[00:02:31] Joe Carlasare: Well, as you know, as our colleague who’s not here tonight, Steve talks about frequently the sec let ETH futures ETF trade. Right. He is spot on. They, they stood down and allowed eat futures to come to market in the form of ETFs. And that followed the CMEs decision to list the futures. So in case law, which is the world I live, once you set a precedent like that, once you say that it would be arbitrary and capricious to treat spot products different than futures products, where there’s over, you know, 95 percent correlation between the prices of the two assets, how can you discriminate against the spot ETF.

[00:03:06] Joe Carlasare: Now, the way I read the development here with respect to pulling their 19B application is effectively they’re, they’re playing nice with regulators with the hope that they will approve it on the timeframe, rather than agitate them, rather than have to go through litigation, rather than holding their feet to the fire with the court system.

[00:03:24] Joe Carlasare: They’re standing down now, they’ve effectively pulled the application voluntarily as opposed to forcing them to make a denial and then pursuing it in court. So I think it’s a question of timing and I think rather than escalating it with the regulator, they’re just going to play nice for now.

[00:03:40] Preston Pysh: So it would sound something like this.

[00:03:42] Preston Pysh: If I’m at the SEC, I would go. If you pull this right now, it’s actually going to be faster for you and it’s going to be cheaper for you. We just need a little bit of time because we’re working through some stuff locally here at the government level. Resubmit in three months.

[00:03:56] Joe Carlasare: Well, who knows what it is, right?

[00:03:57] Joe Carlasare: I mean, you got to remember, we can, I’m sure we’re going to get into this and I’m interested in huddle and just take on this, but the sec won a pretty significant motion to dismiss that was Coinbase suit, right. And that is, that case is pending. We’ll talk about that later on, but that’s active litigation, right?

[00:04:14] Joe Carlasare: That’s the major custody provider for all the Bitcoin spot ETF save, you know, one or two, there are things coming down the pipeline. And I wonder if the sec said, we’re going to get to this, but we just don’t want to do it now.

[00:04:26] Preston Pysh: I’m not well versed on this, so either one of you guys take it away. Let’s dive into it on the Coinbase piece.

[00:04:32] Jeff Ross: Go ahead. Yeah. No, keep going, Joe. You know, way more than I do. Keep going.

[00:04:36] Joe Carlasare: Okay. Okay. I sent you a screenshot. I don’t know if you had a chance to share my screen here. It’s okay. So there was a decision that came down. It was a significant decision in the, at the end of March. Okay, I think March 27th.

[00:04:49] Joe Carlasare: And this was a decision that came out of the Southern district of New York, which you may remember, Preston was the same district court, same us district court that resolved the ripple decision, right. And the key takeaway from this decision is that it is completely at odds with the logic, at least with respect to secondary market transactions in the ripple decision.

[00:05:10] Joe Carlasare: So you get this bright line rule almost, even though it’s not quite a bright line rule based on the footnote, Where the judge Torres in the ripple decision said, well, these are blind bid ask transactions on a secondary market. We think the institutional sales by rebel labs of XRP that that qualified as an investment contract.

[00:05:28] Joe Carlasare: But once you transform it to this secondary exchange, that’s totally different. There’s no way that a purchaser on that exchange knows that they’re buying from rebel labs or if they’re buying from huddle dumping is XRP bags, right? There’s no idea. You can’t figure it. You can’t figure it out. So the court sort of applied this test that’s saying, no, for those secondary market sales, those are an investment contracts.

[00:05:48] Joe Carlasare: Well, obviously that’s a huge development. Okay, that would be a huge sort of categorical removal of a lot of these coins and tokens from the securities analysis. Well, In the Coinbase suit, that same argument was raised and judge the judge in this case basically said, no, I disagree with that rationale entirely.

[00:06:06] Joe Carlasare: I’m applying more of an economic realities test. I think there’s clear evidence put forward by the SEC, at least in the form of allegations that are plausible at the pleading stage. That even secondary market transactions can be investment contracts. That’s huge, right? Because it changes the game. It almost swings the pendulum from one end to the total other end.

[00:06:26] Joe Carlasare: And now we’re left with confusion. And this is within a single district, a single district court judges disagreeing over this. And grappling with these issues. So it was kind of, one of the first, I would say in a while major victories for the sec in a, in a case because they were able to sort of reject this test or this precedent at least from the ripple decision regarding secondary market transactions.

[00:06:48] Joe Carlasare: So, you know, there, we can get into a little bit more, but I’ll stop there and see if you guys want to have questions or whatever. I’m not making clear.

[00:06:55] HODL: You know, it is interesting. They’re talking about the friction even between districts. Joe, I’d love to get your take on this is that, you know, it seems that every regulating body has, it’s like a turf war, like they all want access to it.

[00:07:07] HODL: And one of the things I’m hearing behind the scenes is that FinCEN is actually pretty miffed by the DOJ action against samurai, because they feel like their rules that they’ve been setting since 2013 are clear. And they’ve been like laying out this path and that the DOJ action actually muddies the waters.

[00:07:22] HODL: And now they’re You know, they haven’t put out anything official about this, but this is just sort of a rumor that’s happening behind the scenes. And it’s not just there, but it’s all throughout these regulating bodies that it seems that each one of them has a different sort of a purview on how it should be regulated.

[00:07:36] HODL: And they all think it should be under their control.

[00:07:39] Joe Carlasare: Which is common for bureaucrats, and we have to get into tornado cash and samurai wallet at some point on this podcast. Let’s do it. I would love to go there. Yeah. But, but I want to stay focused on this Coinbase one for a second here, because I think, I think Hoddles brings up a great point, right?

[00:07:53] Joe Carlasare: The SEC declined to participate in that settlement with Binance, Hoddle. Remember that months back, the criminal settlement? You had CFTC there who had filed suit against them, and, and this is typical of regulators. There was through, for years now, there’s been this back and forth over quote unquote crypto and bitcoin between the CFTC and the SEC.

[00:08:13] Joe Carlasare: They have a turf war. And all these government agencies as, as is typical, they’re fighting for funding, they’re fighting to expand their jurisdiction. You have a fast moving, growing industry, right? And the first thing a regulator says is, I want that under my jurisdiction. Cause that allows me to go to Congress and lobby for more staff and more resources, et cetera.

[00:08:32] Joe Carlasare: That’s very typical. And I think it will continue and I think it’s actually going to get worse as these issues boil up.

[00:08:39] Preston Pysh: Everybody’s just fighting for their piece of the pie at the end of the day.

[00:08:43] Joe Carlasare: Yeah, so let me just, if I can I share my screen? Yeah, I think you can share now. Yeah, go ahead. Okay So this is what I was referring to this is the decision that came down And the judge cites the ripple the decision in particular and sort of dismisses it. She barely touches on it but she talks about the sec has adequately pled this requirement sec is plausibly alleged that the issuers and promoters of crypto assets through websites social media posts Investor materials, town halls, and other fora repeatedly encouraged investors to purchase tokens by advertising the ways in which their technical and entrepreneurial efforts would be used to improve the value of the asset.

[00:09:15] Joe Carlasare: There’s no way to reconcile, I think this portion of the opinion with Judge Torres’s decision in the ripple case. So now you have what is typical in the law in new industries and new issues that are coming up. You have courts coming down differently on this issue, and eventually it will move up to the appellate courts, courts for appeals, and they will have to deal with it, and they’ll have to resolve it.

[00:09:36] Joe Carlasare: So, you know, this is, the long story short is, this is not going to be resolving be resolved anytime soon, this is going to be a long, protracted litigation, I think the SEC has filed against Coinbase. And if you’re wondering about market dynamics and wondering why certain assets are or not performing as they have, quote unquote, in prior cycles, right?

[00:09:55] Joe Carlasare: This is, I think this is a headwind. I think it’s just a significant concern among investors. And I’m very happy every day that you don’t have this same cloud, at least with respect to Bitcoin.

[00:10:05] Preston Pysh: Very interesting. Any questions on this stuff, guys?

[00:10:09] Jeff Ross: When you say that this is going to be going on for a while, Joe, and up and up to the appellate courts, do you think it continues on from there and we actually bring this all the way up to the Supreme Court and this is going to be like a, for the rest of this decade, we’re going to be hearing about these cases or how long do you think this, this all lasts?

[00:10:25] Joe Carlasare: Well, very few cases ever get to the Supreme Court, right? Like they’re the tip of the tip of the iceberg. And generally they, What they’d let happen is they let a circuit split develop. So imagine if you got the fifth circuit court appeals versus the seventh circuit where I reside, they, them coming down on different issues.

[00:10:43] Joe Carlasare: Those are, this tend to be the ones where they start to resolve. They do show a lot of deference to the courts of appeals. So. You know, I think that once you get a court of appeals decision, that’s solid, that’s going to send a lot of, you know, warning shots across the industry. But remember, you know, a case law can easily be read and then smart savvy crypto lawyers can tell clients, well, here’s how you do it to avoid some of these issues.

[00:11:07] Joe Carlasare: I mean, I think the mean coin phenomena that we’re dealing with right now. Is a direct response to this, right? Just disclaim everything away. Just basically tell people you’re selling air and there’s nothing there and people will still buy it because it’s just gambling. And that’s what they wanted with crypto all along to go on and gamble.

[00:11:23] Joe Carlasare: From my standpoint, I don’t think it’s going to be resolved. I think it could be 10 years of litigation on this. That is, yeah. I mean, that’s not an exaggeration. I think the Coinbase suit alone is going to take, you know, go well into 2025 and then you’ve got an appeals.

[00:11:38] Preston Pysh: Good Lord. Let’s talk the privacy side.

[00:11:40] Preston Pysh: So Joe, I mean, if you’re one of these companies and you even have a remote concern, like you just don’t even want to touch the U S rails at this point. Like you just want to IP block anything coming out of the U S., how do you walk somebody off that cliff if you’re advising them from like a legal standpoint based on everything we’ve seen in the past month?

[00:12:00] Joe Carlasare: Well, the general advice I give to anyone when they’re dealing with the government or regulators in general is that you have to sort of understand what really pushes their buttons. What’s going to agitate them and what is going to sort of most likely fly under the radar. Not that I would ever encourage anybody to break the law or commit a crime.

[00:12:18] Joe Carlasare: I don’t do that. But I do think that there are important issues that need to be fought and important cases that need to be brought. And from my standpoint, I think that there are very important pieces of litigation that are going to start to be emerging in the next, say, two years, on these issues on privacy concerns.

[00:12:35] Joe Carlasare: And when you bring forward those cases, and I think I talked with huddle about this briefly, or maybe it was Jeff, you really want to bring forward good test cases, right? What the government is really good at doing is they bring forward the worst possible case. Okay. You bring forward cases where they’ve got individuals.

[00:12:52] Joe Carlasare: All but admitting to criminal actions through Twitter DMs they’ve got, they bring cases where the undercover agent has basically recorded the guy putting forward the technology saying he’s trying to skirt the law and avoid KYC requirements. They bring great test cases. And the problem is that there’s probably good, genuine bonafide issues in those cases.

[00:13:12] Joe Carlasare: And we’re forced to defend in front of a judge, somebody who is really just, you know, was purposely trying to evade the law. Now, the way I think that the industry needs to respond is they really need to think about what they say, what they do, if they’re going to poke the bear, you know, unnecessarily with comments.

[00:13:30] Joe Carlasare: And the samurai guys clearly did that with some of their tweets and those found up found their way into the indictment. And you know, we just need to mature in that respect because you, you have to know, you have to go in with a sober mindset knowing this is going to upset a lot of people. You’re, you’re challenging the rails, like you said, that they think they own and control.

[00:13:48] Joe Carlasare: And when you do that, when you’re rattling those cages, you have to be prepared for the full onslaught of the big gorilla United States government.

[00:13:56] HODL: I think that’s a really interesting point. And you know, digging into, you made a great point about the government picking the absolute worst case. And I think that’s the feeling a lot of big winners have had is that we’re, we’re on defense, you know, like, like crazy.

[00:14:07] HODL: And maybe we weren’t expecting to be on defense this much, or maybe we did expect it, but we weren’t prepared or, but we need to go on offense as well. And start picking our own cases that are darling cases from our perspective, because if the government is looking to cherry pick horrible cases in the crypto industry, there’s so many, I mean, it’s, it’s infinite.

[00:14:25] HODL: It’s like a beggar’s delight for them. Like they can just have everything they want, right. And one of the things in particular with like the samurai case. That I’m worried about is that the the money services business charge is the lesser charge between that money laundering. And so now listen, the samurai guys are ideological.

[00:14:44] HODL: They seem to be hardliners. What I’ve heard behind the scenes is that they are intent on fighting this thing tooth and nail to the bitter end. That said, though, you know, who knows how things progress. And that’s, that’s a good place to start from if you’re going into a long protracted negotiation with the government.

[00:15:00] HODL: But if there is a plea set on the table, one of the things that is worrying or concerning is that the plea could be, we’re going to strip away the money laundering charge from you guys. And we’re going to hit you with the MSP charge, which has wider ranging implications for the rest of the industry. So I think that’s something that’s very concerning that could come out of this case.

[00:15:18] HODL: I guess to Joe, I’d ask, like, let’s just dig into the samurai case, maybe some of the specifics and everything, but like, is this a case that we, is this a hill we need to die on as, as Bitcoiners or is this like a do your best, get out intact and live to fight another day?

[00:15:35] Joe Carlasare: You have to always reconcile the overarching public policy concerns, things that are important like privacy with the individual rights of the defendant.

[00:15:42] Joe Carlasare: And I think if I were representing these gentlemen and the government will invariably dangle huddle to your point, some sort of reduced plea deal, some sort of reduced sentencing that is I think far lower than what they would face if they went to trial. And it’s really tough, right? Like you’ve got your liberty at stake and are you going to roll the dice on principle when you could end up being the next SBF and having to do 25 years, right?

[00:16:06] Joe Carlasare: We just saw, you know, that come down when you go to trial and you screw around, you’ll find out what could happen if, if the sweet old lady in the jury doesn’t like you messing around with this crypto stuff and thought you were aiding and abetting terrorists through laundered funds. This is the same issue, you know, can go back years in the industry, but all the way back to Charlie Shrem, right?

[00:16:24] Joe Carlasare: He pled out to lesser charges because he was afraid of having to face more significant penalties if you went to trial and that’s throughout the entire criminal justice system. That is a tactic prosecutors use. And to your point, okay, answering the question directly about is this the sword you want to want to fall on right here?

[00:16:41] Joe Carlasare: I’m not necessarily sure that that it is because of the emails and some of the DMs. It looks like they were directly communicating with an undercover agent as alleged by the indictment, which is not good, right? If he, if he was, you know, if they were in concert conspiring with him to try to launder funds and he was undercover for the feds, that’s not going to be really good for from a jury standpoint.

[00:17:01] Joe Carlasare: Right. And there will be other cases that are more important to fight on cases involving lightning and other, other businesses. Some of my clients have talked about these cases. I mean, we need to figure out what the good test cases and to the point, you know, earlier, think about other great civil rights movements.

[00:17:16] Joe Carlasare: Think about why you remember Rosa Parks, right? You remember because she’s the sweet old lady that just didn’t want to sit at the back of the bus, like she didn’t do anything wrong. She didn’t say anything. She didn’t assault anyone. And although that wasn’t a legal proceeding, I mean, I think there was a charge or something.

[00:17:30] Joe Carlasare: It was a point. It spurred a cultural response because she was impeccable with her character. And I think that’s the type of thing we need to say. We need to put forward cases where people are impeccable, just trying to defend their liberties and rights to privacy.

[00:17:45] Preston Pysh: Yeah. And do you see the fact that maybe they’re making money or like there’s some type of profit associated with the business versus somebody who’s just literally trying to provide privacy technology and they’re not making any type of money?

[00:17:58] Preston Pysh: Is there a big difference there between? Like the representation and what it would represent for the, the space. If we had some type of case that went forward that wasn’t profit motivated.

[00:18:09] Joe Carlasare: Yeah, absolutely. That’s spot on point. The indictment alleges they profited to the tune of like 3 million. And one of the things I tweeted out is, and again, this is a, any, anybody want to chime in?

[00:18:20] Joe Carlasare: Cause it’s more of a technical question. But I always wonder, is there a way to develop technologies like the whirlpool, which is really the basis for the samurai wallet privacy feature without extracting that profit, right? If you take it out of the for profit enterprise of the business, it changes the whole complexion of the case.

[00:18:36] Joe Carlasare: It changes the motivations. It changes the scrutiny of the government’s going to have. When you cross that chasm of having a business that is profiting from anonymizing transactions versus one that just opens up, you know, some sort of a service that has no benefit from it. It’s just there and it just exists independent of the business.

[00:18:54] Joe Carlasare: I think it’s a totally different money services business analysis. It’s a totally different 1960 analysis. And the interesting thing which we’ll talk about, I want to get Jeff to weigh in on this, but you know, this, this, I’m sure, you’re familiar with the tornado cash argument about control and how the government says that businesses don’t even need to have control over funds to be a money services business, transferring funds on behalf of others, which is a, that’s the FinCEN reg you’re talking about.

[00:19:19] Joe Carlasare: And that’s sort of evolution of that position from the government.

[00:19:22] Preston Pysh: Because it goes to nodes, right? Is that where you’re going with that?

[00:19:26] Joe Carlasare: Well, the argument that they, they make in tornado cash is that 1960, which is the money, the penalty statute portion of the statute for money service businesses, it does not require control that all that’s Congress wanted was that if you were a business that was facilitating or affecting transfers of money, that was enough to qualify as a money services business, they use this analogy of here, I’ll show it to you just so you can see the government’s argument because it’s important to understand.

[00:19:52] Joe Carlasare: I think even if you disagree with it, they wrote in. This is the tornado cash reply brief that was recently filed. They say, consider the example of business that accepts parcels of cash from criminals and moves the money by courier to locations overseas, perhaps the archetypal 19 section, 1960 violation under the defendant’s theory, such a business would escape liability.

[00:20:13] Joe Carlasare: Only by accepting cash in the locked parcels, as long as the customer did not give its keys to unlock the parcels, then it could claim it never had control over the fund. Surely Congress did not intend this action to be so easily evaded. The reason they’re bringing this up is because the argument raised in the Tornado Cash case, which is equally applicable to the Whirlpool transactions in the Samurai case, is effectively that, listen, we don’t control the keys. Every user on the Samurai wallet controls their own private keys. We don’t control the Bitcoin. We may build out the transaction through Whirlpool, but they keep their own keys. And because they keep their own keys, we don’t have control over the funds.

[00:20:48] Joe Carlasare: Therefore section 1960 violations don’t apply. The government’s saying that’s wrong. Government is trying to read 1960 more broadly and saying that Congress had, you know, this really expansive statute, we’ll see who’s right. But to huddle’s earlier point, when we test this theory, we want to make sure we have an impeccable set of facts to give us the best chance in front of a judge.

[00:21:08] Joe Carlasare: And from our standpoint right now, I don’t know that this is the right case.

[00:21:13] HODL: Well, it’s also, it’s going to get real technical in court because The government is sort of alleging that Samurai is a mixer that CoinJoin is a mixing process. And CoinJoin is not technically a mixing process. It’s much more better thought of as like a smelting process, where like, we all throw our gold bars into a vat and we create new gold bars.

[00:21:31] HODL: Rather than I’m a dirty person. I give you clean money and you’re a clean person. You give me dirty money and we go on our separate ways. Yeah that’s the way that it’s being alleged by the government, but that’s not technically how it operates. So is the smelting process that is, you know, coin joining and moving to new UTXOs, is that strictly speaking, the same thing as mixing?

[00:21:51] HODL: Personally, I don’t think it is. I don’t think the samurai guys think it, think it is either. And that’s why, you know, wasabi and samurai were operating. Clearly one of the samurai guys was living in the U S you know, you don’t, that’s not, you don’t live in the US if you think you’re doing something illegal.

[00:22:04] HODL: I don’t, they didn’t think they were doing anything illegal.

[00:22:07] Joe Carlasare: But to improve the facts using your, you know, analogy there, you would want a business that does not extract a fee from the same, the smelting, right? That’s not extracting something and also isn’t controlling the smelting. You want it to function independent and my understanding just from reading the government’s allegations is that, you know, the Whirlpool feature would not work without them building out those transactions on the back end through Samurai, correct me if I’m wrong.

[00:22:32] HODL: Yeah, it’s a, no, it’s a centralized coordinator. And it’s also, you know, one of the, one of the problems is that privacy in general is like anytime you have to opt into privacy, now it shouldn’t work this way, but it does work this way is that it’s, you know, by default seeing that you’re doing something nefarious because you’re opting in to be private.

[00:22:48] HODL: We, we don’t have good base level privacy on Bitcoin. And that’s an issue that, you know, maybe hopefully we can solve technically. But as of right now, today, anytime you’re doing something extraordinary in order to gain privacy, you’re going to be, you know, suspicious by default, unfortunately.

[00:23:04] Preston Pysh: What do you guys think today?

[00:23:06] Preston Pysh: There was a lot of news on this SAB 121 getting approved through the house. The white house then comes out and says that they’re just going to veto it. And this is to allow the banks. to custody digital assets. What a turn of events. It’s looking like they all want to play ball. They’re working on the, I don’t know.

[00:23:27] Preston Pysh: It still has to go through the Senate before it would then go to the white house. Is that correct? So it got the approval in the house. Do we know if it’s going to get the approval in the Senate? I haven’t read up on that. Does it look like it’s going to go through?

[00:23:38] Joe Carlasare: I’m not sure that either Jeff, you know.

[00:23:41] Jeff Ross: I don’t know, I would assume it would, but I don’t know.

[00:23:44] Jeff Ross: I think it’s going to, it sounds like it’s going to get approved. It’s going to go to the white house and Biden’s going to veto it. I have mixed feelings about that too though. Right. I mean, as a Bitcoin or like, do we really want the banks to take custody of our Bitcoin? That’s not the direction we want to move anyways.

[00:23:59] Jeff Ross: I mean, there’s so many things that are coming to the forefront right now that are so interesting to me talking about this privacy. Privacy is not a base layer feature of Bitcoin. It never was, right? It’s decentralized, secure, permissionless money. It’s not privacy money. And so is that a hill? It’s a layer two application of Bitcoin.

[00:24:16] Jeff Ross: And if you do that, to HODL and Joe’s point, You’re going to attract the ire of the U. S. government. And is that a battle you want to fight for the rest of your life? Some people, it’s, it’s a hill worth dying on. And some, some people it’s not. I’ve been waiting for this to happen for, and I’m sure you guys have too, for five or six or seven years.

[00:24:34] Jeff Ross: You see these things happening and you see people flaunting criminal activity, at least criminal in the eyes of the U. S. government. You’re going to rain fire down on you, on yourself. And so is that what you want to fight for? I have massive respect for people who fight for this privacy. And I, you know, I’m a freedom maximalist, but again, it’s not a base layer feature of Bitcoin.

[00:24:54] Jeff Ross: And so, I have very mixed feelings about all of this kind of stuff. I’m, I’m just not quite sure how to feel about it. And Joe, you know, as an attorney, right. You have to tell people do not evade taxes, do not do things to draw the attention of the government, unless you want the government focusing its headlights on you.

[00:25:09] Jeff Ross: And so, these are very difficult issues. And as a community, this is what we have to decide is where do we want the future of Bitcoin to go? Do we want banks to take custody of it? So we can get things like B locks, right? I like the idea of those, these Bitcoin lines of credit and all these features you could have, if you had somebody, these traditional financial institutions taking control and custody of your money.

[00:25:29] Jeff Ross: But now you have all these other custodian risks and you, you, you risk that government confiscation of your, of your Bitcoin. So I don’t know. It’s, it’s a crazy time. It’s a crazy time to be involved.

[00:25:40] HODL: You know, what’s interesting, Jeff, while we’re trying to figure things out internally on the Bitcoin side, what do we want, where are we going?

[00:25:46] HODL: The government is trying to figure things out on their side. They in with this new move by the Biden administration to ban, you know, banks from taking custody of digital assets. It’s very interesting because it’s very bipolar between some of their other stances. It’s, it seems like they can’t, they can’t as the USG as a, just a entity cannot figure out if it wants to bring Bitcoin in and attempt to co opt and control it, or if it wants to keep Bitcoin out because by keeping Bitcoin out, it’s, you know, it’s system is safer.

[00:26:14] HODL: And I think that tension is really interesting to watch play out.

[00:26:17] Jeff Ross: And it’s all like chess, right? Because what’s better? What do we fight for as Bitcoin? Do we want the government to accept it and co opt it and then we fight that battle or do we want it to stay out at arm’s length and be kind of treated as this extra governmental thing where then we can fight that battle?

[00:26:34] Jeff Ross: The battles are totally different and it’s so interesting. The consequences and the second and third order consequences are really hard to think through.

[00:26:41] Joe Carlasare: Keep in mind, just in terms of knowing which part of the government, to your point, we’re sort of quarreling with, okay? SAB 121 comes from the SCC, okay, Gensler’s SCC, which has been antagonistic towards quote unquote crypto and Bitcoin for a long time.

[00:26:56] Joe Carlasare: And from that standpoint, it’s, it’s really, yes, the Biden administration said they will veto the bill repealing SAB 121, but it’s really coming from Gensler’s SCC.

[00:27:06] HODL: Which is influenced by Warren, which is also part of the Biden admin. So maybe this is like a third rail in American politics or whatever, but I mean, listen, we got an election coming up.

[00:27:15] HODL: Nobody wants to say Alex Leishman was just putting this on Twitter. Nobody wants to say the T word. It’s Trump, baby. If you want, if you want Bitcoin to do well over the next four years, we need Donald J. Trump. Okay. And his magnificent head of hair, lead him in there. Joe Biden is not going to get it done for us.

[00:27:30] HODL: It’s going to be four more years of antagonism, if we have a Biden administration.

[00:27:34] Jeff Ross: And did you see Trump’s response today?

[00:27:36] HODL: Yeah, he just addressed that. He said that’s something we should talk about too. Yeah. Yeah. Sorry. Go ahead.

[00:27:41] Preston Pysh: Well, one of the things that I wanted to just bring up is, is, is all of this confusion from a governmental standpoint, actually a bullish thing for Bitcoin that they just can’t even figure it out.

[00:27:56] Preston Pysh: The fact that they’re quarreling, they’re trying to stop it. They’re not trying to stop it. They’re bringing in, you got all this legal ambiguity that’s happening. And meanwhile, it just tick talk. Here’s another block. Here’s some other country that is figuring it out. Here’s a, here’s another country that’s opening their arms wide open for, for companies to show up and arrive.

[00:28:15] Preston Pysh: I don’t know. I, I think that them not being able to figure it out is just very bullish for Bitcoin to, to continue to just reach its tentacles in deeper. We just had an, I know Joe, I saw your comment, the Hong Kong ETF was very lackluster, the amount of inflows that initially came out of it. It doesn’t mean that it will always be like that or, you know, over in Asia, but tapping into these other markets.

[00:28:38] Preston Pysh: Like just the fact that that vehicle is there. Then I saw in South Korea, they’re getting, they, they’ve got a new president that just came in and a whole new administration that’s going to be pretty pro crypto Bitcoin there. And that they’re going to have a vote. I think it was in June. And so you’re seeing these other countries that are taking action.

[00:28:57] Preston Pysh: They are, they’re also kind of recognizing that this is a global race. Global game theory that’s playing out. And I just don’t know that any of it’s bad. I think that in a way, maybe it’s good that we can’t figure it out. What do you guys think?

[00:29:12] Joe Carlasare: If Bitcoin was ever going to succeed, it would have to be a Trojan horse, right?

[00:29:15] Joe Carlasare: In the early days, there was plenty of opportunity for the government to come down hard and shut it down in the United States, right? Crush it for 10 years. They didn’t, they sort of, whether it was through. Underestimating the asset or just not understanding it. It doesn’t really matter. They didn’t take the requisite steps that would have been necessary very early on in entities like Coinbase and others to just clamp down hard on the industry.

[00:29:39] Joe Carlasare: They didn’t. Now they’re sort of, I guess, screaming at the wind, right? Trying to stop what’s coming in their direction. And I think it’s all futile at this point. I do agree with you. Like, I think like most of their efforts are just you know, sort of haphazard and not clearly thought out. There’s dissension among different bureaucrats.

[00:29:56] Joe Carlasare: And I think there’s enough people now. I mean, I know judges that hold Bitcoin. I know justices on appellate courts that hold Bitcoin. It is spreading throughout society. And the genie is out of the bottle. I don’t think you can put it back in at this stage.

[00:30:10] HODL: Yes, I totally agree with Joe. And you know, not, not from like a prescriptive standpoint, like I think this is the best way for things to happen.

[00:30:17] HODL: But just from a base level reality, descriptive standpoint. Is that Bitcoin is an open permissionless monetary network that’s global. So we have no ability to gatekeep it. Like, you know, we call ourselves big winners. We’re very involved with what’s going on. You know, we know people who are at the inner sanctum of Bitcoin to some degree.

[00:30:34] HODL: We are too. And still, it doesn’t prevent us from, you know, Wall Street gaining a lot of Bitcoin. It doesn’t prevent us from China getting a lot of Bitcoin or Russia or anybody who, you know, we may be at odds with the United States government may be at odds with all of your enemies are going to use Bitcoin.

[00:30:51] HODL: Bitcoin is going to be, you know, the world’s money or the world’s reserve asset or the world’s greatest digital property, Michael Saylor ism, whatever you want to call it. It’s going to be a really big thing and we cannot prevent people from gaining access to it. So with that in mind, that is a framework going forward.

[00:31:08] HODL: You have to think to yourself, okay, so it’s going to go through this period where there are going to be a bunch of entrenched entities that are going to try and get their hands around it, right? What happens after that? And I think that’s the most interesting question to me. There is no way where we like evade capture.

[00:31:25] HODL: Like, like Joe was saying, like, you know, pretty much Bitcoin was like, okay. You can almost think of it as being designed to be captured in a way, you know, it’s like you throw chains on King Kong and you take him to America and you think you’re just going to display him in a zoo and then boom, he busts free and he’s got, you know, what’s your face at the top of the Empire State Building?

[00:31:41] HODL: That’s Bitcoin. Like, that’s, that’s how I see it playing out.

[00:31:45] Preston Pysh: All right. I’m going to shift gears just a, just a touch. Japan FX intervention, swap lines. Jeff, did you see this?

[00:31:52] Jeff Ross: I did. Again, another thing we probably knew was coming, right? I mean, so we’ve been watching the yen crash and burn whether or not this was intentional or not.

[00:32:02] Jeff Ross: That’s a one question, right? Maybe they want their currency to weaken. I think Joe has talked about that. I I don’t disagree with that. What’s the textbook of financial repression, by the way, high inflation and low interest rates, which is something that I think we should talk about, by the way, and how that pertains to all countries, including the U S.

[00:32:19] Jeff Ross: But so they opened the swap lines, right? And so the way I understand it is they have the ability to not sell their treasuries because of course the U S does not want Japan selling their treasuries. In fact, Lord willing, they’ll buy more, right? Where, cause we’re going to open the floodgates and we’re going to continue to put more treasuries on the market.

[00:32:36] Jeff Ross: And so we don’t want them the largest buyer, the largest international buyer to be selling their treasuries. What if they could just short the dollar and strengthen the yen? Wouldn’t that be a great solution? And so it’s sort of a synthetic solution to their problem. Again, just monkey. Sorry.

[00:32:51] Preston Pysh: Oh, no. I was just going to say just for a little context and I want you to keep going there.

[00:32:54] Preston Pysh: Japan has the second largest amount of treasuries. I think it’s let me see here. There’s 1. 2 trillion sound right about right for Japan. And then China has the highest with 3. 1 trillion. Of us treasuries. And so, I mean, they have the lion’s share of these trade. They can’t, we cannot allow them to just step into the market and start selling these to defend anything.

[00:33:19] Preston Pysh: So they open these swap lines. They allow them to print a bunch of yen to swap them for dollars. And then all of a sudden they don’t have to come up with dollars to defend this anymore. But, Yeah. Keep going there, Jeff, just so people understand.

[00:33:30] Jeff Ross: I mean, I was just going to sum it up to say it’s just shenanigans, right?

[00:33:33] Jeff Ross: It’s just clown world shenanigans going on where everybody’s debt is spiraling out of control. The demographic situation in Japan is absolutely horrendous. The debt to GDP is horrendous. To me, it’s just a completely hopeless situation and they’re just sort of monkeying with the little knobs trying to do something right now.

[00:33:52] Jeff Ross: So anyways, I just think it’s shenanigans and of course this is what they’re doing. And of course, I’m so glad there’s Bitcoin as an alternative to these monkey shenanigans. Anyways, Joe, you probably have a more articulate response on this.

[00:34:04] Joe Carlasare: No, I don’t know about that, but I’ll give you my thoughts. So folks know that I think Preston, you talk about this all the time, the yield curve control at by the bank of Japan and their dominance over the JGB market effectively has created really bad results for their currency.

[00:34:23] Joe Carlasare: And even though they have abandoned, at least, or let the lower bound rise of the yield curve control, right? It’s significantly lower than where it should be relative to its peers, right? So you’ve got that interest rate differential among government securities from the Japan through every other currency.

[00:34:42] Joe Carlasare: And because of that, right, you’re dealing with the FX pressure. Why do they have all these treasuries and what kind of risks should you really be concerned about with this? And I think it’s so strange to me why people were surprised at the intervention, considering that has been the path forward for Japan for decades.

[00:34:59] Joe Carlasare: Now, this is not like they just decided to do intervention. I mean, anybody who’s been following Japanese credit markets really since the early nineties has seen the BOJ increasingly become dominant in the marketplace. And with respect to these concerns about a credit event, and I think they make no sense at all.

[00:35:18] Joe Carlasare: They want to do the following. They want to basically weaken their currency. Which is going to be very helpful from a trade standpoint, but aside from weakening the currency, they want to weaken it in a slow and orderly manner. That is the concerted policy of the BOJ. They don’t want it ripping towards one 60 or one 70 in a month or two.

[00:35:36] Joe Carlasare: That would be disastrous for them. But if they, if it hangs around in this range, it’s going to be fine. And by the way, they have the treasuries, as you pointed out, Preston to defend it if necessary. Now they have swap lines. So, you know, the notion that this is going to all blow up and be some sort of huge credit event.

[00:35:51] Joe Carlasare: I, I think that’s a lot of panic over nothing, but the important takeaway, right, is that. Intervention will continue to come both from the BOJ and from now the Fed with swap lines that is entirely expected and there’s more than enough ammo in the gun to keep their currency in the desired range without more volatility they can stomach.

[00:36:12] Preston Pysh: I’m just pulling up a chart here of the USD to Japanese Yen and we’re seeing lows against the dollar in Yen terms. That I mean, you go back to 1998 and it’s, it’s putting in lower lows than we had back then. So yeah, I think the low of this chart here. Oh, here we go. Let’s see here. Yeah, we’re putting in lows that are on par with 1990 pretty crazy what’s happening right now over there, but I agree with you Joe I like they can’t allow it to get much further out of control than where it’s at right now.

[00:36:48] Preston Pysh: I don’t think I think them opening the swap lines is a huge, massive move to just demonstrate, we’re going to back this, we’re not going to allow this to unwind beyond a certain point. And I mean, the swap lines are typically, correct me if I’m wrong, or if you guys see it differently, but once they open those up and they’re just basically, hey, print whatever you got and we’ll give you dollars for it is, is the charade that’s played of, you know, not.

[00:37:13] Preston Pysh: What’s the word I’m looking for? I mean, it’s just a total Ponzi scheme at that point, right.

[00:37:18] Jeff Ross: Always was. I think to Joe’s point, by the way, to Joe’s point, there are many people speaking very hyperbolically about this. Like this is a doomsday scenario. I couldn’t disagree more with that. I mean, to Joe’s point, they’re going to control this.

[00:37:31] Jeff Ross: Things are fine. They’re just shenanigans. They got it under control. I don’t think that this is going to set off a major event. Personally, I’m not worried. I don’t think this is going to set the world off into another major calamity. We’re not on the precipice of another massive bear market recession, and we can get into those macro stuff later if we want to, but anyways, everybody, you know, people love the, the, the clickbait hyperbolic headlines, and I just don’t think we’re going to go there.

[00:37:55] Jeff Ross: I think this is going to blow over personally and not too long.

[00:37:57] Preston Pysh: Yeah. Let’s, let’s go down that path. So, so your opinion is basically, they’re going to do whatever it takes to manage this. They’re going to print whatever they got to do. They’re going to open whatever swap lines they’ve got to open, and then they’re going to do.

[00:38:09] Preston Pysh: Yield curve control. If the, cause I can pull up a US treasury chart here. Let me pull it up. So when we’re looking at this, you know, I mean, this is, this is looking like we’re kind of going to keep selling off through the thresholds that maybe we hit there in October of 2023. And if we do like, does things start getting a little disorderly?

[00:38:32] Preston Pysh: I kind of think it may, but they’re going to, they’re going to step in and try to backstop it. Right. Well, what are your guys thoughts here? And like, what’s the ramifications from a broader, like Bitcoin standpoint as well?

[00:38:44] Jeff Ross: I don’t mean to keep talking, but I just continue to be just extremely bored by all of this.

[00:38:49] Jeff Ross: This choppy sideways nonsense, right? I think, I think we’re just kind of at normal levels now for treasury yields. I think that inflation is going to continue to chop sideways. Joe and I have probably been talking for 12 straight months in spaces about this, about how we’re going to be talking 12 months from now about how it’s continues to chop sideways.

[00:39:07] Jeff Ross: Inflation is not going back to sub 2%. It’s going to be up at these higher levels. We’re not heading into a recession, so we’re not going to have a deflationary bust anytime soon. We may have it in 2035, 2036 somewhere. Sure, we can talk about that, but that’s in the future. For now, that can has been kicked down the road.

[00:39:24] Jeff Ross: So if we have decent GDP growth, which we do, both in the US, by the way, and now around the world, I think it looks like the entire world’s has basically bottomed and has recovered and is starting to move higher including China, including Europe. And so personally, I think these recessionary fears are just overblown in my opinion.

[00:39:43] Jeff Ross: And so we should see these rates to be about where they are. And I think the fed is just going to kind of continue to keep their fed funds right about where they are. They may lower it a little bit. They may raise it. I don’t know. I don’t think we’re at risk for a runaway inflation. Like, yeah, this is one of the first times I have ever disagreed.

[00:39:59] Jeff Ross: So which probably means I’m wrong, but with Jamie diamond, who continues, he continues to throw out that like 8 percent number on rates. And I think he’s wrong. I drink, people are thinking we’re going to head back into a 1970s, like, you know, double inflation peak. I just don’t see that at all outside of a major war.

[00:40:15] Jeff Ross: I just do not believe that’s going to happen. So I think we’re going to muddle along and crab sideways and everybody’s just going to want to kill themselves because it’s so boring and we’re going to continue to argue over just this, you know, choppy sideways price action forever. How does it relate to Bitcoin?

[00:40:28] Jeff Ross: I think at some point people are going to realize, Hey, you know what? The economy actually isn’t that bad. And banks are actually going to start lending again as economic gears start grinding again. And things like M2 money supply. Liquidity, you know, and we can talk about that or not, and I don’t really care.

[00:40:43] Jeff Ross: Eventually that will start rising again and the economic wheelhouses will start rising again. And what that’s going to do is push people, push money outside, further on the risk curve, into risk assets, into stocks, and especially into Bitcoin. And I think that’s going to be what propels Bitcoin higher as we head into 2025.

[00:41:00] Jeff Ross: Sorry, I’ve been talking a lot.

[00:41:02] Preston Pysh: No, no, no, you’re good. I just pulled up the global M2, so I’m combining all the major currencies, whether it’s the Yen or the the Yuan or the Euro. And then dollars and I’ve converted them all into dollars. And then this is the trend that they’ve stayed within for a very long period of time, going back to 2008.

[00:41:22] Preston Pysh: And you can just see how they just keep expanding this. What I find interesting on, on this metric, cause a lot of people will just pull up like the US M2, and I don’t think that it does it necessarily justice. I like kind of adding in all the others because it’s. I think it’s completely globally coordinated.

[00:41:38] Preston Pysh: So that’s why I did the global M2 chart. It looks like this is really kind of diminished volatility in the amount that’s being added and they’re really trying to hold it. And to me, it seems like there’s going to have to be some type of major move. Up here by the middle of the summer, based off of this kind of going sideways since when are we, when you start going to March of 2020, 2022.

[00:42:03] Jeff Ross: So notice that that kind of follows the path of risk assets, right? How it peaked and then rolled over and everything rolled over. What I would say is I don’t actually expect a huge surge higher. Like you’ll see back in 2020 where it suddenly ripped higher. I think we’re going to creep along. And what we’re going to see is, like I said, the economic engines are just going to start kind of, revving up a little bit.

[00:42:21] Jeff Ross: Yeah. And we’re going to creep up along the lower aspect of that line and just start heading into a more healthy response and a more healthy increase in global M2. When you look at interestingly, and I’m sorry, I keep talking, but you know, you look at the spike that we had from COVID in, in M2, right?

[00:42:36] Jeff Ross: All the transfer payments and everything that happened, we had that huge fiscal and monetary impulse. We have absorbed all of that now and, and looking at that bottom line, the upper right hand corner where we are today, it’s all been absorbed and now we’re ready to just start going higher again and, and grinding higher again.

[00:42:52] Jeff Ross: So that’s why I’m just generally optimistic, but not wildly optimistic. Like we’re going to see this massive blast of liquidity like we saw back in Covid. I just think we started gen heading higher and, and people are one by one going to turn from being these pessimistic, freakout, hyperbolic states people looking for clickbait.

[00:43:08] Jeff Ross: And they’re going to be like, well, I guess the economy isn’t that bad at all. And I guess there is a basis for why the stocks are grinding higher and Bitcoin is heading higher. So I don’t know.

[00:43:16] Preston Pysh: Joe, HODL, do you agree with that?

[00:43:18] HODL: Yep. Well, I was, Oh, go ahead. Go ahead. No, no, you’re first. I was just saying, I’m looking at the chart and like, you know, I I’m hearing what Jeff’s saying.

[00:43:26] HODL: I can anticipate some big corners being like, Oh, well, that means we’re not going to have this crazy pump and everything. But if you look at 2017 versus 2000 and 2021, Bitcoin actually didn’t do as well, even though there was much more expansion in global M2. So I don’t know, just an interesting data point.

[00:43:43] Preston Pysh: It was a lot small of, you know, if I was going to argue the opposite side, the market size was a pittance compared to like these global M2 numbers. And maybe Bitcoin’s matured quite a bit like today compared to where it was then. But Joe, what were you going to say?

[00:43:58] Joe Carlasare: Can you pull up the chart of the 10 year?

[00:44:00] Joe Carlasare: So, so let’s go through a couple of things on this. So if you, and this is just stay, stay, stick with me for a minute. I’m going to try and get through this quickly. But if you look at that chart, okay. Yep. We, we have that bottom that was put in, in the bond market where the yields hit. What do we hit?

[00:44:17] Preston Pysh: We had five on the 10 year in October.

[00:44:20] Preston Pysh: You were, well, so the high, I would argue that the local high here, like price wise was December of 2023, where you were at a 3. 7 percent yield. Is that what you’re calling out, Joe?

[00:44:34] Joe Carlasare: The yield.

[00:44:35] Jeff Ross: High yield, Joe.

[00:44:35] Joe Carlasare: The high yield. Oh, right here. Which is the bottom of the market. Yeah. Okay. Which is the bottom of the market.

[00:44:40] Joe Carlasare: So right here, you were at 5%, yes. Yeah. So in October, right? And then what happened after that? After that, we got several very favorable, optimistic prints from CPI prints, month over month prints, annualized prints. They were, they were pretty solid. And that also coincided in October with the release of the quarterly refinancing announcement, where we found out that Janet Yellen was not going to expand the coupons issued into the market.

[00:45:06] Joe Carlasare: So I think both those contributed to a significant bid of the bond market, which is why those yields fall very consistently. Basically from for October through the end of the year. Okay. So what happens after that? After that, we’ve get the following. We start to see some uptick in the issuance of coupons into the market.

[00:45:24] Joe Carlasare: And we start getting successive month over month prints where CPI comes in over expectations. We got the December print, which we got in January, right? It’s a month delayed and that showed a super core expanding. I think it was like came in 0. 4 over expectations. We got the, the really bad March print.

[00:45:43] Joe Carlasare: Okay. Whichever is really the February print, but in March that really sent the bond market into a hard sell off, which yields rose. Okay. But to Jeff’s point here, okay. The question is, where do we go from here on these prints? And if we continue to stay stuck in this range, you know, say closer to 3%, but not necessarily at 2%.

[00:46:02] Joe Carlasare: The bond market should reflect that. And I think the interesting thing for me right here is that people look at this 10 year chart and say, well, the 10 years selling off so significantly. No, it’s not look at the fed funds, right? Fed funds, effective fed funds is at 5. 3%. And as you know, Preston basic, you know, arithmetic with respect to bonds.

[00:46:21] Joe Carlasare: You should be charging a term premium, right? For the longer duration, but in a healthy economy, the longer end instruments should always have higher yields than the lower engine instruments. So for people that think we’re entering into some hyperinflationary period or the 1970s, like Jeff talked about, the, why do we still have an inverted yield curve?

[00:46:41] Joe Carlasare: Why, why do we still have the long end significantly yielding lower than the yielding significantly lower than the front end at 5. 3%? To me, it’s only really two options. Either there’s a lack of coupons circulating in the economy, which is possible, right? Cause a lot of that’s sitting on the feds balance sheet.

[00:46:58] Joe Carlasare: But aside from that, it’s that inflation expectations, whether you look at like break evens or five year, five year forwards. They don’t show the type of, you know, 5%, 6 percent inflation that a lot of the inflation eases are wringing their hands about. They show stickier, higher, closer to three than 2 percent inflation, but they show that against the backdrop of an economy that I think I saw Atlanta feds real GDP now at like 4%.

[00:47:23] Joe Carlasare: Right, Jeff? Did you see that? Did you catch that today? Yeah, of course. They’re projecting 4 percent real, you know, real GDP for QQ2 now. I mean that like double the trend that the Fed has for the next 10 years. So I don’t understand the refresh, you know, a recession argument at this point. I really don’t get it.

[00:47:39] Joe Carlasare: And maybe Jeff can say.

[00:47:41] Jeff Ross: Well, so this is why people want to kill each other during the, and I’m sorry, Preston. I’ll, I’ll, I’ll stop quickly. This is why people want to kill each other is because what did we just get? We just went through this period where like people were like. GDP growth was so much lower.

[00:47:52] Jeff Ross: The economy is weak and then inflation’s rising. Oh my gosh. And everybody’s panicking. And I’m like, just wait, wait a week, wait two weeks. And I promise you the data will change when you get in these crabby markets and you get too far to one end of the spectrum. If you’re too low, it’s going to bounce back up.

[00:48:07] Jeff Ross: If you get too high up here, it’s going to go down. It’s just what these markets do. And they drive people insane because people can’t handle this choppy sideways action. Sorry, Preston, go ahead. No.

[00:48:16] Preston Pysh: No. So for a person that’s hearing this. That’s a Bitcoiner. What’s the message for them because they hear all this.

[00:48:22] Preston Pysh: They hear us talk all this bond stuff. It gets us all excited. We’re talking about what we think this means from just a liquidity standpoint. I think that’s why we really do love covering it is because we’re talking about the global liquidity that’s in the system. What’s the message for them?

[00:48:37] HODL: Yeah, I think if Jeff is right and it’s going to be crabby for the foreseeable future or in the interim here, then just, you basically don’t want to wait to buy.

[00:48:46] HODL: And you also don’t want to, you know, over lever yourself either, assuming there’s a big bull market one week away. So basically just, if you got, if you got dry powder, now’s probably the time, or, you know, sometime between here and there, probably not going to get a crazy deal. You might, but like just DCA in and chill.

[00:49:03] HODL: Stay humble, stack sense. It’s the same advice, Preston, all the time. Always the same advice. How about this?

[00:49:09] Preston Pysh: What do you guys see happening going in closer to the election? Because I mean, there’s, there’s no way based on how corrupted everything’s getting, like, I’m sorry, but like going into middle of the summer into November timeframe, like I just expect them to totally goose these markets.

[00:49:25] Preston Pysh: What do you guys think?

[00:49:27] Joe Carlasare: I’ll just say the person listening to this, that’s just a regular person just trying to figure all this out. They should reject the notion that people have promoted, at least some people in Bitcoin circles or Bitcoin adjacent circles, that it is a doom insurance type instrument.

[00:49:40] Joe Carlasare: It is not about doom and gloom with Bitcoin. Bitcoin is about the most pristine asset that can soak up global liquidity, which we know will continue to expand. We know the system’s not going to fall apart because there are so many tools at policy makers discretion. And Bitcoin is going to increasingly be identified as a tool that protects you from long run debasement of your currency, debasement of your unit.

[00:50:03] Joe Carlasare: It’s not a consumer price inflation instrument, right? So a lot of people are disappointed because when we had high inflation, Bitcoin sold off. And did not really do very well during during 2022. It is a long run debasement protection instrument, and it’s going to be used by, I think, a lot of people across every segment of society, from the very poor to the very, very wealthy.

[00:50:23] Joe Carlasare: But going to your question about the election, right? The election, I think I see two candidates, both of whom, whether you pick candidate red or candidate blue, they’re going to spend a lot of money. Candidate red will spend a lot of money in the form of tax cuts, which are going to try to spur economic growth.

[00:50:38] Joe Carlasare: And candidate blue will spend a lot of money versus in the way of entitlements. So you pick whatever you want, but I’m going to pick Bitcoin.

[00:50:46] Jeff Ross: And I’ll jump in there because you’re asking about the election. I don’t think it’s a coincidence that we see the beginning of the bull, the huge bull markets happen right around election time.

[00:50:55] Jeff Ross: And I think that’s going to hold again this time. So my guess is if we were talking, what is it made? So six months from now, say it’s November 8th, that’s right around, you know, the election happened by then whoever won to Joe’s point. Lots of money spending is going to happen. There’s going to be a, you know, zeal in the air.

[00:51:13] Jeff Ross: People are going to be feeling optimistic that will start pumping. I think that’s when we start talking about Bitcoin heading much higher. To go back to your chart you showed earlier, Preston, about global M2, we’re going to start tracking along, at least at a minimum, tracking along that bottom line. And heading higher, the economies are going to be starting to generate.

[00:51:31] Jeff Ross: At that point, people will feel optimistic. I think that’s the, the, the start of the bull market. And I love looking at past cycles and just kind of thinking about them. It’s uncanny how similar this cycle is right now to the 2016 cycle. The, I think the ETF hype got people a little too hyped. And so we have this period of cooling that I think is going to disappoint a lot of people for the next several months, but then it’s laying the groundwork for the next bull move higher.

[00:51:56] Jeff Ross: And to HODL’s point, you know, it’s always a great time to be buying. I put a tweet out a day or two ago. The saying what state what stage of the Bitcoin cycle are we in and I showed astronauts boarding a rocket That’s where we are right now. This is your last chance and I’m telling people. Yeah, just a guess, right?

[00:52:13] Jeff Ross: This is not individual estimates This is your chance to get on before the rocket takes off because the rocket I believe is going to take off again And I believe we’re going to have another parabolic move higher and I might be wrong But I will be very surprised if one year from today, May of 2025, we’re not well above a hundred thousand dollars per Bitcoin.

[00:52:31] Jeff Ross: And I think we’ll be moving much higher at that point.

[00:52:33] HODL: I so agree with you. I feel like Jeff is like the ultimate, like road trip dad, where like, he’s like, children, it’s going to be very boring for the next several hours. Do not annoy me. Do not annoy me. And then Twitter is like, are we there yet?

[00:52:46] Jeff Ross: Exactly. Yes.

[00:52:51] Preston Pysh: Oh my God. I agree with you though. I think you’re, I think you’re all over it. All right. I got one more. I don’t even know if this is a decent question, but it’s a, it’s a funny question. Roger, you guys follow on what happened with Roger 50 million tax bill. Did they ball him up?

[00:53:09] Joe Carlasare: I think they did.

[00:53:10] Preston Pysh: Right. They’re hauling them back to the U. S. What’s, what’s going on?

[00:53:13] Joe Carlasare: He was. Oh, is that a funny question?

[00:53:15] Preston Pysh: That’s, that’s I’m not a fan. I am not a fan. Sorry. It’s not funny. It’s not funny, but I’m not a fan of him.

[00:53:21] Joe Carlasare: Preston, have you read the indictment? Did you read it? No. It’s amazing. So just to, just to give some TLDR on it, I have a thread about it, various different, but they apparently got a ton of emails by in between him and his lawyers.

[00:53:36] Joe Carlasare: Okay, where, you know, he, and he was, he was specifically asked to sort of pretend assets that he was holding personally were transferred to a company on a certain date. There’s so many emails in here from his lawyers giving him advice and then him ignoring it or, you know, skirting around it. That what it tells me is that it’s very likely, obviously speculation here, but it’s very likely that his lawyers are cooperating witnesses with the government.

[00:53:59] Joe Carlasare: Because there’s so many, I mean, they cite these law firm, one law firm, two law firm, three.

[00:54:03] Preston Pysh: Well, they got a liability at this point. So I’m sure they are.

[00:54:06] Joe Carlasare: Of course, but you know, when he, when he had his anticipated expatriation from the country, right. The whole gist of the scam, right. If you believe the government.

[00:54:15] Joe Carlasare: Is that basically he was taking the a hundred portions of the hundreds of thousands of Bitcoin that he held and that he was moving it towards companies that he could avoid that tax when he expatriated. They’ve got emails to him basically showing him advising people to directing people to transfer, make these transfers and you know, manipulating documents and ignoring legal advice that he had to claim certain income.

[00:54:38] Joe Carlasare: It’s pretty damning. And you know, it’s one of those things where it just catches up with you if you behave yourself like a, we know Roger did.

[00:54:45] HODL: Does that mean, in your opinion, Joe, does that mean jail time?

[00:54:49] Joe Carlasare: Oh, yes. Oh, for sure. I mean, this is fraud. And keep in mind, you know, unlike other portions of the tax code, a tax fraud has no statute of limitations.

[00:54:58] Joe Carlasare: You know, if you, if you, and there’s a reason for that, right? The, the reason why is because the burden for proving beyond a reasonable doubt that someone knowingly and intentionally sought to defraud the IRS on their taxes is high, right? Because a lot of people can just say, you know what? I forgot to include this, you know, extra Bitcoin I got over here in this wallet.

[00:55:18] Joe Carlasare: I didn’t remember it. I’m sorry. It was an accident. I pay taxes on everything else. But when, when they charge you with fraud, they really most often, more often than not. I’d say in almost every case I’ve ever seen, they have the goods, they have documents, they have it where it’s, you know, I don’t care what you say, there’s no plausible explanation for why you may fail to report this income.

[00:55:37] HODL: What kind of a prison sentence is he looking at if they have him dead to rights on this?

[00:55:44] Joe Carlasare: Yeah, that’s a good question. I didn’t do that deep of a dive on it, but it’s serious. I mean, I think I know it’s over 10 years for sure. And maximum sentence. Yes. That’s wild.

[00:55:54] HODL: Cause Roger, Roger was a convicted felon before.

[00:55:58] HODL: Which was for selling dynamite through the mail, right? Or firecrackers or camera.

[00:56:02] Joe Carlasare: It’s eight, it’s, it’s eight counts, you know, eight separate counts that the grand jury indicted him on. That’s not good.

[00:56:08] Preston Pysh: It’s not funny. I feel bad. I said that, but yeah, I know what you meant. I shouldn’t have said that. That was rude.

[00:56:16] HODL: Roger pulled a lot of shenanigans that we didn’t agree with. And that’s where it’s. That’s where I’m frustrating. Yeah, but it is hard to get mad at a guy who tried to keep his own money. And maybe it’s not the smartest thing in the world to do it like morally. It’s not like you killed somebody, you know?

[00:56:33] Jeff Ross: Yeah.

[00:56:34] HODL: Yeah.

[00:56:34] Jeff Ross: Speaking of old things like that hot, are you still running Bitcoin XT?

[00:56:39] HODL: No, that’s fine. I admitted that on stage. Actually, I’m just kidding that I thought that was awesome when he admitted that. It was confusing times back then, Jeff. I was confused too. Can I just say this? I switched sides multiple times during the block size war because I didn’t, I just didn’t know what was going on.

[00:56:57] HODL: I just, I didn’t, you know?

[00:56:59] Joe Carlasare: So I have a question for the three of you and especially Preston, I love your take on this. And I’m not going to give you my opinion, but for a variety of reasons, there are folks that talk about Roger’s case here and they believe that there’s no way he would have been prosecuted, especially this many years after the fact, had it not been for his association with Bitcoin and that this, this indictment is yet another arrow that’s been shot from the government to try to say, don’t mess around with us.

[00:57:28] Joe Carlasare: We’re coming for all you. Bitcoin DGNs that are you know, playing fast and loose with the rules. I’m interested in each one of your thoughts on that. If that is true, or if that’s just a coincidence that, you know, Rod, it, you know, go ahead.

[00:57:40] Preston Pysh: This has so much to do with a comment that you made earlier in the show, Joe, where it’s like, if they have just hard evidence and they have a high profile from a marketing standpoint, have a very high profile person that everybody knows that they know that everybody’s going to talk about on social media.

[00:57:57] Preston Pysh: That’s a win for the government, right? Like they, that’s the shot they want to fire is everybody’s going to be talking about it. We have hard evidence. We don’t even have to try because we, the evidence is so damning that it just makes a whole lot of sense for them. I, so yeah, I think that that’s, I think it was definitely in their playbook to strategically go after him.

[00:58:16] HODL: Yeah. I had heard behind the scenes. I’m not sure if you heard this as well, Joe, that there were two other guys who, you know, got this same treatment who had expatriated around the same time who were both OG Bitcoiners, but they’re basically anonymous. Like, you know, nobody knows who they are. You could probably like look it up, you know, but they’re not high profile like Roger.

[00:58:37] HODL: I do think that like, yeah, I mean, one of the ways that just put it broadly like this, man, I mean, yeah. Bitcoin is going to be one of the most valuable things in the world. Governments are going to need it and want it. And if you’ve been cheating on your taxes, you just gave them a really easy hook to get some more from you, you know?

[00:58:55] HODL: So be smart, pay what’s out, render to Caesar, what’s owed to Caesar, move nimbly, make a full faith effort, et cetera, because that’s an easy, easy, easy maneuver they can use to extract wealth from you. Don’t allow them to do that.

[00:59:10] Preston Pysh: And if you just DCA and you never sell, well, you don’t have anything to worry about anyway.

[00:59:14] HODL: That’s right.

[00:59:14] Preston Pysh: Hodling has no taxable events. Just hang on to it and don’t sell it like an idiot.

[00:59:21] Joe Carlasare: Well, well, and to that point, sorry, Jeff, did you have anything to say on that?

[00:59:25] Jeff Ross: I just, my, my only comment to, to, if this is what you’re getting at is based on anecdotal evidence. I firmly believe that if you are a public Bitcoiner, that you are a red flag by the regulators.

[00:59:37] Jeff Ross: And just from anecdotal evidence, I can say, I confirm that suspicion if that’s what you’re asking.

[00:59:44] Joe Carlasare: It is. And it kind of dovetails pretty nicely into a tweet I saw from Brooke Mollers where she tweeted out and I’ll quote it on the 25th of April. When we were audited, the IRS crypto committee told our accountant that cold storage was a huge red flag.

[01:00:01] Joe Carlasare: So to your point, Preston, you know, even huddling Bitcoin, even to me, it’s kind of bizarre people don’t have this in their mental models, but even just huddling Bitcoin in cold storage, and I don’t mean this to scare anybody. I’m just saying, just know it’s a reality, right? You’re going to go into databases.

[01:00:16] Joe Carlasare: I think that are probably not databases you want to be in. If they can tie that to you. So it’s not, I don’t mean to discourage anybody, right? I do this myself. Okay. I’ll just say that, but I just think it’s just reality, right? Like there’s an antagonistic approach to the asset and you have to be prepared for it.

[01:00:33] HODL: At the same time though, don’t let something like that scare you into being like, well, I’m going to exactly on an exchange because I don’t know if everybody heard this interview, but my friend John says, there’s a, you know, well known Bitcoin OG. He caught one of these guys, these social engineering scammers, on the phone yesterday, and surreptitiously recorded the conversation.

[01:00:53] HODL: For 35 minutes he got this guy to basically, this kid, he was a kid, he was like 18, 19, he was just spilling his guts about the way they socially engineer. Millions of dollars out of people every day. And on the phone call, he said that they had a 1. 2 million withdrawal pending at swan Bitcoin. It’s socially engineered a swan customer.

[01:01:11] HODL: Okay. I mean, I heard it. I reached out to swan to the security department at swamp. They told me that their internal systems had already caught in flag, but it lets you know that that’s a real details. And it’s a fascinating, if anybody wants to listen to it, it’s very small claims on Twitter. You can find his, the interview under his Twitter account.

[01:01:29] HODL: But man, is it, it’s so scary out there if you’re leaving your coins on exchange because the way it works is they hack your Google. Then they have access to your Google authenticator because a lot of it is cloud synced and then they can get into all of your crypto accounts and they call you up and they scare you and they tell you fake stories and blah, blah, blah.

[01:01:48] HODL: So like what Joe said is true, but just don’t let it scare you because it’s not just the government that hates you and wants to steal your coins. There’s a lot of enemies around the average big winner.

[01:01:58] Preston Pysh: And if you’re paying your taxes and you’re self custodying, what are you worried about? It’s a red flag, but it’s legal.

[01:02:08] Joe Carlasare: It’s totally legal. So correct. Yeah, correct. Yeah. Yeah.

[01:02:12] Preston Pysh: All right. We’ll leave it there. Gents. This is always a pleasure. I really appreciate you guys making time to have these conversations. I find them very beneficial. I learn a ton. Every time we do this, give, let’s go around the horn. We’ll start with Hoddle.

[01:02:25] Preston Pysh: Give people a hand off. If you have anything you want to hand off, go ahead.

[01:02:29] HODL: Totally. I think I swore too much. Preston asked me not to swear. I think I did. I think I did a little too much. So I just want to apologize to Preston’s editors. I’m sorry. And to the audience, the peeps were they, that was me swearing.

[01:02:41] HODL: I’m sorry. I messed up.

[01:02:43] Jeff Ross: This was awesome. Preston loved doing this. It’s fun to have HODL on. I thought he did good at all. I don’t, I don’t even think HODL swore too much.

[01:02:50] Preston Pysh: Just there at the end. He was doing great. He was doing so. So congratulations, man.

[01:02:53] Jeff Ross: That’s good. Great conversation. Just be safe out there. I listened to that same John Seth’s interview and it’s so, it’s very sobering.

[01:03:01] Jeff Ross: Highly recommend you listen to it. Basically that I thought that the most important take home point is if you have Bitcoin on an exchange, get it off an exchange. Like right now, he’s like the kid, by the way, he’s a high schooler. He said, so probably 16 or something. He said, if you have an exchange, it’s super, super easy for us to steal it and to get it off the exchange.

[01:03:19] Jeff Ross: So, and he was just telling John said, yeah, you don’t want to keep it on exchange, get it on a, get it on in cold storage, keep it secure. Never, ever, ever, ever give anyone your, your seed phrase. That’s just the dumbest thing you could possibly ever do. And this kid says every single day, people give them their seed phrases and he steals their Bitcoin.

[01:03:37] Jeff Ross: And they’re crypto. So don’t do that. Be smart.

[01:03:39] Preston Pysh: We’ll have a link to that in the show notes. If people want to watch that or listen to that, Joe.

[01:03:45] Joe Carlasare: Yeah. So again, Joe Carlasare if you Google my name, you’ll find my law firm and you can reach out to me. If you have a litigated matter, I have a ton of cases currently representing Bitcoin miners, commercial disputes, fraud cases.

[01:03:56] Joe Carlasare: So I’d love to help you if I can. And if I can’t, I can refer to somebody that has expertise in that field. And I do that all the time. I’m also at Joe Carlasare on Twitter, and I’ll just end with one thing in these sort of sideways, trendy markets. Okay. My one thing, if I can just take away from this episode, it is so invaluable for you to continue to an approach of steady accumulation.

[01:04:19] Joe Carlasare: Okay. I cannot emphasize this enough. I have so many people when the market was ripping, you know, in November, December, January, or this year, they were asking me about how much exposure they could get. They were asking me, you know, when’s a pullback coming. And then all of a sudden the phones go silent and the texts go silent.

[01:04:36] Joe Carlasare: And hopefully if you’re listening to this podcast, you’re not one of those people. You’re taking advantage of what I think are ridiculously cheap Bitcoin prices relative to all the issues globally we talked about today. And, you know, from my standpoint here, I think you’re going to be looking back few years from now, I don’t know what the time of, I’ll just tell you, I just think down the line, you’re going to say, wow, I had months and months to accumulate in the sixties or 50, 000 area of Bitcoin.

[01:04:58] Joe Carlasare: What was I doing? Not selling my chairs, you know, so to speak.

[01:05:03] Preston Pysh: Oh, Pierre’s so good with all the memes and the, the memorable lines. All right, guys, we will have a links to all of this in the show notes. Thanks again for making time.

[01:05:14] Joe Carlasare: Thanks, Preston.

[01:05:15] Jeff Ross: Thanks, Preston.

[01:05:16] Preston Pysh: If you guys enjoyed this conversation, be sure to follow the show on whatever podcast application you use. Just search for, We Study Billionaires. The Bitcoin specific shows come out every Wednesday, and I’d love to have you as a regular listener. If you enjoyed the show or you learned something new or you found it valuable, if you can leave a review, we would really appreciate that. And it’s something that helps others find the interview in the search algorithm. So anything you can do to help out with a review, we would just greatly appreciate. And with that, thanks for listening and I’ll catch you again next week.

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