On The Brink with Castle Island

Latest Episodes:

Jeff Dorman (Arca) on asserting tokenholder rights (EP.129) Sep 23, 2020

Show notes

Jeff Dorman is the CIO at Arca, which is currently engaged in a fascinating standoff with Gnosis, a token project in which they have a position. Arca is asserting that Gnosis has delivered little value to tokenholders and has proposed that they perform a tender offer for GNO tokens with the assets held on their balance sheet (which exceed the capitalization of GNO). Covered in this episode:

The original purpose of Gnosis as laid out in the whitepaper
Why Gnosis only sold 5% of their tokens in the initial sale
How Gnosis's dutch auction backfired
How the original objective to create a prediction market failed
The history of Gnosis' non-core products and expenditures – and why they don't accrue value to GNO
Under what circumstances pivoting is permissible – and when it isn't
The existence of obligations towards tokenholders, even if implicit and unstated
What should a well-codified arrangement between tokenholders and token issuers look like?
Jeff's view of whether the utility theory of tokens is still valid
The substance of Arca's proposal to Gnosis, and their preferred resolution
Arca's proposal around a tender offer to buy back GNO at a fixed price with treasury assets
Why large investors exerting themselves in governance benefits smaller shareholders
How Arca's GNO position is similar to the ESG movement
Arca's response to the rebuttal that tokenholders have no rights
Arca's leverage to achieve a positive outcome – and willingness to litigate
Whether explicit security tokens like Arcoin and INX will converge to tokens with equity-like characteristics

Tom Lombardi (3iQ) on the Crypto-Asset-Management Opportunity (EP.128) Sep 21, 2020

Show notes

Tom Lombardi, Managing Director at 3iQ Corp, joins the show. In this episode we discuss:

Tom's path from traditional finance to the cryptoasset industry
The enterprise blockchain era: lessons learned and the second order effects of the hype cycle
The state of institutional exchange infrastructure
The crypto-asset-management segment and how 3iQ is positioned to capture this opportunity

To learn more visit www.3iq.ca and follow Tom on Twitter @tomlombardi

Weekly News Roundup 09/18/20 (Why Wyoming's SPDI is so exciting, a shift in tone from the SEC, Microstrategy keeps stacking) (EP.127) Sep 18, 2020

Show notes

Matt and Nic return to cover news of the week. In this episode:

Our review of NFL week 1
Whether or not securities law topics come up at parties
Why we're so excited about Kraken getting the Wyoming SPDI
Why the SPDI being full reserve is so important – and why it eliminates certain regulators from the picture
How Kraken's bank charter is reminiscent of a classic scene in There Will Be Blood
Why Wyoming's SPDI is a long-awaited rebuke to Operation Choke Point
Michael Saylor stacks MORE sats
How Matt was able to initially break the Microstrategy news
Why financial services firms looking at crypto need buy-in from the top
Michael Saylor's revealing quote about Bitcoin's hard forks
Why shrugging off hard forks defeats a key critique of Bitcoin
What the SEC settlement with Unikorn inc means for other tokens
The SEC sanctions rapper TI
Matt's embarrassing TI story
Our current view on handshakes
Why the settlement quality of stablecoins is context-specific

David Kinitsky and Marco Santori (Kraken) on obtaining the first Wyoming SPDI (EP.126) Sep 16, 2020

Show notes

Today, Kraken Financial, a wholly-owned subsidiary of Kraken, became the first financial institution to receive the Special Purpose Depository Institution (SPDI) charter from the State of Wyoming. To celebrate this major milestone, David Kinitsky, CEO of Kraken Financial, and Marco Santori, Kraken CLO, joined us on the show. In this episode:

Why Kraken decided to open an office in Wyoming and pursue the SPDI
Why David and Marco chose to join Kraken and work on this project
Kraken's journey to obtaining the SPDI and what's next
Why Kraken Financial will not seek oversight from the FDIC – and why it doesn't need deposit insurance
What an SPDI will enable Kraken to do
What distinguishes a full reserve bank – and why take that approach
How Kraken Financial would distinguish itself from the standard banks that service crypto companies and from full reserve bitcoin custodians
Whether Kraken expects NY to honor reciprocity for the Wyoming SPDI
The relationship between Kraken group and Kraken Financial
The next steps to take the SPDI approval and become an operational, fully-fledged deposit taking institution
What the SPDI will mean for existing Kraken customers