foreign casting live late at night from Toronto Ontario I'm here in town for the Bri's annual Summit I was invited to speak and I'll be speaking tomorrow but as many of you notice uh that there's a lot of stuff going on right now in the markets and uh you know everything's kind of a unique place and so I figured I'd make a video before I went to bed even though it's quite late here it's almost one o'clock in the morning it's about 12 30 of what we know what's going on so uh FTX is a major Financial player and they do a little bit of everything a little bit of the money transmission stuff a little bit of the market making stuff a little bit the trading stuff uh and they were led by uh Sam Brinkman feed and uh SPF as we all call them in the industry was recently going on a tycoon search throughout this year uh he made or attempted to make many high-profile Acquisitions like the Voyager acquisition for example now uh Sam on paper apparently was worth quite a bit of money it was a Deca billionaire uh so technically had assets over 10 billion dollars and the books of uh his organizations cumulatively were over that much as well uh it looks like what's occurred is that FTX was through a series of transitive relationships closer to what occurred with Luna than people led on so uh Luna as many of you know when it collapsed created a cascading series of failures for things like three arrows Capital uh and uh others and it's created an enormous amount of instability in the market that the market is still attempting to digest uh there's an asset called Alameda that had a relationship with FTX and that asset apparently got a bit too much value and it's created a liquidity problem for Sam's Empire uh and it may be the case that and more will be discovered soon that he's insolvent and as a result requires a bailout for acquisition basically a shotgun wedding to continue operations and if it doesn't get that bailout that there's a good possibility that uh his uh FTX will go out of business it'll get liquidated um much in these things tends to get discovered so binance has made an offer they've signed a non-binding letter of intent based upon due diligence and as due diligence is done oftentimes things are discovered in uncomfortable things especially the relationship financially speaking of the founders to the entities as well as how funds were used and how much risk exists within the entities there is a non-zero probability that the acquisition proposal that binance is put on the table to bail out FTX to acquire it will not succeed because it will fail due diligence this is often the case in many distressed assets that when people look at them they discover that they're far more distressed than they thought if that's the case because of the size and scale of FTX it's very likely that that will Cascade through the cryptocurrency market now my firm we had no involvement exposure or connection to any of these things so we didn't lose any money um cardano doesn't have any gaps or defy that really touched anything related to the Luna ecosystem or the yield products that were very popular but highly unstable in the ethereum ecosystem so effectively speaking this does not directly impact the cardano ecosystem but as members of the broader cryptocurrency space this will likely cause issues for all of us uh in particular there is the case that uh SP that FTX has been lobbying very heavily in Washington DC their failure uh could change the political landscape in unpredictable ways it was my belief and that a red wave would occur today and in early indications of the election are that that is the case with just to the magnitude of it and based upon that magnitude it was my belief that legislation would pass that would be inspired from things like the statnow proposal from the U.S Senate things like the financial Innovation act and so forth um the issues here are that should we see more systemic failures there could be a belief for more regulatory scrutiny or more Draconian laws to be passed to enable that scrutiny the failure of FDX could result in that which could in turn more badly damage the industry and in many cases offshore the American cryptocurrency industry so this is not a minor event this could become a very significant event and it's the last in a series of failures that we saw started by Luna uh Luna led to Celsius and other such things and now we're here it's just an example of the excesses that I repeatedly warned people about in 2021 and all throughout this year in part prior points in my career like in 2017 with Ico Mania you don't get something for nothing an extremely high yields tend to evaporate very quickly and this is no different from that just because the asset classes change and because we use new and emerging technology in no way shape or form somehow indemnifies us from the risk that this new technology has and yet for some reason Financial Engineers entrepreneurs and startups seem to think that this time will be different there is no substitute for hard work there is no substitute for discipline and every month building and creating utility and getting real adoption the tech stocks are another example of this majority of tech stocks the United States and abroad are significantly down in some cases many are over 90 percent down which is quite sad given that they had enormous valuations just a few months ago in some cases and so the crypto industry is just a microcosm of a macro Trend that we've seen over the last few years of rampant asset inflation so it's hard to know what's going to happen next if the binance acquisition goes through there is a possibility that the markets could stabilize and that things will look good or at least call and we can move on and continue to heal as we were doing before this event if the acquisition fails there is a possibility that a series of cascading failures will occur and because of a lack of transparency it is very difficult to know how deep these tentacles go and it's entirely possible that other firms that were Reliant upon FTX could also fail similar to a 2008 financial crisis style event after the fail of Lehman Brothers and the threat of the failure of AIG so I just wanted to make a video to kind of fill you guys in with what I know which is currently not much I'm hearing tons of different rumors and speculations and so forth but unfortunately we're too far removed from this but I figured I'd make a video on current affairs and just let you know that things are definitely coming things are definitely happening I and this is going to be a very transformational week or at least next 10 days for the cryptocurrency industry uh and it's another indication that we need to do things a little differently and we need to think about things a little differently both as participants hopefully the stream is back I hope everybody hope everybody can hear me can you guys see me can you guys hear me okay um uh the laptop went dead and had to plug it in it said it had 100 battery and then suddenly it went to five percent and died uh so as I was saying uh we have a situation where uh cascading failure could occur in the markets uh and it's unclear um How likely that scenario is it just is based upon the level of transitivity of connections leverage debt and other factors with FTX and if fftx gets a bailout or not um now this might be isolated to certain asset classes and it may be isolated to a certain financial institutions that trade and deal with crypto but it's certainly in the short term could have a significant impact on cryptocurrencies in terms of Market stability and predictability so a lot of volatility could come uh now uh we will know a lot more this week and next week as uh due diligence is done and if Finance chooses to go to the next level and go from a non-binding to a binding acquisition offer as well as some more forensic accounting is done on how bad the situation really is at FTX and the level of insolvency they have and how their assets have been moving around and uh what the accounting tells us uh this will likely not be public knowledge for some time but we'll probably get exposed either through a bankruptcy process a class action lawsuit or an acquisition process or regulatory event or all of those above from our part as I've mentioned before cardano stayed out of all of this wild west defy as an ecosystem so there's nothing directly touching FTX in fact it's a bit of a dark comedy but FTX actually refused to list data for some reason so it's not even on that Exchange okay um but we've witnessed a lot of this this year as I mentioned before Luna Celsius uh and uh other ecosystems that have collapsed and created these cascading failures this happens especially in Emerging Markets uh and uh especially in global markets and you just have to deal with them you take the good and you take the bad um we're still strong we're still going to wake up tomorrow and uh you know do our job and build things and there's over a hundred projects that have launched on cardano and they're building and they're strong and a thousand more under construction launching and deploying so that's very exciting to see uh Scott Fest is still going on and just about 10 days the um Switzerland Cardinal Summit is uh still on schedule there's lots of people who are going to attend amas are still going to happen code is still being written members-based organizations still under construction so smooth sailing with respect to project progress the Community Development and the great kpis that we've been achieving for example cardano's consistently in the top two to three for nft issuance and trading cardano continues to grow in terms of technology and there's a lot of great governance improvements and good things to come I wish we were an island I truly do because if we were just to look at cardano there would be nothing but optimism excitement and enthusiasm unfortunately cardano lives embedded within a broader industry that is now being coming having to pay back the price of its excesses the cost of its excesses and so that will on inevitably hit our ecosystem a little bit if anything it'll make it more difficult for the projects building on cardano to get Venture Capital uh it will make it more difficult to get Fortune 500 and government adoption because they're reluctant to adopt cryptocurrency it'll make it more difficult to navigate the regulatory reality of the cryptocurrency space which is already uh very complicated in Mercantile uh excuse me complicated and mercurial very late here I'm sorry and I'm very tired been up for a long time so we're just gonna wake up every day and keep chipping away at it and keep pushing forward and I always try to find ways to keep you guys informed with what I know and also warn you when I see things that are coming that could become problematic I still do believe cryptocurrencies are here to stay I think these are very inconvenient and kind of shitty events and circumstances and we just have to work our way through them together I remember not too long ago that I made a video when Luna collapsed and uh mentioned to the community that we could get through it and things are going to be okay the day of it it's always tough and I imagine there's a lot of people that are heavily invested in those ecosystems FTX and others that are connected to it that are hurting a lot today and I am truly sorry that you feel that pain I wish there's something we could do to help you out you really can't the markets have to work their way through I hope that you can find a way to move on through and realize that the industry itself is still going to be here tomorrow and that the technology of the industry the accomplishments of the industry the things that we're doing are still going to shine bright through all of this in the long term there's a lot of great and wonderful things happening and I'm sure that wiser Minds will prevail in the leaders in this industry especially in the at the fintech side will uh will come together and they'll find ways to uh to ameliorate this situation situation like this as I mentioned do tend to invite litigation they tend to invite regulation and they tend to invite enormous scrutiny and I suspect that that will be enhanced quite a bit should FTX fail um and let me be clear the purchase of FTX by binance is no Silver Bullet there are still many things that have to happen in order for this to be completely cleared from the market and it is not clear the transitive Financial relationships between different firms it is what it is in that respect so overall pretty shitty day and for uh for crypto and uh unfortunately not an unexpected one the good news is there's not many of these players left and there's not much of this rapid speculation left in this respect uh the uh After Effects The Hangover of 2021 is starting to fade a bit and I think this might be the bottom one of the last ones to deal with it's going to be hard to predict how bad it will be and it could certainly potentially be very bad but there's not many more firms that were like FTX or Alameda or like three arrows capital and so forth at least in this cycle I truly do hope that this is the last cycle of this nature I've been through I think seven of them now and they keep getting more complicated and difficult and this was really the first one that involved a heavy amount of institutional structuring when sophisticated Financial engineering gets involved they tend to make fabulous returns but they also tend to fabulously [ __ ] things up because they're really good at that and we saw that in 2008 and we've seen that long-term Capital Management 1998 the SNL crisis in the early 90s Black Shoals crisis in 87 we've seen it a lot and unfortunately it entered our space and when I saw everything get so big in 2021 I realized that at some point uh that Jubilee that would come to an end and now we're witnessing that now um I don't believe for a moment that uh crypto's best days are behind it and we won't see the same economic clout and scale ever come back it will in fact I think we'll Eclipse it in the long term but we have to Eclipse it with users utility and social significance we have to Eclipse it because the 300 million people who are in the ecosystem are in it because they're doing stuff instead of just speculating and too many cryptocurrencies floating around too many instruments floating around unfortunately are still living in that rampant era and that has to stop and it's not going to because it'll either run out of money or regulation will crush it I really hope that wiser Minds can Prevail and I really hope that people can realize that tribalism has to stop I often call for it and um I don't really care what you think about me or say about me but you do have to understand something that we actually are all in the same boat and either we succeed together or fail together there's no middle ground in this respect cryptocurrencies have a small window of time to prove themselves and I get real sad when these types of things happen because we could have done better we should have done better as an industry and every time one of these things occur it's a black guy for us all because consumers regulators and everyday people they don't differentiate the ftxs from the ethereums from the cardanos they just put everything into one bucket crypto and For Better or Worse we have to live with the victories and the failures of the industry as a whole so why then does it make any sense for us to be so tribal and so vicious so I hope that it's a teachable moment and I hope that we as an industry leave this stronger smarter wiser and ultimately more collaborative in that respect so we'll see uh what the next few days look like and we'll see if crisis can be averted or it can be exacerbated as due diligence is done we'll see as they dig what they discover and how bad things really are and certainly a lot of things will be discussed as I said on our part we're just going to show up to work tomorrow and do what we do and cardano ecosystem all the people I've talked into it told me the same thing doesn't impact us too much that's why I tweeted a the turtle you know slow and steady wins the race it's who we are and maybe sometimes chasing blindly chasing tvl is not the best idea in the world maybe sometimes blindly chasing uh high yields in these things leads to disaster food for thought I'm gonna go get some sleep good night everybody
