FRMO Corporation (OTC:FRMO) Q2 2023 Earnings Call Transcript

So they’ll just throw it on the market and won’t be enough people to buy it and for that reason it will trade at a big discount to an asset value. That’s basically that scenario. Personally at this discount net asset value, I think Bitcoin Investment Trust, GBTC is a great buy. And just so you know, I personally bought some today, just so I really did. I’m not going crazy and buying tremendous amount fit, but I bought some, so I don’t know how long the discount to NAV is going to last. Chances are it’s not going away in a day or two, but eventually there will be Bitcoin ETFs and eventually this is going to be a Bitcoin ETF and it’s going to trade at NAV and I believe the Bitcoin price is going to be higher. So let’s assume, of course I could be wrong.

So don’t go by what I say, but if Bitcoin is going up X percent, whatever that number happens to be, and you are buying the Bitcoin Investment Trust at roughly half of net asset value, well if it traded an asset value and Bitcoin didn’t go up, it just traded NAV and you’re at 50% of NAV, you’re doubling your money, it’s a 100% rate of return. Now Bitcoin rises X percent and it trades at debt to net asset value, you can see how robust that return is. So I personally think it’s a really great investment. Anyway, we have lots of shares of it and I wouldn’t mind having more shares of it. That’s it.

Thérèse Byars: The next question is related, does management have any thoughts on the FTX crash and how this may affect Bitcoin and institutional adoption of Bitcoin as a monetary asset going forward? This crash appears to be unique from other previous Bitcoin cryptocurrency related crashes, for example, Mt. Gox, in that this most recent crash has affected a large number of institutional investors, who had stuck their necks out for cryptocurrency. Is this a correct reading of history? Does management with their unique position in running an asset management business themselves see any growing once bitten, forever shy sentiment among institutional investors regarding cryptocurrency or Bitcoin in particular?

Murray Stahl: Okay, well, lot of lot of things I can say about that. Let’s just start with this. So this was embezzlement, this was fraud. So in its own way, in fact patterns a little bit different. It’s not that dissimilar from Enron, it’s not that dissimilar from the Madoff scandal. So the Madoff scandal, did that stop people from hiring outside investment advisors, the Enron scandal did that stopped people from buying publicly traded securities? I mean at the time it was traumatic, but it’s basically the pledging and looting of client assets. Basically it’s what happened. So had it not been a crypto company, had it been a normal financial advisor, you would have had the exact same outcome and they could have the exact same outcome in dollars.

The fact that it had to be crypto had absolutely nothing to do with the ultimate collapse. So they were a money market fund and they were doing nothing other than buying United States treasuries. Well, you steal all the money then you’re not going to get any. So it’s really that simple. The company FTX had a very high ESG rating. I think by the ESG rating companies it had the highest rating you can get. And that’s the problem, that’s the problem with ESG and the way things are rated. Just because I have no idea to what degree they complied or did not comply with ESG and I have no idea how these ratings are compiled, but it had a high ESG rating so you could see why an institution would say, well it has a high ESG rating, it must be okay and obviously that was not true.