FTX debacle continues, EIP-4844 updates and more - The Daily Gwei Refuel #486 - Ethereum Updates

Transcript

hello everyone and welcome to another episode of The Daily way refuel where we've got the latest news in the ethereum ecosystem I'm your host and the designer and test the 14th of November 2022 alright everyone let's get into it and we have a lot to get through today this is probably going to be another extra long episode I missed Friday so I'll be making up for that and the weekend and what a weekend it was so I guess starting at the top here you can see that FTX officially uh declared bankrupt here chapter 11 bankruptcy in the US uh this includes FTX us and I think like over a hundred other subsidiaries of um of FTX or other kind of entities that were included as part of the uh the bankruptcy filing here and this shouldn't come as a surprise to

anyone obviously uh but I do think that the speed at which everyone thought that FTX was completely solvent on top of the world you know couldn't do any wrong and was completely safe to what we are seeing today or what we saw over the weekend uh is quite something to behold I thought the Tara a crash was fast well this happened in less than three days I think in terms of kind of when we start when we found out about what was going on and when they declared bankruptcy which was just you know utter Insanity right so this is really sad uh because of a lot of other things I'm going to get through um shortly but this is very sad because as I mentioned last week bankruptcy proceedings are not quick they take many many years and I don't

even know if people are going to get back anything from this considering the massive hole that exists uh in the balance sheet which the estimates put it from 10 to 50 billion dollars and a lot of that or pretty much all of that is customer deposits um and a bunch of other kind of liabilities there as well and I yeah even though there are these bankruptcy proceedings beginning I don't think it's going to be uh it's sorry I think it's going to be a while before people see their money back from FTX and this hit a lot of people right this wasn't like uh uh Terror this wasn't like um uh the three AC Fallout and things like that and the general kind of I guess crypto bear Market that obviously hit everyone um this hit a lot in an indirectly

directly and indirectly whereas FTX going under hit a lot of people directly because they lost all their funds that were on there and there were a lot of people who kept substantial amounts of money on the uh the FTX exchange a lot of crypto Twitter personalities a lot of trade active Traders and things like that that just kept a substantial amount of money on there now I really hope that they're all doing okay obviously it you know reminds us all of the importance of not your keys not your coins but I think a lot of the people that would have lost money were definitely active Traders now you could do active trading on D5 but depending on the size that you're playing with it can be quite difficult and also if you're trying to actively trade on a club which is stands for Central order book which is basically

what exchanges run you haven't got that many options within D5 uh and definitely not that many options that are as liquid as centralized exchanges so I totally understand the reasoning for people especially active traders to to keep their funds on these exchanges uh and I and I think that I also totally understand people's shock with FTX going under because I mean we've all seen it over the weekend I don't think I have to break it all down and I guess we all saw it over the years depending on how long you've been around if you've been around for the last two to three years you saw how legitimate FTX looked it looked just as legitimate as uh binance and coinbase and Kraken and all the other exchanges out there even though Sam SPF was at the head of it definitely uh uh a Cowboy you

know an ego Maniac it people kind of regarded FTX as as a safe exchange and obviously that all came crashing down over it's only been I think like a week at this point which is just absolutely insane right um but yeah so moving on from that as I said uh to Alameda which is so okay I I keep mentioning FTX but Alameda was the other company that was involved in this as I mentioned last week FTX and Alameda were legally separate but practically they were the same thing they were working together they were under the same umbrella it was SPF and his cronies doing you know operating both of these things so the the Alameda owes FTX about 10 billion dollars and FTX lent billions of dollars worth of customer assets to

fund risky bets by Alameda research so essentially this is where the whole uh kind of seems to seems to be seems to be sourced from is FTX lending billions of dollars worth of customer assets to Alameda research to go do all that cowboy stuff with whether that be uh farming D5 protocols uh uh kind of I mean getting involved in early stage seed rounds uh doing leverage related things like all that sorts of stuff they were doing they were using customer deposits for that which is the the biggest part of the story right the fact that they weren't just using their own money they were using customer deposits well they weren't just using other institutional Capital like something like three hours Capital where they were actually using a straight everyday customer deposits which is which is in

insane so uh that this tweet three continues by saying you know all in all FTX had 16 billion dollars in customer deposits according to the person so FTX lent more than half of its customer funds to assist the company Alameda and then uh this account uh says a man WTF and truly WTF right this was just this goes beyond being a cowboy this goes to the point of just being absolutely Reckless right so there's that uh there's that kind of news there that came out and then Greg here uh who works at the Block as um in the research team did a deep dive into the FTX balance sheet and revealed uh over the weekend by the financial times and uh Greg says he'd be surprised if users are going to see more than five cents on the dollar

after all of this is over so as I mentioned before even though the bankruptcy proceedings are ongoing and will take a while there's only so much money that they can actually get back and Greg here is estimating that they're probably going to be able to pay out once it's all said and done five cents on the dollar AKA five percent of what people had so if you had a thousand dollars on FTX for example you may only get back fifty dollars which yeah that's that's so sad right that gets so insane and by the time you get it back I mean at that point you've probably written off that loss completely you've forgotten about it doesn't even matter to you anymore just like how the funds lost on Mt gogs still aren't returned and I'm sure all of those people have written it off at this stage they're not

just sitting around waiting and being like Oh yeah I'm getting my funds back soon I can start my life it gets again soon I got this massive payday coming I mean maybe there's some of those people but most of them have have written it off definitely and I think a lot of the the people that were affected by that are still in crypto you know I'm seeing a lot of people go on about crypto being dead uh so to speak and it's funny whenever I see that terminology because I've seen it a lot from people who lost money on FTX and it's totally rational response to have right if you lost money in any capacity if you lost it because of the bear Market if you over traded uh if you lost it in obviously a um a centralized exchange going under or any other way

you definitely start to feel like you want crypto to be dead so that uh crypto doesn't succeed without you and that you miss out on the games you would have had if you hadn't you've blown yourself up or lost money on a centralized exchange and all that stuff and I've been there myself I mean after Mt gogs blew up I didn't have any funds on there but what ended up happening was that I traded away a lot of my BTC in 2013 being like super you know Noob super amateur not having much BTC to begin with wanting to increase my stack then Mt gox blew up and any BTC I had ended up being worth very very little over the course of the next few months so I sold and I was one of those people in 2014 15 and even 2016 saying you know crypto's Dead uh it's

it's all uh kind of like a failed experiment blah blah blah and then I came back in 2017 and I've been you know extremely active in crypto since then putting much money that I put in in 2013. I think there's plenty of people like that so crypto isn't dead like that's just such an over exaggeration I I totally understand that people you know why people are saying that but at the same time it's such an over exaggeration and I wouldn't actually put any stock in people saying that uh it doesn't mean that the bear Market is going to end today tomorrow next month or anything like that I've got no idea what the prices are going to do but crypto as an industry is definitely not over definitely not dead I do hope that we see the death of these super unregulated Shady exchanges and the

death of people trusting these ego Maniacs with their money but I'm not holding my breath for that either because we always have a new crop of people every cycle that come in and they don't remember or they don't know about the the sin of the last cycle and they repeat the same mistakes I mean history doesn't repeat but it Rhymes right that's that's the saying there so just really sad to see that Greg here thinks that there will only be about a five percent uh recuperation for people who have lost money so really if you did lose money in FTX honestly just for your own mental health I would not be holding your breath for any anything here I would just be writing this off as a total loss and if you're interested in staying in crypto and still think crypto is the place to be building yourself up

again uh and and I think that goes for anyone that's lost money in crypto is that if you still want to be involved here learn from those mistakes uh and and try to build yourself up again and if you want to exit and if you think crypto's dead and you don't want to be involved in it anymore that's totally fine as well I mean you wouldn't be listening to my show if that was you but I totally get that position as well like it is something that can take a heavy toll on people mentally if they lose all all this money and then they think that well I can't make this back you know Screw crypto it's it's all a scam blah blah I get that line of thinking if you have suffered a big loss for sure because I've been there myself right and

not in a direct way but definitely in an indirect way there all right moving on to this is funny so Tom Emma who is a uh Congressman uh in in the US here said that Gary Gensler runs to the media while reports to my office alleged he was helping SBF and FTX work on legal legal loopholes to obtain a regulatory Monopoly we're looking into this and then I had a tweet where I basically said so gensla actually was going to give SPF a pass for all of his Shady dealings seriously after the SEC so this is part of a broader I guess conspiracy theory that is playing out right now with regards to SBF and the US government because it's hard not to get into the conspiracy

theory territory here and I'll explain why we all know that SBF has been had been cozying up to Regulators over the last I guess like you could say six or 12 months right especially the Democrats in the US he was Biden's second biggest donor in red in the presidential election and he'd been donating a lot of money to Democrats over the past 12 to 18 months I would say right and he'd been been having lots of meetings with different Regulators I showed a picture last week of him with the cftc commissioner he'd been cozying up to the SEC and it seems that uh in DC in in Washington he was definitely the person that that the politicians went to to talk about crypto so the fact that you know it came out that Gary gansla and

there was some documents that said this was going to give SBF a pass so to speak um uh for all of his previous Shady dealings in in order to get him to I guess be an advisor on all things crypto to the US government uh is extremely screwed up right and if these other I mean there are just allegations right now like it's not proven but it seems pretty pretty plausible if these are true then I don't understand how garaganza can still have a job let alone be a free man I mean this is blatant corruption if it is true right like that's that's how I see it anyway and I'm glad there's another person looking into this uh Tom Emma but unfortunately given the fact that SPF was such a large donor of the Democrats here and given

the fact that the Democrats are still in power they they kept the Senate and in the midterms they obviously have the presidency we don't know yet if they're going to keep the house or not but if they even if they don't I don't really expect any big moves from them against SPF because it would embarrass themselves for getting into bed with was essentially one of the greatest fraudsters of our time I mean if you really think about the amount of Fraud and damage that was done by SPF it is one of the greatest Financial frauds of of all time like probably we don't know the exact figures yet but it's probably just as big as as Bernie Madoff and and it's crazy to to think that Gary genslow was prepared to give this person a a pass right a pass just because he was being Community communicative with

regulators and with uh with politicians and helping them with things um well I mean helping them I guess like depending on your point of view here he was helping uh or not helping but definitely uh that that bill he was trying to get past was not helping defy and it's hilarious thinking about him trying to pass that bill when he was the one doing all the Shady stuff right so there's that happening and there's a lot of conspiracy around this uh right and so I'm not going to dive too bit too deep into that but there are a lot of connections here spf's parents uh there are a lot of connections of SPF and around him uh the SEC cftc a bunch of other politicians in the US but I'm not going to draw any conclusions just yet I'm going to keep monitoring the

situation but I think that's something that people should be aware of uh as well there I just think that I don't understand how Gary ganza still has a job to be honest he should have been uh fired long ago but such is uh politics right I guess like he's probably doing the right the right job as per his real mandate rather than his stated mandate right um all right so moving on to another thing that uh came out over the weekend is uh an exclusive here from Reuters who said in a subsequent examination FTX legal and finance teams also learned that SBF implemented what the two people described as a quote-unquote back door in ftx's bookkeeping system which was built using bespoke software they said

the backdoor allowed SBF to execute commands that could alter the company's Financial records without alerting other people including external Auditors this setup meant that the movement of the 10 billion dollars in funds to Alameda did not trigger internal compliance or accounting red flags at FTX they said so I've talked about this before about how even if you have Auditors and regulators and you know proof of reserves and and balance sheets and everything being uh plastered uh all online to attest to a company's solvency you can never trust that the same way you can trust something like a public blockchain because on a public blockchain if a back door like this was installed to fake metrics everyone would

be able to see it right like if it's open source everyone would be able to see it there'd be no way to hide this but because this was not open source because this was closed Source SPF was able to install this back door which tricked to the people that were auditing FTX and attesting to ftx's solvent solvency which is I guess uh an extremely up thing for SPF to do in the first place but the fact that this is possible um in in you know traditional Finance in centralized fine and centralized crypto Finance uh just speaks to the fact that um in defy this can't happen uh because if anything is closed Source in DFI people call it out straight away and they're like okay well you know why would I trust uh your app if it's closed Source I don't know what's going on

under the hood uh and I guess like maybe me saying it can't happen is not the right word right right word but the thing is it can happen but it can be called out relatively quickly and then you don't have to trust anyone you can audit It Yourself by running a full node that goes back to all the conversations I've had previously about why it's so important to run your own full node and for the ability to use this to run their own full nodes right I think that was just a really great little example here of something happening on centralized crypto finance that is extremely difficult if not impossible to happen in D5 I mean in proper D fight it's impossible to happen because everything's open source everyone can audit it if a backdoor was installed then that thing isn't defy to begin with

but also people could see it so this yeah I mean this is just crazy the fact that he was doing this um I don't know what kind of drugs he was on there's definitely drugs involved in this uh and definitely he has some uh some uh some some deep issues to be able to do this because normal people do not do this level and this is just pure fraud right like absolutely pure fraud I mean if SPF does get arrested I say if because I mean there are still other uh scammers on the loose right now right after the collapses of this of this year but if SPF does get arrested uh I I do really wonder how long he would actually spend in prison like the the level of crimes that he has committed at this point from what we know he should spend

his life in prison but Financial crimes tend to get punished a lot less severely than you know other crimes uh so yeah I'm not holding my breath there but just another thing that came out over the weekend that I felt was worth covering uh next up was another up thing that SPF and FTX did was that they said that they were processing withdrawals for Bahamian residents because the Securities uh regulator there uh uh force them to do this and then the Securities regulator came out in the Bahamas and basically said that no we didn't force them to do this that's a lie so essentially the withdrawals were probably FTX insiders getting their money out and there was a lot of uh like drama around people buying accounts that belong to people in the

sorry the FTX accounts and then KY seeing them as Bahamian residents and and then withdrawing the the funds that way uh and they were buying these accounts for like you know 10 cents on the dollar sort of thing so although making money from this which again is just absolutely screwed up uh another lie here and and a lie like after the fact too after they got caught doing things and I guess I mean the fact that they've already been caught doing all these sorts of stuff they probably thought well what's the worst that can happen we just lie again we'll get money out hopefully we can avoid being uh you know going to jail or something run away to some country that doesn't extradite extradite to the US and no one knows where SPF is right now uh it's it's kind of hard to tell obviously

um but I I don't know maybe maybe information will come out about that uh uh you know uh it's at some point this week all right so uh Frank Shapiro has another thing uh over the weekend that he put out or a tweet here he put out where he said just I spoke with an LP and several crypto funds he said when he asked funds why they did lazy due diligence on FTX they responded by basically saying he was on the cover of Fortune Magazine he was a big name there's going to be a lot of lawsuits and a lot of funds will shudder so this is this is funny because I was talking about this in the Delaware Discord Channel I think today and yesterday and I was saying that last year doing due diligence for deals within crypto as a fund was a

liability because by doing due diligence you are basically taking longer to do a deal that other your competitors were probably jumping right into and everyone was making so much money that you not doing that deal would have your investors your LPS asking like why weren't you in that deal why weren't you alongside all these big name investors because FTX wasn't just invested in by small unknown investors they were invested in by like the biggest names in this space right and the biggest names in um just normal Tech VC so if you are a a big name crypto finder a medium name crypto fund and you weren't getting into the FTX rounds uh because you did you did your due diligence and you thought that they were dodgy or that didn't look right your LPS and your investors

probably asked you why that was the case given that the other reputable investors were kind of were involved in those rounds and this is the Warped incentives that were playing out especially last year in the bull market and that's why they didn't do actual due diligence they just kind of said oh well this investors investing and you know SPF is on the cover of Fortune Magazine he has his reputation of being like a really uh shrewd businessman a really uh um a really good operator we're just going to invest here and it's not just FTX it's applied to it's a lot of things especially last year because the bull market was so uh was so um so frothy uh there were just a lot of really really bad deals done and and those things I

mean there's a lot of uh teams that were invested in by FTX Ventures as well and and and that money kind of um or that those are Partnerships that they're hoping to get has evaporated I'm not sure if they kept that money on FTX but I'm sure a bunch of those projects did so a lot of their runways definitely been evaporated and it's just not a really great sign I think as well now to have FTX or Alameda research and lftx Ventures on your cap table I really do think that that's probably going to be a bit of a knock against certain projects but at the same time I hope it's not because it at the end of the day like not every project that FTX invested in is is dodgy or is like not sound there are plenty of projects that they invested in that are definitely um a

really great projects and don't deserve uh to be I guess caught up in the contagion here but they are if they want to be or not so that was just another thing that came out over the weekend from Frank uh so Zach X Big T uh uh was able to confirm that uh multiple former ft FTX employees confirmed that they did not recognize uh 383 million dollars worth of transfers out of FTX now this happened over the weekend as well people were speculating that FTX was hacked or that uh insiders were uh well FTX said they were hacked and insiders were withdrawing funds from FTX and and getting whatever they could out and I don't know if there was any uh Clarity on this but yeah it seems like about 400

million dollars was able to be withdrawn from these FTX wallets by uh by insiders I don't believe for a second that they were hacked or anything like that I do believe it was insiders and maybe the Insiders were the ones that hacked them but still I mean that's not really a what I would call a hack so just more I guess like going on here with uh with FTX and with the with the team then with the Insiders there just crazy I mean I think that there was I mean it came out over the weekend as well that there that there was kind of like about 10 people that were part of FTX and Alameda that were part of some like sex cult orgy thing I don't know how true the the sex cult part was but there definitely was like a very inner circle

of people at FTX and Alameda that did all of this and knew about all of this and The Wider teams seemed to not know anything about it even the the Auditors in the legal department because they were being lied to so if anything it would the Insiders that were taking this money would have been probably part of that very Inner Circle there and maybe even SPF himself we haven't got any confirmation on that but yeah that was another thing that happened over the weekend a bunch of funds started moving out of FTX after they had Frozen withdrawals um and on top of that Lucas Nazi here had a another thing that uh another dodgy found another dodgy thing that FTX did uh where he said FTX might have minted serum or SRM tokens out of thin air to pop up its balance sheet serum's total Supply increased by 60 this year

via two huge mints these were not previously disclosed based on anything I could find first mint in February of uh in February of uh uh of the Shia and second mint on on in May of this year both 50 million uh SRM the serum protocol for the longest time I thought was just like a giant not I mean I don't think the protocol itself was a giant scam but the tokonomics were very very scammy because they had a really really high fluid diluted marker cap with a really really low circulating Mark about cut pretty much the worst I'd ever seen and FTX was basically in control of this thing they even control the token I believe they were using it as collateral for certain things uh and it was just really really dodgy from the start so the fact that people didn't even catch

these mints happening is hilarious to me because it means that people were aren't really watching anything because SPF could do no wrong right like everyone seemed for SPF for such a long time and they thought that he had uh he was he was a God and he could do everything right and and serum was great and Solana was great and all this stuff was great I mean I don't want to knock Solana too hard here they did that the serum's on Salina that's why I mentioned them uh but Solana did get into bed with FTX and I would attribute a lot of Solana's success especially its price rise the sole token price rise to directly to FTX and Alameda so it's kind of wild to see the contagion there as well and see how the Solana ecosystem was basically dominated by FTX I'm not sure what that

ecosystem looks like going forward uh given that FTX was such a big part of it they are trying to distance themselves from it because of course they are right they get in bed when the goings good they try to distance themselves when they're going bad and it really it came out also recently I don't know if I have the Tweet here but it came out that SPF was using a lot of the funds to prop up certain token prices and pretty much all of them were part of the Solana ecosystem including Seoul and it kind of reminded me of how uh icos in 2017 caused eth to go on an incredible run right and I think the same was true for Seoul in 2021 where it went on that incredible run that it had because SPF and FTX were just buying so much of it

uh using customer deposits uh using profits from uh these certain activities and now that that's gone I mean you've seen what's happened to the the Solana price and the Solana ecosystem projects over the past few months it's just gone down only right like really really bad I mean the soul token is down more than eth went down in 2018. I think it went down like 96 or something like that from all-time high 8th went down 94 so it does strike similarities though to me in terms of the incredible buy pressure that Eve had in 2017 and then the credible cell pressure in 2018 from the Ico selling kind of similar Dynamics yeah but yeah just another dodgy thing out of the FDX ecosystem there um and Frank hadn't uh From the Block

had another scoop here where he said FTX spent at least 74 million dollars on real estate in the Bahamas this year so much for that effective altruism that Sam always went on about right and so much for wanting to give away all his money and not living large and driving a Toyota Corolla and being vegan and all this other that he manufactured to make himself seem like an effective altruist which I always called out as bull I mean the effective altruist uh altruism movement I think has some Merit to it in that uh you want to basically make as much money in any way possible and then direct that money towards uh I guess public goods for a lack of a better term around donating that money around to uh to causes that you believe in and that causes a doing

good for the world but I don't believe SPF ever actually wanted to do that I don't believe I believed he used that as another marketing gimmick another psyop in order to get people to think that he was some kind of God or to just craft this Persona around him and uh yeah I mean definitely now that's all pretty much proven right like he was never an effective altruist he was all about himself all about it building his own Empire all about making as much money as possible and the fact that he blew it all is still amazing to me considering how I mean considering what they started with right like they had every Advantage they were making so much money and they somehow lost it all because they got super super greedy and then they tried to make it all back after they blew up

which seemed to have happened in Q2 of this year they tried to make it back with customer deposits which obviously is the worst thing you can possibly do as a as a custodian and as a centralized exchange we just blew up in their face but yeah that's another thing that uh that FTX had done uh spent 74 million dollars on real estate in the Bahamas which is just absolutely crazy there um and autism Capital put out a tweet as well over the weekend where they said uh from a block fire block fire employee the only reason FTX bailed us out was to get our user funds onto their platform to use in their shell game they applied immense pressure to get Block five funds migrated to FTX custody employees were told by Executives not to ask questions about the move so blockfy was another thing that blew up this year and then uh

FTX came in all white knighting saying yeah we're going to bail you guys out it's gonna be fine we're going to lend you some some line of credit it's going to be all well and good Well turns out that I don't know how verified this is but it's pretty believable it turns out that SPF only wanted block fire to get access to their customer deposits in order to gamble them away and and use them for his own nefarious activities I believe that totally I don't know if it's been verified but I think given all that we know we can be pretty confident that it is true uh and yeah that's just another thing that that's just crazy to me the companies that SBF bailed out you know or already blow up once and then blown up again now and base basically have gone to zero here so I think as far

as I can tell block fight is a zero as well there uh but that's just yeah absolutely crazy stuff going on there and then woo blockchain here has made a chart of Institutions that publicly publicly indicated damage in the FTX crash event uh but this is only a small part you can see the exposure to FTX via investment at the top so Paradigm invested a total of 290 million dollars in FTX which they're writing down to zero that money is literally gone guys like that's a that's so much money just gone Sequoia over 200 million temasac over 200 million the Ontario teachers pension fund 80 million and then inability to withdraw um the hardest hit here was Genesis trading which with 175 million which was plugged by uh uh digital currency Group

which is the parent company so they basically covered that whole uh Galloway's Capital 100 million dollars I think or I think it was 50 million or 100 million dollars but definitely a big hit for them and for those of you who don't know or don't remember Galloway's Capital was the one pushing the ethereum proof of work uh Fork so I guess like a bit of karma there uh you guys know my opinion on galloys uh Galaxy digital which is Nova grassless firm 76 million dollars worth of exposure and then a bunch of smaller ones here and then you've got uh you know about a bunch of other ones under there which you can check out on the chart for yourself but I mean this isn't the the end of the exposure here there's plenty of exposure to go around I think in terms of how

many people have gotten wrecked by FTX going under but you know what guys I think at the end of the day this is a really positive cleansing event I really do think that especially when it comes to investing uh and it comes to I guess like trusting certain platforms these bigger investors and institutions are going to be much more I guess uh much more picky going forward and they're definitely probably going to get much more regulated than they have been in the past uh given what has happened here so that's a net positive to me and honestly I'm very very glad that we've washed out SPF from this ecosystem uh for anyone who's followed me for the longest time I've always thought he was a dodgy actor I've always distrusted him I always thought he was a net negative for this space so I'm just

super glad that he's been washed out yes there's Fallout yes a ton of people got hurt but at the end of the day like that is just an effect of the washout like he did this it's his fault it's not you know the fact of the matter is that it's all on him and his cronies they did all this they did the damage here but I'm glad that the damage was relatively contained I'm glad that it didn't keep going just like I'm glad that Terra didn't keep going we need to get better at spotting these things early on we need to get better at weeding them out early on as an ecosystem people just need to get better at listening to people when when stuff gets called out because holding everything fud does not do any good but also like there is a lot of

fight out there I mean how many people were saying just a few months ago that coinbase was insolvent well I mean that was complete I was saying that it was complete and none of those same people were calling FTX insolvent which is just hilarious to me but really we do need to get better as an ecosystem to listen to the smart uh people who are actually uh saying these things and actually pointing out the dodgy things rather than I guess ignoring them uh at face value here so so yeah I'm sure there's going to be an updated uh chart here with exposure but yeah I I think this is a positive washout all in all uh even though lots of innocent people have lost money at the end of the day as I said like that's just an effect of of this blow up that

is not I mean I can't do anything about that right I mean I tried to warn people I've always said people don't to people don't leave your coins on exchanges regardless of what exchange it is doesn't matter how trusted it is just unless you're actively trading don't leave your coins on there it's not hard to self-custody honestly if you're if you're a daily way listener and Watcher I'm sorry but you should be able to self-custody that is not uh it it honestly like I should make it a prerequisite for being able to to listen and watch the the show because the daily way is not a noob uh show like I go into very deep topics about ethereum I'm not a noob friendly Channel I'm not trying to be a new friendly Channel I know there are different uh different people uh listening and watching this and

there's different levels of knowledge but if you don't know how to use a hardware wallet like I'm telling you it's not that hard because there's plenty of Guides Online it's very simple if you can use metamask you can use a hardware wallet that that to me is the um that that to me is the the short and sweet of it the hardest part of a hardware wall I would say is the same as the hardest part of something like metamask is securing your seed phrase making sure that you don't lose that that to me is the most difficult part and that in of itself is not that difficult right um so please please please like if you've got coins on exchanges still please just transfer them to a hardware wall a ledger a lattice one or any of the other trusted Brands out there honestly I've only ever used Ledger and

lattice one so I can only recommend those and please only buy them from the official website don't buy them from third-party vendor because they could become compromised from a third party vendor only buy them from the official Ledger website and the official grid plus website which makes which uh makes the lattice one um and then you know move your assets to them you can do test transactions as well to to make sure that you're moving it to the right address and everything but you won't regret it you'll feel a lot better uh and and you'll feel uh like you are actually you know you're actually doing crypto right so to speak because we invented self-custody for a reason guys like we should we shouldn't be just giving all our funds to these centralized entities and being like Oh yeah we trust you with our money uh

because we we don't I mean I don't I honestly doesn't matter how how legitimate legitimate I think an exchange is I do not trust them to custody of my funds and to be honest like if I didn't have to do it I wouldn't keep fear in a bank account like I have to do it because practically I can't keep uh large amounts of cash on my person or in you know under my mattress like that's not very secure it's very impractical uh it makes basically locks me out of the the digital banking system right because like I need a bank account to access that but when it comes to crypto the practicality of being able to self-custody large amounts of money is is just as practical as um being able to to uh have a bank custody of funds right in terms of like in digital but you do

it in a self-custodial way instead of uh instead of giving custody over to a third party so anyway that's my that's my rant there on that one not your keys not your coins all that good stuff I think that's definitely uh more apps now than ever all right sorry shifting gears a little bit here still on the FTX topic but I put out a tweet where I said most of spf's biggest Sims have been dead silent for days now and they are cowards they are cowards like like I I and I named some of them in my reply here to someone I said uh uh Sino uh samani and kanav so for those of you don't know uh Maddie Cena was a very big name or is a very big name investor in the Solana ecosystem and in the FTX ecosystem he's been silent through this whole thing uh

samani same deal here and I went on my rant about Carlson money last last week so I'm not going to continue there and and kind of he is the CEO of jump crypto which I've talked about a bunch of times before but basically he has lost money on on a lot of things this year and I'd be embarrassed to be him right now I know jump capital in traditional Finance basically yeah Prince money and they've got so much money they don't know what to do with but uh kanav has also been silent samani's been silent haven't said anything what's happening probably lost a lot of money in the FTX exposure and they have to basically do damage control with with different parties that they interact with which is fine but you know they were their biggest simps and I mentioned last week that samani said

haters take note over uh over I'm concerns around FTX being insolvent implying that he believed FTX wasn't in solve it and then he was all he was withdrawing funds from FTX as part of multi-coin so the fact that they've been silent to me is just uh you know I mean I'm not surprised but very clear indication of the fact that you should never trust these people ever they do not have your best interest at heart at all they don't care about you at all they don't care about this ecosystem all they care about is lining their pockets with as much money as possible and they're profit maximalist right that's what they do so don't trust them and and don't think they care about you just a small note on that one um and one of those people is uh suzu so both suzu and Carl Davies of three hours

Capital are trying to do a comeback Arc right now uh Redemption Arc right now in the wake of FTX blowing up now Sue uh put out a tweet over the over the weekend where he said uh it's a long story but we were scammed just like you guys it's okay Justice is coming so basically he's trying to shift blame from himself and Kyle and three hours Capital to Alameda FTX and SPF I think that this uh is complete complete whole it is not uh Alameda and ftx's fault that uh three hours Capital did all the dodgy borrowing that they did and all the dodgy leverage games that they did they're fully responsible for that and they actually were completely in bed with FTX as well promoting them um you know uh Shilling

them all that sort of stuff so don't give these guys a pass please don't welcome them back with open arms same with doe Quan same with um machinski uh same with all those people that gaslighted you that basically scammed you that showed you garbage that um did all these dodgy stuff please please please do not welcome them back keep uh keep the pressure on them keep um replying to them saying I know you're full of you're a fraud get out of here I don't want to see these people coming back I don't want to see them have any kind of redemption Arc please like just just just just just just keep doing that keep the pressure on I believe that that's the uh the best way to go about it here all right so uh speaking of I guess like I get early in the episode I spoke about

how SPF had a lot of connections in DC and in Washington in in politics in the US there's a good thread here from Ron Hammond who said this week in Congress and crypto the FTX drama has captured DC's attention more than anything before but for different reasons FTX approach to lobbying has been scrutinized by the hill and an industry alike here's what we're hearing from the hill and what to expect next now these people was put out three days ago but it's still very informative and very relevant so go read this thread I'll link in the neutral description below but basically this is definitely a red mark on on Washington and on DC politicians here they're definitely going to be feeling the heat from different different areas maybe they do make SPF an example but I don't know because it makes them look bad it

makes them uh look embarrassed but still give this thread a reader goes into great detail about this and it gives another view about this whole thing all right so I put out a channel a tweet over the weekend where I said I'm really glad that regulated sanctions tornado cash cozied up to SPF and focused on killing defy instead of putting in guardrails to potentially potentially prevent the FTX collapse I feel very protected protected as an investor right now like as I said they all got into bed with SPF these Regulators Gary Gensler seems to have gotten into bed with him cozied up to him they did nothing to protect investors from this and as I said this is the biggest collapse in crypto's history one of the biggest collapses in finance Financial history besides 2008 and The Regulators who say

they want to protect us they want to put in guardrails they want to regulate things didn't actually prevent this now I know FTX uh was not uh so uh was not domiciled in the US they were in the Bahamas but there is an argument to be made that because the regulatory environment in the US is so harsh for crypto FTX didn't incorporate in the US and Incorporated overseas and then they had to do a separate entity called FTX us which was uh more obviously more heavily regulated but the only reason or one of the major reasons why FTX was able to get away with stuff for so long was because they were offshore they weren't heavily regulated by proper regulators and that was in part due to the fact that crypto regulations in the US are so ambiguous as no clear a guidance here and it's actually not

worth it for a lot of companies to spin up in the US it's worth it for them to go overseas which contributed to this I believe as as well all right so I yeah another tweet that I put out over the weekend I know I'm getting to the relative end of the FTX stuff I know I've rambled on a lot about it but I think it's important to get through it all but another tweet I put out I said kind of up and sad how it seems that 90 plus percent of people in this industry have supported one or more of the things that blew up this year Tara three hours Capital FTX Celsius Voyager block five hodl naught and more we need to be better than this ah so I was thinking about this over the weekend if I was to call out everyone

that would that supported one or more of these things I would have no friends left in this industry but I also think that there are different levels of supporting something for example if you supported the Terra ecosystem and the terror project because you truly did believe that it was a sound project right and you weren't just doing it because you wanted to make lots of money and you knew it was a scam but you wanted to get and you knew it was a Ponzi sorry and you wanted to get out before the whole house of cards collapsed collapsed if you actually believed in it truly believed in it then that is different to people supporting it knowing that knowing that it was a Ponzi right knowing that it was gonna blow up I think that there's a line to be drawn there um then if you were supporting something

like uh FTX for example well I mean FTX caught most people off guard so you could be forgiven for supporting FTX to an extent because they lied about everything that portrayed a very legitimate image and it fooled a lot of the smartest people in this ecosystem so again like supporting the the the word support here uh varies from from thing to thing um but also uh as I said like there's a lot of people that uh that are that are smart and that have supported these things but now they have egg on their face now they're going to be probably a lot more skeptical of a lot more things which I think is a net positive but I'm trying to call out as many people as I can but only the Bad actors I don't want to call out the good actors who just got

duped or who um you know supported something because they thought it was legitimate uh genuinely thought it was legitimate for a bunch of different reasons and it turned out it wasn't but at the same time I am I'm trying to call out as many Bad actors as as I can but again like I obviously am a very public person I'm not Anonymous I can't call it everyone as well because I'm just one person but I think I've done a good job so far and you can let me know if I have or haven't actually but I personally think I've done a good job so far of grinding that line between calling out everyone that you know and no matter who they are and just sticking to the people that I believe to be actual Bad actors who have demonstrated that they're bad actors over longer periods of time and

for supporting these things so I think that uh you know let's not be too hard on everyone in the ecosystem even if they supported uh you know one or more things on this list but make sure that they learn from those lessons if they especially if they're public people and and help them not to repeat those same mistakes by calling things out to them saying hey this looks dodgy I saw that you're a supporter of this you know look into it more closely because uh I I see this as looking dodgy and all that sorts of stuff so I just thought that was what that was worth bringing up because I see some people you know got all the pitchforks out for everyone when in reality they should be focusing our pitchforks on the actual Bad actors rather than the good actors that just got caught up in certain

things because of being duped themselves I mean we're not perfect guys like humans get duped all the time we get lied to we fall for stuff I've fallen for stuff in the past as well I'm not perfect uh but my these days my the tech day is like way way tuned to uh tuned up like I I I you know it's funny because like I used to call on a lot of things um not just the things that are on this list but also a lot of other things and some of those things turned out to be completely legit and they weren't actual and I was wrong about them and the biggest one I was probably wrong about is binance I do think that binance did a lot of dodgy Shady things early on but they haven't done uh you know anywhere near as bad as uh these other

kind of uh these other things in crypto and I think CZ even though he I don't consider him a hero I still consider him a bit of a villain right definitely a shrewd businessman definitely a profit maximalist I do think that he's a lot better right than these other actors and I've been wrong about him too I I think not to say that he's perfect or he's infallible or anything like that but uh yeah that's just an example of something I've been wrong about in the past but I think on net I have stuck to at least trying to call out the the obviously Bad actors uh is the way I see them anyway um and yeah moving to I guess like a bit of positive news here I said one positive thing that has come out of the FTX debacle is that some centralized

exchanges are actually doing proof of reserves now really hope to see this continue at a regular Cadence it's the least that these platforms can do to build trust in this ecosystem and then I said you know the replies are right the approval proof of liabilities is also important and I hope centralized exchanges start doing this too though this is more complex and involves third parties that may not want this information disclosed disclosed so I'm not sure if we're going to get proof of reliabilities anytime soon though I hope we do proof of reserves I think the main strength of it is that it identifies that the addresses the on-chain addresses that centralized exchanges uh own and actively use so that users can follow them and and spot anything that looks suspect that to me is the main uh uh the main um benefit of this obviously

people reserves can be faked and we've actually seen some exchanges seemingly fake their proof of reserves by borrowing funds from another Exchange and then doing a snapshot and saying hey we have like this These funds on this address uh and this is our proof of reserves and then moving those funds back to the address that they borrowed it from and and basically you know the proof is basically worthless but we can see that on chain and that's I think the value of it so I think that's just a positive that has come out of all of this I do hope to see more of this and the proof of liability stuff but at the end of the day we're still trusting the centralized exchanges to be truthful here whereas we don't have to trust things like D5 so as I explained before that's again a massive

kind of uh uh uh benefit to to defy over something uh like C5 here uh and speaking of uh uh centralized exchange transparency default llama released a uh transparency dashboard for centralized exchangers with a tvl of user deposits in the centralized exchange and liability audits along with auditar and date so you can check out this dashboard for yourself at d5lama.com Sexes or s-c-e-x-s and you can see here the tvl uh clean tvl liabilities all the time last audit date so most exchangers do not have a liabilities auditar at all you can see in this list here even the biggest ones don't the ones that do a coinbase kraken

gate and nexo um coinbase has theirs from Deloitte and this was done 31st of December 2021 so it's coming up on a year old here Krakens was last done in June this year gates in October of this year and nexo uh basically three days ago and they're they are done by um uh uh minnow LLP so great to see that there are at least some centralized exchanges that have liabilities or Auditors but you can see here that uh most of them don't but good to see this dashboard good to have something that Aggregates all this information for us to keep tabs on here all right so uh another thing that happened over the weekend has got to do with crypto.com so they basically said that they accidentally sent 320 000 eth

yes 320 000 eth to a uh exchange address on gate dot I I gate.io exchange instead of their Cold Storage address and I put out this tweet saying you know why would anyone ever trust a centralized service that quote unquote accidentally sends 320 000 eth to the wrong address this is pure amateur level and crypto.com deserves to be called out for it if your funds are on there I highly recommend moving them off right now so honestly like this should never happen like it's mind-boggling to me that this was even uh possible that this could even happen that you would send 320 000 eighth which is not a small amount of Heath guys like this is a very very uh large amount of eighth this is probably all of the eighth of crypto.com

has they sent it to gate.io and then they got most of the funds back but not all of it I think they got like 285 000 each back but not the entire amount back so what did they owe gate.io 35 000 uh eighth in in you know in a debt or something like that I don't know I haven't tracked it since uh since this kind of news came out but yeah this is amateur level I will never ever use crypto.com I mean I was already not going to use them because I thought they were dodgy for quite a while but given this latest I will never use them I will never recommend them to anyone and I recommend that if you are using them to stop and to withdraw all of your funds from them you cannot trust a a centralized operator you shouldn't trust

any centralized operator to begin with but you can't even begin to trust one at all that accidentally sends the this amount of of money to the wrong address right because it could have easily I mean they said that it was a whitelisted address and that's why it was able to be sent there it can't be sent to any address but that doesn't matter right just because it's a whitelisted address why was it whitelisted you should have separate addresses here you should have a a set of whitelisted addresses for your cold storage and a set of Wireless that addresses for things like other centralized exchanges they shouldn't be co-mingled at all so that was a massive oversight by them but as I said I'm never ever going to trust them have I never going to use them and if you do use them just use somewhere else

there's plenty of other options for you if you need Fiat on and off ramps if you need centralized exchanges and please do move your funds off there because they obviously can't be trusted all right so another bit of positive news just to break up the negative news here I put out a tweet where I said just a friendly reminder that amongst all the crazy bad that happened this year ethereum had an extremely successful merge and work on the next protocol upgrades it continues unabated ethereum Remains the strongest ecosystem in crypto and I'm incredibly excited for its future what I think about what's happened this year I split it up into two buckets ethereum has had an incredibly positive yeah D5 has continuously been tested on ethereum and worked just fine if the ethereum

network went through its biggest upgrade in its history with the merge and it was extremely successful was basically a perfect merge um the eighth price uh as compared as compared to other assets has been relatively stable and that can be measured by the BTC ratio work on the next upgrades continues right and and is continuing at a really rapid rapid clip the layer 2 ecosystem on ethereum has gotten so much better and has matured so quickly all of the the layer twos are building out some crazy cool that that is being released slowly as time goes on their ecosystems have been built out uh uh and on top of that I think that the ethereum community is just in just such a great place right now uh because of all of that right then you

look at crypto as a general thing it's all gone to I mean like all the Alltel ones are pretty much dead even the biggest ones have had just their worst years ever I mean they haven't been around for very long they've had really really bad years things have literally gone to zero like Tara Tara guys Tara was one of the biggest ecosystems in crypto it went to zero um some of the biggest players have gone to zero one of the biggest centralized exchanges have gone to zero like crypto is really not having a good time but ethereum in the face of all that is having an absolutely excellent time I can't even find anything negative about ethereum uh that's happened this year uh besides the censorship stuff that is really the only thing that I can think of off the top of my head that I would

consider a large knock against ethereum is the the oh fact sanctions but even that right we've turned into a positive because it's got a lot more people thinking about uh enhancing ethereum censorship resistant properties and and got a lot of people thinking about Mev as well so I think that would be the only major negative thing that's happened to ethereum this year um but that in of itself as I've mentioned before is a positive thing because not just because it's kicked our ass into gear to take censorship resistance more more um what make it more prevalent but it means that ethereum is doing what it was made to do and and B the uh that thing that challenges nation states challenges governments challenges the existing order of things and it's doing it and you can still get your tornado cash

transactions in um you just have to wait a little bit longer uh uh because uh the ethereum is still essentially resistant Network even though 75 or whatever it is today of blocks in ethereum are censoring those transactions uh you still have 25 that aren't and you're still able to get a tornado cash transaction in in less time that it takes for a Bitcoin block to be mined right in less than 10 minutes which is which is absolutely hilarious to me uh at the same time as it is crazy so yeah ethereum has just had a killer yacht it keeps killing it and never be more excited for ethereum's future and I hope to see obviously uh ethereum keeping kicking goals as time goes on all right uh I think this is the last bit of news about FTX yes it is all

right I'm finally at the NTR so CZ put out a tweet just before where he said to reduce further cascading negative effects of FTX binance is forming an Industry Recovery Fund to help projects who are otherwise strong but in a liquidity crisis more details to come soon in the meantime please contact binance Labs if you think you qualified also welcome other industry players with cash on hand who wants to co-invest crypto is not going away we are still here let's rebuild so basically CZ is doing what if what SPF was doing and basically purchasing distressed assets purchasing distressed companies or investing in distressed companies in order to get himself a really good deal uh which I think is very smart SPF obviously had the right idea wrong execution but CZ definitely

has the right idea and the right execution it seems yeah but this is great I think it's great to be able to invest and and make sure that the projects that are actually uh building sustainable things and Building Things people that that uh that people actually want to use are still able to do that without the worry of of not having the the runway so it seems that CZ is putting his weight and his money behind this and this is a much better use of his money than the original offer to bail out FTX as I said bailing at FTX was basically uh it would basically bring no benefit to CZ or binance at all but investing in these uh distressed companies or just in more companies in general through binance Labs definitely brings a huge positive to to binance and to CZ so obviously he wants to do that

so if you are a project that is distressed or if you know that one that is maybe you can go to to binance labs and see if they would like to invest in your project to give you more Runway or in the project you know to give them more runway in order to keep going uh for however long this bear Market lasts all right shifting gears completely now into the last set of up uh last set of updates which has got to do with ethereum so Marius from the Geth team put out a tweet where he said the next withdrawal devnet will be started next week next week being this week There's a load star Geth load style nevermind withdrawal devnet running 6X fully already but we wanted to add prism into the mix so work still continues on the

beacon chain withdrawals that are slated for Shanghai the dev Nets are being a new devnet is being spun up and as I said it goes devnets test Nets uh sorry uh private test net or short-lived test Nets then public test Nets then mainnet withdrawals uh I mean as I said 99 coming into Shanghai uh with erp48 44 still on the fence which is a perfect segue into a few 48-44 related updates so op Labs put out a summary that was written by infy here uh all about uh Proto dank shining and Erp 4844 so it's quite short you can definitely check this out for yourself and read the blog post for yourself uh but yeah just wanted to highlight that one there there was also a thread from Alex Stokes here about Erp 4844 and what this looks like

from a builder's perspective so if you are a builder or a developer this is the thread for you to read which I'll link in the YouTube description uh below uh and then uh just a couple of last things here super fears uh put out a tweet where he said if you came to the ultrasound.money negative issuance celebration on November 8th and sent five dollars to negative issuance.eth you're probably able to claim a pull-up uh and at this address that he'd link so I'll link that in the YouTube description below you can go claim that pop-up now last up here is a shout out to a another YouTube channel that I learned about a few a while ago but I actually joined the rocketpool voice chat the uh over the weekend uh oh no on Friday actually um and someone mentioned to me that I should give this channel a shout out

because they were inspired by the daily Quay well that channel is Rocket Fuel which is a YouTube channel that covers all things got to do with the rockapole community with daily updates now this channel was created by whack Whack Attack a rockable Community member and it's honestly amazing to me that he finds enough content to do a daily video about just one project considering I do it about the entire ethereum ecosystem he does it just about rocker pool and covers everything you want to know about rockable so if you you love rockapol and you want to keep up to date with them definitely go subscribe to his rocket fuel Channel or go check it out watch his videos I think they're very informative he does a really great job of explaining things so I just wanted to give a shout out to whack Whack Attack

and Rocket Fuel there now before I end this today's episode because we're coming up on the hour here I just want to say that I hope all of you are doing okay right not just financially but also mental health-wise the last few days last week have been some of the craziest if not the craziest in crypto's history I know I said that about Terra and 3ac and a bunch of other things this year but I think this whole debacle over the last week Takes the Cake there has not been anything bigger than this it's just been you know eyes on the screen eyes glued to Twitter the whole time especially for me I mean I went away over the weekend to the beach with a bunch of friends and I was still like I was trying to stay off my phone but I was still glued to it because I'm like

you know this is just too much going on um you know and even if I didn't look at my phone for a couple of hours I missed so much stuff so it was quite difficult but you know I think it's always worth remembering that your mental health mental health should come first if you're feeling really burnt out if you're feeling really tired if you're feeling like this everything's just too crazy and it's very hard to to keep up with things don't get down about it maybe take a break force yourself to take a break try and just step away the ecosystem will still be here if you do that you can probably take a break for a few days and just watch the refuel if you want and you'll get caught up with everything you've missed anyway there's no need to to sit on Twitter if you've

got the refuel like I do that for you I mean honestly like I know this applies equally to me the advice that I'm giving right now but I like every person varies and for me personally like I live and breed this stuff like this stuff just I mean it doesn't get me burnt out or tired or down or anything like that like this is my bread and butter I live in bread that I love being able to talk about it with all of you guys and and get this information out there and educate but I know not everyone is like that so if you do feel burnt out or you feel tired or you feel very uh run down and and exhausted from the last week take a break there's no shame in that there's there's as I said the ecosystem is still going to be here uh everything's still going

to be here the refuel is available for you if you need to catch up at any time right uh so yeah but I think on that note that's going to be it for today's extra long episode so thank you everyone for listening and watching be sure to subscribe to the channel if you haven't haven't yet give the video a thumbs up subscribe to the newsletter join the Discord Channel and I'll catch you all tomorrow thanks everyone