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COIN TALK is produced in partnership with Medium and hosted by Aaron Lammer and Jay Caspian Kang. Press “Listen to the story” above to play the episode. (You can also subscribe on Apple Podcasts, Google Play, download the MP3, or email us at hi@cointalk.show)

Show Notes

  • Coinbase acqui-hires (then fires) Neutrino, a blockchain analytics firm that previously sold spyware under the name Hacking Team
  • Can you buy a BTC button in Vegas?
  • Cryptopia re-opens and Aaron’s $SUMO bag is still there!

Transcript

Aaron Lammer: I alluded in the introduction to Brian Armstrong’s Medium Apology Tour, which it is an enjoyable tour. It’s nothing like the Jeff Bezo’s Tour deForce by the Enquirer and engaging in the personal lore of the president Medium post, but-

Jay Kang: Are those two comparable?

Aaron Lammer: It’s a good question.

Jay Kang: I guess they’re both on Medium, you’re right.

Aaron Lammer: No, they’re both on Medium. They are different. I feel like there’s the defensive and the offensive Medium post and I appreciate both. I also appreciate all the great non-apology writing on Medium and everything they do, but there is something particular to this age that like, 50 years ago, the CEO would not be apologizing on a personal blog for hiring super hackers to work at a company.

Jay Kang: When did that change? Do you remember the first time you read the head of something writing a lengthy, personal apology on the internet?

Aaron Lammer: It’s a relatively modern phenomenon, I would say. And I’m saying, post social media, it wasn’t immediately social media came out and people were doing it. I think it’s trying to get out in front of things, but it means that the apology is written an a highly personal, almost directly to you tone.

Jay Kang: Somehow, has not been in politics yet because I guess the politicians generally just give press conferences or something, but the only Beto O’Rourke, for example was doing his weird blog after he lost the election, so I don’t know, maybe the … and then of course, there’s the correlator to that in sports, which is The Players’ Tribune, which is where players get to write with the help of some editors, whatever they want.

Jay Kang: I don’t know, I think there’s probably a decent future going forward where this is the main way that big business leaders communicate with the public, because they have full control over it. There’s no writer or reporter who’s editorial icing around it. It’s literally just a block of text that says exactly what they wanna say.

Aaron Lammer: And there’s no comment section, which I think is integral to the product design. I know that you can quote Medium pieces, but there’s not a comment at the bottom of the Brian Armstrong one that’s like, “Fuck you for ruining Satoshi’s vision!”

Jay Kang: Yeah, exactly. Well, I think that you can, actually. You can turn them on, but yeah, people generally don’t. It’s not the type of thing that is conducive to comments, even if comments can exist, if that makes sense.

Aaron Lammer: Absolutely.

Jay Kang: Some things are made for comments, and some things have comments and are kind of hidden.

Aaron Lammer: It’s just funny to imagine all of these CEOs through history, you’ve got Henry Ford like, “I’d like to apologize for sending those Pinkerton detectives to that union camp. That was regrettable. It went against our values here, at Ford.”

Jay Kang: Exactly. “The thing that I will defend, is the use of the Pinkertons to go there, but, listen, we did not-”

Aaron Lammer: “I did not know that the Pinkertons were associated with violence. Upon looking into their past, these guys were involved in some shady stuff and we won’t be hiring them again.”

Jay Kang: Okay, so that’s a good segway, obviously, to, I think the biggest story in crypto over the last couple years, which is something even I noticed in my crypto chamber of isolation, which was that a lot of people were tweeting about Delete Coinbase, and it almost made it outside of the crypto sphere. I saw a lot of mainstream publications writing about it as well. What was your sense of what Delete Coinbase was?

Aaron Lammer: This one was interesting for me because I believe that David Morris, from Breaker was the first person who wrote about it … don’t quote me on that, don’t @ me … but I know that he DMd me when he was writing about it, so it was the rare time that I came across the story before I saw how the audience was gonna take the story. He sent it to me, I think it was right when he published it, or maybe even [crosstalk 00:05:26].

Jay Kang: Are you secretly the editor at large or something, at Breaker Magazine? [crosstalk 00:05:31] Why are they sending you articles before they’re published?

Aaron Lammer: Probably so that … No, it wasn’t before it was published, it was right when it was published.

Jay Kang: Oh, okay, okay, okay. That’s totally different.

Aaron Lammer: Probably so we’d talk about it on the show, which they listen to. Shouts to our friends over at Breaker Mag. Great magazine, writing about stuff like this that isn’t always convenient for crypto, but I think has good journalism. I also know that Matt [Licing 00:05:54], I think, wrote extensively about this, so it’s been a team effort. Basically, what they revealed, was that Coinbase has acquired this company called Neutrino, that is a blockchain analytics company-

Jay Kang: What is a neutrino?

Aaron Lammer: That’s a good question. I think it’s like a subatomic particle of some kind.

Jay Kang: Isn’t it associated most regularly with super hero movies where neutrinos are the things that lead to mass mutations or something like that?

Aaron Lammer: That, I’m not sure about. I think they’re the smallest particles. So people will say, “He made himself infinitely small.”

Jay Kang: Ah, I see.

Aaron Lammer: Like Ant-Man turned into a neutrino or something.

Jay Kang: Neutro a subatomic particle with a mass close to zero and half integral spin, rarely reacting with normal matter. Yeah, okay. So that’s what it is.

Aaron Lammer: Okay. To rewind, Neutrino’s the name of the company, Neutrino’s founding team, there are three executives, were previously part of an organization that I don’t know if it’s formally or informally known as Hacking Team, that solved extremely invasive hacking tools to frequently authoritarian and repressive governments.

Jay Kang: I was a little bit skeptical when I first started reading this, because I felt like maybe it was opposition type research stuff that somebody [inaudible 00:07:27] to doesn’t want Coinbase to do well. Then I read about this company that these guys used to be part of before they started Neutrino and it’s horrible. It’s like the type of thing, where if you’re a journalist … because a lot of the stuff was doing spyware in countries like fucking Sudan to spy on, and then sometimes in those instances, those people got killed. It’s like literal abedding war crime stuff, so I don’t know-

Aaron Lammer: There was a lot of similar stuff that came out earlier this year. It’s a different company, but similar software that was sold to the Mexican government that was very directly being used to spy on journalists’ cell phones. A lot of these tools are basically for hacking telcos and cell phones more or less. These are black hat tools and it’s a weird pull and tug with these things because a lot of this technology is developed by governments. In some cases, these are tools that were developed by governmental agencies that hacked and are being resold to less rich governments with more authoritarian policies because they don’t have the tools to develop their own black hat software. So, it’s a dirty world no matter what vantage point you’re sitting at.

Jay Kang: Yeah, it’s one where it’s very difficult to do the, “Well, that’s how the world works, be an adult and just deal with it,” type of thing because this is definitely in the 1%, I would say, of bad companies. It’s not like something that’s kinda bad that people can focus on the bad things they do and blow it out of proportion, this was a bad company.

Aaron Lammer: There’s a certain person who’s gonna respond to something like this, by like, “Well, that’s nothing compared to what the CIA does,” and it’s like, “Hey, I’m not fan of the CIA either.”

Jay Kang: Yeah, exactly. If the CIA was behind my Bitcoin wallet, I’d be like, “No thank you, I’m gonna go do something else.”

Aaron Lammer: To their credit and discredit, Peter Thiel, who I think is probably a Coinbase investor at some level of shell companies, has made billions and billions of dollars building Palantir, which does things that are not exactly the same, but are, in my opinion, just as dirty. The one that feels weird here, to me, is I feel like spying and invasion of privacy has become normalized in the tech community, but Bitcoin was supposed to be the anecdote to that poison.

Jay Kang: I think that if this had happened in any other community except the crypto community, I think somebody would have probably made a stink about it, but it certainly wouldn’t have reached the height that Delete Coinbase did. I think that what it is, is that … Coinbase has tens of millions of customers, so obviously you don’t wanna make a statement about who their customer base is, but they’re a more vocal and powerful customer base. Clearly, this type of thing is completely anathema to what they believe in, so I think that’s part of the reason why it became a big deal, because there’s literally nothing less crypto than a fucking spyware company that sells out anybody practicing free speech or journalism, or any expression of their first amendment rights, and that sometimes can lead to murder to uphold an oppressed regime. That’s about as anti-crypto as you can get.

Aaron Lammer: Can I pause you here, and say, is this really an anathema to what Coinbase does?

Jay Kang: No, no, not to what Coinbase does, but to what crypto is.

Aaron Lammer: What crypto is. It feels like what Coinbase’s corporate ambitions are increasingly at odds with even lip service, to the stated ideals of crypto. It feels more and more to me like the stated ideals of the crypto movement and the ambitions of Coinbase have almost no overlap.

Jay Kang: Explain. I don’t disagree with you, but I wanna hear this.

Aaron Lammer: I’m gonna read from Brian Armstrong’s message after he let the members of Neutrino, who were previously part of the hacking team go. He says, “Until recently, we worked with several outside vendors that provide blockchain analytics, as most exchanges do. However,” first of all, lol at as most exchanges do … “However, they didn’t support all the assets we wanted to have on our platform, so we knew at one point that we would need to bring this capability in house. We examined the players and found that Neutrino had some of the best technology in this area, and decided to acquire them.”

Jay Kang: No shit.

Aaron Lammer: Let me translate this from double speak to the truth for our listeners. “We were pretty good at spying on people who were using Bitcoin and Ethereum, but as we branched out further into the Shitcoin realm, we needed some hackers who were good at tracking people on all those blockchains, too.”

Jay Kang: Yes, I agree with that completely. Do you know how if you use Bitcoin from Coinbase to do anything shady, if you send it to any wallet that might be shady at all, they shut down your account?

Aaron Lammer: Yep.

Jay Kang: This includes stuff like gray market … honestly, it’s closer to okay and legal than it is black market stuff like sports betting places which advertise on the radio, on ESPN. You can’t send Bitcoin there without them shutting down your account, so this seemed like, “Hey, you know who’s really good at finding people? Those guys who got all those people killed in Sudan.” I bet they’ll be able to figure out if somebody’s sending that somewhere that just allows small bets for … it’s ridiculous.

Aaron Lammer: Yeah, for the future blocking of, like bat to Nazi sites? Yeah, I think that’s probably accurate.

Jay Kang: That’s being kind to them, yeah.

Aaron Lammer: That’s my bullish take on this. My bearish take is, this isn’t really just about stopping you from using some gambling site. I love, Jay, I love that you’re saying, “It’s legit. It advertises on ESPN radio.”

Jay Kang: You don’t think that they have standards? Come on.

Aaron Lammer: Hundred percent, anything could advertise on ESPN radio. Particularly online gambling sites I do not think are inherently outside of the gray market because they advertise on ESPN radio, but we’ll-

Jay Kang: That was a correction mid-sentence. My original was gonna be that they advertised on Bar Stool. I actually don’t even know if they advertised on ESPN Radio. We probably shouldn’t slander ESPN Radio.

Aaron Lammer: Wow, Jay, I love that you just outed yourself as a Bar Stool listener, though. Brave.

Jay Kang: I listen to Part of My Take, which I think is very funny and-

Aaron Lammer: It’s a good show. It’s a good show.

Jay Kang: Yeah, it’s a great show.

Aaron Lammer: Okay-

Jay Kang: But I don’t really have the same problems that … We don’t have to go into this. [crosstalk 00:14:42] I wrote a long article about it.

Aaron Lammer: If you wanna know all of Jay’s thoughts on Bar Stool Sports, there’s a New York Times magazine article that we’ll put a link to in the show notes. Okay, they wanna spy on people probably as deeply as they can. We know that the blockchain is perhaps a truth machine, but it is not a privacy machine. If you’re standing where Coinbase is, which is knowing what wallets are paired with what people, and you can triangulate transactions that way, you’re pretty damn close to a with identities social graph of the entire crypto internet.

Jay Kang: Yeah, can I ask you a question though? What percentage of people on Coinbase … let’s say Coinbase has 10 million users, what percentage of those users do you think have ever made a Bitcoin transaction? Like, even moved it to a different wallet?

Aaron Lammer: I gotta think it’s a minority.

Jay Kang: A minority, meaning 40%? Or like, 5%?

Aaron Lammer: I would say more like 10%, yeah.

Jay Kang: Yeah, that was my thought. It’s probably 10% or less, I don’t think it’s anywhere close to 20%, so what, really, are they tracking?

Aaron Lammer: It’s funny also, that they do something wildly risky to get Neutrino, which is probably so that they can track BSV transactions or-

Jay Kang: Or Zcash or-

Aaron Lammer: Zcash is, again, generous. It’s probably because Neutrino has expertise in the 190 Shitcoins that Coinbase has a roadmap of introducing over the next two years. It probably has almost nothing to do with Bitcoin. I would assume that they’ve already mastered tracking [DTC 00:16:36] around, and I think we know this because during the whole Rodriguez scandal, which I am still waiting to do my tell all video about, Jay. New stuff is breaking, we’ve gotta do a Quadriga episode. Will you consent to it?

Jay Kang: Yes, I consent to it.

Aaron Lammer: Okay. I will break out the green screen.

Jay Kang: I make no decisions anymore based on my journalistic reputation. I’ve decided just to let that go and-

Aaron Lammer: Jay has retired as a journalist, full-time commentator now. So anyway, Brian Armstrong released some information on Quadriga that basically said, “We have this evidence based on these wallet movements, and those are wallet movements between Coinbase accounts and Quadriga accounts, which a significant amount of transit must have occurred between them, that these are their cold storage wallets and they were already short huge, huge amounts of Bitcoin and other currencies long before Gerald Cotton ever maybe traveled to India and died, and lost the private keys, which supposedly had $190 million worth.

Aaron Lammer: The fact that Brian Armstrong, with no inside information about Quadriga, other than what he can see from Coinbase’s villainous analytics lair, suggests that they’re already pretty deep in terms of the major assets, I would think.

Jay Kang: Can I ask you a slightly related question off of that?

Aaron Lammer: Sure.

Jay Kang: What do you think would happen if there actually was a mass movement away from Coinbase?

Aaron Lammer: Well, look. Gemini is running subway ads, which I see on the approximately one time a month I ride the subway … That’s not because I’m too fancy for the subway, that’s because I don’t go anywhere … The one time a month I ride the subway, you see these Gemini ads, I see them in bus stops, too. Can’t even remember what the slogan is, but it’s basically like, “Crypto for grownups.”

Jay Kang: What does that mean?

Aaron Lammer: Someone had to make it legit … I’m gonna fuck it up.

Jay Kang: I’m looking it up. Gemini subway ad. “Finally, a regulated place to buy, sell and store crypto. Crypto without chaos.”

Aaron Lammer: There you go.

Jay Kang: “Money has a future. What follows the revolution?” Question mark. These are all ads that showed up.

Aaron Lammer: Okay, you got the gist. Crypto … what was it? What follows chaos?

Jay Kang: Crypto without chaos.

Aaron Lammer: Crypto without chaos, okay.

Jay Kang: Money has a future.

Aaron Lammer: What do all these things tell me? It tells me that Gemini is also positioning themselves as sort of nannies to your account and I’m guessing that if a bunch of people Delete Coinbase, Gemini is probably the prime beneficiary in the US?

Jay Kang: Yeah, maybe. I think that the Cash App probably is pretty stiff competition for them at this point. I guess all the places that were suppose to come from … Japan and abroad, I don’t think they’ve gotten really a foothold yet, but obviously there would be some international competition. As you and I say every single time, the winner will be the one who makes the most pleasant and easy UX experience, and right now, I think that the Cash App probably has a leg up on it. I wanna say this though. These slogans are terrible.

Aaron Lammer: Are they, though? I mean, okay, they’re bad, but-

Jay Kang: Yeah, finally, a regulated place to buy, sell, and store-

Aaron Lammer: As an ad critic, I’m not sold by them.

Jay Kang: All I’m saying, is that you and I could probably make some money selling taglines to Gemini.

Aaron Lammer: A hundred percent. All these crypto companies could use us. Brian Armstrong could also hire you to make his apology letter not seem like it was written by a robot, but in general, I think what they’re signaling with these poorly written ads, is very clear, which is Gemini is like the fidelity … it’s the Robin Hood for the younger generation or whatever-

Jay Kang: Well not Robin Hood [crosstalk 00:20:42].

Aaron Lammer: Not Robin Hood, that’s a bad one. What are the responsible [crosstalk 00:20:46] financial apps?

Jay Kang: It’s like the Goldman Sachs or something.

Aaron Lammer: Goldman Sachs, et cetera. I think Coinbase is being dumb by acquiring Neutrino, but the overall sentiment that these companies are trying to convey, is we’re gonna do this in the most grown up way possible, which probably is to spy on everyone.

Jay Kang: Yeah, exactly. Like, listen, we know how the world works. We’re just gonna steal your information and sell it to Russia. Can I just [inaudible 00:21:20] my second response to these ads? Who is this targeted for?

Aaron Lammer: Finance dudes who are looking for their first BTC buy?

Jay Kang: Oh my God.

Aaron Lammer: It’s New York.

Jay Kang: It just seems reactive and dumb. I’m 39 years old. You’re 38 years old? Is that right?

Aaron Lammer: Seven. 37.

Jay Kang: 37 years old. Most of my friends are-

Aaron Lammer: I’ll say once again. Don’t [dox 00:21:43] me, bro.

Jay Kang: You’ve already been doxed and hacked. Most of my friends are lawyers or professionals in their 40s and late 30s, and the ones that are into crypto are not into it to act like adults. They’re into it because it makes them feel young and it distracts them from the endless process of getting old and lame, so I don’t really think that this is the right messaging either, because it takes all the fun out of crypto. At this point, if you’re the type of person who is on a subway, let’s say you’re going to the Wall Street stop on the four from Barclay Center and you have like, 20 minutes on the subway and you make $400,000 a year and you have a lot of money and it’s all saved away, why do you care about crypto? The only think you know about crypto is that it’s highly volatile, it’s probably stupid, and then it crashed.

Jay Kang: The idea that there’s an adult way that’s backed by the Winklevii to invest in crypto, I just don’t get who that appeals to. I think what would appeal to that guy, is like, “Hey, you wanna do some gambling? Do you wanna have something fun?” I just don’t get this messaging at all.

Aaron Lammer: I’m gonna take the opposite tact, which is to say we know about Fidelity, we know about JP Morgan COIN, we can assume that most of these responsible adult financial management websites probably are looking at adding Bitcoin in the next few years. We just know that there’s a bunch of activity. Some of them are not, some of them are, but custodial crypto stuff if not outright selling you Bitcoin, at least holding your Bitcoin, I have to believe is coming. And probably our listeners will tell us it’s already been announced in certain cases.

Aaron Lammer: So you think, Gemini is now needing to compete with those people. That’s like the sound business move, but they like, “Go big or go home. We’re the Winklevii and we have 8% of the Bitcoin supply.” We wanna be Jeff Bezos vision is not that simply they compete with Fidelity to be custodial account for your Bitcoin, but they just start selling stocks and they become the new financial center, they become a new big bank.

Aaron Lammer: I think the maximalist vision of Bitcoin isn’t that Bitcoin goes inside the financial system, it’s the financial system moves over to these Bitcoin exchange accounts.

Jay Kang: Okay, but … I mean, I don’t disagree with that, I just don’t-

Aaron Lammer: It’s not realistic?

Jay Kang: No, it’s not that it’s not realistic, I just don’t know what this message does to do that. One of their ads is, “Crypto needs rules.”

Aaron Lammer: I agree with you.

Jay Kang: Who is that tailored to? Like, “Hey, look, you crazy guys. Listen, it’s time for some rules.” Good lord, this is bad.

Aaron Lammer: Yeah, I kind of agree with you insofar as we brought up Robin Hood in there, and when you look at Robin Hood or Cash App, or any of these new fangled money as an app services, those feel a lot closer to a fun consumer vision that becomes where everyone stores all their money, whether they’re a responsible person or not, than sort of brow beaty, blockchain analytics … Both Coinbase and Gemini, I’m like, “What are you doing? What kind of a a foot forward are you putting?”

Jay Kang: I agree. Generally speaking, you and I have been doing this now for 18 months, almost, right?

Aaron Lammer: Yes. [crosstalk 00:25:39]. Which is actually one decade in crypto time.

Jay Kang: Yeah, we’re like, 72 in crypto years. I don’t think the people who run these things are stupid, there are obviously some smart people there, but I also think that these companies are generally run by … they’re not democracies, they’re not run by a board that has a lot of experience. I think because the whole space is so new, that people in charge are probably making the big decisions. Do you think that’s true? Do you think Brian Armstrong and the Winklevii are probably making most of the decisions for Gemini [crosstalk 00:26:14].

Aaron Lammer: Yeah, I think that’s generally the start up tech [VC 00:26:17] model and everything, which is, you just give the keys to the person, you bet on the entrepreneur, not the idea, and it’s a cult of personality with a close inner circle of advisors who are usually people who have other successful tech assets like, I think [Belagee 00:26:35] is the guy at Coinbase now. So I would imagine that it’s not like a dictatorship, but that it’s like a tight, inner libertarian circle of a few.

Jay Kang: Yeah, I guess I just don’t really understand the choices that they make. If you do compare it to something like Robin Hood, which will never say it out loud, but allow all sorts of crazy shit to happen on the sides, on Reddit and things like that, where Robin Hood makes it still seem like, “Hey, if you wanna do some crazy, fucked up options trading and go HundredX, or go broke, this is the way to do it.” That’s their main messaging, I think, I just don’t understand why crypto wouldn’t do that as well, like, “Hey, do you think gambling is fun? Or options trading is fun? This is even more fun,” And then build a bunch of semi-legal financial products to make it even more degenerate. That’s what I would do, at least, if I was running a crypto exchange.

Aaron Lammer: I think that’s what’s happening. I think we’re already seeing it happening. I’m just saying that I think the more valuable … if assume what you’re gonna do is gonna win, it’s more valuable to win the more grown up brokerage than the BitMex leverage trading. The leverage trading stuff sounds like a great business to me. I’m sure you’re gonna make out like a bandit doing it, but the VC, I wanna be one of the richest people in America path, which I do believe about the Winkleviis and Brian Armstrong in some ways do, is to build the next financial institution.

Jay Kang: Okay, fair.

Aaron Lammer: I’m gonna read just a little bit more of Brian Armstrong’s apology letter. I won’t torture you this too much longer. “We had a gap in our diligence process. While we looked hard at the technology and security of the Neutrino project, we did not properly evaluate everything from the perspective of our mission and values at crypto company. We took some time to dig further into this over the past week, and together with the Neutrino team have come to an agreement. Those who previously worked at Hacking Team, despite the fact that they have no current affiliation with Hacking Team, will transition out of Coinbase.”

Jay Kang: That’s my favorite part of it because …

Aaron Lammer: First of all, it’s great that it’s called Hacking Team. They can’t-

Jay Kang: That’s my favorite part.

Aaron Lammer: They have to keep saying it. It’s like super villains. Everyone who worked at the Bank Robbers Academy will no longer be allowed to work at this bank.

Jay Kang: It also makes their statement seem so absurd because they’re like, “Listen. We’ve made this big acquisition, we’re really excited about it, and we did all of our due diligence, but when we looked at their resumes, we saw last place of employment: Hacking Team, and we didn’t think anything about it.” Hey, what is this Hacking Team? Could it be a team that hacks?

Aaron Lammer: Yeah, it’s just fantastic. It’s like, “We’re a sophisticated company that is trying to figure out how to spy, even on the users of Shitcoins, but we were unable to Google.” I wanna say, it’s not like Neutrino employed members of Hacking Team, Neutrino is founded by members of Hacking Team.

Jay Kang: It’s just Hacking Team and they rebranded.

Aaron Lammer: The people that they’re saying they let go are the three executives. They are the people who were on the LinkedIn page for Neutrino, which literally may have included that their previous employer was hacking team, as you said. There’s no way to make this mistake. You didn’t care.

Jay Kang: Yeah, they just didn’t care. And they definitely knew, and I think that makes Brian Armstrong’s statement even more ridiculous. We have no idea what is in Brian Armstrong’s heart or head, but I mean, come on. Do you really believe that they didn’t look into these guys’ backgrounds? It’s insane. The stuff that they’re asking them to do was shady enough and of course you’re gonna … you’re a multi billion dollar company, of course you’re gonna look into these guys’ backgrounds, I’m sure they know everything about these guys and to say we had a gap in our due diligence, we didn’t look at the second like of their resume where it said Hacking Team, come on.

Aaron Lammer: I also think about the basic premise here of doing due diligence is like, they’re basically getting these guys so that they can know what their customers are doing, but they have absolutely no problem with working with people who are involved in all this shady shit, and that’s the people who are useful in crypto. We’ve seen this over and over again. The Quadriga story, it was a guy who had been running this shady liberty reserve exchange previously and was involved in hacking. The people who have the skills to do the things that a big, spying, Facebooky company in crypto would wanna do, are mostly criminals, or gray market advertises on ESPN Radio, but is still maybe a criminal.

Jay Kang: Hey, it was Bar Stool, but-

Aaron Lammer: Bar Stool, okay. I apol-

Jay Kang: To be fair, to-

Aaron Lammer: So, Jay, I was trying to pull that quote from medium which caused me to click back into Brian Armstrong’s Medium history … can I read you the titles of his blog posts over the nine months? They’re an amazing crypto time capsule.

Jay Kang: Okay.

Aaron Lammer: The first one, this is about nine months ago, this is … “We’re already off the high, crypto has crashed. Introducing crypto.org,” that’s Brian Armstrong’s crypto charity in which the charity has to hodl.

Jay Kang: Oh, was that in response to maybe the dumbest thing that he’s ever said in his life, which was that he wishes that all charities who he gave crypto to would never sell that crypto because obviously crypto can only go up and if they were smart, they would keep all of it.

Aaron Lammer: Not only that, but this post is from after the crash of Ethereum. So it’s basically like saying … I guess that was a good time to be buying into crypto eternal hodling, but Jesus, it seems like a different time.

Aaron Lammer: This is another one. This one’s fantastic. Sometimes his posts are kind of like CEO self helpy and they’re like lessons of a CEO. This is the title, “Bar raisers at Coinbase. If you’re not a hell yes, you’re a no.”

Jay Kang: Oh my God.

Aaron Lammer: That’s about how they only hire A players. No mediocre people here.

Jay Kang: Yeah, like The Hacking Team who are very effective in outing journalists in Sudan to be killed.

Aaron Lammer: Next one is, “50 lessons from HP’s company culture.”

Jay Kang: Okay.

Aaron Lammer: I just think it’s funny that this is a person who’s blogging about company culture. Here’s one idea for improving morale and resolve among your staff: Don’t hire known criminals.

Jay Kang: Yeah.

Aaron Lammer: Anyone who could potentially … maybe not be charged with a war crime, but forced to testify at a war crimes trial, that …

Jay Kang: We’re gonna get sued by The Hacking Team.

Aaron Lammer: … Might not be in the company culture that you’re looking for. Okay, here’s the next one up. “Chris Dods, Charles Schwab board member is joining Coinbase’s board.” So there’s all this signaling of like, “We’re grownups now, we’re like a company like HP or Charles Schwab,” at the same time as, “I’m hiring villains to spy on my users.” I guess that is like the modern tech CEO culture.

Aaron Lammer: Then of course, the last one, “Living up to our values and the Neutrino acquisition.” So a wild nine months for Brian Armstrong and the team … and the nine months before that were wild, too. Remember last time when there was a bull run and Coinbase just kept crashing in the middle in strategic ways?

Jay Kang: Yeah, yeah, I was not a truther about that sort of stuff, but there certainly were, and now, in retrospect … about a year later, maybe more than a year later, it does seem a little bit sketchy. Can I read you one last thing about The Hacking Team that I thought was really funny?

Aaron Lammer: Sure.

Jay Kang: In 2015, their Twitter account was hacked by somebody who said that they had breached their computer systems and they put a lot of their stuff out there, and this is where people showed that they had invoiced the Lebanese army and Sudan, and that they had sold spy tools, which some people think are weapons to places like Kazakhstan and Bahrain. As part of it, they put out some of the passwords for The Hacking Team’s employees and it’s like password with a four instead of the A. Wolverine, all lowercase, and universo, no capitals in any of it. I think that’s pretty funny, especially the wolverine.

Aaron Lammer: I wanna say one last also insulting thing about a Hacking Team subsidiary of Coinbase Inc. which is, you might be sitting there thinking, “Well that stuff is evil, but they’re probably genius hackers to be able to develop all this stuff. These guys are great at what they do.” Not the case. These are not tools that they necessarily developed. These guys are black market warez sellers like, selling pirated movies on the internet. The reason they’re mad this dude leaked their shit was because that was their fucking goods that they sell. It doesn’t mean that they made them, they’re just dealing in black market spy tools and selling them to governments because governments don’t know how to buy and sell this stuff.

Jay Kang: Yeah, their talent, if anything, is connections and being unscrupulous. These are … I don’t really-

Aaron Lammer: If you believe that Ross Ulbricht should be in prison, I think you should also believe that people who sell Dark Web spyware tools should be in prison.

Jay Kang: Yeah, I don’t know if there would be many people who would have those conflicting beliefs, but I agree that those are consistent.

Aaron Lammer: But it’s crazy that we’re having to talk about [inaudible 00:37:06] employee people who don’t have anything to do with slash potentially prosecute people.

Jay Kang: I think that if you sell spy tools to foreign governments to up end any type of democratic processes that are going in that country, that you are essentially selling weapons to that country and that you should be thought of both in the public sphere, and in the legal system, as somebody who has done that. I don’t really understand what the argument against that would be, so good job Coinbase.

Jay Kang: I have a last question before we move on from this, Aaron. Are you going to delete your Coinbase account? Because I actually probably will at this point because I don’t even use it, so who fucking cares. It’s not like I’m doing some big gesture. I’m not gonna Tweet that I deleted it, but I just don’t want to have anything to do with this company anymore.

Aaron Lammer: Well it’s an ironic one, because I think I am done with Coinbase, but it’s not because of the Delete Coinbase movement, it’s just because I’ve found it easier to buy up little bits of Bitcoin in the Cash App and I’d rather just keep … every time I get new Bitcoin, put it into some sort of cold storage, and who cares where I’m buying it, and Coinbase no longer feels like the best place to buy it.

Jay Kang: All right. Cash App, sponsor this podcast.

Aaron Lammer: Anything else jump out at you this week?

Jay Kang: I just wanted to ask you something, this was not about any news that happened. Every year, my friends from high school and college and I go on a trip to Las Vegas to watch the first weekend of the NCAA tournament.

Aaron Lammer: Wow. It sounds like a great trip, I didn’t know you did that every year.

Jay Kang: Yeah, we go every year. I think we started pretty young, I don’t know how many years in a row we’ve gone, but there was a period of time where me and my friends from high school would go once a year and we were like, 24 years old, so maybe it’s been 15 years or something like that. The first thing is that we would go before we would see all these old guys who were getting hammered and clearly it was their one weekend away from their kid and family and they were just going hard. They’re wearing like, Butler University windbreakers and stuff like that and you’re like, “These are the biggest dorks in the world.”

Aaron Lammer: Oh yeah.

Jay Kang: I think that’s us now. But one of our friends has quite a bit of Bitcoin and we were trying to figure out if there’s a way to turn that into casino chips. What do you think? Would you guess that that’s possible or not possible? We’re not talking about a small amount of money here, we’re talking about five figures. This is a friend who’s much more-

Aaron Lammer: If there’s one place I’d expect there to be robust local Bitcoins environment, it’s Las Vegas.

Jay Kang: Yeah, right? How would you go about doing that do you think, if you had to guess? Let’s say I gave you 20 Bitcoin and said, “All right, we’re gonna go to Las Vegas and you’re gonna gamble all of this and you’re either gonna go home with half a million dollars or zero.” How would you go about converting that?

Aaron Lammer: Well, it’s an interesting question. You clearly don’t wanna do it through Coinbase. You could do it through Coinbase, but you would a hundred percent know that that was being reported to the IRS and [crosstalk 00:40:28].

Jay Kang: How would you do that? [crosstalk 00:40:31] do a wire transfer to another wire transfer.

Aaron Lammer: Yeah, you’d have it transferred out from Coinbase to your bank account, then you’d go buy chips with your bank account. That’s how you’d do it, but if you have … We know this, and this is something I’ve wanted to talk to you about on the show, actually, and I don’t still feel like I totally understand it, but Bitcoin that is detached from KYC regulation is worth more than Bitcoin that is attached to KYC regulation.

Jay Kang: Wait, so it’s like unlocked phones, basically?

Aaron Lammer: Put it this way, you can pay … remember that company that we talked about-

Jay Kang: Or like a gun with the serial number scratched off?

Aaron Lammer: More or less, yeah. We talked about how you can do that thing where you buy stuff on Amazon with Bitcoin, and then someone else buys it with cash and you send the Bitcoin. They get like, 80, 85 cents on the dollar for that stuff, so that’s how much people are willing to go to crazy lengths to acquire Bitcoin in ways that don’t involve Coinbase or Gemini style KYC declaration. KYC for our listeners, means know your customer, it’s basically corporate doxing.

Jay Kang: Yeah, well, just saying the company knows who you are, what your name is, and generally what you’re gonna do with it.

Aaron Lammer: If you do over a certain amount of business, that that business can and will be reported to the IRS, and I think usually, that threshold is about $10,000. So, in the case of your 50 100 Bitcoin stash, you’d like to be able not to do that.

Jay Kang: Yeah, if you do the thing that you say, you lose what? 4% or 5% right off the top for the transaction fee. You have to wait a few days for that money to show up into your bank account. You can only withdraw it in $10,000 chunks if you’re on Coinbase, or 25,000 if you have a special account, so if you’re trying to take out, let’s say 100 grand, it’s gonna take four weeks to do, and every time you do it, you’re gonna be losing both time, every single thing you do is gonna be reported, and you’re gonna be losing transaction fees, then you have to wire that to the casino to buy a marker. At that point, you’ve basically lost whatever … the amount of money that you’ve lost in that transaction is equivalent to being good at counting cards or something like that. You’re kinda screwed.

Jay Kang: My assumption was your assumption, Aaron, was that Vegas casinos, which are not in good shape right now, would have very easy ways for customers who would talk to somebody like a casino host or somebody like that, to convert Bitcoin to casino markers. Basically one for one without any sort of transaction fee because they want your business, but I found that that’s not actually true. They’re still pretty shy about it.

Aaron Lammer: I think that’s illegal is why it’s not possible.

Jay Kang: What’s illegal?

Aaron Lammer: I think it’s illegal for them to let you walk in with 100 Bitcoin and turn that directly into poker chips without reporting it.

Jay Kang: Why would that be illegal? It’s just like an exchange of … or they can report it, I guess-

Aaron Lammer: What happens if you wire in a million dollars from an anonymous Swiss bank account?

Jay Kang: Yeah, I think that you could get that in chips and they would be discreet about it.

Aaron Lammer: I don’t really know that much about how Vegas’ internal know your customer kind of stuff works. I would imagine, at least for a smaller sum, that the simplest thing to do would be to exchange the Bitcoin via local Bitcoins for cash or for a person to transfer money directly to the casino, and that there’s probably over the counter kind of like whale greaser types who can help you out with a hundred Bitcoin transaction in which they vouch for you at the casino or their personal million dollars they keep at that casino comps your chips in, and then somehow, you transfer the Bitcoin to them, and they run some sort of a large personal local Bitcoin services for … You starting to talk about whale business when you’re talking about just coming in with a hundred Bitcoin worth of chips?

Jay Kang: Yeah, that’s what I think is the … Look, I don’t think this person is actually gonna do it, because it’s too interesting, but I definitely sent him the local Bitcoin site and I was like, “Just look for people in Vegas who have good reviews,” and I think that that would actually work. Let’s say it’s $50,000, would you feel comfortable meeting someone at iHop and getting a briefcase of $50,000 and giving them a USB drive? That’s essentially what it would be, right?

Aaron Lammer: I think that the larger transaction are heavily done with a remote escrowed transfers more so than in person meetings. I think in person meetings, it’s like … If you were doing a Bitcoin or two, you could potentially do an in person meeting.

Jay Kang: Yeah, but once that money hits your bank account, it’s traced. People will be like, “Well what is this $50,000 you got into your bank account?”

Aaron Lammer: I would assume that if you were running this as a Vegas shark. You know when Fredo goes to Vegas and he’s just supposed to make sure everyone has a good time and make sure that they keep supplied in chips and drugs and prostitutes … that’s a Vegas archetype, right? But another service would be you have some sort of account that receives wire transfers and does basically, over the counter crypto exchange.

Jay Kang: Yeah, I think that is basically it. There are some people who will do this for you there, but they’re out of my general circle of influence. I was just thinking about it and it’s like, there are all these dudes and a lot of them are involved in poker and gambling who have a ton of money no, because of crypto, why would the casinos not make it as easy as possible for them to come in and gamble that? The answer is, there’s one casino that will let you do it, but you can only do it … it’s called The D, but they only let you do it through the Bitcoin ATM, which obviously has huge fees as well, so I don’t know.

Aaron Lammer: I think you’re probably paying a fee somewhere along the line … If there’s someone who wants to do this for only one or two percent fee, that’s a great partner. Most people are gonna want 10 to 15% to do something like this for you.

Jay Kang: Yeah.

Aaron Lammer: Which hey, look, that’s less than you’d pay in capital gains taxes.

Jay Kang: Yeah, for sure, and you don’t have the headache of having to figure out what to do about it, so I don’t know, that’s-

Aaron Lammer: Wait a minute, wait a minute, wait a minute. Let’s say you win all this money, that money’s still going to your bank account anyway from the casino.

Jay Kang: You could keep it in a shoebox somewhere.

Aaron Lammer: This is what I don’t understand about gambling, it’s like the perfect vessel for money laundering. I just don’t quite understand sometimes where the clean money comes out. The clean money … when you’re leaving the casino, you’d want to put it back into Bitcoin, wouldn’t you? Just hodl the Bitcoin.

Jay Kang: No. I just think there’s probably OTC people who know how to do all this sort of stuff. I don’t know, I thought it was an interesting idea because it just sort of shows where Bitcoin is at in terms of adoption in these types of places and I still don’t quite … maybe we just didn’t say the secret word or something. Maybe there is some way to get the casino host to do that for you, but I don’t know that secret word. If anyone knows, please email us, tell us.

Aaron Lammer: This makes me think that me and you should set up a weird in person Vegs crypto exchange called Fredo together. What could go wrong?

Jay Kang: That’s such bad name. Have you seen the end of that movie? Be like, “Listen, no.”

Aaron Lammer: It’s all about family, that’s what I heard the movie’s about.

Jay Kang: Is there anything else you wanna talk about?

Aaron Lammer: I just wanna talk about about one thing before we go. Cryptopia is back. It has reopened. It was actually supposed to reopen yesterday …

Jay Kang: Did you sign on?

Aaron Lammer: I went to sign on and still had that weird federal … you know those seized by the FBI kind of notices that you see on the internet occasionally?

Jay Kang: Sure. Yeah.

Aaron Lammer: Those are amazing, for starters. They don’t seem real.

Jay Kang: Yeah, I still remember the day when the online poker sites got hit with that.

Aaron Lammer: I went to take a screen shot of it in our Google Doc of things to talk about … Bam. I’m wrong. Cryptopia one day late, does reopen. I successfully logged on, the coins are there.

Jay Kang: They’re there?

Aaron Lammer: Did not lose them. My SUMO bag is alive.

Jay Kang: Wow, that’s kind of amazing. Wow.

Aaron Lammer: Not only is my SUMO still there, but during its period of cocoon where I have not had access to it, I’ve actually accumulated two other coins. You remember RYO coin, that was a fork of SUMO, it’s forked again with ANON coin. So now, I have an Anoncoin bag in there too.

Jay Kang: Did they explain what happened?

Aaron Lammer: They said they got hacked and that they lost a bunch of stuff, and that they had to shut down to figure it out. They didn’t say that they … I think they lost several of their more legitimate Altcoins, so I have a good feeling that no one is sitting there like, “How can I steal the world’s supply of Sumokoin?”

Jay Kang: I don’t know, you did pump it a lot on this podcast.

Aaron Lammer: Well, now I’m gonna be pumping it again.

Jay Kang: How much Sumokoin do you have?

Aaron Lammer: I have about 5,000 Sumokoin.

Jay Kang: What? How much is each one worth?

Aaron Lammer: Presently, they’re worth less than five cents each.

Jay Kang: Oh, so that’s kind of a lot of money.

Aaron Lammer: Let me see, I don’t want to give you an imprecise quote, here, on my bags. I always try and give you the most up to date look at my holdings. Lets see, SUMO is trading for 3.6 cents right now. From a one year high of a-

Jay Kang: Wasn’t it at $10 at some point?

Aaron Lammer: Within the last year, it was $1.34.

Jay Kang: It was $1.34, so it’s down 98%.

Aaron Lammer: It’s down 94.2% on the year. So, there’s nothing but space above us if you’re thinking about getting into Sumokoin right now. None of this is investment advice.

Jay Kang: Yeah, I don’t know. I feel like you’ve violated … you’ve just shilled the bag on our podcast for the first time in a long time. That’s either a sign that Bitcoin is going up or it’s going down, but if we’re shilling bags on this show, then something’s happening.

Aaron Lammer: I’ll say this, I should immediately upon signing onto Cryptopia, my first instinct was to get my coins off of Cryptopia since Cryptopia had been seized by some sort of authorities until less than 24 hours before. There’s nowhere to put Sumokoin. I think the developers were working on a wallet, but again, those developers turned out go be one person with a different name, and I can’t find the wallet anywhere, so even if I wanted to take my Sumokoin somewhere, I think the best I could do, is just putting it on one other extremely shady Altcoin exchange that I’m like, “Maybe I should take the lightening doesn’t strike twice in one place,” view and leave them on Cryptopia.

Jay Kang: Can you actually sell it?

Aaron Lammer: When I tried to transfer it, it said that transfers and all that stuff were still shut down. All I think you can do right now is transfer it to a different Cryptopia account. I think their markets have not yet opened. They’re only showing custodial account stuff, but maybe they’re opening soon? I’m not sure. No, they are open! Okay, so I could sell it. There you go, I could sell it at 3.6 cents a pop. Should I do it?

Jay Kang: No. You’ve gotta go down with that ship.

Aaron Lammer: I gotta go down with that ship, that’s how I feel. Even if Cryptopia stabilizes, we could easily see a 2x on this coin. Come on people, pick up some SUMO.

Jay Kang: Yeah, I don’t really see how you don’t … If you got rid of it, then we should just stop the podcast. It signals that there has been some loss of faith in Shitcoins for you and we’re all [inaudible 00:53:49] at that point, we should just do a different podcast.

Aaron Lammer: Let me ask you a question. Would anything get you back into trading Shitcoins again? I’m not talking about the Kang Line and buying Bitcoin, which I think you’ve fully articulated your viewpoints on, but if I had just told you gamified trading is back and it’s super easy to pick these and get 5x runs, would you do it?

Jay Kang: Yeah, I feel like I’m more self-righteous on this show than I am anywhere else in the world in terms of like, I don’t deal with that type of stuff. Usually I’m crawling around in the mud, but in reality, of course. If there was a Alt Spring, for example, and one of our friends, let’s say ledger status had gone 10x on some bag, there’s no way I would stay out of that. Especially if it was easier than signing up for Bittrex or something like that. If it was all app-based, I would definitely be back in.

Jay Kang: I think this time around, I would probably be a little bit more careful about making sure that the thing I was buying had some feature beyond just trading … I don’t know if that makes sense, but just to say, Maybe this will be … like Mimblewimble or something like that where you can sort of see a world in which this thing will be a bigger deal than just a press release. But then again, that’s what we said last time and we just didn’t follow, we bought every dumb thing there was, but yeah.

Jay Kang: This morning you texted me and said that you pick us up 40%.

Aaron Lammer: I was gonna say, shouts to our guy Doug Kim for being a longtime [inaudible 00:55:41] holder. He must be having a good day. You know that Alt Spring has arrived and we have Doug Quebec on the program. He’s like he groundhog in Groundhog Day [crosstalk 00:55:50].

Aaron Lammer: Basically, we have Doug on every time there’s a fork in the road and we’re like, “Is this Alt Spring?” Each time, we’ve just gotten pounded into the ground. It’s been bad news from the hedgehog … groundhog.

Jay Kang: Is this what global warming is gonna be like, do you think? Do you think it’s gonna be, “Well, the weather’s finally gonna turn,” and then it just doesn’t turn, it gets worse for end on end on end on end-

Aaron Lammer: Pretty much, yeah. The first time, people are gonna be like, “It’s fluky. It’s just a streak, this happens all the time,” then it’s gonna be like that for three years. I do wonder … we don’t talk about price on this show very much anymore, I think that’s for good reason, and I don’t have really anything to say about it, but Jesus, I’m getting a little exhausted. This has been a long winter.

Jay Kang: Is it the winter, though? It’s been pretty stable.

Aaron Lammer: Yeah, it’s been stable. It’s like temperatures have been a consistent negative 10. We haven’t had one of those negative 20 days for a long time.

Jay Kang: All the sources of clean water have been frozen. Yeah, you’re right, there hasn’t been an Alt Spring on the crypto quad where people bring out the hacky sacks in a very long time.

Aaron Lammer: That Alt Spring on the Campus Quad episode we did was like a year ago or something.

Jay Kang: Was it? Oh my … yeah, this sucks.

Aaron Lammer: We’ve wasted our lives.

Jay Kang: What would this podcast be like if crypto wasn’t just in an absolute death spiral the entire time we were doing it?

Aaron Lammer: I feel like it’s like we started a really successful fan blog for a team that’s like the Cleveland Browns in like, 1972.

Jay Kang: Or even we start a Cleveland Cavaliers fan blog right before LeBraun went to the Lakers.

Aaron Lammer: Exactly. It seemed like a good idea at the time.

Jay Kang: Oh well, at least we now know we could probably make a weekly podcast about almost anything if we could stay with crypto this long despite the depressing times around it.

Aaron Lammer: I’ll see you next week?

Jay Kang: Yes.