Weekly Roundup 10/24/25 (Quantum, Crypto Pardons, Fed Payment Accounts) (EP.679)

Matt Walsh and Nick Carter are partners at Castle Island Ventures. All views expressed by them or the guests on this podcast are solely their opinions and do not reflect the opinions of Castle Island Ventures.

Brought down by bad mortgage investments, Lehman, which has 25,000 employees.

The federal government loans American International Group AIG$85 billion.

Different kind of market and the Fed is asleep. The federal government is stepping in to stabilize Fannie Mae and Freddie Mack, the two mortgage giants that have been threatened by the housing crisis.

That's mine.

Britain's ailing economy with a new round of quantitative

You print a couple trillion dollars and all of a sudden people start to worry. So, out of this worry, we have something called the

Welcome to On the Brink. I'm Matt Walsh.

And I'm Nick Carter.

Big week for crime. Are you are you paying attention to this NBA betting story?

Yeah, I mean there's a lot of nostalgia going on with the crime. Like we're going back in time crime wise. We have the jewel heist. We have insider betting, some like zany poker schemes too.

Yeah. I mean, so let's do the NBA one first. So Portland Trail Bla Blazers head coach Chauncey Billlops, who I I believe is in the Hall of Fame as a player, used to play for the Celtics for a cup of coffee. Um, him and Terry Rosier, there's an assistant coach from the Cavaliers, Damon Jones, they're arrested as part of a wide ranging illegal sports in poker rigging uh situation with the mafia. I guess the mafia's still going strong.

I just didn't think the mafia was a thing anymore.

I guess they are. I guess it's still a thing. And so there's bets here around taking the under and player points. And this guy Terry Rosier is alleged to have just taken himself out of the game early and telling people to bet the under.

Yeah, I mean so there's the insider betting and then there's also poker games that are rigged some of the defendants are shared between these two cases. So y you had some of these guys doing double duty with insider betting and now these rigged poker games where Yeah, like some guy would be wearing sunglasses and he the cards had like ultraviolet Patterns on them.

Yeah, it's like what is it, like X ray goggles on right in the

Like the oldest trick in the book, man.

Then cameras underneath the table or something so they can see the cards. W what an unbelievable hideous.

I mean, if I'm playing poker and there's a guy wearing sunglasses inside, I like it does happen actually in poker because you want to like never reveal any information, but I find that inherently suspicious.

I mean these guys make a lot of money as NBA players and NBA coaches. It's kind of a foolish thing to do.

A lot of people have been using this as a jumping off point to denounce sports betting culture overall because it's become so normalized and legalized in this country. I guess the view is that how can you stop professional athletes betting? Everybody does it.

Yeah.

And I frankly I agree. I I don't think sports betting should be legal.

Really? Wow.

Yeah, yeah. So I don't think it's good for society. I mean I think all the data shows that it, you know, correlates with domestic violence. Uh, there's some studies around that. I just d I mean I don't who does it benefit, you know?

Well I guess it benefits the leagues and it probably benefits the The gambler, uh gambling companies, right?

Yeah. It's one of those things where I have an opinion that's I think probably totally out of step with the mainstream.

Yeah, I'd say that's a great

recriminalize it.

Well it's a tale as old as time, right? I mean, what was it the Black Sox of uh Shuas Joe Jackson era? They it was nineteen nineteen, they threw the World Series. I mean, I'm sure this has been happening for centuries.

Oh I'd I I've never heard of that. Is that this is a baseball lore thing?

Well yeah, it's true. I mean, I don't think uh Shoeless Joe Jackson is in the Hall of Fame because of I think he was kicked out of baseball. And then of course you had Pete Rose in the eighties.

I mean if I was if I could potentially win the World Series I would just do that.

As opposed to tossing it, right?

Yeah. The glory is worth so much more than the money. And then we have a jewel heist as well.

Yeah, so

Of all that.

So someone just broke into the Louvre and just took a bunch of jewelry. I mean, what do you do with the jewelry? It's all tr a staggering amount of jewelry.

Yeah, who's the buyer, you know? You gotta have a buyer lined up ahead of time, presumably. You can't just go to the pawn shop and sell the tiara of whatever Josephine Bonaparte.

So Josephine Bonaparte's jewels, like w where can you actually showcase them now that you've stolen them?

I mean, there's a lot about this story that's completely bonkers. There were guards in the Louvre that saw this and they were unarmed.

Oh they were really.

Very European situation. And they didn't intervene. And the robbers brandished their like gr you know, whatever, Dremels or I don't know, circular saws or whatever they had on them to get into the cases and that was apparently enough to discard the guards.

I mean it's crazy you see these like Oceans eleven things and this is just more brazen uh it

Mm-hmm. I don't mean to second guess what the guards did, but I do. Like, okay, you're unarmed. These guys, he's holding like a uh I don't know, some kind of like glass cutter. Like I think you just you just try and tackle him at that point.

Oh, you're a guard making minimum wage. Is it really worth it?

It's an abdication of duty. Like this is the only time in your career where you're gonna see an active jewel heist at the Louvre, like be a hero, like do your job.

Uh I don't know. I kinda feel for

Crazy to me. No, I don't feel for them.

Crazy to me that it happened in the first place. Nice to have a week where the two main crime stories are not about our industry.

Yeah, we have some we have some crime related stories, but not Not quite as exciting as though.

Well let's get into something very exciting on quantum computing. Uh would you say this is your new obsession? You wrote a a good blog post about quantum computing this.

I'm planning a trilogy. I have one is out. I don't know. You know, I got really carried away. I got into a level of detail that I couldn't sustain. So I initially thought I would just briefly explain how elliptic curves work. That turned into a days-long Odyssey of diving into the math. I think it was a pretty good explanation. The objective is to Discuss the odds of quantum breaking elliptic curves. Treat it with the seriousness that it deserves and just look dispassionately at the data.

So w is is part two gonna be what should we do?

No, part two is actually just making the case that quantum is a threat.

Okay.

We don't even get to you know, reactions until three. Cause I'm just trying to establish that because everyone dismiss'cause people will say, oh, quantum's been a decade away for the last three decades, whatever. But actually a lot of things have changed. recently with quantum. There's been a lot of new development a lot of cash has come into the sector. So I think the odds are changing in real time.

So

Yeah. I mean if you project out the a lot of these timelines that these major publicly traded companies or IBM or Google they're projecting their um l physical and logical qubits. If you project that out, you'll get to a quantum break of ECC by between twenty twenty eight and twenty thirty three.

And is this just a function of GPUs uh being thrown at this problem? Is that what's driving the acceleration?

No, I mean you need specialized bespoke computing hardware. Compl completely unlike anything you c you might imagine. It's like super cooled um you know atoms that are suspended in some kind of uh you know, strange solution. I mean, there's a bunch of different ways to do qu quantum computing, but quantum computers look nothing like classical computers. 'Cause you need to m have them at massively low temperatures.

Fascinating. All right. So we have that one in our newsletter. Recommend everyone check that out. Should we hop into the deals of the week?

Yeah, first up, two deals in the Castle Island portfolio. Uh first up is Beam. It's a stablecoin infrastructure company. They were acquired by Modern Treasury. Congrats to Dan Mottis and the Beam team.

Yeah, very exciting for Dan and team over at Beam. Um excited to see how Modern Treasury integrates stablecoins as well. And second one also in the Castle Island portfolio, Dynamic, which is a wallet infrastructure company. They've been acquired by Fireblock. So really excited about that one. Uh Italian Yoni, uh great entrepreneurs, excited to see what they build over at Fireball.

And uh a couple of massive uh fundraise MA deals uh this week. Tempo, the stripe backed, stablecoin L1. There is five hundred million from Thrive Capital, Green Oak, Sequoia, Ribbit, and others.

I mean Stripe is just coming right at the credit card companies, don't you think? I mean this is just a a signal that they are using this L1 blockchain to build a new network. Um and I think interchange is really in the crosshairs here.

A lot of soul searching among the ETH crowd over this. Um, but I don't know. I th I think it's a a very different thing. I don't think it necessarily is parasitic on ETH.

Yeah, I don't think so either. I think this is more of a play to go after the payments but Um another big deal, Echo, uh, which is started by Kobe. Uh it is an on-chain capital raising platform. They're acquired this week uh by Coinbase for$375 million. Really impressive.

Yeah, very interesting move by Coinbase. I think it uh you know, Echo has the kind of crowdfunding crowdfunding accredited investor platform, also has the ICO platform. Sonar, I think it's called.

Sonar.

Sonar makes sense, Echo. Um I think that's a big part of the reason why why Coinbase has has acquired them you know, we've had some regulatory loosening, shall we say. Coinbase is historically not a place people go to do listings or initial public, you know, whatever, coin offerings, token listings, etcetera.

Yeah, I I agree with that. I think it's a smart acquisition, especially if you have the view that this market structure is going to be defined. You're gonna clearly know what's a commodity, what's a security This will be the platform that allows you to take these entities public and then be traded on Coinbase and be traded on the base blockchain. So a pretty smart category bet, I think, for Coinbase.

Uh next up we have twenty one shares there in ETF Fissure. They're acquired by Falcon.

Then it's Pave Bank, which is a crypto native commercial bank licensed in the country of Georgia. They have raised thirty nine million dollars from Excel, Tether, and Winter Bank.

Next up we have Bitcoin OS, there are Bitcoin L two. There was ten million from Greenfield Capital, Falcon X and DNA fund.

Turtle Club is a DeFi liquidity provisioning platform. There is$5.5 million from Bitscale, Thaya, and Varies Capital.

Then we have Limitless, their prediction market, there is nine million from OneConfirmation, Collider Ventures, F Prime and others.

Printer is a meme coin launch pad that raised two million dollars from Mirana L1D and Flow Deck.

Lit protocol is a decentralized private key management system. There is two and a half million from R R. E ventures and collab currency.

Then it's a dat uh Greenlane Holdings, which is a Barrachain treasury company. They raised$110 million from Polychain, Blockchain.com, Dow5, and others. I think some of that$110 appears to be in kind, but Now we have Barra chain.

And lastly, we have Railbird. They're a CFTC licensed DCM. They're required by DraftKings. DraftKings apparently plans to launch DraftKings Predictions, a mobile app which will let customers trade on regulated event contracts. Real world outcomes across finance, culture and entertainment. Polymarket announced that they would serve as the designated clearinghouse for the new draftings platform.

Makes a lot of sense, right? If you're FanDuel or DraftKings, you have to be in the prediction market game.

Um newswise, kind of a lighter newsweek, I would say big headline, CZ is pardoned by Trump. He of course pled guilty to Uh BSA violations, a CEO of Binance served time, right? I mean I don't know if he went to actual prison.

Yeah, he was in prison for four months.

He's in real prison, yeah. And now he has been pardoned.

Yeah, so this is a controversial one, I guess, with people uh people on each side of the aisle really uh taking a different stance on this maybe, but um so he pled guilty to one BSA violation. I is he the only person in the history of the country that's ever gone to jail for a BSA violation?

I think that's right.

For for at least one count, I think. I mean maybe there's others that have gone to jail for many counts, but You know, he went to jail for one count. Um obviously there's an angle here with the Trump family and some of the projects that the sons have been involved with that involve Binance. So that's really the source of scrutiny, I would say, that you're hearing.

Yeah, I mean any major token involves Binance, so that's just the nature of the re uh industry. I think you know, CZ probably was pretty hard done by to face the criminal sanction for BSA. Uh yeah, the excessive pardons also it's alienated even some of Trump's supporters. I think Joe Lonsdale spoke out against it too. Yeah. I was watching Trump's press conference today, which was meant to be about

Oh really?

Uh yeah, he he had no clue. And uh he was like, Yeah, I've never met the guy. He's like and then it sort of came to him, he's like, Oh yeah. Yeah, you know, people I trust told me that he'd been very hard done by um and targeted by the Biden administration and so but it was very clear that Trump had never met him. And had a h actually a hard time recalling him at first.

I guess he would have had no risen of meet him, right?

Yeah.

Um, do you see George Santos also got pardoned after we recorded last week?

Yeah, so uh what was his deal? He was in Congress and then it emerged that he lied about every aspect of his biography, right?

I think every aspect of his life is

Everything.

Happen.

But what I don't and I know he like spent money on like a lot of stupid stuff, maybe campaign funds, but I don't remember what his crime was. Like what was his actual crime?

I think it was campaign finance violations, wasn't it? Wasn't he just using campaign funds to, you know, live a lavish lifestyle?

So uh Google says uh it was wire fraud, identity theft, and lying to Congress, embezzling campaign funds for personal use. Stealing the identities of donors to make unauthorized credit card charges and making false statements on financial disclosures. He had a seven year sentence that was commuted. Wow.

Well, like a month ago.

My goodness. I think maybe he probably should have been in jail a little longer, if you ask me.

Well he's out now. I guess I don't know what he's gonna do. Hopefully it just stays away from our industry. I feel like we've we don't need

He seems very popular on social media.

Oh, as a channel.

People have a real soft spot for him. Yeah.

Um all right, so in other news, Maelstrom, which is a crypto investment fund, it is uh it is Arthur Hayes' fund, the BitMEX founder, they're looking to raise two hundred and fifty million dollars for a private equity firm. It will be targeting buyouts of medium sized crypto. Haven't really seen a lot of private equity dollars coming into the space. I think this is pretty interesting.

Yeah, this is sort of the first of its kind. Very very uh interested to see what Arthur does with this fund.

You think about the types of businesses that would be conducive for private equity. Obviously you're talking about businesses that generally would take on debt and so that have cash flows. What categories do you think are interesting?

I mean, actually exchanges I think are in that category, especially offshore ones that maybe are a little harder to sell, but I don't know. You do have to sell it eventually. So

Yeah, I think you have these regional exchanges that could be really interesting from a private equity roll-up strategy. And I guess yeah, you have to sell, you gotta take them public, uh Who knows? Maybe there's like a token angle with some of these exchange tokens. Uh that could be a source of liquidity. I'm interested to see where that goes.

Yeah, we'll be tracking this one.

Of

outcry over this, uh especially on the Democrat side. So I guess crypto executives have now met with senators in DC again to try and hash this out.

Yeah, apparently David Sachs went down to the hill and brought a bunch of uh crypto people with him. They met with uh Republicans and Democrats. Sounds like Gallego was not very happy that this got leaked.

He does seem very upset.

Terrible policies it looks like.

Yeah, I don't get it like okay, so you're propos like the Senate Democrats are proposing version of clarity that's worse than anything Biden ever came up with. We're upset about it. What are they upset about?

They're upset.

They're the ones that are trying to harm us. So what? I don't got it.

They're mad that we're mad.

We are justifiably mad. It's all right.

It's like, Hey, we put out this proposal, it makes decentralized finance illegal in the United States. What are you guys so mad about? Stop being a mouthpiece for the Republicans. It's like, no, no, it's we just don't want the industry to be illegal.

Yeah, some things are bigger than politics. But let us have DeFi for God's sake. What the heck?

Incredible. But um there was a bunch going on in DC this week. So the Federal Reserve um mid uh Waller made some news here. So what was this? He he's proposing a kind of a skinny master account?

Yeah. Uh payment account. Um a new type of uh yeah, master account that would give fintechs and um financial institutions access to the Fed that otherwise don't have access has obviously been a huge issue with custodia and their lawsuit against the Fed and their inability to obtain a master account, so

Kinda reminds me of the FinTech charter that was shot down by the bank lobby. It's a different name this time around, but it's very reminiscent.

Really cool.

All right, so in other news, Joe Nagger, formerly of Golden Tree Asset Management and Republic Digital, he is launching a new$300 million crypto hedge fund called Feynman Point Asset Management. It will focus on digital assets and frontier technology. You don't see a lot of new hedge fund launches in the industry. Uh Joe Nagger has a storied history, so this will be a a really interesting one to watch. He was um he was very involved in the big short era. Uh

What is he really?

Yeah. He's in some of these books actually. I I forget what bank you worked at, but he um He had coverage on some of the hedge funds that had this trade on. And I believe at that point, you know, some of the banks internally had the short trade on as well. And he was one of the guys that had it on.

Well, where is Feynman Point anyway? Or is that a Richard Feynman reference? Oh yeah it is. Uh so It is uh do you know this? It is a sequence of six consecutive nines that occurs in the decimal representation of the number pi.

Hmm, I did not.

And it starts at the seven hundred and sixty second decimal place. Yeah, it's uh it's you know, uh six digits in pi.

How far can you go on pie just off the top of your head without looking?

Without looking, three point one four one five hundred six five three.

That's it. Yeah, that's as far as I go too.

I I don't know, that's like programmed into my brain for some reason.

That's pretty good. I feel like a lot of people can just go three point one four.

I don't think you really need much more than that.

I don't even think you need to know it anymore. You just use a calculator.

Yeah, so it's the longest sequence of consecutive numbers in pi up to that point. Interesting little

Pretty good name for a font. I like that. Yeah. I would have figured that Feynman Point was just named after a you know.

Kind of sounds like a yeah, like a protrusion or peninsula.

Um I thought this was interesting. T Row Price, they have filed for their first crypto ETF, and it's going to be an actively traded strategy with fifteen crypto assets at a time. Very interesting.

Yeah. Haven't seen too many of those.

I don't think I've seen any actively traded ETFs applied for yet. And T Row Price, not exactly who you think.

think we've got to be able to do it. Yeah. Not known to be in crypto at all. That's their first crypto product, it looks like.

Here's an interesting one this week. Uh cryptocurrency exchange Kraken reported uh so they're private still, but they're starting to report publicly their numbers. They reported six hundred and forty eight million in revenue for the third quarter, up one hundred and fourteen percent year over year. Um pretty incredible.

Yeah, great numbers. What do you think's driving that?

I think trading volumes are up a lot. Um, so it's gotta be the main driver. I think the geographic expansion that they've had also probably a big part of that. But um really good execution.

On the uh C Z topic, Ryan Salame has just tweeted. How do you see this?

No, what do you say?

He said, as the Trump administration corrects injustice for targeting crypto republicans, this is the crypto case. Even though the Biden DOJ made clear that Ryan was not involved in any fraud at FTX, they hunted him down for political reasons. And tried to lie to further agenda. When they refused they threatened his family to force him to plead guilty. Um I I'm actually kind of sympathetic to that.

Yeah, I am too. I actually think that yeah if anyone had a strong case for a pardon it would actually be Ryan Salem.

Yeah, I mean what's he seven and a half years he's doing?

He's doing seven and a half years. I think he could've done zero years if he'd flipped on SBF, but I guess he didn't

Yeah, like Caroline got what? Caroline got two years in like minimum security, like house arrest practically, right? I don't think that's right at all. And look, George Santos got out. He was meant to do seven years.

Yeah, I agree.

A lot of like coherence in our justice system. It seems very arbitrary actually.

I just hope that we don't go through this news cycle of is SPF gonna get out? Because he doesn't deserve to.

I think he was probably pretty excited when he saw that. I mean mixed feelings cause C Z was the architect of his downfall.

I think he was the own architect of his downfall. I stole all of the customer money.

CZ provided the catalyst. Is the spot.

Had the spark that made everyone realize that the money was not there.

I th it's kind of funny. I wonder if SPF regrets. mostly aligning himself with the Democrats. You know? That was just the wrong bet to make.

I think he might.

If he'd been a big Trump guy, he might be out of jail by now.

I don't know. I mean, how would you let a guy like that out of jail? He just took all the customer funds. I mean

He made an investment in anthropic. You know.

I he turns out he's just one of the best VCs of all time.

Like incredible investments.

The Robin Hood deal too.

Yeah. The anthropic deal alone is like Ten FTXs.

It's Hall of Fame level investment stuff. Now, to be fair, he also had about six hundred other positions and a lot of those went to zero. So, you know, portfolio concentration wasn't exactly there.

Yeah, I mean if you were an effective altruist deploying capital in twenty twenty, twenty twenty one you just couldn't miss because those turn into these gigantic AI companies. So, right place, right time, in a big way, man. Profitable ideology.

A lot of uh controversy with Anthropic this past week. Reid Hoffman going at it with David Sy.

Yeah, I mean, I get it. These AI models are very, they want to police your behavior. Like they don't let you do stuff. That's like pretty innocent. The AI browser, uh I guess Chat GPD is browser now, it just doesn't let you go to certain sites if it doesn't think that's appropriate.

I definitely think that's right. What's the answer to that? I mean, do they publish weightings and i is there a way to actually get to the ground truth of what's going into these models?

Hmm, that's hard to say. I know we don't know what the model is thinking when it's doing the thinking. We haven't figured that out. How to like x-ray its brain, basically. I mean, it's also possible to just empirically evaluate the models and say, you know, determine what their political bias is. Like that much we know. And it looks like Anthropic is m more on the left, Grok is actually m more toward towards the middle or to the right.

Yeah. It strikes me that the um so at least in the crypto world we have the two bills that we identify that we want to work towards and we got the stablecoin bill and hopefully we get the market structure bill. And then we have a bunch of concrete things that needed to happen at the agency level that have by and large most of those have started to happen. It feels like the AI people haven't really figured out what the comprehensive led.

Yeah, that actually is a huge problem right now, is that there's a it's literally what we had. There's a patchwork of state rules. Right. From California's highly inven interventionist to m more or less if your approach is And it's making it very hard for these companies to do business. But I don't think they're very united. I mean kinda like the crypto industry, pretty fact fractious as well.

Pretty fractured and I I'd say even within like the Republican Party I think you have very divergent views in terms of what the states should and should not be able to do. y you kinda have to get something done here. Otherwise all of these states attorneys generals and governors are gonna be able to dictate a huge part of just federal policy just by virtue of intervening and shutting down some of these companies.

And presumably since a lot of these are headquartered in California, that's the most important one.

Yeah, right. So you had um Newsome, didn't he veto a bill um that was Originally the bill was meant to protect um juniors, like adolescents uh and kids, uh, with AI. But I guess it was written pretty broadly, so he ended up vetoing Um so he's in a tough spot obviously because he wants to run for president. He doesn't want the AI lobby against him. But in California, I mean, look, their Congress wants to kind of shut some of this down.

It is funny, I have seen folks on the AI side saying, looking at the example of Fair Shake and being like, We need to do a Fair Shake. Maybe they did. I mean Wow, it's when I see that I'm like, Well, we really punched above our weight, didn't we? AI is a much bigger industry than crypto. Yeah. At this point. And they're envying crypto's political strategy.

Yeah. I mean Fair Shake uh certainly they They take some hits from you for the gallego thing, but uh they by and large did a great job.

Yeah, we l we like'em one week, we don't like him the next. I'm just saying Fair Shake ha for better force is envied.

Of course. I think it's one of the strongest organizations out there in politics. Probably up there with like the NRA in terms of how successful.

But I still disagree with the Gallego thing. I think that's I think we're allowed to say that.

Yeah, Gallego turns out

Very close race. Very close race in Arizona. Kerry Lake. I didn't really like Kerry Lake to be honest. But uh it is what it is. Arguably Fair Shake pushed Gayago over the edge. And then he doesn't even like crypto.

That's it. That's where you just have to have an issue with some of these politicians that will just say anything to get elected. So this guy was pro-crypto and then he takes money from the crypto lobby. He gets in and he's anti-crypto. It's unbelievable.

It's like taking money from the NRA and then trying to ban rifles. It doesn't make any sense.

I mean it's just a little bit more.

We you thought we wouldn't notice?

He's just uh turns out he was lying about it. Oh actually that reminds me, um did I tell you that up in um Massachusetts, John Becha, who used to be the general counsel at Circle, is running for the first time.

Against the

Uh I don't know who he's losing a bunch of people running for it. It's Seth Moulton's seat. So Seth Moulton is running against um Markey, the existing senator. Moulton's very pro crypto. Obviously Betcha is too.

So this is an open seat. This is uh the uh Massachusetts sixth district.

Yeah, I believe so. Like North Shore, Lynn area, that type of thing.

And the the website is Butcha for Congress.

That's uh

Actually B E C C I A. It's not betcha, but it's pronounced betcha. That's right.

So they've helped a lot of companies in the crypto space navigate um regulation. So you know, you you hire FS vector to get advice on what your regulatory strategy should be, where you need licenses, that type of thing. So I was very excited to see that he's running.

Massachusetts, not a state known for its pro crypto members of Congress.

No. No, we really only had really one. Molten's really the only Really pro one.

It's been tough aside from that. Yeah, it's been real tough.

Yeah, I mean Achenklas kind of stabbed us in the back. He he he was pro crypto and then he voted against the Yeah, hate us, yeah.

Not good.

All right, I think that is it for the week. We're recording here late on a Thursday. Um lot of news this week. But we will be back next week. I think we have a couple fresh pods coming out next week. So everybody have a safe and healthy weekend and we will see.