The Pomp Podcast - Steve Ehrlich, CEO of Voyager: The Days of Crypto's Wild West

Episode Date: May 22, 2019

Steve Ehrlich is the CEO of Voyager, a cryptoasset broker made for every investor. In this conversation, Steve and Anthony Pompliano discuss the brokerage business, the wild west of crypto, and Voyager. Steve has some wild stories from the early days of crypto. Listen & enjoy! ----- Monarch is building the future for those interested in one wallet that consolidates the best services and functionality into one simple and easy to use app, Monarch will empower users to control all aspects of their Financial Kingdom from the palm of their hand.  You may have heard the phrase “Not Your Keys, Not Your Crypto”.  With Monarch, you own your keys and seed, meaning You own your crypto.  With Monarch, you can Store, Receive, Send, Swap, Buy, Sell and earn interest on Crypto, track your portfolio, the news, the market cap and more today! We're constantly adding new services and updates too! Learn more today by visiting MonarchWallet.com/pomp or download the wallet for FREE today from Apple or Google. Visit https://monarchwallet.com/pomp/ to get your free tokens! ----- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off The Chain, simply the best podcast in crypto. Let's kick this thing off. Monarch is building the future for those interested in one wallet that consolidates the best services and functionality into a simple and easy to use application. The Monarch app and wallet will empower users to control all aspects of their financial kingdom from the palm of their hand. You may have heard the phrase, not your keys, not your crypto. With Monarch, you own your keys and your seed phrase, meaning you own your own crypto. With Monarch, you can store, receive, send, swap, buy, sell, and earn interest on your crypto. You can track

your portfolio in the news, and you can check the market cap daily. They're constantly adding new services and updates, and you can learn more today by visiting monarchwallet.com slash pomp. Again, that's monarchwallet.com slash Pomp, or you can download the wallet for free today from Apple or Google. is for informational purposes only all right guys bang bang i'm here with steve we've got a whole bunch of stuff to talk about he's got a super interesting background that is uh very uh important and related to crypto so thank you so much for coming in and doing this oh thanks for having me um all right let's uh let's talk all pre-crypto um you've been in and around the securities business for a long time uh especially in retail trading since like the 90s so uh

explain kind of what you did uh before you got into this internet magic money uh yeah i'm the gray hair in the business here i've been around the uh the securities business since 1994 was with a firm that was an institutional trading firm we sold it to e-trade back in 1999 led by jared lillian and we wound up taking over all the brokerage part of e-trade in a really exciting time at the time where really you were starting to build on how to make the brokerage world efficient and how to make online brokerage efficient and how to grow that business from you know from the early 2000s it was really interesting time and so explain a little bit about what the brokerage business is and how that works in like the legacy uh financial system yeah

i mean back then uh everybody was calling their broker and was paying give or take 150 dollars a trade for 100 share lot e-trade came along in in as most people know in the mid 90s uh and by the into the 90s and early 2000s, you know, they kind of took out the broker. And you remember some of those crazy ads that they had, which were a lot of fun. I'd love to see them again. But, you know, it really took out and said, people go trade online. We'll get your trade done in a really efficient manner and really quickly. And you'll open your account in a really quickly, you know, quick manner. So people started adopting that. And that was the real early stages of the mass internet adoption. And so really the thought process here was you go from paying $150 per

trade to uh much less than that and sometimes even no trading fees at all yeah back then was still 1999 i think if i remember right which was still a bargain in those days you know now you have some as low as free trading but that was the time where people were like wow you know for 100 share lot i don't i could actually trade in and out without the price you know having to go 10 points i can make a little bit of money on a few point move and you couldn't do that before and that's when all of a sudden people started coming in. You started having the time where people were given, you opened an account, they gave you a couple of thousand dollars to test it and free trade. And then they got you in and you were starting to trade a lot more and it really grew

from there. Yeah. It's funny to think about this from like a multi-decade evolution of it used to be $150. Then it was like 20 and 20 was a big deal, right? Then we got it down to 999. And then eventually all along came this free trading, right? Or kind of not actually paying on a per trade basis, which is all the rage now. Well, what's interesting about the free trading, and not many people remember this, is sometime, I think, in the late 90s or early 2000s, one of the big online brokers, I think it was Ameritrade, had a sister brand that did free trading. It didn't work. So it didn't work 15 years ago, then all of a sudden now it's back in vogue. And the trading commissions now are as low as $4.95 or free in a lot of cases,

But it really went to, you know, 20 to zero. And any idea why it didn't work back then and now it works? Any guesses? I think mainly it was people were still thinking of you get what you pay for. And with zero, they're probably going to take something from me. They're screwing me somehow. Somehow or another, the brokers got to make money, right? I mean, because they were still, those brokers were starting the time of going from not making money because every dollar went into marketing, losing billions of dollars, and then starting to make money.

So customers were a little bit fearful of that. I think the millennial generation now is like, oh, that's okay. I'll take it for free. And I don't really care about what my execution quality is on an equity, especially if I'm trading 10 shares. Yep. That makes sense. And so talk to me a little bit about working at E-Trade in the late 90s, early 2000s.

Like you get to see the big bull run and the boom, and then you get to see the bust as well. Any takeaways from that? Yeah. I mean, I think... Other than you should have sold kind of like early 2000. I got kind of lucky. My team and I, when we left, and I left in 2006 and started a company called Lightspeed Financial. That was a buyout, management buyout out of E-Trade. We left, I was telling someone this story today. When we left, you know, the stock price pretty much topped. And so we exercise, all of us got lucky enough that our options were in the money and we exercised at tops. And then shortly after that, that was 06, 07 is when the real bust happened, when E-Trade, you know, got caught with all the CDOs and all of a sudden their stock price crumbled.

But from that time, from 99 to 06, when I was there, it was acquisition mode, go buy things that filled in gaps, go buy a market maker, which I did for them, go buy Canada back, which I did for them, go buy a day trading firm and really try to grow through acquisitions, which kind of is what got me started in how you grow the business. The other thing we did was we automated everything. There was no, I remember the days when you used to open an account, they used to mail you the forms, you'd fill them out and mail them back. You know, my team and I automated the very first online application for E-Trade way back in the day. And it was controversial. It was like, can people really accept confirmations and statements online?

And, but it was the early stages of really trying to get people open an account, trade and move on the process pretty quick. Yeah. Well, it's early days of the internet. like, am I really going to put my credit card information in? So now am I going to put like my more sensitive personal information in? Am I really going to trade my stocks through the internet, right? To today, you know, you see people saying, am I really going to put my, you know, my wealth into the internet magic money? And so it's, it's funny how the early

days of all this stuff is always somewhat correlated or, you know, parallel. It goes around, comes around, right? I mean, it's the same thing. That's what got me so interested in magic money, as you call it, is that, you know, it's the same thing all over again, Just a different, what I'll call asset class at this point in time, although I think there's a lot more to it than that. But it's the same things that we put in place almost 20 years ago at this point. You're coming back in this, you know, for cryptocurrency. Yeah, absolutely. And so describe, so 2006, you roll out of E-Trade, you do the management buyout, and what'd you go do?

We formed a company. It was the old E-Trade Professional Trading Unit. It was direct market access trading. We built a whole... What does that mean? That means customers, our customers were all professional traders, day traders, active traders. The system we used allowed them to put executions or trades directly on the different markets. So they would put a trade either on Instanet or ARCA or the New York Stock Exchange or NASDAQ.

There was multiple exchanges in ECNs way back in that day. We gave customers the ability to place those orders directly on the exchanges. So therefore, DMA or direct market access. We grew that business from when I left. When I first started it and when I left E-Trade, we had about, give or take, 8 million of revenue. And we did maybe 10,000 trades a day. Within four years, we were at somewhere around 85 million of revenue and 450,000 trades a day. We were the third largest broken dealer by trades per day by 2008, 2009.

Wow. It was a great ride. It was a great ride. It was, you know, active traders engaged in the market. And we were talking earlier about the crash of 07 and 08. That's when the active traders made their most money and when they were able to short the market, take positions that actually made them money when the market crashed. And so we saw a ton of volume back then and really grew a business. And it was it was really a lot of fun to do that, although everything around us was, you know, was very sketchy.

We thought it was just, you know, we were in high time at that point. Got it. Makes a lot of sense. And then how do you go from that to crypto? You know, I wound up like one wild west to the next. Well, that's what drew me in, actually, is after I had left Lightspeed, I did some other stuff learning about APIs. I mean, that was my next step was what can I learn in the brokerage business that we didn't have at E-Trade? And one of the things was we didn't have third party APIs, APIs that people can look to, to connect to and grow their products with. So I found the company. I worked with them for about 18 months, learned a lot about APIs.

then got introduced to my my co-founders and they were in a similar uh api business called trade it two of my co-founders were in a company called trade it gaspar didruzzi and serge kreiker we got together we got introduced by jared lillian and we started thinking about ideas to do things then philip etan who was an early investor in uber uh came into the group and then our most notable uh co-founder oscar salazar and oscar was the founding cto of uber we're like what can we do next you know what could we look at and we started looking at crypto one of the one or two of the guys were trading crypto and we're like hey they're just to me it looks very similar to what was going on in the late 90s early 2000s so how can i use that knowledge with the knowledge of

the apis of the group and oscar's obvious knowledge on how to be disruptive into technology how do we bring that into the mix and build something that customers really want and that's what got me i mean i did a lot of research in the crypto uh didn't know that much about it i was a late Bloomer when it comes to that. And I was like, wow, we really can make something happen here. And so what was the original idea to go do? The original idea behind Voyager was to deliver a user experience for retail customers that was second to none. That was what they're used to seeing in the marketplace, made them comfortable when they logged in on their mobile apps. But at the same time, look across all the exchanges

across the globe and find the customer the best execution on that trade which many customers we did some research and customers were saying or potential customers were saying you know i hate to have an account at this exchange this exchange this and i got to move my money and then i can't get the price and we're like hey why don't we do all the work for you guys and we'll build the execution system and have a best x router to make that happen and so really you know we were talking before that what you guys have done is you've built a retail interface, right? A user experience that overlays a routing system. That routing system hooks into 10 or so exchanges. And you said something to be really interesting that you're seeking best execution, right? And I think

a lot of times people hear best price. Describe the difference between best price and best execution and how you guys think about that. Yeah, that's a great point. I think people who claim to say they're always going to get best price can't be telling the truth and it's probably controversial to say that but with the number of exchanges out there there are some exchanges that have the best sell price or the best buy price but you can't reach them hey you can't get to their apis because they they uh they fall off you can't connect all the time you can't get your money out so you can maybe execute there but you can't so we look at best execution as the best available price that we can get for that size of the order across the 10 markets that we're in,

that we feel are the markets that we can move money around and play treasury with to find the customer that best execution, because it's a near impossibility to get best price on every single order. We're always trying to do the best for the customer to give them that best execution. Got it. And so if I go in and I want to trade crypto on Voyager, basically, I'm going to see this, you know, beautiful retail friendly interface. I say, hey, I want to buy one Bitcoin, right um when i say that you're then on the back end it sounds like you're going out to these 10 different exchanges and you're saying trying to find whatever the best available price on those exchanges are and then you're bringing that back to me and executing the transaction that's pretty

much how it works what i miss okay well i mean we have a price feed so we're seeing all the depth of book on across all the exchanges so when you give us that order we're going to give you a price right then and there and then we're going to the market and we're trying to find you know trying to find better execution than what we could even price you at and you're stopped at that price you're getting that price and if we find better execution we give you price improvement as well so because sometimes you know when you go across the exchanges you might put in a one bitcoin order but you know binance might only have 0.01 of a bitcoin at that top price uh coinbase may have 0.02 so we have to aggregate and look and chop that order up so but we're guaranteeing you that

price and if we can beat it we'll give you price improvement so basically at the when you talk about chopping this order up. At the end of the transaction, I end up with one Bitcoin I wanted. You in the background kind of automagically went out and found different component, you know, different slices of a Bitcoin and put it all together for me and got me one Bitcoin at a blended price that is attractive. That's correct. That's how we do it. And you're guaranteed your execution at that price. When we show it to you, you're guaranteed at that price. We're going out to beat it and then give you extra to your order. So if we can beat it, we'll give you that extra price. If somehow we can't beat it, we, we eat that loss. Got it. And then how do you guys make

money? We make money because we, when we get you that best price, you know, there is a little spread in there for us. We don't charge a commission. So we're always trying to beat that price for you. And then we'll give you some to you and then we'll take some. Got it. And, and as you're doing this, the focus is really on the retail side or on the institutional side, or how do you kind of, how do you cut the, let's say addressable market of people who would want best execution for crypto yeah we our business actually is for both the retail and the institutional we have a suite of apis that we also deliver those apis to broker dealers to trading platforms all across the globe uh we're deep in uh an integration with a

true institutional trading platform to offer that service to them as well and to their customers we look at both we think it's the whole you know we could cover both markets our focus is is in both But we see the size of the market today where it sits as a bigger retail market as the institutional start to come into the mix. We look at institutions as let's try to find the businesses that want to connect to us. But we will soon have hedge funds using a platform to execute through our system. Got it. So retail is going through the mobile app and then the institutional customers are going through these APIs that you guys have created that help them basically layer into that best execution. That's correct. I have yet to see an institutional hedge fund trader want to trade on his mobile app.

This is crypto. There's a lot wilder stuff I've seen. That's true. But it's from my days of running Lightspeed and our direct access desktop platform, I think most institutions, most hedge fund traders want more data than what you'll see on that little. Although you're right, they'll be running around wanting to make a trade. They're just going to make it. It doesn't really matter. They won't need the info.

But we feel that we can grow our institutional hedge fund business by partnering with the right trading platforms to deliver the APIs to them and then doing all our routing. Because the other complexity to this is the treasury management behind it. You know, being able to access on the exchanges is one thing. Then settling with cash and the coins on all those exchanges is another really important aspect, which is why we actually went out and bought Ethos. Hold on before we get there. Hold on. hold on. So I want to walk through Voyager's journey here a little bit, because you guys have done a whole bunch of things that I think one, either people don't realize or two, they

may not even understand why you did it. Right. So the two big ones are after you started the company, you went public almost immediately. And then two was you made an acquisition shortly thereafter, right. Or maybe even simultaneously. So you can explain kind of, let's go through, what did you do in terms of going public in the acquisition? And then we can talk about why you did these yeah so the we started the company in give or take uh december of 2017 uh we formed uh we filed with the tsx uh in the venture exchange in toronto in february of 2018 and we became public by february 2019 the process took a year yeah we were under the impression when we started it would be slightly quicker uh i think the the cannabis industry

didn't help us only because of the fact that the venture exchange got so many applications, I believe, that that became their hotspot and crypto pricing was decreasing. So we became kind of like down the line and getting done. Why did we do it? You know, we thought that was a great way to bring clarity to the crypto industry, transparency to the crypto industry. We'll be undergoing audit. Our year ends June 30th. So we've engaged in a public accounting firm to audit our books so people can see that we have the assets we say we do. We have the infrastructure we say we do. So we're going through a public audit that I'm not so sure any other crypto firm today that takes retail customers is going through that same detail of public visibility that we do. We

thought it was really important for the, not just for us, but we thought for the crypto industry in general. Got it. And so as part of doing this, you then made the acquisition when? Yeah, February is a really busy month for us. Oh, so all this happened February 19th. Everything was February 19th. It was, we got the approval. We got traded on the venture exchange, February 11th. February 13th, we launched our app. I wanted to do it on Valentine's day for no other reason, but it would have been cool to say that. And then who stopped you? My chief marketing officer said, no, we don't want to do it on that day. Oh, that's fine. He's sitting in the room, by the way, smiling as if he He won that debate, so keep going.

You know, that wasn't the one I was going to pick a fight on, so I let him have that one. I think he had plans on Valentine's Day. Me being the old man in the room and married for 25 years, I had no plans. I was done. You mean that you were going home to impress your wife of 25 years. Yes, exactly. He had more impressing to do, though. He's the newlywed.

And then by the end of the month, we had announced the acquisition of Ethos, which has a few hundred thousand users on their universal wallet. But what intrigued me even more than the users in the wallet was their infrastructure. They have a product called Bedrock, which is a suite of APIs. Again, back to the API theme, suite of APIs that sits on seven different protocols that allows us to move coins between the exchanges, between wallets much quicker than we would have without that. Yeah. So that was really intriguing to us to be able to get an asset like that and actually start building upon it now. And so really what you've been able to do here, I think it sounds like, is you've got a wallet that also has the APIs that are hooked into the exchanges. And so you're able to use the order routing and execution on top of that wallet.

So you can kind of provide a more vertically integrated solution. Is that correct? That's correct. And, you know, we're trying to bring that as we integrate that wallet more into the Voyager infrastructure that will allow our customers to move coins and trade quicker without having to take the coins and put it onto the exchange and then go trade. we'll be able to make it a seamless experience for the customer. Plus, there's a lot of other things we can do on our own treasury side for us moving inventory coins between exchanges to make sure that we can never miss a trade for a customer.

Got it. And so what's the downside of going public and doing all this kind of in this manner, right? Like, have you experienced any of those downsides or do you foresee any of them? You mean all the investors call me every day? Why is our stock down a penny or two pennies or whatever? So that's the downside. But we're, you know, kind of like Galaxy. Galaxy went public a few months before us. We're such long term believers in what we're doing and crypto. We don't really worry about the stock price. We know that'll take care of itself. And I met with the TSX-V at the end of February as well after we were listed. And I was starting and asking them questions about how, you know, how should we act towards a stock? And they're like, don't look at it. Never look at your stock. Just go execute your business. Because if you execute your business, the stock price takes care of itself. That's why we look at it.

But the flip side for me, being a guy who loves to do acquisitions and built, you know, help the E-Trade do acquisitions, Lightspeed, we did eight acquisitions in eight years. It's a great currency to do acquisitions. We used it for the Ethers transaction. We will use it for others. I think this industry is so compelling to us that we think there's so many good projects, but they're all, a lot of them are running out of funds. And we could use our currency to pick up really additional points and projects for us that will help us scale our business. Got it. And so as you continue to do this, is the goal to build out more of the infrastructure around order routing and kind of the business you're already in?

Or do you see this as more of kind of an expanding out from the current business? I don't know what you're allowed to say as a public CEO. Tell me to shut up if I ask questions you're not allowed to. No, no. Anything I'm saying, this is public forum, so I'm good. I'm good. I'll tell you what I can say, which is pretty much nothing as long as it's public. We look at this as long term.

We think that we want to expand internationally. We're actively looking at ways to expand internationally. Fiat gateways are the most important aspect to that, how we get with banking partners to effectuate that. I have a belief that every customer, every retail consumer, every institutional consumer should be able to trade every crypto pair to every crypto pair. crypto to every fiat pair and then you go one step further why can't i use my crypto today say bitcoin to go by microsoft or apple or something like why not i mean why what's the hold back there so we have a long-term vision that everything should be able to be sold out of your wallet or on an omnibus uh structure from what we're trying to do and that's the router and how we're

trying to build it because it's all cross-functional got it so really you buy into this thesis that every we'll call it stock bond currency and commodity but just all these financial instruments will be held in and traded out of one centralized location for a user or a fund is that i do i do believe that because i think first i think we're going to start seeing more security you know security tokens uh i think it's a necessity um i think the holdback might be the cost of to make a security token versus this traditional paperwork on doing it uh but i mean there's there's a lot of of inefficiencies and those in the brokerage business won't call them inefficiencies they'll call it how we make money but there's a lot of inefficiencies that should allow for more security

tokens and for more tokenization of assets i mean why are we still sitting today in a clearing world on the financial services at a trade plus two settlement date makes no sense to me so you do a trade on on any online broker that actually doesn't settle for two days why shouldn't it settle today. Why shouldn't it be immediate settlement? The blockchain has the ability to settle these trades immediately and use your funds immediately. You know, these inefficient, what I call inefficiencies are going to go away over time. I don't know how long it's going to take, but it's going to take time. Yeah. And so what do you think is necessary for those inefficiencies to go away? Like what, like what are the one or two milestones that you think are

most important? And then we'll be sitting here saying, oh, you know, that removed a huge kind of hurdle out of the, or a huge inefficiency? I think it's still user adoption. I think we've got to get more and more people to buy their first, you know, on-ramp to their first Bitcoin or Ethereum or something, or some other coin. They just need, we needed to get them comfortable with that so that they see, you know, it's safe, it's easy to do, and more adoption will then start forcing more of the securitization of tokens and securitization of assets to be able to go that route but i think we got to get people in this more yeah uh first it's interesting because um there's a a product um i'm probably going to screw it up but it's x die x dai i think that io i may

have that wrong but i'm pretty sure that's the right one and it's essentially like a burner wallet right so what you can do is i can tell you right now go to x dai.io you pull it up on your phone i pull it up on my phone if i have crypto pre-loaded i can immediately send you uh this crypto onto your device. You didn't have any account. You didn't sign up. You didn't do anything. And so it's a great way for, let's say I go meet an institutional investor. I say, hey, pull out your phone, go to your browser. Immediately I can send you something. And they don't even know what happened. Right. All they see is they had zero balance. Now they have one dollar and they're looking at me like, what the hell was that? Right. And so you've got their

attention now to listen. Right. And so I always think of like that type of interaction. It would be really, really cool if there was a way to do that with Bitcoin. Right. Or to do it with some other um you know cryptocurrencies and start to show uh you know i always think of just like 30 seconds or less how do i show you how crypto works right and if i can do that just walking up to you on the street or in a meeting i i do think that really starts to demystify and break the barriers down because people are paying attention they want to learn right like what explain to me how that worked right and that's where you get some some movement on their thoughts i i agree with you i think that's that'll be one way to get that adoption i think

most people do want to learn and they're not blind to the fact that there's this bitcoin and blockchain around them and it's gonna i think everything you read about it forget the cryptocurrencies themselves but the the technology behind it is going to change the way we operate across so many different ways and people get that they're just still worried like you know we always found this in the in the online brokerage space especially early on how do you get someone to to give us their dollars because it goes from a bank where they they know a bank they can go down to the corner and see it and touch it and feel it now it's being moved to something like i can't feel it anymore where is it it just goes you know to quote my dad like it

just went into space i mean where to go and we have to get people to understand that it's not space it's actually secure somewhere and then it'll start the adoption rolling i was joking i say, look, you go and you buy Apple stock. You ever touch an Apple stock certificate, right? No, right? Now they have the beauty of they can walk into the Apple store, right? So they're comfortable with the kind of the brand of the business that they're buying. But the actual financial instrument is very similar to Bitcoin. They don't actually touch it. It's ones and zeros on a screen, right? Same thing with these digital assets. I think the big difference is just what is the underlying value, right? Or the kind of that fair value in their mind and how tangible is that?

Well, and I think if you dig into the financial services even further when it comes, you buy a hundred shares of Apple and it's quite a bit of money these days. You know, it's not really held in your name by the by you buy it at your online broker. They're not holding it in your name. It's on a ledger that says, you know, Joe Smith now has a hundred shares of Apple. It's in the back end. It's being held by DTC. It's an electronic form and it's being in street name, meaning it's being held by the broker dealer's name. So you don't actually even know, you don't own a particular certificate with it.

It's just, and no different than what we're dealing with in blockchain and Bitcoin, is that things are in ledger form. But actually, I would argue that within the blockchain world and Bitcoin, you actually have an address on that. So this is actually so much better than the way the financial services. It's less risk. It's less risk. Yeah, you have much less risk doing it this way than you do in the centralized model. People don't realize that in holding your security in street name, yes, there's capital requirements and all that of broker-dealers and banks. But when your certificate is held by an online broker or any broker, you know, you're subject to the capital of that broker-dealer.

If suddenly something happened to them, you know, yes, there's SIPC and there's certain levels of insurance. But if you hold too much in excess SIPC, you might not get anything. So I think not to panic anyone, but those that know how it actually works realize that crypto and blockchain are far more safe than the financial services world. Got it. Has there been a situation where one of them has really blown up in this kind of street name mechanism? You could actually go back to probably around 2008, 2009. For people that remember, there used to be a clearing firm called Pensyn. Pensyn.

p-n-s-p-e-n-s-o-n okay uh i've never heard nearly were they were the clearing firm for uh lightspeed they were clearing firm for uh probably think or swim back then before they sold they were the clearing firm for probably five or six of the biggest brokerage firms out there wow they had capital problems they were going out of business and the peak six guys out of chicago wound up buying them and saved the firm and saved you know and obviously all the assets But it was literally days away from the SEC or SIPC coming in there and having to do a liquidation of Penson because they had run their capital so long and their expenses outweighed and they had problems. So people don't realize that. But those of us who knew what was going on, you know, we knew there was, you know, peak six was coming in to save the day, which became options house and all that stuff.

But that's, you're subject to that in the financial services. So yes, it did happen. What would have happened to people who are holding equities in that scenario, right? So, if their assets were at risk, they've recouped their money. Is there insurance? There's SIPC insurance. And there's levels of SIPC insurance. You know, each account's held.

I think you're insured for up to $500,000. Got it. So, there's some protection. Some protection. But depending on who you are and how kind of deep you are, you actually could be in trouble in some situation. Yeah. It's pretty crazy. I joke and say that the only thing that Americans know less about the financial market structure is

actual just personal finance. So we definitely don't know anything about market structure, but we know even less about personal finance. And both of those are bad situations for Americans to be in. Well, think about the bank situation we had, right? When Wamuu went out and they had to be saved, I remember running around and being like telling people, hey, split your, you know, the fdic insurance was only maybe 250 for people so it's like hey you should you know if you have more than 250 000 with a bank you should go open a new bank account and just you know move your risk around why would you leave it there we went through that people forget that we did go through these things way back when in a very uh regulated environment of banks and brokers you know time

goes on you know the memories of that pass but it happened it was there we had that banking crisis of 07, 08. And I think that's effectively where the beginning of crypto came, right? The distrust of the government and the banks. And, you know, we're starting to see that. And I think that's why I believe where I started this off was that you should be able to buy everything out of Bitcoin at some point. I mean, it's still the safest thing to do. Yeah. I mean, I think of it a lot and I've talked about on the podcast of like people aged, I'll call it 25 to 35, right? And give me a little bit on either side of that. They were old enough to know what was going on with the financial crisis but not old enough to actually have the enough assets personally to like really

be affected by it so they saw what were these institutions that their parents could have never imagined could be in trouble right uh get bailed out and then go through all this situation and they could grow up and part of it is distrust like i actually don't trust you people and then the other part of it is uh just now they understand that there is the ability to validate so it's not even like i don't care if i trust you or not i want to validate right and so i think that it's a really kind of perfect storm that we're seeing with crypto bitcoin um you know becoming more popular it's just those people are getting older they have more assets now right and kind of here we go well and that's why i hearken back to owning a wallet and doing the ethos it's like self-cut

more and more people want to hold that i mean you buy bitcoin i'm going to hold it it's my asset i'm not giving it to you i'm going to hold it uh and then eventually if i want to lend it or if i want to you know do something earn some interest on that i'm going to make that decision i'm not giving it to you as the bank to do that because we could get in another situation that's my asset i'm holding it absolutely that's again bringing it all back to why bitcoin to securities and all it makes sense because i'll hold my asset i'm not going to give it to you and let you make all this extra money on it if i want to make money on it i'll lend it out why am i giving it to someone else if uh if i go down i want to go down because of my decisions right i mean that's the way we

all it's like i'm not betting on someone else i always rather bet on myself than someone else absolutely uh before i wrap up i usually do a rapid fire questions uh most important company in crypto oh he's cheated he came with notes i did i had to oh my god he came with notes i did i had to i wasn't gonna get caught with my pants down because i didn't i don't want anyone in my shop i'm already changing my questions up because he's got questions he's got notes i knew you would do that uh most important company i don't think we've seen it yet actually to be honest with you you don't think we've seen the most important company in crypto all right if you had to pick one right now what do you what do you think it would be can't say yourself i'll say ethos because

we haven't uh it's not all right all right i i actually think uh and i know it's been said before but i think binance and what they've done for the industry is is probably still the most important in crypto i think we all rely on them to be solvent and to you know be a core component of the system and the adoption of crypto it's uh it is incredible what cz and team has done so we'll uh we'll see if they can continue um what is the one regulation that you would change or improve if you could oh that's easy uh and my steve's gonna laugh when i say this i hate money transfer licenses i can't stand this has become a much more popular answer to this question like in last six months people just are railing against these you know when you're a broker dealer and

you want to get registered in all 50 states you know it's easy check boxes and you're done literally within a month you can answer all their questions to get a money transfer license you have to go state by state right state by state each one is different each one's requirements different uh it takes legal dollars to do so there's a barrier i mean from a barrier to entry I don't mind it because we're well-capitalized to do that, but it costs legal dollars. You need certi bonds for every one of them. And everything, it just takes time. No states are working super quick to do that.

You throw the MTLs on top of trying to then get the licenses in states like New York and the BitLicense. You're just adding a lot of complexity to something that I'm not so sure we need, but we should definitely look at. Absolutely. Makes sense. What's your most controversial thought in crypto? What do you believe that everyone else will disagree with you on? you know uh we're a broker right so when i've seen all this pushback on bsv and bsv has been you know people hold about bitcoin sv yeah right you know people hold that asset on exchanges that

now say you can't trade it i shake my head and i'm like wait a second you sold it to them you're not giving somebody the avenue to get out of that even on fractions of the dollar uh and forgetting about the theoretical or any about it's like that's where we came we're like why would you do that you know you have an obligation funding a fiduciary obligation to your customer that you give them a way to at least close out their position and move on to another day so i think that's controversial i think a lot uh so i don't think that that is in my opinion uh trapping a customer intentionally i don't think is is looked at positively by many people maybe there are some people who think that's okay but but i don't think that that would be uh a common opinion

right it's okay to trap your customer uh i think what most of the exchanges have done and and uh i tweeted and said hey take these things down right was uh they gave them a time period right so i said hey you know two weeks from now we're going to delist this thing etc um you could definitely argue right i think a fair criticism of that approach would be they didn't give enough time they didn't do enough to alert them right i think all that is fair criticism um to me the The one part of that whole situation that just made me laugh was people basically were acting as if it was somebody's God-given right to be able to trade any asset they possibly could on any exchange. And I kept saying, what about the rights of the private business to say we're not going to support something? By the way, if it's a good asset, other people will support it.

And I think what you actually saw was this bifurcation of exchanges that sometimes we're going to let you trade anything that we possibly have forever. We're never going to delist anything. And others took a position. and it's really interesting to see the response because some people like that and some people don't no it's perfect it was it's controversial right i mean i think i think maybe haven't been in the online brokerage space for so long uh i would probably have given people like hey if you own it you know you've either got to move it somewhere or we'll move it for you or work with a partner that will take it yeah i think there was almost more hand holding yeah like okay either

you could liquidate it here or we'll help you put it somewhere yep where you can liquidate it or hold it where somebody is more willing or put it into a wallet figure out a different way than just it's trapped there yep uh just make it a little bit more accessible for people to do it i think that that's a fair position to take right and i don't know if people think that's controversial tweet at us that's fine uh what uh what do you think the most important book is that you've ever read uh pretty simple it's old school it's uh jim collins good to be great i love that book i made my management team at lightspeed read that book my management team at at voyager get prepared You're going to have to read the book.

The beauty of it is the concept of the boss. Everybody getting on the boss, getting in the right seats, and all going in the right direction. Every startup company needs that. And every company needs that. Forget startup. Everybody needs the right people in the right seats to move forward. So it's something I've had with me forever. Yep.

I think it is one of the greats because it is one of the greats, right? It makes a lot of sense. All right. Aliens. I know you came prepared for the alien question. Believer? Non-believer? I am a non-believer.

Believe it or not, I'm a non-believer. Why? How do you come in here and say that? Although some of the people I've met over the last couple of years and even longer, they might be aliens. They might be men in black all over again. One of my favorite movies. But I don't know.

I just, you know, I'm just a non- You're a non-believer until you meet one. Yeah, which I've probably met some already. Yeah, well, that's definitely possible. All right, because you came prepared. and now I'm going to screw you up. Yeah, good. How long would you dunk Oreos in milk?

This is the psychopath test. Oh, almost until they fall apart. Oh my God. That's the second worst answer we've ever had. The worst answer was Juan Hernandez from Open Finance who said that you leave the Oreos in the milk until it becomes soggy and then you eat them like cereal. The second worst is you dunk them

until they almost fall apart. Until they're almost done. No, it's like a five to seven second thing. Oh no, I love, I've drenched in milk. Oh, my. Completely drenched. All right. So the reason why I call it the psychopath test is because people who almost drench them in milk are psychopaths.

I might be the alien. Perfect. All right. What one question do you have for me to finish this out? You know, who was the most influential person for you getting into crypto? Ooh, most influential person for me getting into crypto. This kid, JP Barrett. I met him when he was in high school.

uh and then i met him again like we like reconnected when he was in college uh he was just persistent like you've got to pay attention um and i'd heard of bitcoin when i worked at facebook uh didn't pay 10 out of 12 million times um but he really was like hey man like you gotta pay attention to this uh and the thing he did that probably was better i couldn't have realized was so positive was he did it through mining so he was really into mining and he was like you should get into mining you should get into mining um and uh whether he was a good salesman or i was stupid i took some money and i bought some rigs and and got to work there uh and um and it just happened to be at the right time and then price increased and i was hooked and like and it's just

you look back and you're like the whole thing is so serendipitous in terms of uh not only being interested in the technology, but then also the way you get in and how it holds your attention. And then you look like in reverse or historically, and my partner, Jason Williams and I, we actually made a bunch of investments that are in and around fintech and anti-money laundering and like all these things that are really prevalent in crypto. They just weren't based on blockchain. They weren't cryptographically secure. Right. And like now those founders are talking to us like, hey, like my anti-money laundering software that works for fiat actually works better in crypto because everything's so transparent like you think i should go into crypto and so it's pretty funny

to just see how like you know and this is the story of a lot of people right it's like so many different life uh interests and experiences and everything just kind of intersected this one thing and you're like it's money it's technology it's psychology it's like all of this stuff together dude i want to work on this forever right like this like this is so much fun i wish i had my i wish i had a friend like your guy because i took me too late i missed i missed a good chunk of the run-up. It's all right. Don't worry. The next one will be bigger. It's coming. I don't know if anyone is listening. This is not financial advice, but that's what we're betting on. So we'll see. But listen, I really appreciate you taking time to do this. I think what you guys

are doing is super cool and we'll have to do it again in the future. Great. Thanks for having me. I appreciate it. Monarch is building the future for those interested in one wallet that consolidates the best services and functionality into a simple and easy to use application. The Monarch app and wallet will empower users to control all aspects of their financial kingdom from the palm of their hand. You may have heard the phrase, not your keys, not your crypto. With Monarch, you own your keys and your seed phrase, meaning you own your own crypto. With Monarch, you can store, receive, send, swap, buy, sell, and earn interest on your crypto. You can track your portfolio in the news, and you can check the market cap daily. They're constantly adding

new services and updates. And you can learn more today by visiting monarchwallet.com slash Pomp. Again, that's monarchwallet.com slash Pomp, or you can download the wallet for free today from Apple or Google. Hey everyone, Pomp here. If you liked this episode of Off The Chain and want to help us take crypto to the top of the Apple, Spotify, and other podcast charts, please do us a favor and rate, review, and subscribe. To review, simply go to the Off The Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on off the chain.