Bloomberg Crypto 04/09/2024
Summary
TLDRThis Bloomberg Crypto episode discusses the upcoming Bitcoin halving and its potential impact on the market, with insights from Marathon Digital's CEO, Fred Thiel. The show also covers the ongoing Senate hearing on illicit finance and features Circle's head of global policy, Dante de Sparty, who addresses the crypto industry's role in such activities. Additionally, the episode touches on the latest developments in the case of TerraForm Labs co-founder Do Kwon, who faces extradition and fraud charges.
Takeaways
- π The Bitcoin halving is approaching, with significant implications for miners and the market.
- π° Bitcoin's price has seen a recent increase, but the upcoming halving event could affect miner profitability.
- π Marathon Digital, a major mining company, is optimizing its operations and facilities ownership to mitigate the impact of the halving.
- π The U.S. Senate is holding hearings on illicit finance, with a focus on the role of cryptocurrencies in such activities.
- π‘οΈ Circle's head of global policy discusses the need for clear regulations and the industry's efforts to combat illicit use of crypto.
- π The crypto market is experiencing a broad decline in prices ahead of key inflation data release.
- π Ethereum's price is still below its 2021 highs, indicating a potential shift in market sentiment.
- π Marathon Digital is focusing on energy efficiency and international expansion to stay competitive post-halving.
- π The company aims to have 50% of its revenues from outside the U.S. by 2028, diversifying its revenue streams and operations.
- π‘ The concept of 'energy harvesting' is introduced as a potential future for Bitcoin mining, utilizing waste energy sources.
- π The U.S. is making progress in efforts to extradite TerraForm Labs co-founder Do Kwon for fraud charges related to the 2022 collapse of his company.
Q & A
What is the significance of the Bitcoin halving event mentioned in the transcript?
-The Bitcoin halving is an event that occurs approximately every four years, where the reward for mining new blocks is reduced by 50%. This event is significant as it reduces the supply of new Bitcoins entering the market, which can potentially impact the price of Bitcoin and the profitability of miners.
How does the Bitcoin halving affect miners' revenue?
-The Bitcoin halving affects miners' revenue by cutting the block reward in half, which directly reduces the amount of Bitcoin they earn for mining new blocks. This means miners will earn half the amount of Bitcoin they were previously earning, which could potentially lead to lower profitability unless the price of Bitcoin increases to offset the reduced rewards.
What is Marathon Digital, and what is their strategy in response to the upcoming Bitcoin halving?
-Marathon Digital is one of the largest Bitcoin mining companies in the world. In response to the upcoming Bitcoin halving, they are focusing on optimizing their operations by consolidating their hosting facilities, increasing energy efficiency, and exploring new technologies and revenue streams to maintain profitability.
What is the role of Circle's head of global policy, and how do they view the depiction of the crypto industry in the context of illicit finance?
-Circle's head of global policy is responsible for shaping the company's approach to global policy issues and engaging with regulators. They argue that the crypto industry is often unfairly depicted in discussions about illicit finance, emphasizing that it is not the technology itself but bad actors who exploit any financial system for illicit gains.
What is the current status of the TerraForm Labs co-founder Doak Wan's extradition case?
-The Montenegro Supreme Court has overturned earlier decisions to extradite Doak Wan to South Korea, but the U.S. is working on getting extradition approval. Once the court decides on the country to which Doak Wan will be extradited, he is expected to be brought back to the U.S. to face fraud charges related to the collapse of TerraForm Labs.
How has the ETF approval impacted the Bitcoin market according to the Marathon Digital CEO?
-According to the Marathon Digital CEO, the ETF approval has been a huge success and has attracted capital into the market. It has essentially brought forward price appreciation that typically would have been seen post-halving, thus impacting the market dynamics and investor behavior.
What is the role of the U.S. Deputy Treasury Secretary in the context of the Senate hearing mentioned?
-The U.S. Deputy Treasury Secretary, Wally Adeyemo, is involved in a Senate hearing discussing efforts to counter illicit finance. His role is to represent the U.S. Treasury's stance on the issue and to discuss potential strategies and policies to combat the use of cryptocurrencies for illicit purposes.
What is the significance of the daily revenue for crypto miners relative to the price of Bitcoin?
-The daily revenue for crypto miners relative to the price of Bitcoin is significant as it directly correlates with the profitability of mining operations. Higher Bitcoin prices generally lead to higher revenues for miners, but the upcoming halving event will impact this dynamic by reducing mining rewards, thus potentially affecting miner profitability.
What are the key points of Circle's strategy to combat illicit finance?
-Circle's strategy to combat illicit finance includes operating according to all the rules governing money transmission in the U.S., adhering to anti-money laundering and countering the financing of terrorism and U.S. sanctions. They also focus on collective defense within the industry and promoting compliance with responsible financial norms globally.
What is the potential impact of the Bitcoin halving on less efficient miners?
-The Bitcoin halving could potentially push less efficient miners over the edge if the price of Bitcoin drops significantly. These miners may have to stop mining and could become acquisition targets, as their machines are less energy-efficient and may not be profitable under the reduced mining rewards post-halving.
What is the future vision for Bitcoin mining according to Marathon Digital's CEO?
-Marathon Digital's CEO envisions a future for Bitcoin mining that moves away from large data center sites to smaller, more distributed sites that can utilize stranded energy sources like methane from landfills or biomass from industrial processes. This approach aims to achieve zero-cost energy for mining, where the energy cost is offset by the value generated from selling heat back into industrial processes.
Outlines
πΊ Introduction to Bloomberg Crypto
The script begins with an introduction to the Bloomberg Crypto show, hosted by Sonali Basak and Tim Stanley. They set the stage for the episode, highlighting the focus on people, transactions, and technology shaping the world of decentralized finance. The hosts mention the upcoming Bitcoin halving event and discuss the Senate hearing on illicit finance, featuring Deputy U.S. Treasury Secretary Wally Adeyemo. They also touch upon the legal issues surrounding TerraForm co-founder Doak Wan, who is found liable for fraud in a U.S. government lawsuit. The introduction ends with a brief market update, noting the overall downward trend in the crypto market ahead of key inflation data.
π Impact of Bitcoin ETFs and the Upcoming Halving
In this segment, the discussion revolves around the impact of Bitcoin ETFs on the market and the anticipation of the Bitcoin halving. The hosts explain how the ETFs have attracted capital into the market, potentially bringing forward price appreciation that would have been seen post-halving. They discuss the significance of the halving event, which will reduce the supply of new Bitcoins and the implications for miners. The segment features an interview with Fred Thiel, CEO of Marathon Digital, who shares insights into how his company is optimizing operations ahead of the halving, including reducing costs and expanding facilities. Thiel also discusses the potential for Bitcoin mining to evolve towards more decentralized and energy-efficient models.
π Global Expansion and Industry Challenges
This paragraph focuses on Marathon Digital's global expansion strategy and the challenges faced by the Bitcoin mining industry. Fred Thiel discusses the company's goal to diversify its revenue streams and expand internationally, with an aim to have 50% of revenues from outside the U.S. by the next halving in 2028. The conversation also touches on the importance of a vertically integrated technology stack and the potential for Bitcoin miners to utilize stranded energy sources, such as methane from landfills, to offset energy costs. Thiel emphasizes the need for the industry to adapt and evolve to maintain profitability and sustainability in the face of market dynamics and regulatory pressures.
π Combating Illicit Finance in Crypto
The focus of this segment is on the efforts to combat illicit finance within the crypto industry. The hosts discuss the testimony of Deputy Treasury Secretary Wally Adeyemo at a Senate Banking Committee hearing, which highlighted the use of cryptocurrencies by terrorist groups and other illicit actors. Circle's Chief Strategy Officer and Head of Global Policy, Dante de Sparty, shares his perspective on the issue, emphasizing the need to distinguish between the technology of crypto itself and the bad actors who exploit any financial system for illicit gains. He argues for a collective defense model within the industry and highlights the importance of complying with regulations to deter and identify illicit activities.
π Updates on TerraForm Labs Case and Extradition
The final paragraph provides an update on the legal case against TerraForm Labs co-founder Doak Wan. The hosts discuss the ongoing extradition process in Montenegro and the likelihood of Wan being sent back to New York to face fraud charges. They also mention the potential scale of the trial, comparing it to that of Sam Bankman-Fried, and discuss the broader implications for the crypto industry. The segment concludes with a brief mention of other individuals associated with TerraForm Labs who have been arrested or indicted.
Mindmap
Keywords
π‘Bitcoin halving
π‘Decentralized finance (DeFi)
π‘Cryptocurrency
π‘Senate hearing
π‘Illicit finance
π‘Marathon Digital
π‘Market snapshot
π‘Ether
π‘Risk appetite
π‘TerraForm Labs
π‘Cryptocurrency mining
Highlights
The Bitcoin halving event is approximately ten days away, which will reduce the supply of Bitcoin by about 450 per day.
The ETFs approval has been a huge success, attracting capital into the market and bringing forward price appreciation typically seen post-halving.
Marathon Digital, the largest miner and mining company by market cap, is focusing on scaling quickly using an asset-light model.
Marathon Digital is transitioning from relying on third parties to building and owning more of its facilities, increasing efficiency and reducing costs.
The halving event will make mining Bitcoin more expensive, potentially impacting miner profitability and leading to industry consolidation.
Marathon's fleet is among the most energy-efficient in the industry, which could give them an advantage post-halving.
Marathon Digital's average cost to mine Bitcoin is in the low $20,000 range, which will double post-halving.
Marathon Digital aims to have 50% of its revenues from outside the U.S. by 2028, diversifying its operations geographically.
Marathon Digital is investing in a vertically integrated technology stack, including pool software and firmware in miners, to optimize operations.
The future of Bitcoin mining may involve smaller sites utilizing stranded energy and heat generation for industrial processes.
Circle's head of global policy discusses the need for understanding the nuances of crypto and focusing on bad actors rather than the technology itself.
Circle operates according to all rules governing money transmission in the U.S., including anti-money laundering and countering the financing of terrorism and U.S. sanctions.
The crypto industry has been working on enforcing good standards and self-regulation to combat illicit activities.
USDC, Circle's stablecoin, is rarely used for illicit purposes due to Circle's strict compliance with financial regulations.
TerraForm Labs co-founder Do Kwon is likely to be extradited to New York to face fraud charges related to the company's 2022 collapse.
The U.S. is making progress in its efforts to try Do Kwon for fraud charges, with Montenegro's Supreme Court overturning decisions to extradite him to South Korea.
The potential trial of Do Kwon in the U.S. could be on a similar scale to that of Sam Bankman-Fried, given his prominence in the crypto industry.
Other individuals associated with TerraForm Labs have also been arrested and indicted in South Korea in relation to the company's collapse.
The crypto market is seeing a decline across the board in anticipation of key inflation data, with Bitcoin and Ether both experiencing price drops.
Crypto-related stocks are also moving lower, with companies like Coinbase and MicroStrategy seeing declines despite strong year-to-date performance.
Transcripts
Live from Bloomberg's world headquarters in New York.
I'm Sonali Basak. And I'm tim stanley back.
Welcome to Bloomberg crypto. We'll look at the people transactions
and technology shaping the world of decentralized finance.
The Bitcoin halving is now about ten days away and we're going to talk to one
of the largest miners in the space, the CEO of marathon Digital.
Plus, in D.C. right now, a Senate hearing is underway
with Deputy U.S. Treasury Secretary Wally Adeyemo
discussing efforts to counter illicit finance.
We're going to talk to Circle's head of global policy who pushes back against
how the industry is depicted on the issue.
And we're going to get the latest on the whereabouts of TerraForm co-founder Doak
Wan, as he is found liable for fraud in a U.S.
Government lawsuit over the firm's 2022 collapse.
All that and more coming up over the next half hour.
But first, here's a snapshot of the market today.
We're seeing crypto lower across the board as we see at risk off day in
general ahead of key inflation data tomorrow.
That set a relatively steady march higher for Bitcoin.
Over the last week, though, we are shy of $70,000 over the last seven days,
higher by 5.4%. Bitcoin did reach a high of 72,500
yesterday. Remember the all time high set last
month? 73,797.
And here's that sea of red ether also moving a leg lower today, down 4.3%.
Remember ether still not back to its 2021 highs of 40 $800.
Crypto related stocks also moving lower today after surging yesterday on a
Bitcoin rally. Coinbase now down 4.4%.
MicroStrategy also rallying yesterday, down today by 7.3%.
Remember, both of these stocks up double digits year to date.
We should note that MicroStrategy up more than 100% so far this year after
last year's 350% increase Ali. And Tim, I also want to take a look at
that dynamic you were talking about of Bitcoin relative to ether, because it is
sending a signal. According to crypto trading firm Qcp, it
is hinting at a possible slowdown in risk appetite for crypto and the pattern
could be a very early signal, they say, of FOMO morphing into fear.
If ether is viewed as a proxy for sentiment towards smaller tokens.
Now what we're looking at here is that ratio really being at the highest level
since back in 2021 before Bitcoin, much more valuable than ether.
Finally, the two converging into 2021 a little bit more and back still now
Bitcoin being more valuable and ether being a little more stagnant.
But remember, ether is still one of the largest crypto assets out there.
Tim And it is difficult to say about what it means for the sentiment for the
rest of the smaller crypto tokens out there.
Okay. Well speaking of Bitcoin, I do want to
take a look at how things look ahead of the having.
Here's another chart. This is the daily revenue for crypto
miners relative to the price of bitcoin. This chart courtesy of Deutsche Bank.
Now on the left axes, what you see here is the daily bitcoin miner revenue.
Then over there on the right axis you see the price of Bitcoin.
Perhaps unsurprisingly, miners make more money when the bitcoin price is higher.
Hit a record level this year. Now that the having is coming up this
month though, it's going to cost more to mine an individual Bitcoin.
So unless prices go up and miners are able to actually mine for less profit,
margins are at risk. Bloomberg Originals explored how the
having will work. On the horizon is a pre-ordained event
that will change the business of Bitcoin forever.
It's called the Having. It will become much more difficult for
miners to produce new coins after the having margins will be cut overnight by
50%. So the halving might be good for the
holders, but it's not necessarily good for the miners.
Some companies are either bulking up for scale or finding ways to diversify.
Some companies that in the past were Bitcoin mining.
They've shifted over to training these ever bigger A.I.
models. This is kind of a moment for Bitcoin
that is arguably one of its biggest ever.
21 million. That is the total number of bitcoins
that can ever exist in over 19 million of those have already been awarded.
The having is the mechanism designed to create scarcity and control Bitcoin's
limited supply. It happens every four years, and when it
does, all future block rewards are cut in half.
The having is a natural phenomenon in Bitcoin that disciplines the entire
market and forces it to become more efficient.
Let's now bring in Marathon Digital's Fred Thiel, the CEO of the largest miner
and mining company by market cap. And he comes to us from Washington.
And it's worthwhile to start with the prices here of Bitcoin and how you think
it might be impact into the having a lot of questions out there of whether a lot
of those rises have already been baked in.
Well, I think the ETFs approval, which has been a huge success, has attracted
capital into the market and essentially brought forward what could have been the
price appreciation we typically would have seen 3 to 6 months post having.
So I think we're seeing part of that now already.
These ETFs 11 were approved. Four of the 11 ETFs are the most
successful ETF launches on record ever, and the total amount of capital in the
ETFs already has surpassed 50% of the amount of assets under management in
gold ETF. So what has happened in three or four
months compared to 20 years with gold is pretty astounding.
And so we think that has pulled forward some of the demand.
The having event will reduce the supply of Bitcoin by about 450 a day.
The new emissions of Bitcoin, which will have some small impact on price most
probably. But as miners, we're very excited to go
into a having where for once price has not declined prior to the happy, but
rather price has gone up. So everybody is obviously maximizing and
optimizing to that. Right.
Fred, I want to talk about exactly what you're doing to optimize ahead of that
having over at Marathon, you guys on average mine about 28.7 Bitcoin each
day. What are you doing to decrease the cost
since it's going to cost you more to mine these bitcoin?
What are you doing to save money and easier margins?
Great question. So we built the business and scaled very
quickly using an asset light model where we essentially relied on third parties
to build the infrastructure, the hosting, the data centers.
If you want, then we would come in, plug in our miners.
So 100% of our CapEx was invested in miners that allowed us to scale to
become the largest miner, publicly traded miner, arguably in the world.
Then in December, we went and started looking at those hosting relationships
and we started moving to consolidate them.
And we now have gone from owning less than 3% of our facilities to owning over
53% of our facilities in just a few short months.
The benefit there is it allows us to essentially take out the middleman and
take out the margin that we were paying a third party to build infrastructure
and manage it. And we were able to do that at a cost
less than the replacement cost for those assets.
So a net net great gain for our shareholders in that regard.
We'll continue to do that as we move forward as well as continue to expand
through owned and operated facilities both in the U.S.
and abroad. Average daily Bitcoin produced you have
at 28.7 as of the end of February. When you think about the having how is
it going to change your economics and what you see in terms of Bitcoin rewards
you think? So the essentially, if you look at the
number of 28 eight on average per day, that would tend to be 14 roughly per
day. We'll have to see the impact, if any, on
the global hash rate, remembering that Bitcoin mining is a zero sum game.
Today there are 900 Bitcoin made a day or committed a day post having it'll be
450 and all the people mining or vying for that.
So all our computers, we paid for that. So the key is to be one of the most
energy efficient miners. Marathon's fleet is amongst the most
energy efficient in the industry. Those miners that have less efficient
machines may have to shut off, but the high price of Bitcoin right now
essentially has made it profitable for even marginal miners to mine.
Post having what we'll have to see is really what happens to the dynamic if
the price of bitcoin were to drop ten $20,000 per bitcoin, that could
potentially push some of the more marginal miners over the edge and they
would have to stop mining and they could become acquisition targets potentially.
You also have a fairly large number of rigs, the computers, if you will, that
miners use that are not very energy efficient, that will be marginalized by
this having. So it'll be very interesting to see what
happens. But we're very focused on both organic
and inorganic growth. And we believe that the industry
globally is going to continue to grow in that hash rate, to continue to mine and
secure the Bitcoin blockchain. Fred, on average, how much does it cost
you to to mine a Bitcoin and like what's the cost of extraction in then?
I'm wondering also about potentially moving more outside of the U.S.
perhaps to find cheaper energy. Sure.
So our average cost to mine Bitcoin across all the facilities is in the low
$20,000 range today. And by that we include the energy cost
as well as the operating overhead of the people on the ground that run the
facilities, any cost to run the facilities, etc..
So it's the marginal cost of mining bitcoin, if you would,
that will now go to about $46,000 on average.
Obviously, the people cost doesn't increase.
It's just the amount of effort, the amount of energy that the miners have to
do that will double. So domestically, we're still going to be
in a great position. We operate today on three continents,
North America, the Gulf region and Africa, as well as
Latin America and Paraguay. We're going to continue to grow our
business internationally. And one of our goals is to have 50% of
our revenues from outside of the U.S. by 2028, which is the next having in
line after the one we're going to have here in a couple of weeks.
The other thing we're doing, we're very focused on a vertically integrated
technology stack. So everything from our pool software,
which is the orchestration layer that kind of controls what our miners do all
the way down to the firmware in the miners and also investments in
technology through a company called Paradigm, which is the only U.S.
manufacturer in the space located in Silicon Valley.
And then also immersion or truly tech knowledge.
And we just released some very interesting emerging technology at the
Empower Conference in Houston a few weeks ago.
And so we think that even the A.I. industry will have interest in that.
So diversifying revenue streams, optimizing existing operations, we
continue to expand very quickly here. How do you feel about the future when it
comes to your industry? You kind of alluded to this idea that
players could be washed out. When we think about the dynamics and the
pressure that it puts on the Bitcoin having rewards being less this cycle and
of course in future cycles, how are you preparing for that potential wash out?
You mentioned acquisitions. What do you do today to prepare for that
opportunity and how big do you think that will be?
Yeah, great question. So we are believers that Bitcoin miners
have to try to strive to get to zero cost energy.
What do I mean by that? It means that basically the only way
we'll survive long term is that our cost of energy is offset by something else.
So we have started an initiative that we call energy harvesting.
This is where we are going to landfills and using stranded methane gas from
landfills. It could be oil fields, it could be
biomass from beer brewing, ethanol manufacturing, methanol manufacturing,
where you take that biomass, convert it into energy and then feed back into
whatever that industrial process was. Heat industry pays about 50% of the
energy cost for industry is spent on heating things.
And so Bitcoin miners are great at generating heat.
When they mined Bitcoin, about 95% of the energy that goes into a chip that
mines Bitcoin comes out as heat. So we believe that Bitcoin miners will
be able to essentially take stranded energy in the form of methane, biomass,
what have you generate electricity, generate heat, sell the heat back into
an industrial process. All of that subsidises the cost of
mining Bitcoin because Bitcoin is simply how we generate the heat that we sell
back. And I think longer term bitcoin mining
will move from being these large data center sites with hundreds of megawatts
to being hundreds of thousands of much smaller sites that are doing everything
from heating buildings in Finland to mining to heating greenhouses, eating
shrimp farms, industrial processes, ethanol plants, processing corn waste,
cow manure at dairies, etc. That's the future for Bitcoin mining
long term. Fred, we thank you so much for drawing
out the future the next couple of weeks and frankly the next couple of years
ahead. That is Marathon Digital CEO Fred Thiel.
Now coming up, we're going to talk to Circle's global head of policy, pushing
back on the idea that the crypto industry's role in illicit financing.
Just as the Senate holds a hearing today just on the issue and the chances of
terror reforms, Erdogan heading to the U.S.
to face fraud charges are rising after Montenegro's Supreme Court blocks his
extradition to South Korea and access all the latest data and news on crypto,
check out, see our wiki. Go on the Bloomberg terminal.
This is Bloomberg.
We are increasingly concerned about the ways these actors are using
cryptocurrencies to circumvent our sanctions.
For example, years ago, al Qaeda and affiliated terrorist groups, largely
based out of Syria, operated a Bitcoin money laundering network using social
media platforms to solicit cryptocurrency donations.
After receiving virtual currency, they launder the proceeds through various
online gift card exchanges to be able to purchase what they needed to advance
their own agenda. That was Deputy Treasury Secretary Wally
Adeyemo at the Senate Banking Committee hearing on countering illicit financing
and conflicts in Russia and Gaza and highlighted Crypto's role in those
efforts in particular. We're going to discuss what's going on
with Circle Chief Strategy officer and head of global policy, Dante de Sparty.
If you think about the testimony that was put forward today in Congress, how
do you think about the Biden administration's approach to financing
through the crypto industry, particularly when it comes to
Stablecoins? Well, one of the things that I think is
a little bit candidly frustrating at this point in time is that the Biden
administration was the administration that issued the first executive order on
blockchain and digital assets calling for a broad whole of government study of
the sector. But yet, notwithstanding that, and
notwithstanding many calls from people like Secretary Janet Yellen, Chairman
Powell and Deputy Secretary Adeyemo himself on Congress to act to
effectively equip the U.S. government and regulators and others
with rules for the for the space. We're still seeing this this era of
congressional inaction. And that's that's an item that is, for
us, very frustrating as a company. Circle operates according to all of the
rules that govern money transmission in the U.S.
We we, of course, abide by all the rules for anti-money laundering and countering
the financing and terrorism and U.S. sanctions.
But but in a world where the U.S. doesn't get stablecoin legislation
across the finish line, we think much of the industry will be defined by the
worst actors in the space. Well, I'm wondering, in your opinion,
how to stop those worst actors in the space?
Just to repeat a little bit of what we heard from Deputy Treasury Secretary
Wally Odhiambo just in the last moments. He talked about North Korea and Russia
among the state actors, increasingly using digital assets.
He talked about the Iran Quds Force sending crypto to militant groups, Hamas
and the Palestinian Islamic Jihad in Gaza.
What, in your opinion, is the best way to stop illicit actors from using
crypto? Well, I think the first order of
business and I know your program studies crypto very carefully, is to understand
the nuances, the term of art. Crypto is a neutral term of art that is
frankly no more politically motivated than the Internet itself.
What we really need to identify, especially when combating illicit
activity, are the bad actors or the bad products or the bad nexus of actors,
government and non-government that may take advantage of any financial system
for their illicit gains. And that's a really critical
opportunity. I recently wrote an op ed, in fact,
anticipating the Deputy Secretary's testimony today in Coindesk that
underscored this point that crypto itself doesn't have an illicit finance
problem. Bad actors do, and bad actors will
exploit any financial system to get away with it.
And all of us in the industry and beyond have to work together in a model of
collective defense. The Deputy Secretary has called on the
Senate and Congress to give the Treasury new authorities.
The industry has also done quite a lot in enforcing good standards across the
sector. So while I can understand your point
here that it's not just a concept of a bad product, but bad actors, and you've
also heard, of course, through the crypto industry where people have used
cash for illicit reasons as well. And a lot of these actors have been
found through the use of blockchain and being able to track what's going on.
With all that said, Dante. I think that given everything that's
happened with the significant fines you've seen coming out of the Treasury
and significant actions coming out of the crypto industry that have been bad
over the last couple of years, how does crypto kind of save itself from this
reputation? And victims question distanced itself
further from those bad actors that you're talking about?
Well, it's a good point. And obviously I'm one to avoid false
equivalencies. And, you know, comparing all of crypto,
for example, to all of cash. But I do think it's a really critical
opportunity to underscore where there are good actors using new technologies,
blockchains, digital assets and cryptography, to say the least.
We could demonstrate not only better performance than peer institutions, we
could we could even get to a state with illicit activity of what I would like to
describe as effective deterrence. For example, in a recent Tehran Labs
report looking at illicit financing, illicit finance economy in the space
they're reporting has identified that Usdc circle's stablecoin is used almost
rarely 99.9 95% of the time. Usdc is used for illicit purposes, and
that is, in our view, a function of the fact that circle has structured itself
to be compliant with all of the rules and norms that responsible actors
anywhere in the financial system must abide by the gap that the United States
has. Is it not promulgating those standards
around the world? We're going to have to leave it there.
Circle Chief strategy officer, head of global policy, Dante de de joining us
from Paris. Coming up, the US closer to getting
extradition approval for Montenegro after finding dope on an terraformed
land liable for fraud. This is Bloomberg.
While Montenegro's Supreme Court overturning earlier decisions to
extradite TerraForm Labs co-founder Dau Quan to South Korea, boosting U.S.
efforts to try the former crypto mogul for fraud charges.
Bloomberg's Eva Benny Morrison joins us now.
Eva, good to have you with us. What does this mean for Doc one?
Doc one has been stuck in this tug of war over his extradition in Montenegro
for the past 12 months. So it means that he is more than likely
going to head back to New York, where he'll be on trial for fraud charges.
Prosecutors here allege that he misled investors over the over his company,
TerraForm Labs, before it collapsed and wiped out almost $40 billion in investor
assets in 2022. How do you see this all playing out,
given the issues with extradition? How does it complicate the timelines and
the ability for the US to do their part of the job here?
One of the unusual parts of this case is Japan has actually consented to
extradition. He hasn't consented to where he will go
because that decision is not really up to him.
So once the court makes a decision on where he will go or if the justice
minister can make a decision on which country he goes to, we'll expect to see
him back here on U.S. soil, more than likely pretty soon.
Okay. So when he is here on U.S.
soil, is it a trial the likes of what we saw with Sam Bankman-fried?
Is that the sort of thing we're talking about here?
It could be this. Dogecoin is a big figure in the crypto
industry, and this would be a really big case if he chooses not to play.
Not to plead guilty. He will go to trial and we could see
something on a similar level to Sam Bankman-fried Strong.
What do we know about anybody else that was involved with TerraForm Labs at this
point? He's a TerraForm.
The former TerraForm Labs CFO was also arrested with Doe Quantum Montenegro.
He's already been arrested, sorry, extradited back to South Korea where
he's facing accusations there. There were a few other people who were
associated with the company that were also arrested and indicted in South
Korea as well. But just very briefly, what's the next
thing we're watching for What could happen with Dock One?
We're waiting for the Supreme Court there in Montenegro tonight to make yet
another decision on where he will go and when he will be extradited.
Hopefully this week Lindbergh's ever going to Betty Mars.
And we thank you so much for following all the trials.
My goodness. And it has been a firestorm of them, for
goodness sake. That does it for Bloomberg Crypto today.
Join us again, same time, same place next week, Tim.
Same Tim. Also same time.
Same place. Well, stick with us for markets up ahead
next. This is Bloomberg.
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