Had a way to do that. That went to 4 billion and now David it's at six. So just this week we are up 3x. Here's a tweet. The US Treasury announced it is buying back six billion in long-term debt, tripling levels seen before the recent intervention announcement. So, they keep upping the stakes here in an effort to get Treasury yields down. This was a

fascinating clip from Bessant. He was speaking at a fireside chat. Let me just play this. >> Whenever people say, "Oh, well, Treasury Secretary is taking a risk." Well, it's my dream. I have asymmetric information like I am the house now. So, right. So, so when we intervene with the Japanese yen, I have pretty good insight into what the Japanese what the Bank of Japan's going to do, what Japanese policy makers are going to do.

>> Do you hear that, David? I am the house now. Does this >> I'm not I'm not bullish. I That's That's a That's an icorus. He's icorusing. You are not the house, sir. the the market is the house. You are a large player, but you are not larger than the market. >> It there's there's something reminiscent. We've seen our share of icoruses in crypto over the years, and he's not icing that hard, but he's getting up there. And uh yeah, it doesn't make me feel good about where bond yields are going on that. >> I think it's very notable that the buybacks tripled and then yields have risen. Yes. And if you listen to my episode with Jim Biano, he has a perfect explanation for this is that you want to incent bond buyers by hiking rates

because it's giving them confidence that inflation is going to be under control. Bessent is doing the opposite. He is doing QE. He is injecting money. He's injecting liquidity which is going to induce more inflation. And so it's causing bonds bond holders to sell because they are not confident that inflation is going to be under control. And so the more QE that Bessent buys or the more bonds that Bessant buys, the more bond sellers are coming into the market is Jim Biano's rationale. And if that that would predict exactly this effect that happened this week.

>> Well, I think there's an element of that. He keeps rationing it up and he's tripled the buys and this is the 30-year yield. It's at 5.3%. I mean, highest since 2007. It continues to make all-time highs. This is the 10-year. It's also creeping up. Uh, all of this has an effect on politics and of course midterms. So, this is mortgage rates. Mortgage rates after kind of decreasing to uh close to 6% they're back up heading towards 7%. We also have inflation as you mentioned like diesel is at a record almost $6 per gallon right now. But basically the 30-year and the 10year and the bond market sets the

cost of capital. So you can imagine any kind of loan product whether it's a car loan, whether it's a credit card, whether it's a mortgage, those numbers are going up with the bond market continuing to go up. And I don't know if you saw this, David, but this happened uh I guess the day before we've recorded. This is uh Donald Trump injecting his input into this. Not specifically about bonds, but the politics of affordability. Here's what he said. >> But what we're doing is because we've done so well and because our country is making so much money that only I can make this promise to you. And here is my

promise. If the Republicans win the House of Representatives and the United States Senate, both of them, because of our economic, tremendous economic success, like in in history, we've never had anything like what's happening, but because of our tremendous strength and success economically, I will issue a dividend to every adult citizen in the United States of America for $5,000. There you go, David. A $5,000 dividend to every adult in the United States of America. The the cost of this would be

be about a trillion dollars. Of course, tariffs would pay for all of this. You know, tariffs, meanwhile, I think they raised about 150 billion and have been spent, you know, already 10 times that amount and this is an additional 1 trillion. So Trump with just a direct appeal to populism on the backdrop of basically a a top three issue, maybe the top issue for voters, which is like cost of living, affordability. There's a Reuters poll I saw today. 74% say cost of living is on the wrong track. It's a top issue for for both parties and the cost of capital rising, the bond market rising does nothing to improve that.

makes it far worse. So, what's going to happen there? >> Did the markets react after he said this? >> I don't >> because Donald Trump says a lot of things. >> Well, I mean, he look, he said if Republicans win the Senate and the House, it's kind of a that's probably not going to happen, right? Like the Senate and the House. >> Not before people are incented with $5,000. >> Yeah. You think that's really going to move people into into kind of, you know, like >> No. Do you think you can actually get voters to just be bribed for, you know, $5,000 in order to vote? Especially when it's a promise coming from Donald Trump, like you just like, you don't know whether you can cash that check, whether that would actually happen or not, right?

>> Or whether it's just rhetoric. >> Yeah, this does trigger my memory of when we all got $1,200 helicopter money from the Biden administration during COVID. And then Brian Armstrong tweeted out the most incredible chart ever, which was a uh chart of dollar deposits into Coinbase by count. And there was like, you know, you would see a lot of $1,000 deposits, you would see a lot of $5,000 deposits, but like the week of the $1,200 helicopter, >> $1,200 checks. >> The number of $1,200 deposits into Coinbase was just like it blew up the chart. And I think people, the government, everyone should take note that when the government hands you

money, people take it to buy Bitcoin or hard assets generally >> or the DJ debasement assets like meme coins whatever >> shenanigans. Yeah. But like they're not keeping it in your system because obviously if you disrespect your financial system, people are going to take the money that you are dis disrespecting it with and take it elsewhere and remove it from the system. >> Here's the thing, though. I know we've been this whole rally has been kicked off by the debasement trade and sort of the best and put you know four weeks ago this crypto rally. I don't think that this the reason for the yields going up is just debasement and just inflation, right? It's it's AI and has he made this point the last couple of weeks? It's just the cost of capital is going up

because AI is so profitable and they can uh make profit on a token and they need capital. They need debt instruments. a AI token, >> an AI token, they they can generate tons of uh cash on that and they need a lot of investment in order to continue that buildout and they will pay top dollar yields to investors and so the nominal GDP is going up and in that backdrop yields will go up and they will continue to go up. Another era to look at actually is the 1980s where the the market was just kind of like humming and uh I read a Michael Howell post earlier this week who compared right now to actually 1987. He says it's kind of like

that we the yields were very high but we also had GDP and an economy that was like raging and and hot and so sometimes high yields are not just examples of like a debasement trade. It can be that the economy is kind of booming and nominal returns and nominal GDP is increasing upwards. So a lot of that is happening which is why like >> I don't know if it makes sense for Bessant to fight this secular trend. >> Look Besson has way more experience than me. He has way more information than me.

the house, but like he is the house. But man, I don't like it just doesn't make me comfortable to see the government react to the market and try to win a thumb war over the market. Like you don't the market always wins. The market is the house. You are not the house, sir. It feels a little panicky. Uh we got to talk more about Robin Hood, including the AMC CEO. You said it was this. He used these words: contemptable, outrageous, disgusting, and detestable. What is he talking about? We'll discuss all that and more. But before we do, let's thank the sponsors that made this episode possible. I've been trading crypto assets for almost a decade, and I've used so many wallets, exchanges, aggregators, front ends, and I'm kind of always looking for the same thing. One

interface with deep liquidity across a bunch of chains and assets, and the ability to act in private, and I still control my own funds, and I've never really found it. And I'm always switching wallets, juggling gas fees, or getting eaten by slippage. Near.com feels fundamentally different to me. My account is easy to use and I can take all the actions I want from any chain while my activity remains confidential. It runs on Near, which has moved over $23 billion crosschain using postquantum signing and has over 5 years of uptime. Near.com is the best way to be onchain and be in control. Get 20% of your trading fees back through the bankless link. It's in the show notes, not investment advice. Bankless Nation, we've built something for you.

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staying up to date. The bankless MCP is exclusively available to bankless premium subscribers. So you can go to banklist.com upgrade to premium and connect the MCP in just a few minutes and all of a sudden your crypto queries to your AI LLM whatever you use will get a thousand times better. So go check it out. There is a link in the show notes and once you become a banklist premium member, you can hop into the Banklist Discord and let me know how you like it. Cheers, Ryan. You should never ever annualize a weekly chart. But if you did, the Robin Hood chain is printing Robin Hood $1.5 billion of annualized revenue. Insane >> just from the chain.

>> Don't annualize a weekly chart, but the metrics coming out of Robin Hood chain are is pretty damn crazy. Uh Robin Hood chain is now the number one blockchain by revenue. Uh generated $30 million this last week uh this last week. Uh most of this is from memecoin trading, but also because these meme coins are paired with tokenized stocks, that means that it's also tokenized stock volume as well. So that's one of the big unlocks here is that because Robin Hood has invested in the whole tokenized stock ecosystem, they are capturing this activity. And really like it's also interesting to say interesting to to learn that I think like 70 or 80% of the volume on Robin Hood chain on at least

on the memecoin activity is coming from the FOMO app. And so FOMO is acting as a huge conduit of activity. Uh, and the FO the FOMO plus Robin Hood chain combination is generating the most speculative fervor of activity since the whole memecoin mania on Salana in like 2023. Uh, and so once again, the meta is memecoins. It was memecoins last time. It was memecoins the time before that. And now with Robin Hood chain and a brand new social trading app, it's memecoins once again. Uh, but it is pretty cool nonetheless to see a big chain launch and generate a lot of excitement activity in crypto. I saw this even pump. Fun is trying to catch up on that um pair meta with a a stock and a memecoin. So they just launched

custom pairs allow you to pair any memecoin on pump with tokenized stock or even commodity gold any type of asset. So that seems to be the current narrative of choice. You do not think this has legs as you said earlier, but it is providing providing some gasoline and energy to all of the even some of the blue chip defi on the Robin Hood chain. So, most notably, unis swap is absolutely pumping. So, this is a uni burn of course they have the fee burn now. I mean, for years it was like uni token when burn when burn. Now, they have it active >> when fee switch >> 200 million per year in burn. It's getting close to that. At least on the

7-day, would you just say you shouldn't annualize a oneweek uh chart? Well, if you did annualize the unis swap burn, at least right now, $200 million. And a lot of that is on the back of this Robin Hood meme economy taking shape with stocks and with meme coins. But there is someone we've been talking about who is not too happy about it. This guy's name is Adam Aaron. He is the CEO of AMC and he said that line, "I find this practice to be contemptable, outrageous, disgusting, despicable. It's vile. How can this possibly be legal?" What's he talking about, David?

>> He's not talking about memecoins, which is usually the words that you hear being pointed towards memecoins. He's talking about the tokenized stocks. His own stock, right? His own stock AMC is a tokenized stock on Robin Hood chain and that is the practice that he thinks is contemptable. Vlad Tennf, the CEO of Robin Hood. He replied to this very long paragraph of text on that Adam Aeron, the AMC CEO, put on Twitter. He simply replied, "What's the concern?"

Aaron uh tweeted his reply. It's like, "I'll tell you what the concern is." And then another very long paragraph of text. And then I never really got to the bottom of what he was really concerned about other than how these stocks don't have shareholder rights, don't have governance rights, and so if you are an owner of the AMC tokenized stock, you don't you aren't able to use that stock to govern over AMC. >> Does he really care about that? Is that really what he's concerned about? Is that some of his shareholders aren't able to participate in governance?

That's what matters to him the most. >> It's kind of funny cuz wasn't AMC like one of the sort of GME type meme meme? >> It was like it was GME adjacent. Yeah, for sure. >> I don't know why he's so angry cuz he's been in this game for a while. Uh but he ends this the second tweet multiple paragraphs. I hereby call on you and Robin Hood to voluntarily cease and desist the trading of AMC stock tokens. You must cease and desist this. Um Vlad was actually on Squawkbox the following morning asked about this and I think he gives some details into the structure of these types of tokenized stocks and the rights they do confer and the rights

they don't. Let's go play that clip. >> I I kind of hear what you're saying, but I understand Adam Aronson's frustration with this. He's trying to build something. He's trying to continue to build something and you know he wants investors who are interested and believe in his product to come to him, not to go through you. He thinks if they go to you instead of going to him, his stock price is not going to do as well. He points out validly that if they're going to you instead of him, they don't get a chance to vote as a shareholder. I can understand why a CEO would be frustrated and upset about that. Um, what makes you think that other CEOs aren't going to think the same thing? Hey, if they're interested in buying shares of my company, they should buy it from me, not buy something that you've modeled to to

transfer off of it through you. That that may in turn hurt my stock price because I'm not getting all the people who are interested in buying my stock buying it. >> I mean, I I think that there there's two things there. Number one, these are products available outside the US in 120 plus countries. And in a lot of those places, uh, people don't have easy access to US equities. There's no underlying brokerage infrastructure. There's no Robin Hood where you can go on your app and and buy shares. So, we think a lot of this is actually net new business and the opportunity for these companies to access a whole new >> business for you. What's Adam Arson get

from it? Well, he gets access to a whole new uh shareholder base, people who have exposure to his stock. Um, >> and because the tokens are backed one by one one to one by underlying shares, uh, there is stock purchase backing these sto these tokens. Um, so I think that's just a misconception obviously. Just glad just so I understand because it's one to one does does the token come with all of the >> um >> voting rights and everything else that's associated dividends and the like with with owning the actual stock.

>> It it it comes with dividends. Um voting rights not in this case because it is a debt security and the shares are held as collateral. But again, that's not dissimilar to how an ADR or an ETF would function, right? If you have an ETF and you get exposure to an underlying, you're not voting uh in in each underlying. >> Can Larry Frink vote my my my stuff? Uh I want to put him in charge, Vlad. I really like his politics. Is that possible?

>> Can I >> We can look into that, Joe. >> Yeah. Thanks. >> Uh Vlad, can you vote the shares? Um, me personally, I mean I uh >> No, I'm saying well is Robin Hood going to be voting the share in the same way that Joe's unhappy that that Larry's voting shares though it's his firm. Is Robin Hood voting those shares? >> Um I I think that we haven't really announced plans for for the voting aspect of of that. Um so I mean we we can we'll certainly share more if we have it but okay again there is established uh there is established precedent for

uh creating these types of products and you know they they give exposure to these assets to people all over the world. So I do think this is the future. The entire financial industry is headed in this direction. >> Wow. The US is is also working on innovation exemptions to allow for for tokenized securities out here. And it'll take time to educate the issuers, the market, but uh we we already see the benefits and and I think it's a little bit ironic in this case because one of the benefits of tokenization is that you have instant settlement. So >> actually the underlying reasons behind

uh the GameStop and AMC uh issues in 2021 would largely be resolved with with this new infrastructure. >> Okay. >> I thought Vlad made fantastic points there and I actually really think that the concerns from the AMC CEO and even the Squawkbox host are just mis misunderstood. They like, "Okay, Vlad, you get a new investor base, but not the AMC, not the AMC corporation is just strong. It is a conduit. The Robin Hood took is a conduit between a new investor base that would not have otherwise bought the stock and AMC. AMC does get the economic connection between these buyers that doesn't get the shareholder

governance connections, but honestly, who the hell cares? And AMC does get all the benefits. Robin Hood and Vlad are not running interference or running interception. They are unlocking access on behalf of AMC or any other tokenized stock company and investors who wouldn't otherwise have access, which is the whole rest of the world. The memecoin people get their hands on it first and that's always kind of distasteful for people who are not in the memecoin world. But the whole idea of like NEO brokerages and tokenized docs on permissionless blockchains enabling access to people who do not have access to US capital markets is a foundational point that should interest every single US company. And I all I'm seeing when I

see the AMC CEO get upset is that like you didn't ask us permission. like you didn't ask us if this is okay, but all of the benefits are almost other than shareholder governance almost onetoone given straight back to the company who has issued a public equity. And so I I think this is just actually a fantastic marketing for Robin Hood and he gets to explain what these things are on Squawkbox. And so maybe this is just part of the process that we need to go through for the world to become normalized to tokenized stocks and this is just what this looks like. Yeah, I mean they're not tokenized stocks in their ideal form, right? So they're outside of the US. They're kind of, you know, outside US jurisdiction. It's and

this is because SEC rules quite frankly. So we can get tokenized stocks that have all of the governance shareholder rights that the AMC uh you know CEO might want. And also Vlad's point is ETFs don't even have those. I mean they don't infer a governance right. But the broader point is like I have no idea why this dude is so upset because like >> it doesn't affect his existing shareholders. It just broadens his base of perspective shareholders. It's like net bene like there's nothing bad. They cost him nothing. The the way I think he's interpreting it is that if they are buying the Robin Hood tokenized share, they are not buying my actual

equity and therefore I get none of the benefits because those things are completely decoupled. He's a >> He's smart enough. He's smart enough to know this. >> It It seems to be what he is arguing and what the Squawkbox hosts also don't understand is that these are one like near onetoone representations and a $1 purchase of an AMC tokenized stock does equate to a $1 purchase of the AMC equity. >> That's funny. You could find meme coins distasteful, but that was not what his rant was about at all. >> That's No, it wasn't about the meme coins at all. Uh anyways, I hope that this actually does a lot of positive marketing for tokenized socks and that just adds fuel to the fire of this whole innovation that crypto finally has arrived that we've talked about for like

a decade now. >> Tell me about the open AI case. Did they actually steal from a mathematician? What is the news here? >> Okay, so there is this like millennium math prize, a million dollar math problem. There's a few of these out there like I think six or something. One of them got solved this last week thanks to the work of artificial intelligence, thanks to LLMs, thanks to intelligence. The drama here, the debacle here is that the two people working on the problem, Tristan Buckmaster and Levent Alapati, sorry I butchered that last name, uh were working, they've been working on this problem. They are the two humans working on this problem and they spent a

year working on this problem using both anthropic uh co-work and uh open AAI codeex and so they were working on this problem as humans do but feeding this into open AAI codeex they had published something close to a breakthrough they were coming very very close to solving this math problem and then open AI publishes the solution to the math problem about the same time as they were getting ready to release their paper talking about how close they were. And so this has created a bunch of uh drama about why is there a coincidence in timing between these two people who were using OpenAI codecs almost nearly

cracking the cracking this case, cracking this math problem and then OpenAI does solve the problem and then releases their solution. And so, uh, there has apparently been, uh, reports, uh, um, statements from Tristan Buckmaster, the mathematician who is the human behind this, about, uh, some sort of negotiation happening between them and OpenAI about who gets the credit. and OpenAI is happy to give the monetary prize to Tristan and her co his co-author Levent Leavant, but they still want to take credit for actually solving the problem. And the claim is that OpenAI took the inputs that Tristan and

his co-athetician Levent were putting into OpenAI codeex and they were using that as a jumping off point. And they and then OpenAI use a ton of compute to basically finish the job and truly solve the problem. There's privacy concerns here. There's provenence concerns here. And also one interesting bit is that the Leavant character is a an employee at Anthropic. And so in this negotiation between OpenAI and Tristan the mathematician, they wanted Lavant removed from the credit because they don't want anything associated with Anthropic. And so this has triggered a bunch of people in the privacy world and the just like data sovereignty world to

say like look at what OpenAI is doing probably also anthropic too. They are just consuming data and using it to train their models and inform their own processes. And these people are not your friends. They are not your friends. They will take your credit and they will take all of the the fame that they can associated with it. >> Okay. So the soft allegation here from Tristan is Open AAI basically stole my homework and now solved this as a result of basically my chat logs with Open AI. And there's a word for this that comes to mind in crypto that we talk about all the time, which is the word frontr running.

>> This is the allegation is that OpenAI front ran these mathematicians, took their proprietary information. They thought this was a private chat and then actually used it in order to get the prize, capture the, you know, the the notoriety, solve the problem, and frontr run their user base. And I think that's a that's a fascinating way to frame it and certainly brings to light like what actually do companies like OpenAI and Anthropic use the chat logs and data for and by default David >> they can use any of your chat logs for internal training. It's sort of vague as

to what they're doing but like that's the default. you have to turn that off in anthropic uh in in claude I should say and also chat GPT if you want them to not do that and even then it's like are they really doing it it's a pinky promise I mean open AAI came out and said we didn't actually use any of these chat logs they said we cannot rule out that de identified data derived from their usage of our product helped improve our models but they're explicitly saying no we we didn't steal these researchers homework and it's like very difficult to prove poof. Can you actually prove this?

>> Right? >> There's such an >> asymmetry in terms of a user's ability to like point at a large tech company like, you know, Open AAI and say, "You stole from me." And I mean, how are they supposed to collect proof? Like, where's you know, so so even the the the mathematicians here don't have evidence of this. >> But right to your point, it really brings data sovereignty into the forefront. And I mean, is this part of the reason why some things are pumping like the VVB token? Like, you know, some the privacy meta is happening in crypto.

It's just like people are realizing big tech does not have your back when it comes to data sovereignty, when it comes to privacy. And, you know, you could go with the anti- tech movement of like, okay, let's just go back to paper. Let's not use AI. Let's not use computers. Or you could go to kind of the crypto data sovereignty expression of this which is like hey use tech but users retain the sovereignty of their own data. Like that's a message I feel like is comes from crypto is part of the ethos and is maybe a reason why VVV is getting the uptick and some of the privacy uh tokens are are are doing well.

Yeah, there there are a couple things I want to underscore here that like if you just kind of try and remove the drama, some some things are worth stating. One is that it can be true that when OpenAI So at OpenAI a team of OpenAI employers employees created a prompt to solve the math problem in question. What's what's the name of the math problem? The Navier Stokes math problem. Millennium prize problem. So, OpenAI team members typed in a prompt to their own model, which I think was also like unreleased. It's not even the new chat GBT6 model. It's something even more frontier that they have access to that no one else has access to. So, they typed in a a prompt

that was like, "Solve this math problem." The model, it can be true that the model did not look at user data, but at the same time, the model itself was trained on the data anyways. And so the training can happen. So like when the mathematicians in question Triston and Levant when they uploaded all of their drafts to uh OpenAI codecs, the OpenAI models are able to be trained on that data. But when the OpenAI researchers or users, the the team members typed in the prompt, solve this math problem, it can also be true that that data was not accessed because maybe they were actually um they didn't have their hands

on the data. Both of those things can be true. So the LLMs can be trained on the data, but when the LM is being prompted, it doesn't have access to the data. That is the gap that OpenAI didn't really close here. Saying like, "Yeah, we're not we're not using your data, >> but our LLMs are totally being trained on them." Is the thing that they did not >> benefiting from their data and and you made the point that that's actually part of the business model, right? >> Totally. That is the business model of anthropic open AAI and probably all of the Chinese models because if you are not using all of the data accessible to you >> not the Chinese models probably not like because like Chinese models are just their open source open way anyone can run the inference I mean I think it's

less so the um the Chinese models >> the the the point I want to make is that if you are in the arms race of model development you need to get your hands on as much data as possible. possible. So if if that's open AI, that's anthropic and that's probably also trying to use models too. You need to get your hands on as much data as possible. >> And so open AI and entropic, one of the benefits of being in the position of being a consumer product, a direct to consumer product is you get to have first access to all of this data. If you are not using that data, you are disadvantaging yourself as a matter of principle to protect your users data sovereignty. So Daario and Sam are like, I don't care about those principles. I

will suck up as much data as possible to improve the product because I'm in an arms race. So that's what's happening. And so that's just kind of like the toxic nature of the AI arms race. It is what it is. Also, zooming out, AI LLM solved this math problem that happened. And so ignoring the drama about open AI or anthropic and who gets credit and like the humans that did the work whatever whatever whatever we have a millennium math problem, one of the six math problems that got solved because of AI.

>> And I think it's also worth like it's it's shrouded by all this drama and this this credit, but it's still cool that AI is solving huge math problems. Yes. >> And we are still not yet at the final capabilities of these AI models. And so it's worth stating that we are solving very cool problems and the future is going to be sick and meanwhile we have all this drama along the way. But it is very very cool that AI is solving massive >> problemat data sovereignty though right like be careful what you put in your chat logs with a a cloud or an open AI right on their enterprise tiers apparently you know there's the legal contracts where they can't peep into your data. I I don't know. There's a lot. But we don't know because once the data gets into the weights, the weight

the model weights of a LLM model are a black box. We don't know what data is in there. We just know that the weights are what they are. And once the data goes in there, you have no way to prove about whether your data got used to shift the tuning of those weights or not. >> It's all a big question of who's going to capture the value on top of all of the data. and more and more value seems to be captured by some of these frontier labs and I think people are rightfully uh worried about that. >> Anyways, Venice, the platform that can't steal your data is up 40% on the news.

Also, near pushed through like 20 or 30% up on the week this week and the near AI cloud platform. If you listener are interested in not having this happen to you, this is what Ilia and the Near team are have been working on and have been building on like self-s sovereign user sovereign AI userowned AI. And so we it's cool that in crypto we have the antidote to this problem, all this drama that's happening in the AI arms race. And so near AI near sovereign and so the near AI cloud is built to exactly protect user data. And so, shout out to Near and shout out to our partners at Near for helping build that and giving our users protection over their data.

Ryan, are you ready to talk about the Hunter Biden laptop? >> Uh, I am, but I think we need a break for sponsors first, don't we? >> We do. And so, we'll get right to the hottest story of the week right after we talk to some of these fantastic sponsors that make this show possible. >> Some exciting news. We are launching a new podcast to help people figure out the crypto cycle, how to navigate it. The best cryptocycle investor I know, his name is Michael Nato. He runs the D5 report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin

and Ether, and where we are in the cycle. There's new episodes that are released every Wednesday. They're 30 minutes, they're short, they're punchy. I think this crypto cycle is harder to navigate than most. So, let's do it together. Go subscribe to this podcast. Search the DeFi Report wherever you get your podcast, YouTube, Apple, Spotify, or find a link in the show notes. There's a new episode waiting for you now. On September 7th, the Wall Street Journal reported that Hunter Biden will be launching a memecoin called Laptop on the base chain. About 4 minutes later, after the story broke, Hunter Biden posted the ticker and the date on X with a Fox News clip about said laptop. The laptop, Biden said, Hunter Biden said, had been turned into a weapon against him. But he was turning it into a token,

a symbol of resilience, redemption, and recovery. He would go after Trump's memecoin, Grift, citing nearly a million wallets that had collectively 3.8 billion in losses and hashtag or ticker laptop, he promised, would be different and compensate all those people who lost money on the Trump memecoin grift. Oh no. Oh no. Anyways, after crashing 99%, Hunter Biden had to go to Twitter to defend the launch on X. He blamed predatory snipers and also claimed that no one on the Hunter Biden team or in the Hunter Biden insider circle were able to sell any tokens, which earned

himself a community note, which identified multiple wallets receiving 100 million tokens, 10% of the supply before the launch and sold them all. this. Okay, so if I had to just give you a formula, starting with the Libracoin, it's an insider wallet. Blame snipers. Say you're doing this for some positive reason. >> Wait, the Libracoin, the the Argentina coin, >> the Malay. Yeah, but I don't want to blame Malay because he was just kind of a useful idiot, unfortunately. But like, we've seen this movie so many times before.

>> We've seen this movie. Yeah. like say we're doing something good. Blame snipers. There's insider wallets that get allocation early. They sell. Uh the person in question says that the team is locked up and can't sell. The token dumps 99%. It's like I if you wanted to write the most normal movie about a shitty memecoin launch and have nothing change whatsoever about the formula, this was it. >> Yeah. and you just swap out the political celebrity whatever with someone else and Vince Wash.

>> Totally. Totally >> depressing depressing stuff. David, um why also why go against literally the world's greatest meme lord, Donald Trump with a memecoin? Like you're going to lose. >> Um MetaMask is spinning out of Consensus, which is interesting. MetaMask of course was part of Consensus. consensus kind of a an early Ethereum conglomerate but they had an enterprise structure with their L2 Lana um Bezu all their institutional products and then they also had this wallet which is the MetaMask wallet they are now splitting those two things into separate entities so MetaMask is now off on its own they're going to focus on the

consumer use cases saw MetaMask rolled out like a Mastercard type product you see where the future of that's going it's kind of like consumer fintech meets crypto wallet. Um they're boasting what how many users do they have? Like 30 million users. A ton of users >> the most. Yeah. >> On the MetaMask side of things. And then everything else is staying within consensus. Joe Luben is actually going to be the CEO of the MetaMask product. Oh, 100 million downloads was the stat I wanted to give. No mask token in the announcement. So, don't know if that's coming, if that's ever coming. That has been a rumor for a lot of years. But, uh, big news that MetaMask is now splitting out of consensus.

>> IPOs, I don't know. I mean, there there have been rumors for a long time that consensus was going to IPO. This might be a step towards that. consensus IPO ipoing without MetaMask is much more why like MetaMask and like one or two infura >> is the whole like the whole pie and so MetaMask I've mentioned this on the podcast many many times before is a uh like auditing mess if you will like they started in 2015 they paid their first employees with ether they didn't have payroll there was no books like it was a complete jumbled mess in the beginning and I'm sure that that is just like kind

of unresolved because of how much of a spaghetti unorganized mess that consensus was in the first few years. I'm sure that they have shaped up, but like going back and fixing that is I I don't really know how to take a company public. It's far easier and cleaner to spin out the things of consensus that make money and then have liquidity events on those things. >> Yeah, maybe that's what they do. Maybe there's going to be a MetaMask IPO is what you're saying. >> I met MetaMask IPO, Infura IPO, like IPO these things individually and that's how Joseph Luben and the consensus equity holders get get their liquidity event.

There was some news on the week from the Ethereum world about uh frame transactions. I think Vitalic put out a post. This is a feature that is going to be a headline feature, not in the next hard fork, not in Glamsterdam, which is supposed to still happen this year, 2026, but the one after that, uh, Hogat it's called, in 2027. And frame transactions are going to be a headliner, a feature of that Hogat hard fork. Vitalic talked about it. Can you simplify it for us? And you're pretty bullish on it, actually. Can you can you tell me why? Account abstraction. Yeah, we've had account abstraction as a subject in Ethereum land for forever.

Even Ethereum layer 2's tried to beat the Ethereum layer 1 with account abstraction. Account abstraction is a smart wallet. It's actually kind of like hard to explain because it's a it's conceptually very different. It is an alternative to externally owned accounts. And so rather rather than having a dumb wallet kind of in the same way that like Bitcoin is kind of like a a dumb blockchain. It's like a simple blockchain and and Ethereum is a smart contract blockchain. Externally owned accounts which is your ledger, your MetaMask, your you know your normal wallet is a dumb wallet and account abstraction is a smart wallet.

It's programable, right? So you could do stuff like you you don't have to pay gas and ETH anymore. You could pay in whatever token you have including stable coins. An application can sponsor the gas fees. You could have gasless transactions. You could have pass keys as the as sort of the private keys doing doing uh signins. You can batch transactions. >> You can you can swap out private keys. You can have the same you can have the same address but a new private key which is how actually much of Ethereum can become quantum proof, quantum resistant when we were talked about like near two months ago or so becoming quantum resistant first. It's because they had this structure, right? Uh and so you can easily swap out a a address or a private key uh and have your front end address

be the same. >> So transactions limitless as to what you can do. Yes, >> that's what frame transactions are and it's coming in Hogata. Like I guess >> I feel like we have been promised or we've talked about account abstraction so many different ways over the last like 10 years in Ethereum, >> right? Like at some level I'm like, "Okay, like cool." But like why has it taken so long to get here and why is this now being prioritized? You have any thoughts on that? Um it was always prioritized in some sense like it was always destiny to have merged into Ethereum in the future. Why did it take so long? Because Ethereum is a startup mentality or because Ethereum

and the EF development is a nonprofit mentality, not a startup mentality. It would have been far better to have had account abstraction during the wave of mass building in crypto during 2020 through 2022. Having those synergies aligned, having all the builders plus account abstraction would have been phenomenal for the development of not just Ethereum but the industry at large. It's a shame that it has been taken so long. It has a shame that crypto as a whole and Ethereum as a as a whole has been has taken so long. Why is it taking 10 years? Because Ethereum is a decentralized system. We needed to argue on standards. We didn't have as much data now as we did then.

>> I think on account of abstraction though people forget there were like precursor EIPs to this like multiple things tried. Do you remember there's uh the ERC um 4337 >> which is just basically wallet would have to adopt it that would be more countraction. the adoption levels, you know, never really took off. It didn't really become kind of the default choice for wallets, but at least that like tested out the idea of smart accounts and programmability and how that would work inside of the Ethereum network. So, I feel like now that we have those building blocks in place, there's more uh you know, it's battle tested, I suppose, and so now they can go all in on frames and just make it part of the

core protocol. But the big reason I think this was prioritized, David, is because like you're going to need to replace signatures due to quantum. The signatures in Ethereum are not quantum secure. Those have to be replaced. Ethereum also the EF came out this week and and said by 2029 we want to have the entire Ethereum stack quantum secure. Okay, so that that's a lot of things to replace. This is one of them. This I think is why DF has prioritized. I don't think it was because of better UX. I think they >> haven't cared about that as much as other things. I think it was really quantum signatures that kind of pushed

it as this like we have to have this in order to get to our deadline in 20129. That's how I read it. Yeah, I do remember talking I can't remember which EF researcher it was when the first iteration of account abstraction got merged for 4337 like account abstraction had been discussed in 2016 and 2017 and 2018 and then it got put onto the shelf and then it finally had its first implementation in 2023 with 4337 and like one of the researchers the quote that like resonates in my brain was like >> this just proves that there was no good reason for why we put account obstruction on the shelf in the first place. We could have had this forever ago and that was in 2023. And so like to once again hit beat a horse beat a dead

horse. To answer your question, why did it take took 10 years? There's no good reason >> other than like there was no forcing function other than quantum. >> Right. Right. Well, uh I guess glad we have quantum as a forcing function. I'm not sure. I'm not sure the reason, but getting it next year that is the big news. Um David, let's end with this. So next week the clarity act it's do or die week they vote on uh closure odds on poly market are about 15% right now people think it's going to fail because >> 15% that it passes >> that it passes so the odds of failure are 85%. The the reason is because the ethics language hasn't really been that bridge hasn't been crossed. probably the

Democrats also just don't want to throw another bone to crypto or to Trump any things on his agenda prior to midterms. So, >> I don't think this is going to happen. Uh are you bothered by this or like hey 15% is not zero. >> 15% is like >> it's possible it goes. We'll see where it goes next. Bankization, thanks for sticking with us another week. Hopefully this is the start of a very long and glorious bull market and if it is we will be here along the way. Crypto is risky however but not risky enough. The institutions are landed so we are going even further west. This is a frontier.

It's not for everyone but we are glad you are with us on the bankless journey. Thanks a lot.