Weekly Roundup 06/26/26 (Quantum EOs, STRC's selloff, more MSTR) (EP.727)

Speaker A: Matt Walsh and Nick Carter are partners at Castle Island Ventures. All of these expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures. Guests and hosts may maintain positions in the assets discussed in this podcast. You should not treat any opinion expressed by anyone on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of their personal opinion. Uh, this podcast is for informational purposes only.

Speaker B: Brought down by Bad Mortgage Investments. Lehman, which has 25,000 employees, will be liquidated.

Speaker A: The federal government loans American International Group, AIG, 85 billion.

Speaker B: This is a different kind of market, and the Fed is asleep. The federal government is stepping in to stabilize Fannie Mae and Freddie Mac, the

Speaker A: two mortgage giants that have been threatened

Speaker B: by the housing crisis. The bank of England has pumped 75 billion pounds more into Britain's ailing economy with a new round of quantitative easing.

Speaker A: You print a couple trillion dollars, and all of a sudden people start to worry. So out of this worry, we have something called the Bitcoin.

Speaker C: Welcome to on the Brink. I'm Matt Walsh.

Speaker B: And I'm Nick.

Speaker C: I think the first time I had a huge hiccup in the podcast like this, and I've apologized profusely, but we recorded about a half an hour of this podcast, and then I realized I wasn't recording.

Speaker B: Let it be known that I was actually very good spirited and very forgiving about it.

Speaker C: You were. You handled that very well. I don't think I would have handled that with as much poise as you did, because that was painful.

Speaker B: So we recorded a full half hour, and then Matt realized he didn't turn his thing on, which I think. How does that ever happen in this podcast before?

Speaker C: No, we've been doing this since 2018. I don't think that's ever happened to us.

Speaker B: Six years of the eight years. Jesus, that's. My God.

Speaker C: Uh, time flies.

Speaker B: We hit. We did lose a podcast episode because I was at a conference and forgot to upload it. So there's one lost tape out there.

Speaker C: There is a lost tape, but then we skipped a week once.

Speaker B: We skipped. Yeah, we skipped, like, two or three, I think. But we have never forgotten to turn on the equipment.

Speaker C: Yep. So that's me.

Speaker B: It's kind of a cool milestone for us. So it really was. You know that song, the Greatest Song in the World by, um, Tenacious D. Yes. Or it's called Tribute. Right.

Speaker C: This is. Yeah, this is not the greatest song in the world. This is just a Tribute.

Speaker B: Yeah. So what was it? He like, dreamt of the greatest song in the world or something, right? Was that it?

Speaker C: Yes.

Speaker B: So this episode is a tribute to the greatest episode ever recorded, which was just now.

Speaker C: It's in my defense, we got a lot going on here. I was, I was trying to coordinate signing a term sheet. We got a couple follow ons going on. We have day jobs over here.

Speaker B: We do. And we're uncompensated for this. I do, I do remember thinking to myself, this was a particularly good episode.

Speaker C: I know because we started talking about my skunk problem. Oh, there's the six minutes on the skunk. And you know, for those of you who didn't hear, which is all of you, I have a skunk in my backyard now.

Speaker B: Yeah, I guess we'll just play. We'll just play it back. So has, um, the skunk sprayed you or your children yet?

Speaker C: Skunk has not sprayed me or my children. I, you know, I've got the turkeys. That's been well documented. But now we have a skunk burrowing holes in my backyard. I thought it was a mole, but it was a, a full blown, totally

Speaker B: different scale of rodent. So. Skunks are very cute. I would argue. They're.

Speaker C: Yeah, they're good looking.

Speaker B: They're handsome little forest critters, but they just have this really dark side to them, unfortunately.

Speaker C: Yeah.

Speaker B: So you can't enjoy their presence at all.

Speaker C: Yeah. And, you know, then we did a whole riff about, uh, what the skunks do in the winter. I think that's. I don't know if we can play that back.

Speaker B: Yeah, we don't need to. Actually had a long discussion of like, what various creatures do in the wintertime in Massachusetts. And the tldrs, we don't know how they make it through the winter. We don't know.

Speaker C: Tldr is someone needs to convince me that deer don't hibernate because I don't really see much of them in the winter. Um, they go somewhere.

Speaker B: I don't even. I don't think larger creatures can hibernate. Bears, I mean, bears hibernate. Right. But they kind of like wake up

Speaker C: a little, uh, don't they? No, I think they kind of just stay in like a torpor.

Speaker B: All right, so there are certain frogs that freeze solid. Do you know that?

Speaker C: I did know that.

Speaker B: Yeah. So they freeze. So they have some antique freeze item in their blood. So they don't. Their, you know, red blood cells don't burst or something. I have always wondered about Reptiles in the winter too.

Speaker C: Like they fall out of trees down in Florida.

Speaker B: Yeah. Yeah. But in, in Massachusetts, I guess amphibians and reptiles just burrow into the mud and that's it.

Speaker C: Yeah, And I guess we don't really have reptiles up here.

Speaker B: Yeah, you got reptiles. There you go.

Speaker C: What do we have?

Speaker B: We got turtle box. Box tortoises.

Speaker C: Oh, yeah, I've never seen one.

Speaker B: Presumably have frogs. Probably some salamanders even. Well, those are amphibians. Sorry.

Speaker C: Yeah, I don't know. Not sure I've ever seen a reptile outside of the zoo up here.

Speaker B: Snakes. You definitely have snakes.

Speaker C: Yeah, we definitely have snakes.

Speaker B: So I don't know what they do in the winter at all.

Speaker C: Well, we're gonna have to roll back this micro strategy, uh, rundown here because there's a lot going on in microstrategy and I think people aren't really talking about the things that matter. But should we just run through the deals of the week first?

Speaker B: Yeah, let's go. Deals.

Speaker C: All right. First one up is FOMO. This is an on chain trading app. They raised $75 million from index and Union Square Ventures.

Speaker B: Then Allium, our friends at Allium, that's a blockchain data company. They raised 40 million from Amplify Partners, Kleiner Perkins and Theory ventures.

Speaker C: Then it's Orn, which is a tokenized GPU compute marketplace. They raised $33 million from Andreessen, crypto Galaxy and Nordstar.

Speaker B: And that's Orin, with two N's. Next up we have Onyx Odds. That's a sports focused prediction market. They raised 20 million from Payword, which is Kraken, Xfund and Breyer Capital.

Speaker C: Then it's Ground, an on chain yield platform that raised 3.6 million from Bain Capital.

Speaker B: Crypto Parafi and Nascent Cambrian is a data oracle network. They raised 6 million from Franklin Templeton, Polychain and flow traders.

Speaker C: Daiya is a stablecoin payments platform. They raise 2.4 million from Hivemind, Lattice and Alliance.

Speaker B: Dow BitBank is Japanese crypto exchange. They were acquired for 289 million by SBI Holdings.

Speaker C: Big deal there. Chunky deal. Uh, then it's Entendre. This is a AI enabled finance operations company. They're required by Moonpay, which is on an acquisition spree.

Speaker B: Had to say it the French.

Speaker C: Not a double. Not a double entendre.

Speaker B: That's a single entendre. So it's just exactly what it sounds like is a single entendre. 250 digital, that's a active crypto Investment manager spun out of Coin Fund. They're acquired by Franklin Templeton and it's now Franklin Crypto.

Speaker C: Now let's get into the strategy. And I confess, I finally did it. I just burned several hours of time actually going deeper into this company. We don't have a position. We have no way of making money on it. I don't know why I wasted my time, but I feel like I understand it a lot more and it's a lot uglier than I thought.

Speaker B: Oh, yeah. So in the prior episode, which has now been lost, we actually figured out the answer to strategy. But, yes, we've since forgotten it. So we're just going to pick up the pieces here. I like that you finally dug into it because it's like the. In my opinion, it's like the GBDC of today. Like, it's something that you don't even necessarily have to hold, but it really matters for the market.

Speaker C: It is. It matters a lot. It's. GBTC was not as complicated as this. This is really complicated. But there was closer to Terra Luna,

Speaker B: to me, more, certainly more moving parts. There's like six different overlapping securities. But you need. You could. There was alpha in understanding gbdc. There is certainly alpha because you could look at. Remember we would go and look at the creation of units of the trust and then the premium coming off as these funds were arbitrary. Those are the good old days.

Speaker C: Simpler times. Simpler times back then.

Speaker B: So what did you discover?

Speaker C: All right, so everyone is talking about microstrategy and most people are talking about the relationship with the preferred, which is stretch strc. So this is a preferred that is theoretically supposed to trade at $100 and it's supposed to pay out. What is it, 11.5% interest that has been plummeting. And where is it today? Do you know where that's trading? Somewhere in the low 80s, high 70s.

Speaker B: STRC. Um, hang on. STRC hit a low of $73 today. It's currently trading at 77.

Speaker C: Okay. So everyone's talking about he has to have cash to make these payments on the preferred. And it looks like he has 9.8 months of cash to service these preferreds. So he's been doing at the money Equity offering, and he raised over $300 million last week in at the Money Common stock. So the question is, okay, what does he do with these preferreds? I think there's a bigger question here that we alluded to a couple weeks ago when we talked about why would he pay back these convertible bonds that he had previously issued. And I think there's a good answer to this the more I dig into it. So these converts, uh, have a put schedule as I understand it. And so they have conversion prices, which means that if MicroStrategy, the common equity, trades above a certain price, then Saylor can convert these into equity. If they do not trade above that price as of a certain date, he has to give them their cash back. So he has to come up with cash to pay back the principal on these convertible notes and the put schedule, as I understand it. I'm just going to run through some dates and some big numbers here that potentially MicroStrategy would have to pay if their stock again is not at a certain price. He has to come up with $1 billion in September of 2027 if he's not at 183 a share. He has to come up with $2 billion in March of 28 if he's not at 433 a share, 1.5 billion in June of 28 if he's not at 672 a share, 800 million in September of 28 at $150 a share. Another 604 million in September of 28 if he's not at 233 a share and $800 million in June of 29 if he's not at 204 a share. So everyone's talking about how's he going to come up with the cash to service the preferred. But if he defaults on these convertible bonds, uh, that's a, that's a jeopardize the company, jeopardize the franchise type of thing. He can just let the preferred, as far as I'm concerned, trade as low as it goes. And he probably still shouldn't buy it back because that's a bad use of proceeds. There's no maturity date on the preferred. So I think, you know, if you kind of follow that logic, he needs a lot more cash. And there's two ways to get that cash. Number one is you could keep on selling at the money convert, uh, at the money equity here and just dilute the common. But even the way he calculates his M Nav, this thing is already trading around a 1x on an M Nav basis, maybe even lower if you dig into it. Yeah, I would say he's gonna have to sell some Bitcoin here.

Speaker B: Yeah. If you're on the board, you're looking at this. So what is it? September of next year is the first cliff. Right. You got to come up 1 billion

Speaker C: in September of next year.

Speaker B: Not to mention all the preferred dividends before that, which you have not funded currently. That's the thing to be afraid of is the converts. That's, that's the tricky thing. The M NAV is 1.05 according, or 1.03 even according to their kind of messed up version uh, of M Nav, which is not correct in my opinion. You have to compute your own. Um, so as the board, you have to kind of time the market a little bit. You have to think, well, do we just wait, do we wait for bitcoin to go up and maybe we sell some bitcoin later, maybe, maybe the premium grows from mstr. I don't know why the premium would grow because MSTR knows now it's the primary way to monetize STRC and these other obligations. Or do you bite the bullet and sell 50 to 100,000 BTC today?

Speaker C: Yeah, I, I think that's right. So today's bitcoin price, which is, uh, at least it was earlier today, a little bit over 60k. It's since gone down. Funding the first three puts entirely with Bitcoin would require MicroStrategy to sell 74000 bitcoins. Funding the full 6.7 billion dollar put schedule would require them selling roughly 111,000 bitcoins. Uh, and that's before the preferred dividends. So if I'm on the board of this company, the question I'm asking is, should we be selling 75k to 100k bitcoins, units of bitcoin in order to give us some breathing room here? And if the answer is yes, how do we do that without completely spooking the market?

Speaker B: You know who they could really use on the board would be a legendary distrust investor, name of Great point name of Pete Brigger. But he is no longer on the board.

Speaker C: That's. So this is a conversation that you and I had this morning where I said I had put out this tweet storm and I said, look, uh, you know, at least they have Pete Rigger on that board as far as I knew at the time. And then I go to the website and Pete Brigger, who I think was named to the board last year, is not on the board anymore. So what's going on there?

Speaker B: Yeah, that's odd. So strc, we also have to talk about it. I think I figured out why it's trading, uh, in the 70s. I don't think it's an accident that's trading there. My way of reasoning about STRC is what would you have to be paid to hold this instrument? What would you demand to be paid to hold the instrument? Ah, he's Saylor is offering 11.5%. That's not enough, right? It's not enough. The market's saying it's not enough because it's not the most senior claim. It's not really a, ah, real debt instrument because he can just suspend the dividend at any time so he can basically quote, unquote, default on it whenever he wants. And this thing, the capital structure is a little impaired, obviously doesn't have the cash to pay it for a long time. He's got a few months cash and there's negative convexity associated with the instrument. The um, cash out the door increases as the collateral declines as wrong way on the trade. So I don't know, I think if I was a junk bond investor, which I'm not, I would ask for 15 to 20%. And so you can back into the price of STRC that gets you to that yield 15%. It has a sell off to $76 which is where it is. 20% has a sell off to uh, $57. So I think that is the sort of appropriate range, so to speak. And I think that's where it's going to trade until something changes. I think the market is actually being kind of efficient here. It's basically saying we're demanding a higher rate. Saylor is not hiking the yield. He's holding it fixed 11.5 for now, given that we're selling this thing until the yield, the implied yield rises to our required rate of return.

Speaker C: So I follow that logic and I agree with it. My personal view is that there's no floor to STRC right now because it's not economically rational for him to go in and buy this thing back when he has the puts to deal with. And so you might argue that you should be getting paid a lot more to hold this preferred security.

Speaker B: Yeah, but um, if that ratio goes above, if the Yield goes above 20% then this thing, the required price of S2RC goes down. Way, way, way down.

Speaker C: It goes way down. But what's to say this thing should trade at 100 bucks? I mean there's no actual peg there. Um, so what should he do? Uh, and I have my view but curious what you would do.

Speaker B: I think what he will do. And remember he used AI to design this or helped it helped him. Right. So we actually know because we just ask AI what he should do and he's asking AI so we know what he's going to do because just whatever Claude thinks, Right.

Speaker C: I think there's, what should he do and then what will he do?

Speaker B: I think he should front load the sales of, uh, BTC specifically. So I think that's what he should do. What he will do, I think is just wait, just wait it out, do nothing with strc, sell MSTR as needed, drip it out into the market, even maybe at a slight discount to M Nav and try and fill the coffers and keep that buffer alive and then basically hope the bitcoin recovers and the premium recovers too.

Speaker C: Yeah, yeah, I think that's probably right. I mean, I think what he should do is at least stop accumulating bitcoin. That would be a good place to start. And so you do that, you start to pad some cash, potentially you sell, uh, MSTR maybe to the point where it's tolerable from an M Nav perspective, which, who knows, maybe that you even do that below 1x M nav and maybe that's still the right move. I think you have to try to repurchase these converts opportunistically when they trade below parent and you need to try to refinance these things. This is not a existential crisis yet, but it could be if you're up against, uh, a, uh, repayment here. And so he's got to do something here. Uh, and then I think there's no way around it. He's going to have to sell some Bitcoin and he just has to hope that he's going to be selling that bitcoin into a period of strength. But you look at how much Bitcoin microstrategy has on the balance sheet, we're talking about a major league market impact on Bitcoin here.

Speaker B: Yeah. And I think the market is holding its breath waiting to see if those sales are coming now or later.

Speaker C: Oh yeah. I mean, this idea that Bitcoin is just going to rip up and solve his problems, that's not the way this is going to work. I mean, this and Quantum are the two things overhanging the market. But microstrategy probably more acutely than Quantum.

Speaker B: So that's a great transition to the other major news item of the week, which is a monster executive order from the White House. Uh, the title of the fact sheet is Trump Ushers in the Next Frontier of Quantum Innovation. So the White, uh, House this week did a whole number of things regarding Quantum. They accelerated the deadline of quantum preparedness at the federal government from 2035 to 2031. So it was a massive pull forward. They also said they want to have a commercially relevant Quantum computer by 2028. So not only do they think that this is going to happen, they actually want to make it happen. And then there's a number of other measures. They announced basically industrial policy to support the domestic quantum ecosystem.

Speaker C: Yeah, part of those policies is, I believe, providing law enforcement help to US quantum companies such that foreign adversaries don't steal their IP and things like that. Um, so we've gone from 2035 to 2031 in terms of when the government itself is going to upgrade to post quantum cryptography. We have Google and Cloudflare and other big companies coming out and saying 2029, 2030 in some cases. And then we have certain public blockchain development teams that are just not worried about this.

Speaker B: Yeah, it really mystifies me at this point, uh, that as the developer of a major trillion dollar protocol, you're bearing your head in the sand about quantum and most blockchains aren't to their credit, most blockchains are not. Bitcoin developers still have not gotten their act together on this, in my opinion. And it's really curious because you have the biggest Internet companies on the planet and now the government itself that are saying, well, not only do we think this is going to happen fairly soon, we're actually going to make it happen. I don't see how it's tenable as a bitcoin developer to say this is fantasy.

Speaker C: I don't either. I mean, I could see a perspective of a physicist that is studying this thing to have a view that it's not going to happen by 2030. But the idea of a cryptographer just having that opinion in a vacuum just seems perplexing and, uh, ignorant.

Speaker B: Yeah, I, so I think it's about time that we actually start talking about implementing a PQ upgrade the hours later than we think. We're midway through 2026. Google and Cloudflare think this thing is coming by 29. The government exposed, uh, agencies have to transition by 2030 and the whole government has to transition by 2031. How long does a transition for Bitcoin take? Certainly a while, two, three years.

Speaker C: Yeah, we've talked about this. I mean it's just operationally, if we had the BIP written and the software was actually in place, it would still take a while to rotate everyone's coins. Right. So best, uh, time to start would have been yesterday. But the second best time Is today.

Speaker B: We haven't even started the clock. That's the problem. We need to start the clock.

Speaker C: In other news, um, here's an interesting one. Andrew Cuomo is back in the game. So OKX and the Intercontinental Exchange, which is the owner of the New York Stock Exchange, have formed a joint venture to tokenize listed equities on nyse. It's co chaired by, uh, Andrew Cuomo. Didn't know he was a financial services crypto blockchain guy.

Speaker B: Yeah, very shocking career pivot for him. I wouldn't have guessed that OKX was going to be the one to partner with nyse. But uh, credit to them for pulling that off.

Speaker C: It's super impressive. I mean you would have thought that that would have been a, maybe a U.S. uh, exchange. But good for Okx to get that.

Speaker B: So the Ethereum foundation appears to be in turmoil that whenever I go look over at Ethereum land, there's some kind of crisis brewing over there. They've announced that they cut 20% of the staff, 40% of the budget. Large restructuring. Five former researchers announced the creation of a different nonprofit, ETH Labs. I remember just recently they also seems like a lot of them went to Etherealize. There's always something going on in Ethereum.

Speaker C: I mean, didn't a lot of. Well, not a lot. But some of the really critical developers also went to Tempo, which wasn't probably great for Ethereum. It seems like, uh, this is by design though. I think Vitalik doesn't want to have this kind of big foundation albatross thing. He'd much rather have it be balkanized with many development teams. So seems like it's intentional, but who knows.

Speaker B: So did you see the story, uh, in the Journal this week about Polymarket's marketing campaign? It was quite troubling.

Speaker C: Do you think we're gonna have to bring back the bad boys section?

Speaker B: We might, yeah. I mean it's kind of a bear market phenomenon. It seems like we're in one. People are definitely doing bad things. Yeah.

Speaker C: So this piece, uh, this is bad, right? They just had influencers that were told to trade on fake sites, fake poly market sites, and post winnings of things that actually didn't happen.

Speaker B: Yeah, so we like prediction markets. We enjoy reading them and using them informationally. We use them all the time on this show to see what's going on in the world. However, that doesn't mean that they are completely blameless with regards to their marketing. This expose was really a tough read. I mean, so apparently Polymarket created fake mirror versions of their site. Kind of like those scam sites will change an L to an I or something. They did that to themselves, gave it to a bunch of influencers, told them to place fake trades that looked real, record the sites, record them doing it, and then go on social media and claim that they won all this money trading on the site. And they, those were not real trades.

Speaker C: Uh, I don't know what law has been broken there, but I can guarantee you that it is A law has been broken.

Speaker B: That's egregious. I mean, it's deceptive as hell. I mean, these trades didn't hit the tape. These not real trades. They're going out to retail investors and saying you too can make rent money by betting on stuff. The trades weren't real.

Speaker C: Yeah, that's not good. I mean, I just think that Polymarket and Kalshi too. I mean the, the way that they market themselves is going to be so damaging in the long run and there's going to just be a major backlash here. Yeah, they're going against this tide of just young people becoming complete degenerates. And it's. I think there's going to be a ton of opposition politically to that.

Speaker B: Yeah. And it's such a important time for the platforms to get this right because there's a massive fight brewing between the states. They want to regulate these effectively. Sportsbooks and the federal government and the CFTC. The CFTC's argument that they alone can capably regulate these platforms is weakening with more, uh, bad behavior that is exposed.

Speaker C: Well, yeah, that's a good point. I think that the sports gambling side of this is going to end up in the Supreme Court. And you know, you have Kalsheet this week, reportedly in, uh, discussions to raise at a $40 billion valuation and go public next year. You really wonder the timing of an eventual Supreme Court case, what impact that will have on the value of these platforms. Because sports is a huge, huge part of their revenue.

Speaker B: Did you see this story this week? It, uh, was just a long, detailed investigative, uh, piece of journalism from this guy, Alex Waltz about who the first bitcoin miner was.

Speaker C: Oh, is this the guy that just. He put it out on YouTube? Yeah, yeah, I saw. I actually did watch that. That was fascinating.

Speaker B: So it was a really cool piece of research. Clearly took him a very long time. Actually hadn't come across Alex Waltz before. So he found that Hal Finney was not the second person to run bitcoin. Yeah, so it was Dustin Trammell.

Speaker C: Dustin Trammell. But, uh, I Thought he came to the conclusion that Satoshi was the second node.

Speaker B: Well, we don't know for sure because a lot of this stuff is lost to the sands of time. But it may have been Satoshi running a couple nodes. But between Satoshi and Finney was Trammell, which is Dustin. Trammel's kept a very low profile over the years, I would say.

Speaker C: I'm sure he likes it that way.

Speaker B: Yeah.

Speaker C: I had never even heard of Dustin Trammell until this week.

Speaker B: He runs a bitcoin venture fund, tvp.

Speaker C: Oh, that's Dustin Trammel?

Speaker B: That's the very same, yeah.

Speaker C: Oh, uh, no kidding. Okay. All right. Well then I have heard of him.

Speaker B: Yeah. So, uh, pretty cool, blockchain archaeology. He also found that the first couple days of bitcoin they were long blockchain halts, which was something that I had found eight years ago.

Speaker C: I remember that.

Speaker B: Yeah.

Speaker C: Just the big intervals between the blocks, right?

Speaker B: Yeah.

Speaker C: Why was that? Just the nodes were crashing or something.

Speaker B: Yeah. The early software just wasn't very reliable. There are a lot of bugs in it. And, uh, Hal Finney's node crashed the first time he tried to run it.

Speaker C: If you could go back in time, is that in the top five to 10 things that you would do is just become an early bitcoin participant?

Speaker B: I mean, yeah, of course. It's just you had to be such a specific kind of person to do to be in that position. You had to be a cypherpunk. You had to be on the mailing list. You had to care about it when no one cared. You had to think. You had to see the value of bitcoin.

Speaker C: Yeah.

Speaker B: And even the serious cypherpunk guys, most of them wrote it off, they didn't care at all.

Speaker C: And you had to have been able to get the node up and running.

Speaker B: Apparently. Yeah. And you had to run, you had to run a mysterious executable piece of software from an anonymous guy, which is like downloading as a Windows user. Downloading a.exe and running it is kind of a crazy thing to do.

Speaker C: It is, yeah. You don't. You definitely want to not be doing that on like your work computer.

Speaker B: Yeah. So I was actually thinking about that. I'm like, okay, would I have done it? Probably not. I'm not downloading a mystery Meat file and running it on my workstation. That's scary. No. Yeah, from this guy, he's like totally anonymous, made up name, experimental software. Absolutely not. I'm not running it. That's too scary.

Speaker C: So you got to tip Your cap to Trammel.

Speaker B: Yeah, well done.

Speaker C: Uh, we were just talking about prediction markets and this is an interesting thread on the prediction market side. Meta has reportedly begun developing their own prediction market called arena, and it might be a points based system as opposed to cash. I was really surprised and I still don't understand why they would do this.

Speaker B: I think it's one of Zuckerberg's things, is that he loves shiny objects and he, uh, gets captivated by them and doesn't necessarily have a full appreciation of whether they suit the platform. I mean, how much money did he spend on his Metaverse boondoggle?

Speaker C: Yeah, I mean, Andy changed the name of the business, but so if he got a ton of flack for just getting into payments, how much flack is this guy going to get for getting into prediction markets? This is. Politically, this is going to be a debacle for him.

Speaker B: I think if it's play money markets, he'll be all right, I guess. I don't think he can do real money.

Speaker C: Yeah, I guess that's probably right. Uh, in other news, uh, Senators Cynthia Lummis and Ruben Gallego, they have introduced a resolution opposing a pardon for Sam Bankman Fried saying he is exactly where he belongs. Hard to argue with that.

Speaker B: Yeah, that's mostly ceremonial, I would say, or symbolic rather. Uh, there was another. Got to give some props to Wall Street Journal as much as we've tangled with them in the past. There's another good article in the Journal this week about Coin X. Have you heard of Coin X?

Speaker C: I've never heard of this.

Speaker B: So apparently this is an exchange, I think Iranian, uh, they reportedly Iranian entities moved $3.8 billion through coin X in close, uh, conjunction with the Central bank of Iran. So, um, it appears that meaningful amounts of funds were moving on chain. They were effectively owned by Iran.

Speaker C: Not great, but also not surprising. I mean if you're cut off from the rest of the financial system, then that's probably something you would look at doing. These, uh. Yeah, these Iranian crypto exchanges were never part of like a reference rate methodology. They kind of fly below the radar.

Speaker B: The treasury did something quite good this week, I think, which is they are finally cracking down on these, these uh, scam compounds in uh, Cambodia and Lao and places like that.

Speaker C: Oh yeah.

Speaker B: I mean some of the reporting on this stuff is just traumatizing. I've read some of these long form pieces, I think in Wired about it, about basically people that got put into indentured servitude and end up in these compounds in the Middle of the jungle basically. And all they do is um. It's called pig butchering I guess. Do romance scams mostly against Americans elderly and extract. Just tens or tens of billions of dollars a year.

Speaker C: Yeah. Do you ever wonder if some of these scam calls you're getting are originating from over there?

Speaker B: I'm sure they are. I'm sure they are. So I'm really glad Treasury's cracking down on this. I think they should put a lot of pressure on the local sovereign governments to. I mean we know where these are, you know. Yeah, there's just. It's just totally lawless. These governments don't have the territorial control I think over these places.

Speaker C: Well, I think they're also just getting paid off by some of these organized crime syndicates that are running these things. But yeah, you really just need to go in and knock these compounds over. So I'm glad that uh, they acted on it. This is something that if you've been investing in the on chain forensic space as we have for many years, everyone knows about these things. They're no secret.

Speaker B: I mean anything about the amount of harm that's being done to everyday Americans, it's astronomical. So I'm very glad that treasury is now doing something about this.

Speaker C: Looks like the bank of England has pulled back on its previous plans to cap individual holdings of stablecoins. Instead they're opting to place a cap on the issuers. So it looks like the issuers can only go up to 40 billion pounds per issuer, which, uh, I mean, that doesn't seem like a great idea either, to be honest with you.

Speaker B: It's less worse than the alternative. But it's still not great.

Speaker C: It's still not great. Have you checked out like CoinMarketCap lately?

Speaker B: No. What's going on?

Speaker C: Tether briefly, was the number two asset on CoinMarketCap this week and it's neck and neck with Ethereum. Yeah. When was the last time you saw that? Uh, Ethereum, uh, not be in the number two seed. I mean that's been like seven or eight years ago.

Speaker B: Yeah, I think Ripple might have passed it at one point. I mean, I believe that Tether or some stablecoin will be the number one eventually, even ahead of.

Speaker C: I do too.

Speaker B: I mean, um, there's more dollars in the world than there is gold, right?

Speaker C: Yeah. So, yeah, I think that's just a matter of how many Stable coins will you have. Right. There could be, there could be many winners there, but um, I think that's reasonable as a cohort. They'll Definitely. Well, surpass Bitcoin.

Speaker B: So, going back to Polymarket, as much as we've been hating on them today, um, do you think the US is correctly priced at 3% chance to win the World Cup? They played tonight against Turkey.

Speaker C: And are they favored against Turkey? Is Turkey good?

Speaker B: No, Turkey is terrible. Actually, we're meant to call them Turkey because they changed their name officially.

Speaker C: Did they really?

Speaker B: Yeah, it's like how the Czech Republic were meant to call it Chech Chacha now. Yeah, they changed your name too. I just, I'm like, do we really have to do this? Like, why can't we just call Turkey?

Speaker C: Yeah. So hold on. The US only has a 3% chance of winning the entire World Cup. I would say stranger things have happened. And I will caveat that I've never seen the US Play soccer. Um, but I plan on it. I. I tried to watch the last game, but I had something going on. But, I mean, Miracle on ice. Anyone heard of that? Come on.

Speaker B: Yeah, it could happen. It could. I think 3% is probably right.

Speaker C: Oh, uh, this game's on at 10:00 clock at night.

Speaker B: Yeah, it's late. It's late.

Speaker C: Where are they playing this, in California?

Speaker B: Yeah. I don't know. But, uh, Turkey has been awful and the US has actually been great in their first two games, so who knows?

Speaker C: So the, the banter around the office yesterday was that some of the bars in Boston that love the Scots shut down for the England game so that the English people who have now taken over the city couldn't watch the game at those bars.

Speaker B: But why, why be hostile to the English and not the Scots?

Speaker C: Everyone loved the Scots. I mean, the Scots were running around with their skirts. It was, uh, it was mayhem. But they were just good natured. And I think the English are a little bit. They've got a little bit more of a mean streak. They're a little bit more destructive on the city.

Speaker B: Well, I mean, first of all, you're saying this to a Brit, so.

Speaker C: Yeah, but you're now a U.S. citizen.

Speaker B: Yeah, I have dual loyalties. I also do like the Scots very much. I spent five years there and I went to find them the other day because they're here in Miami now. The tartan army.

Speaker C: That's true. Tartan army. Uh, they're the best army out there besides the US Army.

Speaker B: It's a great innovation, the tartan army. They were wandering around south beach playing bagpipes with their kilts on. I mean, sweating it up. They really didn't look like they belonged in Miami, tell you what. But they were. It was lovely, actually to run into them. They're good people.

Speaker C: Now, I wouldn't say this, but a lot of store owners and bar owners are saying we've already kicked the English out of this city once and will do it again if they keep on acting up. So I think there's a little bit of a behavior problem.

Speaker B: Well, I mean, New Englanders are, uh, descendants of the English, so That's.

Speaker C: Right.

Speaker B: Pretty much direct. So it's kind of like they're your distant cousins, I mean.

Speaker C: Yeah, well, I came up from the Irish branch, so I was a little bit different.

Speaker B: That's. That would be true, but I think it's a little unfair to be prejudiced against English and not the Scots.

Speaker C: I just thought it was really interesting that these bars were like, hey, we're wide open for Scotland, but we're actually not open today for all these English people that want to get in.

Speaker B: Yeah. And frankly, on a technical basis, I would say the Scots are more rowdy and more prone to violence than the English.

Speaker C: Oh, is that right? Interesting.

Speaker B: 100%. Having lived in both places, from my own experience, you're more likely to get into a fight at a bar in Scotland than England.

Speaker C: Um, I was down at the US Open for a couple days last week, and the tartan army was down there. And you would have thought that these people were celebrities. People are coming up to them, buying them drinks, giving them hugs. It's. These people travel.

Speaker B: Well, they do. And they just had such a bad World cup, unfortunately. They did horrible.

Speaker C: Oh, are they out?

Speaker B: Effectively, yeah. They lost to Brazil yesterday.

Speaker C: Okay.

Speaker B: So that's a shame their party has to end.

Speaker C: I mean, it's got to be a little bit different partying down in Miami versus Boston.

Speaker B: Yeah. I mean, there's 24 hour bars and clubs here. They don't close.

Speaker C: All right, So I think that's probably a good place to, um, to leave it. Um, do you think I'm just going to get sucked into the vortex of tweeting about MicroStrategy again? I was. I took six years off and came back into it with a. With a couple tweets last night.

Speaker B: I mean, if you want to get your impressions up, tweeting about strategy is the way to do it.

Speaker C: Yeah, I don't really care about that, but, um, I find it interesting that no one's kind of talking about these converts. I think that's. That's the big problem.

Speaker B: I think it's an interesting puzzle because there's so many moving parts. It's just great and it is driving the market. So you might be stuck in here with us.

Speaker C: Well, it's kind of like one of these things where we know he's talking to AI. Ah. So he's probably just saying, what's the craziest thing I can do to get myself out of this pickle?

Speaker B: And the funniest part is when he came up with it, he was using the 4O model. I know, which is the most sycophantic one, by the way, which is a. It's a quite a concerning thing, actually.

Speaker C: I know.

Speaker B: Uh, because he used the model though, to just praised every wacky idea.

Speaker C: He should have just said, what's the worst that could happen? And it probably would have said, what's happening right now?

Speaker B: Yeah, this.

Speaker C: All right, that's a good place to leave it. Everybody have a safe and healthy weekend and we will see you on Monday.