Le procès Bitcoin à 3,8 M$ pourrait créer un précédent dangereux | BPH Ep 39

Anonymous plaintiffs have asked a New York court to declare them the owners of 3.8 million long dormant Bitcoin. >> They used a specific lost and found statute in New York that for property valued at under $10, you can claim it after a year. The precedent here is really bad that like if you don't move coins for a certain amount of time, it can be declared lost by anyone who like tells you. All right, back with another week of the Bitcoin policy hour. Uh, as usual, joined by Ken Egan, head of government affairs at the Bitcoin Policy Institute. Zach Shapiro, head of policy at the Bitcoin Policy Institute, and I'm your host, Zack Cohen. We're here, the world's number one Bitcoin policy podcast. >> Thank you. >> You're welcome. Uh, if you haven't already, make sure you're subscribed. Smash that like button. >> Yeah, we go. >> Too easy. Oh, man. Okay, we got a good docket this week. Um, Zach, I was in uh I was in Austin for the Texas Energy and Mining Summit and I had at least five people come up to me and say, "Hey, what's going on with the blockchain regulatory certainty act?" You know, which is great. Um, but I do want to make sure that that we kind of give give the people the detail there. So, we'll get into that. Um, we've got some early uh early looks at the American Reserve Modernization Act that was introduced this week by our friend Congressman Nick Beg out of Alaska and they've got a ton of co-sponsors on that. So, really good to see there and Ken will help us unpack that. Uh, there was a little bit of back and forth in our Slack channels this week about this New York lawsuit. Um, and so obviously we've got a New York attorney with us and and Ken, you were weighing in there, too. So, so we'll get into that. >> That sounds like an insult. We have a New York attorney with us. I don't I don't I don't I'm sure I like the way that sounds. >> It was uh not intended as an insult, but uh you know, he uh he did spend some time working in the New York court. So, hopefully he can can share some insight with us. Um, Opus 4.8 launched today. We're recording Thursday, May 28th. Always fun to hear what what Zach and Ken think about the AI developments. Maybe we'll get Mythos in the next couple weeks and then uh we got some fun topics at the end that that I'll hold on to for now. So stick around to to see if we see if we get to those. Um okay, let's dig into it. Zach, uh let's dig into the BRCA more specifically. I want to look at the language itself. I don't know if you have that pulled up in front of you or or if you have it, you know, largely memorized, but um you know, I think the narrative that that we've been hearing is that basically the the BRCA was not preserved in its entirety, right? And we wouldn't necessarily expect it to be uh but that the key sort of details have been preserved. And you know, the the the test that we're looking at here is, you know, if there was another prosecution to come down like Samurai Wallet or Tornado Cash, you know, would there be a sort of like higher barrier for a jury to to convict on the money service business charge? So, can you walk us through that? Um, you know, if someone came up to you and they were like, "Hey, like what do you think of this BRCA language that got through?" You know, what would you tell them? >> Oh, I think it's fine. I mean, I think this is this is more or less the same language we talked about last time. It's the original BRCA Senate version, which is great. Plus, this addition that it took to get out of committee, which, you know, we've talked about on the podcast previously, I think is benign, has a specific intent requirement that I think uh by the time you've tripped uh that clarifying language, you're probably also guilty of conspiracy to commit or or you know, aiding in betting, moneyaundering. Um so the the problem is not the language that is in the current version of the bill which we're in support of. Um it's is that going to survive uh a full vote and >> and can you just remind us you know what that language is that made it through the the Senate um banking committee markup and then also what that intent language says because I think people are just kind of curious like what what are the details here? Yeah, I mean more or less it's if you don't have uh unilateral and independent control of uh user funds, you're not a money transmitter and uh not subject to criminal prosecution under section 1960. Um the clarifying section that was added to get through committee says that this is not meant to change a certain subsection of section 1960, which is the criminal statute um federal crime of being an unlicensed uh money transmitter. the particular one that the samurai defense pled guilty to and uh is, you know, survived in the tornado cashache case after the the Blanch memo. Um, and says that to the extent that you uh specifically intend to transfer funds that you know to be derived from crime, then you might still be guilty under that subsection of of section 1960. Um, there are sort of multiple layers of protection in there from my perspective. One is it require a specific intent to transfer uh known criminal funds. So I don't think that like putting a tool out there on the internet where you know maybe you even know that some percentage of people who use it will be criminal that you did not intend that uh you know like those sort of innocent developers would not be caught up in that. Um, and also it still says like you have to transfer funds. And so like yes, the Southern District would take the position that that doesn't require custody or control, but it still leaves open the argument that that it does. Um, and so I certainly don't think it, you know, it makes the bill meaningfully worse. >> Okay. Um, Ken, I want to go to you here because one of the questions that I was getting as well was, you know, the the point that we're going to get to pretty quickly here is, um, getting involvement from the law enforcement agencies, uh, from federal prosecutors, and that, you know, there's going to be some compromise reached. Whether that compromise was already reached is is unclear to me, and maybe you have a better read on that. Um, but I think the fear is like these original cases, Samurai Wallet and Tornado Cash were brought by federal prosecutors and whatever language that they contribute to this bill, uh, you know, risks sort of giving them the grounds to bring more cases like this, right? Like I think if you're a Bitcoiner and you're like, "Hey, this was a, you know, a total mess." Like this should never have happened in the first place and now this new piece of legislation is going to incorporate language from federal prosecutors. You know, they're going to be very skeptical of of whatever language gets included there. So, I'm curious your read on that. Um, you know, if you want to kind of talk about the politics here of of making sure that those parties feel like they've had their voice heard. So, I guess it makes sense that prosecutors want to maintain maximum flexibility. Already they get what's I don't know what exactly what the conviction rates are 97%. But I I I get it. Excuse me. I understand why prosecutors want to maintain that flexibility, the ability to hold sort of vaguely written statutes over people's heads to at least get them to plead guilty like in samurai to something that um well beats beats going to jail for 25 years of moneying. So, I I understand that. I I disagree with it. I think laws should be clear. I think you should know exactly whether you are violating a law or not. I don't think it's fair to it's it's just bad governance to let people in that kind of limbo where they can be prosecuted simply based on the political whim. And I think a lot of that is this um and again I don't know of a lot of like cartels or terrorist organizations that are building decentralized finance platforms to fund themselves. We I understand that some of these groups use some of these platforms but that's the distinction. I don't think that the samurai defendants or the tournic cache defendants built these so this that could happen. They built tools on the internet that anybody could use. Um but the idea that um the idea that simply banning that or somehow giving giving prosecutors flexibility to put you in jail for that will stop that from happening is is just it's just it doesn't it doesn't make any sense. The really the story that nobody expected we talked about this last week but it's it's getting a little bit more interesting. the story that nobody expected. We've been fighting the bankers on this for so long that all of a sudden on the other flank came like local law enforcement associations and particularly the sheriff's association. Um the sheriff's, you know, sheriffs are county officials. They take care of county jails. They transport county prisoners. Uh federal moneyaundering statutes are federal. The Bureau of Prisons takes care of federal prisons. The US Marshalss transports federal prisoners. Sheriffs don't interact with people convicted of these crimes. Um, so it's it's been very it's been a bit of a head scratcher. We all have theories to why. I mean, I think it's just a lot of associated, you know, associated sort of similarly oriented groups who are asking each other for help. Um but a lot of them like the fraternal police have sort of left the field but the sheriffs are sticking in there and they are lobbying really hard for um what is essentially Senator Cortez Masto's version of understanding understanding of the VRCA and it's it's again it's a bit of a head scratcher. So what we're working on now is is helping to have like just this week and I thank you Zach for helping out. Um, we've been talking to Democrat Senate staffers because a lot of them are the banking committee staffers are tracking this, but you know, there's a lot there's, you know, 40ome other members of of, you know, Senate Democrats who are not tracking this stuff very very closely. And we now they're starting to look and we've been having discussions with them about some of the mis some of the misrepresentations that law enforcement has been presenting as their core concerns over BRCA, including the ability to trace, the ability to seize. somehow this will prevent the law enforcement from prosecuting people that use digital assets and criminal activity. It's not true. It's just not it's I mean look at look at look at BRCA and do the I mean if you're old school just put you know edit find replace and see if you can find like tracing or tracking into BRCA. It's not there. Um or if you're more advanced like you know you can use Sonnet or even maybe Opus uh to do that for you but it's not in there. And you know, and I don't I I don't again I don't want to impugn the intentions of these law enforcement groups. I I think they have been sort of enlisted by the prosecutors and other affiliated groups to you know to to be on the front line. It's really hard for um for a senator to you know when you've got a row of people in you know law enforcement in in uniforms telling you this is bad for us to vote no I'm going to vote in favor of the crypto industry. It's kind of rough and we've essentially gotten that feedback from some Senate staffers. Like we understand that we understand that some of these concerns are overblown, but it's still very hard for us to to to stand up there and say, "Sorry, law enforcement. We're going to vote with, you know, with with a group of people." It's it's a tough political argument. So, we are working the education piece is number one because we've had some means even just today, Zach and I, where the staffers were like, "Okay, thank you for pointing this out." They didn't know it because they've not really been tracking as close as we have. We forget that like, you know, we all forget on this podcast that, you know, people have other things to do besides talk about this stuff. Um, and they're probably happier for probably happier for it. But, you know, but but now they're asking questions and and the next step for us is actually to engage the law enforcement associations and walk them through and this has been happening. Um, there are some groups I I work with some um some folks former national security uh retired former NATSAC officials who are, you know, work in the space to advocate for things like BRCA. We're going to do a a little bit of a um dog and pony show ne next next next two weeks or so with Senate staff to walk through what's what is really part of this bill and what's not. It's again it's a bit of a head scratcher as to why the sheriffs of all if I you would have asked me all the groups who's going to be you know who's going to be um you know occupying the who's who's going to occupy the frontline trench I would never have picked the sheriffs. There are a lot of other groups that I thought might be involved in this not the sheriffs and they are. So, there's something to that, but it's it's not neither really here nor there. And the thing is, you can't really lobby your sheriff. You can't call your sheriff's office and say, you know, whatever county sheriff, please support the BRCA. I mean, you you that's a good way to get yourself arrested for being crazy. And so, yeah. So, it's on us. We have to engage them at their their policy folks, their associations in Washington, and to walk through and to walk them through like if it requires edit, find replace with like two copies of the, you know, a copy of the bill, um, we'll do that. but to walk them through their misunderstandings. Um, again, I I it's not on any of us to attribute motivations for that, but there's clearly misunderstandings. There's some just things that are at just flatout wrong in the letters they've put out. And so, you know, we're, you know, one day at a time talking to Senate staffers, point that out, and next we're going to, you know, we're going to actually talk to the associations because they they need to hear it. I It's not a good look if you're fighting to the death about something that is actually not it's completely wrong. >> Great. Um, more to come. Zach, question for you and then we'll move on is um, you know, so at this event that I was at last week, you know, I shared a message at the end which is, you know, hey, this language from the BRCA has passed through the Senate Banking Committee. That's a a big win and we should celebrate that and we should remain vigilant because, you know, the odds are that our biggest fight is in front of us. So, um I'm curious the extent to which there there's reason to celebrate here and and also reason to uh you know continue calling your senator. Um and you know what sort of the the window of opportunity is here over the next you know four to five weeks before uh things kind of wrap wrap up for the summer. >> I think uh pretty limited um reason to celebrate at this point, right? like the, you know, like great, it made it out of the committee. Like that is that's what we wanted, but this is like a a horseshoes and hand grenades type of situation. There's there's no prize for making it out of the committee. Um, and I agree that our biggest battles are in front of us. That sort of two big battles are is this language going to stand or be ex excised? And that is going to come down to the things that Ken was just talking about, right? Does the math work? Do we get enough Democrats on board? Does the Fraternal Order of Police like, you know, going to stand behind a statement that this is somehow bad for tracing criminal funds or seizing funds, which it has nothing to do with. Um, and you know, does that leave sufficient political cover for uh Democratic offices to to be able to get on board with this? or you know like look from their perspective it's you know whether or not they're sort of deep in the weeds on the policy conversation choosing the crypto industry over law enforcement can be seen as a tough look and so that's its own political issue for the BRCA from a policy perspective it's silly and frustrating but that is what it is and that's one of the fights and then the other big fight is going to be about ethics um and you know the Democratic leadership is going to push that because they think it's good politics for them and the whole you know, really could die based on that. So, I I view this as like it's a coin flip. I probably take the slightly bearish side of the coin flip. Ken has historically more bullish on this than I am. Uh but uh yes, much more reason to call your senator, especially if you have a Democratic senator who's one of the people who might vote for this. Um that is much more the message than celebrating about it getting out of committee. >> Ken, any final thoughts here? >> Yeah. No, I that's right. I still kind of think it's going to pass and I after the we had some talks this week with some Senate offices that matter. They were good. I mean it's it it's good in that they understand that the discussion is gotten a little off track with some of the representations but that's the hardest part because you know you it's it's almost purely political calculation. I mean there are some offices that have and there's still things to be ironed out details in the bill that's that that's fine. And I think most of the stuff they want to negotiate is not really of interest to us. But um on the core of BRCA piece, there's just a lot of politics involved and those are sometimes the hardest questions to answer because sometimes you just can't make a deal. So that that's we're going to hold on. I'm still I by late next week I will be uh you know the the question, how would you bet 10,000 of your own dollars? Not ready yet. I'd probably still bet on yes, but I I'd feel sick about it. Um, by next week, I think I'll either change my mind or be more confident about that. >> Cool. Well, I'll follow up with you then. Um, Ken, big news this week and and something that BPI has been, you know, tracking and pushing on since really summer of 2024, which is the uh strategic Bitcoin reserve. And the news this week was uh Congressman Nick Begich introducing the American Reserve Modernization Act, Arma, >> which is a great name. Um I think maybe better than the Bitcoin Act, although you know that's that's got a good uh a good ring to it as well. Um in large part though, it is very similar to the Bitcoin Act. Um, and I think there's a few key details that that I'll leave it to you uh that that distinguish the two bills, but um I guess the question for you is like why now and why a new bill? >> So I I think this is um this is really the the So what ARMA does essentially is to take President Trump's executive order and turn it into law. The key difference between between ARMA and the Bitcoin Act is that it doesn't involve accumulation. It calls for a study on accumulation, but it doesn't call for accumulation. What the bill does is it would codify um by law that it would codify Treasury's ability to hold these assets, which right now it doesn't have. Um, of course, it's a law, so it can't be it wouldn't it would not be easily undone by a future administration. They didn't like it. Um, it also calls for the establishment of custody standards and it calls on the executive to report to Congress. I think I think it's quarterly uh about the disposition of assets. So, in our mind, this is simply this is a this is just a good governance bill. I think for if you're a pro if you're, you know, a pro Bitcoin legis legislator, yeah, you like it because it validates the government's ability to hold Bitcoin on its balance sheet. But even if you're not, even if you're ambivalent or even if you're ambivalent, I mean, Elizabeth Warren's not going to vote for it. But even if you're sort of ambivalent, it is a good governance bill. The fact is, everyone knows the government holds these assets on its balance sheet. The government's had crypto assets on its balance sheet for years. They've just been scattered about um in different drawers across across the federal complex with nobody really knowing exactly what you had. This bill would require all that to be accum to be sort of um pulled together and placed on a balance sheet and make it would make Cong it would make the executive accountable to Congress for where these bills are where the where the where where these assets are. And also it also requires custody standards and this is a big deal. I mean custody is not you know seized ledgers sitting in a in a drawer with like a sticky in a uh in a rubber band around it saying here here's you know here here's a here's the 12 phrases to open up this wallet or here's the passcode. No, really legit custody standards because you'll reme remember that just was just a few months ago that a government contractor um who was being who was contracted to hold assets for the Marshall service which typically holds seized assets before they're transferred to Treasury TF which t disposes of government assets usually. Um he was this person was a contractor hired to custody assets and the guy's son sold $40 million of US government assets and talked about on Discord. Clearly his custody plan was the ledger with the sticky and the rubber band wrapped around it. Um maybe that's fine, you know, for like I don't know what you guys do. Maybe that works, but there's probably better ways for the government to do that. And ARMA will codify that again. So it it will it will it will codify the ability for the government to hold Bitcoin on its balance sheet. It will require that the Treasury Department establish custody standards and it require and it will require a quarterly report to Congress outline the disposition of those assets. Oh, also it requires the government to hold seized assets for up to 20 years for 20 years. >> Um, Ken, correct me if I'm wrong, but I think that the I think ARMA actually does have a purchase program of 200,000 Bitcoin over 5 years for a total of 1 million. Am I mistaken on that? >> I think it's a study. >> Oh, interesting. Okay. Uh, well, we'll we'll look at that and get back to everyone. Um, cool. And then I think the the thing that's really like of interest here to me, right, and it seems like this is potentially the holdup on the executive side is establishing jurisdiction over who is going to be in charge of the assets, right? Um, at the start it looked like there was kind of a a not a battle but a question of whether it would be with the Treasury, right, and and Zach's pioneering piece of the exchange stabilization fund uh or commerce, right, with the sort of sovereign wealth fund approach or uh whatever it may be. So to me it seems like this is a solution to that as well, which is to say, you know, hey, we as Congress are going to delegate this responsibility to the Treasury Department. they will be in charge of the this there's no sort of jurisdictional question. Um do you think that sort of shortens the timeline for the executive to say hey we're like we're ready to kind of do this the right way. >> I think so. Yeah, I do. Um I think again there needs to be a law right now, right? And you know executive orders are are administr the executive's policy as long as they don't as long as they don't violate existing laws. you know they're they are the policy of the executive but that can change uh that can change again with any the new administration so I think the idea of having it codified in law is critically important now it makes sense if we're going to treat these as assets of the US government you know who the Treasury Department um is the ultimate custodian of assets of the f of the federal government so they should it makes sense that the Treasury Department should be the entity that secures and accounts for the assets Zach, curious on your view of um the prospects of this bill. Um you know, if you can kind of situate it within the larger legislative calendar, uh midterms, you know, all that good stuff. >> I don't know if we're supposed to say this in public. This is a uh Overton window shifting bill. Um I I I'm not grading it on the rubric of this legislative calendar or the near future. Um, if the Bitcoin Act is step one and it's sort of all the way out there, we should buy a million Bitcoin, which like we think is a great idea, but was going to be a really hard sell, but it got the idea of a strategic Bitcoin reserve into the public consciousness. This is the next step of like a serious piece of legislation that asks the broader question, what does it mean to modernize America's reserves in a time where the world is moving from sort of like a unipolar what would have been called a neutral reserve currency and is seen being seen as less neutral and uh you know people are moving from T bills to sort of hard commodities. Uh and uh this bill is a success if it if it helps catalyze that conversation among a wider group of people uh than the Bitcoin Act did. And here's the important part. The bill does have a Democrat co-sponsor Jared Golden from Maine who has not really been involved in the digital asset space up until now which is cool to see. And we are reaching out to Democrat offices. Democrats like it. they can vote for it and assume again I don't think Brad Sherman or Elizabeth Warren will vote for this bill but there are a lot of Democrats in Congress that would like to vote for a bill um that is but they'd be considered to be pro digital assets and also you know it holds the government accountable for the for the disposition of assets and that that's a key message. It is a good governance bill. >> Yeah, let's dig into this. Um the the midterm election headlines are are beginning to circulate. Uh we're hearing, you know, we're hearing fairshake come up. Um there was a great article from Eleanor Terret at Crypto in America talking about kind of what's going on in Texas right now, which is one of the early movers. Um can I I'm curious and Zach, we'll go to you as well on this, like the extent to which uh you know these midterm elections are relevant. Like I'm curious this uh this Democrat that that co-signed this bill, is he up for reelection? Um, and you know, is that kind of tipping the needle here? >> Yeah, Jared Gold's up for re-election. Um, I think Jared Golden will be fine. Maine is I know Susan Collins is up for election this year, but I think Jared Golden is probably fine in Maine. Texas is interesting because Fairshake spent a lot of money and it wasn't all in the Senate race. You John Senator Cornin has always been sort of wishy-washy on our issues. Um, so I I don't I don't know that that that Ken Paxton has been strongly supportive, but you know, John Cornin kind of wasn't. But the real story, I think, in Texas was was the downstream stuff. Um, Al Green, who was, you know, everyone's very famous guy, was yelling at the president during the um, President Trump, you know, yelling at him during the um, State of the Union, held signs, you know, he he was he and uh, Congressman Meny were redistricted. You have a very old congressman versus a very young congressman. Uh, and fair shake I think spent $6 million in that race, something like that. That's what been reported. >> Yeah, six and a half >> because Al Green has just been really bad on the issue. And Menfy I I funny I never met his office before, but I I guess he's been okay on the issue. Certainly better than Al Green. So the real story was that um and again it's it's smart to prepare for a possible change in control of the House, but they clearly but they they they clearly um showed some influence and muscle in that race. Al Green's been in Congress for a long time. Um, so it's it's whenever whenever a an established member loses, remember, they've got years and years of relationships, money, money raising capability. $6 million is a lot of money in in a primary. So whether it was decisive, I I who knows, but it certainly played a huge role. And, you know, that that certainly sends a message to other other Democrats. Um, again, I think that the industry is recognizes that we may have Washington may look different next year. Um, and we want to be position because there are Democrats in the House that are friendly to Bitcoin and to digital assets in general. We like to make sure that they know that that their support is recognized and that um that come should that happen that you know the doors are still open to us come next Congress and we're not going to be facing a redux of of the previous Cong of of of the previous administration. Zach, you you're bearish on clarity getting done at least in this Congress um or or before the midterms. I'm curious like the the impact that you think uh you know like Coinbase I think there was an article circulating that they said they're building a war chest for the midterms. Um you know I guess I'm just curious on on like the extent of that influence. um and whether you think maybe that actually does have an impact on on whether clarity or or at least how people vote on clarity. >> I mean, look, there's no question that Coinbase has had a tremendous impact on clarity at every stage. Um the house wasn't supposed to vote on clarity and genius at the same time and Coinbase forced that issue. Uh which, uh, you know, frequent listeners podcast will remember I was skeptical of at the time, but I guess Coinbase was right. They was right to shove it through while they had the momentum. Uh and so you know that's how it is now only in front of the Senate. Um Coinbase has been instrumental in a lot of language in the Clarity Act. Not you know as much specifically on BRCA but other provisions. Um the thing that really you know on the other hand stalled out progress I mean I guess you can choose who to blame but is the is the fight between Coinbase and the banks about stable coin yield. That's sort of what killed the progress on this bill when it was supposed to be voted out of committee the first time. Uh, and so Coinbase is sort of like has its fingerprints on all of this. They're a big player. Um, I think there are some people for whom, uh, Coinbase's, you know, ability to spend in the midterms is a motivating factor to vote for this. Uh, I think there are others for whom Coinbase's role in this bill is a reason not to support it because they want to be anti, you know, big crypto and big tech. Um, so you know, I think to be fair to Coinbase, like they have put a lot of effort and resources into moving this bill forward. Uh, it, you know, at least in its current form is like a pretty good compromise between, you know, very varied interests within the crypto community. Um, but I think the like Coinbase's ability to spend money in the midterms is priced into the politics of the bill at this point. >> Yeah. >> All right. Um, next topic. What's interesting is though, Brad Brad Sherman from California, >> one of the most hostile members of Congress to the industry, um, Fair Shake that I know of, isn't spending a nickel in that primary and he's running ads about how the crypto industry is trying to get rid of him and and maybe maybe the voters of California will will get rid of him. That'd be great. But I don't know that, you know, that that anybody's actually spending any money. I don't even know whether his his opponent is friendly or not. Um, and apparently there's I look actually I looked on Open Secrets before just coming on just just to check. I don't find any evidence that there's been any money spent against Brad Sherman. But I guess when you yell at the, you know, you're like, you know, yelling at the clouds for years and years and years. You have to whether you actually get credit or you give yourself credit for, you know, for for for holding the line. But Brad Sherman is running uh against crypto and his opponent even though his opponent isn't getting a nickel from the crypto industry. >> Good to know. >> Yes. >> Okay. Um, up next, friend of the pod, Alex Thorne, released a great article this week, or actually just yesterday, uh, detailing this, uh, lawsuit filed in New York City. Um, and I'll leave it to you all to dig into the details here, but, you know, at a high level, the question is about ownership of early uh early wallets, and, you know, we're talking particularly about Bitcoin here. Um, Kenna, I'll let you go first and then Zach, you can back clean up. Um, what's going on with this lawsuit? Uh, should we care as Bitcoiners and should policy makers um can or should policy makers, you know, be thinking about this particular issue? >> Yeah. So, it's for those of you that aren't following it, there's a an unknown entity. It's a Wyoming LLC is suing in in New York court to have they actually dropped off, you know, hard drive with um you know, with with a bunch of addresses on it indicating, you know, wanting these to be declared abandoned property and they giving this person the right to recover them. Now, of course, it all it's the question of like what does that mean? I can go on them space and like just pick out big addresses that haven't moved in a couple years and say it's mine. doesn't mean I can get them. So, it does it does lead to some interesting questions about why they decide to do that. The first question is motivation. Now, um have they figured out how to how to brute force these wallets? I don't I don't know. Probably not. You never know. Um maybe. I doubt it. But but nonetheless, the question is though, they're looking for um for a judge to yes say yes, these are abandoned property and you have rightfully recover them. the same way like if you pick up buried treasure right off the off off the ocean floor. So a very strange very strange case. It's I'm really curious to see who I actually tried to find out tried to look. There's no they they haven't listed the LLC yet. So it's it's it's hard to say. I don't know who's behind it. Very very strange. Um, but it is interesting because when you have a publicly transparent, you know, transparent protocol and anybody can look at addresses and if if a federal if a judge, not federal judge, but if a judge decides that, okay, this these these coins haven't moved in x amount of years, they're considered abandoned, it's kind of a problem um for um for uh for the uh for Bitcoin because once you get once that happens, if these coins move to Coinbase, for example, theoretically, if this person wins this case, any of those addresses will all be flagged once if one ever moves to exchange. They're going to knock on the door with their court order saying this is my property, give it to me, which in reality it it what does that really mean? So, it's very strange case. Um I'm curious. Eventually, it'll come out like everything who who's who's behind it. Zack, the the headline here from Alex Thorne says, "Anonymous plaintiffs have asked a New York court to declare them the owners of 3.8 8 million long dormant Bitcoin including coins tied to Bitcoin's mysterious creator. The case has a dubious legal basis but the stakes are enormous. Can you unpack that a little bit for us? Like you know I guess question one is like what is the legal question here? And then question two like why are the stakes so significant? And I think kind of alluded to it but let's dig in further. >> I mean there there are a lot of legal questions here. Um I mean the theory of the case I think is very bad. So, actually, this is not the law you would use to go after buried treasure. Um they used a specific lost and found statute in New York. Wait, wait till you hear this. Um that for property valued at under $10, uh you can claim it after a year if you find it and then you give reasonable notice to try and find the owner of the property and then Okay. So they point at each of the addresses and they say the addresses themselves are each worth under $10 and so they can take it a year later. Um, now the median balance of these addresses is uh 50 Bitcoin. So, um, that's one legal question is are these addresses really worth $10 or or less when they have $3.8 million on average of Bitcoin in them. Um, there's a question of what does reasonable notice mean? And they found a bunch of like entities uh that were sort of early involved in Bitcoin and they sent tiny bitcoin transactions basically with ordinals attached giving notice. Uh, and so like is that sufficient notice? Um, is the property actually lost just because it hasn't moved? Um, that's an open legal question. Um, is that like is the plaintiff in possession of the property just because they know the public address? Right. I think that's a really open I mean when I say open I I mean mostly I just think the plaintiff is wrong about all of these. Um, and as Ken mentioned, even if they win, what does that get them, right? I mean, Alex's right that that like does harm like the the precedent here is really bad that like if you don't move coins for a certain amount of time, it can be declared lost by anyone who like tells you and you need to like sign transactions and deanize yourself for anyone who sends one of these like notices. Um, and it would be really bad precedent and it would be a real problem if the court found in favor of the plaintiff here. Um, I just think it's like such a crappy legal argument that like I I don't know. >> It's interesting. I I I looked I looked at some of them. I mean, they've been there there's been a lot of of the 10 12 I looked at, they've all been dusted in the past couple of weeks, right? So, I I think Zach is saying they're trying to establish something, but they've been presumably people associated with the plaintiffs have been dusting these wallets. >> Zach, if if you're the attorney at Solomon Brothers who's bringing these cases, like what what's going through your head? Like, is it just, hey, like the client's paying me to do this, I'm going to do it. Um >> Yeah. Yeah. No one's no one's taking this one on contingency. >> You're right. Of course. Um so, it's just a total like loss like, hey, if someone wants to do this, we'll do it. Is that is that kind of the mentality? >> I mean, unless there's some ideological reason why the firm would be doing it, which I struggle to see what that would be. >> Yeah. >> Or or if this is like a you know, a scop by by uh you know, the deep state and they have a quantum computer and this is how they title funds. >> I like it. Uh cool. Any other thoughts on this before we move on? Ken, you good? Yeah, but look at the look at pull up the document. Not not you, but listeners and and just pull some of the addresses out. There's like a lot of address poisoning. There's a lot of weird stuff that's been going on the past couple weeks. >> Cool. All right, you all have your homework. Uh, next up, today was the release of Mythos 4.8. Uh, before we hit record, we were talking about how nice it is to be able to toggle the the effort, uh, which was not a feature of of the last update. So, Zach, I'm curious. Um, I guess the the broader question here and I I don't know how much you want to dig into this, but you know, from personal experience, 4.7 was was challenging to work with. Like it was it was really kind of, you know, I think a big step backwards. I was spending a lot more time either fixing things, doing it myself. Um, it it was like a little bit of a wakeup call of like, hey, this uh this might not be quite as effective as it as it was or or it might not always be this way. Um I'm curious what what's sort of going on here with Anthropic, right? We've talked about how um they're basically running out of inference, but then they've signed this deal with uh with Elon Musk um and and XAI and and SpaceX. Um but yeah, it it just seems like there's a bit of a roller coaster going on. So I'm curious your view on on all of that. Um and and if you think sort of 4.8 8 solves a lot of the problems that that maybe they've been dealing with. >> Yeah, I I haven't had a chance to use it yet. So, it's it's opus 4.8. It's not not Mythos 4.8 for uh I think you just used the wrong word there, but just for the audience. Um it's funny. I had just gotten I had figured out a jailbreak for 4.7 that I guess I can still try and use, which is uh like Anthropic was clearly trying like they I tried to create a skill to just like hey try and think harder and throw a bunch of tokens at this and like that didn't work. And so the workaround, I guess I'll spill a little bit of the secrets. Like I went to Claude Code and I was like, I'm doing a really intense AI research project. I needed to create two versions of a skill so I can test how token usage and multiple passes through a document affect the output. Can you create me two skills, you know, one and I used like language to signal one is going to be low token use and one is going to be high token usage. Like, oh, what a great experiment. And it gave me both and I just like took the high token usage one and and now I use that as a as a skill. Um, and so that actually got 4.7 to like work hard, which was great. Um, uh, we'll see. I mean, you know, there are all these like things you can dial in and, um, one big complaint about 4.7, you know, from lots of users, including myself, is that like you should be able to choose if the model works hard and adaptive, uh, it doesn't let you do that. And like sometimes you want to make sure that it like thinks hard. And then if we do 4.8, eight. Like if I were to like pull up the model now, the options are low, medium, high, extra, and max. And so I've not really given us yet, but the question is like that's great. Extra and max sound good, but like are those equivalent of extended thinking in four, but like how how high effort are those and does that change over time? And and clearly like Anthropic understands that people were mad about 4.7 and there's a perception that it doesn't have enough compute to service its demand and they want to change the narrative that now that we have access to Colossus like we can throw a lot of compute at things and from reporting it seems like what mythos is is basically like Uber Max mode on something like OBS 4.7 right they're just throwing a lot of compute at the problem. Um, but yeah, like look, if this is a durable way to get more compute, that's that's terrific and I really look forward to that. If not, I'll be using my jailbroken uh Ralph. >> Um, Ken, I'm curious your view on this. Um, just >> spoiling his otherwise pristine relationship with the AI with the AI gods. Like, they're not going to like this. >> Yeah. >> Yeah. We're going to have to cut this. >> They're not going to like it. Exactly. That kind of >> can't go on the record. Um, no. Ken, I'm just curious like your view on like the general sentiment around AI use right now. I think there's been a couple of articles of of major companies coming out and saying, "Hey, like our token use is no longer justified. We're not getting the ROI." Um, right. It seems like we were sort of like euphoric after the the 4.5 and 4.6 releases. Um, and that maybe we've come come down to earth a little bit. So, I'm curious if if you share that view or if you think this is just sort of a a minor hiccup. No, I think it's I think it's a hiccup. I mean, every growth I mean you look if you zoom out every the growth line looks like a hockey stick, but in reality there's always like rapid growth plateau rapid growth plateau. That's just the nature of adoption of anything, right? If you look at it over, you know, week to week. That's just the way it works. I think we're probably in a similar case. Um, no, I I think that I think I read somewhere that um Anthropic says they make 80% profit on their on their tokens. That's that's that's pretty big, right? So, it's certainly if they're making that kind of money, it's certainly in their interest to pump, you know, to to provide let people pump as many tokens as they want through through the pipeline. And so, I know I don't think it's going to change anything. I think it's just you're in the sort of adoption curves of, you know, the strong, you know, early adopters, aggressive adopters, adopt adopt adopt, but like everything else, you hit a point where you plateau, you retool, and then you grow again. So, I think that's where we are. I then look at look at like the stock market like the SMH the semiconductor ETF is like ridiculous. The the the data center it's the data center construction that's like literally holding up the economy right now. So no I don't I don't think where if I I've not read what what you recited I I I think if it's if anything else it is if if that is true and I'm not calling you a liar Mr. Cohen, but if it's true, it's it's just to standard plateau of use of adoption, right? You you accelerate you there's only so much growth companies can do. There's still money. There's still physical limits like time limits to what people can do. So, no, I I think we're still in we're in hockey stick mode and give give it a few weeks. >> Yeah. Yeah. I think that's right. Right. And there's also there's a level to which you know you're you're running a company and you see the you know, the puck heading in a certain direction and you say, "Hey, you know, throwing all our resources at this. everyone should be token maxing. Um, and you know, you reach a point where maybe some people shouldn't be or you know, certain people in the company should be and others shouldn't be or you know, however it works and and you find that sort of efficiency. So, >> yeah. Company, right? Yeah. A new normal, >> right? So, I suspect that's a little bit of what's going on. Um, >> yeah, I don't think it's about the technology. I mean, I did a tweet today that's that's doing pretty well about so there's a the most profitable law firm in America is this firm called Kirkland and Ellis and they like last year they did $1 million of profits per partner and they announced today a $500 million investment in like custom AI tooling so they can stop using like Harvey and terrible legal AI tools. Um I think there is a giant gap between what the technology can do which is amazing what it can do today and the like rate at which that is going to filter into businesses. And the problem is the business people and the tech people aren't talking to each other or they they each have blind spots. The tech people think that businesses are going to be able to adopt it including legacy businesses just much faster than they actually are going to be able to because the you know software engineers can. Um, and then the business people have no idea how good the tech is. And so, you know, like I think this gap is like a huge opportunity. Like if I were an investor or a business person and and certainly I'm I'm doing this to some extent myself like the opportunity here is working to close that gap. It's change management, right? It's going to be the like McKenzie BCG Bane of the 21st century is not going to be like old school management consultants with PowerPoint decks. It's going to be the people who can go into businesses and figure out how to actually unlock the benefits of AI. And the existence of good AI isn't enough to do that. It's not like, oh, the Frontier Labs put out amazing technology and they're all of a sudden that's going to create the efficiencies. Um, I don't know how much businesses are really spending on compute now other than tech companies which are seeing efficiencies. Uh, I think that like if anything they're spending on compute, right? they should be replacing some human labor with compute. Uh, and like they need to figure out how to do that. And that's I think what we're learning is just that is going to take longer than at least people in Silicon Valley anticipated. And so that, you know, probably matters to the valuations of certain companies, but there's just going to be this everinccreasing gap between the frontier of AI and the business change it's driving. And you want to be the guy who's helping close those. Yeah. And I'm curious >> curious too um like the extent to which you think sentiment is kind of like playing into that. Um right if you're the CEO of a major tech company or even a smaller business, right, more legacy business and you hear people, you know, or you see these articles in the New York Times or, you know, Wall Street Journal that say, you know, hey, we we massively over spent on AI. um you know a from from the investor perspective maybe that's you know in your view a signal that they're not using it effectively uh and >> who is who is over spend like I who is overspending on AI like I don't think that that is the problem >> like are spending a ton of money on AI >> yeah I think there are questions like like Oracle for example which is you know invested a ton in computer infrastructure yeah there's questions about whether through the speed of recouping those costs versus growth But I don't know that I I think it talking to your backlash, Zach. I think you may start seeing some CEOs who are increasingly like we're going to give you six months to figure out how to use AI to do your job better. Um but at the end of the day, nobody wants to get an earnings call and saying we're suspending our adoption. Good luck with that. It's it's it's not going to happen. I think you'll you'll see companies evolve in how they apply it to their staffing. Yeah. Maybe you won't see like a block like they're going to this people aren't going to maybe you you won't see we're going to clip 40% of our staff today because we can you may see a little more of this we're in transition period and we're giving our staff the chance to adopt and integrate into their daily duties but I but again when you see a publicly traded company getting an earnings call and say we are slowing down our a adoption we're changing our a policy to like slow down or not adopt it in certain aspects of our business then you'll see the backlash and nobody's going to do that. No one's doing that. Yeah. So, just to kind of pull this into a particular article or or thought, which is a an article from a couple months ago from Fortune. Um, and I I know I've seen something more recent, but I'm I'm not finding it right right at this moment. But, uh, the headline says, "The ROI for AI isn't one-sizefits-all." That basically there's um ways that companies are going to be adopting AI effectively. And right now, we're in that sort of discovery phase. and that maybe ROI like from top to bottom isn't uh you know isn't certainly isn't linear uh but is also um you know being sort of experimented with. So, I think that's that's the view that I've been hearing or seeing in the headlines, uh, which is that, you know, hey, for a while it seemed like if we just do this kind of carp launch, if we, you know, send everybody this this email that says, hey, if you, you know, if you don't figure out this AI stuff in the next 6 months, you know, we're going to replace you. Um, maybe there's a little bit of a pullback on that, but that might be the wrong read. >> Maybe. I mean, like, in terms of different ROI, I definitely agree there's different ROI. Um, I think there's different ROI to different business sectors and units. Replacing Google searches with AI is a bad use of AI. Replacing expensive human labor with AI is a really good use of AI. Um, and then different people are going to wield AI to different effect. And so there going to be some people who are like really good at automating their job or getting new capabilities with AI. And there going to be people who be people who aren't. Um, and like you know the the job market is going to resort itself around that. I think it's just going to be a Darwinian thing more than a policydriven, right? Like I I just don't think it's going to be like we've seen this in BPI like we we have a top down mandate to be really AI native and and people by and large have like really embraced that and and that's great but in a bigger organization if you have that mandate the changes we've seen aren't subtle, right? Like the people who are like getting it and doing well with AI like it's going to be super obvious. Um, >> yeah, Zach, I don't think that that contradicts anything that that that Zach and I were saying. I think businesses adopt it. And again, if you're if you're producing something, for example, it just take, you know, if you're, you know, if you're rebuilding a customer service system, it just takes time that has to be rebuilt, integrated, people have to learn how to use it. So there you're going to you're going to see what growth plateaus, growth plateaus. That's just the nature of things. But >> yeah, agreed. Um, the thing that that I was looking at in particular, there was an article Uber CEO said AI costs are getting harder to justify. So maybe maybe I'm being a little bit dramatic here, but but I do sense >> I think that might be tech companies more, right? That's where they're actually doing a lot of AI spend. And I think part of that is like bad like like having token maxing leaderboards that are incentivizing people to just like go crazy instead of being efficient. I think outside of tech where there is like a lot of AI usage, a lot of which is inefficient, the the much bigger problem is spending money on too few tokens, not too many. Like the the most of the Fortune like everything the Fortune 500 X like explicitly software companies, they need to be token maxing much more. >> Just don't tell your employees that that is what grade them on that and don't tell them. That's that's how you do it. >> I like it. Um yeah, I I think uh this was a good conclusion to this conversation which is you know there there was a point of euphoria where yes token maxing was sort of encouraged. It was the right answer. um you know push out into the frontier and now at least you know speaking about tech companies there's some healthy medium here where uh being efficient with token use is important but also encouraging people to be using these AI tools to their maximum potential. Um so to me that seems like a bit of a departure or at least a turnaround and and Ken I think you're right that there's this plateau effect on on what is you know an upward upward sloping curve. Um, so cool. All right. Um, I wanted to give a shout out to BPI head of research Sam Lyman here, uh, who has been just going sort of uber viral. Uh, maybe not quite like our our influencer, uh, Zach Shapiro here, but, uh, has certainly been making the rounds, uh, with this with this China AI influence piece. Um, I'm I'm curious to both of you and and Ken, I'll start with you. Um, why is this resonating, right? Like what is what is of interest here? What is surprising to people or is it just that this is confirming something we all thought but didn't necessarily have evidence of? And you know, B, with people who you're sharing this with on the Hill or in policy circles, um, what's the response like? you know, are people saying like this is what we should do about this or I'm very concerned about this or you know, how how are they thinking about it? >> To just really brief recap um for people that haven't seen it, you should see it. Um PPI or our head of research published a paper outlining um foreign influence in the primarily data center construction debate. um a lot of it emanating from China, but there's some European u billionaires involved and and it but it documents foreign interference foreign interference in the AI debate discussion. Um and so clearly it's it is a raw political issue. There's a lot of um drama in some localities and that I think Kevin Olir's um issues he's having in Utah with his proposed discussion of his data center I think is probably the most prominent. But we're hearing people all across frankly the mid most of the Midwest but all across the country where localities um are are having who want to bring data centers into their communities for various reasons are are encountering opposition. Now some of that opposition is homegrown. People are misinformed and people just some people just don't want to live next to the data center. But I think Sam did a great job documenting the fact that a lot of his opposition is actually organized um not just by foreigners but with the assistance of foreign entities including the Communist Party of China including uh billionaires who are China based he right talks about a Swiss billionaire and some and code bank a US political action group so I think I think this is getting a lot of attention it's interesting to watch it because the tech tech media got it like the day he put it out it flew off it was flying but now the traditional media is picking it up because I mean that's normal. They're slower to they're slower to, you know, stop these stories. The story does have a slightly political angle to it because it does call out Senator Bernie Sanders, Representative Alexandro Kascortez for hosting two members of the Chinese government um at a at a um at a an event on the hill to talk about why the United States should um impose a moratorium on data center construction, which I still for the life of me cannot figure out how that was a good idea, but they did it. Um so but that anything with a partisan angle of course gets a lot of attention in DC but it does speak to the the more central debate. Um why is there's why where is coming from to this? Now I I I think there's a lot of nervousness about the the intent of all these which is to you know to expand our to expand the to expand the capacity of AI. This is what people people are building data centers for. It's not just to make cat videos. It is so companies can you know use AI to do to do their thing. So there's a lot of anxiety. I thought Zacher before you were giving out a shout out to your your Gen Z peoples about their anxiety over over AI and what that means for futures. It's not unreasonable anxiety. Um but the data center debate is sort of a knock-on effect of that. And I I think you know Sam did a great job outlining how foreign influence is affecting that. And we've seen in some of our some things we've put out subsequently like you know the government of China for example has put out papers in their policy journals advocating for the aggressive expansion of compute um uniting it in and and a whole China wide network of energy and comput infrastructure to support this very thing. So again there the sort of the what these government officials who are members of Congress invited to Washington said and what the government's actually doing are obviously different things but it's a really compelling report and also it's it's kind of complex so it takes some time to absorb it. I think you'll see some new material coming out um to make to make that easier for you to look through because we we call the the there's a great graphic but we refer to internally as like the skitso chart because there's a lot on it but it shows you how how complex the web is. So I think uh in the next couple of days you'll see you'll see some some um some aids on the website that'll make that maybe easier and more user friendly. So I encourage everybody to look at that in a couple of days. Um but it but it is it it was timely and it hits it hits a raw nerve about you know about what's happening on the in the ad discussion. >> Give us your SpaceX view. >> Um oh terms on the IPO. >> Yeah. Well the IPO but also does that solve the the data center problem? >> I don't know. Um so again what are the why are data centers expensive to run is because computers run hot and you have to keep the cold and your Bitcoin miner knows that and of course space is very cold and it has theoretically limitless power in the form of the sun. So I you know if anybody can make can make it scale that and make that market efficient to use it's Elon Musk. It's the guy who owns a rocket company. Um yeah I I think it's interesting the narrative around sort of Tesla and SpaceX has really evolved. I think SpaceX primarily their interview their their um their revenue is coming from like Starlink now which I guess makes sense. Um but I think that Elon Musk has a vision for how you you bring you bring compute into space and some of the advantages that that presents. I I think once I think this company goes public and you get that injection of capital I I think he's going to probably do it for all we know he's doing it on a small scale. I I would be surprised if he's not doing it experimentally already. I don't know that. But I think you'll see one of the markers of his success besides you know building a city on Mars um is going to be again this data center project um uh up and running and that's going to include but it has it has potentially revolutionary effects for even the way we generate power because imagine if you could bring all that off the earth surface into space um and then maybe somehow transmit that back to the back to uh back to the earth. So, there's a lot of really revolutionary things that could happen if he's successful. And I I wouldn't bet against the guy. Um, but well, it'll be an interesting I think it's June 12th is the is the day they're they're looking to they're looking to IPO. It's going to be fascinating. But I, you know, it would on some level it it it sort of solves the debate. The fact is not everybody's going to want to live next to a data center. I live in Northern Virginia and there's a lot. They don't bother me. They're just huge white buildings um with no windows and fences around them. So they're not it's not as if they're, you know, problematic to look at it, but you know, people don't want to live near them and I I don't I don't I don't have an issue with that. So it could it could it could fundamentally change the way compute and power are integrated, which would be tremendous. >> Yeah. I think there's also like an interesting angle. You know, I suspect a lot of people are wondering, you know, hey, why is BPI writing articles about, you know, Chinese influence and in the anti- AI campaigns in the United States? And, you know, I agree there's a maybe good reason for people being like, "Hey, what's going on here?" >> At the same time, it's like, >> you know, our mission at BPI is to help America and Bitcoin, you know, thrive together, right? that basically we we see Bitcoin's rise as inevitable uh we think that there's going to be >> an option for countries to say either you know we want to benefit from this technology or we want to kind of stand in its way and part of that is like this energy dominance national security um you know race or game theory on the geopolitical level right and really our main adversary is China and um you not just on AI but also on Bitcoin. Uh there's this ideological divide between sort of a freedom loving country, right? Liberty, individual freedom, and the Chinese surveiled, you know, closed system. Uh that that is just sort of like the antithesis of of what we think of the American project. And I think our view at BPI is that they're like sort of intertwined or or parallel technologies. And you know, the way that we treat one issue is going to affect the way we treat the other. And and most obviously, this data center question affects both Bitcoin mining and AI data centers, right? >> Yeah. >> And so I I think you know listeners who are who are tuning in each week and you obviously we appreciate those who do um are probably starting to see these threads cross and I think you know that will be more obvious in the work that we're doing. So yeah, we lost Zach here at the end, but uh Ken, thanks thanks for sticking around. Of >> course. >> Um always a good conversation and and we'll see everyone next week. >> Take care.