CZ Busted?! | Gensler Testifying Soon | SBF in More Trouble | War on Crypto Continues

Gary Gensler tell the principal's office can we get Gary Gensler to the principal's office wait I thought he was the principal you can bring him to another office there's there's a principal's principle which he is now going to yeah so he has been summoned bankless Nation it is the last Friday of March it's time for what is it David uh the bank was Friday weekly roll up where we cover the entire Weekly News in crypto which is always an ambitious Endeavor this week is a medium week not

so bad so everyone can take it breather medium still still a lot to happen though uh so yeah we persevere nonetheless regardless of whether it was a big week or a medium week uh in crypto and here we are you have to you have to keep going right because you never know which roll-up might be the last roll-up you just never know life is uncertain David uh a few topics of the week though oh I I gotta start here you're not in your usual place though no different background different background yeah I'm currently in Montenegro which is not ever every spot that I ever thought I'd

be to be honest wait a second wait a second isn't that the place dokwan was just found or like late last week Friday of last week and you are there too I was at the same airport that Juan dokwan was at like five days uh ahead of me yeah I'm I'm on the hunt for dokwon that's what I'm doing people don't know right now whether you're joking or what's going on but we'll just let the mystery continue we got some topics of the week number one there is a cftc versus binance Battle

Finance getting busted by the cftc we're gonna dig into that what else David uh zkevm continues we got two of them this week last week we had one this week we have they're done every week yeah every week so far they have been doubling every single week for two weeks in a row uh and then lastly uh Gary Denzel until the principal's office can we get Gary Gensler to the principal's office wait I thought he was the principal you can bring him to another office there's there's the principal's principle which he is now going to yeah so he has been

summoned uh to uh testify are these the right words uh in court about his actions against the crypto community in court is it in court excuse me no not in court not in court in front according to the people which is congress Gary Gensler to face Congress grilling over crypto policy Gary Gensler will testify before the house Financial Services committee okay so Gary Gensler is testifying in front of the house about his treatment of us there we go those are the details I'm I'm here for a good genzler grilling I'm I'm here for it let's do it

that's exactly what I want speaking of product Market fit we got to talk about our friends over at in Fiora because they have a an API nft API that I think has some product Market fit David tell us about it this one's for the devs isn't it yeah this is for the devs so this is for an 8 Pi for your nft dap if you will so whether you if you don't know what that means you're not a Dev yeah so just absorb this knowledge through osmosis I'll brute force it into your brain uh

so inferior has got an SDK for you the nft Builder out there whether you are doing most of the things that nft contracts do selling in nft buying an nft minting an nft infuro has got an SDK for you to make that easy for you three smart contract templates to allow you to write onto eight different blockchains and mint nfts either ERC 721s or 115 tokens to really expedite the building of your nft process your nft application there is a link in the show notes for

you to get started you can sign up an account with inferior to get started or you could just go to banklist.cc slash inferior there it is uh well will it help me shill in nft that's another verb that's uh hey we all start somewhere but uh that's not in specifically the API okay can't help you shell can help you do everything else though click the link in the show notes guys gotta get to the markets David what is bitcoin telling us on the week uh Bitcoin down half a percent which I consider flat uh so start of the week at 28 000 dish

currently or 28 700 currently at 28 420. week for Bitcoin in the week I'll take a flat uh how about eth down 2.3 on the week start of the week at eight hundred eighteen hundred twenty five dollars currently at 1795 2.5 I mean all this not bad considering right not considering yeah interesting I think we'll get into that in a little bit how about the ratio what's that saying on the week also flat

uh down two percent um so 0.063 so I believe the third consecutive week of a Down ratio price um yeah uh how about total crypto market cap 100.23 trillion dollars one two three not too bad I look I consider all of this a win in this economic environment yeah a bear market right yeah just like hopefully this is not only narrative hopefully there was actually real new

buyers of Bitcoin in the last since the last banking crisis the worst case scenario would be that it was just sidelined crypto traders who had a bunch of stable coins who then decided to buy on the narrative that real buyers would be coming that's what we don't want to be true what we do want to be true is Bankers we're like Bitcoin okay I think that's probably still early I think it's all still the same recycled buyers but that's how all of the experience starts I know that's still the bear case but it doesn't mean that they're wrong right now and you have to

start somewhere and you always start with that Foundation of existing buyers who are like I'm a little scared I'm going to stable coins and then they buy back in I think this might be the story as to why David and this to me looks like fundamentals this is from Jim Bianco this is the fed's updated balance sheet you can see the numbers here now two-thirds of the quantitative tightening has been reversed so over the course of starting in 2021 all the way to up till March the FED had been actually sorry from 2022 March of 2022

or so up till 2023 a full year the FED had been tightening they had been um destroying assets uh on the balance sheet decreasing the balance sheet I I shouldn't say and it went from like nine trillion dollars all the way to 8.35 trillions they got 7 100 billion dollars in decrease in the FED balance sheet and then what happened David uh then 500 billion dollars came back inside of two weeks so nice try fed you guys you guys

really did your best uh and Ryan you're saying you said we uh the Fed was able in the last year again the interest rate started March 2022 uh now we are in March 2023 one year so we had good a good old good old try a good old good old-fashioned fed tribe let's try third old College try we started at basically nine trillion dollars so when you said we shaved off 700 uh billion dollars we we started from nine trillion dollars so 700 billion dollars is a lot of money it's quite a lot of money uh we started

from nine trillion dollars we got down to basically 8.3 trillion dollars and then in the last it took us a year to go from 9 trillion to 8.3 trillion and now it took us two weeks to go from 8.3 trillion into 8.7 trillion 75 trillion David this seems to be the big deal you had a good run fed well but like there's still some debate here so a lot of people are still saying including uh Ben Hunt who we had on the podcast as part of kind of are the banks insolvent is the dollar going to hyperinflate says

this Spike right here is just temporary you know he always uses the analogy of like you inject liquidity right into the heart right this is kind of the like right you wake up the patient kind of needle uh and then it it goes back down eventually whereas biology Arthur Hayes say this is permanent and by the way this Spike you ain't seen nothing yet this is going to continue to increase biology is like in 90 days this is going to be massive whereas Arthur Hayes thinks it will take years Jim Bianco

gave us a pretty reason take I feel like was was kind of in the middle wait and see how would you summarize Jim bianco's take from our episode earlier this week Jim Bianco is towards the Ben Hunt end of the spectrum so I was say biology and Arthur Hayes are actually pretty close to each other in terms of their position like biology saying 90 days until bitcoin's one million dollars which is very fast Arthur Hayes saying two years to a million dollars which is still very fast two years maybe a million yeah Millions on the table in two years yeah

Ben Hunt is like that's complete noise and Ridiculousness and actually totally irresponsible and Jim Bianco is less emotional I'd say than bent Hunt is but still directionally agrees with Ben Hunt saying that yes this line that we are looking at on the screen is extremely vertical we just erased two years of rising interest rates think of all the the pain in the market that we've had for the last year excuse me the year of interest rates think about the pain that we've had and then we just erase all that progress from the fed's perspective

inside of two weeks Jim Bianco says okay but this Spike that we've had is not systemic um it doesn't mean the same amount of QE and liquidity injection that is Jimmy checks do and so this is much more contained compartmentalized to just the banking sector and it's not going to leak out to the actual bank accounts of you know Mom and Pop and Joe and Alice right and so uh I think I think this is actually if and of those four interviews

that we did and damn did we really try and get down to the bottom of this and I feel like we did with Jim Bianco yeah I feel uh I feel closer on this honestly I I went in being like let's get two sides of the story here and what we ultimately ended up getting is like four different perspectives which is which is actually closer to reality I mean things are complicated real life is complicated and so getting all of those four perspectives uh kind of uh yeah I feel closure on it anyway this is another piece um of the macro story here this is elf

saying the same thing macro elf that is it took 215 years for the US to reach 7 trillion in debt this is he's zooming out here then it took only 27 months March 2020 to June 2022 to add another 7 trillion 215 years to get to the first seven trillion David and then 27 months to get to the next 7 trillion this is of course all of the outstanding debt um you know from covid this is the big jump right here these 27 months this is

the big story I think here of like if you zoom out a little bit even past the two-year mark look how large and how fast the FED balance sheet has actually grown yeah he also finishes that tweet saying uh debt is not a bug of our credit based money system it's actually a feature what does he mean by that I'm confused by that I think he's saying central banks are kind of designed to do this this is what they do I mean this is the nature of like compound interest right so like when you see an exponential curve like that I don't think it should be totally like foreign

that this is happening because I mean this when you inflate a currency at two percent per year this is actually the the shape the same shape of the chart that it would look like uh this is certainly more than two percent per year but this is what happens did you listen to so Ben Hunt's strongest point to me is like you can have a hard money Bitcoin type of or ethereum type of um monetary system because what you lose is credit you you lose this the ability to pull social credit together and that's what a Fiat regime brings and and

by the way he he would argue the last you know 100 150 years of economic Prosperity everything we enjoy in a modern economy is because we have that social credit we have that trust and so he really rejects the the idea that we would kind of go back in time and re-establish things uh that so that's his take and I think maybe macro Alpha is saying something similar in debt is not a bug of our credit based money system it's it's a feature right how else do you get credit David in kind of

a hard money hard asset regime that that's the the question Ben Hunt posed and I understand elements of that and Jim Jim Bianco kind of echoed that and he's like hey Banks actually play this is bankless but Banks play a function did you know the function that they play is not as a data it's not as a money Warehouse that's kind of stupid I mean we can hold our own private Keys we don't have to Warehouse our money inside of a um you know Wells Fargo but the role that they do play is like small community credit creation and that is a role that right now defying cryptos is

not fulfilling and there is some role for banks in that world so I understand that perspective too yeah I think the thought experiment to really um understand this this metaphor that Ben Hunt was saying was that um say say we have a Bitcoin standard you could have a bank that have big coin that has Bitcoin deposits that operate on a fractional Reserve System so they take in 10 Bitcoins and then they lend out 100 Bitcoins and then they charge interest rates to get that back the the reason why so in theory like you can still get credit in a Bitcoin system uh if you had

just like a Bitcoin bank that denominated in Bitcoin and did the whole fractional Reserve thing that's technically still possible the reason why the economics would still be different is that in the Bitcoin banking system with a Bitcoin standard with Bitcoin credit you actually don't have a Federal Reserve which can mint Bitcoins on the other side to backstop Banks if something goes wrong and so even in a Bitcoin banking system you still have uh much more credit risk because again if the bank goes insolvent you have somebody who can print Bitcoins on the other side which allows for more credit at lower interest rates therefore more

investment in the future therefore ultimately more debt on the federal reserve's balance sheet to happen yeah this is my question look at this chart David So this Central Bank chart how does this chart compete against this chart something like this crypto economic system by the way for those directions not seen in podcast like uh just listening to this so the FED balance sheet is obviously you know spiking up expanding at a precipitous rate and I just pulled up ultrasound money which is ethereum uh Supply decreasing

um right those charts are inverted to each other so which do you want to hold do you want to hold treasuries in the dollar or do you want to hold this thing that's what I don't think central Bankers have fully calculated that now there is another option right a better option and we get to we do get to have both like we want to as individuals hold ether because of its deflationary properties and it's a store of value over the long term and as a society we also want Fiat so we can get a home loan

for example both are good but I think they both have their I think you can tell totally have both yeah but I'm not holding this one I'm not holding dollars though I am well so like I I have a home loan uh I have debt in dollars I love debt debt in dollars isn't it great you ever look at your mortgage and you're just like oh my God that is just inflating away that is getting uh less expensive over time right fantastic meal I've got ether on the other side like that is a

beautiful symbiosis for you it is definitely for me I don't know what it does to society I mean that this is what we're grappling with um yeah this is Chris berninski's take on this on this whole thing David which is uh he says this um maybe this kind of sums up the discussion we've had a number of people asking me what I think about in the context of the current baking crisis regulatory fights biology's bet and so on so here it goes current banking crisis is bullish for crypto long run short term we're likely in the eye of the storm so expect volatility but the banking crisis has been a monetary

induced policy too much too fast with rate hikes and will be solved by monetary policy fed and other central banks will drop rates perhaps even this year as the market is now anticipating which will allow existing bonds to rally and voila banks that are currently struggling will have healthy balance sheets again in quotes this banking crisis is also more likely to cause disinflation than hyperinflation in Chris's opinion credit is drying up that's interesting btfp isn't the same as stemmy's stimmies went straight to consumer spending whereas btfp is

showing up bank balance sheets which is likely to just sit there but disinflation will give the fed and the other central banks cover to lower rates and that will breathe air back into the fire of growth stocks and crypto turning regulation and crypto and then he ends with this as for biology's bet I don't take him literally but more as directionally alerting people in this distracted day and age sometimes you need to do severe things to get people's attention he's done that but as I said earlier I think disinflation from here is more likely than hyperinflation at

least for the coming years really interesting take here is um biology was kind of being intentionally nomadic about this and the bit signal 90 days a million dollar Bitcoin bet that was him intentionally kind of being hypermark about this he said he said he wasn't doing that yep I know he's he said on the podcast that this is not him doing a marketing stunt yeah well so I

another reasonable take from Chris and uh I guess we'll see uh we are what you know 80 days left 75 days left yeah speaking of upcoming dates what do we got happening pretty soon David uh we got withdrawals happening pretty soon Ryan uh ether withdrawals coming uh the date is April what's the date if you scroll down I can read it up because I don't have it memorized April 12th April 12th and so LSD tokens are getting uh a nice little bump in their price because of the incoming uh uh Shanghai upgrade so this is when we can as validators

withdraw our ether and ether just gets violently sold into the market and The Ether goes to zero crashes yeah that's what happens next well what do you think is going to happen in at withdraw it's up or down prices go up number go down what do you think flat flat yeah staking tokens going on flat first first flat maybe for a week maybe for two weeks and then people will realize that it was quite literally a bullish unlock in the sense that the stickers aren't dumping their ether because stakers are

inherently bullish either and then people will realize that everyone that hasn't bought ether in the last month because they're fearful of the staking withdrawal unlock are gonna be like oh it's over and the sakers didn't sell well I'll guess I'll buy back my ether and then David David thinks the unlock will be bullish it'll be flashing bullish and then bullish yeah I don't have a strong opinion on that so I'll just take yours sounds good David uh tell me about arbitrary are you surprised that my conclusion is that it's bullish are you

surprised about that opinion I'm not David I'm not surprised let's talk about arbitrim though so they had a token launch was that last week last week before it launched just last week it was announced two weeks ago it was a long time right right it's all blurring to me arbitrim uh total locked value jumped a nice two billion dollars you can see yeah on Layer Two beat and uh there was also some reports of airdrop farming what is this tweet David yeah so this is a tweet of what looks

like just uh one device emulating what looks like hundreds of devices and I can only assume processing transactions on arbitrum so this is what a modern day airdrop Farm looks like um uh I'm still yet to see an analysis a report of the farmed nature of the Arab airdrop um like 600 000 addresses and we didn't know what percentage of them might be farmed hopefully it's low but you're worried that it might be I'm sure the efforts of the Arbitron airdrop like curation like the criteria pruned away

like 90 of at least 90 of the airdrop Farmers efforts but like ninety percent like they need to have well it is what it is ideally they would print away a hundred pruning away 100 is damn near impossible how close to 100 did they get is the million dollar question and I have yet to see an answer to that question how successful were airdrop Farmers we do not know the answer to that uh decentralized exchanges seem to be recently successful this is Hayden Adams tweeting Dex versus

centralized exchange I don't know what to say you're not you're not gonna say sex uh Dex versus sex volume is at an all-time high of 25 since the FTX collapse uh pretty incredible on the back of new all-time high decentralized exchanges are crushing it um this is a tweet about have you ever wondered David how much eth is is just lost forever I actually wonder about that quite a lot okay well um this is Connor and he's got the answer for you want to read this

thanks Conor uh Connor says uh I've categorized thousands of instances of ethereum typos user errors and buggy contracts thus far I found 636 000 ether about 1.15 billion dollars that is lost forever and I'm assuming verifiably lost forever which is about half a percent of the circulating Supply so that's a lot that's not a small amount that's not a small amount and you can see where he came up with some of these numbers the parity wallet bug oh my God that's almost like that sucks

yeah that's almost like 0.5 alone that's a good piece of ethereum History lore that I bet you a lot of 2021 uh crypto people don't know too much about oh okay well why why don't you tell them uh oh God it's such a crazy story man uh so there was this library of code I don't know um this is stretching my developers like technical ability to tell the story but like there was this Library code based library or something and a junior Dev on uh the parody team

was messing around with it and sent this very Infamous message um to I think inside the parody slack that says something along the lines of oops I accidentally killed it he accidentally deleted the code library or something which basically froze the multi-sig for parity uh parody was a consensus client um that um didn't how did they get all that either

my memory of this is this is a polka dot raise they basically put it in a uh in a wallet a smart contract like a multi-sig type early prototypes that wasn't diagnosis safe it was their own custom-made uh multisig yup and the bug uh caused a billion dollars worth of eth now to be stranded there forever and locked forever so yeah the message is I think I killed it that is terrible um unfortunate but that means point five percent which doesn't even include an

ultrasound money chart of eth is probably locked forever and it's yeah it's uh that's gonna increase over time that much yeah uh all right David what do we have coming up next coming up next we got the big news of the week Gary Gensler goes to the principal's office which yeah I'm sure everyone is listening to would love to talk about that but first we're gonna have to talk about binance getting busted by the cftc and we'll give our takes about that how serious of a deal that is uh ZK EVMS an Oiler update SBF managed to get in trouble again so we'll talk about that

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never lose another airdrop binance gets busted David the cftc sued binance over what they say are regulatory violations this is a press release from the cftc what is going on here yeah so the cftc has filed a civil enforcement action charging CZ and three entities that operate the binance platform with numerous violations of the commodity exchange act and other cftc regulations so this complaint charges that binance Holdings limited binance Holdings IE

limited and binance services Holdings Limited together Finance man that's a lot of entities and that's not all of them operate the binance centralized digital asset trading platform along with number of other corporate vehicles through an intentionally opaque common Enterprise with CZ at the helm as binance's owner and chief executive officer the defendants allegedly chose to knowingly disregard applicable provisions of the Commodities Enforcement Act while engaging in a calculated strategy of regulatory

Arbitrage to their commercial benefit okay let me summarize that tldr cftc is suing binance NCC on allegations that the company knowingly offered unregistered crypto derivatives products inside the United States against federal law crypto derivative is like a future or something yes they didn't get the cftc's blessing exactly yeah uh directed U.S customers to evade compliance controls through vpns poorly super advise its business didn't implement kyc or email AML processes and had also had a poor

anti-invasion program and also they never registered as a compliant Futures commission's Merchant and so the cftc in continuing litigation against its defendants the agency seeks disgorgement civil monetary penalties permanent trading and registration bans and a permanent injunction against further violations of the cea and cftc regulations this this is interesting David this is not a charge of fraud seems like it's basically it's all right you did not

follow them yeah file the paperwork and register for your you know derivatives products and you didn't do the AML kyc stuff that uh is required by U.S financial law the cftc um this is not like an SPF you're running a Ponzi scheme there's you know the assets aren't backed type of charge I don't even think it's the the uh the same type of charge that um bitfinex was charged with uh which was

some of his but wasn't there also bitmax excuse me well bitmax was charged with violating the bank secrecy act which is a massive deal right um so what what does all this mean what like what's your take on this uh well there's there's some other things in this report as well so there's a link in the show notes to to read the report there are some pretty damning things and so here here's a link there is a thread of we are looking at one tweet in a very long thread of a summary of this report and so I'll read this one tweet to kind of indicate the more egregious side of things if instead of just like failing to do kyc and

registering so uh reading from the report here internally binance officers employees and agents have acknowledged that the binance platform has facilitated potentially illegal activities for example in February 2019 after receiving information regarding Hamas transactions on binance uh lim a binance executive explained to a colleague that terrorists usually send small sums as large sums constitute money laundering uh so they send small money through buying hands because they don't want to send large money because large money triggers the flags so the

colleague applied uh six you can barely buy an AK-47 with 600 bucks and with regard to certain binance customers including customers from Russia Lim acknowledged that in a February 2022 chat the quote is like come on they are here for crime binance is mlro I don't know what that is agreed that we see the bad but we close two eyes uh and so like the the more direct charge that's being made here is binance was the host of a very significant amount of money laundering and they just completely were

aware of that and just looked the other way maybe perhaps totally obviously totally willingly so that's the more damning charge that's going on here yeah and I also don't think that's any surprise to anyone in the crypto industry like I I guess without any evidence I totally assume that that's what's going on yeah it's it's just interesting I I guess the posture here is okay cftc uh understood um but at the same time they're going after binance they're also going after not the cftc but U.S Regulators they're

going after coinbase I mean we just talked about that right last week like shutting down coinbase staking um the wells noticed to coinbase from the SEC and I know that coinbase is much more thorough being us located on AML and kyc acts so I you know I don't know um I understand it I understand why the cftc is doing this what is um finance's response to this complaint yeah so CZ made a response to the cftc complaint so I'll just read the first two sentences