Nov 15, 2023

"The Cryptopians" author and "Unchained" podcast host Laura Shin discusses the latest headlines shaping the crypto industry, including FTX founder Sam Bankman-Fried's conviction and institutional interest growing within the digital assets space.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. All right, Q four has been a wild ride for crypto. Sam Bateman Fried was tried and convicted of seven charges related to fraud all while institutional interest continues to heat up the crypto markets. Joining us now to unpack some of the latest events shaping the industry is the crypto cryptopsy author and unchained podcast host, Laura Shin. Welcome to the show. Laura, hi. Thanks for having me. Of course. Thanks for being here. Always a pleasure having you on now. You were in court when Sam Bateman freed was found guilty. We were following your tweets very intently uh over here, talk to us about anything that surprised you during the trial. Well, um I mean, there were a number of things I think uh there were a few things around, you know, just exactly when it was that the fraud started. And I think there were different times when people thought that it might have kind of happened due to the uh downturn that got kicked off with the collapse of Terra Lua in May of 2022 and the government really brought evidence that a lot of this was happening before some of the notable incidents that occurred were, for instance, showing that Alameda had special privileges that were coded in as early as a few months after FTX launched in July of 2019, meaning they were coded in then after the launch in the spring, like April and then on top of that, that customer money was used in, um I guess it would have been the summer of 2021 when FTX went to buy out finances stake in the exchange. And then on top of that, that in late 2021 Sam Pickman Fried was considering making more investments in venture capital and asked Caroline Ellison to, um, you know, come up with scenarios of what would happen if they did that. Plus there was a downturn. And so, um, you know, she again projected, if we were to do this, then there would be 100% chance that we cannot pay people back. So point is that even before the events of 2022 when we saw multiple collapses in crypto, we did see that Sam Big be Fried was willing to use customer money and not only willing to but frequently did. You know, Laura, you've been covering this space for a long time, I think almost a decade. How are you seeing the industry change in the wake of, of Sam's conviction what I've seen? And I frankly saw this pretty early on is that people were just doubling down on decentralization. They were realizing that, you know, I mean, I'm sure, you know that in the crypto industry, the ideal that's often built, been held up is around building decentralized applications to centralize money. Um you know, whatever it might be. And, you know, Saman and Fried's Empire was really built around centralized companies and entities. And even before the collapse of FTX, we did see that in a way the crypto community turned against Sam once they realized that some legislation that he was championing in would benefit centralized actors over what many of many people in the crypto community. Um you know, felt they were really aiming for which was a more decentralized world and more products and services that could be offered to people in a decentralized manner. And so I feel that, like I said, pretty much immediately after the collapse, I was hearing from more entrepreneurs that they really learned their lesson. And it is true that obviously in order to get this industry off the ground, there has been this period of centralized actors that have been necessary. You know, Coinbase is probably a prime example where they really built that on ramp from traditional uh from the traditional financial system to the crypto world, which you know, at least aims to be decentralized. I don't know if it's always achieved that yet. Um But the point is that you know, many people see that as, you know, what's necessary to kind of bring people over into the crypto economy, but that's not the direction people are headed. And so, um you know, we've just seen kind of a doubling down of, you know, more ways to make sure that different parts of the crypto ecosystem are not vulnerable to single points of failure. Um More interest in things like proof of reserves or in letting users of crypto exchanges retain hold of their keys. Um It's just numerous, you know, ways where I see that, you know, if, if people are going to be using their own hardware wallets to make sure that they're not vulnerable to themselves losing their own keys, things like that. So I have a feeling that in a way um this will end up being um sort of a, a pivotal point where the crypto community kind of came back to its ideals after having um you know, engaged with centralization in a way. But, but now they're, they're really uh setting their sights on that decentralized world. I mean, it, it might have these ideals, but at the same time, inevitably, things tend to move towards monopolization unless there is some sort of barrier to monopoly, right? I mean, we saw this in the 18 hundreds in the United States where you had conglomerates and, and large monopolies taking over things. And uh ultimately, it, it required the uh the force of, of the government uh to, to break them up and unwillingly and, and they're still involved in that. Uh Yet people like me are, are all for free markets and we could, we could go on and on about how great they are. Um, isn't that inevitable regardless in something that might seem decentralized? But at the end of the day, it's gonna for it to get anywhere or as it, as it gets used, it will, it will find itself constantly centralized, add add infinitum. Um So I, I understand what your point is. Um But I would just reframe it a little bit where I would say that once, you know, there's certain decentralized services that get codified or get used more widely that we might see it narrow where there are certain ones that are used more widely than others. But as long as um they're built in a way where they truly are decentralized, then I think we would see that they are just applications that are available, they're not controlled by any single entity or if they are controlled by a dow or decentralized autonomous organization, you know, a group of people that owns tokens that gives them voting rights over control of some protocol, then it could be the case where it's not. Um it, that yeah, maybe, maybe so for instance, like a decentralized exchange, maybe there's kind of 2 to 3 dominant ones. Um But it could perhaps be that they're not controlled by centralized actors, but more like these um you know, decentralized or distributed communities I'm using, by the way, I'm using my Celsius Hole coffee mug today. Great, great. Um It's good to see that some part of Celsius is still in use today. Laura, quickly before we go, we got to get your comments on the spot. Bitcoin ETF Race Ark Invest Ky Arc, Ceo Kathy Wood story said on C NBC that it's hard to come up with a logical reason for why Sec chair, Gary Gensler is standing in the way of a spot. ETF, you wrote an op ed for coin desk recently talking about FTX and ETF S. What do you make of her comments? And do you think we're going to see an approval um by the end of this year or by early next year? You know, I would attribute these comments not even directly to Cathy, but I know she's the one who said them yesterday. But if you look at that decision about converting the gray scale, uh Bitcoin trust over to an ETF the three judges in that they um basically said that they could not see any logical reason um why the SEC would have denied that. And they called out, you know what the crypto community has been calling out for a long time, which is that the uh Bitcoin futures ETF S had been approved and the price of those, uh Bitcoin Bitcoin Futures tracks the price of spot Bitcoin 99%. So there really isn't a difference. And so the notion that the SEC would deny the spot Bitcoin ETF because of potential manipulation in the markets just it was like, OK, if you are approving the futures ETF which is based on the same price, then why wouldn't it be the same concern? So, you know, hence, since you did approve the one, then that would mean that you should also approve the other. And so I think that this notion that there was not a logical reason to deny has been, you know, like I said, alive in the crypto community for a long time, um The judges reinforced that and then Cathy, you know, she's the latest one to just call that out that, uh the logic behind denying that um just wasn't really there. And so she went on to surmise that Gary Gensler has political ambitions. You know, I can't claim to be enough of a DC insider to know whether that's true or, you know, to what purpose that would be for. Um However, given the fact that there isn't a logical, rational reason to have done that, then it does make sense that there would be some extraneous reason that is not relevant to Bitcoin itself. Why the SEC and G himself would be against approving a spot. Bitcoin ETF. All right, Laura, we are all out of time. Thanks so much for joining us this morning. Always a pleasure having you on the show. Thanks for having me. Same here. That was the crypts, author and unchained podcast host, Laura Shin.

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