The Breakdown - The Battle to Get A Dictator’s Seized Millions to 62,000 Venezuelan Health Care Workers

Episode Date: August 27, 2020

Today on the Brief  The SEC changes accredited investor rules  Fintech and crypto investor Ribbit Capital starts $350 million SPAC Previewing Federal Reserve Chair Jerome Powell’s Jackson Hole speech Our main conversation is with Ruben Galindo, CEO and co-founder of Airtm. Airtm is a global dollar account that lets users anywhere access U.S. dollars, powered by cryptocurrency infrastructure and a P2P network.  The company is currently working with Juan Guaido’s opposition government in Venezeula to attempt to distribute $18 million in funds the U.S. seized from the Maduro dictatorship.  In this conversation, he and NLW discuss: How Airtm works outside of the traditional banking system Why people around the world are hungry for access to dollars  What the Health Heroes campaign is trying to achieve  How Guaido and Airtm are trying to work around the Maduro government’s attempt to suppress them Find our guest online:Website: airtm.comTwitter: @theairtm

different things that are important about what we're doing, that make RTM and the crypto community shine. For one, we're helping healthcare workers get the resources they need to fight this pandemic, which they should have in the first place. And second, we're helping President Guaido legitimize himself in the eyes of his country because for the very first time, he's able to help them as he should be able, accept his government, lives in exile. And so it's very difficult for them to assist in any type of way. And third, why it's important for the crypto community, and even though AirTM is not necessarily 100% pure crypto company, is that we're showing that countries or regimes,

monetary regimes with agendas that might not necessarily be in the best interest of its people, now no longer have control of what people decide to hold their harder money in. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by crypto.com, BitStamp, and nexo.io, and produced and distributed by CoinDesk. What's going on, guys? It is Wednesday, August 26th, and today we have a really important conversation about a battle to get 8.5th. $18 million of money seized from the Maduro dictatorship in Venezuela to 62,000 healthcare workers in that country, and how it involves a crypto-based platform that helps people access

dollars wherever they are in the world. First up, however, let's do the brief. First on the brief today, we have some new accredited investor rules. For those who aren't familiar, accredited investor rules are rules that determine who can invest in early stage startups. Historically, those rules have been based on measures of wealth, so having a salary of above $250,000 for the previous two years, or having more than a million dollars in assets, not including your house. The principle, I guess, is that if you have that sort of wealth, you have more ability to lose money without it being a huge issue. Now, many people have pointed out flaws in accredited investor thinking around things like the hypocrisy of allowing people to gamble whatever they want at Vegas,

but not allowed them to make bets on early stage startups, which could theoretically be life-changing. I actually posit that a big part of the pent-up energy that was released by the ICO boom in 2017 and 2018 had to do with people having spent the last 10 years hearing about all these technology companies but being excluded from them until they get all the way to the IPO and regular stock process. So the new rules include a few different types of expansions. First, if you are a member of an investment team at a fund like a venture fund, a private equity fund or a hedge fund, that can potentially include you. There is a spousal equivalent. In other words, you can pool finances with your significant other, which just makes total sense. And then finally, there are certain types of

certifications like the Series 7 and Series 65 that you can get that would also qualify you. So effectively, there's two things going on here. With the spousal equivalent, they're just taking what I think is a much more rational look at household finances when it comes to this potential risk. And then second, when it comes to being a member of an investment team or those with certification, they're adding a knowledge dimension, not just a financial dimension, which obviously, I think, again, makes a lot of sense. Now, Catherine Wu pointed out that this is an interesting moment for this to happen since there

is a rise of rolling VC funds which allow people to raise money over time rather than having a single close, and that these rules might allow more individual LPs to join those funds. I haven't had a chance to go really deep on these rules, but I think in general I am a huge supporter of us expanding the ways that people can prove that they are qualified to take this sort of risk. So to my mind, this is nothing but a great big win. Next up on the brief today, ribbit capital is raising a $350 million SPAC. Spacks are, as regular listeners will know, one of the defining trends of the markets this year. Spacks are special purpose acquisition companies and are effectively an alternative to IPOs in which a company goes public that is just a blank check

company. It has nothing on the books other than this capital, which it is promising to go use to acquire a company effectively taking that private company public through the acquisition. In my introductory episode on SPACs a couple weeks ago, one of the things that I mentioned was that there was a lot of speculation that this might be a promising vehicle to take crypto companies public. Well, Ribbock Capital, which is a fintech investor that has invested in Coinbase and Revolut and Robin Hood and Zappo and chain analysis and a number of other companies, both in the crypto and the traditional fintech space has just filed for a $350 million SPAC. As with all SPACs, they haven't really gone too deep into what they intend to do with this. It's not even clear if it will be a crypto play, but I still think

it's a very interesting type of vehicle for the crypto industry, and I wouldn't be surprised if part of what we see with Ribbitt SPAC is in effect a crypto IPO. Finally, today on the brief, previewing Powell's speech. So tomorrow Jerome Powell is giving a speech at the this year virtual Jackson Hole conference. Each year, the Fed holds a big central banker gathering. Last year, Mark Carney from the Bank of England, talked about a synthetic hegemonic currency. Basically, they do this big conference in Jackson Hole each year, and it's a chance for the central bankers to share their big ideas, right? It's different than a normal conference. This year, there is a huge amount of anticipation around what people expect the Fed to be previewing a really new approach to monetary policy. Bloomberg is running a headline that says

Fed seen holding rates at zero for five years in new policy, and moreover, people are just speculating about what they think that the context of this zero interest world is going to mean for how the Fed comes at its twin mandate. The changes that they're expecting to announce in the context of this new reality include one, inflation that averages 2% over time. So in other words, a new model where it's okay and in fact good to overshoot 2% inflation if there has been an extended period of undershooting. So instead of any time we're trying to get at 2%, but not over kind of model where we've been since 2012, this would instead want to see an average rate of 2%, which could mean a lot of difference in the short term. The Fed is also expected to start being

more aggressive about their full employment mandate, giving up a fear of causing two rapid in inflation. This effectively means that they're throwing out the idea of a natural jobless rate that they shouldn't exceed. All of this matters because basically the Fed's policy is the benchmark that markets build expectations around. They follow it as closely as anything else in the markets, and really the question now is just what's going to actually be said and how the Fed is going to choose to implement those policies, given that their normal strategy of interest rates are not really available to them as a tool unless they're willing to go negative, which would be its own very new break from the past. I'm sure we'll have a lot more to talk about on this topic. I would

expect Friday's breakdown to be largely focused on what Powell actually says. And with that, let's shift to our main conversation. Venezuela is often held up as the quintessential example of a place that Bitcoin could help. It has experienced hyperinflation that has made its money virtually worthless. It is ruled by a dictator with an iron grip. Some, like Eduardo Gomez, have used Bitcoin to actually change their life and escape the situation while helping their family at least flee in terms of their money. But the reality is that, like so many other parts of the world where people are trying to escape their local fiat regime, the demand is more often for dollars, U.S. dollars than anything else. U.S. dollars are seen as the pay

of safety in this type of inflationary environment. Recently, the U.S. government unlocked $18 million in cash that it had seized from the Maduro government. It gave this money to the opposition party who the U.S. treats as the legitimate president, Juan Guaido. The plan was to distribute that money to 62,000 health care workers in what they're calling the health Hero's campaign. However, because the banking system is subject to the control of the government, they needed a workaround. Enter RTM. AirTM is a Mexico City-based startup that gives people anywhere access to dollar accounts. Instead of working via existing banking rails, they work through crypto networks and a peer-to-peer system that makes them much more censorship-resistant and

allows people to access dollars regardless of what their local government's policy towards dollars is. The Juan Guaido government selected Airtem to help distribute this 18 million again in order to get around some of the controls of the Venezuelan banking system. Of course, as you might imagine, this raised the ire of the Maduro government who quickly moved to try to make it very difficult for Venezuelan citizens to access Airtm. The Guido government and Airtm are now in a campaign to get that money to those health heroes, including teaching people about VPNs. Today, I'm joined by Ruben Galindo of Airtem to talk about the ongoing campaign, how AirTM works, why dollars are so important to people around the world, and how crypto infrastructure

provides rails to make a system that is much more censorship-resistant work. All right, I am back with Ruben Galindo, and Ruben, I am so excited for this conversation today. Welcome to the show. Hey, Nathaniel, thanks for having me. It's an honor. So let's start by giving a quick background on AirTM. Can you tell us just a little bit about what you guys do and where you operate and how long you've been at it? Sure.

Well, we dedicate our time to giving people access to dollar accounts just because we believe that the dollar is the best type of money. and that might be a contrary opinion here in your show given your crypto audience, but the dollars hold their value, the dollars are accepted worldwide, and if everyone had access to the dollars, then they wouldn't need to, well, to preserve their wealth from inflation, to participate in the global economy, to receive international payments of good costs or good rates. And so we believe that everyone should have access to a dollar account with which to solve all the problems I just described. And we see it almost as a human right.

And we go to very far lengths to make sure that people get access to these dollar accounts. So far we have given 400,000 people that have used a dollar account, access to it via RTM. with it they have moved over $320 million worth of deposits to their dollar account, withdraws from their dollar account, peer-to-peer payments with their dollar account, buying things online, even investing in cryptocurrencies. And the way we are able to give people access to these dollar accounts, because it's not an arbitrary thing, is that we kind of hooked up our dollar account to an OTC dollar marketplace.

So essentially local Bitcoins is plugged into PayPal and that's Airpm. It's very similar to PayPal because we give people access to dollar accounts and balances that you could keep it. There's some differences, mainly differences revolving around the use cases that we serve in comparison to PayPal, which focuses on e-commerce. We want to find, for people to find an RTM a retail financial service alternative, not a way to buy things online easier. And it's also, or it has this local Bitcoin's component to it because the way that you as a client get access to making a deposit or withdrawing from your account is through RTM agents that either sell dollars to you, Airtium dollars to you whenever you want to make a deposit, or they buy dollars from you.

They buy your Airtim dollars in exchange for whatever type of money whenever you want to make it withdrawal. And so that's how we are able to deliver our dollar account, basically to everyone anywhere in any country, regardless if you are in Venezuela or in Mexico or even the U.S. We do not discriminate any person's banking system or any type of, basically, type of money they want to use to deposit. Our agents accept it. And that goes to show that we are super accessible and non-discriminatory with regards to the types of money that are compatible with our system. We believe that the whole kind of space, the crypto space is fighting towards that just cause of giving people access to financial freedom.

But we believe that through dollars and through our agent network, we're actually able to deliver on that promise where we believe the rest of the projects kind of fail. We're not necessarily a crypto company, although crypto is essential for what we do in several ways. one, our agents are only able to get access to dollars to which or with which they can interact with their clients want to buy them by by depositing Bitcoin Ethereum or Dye. Also in order for us to, so there's, I guess our capabilities are not only used by people or that need access to a dollar account, but they're also used by businesses that want to deliver payments from the U.S. into Latin America primarily. And in order to facilitate that flow, we also have to deal with crypto exchanges

that have money transmission licenses in the States that allow us to onboard big wads of money, like hundreds of thousands of dollars at a time. And then we can then transmit that money to Latin America and deliver it to the hands of the people that earned it, like freelancers, or with a case of the Health Heroes campaign, donations. Anyway, that's also another way that crypto is important for RTM. Also, our user's balances are actually held on crypto on different stable coins, including dye or circle, or USDC, sorry.

And then also we give people or users access to a crypto trading product thanks to Krakken. We leverage their API to give our users, the users, an experience of crypto trading. And also within our agent network, it's a very popular payment method for people to deposit and withdraw money from their account using basically any single type of cryptocurrency. And that's basically the way we are a crypto company. We're not a very traditional crypto company. And if you're a purist, you might not say or you might say we're not.

not crypto at all. But we proudly call ourselves a crypto company and we proudly carry that banner of financial freedom around as if it was ours because it is ours and we belong to the space that that kind of carries it in representation of us all. So that's kind of air-tm, in a long-winded answer. What's going on, guys? I'm excited to share that one of this month's breakdown sponsors is crypto.com. Crypto.com offers one of the most cost-efficient ways to purchase crypto out there, as they've just waived the 3.5% credit card fee for all crypto purchases. What's more?

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Their platform is powered by a NASDAQ matching engine, and their APIs are recognized as the best in the industry. Download the BitStamp app from the App Store or Google Play, or visit bitstamp.net. slash pro to learn more and start trading today. That's bitstamp.net slash pro. In this crisis, many investors aim to keep and grow their digital assets. Others seek to maximize the yield on their cash. Nexo allows you to achieve exactly these two goals. The company offers instant crypto credit lines against all major cryptocurrencies, with interest rates starting from only 5.9% APR. Nexso also lets you earn up to 10% annually on your fiat and digital assets. What's more, interest is paid out daily and you can add or withdraw funds at any time. Get started at nexo.io. So I think that like the way that

I might describe it is you guys have designed a setup that uses crypto infrastructure to meet people where they are in terms of demand. And even if you are a person I believe who thinks that fiat currencies days are numbered and they're worried about, you know, know, the long-term, you know, devaluation or debasement of the U.S. dollar, the reality that most people live in is that the dollar is a radically better alternative than their local currency regime, right? And what you guys have done is created a mechanism for people to opt out of their local system and into a different system, whether partially or fully, that it takes advantage of these rails, but still gets them the core asset that they're looking for. I mean, is that an accurate

description. That's so much better than mine. Well, so I think that that's really powerful. And certainly anyone who's been watching what's been going on this year and, I mean, in previous years, too, but especially in the context of kind of global economic and health crises, there is, there's been a tremendous push to have access to this sort of dollar-eyed product. And so I wanted to guess bring this to the health.

Heroes campaign and Venezuela specifically. I guess first of all is what had your usage in Venezuela been like previous to this campaign? Well, RTM was born out of the feeling of injustice that my founders or co-founders and I felt when we heard that there was countries with 50% of, inflation a month and where it was not possible for you to get access to dollars. And so Venezuela being the most extreme example of a hyperinflation was the first market in which we launched their TM in conjunction to Argentina, although for the last years, we've mainly been focused on Venezuela because that's where we feel our services are most needed.

we first gain popularity back in 2017 when our market's exchange rate became a very solid reference for the whole country's exchange rate, which is no easy fee. And when we're very, very proud of, just because we were able to determine the value of the bolivar and to be an accurate measurement for inflation day to day. And so we've been working in Ben as well for quite some time. However, this Health Heroes campaign is a totally new milestone. And it brings their T.M and basically everything we represent to a whole new level. So I'd love to get into the campaign itself.

Where did the resources? I guess first, what is this campaign? And then second, maybe is where did this money to be redistributed come from? Sure. So basically, and everyone in this podcast will understand because Venezuela is probably the number one example. Everyone points to when they're asked by their parents, who needs Bitcoin? But Juan Guaido, who everyone knows is the president in charge of Venezuela. And he's trying to figure out a way to free the country from the dictator.

Maduro, Nicolas Maduro. And he's doing so not only because he's the rightful president, but he's doing it kind of with the help of the whole world. Basically every single

country has approved the reasons why Guaido is the rightful president and they are helping him in whichever way they can to make sure that Venezuela gets freed from the hands of the dictator Nicolas Maduro.

The way they're doing that is that all the money or assets that the Venezuelan government or the country of Venezuela, sovereign nation, had in deposits in different countries. Well, it's now, it doesn't belong to Juan Guadot, the president now, but it's controlled by him to meet his country's agenda and their objectives. There's been money that has been seized from Maduro and has now been put in the hands for the control of President Guaido in the UK, in the U.S., and in many other countries who support Juan Guaido, President Juan Guido. some of these funds are of course in the US in dollars and they were frozen by the US Treasury

because they no longer should have been in control of Nicolas Maduro, the nation's usurper. And so the first thing that President Juan Wider was one of the first uses of that money, is or come to a very timely manner and kind of to meet an urgent demand for doctors and nurses helping, well, fight the COVID pandemic, get access to dollars. And so, RTM has become this channel to deliver funds to 62,950, I believe, health care workers in Venezuela. They're going to get a hundred bucks a month for the next three months. And that will not only help them get enough money to feed their families, but also to

become better prepared to fight the pandemic. And I guess there's a lot of different things that are important about what we're doing that make RTM and the crypto community shine. But for one, we're helping healthcare workers get the resources they need to fight this pandemic, which they should have in the first place. Second, we are, we're showing or helping President Guaido legitimize himself in the eyes of his country because for the very first time he's able to help them as he should be able, accept his government, lives in exile.

And so it's very difficult for them to assess. exist in any type of way. And third, and why it's important for the crypto community, and even though Eritem is not necessarily a hundred percent pure crypto company, is that we're showing that countries or regimes, monetary regimes, with agendas that might not necessarily be in the best interest of its people, now no longer have control of what people, decide to hold their harder money in. The money is free as it should be, as it should have always,

and it will never, ever in the future will be enforced down to someone's throat because it doesn't have to. Not only that, but I think ERTM is also proving how powerful our agent network is just because there's probably no other way that you can get, tens of millions of dollars into Venezuela, other than through this censorship-resistant agent network in our dollar marketplace. So what has the response been from the Maduro government? I can't imagine that it's gone over well. Well, of course not.

We don't necessarily like to politicize RTM, but evidently this is a very, political situation. From one part, or in one part, there's President Guaido trying to deliver help as it's his job to his people. And on the other, there's a dictator trying to show that,

well, or trying to prevent President Guaido from legitimizing himself by being able to help his people. the people that he represents and that he's supposed to help. And so as such, we have received quite a negative response. And to be honest, I was a bit surprised because at a human level, I believe that Nicolas Maduro is a person and any type of aid arriving to help, well, people helping is people fight the world.

crisis, their pandemic, would be welcomed. But no, it has been, well, met with quite the opposite response. We have had our IP blocked by all those internet service providers. Also, the banks have been warned and they have been asked to fly your Kim transaction so that they can be reported. Regardless, we believe that we're very well prepared to face this. And we know that Guas Maduro, he hangs out with very powerful people because he has allies in very powerful countries.

Venezuela owes money too and they might do everything in their power to make sure that they eventually get paid. Nonetheless, we are just fighting for financial freedom and pretty really, really, ready to not counterattack, but to defend our users and ourselves against any measures that might be put in place in the past few weeks and going forward. So I had read that there's been a campaign to combat this in part by helping educate people about VPNs. I guess, what else, are you guys doing that? And who are you working with most closely on the ground in Venezuela now, who's helping make this happen?

Well, we are doing everything to try to get healthcare workers, get access to our dollar account, anything from helping them understand that they can change their DNS, they could get access to a VPN, and we have been working with, well, President Guido's team hand in hand to make this flow happen. And it's not just people in Venezuela. It's tens, hundreds of people that we have probably been in contact with to make this flow happen and are now not only leveraging his team locally and his team outside of Venezuela, but also a very large, very helpful community of already RTM users and of other Venezuelans that have been helping healthcare workers or the health heroes get access to the dollar account.

If you go on Twitter, you'll see how amazing that is, the whole community coming together to bring healthcare workers access to their dollar account so they could get paid and we'll be sort of launching more and more campaigns as time progresses to make sure that we avoid any other blocks, but we will heavily rely on our community to not only spread

the word, but to actually help the health heroes get access to their hard-earned money. Also, we have other technical solutions coming in the next few weeks that will make accessing RETM even

easier and they will be more difficult to restrict, but we're working with more sophisticated technology, which will make it more difficult to censor. And lastly, we are also launching a campaign to get the rest of Venezuela to open up AirTM accounts so that everyone can join. Join health heroes in the RETM network to accept their payments so that the health heroes no longer have to rely on using the financial system, which is controlled and censored by Maduro. So these are all a bunch of initiatives that are undergoing and with the help the community. And it won't be easy, but we'll get past it. And we're going to be delivering this money by whatever means necessary to.

the people that need it and deserve it. For people who are here, or at least outside of Venezuela, who are interested in doing what they can to help, what would you point them to? Well, it depends on their level of involvement. But if you are someone technical, someone that you think you could help prevent censorship, then please contact me at Ruben at Airbus.

TM.io. If you just want to have a smaller level of involvement, then you can just answer, help health heroes get access to information which they could use to combat the block. Also, spreading the news about what's going on will help because it will make sure that no one doesn't hear what's going on and that will increase pressure so that people or New Plas Maduro is maybe even more likely to allow this to happen as it's probably even in his best interest and it makes him look bad so that's another way and lastly something that will be very helpful is, and not just because of the doctors in Venezuela, but also AirTM has

hundreds of thousands of users in Venezuela that need access to, well, the global economy. And if you work in a company that you think can provide value for Venezuela, who does not have access to your goods or services, well, then accepting payments yourself and your company via TM and we have an API with which you could receive these payments will also help Venezuelans access to well to the world. Something that we would love to be able to give Venice Wells as access to freelance marketplaces. If Venezuela had a way to easily work for someone abroad without getting paid with PayPal who doesn't connect to their banking system, unfortunately.

But they would be able to remain in their country. they would not have to go into this kind of exile, which a lot of Venezuela are forced into because there's no job availability locally. Then we would allow them to work at home, stay at home, feed their families. And that would be of great help. So if you work at any of these freelance companies, that would be of great help being able to bring to people in Venezuela. but otherwise, spread the word and let's continue fighting as a whole,

then there might be some other ideas that you have that I might have not mentioned, but they might be helpful nonetheless. So I encourage everyone to contact me if they feel like they could help out in any way and will always be super open to receiving your help. Awesome, Rubin. Well, thanks so much for spending some time with us today to tell us a story. And I'm sure people will have ideas about how to get engaged. So hopefully we can make this, get this money to where it's supposed to be.

Sure thing, Nathaniel. Well, thanks for having me. Have a great rest of your day. A point that I think is really important reflecting on this conversation is the idea of meeting people where they are in terms of where their monetary demand lies. For most of the people who are served by RTM, their focus is on getting US dollars. And now we may be concerned about the long-term purchasing power hold of those dollars. For those people, it is such a dramatically better alternative than what they have. I think it's fascinating how RTM uses crypto infrastructure,

something that didn't exist just 10 years ago, to actually make it so that people can access those dollars in a fundamentally different way. One of the things that is so powerful about this moment that we live in, and this is something that I said on Peter McCormick's 250th anniversary show, is that for the first time, there are these ways for people to actually legitimately escape their local monetary regimes. And my guess is that for some time, that's going to include a weird mixture of U.S. dollars through these types of systems, Bitcoin, and other ways that people prevent their wealth from being seized or debased. It may not be Bitcoin that's moving into these people's accounts,

but it is certainly a success of the Bitcoin era and something that is very natively and only possible because of the Bitcoin era that is opening up this possibility in Venezuela at all. So I hope you enjoyed this look at what's happening in Venezuela on the ground and what it really means and how this industry is involved. And I appreciate you listening. So until tomorrow, guys, be safe and take care of each other. Peace.