Michael Saylor | PBD Podcast | Ep. 212

we're ready all right all right all

right okay so this is

part two with the one and only Michael

Saylor obviously Michael from the last

time we sat down to today last time

Bitcoin was 44 000 today it's 17K

ethereum was three thousand today's

1262. I figured we do a part two because

it's been very quiet the last nine

months not much has happened in the

crypto it's not like there's been a guy

that screwed a lot of people over it's

not like there's a lot to talk about but

we're so happy I'm gonna have you back

here for part two I was worried uh you'd

be bored of me

I think that's the last thing yeah

crypto space very boring right now no

news nothing of no very big I ran out of

stuff to talk about well you know since

you ran out of stuff I think some people

worked very hard to create new content

for him to talk about so by the way have

you ever had any interaction with the

sandbankment freedom have you guys ever

spent time together I haven't spent time

with him but I've talked to him okay

what do you think like was anything

that's going on with him anything I mean

you're a guy that uh I've seen the

numbers I don't know what the numbers

today was it a hundred you own you own

139 000 Bitcoins that's a big number 130

000 100 microstrategy at micro Stratton

and that also doesn't include what you

have personally using yeah I own like

another 17. so 17 personal 113

000 not 17. correct yeah so so it's not

like you're

I'm somewhat long Bitcoin oh yeah I saw

what you said article you said if you're

this is the first uh bear Market if

you're in this business for just kind of

uh messing around and you know you're

not in it long term for four years

you're you're you're not doing your

self-adjustice but going back to SPF so

any of the stories that came about did

the did the guys in the industry like

yourself the heaviest were you aware

that something was going on at SPF or no

yeah I mean I I think that uh you have

the Bitcoin Community opposite the

crypto community and then there's been a

low grade sort of boiling Guerrilla war

between the two camps for the past two

and a half years and Sam is kind of like

the poster child of the crypto world

right Sam makes billions of dollars on

an unregulated exchange offshore he

makes billions of dollars issuing his

own air token he he uh spends hundreds

of millions of dollars giving to the

crypto Lobby and to politicians and one

of their messages is uh you know Bitcoin

is bad for the environment he uses too

much electricity but not to fear we have

a you know a staked air token which does

the same thing as Bitcoin and it's

environmentally friendly so you know we

we've always seen that going on and I

think that um you know the Bitcoin

Community would say you know there's

something ethically broken about being

able to issue your own unregistered

security right they call it committing

the sin of coinery yep right so so

Sam and most of the people in the crypto

world were always guilty of the scent of

coinery or pumping and promoting

unregistered Securities and and that was

obvious I think

um you know that that was obvious to the

chair of the SEC to most politicians

right that the phrase that pops up over

and over again is the vast majority of

all crypto tokens are unregistered

securities but I think the Diabolical

twist in the FTX story that none of us

saw coming but it is particularly

diabolical

so Sam creates you know uh eight billion

dollars worth of air token with SRM and

ftt then he issues himself locked token

secret locked token marks it up on his

balance sheet by another four to eight

billion dollars and calls at 16 billion

worth of collateral

okay then he goes shopping for a bank to

give him a loan against this well if I

took a billion dollars of Apple stock

and I went to a legit Bank Bank of

America JP Morgan Goldman Sachs I still

got a billion of Apple stock they would

say

well we won't give you collateral value

for up to the amount you have or five

percent of the daily trading liquidity

on a legitimate regulated Exchange so if

you show me a security that trades a

billion dollars a day and you have a

billion dollars of it I might give you

50 million a collateral value and that

means you could borrow 25 million

dollars against it at 50 loan to value

but I'm going to margin call you if it

moves a tick so it means practically

speaking a billion dollars of that legit

security is probably going to give you

10 million dollars worth of a loan on a

billion on a billion that's one percent

okay right because the the gating factor

is what's five percent of the trading

liquidity of that token or that asset

because if I have to dump that thing in

the market I want to sell the entire

position without uh moving the price

sure okay so that's the traditional

World on Shore what Sam did was

generated 14 to 16 billion dollars worth

of Solana you know ftt serum and then he

went shopping for a bank to give him a

loan but he didn't want uh you know you

wouldn't get a loan from Goldman Sachs

on it no one's going to borrow your

money at least no non-crypto company so

what he did was he went to himself he

runs a bank called FTX he applied for a

loan from himself he granted himself the

line for a loan from himself well

secretly applied he didn't tell anybody

but he when they say well Alameda had a

margin account and the margin position

was slightly bigger than I thought

what he means is oh yeah they pledged a

few billion dollars of error token gave

themselves a 10 billion dollar loan and

they extracted

even if he had pledged 15 billion worth

of air token giving yourself a 10

billion dollar loan means that you gave

yourself about a hundred X the

collateral value you would have got on a

regulated exchange on shore

so what he did was in essence extract 10

billion dollars of real stuff dollars

Bitcoin salable assets and he pledged

10 billion dollars worth of air token

stuff and of course the it's a double

diabolical thing here's here's the

problem so I create a token I have 300

million tokens and then I basically

trade it with myself like I give it to

you and you work for me and you give it

back to me then I lean on it so I lever

it up ten to one you know an FTX you

could lever it twenty to one then I

borrow your money you're a depositor so

I take your money you have 10 million

dollars I levered up twenty to one I

have 200 million dollars I buy my own

token I drive my token up by five bucks

five dollars times 300 million makes me

1.5 billion in collateral I post the

collateral and then I would draw one

billion dollars of

you know a hundred thousand people's

money

I put it in Alameda and then Alameda

gives a three and a half billion dollar

loan to Sam right to he gave 3.3 billion

to either himself or his personal Family

holding company

so here's the Diabolical twist I didn't

just generate 10 billion dollars of an

unregistered security to dump it on the

unsuspecting retail that would take me

500 trading days dumping 20 million a

day right they didn't do that what he

did is he generated a 10 billion dollar

in unregistered security and then just

borrowed 10 billion dollars secretly

from his depositors

and then went and gambled it traded it

spent it lost it how and that is like

it's particularly impressive how do you

so here's the question you know how you

he goes and he raises the two billion

okay and he gets the 2 billion from not

small people he gets it from the best of

the best of the best right you got

BlackRock you got inside I can you know

the names I don't need to give you the

names you know the name so page your

names then he they don't get any seeds

board seats in return these are very

very smart people who are seeing this

are they just as responsible for the

fall of FTX as sandbankment fritas uh

the Bitcoin maximalist would say that

the problem in crypto is greed arrogance

and foolishness okay okay anybody that's

investing in it is is either greedy

arrogant or foolish so there's three

constituencies that got taken for

billions of dollars here the VC

investors put two billion dollars into

an offshore exchange The Exchange just

to be clear was unethical and illegal

from the very beginning it's illegal to

do what they did in the U.S and it's and

and it's unethical if you think I'm

front running my customers issuing a

token manipulating the price of the

token dumping it on them if you did that

on stocks you're going to jail if you if

you front run it's not it's absolutely

yeah right FTX was its own regulator its

own Market maker its own exchange the

issuer right all all at the same time

this is this is such a con and a hedge

fund too much conflict of interest so

but the three constituencies are the VC

that put the two billion into into FTX

they were supporting basically an

offshore unregulated Casino you know

running an opaque fashion you know honor

the interest of its own customers they

didn't ask for a board seat they didn't

do due diligence they were chasing what

they thought was insane gains right FTX

is showing a company that goes from 50

million in Revenue to 500 million in

Revenue to a billion in revenue and they

thought they just had the next great

thing so you know Sam lies that any con

right is like I think I'm getting a deal

that's too good to be true and the con

man is lying to me we're all lying to

each other and and so that's the first

two billion goes down the drain

there's another 4 billion or something

like that and just loans made by you

know crypto industry I think Alameda

borrowed hundreds of millions and

billions of dollars from Genesis from

three arrows from Voyager from Celsius

from you know block Phi

Etc so it's like if you start with this

fiction that ft and T is ftt is a real

thing

if I create you know again like yo-yo

token and I and I manipulate the price

up to 10 billion dollars by trading two

percent of the float if you think it's a

real thing and I act like it's a real

thing then I pledge it is collateral and

you give me real stuff for air thing

and so there's like four billion dollars

of that and they went and they lost half

of that that they you know that was part

of the reason that Voyager and block fi

going bankrupt and the reason that Sam

wanted to bail them out is he didn't

want to actually have the loans called

right he was actually trying to buy

block fi and block buy Voyager with ftex

equity which of course is fraudulent and

worth nothing but if I borrowed a

billion dollars from a company and they

want the money back and I can simply

give them a billion dollars of equity

take over the company and not pay the

loan back I can roll the entire fraud

forward so that's the second the third

is you know they

this is also diabolical you know FTX

said you know we're built by Traders for

Traders and Sam Bragg that they only

charge like three basis points trading

fee and he was 30 times cheaper than

coinbase or much cheaper than binance so

he's stealing customers off of the other

crypto exchanges by in essence offering

near free Trading he's not trying to

make money off the trading he's trying

to actually get the assets on his

platform because once he had the assets

on his platform he basically used FTX

like his own personal piggy bank it's

like there's 10 billion dollars there

everybody else is going to get wiped out

if uh if their margin positions trade

down 20 percent for a minute

except Alameda Alameda has God mode they

never get margin called so in an

exchange you know like in in the US it's

illegal to go more than 50 loan to value

that means you're kind of like you start

with a million dollars you borrow 500

000 you're 1.5 x leverage

okay well FTX started with 100x leverage

and then they backed it down to the

responsible 20x leverage which means

that you post a million and you can take

a 20 million dollars okay who allows

that now here's the insane what if I put

a billion dollars of air token ftt on

the exchange I recognize you and I let

you take a 10 billion dollar bet

like whatever you took a 10 billion

dollar bet now you withdraw four billion

dollars of real cash and you use that to

buy property and buy everything under

the Sun so Sam basically he scraped

billions from unsuspecting investors in

Silicon Valley who they should have

known better he took billions from

crypto hedge funds and crypto Banks like

blockfi and Voyager they should have

known better and then he took probably

10 billion or more from depositors on

his Exchange

they they have the best argument it's

like they are staring at terms and

conditions that said he's not going to

re-hypothecate or use their assets and

he just you know he lured them with the

promise of cheap trading High leverage

and uh you know if you thought well Sam

is manipulating the price of FDT and

serum and Solana and he was right that's

illegal and unethical right your pump

it's a pump and dump scheme we talked

about this before but if you if you

accept the idea that crypto tokens that

are issued by some offshore you know

dude are okay then you're thinking well

I guess I want to go buy some of that

and and get behind Sam and Alameda

because they're going to drive the price

up and I think Solana went from you know

three bucks to want to go to 50 you know

it went way up and ftt went to fifty

dollars a token or something so you

could have made a lot of money trading

those tokens but you probably would have

wanted to go to the FTX exchange because

you know guess what news flash it's

illegal in the U.S can I ask you a quick

just a yeah a question about

SPF not so much the inner workings the

mechanics the inner Plumbing of how it

all works just more the person you've

used the word diabolical multiple times

explaining what he's been doing do you

think like he's been compared to Bernie

Madoff Ponzi schemes type of thing Sam

the person do you think he's he's

obviously brilliant and smart and was

able to get away with a lot of stuff but

was he a criminal from the onset did he

just make some foolish mistakes mentally

where was he throughout all this

Sam's he's like the 14 year old kid that

stole the family car he doesn't have a

driver's license he got he got you know

eight of his high school friends in the

car and then he found out that there's

like a hundred thousand dollars of cash

a bunch of drugs and a gun in the car

and then they went George Saturday night

wow you know and

and horrifically with the car wrapped

around a tree half the people but that

analogy I think is very important to

clarify that analogy and maybe he's an

honor student in high school but the

point is he was not ready to drive the

car if he had 30 years of experience if

he was surrounded by 200 Good attorneys

and accountants and and uh banking

credit managers if they if then they

would know what they don't know and

maybe they could have constructed a

company that might have managed this

amount of of risk you're saying he's not

smart enough to have Kant people you're

saying he did that accidentally or it

was intentional like knowing what he's

doing I'm I'm saying that he basically

incompetently foolishly greedily

enthusiastically pursued what he thought

was a good idea but he didn't have the

combination of the real world experience

and the ethics and the legal

understanding and the banking

understanding to even know what he

didn't know so is it criminal absolutely

it's criminal it's like if you if you

roll over a bunch of people in a car and

kill them all it's illegal right but but

at the at the end of the day it's it's

not clear to me that Sam understands

what he did wrong now

like for example what did he do wrong

there's a counting fraud here there's

there's basically Equity fraud by

creating an air token there's all sorts

of credit fraud there's investor fraud

misrepresenting that the equity you sold

the investors they're self-dealing he

issued himself loans there's front

running there's insider trading there's

wash trading there's such a Litany of

ethical and legal lapses but but if you

look at all the coverage in the cryptos

you know World they don't they miss the

fundamental issue which is it's illegal

and unethical to issue your own error

token I mean but that that the entire

premise of the industry an exchange that

trades on registered Securities and an

issuer of unregistered Securities that

fundamentally is unethical everywhere in

the world illegal nearly everywhere in

the world and yet they built the

business on that premise on top up of

that premise

then he inflated the accounting values

built back doors into the into the it's

just non-stop illegal stuff going on

what were you just say Pat yeah here's

what I was going to say so two things

one last night I'm watching a

documentary and let me just I I before I

forget what this documentary was I'm

watching this documentary last night

it's the story of the good nurse the

movie and the documentary came up at the

same time it's a dark documentary I

don't recommend it it's called capturing

the killer nurse I don't know if you've

seen this documentary or not it just

came out so it's a story about a guy

named Charlie Colin or something like

that where he's working out of this just

type in the capturing the killer nurse

and this guy you know intentionally

gives this drug drug to his patients

that they don't track at all in the ICU

and over a 16-year span in this Hospital

in Jersey he kills an estimated 400

people with this shot that he gives and

if you look up what the drug is the drug

is uh Jackson I don't even know how to

pronounce this d-o-d g x i n something

like that okay I've hit images over

there so so he gives us drug and he

kills him and eventually one of his

co-workers like why are all his patients

dying why are so many of his patients

dying and so they eventually gets caught

one of his co-workers Mike's herself

because she's dealing with the FBI and

goes and sits down with him and talking

and she says why are you doing this and

then all of a sudden the mic cuts off

and then there's a live interview of him

and he says well I and he starts crying

he says I'm just doing this because I

didn't know what I was doing I'm just

doing it because I want to put these

people out of their misery and you know

I don't want to experience this pain you

know it's kind of like Sam bankman freed

is like hey today's Wall Street Journal

FTX founder bankman freed said he

couldn't explain what happened to the

billions of dollars that customers of

his failed cryptocurrency exchange sent

to bank accounts of his trading firm

Alameda what do you mean what hap he

doesn't know what happened so to me this

guy knew what he was doing this this guy

behind this afternoon so that he knows

he's killing people and this guy knew

what he was doing so so the part that

this leads me to is two different things

one let's say CR Bitcoin goes to a

hundred let's say Bitcoin doesn't drop

the way it did let's say Bitcoin goes

200 let's say ethereum goes to 6K I'm

just making numbers up right now saying

the theorem goes to 6K Bitcoin goes to

100 000.

does anything happen to them if Bitcoin

goes to 100K and ethereum goes to 6 000.

yes he had created an extremely fragile

situation where he had

he had one account Alameda that had a 10

Billion Dollar Plus margin position

backed by air and if that if that air

token ftt or serum if they had been

attacked by anybody the entire thing

goes up like a house card so so I think

if you look at all the blow-ups right

Celsius block fi dokwon Luna Terra three

arrows Genesis and FTX all of them uh

were were going to blow up at some point

because like uh Luna Terra it was a 20

billion dollars worth of a stable coin

backed by two billion dollars of real

assets and a 50 billion dollar Luna

thing that had 50 million dollars a day

of real liquidity so so they were all

running on 100x rehypothecated Leverage

and they were going to blow up it's just

a question of when they're gonna blow up

I think that this is uh it's a it's a

painful deleveraging of the entire

industry but if you look at everybody

that was kind of Behaving Badly like

doing stupid things like like again

aggressive lending in the real world is

1.4 leverage that's insanely aggressive

lending these guys were all running at

20x 10x that's insane to me so you had a

lot of people Behaving Badly they were

destined to blow up it might have been

held off for a bit but I have seen

pretty credible evidence

circulating in the Twitter sphere that

Alameda had already taken a three to

four billion dollar loss in 2021 during

the bull market because they were just

doing stupid things so how come nobody

caught him then what what was the

Tipping Point was the Tipping Point when

he went to the binance CEO and says hey

uh uh I I need you to you know why don't

we partner up and okay I need a billion

dollars from he said oh yeah we'll do

the deal in the last one no no we're not

doing the deal because even if we buy it

it's just not the interview that he did

which was fascinating by the way the CEO

binance so very impressed by that guy

says no we're not even touching him he

says are you concerned that you're

losing a company like FTX as a

competitor he says he's not a competitor

if you know this business we're not

competitors so what was if you're saying

last year they lost three to four

billion in a in a very bullish Market

what was the Tipping Point all of a

sudden hey we got to get recently got

away with this he's running a private

unregulated cut set of companies right

he had his private holding company paper

bird he had Alameda a private company he

had FTX a private company no

transparency no disclosure if you were

running a public company you got to

actually publish audited financials

every quarter and make 8K statements and

you have adult supervision you I have

lawyers Banker I have two sets of

lawyers two sets of accountants you know

an army of an army of internal

accountants external accountants

Etc and if I just came on your show and

said hey I just wanted to announce that

microstrategy has 175 000 Bitcoin my

phone would start ringing by the lawyers

put that down they'd be like what are

you doing you're crazy yeah and you know

they would say it not just because it's

wrong they would say it because their

careers are on the line and they don't

want to spend 10 years in litigation

hell so there's a way that you run a

public company and there's a way you run

a regulated company and and on the other

hand Sam was his own regulator he could

make up his own rules he had he was

accountable to no one and if you have 10

billion dollars in the bank and then you

lose 4 billion

and you don't and the bank doesn't have

to disclose what is done with the money

you just go and give yourself a four

billion dollar loan secretly you know he

didn't tell anybody so they were able in

essence because they had so much power

as private unregular it's not just

unregulated it's one thing to be

unregulated it's unregulated and opaque

if you if you look at uh and poorly run

right there are some offshore businesses

tether binance that are that are not

regulated and they're not onshore in the

US they're not public but but by Common

wisdom they generally are viewed as

better run like adults adult supervision

because when people ask them to redeem

15 billion dollars they can do it right

I think that FTX three arrows you know

these companies that went bankrupt doe

Quan and Luna they were just really

poorly run opaque crypto organizations

and it was it was destined now the what

was the pen I think

like there was uh there was a summer a

simmering uh a simmering war going on

between the Bitcoin movement and the

crypto movement in DC and the Bitcoin

movement is Satoshi gave us ethical

money nobody controls it you have to pay

for it by burning energy or by buying it

with real cash and you can't corrupt it

you can't issue more it's capped at 21

million nobody gets to you know co-opt

it or use it in a useless fashion to

make themselves Rich okay that's Bitcoin

um the crypto world is you know well we

invented Solana to be better than

Bitcoin and we invented such and such

ftt to be cleaner than Bitcoin and don't

mind the fact that we gave 80 percent of

it to ourself right and that uh and that

we're going to dump the rest of the

general public and we're opaque about it

now that that uh war is going on on

Capitol Hill where the crypto Lobby is

lobbying for light or no regulation let

us basically issue these tokens and make

them Commodities and so we don't have

any Securities laws constraining us

The Regulators that understand better

like a guy like the chair of the SEC

would say look they're all Securities

you can't just let them trade as

Commodities that's the same as saying

anybody can issue their own equity and

and lie cheat and steal the general

public and that would threaten the

entire 100 trillion dollar Securities

Market

but you know Sam you know Sam was the

number two donor the Democratic party he

was the number three donor to the

Republican Party they've admitted to 200

million to 300 million in donations but

they might have donated hundreds of

millions more you're saying that he was

donating that much Republican and we're

very familiar with how much he's donated

to the Democratic party he was I believe

number two but yeah he needs both sides

I tell you his daughter it's diabolical

we know that he was the number two donor

to the Democratic party and until about

a month ago that was the narrative and

then we found out that the chief

operating officer that worked for him

was the number three donor to the

Republican party and and that guy gave

25 million to the Republicans in the

last few weeks so not he himself not

himself because he is fully uh

supportive of what the Democratic

beliefs are look I mean he wanted to be

viewed as remember he said he was going

to give a billion dollars in the next

election cycle yeah he might have given

a billion in the last election cycle we

don't know but he wanted to be viewed as

the as the great uh Progressive Savior

and finance here so they gave they gave

hundreds of millions of dollars to

celebrities they give hundreds of

millions of dollars to academic

institutions hundreds of millions of

dollars to politicians huge amounts of

money to journalists right why wouldn't

you keep in mind if I can generate 10

billion dollars in air token in order to

make a billion a year

all I got to do is take 10 million

dollars lever it up five to one lean on

the liquidity on my own exchange and the

price moves three or four bucks I get

two billion dollars more I made two you

know I made two billion in the year in

investment income and then I go and I

borrow one or two or three or four

billion in my margin account

right they had in that they were

counterfeiting money and then they were

using the counterfeit money to steal

other money or either to steal it from

their deposit or steal it from their

investors or steal it from creditors

then they were funneling that into the

political and the marketing process and

that's why you saw them on the Super

Bowl ad that's why the FTX Arena was

named after them that's why every

celebrity is getting sued right now

right if you can what business is better

than counterfeiting money as a business

right okay so what what burst the bubble

here well this can't go on forever and

and uh in DC there's a war over whether

or not the SEC should regulate crypto or

whether the cftc should regulate crypto

so Sam supports a bill the stabenon

Bozeman Bill and they give huge amounts

of money to politicians and if you read

the bill the bill said crypto will be

regulated by the cftc what's the cftc

the commodity Futures Trading okay we

know what the SEC okay the cftc would

regulate if you were trading soybeans or

pork bellies or Commodities or anything

come on he's got it okay a commodity is

an asset without an issuer okay a

commodity is a much more ethical thing

to promote and to trade than a security

a security

is Yo-Yo coin or or penny stock I

invented it the difference between a

security and a commodity is if I looked

at you right now and said you know I

don't like people in Japan I'm just

going to turn off all their Steel

I can't do that right I can't make steel

not work in Japan I can't turn off

electricity in Japan or turn off oranges

right so a commodity is an asset without

an issuer no matter how much money you

have of pork bellies or Lumber you

cannot invalidate somebody else's Lumber

okay and that's why it's it's impossible

to commit Securities fraud is that

because that's those are natural

resources

these are natural resources pork

everything because they're they're again

it's land right if I said to you buy

land in Texas and I was wrong

okay it's like I'm I didn't create the

land in Texas I can't remove the land in

Texas but what if I said buy Texas coin

there's only a million Texas coins it's

going up and then you buy Texas coin and

then I go and I give myself 10 million

more unlocked Texas coin I dump it on

the market the price goes to zero

now do you feel like you got cheated

you say you see how it's possible to

cheat you with a security because I can

manipulate the characteristics of the

security a security is an asset with an

issuer so if you have an asset with an

issuer like for example a publicly

traded stock like microstrategy mstr is

an asset with an issuer I have ethical

civil obligations right you know if I

lie about it I I can't just say I can't

I'm not going to say what I'm going to

say right I don't even talk about it I

wouldn't I wouldn't tell you to buy it

or not buy it I would say read our

disclosures there's thousand pages of

risk factors

everybody in the board of directors

everything we've done everything we

think we're going to do if we change our

mind about what we're going to do you're

going to read it in 8k within four

business days because I have an

obligation to be transparent on a

security but on the other hand if I say

I really think you ought to stock up on

Lumber in case you know you need to burn

it this winter I'm promoting a commodity

maybe you stock up on Lumber and you

overpay for it maybe you stock up on

Lumber and you don't need it during the

winter right did I defraud you

I'm promoting Lumber maybe I gave you

bad advice but the difference between

promoting Lumber and promoting

lumbercoin is I can print a hundred

trillion Lumber coin

you know on Saturday night and dump it

on you and drive your Lumber coin to

zero I can't create a hundred trillion

Forest overnight by snapping my fingers

it's a natural phenomenon it doesn't

that speak to just a bigger question

about the crypto Market in general like

a lot of people will be like yeah I

don't you know I can't touch it I can't

hold it even with nfts meaning real

estate I can hold it I can touch it

Commodities cash these are tangible

assets even the stock market however

with crypto it's it's all very digital

you can't touch it I feel like a lot of

people are uncomfortable with that yeah

it gets to the fundamental point of what

are those assets some of those assets

are crypto Commodities a crypto

commodity is a token without an issuer

that cannot be manipulated by some CEO

or Corporation or other party right

there are crypto currencies like tether

and circle they are actually tokens

meant to represent the US dollar or some

other stable asset they have an issuer

and generally they're going to be

regulated as as Securities and as

currencies by the banking establishment

the SEC then there's crypto securities

Solana ftt serum those were all

Securities they had an issuer there were

companies behind them there were CEOs

behind them people could make more of

them people can destroy them there are

some people insiders that had

disproportionate interest in them those

could only be ethically sold to the

general public pursuant to a full and

fair disclosure

right and this is common sense right if

you create something and you dump it on

the general population you have an

ethical obligation to tell them who made

the decision how much is there you know

what is your background what's going to

happen next that's what you do when you

take company public

so coming coming back to this crypto

issue you had a little war between

between the two factions and the right

answer is if you're selling a crypto

security

it should be regulated by the SEC

if you have a crypto commodity then it's

not a security now the question is

what's a crypto commodity the chair of

the SEC has said the only crypto asset

that's clearly a commodity is Bitcoin

the chair of the cftc had said as of a

few months ago the only crypto assets

that are Commodities or Bitcoin and

ether

but ethereum is not really a commodity

ethereum is a security and that has been

a big fight in the community

below the surface as of last Wednesday

the chair of the cftc went to Princeton

gave a speech and said the only crypto

asset which I deem is commodity is

Bitcoin so now you have the cftc and the

SEC

and and certain other Regulators that

had a treasury the head of the Federal

Reserve you know all of them in essence

endorsing Bitcoin as a commodity

and leaving us to figure out what we're

going to do with the Securities and the

currencies that exist in the system

the thing that brought FTX Crashing Down

is that Sam went to DC spent a lot of

money on lobbyists lobbied for this bill

that would have made uh both Bitcoin and

ethereum commodities and would have put

the cftc in control would have created

light regulation would have created a

path for other crypto tokens to be

viewed as Commodities and in addition to

like giving a lot of money to the media

a lot of money to the academics a lot of

money to the politicians and a lot of

money to the celebrities he also

inserted in the bill that that uh the

crypto exchanges would send fees to the

cftc and they in essence try to bribe

the cftc with with crypto usage fees in

order to get light regulation

that didn't go over well with a whole

set of regulators that thought that that

was a way to undermine the Securities

industry it was at a deadlock that's why

we haven't had any uh regulation because

of this deadlock between I think people

that know better

and

look to crypto people have they had

billions of dollars of counterfeit money

Sam just Sam alone spent billions of

dollars of counterfeit stolen money but

imagine if everybody that was generating

crypto tokens doing the same thing right

now and I'm I'm not going to go into the

into the others involved but you can

probably figure out what's going on

you have a lot of money trying to get a

very light regulatory regime

uh wide sand blow up well Sam went to DC

and in addition to trying to get you

know fairly exceptional treatment just

for his exchange he then started bad

mouthing binance and and uh implying

that uh the other offshore exchanges

were much shadier than his

and uh that pissed them off and that

pissed off CZ

and so CZ said okay well and that

combined with

combined with the leak of the balance

sheet when the Alameda balance sheet

leaked and it was clear that something

like 10

12 billion dollars of 14 billion in

assets were air tokens backed by nothing

it became pretty clear that they were

rickety imagine if I said I have 12

billion dollars of air token it trades

10 million dollars a day

okay well all you got to do is dump 100

million dollars on the market it's going

to zero so once they saw that I think CZ

has decided the heavyweight the CZ the

heavyweight of heavy weights or would

you put uh yeah

look look off that's the CEO of Finance

yes off sure right offshore the most

influential uh person in the industry a

CZ but worldwide

I think the most influential person in

the industry is the chair of the SEC and

the entire yeah Gary guns are and the

entire industry

pretty much is waiting to see what

Gensler will do and Gensler is is pretty

much the one person who could provide a

Playbook a set of rules of the road that

would cause this industry to move

forward in an economically responsible

ethical fashion this this guy is not a

light guy he he's he's a guy that some

people are in the middle are careful on

what to say about them because they know

they need them some people are very

careful to see if you push too much he

may over regulate you he may take

because he's got a lot of power he's

like Gary Gensler this guy's a very

powerful person in America yeah you

brought up drone palsy bigger than power

no he's not big I don't know if he's big

no he's not bigger than power Powell

maybe shamat says Powell maybe the most

powerful man uh because he controls Wars

if the interest rates go high you can't

finance a war but what are your thoughts

about what he's doing with ripple the

Ripple Army I had John D Eaton here the

lawyer representing Ripple what are your

thoughts about what's going on with

ripple and how he is handling the real

case Ripple is an unregistered security

it's pretty obvious there's a company

the company owns a bunch of it they sell

it to the general public but there's no

they never took the company public

there's no disclosures

right so so the sec's position is you're

selling an unregistered security it's a

it's a crypto token right just like

ethereum it's a non-registered security

it's controlled by a few people in the

ethereum foundation and consensus

ftt just like Salon perfect but here's a

follow-up they're all unregistered

secured here's a follow-up on that I

don't own a single Ripple just so we

know so full disclaimer I'm not a ripple

guy but if if both of them are

unregistered why Target Ripple and not

Target ethereum the way he is targeting

Ripple

and by the way this is coming from a guy

that owns uh ethereum not Ripple yeah I

think I think the best thing for the

world would be with the if the SEC

pretty much shut down all of it

it's all unethical right I mean the

Bitcoin position would be

Bitcoin is an ethical commodity all of

these other altcoins are unregistered

Securities they're all just Equity

tokens issued by a company in order to

get around going public and they're

committing Securities fraud ethereum

included of course especially ethereum

you know ethereum's got 20 billion

dollars of each token locked up in the

staking contract right now and there's a

couple of people that may or may not

give it back to you ever

Now isn't that the definition of

investment contract if if a bank took 20

billion dollars of your assets froze the

the window and said you can't have your

money back ever maybe in the year 2024

we're not sure we're just going to keep

it we may actually give you interest on

it we may take it all we may you know we

may slash it

that's the definition of a security

right it's an investment of money in a

common Enterprise you know relying upon

the efforts of others an expectation of

profit

the whole the whole point is if you want

a crypto asset to be a commodity you

can't rely upon four Engineers a company

a CEO if if a person can make a decision

it's not a commodity anymore the fact is

Ripple's got a company ethereum's got a

company ethereum Foundation has

Engineers you're literally waiting on

the engineers that work for the ethereum

foundation to write the code to give you

your money back and then you're also

waiting to find out what the monetary

policy will be

they change it half a dozen times in the

last six years it's always changing to

you it's xrp and ripple the same thing

there are both on registered securities

xrp and yeah xrp is just the equity

token of Ripple

yeah

so I mean it seems quite obvious right

if you wanna if you want a road map for

how you create a commodity you have to

do it the way Satoshi did it you create

a protocol

you give it to the world you disclaim

beneficial ownership of it you disclaim

control of it and you disappear

that's what Satoshi did it was a gift to

the world if the founder is still around

and the founder is a billionaire and the

founder is spending hundreds of millions

or billions of dollars to defend the

token isn't it obvious that it's a

software company with an equity

so I I think that that's pretty evident

with all these crypto tokens what you

have is you have

the complete sham Ponzi schemes you know

like at the collapse in a hurry like

Terra Luna then you have crypto tokens

that are unregistered Securities that

are perhaps somewhat pseudo-competently

managed that don't collapse but they're

still unregistered Securities which

makes them unethical to promote

and then you have crypto currencies like

tether and circle they attempt to have

backing right Circle purports have a

hundred percent backing uh for their

coin we know that to like 83 percent of

tether deposits are backed by U.S

treasuries if you're to believe their

attestations

but again those

those are not publicly traded companies

so I think the one thing that's missing

in the crypto industry is by and large

nearly everybody in the crypto Market

has never taken a company public they

don't understand Security's law they're

like if you're going to be kind you're

going to say they're well-meaning

technologists that are enthusiastically

pursuing new ideas

but generally they're pursuing new ideas

in an irresponsible

inappropriate unethical fashion is that

based on Greed what is that based on

the same reason Sam did it is a one-part

greed one part enthusiasm go fast and

break things one part lack of adult

supervision

right uh what you what

what you could say is that

that

um you know the The Regulators ought to

just be very very clear if you were very

clear you'd say look

you've got like 180 days in order to

register your token with the SEC and you

register and give us all fill out these

forms give us all these facts answer our

questions and we'll tell you whether

you're a currency whether or not you're

a commodity whether or not your security

and whether or not you're allowed to

trade and at the end of the 180 days if

you haven't actually registered you're

shut down and nobody can buy and sell

and trade this thing anywhere in the

world and that that would actually clean

up the industry in a hurry

I got a crazy question for you can you

pull up the article that I sent you a

bunch of Articles while we're talking

pull up the one about Maxine uh her

tweet uh if you can pull up vaccine

Waters here's her tweet that just came