Binance HUMILIATED | Massive Crypto Arrest.

well folks we just had another big

crypto arrest uh do Quan was interested

in the month

on his way to you guessed it Dubai and

CNBC just released a massive hit piece

on finance yikes let's talk about both

of those so first of all duquan is the

founder of Terra Luna which is a

complete disaster that many say started

the crypto collapse that we are now well

enjoying dare I say some actually like

that word enjoy because you see it as a

by the dip opportunity on ethereum and

BTC but Tara Luna's collapse led to the

collapse of three arrows Capital which

led to the cops of Voyager digital which

led to the collapse of Celsius which led

to the collapse of block five which led

to the collapse of FTX it's all a

connected disaster it was a Domino's a

Domino's disaster

not pizza disaster dominoes falling

disaster so do Quan uh has been fleeing

from South Korean prosecutors who have

put out have basically been on a on a

hunt for this guy and they finally found

him because for some reason he actually

thought it would be a good idea to try

to get on a plane somehow he made it all

the way to Montenegro which is in

Southeastern Europe it's over there by

like Croatia but instead of staying by

land he decided to go into

an airport

and then he tried to use fake Costa

Rican travel documents now there are

allegations that he has siphoned

billions of dollars from Terra Luna and

is and should have plenty of money to

actually get a high quality fake but

apparently he couldn't get a good

quality Costa Rican passport because he

got caught

immediately after he got caught the U.S

justice department filed charges against

him for fraud immediately as soon as he

was caught more charges were filed

against him now he was on his way to

Dubai why do people go to Dubai when it

comes to crypto which should be obvious

Dubai in the United Arab Emirates does

not have an extradition treaty he will

go to Dubai for two reasons one

low to no taxes

number two

no extradition treaties so if you're a

wanted criminal in America because you

made a lot of money by a fraud or

otherwise where do you go you go to

Dubai

where is our Cayman island-based Finance

located with CZ at the helm oh that's

right

Dubai yes also massive and many U.S

security uh charges against uh uh CZ of

Finance now every time I talk about CZ

people uh get very defensive of CZ I

have to give CZ credit they survived so

far they had a massive run at the end of

last year and so far they have survived

we just to catch you up to speed have

regularly found that a CZ likely

commingles uh the funding and

backstopping for multiple coins on the

finance platform that is when they tell

you hey all of our coins are backed one

to one what they're really saying is hey

if we have a pot of a billion dollars

and then we have three different coins

that all have a billion dollars of

assets underneath them

at any time if you take a snapshot

they're backed one to one because the

pot is backed one to one to this coin

and then one to one to this one and then

one to one to this one but they're never

all backed in it in their entirety at

the same time this is pretty obvious at

this point so if you hear from finance

that coins are back one to one probably

not in fact probably the same assets

that are sitting in quote seifu probably

the same assets that are basically

people's deposits that are backstopping

multiple other points so if everything

was facing some form of liquidation at

the same time

probably be running into some issues but

I have to say they were able to survive

what happened in December which is very

very impressive now though what is CNBC

telling us well CNBC has done

pretty interesting deep dive into

finance and this deep dive was actually

associated with the binance angels now

binance angels are apparently trained

volunteers they are potentially paid for

by binance but indirectly probably

through a blockchain based wallets that

make it very difficult to track how

people are actually getting paid but

Angels technically identify as Finance

employees but binance calls them

volunteers sort of like the community

monitor moderators and what these Angels

were caught doing by CNBC was basically

in a Discord server of about 220

000 users they were basically teaching

people how to get around the know your

customer rules in China and after all uh

well not just the know your customer

rules I should say in America but also

the fact that remember crypto has been

banned in China since 27 17 the

platforms have been banned since 2017

pretty much everything's been banned

since 2021 in China uh and uh CNBC did

an investigation looking into wait a

second here what do we have here we have

binance and these Finance Angels

teaching people how to circumvent the

Chinese rules for actually accessing uh

binance they go as far as suggesting

that Finance created an app that makes

it easy for you to circumvent the rules

so you could sign up for binance in

China not only do they recommend using

vpns based in the United States

Singapore Hong Kong or even Taiwan to

basically restrict or circumvent uh

these Chinese fans but they also

encourage you use overseas email

addresses when you sign up such as

Outlook Gmail or protonmail and if you

end up choosing China as a place of

residence just choose Taiwan while you

sign up so you can sign up and then

change it back to China afterwards so

you look like you're in compliance and

you never lied but you could sign up to

get through the gate via these ways

really what CNBC is alleging is that

basically uh Finance set up this uh this

this system of purposefully leaving

holes in their system so they could tell

China look we banned people see you

can't sign up if you click you're from

China but then leaving back doors open

that they can then teach their Finance

Angels how to teach people about and

then after they teach their binance

Angels about it they can tell the world

about it so people could actually sign

up for finance take a look at this this

was the CNBC piece it was actually a

phenomenal piece they mentioned here in

multiple different places uh well they

do multiple different interviews here

with different people talking about look

if I had an 8 out of 10 concern uh when

it comes to finance for a regulatory

perspective from a national security

perspective I have a 10 out of 10

concern a lot of people just call this

uh a fun right of course but but this

this is real uh so so what what's

happening Finance employees are

explicitly prohibited from supporting

users and circumventing their local laws

that's okay because you call angels

volunteers they're not employees they're

just volunteers so you have to kind of

read through the the uh read between the

lines so to speak to see how they're

talking basically out of both sides of

their mouths but anyway Finance has

stopped letting Chinese register with

their mobile phone so you can't use a

Chinese mobile phone uh and they're

trying to ban people from being able to

use vpns yet at the same time you have

these angels in a Chinese Discord server

saying basically use overseas emails use

vpns so that way you could sign up for

finance here in December 2022 a person

with the handle Stella was identified as

a finance Community manager explained

how people can use a specialized VPN

free domain name and download an app

which appears to be specifically

tailored for customers in mainland China

to use binance Services CNBC was

provided a link to this app from an

email address with a finance.com domain

a reporter was able download the app

from a location within China without a

VPN and register using a Chinese phone

number so even though binance is telling

you oh we don't take Chinese phone

numbers apparently you're able to sign

up with a Chinese phone numbers

apparently all the back doors are

basically wide open it's like

doors closed in the front wide open in

the back we'll show the Chinese

government the front we'll let you in

the back this is the kind of stuff that

happens over at finance a reporter uh

okay yeah let's see here uh the app is

hosted on tencent which offers a cloud

complete Computing software popular in

China and offers the ability to purchase

crypto uh using popular Chinese web apps

like a Wii app or sorry WeChat and

alipay uh now binance says we don't

offer uh any kind of Chinese specific

app there's only one official app sure

there is only maybe one official app but

you happen to offer another app that

lets people backdoor the rules and then

of course the Angels come to the defense

as well saying we don't speak on behalf

of Finance uh you know we're we're just

volunteers you know so they've really

been trained potentially in a process

that takes as long as a year to train

these angels uh and there's even a

hiring page according to binance this

page has since been deleted CNBC

actually talks about that in a moment

but apparently these angels go through a

separate training process that takes up

to a year and they're vetted trained and

deployed across binance's Telegram and

Discord groups operating under the

supervision of Finance employees and

they basically teach people how to

circumvent rules so you could sign up in

China uh saying things like oh don't

worry your proof of residence is not

required or if you're going to like

submit Chinese identification documents

don't worry just go ahead and claim to

be from Taiwan use your Chinese

identification and finance basically

just will turn a blind eye we just won't

look so that way we can bypass all this

stuff Finance reiterated that angels are

not employees it's just an ambassador

program don't worry and angels are

forbidden from sharing recommendations

that are against our policies or law of

course you're going to say that of

course of course CZ calls this very

Innovative yes it's very Innovative how

to skirt the law uh and basically you

have even been able in uh in Europe to

use a Visa a debit card created by

binance to let people turn their crypto

into Fiat for use anywhere Visa declined

to comment on the story uh anyway

basically the story goes on and on and

on CNBC asked binance to share

commentary on this and as soon as CNBC

asked Finance about these these this

evidence CNBC had guess what happened

hours after binance reported to CNBC

messages appeared on Twitter suggesting

that some customers Finance debit cards

had been frozen why was my binance card

Frozen and multiple of the websites that

showed hiring pages and Discord servers

were basically deleted so in other words

CNBC just caught Finance red-handed

again trying to skirt the law or dare I

say not trying to script the law but

actually skirting the law it's not a

surprise that's what binance does that's

what they've been doing that's why their

owner is in Dubai so we can't be held

subject to all the drama of Regulation

and in some sense can you blame them I

mean look at look at what coinbase is

going through coinbase is going through

our absolute freaking hell now let me

give you this okay I I know some people

are like oh Kevin you know just crypto

fighting or whatever I actually think to

some extent

CZ is doing this because they realize if

you try to do it the right way you're f

it ain't gonna happen anyway look at

what coinbase is going through coinbase

is going through absolute hell and back

to try to get just out of the sec's

crosshairs they want a way to get

registered with the SEC they want a way

to legitimately work with the SEC and

register their offerings but now the sac

sends a Wells notice to coinbase and

coinbase is like what the hell now we

have to go through even more lawsuits

and more problems now look I'm I'm not

an apologist for coinbase maybe they're

doing stuff wrong we don't know we'll

find out when the actual investigation

comes out right

and I'm also not a straight apologist

for the SEC although I do think that the

SEC is as we all know

the government is a bureaucratic

organization their hands are probably

Tied by Congress

ultimately and then it's a bureaucracy

not just within the SEC but also amongst

all the other agencies commodity and

future trading Association they don't

have a consistent message between them

and the SEC there's no coordination why

well probably it's because Congress

hasn't passed any kind of

authorization for them to do anything

now again I'm not trying to apologize

for the SEC just saying like Congress

needs to do something because until then

coinbase is going to keep complaining

about stuff like this look at this

coinbase has this massive blog post from

their legal counsel about how they got

this Wells notice and how they've been

trying that they're disappointed because

the SEC has been working with them

forever and coinbase says multiple times

been Pro and spending millions of

dollars trying to provide proposals to

the SEC about registration all of which

the SEC ultimately refuse to respond to

honestly I don't think the sac wants to

refuse to respond I think they look at

all the proposals and they're like

probably not a bad idea but guess what

we can't do anything anyway because we

don't have the Congressional authority

to do it so so people at the SEC who

probably pulling hair out of their heads

going like we have to follow our our

government mandated Mission uh which is

what Congress tells us to do and an

abiding Administration tell us to uh

which is you know protect the banking

system and and minimize fraud uh and so

what's everyone cracking down on well

crypto why because guess who was really

exposed to crypto Signature Bank in New

York and silvergate and guess what

started the freaking banking crisis

silvergate bank and signature so it's

it's all correlating when you have banks

that fail because of crypto

and those bank failures lead to more

bank failures like Silicon Valley bank

and then Credit Suisse and now

potentially Deutsche Bank well what do

you have you have the government and

people like you know Elizabeth Warren

pounding their piss on the table going

we need to protect the banking system

well all you're doing is amplifying

pressure on the SEC to put pressure on

crypto

and the more pressure goes on crypto the

more the the crypto companies and the

sec's crosshairs have to deal with this

stuff

that's why in my opinion coinbase has to

deal with this because of the banking

crisis CZ is registered or has binance

registered in in confusing entities in

the Cayman Islands and he lives in Dubai

because it's quite frankly now he

doesn't have to deal with all the

regulation no that doesn't mean he's not

a fraud he very well could be I don't

think all of his assets are backed one

to one I think their audits are bogus I

would not have a diamond binance would I

maybe use I mean I don't want to come

across as endorsing I'm certainly not

endorsing but if I was in a foreign

country and I'm like look I'm just going

to use binance to like fly coins and

then take them off wall like off

exchange rather and put them on a cold

storage wallet

maybe maybe that's my only choice to get

involved in crypto right especially if

I'm in a country where my currency is

being devalued like if I'm in Turkey I'm

like dude I'd rather get my paycheck and

throw it all into crypto I'll use

binance to throw all my money into

crypto and I'll be a lot safer from the

60 inflation we're experiencing in

Turkey so like if if you think about

this

can you really blame people

can you really blame people for putting

their money in crypto with all the

inflation that's happening in the world

especially in developing countries of

course not can you really blame people

for therefore using brokerages that

enable them to do that of course not can

you really blame the SEC when they're

getting all this pressure from Congress

because of the banking failure oh of

course not who can you blame well you

blame the people who were actually the

frauds and who had terrible risk

management procedures who led to these

collapses like three arrows capital and

FTX that's who you blame but guess what

everybody else now has to deal with the

consequences what you're basically doing

is you're socializing the pain that's

what's happening in crypto the pain is

being socialized so everybody who's left

in crypto who wasn't a scumbag has to

deal with the leftover paying and the

reality is that's probably coinbase

because they're publicly registered with

the SEC now being publicly registered

doesn't mean the SEC approves of

everything they're doing now they do say

that in here that hey you let us list

why did you let us list then well that

means nothing

that means nothing just because you you

sent your documents for review with the

SEC and the SEC is allowed to add

commentary so you add more disclosures

doesn't mean they approve of crypto

fortunately that's also confusing though

because like we said yesterday it's like

how could you potentially punish us for

something we don't even know is illegal

or that you don't even know is illegal

challenge but it's all because of the

spanking crisis and this bureaucratic

crisis that we're going through like I

don't really think with the exception of

people like sambang than freed and

potentially seizing I I don't know I

can't say that for sure about CZ

but you can say that for sure about

somebody like Sam Beckman freed

I don't know that individually

you know if you're involved in crypto or

you have a crypto company or or whatever

that that anyone is necessarily a fraud

we can't say that right I think

everybody's trying to do their best with

the information they have available and

we're just in a very frustrating time

for the cryptos ecosystem

and the stuff like the CNBC

investigation doesn't help but then

again like

you know people in China obviously

demand that just like there's a demand

in a Black Market there's a reason why

because people are trying to potentially

get their money out of China China

doesn't want to fly to Capital out of

China because all the money's going over

to like Hong Kong or Singapore because

people like get me out of the CCP

I don't know again I'm not trying to

apologize for everybody here I'm just

trying to provide perspective from every

point of view the point of view of a

citizen in China who's just trying to

you know have control of their own money

or the citizen of turkey who's trying

not to get inflated to death or the

bureaucrat working at the SEC who's

legit trying to do their best but they

can't because of all the red tape

or the people in Congress who are like

we should pass crypto regulation but

dude Congress ain't gonna do jack

over the next two years they ain't gonna

do anything over the next two years you

know I was in an interview yesterday uh

news interview yesterday with a TV

station

and they're asking me what do you think

is going to come out of this this Tick

Tock Banning thing I'm like nothing

congress is not going to do anything

over the next two years there's too many

politics involved

now would I invest in coinbase right now

hell no

uh and that's not well I mean I went

through their financials yesterday their

financials are terrible their financials

are absolutely horrible uh but beyond

that the regulatory disaster that you

would be walking into investing in

coinbase right now it doesn't make sense

it's not for me and look yes I am a

licensed financial advisor I run an

actively managed ETF I have courses on

building a rough you can learn about all

of those you can even click to what my

ETF is by going to meet kevin.com uh all

of these things just go to me kevin.com

you can see it it's not a secret it's

all there but this information is not

personalized Financial advice to you let

me just put it this way though when I

look at the coinbase fundamentals like

we did yesterday I get a little nervous

why do I get a little nervous well

because their revenues collapsed the

revenues nearly halved uh last year and

their operating expenses nearly doubled

last year why would I invest into that

it's very very risky especially in this

sort of regulatory regime now is that

necessarily Fair uh uh that coinbase has

to deal with sort of my criticism

because of Regulation

yes yes it is it's absolutely Fair

because the reality is you as an

investor have to be aware of the

headaches that they have to go through

now look I'll give them a positive note

okay yes they have about four billion

dollars at least of free cash that's

fantastic then uh uh they are losing

money right and their free cash flow is

is not that great uh and uh insiders are

selling coinbase uh but beyond that do

you have to look at the actual

fundamental business model they're just

not that good these people have about a

two-year Runway rate at about that 1.58

billion dollars in negative free cash

flow they have uh but beyond that if you

look over here you can see it their

revenues went down 4.2 billion dollars

while their expenses went up 1.7 billion

dollars and you've got the regular

service I can't touch them can't touch

them with a 10-foot Pole right now so

that's just my take now uh another take

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quick follow-up on this apparently

binance is also now taking the move to

dump essentially one billion dollars of

B USD they're swapping it uh it for BTC

eth and BNB uh some say this is uh

because of one billion dollars of buying

pressure uh which kind of or will create

about one billion dollars of buying

pressure which which some say might have

led to a little bit of a temporary bump

uh in in the prices of uh BTC and eth a

lot of people have been seeing BTC pump

and they're like why is this happening

well potentially it was binance moving a

billion dollars of busd into BTC Ethan

BNB

now uh why did he potentially

pre-announce this that is why did CZ

pre-announce this well some people think

that uh binance pre-announcing this was

potentially a post announcement designed

to pump up their own uh stake so to

speak after they made their purchases so

think about this from a from sort of

just a cynical point of view you look at

this tweet you go given the changes in

stable coins and Banks binance we'll

convert the remaining of the one billion

dollar Industry Recovery initiative

funds from busd to Native crypto

including BTC BNB and eth some fun

movements will occur on chain today

transparency

okay right right some fun movements will

occur today okay interesting uh either

way the point is

you literally have the potential for uh

CZ to move markets with with his own

chatting on Twitter

uh and which makes sense because they

have a lot of capital but what they've

basically done is they've taken their

cash backing

and turned it into a now a market float

coin which which is pretty pretty

shocking they're going to convert a

stable coin which is supposed to be one

to one peg to the dollar so they say and

turning it into BTC B and B and E it's

the perfect sales pitch for the binance

token it's the perfect sales pitch for

eth and BTC it's the perfect amount of

buying pressure to potentially get a

rally moving whether whether they made

the transaction right after the Tweet or

at the tweet I mean we could look at the

chain history it doesn't so much matter

what matters is

it's essentially diluting The Recovery

Fund and creating more risk while

creating an ad for binance

kind of scary well at the same time uh

you know some are saying maybe busd

might come to an end since some of the

uh since the issuing bank for busd is

paxos and paxos is now getting sued by

the SEC another sec lawsuit the supply

of busd uh is is now uh basically only

able to go down redemptions are open but

you can't mint anymore busd coinbase

disabled trading for bib USD so

basically it's just like withdrawal only

uh you have this this uh this idea that

potentially

uh Banks and institutions are trying to

eliminate access uh to to these stable

coins at all uh binance being one of the

targets for them that's why paxos is

probably getting sued remember that

silvergate was the operator of the send

Network The silvergate Exchange Network

which ran 24 7 allowing those on and off

ramps from crypto to dollars but crypto

is basically getting debanked right now

likely for political reasons but this

debanking is also creating a d

stable coinization I totally just made

that up obviously but anyway it's

interesting because the more you

de-stable coin and the more you go to

these free float currencies like Bitcoin

and eth the more you actually

potentially are vulnerable to a shock

taking the whole system down

no it's unlikely that you know Bitcoin

and ethereum will actually go down

entirely but you could lead to

substantially more rapid panic in in the

pricing of of these coins and assets so

uh I don't know not not not great in my

opinion not not great