MARCO OLIVERA: Hello and welcome back to Real Vision Crypto Unwrapped, a weekly show where we dive into the stories that drive crypto markets, cutting through the noise and hype in digital assets. My name is Marco Olivera, I'm a producer here at Real Vision. And with me today, we have Moritz Seibert, co-head of Digital Innovation Strategy here at Real Vision and CIO of Exponential Age Asset Management, and Sergio Silva, aka Sergito, Sergito on Twitter, NFT connoisseur and sales director at Fireblocks. Moritz, Sergio, welcome to the show.

Well, please send us your questions. For our viewers and much to our viewers, you can do it through the Real Vision Exchange, our website, YouTube or Twitter, we want to hear from you. Let's get started with the latest price action. Bitcoin currently swinging within the 19k to 21k range, down over 70% from its all-time highs, this downswing affecting Bitcoin treasuries. We have this list here from bitcointreasuries.net, compiled by @NBK. A lot of red, many are down on their initial investment.

If you look at the cost basis versus current value, it's an interesting chart because it gives us a sense where the institutions backing Bitcoin are at right now during this bear market. Bitcoin miners are also feeling the pain. We have core scientific among the largest, publicly traded crypto mining operators in North America. They sold almost all of their Bitcoin holdings last month.

We're also keeping an eye on the Fed. The minutes from the June Federal Open Market Committee will be released later today. They should give us a better understanding to how the Fed is going to be reacting, are they going to be tightening monetary policy? And all of that said, that brings us to our first clip of the day, Moritz last week, you spoke with Joey Krug, co-CIO at Pantera Capital. Here's what he had to say about this current bear market.

JOEY KRUG: Yeah, it's definitely like the most challenging environment I've seen from a price action standpoint in crypto. I started investing in Bitcoin back in 2011. Obviously, the drawdown in 2011, 2012 was worse than this in percentage terms. But in terms of total capital, and the scale, this is much more intense than that, at least for me.

One thing that's interesting about it is how fast it's happened. Like in the 2018 drawdown, it really just slowly, steadily bled out over a year. And then the market bottomed in December, versus here, crypto was tracking equities at 2.5 to 3 beta sort of, and then we had this Celsius stuff with Three Arrow stuff blow up all at the same time. Obviously, the spread versus equities got really blown out and you saw ETH trading in the low 800s, Bitcoin at 17k, that sort of thing. So, it's been a really interesting and definitely challenging environment.

MARCO OLIVERA: Moritz, that was a really fascinating clip talking about the bear market. What other topics did you guys touch on whenever you had the conversation with Joey?

MORITZ SEIBERT: Yeah, it was really interesting. I enjoyed that chat with Joey a lot. And by the way, I was on mute just a second ago. So, thanks for inviting me to the show. And hi, Sergio. Hi, Marco. It was great talking to Joey. It was the first time for me to speak to him. I think it was a repeat appearance for him on Real Vision, brutal bear markets, we did speak about defi working actually relatively well, not the centralized lending piece but protocols such as Aave where you have automated liquidations and overcollateralized lending strategies, all of that has actually stood up quite well.

We touched on Tether and the risks related, the potential risks related to Tether and other potential risks that are real risks related to Tether, but whether that will actually come to fruition remains to be seen. I guess with every day that Tether stands, it becomes a little bit more Lindy and a little bit more resilient. And it might be more difficult to actually take it down by those people who actually want to take it down. I'm not one of them, by the way.

And we did speak about Ethereum potentially being a consensus trade, which I think is interesting. And one of the things that I heard repeatedly in the past couple of weeks is people are looking to build up an Ethereum position, already have built up an Ethereum position in expectation of the merge, which is proposed to be happening somewhere between say, August and October, November, December. Nobody knows for sure, but that could be a massive catalyst higher.

And I'm not sure why that necessarily has to be the case. Maybe some people have that in their head for the wrong reasons. But if everybody's thinking along the same lines in markets, then you know what very often happens, that it just doesn't play out that way, and you get a different result. So, that was, in a nutshell, the conversation with Joey. I thought it was great. I'm looking forward to doing it again at some point later on this year.

MARCO OLIVERA: Yeah, fantastic. So, more Sergio, moving on to the developing stories. Over the past few days, we had news of more crypto industry failures. So, obviously breaking news today, New York based Voyager Digital filed for Chapter 11 bankruptcy. They halted their withdrawals on July 1st. Some other casualties include Singapore based crypto lender Vauld. They're currently in talks with an agreement with London based rival [?] to Nexo to be taking over.

We also have CoinLoan, a crypto lending platform that temporarily cut the daily withdrawal limit by 99% from 500k to 5000. Moritz, what do you make of this growing list of crypto firms limiting or freezing customer withdrawals? How is this going to impact markets?

MORITZ SEIBERT: Yeah, it's not a great sign see this to be quite frank, Marco. I think most of these platforms have essentially strategy issuing unregistered securities. They weren't securities, but it's like a hedge strategy whereby they engage in yield swap, I think we've touched on that a couple of weeks ago when I was on the show. Customers giving them funds with the promise of the yields, but then the platform, Celsius, whoever uses that money in an unsegregated form and engages in highly risky speculative activity, as opposed to focusing on lending.

So, these platforms, I think will go out of business. I don't think it is something that will cause the market to crater. It's very bad for morale, because a lot of retail money is on these platforms, and people will probably lose a lot of that money and not getting it back. That is my hunch at least. So, the affected people, unfortunately, might want to stay away from the markets and like they've had it. But the overall size, I don't think is big enough for it to really impacted the market significantly.

I think the two big things that we've seen that rocked the markets were Three Arrows and LUNA, and that has worked its way through the markets. It seems we're maybe bottoming out. We can speak about this in a minute, but I don't think there's still a massive risk with these cefi lending platforms.

MARCO OLIVERA: Yeah, on that note of cefi lending platforms, Sergio, I want to get your take on this as well, if you can jump in, what do you make of the cefi lenders? And what are your thoughts on this?

SERGIO SILVA: Sure. And thank you for having me on the show. I'll echo Moritz's feelings about sentiment, it's obviously not great that these platforms that took client funds and put them to work in ways in which the clients never understood, how those funds were being put at risk to generate that yield, not good, they're going under. But at the same time, I'd like to see the glass half full and hopeful that the depositors can recover most of their funds.

And we're seeing not just from retail, but also institutional clients come in and go back to the core principles of blockchain technology, which is not your keys, not your coins. So, understanding really your counterparty risk, and who has control of your assets, as well as don't trust verify, and actually knowing what your assets are being used to do, how they're generating yield. Obviously, defi protocols that are fully on chain and are immutable and transparent held up pretty well. And you can always see what's happening with those.

Those are those black boxes that pretty much just copied the centralized finance model that really brought the headaches and morale will be low, but I think we will take this opportunity to learn as an industry, as investors, as consumers and hopefully come out stronger and more educated.

MARCO OLIVERA: Now, that makes a lot of sense. On this topic of Voyager Digital, I'm curious, we obviously we heard some news before FTX extended a credit line to them, obviously, that credit line is now gone. Now, we're hearing with this lender Vauld that Nexo is going to be taking over, that deal could fall through. Do you think that maybe there could be more-- once they analyze the balance sheet of this company, they might decide, hey, this is not like a deal worth pursuing.

SERGIO SILVA: I think it's hard to speculate. Especially because we don't know what's in the books. Obviously, the parallels to the global financial crisis back in a decade or over a decade ago, are quite clear in that Bear Stearns went under in March and it wasn't really until September--

MARCO OLIVERA: Well, sorry to interrupt, Sergio. We have a viewer question here from Ralph Humphrey on the Real Vision website. He's asking, is there any clarity as to the legal status of clients of crypto lending platforms that may be in financial trouble? Moritz, I'm going to kick this one over to you. What are your thoughts on that question?

MORITZ SEIBERT: Well, these platforms aren't regulated, they've never been regulated. Going forward, I guess they will be regulated. I don't think there's any clarity unfortunately. When you read these messages, most recently by Vauld that they're stopping withdrawals, when you read the message from Celsius, which is now like four weeks or so ago, they're stopping withdrawals, they essentially begin insolvency proceedings or takeover proceedings. It just feels like, it sounds like the money's gone. And maybe there's something left over the other day that can be distributed, but there's no clarity.

There's no regulator to go to really. Those platforms were not regulated, they're not under the supervision of the CFTC, or the SEC or any other regulatory authority in the world, I think. So, you don't have this option of going to the Ombudsman and complaining about it. It just doesn't exist yet in the digital asset space.

MARCO OLIVERA: Yeah, got it. So, we have another question here from Paul E on the Exchange, I'm going to throw this one over to you, Sergio, because you were just mentioning, not your keys, not your crypto, what crypto exchanges are still safe? And do you recommend moving all crypto off exchanges and into private hard wallets?

SERGIO SILVA: I think is just high offset to really take advantage of what crypto allows us which is custody your own assets. So, I would recommend it not out of a sense of fear, I recommended it at the top as well and in everyday sense, I think it's important that we take responsibility for our own assets and really go for lengths and make sure not just custodying your assets but doing it in a secure way and making sure you have cold storage, hardware wallets, making sure your seed phrases are well backed up.

As to what's going to happen to the rest of the exchanges, I think we'll continue to see a wave of consolidation again paralleling what we saw back in the financial crisis where the stronger lenders took over some of the businesses that have made some bad decisions and were weak, and the system today is much, much stronger than it was before. So, I'm looking forward to seeing that happen in crypto as well.

MARCO OLIVERA: Yeah, definitely. I'm right there with you. So, on the note of crypto industry turmoil, last Friday, we had this interview with CoinFLEX CEO Mark Lamb. First, some context, Leslie Lamb, Chief Marketing Officer at CoinFLEX, is a frequent contributor on this show. On June 23rd, CoinFLEX obviously, they halted customer withdrawals. CEO Mark Lamb who is married to Leslie Lamb confirmed a halt in redemptions is due to a CoinFLEX account holder going into default. It was later revealed on Twitter that that account holder is Roger Ver, an early Bitcoin investor.

Mark Lamb claims Ver owes CoinFLEX around $47 million worth of USDC. Ver is of course denying that he defaulted on this debt and is in fact claiming that he is owed money by CoinFLEX. He doubled down on that statement on a Bitcoin Cash Twitter Spaces over the weekend. Our very own Ash Bennington asked the CoinFLEX CEO why they operated in such a way that one account could effectively bring down the whole company, take a listen.

ASH BENNINGTON: Why would an exchange operate so close to its risk limits that a single individual defaulting on a margin call would force you to suspend redemptions of other customers?

MARK LAMB: Yeah, that's a great question. And before I answer that question, I do want to say that we are going to be reworking our margining rules and contracts after this, such that there is no accounts that have manual margin agreements. This is something that most exchanges do. They have non liquidation accounts that are institutional customers or large whale customers. This is something that is commonplace not only in crypto, but also in the traditional financial industry.

And although it may be commonplace, it's still not something we should be doing going forward. It's in hindsight, we would not have done it in the past. The reason for an account like this, the reason for an arrangement like this is it enables the customer to trade with more confidence that they will not be liquidated and keep cash on the sidelines in order to fund those liquidations without having to worry that their ability to meet those margin calls won't be hindered by the fact that they might be asleep.

MARCO OLIVERA: Moritz, Sergio, what are your thoughts on this clip. Moritz, I want to start with you. I know that you had a lot of thoughts that we spoke about offline, give me your rundown.

MORITZ SEIBERT: I went through it actually two times, not the entire length, but certain parts of it over the weekend, and honestly, I think watching it, you could feel his pain, the pain that he's currently going through as his business is under so much stress, and full disclosure, I've never had any assets with them or exposure to them, and I don't think I'll have any in the future. Look, we're looking to give a balanced view here. As Real Vision, we don't have an opinion as to the future of any of these businesses just personally, it didn't sound very convincing to me to be honest.

And I don't like these business models to begin with, like this cefi type of I have a platform and I take your assets, and I take them for a ride, and I pay you yield for it. It's completely untransparent. I don't like these businesses to begin with. I think there's good businesses to be had in that space that have to do with lending. Lending is an important function for markets to work. And you can engage, you can run the lending business in a first-class way, in a very transparent way and focus on the lending part. You have fixed versus floating or maturity, transformation, all these type of things.

Have it overcollateralized, defi does that really well. This other part of I'm taking your money, and I'm staking it, or I'm putting it out on the risk curve. I don't like that very much. So, I guess the overall space might actually be helped with these type of businesses changing, maybe not going out of business, but definitely changing to the better. That would certainly help the space.

MARCO OLIVERA: Well, yes, no, I definitely believe it would definitely help to space. I want to apologize to the viewers. We're experiencing some technical issues we're having today. Keeping on the same story, however, Sergio, what are your thoughts of the CoinFLEX CEO? What's your take on the story?

SERGIO SILVA: Well, personally, I also don't have any exposure. And I would just echo again what Moritz said, I think it's important for any business that's taking customer funds to have clarity, like be more clear with their depositors. And also, for clients to understand better what they're providing those funds for. So, I would invite everybody in the industry to maybe do better in that sense. And we're obviously seeing an industry that's growing, that's maturing, unfortunately, sometimes, there's big decisions by key players that bring a bad light to the whole industry.

So, I think it's upon all of us to make sure that we're all helping each other get more educated, and not just have business models that are more friendly to the consumer, because otherwise, we're just inviting a lot of regulatory burden. And sometimes, I know we'll talk about regulation later in the show, but regulators don't really understand what's going on. And it could be really negative for the growth that we're experiencing.

MARCO OLIVERA: Yeah, well, on that note of friendly, on a more positive note, you have this interesting story about MakerDAO members voting on what could be a new chapter in the defi history books. It's just the story to lift our spirits, break it down for the viewers.

SERGIO SILVA: Sure. So, MakerDAO, which is an organization that is behind Compound, the defi market protocol, where you can take an overcollateralized loan on your crypto and mint DAI, DAI being a stablecoin, they are voting on approving 100 million DAI vault for Huntington Valley Bank. This is a bank that's over 150 years old out in Pennsylvania. And the idea behind this vault is that the bank will be able to access DAI liquidity by selling up to 50% of the loan to MakerDAO, and then Maker will be collateralized by real-world assets.

And I think the big unlock here is that integration of a defi protocol into the real world. And it's what we've all been building towards for the last 12 years or so. We're really bringing the power of defi, decentralization into the real world being able to unlock value. And I look forward to seeing this proposal passed, hopefully, and maybe other big financial institutions take note and start coming and doing things more intention with what's being built on to the defi space.

MARCO OLIVERA: Yeah, definitely. I really love the positivity in the story. But I also want to discuss the flip side right here. At Real Vision, we want to discuss both sides. And it looks like, Sergio, on that article that there was some skepticism on Twitter. Users are asking why wouldn't banks get loans in TradFi or banks claiming the banks could dump their worst assets on this DAO? Any thoughts on this skepticism?

SERGIO SILVA: Yeah, there's a couple of Twitter comments on there. One of the main tweets, obviously, anybody can compose their replies to Twitter, I think questioning things is valid. But also looking deeper into the protocol and the proposal, the bank will keep 50% of any loans that they partner up with Maker. So, the bank definitely has a stake in making sure that they're only underwriting high quality loans. This bank also has a history of underwriting good loans.

And so, I don't