January 17, 2023

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The 2 previous Three Arrows Capital founders have launched a new venture! Today. I discuss why this is an investment opportunity FOR ME, which is misunderstood by everyone! Join Cryptoman Ran in today's episode of Crypto Banter and find out more! - - - - - - - - - - - - - - - - - - - - - - - - - - - - 𝗕𝗘𝗪𝗔𝗥𝗘 𝗢𝗙 𝗦𝗖𝗔𝗠𝗠𝗘𝗥𝗦 𝗜𝗡 𝗢𝗨𝗥 𝗖𝗢𝗠𝗠𝗘𝗡𝗧𝗦 𝗔𝗡𝗗 𝗖𝗢𝗠𝗠𝗨𝗡𝗜𝗧𝗬 𝗖𝗛𝗔𝗡𝗡𝗘𝗟𝗦 𝗗𝗶𝘀𝗰𝗹𝗮𝗶𝗺𝗲𝗿: Crypto Banter is a social podcast for entertainment purposes only! All opinions expressed by the hosts, guests and callers should not be construed as financial advice! Views expressed by guests and hosts do not reflect the views of the station. Listeners are encouraged to do their own research. #Bitcoin #Crypto #Altcoins 𝗧𝗶𝗺𝗲𝘀𝘁𝗮𝗺𝗽𝘀: 00:00 Show Summary & Intro 04:01 Bitget & ByBit Rolex Giveaways 05:20 What Drives This Crypto Pump 07:20 Ethereum Pump & AVAX Trade 09:07 Trading Gala & Metaverse Altcoins 10:50 Massive Week for S&P 500 & DXY 12:40 Japanese Yen Volatility Explained 15:10 S&P 500 Fractal Pattern of 2008 17:20 Crypto Rally Explained 19:20 Harry Yeh Breaks Three Arrows Capital News 21:00 Investing in GTX? 22:59 What is GTX - Pitch Deck & Team 28:00 Who are Kyle Davies and Su Zhu? 32:20 What Went Wrong with Three Arrows Capital 42:53 More Crypto News Today 𝗠𝗼𝗿𝗲 𝗩𝗶𝗱𝗲𝗼𝘀: WATCH THE INTERVIEW WITH HARRY YEH 𝗥𝗲𝗹𝗮𝘁𝗲𝗱 𝗦𝗲𝗮𝗿𝗰𝗵𝗲𝘀: Altcoin News - Bitcoin Price - Bitcoin News - Bitcoin Today - Bitcoin News Today - Crypto News - Crypto Market - Crypto News Today - BTC Price Target - Crypto Man Ran - Ran Neuner - Decentralized leverage trading - Banter - Banter Crypto - Crypto Banter - Crypto Banter Today - Crypto Banter YouTube - Crypto Banter Live - 3 Arrows Capital - Three Arrows Capital - 3AC - Controversial Crypto Project - Kyle Davies - Su Zhu - GTX - Investing in GTX - Crypto Pump - Harry Yeh


It looks like we may be prepping for the next leg up. If you look at the Bitcoin chart, we had Bitcoin at about 21,400. In this show I'm going to show you one or two indicators that you haven't seen before. I promise you that you haven't seen them before and they are really, really, really positive indicators. One of them has got to do with the S&P. The other one has got to do with Bitcoin. And I've got one extra indicator which actually shows you that institutions are the ones that are driving this pump and not the retail investor. And if that's the case, then that may mean that there's a whole lot of money coming into crypto also I want to talk about that over there the elephant in the room and the question is should I invest in the new venture that Carl and Suzu from three arrows capital are going to be launching and I know initially your answer is absolutely not what the hell are you thinking but I don't know I want to show you one or two things that I've seen that maybe change your mind maybe you should invest that's what we're gonna talk about today all right here wake you wake you rise and shine it is 21,378 on the Bitcoin price I think that we may be seeing another leg up I'll show you why I think we may be seeing another leg up we've got a huge show today we can talk about Bitcoin we're gonna talk about Esterium and talk about a whole lot of other altcoins that are actually running we're gonna look at Suzu and Carl's new venture which they initially called GTX and decide whether it's a good investment idea or a bad investment idea to invest in GTX. Yeah, I mean, that's pretty much what we're going to do on the show today. It's going to be a very, very fast, very, very high alpha filter, because remember, we promised to bring you the highest alpha crypto show on the entire internet. That's what we promise you. What you're going to do is very simple.

You need to subscribe to the channel. I don't know if you saw that, but today we're on 596,000 subscribers, which means that our channel is one of the only channels that is actually growing in the bear market, thanks to you guys. But then I need your help again. And the reason why I need your help again is because again, we are shadow banned, the only thing that gets us out of the shadow ban, and you would have noticed that we're shadow banned. Because you would have seen that you don't actually get notifications for the show anymore. And the reason why I don't get notifications is because YouTube is thinking to itself, we don't want to circulate this content. So I need you to help me. I need you to smash the the like button! Subscribe, give us love if you know what we're doing in the comments, we are going to talk about gala games, we are going to talk about GTX, I see you guys in the thing, we are going to talk about Al Capo who's salty, I see all of you, I see B Love to God, I see Benny, I see Angelo, I see Charles, I see Riccardo and Younes, I see you too. I see everybody here, so let's do this we can have some fun here today. Remember if, I mean I know you haven't forgotten, but I've loaded up my BitSc Baseballoph Warnock ready to take trades. And you can see bank, Bitcoin is now over 41,451.

I've got money in the account, ready to take some trades. Why? Because we are giving away the two Rolexes. That's the Bybit Rolex. That's the BitGet Rolex. Now, I want to just talk to you about something. So we got the watches. The watches are here. You've seen them. That's the one. By the way, I love this one. This one's a bit more classic.

It's the classic Submariner. I love it. We are giving the black one away to a BitGet user and the blue and gold one away to a Bybit user. Every time you trade between now and the end of Feb, you get a point. Each one of them is entering for the competition. The more you trade, the more you can win, the more you chances of winning. And if you want a chance to win, one of each of the Rolexes is open a Bybit account and a BitGet account. But here's the elephant in the room. I noticed that Sheldon Show, the people that are watching Sheldon Show, are signing up for the promotion much quicker than people from my show, which upsets me a lot. I thought you guys wanted to win the Rolex. So let's show Sheldon show people to watch Sheldon show. Let's show them that we can also do it.

Sign up a buy, but sign up a bit kit. If you're already signed up with one of our referral links and you don't have to sign up again, it all works and every trade that you do gets you into the competition. All right, that's it. I promised you guys that I wouldn't talk a lot. Let's quickly look at the market. There we go. I said to you, as we started the show, I said to you, I think Bitcoin's ready for another leg up, here it is. 21,450 coming down slightly. I'm going to show you why this pump is actually driven by institutions and not by retail. And if it is institutional money, then it could be much bigger than we think. I'm also going to show you one indicator that may be a huge indicator that the worst is over, and I think you're going to love it. So let's quickly look at the Bitcoin chart.

If you look at the chart, we are facing major resistance at the moment, which is actually no surprise. So let's look at where the resistance is. It's that resistance over there. Sorry, my line is slightly sku here, but just raise it slightly, and raise that line over there. This is a big resistance level, and you know why this is a big resistance level? Because you gotta look at where this resistance actually came from. And this resistance, if you look at it carefully, actually came from here, what happened on the 5th of November. Well, this was the FTX collapse. So this is the resistance to go about the FTX collapse. Now, I was quite surprised when Bitcoin went over the 200 day moving average in one shot. That was super surprising. I thought that, as Ivan said, the opponent would make us fight harder.

But right now, it looks like we may smash this pre-FTX level, which I'd be surprised if Bitcoin broke both levels. If Bitcoin breaks both levels, then for me, this is confirmation that we're game on. But there are still people who hate this pump. There are still people who are calling it down. The GMX long short ratio, the longs are six times the shorts now. And you cannot go long on GMX anymore. So that's a big one. Tashlab says, for the first time in two months, my market breadth indicator is overbought. So she's saying the crypto market is overbought. But what you can see is that generally, when her market breadth indicator says overbought, it could be a long time where it's overbought before it actually dumps. Now, it's just the first overbought market indicator. You see that?

So it could be a long way to go before the market actually comes down. Let's jump to the ETH chart. ETH also broke through or sliced through this 200-day moving average like butter. It was like as if the 200-day moving average didn't exist. It was like a poor opponent, if you want to call it that. ETH now almost touching $1,600. The reason why I'm talking about ETH is if you believe that this pump will last, if you believe that this pump is real, if you do, then you could be saying that since Bitcoin and ETH have broken through the 200-day moving average, that the next altcoins will also start breaking up of the 200-day moving average. So you want to talk about altcoins? Holy shit, let's address the elephant in the room because now I'm really down off this green candle. So my trade on barbit probably down about $12,000 now. As I said, I'm not too worried about this trade. And the reason I'm not too worried about this trade is because as I said, my portfolio has huge gains in the last couple of days, and this is my only losing trade.

I am going to try get out of it because I don't like being in trades that are against what I believe in the market. And right now, I'm super bullish. So I don't want to be super bullish and be taking a bearish trade. So I'm kind of looking for the opportunity to get out. I think there will be a pullback when the pullback comes. I'm cutting that short because fundamentally, I do believe that Avax is good. I bought it. I shorted it because I just thought that had run too fast, and then the market turned against me. Let's jump into some other altcoins. So we've got, you know, I think this guy's right. He says, look, if you are bullish about altcoins, you can kind of see where we are. He says, look, I wouldn't rush in too long any new positions thinking you're out of time, but maybe I'm just a dumb trader with way too much PTSD.

But I mean, that is perspective on how much we've recovered. Okay, this is perspective on how much we've recovered. So let's look at it. Let's look at some of the other altcoins. So the first altcoin I think we need to look at is Gala. Gala up again. Gala has been absolutely amazing this year. So look at Gala. If you look at what day is this? This is on the 5th of Jan. So 5th of Jan, 7th of Jan, which is 10 days ago, Gala was trading at 17 cents. So if you would have invested in Gala at 17 cents, you would have made 215%.

You would have tripled your money. And that is driving up all the metaverse tokens. So Gala is leading all the metaverse tokens. So that is the metaverse index. Now, for those of you who don't know what this metaverse index is, it's called the MVI, the Metaverse Index. And what it is, it's a fund or an index of all the metaverse stocks. you buy the MVI and you get exposure to a whole lot of metaverse stocks. Let's actually see if we can quickly see what these metaverse stocks are. So it's alluvium, axi, sandbox, decentralized, engine, wax, rally, etc. You can see what they are here. And you can see the weightings and whatever else. Now, I'm not saying to you that you should FOMO into this.

But I'm saying that if you don't have time, and you want to get exposure to a whole lot of metaverse tokens, And you don't have time. We don't have the expertise to cherry pick tokens. And this is maybe a good way to get some exposure. And if you look at this tweet over here, you can see that this metaverse index actually just broke up. In fact, Sheldon spotted this and it just broke up. Let's look at some other altcoins. I did look at FTT, FTX. I did say to you guys yesterday, probably worth a short. It was the 265, I think, when we spoke about it on the show yesterday, back down to 228. Long-term, I think this thing's going to zero. I'll show you a few times why. I think this is going to zero.

So for those of you who took the short, well done. Congratulations. Hopefully you took it on gains, which is our partner and one of our sponsors. Let's look at some other charts. So it's a big week for the macro markets, huge week for the macro markets, massive, massive, massive week for macro markets. I'll show you why. First reason why it's a huge week for macro markets is if you look at the S&P on the one day, it's reached a massive support that it started in December 2021. So it's now touching on this massive support. Now, two things can happen here. One, it can break the support and break straight out of it, or it could touch up and be rejected. And the same thing is happening with a NASDAQ. So if you look at the NASDAQ, also about to hitch this massive support.

And then after that, it's either going to go up or down there. But it's a big week for the S&P. And I'll tell you why. I think it's a massive, massive, massive week for the S&P. Something's happening tomorrow. And what's going to happen tomorrow is going to affect the Dixie. So let's look at the Dixie. The Dixie has been collapsing. It's now under 102, which is huge improvement for the Dixie. But something massive is happening tomorrow. And specifically, it's happening in Japan. I spoke about this yesterday, and you can expect huge volatility as a result of what is about to happen tomorrow.

So don't be fooled by this lack of movement in the market. In fact, I think that is why Bitcoin will break out, is breaking out, et cetera, because of what's going to happen in Japan tomorrow. So let's quickly talk about what's happening in Japan tomorrow. OK, so in Japan tomorrow, you can see that there's a lot of volatility in the Japanese yen. And the reason why there's a big volatility in the Japanese yen is because the Bank of Japan adopted this thing called yield curve control. And what they did was they fixed interest rates at zero. They said, look, in Japan, there's no interest rates. End of story. And they did this to try and get economic growth. Now, recently, what's been happening in Japan is that they've been buying, they bought 13 trillion yen in Japanese bonds to hold this yield curve control. Problem is that they can't keep doing it forever. And so tomorrow there's a big meeting.

And in this meeting, they're going to decide if yield curve control remains in place or whether they're going to release this into the market and start having a more open market. Now, when it comes to yield curve control, if they abolish yield curve control, all of a sudden, there's going to be a whole lot of new dollar capital flying around in the market. And if there is a whole lot of new dollar capital flying around the market, let me give an idea. I think Japan has about 15 trillion US dollars or something like that or worth of bonds. Now, if they put those back into the market, all of a sudden, we're going to get a whole lot of liquidity in the market. So this article says actually it says Bitcoin is primarily concerned with the dollar liquidity conditions, rate of change and the quantity of money in circulation. This will be positively affected if we get the QE in Japan and likely lead to an up only again for risk assets in Japan. So this is happening tomorrow. We've got to keep our eyes on the Dixie, which is this chart. Someone says everything's damping. Wow. OK.

Everything's pumping. The only one that's not dumping is the one that I'm short. Dump, baby. Dump. Go down. Go down. Come on. Come on. I see you. I see you. Go down. I see you.

OK. We'll go back there. All right. So that's that's what's happening tomorrow in Japan. Then we have another big indicator which shows us that maybe, maybe, maybe the worst is over. And I want to show you the indicator first. And then we'll talk about it. So this here is the indicator. And what you can see here is this is a fractal of the S&P in yellow in the 2008 crash and the 2022 crash. So this is the way up and this is the way down. Now, lots of people, including Michael Barry from the Big Short, said that the S&P is following the same fractal or the same pattern that it was following in 2008. And they said that if this happens, what you could see that there would be another very big leg down from here.

In fact, it would have been something like a 30 percent down from here. But what happened recently is that the current S&P decoupled from the pattern of 2008. And this is big because this could mean that people like Michael Barry actually change their thesis. They may turn around and change their thesis and say, you know, if this is the case, then we're actually we're actually maybe bullish. You can see that there's a massive divergence here between what happened in 2008 and what is happening right now. So you can see that over there. And I think that the Bank of Japan decision tomorrow might have a lot to do with it. I think the fact that inflation is done might have a lot to do it. I'm fine. I'm fine on my own expression. I told you let the markets continue to go up and I'll be the happiest guy in the world. Believe me.

We're also getting I saw Kramer. I saw Kramer came onto the market and he did. He said this, you see, this is the only thing that worries me is that Kramer has said that he's bullish. He's seeing bullish. He sees bullish signs emerging in the stock market. I would have been completely, completely comfortable until I saw this, which which is like that's that's that's that's it. Let's see someone saying my short guys. Don't worry about my short. I'm fine. Even if I lose the ten thousand dollars, I promise you I'm 100 percent going to be fine. All right. Let's get into the crypto into the crypto rally.

That's what you guys are here for. I see we still shadow band. Help, help, help. Come on, guys. Smash that like button. All right. Let's go. Let's go to this rally. Yesterday, we saw a whole lot of USDC being printed. I saw two transactions, which was about a billion dollars or 750 million dollars worth of USDC being printed. That was the first one. And then that was the second one.

And then what we also seeing right now is that the OTC desk balances of Bitcoin are actually going up. Now, who's buying OTC? It's institutions that are buying OTC. Retail is not really buying OTC. And if we see such a big increase in the institutional holdings of Bitcoin, sorry, in the OTC holdings of Bitcoin, over the counter holdings of Bitcoin, it means that there's some institutional driven volatility in the market. So you can see that this I mean, the last time this happened was when when Luna collapsed. The time before that, yeah, when Luna collapsed and stuff like that. So you can see that this is actually being driven by institutions. There's another indicator, which is kind of showing exactly the same thing. And it's showing that the average trade size specifically on Binance is going up, which means that it's not the small shrimps that are driving this. It's actually slightly bigger investors that are driving this. And then there's one more indicator, which is worth looking at.

And that is that people that hold one Bitcoin is fast approaching a $1 million mark. So imagine that's like one million addresses hold at least one Bitcoin. It really is going to start putting a supply shock on Bitcoin. So that's something we should keep our eyes open for. Let's check you guys out. You guys are making me paranoid around my short check. Just chill. I'm fine. Let's move on. All right. Let's get into the story that I want to talk to you guys about. And that's the story over there.

Over there. See, I don't know where the screen is. And that's what happened yesterday on the show. I don't know if you were watching our show yesterday. We did post it on our TikTok. I want to show to you the guys for those of people who weren't here.

With that Kyle and Sue, it's actually true. It is true. Yes.

Hold on. That's them. Wow. Would you support them? Would you invest?

I'm an advisor.

Wow. I mean, this is getting crazy. These guys blew up billions of the money that they had. They were completely, completely over leveraged. Then they went into like hiding, I suppose. It's not like they were going 10X.

They were collateralized leverage.

Look, even we got affected. I'm blown away that Suzu and Kyle Davies are raising cash. And I didn't even know that Harry even knew about this. And I found out that he's an advisor on the show. We've got to do more digging and we've got to find out what's going on with this exchange. So that was the news. It broke yesterday while we were live. So it was one of those news items that we were like, wow, that's happened while we were live. So that's the news. The news is that Kyle Davies and Suzu, the two founders behind Three Arrow's Capital. And I think let's talk about Three Arrow's Capital and what it means. So, Three Arrow's Capital was a hedge fund, but it wasn't a hedge fund that took client money.

It was a hedge fund that only had proprietary money belonging to Kyle, Suzu and their families. That's it. It didn't take any customer money. never used or never co-mingled faster money. They went down and they filed for bankruptcy. They filed for, I think, chapter 15 bankruptcy. And yesterday, there was news that the founders, Suzu and Carl Davies, and two founders of CoinFlex have launched a new project called GTX, which is raising a seed fund of 25 million to trade claims from creditors. And initially, there was a lot of pushback on Twitter. I mean, I just got you guys some of the stuff. This is, I think, one of the founders of Wintermute. And he says, since we're talking about cansting stuff, if you are investing in CoinFlex Three Arrows Capital Exchange, you might find it a bit more difficult to work with Wintermute in the future on the relationship building side. So they're almost like saying that if you invest in these guys, we're out.

Then, I mean, Kantrin Clark says, how are they going to operate from GTX from jail? Also a question for Suzu and Carl, what is your go-to phone battery backup since most of your work will be on the run? Any suggestions for overnight stay luggage? So you can see lots of hate coming in. And naturally, Nick Carter says, GTX arsonist returning to the scene of the crime, walking buckets of water to their victims. So, I mean, it's controversial. As Scott Melker said, imagine watching FTX fail after seeing your own company fail, and then choosing to try to launch an exchange and name it GTX, which is one single letter from being FTX. Whoever's running the simulation loves trolling us. Okay, so that's him. Then after he's chimed in, he said, take note, SPF, if these mappers can raise 25 million by changing FTX to GTX, imagine what you could do by changing FTX to ZTX. So you might even be able to pay all your customers back. And then someone says, it's 2023.

Yep, you cannot post your stolen FTX collateral as collateral here at GTX. It's 2025. Yep, you can post your stolen GTX assets as collateral and HTX. And he goes on and on and on. So Twitter didn't like this. And initially, when I heard it, I was like, what the hell? Like, these guys raising money again. But then I got the deck. Here's the deck. Here's the pitch deck. And I read through the pitch deck. Okay.

So I read through the pitch deck. What is GTX? GTX is a public marketplace. It's an exchange. It's a public, sounds like a centralized marketplace. Where initially, you will be able to trade claims. After that, you will be able to trade crypto. After that, you'll be able to trade stocks and lending, and on the fourth one, after that, you'll be able to trade forex and a whole lot of other things. So it's really, what it is, it's a trading platform. Instead of starting with crypto, They're starting with a whole lot of claims, and the reason why they're starting with claims is because they're saying that right now, the current process of buying and setting claims on competitive platforms is clunky, expensive, and impossible for small claim holders. Customers are looking to diversify, exchange risk post FTX. Distress funds can't obtain the size of claim they're looking for.

Claimants will be stuck with illiquid lock debt, which they would like to unleash. On the other side, there's a whole lot of buyers who might want to be buying all these claims. They're saying the solution is GTX. What GTX will do is allow people to unlock FTX, Celsius, BlockFi, Mt. Gox claims, and a whole lot more. Once they've done that, they will then be able to trade cryptos. They're saying, look, let's onboard a whole lot of clients who have claims. There's a whole lot of FTX clients, Celsius clients, Voyager clients that all have claims, use that as the customer acquisition strategy, and then add crypto, stocks, lending, et cetera. Let's look at, they say the market claim size is now $20 billion in market claims, which can be bought and sold, which is probably true. In terms of competitors, there's one competitor or two competitors, X claims and claims market, we've spoken about these. And they said that they have a team of 60 developers with 10 years of experience operating a crypto exchange. Could that be some of the FTX people who's developing, who's the team, Carl Davies, Suzu, Mark Lamb from CoinFlex.

Now, CoinFlex is the company that fought with Roger Ver, and I think they went into liquidation. I'm not sure if they went into liquidation. So I got this deck. I look at the deck, and I'm thinking to myself, would I or should I even contemplate investing behind Carl and Suzu? And naturally, of course, the answer is no, obviously not. These guys are fraudsters. These guys went down, these guys collapsed. But then I thought back to first principles, and I thought, Hold on a second. There's nothing more dangerous than an entrepreneur who's learned to lesson. And in fact, the truth is, I would rather back an entrepreneur that has failed and learn something than an entrepreneur who's just been successful, because generally, you find that you learn a lot from failure, and that success actually just brings breeds overconfidence and stuff like that. And so I thought, Okay, let me just take a deeper look. And I'm not saying I am going to invest.

In fact, I have got a call with them tomorrow and I think maybe you guys can help me decide whether it's worth even discussing an investment with them. So I started digging into them and comparing them to what happened and just deciding, you know, are these actually really good people? I know that, as I said, the, the current perception on Twitter is don't touch these people. In fact, when I look at tweets like this, I'll show you, this is a tweet by a friend of mine, Gollum, and he says, overview of GTX with commentary, an exchange by failed hedge fund founders, 3AC, Carl Davies, and Suzu, along with founders, momentum six, blah, blah, blah, blah. He says claims market started by mainly by 3AC, which is ironic because they were the ones who took down, they went down because of Luna and all the related collapses, they took down Celsius, BlockFi, and Voyager as a result. And you could probably argue that all those collapses actually led to the, to the fall of FTX, so they were at the center of this whole thing, but they did, they didn't cause the Luna collapse, which, which is the one that wiped them out, she said, roadmap is basically the opposite of what was done before. They are learning fast and I'm already drooling, financial transparency. No, knows how to hide better than anyone. So doing the opposite is a win. Liquidity knows how to crunch it. Certainty, certain about the super cycle, lots of words on this one, hard to process it a bit, but he says, yeah, breed user loyalty and community sticks out to me, nothing says a community like liquidations. So he's like, he's taking the piss out of it.

At the end of the day, obviously he says, no, thank you. Okay. So generally the, the, the, the, the consensus is not to invest. But then ask myself a question. What did these guys actually do wrong? They weren't fraudsters. As far as I know, they, they, they, there's no fraud cases against them. And in fact, I managed to dig up a, um, uh, uh, a video of an interview. At the minute, I think it's worth listening to, to, to a couple of parts of this video. So for the first part that I want you guys to listen to is this.

Try is it in the market. There are other firms out there that, that did borrow from retail and probably didn't make the right disclosures to them did take aggressive risk management. And they, I mean, we've had six months since our liquidation. We have no regulatory action anywhere in the world. Um, there are others that have had, uh, you know, liquidations in the past couple of weeks that have lost its already in regulatory actions already. Right? Even potential criminal stuff in the case of FTX. Right.

So, um, so yeah, you haven't, you haven't. Okay. So, for six months, there's been no fraud charges brought against them. So I think, I'm assuming that there's, that they're not involved in fraud and if they're not involved in fraud, well, then we should look at at some of the other parts of the case here. First thing is, who are they? They are friends that went to college together. Carl and Suzu are friends that went to college together. And then there were traders that created Suisse. There were Ash 2012. They started a company with I think they said 1.2 million dollars of their own capital. They managed to grow that 1.2 million dollars of their own capital into billions of dollars. And in fact, if you read Wikipedia, I mean, I don't know where to get more accurate information.

They said they managed about $10 billion of cryptocurrency assets, a lot of them which were around collateralized and uncorricularized loans. But be that as it may, they managed to build $1.2 million into billions of dollars. They managed to get a seat at the table with the biggest banks and the biggest funds, and they managed to build a portfolio which was in the billions of dollars. Even though it was collateralized. I want to just play you one or two parts of this interview. I want you to notice the look on the interviewer's face when Karl talks about the returns that

their fund was actually making, their fund in the early days, their FX fund. So when was the kind of the first proper calendar year as a hedge fund with no coins?

That would be 13, 14, when would that be? So we started in November 2012, and so I guess the full year of 2013 would have been the

first year. Okay. And I've not heard mentioned, what were those annual returns like when you were doing your

FX arbitrage? Oh, first year I think was 250%, something like that. Second year was 500%. No down months at all. Actually very few down weeks period. It was an arbitrage book. What's your face?

What's your face?

Yeah, so no down months and between 200 and 500% returns trading FX. So they were very smart guys and they did get good returns. Where did it all actually go wrong? Well, let's go forward and you can hear for yourself where it actually went wrong. It went wrong when they started taking leverage to trade the GBTC premium. So they would borrow USD to buy Bitcoin in the GBTC trust because it was trading at a

huge discount. The way we thought about our book is we had a lot of spread trades. For example, if I trade spot versus futures, that is not a directional trade per se. Obviously it does better in certain market conditions, but you buy Bitcoin and then you sell a Bitcoin future. If the market goes up, they move together. Kind of the same thing goes with borrowed Bitcoin for the trust. You borrow Bitcoin, you invest in the trust, you sell the shares, you return the Bitcoin. So again, it's like market neutral. It does well in certain circumstances like you can test it through a VAR model, all that good stuff. VAR is not going to teach you anything about this because it's too new of a market and I don't know how like the premium would fit into VAR, but there are some ways you can think about it. And that's how we kind of conceptualized it. But then over time, the thing is, like I said, it was a credit boom bust cycle.

At first, it was very hard for me to get like 10 million to borrow. But then over time, the grayscale was the name of the trust. There was an affiliate group called Genesis, both owned by DCG, the same parent company. And Genesis's job was to provide financing. So they did lots of borrowing lending. They had an OTC group as well for spot trading, but basically borrowing lending.

And they worked together to lend to invest in the trust. So DCG actually enabled them to take more and more leverage to invest in their trust. And that's kind of where the whole thing went wrong. Genesis, which was owned by DCG, was learning these guys money to invest in the trust buying

Bitcoin at a discount. And because of this business model, they would go out and say, we understand the trade you're doing. We're going to lend you a lot more than what we did before, hundreds of millions, right? At the end, billions. And it wasn't just that. There were other groups that came up because the borrow rates were high, because their spot futures was trading in the 20 to 30% range, and the grayscale premiums are trading in the 30 plus percent range. There are lots of firms that just pop up out of nowhere to be able to provide more borrow.

And that Celsius, Voyager, BlockFi. So these guys started to lend these guys money to invest it in the grayscale Bitcoin trust. Then what they started to do was they started to buy tokens from layer ones. And I want you to hear this because you need to question your layer one and decide whether your layer one was actually involved in this.

Listen to this. And so just to give you, I'll just finish this and then we can talk, but the idea of a layer one is protocols like Avalanche, Solana, Ethereum competitors, let's say, they raise money in an ICO. They have a lot of their token in their own treasury and they want to diversify it. So they would sell it to groups like me at a big discount, 40 to 50% discount. But with vesting, three to four years, something like that, maybe two years, that's unhedgable risk. There's no future. There's no liquidity to hedge this. You can't borrow that amount. It's just a risk you take. And it still seems like a good trade, right? Like if you believe the market's going up, if you believe in this protocol, if you believe that they can take those dollars and do marketing or build their platform or hire more people and build value, then it looks like a very attractive trade. And so for us, we found several protocols that we liked.

We did very sizable amounts with them and that became another source. Another source. There's layer ones pre-selling their tokens with long unlocks to these guys. All right. So then he says, where did it all go wrong? And all went wrong when Luna collapsed. We know what happened when Luna collapsed. The credit market's closed. All the credit just started to call back their money.

A lot of people just made money because the token went up, but probably around $15 billion, which was dollars that went in that that thing got wiped, right? And I don't know. It's hard to say exactly the amounts, but I imagine it's a big number. And that led to a credit squeeze. So for me, it was a hit. I put 200 million in, went up to 600 and then went to zero. So it was a hit, but I was a four plus billion dollar fund. So like it wasn't an enormous hit. The hit came when credit got squeezed across the system and a lot of Bitcoin, Ethereum, all the layer ones started falling by, you know, 40, 50% each. And all the blenders started recalling again, not a huge problem. We returned to everyone that recalled during that period.

It took a month before we, you know, had to file for liquidation, but the. Okay. So let's talk about what these guys actually did. So what was their mistake? One we know for sure that didn't take any clients money. So they didn't commingle clients money, et cetera. They as far as we know. And again, I don't have the facts, but as far as I know, they didn't commit any fraud. And as he says in the video, six months later, there's been no fraud charges brought against them, no criminal charges brought against them. What did they do? They were too bullish. They took too much leverage.

And as a result of taking too much leverage, when the limited trade unwound and the whole market squeezed the leverage, they couldn't pay back their leverage. And it blew them out of the market. And it left a $2 billion hole in their balance sheet. Question is, were they dishonest? Were they fraudsters? And if I look at all of this, I'm not seeing anywhere where these guys were fraudsters. They made a huge mistake, terrible, terrible mistake. They took way too much leverage. They were overconfident. And as a result, we had huge market implications, which we should blame them for, but we should also blame all the people that gave them all the unleveraged credit for being greedy and just giving them more and more and more credit. He says it himself. He says, if you look, let's just quickly listen to what he says, he says, we didn't have any investors.

It was all our money and our family's money. Listen to this.

You want a hedge fund, you know? Not really, Kurt. The hedge funds have investors, and you have to report to them and you have to tell them all your confessions. And when you mess things up, it is very it can be very humbling.

And you just had, you know, where you don't make money, you know, it's like. We're a partner fund.

They didn't have any investors. In fact, he says here, he says that only people had lost money with them and their family and not actually.

didn't blow up any of investors' funds because they didn't take any investors' funds.

My family lost the most in this, followed by Sue's, followed by our creditor list.

And if he compares it to FTX, he says, look, listen to what they say about FTX. So for him, I mean, he took client deposits from the exchange to the prop trading firm. He was insider trading against them. He was printing money. He didn't even have the coins a lot of the time. You just print them and then short them into people's liquidations or whatever. So to the extent of that fraud, I mean, to me, it sounds like a black swan, but frankly, I agree with you. If we zoomed out to multiple cycles, then you would see this was a credit bubble. Credit bubbles, when they pop, you see who's swimming, naked, right?

And surely there's going to be like one or two frauds in there that... So I mean, let's summarize. So you've got these guys, they were co-founders. They made a lot of money and then they were over leveraged. They got over confident and they lost a lot of money. They were irresponsibly leveraged. They lost everything, or they say they lost everything. And we'll only know that when the liquidation is finished. And right now they're facing liquidators, the liquidators are liquidating and there's a $2 billion shortfall, but they do have some assets. And they're trying to obviously match the assets or trying to maximize what they get for the assets. Meanwhile, these guys are trying to rebuild and they're trying to build something. The question is, are these guys investable?

On the one hand, they were completely irresponsible. They showed no understanding of risk management whatsoever. They were so irresponsible that they almost took down an entire industry because they took so much leverage. They had no risk management systems. On the other hand, they did achieve huge returns through this leverage. They did take a whole lot of smart bets, and it was the lack of risk management that let them down. They didn't lie to lenders. They said they didn't. Look, maybe, as far as I know, from what I'm reading, they didn't really lie to lenders. Lenders knew exactly what they were giving them money for because lenders felt safe because they were going into the DCG trade. So on the one hand, you've got a bunch of people which were bad risk managers, which caused a whole market collapse because of their bad risk management, and that affected millions of retail investors, which got hurt. Now, on the other hand, you've got entrepreneurs who are quite smart, were once successful, and have been humbled, and hopefully have learned a huge lesson.

Now, the question is, are those type of entrepreneurs actually backable again? I believe that backing someone who's failed is a great strategy, especially if you think that they're gonna succeed. We also saw people like Andreessen, recently invest in Adam Newman from WeWork. Now, you'll remember that he had a very similar story where he built a company, and through his mismanagement and negligence and whatever else, he blew himself up. Yet, a couple of months later, or a couple of years later, A16Z, which is one of the biggest funds in the world, backed him again, and didn't only back him again, they backed him with the biggest check ever. So tomorrow, I have a call with these guys. And the reason why I made a call with these guys, not because I'm saying I'm gonna invest, but because I want to hear more. I just wanna hear what they're doing, and I wanna understand whether these are backable entrepreneurs that have failed before, and have been humbled, and have learned a lesson, or whether these guys are still the same cowboys that have poor risk management, poor financial systems. And I mean, I guess that we can't really dispute that these guys were pretty smart, because people who started a business with a capital of $1.2 million, and then a couple of years later, have billions of dollars, may be pretty smart. So what am I doing right now? I just wanna hear more. Let me know what you think.

Let me know whether you think it's worth hearing more, and let me know if you would invest. Let me know in the comments below. In the meantime, I do see that people are saying that there's a massive green candle on Avax. Yo, we, there is a massive green candle on Avax. Is there a massive green candle on Bitcoin as well? Or ETH? No, it's just Avax. It'll come back. It always does. I hope so. I hope it does. If not, great, because all my other, the rest of my trades are going very, very, very, very well.

Let's look at some other things that are happening in the market. Silver Gate, they reported losses of a billion. A lot of people are watching Silver Gate Bank. Let's quickly go and look at Silver Gate Bank. I think it was on my watch list. Up 16% after their results. I mean, this could be a bank that has turned the corner. I kept saying to you guys, at some point, I think Silver Gate's gonna turn. Maybe it has also seen a bottom. Maybe it has also seen a bottom. Again, a lot of people are worried because this may be linked to FTX, et cetera. You've got this 29% of millennials in America already own Bitcoin.

I mean, on the one hand, that's great adoption. On the other hand, that does show that you're no longer early. Like when one third of American millennials already own Bitcoin, that means that you're no longer early. So, I mean, you go look at both sides of the coin. Then you've got GMX, again, look at their fees. This is what happens when there's a little bit of volatility and people actually start to trade again. You see the platforms start to make huge fees. You can see that yesterday, they did $300,000 worth of fees. Last seven days, $563,000 worth of fees. So that's quite big. Optimism, a lot of activity on optimism. I've been watching the token price of optimism.

I don't like the tokenomics. I don't like tokenomics, but I said, let's have a look here. The price of optimism has been going up and up and up. So, let's just have a look at this. Oh, man. Okay, I think it's frozen, but let's just see if I can get another chart here. So this is the last 90 days. Optimism has doubled in the last couple of days. Last two weeks, optimism has doubled. And there's a lot of activity on optimism. A lot of people are very positive on it. I saw this, I mean to think that Sam was a vegan and they ordered nearly $7 million worth of food in nine months.

I mean, how expensive is vegan food? James, you were a vegan, weren't you? It's cheaper, I don't understand how they spend $7 million worth of food. $7 million on food. I don't understand it. I really don't understand it. So someone says here, it's the banter fam counter-trading me. Are you guys trying to short squeeze me out? Is that what's going on here? Is that what's going on here? Is that what's going on here? Okay, I'm comfortable.

I'm comfortable because I'm expecting some kind of pullback soon and then I'll dump this the Shorts at some point. As I said though, I'm not too worried about the Shorts. The reason I'm not too worried about the Short is because if this goes up it means all the other alts are going up. And I've got so many other alts that a small loss here is not going to hurt me in the big scheme of things on the rest of the portfolio. And also not every trade is a winning trade. What else is there? Jump exiting their LIDO position, it looks like it. I wonder why, because there is a big narrative around LIDO. And I did see, oh, here, by the way, we're talking about KOTI. The JED stablecoin launches around the 23rd of January. So I was watching this price earlier just to see... It also, I think, doubled.

So now it's 50% up. It is climbing pretty steadily. So I wonder if this has got something to do with it. Yeah, I wonder if it's going to do this. Anyway, I will see you guys again tomorrow. Until then, have fun, trade well, and listen, going into the Rolex competition. Remember, you can just go to any crypto banter video. Until then, go to the link below. Sign up with the buy a bit link or the bit get link. Here we go. Here it is. You can see it.

Sign up with buy a bit, sign up on bit get. Yeah, someone says here, I love your show, but please don't promote scammers. I'm not promoting anyone. I'm not paid to promote anyone. All I'm saying is I'm not riding them off. I'm definitely going to have a phone call with them. I want to hear more. That's it. That's all I'm saying. I'm not investing. If I am investing, I will let you guys know. But for now, I'm just listening.

And the reason why I'm listening is because I think there's nothing more dangerous than an entrepreneur who's smart, humbled, learned to listen and got a point to prove. And again, I say this only when I say this only, only, only, only. When if there's no fraud and if they didn't misrepresent their investors, and if they there was fraud and if they did misrepresent their investors, if that's the case and I think these guys must land up in jail. But if that's not the case, then I do want to hear more. That's what I'm saying. That's all I'm saying. Someone says, let's keep One Rolex in South Africa. Let's keep one role in South Africa. I wish you could control it, but it's not me. It's the exchanges you guys need to trade. The more you trade, the more you trade, the more interest you get. Until then, yeah, people stay here.

Banter became stronger after the lunar crash. No more shill since we have been a lot more sensitive since the lunar crash. We really have. Too early to know about fraud? I think it's six months. I think in six months, I mean, if you think about SPF, the fraud charges came about one month after he has liquidation. These guys are six months. Yeah, so let's see. Cool, I think that's it. Sign up for the promo. I'll see you guys again tomorrow. Until then, have fun.

Trade well, my friends. James, your opinion is the only opinion that counts. And you're not asked counts. That's fucking short of mine, which is getting killed. Cheapers.