Latest / The Paul Barron Crypto Show / CZ Warns Banks Are Not Safe🔥Binance Aftermath Bullish?

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CZ Warns Banks Are Not Safe🔥Binance Aftermath Bullish? · The Paul Barron Crypto Show

• 0:00
  Speaker 1: Our bank safe today, we're going to be breaking that
• 0:02
  Speaker 1: down because a lot is happening around these hacks and
• 0:05
  Speaker 1: whether or not this starts to hit traditional finance is
• 0:08
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• 0:47
  Speaker 1: it out. Tell them we sent you. I want to
• 0:49
  Speaker 1: lead off with this tweet right here. This, of course,
• 0:52
  Speaker 1: is CZ saying, banks, may be more vulnerable to cyber
• 0:55
  Speaker 1: attacks than crypto exchanges. Now, he went on and did
• 0:58
  Speaker 1: an interview. We'll show you several clips of that where
• 1:01
  Speaker 1: he's breaking down this thesis and the issues that are
• 1:04
  Speaker 1: facing the industry. And when I say the industry, I'm
• 1:06
  Speaker 1: talking about the finance industry at large. You look at
• 1:09
  Speaker 1: this right here. Binance said hackers used a bogus job
• 1:12
  Speaker 1: interview to compromise a computer and then an internal AI system.
• 1:18
  Speaker 1: tool to gain control over the company's wallet. This goes
• 1:21
  Speaker 1: back to something that I've talked about before, and that
• 1:23
  Speaker 1: is social engineering hacks right now are really the vector
• 1:27
  Speaker 1: that I'm most worried about. And those are usually the
• 1:30
  Speaker 1: easiest to hit traditional finance. And we've seen this out
• 1:34
  Speaker 1: there within this industry quite a while in terms of
• 1:37
  Speaker 1: the success ratios. And when you add AI into it,
• 1:40
  Speaker 1: it only makes it more efficient. And this is kind
• 1:43
  Speaker 1: of where it started. I want to go to a
• 1:45
  Speaker 1: clip because this goes back to, if you guys remember
• 1:47
  Speaker 1: the IoT side of things, and that's Internet of Things.
• 1:51
  Speaker 1: This kind of is where it all began. Let's take
• 1:53
  Speaker 1: a look.
• 1:54
  Speaker 2: Well, we still don't know who was behind it and
• 1:57
  Speaker 2: if it's necessarily related to that similar cyber attack on
• 2:02
  Speaker 2: fridges in France last month. But the scope of this
• 2:05
  Speaker 2: this time is much, much greater than that attack in France,
• 2:09
  Speaker 2: because it involves six countries stretching all the way from
• 2:12
  Speaker 2: Sweden and Finland over to Ireland to here in Belgium,
• 2:15
  Speaker 2: affecting some of our biggest retailers here in Belgium.
• 2:18
  Speaker 1: A coordinated campaign of sabotage, or it might indeed be
• 2:22
  Speaker 1: groups testing out what they could do for a future
• 2:25
  Speaker 1: campaign of sabotage. Essentially, a lot of things will be
• 2:28
  Speaker 1: connected to the internet now for remote control and remote monitoring.
• 2:31
  Speaker 1: So if you think of people who might have a
• 2:34
  Speaker 1: heating system at home. Our fridge is attacking us as
• 2:38
  Speaker 1: we speak.
• 2:39
  Speaker 3: Are you all prepped and ready for Armageddon?
• 2:42
  Speaker 1: All right. So the point getting is that you're looking
• 2:45
  Speaker 1: at so many devices and this is talking about simple
• 2:48
  Speaker 1: things such as refrigeration, which happen to be large things
• 2:51
  Speaker 1: because it controls a lot of supply of especially when
• 2:55
  Speaker 1: it comes down to food. So when you look at that,
• 2:58
  Speaker 1: along with grid potential attacks, the issue with communications, telecommunications, medical,
• 3:03
  Speaker 1: all those kind of things, a lot of these systems
• 3:06
  Speaker 1: are connected to the Internet now. And we are already
• 3:10
  Speaker 1: seeing one layer of this being affected in Europe. So
• 3:14
  Speaker 1: I think this is the point where people are saying, hey,
• 3:16
  Speaker 1: maybe there's a wake-up call that needs to be done.
• 3:19
  Speaker 1: And here is CZ talking about that.
• 3:22
  Speaker 4: Real wake-up call for not just crypto, but for the
• 3:26
  Speaker 4: financial system overall. If a crypto exchange can be hacked,
• 3:30
  Speaker 4: banks are in a worse position, in my opinion. But
• 3:33
  Speaker 4: the banks are not safe from the security attack ability
• 3:39
  Speaker 4: increases with AI. In some sense, it actually kind of
• 3:42
  Speaker 4: merges the two industries together. On the same day when
• 3:45
  Speaker 4: the Binance hack, traditional tech market, the stock market was dropping.
• 3:49
  Speaker 4: But I think the hack actually probably contributed a little
• 3:52
  Speaker 4: bit to the psychology of it. Is any system in
• 3:54
  Speaker 4: the world secure?
• 3:56
  Speaker 1: I think that's a good statement right there. Is anything secure?
• 4:00
  Speaker 1: And it is a situation, I think, that maybe crypto
• 4:03
  Speaker 1: and traditional finance maybe could come together and maybe figure
• 4:07
  Speaker 1: out a way to address this, at least in a
• 4:10
  Speaker 1: position where it's readying for what could be happening before
• 4:14
  Speaker 1: they get their own AI systems in here to help
• 4:17
  Speaker 1: these defense systems that need to be built. If you
• 4:20
  Speaker 1: look at what's happening with Binance, and this is large
• 4:23
  Speaker 1: funds now are flowing into Binance. This is 24 hours
• 4:27
  Speaker 1: after the hack. Now we're starting to see net flows
• 4:29
  Speaker 1: coming into Binance. So they have seemed to be the
• 4:32
  Speaker 1: place of trust now that they've been able to secure
• 4:36
  Speaker 1: against it. And the better point is I think the
• 4:38
  Speaker 1: kind of hack that hit them is a little bit different.
• 4:41
  Speaker 1: It's easier to fix, at least on the social engineering side,
• 4:44
  Speaker 1: because you can lock down systems very easily. But the
• 4:47
  Speaker 1: problem is when AI starts to circumvent this on the
• 4:50
  Speaker 1: front vector, the surface vector of attacks, that's where the
• 4:54
  Speaker 1: most concern is right now. I want to go to
• 4:56
  Speaker 1: a clip right now because this is where CZ is
• 4:59
  Speaker 1: talking about the outflows and why this is an important
• 5:03
  Speaker 1: instrument that's happening today. Take a look.
• 5:05
  Speaker 4: 2% outflow within the first 12 hours of them turning
• 5:09
  Speaker 4: back on withdrawals is actually a very small number. Honestly,
• 5:12
  Speaker 4: I thought the number would be much higher. I thought
• 5:14
  Speaker 4: the withdrawals would be like 10%, 20%, 30%. But the
• 5:16
  Speaker 4: fact that only 2% went out is.
• 5:22
  Speaker 4: Is a very strong indication of how much people trust
• 5:25
  Speaker 4: the platform, trust Binance. Like on hourly basis, there's actually
• 5:28
  Speaker 4: not net inflow, net deposit back to the platform. So
• 5:32
  Speaker 4: people are like putting more money back onto the platform
• 5:34
  Speaker 4: than withdraws now.
• 5:37
  Speaker 1: All right, so good signs, I guess, when you think
• 5:39
  Speaker 1: about crypto in general. But I think when you look
• 5:42
  Speaker 1: at the crypto investor, we understand, we've seen this, everything
• 5:45
  Speaker 1: from Mt. Gox and so many hacks coming through the
• 5:48
  Speaker 1: evolution of crypto. First of all, we have seen this
• 5:52
  Speaker 1: a lot. And understanding that you've got a company who's saying, hey,
• 5:54
  Speaker 1: we're going to make everybody whole. We're going to make
• 5:57
  Speaker 1: everybody do it and make everybody whole with their own money.
• 6:00
  Speaker 1: I think that starts to elicit a lot of trust
• 6:03
  Speaker 1: in where Binance is today. And this was another thing
• 6:06
  Speaker 1: that CZ was trying to get to because he thinks
• 6:09
  Speaker 1: that maybe there's an alliance here that needs to be
• 6:12
  Speaker 1: built to deal with these things going forward. Take a look.
• 6:15
  Speaker 4: And also as an industry, we probably need to come
• 6:17
  Speaker 4: up with some kind of standard to help each other,
• 6:20
  Speaker 4: some kind of alliance, et cetera. That's being discussed. Not
• 6:23
  Speaker 4: a whole lot of detail yet, but I think that's
• 6:26
  Speaker 4: something we will be very keen to push on.
• 6:28
  Speaker 1: A couple of points that CZ is hitting on. First
• 6:30
  Speaker 1: of all, and I know many of you would say, hey,
• 6:32
  Speaker 1: crypto needs to be decentralized. But guys, you as well
• 6:36
  Speaker 1: as anybody knows that there's a lot of exchanges out
• 6:39
  Speaker 1: there that are centralized. The likelihood is those are being
• 6:43
  Speaker 1: used for a variety of basic element usage. Sometimes you
• 6:47
  Speaker 1: just go in for a trade and you're out to
• 6:48
  Speaker 1: a cold wallet or to a hardware wallet. The point
• 6:53
  Speaker 1: I think he's getting at is that if these controlled
• 6:55
  Speaker 1: exchanges start to secure that front, it creates another or
• 7:00
  Speaker 1: at least one less attack vector that potentially could even
• 7:05
  Speaker 1: go into the side of traditional finance. And what I
• 7:07
  Speaker 1: mean by that is, best methodologies to be able to
• 7:10
  Speaker 1: thwart these kind of attacks. So I think that's the
• 7:13
  Speaker 1: direction he's talking. I don't think he's talking about getting
• 7:15
  Speaker 1: into an alliance to try to control crypto as a whole.
• 7:19
  Speaker 1: But maybe there would be some things there that, of course,
• 7:22
  Speaker 1: could also help even DeFi going forward. Because listen, things
• 7:26
  Speaker 1: are ramping up quickly. And when you think about the
• 7:29
  Speaker 1: biggest contributor to all of this, North Korea has been
• 7:31
  Speaker 1: the biggest contributor One of all, and this, of course,
• 7:35
  Speaker 1: is coming in where they're denying against the issue of
• 7:37
  Speaker 1: what happened with Binance. Many people still pointing to the
• 7:41
  Speaker 1: Trader Trader group as the entity that did this. And
• 7:45
  Speaker 1: when you look at just most of the hacks that
• 7:48
  Speaker 1: have been coming out of North Korea before, it seems
• 7:51
  Speaker 1: to be in line with that. All of this still
• 7:54
  Speaker 1: yet to be determined as we continue to look forward
• 7:56
  Speaker 1: on a lot of this. But let's go back over
• 7:58
  Speaker 1: to the traditional finance side because this is where it
• 8:00
  Speaker 1: gets very interesting. And these are the kind of things
• 8:03
  Speaker 1: that the banks are worried about right now. Top of
• 8:06
  Speaker 1: mind for banks, credit card interest rate caps. That's a
• 8:08
  Speaker 1: big deal. Interchange fees, crypto, and then Senate banking committee chair.
• 8:12
  Speaker 1: I don't think this is what they need to be
• 8:14
  Speaker 1: worried about. They need to be worried about one of
• 8:17
  Speaker 1: the biggest issues out there right now, which is security.
• 8:20
  Speaker 1: And my concern is, is that a major bank gets hit.
• 8:23
  Speaker 1: We start to see a pullback in our traditional finance system,
• 8:27
  Speaker 1: which could cause some major issues here in the United
• 8:30
  Speaker 1: States as a whole. Central banks have expanded their gold
• 8:34
  Speaker 1: reserves fastest pace since the end of 2024 in the
• 8:38
  Speaker 1: third quarter. That's one big news point going forward is
• 8:41
  Speaker 1: that we continue to see a lot of push toward metals,
• 8:44
  Speaker 1: which is why we saw gold up slightly this week.
• 8:47
  Speaker 1: I want to go to Austin Campbell here. He talks
• 8:49
  Speaker 1: about this very issue that crypto is in a tight
• 8:53
  Speaker 1: spot when it comes to security. Here we go.
• 8:57
  Speaker 5: Crypto never built itself for security outside of the tech vertical.
• 9:00
  Speaker 5: And I think it's related to point one and not
• 9:02
  Speaker 5: understanding finance. But you can see this with the Binance hack.
• 9:07
  Speaker 5: When that amount of money can move instantly across networks
• 9:11
  Speaker 5: with no double checking anywhere, and I'm not necessarily talking
• 9:14
  Speaker 5: like exercise judgment, but just somebody building any protocol that
• 9:18
  Speaker 5: says if you're going to move a billion dollars, there's
• 9:20
  Speaker 5: a 24-hour clock on that thing. You don't just get
• 9:23
  Speaker 5: to yeet that thing out the door.
• 9:26
  Speaker 3: These are not built.
• 9:28
  Speaker 5: And these are pretty standard sort of things that we
• 9:31
  Speaker 5: understand from TradFi. We know what a circuit breaker is.
• 9:34
  Speaker 5: We know what like demand responsive pricing is. And so
• 9:37
  Speaker 5: they're kind of like 101 level risk management things that
• 9:40
  Speaker 5: are not being done in crypto. And so I think
• 9:42
  Speaker 5: part of why the hacks have been so bad is
• 9:45
  Speaker 5: that you built a system that was optimized around the
• 9:48
  Speaker 5: tech concerns without ever thinking about the financial risk concerns.
• 9:51
  Speaker 5: And then Chris- To your point about AI neither being
• 9:54
  Speaker 5: a friend nor an enemy, this is a case where
• 9:56
  Speaker 5: AI is an enemy purely because it lets people poke
• 9:58
  Speaker 5: holes in all these things faster. It also lets you
• 10:01
  Speaker 5: patch them faster. It also lets you fix them faster.
• 10:05
  Speaker 5: But so far, the classic attacker, like defender ladder game,
• 10:09
  Speaker 5: the attackers are ahead. All right.
• 10:11
  Speaker 1: So I would agree with Austin on one point. And
• 10:13
  Speaker 1: that is that, yes, AI has started to accelerate this,
• 10:17
  Speaker 1: but I would disagree that the defense mechanisms can't be
• 10:22
  Speaker 1: aided into a lot of these entities even better. In fact,
• 10:25
  Speaker 1: I think this actually gives us a little bit of
• 10:26
  Speaker 1: an upper hand when you look at the amount of
• 10:29
  Speaker 1: engineers that are working on this, whether it's Anthropic, SpaceX,
• 10:33
  Speaker 1: what's going on with OpenAI. I think that's an opportunity
• 10:37
  Speaker 1: for the AI industry to actually get ahead of all
• 10:40
  Speaker 1: of this, and they know they can do it. I mean,
• 10:42
  Speaker 1: you're talking about literally trillions that have been spent on
• 10:45
  Speaker 1: this industry So far, and the opportunity, even if you
• 10:48
  Speaker 1: just look at the Anthropic report just here recently, that's
• 10:52
  Speaker 1: the kind, in terms of performance, which has been ridiculous,
• 10:56
  Speaker 1: this could become one of the most valuable companies ever
• 10:58
  Speaker 1: in the history of the United States. That in itself
• 11:01
  Speaker 1: starts to represent one thing, closing on one vector, and
• 11:04
  Speaker 1: that is protect financial institutions, protect the grid. Give that
• 11:08
  Speaker 1: to an AI, especially at that level, I think you
• 11:11
  Speaker 1: can win this. I think it's an easy win. Now,
• 11:14
  Speaker 1: Justin Drake kind of called this out, and he did this,
• 11:17
  Speaker 1: and it was what he was saying here. And I
• 11:19
  Speaker 1: want to read this to you. This came back in
• 11:20
  Speaker 1: early October, but he says, Today I call upon the
• 11:22
  Speaker 1: blockchain industry to calmly begin planning for bunker mode. My
• 11:27
  Speaker 1: personal recommendation is to set in motion controlled mass migration
• 11:31
  Speaker 1: of assets and fresh addresses. Public keys remain hidden behind
• 11:36
  Speaker 1: the hash. This was done back in October, October 7th, guys.
• 11:42
  Speaker 1: And here we are, November 3rd, after we started to
• 11:44
  Speaker 1: see this acceleration just in the last couple of weeks.
• 11:46
  Speaker 1: So Drake was right. So since that date, you had
• 11:49
  Speaker 1: one thing. Of course, the foundation delayed Glamsterdam. If you
• 11:53
  Speaker 1: go back to the chart and we go right here
• 11:56
  Speaker 1: to October 7th, this was the major point. This, of course,
• 11:59
  Speaker 1: started to slow ETH down. And we have not recovered
• 12:03
  Speaker 1: from that issue of slowing Glamsterdam down. I want to
• 12:06
  Speaker 1: go into a clip. This is Vitalik talking about absolutely
• 12:10
  Speaker 1: trust no one. Take a look.
• 12:12
  Speaker 3: Who do you trust? And the solution here is openness
• 12:17
  Speaker 3: and verifiability. If you want a path for us to
• 12:22
  Speaker 3: be able to survive and prosper in this new environment,
• 12:26
  Speaker 3: a path that does not depend on handing over the
• 12:29
  Speaker 3: keys to everyone's castle to one small group of people,
• 12:33
  Speaker 3: then if you want something that simultaneously respects local self-sovereignty
• 12:40
  Speaker 3: and also that enables cooperation, then you want open source.
• 12:45
  Speaker 3: You want to be sure the TV is not spying
• 12:47
  Speaker 3: on you. You want to minimize trust dependencies. We really
• 12:51
  Speaker 3: need to treat data as toxic waste by default. If
• 12:55
  Speaker 3: you can, don't collect it at all. The answer is
• 12:59
  Speaker 3: not to trust no one. The answer is also not
• 13:02
  Speaker 3: to trust powerful corporations. The answer is also not to
• 13:06
  Speaker 3: trust charismatic influencers who claim that they're a good and
• 13:11
  Speaker 3: righteous rebellion against powerful corporations.
• 13:15
  Speaker 1: All right, so there you have it. I mean, that's
• 13:16
  Speaker 1: a complete opposite of where CZ was heading. Vitalik going
• 13:22
  Speaker 1: at the angle of self-sovereignty. And I'm kind of on
• 13:26
  Speaker 1: Vitalik's side with this. I definitely don't trust powerful corporations.
• 13:31
  Speaker 1: I don't know how you can move through modern day life, though,
• 13:33
  Speaker 1: without collecting data and especially access. So it is upon
• 13:37
  Speaker 1: us And I think even the industries and, of course,
• 13:41
  Speaker 1: the companies that we frequent to be able to try
• 13:43
  Speaker 1: to protect us in the long run. However, when you
• 13:46
  Speaker 1: look at the possibility of the blockchain playing into this,
• 13:49
  Speaker 1: the SEC's decentralization test, let me kind of zoom in
• 13:52
  Speaker 1: on that for you. Ethereum set the benchmark right here
• 13:56
  Speaker 1: under their updated crypto guidance. This was in reference to
• 13:59
  Speaker 1: a decentralized network, meaning Ethereum has been the highest score there.
• 14:04
  Speaker 1: Solana comes in at number two at 8.8 XRPL. coming
• 14:09
  Speaker 1: in 8.1 and Canton at 5.1 as the most friction.
• 14:13
  Speaker 1: So the point being is that there is an opportunity here.
• 14:16
  Speaker 1: Ethereum seems to be in the lead, at least on
• 14:18
  Speaker 1: a decentralized basis. This could also eliminate a lot of
• 14:22
  Speaker 1: the issues that we're facing right now around what we're
• 14:26
  Speaker 1: seeing in not only these kinds of social engineering attempts,
• 14:29
  Speaker 1: but what will happen when AI actually gets into some
• 14:33
  Speaker 1: of these key systems that are running finance, the grid, etc.,
• 14:38
  Speaker 1: Last thing I want to hit on is this tweet
• 14:39
  Speaker 1: by Eleanor. Six more issuers now have objected to having
• 14:43
  Speaker 1: their shares tokenized through OKEx Ice. This, of course, comes
• 14:46
  Speaker 1: from what has been very pro-crypto companies, including SpaceX and Tesla.
• 14:53
  Speaker 1: Amazon in there, Netflix, not surprising. Lam and then SoFi,
• 14:57
  Speaker 1: SoFi surprising. The point being is, is that maybe. There
• 15:00
  Speaker 1: are deals being made right now behind closed doors that
• 15:04
  Speaker 1: are trying to get in front of this to where
• 15:06
  Speaker 1: OKEx Ice may not necessarily be the one that brings
• 15:09
  Speaker 1: this to market. That's my question going forward. Who are
• 15:13
  Speaker 1: the power players that really want to be able to
• 15:16
  Speaker 1: control tokenized stocks in the future? Watch for that, and
• 15:20
  Speaker 1: maybe we would have some answers to this very soon.
• 15:22
  Speaker 1: So stay tuned on all that stuff. We're going to
• 15:24
  Speaker 1: cover the rest of the elections this week and see
• 15:27
  Speaker 1: what it means for crypto. So stay tuned. If you
• 15:36
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• 15:39
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• 15:42
  Speaker 1: The link is in the description.