 As everybody talks about drone Powell and what just happens in the press conference and raising rates and higher for longer If there's something that really got overlooked and that particular case is this two-year Treasury yield tops 5% for the first time Since 2007 now, I don't remember 2007 But what this little the big recession and that lasted for about a couple of years or so and we take all these Treasury yields That is one of those recession indicators. So here's what's happening why it's concerning me So the two-year year of Treasury yield on Tuesday topped 5% Rosewood's highest level since 2007 as investors assessed comments from Federal Reserve Chairman Jay Powell We said the central bank may need to increase the pace of interest rate hike again Now everybody's talking about this on youtube. I don't want to cover it But essentially this goes like this drone Powell is saying look we got we're not having everything under under control Inflation is is still not tamed. We need to raise rates for longer And higher and essentially faster. That's essentially what he's going to say And that's what he talked about today and then that will affect these recession indicators, which is the yield And it says here meanwhile the yield on the benchmark 10-year Treasury was little changed at 3.97 Why is this important that we're talking about a 10 and 2 years if we take a look at why charts is a link in the Description it says very simply like this A 10 and 10 and 10 and 2 Treasury spread that approach that approaches zero Signifies a flattening yield curve a negative 10 and 2 yield spread has historically Been viewed as a precursor to a recessionary period a negative 10 to spread is predicted every single recession from 1955 2018 But has occurred six to 24 months before the recession occurring and this actually started In 2022 of july So what it should look like as far as 10 and 2 if you just take a look at it This is the treasury yield curves and you got it from one month three months six one year This is what it should look like because as time goes on You know you take a little more risk right because over 30 years you want to do that Then we'll give you 4.70 as far as the treasury yield as far as what the government will pay That's what it's supposed to look like over time. However When these start to invert like we have right now Now you got the six month treasury yield of 5.22 And what that means is like look, we don't know what's gonna happen the next six months. What's your 5%? Just give us some cash. We've got to bail ourselves out and then over here for the for the well That's 30 year 10 year. It's at 3.9. That's not what it's supposed to look like That is the precursor and that's what's going on now That does not mean that we are guaranteed a recession But it is something to look out for well how the markets get affected. Well, honestly not too bad I mean only one and a half percent in the s&p 500 if we take a look and just zoom out We're five days looking pretty good one month. Okay. Got me on that one six month For a year kind of sideways action five years Not doing too bad honestly, and then if we look at the the nasdaq You can see it over a day down a little bit, right? If we take a look at over a six months ceo going pretty much little sideways action And then if we take a look over three years still looking pretty good And uh, how do crypto reacts? They don't really care crypto doesn't really care in last hour bitcoins down 0.1 and nothing's really budged so The thing you have to ask yourself is is it priced in and I can't say for sure But this article does talk about some interesting things where they say here some investors found the comments Unsurprising from Jerome Powell. They said look Well, some market participants might have been caught off guard by Powell's comments The reality is that he is largely affirming what the bond market has already priced in In terms about the pace of rate increase dragging the u.s economy into a recession Have spread among investors and prompted me to hope for the Fed to pause Rate hikes this year and recent weeks Fed officials have hinted that rates could go higher still and remain elevator for longer They haven't been hinting at it. They've been telling us what they're going to do This is no surprise And then lastly I will just say this As far as like Pausing rate hikes and essentially pivoting that sounds great But if we take a look at when the Fed pivots and this is going back Quite some time even back in the 1960s You can say that As far as the s&p 500 when the Fed pivots And they stop raising those rate hikes and they actually decreased say okay, we're not going to raise them We're going to lower them That's when the economy or when the s excuse me when the s&p 500 Actually says, you know what? You guys broke something and now we start to fall apart and this happened in 2000 this happened in 2007 This happened again in the 2000 while this was during the pandemic But what's an interesting note here? Take a look at this upward momentum as it just goes this way and just keeps going up s&p 500 If you lay that over the m2 money supply Isn't it interesting? Oh, this is in red and of course they've They've changed the way they calculate m2 money supply and where but when we take a look at here, it just seems like honestly that When there's more liquidity in the system Seems like things do pretty well This is more money sloshing around to to lubricate the giant that is The s&p 500 even even right here 2008 and nine as they pivoted And of course these two places they pivot it goes down they go. Well, I broke something Let's start printing some more money. They do that here and then same thing happens over here in 2008 And they they pivot and like wow, we broke something. Let's let's print some more money And of course we're coming up over here and now they've gone in the reverse raising rates Stopping the printing and doing quantitative tightening. So who knows where we're going off in the future but just remember that Bear markets don't last forever neither do bull markets and that'll lead me to my last section here. I I had a A conversation with a couple of of retail investors At Celsius and they wanted me to they said hey you should talk to uh deborokovsky She is working for us for the Celsius And the capital of embankruptcy and she represents the withhold and retail accounts group along with Block 5 and I'll just say this first that I apologize for the audio not for sure exactly what happened here, but There's a bit of offness of the audio But it doesn't matter because listen to this interview with me and deb and you're going to understand why this case That is coming before us for chapter 11 Is going to dictate just as much as what's going on potentially with the sec coming down On ripple and all the other centralized exchanges. So just take a listen to what we have here I was just bringing somebody that can give us a little revelation about the things that are happening As far as Celsius deb welcome to the show for the first time Thanks so much for having me on Yeah, so we're in the intro people know, uh, you know, where you're from what you're all about There's just some questions that we had and one of those things is I want to talk to you about just to like a quick follow-up And an overview of the video that you and cto did was about an hour or so of the links in the description You guys can check that out And the things that we talked about it made me realize that this is a bigger issue than more than people realize Also Talked about what the full group is a good chance of having all their funds returned And lastly just real quick explain to us about there's a question about this 502d and how that impacts the bankruptcy So first things first This video fantastic I watched about two or three times you and uh friend the show cto larson and one of the things you talked about in the very beginning Is you talked about how you said look stock brokers financial institutions and banks are regulated And have insurance this new sector of finance called crypto and digital assets They don't have that They have neither because regulators haven't caught up and put in laws or given guidance How big of an issue is that in this situation? I think it's an enormous issue and I think it's something that the sec is going to need to start addressing um not just through You know Regulation by enforcement. I think that bank regulators. I think congress that somebody's going to have to figure out some kind of regime where If you are investing in something that looks like a bank feels like a bank or looks like a stock broker It feels like a stock broker is kind of shaped like these financial institutions where if you put your assets on You're protected in the event of an insolvency We need to see something similar or you're going to keep having these types of issues And the end result is going to be there's not going to be any any possibility of a C5 crypto industry in the u.s. Because people are going to say look, you know, this is great But if anything goes sideways, I'm going to lose everything And you're going to try to quad all back for me So you the current regime just does not work and really needs to be addressed in a more organized fashion Great. I'm going to say it better. All right. So the next I'm not going to I'm not going to harp on this one People on the channel know my stance on that And then you'd also talked about even if you live outside the u.s. You are still susceptible to these 90 day clobax Right, so I I spoke with with um cto larson a little bit about this concept of extra Territoriality and I keep stumbling over that word. It's a lot of syllables Um, so there are multiple pieces here like one can the statute be applied Side of the united states and I think that the way that the second circuit has answered that question And that's where new york courts are in the second circuit. Um is yes So we've we've got a statute where it doesn't matter where the defendant is if the Transfer being avoided is from a u.s. That are I think I think we're in business there But there are some other points to consider as well Before a bankruptcy court can reach out and just you know grab a defendant You know halfway across the world say hey, I'm going to enter a judgment against you There's got to be personal jurisdiction There's a due process issue that individual has to have at least minimum Contacts with the united states and one of the things you'd want to be looking at is Well, what are the terms of service say if you're doing business with a crypto platform in the us That is us based and you click, you know that that that click wrap agreement when you go and you open your account And you're agreeing to the terms of use What does it say about jurisdiction? What does it say you're consenting to? Because you can consent to the jurisdiction of the u.s. Courts So that's something to think about and then the last issue is service Well, so let's say there is personal jurisdiction over you because like maybe you agree to it in the terms of use Then the trustee or the debtor whoever's suing has to figure out how to serve you properly in whatever country you're in So is it more difficult and expensive? Sure is it doable? Absolutely Yeah, it's doable But then you also said something else about look if you if you would drew your funds within 90 days And then you gambled it all away And then you could prove that you did that or you lost it in some way shape or form whatever you did But you actually I actually had to prove it What are the chances of them going after you for that? well They're not going to know What you've done with your assets or what your financial status is but I don't think any lawyer that I know that's a A responsible bankruptcy lawyer is in the business of trying to force defendants into bankruptcy themselves If any any situation I've had where you know, I and I've represented post confirmation trustees suing defendants And they've come back and said look that's great, but you know what my financial circumstances have changed I just don't have the money You can't get blood from a stone and then at that point say okay prove it Show me your financials. Show me your bank account statements. Show me your list of assets Give me an affidavit and if you can really show that Your judgment proof then you know, I I do understand you cannot actually get blood from a stone and that's kind of you know Where things end up now if they show me they have no assets But you know mysteriously their house somehow just transferred into their kid's name three weeks ago. That's a very different story Sure That totally makes sense which I guess what leads to the other thing you guys talked about as far as transfers This is the this is the most scary. This is one of the reasons why I think we need some type of regulation You take one bitcoin and it goes from Celsius. You would draw it within 90 days You take that that bitcoin put it into voyager take that out and you go to ftx take that out Within a 90-day time frame. How many bitcoins do you go? potentially each debtor could seek to claw back a bitcoin from you because it's potentially a preferential transfer with defenses and I think you're right. There needs to be some kind of Regulatory scheme that would deal with this. This is just not a scenario the bankruptcy code ever contemplated And honestly, I think at that point all you can do is get all three four five However, many trustees are pursuing you put them all in a room together. Let them find it out So guys I've got one bitcoin y'all can decide who gets it Well speaking of the people that may or may not have that bitcoin There was nothing you guys talked about as far as the retail or the individual versus the insiders And it's not like to me that for the retail us We're gonna they're gonna be able to go back 90 days But as far as like the insiders and what they could look at to to get back You're looking at a year to two years and they could look at the finances. I wasn't too clear on this one Okay, so for preferences the look back for non insiders is 90 days for insiders It's a year. So there's a much longer time period that the trustee is going to be looking at You know, Alex Mishinsky, Sam Bakeman Freed, whoever the insiders are of each of these entities They're going to be scrutinized for at least a year back. They're also going to be looked at very closely I would imagine for fraudulent transfers Which are you know another type of clawback and that can have a look back period Under state law four to six years depending on what state you're in I got you. Yeah, that makes that makes sense. And the last thing I think we talked about was Because you you represent a lot of different individuals But non insiders of course and you you talked about you said, well, I don't usually go after non insiders That's who you represent But in most cases that you've seen Where is the the bulk of the funds coming from when they're trying to claw these these things back or preferences? Is it from non insiders or insiders? So I I have been in cases where non insider preferences have been pursued and I represent a lot of committees And that's a lot of post confirmation trustees. So I'm often the one analyzing preferences and making recommendations um in my experience most of the time The big dollars the ones that went to the insiders because they were in a position to loot the company not always Um, but that that's usually it the other thing that I always think about and the analysis that I always do is look I could go out and I could pursue A thousand preference claims against non insiders against general unsecured creditors The only reason to pursue preference claim the only possible Justification is if I think that's going to result overall in a better return a better recovery To the unsecured creditors as a whole if I'm looking at this and I say I can pursue these Thousand preference claims. I'm going to make great attorney's fees on this and I'm going to be so excited I'm going to buy a new car or whatever, but at the end of the day I'm increasing the distribution to unsecured creditors by half a percent one percent. That's not worth it That's that's to me. That's a breach of fiduciary duty I gotta agree and like there was a video that just put out that talked about how and this is Unsubstantiated so far it looks like alex vashinsky in upper management There looks like they've gotten out 70 to 80 million over the last two years or so Maybe that's a good idea to look look there first. I'm just just saying okay So so that that was just that that overview part Let's get into a couple of questions, which is this now you represent the withhold group So talk to us about why they have a really good chance getting their funds returned Well, I think they they do have a good chance because withhold is basically like custody But in those states where Celsius wasn't entitled to offer custody accounts So you have the same issue where you have people who took their money out of urn They were no longer lending their assets to Celsius They were no longer granting Celsius rights of ownership Celsius No longer had any contractual rights to do anything with those assets Unfortunately didn't properly safeguard them, but there are definitely I think strong legal and equitable claims as to why withhold should be treated comparably to custody Excellent So hopefully they can get hopefully they can get a hundred percent back because it was a I thought it was a gray area, but I mean this was kind of put on the fly. It was very fast I didn't understand how they couldn't do other things, but I guess state-by-state regulations just wouldn't allow that And then the last questions is there was a let's keep coming up this 502 d and how this this impacts the bankruptcy can explain what that is Sure, so what 502 d of the bankruptcy code says is that basically if you owe a preference if you received a preferential transfer from the debtor So you got something out in the 90 days before and it's a preferential transfer potentially Until that gets resolved until you either you know, if you're not to owe it or you pay it back You're not entitled to any distribution from the estate. So let's say you still got you know, a hundred thousand dollars still locked up Well, that might be In the range of releases say you have half a million dollars still locked up on a platform And and you'd like to get your distribution out because all of the other creditors They're getting their 20 cents 30 cents 60 cents. Whatever they're getting is their distribution You're like, well, where's mine? I'm waiting, you know to get my transfer of bitcoin or cash or whatever I'm going to get and the trustee or the debtor whoever is In charge of actually administering the plan is going to say, I'm sorry I can't distribute to you because you've received this potential preference. And so until we get that resolved I'm hanging on to all of these assets because the bankruptcy code says I can Okay, it's going to put people in a little bit of a limbo. I think from there All right, and then dev the last one this will be the bonus question, which is this we had talked about this before I didn't really understand it that well cram downs Explain to us about cram down so I can understand it best Okay All right, and this is a complicated topic and it's one that I wish I had a whiteboard here would be a lot easier um A lot of people think that if the creditors of Of a debtor as a whole reject the debtor's plan that plan doesn't get confirmed It fails that is not necessarily true Because creditors don't vote in a single block creditors are classified into different classes So you may have um, let's say Class of convenience creditors who are small creditors. Maybe there's a lot of them Their total dollar value is let's call it a hundred million dollars And let's say there's 10,000 creditors in that class and they're owed a hundred million and then you've got Maybe another 10,000 of credit or sorry another 10,000 creditors in a separate class, but they're owed a billion dollars, right? so You think one class is much bigger And if that class voted to reject the plan because they're owed so much more money that would just tank the plan But that's not how cram down works Because all that you need in order to confirm a bankruptcy plan is one impaired class that votes to accept the plan So if the little class that's only owed a hundred million dollars Votes to accept the plan and a class accepts a plan by voting in favor of the plan By more than half the members in the class that are holding more than two-thirds of the of the dollar value So you got your your one class over here That's the little class that's only owed a hundred million and they vote in favor of the plan as a class Not everybody in the class has to vote in favor But in no vote in favor holding enough claims that that class had thumbs up Then you've got the big class that's owed a billion dollars and they say forget it We think this plan sucks. We vote against it and they think great We're we're going to take this plan. This is not going to go forward As long as the other requirements of the bankruptcy code are met That plan can still be confirmed. It can be crammed down over the objections of the dissenting class over their rejection of the plan Even though if you look at it on you know on a dollar basis, they hold the vast majority of claims against the debtor But that's the way that the bankruptcy court is structured And there are arguments about well, did you improperly gerrymander the class is just so you could get an impaired accepting class and and those are things that get litigated all the time But um, that that's that's the idea of crammed on you cannot assume that just because Even if it's a majority a number and a majority in claim amount That votes to reject the plan It can still get confirmed as long as there's an impaired accepting class And the other requirements of the bankruptcy code are met Hey, well dad, I'm glad you're doing what you're doing. So I'm only I could do those types of things and deal with those situations So everybody first of all dib. Thanks for something by we appreciate it Yeah Yes, and what I'll do is I'm going to put your information up If you are a part of any of these these groups of these classes and you like to reach out to talk to dib And uh her lover, uh, the information will be there links in the description and that is it for this one So dib, thanks so much Thanks. Take care. All right. So that's it. So again, you can find uh, uh, deb Kofsky's information in the link in the description if you need to reach out and contact her But that is it for today. So look like this video give it a thumbs up Consider subscribing everything to talk about is time sensitive. That's it for today I thanks so much for stopping by. I appreciate it. I'll see you on the next one