ROLLUP: Extreme Fear | Tariff Whiplash | Citrini AI Crash | Jane Street vs Terra | Pentagon vs Anthropic

It is the fourth and final week of February. Thank God I hate February, David. It is time for the Bankless Weekly Roll-Up. I didn't know that. I don't like Februaries. I mean, it's just like a cold, bleak month where nothing ever good happens. It does feel like the Hufflepuff of months. That's pretty disrespectful to a major school. One of the four houses. One of the four houses, Jan. Hufflepuffs are some of the best people, aren't they? Cedric Diggory, a Hufflepuff? Yeah, they're like the kind and offensive ones in my mind. They don't change history in my mind. But still, this was not a Hufflepuff week, I think, in crypto. This was definitely a Slytherin week, let's say. We had some Jane Street shenanigans that we'll talk about. Also, ZachXBT exposes yet another crypto crime ring. I guess it's just another week, isn't it? What else we got? Yeah. In trad markets, we have the Citrini crash, followed by the Trump tariffs getting revoked and then re-invoked. And then also Bitcoin and the crypto markets sustaining the deepest level of extreme fear we've ever seen. Overall, just big old question marks over like what the hell the market even is right now, both in crypto and I would say also in the equities market as well. Yeah, a lot of fear going around, a lot of uncertainty going around. We'll dig into that. David, our friends and sponsors over at Figure have a something. Something new for the Bank of the Nation. Can I tell you about the thing? Yeah, tell us about this thing. Figure, fintech company coming into crypto, they actually do the thing where they put the stuff on the chain. To put it in a technical term. They put it in technical terms. So they first have crypto-backed loans offering an 8.9% interest rate at 50% LTV. Everyone understands crypto-backed loans. But they also make it easy for the rest of the world to do this. decentralized MPC custody so that you can have custody over the crypto back loans. It's not commingled. But what I think is truly cool about Figure and what I want bank listeners to check out is what they're calling democratized prime using the blockchain, using the blockchain as the infralayer. They are able to just cut out middlemen and that allows people lending to this product earn up to 9% APY variable interest rates with real world assets and Bitcoin backing the loans. And so 9%, that's pretty damn good. That's pretty damn good. Paid out hourly. And this is kind of the old opportunities that was previously locked behind closed doors. Now open and more efficient to end investors. 9%, there is a link in the show notes, banklist.cc slash figure CBL. If that number has peaked your interest. Good to have stable coins at a time when the markets are so uncertain, isn't it? Okay, let's talk about the extreme fear going on in the markets. First of all, maybe just touching on price, the time of recording in Bitcoin is 67K. Ether is 2010. So wait, Ether up 5% on the week? 5% on the week, yeah, not bad, not bad. But I mean, Ether did dip pretty low in the week. I saw like 1800 at one point. Yeah, that's right. Bitcoin went to 62,000, 62K. So I mean, that didn't feel very good. And this chart is the one maybe to focus in on. This is the fear and greed index, David. And this is historic highs of fear, which means historic lows, I guess, on this index. So the way this index works is- Fear is at all-time high. Sentiment is at all-time low. Same, same. Don't get confused. 100 is really good. That's all greed. That's the green territory. 100 is what? What did we feel 100? I didn't feel it any time this cycle. Most recent time was probably the AI meta a little over a year ago. Okay, maybe December 2020. That was probably pretty greed, yeah. Okay, well, now we are on the opposite end of the spectrum. So we're in the fear end of the spectrum, so very low numbers. So that means fear is high. We're at a five, David. We're at a five, okay? Five out of 100. From zero to 100, we are at a five. And we've been at a five, haven't we? Like, look at this chart. What are the comparables if you zoom out and you look historically at what this index is showing us? When else did we feel like this? You can find it. You can find the COVID crash. You can find FTX. You can find Terra Luna. Notably, all those things have numbers, you know, pretty little numbers. Things like 6, 8, 10, 11. There was the crash of 2017. Those are all higher numbers than where we are now. We are at five. So, like, we are truly breaching lows on the fear index. And, you know, fear, uncertainty, doubt, FUD. I know sometimes FUD is used as market manipulation, but if there is a lot of fear, uncertainty, doubt in a market, prices are going to be low. Those three psychological indicators represent low prices. Yeah, they do represent low prices, and they also cause low prices, and also they are the result of low prices. So it's this weird reflexive loop here. fun fact we are lower on the the fear and green index so more fear than FTX at the point that FTX was revealed to be bankrupt that was an 8 we are at a 5 now look at these spikes we've been at 5 all of February this is another reason I don't like February David it's just like we are sustaining it's not only are we so incredibly low but we are sustaining such low numbers without any sort of resurgence. Okay, why? I mean, nothing blew up. Again, we've been saying this for a while. There was 1010. We're still not really sure what happened on that date, but there was no BlockFi. There was no three hours capital. There's nothing that has really blown up in a big way this cycle, and yet we are more fearful than we were when FTX blew up. Why? There are answers to that question that I think are native to crypto, and then there are also answers to that question that also indicate why the stock market, the equities market, is also going risk off in this moment. I would say on the crypto side of things, the doubt of FUD, fear of uncertainty, doubt, the doubt side of things, there's, I think, a higher level of doubt that the crypto markets will ever access some of the all-time highs that we've ever seen before, at least in the near term. And so there's fundamental doubt about the industry. In the trad market, we'll talk about a lot of the uncertainty here, but to really drive the doubt point home, there's a tweet that you and I were sharing back and forth this week from Evan's friend of the pod. He goes, I think what you've been seeing across crypto is people who have had historically 80 to 100% of their net worth in crypto for many years, making a permanent allocation shift. Potential reasons are the four-year cycle. We are just doing the four-year cycle. And so now we are in the down part. There's quantum fears fundamentally suppressing the Bitcoin price. We are having the blowback of Trump using his powers to extract money using crypto. And that casts a very bad shadow on us. Same thing with micro strategy just being cooked. Wrench attacks are going up. And then also AI robotics are stealing our thunder. Overall, there's just like, it's casting doubt on the belief of the industry. And this is something that like I felt at ETH Denver and overall the industry as a whole is just like disgusting right now. Huh. It's disgusting. And you think that like... Disgusting. I didn't say disgusting. I was like, wait. Wow. This is a disgusting podcast. Well, I mean, there are some disgusting bits of this industry, so I wasn't going to completely question that. Well, we'll talk about some of those later. Yeah, but I guess here's what Evans is saying, that this is a permanent allocation shift from people who have had 80 to 99% of their net worth in crypto. They are permanently exiting. I'm not sure if that's true, but that's what it feels like right now. That's what the sentiment feels like. Yes. How much of this do you think this is the market pricing in a backlash against crypto? So if the wins were in our favor with Trump coming to office and he was going to get the Genius Act done and Clarity Act done and get rid of Gensler and all of those things, that's well behind us now. Now we're on the other side of that and the market's looking at crypto and saying, well, there's a lot of corruption and grift from the Trump family. And everything should be good in crypto, but we're not onboarding as many people as possible as we thought we would. The use cases aren't fully, you know, and maybe the market's pricing in a backlash as well against Trump and against the regulatory tailwinds that we've had. You think that this could be true? Part of this, I think, is illustrated downstream of what we were talking about last week with the guy on Lex Rudman, Peter Steinberger, just talking about, like, I was building my AI product and the crypto people came in and tried to, like, gamblify everything about it. They hacked my servers. They got in my way. And I just wanted to quit. And it was such a bad look for the crypto industry. And that was like kind of a cherry on top of so much other grift happening in the industry that is on the media's front pages all the time. Whenever crypto is on the media front page, it's always bad. And then there's also the issue of Donald Trump using crypto as a conduit for grift everywhere. And so when Donald Trump got elected, Bitcoin ran from $60,000 to $100,000, broke all-time highs, went even higher after that because the market was going to do things like put in a favorable SEC, put in a favorable CFTC, find a good market. And it has. That's good. And that's good. And now we did all the good things. We got all the good things. And now we have created new bad things. And the one half of the political aisle is now so strongly associating crypto with Trump's grift, who they hate, that now as an industry, now we have to deal with that. And that's the new problem ahead of us. And no longer are things like the Clarity Act or the removal of Gary Gensler catalyst for the industry. And then you also, you add on that, like, we are just not hot shit anymore. AI is hot shit. We are not hot shit. Quantum is truly a problem. You layer on four-year cycle. It's kind of just like we're getting slammed left and right, unfortunately. Yeah, sure. Which is kind of what bear markets feel like, which brings us back to the four-year cycles component of this. That's right. And that's the flood. I mean, we talked about the fear, right? And we just talked about the doubt. The doubt right now is that crypto will ever come back, will ever return. Let's talk about the uncertainty. because it's not just in crypto markets. I feel like this is the one variable that is everywhere all at once right now. It is global. It is structural. In fact, that's the argument that a friend of the show, Michael Nato, made in his report this week. It came out on Wednesday. He's calling this an uncertainty bubble. And there were, I think, two sources of uncertainty this week. Both of them have been pretty persistent over the last 12 months or so. The first is the Supreme Court and tariffs or just generally tariffs. So what happened on the week that caused uncertainty with tariffs? Yeah. So this week, the Supreme Court struck down Trump's tariffs. So I think we all remember that famous picture of Trump with that Excel sheet poster board on Liberation Day where he's like announcing all of the tariffs for all the countries. And it's like, remember, you know, that image, those tariffs have been deemed illegal by the Supreme Court. Yes. All of that. What we are looking at on screen right now with the China, 34% tariffs, European Union, 20% tariffs. Those tariffs are gone. Those tariffs are illegal as determined by the Supreme Day. That was Liberation Day. Is that a day, by the way? Are we going to celebrate that day every year? Is that like a national holiday? We get new tariffs. We get new tariffs every year. And so a six to three ruling in the Supreme Court held that the emergency powers that Donald Trump use to tariff nearly everything, exceeded presidential authority, and required explicit congressional approval. So they said those are legal and those don't exist anymore. And they have to be refunded, right? And they have to be refunded. We'll get into that. In order to add to the uncertainty as to what happens next, right after the Supreme Court did that, Trump reintroduced more tariffs, just under a different lane, going in a different direction. So the Supreme Court struck down the tariffs. And then Trump was like, how about more tariffs? And so the question might be like, how is Trump allowed to do it? Why is he just allowed to do that? Yeah. Is he going against the Supreme Court? Is he going against the Supreme Court? So I had to do a little research here. The IEPA, the International Emergency Economic Powers Act to Institute Tariffs, Act of the President, that's what he used. That's the strategy, the legal precedent that he used to implement the tariffs in the first place, that door is closed. Okay. But it turns out Trump, the president, has like four more doors available to him. Oh, okay. There's section 232 of the Trade Expansion Act. There's section 301 of the Trade Act of 1974. There's section 122 of the Trade Act of 1974. Doesn't matter what these things are. The idea is like Trump just gets to pick one. And that's the new precedent for the new tariffs. And so now if we want to strike down those tariffs, we have to go back through the litigation process, which that is just like the market and me also and the world is like, where does the equilibrium lie between the Supreme Court and Donald Trump? Because it sounds like we're just about to do another rodeo. Well, I mean, the tariffs are remaining in place effectively, but there is still the redemption piece of this, right? So with the original door that closed, there's a redemption. I don't think the Supreme Court weighed in on that. Do we have any idea how that's going to get resolved? Yeah. So $150 to $175 billion of tariff revenue has come to the door. Now we have that in the Treasury. That in theory could be the subject of refund claims. The Supreme Court did not directly order the refunds to happen. But like now anyone who's been paying tariffs to the government now gets to sue to get those back. Oh, really? Yes. So major companies like Costco and FedEx have already filed suits to preserve their claims. Roughly 300,000 U.S. businesses could do that. So the businesses get it. It seems like it also costs consumers. Do individual consumers get to file for this? I am uncertain about that, Ryan. Wow, there is so uncertainty in the market. I'm a big you on that one. Okay. So one source of uncertainty is the tariffs. And I think this is broader, right? Because this also impacts geopolitics and where does the U.S. see itself in the world as an agent of free trade? and where do other countries see the U.S.? There's all that. Mixed in with that, though, we have the biggest uncertainty, I think, that probably you and I have ever experienced in our lifetime. And that is like super intelligent computers. That is AI, AI tail risk. I think the future is so uncertain for everyone. You can see this in demographic questionnaires. Like the Zoomers just are so uncertain about their career choices, their career paths, anything. tech companies, SaaS companies, everyone is like, what do we do about AI? Is it bullish for us? Is it bearish for us? I just don know I honestly don Do you know I don know No The fog of the future is so unclear It is you know it unclear And it also February of 2026 I don know what 2028 is going to look like. That didn't used to be the case. I used to roughly be able to predict two years in the future. Yeah. That's because for me personally, that's because AI has driven variants into the future. Right. Like there's the sense that it could be either really, really good up or really, really bad down. Or nothing. Or maybe nothing, but it does feel like there's some jostling of kind of some extreme scenarios. There's some rebalancing of the world. That is correct. So there was a Substack article that came out that made the rounds in traditional institutional finance as well, as well as crypto all over the place. It was called The 2028 Global Intelligence Crisis by a group called Citrini Research. What was the summary of this article? Yeah. Yeah. So this piece was written as if it were June 2028. And it was doing a retrospective over the last few years, diagnosing a massive market crash in the S&P 500. So, like, to be clear, fiction about a potential model of the future. Wait, wait, wait, wait. You said fiction. But in the very first sentence, it says what follows is a scenario, not a prediction. This isn't bear porn or AI doomer fan fiction. It says it's not fan fiction. Ryan, it was bear porn and it was AI doomer fan fiction, to be clear. That is exactly what it was. So it ain't say. So what, according to this article, does 2028 look like? Yeah, basically at the core of the argument, it's like massive AI driven productivity gains paradoxically undermine the economy as a whole. Basically, AI takes all the jobs, all the companies under duress because of like, you know, profits getting squeezed, margins are getting squeezed. Many companies lose this. The companies under duress fire all their employees and replace them with AI agents, which actually like adds further capacity to AI agents and profitability to AI agents, which just kind of feeds into this doom loop of basically capacity is going to grow so fast. all companies are going to be dependent on it. The core of all companies is going to be like Claude, Gemini, or ChatGPT. Everyone's going to be out of a job. This is going to accelerate in a Doomloop-style fashion. And the tagline, if you don't want to read the article because it was somewhat long, is like, AI is so bullish that it's bearish. And everyone's going to lose their job. That doesn't seem real. But a lot of people said that this actually was responsible for spooking markets somewhat. Yeah, people called it the Citrini crash. Okay. Citrini crash this week. This narrative. I guess this narrative kind of took hold, propagated, and people were thinking about job loss due to AI in the week. And we lost, this was on the 23rd. So what was that, like Monday? Monday, yeah. U.S. stocks erased nearly $800 billion in market cap. AI disruption fears spread, and trade war headlines returned. So again, uncertainty in tariffs, uncertainty in AI. What's it actually going to do? Is this going to be so bullish that it's actually bearish? Markets got spooked and sold off. Yeah, yeah, that's exactly right. I do want to point out that there is just a coincidence in timing possibility here. Like the markets are volatile and have been volatile today or that day on Monday. They were volatile to the downside, which happens to be like the first trading day after the weekend that this article went viral. I would like to allude to some sort of coincidence with that just because, you know. Random walk. Random walk. Randomly walked in a direction that happens to like align with the substack. Well, you called this fanfic. Now, I'm going to ask you to justify that because some people are taking this scenario seriously. It's a possibility. But why do you think it's fanfic? Okay, so there was another article that came out the week before that also went viral. Matt Schumer's article Something Big is Happening this grew to 85 million impressions like everyone read this article to the point that everyone was making memes about how everyone was reading the article and if you didn't read that article the basic premise was that AI is in like January 2020 of COVID where everyone kind of is rumbling like hey there's this like you know virus thing in China that's spreading but that's just like one of 18 news things and like don't really worry about it And then, you know, two months later, there was like the COVID crisis. This premise of this article, something big was happening is the same thing with AI. It's like, hey, guys, we are months before a crisis and like it's going to impact all of us. Also, fan fiction. It was also fan fiction. The takeaway, our takeaway is that AI Doomer fan fiction is in because to the point of uncertainty, we can only see so far into the future right now. It's product market fit for uncertainty. Yes, it's narrative, meme, product market fit for uncertainty. That's a great way to put it. Yeah, I pretty much agree. Noah Smith, I thought, had a great article about this. He says the Centrini Post is just a scary bedtime story, and he gives some reasons why. But one of the big reasons why, of course, is like actors can respond. if ai is so productive and um so impactful to the economy from a growth perspective that it spurs innovation and it spurs productivity well we know how to distribute that to the people right i mean we did it to your point in covid right you could helicopter money you could drop stimulus checks all the people affected by ai layoffs well we have 15 like growth in gdp we can cut a portion of that and give that to the population like we know how to fix this at some level. So it's hard for me to imagine, I think Noah Smith made this point too, a world where, you know, the US falls off because AI is too successful and too productive, right? Like, or any society does that. Like, more concerning would be an AI bubble and then a bust. It's not productive. And we go into kind of a downward doom loop of like recession or like depression or something like that. But if this technology is all people think it is, then there's a way to slice that off and give that to the workforce. Yeah, yeah, yeah. I think you labeled a handful of risks there. One risk is, Alex Thorne actually put this fantastically in a tweet where he said, the market is afraid that AI won't be good enough and won't live up to the $600 billion of expected CapEx spending from the big companies in 2026. Yep. That's one worry. The market is also worried that AI will be too good and kill every job, especially in software. The market, like the interpretation is like you can validate both takes in the market simultaneously and those are opposite outcomes. Yes, that's right. And so the market just doesn't fucking know, dude. Very confused. So the summary is volatility is up, uncertainty is in. Yeah, so like the market yo-yos between AI is good, AI is bad. AI is good, AI is bad. Yeah, and how do you hedge against that? I mean, Michael Nadeau's answer is like, make sure you have a little bit of cash. All right. There are some other answers to that as well. I hate that answer. In the meanwhile, crypto is getting a beat down on some of this uncertainty. Maybe it's going to spread. We got a few things to talk about. Was Jane Street responsible for the crash of Terra Luna all the way in 2022, crypto winter? Are they responsible for suppressed Bitcoin prices now? We'll talk about that. Also, Meta coming back with Zuck Bucks. So stablecoin plans, tune in for that, all this and more. But before we do, we want to thank the sponsors that made this episode possible. is real. Galaxy has over $12 billion in assets on the platform and averaged a $1.8 billion loan book in late 2025, reflecting deep trust across the ecosystem. Beyond digital assets, Galaxy is also building infrastructure for an AI-powered future. Its Helios Data Center campus is purpose built for AI and high-performance computing, with more than 1.6 gigawatts of approved power capacity, making it one of the largest sites of its kind. From global markets to AI-ready data centers, Galaxy is serving the digital asset ecosystem end to end. Explore Galaxy at galaxy.com slash bankless or click the link in the show notes. 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. Bricks changes this. Built on MegaEth, Bricks 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% yields backed by sovereign monetary policy. BRICS connects these worlds with institutional-grade tokenization, local banking rails, compliance across jurisdictions, and real-time stablecoin 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. Bricks brings DeFi's promise to the emerging world and brings emerging market yield to your wallet. Let the yield flow with Bricks. What if you could trade gold, forex, and global markets with the same tools and speed that you use for crypto? That's exactly what BitGet TradFi unlocks. After strong beta demand, including over $100 million in single-day gold trading volume, BitGet TradFi is now live for all users. Inside of your existing BitGet account, you can trade 79 instruments across Forex, precious metals, indices, and commodities, all settled directly in USDT. No platform switching and no fiat conversions. This is BitGet's universal exchange vision in action. Crypto and traditional finance side by side. You get deep liquidity, low slippage, and leverage up to 500x, letting you apply crypto strategies to macro markets. New to TradFi? Start with gold. The gold USD pair is liquid, macro-driven, and a familiar natural bridge between crypto and traditional markets. Try trading gold on BitGet now at bitget.com. Click the link in the show notes for more information. This is not financial advice. This week, the administrator helping wind down Terraform Labs, the company behind TerraLuna, accused Jane Street of insider trading that helped collapse Terraform Labs. And so this has led to the crypto Twitter industry, the crypto as a whole, asking like, oh, wait a second. Was Jane Street involved with just the terrible demise of crypto in 2022, starting with Terraform Labs, but then a little bit further after that, starting with the actual accusation here? So a quote from the Terraform Labs administrator, Jane Street abused market relationships to rig the market in its favor during one of the most consequential events in crypto history. On behalf of injured parties, we will pursue all avenues supported by the facts and law against those who exploited their position and reaped substantial profits at the expense of Terraform Labs creditors. Okay, what was the act in question? So I think we all remember when Terra Luna blew up. This happened May 8th, May 7th through 10th, starting on May 7th. Four years ago, four years ago, 2022. Jesus, we've been doing this for too long. May 7th, 2022, Terraform Labs withdrew about $150 million of TerraUSD from the Curve 3 pool. And that was where TUSD, the Terra stable coin, basically had its liquidity, had its peg, was priced. the next day Do Kwon would later say that that $150 million withdrawal was meant to move Terra USD from one liquidity pool to another so it was like an innocuous transfer but the execution and timing of this move was claimed to be non-public information that Terra Labs is alleging Jane Street abused in pursuit of profit because less than 10 minutes after the withdrawal of that $150 million Terra USD Jane Street or while it's associated with Jane Street removed 85 million dollars of terra usd from the same curve three pool with this exiting of liquidity from the curve pool terra usd became um what's the word fragile the peg became fragile because there just was not a lot of liquidity left after these withdrawals and like if you go back in terra luna history like a month before they used a lot of terra usd to buy a bunch of bitcoin to prop up the peg they bought a bunch of avalanche like they were doing irresponsible things with the TerraUSD, which also took away liquidity from this pool. But these are the last few withdrawals of liquidity from this pool that happened right before the demise of the actual TerraSablecoin because the next day after May 7th, the next day on May 8th, TerraUSD fell to 0.97 cents. The next day it fell to 0.75 cents. And then two days after that, it would ultimately trade at just 13 cents. And so these were the last withdrawals of liquidity before the stablecoin de-pegged. Yeah, so Jane Street just was supposed to be an investor, was an investor, but ended up plunging the knife into Terraform and Terra Luna and helping to precipitate the collapse, also exiting their position. I mean, by the way, the same administrator who is suing Jane Street also has a lawsuit against Jump. Right. They claim that Jump did the same things. Yeah, for like $4 billion or something. Yeah. I'm sure they did these things. These are the most informed people about how Terra functions. Yes. And they have the most at stake. So it's true that an algorithmic stablecoin, the way it was constructed, it was always destined for this type of thing to happen. It was like destiny. Yeah. And it's also true that at some level, that's what these funds do. They're absolute sharks. So you're waving a hunk of steak in front of a shark, and you're saying, don't eat this. I know you're going to be my friend. And then what's it going to do? It's going to eat the steak. I mean, that's what happened. Turns out fish are food. Yes. Now, I think there was an especially vitriolic reaction to this, I guess. It felt in some ways, David, to me like crypto Twitter was trying to find a villain, the story, and hammer on them. Not to say that Jane Street is innocent or they're not a villain. They kind of are. But like, why are we now talking about this four years later was part of my question. And there was also this article that came out about the 10 a.m. drop, how Jane Street broke Bitcoin's price. And this starts to cast some blame on Jane Street, not only for events four years ago in 2022, but also a reason for price suppression of Bitcoin now. And they're claiming there's a drop at 10 a.m. of Bitcoin price. It's 10 a.m. every day, like clockwork. And it's because Jane Street is doing some shenanigans. It's behind the scenes with different TradFi hedging techniques and such involving iBit. I didn fully cover all of the details of this I think this is an ongoing developing story that internet sleuths are you know poke at and measure but we don really have the truth of the matter here Yeah. And so, but they did note that once this lawsuit dropped, apparently the 10 a.m. stopped happening. And so they're pointing at Jane Street and saying. Which I'm still categorizing inside of the random walk range. Are you? Like, it just happened to go up for a day. Like, I would need further substantial evidence to really relate Jane Street's activities with the price of Bitcoin. Well, so part of this story, though, is crypto, I think, waking up to the fact that with TradFi instruments, that can start to become the tail that wags the dog. So part of the same story. The 21 million cap only works if the market sitting on top of it is honest. So the 21 million hard cap, that's only 21 million on chain if it's just Bitcoin. If you start creating these different Bitcoin fractional reserve objects and derivatives and options. You can make 21 billion synthetic Bitcoins if you want to and have the means. Exactly. And if that sort of thing starts to happen, then the scarcity of Bitcoin matters less in a synthetic Bitcoin world. And that is starting to have ripple effects on the actual price of the 21 million real Bitcoin that exists out there somewhere. That's the charge that TradFi is, I know, TradFi shenanigans are starting to affect the rest of crypto. Yeah, this, I remember one of the first financial lessons I ever learned in 2017 was I was in a bunch of ICO, like subreddits and communities and chat rooms. And there was a common denominator amongst all of them in 2018, where like the price was going down across the board. And like, the common, a very common thought was like, somebody is suppressing the price. You got to buy our token because the price is suppressed. Yes. Like some of the people are manipulating the price of our bags and they're manipulating them down. And when I see that behavior of just like somebody's out there suppressing our price and like Bitcoin's at $70,000, but it should be at $150,000 because this boogeyman is suppressing the price. I'm like, wait a second. Wait, I don't know about that. I don't know. That's how I sort of think about it. Not that I'm doubting that these types of things are happening and shenanigans are happening, but I mean, I think it's just like we can't blame that for the reason that Bitcoin is trading in the 60K range. If Bitcoin's fair value and what the market wants to equilibrate at is truly $150,000 and Jane Street is suppressing the price, it can only, markets are truth machines, Jane Street can only do that for so long until they blow up or something happens. That's right. And then we spike up to 150. Like, we will get there. Yeah. The problem is demand, isn't it? I mean, that's the problem right now. It's not something that Jane Street is doing to us. It's just where we are in the cycle. I guess one thing, though, it seems like is crypto Twitter is looking for a villain. We always are. We had a very clean and clear set of villains during last bear market. Right. I mean, it was. God, it was so easy. There were three of them. Tara Luna, Three Years Capital, FTX. Yeah, exactly. And also then Gensler as we were preparing. Who are the villains? This is why I think at some level- Now it's us. Now we just can't get out of our own way. We have to look in the mirror and we have to look at sort of the use case. It's like hard mode now. And so I think there's some reaction of trying to find some villains out there. And you can always find villains. We are all temporarily embarrassed, you know, Citadel members. Crypto billionaires. And crypto billionaires, yeah. Meta is reviving its stablecoin plans, David. The Zuck bucks are coming back, it looks like. What's this? Okay, so, I mean, you remember the DM project of 2019, correct? Oh, yeah. Yeah, so Facebook was early to stablecoins. It actually technically wasn't a stablecoin. They actually wanted to make their own currency using their own internal blockchain. They created the Move language, and they wanted to apply that to blockchain. That's how I remember it, right? Yeah, and at first it wasn't a dollar. It was actually like a basket of fiat currencies, right? It was even more wild than a stable dollar. Yes, it was even more ambitious. They wanted to make their own currency on their own blockchain. And I will say they were way ahead of the time. Elizabeth Warren did not like this. A lot of people did not like it. A lot of people did not like this. But I do have a very clear memory of Mark Zuckerberg getting called into Congress and him just getting grilled about like, you are out of line, like this is out of scope for you, blah, blah, blah. Nobody wanted- How dare you? Yeah. I mean, this was also way too close after the Cambridge Analytica news. And so the idea of Facebook, who's already manipulating elections, is also getting their own currency. It was just like too close. It was the very beginning of a huge anti-tech backlash that is still with us to this day. Yes. Anyways, fast forward to today. meta is putting out a request for a product an rfp to third-party firms with the goal to begin integration of a stable coin into the facebook ecosystem so that includes facebook instagram and whatsapp which has i don't know a billion users across all of these things so incredible distribution you just sent out an rfp for that yeah you can just do that that's what they're doing like we hey we have three billion users we're just you know we would like somebody build list of Sablecoin, please. Who do you think that's going to be? I bet you Tempo is at the top of that list. Stripe. Stripe. Stripe Tempo. Do you know that the Stripe founders are actually on the Meta board of directors? Do you know that? Well, that makes way too much sense. It's Cree Stripe. Yeah. Uh-huh. Yeah. Stripe is definitely the hottest candidate. And so the idea here is that Meta is just going to get a native Sablecoin for use inside of its ecosystem. Question for you, Ryan. Are you bullish on this? Do you think this will be a good adopted distributed product? It'll be fine, yeah. I mean, like, what gets me bullish and excited is, like, true crypto-native kind of products, and a stablecoin is sort of adjacent to that. Certainly democratizing finance, I think it's a good step. It's a bit more bankless. I think so goes Meta, so goes the rest of social media. So, yeah, I would put this in the bullish camp. I'm not sure how much of that stablecoin volume is going to actually hit open public permissionless blockchains. It could be all on something like Tembo, for instance. But I imagine at least some of it will. So I think this is a big deal, actually. And it's like one of those bear market things where it's news in the background. No one really cares. No one really reacts. But this could be part of the story to get stablecoins from, what, 350 billion right now to a trillion plus. What do you think? I'm bearish on the product growth here. I don't see Meta and Meta's ecosystem. I don't know why I need stable coins inside of the Meta products that I use is basically just Instagram and occasionally WhatsApp. I don't see my personal need for stable coins. You want to pay someone on WhatsApp? You can pay someone on Instagram or WhatsApp. And WhatsApp is probably far more likely than, because WhatsApp does have, it's actually the normal people's telegram. So I've noticed certain of my family members and contacts, when we get on a call just to do a video chat, catch up with them or something, we'll just use Instagram. I don't need a special app for that because, okay, we're all on Instagram. Well, what if I just want to send my cousin money, let's say? I could just stay on Instagram and send him some stable coins. It could be like a Venmo type replacement. So remittances through WhatsApp would be a pretty big possibility for them. I guess like I'm bearish on it in Instagram and Facebook. I'm probably more bullish on it inside of WhatsApp. Okay. Well, those are things. We'll have to see who wins the RFP, huh? And maybe go from there. Also, ZachXBT. Did we talk about this? This is the crime. The crime circle of the week. Okay. So ZachXBT, he started with a teaser. It was a pre-announcement of the crime exposure. He dropped this on February 23rd. Was this Monday? A major investigation dropping February 26th, that's today, of one of crypto's most profitable businesses where multiple employees abused internal data to insider trade over a prolonged period of time. So, ZachXBT just drops this. And, of course, ZachXBT is the sleuth of all sleuths. I mean, you don't want to be on any of ZachXBT's exposure lists. You do not want to be in Zach's crosshairs. But he's a hero. He's bringing justice. crypto he's like our wild west he's the he's the vigilante the sheriff sheriff he's our sheriff wild west yeah yeah uh-huh and he brings justice he's doing a fantastic job um anyway don't like zach xbt that's a bad look for you you're a criminal you're probably a criminal anyway so now he's getting to the point where he's like pre-announcing yeah uh what he's about to what he's about to do. He's typing it up. Dude, 12 million views on this tweet, man. I was excited. I saw this tweet and I'm like, who is it? This is my Super Bowl. So a polymarket spun up about this. Which crypto company will ZACXBT expose for insider trading? Were you watching this this week? I was. The polymarket on this? I was actually, I remember sending this to you in the week and I was like, there was like five or six companies that had like a decent probability on it. And I was like, wow, the market truly doesn't know. The market does not know what's going on. I think the highest one was Meteora, was people's guests, the biggest guest. And Meteora is where the Libra debacle came from and a lot of the other like meme coin sniping games of old. PumpFun was on there. A handful of others. Bankless was not on there. I'll say that. How would we do? We don't have a venue for insider trading. But there was one contender that just started gaining market share on Polymarket all week. Yes. And Meteora slowly creeped up, started low, ended up... Wait, you said Meteora? Excuse me, you're right. Axiom. Axiom. Axiom. Axiom. Oh, did I just drop it? Axiom. The winner is Axiom. Congratulations, you won. The crypto company, ZaxxPT, will expose for insider trading. And it spiked up pre-ZackXBT actually formally announcing this. So it was, surprise, surprise, Axiom. That's who won the prize of the week. So what did ZackXBT expose about Axiom? What's the charge here? Or the allegation, I should say. Yeah, the allegation. Yeah, so we should probably start with just what is Axiom. Axiom is a meme coin marketplace on Solana that also has a lot of social features as well. And so if you are just in the meme coin trenches, it's kind of like your front page. It's like Reddit for like Reddit for meme coins and for talking about meme coins and learning about meme coins. Not necessarily talking, but just like a lot of market information. So like meme coin markets and secondary and tertiary information as well. Are these some of the markets here? Yeah. Don't fun. One crime. Are these meme coins? Rug coin. Yeah. Detective coin. Imposter coin. Like these aren't, this is not my corner of the internet. So anyways, according to Zach, Axiom staff had access to internal dashboards and that allowed staff to search users by wallet or referral code and view other linked wallets, transaction histories, just a lot of data. Kind of like what I'm envisioning is like a data war room of who's playing in the meme coin games, in the meme coin trenches. and like you know by the year of our lord 2026 the meme coin trenches are have just like devolved down into just like the most cutthroat uh capable sophisticated traders like there's no there's no like uh unsophisticated trader left in meme coins it's all people who like truly love the game poker players who have been at the poker table for a long time all sharks no fish sharks exactly yeah yeah yeah so zach alleged is that like there's the uh the axiom internal employees who have way more data than anyone else in the market. Now, the thread here of ZACXBT has a bunch of screenshots and evidence. Here's a clip that kind of, I think, illustrates pretty well what's going on and was actually used as evidence as to how ZACXBT discovered all the fraud here. This is one of the employees, a senior business development employee of Axiom, and he's talking about researching various wallets. So here's what he had to say. Is that if you have a wallet or a ref code or a user ID, any of those three, I can find out anything to do with that person. If they're on accident, I'll have all their wallets. I'll have everyone. I'll have time and dates. I can even see who they track and what they're named. so this employee was going to parts of the axiom database that he probably shouldn't have access to and he was accessing this in order to find out information about like the wallets right and the traders behind these wallets it's kind of a vast kind of data intelligence system tracking all sorts of information on trade. And then he was what, like front running? Or he was trading based on this insider intel information? So what he would do is he would just like kind of identify who are the most successful traders, the biggest influencers. And he knew whose wallets were whose, and he could map wallets to influencers. And then he would be able to identify like, oh, you know, four of these influencers all started buying up allocations in their private undisclosed wallets of this particular meme coin. I'm going to copy trade them. And then lo and behold, later the influencers tweet about the meme coin. The meme coin goes up. And so it's- And the influencers, by the way, they mostly are dumping on their community, on their, you know. The meme coin complex is not my favorite corner of the world. So yes, that's a yes. It's like, it's kind of the game that people like playing. Sure. It's like, it's just cutthroat left and right. I don't want to moralize about it. It's just like a, it's a cutthroat part of the internet. I don't recommend anyone really go there unless they really enjoy the game intrinsically. This person had an advantage that no one else had and was like using that advantage to their benefit to insider trade. And probably shouldn't have had access to this information. That's right. Axiom actually commented about this. They said, we are surprised and disappointed to hear that someone on our team abused internal customer support tools to look up user wallets. We have removed access to these tools. We'll continue to investigate and hold the offending parties responsible. Do you know what this reminds me of, Ryan? What? Do you remember the name Nate Chastain? Oh, was that OpenSea? Was that the OpenSea employee back in like 2022 or something? That's right. And he was front-running NFT? So Nate Chastain was this guy who worked at OpenSea who was privy to the information of which NFTs OpenSea would feature on their homepage Kind of just like in a rotating band of like this hour we going to put up this NFT And he would use that information. He would buy the NFTs ahead of time and then sell them a few hours later for a profit. And he was doing it under like natechessing.eth. And like this person got sentenced to jail by the Department of Justice. Wow. And he made something like $60,000. He made something like a very, what seemed like a very small amount of money in the grand scheme of things. And like, I think this person is making a lot more than that. But like, but the Department of Justice doesn't care about this corner of the Internet. Because granted, like I said, the only people remaining at this. Oh, yeah. So, I mean, this is at the end of Zach XBT's thread. He said, given the person that we're referring to, Brokes is, I believe his last name. Given Brokes is based in New York City, I think the case presents itself as a good opportunity for the Southern District of New York since it may fall within their jurisdiction. So ZachXVT just giving a layup to the authorities in New York to go prosecute this. Yikes. Okay. Well, maybe it was NHSN 2.0. We got more to talk about. Hyperliquid is opening a policy center in D.C. Also, Robinhood launching a venture fund that's opened all, getting some private access to deals. and Pete Hegseth, the Secretary of War, goes toe-to-toe with Anthropic. We'll talk about all that and more, but before we do, we want to thank the sponsors that made this episode possible. Euphoria brings one-tap trading to the palm of your hand. Built on MegaEath, Euphoria takes real-time price charts and projects it over a grid of squares. You tap the squares that you think the price will enter in just 5 to 30 seconds in the future. If the price goes into that quadrant, you can pocket anywhere between 2 and 100x your trade. No other application helps you trade faster and with more leverage on market-driving events like FOMC meetings, presidential speeches, or global macro events. Thanks to MegaEth's real-time blockchain, Euphoria is the way to get real-time price interactions with the market. On Euphoria, you'll be able to compete with friends using Euphoria's real-time social trading experience, allowing you to go head-to-head with your friends, a great party trick if you project the app on a TV. It'll be like the Mario Party of derivatives. To trade on Euphoria, people can deposit stable coins from any chain or do direct fiat transfers, and everything gets converted into MegaEth's native stablecoin, USDM, in the background. Check it out at euphoria.finance and download the app or find it in Telegram as a mini-app. Few people in crypto put real skin in the game when they make public top or bottom calls. The DeFi Report is one of them. The week before the October 10th flash crash, Michael from the DeFi Report emailed his entire newsletter saying he's going aggressively risk-off and sold the majority of his book from crypto into cash. This is when ETH was about $4,000 and Bitcoin was $110. Michael runs the DeFi Report, an industry-leading research platform built on data, cycle awareness, risk management, transparency, and most importantly, skin in the game. We like Michael at Bankless. We like his analysis, and that's why you hear him on the Bankless podcast about once a month. And the DeFi Report is giving Bankless listeners one free month of access to the DeFi Report. So if you're looking for some sharp, data-driven analysis to make better informed decisions around your portfolio, you can learn why and how Michael called the top. and what he's doing next, all in the DeFi Report Pro. Check it out. There is a link in the show notes. Hyperliquid is opening a policy center in D.C., being led by a huge friend of the podcast, Jake Stravinsky, who tweeted out, I am proud to announce the launch of the Hyperliquid Policy Center, where I will serve as CEO. HPC is an independent research and advocacy organization dedicated to ensuring that DeFi can flourish in the United States. The future of finance will be decentralized. centralized uh so i mean i think you and i both have the utmost respect for jake shravinsky so pretty it's just exciting to see jake do anything uh he was previously a general counsel at variant a vc fund and now he's doing this what's your reaction my reaction i think is if you are playing in the exchange game you need to have lobbyists in dc these days and so hyper liquid they i mean jake is calling them defy here and i think that's partially true also somewhat generous but I think if you're playing in the trading game for crypto assets, you need to have a lobby force in DC. Yeah, because you know Coinbase is not, if you are hyperliquid, Coinbase is not advocating for you and potentially is advocating for the opposite of you. That's right. If you're not at the table, you're on the menu, right? This is what is often said in DC. So this is hyperliquid trying to get a seat at the table for sure. Jake is not the only big name. Chris Giancarlo. ex-CFT chair is also a legal advisor. Crypto dad, crypto dad. Yeah, yeah, yeah, yeah. And also Bob Diamond, ex-Barclays CEO. I don't know that name. Those are some heavyweights. Kind of stacked. Yeah, heavyweights. So good for Hyperliquid, probably a shrewd, smart strategy, good business move. Robinhood launching a venture, a ventures business? Wait, what are they doing here? Is this getting us access to some of the private deals that we haven't had exposure to? What's going on? That's the idea. Yeah. So Robinhood is launching Robinhood Ventures, and their first fund is Robinhood Ventures Fund One. The ticker is RVI. Close-end fund that will IPO on the New York Stock Exchange. That's the thing. It'll IPO, right? So this is not a venture fund that only is available for accredited investors. Yes. It's a public market thing. If you are an unaccredited investor, you can buy shares in this thing just like anyone else. There's no privilege parties here. What's in it, though? The idea, they're going to raise $1 billion. Okay. And then after it will trade like a normal stock. And then that $1 billion will go into the following companies. Airwallex, which is a global fintech payments platform. Boom Supersonic, which is an aerospace company that's working on hypersupersonic passenger jets. Did you, Ryan, listen to the interview that me and Josh did on Limitless of the Boom CEO? I did. Super good interview. I'm very excited for him. I can't wait for a supersonic air travel to come in like 2029. Not anytime soon. Don't hold your breath, but whatever. Databricks is another AI company inside this portfolio, an AI and analytics focused enterprise software. Mercor, don't know what that is. Aura, maybe you have an Aura ring, Ryan. Ramp, a corporate finance expense management platform, and Revolut, a fintech banking app. And they are also, Robinhood is also in late stage negotiations to get Stripe Equity, which I think is maybe the most interesting of that into the fund. I look at this and I'm like, this is great. It's better than nothing. However, like it would, I wish we had access to these companies earlier. Like Stripe, I don't know, it's worth like $100 billion or something. It's been private all that time. I mean, it would be so much nicer. And it's just like, no, I don't want to buy Stripe at $100 billion. I want to buy Stripe at like $5 billion five years ago, 10 years ago. Yeah, public markets are still broken from that perspective. But you do have to give some credit to Vlad and Robinhood. It's like, they are the ones breaking it open a little bit earlier than everyone else. Yeah, it's an incremental move for sure. Also, this was a big deal. Coinbase adding stocks and ETFs trading to the Coinbase platform. So they announced that they were doing this, I think, back in December, actually. But now it's really starting to roll out in earnest. I know you mentioned to me before the show that you actually saw stocks for the first time in your Coinbase account as of this week, right? That's right. That's right. Yeah, that's right. Yeah, so this kind of puts them approaching product parity with Robinhood. The 24-5 trading, I actually think, is leapfrogging Robinhood. Plus 24 hours a day, five days a week, so just not on the weekends? Yeah, so not on the weekends. But Robinhood fully stops trading once the market closes, then a little bit more after hours. So that's pretty cool. Yeah, I mean, so can you buy any stocks? Is it going to be- I think so. Stocks and ETFs. I think so. I don't know all the stocks, but all these tickers that I searched showed up. That's great. I mean, look, this is Coinbase becoming more like Robinhood as Robinhood becomes more like Coinbase. It becomes more like Coinbase as the rest of the market becomes more like the both of them. The big gap there, while that's a true statement, the big gap there that I think truly differentiates Robinhood from Coinbase is the UX of the app. Yes, it's nice. The Coinbase UX is so bad. It's lacking. It's so lacking. They have to know this. They have some ketchup to do. Yeah. I'm sure they're trying here. On the AI watch this week, there's so much we could talk about with AI. I know this is one that we both saw and was interesting. It's notable given our previous forays down AI safety, the AI safety conversation. Yeah, and Vitalik commented on it. So apparently Anthropic is getting an ultimatum from the Secretary of War, I believe, not Secretary of Defense, The Pentagon demanding full control of AI in a final offer to Anthropic. So there's this showdown happening between Anthropic and the U.S. Department of War around how Anthropic's LLM will actually be in use at the Pentagon. So I believe there's a contract between Department of War and Anthropic for like $200 million, I believe, something like this. And the Department of War wants the ability to use Anthropic tools, basically unfettered, no constraints, completely unconstrained. So right now, Claude Anthropic has guardrails up to protect against certain behaviors. Well, there's two things in particular. They have guardrails. They signed a contract with the Department of War saying, yeah, you can use our tools, but there's two things you can't do. You can't mass surveil U.S. citizens, and you can't use it for fully autonomous weapons, AI, fully autonomous weapons. So those are the two things. And the Department of War is saying, no, we don't want those guardrails. We want those things. We want to do those things. We want the ability to do anything that the law permits. Yeah, you don't get to tell us what we can and cannot do. Right. We are the government. And so there's some escalation here between Pete Hegseth, who is the Secretary of War, and Anthropic Top Brass. and Pete Hegseth, I believe, he was giving them until Friday to relax these guardrails and constraints or else they were going to kick them to the curb, make their lives difficult, cancel the contract, you know, dot, dot, dot. Who knows what else is kind of the implicit threat. And as the time of recording, Anthropic is not yet back down, I believe. I'm not sure whether they're going to negotiate or what's going to happen in the future, but this is notable to me. Very notable. And one of the notable things reasons is that say Anthropic holds up to its values and to its commitments. Anthropic of all the AI labs probably has the strongest allegiance to AI safety out of any of them. But the problem is if they hold fast and hold to their values the Department of Defense Department of War is just going to XAI. It's just going to Google. It'll go to somebody else. Oh yeah. And then they will make all the money and then they will have further resources and funds to make their product better, and then Claude will suffer as a result. So it's a big Moloch trap. It's a prisoner's dilemma. It's a big prisoner's dilemma. Because you can imagine Elon Musk and X saying, hey, we won't put those guardrails up. But the fact that the Department of War actually is going to Anthropic and fighting so hard for it does also signify to me that Anthropic must be ahead on a number of dimensions. Like, why do they want it so much? Yeah, right, yeah. I saw there was a ThreadGuy tweet, which was clearly Anthropic, Claude can see God and the Department of War wants that. Yeah. Vitalik actually had a message for Dario. He said, it will significantly increase my opinion of Anthropic if they do not back down and honorably eat the consequences. In my opinion, fully autonomous weapons and mass privacy violation are the two things we want less of. So in my ideal world, anyone working on those things gets access to the same open-weight LLMs as everyone else, and exactly nothing on top of that. So Vitalik telling Dario, the CEO founder of Anthropic, to stay strong and try to resist the Department of War for as long as you can. Do you think you actually can resist the Department of War if they want something in the U.S.? I mean, the U.S. domiciled company, you mentioned the coordination, the Moloch trap. Is any of this realistic? I mean, it depends how aggressive the Department of War actually wants to get, doesn't it? I guess there are laws against this type of thing, but I don't know, the way the U.S. is going, it feels like the administration will do anything it wants to do and can get away with. Yeah, I think the AI safety people are right here in that this is a massive uphill battle to have a desirable outcome here because first, Anthropic needs to win a case against the government. And then XAI, OpenAI, JOOGLE need to go in lockstep with Anthropic and agree to the same things and not defect. And so it doesn't really matter in my mind if Anthropic wins this one fight. You have to win a series of fights that prevents the negative side of HGI coming out and rearing its head. And that's just in the U.S., right? What if China is not going to have any guardrails with respect to mass surveillance of its people? China is like, Claude, please fight this fight as hard as possible because that gives us a lead. Yeah, and you don't mass surveil your citizens. We're happy to mass surveil our citizens. We're doing it. We were doing it for decades. One last thing I had on this is I wonder if it's less effective to kind of overtly resist, although maybe overt resistance is a good thing and Anthropic should continue doing that in this case. But why not just give all users the option to encrypt their message logs with Anthropic? I mean, that to me is a step forward because if all of these messages are encrypted, then there's no data to actually share with the US government. And so you take the mass surveillance prong out of the arsenal here. You don't even make it an option, right? It's kind of the principle of like, the government will ask you to do as much as you can do in this domain. So what you should be doing, your posture should be, we don't want responsibility. We don't want control. Let's encrypt the data. At least have the option to encrypt the data and let individual citizens fight it up. That's right. Anyway, maybe there's a reason they're not doing that. There's so much to watch here. And this is partly why the markets feel uncertain. I feel uncertain. Is the United States government about to have an omnipresent, omnipotent AI model that they can use whatever for whatever reason because that also materially impacts what the future looks like. Yeah. Theme of the week is FUD. I think it's going to be the theme of the next five years maybe. I mean, Oh God. That's a lot of uncertainty ahead because there's just a lot of variance right now in the markets. Well, we got to end it there. Of course, you know, crypto is risky. So is the rest of the world. You could lose what you put in. But we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the bankless journey. Thanks a lot.