Michael Saylor - The Year In Review 2022.

all right we're back Michael welcome

back to the Once Bitten show Lauren

what'd you have to say

question is like it's not related to

bitcoin at all but uh it's a Christmasy

question so what is the best Christmas

kit gift you got

what in his life in his life okay

okay

it's really hard

a house full of family members showing

up to to spend the holiday with me

that's the best gift

that's cute yeah wait a minute you say

that's cute because Uncle Chad says that

but when I say things like that you say

things like I say my presence is your

presence

my presence what do you

um

you see it's about time Lauren it's

about time with loved ones and not the

little plastic things you read the

Grinch poem it's not about consumption

and plastic

yeah

Let's test that it's just Uncle Chad you

know one day you're gonna miss him yeah

I mean you'll be away with your friends

for a ski vacation Christmas you you'll

only miss him for a couple of minutes

but you will miss him and then you'll

get back to the skiing yeah yeah and

something will happen and then it will

click it's like ah the old man was

actually right about some things in life

or something's in life well let's see if

let's see Michael what do you think the

uh for those that are listening to the

podcast I'm wearing a t-shirt with the

HSBC logo on but underneath the acronym

is

hbdc any any idea what that might stand

for

I don't want to speculate

[Laughter]

why don't you enlighten me

Honey Badger Don't Care

okay I like it that that's that's what

we're all about isn't it Laura

do you have any more questions for for

Uncle Chad

so no no can I just say for the record

Lauren you're tall or you're growing out

of the frame

last time you were dead center and now

you're now Daniel has to keep adjusting

the camera up

so that's a good thing the first time

you spoke with uh with Michael wall you

were nine years old

yeah you were just about to turn ten and

now you're almost 12.

how much have you learned about Bitcoin

in those two years

well the amount of people I've met

you talk about all day

21 million

there you go Lauren keeps getting taller

and smarter Daniel and we stayed the

same

I would like to think we're getting

smarter as we go Michael but uh you know

all right well thanks do you want to say

good night then yeah

all right Michael how how have you been

I'm doing fine

should we do a little year a year in

review with uh yeah sure yeah uh why not

kick it off

um

what's been your your biggest uh

positive moment of 2022.

the positive of 2022. I I think

the the most positive thing of the year

is is

um the emergence of Bitcoin as the

institutional grade digital asset and

the clarity that has arrived

to the mainstream media and uh and to

institutions and to the government that

there's one crypto asset that's a

digital commodity

I think uh Bitcoin is that commodity at

this point it's been iterated by the

chair of the SEC and it is now just

iterated by the chair of the cftc

we saw a speech by the Secretary of the

Treasury Janet Yellen

um reciting the legend of Satoshi

we saw

the chair of the SEC sitting in a

cabinet meeting with with prop

Regulators from a dozen or more

different agencies

reciting the legend of Satoshi

we've seen

um we've seen senators

and Congress persons

referring to bitcoin and and the virtues

of decentralization

I think we've we went in two years from

uh from people on Twitter lamenting the

lack of mainstream coverage of Bitcoin

there was no coverage at all

to a point where we saw five stories in

a single day on the front page of the

Wall Street Journal and we saw stories

about the industry you know go to the

New York Times the journal Forbes

Fortune we saw the spin up of Bloomberg

crypto

um

so a lot of mainstream coverage the

legitimacy or the legitimization of the

asset class

uh it's clear that

there's been a lot of crypto Carnage and

a lot of broken glass and a lot of pain

for bitcoiners even more pain for for

non-bitcoiners or or crypto token people

right where they watch their Terra and

Luna go to zero and a lot of crypto

Banks close their doors and went to zero

so we have seen a a crash to zero of

lots and lots of things in the ecosystem

but

I think this is a necessary maturing

process for the industry and and the one

thing that I think is probably just the

most auspicious

is that there seems to be broad-based

consensus

on uh two things one thing that uh

digital assets are here to stay and that

the entire world needs to embrace

the crypto economy once one way or the

other

and the other thing is that the one

crypto commodity that exists in the

world that's universally agreed upon is

Bitcoin

so that being the case but Bitcoin is

the most stable thing in the universe

and and uh

if we're not Banning it then it's only

going to grow

okay and the biggest disappointment of

2022.

I mean the biggest disappointment is

just you know all all of the um

negative uh negative effects of having

the

crypto economy meltdown as we we knew it

was going to but but all of the people

in the Bitcoin industry they're doing

the right thing that are working to grow

the industry have been slimed by their

association with the rest of crypto

right it's like do Quan decides to buy

some Bitcoin and screws up the Bitcoin

Market by blowing up a 60 billion dollar

complex that's been a negative thing the

explosion of three arrows

and well I mean what really makes you

angry what makes you angry is

all the crypto uh Neo Banks and wildcat

banks that uh collected people's money

or into either got people's Bitcoin or

they got their money to buy Bitcoin and

then they either never bought the

Bitcoin or they bought the Bitcoin and

then Panic sold or or sold the Bitcoin

in a fire sale as they were being Force

liquidated

what really makes you angry when you

read about

you know say FTX that collected billions

and billions of dollars but never bought

the Bitcoin actually so

so um

why is this a problem if FTX stole

billions of dollars in a blocked by and

Voyager and three eras and and Celsius

and and Tara Luna if all of those

ecosystems basically collected people's

money and then lost all the money then

people that legitimately wanted to own

Bitcoin had their money stolen from them

so what you had was um you have you have

the very careful bitcoiners

that bought their Bitcoin and still have

their Bitcoin

and then you have a lot of a lot of um

more casual bitcoiners that maybe they

bought the Bitcoin and deposited in

Celsius to get some yield and now they

lost their Bitcoin and I think that

that's tragedy I mean it's it's bad for

them right it's it's it's awful for

anyone had their money stolen from them

and it's not good for Bitcoin because

billions and billions of dollars of

Bitcoin was uh stolen and slash

destroyed right that I send you 20

billion dollars to buy Bitcoin you take

the Bitcoin you steal the money and the

Bitcoin doesn't get bought

right or or I send you 20 billion worth

of bitcoin and then you loan it out to

someone that invested in Terra Luna and

Terra Luna goes to zero and then the

Bitcoin never comes back

you know and so what happened they

converted the Bitcoin into Terra Luna

or convert the Bitcoin into ftt or the

equivalent and then that went to zero

right so that kind of makes you mad

it's it's some somewhat tragic somewhat

it's irritating tragic it's not it's uh

it's not the finest moment for the

crypto industry and

you know you you would say you probably

shouldn't have trusted any of these

people but there are a lot of decent

people that did trust them right you got

a lot of uh a lot of crypto influencers

a lot of Bitcoin influencers and they

were sponsored by blockfolio and FTX and

Celsius and and some of the other other

players in the space if you're sponsored

by Voyager or

or

um or block fi or FTX and then someone

decided to use one of those

then they've suffered I think the uh you

know the the Gemini earned product right

where people actually bought Bitcoin

through Gemini and then they transfer it

to Genesis and Genesis generates yield

by maybe loaning it out to three arrows

and three arrows loses it and Genesis

can't pay you back and

you know that's that's uh you know a low

point in the industry a growing pain

it's a a brutally expensive Market

lesson

but it just reminds you of the

corrupting and influence of the industry

there are so many people

that are counterfeiting money

or they're just stealing the money and

the advantage is to the counterfeiters

right if it I think FTX

FTX um invested 5.6 billion dollars in

FTX Ventures they must have spent

another two billion dollars in marketing

and and or more in the two years so they

poured about seven and a half billion

dollars into the economy and they did it

by in essence counterfeiting 10 billion

dollars or more worth of tokens like ftt

and SRM and they boosted Solana and you

know they boosted maps and then they

went and they borrowed real money

you know they borrowed as much as they

could posting that collateral from

counterparties that you know like they

borrowed from block fi and you know

borrowed from Voyager and probably

borrowed from three arrows or they

borrowed from anybody that would have

made

um a loan to them

and uh and then they borrowed from their

own depositors at FTX

and of course they then raised billions

of dollars from outside investors and

they took all that money and they and

they in essence corrupted everybody they

could right so you give 45 million a

block right 45 million dollars to

uh what a handful of journalists what

could go wrong you know 15 million

dollars to you know to one influencer

who will remain nameless that everybody

knows and you know and then and then you

give it to every politician on both

sides of the aisle and then you give it

to

all of the academics I I think it'll be

probably three to five years

before we know the extent of that

corrupt money but I thought yeah I don't

think that there are many people that

weren't tainted they went to pretty much

every crypto influencer every journalist

every politician

every entrepreneur

everybody that they every educator

everyone that would take their money

you know every celebrity right so you

know just just about anybody that would

take their money they went to them and

you know if you read the ftdx ventures

spreadsheet it's like eight pages long

and they invested they invested

something in hundreds of things right

hundreds you know it's hard to figure

out who in the industry didn't end up

with some of that money so

the uh the counterfeiters have an

advantage in the war over the sound

money people right

no nobody's faking seven and a half

billion dollars of Bitcoin and using it

to tank politicians and taint the media

because it's seven and a half real

dollars right it's hard to come by that

money but if you just gin up seven and a

half billion dollars worth of you know

ftt token

right that's that's made up money I mean

Sam pretty much created that money in 12

months maybe 18 months Max

in order to create another billion

dollars he just needed to to manipulate

the price up three dollars a token how

hard is that not hard at all he

basically took the money from his own

customers off the exchange wash traded

it with himself manipulated the price up

three bucks declared a billion dollars

worth of earnings and they went and

spent it and how he spent any

he bought everybody so I I think

I think that's the debt that's the

negative I guess the positive is we got

lucky that FTX blew up because they were

very close to bribing you know or

corrupting the entire establishment

right we'll see just how far they got

but I mean some of the bills in Congress

they were driving to get

light regulation

in DC and then final crypto exchange

fees Into The Regulators in order to

addict them to more

counterfeit crypto money

so I think um I think it's been brutally

painful year

you know one of the more difficult years

but

um it is neces it's a necessary right of

passage

if the if the Regulators won't clean up

the industry right A lot of people a lot

of people I don't know for whatever

reason they think regulation's a bad

word but but if people are running

through your neighborhood you know

shooting the children and burning down

the houses and stealing your cars you

know and murdering your dog

you would say we're the police why don't

they show up you know and install some

water you know that the real issue here

is The Regulators need to enforce the

law

and what you've got is a lot of people

they're lying cheating and stealing and

The Regulators have been very slow very

kind of very slow very ineffective and

and and enforcing ethics and the law in

the industry for whatever reason

so the result is the market ends up

you know enforce again you kind of need

your own Vigilantes right so you end up

with the Bitcoin maximal is pointing out

the scams and the frauds and they stand

up and say look we're not we're just not

going to let you abuse people like that

and so that and they pay a personal

price to do it

but I think that happened and then

and then you have you know the the

order of nature right the natural result

which is

if if you insist upon acting

irrationally and irresponsibly

right long enough like

Sam basically gets high steals the

family car goes on a joyride 180 miles

an hour maybe the police didn't stop him

but he wrapped the Ferrari around the

tree

see like that's that's what happened

with FTX which is they took the car off

a cliff why because they were high and

they were going too fast

and so you know ultimately uh nature

heals itself

you would like for there to be Law and

Order

and if there was law and order it never

would have got this bad

but even if there isn't Law and Order I

mean eventually

um

play stupid games Win silly prizes right

when when do Quan issues 20 billion

dollars of UST and pays 20 interest he

took out a 20 billion dollar loan and

agreed to pay 20 interest so he had to

come up with 4 billion in cash a year

so okay so some you know some kid

in Singapore decides to borrow 20

billion to pay 4 billion cash a year and

his his idea for how he pays the the 4

billion is he's going to print his own

Luna token

okay so how long can you actually print

Luna token that gets converted to 4

billion in cash a year and it's like I

guess you can do it when it's two

billion dollar loan but when it became a

20 billion dollar loan you couldn't do

it so so what happened

everybody you know was kind of just uh

getting high on infinite Leverage

and there were no cops on the beat

right and uh they got out of control and

so as soon as there's a little bit of

pressure

the little pressure was

um was the uh the Federal Reserve funds

rate right if you if you look at what

really

catalyzed or tipped this off and we go

to you know one year the

the one-year yield

on a U.S treasury bill in the last 12

months went from 26 basis points

all the way up to

470 or 480 basis points

so as the free money environment started

to come out and you started you started

seeing some pressure on the entire

ecosystem the first thing to crap crack

was

Terra Luna and then the next thing to

crack was three arrows which was again

ridiculous leverage and then the three

arrows thing really mortally wounded all

the crypto hedge funds I think and it

mortally wounded Alameda but it took um

another three months before we saw that

filter and it's still filtering we're

still seeing the depths of that because

we're staring at Genesis wondering what

will happen with Genesis there's 34 days

or something since they've froze out or

locked their redemptions hmm

and for the Casual Observer what's

annoying right is the the Casual

Observer those people that might have

just been on the edge of Dipping their

toe in to read some extra articles about

you know Bitcoin rather than like the

the grander crypto kind of sphere they

they

we could have just knocked him back

three to five years

or even longer from even considering

touching uh an investment in Bitcoin

because they just lump Bitcoin in with I

mean the positive for us is it has been

defined

but in the mainstream media they're

still doing a not the best job of um you

know it's all click bait to get this uh

these heady headlines out like cryptos

dead Bitcoins dead and they're always

using Bitcoin as like the main depiction

for those clicks on their um you know

the incentive structure and the MSM

journalist world is still so

pause and and then we've got Greenpeace

you know wailing in on us to use uh

it's like the wild west you know I mean

you you want to go west for property

rights you go west and then there's the

Romantic notion that you've got freedom

but then some criminal shows up with a

gun and he shoots half the people in

town

okay that that didn't help

right that didn't accelerate the you

know the the adoption of the relation of

the West right the fact the fact that

one criminal out of a thousand can go

and shoot 20 decent people including the

town doctor right that didn't help so

um I think we've got the wild west and

you would say well if you if you wanted

a rational adoption and the smoothest

progression of virtuous technology it

would have been better with to have Law

and Order

and we've been lacking uh lacking a bit

of Law and Order in the past two years

and the absence of Law and Order what

you have is you have criminals that are

corrupting and bribing the media the

academics and the politicians and so

that's a setback and then you also have

criminals stealing people's money like

economically murdering people that's a

setback and uh you know but it's above

my pay grade right like I don't I'm not

the president United States

I'm not the head of the SEC or the cftc

uh I'm not uh I'm not going to throw

your hat in the ring

um

no I'm going to keep working for Bitcoin

I was gonna say I'm Gonna Keep the

Bitcoin job that's my day job and I'm

I'm okay with that

but you know I you know I get your point

um we can lament it would have been nice

if there was Law and Order as people

moved West

but you know there was some law and some

order and there's some Vigilantes and

occasionally the criminal comes into

town and everybody kind of gets together

and decides they need to push back on

the criminal and then

at some point somebody sets up and

steals a bunch of money and then people

don't trust that somebody and they shift

their trust to somebody else so I think

that the end

the

the future is Bitcoin and it's it's

obviously a volatile

path

to bitcoin

but we're moving in the right direction

Bitcoin is stronger today than it was

two years ago or four years ago or six

years ago or eight years ago

and I think you just got to keep your

head down nose to the grindstone and

move forward

and here we are you're you're two years

into your your first cycle

that's been a hell of a ride uh do you

want to you know chat about you know

your class of 2020 and um my goodness I

remember very very vividly the day that

microstrategy announced that the big

announcement that um you know you are

going to invest 50 million dollars into

uh into Bitcoin in that September I

believe the announcement was made

you can correct me if I am wrong

um but

we all we all we all get Bitcoin at the

price we deserve is the old saying I

like to tweak that at the time we

deserve maybe might be a nicer way to uh

to put it how

has that felt that there's two years of

roller coaster ride and um for those

plebs that are listening that might have

followed you in uh

even those that bought at 50 60 000 and

here we are sitting at sixteen thousand

what's the message to um to those people

out there

um I think you're just going to take the

Long View right I mean if if you have a

less than four year time Horizon you're

just a Trader you're just a Speculator

and uh if you

If You Think You're Gonna Hold Bitcoin

for four to ten years you probably

haven't you don't understand Bitcoin yet

you should probably go study it hard

right because

um I think once you understand Bitcoin

you know you gotta have a 10-year plus

time Horizon and and when you really

understand it you realize you should

have a 100 Year time Horizon

I could say

yeah you know damn first of all on the

on the cycle I feel like there were

three Cycles since August 2020 right I

mean Bitcoin ran up to about you know 60

000 it ran down to the 30s it ran up to

the 60s again it ran down

to the 30s again it ran up to 47 and we

thought it was headed north and and then

I think the FED started uh cranking on

the tightening and then it crashed down

right and then we thought we were going

back up again and then the FTX thing

happened and we got hammered again so so

you could think one to easily three

Cycles in uh 24 months

um

I I think uh

I mean that's a humbling experience I

didn't I probably underestimated to a

certain degree the volatility that we

were going to have

uh a year a year after I got into this

right I had a little uh debate at one

point with safety Dean on it he turned

out to be more right than I was he was

saying there's going to be a 75 drawdown

and I was like I don't I don't think

maybe it will but uh you know if safer

Dean's listening you were right uh so

congrats to you I don't I don't know if

we're happy about it but you're right

but uh

in any event uh I don't think it matters

at the end of the day right you've got

volatility as

um a digital monetary asset is you know

is coming to life and as we monetize

Bitcoin so

um

two thoughts one

I never really took a hundred year time

Horizon uh I never I never considered

investing in anything for a hundred

years before I discovered Bitcoin

if you had asked me you know in the year

2020 in March of 2020 is there anything

that you would invest in for a hundred

years is it even relevant to ask about

the uh the outlook for the asset in

multiple decades

I would have said you're crazy right you

don't know what Google's going to do in

a hundred years you don't know what

Apple will be I mean you don't know you

can't own that land for a hundred years

you don't you don't know anything really

you don't know that people will use

natural gas oil may be obsolete maybe

we'll use nuclear fusion so

I I would say there's a pretty good

pretty big inflection point that

eight billion people on the planet

had things they could invest in that had

a useful investment life of 10 20 30 40

years it used to be a long time frame

was 20 years

and it was only after discovering

Bitcoin that that

I started thinking different and and you

know

if you roll the clock back to like the

first podcast I I did after I bought

Bitcoin you know people ask me about

picking I said well I looked at it

versus gold

and I started analyzing it and I was

trying to figure out which one was

better because it was the question of do

I buy 500 million a Bitcoin or 500

million of gold

and once I you know read the Bitcoin

standard and I started understanding

stock to flow and I started thinking

about hardness of uh of a commodity

I realized well the half-life of gold is

35 years

if you keep uh if you keep increasing

the supply by two percent it's a 35-year

half-life and if and you know I I knew

enough of non-linear mathematics and

Engineering to see that uh that the ha

the stock to flow of Bitcoin is

effectively zero because because in the

limit as T goes to Infinity

the number is 21 million and in the

limit as T goes to Infinity the stock to

flow is infinity there there is no right

inflation and the limit

and you would understand that if you

studied calculus right I mean it's it's

freshman calculus right right the irony

of course is most economics isn't based

on calculus right I mean when's the last

time you saw an economist say well in

the limit as T goes to infinity or

demand goes to infinity or such such and

such and the limit this is the

equilibrium or this is the solution

so I just looked at that and I said well

yeah and the limit it's pretty clear

that Gold's got a half-life of 35 years

and Bitcoin has got a half-life of

infinity and if I just play it out for a

hundred years

well over the course of a hundred years

you know 100 million of Bitcoin is still

the you know the 100 million but the 100

million of gold has been cut in half

three times so you've got 12 million

equals so goals losing 88 percent of its

energy over 100 years Bitcoin is not

losing 88 of its energy and that makes

it 10x better

Okay so

why would you ever express an opinion

about anything looking out a hundred

years if you couldn't imagine it lasting

that long

and you know the useful life of a

company the average life of a company or

life expectancy a cup is like 20 25

years if it's a successful one if it's a

small company the the expected life is

five years

the expected life of a house or you know

or a building right is

not a hundred years there's no building

that a hundred years after it was built

is still usable without substantial

maintenance

so I think Bitcoin drew me in to

understand thinking hard about the

theory of property

like what what is the half-life of

something

well if if you want to understand it you

have to assume the maintenance costs so

if the maintenance cost of owning a you

know a residential property in Florida

is two percent taxes and another two

percent a year in utilities and upkeep

and insurance then that's four percent a

year so that means that means in essence

the half-life is four divided into 70.

so call it you know

16 17 years or something

okay so so the half-life of residential

property in Florida 17 years the

half-life of you know to calculate the

half-life of a commercial office

building you would have to do some kind

of triple net thing where you look at

the rents and then you

you know you subtract the taxes the

insurance the the utilities cost the

depreciation of the building and you

could maybe come up with some useful

Half-Life but what you can see of course

is

is uh it has some expense and and

there's some challenge to operating it

so I think Bitcoin really drives you to

think about the theory of property and

it drives you to think about the theory

of money and uh when you finish you

realize that all the money you ever had

was defective

and all the property over how you ever

had has a a shorter half-life

especially once you

once you factor in all of uh the natural

maintenance costs and the risk factors

and this is where most people don't do

this very well

for example um what's how do you

calculate

um whether you want a positive or

negative yield on um

alone to Celsius that pays you

six percent right if I give my Bitcoin

to Celsius or block fine they pay me six

percent well that's like I'm getting

paid six percent rent but then what's

the real cost of the investment

and the cost of the investment is

they might just take the money and never

get back to you so how do you assess

that well if you think that that once in

50 one in 50 or once in 50 years they'll

fail then that's two percent a year is

uh the cost of capital

uh but

then you have to put the risk-free cost

to Capital on top of it so if I had a

million dollars in the current

environment uh I could go and get four

4.5 interest from the US government

on a one-year Bond

so the risk-free cost to capitalist 450

basis points then if you think it's

going to fail once in 50 years it's six

it's 200 basis points more so not 650

basis points but now you now you

actually got to consider the tax

so the tax

uh the top the after tax benefit you

have from making the loan

is uh you know maybe get paid six and a

half percent interest then your tax rate

is 33 so you're you're basically getting

like four 400 basis points after tax

and now I have to compare that to

you know what what have you taken right

I guess

I guess the point is if you think that

the firm might fail in 30 years

right then the counterparty risk is

equal to the after-tax return if it

fails once every 30 years

and um and the real problem of course is

you could have got you know 300 basis

points after tasks yield risk-free

if you just put it with the federal

government so

what does that mean ultimately it means

that that you're basically taking on

twice as much cost

as you're getting yield

if that firm fails every 30 years which

means that you know another way to get

isn't it kind of ironic that you get to

a conclusion the half-life of your money

invested in the Celsius bank is 30 years

if it fails once every 30 years right

does that make sense or something like

that right right I mean but of course we

know that the the risk is much greater

right the risk is not not they're going

to fail every 30 years how about every

10 years not even that they didn't even

last five years

so but but if you thought they were

going to fail every 10 years then you

would have had to put 10 percent

on top of that and what you would have

realized is that that uh you're taking

on in essence people are picking taking

on a 30 percent counterparty risk per

year

in order to get paid six percent

or in order to get paid four percent

after tax

they took a thirty percent risk

which meant that they were they were

basically buying a negative yielding

minus 26 percent yielding thing

most likely

although I don't know if many people

even lost it three years

right if the real risk was they would

blow up within one cycle which is 36

months

then you had a counterparty risk of 33

percent

against an after-tax yield of three

so

I think um

I think the reason to study Bitcoin is

because if you study Bitcoin deeply

enough

you would be able to articulate all the

defects of money like the fact that

there's a 34 percent negative real yield

or 30 percent negative real yield on

owning the peso

right yeah if you understand that if you

understand there's a 30 negative real

yield owning the peso then you

understand currency and money if you

understood that there was a 30 negative

real yield uh invest putting money in

Block fi

or an FTX or a Voyager or Celsius

then you understand

um

banking

if you understand

if you understand the risk of investing

in Snapchat or Facebook

or Alibaba or or the like owning an

equity

right yeah now you are now you know why

they're public companies and you have to

read the disclosures but of course

if you bought ftt token you bought an

unregistered security so you bought a

you bought a private Equity token

without a disclosure

whatever the risk of owning a public

Equity like

apple or Microsoft or Amazon or the like

and Amazon's down 50 for the year right

whatever that risk is the risk of owning

a private Equity token is 10x that

so when you put a million dollars into

ftt token

right you're looking at something like a

negative real yield of 40 50 percent

there was a

you know there's a one-third or one-half

chance that was going to zero within 24

months within the cycle

right but you didn't figure that out

because you didn't study Bitcoin right

sure

right who in their right mind would own

ftt token right

someone that doesn't understand uh

Securities right

right and of course a lot of people the

crypto industry don't right whenever we

say you know these are unregistered

Securities all the crypto people say

what does that matter what's with these

stupid Securities laws

right what's with the stupid security

remember certain famous influencers this

stupid SEC law from 1933 right it's like

well why do those laws exist well they

exist so that the Sam bankman Freeds of

the world can't print their own token do

Insider wash trading manipulate the

price up to eight billion dollars

and then tank it to zero overnight that

that's why the laws exist

he could have never operated The

Exchange Alameda would be out of

business FTX would be out of business

and the ftt token would be out of

business if they had actually had to

file a registration statement with the

SEC

because those were all Insider conflicts

of interest and there's nothing nothing

ethical or legal about any of it right

and so they they couldn't have done it

and so the reason that it makes sense to

file registration statements and take

equities public is is in order to in

order to avoid these kind of FTX ftt

frauds that basically destroyed people

now there's a big um

there is a stigma attached to related

party transactions in uh public

companies

rightfully so

because Alameda was a related party to

FTX and ftt was a related party

so Sam bankman freed is the issuer ftt

is the owner of Alameda a hedge fund and

is the operator and and owner of FTX

those were three related parties

the reason that there's a stigma is if

you take if you took FTX public

and you said by the way FTX accepts ftt

which is a related party issue token

and it and it uh it does business with

Alameda

the question that a skeptical investor

would have is

well since the same person controls all

three is it possible that he actually

wired the systems to give himself an

advantage and and if it turns out that

Alameda has a billion dollar trading

loss Will Sam bankman free the CEO of

FTX liquidate Alameda in order to

protect the interest of the other

customers or will Sam not liquidate them

to protect his own interests he has a

conflict of interest and we know how the

story ends

by the way the other question would be

since Sam has uh billions of dollars

eight billion dollars worth of FTE token

will Sam the CEO of a bank issue credit

against the eight billion dollars of the

token that he issued himself and give

himself preferential treatment

uh or will there be an arms link

transaction so here's the instant

question Daniel if if you were an arms

length if this was an arms-length

relationship and there was a

disinterested Financial executive

running FTX how much credit do you think

they would have extended Alameda for

eight billion dollars of ftt token

nowhere near what they did

yeah we know we know they gave them

billions and billions of dollars of

credit right maybe up to 10 billion

dollars of credit well how much did you

get as a Bonafide microstrategy CEO when

you were in the market trying to raise

cash right that that there's the direct

comparison that we can use

yeah

if if I were to go to a bank and say I

have some locked microstrategy stock

will you loan me money against it they

would say no zero

foreign

if I went to them zero right uh the the

answer by the way to the question is a

disinterested CEO of a crypto bank that

was

um honest and competent

would have lent Alameda somewhere

between zero dollars

and 10 million dollars right

yeah like like the number is not one

order of magnitude less it's not even

two orders of magnitude less right it's

somewhere in the range of three orders

of magnitude less if you were honest and

competent you would basically say well

what is five percent of the honest

trading liquidity in the token

if the thing trades 100 million a day

but 80 million is washed trading there's

20 million a day well how much of that

is trading on another exchange not your

own oh 3 million a day okay so three

million dollars of this stuff trades on

on another exchange is that can I trust

that one no they're not none of them are

regulated okay how much trades you know

on any regulations well of course none

of it right but but let's say I threw

out the issue of a regulated transparent

exchange I just said well how much

trades on how much trades on an exchange

other than one you own

10 million

okay I'll give you 10 percent of that

I'll give you one million dollars of

collateral value

okay how much could you borrow against a

million in collateral

well the max is fifty percent loan to

value five zero so I will give you a 500

000 loan against eight billion dollars

of ftt token that's the right answer if

you're honest

and competent

so obviously that didn't happen the

reason it didn't happen is because you

had you had uh three related parties

all terminating with one boss and the

one boss was not honest

not competent

and and uh not disinterested right a

biased dishonest incompetent person

okay what could go wrong

well when you when you have three

related parties and and a biased

incompetent

dishonest person the what can go wrong

is the entire thing gets burned to zero

and is that likely yes highly likely

it's it's not even just what could go

wrong it's highly likely that's the

reason there's a stigma attached to

related party transactions you would

never want the CEO of a bank to be

issuing loans

to a private company that they owned

right I mean like if it turned out that

the CEO of JP Morgan was issuing billion

dollar loans to you know to Jamie Dimond

you know real estate development company

jointly owned with him and his wife

right people would just lose it yeah

for obvious reasons

so what I can't figure out this part of

the story is

the SEC

they knew like that that there's

documented meetings between Sam and uh

and I believe genzel himself if not some

of his team

what were they sitting on I can't figure

that out for the life first of all I

have I haven't no one is credibly

documented that there were meetings we

know that there was a calendar entry

where someone that worked for

Gensler might have had a meeting but we

don't know so we're waiting for

verification on that okay I I think I've

I've read that there were many many more

meetings with the cftc than the SEC and

many many more with politicians but we

don't know the content of any of those

meetings no one has made that public

but what is your question

where were the Regulators it seems to me

as though

you said it before they were were they

sitting on their hands did they know is

there more to this story it seems like

they just don't really want to they they

don't feel that they have the authority

to regulate offshore entities

right I mean that's been the big blind

spot

because he had it all registered in the

Bahamas

right I mean FTX was was in the Bahamas

and so I there's this um

there's this vacuum of power right a