The $200 Billion Shadow Market Behind Anthropic's Stock | Dio Casares

You can't just go to Anthropic and be like, I want to buy a million dollars of your stock in this round, please and thank you. It's a very Wild West reputation and to your point, like kind of insider setup. You have people that have the access and sell the access and you have people that have the buyers and sell the buyers and you have a few people that do both. Even people at funds, they make more money doing these kinds of transactions now than doing primary capital into deals. And so a lot of people are shifting into this market because of that. Bankless Nation, we are here with Dio Casares from Patagon. Dio, welcome to the show. Thanks for having me. Dio, I've got some questions. I think a lot of people have some questions around the secondaries market on Anthropic stock, but also we could probably extend that to the private markets broadly. Before I start asking you my questions, can you just explain to me and to the listeners like where your perch is and why you have a vantage or a perspective on like what's going on with anthropic secondaries. So I guess Patagon has two core businesses. We have our own prop investing business, and then we have a client facing business. We've invested in secondary deals ourselves, and then we've gotten into secondary deals. And that's kind of our client facing business. We help people find access. So as like a service to your clients, you go and find secondaries that are hot and then you package them up and sell them to your clients. Exactly. Exactly. Okay. So that gives you kind of like a first row seat, front row seat to what's going on in this very hot secondaries market. As I kind of understand it, the hot ball of money is secondaries, specifically Anthropic, but also SpaceX, also OpenAI. Maybe just shed a little bit of light for listeners because most people is completely blind to this. What's going on over there? Yeah, so broadly you have two types of secondaries and you have primary secondaries, which kind of defeats the purpose of the secondaries term. Does that make it secondary secondaries? Yeah, I mean, it means more so that instead of a fund putting money directly into a round, there are people that create SPVs and SPVs on top of SPVs to invest into these rounds. And that's net new money for the company. So that's money that the company is selling these shares and they're getting money. There's also, I would also include in that employees that are selling their shares and that's approved via the company because the company is getting value from the fact that they were able to give their employees shares. And now those employees are able to convert that into cash. The second type is basically you're cashing out someone that's bought from the company. That's always been a little bit more difficult. there's always been this idea of IPO or exit and acquisition is when VCs sell or when investors sell. But as people, you know, that was when companies would IPO at like $10 billion. Now you have funding rounds that are multiples of that. And so obviously the liquidity profile and the timeframe has changed. And so even we saw it with FTX, right? A big block of misanthropic was sold during FTX because it had to be because it was a bankruptcy. And so you've seen the secondary market kind of need to be formed, but also at the same time kind of be viewed with this trust from a lot of the management because they see it as potentially competing with their own sales of stock, which are meant to raise money. I see. So one of the reasons why this phenomenon is happening in the first place is A, the market sizes are just gargantuan now. And so the amount of money to be flying around is just larger. And then also because these companies are staying private for longer, there's more time to do it. The market has time to mature and get bigger, attract more participants. And so these are like these two secular inputs aside from just like how attractive Anthropic is as a company. There's just like companies are saying private for longer and getting larger, which just creates this emergent secondary market because of these properties. Yeah, I think that's right. What's something you're actually looking forward to next month? Because Coinbase is doing something interesting. Coinbase One member month starts with 20% off your first year of Coinbase One, plus a $50 Bitcoin bonus when you spend $100 with a new Coinbase One card in your first 30 days. They're also layering in extra rewards and perks throughout the month. And if you're active in crypto, Coinbase One is basically designed for you. You get zero trading fees on thousands of crypto assets, 3.5% APY on USDC, and boosted staking and lending rewards, and up to 4% Bitcoin back with the Coinbase One card. So if you're going to try it, now is the time to lock in that 20% discount before the weekly rewards kick off. Start your month of more with 20% off the first year of your annual plan at Coinbase.com slash bankless. That's Coinbase.com slash bankless. Visit Coinbase.com slash bankless to get 20% off of the first year of your annual plan today. Offers are valid until May 31st. Terms apply. Coinbase One Card is offered through Coinbase Inc. and Cardless Inc. Card issued by First Electronic Bank. Bitcoin back rates are based on cardholder assets on Coinbase. When the market pulls back, most people just wait. They hold cash, hoping things stabilize. But there's another move, and that's where Nexo comes in. Nexo is a platform built to help keep your digital assets productive. You can earn daily interest on supported crypto assets through their Yield product, or get funds through a crypto-backed credit line without having to sell any of your assets. So if you want optionality, Nexo gives you both sides of the equation. You can put your assets to work or borrow against them when you need flexibility. Nexo has been around since 2018 and has over $8 billion in assets on the platform, and has paid out more than $1.3 billion in interest to clients globally. So if you're a new U.S. user, there's a welcome incentive waiting for you when you sign up. Check it out at the link in the show notes. And as always, this is not investment advice. Quick shout out to OKX. They are live in the States building the new money app. And Wall Street is taking notice. The parent company of the NYSE just invested at a $25 billion valuation and took a board seat. That's the New York Stock Exchange coming to crypto, not the other way around. And why OKX? It's the only app combining a full centralized exchange and self-custody wallet in one place. sex trading, DEX access, on-chain activity, all in a single interface. No more bouncing between five apps, copying and pasting addresses, or bridging tokens in separate tabs. They support Bitcoin, Ethereum, Solana, Base, and more. Millions of tokens, just a few clicks, and an infrastructure that processes trillions in transactions and keeps assets fully backed. OKEx users are set to get tokenized New York Stock Exchange stocks and derivatives later this year. TradFi and DeFi finally in the same app. Head to the link in the show notes, download OKEx, OKX and see why it's the NYSE's go-to for going bankless in the United States. Not investment advice, services not available in New York and Texas. Can we talk about just like the normal case because Anthropic knows that there's secondary markets. It's not naive to this. It's also, there's like the happy and normal and like Anthropic approved cases of secondary sales. And then there's like the ones that Anthropic doesn't want and doesn't like. Let's save that for later. Can we talk about just like how a secondary market unfolds that's like happy and approved by Anthropic? Secondary market, maybe the more accurate way to describe it is more SPV market. So you have people that just want to buy into or privates market, people that just want to buy into Anthropic. They're not in a fund. They don't necessarily have a loyalty to the company. They're in it to make money. In general, Anthropic is very pro direct deals. What's a direct deal? Company approved transactions. So it's on cap table. And then that, you know, whatever funds that they're working with there then syndicates that. So they go out and they tell people, hey, we've got this access. These are the fees. They make money from basically helping these companies raise money. Anthropic's doing that right now with a couple of large firms, PE firms for their round. And those firms were not loud, but they were going to a lot of people. They're not in the list of unauthorized people. So you can assume that that's company approved. And then you have the kind of companies that all management kind of very much dislikes. And that actually a lot of the management from these companies will actually send cease and desist to. So that's the hives of the world, the forges of the world. these platforms, the way they work is they see that they have a block. And then if it passes some level of a block, as in like, they have, say, SpaceX, $10 million of SpaceX. Yeah, it's a chunk of equity. Exactly. And so then they'll go out and be and send literally a mass email to like, basically all of their, all the people that can sign up on their platform, which doesn't take KYC doesn't do any kind of checks anyone can set up. So hundreds of 1000s of people, and they're like, hey, we have access to this block at this price. And oftentimes they're in the bargain business, i.e. they're trying to find blocks below the prevailing secondary price or the round price. And what you end up having is that Anthropic will get family offices and large people that maybe aren't going to invest in Hive or VF Hive and Forge for a myriad of reasons, but they'll go to them and be like, hey, why should I invest directly into the round when on the secondary market via these guys, they're saying that I can get it at a 20% discount. And that makes Anthropik's job of raising money harder. And it also, more than that, is a psychological thing. In general, when people see spreads in secondary markets, there's a high sell price, or sorry, there's a low sell price, there's a high buy price across different people. That tends to be a bad sign because it tends to show that the market's not particularly active. So they want to assuade that. Both companies, OpenAI and Anthropic, have also done employee tenders recently. So they've allowed employees to sell up to $30 million directly at the round price. And so that's been their way of also avoiding having direct sellers. So a lot of the people that wanted to sell have now sold enough to where they're not going to enter some kind of off the books secondary transaction with someone else who's like, hey, I'll buy your shares, you know, in a year or so. Okay. So as I understand it, from what I'm hearing, there are just like the sales that are approved by Anthropic. And the reason why that they are approved is because A, they're non-competitive as in Anthropic's actually getting the capital. They're trying to raise capital. They're actually getting the capital. And then also it benefits the future market structure. So employees that want to sell or parts of the anthropic ecosystem that want to sell do sell ahead of the IPO, ahead of actually public listing. So that sell pressure is gone. So there like healthy positive some exchanges of equity and cash that is conducive to Anthropics goals And then there the parts of the ecosystem that have a bunch of middlemen that are extractive that kind of just are producing markets that are just elsewhere from Anthropics that they don't see the benefit from, and also is a bad look. You said that there was like bad pricing dynamics. And are legally dubious. So in the US, when you have securities, so stocks in this case, that are not publicly listed. One of the regulations around it is basically you're supposed to have a holding period of six months. And so you see some of these tokenized equities of these private companies. Tokenized equities is very different from actually the perp market. That's actually kind of different. But in theory, if someone's able to buy and sell and buy and sell and buy and sell back and forth, each time that's a violation of that law. Maybe they've done something on the back end where they have kind of an obfuscation of that. But historically, U.S. regulators tend to think if you're dealing with assets that have a U.S. nexus, that they have purview. So I imagine another thing that Anthropic doesn't want is for regulators to accuse Anthropic of not doing anything when it came to these. I see. Anthropic doesn't have the ability to turn a blind eye, legally speaking. So if they are aware of these markets, they have to do something about it. Exactly. Okay. Okay. How big is this phenomenon? Like, how large is this market? Can we measure this? It's tens of billions of dollars in Anthropoc alone, probably. Is that the unhealthy dark market that's kind of illicit, or is that everything? Is it kind of hard to measure? That's kind of everything on the private side. Okay. And by privates, I mean like, it's also that you have so many different styles of privates. Maybe you have a syndicate of family offices coming in and investing. A lot of people would treat that very differently from like a broker or even a firm like ours going out, getting people, charging a fee, and that's our business. And then you have layers of brokers. You have kind of very first layer brokers that basically they just know a bunch of buyers. and then at the same time they know a broker that knows a broker that actually has access. So you have a pretty complex market structure and you have a lot of money flying around. So I think there's an interesting stat that private market raises now are higher than the amount of money that's raised for IPOs and has been for the last few years. And it's something like $200 billion plus in recorded secondary market transactions plus funding rounds. or not just secondary market transactions, that's pretty massive, especially, you know, we're not talking about fees and the BIPs. A lot of the anthropic deals that we've seen have 10% one-time fees plus carry. So if they're raising, say 10 billion of the round is money into these kind of more secondary kind of clients, there's a billion up for grabs and fees. Wow, wow, wow, wow. I want to talk about two things I've seen on my timeline recently that I think kind of illuminate how crazy this market is. One was some dude's Hinge profile, a dating app Hinge profile. And he said on his little blurbs that you can write, he said, like, I'm friends with people at Anthropic, zero fee commission for dates. So like he's using the fact that he has access to Anthropic shares as like a bait for dates on Hinge, which is kind of crazy. This is a guy in San Francisco. There's another tweet that kind of echoed around the world. Some lady tweeted out, simply brokering an anthropic secondary deal made me more money than my entire net worth from working in my 20s. This is insane. So there's like this kind of like San Francisco social elite, like access to anthropic, like social finagling going on. Talk to me about like how this happened or what's going on here. I also had actually talked to the person that you mentioned right there. The person writing that tweet? Yeah, that was actually, that's relatively interesting case. Yeah. I mean, I think there's a couple of things going on when, say, put yourself in the shoes of a buyer. You want to buy Anthropic. Even the listener right now, it's like, okay, what does that mean? Right? The bylaws and the charters aren't public. They're not easy to get access to. You can't just go to Anthropic and be like, I want to buy a million dollars of your stock in this round, please and thank you. It's a very Wild West reputation and to your point, like kind of insider setup. You have people that have the access and sell the access and you have people that have the buyers and sell the buyers and you have a few people that do both. And so that's kind of the market structure, if that makes sense. There's a lot of these people that have made more money, even people at funds. I mean, I think that person that you mentioned is at a fund. They make more money doing these kinds of transactions now than doing primary capital into deals. And so a lot of people are shifting into this market because of that. And so they just see, it's kind of like there's a gold rush for Anthropic shares. Anthropic shares are the gold and there's a lot of people selling picks and shovels. Is that kind of what's going on? Yeah, there's a lot of people. It's become a lot more competitive, which I think is good. A few months ago, you didn't really have competition. You had some competition, but in my humble opinion, it was not super advanced. It was mostly people that were brokering and not going direct. Now you increasingly have more people that finding buyers and sellers and handling the whole process, which is more professional. At the same time, the amount of money that can be charged in fees because of that has gone down. And I think the other thing that a lot of these people are not underwriting, especially in some scary, I would say, cases, is there's some cases where you can't get access onto investor shares. And so you end up selling forward contracts of employee shares into a lot of these companies. That has blown up a lot. There was a block of XAI sold by a well-known firm that was an employee forward. And that was the employee that got named in an XAI v. OpenAI lawsuit and so got all of their shares rescinded by the company because basically they were accused of corporate espionage. But all the money had been paid, all the fees had been paid. And so suddenly it was a mess. And all the people that were buyer side brokers were kind of left out in the cold because the company that did that was basically like, hey, if you paid fees, you know, that's your problem. It's not our problem. We refunded you, you know, original money. So that in the case of fake SPVs, I think is going to continue to happen. And it's going to become more of a reputation game of who's been able to do these without failing or having a vehicle that fails. Can we talk about why a vehicle would fail? And as I understand it, there's like a nesting doll of SPVs. There's like second tier SPVs, third tier SPVs, fourth tier SPVs. They all kind of have fees. There's increasing risk of whether the equity that these things claim to have, they actually have every time you go down a layer. Can you just kind of explain that like structure that's emerged? Yeah, oftentimes the reason why you have second layer, third layer SPVs, which is also something that Anthropic and OpenAI took direct pot shots at, is because you have an issue of coincidence of wants. If you have a seller for 8 million of Anthropic, you don't frequently have an exact buyer for 8 million of Anthropic. But you might have three individual buyers that are willing to take that position. And frequently, in order for most of the people involved in this space are not broker dealers. So they can't charge a fee and just sit in the middle. but if you make a fund and you have upfront management for handling that fund, you can. And so that's where these fees kind of get charged at the SPV level. And then if- Does Anthropic like the funds or are they like, no, the funds are explicitly bad. We don't like the funds. The SPV, it's better than not, to be honest, because you have tax filings if they're well handled. They also- It's more compliant. If you saw, yeah, but also Anthropic is kind of saying which fund admin companies they approve of. they specifically took a shot at Sidecar, which is kind of funny because everyone else there is like a fund or a SPV broker and they're just a fund admin business. But the reason why they took a pot shot at Sidecar is because they believe, and this is kind of their reputation in this space, that Sidecar does not do enough due diligence that a fund admin should. They basically see a doc and they're like, okay, this looks good, that's fine. To your point originally about the risks, the risks are that the shares aren't real. You can fake share certificates. Is that just straight fraud? That's just fraud. That's fraud. We've seen at least 10 deals like that where we look at the share certs and then we look at something and we're able to see that it's fraud. And there's not much, you know, you can do a whistleblower report, whatever. Sometimes it's like not clear enough of like if they actually did the fraud or if they're just trying to resell a fraud. And so you don't really want to do anything. But there's a lot of fraud out there. I don't think it's as prolific as people say it is. I think it's maybe 10 or 20% of the actual deals that get executed are frauds. But I would agree with a lot of people say that they have access and don't actually have access and try and get some money and then turn around and with that money invest into a company. And a lot of the times that doesn't work out. Is there such a thing as like accidental fraud or like people are doing their best intentions but because of the way that it is, they actually don't have the assets that they want. Is there a gray area here? Yeah, I mean, that's just gross negligence. Okay, yeah. Like, is it a different crime? It sounds like there's no, there's less gray area and it's actually kind of binary. Yeah, I mean, it's like, you can look at PitchBook, you can look at a bunch of, there's a bunch of resources out there and there's a bunch of ways to get access to cap tables and whatever that you should be using if you're direct to the seller. In the event that you're getting a seller and you didn't do the due diligence for your buyer or whoever your client is, that's just gross negligence. You shouldn't be doing that. In the event that you're buying from someone that's a well-known name that has cap table access, you've reviewed the legal docs, and then they still do something shifty, that different but that also like you get what you get that it is a reputation business And the people that are kind of shifty in the business are known Sure Okay So when so like we going to talk about what happens when Anthropic actually IPOs and these shares become liquid and like a lot of this stuff settles. But it doesn't sound like there is any, like if there is like missing shares, it's because somebody was a bad person and they explicitly decided to like do fraud or a scam or gross negligence at the very least. And so there's no, it doesn't sound like there's any sort of like accidental way to cause harm. There are just explicitly bad actors who are taking advantage of frothy money. Is that correct? Yeah, it's mainly bad actors. The other thing is like, take, for example, forwards. The way the US legal system works is you're innocent until proven guilty. So the problem with the forward is say someone sold their anthropic shares at a $20 billion valuation and say they sold like it for a million dollars. And now it's at, you know, a trillion, that's a 50 X that's worth $50 million. There's a real calculus to be able to be made of like, Hey, you know, I can sell this for $50 million. Even if this lawsuit costs me $10 million, I'm going to have 40 million. I see. They have to prove it in court. A lot of people won't do that. So that's also a risk. And that's what I think is going to be interesting is like probably there's going to be some legal precedent of if someone enters into a deal that was illegal by the bylaws or the charter of the company. But, you know, they were acting by that contract. Like the person got paid, right? What happens? Probably what happens is my gut instinct is that that person is personally liable. But we'll see. Yeah. Yeah. And the outcomes could be different, like personally liable for the full amount or just do they get their money back? Yeah, exactly. All of these things will be faxed in circumstances. Yeah. Yeah, because in the chance that this person is. And it depends on the contract they sign, right? Like if the contract's not properly written, then you could be in trouble, which is a problem because a lot of the people that are doing this don't have lawyers looking at their docs. It's ChatGPT. Right. Or Claude. Okay. So I think we've done a good job kind of like illuminating how fraud comes into the market or how just the example that you just gave where somebody just like reneges on a deal. I don't know if that's fraud. I don't know what that is, but it's not great. Yeah. But there's like a lot of- Yeah, yeah. You would have never thought two years ago that you could soon be trading tokenized oil on MetaMask. But here we are. I've been using MetaMask since 2017 and we all remember buying NFTs with it in 2021. And now in 2026, if you haven't checked in on MetaMask recently, Let me tell you, you can trade tokenized stocks, funds, and commodities, along with leverage perpetuals, prediction markets, and even yes, you can gassously swap between crypto tokens across networks too. There's advanced security features like MEV and front-run protection, and even a debit card so you can actually spend your crypto directly at merchants all around the world. And it's all self-custodial. Everything you want to trade in one place. This is the open money future we've all been waiting for. Check out the new MetaMask. It's already on your phone or in the link below. In 2024, emerging markets generated over $115 billion in annual yield for investors, with yields ranging between 10% to 40%. These are some of the highest, most persistent yields on Earth. The problem? DeFi can't access them. BRICS changes this. Built on MegaEth, BRICS takes emerging market money markets and sovereign carry and turns them into composable primitives you can access straight from your wallet. While DeFi investors earn 3% to 6% on stablecoins and T-bills, institutions have been harvesting 10 to 50 percent yields backed by sovereign monetary policy BRICS connects these worlds with institutional gray tokenization local banking rails compliance across jurisdictions and real-time stable coin settlement BRICS does the heavy lifting so defi can finally access real collateral and structured products on top of real world yield even the best carry trades can be within reach BRICS brings defi's promise to the emerging world and brings emerging market yield to your wallet let the yield flow with BRICS And so let's talk about when Anthropic actually IPOs and a lot of this like speculative market goes from speculative to like real. And now there's actually real trading shares. How does all of this kind of like collapse? Not like collapse in a bad way, but things like settle. Like shares get handed out, you know, money changes hands. A lot of things get netted out and like we're kind of done. But then there's going to be a bunch of like, there's going to be some explosions going off, right? Yeah, it depends primarily on two things. It depends on DTCC-brokerage accounts AML or procedures. And it also depends on the distribution aspect of each fund. So some funds have entire discretion on when they distribute. Other funds say like, hey, as soon as there's an IPO and the shares are liquid, we distribute either in kind or in stock. Or sorry, in cash. So if you have, you can imagine a third layer SPV, the first layer receives the stock and then, you know, asks people, do you want to get in-kind or do you want to get cash? And then the second, all the LPs of which SPV number two is one say, we want stock. And then it comes up and it's like, that'll take a few days just because of how DTCC works, at least. If the bank is annoying, it can take like two weeks. So now you've got a two week delay. and then they have to then go to all of their LPs and go, hey, do you guys want to receive cash or stock? And then now we have the third level. The third level SPV is going to receive it three days to another two weeks, and they can decide how to handle that. If at any stage there one of those SPVs has certain distribution rules where they can just hold it, like say for whatever reason, Anthropic opens and it starts ripping, and the first layer is like, hey, I have carry in this vehicle. I want to let this ride. Right, because the carry means that they get to charge more if the stock is ripping, their carry goes up. Or vice versa, right? Like, oh, wow, the stock tanked on open, but now my carry that I marked up to an incredible price is not worth anything. I want to try and hold it for a few months. And so suddenly you have this waterfall effect of, oh, all the people upstream can't, or in this case downstream, sorry, they can't get their shares. And there's going to be a lot of people probably hedging their positions on the market as is technically in a gray area, but you should probably not do. That might hedge up until the six months, not realizing, hey, it could be another month until you actually get your shares. And so that's probably where you see some lawsuits happening. wow yeah this just sounds so messy it sounds like every single spv is kind of like facts and circumstances they have their own governance about how they decide to pass on cash or stock and when and so it's this is not like an instantaneous like clearing of the books when these things get liquid it's just like this seems like it's gonna be really messy not from an entropic's perspective because like at some point entropic just like doesn't really care like they issued the stock that's all they have to worry about like the higher level spvs can just have to deal As soon as they're publicly listed, they go from needing like a private transfer agent that handles all the transactions to a transfer agent just when they issue the stocks the first time. And then after that, it's on DTCC, right? Now, which is how all U.S. stocks are handled. And now they don't really have to deal with anything. But the big thing is like a lot of the brokerages and a lot of the banks might look at these transactions and be like, well, Anthropic says this is void. we need to look into this and see if we can actually sell these shares for you. And that might be a mess. But at the end of the day, also what I think a lot of people are not understanding is at that point, there's not really a game theory reason for Anthropic to void those transactions and actually seize the shares. Also, it's very hard once you IPO to seize shares. They're not going to do another private funding round. They're publicly listed. So the game theory of trying to maintain the market structure no longer is in effect. Interesting, interesting. How just like bad is this going to get? Like how many legal cases, how much dollar at stake? How messy is it going to be? How long is it going to take to clear up? I think it'll, I mean, litigation takes years. There'll definitely be cases that are going to take years. I don't know the full size, to be honest. I don't think anyone does? I don't think anyone does. I think that's right. But it'll be an eye-opening moment for the market where, you know, a lot of, I think there will be a lot of people that, I mean, I talked to someone the other day, tragically, it's a European small family office that I'd invested in. I'm quite convinced had invested in this deal I mentioned before that ended up blowing up, but that ended up refunding the money. But I believe that the GP of that fund, or if you can call it a fund, the broker, didn't tell the LP and just kind of wanted to hold it and try and trade it, which happens a lot. There's a lot of gambling. Trade fraudulent shares. No, take the refunded money and try and out-trade the appreciation of, yeah, which is not. So they took a loss and then they're like, I'll trade to make it back. Yeah, which unless he's made 500% is not going to work out. And I don't have much hope that he did. Yeah, but that's on that fund. That's just a separate story, yeah. Yeah, but I think there's going to be a lot of cases like that where the people that are really getting hurt are the people that didn't have a crazy amount of money but put a lot of money for them into this. Yeah, their personal money. Trusted someone. And then that person ended up fucking up. And by fucking up, you mean they bought illicit shares, fraudulent shares, messed up somehow? Yes, or when there was a mistake. My gut feeling is that there was a lot of fees on that block from the LP that invested with that GP. And then the guy spent all that money. And then, you know, didn't have the money to give it back and just be like, hey, or for whatever reason felt that he couldn't refund that person. And, you know, that's just not how finance works. You've got to, as soon as something like that happens, you've got to have someone that'll be like, hey, I'm so fucking sorry. This didn't end up working out. Here's your money back. Right. Yeah. Right. Yeah. The worry is that like there are people maybe doing their best intentions. Maybe they fucked up and they bought fraudulent shares. But why would they still have people's money if they bought fraudulent shares? Because if you buy fraudulent. Because it's their vehicle. So they bought the fraudulent shares and then they get refunded. Oh, they don't send the money elsewhere? It's like a promise to send the money in the future? Sometimes. A lot of the times that'll happen. Or like that specific deal wasn't fraudulent. It was more so the deal blew up and then the money got turned back but people had already assumed they were invested at a lower valuation So the way to make a mistake was that like you take money from friends and family you like raise an SPV, it has money in it. You have some other promise from somebody else that they're going to sell you shares. And then you're like, okay, great. And then you can do one or two things. You can do nothing and the money stays in the SPV because that's what should happen as you await for your shares. Or you are counting your chickens before they hatch. and you're like, sick, I just made a boatload of money. Let me go buy a house or something, anything, buy a Porsche, whatever. And then the day comes and you didn't account for the fact that you didn't actually get the shares. Now you don't have the shares to pass back, but you spent all the money and that's the trouble. Exactly. Okay, that's wild. Okay. Okay, let's zoom out here. I don't know if there's any much more to talk about with Anthropik SPVs and all that stuff. I think that was pretty thorough, unless there's something I'm missing. but just like, I want to talk about like the lessons that our capital markets are going to learn from this. As we said, private markets are very large. They're staying private for longer. Money is changing hands. It's turning into its own dysregulated, unregulated Wild West. It's kind of the opposite of what our public markets were supposed to be, but now seemingly some of the coolest companies are just staying in this Wild West private market area for longer. How do you think this evolves going forward? How do you think the market adapts? Yeah, I mean, I would think unregulated is not entirely fair. You have a decent amount of regulations around it. But still, I would say it is very wild westy. And it's very unpoliced in the sense that unless there's blatant fraud happening, the authorities are not really doing that much. And also, they can't. They'd be overwhelmed. It's like, do you want to get someone for not doing a proper FINRA filing? Or do you want to find terrorist financing? For most people, that's a pretty clear, I'm going to go get the terrorists. And it's sometimes the same people that do that. But more generally, I mean, markets kind of always do similar things. This is very similar to in crypto when we had the low float, high FDV meta for a bit. There's a constrained supply and that creates crazy markets. and as a result of that, people can raise more easily. I think in this case, obviously, there's a lot of real technology behind that. I use Claude. I love Claude. They have an insane amount of revenue now. But I think there's going to... The interesting thing is that a lot of the existing firms don't really... The banks own or work with their own secondary branches, but they're very cautious and they're not able to move fast enough for how this space works. So you're seeing a new kind of series of different companies coming in to fill this void. The other thing is that, you know, large funds also do SPVs. They just do it in a different structure and they do it just with their LPs. So you've seen this kind of flow away from directed capital, where people put it into funds, into directly managed capital. And I think that's probably going to continue for a while up until this current cycle ends. And there's going to be a lot of people that bought the equivalent of locked tokens in some of these vehicles and lose a lot of money and are like, okay, well, I actually want to put my money in a VC fund. So I think that's kind of how this market will work. But you're for sure going to see maybe the ball of money move somewhere else, but you're for sure going to see a more professional secondary market in the US after this. Yeah. Yeah, which can bring us back to actually what you're building at Patagon. So understanding what you know and your experiences in the secondary markets. Talk about just like the philosophy of the strategy of your company, Patagon. I mean, we started just on the prop trading side, getting into deals. And then we at one point got paid a fee by a buddy of mine. And I asked him why he paid me a fee, like there was no need. and he basically told me that another broker was going to charge him two or three times more. So it was basically the money that he'd saved. And that there was a kind of click there of like, oh, I can help my friends get into these vehicles because I grew up in the Bay. I know a lot of people there. I know the right people to call. I know how to check on a lot of these things and do reference checks. Whereas a lot of my buddies are more international and don't necessarily know someone in SF that's that well-connected. And so I started doing that on the side and then slowly started to realize that this could be more of a business, especially on the branding side. All of the flows, if you look at a Forge or a Hive, these are more marketplaces. They don't verify that the shares are real. They don't vet the person at all. They don't necessarily collect any of the KYC information, et cetera. I should say this is for just the marketplace when they do their own direct investment opportunities. That is different, but they still charge 3.5%. So basically for an intro and a fake order book that you can look at, and you still have to email and negotiate the price, they're gonna come in and be like, hey, I want 3.5% on that transaction, which we find pretty absurd. What we do is we look for deals. We set up vehicles. vehicles we underwrite a lot of the most of the investment side of things so we make sure the shares are real we make sure that everything's properly structured and you're going to be able to invest in these kinds of deals directly on a platform instead of having to first negotiate a price then find out what the documents for the vehicle look like then sign the documents then go back and forth on email on how to send the money to a vehicle and so you can do all of that there in one place and also eventually be able to get credit against some of your positions. And so that's the idea that we want to do. We want to add more value to the client as well than just simply getting them into a vehicle and then leaving them be. Right, right. So you do all of the things that you need to do to protect your clients. You do the due diligence, you review the docs, you make sure no one's getting scammed, frauded, and you just be professional and protect your clients. And then you have like ancillary services on top of that. Exactly. And we've done complex deals. Like we did one deal into a crypto company where it was all forwards, employee forwards. And part of the due diligence process for that was literally looking at each individual employee and doing a reference check and seeing if they had gambling problems, seeing if they had any kind of bad references from people that they knew. and when all we caught one person that did and so we didn't end up working with that person but everyone else was good and the transaction went through without a problem. And this benefits you because when you want to go and you want anthropic secondaries or secondaries from somewhere, some company, you can say like, oh, we have a very solid client base because they pass all of these quality checks. Exactly. And it means that we can more easily go to those clients and be like, hey, we handled a difficult situation because at the time when we did that transaction, you couldn't buy approved shares anywhere else. So we were able to get them into a deal they weren't able to get into anywhere else. And so then you can go to, you know, people are appreciative and then you become their guy for these kinds of things. Cool. Cool. Say somebody is listening to this and they have bought Anthropic secondaries or some sort of secondaries from some company and they just like don't know, like what's behind the curtain. It could be real, it could be not. What advice or just actions do you think that this listener should take? I mean, it's very, very rough, obviously, because there's so many structural, like, I would say people that maybe are holding perps right now, which I don't personally recommend. But ironically, because they're derivatives, they fall under a whole different subsect. And there's not as much of a risk. It's like, sure, maybe your funding is aggressive. But that's on you. But that's on you and that's maybe the price you paid to know that it should trade the IPO price on launch versus like, yeah, I mean, if you're a small person and you have even like $100,000, a million dollars and like a tokenized version of Anthropic or any of these other vehicles, most of the time, you're not going to be able to actually peel back the curtain entirely. Maybe you can peel back the curtain to the vehicle that that money's at, but most of the time those are second or third layer vehicles. So I would be wary of buying more. And if you have a very bad gut feeling about it, probably in general I'm a big fan of listening to your gut and I'll probably get out of it. Yeah, yeah, yeah. Yeah, these tokenized perps, these are synthetics? Do they have attempted claims on the actual equity or is it just like an oracle? or is it just kind of facts and circumstances? I mean, there's a lot of people, like, I guess TradeXYZ is now trying to do this. I have a buddy that's trying to do a new one. Fenschules is doing this. They all have different mechanisms, but the idea is as soon as these things launch, you know, kind of similar to, like people say pre-IPO perps are crazy. There were pre-TGE perps for a lot of these. And that's obviously slightly different because you have the market makers already have deals. And so they can kind of hedge in a different way than how the market structure works in the US for stocks. But at the same time, eventually it settles into a real stock and people can do arbitrage. So as you approach IPO, the stock or the per price and the funding should approach kind of market normal. Cool. Any other topics or questions that I haven't asked? I feel like we've done a pretty thorough job. No, I think that was great. Cool. Theo, thanks so much for coming on and educating me and the listeners. If people want to just follow you on Twitter or follow what you do, any resources that we should send them? Yeah, I'm at Diogenes on Twitter. Got lucky to get that handle. And yeah, I'm mostly on there. Cool. We'll get that. We'll get you linked in the show notes and also on Twitter. Dio, thank you so much for coming on. Thanks for having me. Bankless Nation, you guys know the deal. Crypto is risky. So is the secondary markets. You can lose what you put in, but hopefully not. This is the Wild West. It's not for everyone, but we are glad you're with us on the Bankless journey. Thanks a lot. Thank you.