270. Crypto Update: Meme Coin Resurgence, ByBit Hack & Crypto Taxation

Join us for this episode of A Wiser Retirement® Podcast, where we explore the latest changes shaping the cryptocurrency market. From the resurgence of meme coins to high-profile hacks and evolving tax regulations, we cover key trends that are influencing how investors, regulators, and global markets interact with digital assets in 2025.

Related Podcast Episodes:
- Ep 266: Crypto Update: SpaceX Uses Stablecoins, Trump’s Meme Coin & Altcoin ETF Filings
- Ep 261: 2025 Market Outlook: Navigating the Year Ahead

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Transcript

Introduction to Cryptocurrency Landscape

Speaker 1 0:00

People often think that they can get away with not paying taxes on crypto. I think you can. I wouldn't say you can get away with it. You don't get caught now, but you will get caught when it comes down the line, because everything that's happening A on an exchange or B on a crypto network is all recorded and at some point all these the plumbing is going to be hooked up correctly for the IRS to ingest all that stuff and then it's going to get ugly for some people.

Speaker 2 0:31

Welcome to a Wiser Retirement Podcast. Are you curious about cryptocurrencies? Today, we're going to cover the resurgence of meme coins, navigating the evolving tax landscape of cryptocurrency investments, the buy big, hack and volatility sandwich. Stay tuned for that. I'm Casey Smith. Today I'm joined with Robert Swarthout, founder, ceo portfolio manager of Teton Crypto Capital. Every week, we bring you practical advice on retirement investing, financial planning for your financial future. Don't forget to subscribe to the podcast wherever you're listening. Let's get started guys. Hey, robert, hey, how's it going Doing?

Speaker 1 1:08

good Happy birthday. Yeah, thanks, thanks. One day late. One day late, not an important birthday, and I'm generally not one that cares about birthdays, but I do appreciate it.

Speaker 2 1:20

So let's get started. So let's talk about meme coins First of all. I always have to assume we have listeners that are just still learning about crypto, and let's talk about what is a meme and what is a meme coin?

Speaker 1 1:40

with a slight twist, I guess added. You know the meme stocks that people may recall. You know GameStop and AMC and the stuff in the summer of 2021 and all that craziness yes, exactly. But when it comes to crypto, you know it's funny. It's like I'm the guy guy that wants to see crypto tokens have real purpose. These generally don't, but I've come around to the idea that, if anything, they're more of a collectible. They're not a true NFT, but they're more of something that you gamble with than you're investing with, and I think that's an important differentiator. I would tell people that a meme coin is something that is the same money that you would go to the casino with that you would expect to lose Versus. If you're investing, you probably want to return. Obviously you want to return. If you're hoping for a return in meme, but you're not necessarily guaranteed it. The volatility is absolutely absurd in a lot of these memes.

Speaker 2 2:45

Give me some examples of, like maybe the top three meme points.

Understanding Meme Coins

Speaker 1 2:49

I would say, up until recently, the most famous one was certainly Doge and this is not the, the government agency that's running this, but it's definitely a play on that word, cause Elon kind of winding back again to 2021, when he was on Saturday night live, that's when the height of doge was, um, people thought he was gonna like go on saturday night live and only talk about doge for 30 minutes, which obviously didn't happen. But so you have doge, um, you have uh shibu. There's like a like a dog icon. It's funny how even doge is a dog. They tend to, for whatever reason. You know, this is maybe my me being naive to pop culture um, you know why? Why they gravitate around dogs and dog logos. I don't know, um, but you know there's some, even some, I guess, a bit childish name ones called fart coin. Um, but more recently, as of january, we have a um.

Speaker 1 3:42

Well, at at that time, it was President-elect Trump launching Trump coin on a Friday night at 530. That certainly wasn't on my bingo card for 2025. And then, 24 hours later, melania launched hers and the speculation around it at that point was why did they do it then, if they were going to do it at all? And once he was president during these four years he couldn't do that, cause there's like a part of the constitution that says he couldn't profit for being in office. So I guess 48 hours before you get inaugurated is okay, I you know. As a billion off of that. Well, in one point the Trump token did have a market cap of like $70 billion. Not saying that's how much money went into it, it's purely like the last trade price times. The quantity of tokens out there is how market cap is calculated. And whether he made that much money I don't know.

Speaker 1 4:38

My guess is whoever helped launch it? I don't think it was the Trumps. I think it was an organization outside that they contracted with or whatever. I don't think it was the Trumps. I think it was an organization outside that they, whether they contracted with or whatever. I don't know. Imagine that in the whales that are in the I guess, the dark space of crypto, they probably made more money off that than the Trumps did. But even more recently I was listening I had flipped over on XM radio in the car and to a Fox station, is trying to listen to some news, and there was a commercial that came through and Trump was selling his watches or whatever he's selling, and part one of the ways they said that you could buy the watch was with the Trump coin. I was like, oh my gosh. I don't know if crypto has made it, but this is really weird.

Speaker 1 5:16

It's really weird, yes, so but yeah, you have all sorts of these tokens and sometimes they're not necessarily on exchanges. Doge is on a Coinbase, but like the Trump token, the Melania token and even Libra, which we could go to next, that was the president of gosh. Is it El Salvador or Argentina? One of the two Miele, I think, is his last name he launched one one weekend and it just pumped and dumped and, at the end of the day, it's the people making the money, are the ones that are launching and the normal consumer that's chasing these things are the ones that are providing excellent liquidity for the people that admittedly launched it. So it's a bit of a sad story. So it's gambling. It is gambling. You know. I posted on LinkedIn the other day that People think.

Speaker 1 6:05

Bitcoin's gambling. Well, yeah, I guess One is much more tame than the other. Then I guess I posted on LinkedIn the other day that meme coins are the scratch-off tickets of the crypto casino, so I think that probably frames it pretty well, right, when it comes to just general, where it sits in the market.

Speaker 2 6:27

So really the factors that drive it are celebrity endorsements. Sounds like social media hype right, right, I mean it's.

Speaker 1 6:35

It's the ones that are successful in the successful being. They make the promoters a lot of money. I guess would be the way that I would describe. That are highly crafted marketing plans that build hype and a lot of times what you'll see happen is it's obviously a coordinated effort where somebody launches it, someone else comes in and starts bidding it up really quickly, knowing that they're basically early in the game. They're not worried about driving up the price because they know the crowd is still behind them and they have the ability to kind of more accurately time it than the average person might. That's still legal isn't it there's no regulations around it.

Speaker 2 7:15

You can't do it to a stock, but to a crypto you could.

Speaker 1 7:19

There's no like insider trading laws around crypto right now that there might be around stocks and obviously stocks for it to be listed. It's quite the process. It's not 15 minutes later and it's active on some decentralized exchange, so it's tricky. I think that we will get regulations around this stuff, but how does that really work in a world that it's connected by the internet? It's not as simple as I think traditional finance would like it to be.

Speaker 2 7:49

True, we'll switch to tax. So what are some? Well, why don't we talk first about how tax is handled in the US? When it comes to crypto, is it really that much different than any other security?

Speaker 1 8:04

It's treated as property. So you have long-term and short-term capital gains, the same rules as it might apply to a stock, but the small nuance that like, when it comes to, like, say, tax-loss harvesting with stocks, you have, I think, 30, 31 days that you have to not hold it the.

Speaker 1 8:20

Rossi rule, yeah yeah, that does not exist in crypto, which I guess is a nice benefit right now. If you're tax loss harvesting Like I did some tax loss harvesting for my fund back in June because I felt like we were at a good bottom there and I bought it I mean I sold some stuff and a minute later I was back buying back basically what I just sold and kind of were able to capture those losses. So you know it's short-term, long-term capital gains, but taxes are complicated just generally in life, but they're ultimately very complicated in crypto. If you're doing anything in a decentralized manner, if you're only interacting on one exchange, like Coinbase, they can give you a 1099B I think is what they do these days and they try to help you understand your basis. And if you're buying and selling, like they can, much like a brokerage account um, they can give you a composite 1099 ike. But where it becomes tricky in crypto is to say you buy something on coinbase and transfer it somewhere else, like they can't. There's no built-in mechanism of crypto itself to help you track your basis and all that stuff, so it you have to end up using other software on top.

Speaker 1 9:30

People often think that they can get away with not paying taxes on crypto? I think you can. I wouldn't say you get away with it. You don't get caught now, but you will get caught, um, when it comes down down the line, because everything that's happening, a on on an exchange or B within a crypto network is all recorded and at some point all these the plumbing is going to be hooked up correctly for the IRS to ingest all that stuff and then it's going to get ugly for some people. So pay your taxes, especially pay your crypto taxes, because you're not going to hide that Right.

Speaker 2 10:03

It's on the blockchain. It's all pretty obvious. Exactly, yeah.

Speaker 4 10:14

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Speaker 2 10:57

How does this change like on a global setting? I saw something in the news about change like on a global setting.

Speaker 1 11:06

I I saw something in the news about nigeria's with legal action against binance. Um, yeah, that case is interesting because it's it's a country going after a crypto exchange for enabling other trading. Again, I don't, I'm not an expert on nigerian tax law. Um, I was kind of shocked to know that they even had tax law. Um, but I thought only princes lived there. Um, but the I think the finance is fighting that I I.

Speaker 1 11:37

There's no way they pay 81 billion dollars. That just seems like funny money. Even in the US there's not judgments like that. So there's some countries and I don't know if Nigeria falls in this bucket necessarily, but some of them are treating it like a currency, so it's slightly different taxation, much like you're trading Forex and some of you and this is where regulations kick in they've actually got multiple buckets for different tokens to fall into. It can be a utility token that actually solves a problem. There's some that are act like security, so they have different taxation, I guess rules around them, and then you also have the whole commodity side and then they call them different things in a lot of buckets. But those are essentially the three that you might see. I hope the US gets around to doing something like this. I think it's probably more likely that they will.

Speaker 2 12:30

How does that work? If you're trading tokens on foreign exchanges, are you subject to any of their tax laws? Or is it really just your home domicile, just like it would be with other things? Because I doubt foreign treaties have been set up to cover anything.

Speaker 1 12:46

Correct. I mean, we're so early in this. I've never heard of somebody again. This may fall in the bucket of people not paying their crypto taxes, but I've never heard of anybody paying tax, say, in South Korea, because they're using, using kucoin in their us, their us resident. They're. Obviously they probably need to care about their home country more than they need to do worry about their foreign country that they're operating in. But like I don't know, like I've used kucoin, I've never saw anything in the past before they actually cut off us customers that said that I owed any or was you know, needed to file for south korean taxes, for instance, um, but I, I would use again software that would help aggregate my activity on kucoin, coinbase or whatever into kind of a um, a common ledger of sorts not not a true crypto ledger, but it's more of a I, a checkbook register of sorts and help figure out the taxes.

Speaker 1 13:44

And I know there's some stuff evolving, like the IRS starting in 2025 is making people view wallets, say on Coinbase, as a single entity, separate from, say, another exchange. You may have the same type of token held on. So you're actually going to be watching basis separately versus trying to aggregate it all together because I think it became way too complex. The irs tried to unravel, basically, this bowl of spaghetti that people would not intentionally create, but it's by nature of the. The decentralization and be able to go to different places there's. You don't go trade your Apple stock in different exchanges. There's one place to do it. So it's much more simple than what crypto gets to experience.

Speaker 2 14:30

Moving on to our next topic, I just found the clients of Schwab about cybersecurity and that intrigued me and I thought, man, I should do a webinar. I probably don't need to do a webinar on it, because we have this podcast. Maybe I need to dedicate a podcast to cybersecurity, but I say all that. Basically, north Korea was able to hack $1.5 billion with Ethereum. Yes, and they didn't break anyone's passwords.

Speaker 1 15:14

Yeah, so they don't go by North Koreans on the internet, but there's an organization that is run by some rather elite hackers that North Korea whether they employ them or whether they are citizens, you know it's probably to be seen but it was an incredibly sophisticated attack and it was a social engineering attack is how it happened. It wasn't, again, a software issue at all, which is in some ways scary. So crypto has multiple ways that you can have a transaction happen. In the most basic form, you have a wallet. They call it a passphrase generally, but think of it as a password that you need to have to quote, unquote, sign a transaction. It's kind of putting your stamp of approval on it and then off it goes whatever instructions you gave it on it, and then it off it goes whatever instructions you gave it. In more complex scenarios, they call it multi-sig, so multi-signature. So it can be set up initially the wallet where it says these five people slash controllers of this wallet. They all need to basically sign off on a transaction for it to happen.

Speaker 1 16:19

I don't remember in the Bybit case how many it was. I think I'm vaguely remembering close to a dozen a huge number, relatively speaking, of people that needed to sign off and they would use this software system. That is a solution that is used by multiple places, so it wasn't just like something Bybit had built themselves. And all these people were presented with a transaction that looked legit to them. They were signing it, but behind the scenes it was actually a different transaction that they were signing, so they weren't even getting to see what they were technically signing and basically $1.5 billion worth of Ethereum, as you mentioned, was gone immediately. It got quickly broken up into like almost a hundred different wallets, so they were starting to spread the risk and then they started.

Speaker 1 17:11

As the days have gone on, so this happened, I think on Friday, saturday, this last week, they started washing it, so it started going through, went into Solana. They started sending it different directions. The running joke on crypto this weekend was that North Korea beat the United States to Ethereum strategic reserve aside. It's a scary thing, and I guess the other half of this. So Bybit's the exchange, it's not for US customers per se, but other places around the globe, and they're rather respected and well-known and have decent liquidity or decent backing themselves. So they literally over the course of the weekend and early this week, I think, through Monday afternoon they either went and market purchased, did OTC transactions or got loans of Ethereum from big whales within the Ethereum market and they covered one to one the hole that they had, which is incredible to see it happen that quickly. That was a huge confidence boost.

Speaker 2 18:23

Is that like a donation? I mean, what is that?

Speaker 1 18:27

They're basically making their customers whole. So effectively they're taking on that I don't know if you call it debt, but that burden, so the customers won't feel any impact of this. I mean, they had a number of days where they couldn't do anything with any Ethereum that they may have had on the exchange Right. Part of this goes to how profitable these exchanges can be If you can all of a sudden muster up either the credit line or the ability to kind of go out and market buy Right that kind of volume.

Speaker 2 18:56

I wonder if there'll be a movie about that, and I wonder if there's going to be dead bodies in the end.

Speaker 1 19:04

You know, it seems like it's a bit of a storyline Crypto in some sense. It's sad that it keeps happening. I mean, you don't hear about big hacks all the time. There was another hack recently. That was a smaller number, but it's just like and that was a software issue Somebody found a bug and kind of hacked, found a you know a bug and kind of hacked into a system where traditionally I guess but this, the social engineering hack is super scary. You think you're doing all the right things and you have all these expensive systems you put in place and all of a sudden you have a state actor that did something like that.

Speaker 2 19:40

Even on my front. I got a lot of email from the SEC one day and I opened it up. I'm thinking, hmm, the SEC doesn't really email you, but it was very convincing and I clicked on it and then it immediately asked me for my Gmail password to log in and I was like, absolutely not, you're asking for trouble. Yes, absolutely not. This is not the SEC. This is definitely, uh, somebody trying to get into my email, which would be detrimental.

Speaker 1 20:15

So you can see how it's believable, right Like and how people fall for it Cause they're in such a big hurry and they're so used to the prompt of oh, I just need to use my Gmail password to log into something. Right, the attackers are crafty and admittedly, you know I as someone, as a law abiding citizen. I wish that people generally in life that do these kind of things would just use that kind of skill for something good. Why do we have to do something bad?

Speaker 2 20:44

But I guess that is defined by what I think is bad versus what they think is bad. All right, so we're wrapping up February here let's talk about. Let's wrap this up with our volatility sandwich. Explain, uh, what does that taste like Exactly?

Speaker 1 20:54

Is that?

Speaker 2 20:55

a little turkey.

Speaker 1 20:57

Well, I'm not a big turkey fan, so it's going to be a turkey sandwich. Um, we have turkey in the middle and that was basically from call it the fifth of the month through, I don't know. This last weekend. Um, so you had a, had basically a lot of sideways price action, but I think the more interesting part here is the bookends what I guess would be the bread in this case. You had the first weekend of the month, the first and second of February, and then you had this last weekend that was the 23rd, 24th. So the first weekend of the month was when Trump had obviously just recently been in office, and that's when he announced the Canada and Mexico tariff and they had that whole. I guess I don't know if you call it negotiation or whatever that was had that happen.

Speaker 1 21:41

The crypto market did not like that, and what's crazy about that is if you, in hindsight, going back and looking at all the data that was on chain, it was such a sell off that market makers were even pulling orders out of the order book. Um, you can see this like replay in action, where also, there was no orders and prices were just falling through the floor on a lot of crypto. Some of it was down like 30 percent within like 12 hours and, to put it in context, um, when the ftx exchange blew up and melted down in November of 22, compared to this early part of February, the liquidations that happened early this month were three times the volume of what we saw with FTX, with the whole exchange going down, with the whole exchange going down. So and this is again global, um, but it's kind of crazy um, and during that time, altcoins because a lot of times people look at like what's bitcoin's dominance, like how much of the crypto market cap total does bitcoin account for, and during that time, bitcoin's share of that went up, um, when compared to altcoins. So you fast forward to this last weekend and this, the prices throughout the month were just kind of bumping along, kind of within a range, and then all of a sudden, you had bitcoin fall down from like 94 000 to roughly 85 to 87 000, depending on what exchange you're looking at. So a decent drop there. But altcoins are typically more magnified in their moves than bitcoin up or down, and most altcoins follow Bitcoin down.

Speaker 1 23:12

A little bit different this time is the Dino tokens, as I have been referring to them as so Dino tokens are tokens that have been around a long time and they are likely utility-based tokens trying to solve real problems. That happens to be the wheelhouse that I feel like I sit in, and they've been acting differently. This time they have actually gained market share relative to Bitcoin or compared to Bitcoin, while other ones have lost. But you know it's and I guess this is somewhat of a segue, but I think it actually helps.

Speaker 1 23:45

Crypto, obviously we've talked a lot about in the show has been under attack the last four years, from the SEC largely, and from the Fed with banking, but more so the SEC. Those lawsuits are actually getting unwound or dismissed or different things, and I think the Ripple case is the last one of the big ones that are really still outstanding. That probably is a little harder to unwind, but it plays into this price action. It's just like it's generally all good news, but sometimes in crypto, when good news comes out, the price doesn't react in the positive direction and I don't know if there's any correlation here. It's just interesting to kind of like look at these because they're on the same timeline right now. So it's. I find it fascinating. Other people may find it absolutely boring, but that's the world I live in.

Speaker 2 24:34

Well, I still think the future is pretty positive, at least for the next four years.

Speaker 1 24:40

Oh my gosh, like it couldn't. You know. Obviously we're through the honeymoon stage of from the election to Trump getting inaugurated, the second term, um, and then a couple of weeks after, and then the rubber's hitting the road and things aren't moving as fast as everyone had dreamed that they would Surprise. That's the way it works.

Speaker 1 24:58

I think that I'm incredibly optimistic about the, obviously the next four years, but even just 2025, like we're no longer having gigantic headwinds in crypto. We in some ways have a tailwind, or developing tailwind. So we, you know, we have a crypto czar that and David Sachs that's you know can get the ear of the president if he needs it, you would think, and that's something that crypto has never had and, in some level, technology has never had, because he's the AI and crypto czar. So it's it'd be fascinating to see how it plays out. I think that we have a friendly SEC, we have a friendly CFTC, we have a friendly set of elected officials in Congress. I think that we get stable coin regulation this year and there's probably an outside chance we get a little bit more than that as we go into 2026. But the skies seem nice and blue right now.

Speaker 2 25:54

All right, robert. Well, thanks for all the updates. Thank you, guys for listening to today's episode. If you're still learning more about Teton Crypto Capital or Wiser Wealth Management, you can link to us. You can find our links in the show notes here below yeah, thanks again, robert. And the show notes here below yeah, thanks again, robert.

Speaker 3 26:24

And we'll see you guys next week. You could leave a rating and review. If you have any questions about anything that was discussed today, head to wiserinvestorcom and reach out. This episode was produced by Rachel Dotson. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. Thank you to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.