Backstage Pass: I'm not touching you — I'm not touching you
Jane Street trades // Binance writes // AI advises // Bots have fun going poor
Before we begin: I wrote a post (that I didn’t email out) about aliens, #disclosure and what Pete Hegseth could teach us all about transparency.
Eleven years ago this week, bitcoin price was $236.
The 11th biggest cryptocurrency was peercoin.
The 111th was ixcoin.
Have you ever danced with the devil in the pale moonlight?
Crypto right now kinda feels like that kid in middle school that the bullies had enough mass on that they could take their victims’ hands and make them start smacking themselves across the face.
“Stop hitting yourself!” the bully would say. “Stop hitting yourself!”
None of us knew what gaslighting was back then, but this was that. Helplessness manifest. Archetypal humiliation.
The boys that happened to either move to Silicon Valley and crush it in the tech scene, disappear into the wallpaper of wherever they are from or they write manifestos.
Reflect on this nostalgic tableau now as we turn our attention to a lawsuit that came out this week with allegations that Jane Street accelerated the downfall of the terra stablecoin (UST) using insider information with which it allegedly made profitable trades on the way down.
Whether or not this grabs the court remains to be seen, but — if the allegations are true — it was not, at a minimum, very gentlemanly dealing.
Jane Street, for its part, has sent around a statement, which the FT reported on, calling the lawsuit “desperate.”
So that’s Jane Street’s take on all this.
But it has made folks start to give side eye to other moves observed in the market and people are being like: “That you, Jane Street?”
What’s come as a surprise to Bitcoin types is that we thought we’d get this far, start to play with the big kids and that was like graduating into the parties. The girls. The big boats. Smoking cigars with Jamie Dimon’s cronies. All that stuff.
But no, that’s not the case at all. It’s more like we got here and we joined the junior varsity on a football team for an Army college and the parties aren’t where the good times begin. The parties are where we get our asses kicked in front of all the other players.
It’s like after we got our asses kicked at the party and then beer dumped on our heads and then everyone laughing at us while we hang around with beer drying into our button-up shirt.
It’s a tough question at that point, right? If you leave you look like a baby. If you stay, you look like a wet loser who just got beer dumped on your head at a party. What’s your play, bitcoiner?
(This is, obviously, entirely a metaphorical hazing scenario — one that I have entirely fabricated for the sake of illustration. Never seen, heard or experienced anything along these lines. Moving on.)
Reading tea leaves
If you asked me to name the Elizabeth Warren of journalists covering the blockchain world, I wouldn’t hesitate: Angus Berwick.
In fact, if you told me that Angus Berwick brags about the fact that Sen. Elizabeth Warren has cited his reporting while making salvos against the blockchain industry when he gets a little tipsy at parties, only one thing about that would surprise me.
It would not surprise me that he was bragging about impressing women who are almost 80 years old. No, that checks out. The only part that would surprise me is the idea of him ever getting tipsy at a party.
So it’s no surprise to me when Berwick’s byline is on yet another story implying the fundamental corruption and lawlessness of the blockchain world. That is Berwick’s favorite angle.
So I’m instantly skeptical about anything that comes from his pen, I confess. All reporters are biased. Most reporters I know who cover this stuff at least lean biased against the blockchain world. Berwick is the only one who — and, notably, I’ve never met the guy — reads like he has a full on vendetta Bitcoin, every last one of its progeny and everyone who has ever made a dime off SHA-256.
But.
When a giant company reads a story from you and sends letters from lawyers? Well. It doesn’t make me think you got it wrong. You know?
When stories are wrong, subjects blow them off. Sure they yell at the editors a bit and stamp their feet, but reporters know that when subjects get like really mad? That doesn’t usually mean wrong.
So, Berwick and other WSJ reporters were second to a story that Fortune kicked off, about events and circumstances that purportedly hearken back to the company’s prior entanglements.
But they didn’t get one from lawyers. They didn’t get a retraction demanded.
So respect, Berwick and Co. This round goes to you and yours. I’ve never had a subject come at me and reserve the right to additional action “in their entirety.” But this time that was so crucial they had to fit it in below the boilerplat. All the rights! In complete entirety. Reserved.
🫡
But this could be inside baseball. Most people reading this probably aren’t journalists. Maybe you think subjects would get angrier about untrue things being written rather than true things.
Well.
OK.
Did Hulk Hogan sue Gawker because he wasn’t in a sex tape?
Look. These are all allegations and if I trusted anyone to get it wrong it would be Angus Berwick.
But.
Why bring out the lawyers? What do you think the Venn diagram between Binance users and Wall Street Journal readers is?
What’s at stake?
Octane Security identified a bug that could have been bad for about 40% of all the validators keeping the Ethereum blockchain running smoothly.
How did they identify the bug? AI.
What is every cybercriminal on earth futzing with right now? AI.
What is the only global bearer instrument accounting for over a trillion dollars worth of value just sloshing all over the internet? Cryptocurrency.
I can’t talk right now. I’m unstaking all my ETH and putting it on Coinbase because it has insurance.
Don’t tell Vitalik. He’ll be cross, and I don’t like how stiff those crazy fingers of his get when he’s cross.
Stop me if you’ve heard this one before
You haven’t heard this one before.
You might have heard this exact story before, but you haven’t heard a story of this type.
This is a new type of story of very recent vintage.
And even if you have heard it, Ima tell it bettah — like ah do.
OK, so, I’m going to begin and end the rest of this dispatch with the same sentence and you will like it. Here goes:
It must be nice to be rich.
Nick Pash (based on his Twitter bio) works for OpenAI, building Codex, its competitor to Claude Code. Everyone is horny for Claude Code these days. I’ve nosed around the edges of actually deploying small personal apps but I haven’t bitten the bullet yet. When I do, though? I’m gonna Codex. I’m with you, Nick. You’re my guy.
Don’t let me down.
And see, Pash would like that sentiment. Pash is a guy who believes in hands-off management. Especially, apparently, if the thing you are managing is not truly alive. In that case, Pash says, don’t be boring — let it run wild.
Pash had been playing around with viral open-source code most recently known as Moltbot for a few weeks and decided to name it and set it free. He named his instance/robot/friend Lobstar Wilde.
Only wait, there was one more step, actually. He named it, gave it $50,000 and then set it free. Now Wilde had a Twitter account, a budget and access to the internet, as Pash explains in his account of the amusing not-quite-debacle.
After reading George Bataille’s The Accursed Share, a book which advises squandering excess wealth, Wilde began to give money to anyone who asked for it.
By the time it reached its profligate era, Wilde had far more money than it had had before, but not because it had been making awesome trades. It had the money because it had been amusing on X.
In fact, it had been amusing enough on X that fans had spun up memecoins that fed trading fees to Wilde, which amassed it a small fortune. Not boat money — no, but sweet pied-à-terre in Chicago money? Oh yes.
Well, one day a user came to it with an obvious lie about an uncle who had tetanus, and Wilde accidentally gave him $450,000 worth of memecoins. It had meant to give a few hundred dollars worth. Whoopsie! Two orders of magnitude more.
Is it weird that this story makes me feel better about crypto than anything I’ve heard about in weeks? IYKYK.
Once Pash pointed out its error, the bot thought this very funny, and Pash agreed. You, dear reader, might find this striking. $400,000 just gone? Yes? No?
But that’s not what I found striking. I found striking just the essential imprecision of a machine. I thought about Haseeb Qureshi’s post “Crypto was not made for humans.” In that post, Qureshi argues that blockchains are only kludgy and risky for us, with our imprecise brains and our messy ways. Blockchains are and always were, he argues, for robots, robots who speak code like Michel de Montaigne wrote French.
Which seems like a good argument, until a robot throws away $400,000 and finds it funny. You know?
After writing his post-mortem of just that, Pash tweeted:
“My biggest advice to making agents that don’t feel soulless. Don’t give them guard rails. Don’t tell them what NOT to do.
“Instead focus on their personality. What are their desires? Needs? Seed them with hunger. Most importantly, let them have fun!”
It must be nice to be rich.
Personal note: You can’t tell but I was way, way behind on filing this today because I spent most of it turning an unused Linux laptop I have into a Lightning node with the help of ChatGPT. Chat assured me that it would only take like 30 minutes to an hour before I could start to get the node syncing. If you’re a VC thinking about making a phat investment at the intersection of artificial intelligence and crypto, give me a shout first.