Memestocks are Spreading

0:08Hello and welcome to Slate Money, your guide to the business and finance news of a week in which we happily avoided thermonuclear annihilation. I am Felix Salmon of Bloomberg. I'm here with Emily Peck of Axios. Axios Markets, please subscribe. I'm here with Elizabeth Spiers of the New York Times. Hello. Elizabeth Spires is going to defend the New York Times. What pays her? And I feel like this is... Oh. That is all coming up later in the show when we talk about Satoshi Nakamoto. We are also going to talk about Bill Ackman, who is a crazy billionaire who wants to merge his non-entity of a public company with another public company.

0:52It's worth talking about. So we do. But first of all, we need to talk about who are these people trading billions of dollars on oil futures on offshore crypto exchanges. It's kind of wild. We have a Slate Plus segment on grocery shopping and whether men are worse at it than women are. It's all coming up on Slate Money.

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2:23Legislative and Regulatory Affairs, takes a nonpartisan look at the stories that matter most to investors, including policy initiatives for retirement savings, taxes and trade, inflation concerns, the Federal Reserve, and how regulatory developments can affect companies, sectors, and even the entire market. Mike and his guests offer their perspective on how policy changes could affect what you do with your portfolio. Download the latest episode and follow at schwab.com slash Washington Wise or wherever you listen. Emily, let's start with you this week, because you wrote a fabulous piece on Axios markets, saying that the meme stock trading frenzy retail investors trading in and out of anything that seems to be moving has basically broken out of its playground that used to be the stock market.

3:17And now it has gone global and crypto and across asset classes and especially has become a place for people to trade oil futures, like normal individuals to trade oil futures, which blows my mind, on some sort of dubious offshore crypto platform called Hyperliquid. Yeah, you got it. You got it. The lead of my story, because I'm Gen X, starts with Say Anything, the movie from 1989. John Cusack holds up a boombox outside of Ioni Sky's character's window and is like launched a thousand memes. Anyway, that was Say Anything. Now people trade anything. And what caught my eye was this platform called Hyperliquid where you can trade crypto.

4:05Hyperliquid has these offshoot sites like you can build on their platform. I'm not going to say chain, but chain, blockchain, kind of blah, blah. You can build a platform and there's one offshoot platform called trade.xyz. You can go there and then once there, you can trade oil futures. It's basically like a crypto product that matches up with the price of a Brent oil future that normal investors trade. And it's cheaper and it's become really, really popular since the war broke out. And it's 24-7. And it's 24-7. The Brent futures that you would typically trade institutionally regulated way are not 24-7.

4:45This is fascinating to me because we have had offshore crypto markets in the past, most famously FTX, which imploded, but was very big and successful while it lasted until it wasn't, I guess. And then we had Polymarket, which tried to sort of say, well, let's do offshore crypto, but make it about something other than just crypto. The thing about FTX was really it was confined to trading crypto. And Sam Bankman-Fried would talk every so often about how what he really wanted to do was tokenize stocks so that people could trade stocks on FTX. But he never came close to doing that. But now we have this thing called Hyperliquid and Trade.xyz and all the rest of it.

5:29And while Polymarket is tiny, it's very small volumes, even on sports, but just minuscule volumes on anything that isn't sports. The volumes that we're seeing on hyperliquid specifically on this oil contract are up in the over a billion dollars per day. So this is a – when it says that it's hyperliquid, it's kind of right. And I don't understand who is doing this billion dollars a day of trading. They wouldn't really say – like everyone says, well, it's not – you're not supposed to do it in the U.S. But like people in the U.S. are obviously trading on this platform. If you go to x.com, they're talking about it.

6:05A lot of Asian investors also are trading on the platform. It's completely unclear to me who these people are. It's$1 ,000 if you want to get in there.

6:13Elizabeth Spiers: Do you think part of this is just that with the rise of meme stocks and people getting accustomed to how Polymarket and CalShe work and crypto trading, we're just normalizing a certain kind of risk profile? That's the kind of thing that I was considering and then kind of a little bit rejecting, right? Because if that was the case, then you would see the volume sort of move from meme stocks into something like Polymarket and then from Polymarket into something like Hyperliquid. And you would be able to see a trend where the volumes would slowly move from one asset class across asset classes to other asset classes.

6:51That's not what we're seeing here. What we're seeing is a brand new massive volume in this like crypto oil contract, which dwarfs the kind of volumes that we saw at Polymarket and in fact dwarfs the kind of volumes that we saw at FTX. This is much, much bigger. And I mean, I'm not entirely sure, but I feel like a billion dollars a day, we're kind of approaching or even exceeding most of the kind of volume we saw in meme stocks back in 2021. This is real money. If you remember, we had a whole segment on this sort of$580 million oil futures trade that was suspiciously timed just before a Trump tweet.

7:29And that was$580 million. That was huge. And one of the things we were saying is that no one in America really has the ability to place that trade unless they're a massive institution. And now, obviously, no one's saying that there's one individual on trade.xyz who's trading a billion dollars. But, like, in aggregate, this is really, really significant sums of money. so I I'm kind of not convinced that this is just like the Wall Street bets crowd kind of as a movable feast suddenly alighting upon oil contracts it could be though the kind of people who are

8:03Elizabeth Spiers: buying up these contracts are also people who have done well by speculating on crypto so they already have a higher risk tolerance they could have already made money just speculating on crypto itself. And as a result, it sort of makes them have a higher tolerance for assets that they may not understand. That's definitely true. Well, we don't know who these people are. We don't know where they made their money. But we do know that the amount of risk in this market is enormous, right? This is a derivatives market. It's oil futures. All derivatives markets have one thing in common, which is that there's zero sum.

8:38So for every winner, there's a loser. It's not like the stock market where you can go in and expect that everyone makes money, right? This is a pure gambling betting game. And either you're doing like genuine hedging, you know, you're a airline or someone like that who uses a lot of gas and so you want to hedge your exposure, or you're just speculating. And it's I think it's pretty clear that the overwhelming majority of the volume on this particular market is speculation. And that's just yet that's gambling, it's risk. And for any normal human being, it is fair to assume that your counterparty, the person that you're trading with who's taking the opposite side of your bet, is probably faster and smarter than you are, you know?

9:19And so like for most people, it would be insane to play in this pool because you expect to lose on every single trade. And yet there seems to be no shortage of people doing it. Maybe you can help me understand this even better. So on the trade XYZ, where the oil futures trade isn't like it is on the regular futures market. They don't ask you to put up more margin. If you're on the losing side of the trade and you put up$1 ,000 or something, you just lose all your money. They don't ask you for more money. You get stopped out. Yes, there's no like borrowing to keep going kind of a situation. Right, so the way that regulated exchanges work is you're always technically dealing with a central exchange counterparty and that exchange counterparty cares a lot about your own counterparty risk and we'll audit you and make sure you have lots of money to be able to cough up if you lose and all of this kind of stuff.

10:09But yeah, in crypto, it's all anonymous. You can't KYC anyone or anything. That's like part of the appeal. They don't know your customer. So you have to set it up in such a way that people can get stopped out at the point at which they lose all of their money and they can't lose more than they originally put in. And Sam Bankman-Free tried to set this up at FTX as well, and famously kind of failed. And people did lose more than they put up. But generally, especially if you have a very liquid market, if something is moving against you, you can stop those people out before it just gaps out away from them.

10:43I don't know how it works. I haven't looked at this in any detail. It's a really tough problem, because especially in a volatile market like oil is right now, the prices can just gap, right? And so let's say that you sell oil at$100 a barrel, and then you would lose all of your money if it reached$110 a barrel, but then suddenly, like, there's a tweak goes out, and it's 120, and you don't have time to sell it at 110. Then like you at that point, basically have a negative amount of money. So I don't quite understand how the stop loss mechanisms work. But, you know, people seem to be trusting it.

11:21And people seem to be doing a lot of trading here. So everything on the platform trades at a 20 times leverage. So if you bet$1 ,000 and you're right, you can get$20 ,000. And the trades roll over every eight hours, the future contracts roll over every eight hours. And every time that happens, you get charged a fee on the 20 times leverage number. Yeah. I mean, to Elizabeth's point, this is just pure gambling. It sounds crazy to me that you get charged a fee on the leverage. I don't understand. That's rational, right? Anyone who's offering 20 times leverage It's providing a valuable service that people are going to pay for.

11:59Right. It's basically lending you money in a way. Yeah, they're lending you money. You're paying a fee for the leverage. Right. And maybe that's it. Maybe that fee is so large that it can cover the losses on people who end up losing more than a bet. I think so. Because if you keep rolling over your bet, that's so much money. Two percent every eight hours. It's wild. And the point we have to say here is that there is investment where you buy something and hold it for years or decades, and it goes up over time and you make money. And that does exist in the crypto world, right? The original Bitcoin hodlers are just like, I'm going to hold Bitcoin forever and I'm never going to sell.

12:41And you see that in crypto. So there are trades where you're like, this is trading here. And then over the next few days or weeks or months, I think it's going to go there. And then when it gets to that target price, I'm going to sell and I'm going to make money. And then there's intraday noise trading, right? Which is like high frequency trading. And if you look at what happens to prices of any kind of financial security or derivative on the sort of second to second basis, it's almost purely random. It's indistinguishable from a random number generator. Like what happens on a super, super short time?

13:18And so you're basically betting on a random number. If you're doing something within that kind of eight-hour period on something that is incredibly volatile, you are betting on a random number going up or down. And the fact that people are doing so much betting on this particular random number just is wild to me because there are people who can make money from this, right? The people who make money from this are market makers like Citadel or Jane Street or whatever, who are constantly making a two-way market. They'll buy at this price and sell at that price, and they have a bid-offer spread, and they actually wind up taking very little risk because they are always basically net flat in terms of their position.

13:59They're not taking a positional risk. They're just selling for one cent more than they were buying for a million times a second. And that's a liquidity provision service that they do. and you can make a lot of money by doing that. But the dumb schmucks who are on the other side of those trades who are like, I'm going to bet that it goes up or I'm going to bet that it goes down, those people always lose money.

14:20Elizabeth Spiers: Well, I think there's a better example of the dumb schmucks who are doing this right now. And there's a tanker shipping ETF called BreakWave that's up 1 ,300 % over the last year. And it's a very small, like, you know, they're doing 25 million in volume. So that sounds like more than it is. But it's such a niche thing to kind of trade on. You really have to understand the market and the industry because there are so many different factors that play into how tanker shipping works. And I think a lot of the people who are rushing into that are really just using it as a proxy for oil without understanding anything that they're betting on.

14:54Although I think if you read that Bloomberg piece, we covered it in kind of interesting detail. But one of the interesting things about that piece is there isn't a lot of volume in that ETF. There is a lot of volume in various oil ETFs. that tanker shipping ETF has gone up a lot in price because the cost of sending a tanker through the, it's based on like the cost of sending a tanker through the straighted form moves to China. That cost has gone through the roof. And so the price of the ETF has gone up 10X or 100X or something crazy. But it's interesting to me that that, which is a very low capitalization ETF, is low cap, low volume, high price, is exactly like how markets should work.

15:39Something goes up in price because that's how much it's worth now. But you don't see a lot of speculation on it precisely because there isn't any liquidity and it is dumb to bet on it. And so people don't. Well, yeah, the time has passed to buy into the ETF. Like the time to do that was like February 27th or whatever. It's weird. But like some dumb little ETF on the stock market is that is exhibiting rational behavior of people avoiding it because, you know, you can't make money on it right now. Whereas it's the hyper liquid oil futures that are displaying this relatively irrational behavior of people making bets on where oil is going to be trading in the next eight hours, which is like no one can know that.

16:19Well, we discussed it last week, but you could guess based on what, you know, the president's about to post or something. Right. Maybe. I mean, yeah, maybe that entire billion dollars a day is people who work in the White House. i feel like polymarket walked so that hyperliquid could run like polymarket and ftx kind of showed this sort of proof of concept of we are going to nod wink wink have an offshore thing that americans aren't allowed to use and then a bunch of americans use them and no one gets dinged for it and so now if you're an american going well i didn't get dinged for using ftx by law enforcement and i I didn't get de-infusing Polymarket by law enforcement when it was technically illegal to do both.

17:05Now I'm just going to play around. Oh, I didn't get de-infusing Binance or Tether, all of which is technically illegal in the United States. Then now I'm going to try doing this other thing called Hyperliquid, which that's now real money for the first time. And it's not just real money. It's like it's real assets. It's not just crypto bollocks. But yeah, to Elizabeth's point, If you're used to trading SAM coins and random bits of crypto that make no sense and are here today and gone tomorrow, oil seems almost normal and safe in comparison. We should say Hyperliquid was founded by a guy who graduated from Harvard.

17:41And he's talked about in an interview with Fortune about how he can do better than FTX. His company only has 11 employees, which is kind of crazy. They make so much money with so few people. Oh, and they also have a coin called Hype that is popular. Is there a polymarket bet on whether he winds up going to jail at some point? I don't know. Interesting question.

18:02Elizabeth Spiers: Was he on the Forbes 30 under 30 list? Exactly. I hope not. Bro would be cursed then, yeah.

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20:55on G2, TrustRadius, and Gartner. If you're ready to run the backbone of your business on one unified platform, head to rippling.com slash ACASTBiz and sign up today. That's R-I-P-P-L-I-N-G dot com slash ACASTBiz to sign up. But talking about wunderkind billionaires, can we talk about Bill Ackman?

21:20Elizabeth Spiers: If we must. He's not really a wunderkind anymore. I think he still likes to think of himself as like some wild young bug. But he has one of the weirdest things I have seen in financial markets in a very long time. And I just wanted to talk about it, which is he has this SPAC. We should just rewind a little bit and remind ourselves what a SPAC is, right? A SPAC is a way of taking a company public. So what you do is you raise a bunch of cash from investors. you then list yourself on the stock market as a spec called like felix corp or something that felix corp is just a box that holds a bunch of cash in it and then you find a private company and you buy the private company using your cash and you issue a whole bunch of stock to that private company and then you change your ticker symbol but like you have that listed company and And now that private company is a public company because it has publicly traded shares of what used to be Felix Court.

22:23It's like a sort of backdoor way of doing an IPO. If you're a private company, you don't want to go through the whole laborious IPO process. You can just be bought by a SPAC. And that takes you public. And SPACs had their moment as well in 2021. And some of them did well and most of them did badly. And we talked about it a lot at the time. But then Bill Ackman came along and he said, I don't want to do a SPAC. I want to do a SPAC. do not really concern yourself about the difference between a SPAC and a SPAC, except for the SPAC is just something that doesn't have a lot of money on it. Instead of having like a large pool of cash that people are allowed to take their money out of if they don't like the deal, it has no cash, but people are allowed to put their money into it if they do like the deal.

23:04Whatever, same difference. In both the case of the SPAC and the SPAC, you have this listed vehicle which is looking for something to buy. In the case of the SPAC, it goes around looking for something to buy. It then identifies the target and it goes, I want to buy that target. And then the investors in the SPAC have two choices. They can keep their money in the SPAC and go, yay, now we get to buy this great company at this great price. Or they can pull their money out and say, I don't like that target. I want my$10 back. In a Spark, you don't really put your money in to begin with. You get some warrants and stuff like that.

23:43The Spark goes around, looks to identify a target. And then when Bill Ackman says, this is the target I want to do, then you can put your money in because you like that target, or you can not put your money in because you don't like that target. So it's just a question of like, instead of the Spark mechanism where people pull their money out, if they don't like it. The SPAC mechanism is people put their money in if they do like it. But the SPAC or the SPAC has been around for quite some time before they identify the target in either case. It's a special purpose acquisition company. That's what a SPAC stands for.

24:16What's the R in SPAC stand for? Rights. Acquisition rights. Because there's like warrants and yeah, anyway, because Bill Ackman loves cleverness.

24:24Elizabeth Spiers: They only ask for money from the investors once they've closed a deal to buy a company yeah exactly so they identify the target and then they're like please pay us and then if you like it you put your money in and if you don't like it you don't put your money in so all of this makes perfect conceptual sense it's basically a spec it's a spec with a twist whatever the thing that makes no sense whatsoever is that bill ackman's target after he has gone searching the world high and low to find a private company that he wants to take public, he has managed to find a public company that he wants to take public, which makes no fucking sense at all.

25:08Elizabeth Spiers: Okay, I think it makes sense. Wait, say what the company is. He wants to buy a Universal Music Group, which is one of the big three, aside from Warner and Sony. It's Taylor Swift, Billie Eilish, Bad Bunny. Yeah. He wants to buy it for basically a bunch of shares in his Spark, which are worth whatever the stock market thinks they're going to be worth. And he's basically going along to the shareholders of UMG saying, why don't you swap your shares in UMG for shares in my Spark, which will then own UMG? And the shareholders of UMG are going, but isn't that the same thing? What's the difference between owning a share of UMG and then owning a share of the Spark that then owns UMG?

25:47And Bill Ackman says, you don't understand. It's completely different because instead of your shares being listed in Amsterdam, they'll be listed in New York. And they're like, I still don't see the difference. I have a share in the company. Why would the share be worth more if it was listed in New York than if it was listed in Amsterdam? And Bill Ackman basically says, well, because we will have fewer assets. And they're like, what? He's like, yeah, I'm going to sell the stake in Spotify. And they're like, how is that going to make my shares more valuable? He's like, well, you know what it really is.

26:15I'll put Mike Ovitz on the board. How old is Mike Ovitz? Exactly. How old is Mike Ovitz? And they're like, you are still not answering the question, Bill Ackman. Why is this going to help us? And he's like, well, look, the shares will just be worth a lot more. They will be worth$60 billion. And they're like, no, they won't.

26:34Elizabeth Spiers: Well, also, if the shareholders can elect to take part of the money in cash, and if a lot of them decide to do that, then the deal is worth far less than Ackman saying it is. But I think that a lot of this just boils down to Bill Ackman's general psychology as an individual. He wanted to take over Universal in 2021 and he didn't succeed. And notoriously, he holds grudges. He kind of gets a bee in his bonnet about something and then just doesn't let go of it. And so I think with this, he was just obsessed with the company. but the logic of it just doesn't if the company already thought or understood that simply moving the listing to the new york stock exchange would return money to shareholders they could do that themselves they don't need bill ackman to do it yeah relisting in new york and selling the stake in spotify this is just the old corporate activist playbook which bill ackman knows very well and he's like i you know i have a 4.5 stake in your company and i want you to do this and do that and now create shareholder value except for he's now adding this extra twist of you need to sell to my spark at the same time that just it's it's incomprehensible to me that anyone would take this seriously yet everyone took it seriously i think everyone took it seriously for about five minutes and then everyone looked at the details and said wait what and then they realized that Like the whole point of a SPAC or a SPAC or whatever the fuck you're calling it is to take a private company public.

28:09You can't take a public company public. Taking a public company public is the dumbest thing in the world because it's already public. Well, you could buy a public company if you're a public company or merge with a public company if you're a public company. Stuff like that. That's the stuff we like. It's fine if you're a public company with assets and then you merge with another public company with assets, then people can value the combined assets of the two companies. But Bill Ackman's public company, The Spark, doesn't have any assets. Like the assets of the combined company is just the assets of the company that he's buying.

28:43There are no other assets. I mean, when people use the term financial engineering, I'm often like, what does that mean? And it seems like that's what this is. It's just like a numbers salad, word salad of like, we're going to do this or that. And then I read some quote from Pershing Square, that's Ackman's company. Their chief investment officer told some media outlet, we think we can add a lot of value by helping capital allocation and shareholder communications. So that's another word that's like, we can do better marketing. We're going to do very long posts on X.

29:17Elizabeth Spiers: I'm a new IR person. Yeah. I don't think that is a winning argument. And it's like a storied, I mean, this is the third, one of the top three music companies in the world, right? Taylor Swift, Bad Bunny, like Billie Eilish, the Beatles. Don't do this, Bill Ackman. Like, SPACs are for, isn't the Donald Trump crypto company started out as a SPAC? That's what you do with a SPAC. You do some like, you know, more innovative company, let's say. You don't just do like the most storied music publisher out there. And to be clear, the financial engineering, like music companies have historically, like music labels, have historically traded often relatively depressed multiples and valuations, which is always catnip to financiers.

30:02And there was this very famous financier named Guy Hands in the UK who decided he was going to buy EMI and did. And that one ended in tears. Like basically a lot of financiers think they can run music labels, record labels, like better than the record label people because they look at the record label people and they're like, you just think it's about music. It's not about music. It's about cash flows, goddammit. And I know cash flows. And then they go in there and then they realize it's actually much harder than it looks. I do love the story about Guy Hans trying to get a handle on expenses at EMI, and he kept on looking at this massive line item called fruit and flowers.

30:47And he's like, why are we spending so much money on fruit and flowers? And it took him like two years before he realized it was code for cocaine.

30:59Elizabeth Spiers: You know, Ackman is quoted somewhere saying he thinks music is as necessary as a sleep and food or something. Like, I think he just romanticizes the business and it's kind of like a prestige business for him too. Interesting. You might get to meet all the celebrities and go to all the Taylor Swift concerts. Can he do that now? I mean, he's a billionaire. He's a billionaire. This is one of the things about being a billionaire. You want to go backstage to the Taylor Swift concert? You probably can, you're Bill Ackman. I love the idea that Ackman is saying that he will improve shareholder communications given his history of just posting through it every time something bad happens.

31:35I feel like that's what they meant by that. They're going to post through it. Like, UMG just isn't on x.com enough. In any case, like, the French billionaire guy who owns Vivendi is the biggest shareholder in UMG, and he would need to get on board with this. And Bill Ackman was like, yeah, I gave him a heads up, like 24 hours before I announce this. And obviously I need him to be on board. And it's just like, no, this guy did not become a billionaire by just taking a phone call from Bill Ackman and going, oh yeah, Bill, that makes perfect sense. So we don't think this is going to wind up happening?

32:17I feel like he tried it once in the past, it failed, and now it's going to fail again. And the future resembles the past, and the lessons of the past is it's going to fail.

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35:56That is the perfect segue to talk about another thing that we have seen a million times, which is some random media outlet deciding that it's going, deciding that it's worked out who Satoshi Nakamoto is and running an 8 million word piece about like, let me tell you the story of how I deduced the identity of Satoshi Nakamoto. And then they unveil it all in a blaze of publicity. And the guy goes, yeah, no, it's not me. And everyone goes, oh, well, nevermind. And goes away. Except for in this case, it's not a random media outlet. it's the new york fucking times and it's not a random journalist it's john fucking carrie who you know brought down peranos and these are the two biggest names in financial journalism pretty much well bloomberg notwithstanding um but yeah they're big names and the fact that like they even went there is kind of astonishing to me i found the case convincing and the guy's denial

36:55Elizabeth Spiers: was very kind of odd he was like well you're not really going to know until satoshi cryptographically proves that it's him. That's a sort of misunderstanding of what the standard is for reporting. He's sort of arguing that the Times has nothing unless they have not literal video evidence, but an equivalent of it. And that's not necessarily the case. And I found Kerry's case pretty convincing. You did? I found it completely unconvincing. Where he gets someone to do the equivalent of handwriting analysis, where he uses an AI to... Stylometric AI. And then he was like, and then there was one thing that made me sit up.

37:33And then it didn't work. And it didn't work. The stylometric guy was like inconclusive. And Carrie Rue was like, well, that's disappointing. Let's do it a different way.

37:40Elizabeth Spiers: Well, but also you pointed out that Best, the cryptographer, and just to back up, his case for the idea that this British cryptographer is probably Satoshi is really built around the idea of this body of communication that's public where he's interacting with Satoshi. They have some commonalities. There are commonalities in the ideas that they talk about, the way that they write. The specific case that you're talking about, he also, during part of those communications, brought up the idea of stylometric analysis and suggested that if you wanted to cover your tracks with handwriting analysis, and this is way, way back, but Kerry, you found that in his communications too.

38:22Elizabeth Spiers: So it seems like he might have anticipated that that would be a way to... Okay, so let's not get in too far into the weeds here. There's a very big picture here, which is, number one, Kariru uncovered absolutely nothing new, right? Or everything that he's looking at has been public for years, and he tries to make the case that there was some new cache of Satoshi emails, but really, it's all old news. I think that's true. First of all, he cloned through a lot more stuff than at least the previous things that I've read, beyond just a cache of emails. It's a lot of communication with third parties outside of the mailing list that I think has been the crux of what other journalists have looked at.

39:02He interviewed people who were part

39:05Elizabeth Spiers: of that crypto punk collective that - Cyberpunks. Cipherpunks. Cipherpunks. So it's true that he's building on the work of other people, but I do think that he had some little scoops in there. In general, when I've talked to people who've read this story, The closer you are to Bitcoin, the more you've been following this entire saga of who is or who isn't Satoshi Nakamoto, the less convinced you are. And conversely, the more convinced you are by like narratives, the more convinced you are. Kariru is a storyteller and he's written this story and he's written it in a way to try and make his case as convincing as possible.

39:47But there are, as Emily says, a bunch of giveaways here. One of them is that he starts off the story already convinced that this bad guy is his man, right? He's like, ah, he squirmed in a weird way when he was on video. You're like, oh, for fuck's sake. But one, he starts off already convinced that he knows what the answer is. And then he just goes off on this hunt looking for anything he can find that might reinforce his priors. And this is known in the industry as pee hacking, right? You just, all you do is you look for things that support your argument. And then you're the writer of the article.

40:23So you get to put in the article all of the random bullshit that may or may not support your argument. And you get to make it as compelling as you can while leaving out all of the stuff that does not support your argument. Although, as Emily noted, like even then, he did kind of manage to squeeze in a bunch of stuff was like, wait, hang on a sec. My favorite bit was when he was like, and then I discovered something that made me sit up in my chair here that like satoshi had said like i'm better at coding than i am at writing and then this other guy andy back had also said i'm better at coding than i am oh for fuck's sake none of this is remotely convincing this is what nasim taleb calls fooled by randomness right that when we're faced with a bunch of noise we as humans just want to put a story to it and we wind up telling ourselves stories to understand the world and he's obviously told himself off this story to understand the world and yeah that but this has happened so many times with so

41:22Elizabeth Spiers: many other people there are specific technical issues that came up earlier where there was a period where satoshi disappears and back becomes much more prominent in this community and in the discussion and some of the stuff that he was talking about way before satoshi writes the white paper, you know, come up in conversations later. And I just, the timing, it's either he was so close to Satoshi that he is mimicking some of the same ideas and using the same language, or he is the guy. And I disagree with your premise that, Carrie, you probably left out all the contradictory evidence. I don't think that most investigative journalists I know would do that because you don't want to be wrong.

42:06Elizabeth Spiers: If the story comes out later that it's somebody else, than Kiryu has egg on his face. Like, I don't think that he's in bad faith trying to make an argument just to have it. I'm not saying he's in bad faith. But I am saying that investigative journalists, once they get their jaws on a kong, they do not let go. And one of the things about investigative journalists is they, all of them, without exception, need an incredibly skeptical editor to be like, are you sure about this? Show me the actual evidence. I haven't had my experience at all. But Emily, you're with me on this one, right? Yeah, I do think he started with a conclusion in mind, and then he did his best to cherry-pick evidence and make things that are random or really just coincidences seem like bigger than they were.

42:51Elizabeth Spiers: I think that's about his storytelling style, though. But he doesn't prove that in any way that the guy is the inventor of Bitcoin. He does exactly what a lawyer would do in the absence of video evidence or direct proof, which is that he builds pieces of evidence that point to that conclusion. And I also think I didn't read too much into his notion that he was watching the guy on camera and felt a little twitchy about the way he was behaving. But that was also what he claims convinced him in the end was when at the very end when he confronts the guy in a hotel room and the guy like squirms in a different way.

43:23He's a whore. He squirmed again. I could tell from his squirm.

43:27Elizabeth Spiers: Well, coincidentally, I just interviewed on Tuesday a woman who specializes. She's a psychologist whose specialty is she studies psychopaths. And she wrote a book where she talks a little bit about her PhD thesis, which was about hedge fund managers and whether people who have dark traits have higher returns. And turns out they don't, which is reassuring. But she talked about how she spots a liar and she did criminal work before she started doing stuff in finance. And one of her first examples was she said she was watching a news broadcast about this woman whose daughter had disappeared and the woman was seemingly upset and she was giving a public press conference.

44:06Elizabeth Spiers: And then she, but the psychologist said, you know, I knew kind of instantly that she was lying and I was already working with law enforcement on a similar case. And then she described why. And she said, sometimes she said there are subtle tells. She said part of it is when people are lying, they can control the bottom half of their face, but not the top at the same time. especially if they're being like a... The Emily Peck eye roll is just like... This is not journalism. He's not using that as evidence. He's explaining the origin of his interest in it. Sure. Okay. That's fine. That's fair enough.

44:38But I'm just saying at the end of all these thousand words, he's improving.

44:42Elizabeth Spiers: If it turns out this guy is Satoshi, both of you owe me$100. If it's not, I'll pay you both$100. Brilliant. I have never initiated a bet on this show. This is exciting. So wait, when's the expiry of this bet? when do i get my hundred dollars whenever there's definitive satoshi does the like cryptographic thing or somebody like the sky dies and he writes in his will he's like but the slightly bigger more interesting question the carrier didn't go into is like does it matter and if so why and the answer to this question is that there is this general consensus in the Bitcoin world that if any, and especially if all of Satoshi's Bitcoins were to be sold, that would crash the price of Bitcoin, to which I'm like, you're on anything and nothing can crash the price of Bitcoin.

45:32Like, you know, wake me up when something interesting happens. Nick Carter, who is another person who some people believe is Satoshi, has a long post saying the really important thing is that in a couple of years, AI and quantum computing technology is going to allow the keys that have locked up that stash of Bitcoins to be unlocked, basically. And so you need the owner of those Bitcoins to be able to do clever things to them to prevent them from being unlocked by a bad actor with a quantum computer and i'm again i'm just like what you know what like this goes all the way back to when newsweek claimed that some poor fucking california named dorian satoshi nakamoto was like satoshi nakamoto half of the people were like this is really crazy and important and the other half of the people were like but why the guy disappeared because he's like it's not about me it doesn't matter who it is And ever since then, a certain sort of breed of journalist or investigator has been like, oh, it does matter.

46:42But they've never really done a good job of explaining why it matters or why it should matter. I've been thinking about this. Why does it matter? I mean, obviously, everyone wants to solve the mystery and figure out who the guy is just because we're humans and we like a good story. And wow, someone invented something out of nothing and now is worth whatever it's worth, billions of dollars or more. It's sparked all different kinds of new industries and trading. I mean, it's pretty amazing. You want to know who did it, right? That's one. And two is maybe like someone invented a whole commodity or currency or whatever you want to call it, a market.

47:13We don't know who it is. It's like really like it's like God level weird. Don't you think?

47:17Elizabeth Spiers: Well, also, this person would be one of the wealthiest people in the world. And I think we do want to keep an eye on people who have that much concentrated wealth. That's true, too. It's kind of weird wealth, right? Because as we've sort of discussed, it's wealth that stops being worth nearly as much the minute that you try to actually spend it. is generally understood in the Bitcoin world that like a lot of the value of Bitcoin is sort of built upon the idea that core Satoshi million Bitcoins is just sitting there and will never be touched. And if it ever was touched, that would like send the entire edifice or a large chunk of the edifice crumbling.

47:59And most wealthy people, you know, at least will borrow against their wealth to spend money on stuff. I think actually, the number one piece of evidence that this guy is not Satoshi is that he is the CEO of a Bitcoin treasury company.

48:18Elizabeth Spiers: I don't think that's evidence. Which is like, what does a Bitcoin treasury company do? It runs around trying to find a pile of Bitcoins, put them in a box and then list the box on the stock exchange, which is what Michael Saylor has done at strategy and with more or less success, depending on how much Bitcoin is worth this week. And it's just the dumbest possible use of Bitcoin is to put them in a box and list them on the stock exchange. This just violates every conception of what Satoshi was trying to do was create this like currency that would be an alternative to classical finance. and what the Bitcoin treasury company people do is like, well, let's not do that.

49:04Let's just turn it into a stock that trades on the stock market. It so violates the whole sort of gestalt behind that original 2010 paper. Yeah, that just makes no sense to me at all. It is really creepy that we don't know who came up with Bitcoin. I think it does absolutely matter. Honestly, I do think about it a lot. Do you not? You don't think it matters, Felix? I'll just go back to where I started. which is that I have seen so many different people claim that they have worked out who Satoshi is. And every single time, it's a different fucking person. And I'm like, oh, for fuck's sake, when are we going to get bored of this game?

49:43Oh, this is what I wanted to say to Felix Zaman is last week we talked, or the week before, who can remember, time, we talked about Banksy and Felix was like so jaded, like, oh, we know who he is, whatever. And this week he's like, we don't know who he is, whatever.

49:59Elizabeth Spiers: So the conclusion I draw is like, you don't care about anonymous people. You're like, just be anonymous. I'm fine. I don't care. Yeah, exactly. That's your take. A name is just like, it's not an identity. Like you put a name to an anonymous identity and it's just a name. Like, it doesn't matter.

50:31We should have a numbers round. Elizabeth, do you have a number?

50:34Elizabeth Spiers: I do. My number is 500 million and that's dollars. And that's the annual revenue of a company called Buzzballs. That is the number two prepared cocktail brand in terms of dollar growth in January. And have you seen these? They're like prepared cocktails that are in ball shaped containers. They're about the size of a tennis ball. And you can buy them at grocery stores and liquor stores because the grocery store versions have some form of like agave or orange wine. But anyway, the thing about this is that they look kind of like toys and they're very candy colored, you know, like they're bright blue ones or bright green ones.

51:08Elizabeth Spiers: And so there's been a little bit of a concern that this is sort of overtly marketing to teens and tweens. There's a flavor called Grapes Gone Wild. How do you drink them? This is the dumbest question ever. It's got like a little tab on the top. Tab, okay, got it. And of course, this has been the focus of a bunch of TikTok challenges because they're very easily, they're photogenic drinks. Is it like the Tide Pods, but not less lethal kind of a thing? Yes. They also have a bigger version that's called a, well, two bigger versions. The biggest one is called a Boulder. So instead of a buzz ball, you have a buzz boulder and it's three liters.

51:42Elizabeth Spiers: And they did a special for a while where they had a basketball you could buy. They called it the Big Blue B-Ball. This is definitely not targeting sophisticated drinkers. I feel like this is targeting TikTokers. I'm in favor of anything that can get young people to start drinking alcohol, man. I'm very worried about the future of the alcohol industry, and I want it to live. And if this is an entry drug into proper drinking, let's do it. How are we ever going to get them drinking martinis? The youth are not corrupted enough. Exactly. Felix is on the case. Emily, what's your number? My number is two dozen.

52:14That is the number of Waffle House workers and regulars interviewed by the New York Times as part of the paper's quest to verify whether or not a FEMA official named Greg Phillips did indeed teleport to a Waffle House, as he claimed, in Rome, Georgia. The New York Times came to the conclusion that likely he did not. They also interviewed a physics professor to just ask about the practicalities of teleportation. I want to clarify that I love the New York Times. I'm glad they have the resources to write thousand word investigations that are inconclusive about who invented Bitcoin and that they investigate thoroughly the claims that some guy from the White House, from the Trump administration, teleported to a Waffle House.

53:02I'm glad and I'm here for it. And just to clarify, Todd Phillips did say he never used the word teleportation. Oh, OK. He said the more accurate term would be biblical and that he translated or transported, OK, to the Waffle House. Like Moses or whatever, or the burning bush. I guess.

53:23Elizabeth Spiers: I think we do need to know if a Trump administration official thinks they teleported to a Waffle House. Yes, we need to know that. Maybe we don't need to ask a physicist whether that's possible. I liked it. I was happy. I'm saying I approve of this. Like in my ideal world, I would want to report that story like and call the physicist up and be like, can you teleport? Is that a thing? He says, no, you have too many atoms in your body and the energy required to move all the atoms. It just can't work. Like I enjoy that. The headline really made the Internet crazy because it was written in this very flat style.

53:56Elizabeth Spiers: It said something like White House official says that he was teleported to a Waffle House. experts think this isn't possible yeah but there was a kicker quote i really liked a regular at the waffle house he says i can say i've been drunk and ended up in a waffle house don't know how i got there but i was there yeah that's how it works that's how it works people my number is five which is the number of ceos of g sibs who found themselves summoned to a meeting with the fed in the Treasury this week. This is Jane Fraser of Citigroup, Ted Pick of Morgan Stanley, Ryan Moynihan of Bank of America, Charlie Schaaf of Wells Fargo, and David Solomon of Goldman Sachs.

54:40You'll note that Jamie Dimon of J.P. Morgan was not on the list. He was unable to attend this meeting. He's like, I can't stand that besant guy. I'm not turning up.

54:50Elizabeth Spiers: He was teleporting to a Waffle House. All of the banky G-Cib CEOs were summoned to an emergency meeting by Scott Besant. And the subject of this emergency meeting was, Anthropic has this thing called Mythos, and we should be worried about it. Basically, Anthropic has this tool, which it is not releasing publicly for very good reasons, that when you're looking for vulnerabilities on the internet, there are lots of vulnerabilities on the internet, but you have to kind of spend a lot of time and mental effort trying to find them. And Anthropic has now built this tool that can just spin up all of these agents and find security vulnerabilities without nearly so much human effort.

55:32And so now everyone's worried that there's surely a whole bunch of security vulnerabilities that if this mythos thing gets out, it's going to be exploited and we're all going to get all of our money lost and that kind of stuff. So I think Scott Besson basically just went up to these people and said, the Trump administration doesn't like anthropic for reasons that we know, but you You should probably get yourself Mythos and look for security vulnerabilities in your bank because it's going to leak and then otherwise someone else will do it.

55:59Elizabeth Spiers: Anthropic also, they're only releasing the code to 20 companies and they're all in part of a working group. I think Anthropic gave them the heads up about. Oh, yeah, yeah. Anthropic is doing this the right way for sure. But that doesn't stop the Trump administration from like not inviting Anthropic to this meeting and just inviting the bank CEOs and saying you should worry. It's great PR for Anthropic. Like what is better than like my company invented something that you absolutely have to need because it is so dangerous. You must protect against it. Like I'm not saying that they did it for PR, but it's definitely good PR.

56:32Elizabeth Spiers: I feel like Sam Altman would have just said, we made this thing. Let's try it out everywhere. Yeah. What could go wrong? Let's find out. Yeah. Talking about unconvincing 8 million word articles, the Ronan Farrow thing on Sam Altman was exactly the same as the John Kerry thing. It was a bunch of stuff we already knew in service of something which was not in any way groundbreaking. I'll just say for the record, again, I've already defended the New York Times, which probably needs no defending. But I defend also articles that, quote unquote, tell us what we already knew. Because sometimes what we already knew was dispersed through many, many different articles written and never seen by anyone except whoever is the expert in the thing.

57:14And they're like, oh, the New York Times discovers thing I knew. And it's like, yeah, but no one read the thing you knew. You know what I mean? Like, you need the big piece. No, no, it's true. The journalist's reluctance to report stuff that has been reported by someone else is a problem. Like, we should be okay with reporting stuff that's already been reported. But, like, you don't need to do that at 10 ,000-word length.

57:34Elizabeth Spiers: Probably not. In the details, though, I think part of what happens, too, is that people think they already understand the story. So it's like, well, I already understand this vibe. So the new story comes out and you don't even notice the new findings because they reinforce what you already thought the vibe was. Exactly. And insofar as there are new findings, they're buried like 8 ,000 words in. And at that point, you stop reading all the problems with journalism. No wonder we're just tuning it out and watching TikTok instead. Why they hate us. I think that's it for us this week. Thank you for listening to Slate Money.

58:05Thank you for emailing us on sleepmoneyatslate.com. Thank you to Jasmine Molly for producing. If you were intrigued by Elizabeth's tease of her interview with the author of the book about psychopaths, that's coming out on Tuesday on Money Talks. So stay tuned for that. All of the other wonderful content will happen next week.

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