[00:00:00] Welcome to Crypto Talk Radio, the podcast for everyday investors like you. Visit us on the web at CryptoTalkRadio.net. And now, here's your host, Leicester. Thank you for that, Bailey, and welcome everybody out there on Crypto Talk Radio found at CryptoTalkRadio.net. Juneteenth has come and gone. Had some bangs, people popping fireworks for reasons I don't fully understand.

[00:00:27] Cryptocurrency had some tumultuous few days past. We have a couple of news bits. Forewarning for people, there will be some laughter at points. I guarantee you I will be laughing. Not at you, but I need to laugh at the situation because it was hilarious. I was dying laughing. It is what it is, but I am going to be laughing and I'm warning you.

[00:00:51] So if you're one that gets offended by somebody laughing at something that ends up being your misfortune, I'll apologize in advance. But as a director I used to work for once said, tough skin. As in, you got to grow a tough skin about these things. Things outside of your control are not worth worrying about. No reason to stress over them. You just kind of have to laugh it off and move on. And then adjust your strategy because it's possible you put your faith in something incorrect.

[00:01:22] That's what we're going to talk about in our news updates here today. CoinMarketCap.com, we will start with Bitcoin and zoom out to the month chart. Although we are zooming on the month chart, we are going to talk about the major dump that occurred very recently to Bitcoin.

[00:01:45] Bitcoin, even though the trend was not significantly impacted, it did create what appears to be momentum in the downward direction. It didn't like it didn't like complete dump. But if you were to look on like the last week or the last 24 hours, it looks rather scary. Bottom line though, what I can see, everything is still in overall, like from the month to month to month,

[00:02:11] everything is still headed in this kind of downward. I had said 66 before we're currently at 62.5. And, but, but it's not like a sharp down. I did see people swear 55 was the next destination. I guess that's possible. It's hard to tell. I was, I was trying to stop it at 66, but clearly I got that wrong.

[00:02:38] So Bitcoin would not necessarily be the bad call I was talking about. Cause remember, I said that low prices are, should be perceived as a discount. I know some people get that wrong, but it should be perceived as a discount. I know this. Some don't get that, but that's what it should be. Instead. It's panic. I think theory, I think there's more to the Bitcoin story.

[00:03:01] Let's talk about Ethereum. Cause Ethereum had much worse of it over the month and incredible dump currently at six, you know, 1600 just shy of 1700. As I record this, Ethereum is having a hard time folks getting back up to any sort of solvency and people expect it might go a little bit lower. But I think there's more recent news updates that came out about Ethereum certainly didn't help matters. Although this is, this is the point where I start laughing.

[00:03:31] Although some of this came because of Vitalik Buterin and over periods I've talked about, you know, whether he was dumping on your head or the foundation, the turmoil, the developers that left, it seemed like there was all sorts of problems. Recently, there was an update that said that they were cutting about 20% of their staff, which is not a lot. It sounds like a lot. It is based on how many total they have. They didn't have a lot of people. It's like 54, 55 people.

[00:03:58] So we're not talking a lot of people, but that's 20% of their staff. So between that, the dumps that were going on, the Vitalik Buterin and everything with Ethereum, Ethereum looks like it's just in trouble and that there's tumultuous things going on inside the Ethereum system. Some people look at it saying the budget cuts are to position it for a rebound.

[00:04:24] I would ask you the question, consider how much money the Ethereum foundation and idiot Vittalik should have been sitting on and ask yourself how it's possible that an organization is financially insolvent if that's what's happening. This can only be mismanagement because you shouldn't have that much overhead to where you can cut that deep just because of dips such as this.

[00:04:50] I would remind people the reason that Ethereum is struggling as much as it is, as I said before, is the loss of proof of work because proof of work was profitable for people. When it went proof of stake, we lost the profitability and the same idiot Vittalik was able to profit. What happened to all this money? We have to ask those questions or is it just a cut just for the sake of cutting? You know, we can do it because AI can just write the code.

[00:05:17] I'll get to some of that here a little bit later, but in my mind, I think in my opinion, I think the Ethereum deal is a bigger problem. That's it just simply hasn't manifested itself to the fullest degree. I think it's a bigger problem. I say that because separately, I don't know if anybody knows about Tyco. Tyco is on the L2 layer two, which is Ethereum layer.

[00:05:45] Tyco has there's bridges, crypto bridges, and apparently they identified security problems. So I think there's a bridge where, and I want to try to simplify how this works. When a bridge is occurring, there's a two way transaction needs to happen. So say Ethereum, which is the level one layer one, and then the layer two, there has to be a two way consent.

[00:06:11] The bridge has to say, I'm going to send you a request of some kind. I need you to acknowledge it and accept the request, send it back to me. The two way has the integrity of the two way has to be intact. If it's not, this is how bridges get drained, like with Shabarian, for example. So what these Tyco they called out is that there's a compromise in this verification

[00:06:35] that I'm talking about mechanism where they can't trust the message integrity. They can't trust what's going on. So when they found it, they told people, get your money off all the bridges, get your money off of them right now because we can't, we don't know, which is weird. We don't know which messages we can trust at this point. So get your stuff off of it. Now, of course, because cryptocurrency is in its own bubble and they don't communicate

[00:07:04] outside the bubble, the vast majority of users probably won't know that this is going on and they're going to end up getting breached because they like to be in telescam, which the normal investor is not going to telescam. But because they don't act like a real business, the vast majority of people won't know that this is happening and they're going to get their funds took, which is unfortunate. Now, is this the Vittalic problem or fault? It's his problem. It's not his fault.

[00:07:31] What's really happening at the fundamental level, the more complexity you add to layers of something, the higher the chance something goes wrong. When you're talking about money, security starts to get compromised. The more layers you apply, it's not about having significant amounts of layers. It's about having strong layers. Then you don't need as many of them.

[00:07:59] You just need to make sure they're strong and rigid. But if you just throw a bunch of layers at something, you actually are introducing, believe it or not, more risk vector to your solution. And that's what I think is happening with something like this. It doesn't surprise me that this happened because a lot of these bridges get breached. X bridge got breached. Shabarium got breached. They all, I think SafeMoon had a bridge.

[00:08:24] They all get breached because they're just another layer of complexity because they can't do anything otherwise to interrupt with these different chains. The other problem I'll call out, the MICA regulations, which that's supposed to all take place beginning of July, where a set of exchanges are going to lose the ability to transact for EU customers. The MICA regulations, it's not like it's a widespread type thing.

[00:08:54] It's, it's not. And the irony of it is all that does is it makes it to where you can't cash out on a distant old episode. I don't remember when it was, but a distant old episode. I theorized that there would come a time when these players would position it in such a way to prevent you from being able to cash out, basically lock you into the crypto side.

[00:09:21] At that point, crypto loses its primary utility, which currently is the ability to use it for currency transactions. Some of these like Coinbase, they give you these cards and then you can swipe the card and it spends the crypto. That only is as good as your ability to use them as custodian. If they freeze your assets, that card doesn't do you any good. If you send it to your wallet, which is what you'd have to do if the exchange kicks you off of it,

[00:09:48] you don't have an easy way to get out of it except for like banks or one of the other conversion type utilities, but they have onerous hoops. They have limits. It's not straightforward or you'd have to go to OTC. There's some OTC providers where you basically would communicate with somebody that's in your local area and say, Hey, I've got this crypto and I want your money and then do it that way. Is that a bad thing? No, but the problem with OTC is that a risk getting ripped off.

[00:10:18] B, the OTC provider is not necessarily on the hook to make sure everything is on the up and up. C, there's only so much that's available money and crypto. You're not going to find like some millionaire out there on OTC want to want to buy a whole bunch of stuff from you. It just doesn't exist because they would just go to the exchange. I'm curious to see what happens there and I'm curious to see what happens with these breaches because if you look at price of Bitcoin,

[00:10:43] the price of Ethereum, price of everything going on, everything points back to cash. It points back to the use of money. It points back to the ability to spend. Fiat is always going to run the roost because that's just the way we've pushed cryptocurrency instead of as its own form of transaction. That's why the government's trying to get involved and trying to put some lockdown and regulatory scrutiny around things because they're thinking they're trying to keep you safe. The truth is they're limiting your options.

[00:11:14] Speaking of options being limited, Jared from Subway. No, not the guy that's in prison. I'm talking the MEV bot. If you don't know what I'm referring to, let me start by describing the MEV bot in terms you can understand. When you do a transaction of your cryptocurrency, the transaction that you do by default, if you're on the decent side, is going to be a market transaction.

[00:11:41] The market transaction is a defined price at which the transaction can be conducted. So if you're doing a buy, let's say I want to buy that crypto and right now it's prices 10 cents. Okay. If I want to buy 10 of them, it's going to be a dollar. Well, what happens if during that process the price happened to move? This is referred to as slippage.

[00:12:10] When you do the transaction, you don't necessarily see this shift happen. You're saying, I want to buy 10 of this crypto for 10 cents. And you're thinking you're going to get 10 cents when the truth is you're getting whatever's available at 10 as of the point that your transaction completes.

[00:12:32] What Jared from subway, this bot does is for cryptocurrencies that appear to be new or popular or high volume. It's a contract that somebody's created. It's been around since like 2020. I think it was like 2022. We first saw this. It's a contract that it monitors the chains and primarily Ethereum to try to find these tokens that it can essentially drain liquidity out of.

[00:12:59] It drains liquidity by performing what's referred to as a sandwich attack. The way that it works is it detects whether or not there's a transaction that's coming through for what's essentially a slim liquidity trade. Meaning all it has to do is invest a little bit to shift the price literally microseconds before yours commits.

[00:13:24] So your 10 cents becomes say 11 cents, right? That's your essentially buying for because Jared from subway transaction has shifted the price upward. It did just enough to get the price to go up. You do that by on it. You're a set and then it can basically sell off. So it's taking the amount that extra, you know, penny per or 10 cents per.

[00:13:50] It's taking it from you because you thought you were getting 10 and really you didn't get 10. It's this whole wonky business in how the timing of transactions. There's a delay. There's a necessary delay between when you submit the transaction and when it actually completes. That shift can be small. Like I said, 11 cents per. It might be large 15, 20 cents per.

[00:14:18] It depends on just what's the level of volatility. What's the liquidity amounts? What is the current volume? There's all sorts of factors that this bot takes into consideration to determine what its profits going to be. And then it takes whatever that excess is off. And it's essentially coming off you. You don't realize that's happening. How do you know when that's happened to you or when it can?

[00:14:44] If you go to deck screener.com, you'll be able to see all the transactions for Jared from Subway in the list. And you can try to find yours in the list and see if you've been drained off of chances are you've had at least once.

[00:14:57] Well, Jared from Subway, this bot recently was a victim of its own tooling because a bad actor, and I don't even know if you could describe it as, but a bad actor built a very ingenious way to drain money off of Jared from Subway's bot using its own tactic against it. Here's ultimately what happened. The Jared from Subway bot detected some new tokens on Ethereum that were set up. It turned out that these tokens were fake.

[00:15:27] They weren't real. They were actually contracts that were wrapped in a token wrapper to make it look like they were just regular tokens that could be bought, sold traded. But they were actually smart contracts inside of this that allowed them to take access, you know, access some of the transaction data. Jared from Subway's bot does what it does as per normal. After you do the execution.

[00:15:55] So you'd see this in your wallet on the back end on the bot side on the contract side. It's all kind of faster automated, but when you transact with a token for the first time, you have to approve the contract and the access to the contract. And there's an allowance that you may or may not see. The allowance says, how much am I allowing in transaction to complete this?

[00:16:20] The way that this worked is they said, we're going to control that allowance and we're going to use the allowance to redirect. After the execution of the of the transaction. So when the transaction comes in the first time, it's a brand new token. You have to request approval with an allowance amount. They allowed it to do it, but they redirected all the traffic.

[00:16:47] Now the allowance is controlled by this so-called bad actor. The bad actor then runs a different contract that executes all these lower level contracts draws off of Jared from Subway's transaction. So it's basically draining its own tokens using a parent contract. It's a very elaborate scheme, but using that to drain out of what Jared would have gotten.

[00:17:15] Then it gives back the remainder. Well, this came, I think it was like $7 million for what got taken off the Jared from Subway bot. It's a small fraction of what this person has taken over the years. But finally, I think somebody got frustrated enough. They said, I'm going to give you a taste of your own medicine here, dude. And we're going to take some money off you because we understand what you're doing and we're going to use your trap against you.

[00:17:45] But it also exposes something that I'm going to use as a call to action for you. The allowance need and requirement is the main way for anybody to get breached. By default, when you do an allowance, it's like unlimited. Now the unlimited is within that token, but you should never have an unlimited allowance like trust wallet.

[00:18:10] It took them years to finally get to the point where the allowance was adjustable. And by default, it was only the minimum needed for this one transaction. So let's say you're trying to do again, trying to buy 10 of these. The allowance would be 10, not unlimited. If you needed to do it again, you'd have to do a new allowance, but that's more, that's more secure. It's safer than an unlimited, especially when you shouldn't really trust any of these tokens. Right?

[00:18:40] So Jared from subway, the bot, whoever created it can easily adjust their contract to deal with this by simply limiting the allowance amounts and doing a better job scanning whatever tokens it's interacting with. So they have to adjust it and it's easy for it to do. But for you, you're not the contract. You're not the computer. You can't auto scan these. It's incumbent.

[00:19:08] Look it up on you to pay attention for these allowances to make sure you don't get ripped off similar to what happened to Jared from subway as a bad bot, especially now because desperation has hit an all time high with the amazing dumps and dips that we are seeing across the crypto space. In summary, I personally like seeing cryptocurrency prices down.

[00:19:34] I actually appreciate seeing because I think things ran too hot for too long and it exposes the predictive cycle that people kept throwing out from like the beginning of the year. There is no real clean prediction. Crypto remains volatile. Crypto remains a gamble. Crypto remains highly risky. So it's easy. Don't put more on you can afford to lose. Don't whine about it.

[00:20:02] If you lose and you only lose if you sell, be smart about your trades, educate yourself. Don't expect any of these to take care of you because the vast majority of them, not all, but the vast majority of them are there to take your money. Now I say that, but space X, which is my closer space X, that IPO, it launched and punk to the whatever.

[00:20:28] And people were celebrating saying it's gonna be the highest that the, the, the, the, and then did an amazing dump as of early yesterday or mid yesterday. Amazing dump. But if you look at the graph, there's photos floating around where it basically looks like any other pump and dump shit coin. And so even on like stocks, you see that same, everybody's going to take profit up front. But if you FOMO in, you're the one that's going to be wrecked on it.

[00:20:55] It doesn't mean it won't recover or might not recover, but it means you have to kind of train yourself to watch out even in the stock side. It's not just crypto stock does the same thing. Stock has the benefit of being regulated. Stock has the benefit of having more money in the initial sets. Stock has the benefit of having protections. And you might wonder why didn't the halting do its job? It did.

[00:21:22] The dip would have been a lot worse if it hadn't had halting, but it was that significant of dip where even the halting wouldn't have done any good. So at some point it's incumbent on you to do your own due diligence. You can't trust any side, obviously regulatory and protections. That's something there. And there was money to be made. If you're in the IPO, I'm not dismissing those that did. I'm saying the vast majority.

[00:21:51] They weren't in that they couldn't or didn't or whatever. And they waited till it ran up. And now they're pissed off after it dumps. And that's the reality. And that's just simply one of the very many things I keep emphasizing about protecting yourself with cryptocurrency, especially during this era where things are uncertain with price movement. Even with Bitcoin. We don't know what the future holds. We expect it goes back up. But in the short term, you kind of have to watch out. Watch your own back.

[00:22:20] Don't expect somebody to watch it for you. The banks damn sure ain't going to do it. You too. If you take that, you're gonna make money. We're taking your money, you.