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EigenLayer's Stakedrop is Nearly Here... Here's What You Should Know
206 Plays5 months ago
In today's episode, we dig into the upcoming $EIGEN token launch, what we expect the value to come in at, plus some of the controversy surrounding it. Plus, we explain why. CZ's sentence confirms that we're living in a simulation.
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Transcript
Introduction and Weekly Recap
00:00:11
Speaker
Hello, and welcome to the Decrypting Crypto Podcast. It's May 2nd, 2024, and this is Off Chain, your weekly recap of the biggest stories in the crypto
Bitcoin Trends and Portfolio Impact
00:00:20
Speaker
space. I'm Matthew Housebarbie, and after a little week off, you know, a little halving vacation, let's say, I'm back with my partner in crime, Austin Knight. How you doing, Austin? I'm doing well, Matt, I guess. I don't know. Bitcoin's looking a little sideways. How are you feeling about that?
00:00:39
Speaker
Yeah, my portfolio is suitably halved. So I guess the outcome was good.
Federal Reserve Decisions and Crypto Market
00:00:46
Speaker
So yeah, it's, you know, we're trending a bit sideways. It's been, my feeling here is generally that one, the halving is, as it always is, priced in. And as we've kind of discussed when we did that deep dive into the typical,
00:01:08
Speaker
ways that the cycles play out. We know that, you know, the peak of all of the last cycles came 12 months after the halving. So it doesn't surprise me that it was somewhat of a nothing burger. I think, though, what we are also seeing is our good friend, Mr. J. Powell in the Federal Reserve,
00:01:30
Speaker
doing some backtracking on the initial hopium that he gave us of rate reductions coming in June, which is now probably 99.9999999% not happening.
Treasury Buybacks and Market Hope
00:01:47
Speaker
And people are worried that, as I think you pointed out when we did our predictions, which at the time I didn't agree with, that inflation has remained stickier than planned.
00:01:59
Speaker
We're seeing this all play out and equities have been suffering a bit. I think the discussion at the FOMC meeting yesterday of rates higher for longer, softening the tone on any potential rate hikes, which I just don't think are even feasible at this point anyway.
00:02:19
Speaker
and the shift towards them pushing, well at least the US Treasury pushing to do some buybacks of Treasuries to reduce down the balance sheet is getting people a little bit more hopeful.
Eigenlayer Launch and Token Announcement
00:02:32
Speaker
So I think we've probably got a little bit more sideways action until maybe the next catalyst around the ETF for ETH at the end of this month reaching a decision.
00:02:47
Speaker
Hold on tight, man. Yeah. And I think it's a lot, there's been a lot kind of going on in the space. We're going to be talking about some of that. We're going to be digging into one of my favorite topics that I've been talking about for a long time, which has finally come to fruition, which is the Eigenlayer, Eigen token announcement.
00:03:08
Speaker
Oh yeah, I'm actually planning on moving to the UK for a short period of time. Excellent, yeah. That quote will make more sense to everyone as we dig in, but yeah, the UK tourism boom of May 10th is going to be a big one. So, you know, it's the anti-Brexit. It's going to be great. Why don't we jump into our first story of the day?
00:03:40
Speaker
The long-awaited announcement from Eigenlea, if you're not familiar with Eigenlea, you have definitely not been listening to the podcast, which leaves me a little inclined to not even explain what it is to spite you there, but it has finally arrived. Eigenlea, the restaking protocol,
00:04:01
Speaker
has now accumulated $14.5 billion in TVL, second only to Lido, which I think it's been pulling TVL away from to a certain extent as well.
00:04:17
Speaker
But they announced that they will be finally launching their Eigen token, giant asterisk over that, via definitely not an airdrop, it's a, and here we go, a steak drop.
00:04:32
Speaker
Wow, there we go. New terminology. Who knows what it means? Could it be good? Could it be bad? I don't know, but it's happening on May 10th. So Eigenlea AirDrop, and most notably the actual token launch itself for Eigen,
00:04:48
Speaker
I mean, it's probably the most anticipated air drop I would make a case for saying ever in crypto. We've had this giant Eigenpoints farming that's going to continue, that's ultimately helped them collect, you know, this $14.5 billion in TVL.
Eigen Token Mechanics and Airdrop Details
00:05:13
Speaker
But for all the excitement,
00:05:15
Speaker
Wow, there's been some controversy and we are going to be digging in. It wouldn't be a steak drop, you know, without some controversy. So let's, uh, let's dig in a little bit into some of the mechanics because I have been really down the rabbit hole here. And one thing that I will just tease out here.
00:05:32
Speaker
think we're gonna need to do like a separate episode just on explaining some of the mechanics of this token because airdrop to one side this is a really really innovative approach to the mechanics of a token the likes that we have not really ever seen before at least not to this degree of execution
00:05:59
Speaker
and I think it's going to change the way that we actually think about
00:06:07
Speaker
how staking and governance-based tokens can play a role in the future. But before we do that, let's get into some of the numbers, right? So I just want to start by telling you the total supply of the token, which is $1 billion.
00:06:31
Speaker
673,646,668.28466. Why am I telling you that, Matt? Does it mean anything? Nope, this is exclusively to just point out what a bunch of nerds the Eigenlayer team are, because this number is just the result of encoding the phrase, open innovation into a classic telephone keypad. Austin, if that doesn't make you bullish, I don't know what it does. You know?
00:06:59
Speaker
Well, so yeah, there's a relatively large total supply, somewhat meaningless, as you can tell by the way that they've actually derived it. But let's talk about the airdrop. So 15% of the total supply is being airdropped to restakers, those that restaked their ETH and staked ETH derivatives natively via the eigenlayer protocol.
00:07:29
Speaker
Early investors are getting 29.5% of the token supply, which I think has been somewhat controversial, when you also factor in that early contributors are getting also 25.5%. So that's quite a lot to the early contributors and investors.
00:07:51
Speaker
That said, I think the 15% of the supply being airdropped to restakers is well above average. I think the average we've kind of seen in the airdrop bonanza so far has probably been in the 5% range. So I think that's really good. The rest of it goes to the community ecosystem fund. So let's talk about how this airdrop is going to be structured. And if you haven't kind of
00:08:18
Speaker
partaken in the air drop today, don't worry, there is still time to gain some exposure here because
00:08:27
Speaker
the quote-unquote stake drop is going to happen in both seasons and individual phases. So the first season, which is what's happening on May 10th, or at least phase one of season one, it's never easy, is it? This is for anyone that is re-staked assets directly with Eigenlayer. This accounts for about 90% of the season one allocation.
00:08:53
Speaker
And the season one allocation of the steak drop accounts for 5% of the total supply. So there's an additional 10% that's going to be steak dropped. I'm never going to get used to saying this. Steak dropped in the future seasons, which they're yet to be announced the dates, but they are confirmed that they're happening.
00:09:15
Speaker
So in phase one, anyone that's re-staked assets directly with Eigenlayer is eligible and that's up to March 15th. So any of the time that you have been
00:09:25
Speaker
restaking your ETH, pointing your validators at Eigenlayer, or where you've natively restaked like Staked ETH, or one of the other liquid restaking, liquid staking tokens that they have accepted.
Stake Drop Eligibility and Future Seasons
00:09:40
Speaker
That's where you'll be eligible. You can go check your token allocation right now, and you'll be able to claim it on May 10th. Phase two, which accounts for about 10% of this is a season one allocation,
00:09:55
Speaker
is for those engaging in what they're kind of calling more complex DeFi protocols. So we talked about Pendle a couple of, or maybe three episodes ago, I think it was. If you were participating in like YT, the yield tokens of some of the liquid restaking,
00:10:16
Speaker
tokens, that's where you're going to probably be eligible in phase two. Same with protocols like Gearbox and otherwise. The reason for this is they just need to work with some of these teams directly to get the allocations correct. These are like complex derivatives and the beauty of like an open permissionless system is that anyone can build really interesting layers on top of existing protocols like Eigenlayer.
00:10:43
Speaker
The challenging part is that, you know, you've got to figure out what the hell these teams have actually done to get to the place that they've got to.
00:10:50
Speaker
They've said, don't worry, I don't think there's any reason to be worried here. There was a lot of fun initially on crypto Twitter about this, but I think it was just people not being willing to read a paragraph of text that will all be coming. So I think that's gonna be a huge part. Claims for season one, gonna be open for 120 days. If you were restaking through one of the liquid restaking protocols like EtherFi, which we had Mike on the podcast earlier this year,
00:11:16
Speaker
Puffer, Renzo, blah, blah, blah, loads them. I'm not going to go through and name all of them. You will also be getting your icon layer.
00:11:26
Speaker
a stake drop, I believe what Eigenleir want to do is deliver that directly to your wallet address versus sending them directly to the liquid restaking protocols to then distribute, hence phase two where they're working with them to share addresses. So you'll be able to see all those. That's probably going to be later in May, I imagine, but you'll have 120 days to claim. And again, this accounts at any Eigen points accrued up to March 15th.
00:11:53
Speaker
Then there's going to be season two that'll be March 15th to whenever they announce season two finishes. Kind of like, you know, we're probably used to these now with things like blur and all the other different protocols that have been doing these season-based staking to just avoid this giant dump that happens and then all the TVL disappears.
Token Non-Transferability and Community Reaction
00:12:14
Speaker
But big chunk of the token splice still to be allocated in future seasons. Here's when we get into
00:12:22
Speaker
controversy number two. So controversy number one was people just not reading the text about phase two and like, oh, Pendle and Gearbox users are not gonna be included. They are. So we've cleared that one up for you. This is where people are losing their mind. So when you initially claim your token, Austin,
00:12:43
Speaker
it will be non-transferable. So you will not be able to trade it. It will not be able to transfer out of your wallet. However, it will become transferable in the coming weeks, potentially months, but I did hear Sriram and one of the other founders, which I unfortunately am now forgetting,
00:13:07
Speaker
on the Bankless podcast talk to this. And I think they said, you know, this will be available in the next coming weeks, months, probably not months, but so I get the feeling they're going to try and get this turned around pretty, pretty quick, but there's no set date right now. Don't think it's going to be too long. I imagine maybe it's going to be kind of June time, something like that.
00:13:27
Speaker
The reason they want to do this is they want a chance to get the token drop, stake drop, should I say, all right, figure out the mechanics of the token before they then make it transferable. People are losing their mind about this, which I personally don't mind this at all. Eventually, I think it was Arcade was another protocol that did this recently.
00:13:50
Speaker
where they dropped their token. It was initially not transferable. And then when it became transferable, you claimed the liquid token that you could then transfer. What I like about this is a few things. Well, when you're initially claiming a token that has no value, that has its tax benefits as well. So everything shifts to a capital gain after you then claim from there.
00:14:14
Speaker
which is one nice thing that people aren't thinking about. The other nice thing is if they mess things up, this is a whole lot easier to figure out. This is going to be what I believe the largest airdrop of all time in crypto by value, by size. It's going to be huge. And there are some real complexities and new innovations that are happening at the token level and the protocol level that mean, you know, this isn't a straightforward, simple, you know, run in the mill governance token.
Eigen Token Value Predictions
00:14:41
Speaker
So.
00:14:42
Speaker
I think that's the piece where people are losing their mind again and it's a little overblown. I'm not sure if you feel too bad about that, Austin.
00:14:56
Speaker
Man, I mean it is you know, I like I would say generally it's kind of unnerving to Have a token that is non transferable and then just a little bit of like a trust me, bro You know that you'll be able to to eventually transfer it But I don't know what we'll have to see how it goes. You're right. It's a huge event. I
00:15:20
Speaker
Yeah, it is. And so I think the third piece, and this is where I think there are real reasons to feel a little aggrieved. And this is what you were alluding to at the start of the podcast, which is probably the most controversial piece. The state drop will not be able to be claimed by anyone in the US
00:15:46
Speaker
Canada, Australia, a couple of other jurisdictions. And they have also instituted VPN blockers. So most
00:15:57
Speaker
I will put the emphasis on most feet for all of you, US and Canada and Australian users, VPNs will not work here at claiming. And the reason why they've done this is for pretty obvious reasons, reasons I can really empathize with, especially from my purview at Kraken and understanding regulatory and compliance needs.
00:16:18
Speaker
They want to do this in the most compliant way possible and going above and beyond to show that they're not just making it easy for people to gain the system. So here's the counter argument there.
00:16:31
Speaker
What they have done is let people from all of these jurisdictions stake their billions of dollars worth of ETH via their protocol, which they have benefited greatly from, without any restriction, without any VPN, and without ever mentioning that these restrictions may even be in place upon the possible event of a token launch.
00:16:58
Speaker
So I think there's a fair few people feeling pretty aggrieved. What I will say is...
00:17:04
Speaker
people are gonna be able to figure this out. I made a joke on Twitter that, you know, the May 10th UK tourism boom that comes from people flying over just to claim that their Eigen airdrop is gonna be huge. But the funny thing is I think that anyone that has travel planned that has a significant stake drop coming from Eigen, they will probably do this. But that is where people feel a little bit rugged.
00:17:32
Speaker
However, my perspective remains the same on this. I think this is gonna be an unstoppable monster of an airdrop, and I think that it's gonna command a long-term, huge valuation.
Innovative Token Mechanics and DeFi Transformation
00:17:45
Speaker
That, in my opinion, is warranted. People can clip that statement out and show me that back in 12 months, and if I'm wrong, I'll hold my hands up, but I don't often say this lightly.
00:17:59
Speaker
But let's just take a look at some rough price estimates, right, based on some different FDVs, fully dilated valuations. So I did some napkin math on this, right. So if Eigenlayer, the Eigen token comes in at a $10 billion FDV, which
00:18:19
Speaker
I think is very prudent. I would put this at the low end of the estimates for the Eigen token to give you scale the largest liquid restaking protocol.
00:18:32
Speaker
which is like the layer on top of Eigenlayer, so it just doesn't make sense there would ever be any smaller than this, is EtherFi. And they are currently, even with the current market conditions right now, are at a 3.5 billion fdv. And I think that they were at one point close to a 7 billion fdv. So just for scale there.
00:18:56
Speaker
So I think 10 billion is the bear case here. That would be a $5.97 token price. And then if we try to back this in, I've done some math based on the allocation that I've been getting and the number of points I roughly had around the time of March 15th, I've kind of calculated that as a roundabout per eigen point that you have, around 12 cents per eigen point.
00:19:23
Speaker
Now, if we go up to like a $15 billion FDV, that goes up to about 18 cents per eigenpoint. And then like, if we take, you know, what is like the bull case here, a $40 billion FDV, that'd be a token price of $23.90. You're looking at a roundabout,
00:19:46
Speaker
48 cent per eigenpoint, which would be really, really beautiful. I'm gonna go out there and say this. I believe that eigenlayer within the first two months
00:20:05
Speaker
of it trading will become a top 10 crypto buy, um, by FTV and market cap in, in general, if we look at like Tom, which is the telegram token, the FTV is $24 billion. Um, and I think, you know, easily that Eigen can come in on that. I think in the peak of the bull run, uh, if we, if we see some real movement there,
00:20:31
Speaker
it would not surprise me if this thing hits like a $50 billion FDB. Again, not financial advice. I'm just really speculating on where I think this could be a really, not just a valuable token, but a transformative protocol that's going to really accrue a lot of value.
00:20:48
Speaker
I think this is getting really interesting. I think the bear case is probably around 12 cent per eigenpoint. Realistically, I can't see us going out of the gate anything higher than like a 30 billion fdv, which would put us around 36 cent per eigenpoint. But who knows? It kind of depends on the conditions here of the market.
00:21:10
Speaker
Now, this is all really exciting. I'm personally really pumped for this. And there's another angle, which I mentioned. I think we need a whole separate episode that we can unpack here, but I'm still trying to get my head around some of the exact mechanics of the Eigen token, but what is really interesting and very much on brand with the Eigen teams, overly complex naming conventions,
00:21:41
Speaker
They're referring to the Eigen token as the universal intersubjective work token. So it rolls off the tongue, Austin, right? So there is some logic to this, but I think cutting through all of this.
00:21:59
Speaker
The key innovation here that is coming up is the way that the Eigen protocol is going to be able to actually fork the Eigen token in the event of a
00:22:21
Speaker
Let's, I'm trying to remember the exact terminology that they use. I think it's like a subjective. Let's let me. Enter subjective forking protocol. Oh yes. Enter subjective forking protocol. And what they do though is right. There's like, there's two different types of faults. So like a subjective fault and then an objective fault, right? With objective faults, like we're talking here about,
00:22:46
Speaker
things that can occur where there's a slashing event that's on your staked eave. And then you have like subjective faults, right? Where maybe like a super majority of validators collude, right? And then it's like, it's more of like a social consensus that we've seen happen in the past, right? Imagine like stuff like the, this is slightly different, but like the Dow hack from Mac in like, you know, 2016 and
00:23:14
Speaker
the decision was made to fork the entire Ethereum blockchain. And that's how we ended up with Ethereum Classic. We remember what an absolute mess that was. Well, instead of having to fork an entire chain, what they have built in is this super interesting like dual token mechanic, where they have the Eigen token and then a wrapped version, which is like B Eigen.
00:23:35
Speaker
And the high level here is that in occasions where you have these like subjective faults, it can be resolved by actually forking the token, the wrapped token, B Eigen versus the entire chain. And the way that it's done is that someone will contest basically the situation that has come up and they will stake their B Eigen and say, hey, like,
00:23:59
Speaker
you know, that there has been like a subjective fault that people have colluded, et cetera. This should be forked if they are, you know,
00:24:09
Speaker
a bad actor here, they will have their B Eigen taken from them. If there is consensus around this, the B Eigen will then like fork the token so that there's like this additional, almost like social layer that can be layered in. Again, I'm not gonna go too deep into this and I think I'm probably butchering some of the explanation around this at this stage, but it is super interesting the way they're doing this. And I think this is gonna become a,
00:24:38
Speaker
it kind of standard. So there were there were a couple of protocols that tried to do something similar to this. Aragon is the one that I remember from I think 2017 that tried to do like intersubjective forking and didn't quite make this work. This has been built upon but I think this is going to be super interesting. They released a blog post
00:25:02
Speaker
they released a white paper and it is just in true Eigen fashion, extremely complex of loads of diagrams that aren't easy to consume, which makes me even more bullish, Austin, on the fact that people are not even going to be able to grasp it.
CZ's Legal Troubles and Sentencing
00:25:20
Speaker
But net-net, I think it's going to be a monster of an airdrop. I think a lot of the FUD will kind of get like wiped out a little bit because
00:25:28
Speaker
It will end up okay. I think it will command a big market cap and FTV. And I think that we're going to see a whole new mechanic in this Eigen token that we've never seen before. It's going to be a value add for DeFi.
00:25:43
Speaker
Exciting. Hey, despite the difficult market, this is actually a big one. I love the boldness of your predictions. Top 10, let's check up on that. Oh yeah, hold me accountable. I think we'll check in on that for sure.
00:26:01
Speaker
And I think for these kind of airdrops, when they're successful, it's great for stimulating some liquidity, right? Like people getting this like huge stimulus injection that then will bring liquidity into the market that's kind of needed right now, especially on ETH. So yeah, excited to see what's going on.
00:26:23
Speaker
All right, pause, breather, zoom out from the technicalities of intersubjective forking and we'll jump into our second story of the day. CZ, the founder and former CEO of Binance has been sentenced to four months in federal prison. Earlier this week,
00:26:49
Speaker
He received this sentence for violations of anti-money laundering laws. This is something that we've been talking about for quite some time and following. This is wild, right, Matt? Because if you'll recall, the US government was actually seeking three years in prison for him.
00:27:08
Speaker
And it turned out that the judge on the case, US judge Richard Jones, was pretty skeptical of this request. Part of the reason for that is that federal sentencing guidelines would suggest 18 months given the charges. And then CZ cooperated pretty well with the investigation. I think he even was in the UAE at the time when the charges were brought against him, which the UAE doesn't have
00:27:34
Speaker
any kind of extradition agreement with the US and he still chose to come and turn himself in. Yeah. Which, you know, I think it was a clever move. Um, and I think, you know, looking at this four months, it's probably a very good outcome for him and enables him to not have that hanging over him, uh, in, in all honesty for, for, for the rest of his life. Yeah. He's also a first time offender. So that was another thing that the,
00:28:03
Speaker
Judge mentioned as a consideration. If you look at the case, I think the government was in a pretty weak position here. CZ pled guilty only to failing to set up an adequate money laundering program at Binance.
00:28:17
Speaker
rather than to money laundering itself or more serious crimes. And he also agreed to personally pay a $50 million fine, which I guess that sounds like a lot of money, but he's worth $40 million. Did he just Venmo it?
00:28:37
Speaker
Yeah, he paid it in BNB tokens. Oh, yeah. It's currently worth $5 million now. And then on top of that, Binance agreed to pay $4.3 billion fine as well. So CZ paid a $50 million fine personally. Binance, the entity, paid a $4.3 billion fine.
00:29:03
Speaker
And then Binance is also going to retain an independent compliance monitor for three years to oversee its anti-money laundering systems, which I'm sure will just be so effective.
00:29:14
Speaker
On top of this, another factor in the case is that CZ provided more than 160 letters of support written by his family, friends, and business associates as evidence of his good character. And I guess, you know, typically I would kind of like dismiss that. It's like, I mean, obviously somebody so incredibly famous and for a long time so well regarded in the space.
00:29:37
Speaker
And then also maybe with some strategic political ties should be able to pull together some evidence of good character. But the judge actually mentioned it when he was giving the sentencing as part of the rationale behind why he decided to give
00:29:56
Speaker
Such a light sentence. I mean, really, even if you put aside the fact that the government was seeking three years, I mean, still the guidelines were 18 months and he got four. So it's interesting to me that these letters of support seem to play a role.
00:30:11
Speaker
Exactly. You didn't see SPF with, you know, people lining up to prove his good character. And I think it was a clever play by CZ here to really because it could have been very easy for CZ to be characterized in the same ilk as SPF, which I think would be a very, very strong mischaracterization. So I think it was a clever it was a clever move. You know, I certainly go ahead. Go ahead. Sorry.
00:30:39
Speaker
I think that the prosecutors and the government would have wanted to try to characterize him in that way. But what was brought against CZ, I don't know how you felt about this map, but to me, like the charges that were brought against him, it felt more like just sort of this continued vendetta and siege that the U.S. government has been taking against crypto itself. Like it has more to do
00:31:05
Speaker
with crypto and the space and delegitimizing the space and weakening the space than it did with CZ himself or anything that he really did. Whereas FTX and SPF, I put that in a completely different category of crime and prosecution. I think that that was a completely legitimate thing for the US government to go after.
00:31:29
Speaker
you know, people, even though it looks like it's trending in a positive direction in terms of financial outcomes for people that were harmed by that event, you know,
00:31:41
Speaker
millions of people were personally affected by that and huge institutions as well. So it's categorically a different thing. And I don't think that CZ was ever going to be able to be successfully painted in that light, despite how much the prosecution may have wanted to try to do that, because obviously it was very effective in the case of SPF.
00:32:03
Speaker
Yeah, agreed. And I think, you know, this lets the SEC and others safe face, right? You know, they settled with Binance, but now they get to have a very small victory lap that they also got CZ behind bars, right? And probably all parties involved are happy here. And so I think that's kind of where this played out. The real thing for me here, Austin, though, is that this
00:32:33
Speaker
only confirms that we live in a simulation. I've seen some amazing checks on this, I don't know if you have. So CZ infamously would respond to anything he deemed as FUD with the number four. He was sentenced to four months in a federal prison
00:32:58
Speaker
The settlement by Binance was four billion. He's worth 40 billion. He was sentenced on the fourth month, 2024. This is like, I'm unraveling something here. I feel like, you know, I'm in the illuminati. I've become enlightened to the secrets of life right now. And so it's just, this only happens in crypto. I couldn't have been more happy.
00:33:27
Speaker
that he got four months exclusively for the memes. And I feel like, you know, CZ has really delivered for us. I want to hope that he decided this was all planned. This was his 4D chess playing out in perfect step that he planned this moment the whole time to give his Irish exit from the entire industry.
00:33:53
Speaker
um but yeah i mean i think everyone involves probably feeling okay about this uh to to be honest and i think yeah well yeah you know go ahead i mean i i have to imagine cz feels pretty good about it and even you know during the the trial and you know prior to when the the judge was
00:34:16
Speaker
reading his sentencing all of the reports were saying that CZ was like his body language was great he was super engaged anytime he was criticized he was paying attention he was making eye contact with people he was listening and nodding which i think you could say speaks to you know you could say it speaks to his character you could say it speaks to his poise as a business
00:34:39
Speaker
man and CEO, or it speaks to his confidence as to how the case was going to ultimately go. This is something that, you know, there are some people that are upset about this. For example, Dennis Kelleher, the president and CEO of the Financial Reform Group,
00:34:58
Speaker
better markets called the decision, quote, an egregious miscarriage of justice that sends exactly the wrong message to criminals worldwide.
Regulatory Implications and Industry Impact
00:35:06
Speaker
And he said it's less than a slap on the wrist. I think that depending on how you look at it, you know, that that could be a fair thing to say. I mean, it is. Yeah. Like I said, it's a very light sentencing, even with the 18 months guidance. Definitely. And I think, you know, without
00:35:28
Speaker
all of the actions taken prior to this, most notably the Binance settlement, him willingly stepping down from Binance, him directly coming over to the US without, I know that the UAE wouldn't extradite him, but making that part as easy as possible for the government in the US, I think all of that
00:35:57
Speaker
gets this light sentence i was very surprised that it was four months i will still say i i thought he would at minimum be getting a year you know and probably a little bit more than that um so i think he's yeah he's got away one i mean that the the violations right are serious
00:36:18
Speaker
You know, it's, it's, it, it takes more than CZ to fail to set up adequate AML programs at Binance, but the buck stops with him. And I can understand why that quote from Dennis Kalahar.
00:36:34
Speaker
is coming out right because yeah does it send the right message i'm i'm not sure super important piece but to be honest i'm kind of happy that we've drawn a line under this from an industry perspective and we can start focusing less on all of that kind of news and more on what's actually pushing the space forward now because it felt like that was one of the last things hanging over the space
00:36:57
Speaker
there was like the hangover from like, you know, the FDX and, uh, the Binance Purge. I mean, we've of course still got, um, the SECs like onslaught and constant mandate around Ethan otherwise, but I feel like once we get past that, um, we'll be in a much better place. But yeah, I think it's a good, there is an interesting, perhaps cultural, you know, it's a bit of a leap, but I think it tracks a, uh, even a cultural,
00:37:28
Speaker
operational observation that could be made here and how CZ responded to the case brought against him versus how SPF responded to his crisis. Obviously, they were different types of crises, but to me, CZ really came off as somebody that's familiar with dealing with a very powerful and determined state apparatus. Yes, agreed.
00:37:57
Speaker
And and I think that you know that shows and and how he Obviously he's surrounded by people that know what they're doing and probably advised him on this But I agree with you It was a strategic move to assess the situation and say like is this something that I can get away with or not and if the answer is no and probably the best result is like over compliance and like
00:38:18
Speaker
a huge push to just make me look like the good guy. And then, you know, reduce the sentence as much as possible, as opposed to tweeting out something like one, one, and then disappearing.
00:38:34
Speaker
Yeah, I would say that as far as responses go, that playbook's not great. So I think that's what we learned from SPF. That was his parting gift to us all in like the 101 of not how to respond to a non-slot from the SEC and the authorities at large.
Conclusion and Investment Caution
00:38:57
Speaker
Anyway, we'll wrap things up. I think we can draw a line under that one. We'll see how the Eigen token launch goes, which I imagine will be, yeah, next week, next Friday will be the first phase. So we'll be recording a day before that. So we'll have maybe the following week we can comment on how that goes along with probably what will follow a whole host of more steak drops, let's say. Anyway, it's been a pleasure Austin. See you next week.
00:39:27
Speaker
See you then, Matt.
00:39:48
Speaker
The contents of the Decrypting Crypto podcast should not be used and are not intended as investment advice. Please do your own due diligence before making any investment, cryptocurrency or otherwise.