The Wolf Of All Streets - 3AC Collapse | Exclusive Interview With Kyle Davies | Crypto Town Hall

Episode Date: July 3, 2023

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Do you hear me? Hey, yes, yes, man. I forgot what your voice sounded like. Hey, you missed me, bro. That's it. I'm surprised you pulled it together last week. I expected a shit show. I'm like, this is it.

Oh, that's it. The end. It was like almost embarrassing for you guys how well I did. I know. I know. I was surprised. He even promoted the sponsor. I'm like, holy shit.

The guy that hates everybody promoted something i stepped up stepped up to the plate well it sounds like you guys had a hell of a week though man really have you noticed man that show was uh was uh insane if anyone doesn't know uh me and randall were filming a show called so if you go on Twitter right now and you search Killer Whales TV, so Killer Whales TV, and then check out the videos. There's not much videos there. They're pretty strict. But it's a reality show.

The production's insane. I swear, it just felt like Hollywood. You were in the Batcave, right? I mean, where they still... Yeah, when they filmed... Exactly. Yeah, it was awesome. Exactly.

Exactly. So we were where they filmed... Exactly. Yeah, exactly. Exactly. So we were where they filmed the Batcave where Batman was in one of the movies. And let me just accept the last invite and then I'll tell you the story. Where is it? Who's left?

Someone is requesting. You check the request. Yeah, so we had... So the set, if you check it out, is exactly where Batman was filmed. It was in LA. And like for me, it was, for me, you add a lot of... My story is pretty dramatic for the last week.

So I had the rush of space where I didn't sleep for two days. And not long before that, I had two days before that, I had the submarine space. And before the rush of space, I had Imran Khan, the Prime Minister of Pakistan, ex-Prime Minister. So we did Imran Khan while the mutiny started. Did the mutiny, two days, 24 hours, no sleep, but ended up not sleeping for two days.

And then immediately packed my bags and headed to LA, which is a 16-hour flight for me. Landed, next day, early morning, started filming. So we filmed the Shark Tank. Production's insane. I swear, everyone, you're going to love that show. It's probably the best show I've seen in crypto, even though it's not out yet.

So just a bunch of us judges and then projects pitch and then we just give them feedback. I will end up looking like an asshole. I did not expect it, but that's the feedback I got from everybody. I tried not to be an asshole. So I did what Scott usually does. So we filmed that for two, three days and Ran was there as well. I wish

they, I hope they released the unedited footage because ran is uh the guy's hilarious so we had a few fights on stage um and then yeah new york and then back here so so that's what we were doing while you're chilling behind your desk running these spaces yeah it was uh i'm not jealous it sounds like you were having less fun than me obviously so no but the the what i saw of the show does look absolutely incredible, and I hope that that will do exceptionally well, and maybe we can do some similar things moving forward in the future. So it's pretty exciting that you guys were both there.

Now I'm going to hang out with Ren in London this weekend for the British Free. Oh, shit. He's actually going to London. You guys, I swear you guys have too much free time. I struggled. I almost cancelled the show, the Shark Tank show. I almost cancelled it because of the whole Russia mutiny thing. In my mind, I was like survival mode. And obviously, while I was doing the show, there was a lot of drama happening, Twitter drama.

But look, enough about me. I think, Scott, I'll give you the honor to introduce our special guest and our great panel. Sure. I was going to wait till Ran comes up, obviously, and get his ad for payment. Who's Ran, man? Yeah. Good question. Oh, that third guy, the guy from South Africa.

Maybe give us a quick market update. I know Ran is jumping in any minute. We usually start with a market update anyway. So how's the market? Maybe a quick overview of last week, because I've been MIA. And then how is it looking today? Well, we had a monster week, obviously, two weeks ago on the back of the blackrock etf uh filing and then obviously seeing everybody get in line behind them fidelity etc and so you know basically bitcoin went from

25 000 uh where it had dropped to because of the coinbase and finance lawsuits with the sec and then got the blackrock news and made a move all the way from 25 up to 31. I think it's just sort of absorbing that now. We're probably in wait and see mode to see what news comes. I will say it's surprisingly tenuous. Everybody obviously bullish on the ETF and the idea of it happening. But one sort of misleading headline last week from the Wall Street Journal that said that the SEC, they kind of implied that it was being rejected, but clearly they were just asking for more information. Sent price down to $1,000 in about 30 seconds right before spaces. So I think it's very important to be cautious knowing that sort of any news in that arena clearly is going to

move the market in one direction or another. But I would say generally, I think it's been a positive tone to have the biggest asset managers in the space talking about crypto, talking about, I should say, talking about Bitcoin specifically and prepared to make that move. Whether it's going to get approved or not, I have no idea. We see so much fake news surrounding it, the big fake news of the weekend, which sometimes I just shake my head when I go on Twitter,

was like a made-up news site made up a story that gary denser was resigned it's gonna talk about that yeah yeah with us the source being another sec insider you you read it and it's like written by like a russian operative on chat gpt or something from a news site that has no other news and it just goes viral of course on crypto twitter because the sheep are leading and it just blew my mind how quickly the most players of all time did rock the

market worse than that was the youtube bros who just made video after video after video about how Gary Gensler is resigning I'm not going to mention names they know who they are and they don't remove it after you correct them so they video after video about how Gary Gensler is resigning. I'm not going to mention names. They know who they are. And they don't remove it after you correct them. So then, by the way,

Scott, you're breathing into the mic, man. It's like you're going to swallow it. That's not me. It is you. Trust me. I know your breath, man. See, that's better. But what pisses me off is that they get corrected. They know it's false, but they see it going well, and they choose engagement over reputation.

That pisses me off. Like just, all right, you got the engagement. You'd put a false story. Someone corrected it. You got a rumor. Remove it. Say, hey, sorry, this is false.

Or at least add an update under it. Like, hey, this is false, but you know, the right thing is to remove it. But they just thought they'd just keep it and then get the engagement. I was about to go live. I was thinking of going live

and then I just thought, there's no way I've got to double check this and triple check this and i couldn't find one one um credible site that actually covered it and not only that um if you read the content of the article that gary guest is appointed by the president he's not resigning to his peers in the sec like i just thought like like logically do you think that Gary Gessler decides one day that he wants to leave, goes to the human resources department in the SEC and says, hey, human resources,

just want to complain about the number of leave days that I have. Also, I wonder, here's my letter of resignation. I don't think it works like that. Has there been rumors of Gary resigning in the past? There's been rumors that he'll get pushed out, but not of him.

This is not... Either way, this is just complete... Who's still thinking? This is just literally complete stupidity. Somebody playing a joke and wasting, you know, thousands of hours of people's brainpower trying to absorb it. Cool.

Look, I'm not going to complain. I'm not going to complain. I'm not going to complain. It did push the Bitcoin. Before, right around, just quickly, just right before we kick off the show, one question, your quick thoughts

on the show in LA. Unbelievable. Mario and I were invited to become killer whales on the Killer Whale Show, which is the... Killer whale, killer whale, and killer dolphin. Get which is the killer whale, killer whale,

and killer dolphin. Get your wording right. So it was me, the killer whale, and Mario, the goldfish. Yeah, the killer goldfish. I must say, Mario, first of all, it was amazing working with you. It was a lot of fun.

I think you're a much nicer person in real life than you are on Twitter spaces. On Twitter spaces, you're sometimes a bit of a dick. But in real life than you are in Twitter spaces in Twitter spaces you're sometimes a bit of a dick but in real life you're actually a cool guy I do think that the production quality was unbelievable like I didn't expect such high production

but I have to tell you a very funny story which I didn't like you wouldn't have known this but I have to tell you the story so I traveled 36 hours to be in LA for 72 hours to travel 36 hours home. So it was like a 72-hour of traveling for 72 hours in L.A. And I was very jet-lagged because the time zones are the exact opposite, so like complete opposite.

So I was on two hours of sleep a night, and we were on set for 10 or 11 hours and on set i found these drinks called celsius and it's like it looked like pear juice and you know apple juice so the one on the on the on the second day i drank like seven or eight of these celsius in the morning and i don't know why but my heart started to go like crazy and it was like like i was heart palpitations i thought i thought I was going to have a heart attack. I genuinely thought I was going to collapse. And I'm trying to work out what the cause of the collapse is while trying to stay sane on camera

and smile and look relaxed and whatever else on camera. And I googled the Celsius energy drink. Turns out it has 200 milligrams of coffee, of caffeine in each can. Now, for those of you who don't know, that's two and a half times a Red Bull. So I drank the equivalent of 20 Red Bulls while I was on set.

I was sitting here thinking I was going to have a heart attack. I couldn't let anybody know this because there's cameras and there's lights, but I genuinely at one point thought, this is the end of my life. I'm about to die. Me and you, we're so fucked up on the show.

I was going, I had all the drama happening while I couldn't touch my phone. Like, the world's going on fire. And then you were just on high on caffeine. And then we had to kind of keep a straight face. But when you were, I swear, I don't know if it was the second day, you were like, yeah, it was.

We only did one day together. And Scott, Rad was, Rad, no, we did two shows in one day um ran ran scott ran was the the whale and ran was the project pitching both at the same time for at least half the show it was hilarious it was so hilarious no one would interrupt it because i think they both too comfortable so i was one just jabbing at him but it was epic i hope they put. I hope they put out the behind-the-scenes footage. But Ryan, enough about us, man. I'll let you kick off the show now.

Special guest. Yeah, I mean, okay. Let's just quickly kick off the show today. I think one thing that we saw today, we had Bitcoin performing as the best-performing asset in the first half of the year. So Q1 and Q2 combined, total cumulative return of 86% or 83.81%. And that's relative to the NASDAQ, the NICAR, the NASDAQ at 31%, the NICAR at 27%.

So when you see quarterly returns like this, you get the institutions getting a lot of FOMO. And I think you take that, you know, as an institutional, as a fund manager, how do you not justify not having Bitcoin in your portfolio when there's speculation around ETF, when Bitcoin was the best performing asset

in the first two quarters by a country mile? And that's, I think, the first bit of good news, which we should probably dig into. Second bit of news, which I think some of the more degen people will like,

is that the ETHBTC chart, which is the chart that measures Ethereum relative to Bitcoin, is up, since the beginning of July, is up about 6% or 7%. So that means that Ethereum is starting to outperform Bitcoin. It's only a couple of days, and it's just a little bit of a heartbeat. But there is some life in altcoins, which has been...

It just shows that what it means is that more confidence is coming back into the market. And the fear and greed index is showing that as well. So we're seeing as people get more greedy, we see altcoins. We know the gap between altcoins and Bitcoin start to shrink. But it's only been three days. I don't think we should look into it too much, no? No, I mean, look, it's only been three days, but it's just nice to see, as I say, some signs of life.

If you're working on a patient, it's just nice to get a heartbeat every now and then, which is just to do the social sign of life. One other thing that I think we should mention, this is probably a good time to mention um which is a great success for us as a team myself you and scott and the amazing community that followed us is we had a sponsor last week i'm not exactly sure which sponsor it was uh who took a sponsorship on our show they gave us feedback today they got 50 000 clicks onto the tweet link so i mean it just shows the power of were they giving out who who

who was it so number one i'm like i don't want to promote it too much right even though we're proud about it it was scott it was scott who who was leading that show so me and you get zero credit they're not a crypto company it was linked to their they allow democratization of access to private equity for accredited investors in the United States. Very serious. A big company. Yeah, they got 50,000 clicks on there. Hold on. How did you get so many?

Like, did you just, Scott, did you just tell them, guys? Everyone that clicks wins money. Everyone that clicks wins could win $100,000 worth of Scott coin or something. First, congratulations, Scott. I think you were the one leading the show back then when me and Ran were filming. So congratulations on the success of that sponsor. But first, congratulations, Scott. I think you were the one leading the show back then when me and Ryan were filming. So congratulations on the success of that sponsor. Anyone that wants to sponsor, the pinned tweet at the top is where you can email us or just DM us, but preferably email.

So check the pinned tweet. I'll retweet it on my account so you can see it as well. Ryan, you can retweet it as well. But yeah, that's four. That was the whole topic. That was the whole topic that we should discuss. But I think another topic that I think is very, very, very much worth discussing today is a topic that we're not going to win any popularity contests for. And that is, you know, I think that today what I want to talk about, I've been trying to get Kyle Davies and Suzu on to our shows.

And really because I want to talk to you about uh three hours capital collapse market implications i think it's no big secret that they're also involved in a new exchange which is open exchange um and you know i've been quite vocal about the fact that i backed them in the beginning um i bought the flex token which was the original token that that token done i think for me more than a 10x since since i backed them and uh the reason why why i did back them was to be brutally honest i had a i met up with kyle in dubai when things collapsed and you know he explained to me that you know look there's no criminal investigations against us there's no fraud investigations there was no

fraud case against us um and uh it's just liquidation. We were too highly leveraged, some trade wins against us, and we lost a lot of money and we got wiped out and we got destroyed. And my feeling at the time was to say, look, they seem like very smart guys. Anyone who could have built a business that was that size must be really smart. And the way that I like to look at entrepreneurship is to say, if you don't take risks, you don't fail. And, you know, sometimes when you fail, you shouldn't be punished for failing. And if there are people that have failed, one of the best things that you can do is

if you think that they have a point to prove to the world is to back them again. Now, I don't know, Todd will tell whether I was right or wrong, but I thought what we should do is get Kyle here. Sue's not here with him, but Kyle's here, and I think Kyle will answer questions. And I think for us here, it's a good opportunity to talk about three hours capital, what happened afterwards, plans for the exchange,

if we want to get to it. And I've been very clear that this is not an opportunity to shill. It's not a shill fest. They're not sponsors. They're not paid for sponsorship. I think it's a good opportunity for people who are maybe more skeptical than I am to ask some tough questions.

And, you know, we've got a real opportunity to have Kyle up here with us. So, Kyle, welcome. And thank you for your bravery, sir. Thanks for having me. Can you hear me all right? Fantastic. We can hear you. So, Scott, since you're the skeptic here, you know, since you're the, of myself, Mario,

and Scott, Scott, the more skeptical guy, I'm going to give Scott the microphone. Yeah, well, Kyle, I think probably around the same time that you met in Dubai, I sat with Kyle. I crashed a meeting, to be honest. He was meeting with me. It was with some others but uh and i've you know to to be quite frank everyone knows that i'm a voyager creditor obviously and the biggest hole in voyager's balance sheet was the loan to three arrows and kyle can tell you kyle i mean i basically

sat down uh you were speaking with the other people in the meeting i said look kyle i want to know exactly what you know steve erlich and voyager said to you, or what you said to them, to get a $600 or $700 million unsecured loan. Because for me, that was the personal question I had, and I think it was hinting to the situation at Three Hours Capital, why people were throwing so much money at you guys at the time. And then of course what you were doing with it. And you actually gave me an answer that, uh, I guess surprised me at the time, but makes a lot of sense. Maybe I should just ask you the same question now, or, you know, what, what were basically you being, having to tell people to get those loans? Why were people giving you loans that were that big at the very beginning? Yeah, no, I, I remember, um, uh, I remember catching up with you. And it was a great

conversation. I think people just need to understand the context of the time. This was a time when the lending firms were very much trying as a business model to uh to borrow as much as they could and then relend it out as fast as they could and then they would monetize of course they make a spread on that um but they would monetize by then raising equity valuations of their own companies right voyager included but also block by um you know blockchain.com and others. And these were big valuations. These were multi, multi-billion dollar valuations. And so the incentives are such that as you're growing and you have the investors, they would have investors on the equity side. They would very much be trying to do as low due diligence as possible and to borrow and to re-lend out as much as possible,

as fast as they could, and then try to re-raise the next equity valuation. And this was very much the time. So on our side, obviously, we faced only institutions, right? We had a handful of high net worths, only accredited investors. But really, if you compared us to any of the other firms, it was very much concentrated only on several institutions. And so for us, yeah, there really was not a large conversation there. I think this was not a high due diligence period. Simply just explain we were a regulated hedge fund and that was pretty much it. I think he probably decided before the call he was going to make the investment. That's my- Right. I mean, you effectively told me that they didn't ask for anything. They didn't

need collateral. They needed to lend because they needed to pass on yield to their customers. Yeah. I mean, that's true of a lot of the large firms. I mean, Voyager included, for sure. But that's true of a lot of the large lending firms. And I think I might have mentioned this before, but, you know, anytime there's like a major, major collapse like this, and Bitcoin, CryptoCycle, I've seen several of them, there are some kinds of firms that come back, right?

Like we see exchanges again, we see hedge funds, they're sure they'll change in various ways. And I can explain the way that OpenX is thinking about things a little bit differently and kind of revamp that model. But there are also certain kinds of businesses that will die and that will fail and the old retail lending market structure in my mind is just completely gone there's it's not like uh you know one or two firms and it's not like only the firms that face us it's literally every single firm is gone and they're not coming back it is a broken model right so c So see if I... I want to... If you don't mind, guys, just for the people

that are not too clued in, Kyle, I want to take a step back and I'll give the mic back to Ran and Scott. Just for the audience, who was Three Arrows Capital? And more importantly, tell us about

when these decisions were made. Explain what the bull market was, the craziness that we saw back then, the FOMO that we saw, just to kind of give the audience an idea, especially people that didn't participate in the bull run or forgot it in the ice age we're facing now. Give us an idea of running Three Arrows Capital during those times. Sure. So I'll skip through the background a little bit, but three hours was a fund that I founded with Suzu. We started with just about a million dollars of our own capital in 2012. And we started mainly trading in FX markets, had a really good run. But by late 2018, we made the decision to shut every single other desk and focus only on crypto. And by early 2019, we were putting on some interesting trades, mainly in grayscale kinds of products that then became very large.

And it really set us up perfectly for the bull run. When many other firms were probably trying to recapitalize, raise money, things like that, we were structurally in a place. We were lucky. I mean, we had the timing, but we had some right direction. But basically, we were perfectly set up for the bull run. And yeah, it was wild. I mean, is it fair to say that when you say perfectly positioned for a bull run, you were highly, highly, highly damaged? No, that's not hard to say. What I mean by that is, you might remember the COVID dump, right?

In March 2020, Bitcoin fell to 3.7K. I went into that day flat. And that's what I mean by well set up. Other firms were wiped out on that day. We were not. We were perfectly set up. And in fact, we had been putting on some grayscale trades. At the time, grayscale was trading at a large premium. And we were the largest subscriber to the Ethereum Trust, for example. So when that first came out, everyone was focused on Bitcoin. Bitcoin dominance was close to local highs, and no one was really thinking about this. And we

decided to put the majority of the firm's assets into the Ethereum trust. No leverage, but majority of the firm's assets. And it just so happened that during that year, Ethereum tripled. The premium of the trust was close to 300%. And so that was a kind of a 9x sort of a trade in a relatively bear market scenario. So maybe just slow it down a little bit. So you started off with, when you say you positioned yourself really well, how much money did you start off with? Beginning of time, we had beginning of time of time, when you said position yourself perfectly, how much money did you have when you started to position yourself perfectly? So I guess in the beginning of 2019 or the end of 2018, we took around $20 million or so and just said, we're going to trade crypto only with this capital. And that was kind of where it started. Okay. And then you grew the portfolio.

You had a couple of... We're going to talk a lot about how you grew the portfolio, but you grew the portfolio. What is the maximum size of the portfolio from the $20 million? Well, right before the Luna crash, so that would have been in April... 22. 21. 22, yeah, 22. April 22? Yep.

April 22, we had conservatively marked just under $5 billion, something like that. And of course, we had conservatively marked just under $5 billion, something like that. Of course, we had a large venture book, so if you were to mark things up to where they were trading, then it's north of $10 billion or so. But we would mark down positions based on

liquidity and things like that. You somehow managed to grow $20 million into let's call it $5 billion for round numbers. Of that, how much money was new money that was invested into the fund versus how much of that was actually performed? How much of that was like throwing money at you? That was zero money invested into the fund. That was 100% performance.

We had the only investors in the fund were my family and Sue's family. And then, of course, we had some lenders that are now creditors. But in terms of the net asset value, that is to say the LPs in the fund, that's 100% performance. So you grew $20 million to $5 billion, or conservatively $5 billion. You had zero outside investors, but you had a lot of loans, and you were getting these loans from the CIFI lending companies. Is that right? That's right? Yeah. Okay. So now, I mean, first of all, that's unbelievable. Before I talk about how all of that went wrong, tell me what you did to get,

what did you guys do right to get, because I'm quite a smart investor. Mario will tell you that I'm a really, really smart investor, but I could never turn $20 million into $5 billion. You can turn the other way around, $5 billion to $20 million is what I would say. What did you guys do so well to be able to turn $20 million into $5 billion? What was the secret sauce? Shitter. Okay. Well, I mean, to be clear, first I turned $1 million into $60 million in FX markets. So this was the second big trade that we were doing in crypto. But in crypto,

I guess we started off doing what was considered to be art trades. So there was the futures basis, which would earn something around 20% annualized. There was the grayscale trade, which would earn 30% something annualized. And these were kinds of things. And then there are smarter ways. Kyle, just the basics. Sorry to interrupt, but when you say arbitrage, can you just explain very, very briefly, like 10 seconds, what arbitrage is? So the futures basis trade was buying spot and then selling a future.

And the futures were trading at premium because people were bullish and they want to buy it on leverage. And we would say, OK, we can just earn that basis. And it doesn't matter if the price of Bitcoin goes up or down. We're just looking at the spread between the spot market, the Bitcoin, and the future on Bitcoin. And if you wait until the future is expiry, then you could earn that premium. Another way to think about it is perpetuals are also very popular in the crypto market and you can look at the overnight funding rate and trade that as well. Okay, so you guys did all of arbitrage trading. That doesn't take you from $20 million to

$5 billion. Tell me more about how else you do it. I'm really trying to... I think the story of how you lost the money is a very interesting story. We'll talk about that next. But I think also interesting is how you made the money because I think there are a lot of people listening here going, if these guys managed to turn X amount of money into $5 billion, I want to know how they did it. Yeah, sure. So the reason it's it's interesting to put it against

that uh backdrop is to understand the pent-up demand for bitcoin um my interpretation of the market in 2019 um was that people were so bullish on bitcoin that they were willing to pay a 30% or 20 plus percent premium to put it in, to buy it in their 401ks, which you wouldn't be able to buy actual Bitcoin, but you could buy the grayscale Bitcoin trust. And so there was an enormous amount of pent-up demand for Bitcoin. Also, if you looked at the leverage market, the derivative market, people were willing, were so bullish that they were buying Bitcoin on leverage and pushing the premium up to 30% annualized premiums. And my interpretation of all of this is that there was so much demand that there simply

had to be more fiat that had to come into the system and arb that demand, right? The way it would work is you could borrow dollars, buy Bitcoin, and sell Bitcoin future, and that would be like a closed loop, right? And if a lot of people did that, then eventually those premiums would go to zero, right? But at that time, that was my interpretation of the market. So the reason I mention that is not only, I mean, our background was ARP trading. So we would do that, but we convinced ourselves to be very bullish during this period. And so we would also go long. We started off just keeping profits denominated in Bitcoin or Ethereum. And then eventually, after the COVID dump, and we saw firms completely wiped out while our balance sheet was perfectly intact, we just decided, you know what a this is a once in a lifetime opportunity we don't we're not going to denominate just our profits we're going to denominate the whole balance sheet and uh and that's where that's when we started to do really really well

and when you say denominate your whole balance sheet what you're saying is that you you took your balance sheet or any money and all money that you made you put you you put the profit into uh into into crypto into initially bitcoin but then a whole lot of crypto right exactly so we treated it as a as a as one book right and so one component of that book was bitcoin also ethereum but then we also did some uh venture uh kind of trades later and um and that was something that, yeah, I mean, there are lessons from later. Maybe we talk about that after. But in this stage, let's say the 2020 and then early 2021, we believed that there was going to be a large layer one thesis. And so this was a time when the layer one protocols had these big clips where venture firms were able to invest earlier. And then there would be this vesting period where they would have unlocks and they'd be able to sell. And it was at that time that we were high conviction enough that we said,

okay, we're going to buy all of these unlocks OTC. So we're going to go to someone that's worried about it dumping on that price, and I'm just going to buy everything they have. And Alameda did something similar. There were some other firms that did as well. But basically, we bought a ton of things like Polkadot and Solana and other protocols. And as it turned out, on the Polkadot launch, I think if you asked, like it did a market poll the month before the unlock, everyone would have said, oh, this is going to dump back right back into the ICO price. And what happened? It never traded below the OTC market. It traded up in a straight line because everyone had bought the unlock. And so this was maybe the second big trade that we did.

First was Grayscale. Second was all the layer one one unlocked and then followed by a lot of ecosystem kinds of trades now at this point how many people are working at three hours capital and i mean i know it's you and sue as as partners and you guys had a partnership before before you actually before or early on in the game um tell me about how many other people were working at three hours at this point in time. So we were... I've never been too good at hiring lots of people.

So for us, we were always kind of a small niche group. I know that I can manage well, maybe 15, 20 people, but above that becomes really hard for me. And so we had separate groups. So we had, for example, a De, but above that becomes really hard for me. And so we had separate groups. So we had, for example, a DeFi group that focused only on DeFi.

And then eventually we had an ARB team that focused only, and so they would be more technical and they would write ARB trading stuff. And we had eventually an NFT team that would focus only on NFTs. So it was okay for me to have those separate groups. But in terms of the people that I was talking to on a daily basis that were kind of managing the greater book, it was really never more than four or five people. And the majority were focused. So initially you start doing arbitrage trading. The second big trade is the grayscale premium discount trading, which you guys were masters at. We'll talk about that.

We'll dig into it in a couple of minutes. Then you started to buy unlocks because you were more bullish and people thought that because these tokens were going to unlock, it was going to push down the prices of the market. You guys said, we're bullish. We're going on this bullish thesis. You were buying these unlocks presumably at a discount from people who wanted to sell them OTC at a discount.

And then you were selling into the strength or maybe even holding on after the strength. Is that a good summary of where we're at? That is a perfect summary. And I think my biggest regrets in that period, by the way, were selling too early. I mean, I was getting Solana at like, you know, 20 cents in size and then selling it in like the high single digits

and then watching it go, you know, 10x from there and feeling like an idiot so most of my regrets were around at that time were around selling too early we bought back some later on we traded them around we like to trade the bitcoin

versus the ETH dominance we liked various kinds of theses over time I think it was Kind of a treat. Walker, give me a couple more theses that you guys hit the ball out of the park. The GBTC one you mentioned was great.

The buying of Unlocks is super educational. These are things that, for me, I'm sitting here and I'm writing all of these things down going, in the next bull market, maybe a good idea is to trade the app-only narrative. So give me one or two other narratives that you guys traded and helped you get from wherever you started, 10 million, 20 million to 5 billion. DeFi summer. That was the next one. So we recognized very early that DeFi was going to be a big thing. We recognized that

we were not the people to do it and we needed a team. I messaged the three smartest people I knew and offered all of them money. Only one of them took it and that became Defiance Capital. The other two did very, very well, but raised no money. I tried to force them to take it. They still didn't take it. But Defiance did. And then we were, through that process, able to learn very, very quickly about the DeFi space. And so I think if you go on Nansen today, and you go look at the big farmers from first Comp know, first Compound, then Aave, then, you know, YFI and others, we would still be a top three, like one, two or three farmer of all those protocols. And that was something where, yeah, the so-called, you know, yields first in, you know know spot futures are then in grayscale well at that period the best yields in the market were in defy farming um we stopped doing that right around

after the uh like yams i think that was the last one we looked at um okay and then a lot of other people they you know they got, very risky after that period. We thought it was not worth the risk, and so we stopped doing all farming basically after that period. We didn't have any losses or anything. We just saw... Actually, the thing that scared me the most was when YFI, I thought was uncomfortable for me, but we still did it in reasonable size and knew some people that were doing it

that we thought were pretty smart. Sushi scared the crap out of me because I saw the amount of capital that Alameda put in and I knew they didn't have it. That was the thing that scared me. So I knew that he was using funds either from clients

or in an enormous borrowed way. But there was just no way that he had a billion dollars at that point. How did you know that? How did you know that? Because we had actually seen the early FTX investment deck and knew that they just didn't have that much money. Like I think the deck I saw, he had $3 million. So for him to have like a billion dollars, you know, like a year later made no sense. And the thing is, we're all doing the same trade.

So I knew approximately like what people should make, what people should have. And for him to make that move at that time, I just, I mean, it wasn't just us, by the way. I mean, if you go back and look at other people's tweets, many people were speculating that this, you know, could have been client funds, for example. And now I'm, I think we're pretty confident it probably was, right? And why, so that's interesting, Kyle. Behind the scenes, what were some of those discussions you had with others that had similar concerns and why do you think it kind of got buried away?

Well, I mean, we were very, very vocal about the first deck we saw too, right? And so the first deck was just a flat-out fraudulent debt, right? It said, the last line of the deck says, 20% guaranteed returns, can't lose money under U.S. law. That's almost a direct quote. And the AUM was their assets plus their liabilities. I've had something like $3 million, but they were reporting it as around $80, I believe, something like that, which was actually their borrowed. Yeah. Yeah, I think, look, it was, it was, it was a different time. So yeah, my, my, my point is there were many times where we, we, we pointed out things left and right.

Um, but there's no return to that. Right. Like I don't, I don't, I didn't make any money from, from that kind of thing. So there, there's no extra incentive for me. Yeah. Okay. So, so, okay. thing. So there's no extra incentive for me. Yeah. Okay. So now you've done all these trades, I think towards the end of the ride, I think you guys were very active VC investors. I think

we're a VC fund. And I remember that you guys were in a lot of the protocols. You were very heavy investors at Luna. You were very heavy investors in the Luna ecosystem. We saw CRS Capital on the cap table and a lot of these very, very early stage investments. Walk me through what you guys were doing there. Sure. So I guess at that time, we were probably doing more ecosystem kinds of investments.

So I said, first, we started with layer ones. We also invested in an exchange. We invested in Deribit. We're the largest shareholder. And then we invested in, but mainly we invested in ecosystems built on top of the layer one. So the thinking was, given that we were a large investor in, let's say, Avalanche, made sense to invest in Avalanche projects. And we were also a large investor in Ethereum. And a lot of the DeFi in the early days was just on or like a protocol that uses Ethereum in some way, it's very natural that the larger holders in there would get good terms to invest in those products. And then that kind of just snowballs, right? Once you invest in something that does well, then other people want you to invest in the next thing.

You know, if it's good because you just build this brand and this name, right? So, yeah, I think that just kept going. But you know what? If you want to tie it into the 2022 kind of era, that was when a lot of protocols were doing these discounted rounds. And so I think the first one we looked at was Avalanche, which we led. But we also led them in, you know, Near, Luna as well, and others. And the concept of these... I just want to be clear on the concept of what these discounted rounds are.

A lot of people are sitting here listening, going, what is a discounted round? Correct me if I'm wrong here, but this is when the founders or the foundation depending on the protocol sell tokens that are trading at a high price and sell them at a slightly lower price and they typically sell these to funds that they believe will add value to the ecosystem right so like if avalanche is trading at say 20 bucks and the avalanche foundation thinks that you're going to be a value-added investor they have a certain allocation of tokens and they sell you tokens at say 10 instead of 20 and typically those tokens have some kind of lock-up period so you're typically locked out for 12 months or 24 months depending on the lock-up is that right

yep so that so these were um the rate just to put some approximate ranges on this. They were all from the foundation, by the way. They were between 40 to 55% discounts. And the vesting periods were from two to four years. And by the way, that was another reason why generally a lot of founders like us investing in things. We never sold any venture positions in general. There were maybe a couple. Because you were British. Because I regarded it as... So for example, we were also famous for in December 2021, we sold... We're probably the largest seller of Bitcoin above 60K, right? And even short of the market a little bit.

And so I think we were very happy to trade around Bitcoin and Ethereum. We just had this mentality with our venture book is that if I get in the habit of investing early, getting good terms and then dumping it, that will be very, very bad for the team, for the reputation, for our reputation, for them, for everyone. And so for venture, I had a very different mentality. I just said, if we invest, we're in this for the long haul. Let's see this go to the moon. Some will win, some will lose, but we're long-term believers. And the founder was very much appreciated that. So if I wanted to trade or I wanted to hedge hedge i would just hedge a little bit more in bitcoin okay now i mean last question before i get to the crunch time but what was it that how did you guys have such good access because when i looked at the deals that you were getting into

and even more so when i looked at the liquidators sheet citing the the investments that you guys held i mean you guys had access to everything i mean you guys were you literally had access to all the deals that any everybody that i know was trying to get into but couldn't how how do you why do you think that you guys got such amazing access it's just one of those things okay i think there are a number of things but i think it's just one of those things. Okay. I think there are a number of things, but I think it's just a buildup over time, right? We were known as a fund that never sold venture positions. We were known as thesis driven people that, so when we invest in something, it's not just because we were offered it. It's because we specifically have a deep eye thesis or we, you know, and we believe in what we're investing in, right? And Then we were also known as maybe somewhat of a gateway to Asia.

Starkware, we were a very big investor in. They were predominantly invested by US, maybe one or two European funds. We were the big Asian investor being based in Singapore. You had unbelievable momentum. You had unbelievable momentum. And I think momentum carries investors. I mean, I think when you've got momentum, there's nothing more powerful.

All right, so that's the buildup. You've taken $20 million. It's now at $5 billion. Now tell me where it all starts to go wrong. So I want you to, great. There's one point where your balance sheet is $5 to $10 billion. You have loans.

What is the value of the loans before everything collapsed? So let's start with December 2021. If I have the place to start, I'm on Lake Como. I've got a nice villa with my family. And Sue calls me up and says, I know you're on vacation. I know we have a flat book. We've just sold all of our Bitcoin over 60K and we're net short a little bit.

Guess what? Bitcoin's now 47k market has crashed massive liquidation do you want to buy and of course right who the hell doesn't buy liquidation so um that if i had to pinpoint it i would say not having a committee to decide these things being able to call someone on vacation who makes a decision, you know, that kind of stuff. There were maybe two instances where I really should have had a wake-up call. That was one.

The other was our crypto team was actually founded by a couple of other guys that we ended up acquiring, right? And they became, you know became junior partners of the fund. And then they decided to retire after a while. They got rich. They said, I want out. And I said, sure. And I bought them out. And they were very happy about that. And they moved on. And we're still good friends with them. But when that happened, I should have said, wait a second, we just lost two partners. We need to replace these with either partner shoes or like a team and institutionalize. And that really was the start of when things were not great.

But at that time, you also have to remember that three months later, we doubled our money. So being brash and young and having ego, it was hard for me to see that at that time. So yeah, so you bought that really. Just to be clear, Steve Fungio, you said, we've had the dip, it's forced liquidations, Bitcoin's at 47 grand. Do you want to buy the dip? And you said, hell yeah, I'm fucking buying the dip. And you went up and bought the dip. Do you want to buy the dip? But you said,

hell yeah, I'm fucking buying the dip, and you end up making money on buying the dip. Well, we make money at first, but then, and the dip was, you know, it did bounce. And we didn't buy that much, to be fair. It was a smaller part of our book. But that was the catalyst to then, you know, basically us trading like the, you know, the bounces all the way down. Basically. Okay. Now, at this point, how much money do you owe the lenders? How much money do you owe Celsius, BlockFi, Voyager? I don't have the list in front of me, but like at this point, when things are going relatively well, how much money do you owe the unsecured lenders?

So I should explain one thing. I'm happy to answer that. But let me just explain one thing first. Depending on the position of the book, we have different borrow needs. So, for example, if I'm long a lot of Bitcoin, then I would want to, you know, I would generally be borrowing, you know, dollars against that. Right. And if I'm short a lot of Bitcoin, then I would be borrowing a lot of Bitcoin. Right. And so it's different. And so in December, when I am actually old, almost no Bitcoin and I'm short, actually. Right. And then I actually want to return a lot of

borrow to lenders. I am getting pushback from them. And they are saying, what do you mean you want to return like a billion dollars now? They're getting pissed off at me because they have obligations on the other side and they don't like to see the book moving around that much they just want to say okay you have like whatever a billion of our capital like just just just hold it like let us or we need to earn the interest from you because we have an obligation the other side but we also need right and so um so we have numerous people pushing back at us at that time uh but then uh yeah like the the borrow book is stays around the same size uh we just swap let's say bitcoin for dollars more or less right um okay okay so yeah so so you've got you're riding away you've got this this you're not taking on these

knowns the the now the kids are looking at you guys and saying these guys are bulletproof, these guys are phenomenal these guys, everything they touch turns to gold these guys and they also just saw me short lenders know my general book positioning because they can see what I'm borrowing and they saw me just short the market

in size and make a shit ton of money from it so yes, that is the context. Okay. And now start telling me where it goes wrong. Start telling me where the whole thing starts collapsing. So I know I'd went up, found a great story. I've written that. I've got a whole lot of notes here. I've got a whole lot of notes here. I'm pretty confident that in the next blue market, I'm going to turn $20 million into $5 billion, but I want to make sure I don't go wrong. So walk me through where it starts to go wrong. Well, you should not

invest in Luna. That would be a mistake. So... How much did Luna... How much of your find-slash-book-ish wealth did Luna actually wipe out? Luna itself, not an enormous amount. We invested only in the

LSG round, which was about $200 million. They raised a billion dollars, jumped, led the round, jumped to $300, I think. We did $200. And then Luna tripled. So mark to market, I guess on paper, it would have gone to $600. And then it would have gone to 600 and then it would have gone to zero. Right. We had no UST. So if people remember the Luna protocol basically adds this stable coin and then they have this collateral. We only held the collateral coin, which was called Luna. And and yeah, so it was people, but it was not devastating by any means. Right. Like we were a very large fund.

What was devastating is what happened after Luna. And basically what happened is every balance sheet trading fund took huge hits. And none of the lenders knew who was taking the hits or how big they were at various times right so uh alameda celsius us like a couple others we were known for doing what what i'm calling balance sheet trade that is to say that you would try to earn like yields on like large balance sheet right and um and basically yeah so all the lenders at the same time start recalling loans. We honor all of them. I estimate around a third of our book, all of the loan book gets recalled around this time. That is very easy to do.

The problem is every single trade that we have on is also going against us at the same time. Because guess what? Every other large balance sheet trading firm has the same trades on. So Grayscale discount is going out to a bigger discount the layer one discounted rounds that we're doing are all dropping like incredibly fast relative to the market um you know as well as bitcoin and ethereum uh staked ethereum is breaking its peg right all all the trades that you would do as a as someone with a large balance sheet trying to earn various kinds of yields all those kinds of trades would all go against you at the exact same time

as these loans are getting pulled out of the market not just from us yeah but oh that's right yeah but but but i mean what you're saying here is that this is this is not a problem with the with the balance sheet that's not leveraged i think when it does become a problem is when you're leveraging, when you're doing this and you've got leverage and your assets are illiquid and you have leverage to the lenders and whatever else. Because if you were using 100% your own cash in your own book, this wouldn't be a problem.

You'd just sit and get right out the bear market and there was no problem. What you're saying the problem was, was that you guys had high leverage. Because you had high leverage, everyone started to recall their loans. Because everyone started to recall their loans, you guys eventually got to a point where you just couldn't pay back the loans. We have lots of gross leverage. Gross leverage is having a long and a short.

Lenders, by the way, are aware of this because many of the loans are collateralized. So they literally hold my position. My position's already the net big of a secret in turn, at least of the ones that they can...

So venture book, a little bit hard to borrow against. Actually, many positions impossible to borrow against. But for, let's say, a little bit more of the liquid ones, you very much could borrow against. But for, let's say, a little bit more of the liquid ones, you very much could borrow against. And the lending firms were holding those as collateral. So they're very much aware of some general composition kinds of ideas. But yet,

we very much, as we are losing money on outright long positions. We are also losing money on balance sheet trade positions, right? So the idea that I might be able to do a grayscale trade or a staked Ethereum trade or whatever and hedge. So in theory, I don't care whether the price goes up or down, but I might do that on on bigger gross leverage however if i then start losing money also on directional position then all of a sudden my leverage starts to go up a lot right very quickly um because a lot of capital is being pulled out of the system at the same time okay and again i'm gonna go back to to to scott's uh question and i'm going to make a statement here let me know if my statements may be unfair um the the lending companies gave you guys

uncollateralized loans or semi-collateralized loans that right it entirely it's. It's not fair to say one or the other. In the case of Voyager, which Scott is well aware of, that was an uncollateralized loan. In the case of Genesis or

maybe some other firms, they were majority collateralized with something usually shares of Gradescale or Bitcoin itself or Ethereum or whatever, right? Yeah. If they were collateralized against a Grayscale share and that Grayscale share started to decline, all of a sudden they were uncollateralized, right? Exactly. And so what would you expect Genesis to do or sorry genesis to do you'd expect them to call more collateral in fact they don't this is this is because um all of the lenders remember are

under pressure to lend out actually yes they would call part of their loans but in particular genesis they are doing the opposite um they lend us not just for the case of Luna. They are lending us not just against the $200 million that I invested. But remember, I invested $200 million at a 40% discount. They're lending me against the market price. Why? So I'm actually able to borrow $240 million having just invested $200 million in Luna. And why am I able to do that? It's because they're absolutely dying to lend out more and more capital. They do not want me dumping grayscale shares in the market. They do not want to see their loan books collapse. They want to see credit just in an ever-expanding way. And that's true of a lot of firms. So that is the background that you have there.

Okay. So then at some point, the market continues to go down even further. And then at some point, the collateral that these lenders are holding is not worth the loans. Do they call you and say, please send us more money? No. See, that's the thing. I keep confusing them. Genesis says, we will lend you against the Bitcoin value of your shares. They don't care that they're at a 30% discount. They will still lend them at the Bitcoin value.

So they will be 30% uncollateralized, at least on that notional, if not more, and then even lend more on, oh. And that is, yeah, that is the whole system. Okay. Now, I just want to again confirm for the, because I think there's a lot of people here that are thinking, you know, this is a fund and they lost a lot of other people's money.

At this point, other than the lenders, and let's not confront the lenders, who else has given you money inside your fund? Sue's family, your family, you mentioned, yourself and Sue, I think you mentioned. Who else at this point is invested in your fund, so to speak? Extending lenders. We have a couple share classes, the largest of which, about 95% of the fund, is my family and Sue's family. The other 5% are specific share classes that are geared at specific kinds of things. So one was for defianceiance to focus on DeFi investing or venture style. Another one was called Starry Night, which focuses on NFT. Those are the two main ones.

But basically, it's very clear in all documentation that there is no segregation of funds, that everything is in one fund, right? But for ease of onboarding and use and all that kind of stuff, you know, we agree that it is faster to do it as a share class, not as a segregated class. I think those are

keys. Okay, so now I want to get into a position where I really understand here. When you guys lose this money in go insolvent and whatever else, are the investors that lose money with you or only people that loan you money? I'm trying to ring fence the lenders and the investors that gave your fund money and now and then lost money so uh the first group to lose money is the partner share class so the 95 percent

that i keep talking about that is so as we go to zero the first group to lose money is that. The next group to lose money is other share classes, which would then get hit as equity, right? And then the final group to lose money are lenders to the firm. That is the end. Okay. Okay. Now, okay. So now we have the lenders, the different share classes, and then we have the lenders, etc., who are losing money.

Now, walk me through the point where you decide that you have to liquidate. Well, it's going into liquidation. Unfortunately, it was not our decision. So one of the lenders decides to file, I forget what it's called, but it's some sort of official filing that we have not met a margin goal. And when they have done that,

now that picks off a process with all the lending firms because in their agreements, they say, yes, this firm has any kind of like insolvency issue. Now we must also recall all the collateral, right? And then there's a period of, I think, a couple of weeks where we're doing zero trading.

We're doing nothing really. We're just thinking about what the next thing is. And then one of the creditors ends up filing for bankruptcy. And the bankruptcy, which the judge granted, is a Chapter 15, which is a chapter 11 is where the directors can still operate the company. And then maybe it will come out again. A chapter 15 is like dead, gone. You are not in control. You can go on vacation if you want. You are out.

You are not in no way in control of the fund anymore. And that is the one that we were forced to do. So at that point, there is a liquidation company that comes into play. Their job is to sell assets and distribute those. So they call, I don't know what that's called

in legal speak, but effectively they're saying that you defaulted on a commitment and they request for you to make good on your commitment, at which point you say, hold on, I can't really make good on this commitment because I don't have cash flow. I'm out. What happens next? Well, what ended up happening is the creditor filed for a full

liquidation, right? So not a partial liquidation, not a judiciary, like a full Chapter 15 liquidation. And so at that point, it is no longer in our control anymore. Now, are you in contact with this creditor? Are you working with this creditor and are you giving them a plan? Are you saying, look, this is where we're at. We think this is going to happen. I think we can try it out, or is this all happening via legal documents?

We try at first to have those conversations. They are very, very hard to have. Media is making all sorts of noise, creditors not happy, it's a very hard conversation to have. We are still in communication and we are talking about potential buyers by the way we uh you know even uh uh have a couple of uh you know lined up that we what we are talking to um but uh this actually one of my biggest regrets of that period is that we didn't just uh completely block out all media and focus only on creditor like next steps. And I think if you

looked at some of the other, there've been now many bankruptcies across the whole industry, right? If you look at some of the other ones, they actually were able to find ways to restructure. CoinFlex very famously, you know, restructured and successfully now is, you know, has become OpenX, right? So that would have been possible. But for us at that time, I don't know, maybe I'm just too immature or I was not able to have those conversations. And then eventually a creditor just said, that's it. You know, we're going to file for full liquidation and that really just takes the you know that that that that at that point i just have zero control and so okay okay so now so now you go into liquidation now i wanted i wanted like and it's it's quite hard because

it's been a long time since then but i want you to walk me through what it felt like emotionally for you guys and the reason why i asked that is because before this you were high flyers you were the two blue-eyed boys of crypto i mean when when sue used to tweet or when kyle used to tweet about a protocol people used to ape into the protocol uh there were only good articles written about you guys was saying how smart you were. And then you went to a point where you publicly lost everything. And not only had you publicly lost everything, but at that point, there was no... At that point, we hadn't realized that all the lenders were that exposed. So there was like a lull between the time that you guys went into liquidation and the time that we then realized that all the lenders were actually going to get liquid or to get casualties

as a result. Walk me through what's going on in your head. Walk me through how you're feeling because I know that I've had some big losses and it was very hard for me then to face the public again and to face people around me again. How was it for you guys? Yeah, I mean, it was difficult.

So we had, first of all, we lost an enormous amount of our network, right? The vast majority, right? So before you carry on, before you carry on, before you carry on, how did you feel losing the money? Like what was in your head when you had lost the money walk me through how the calculations if we're going on your head i'll give an example like when i lost a lot of money on lino and i lost i mean nine figures on luna is it nine figures scott knows yeah i lost nine nine figures yeah we discussed nine figures i was i was thinking about how i'm gonna have to change my lifestyle i was thinking

about the different schools that my kids would want that i was thinking about how I'm going to have to change my lifestyle. I was thinking about the different schools that my kids would want. I was thinking about how much less freedom I would have in my life because I had a lot of freedom when I had a lot of money. I want to try and understand in your head, what were the calculations that were going on? Were you like, I've lost everything? Or was it I've lost most things? Was it I'm going to get up again?

Just walk me through the calculations that were going on in your head. Well, I'm also getting death threats. So I am not focused specifically on... I was also getting death threats after that. Right, if it makes a difference. I was also getting death threats after that. So, I mean, I know exactly what it's like. Okay.

Well, basically, I am feeling that I just don't know. I just don't know. And I occasionally am reading the news and Twitter and stuff, and the things that I'm reading are, like, death threats to, you know, really terrible, terrible things that are not true. But, like, it doesn't matter what i say nobody wants to hear that um and so at a certain point um you know we uh get uh you know lawyers uh we they they sit us down and they they have a real real conversation with us and say listen like this is what's going

to happen this is uh you know you guys are going to be fine here. Totally fine here. You're just like, the media is going to be like this. This is how we're going to play this. And they were a hundred percent right. Like in retrospect, but I almost didn't believe them because I'm reading other things online and I'm like, yeah, but what about this? Yeah. But what about that? And, and it's scary. And so, yeah, at a certain point they, we all made the decision, you know what you got to do? You literally have to turn off all your devices. So I think from like July to September, I just didn't read Twitter or anything anymore. And sat on a beach in Bali and read, I think I had a stack of maybe 15 or so books with Sally and Carly. Is there anything else that you could have done

to maybe make the situation better? It just feels to me like if I fucked up, in the most respectful way possible, if I messed up that bad, then instinctively, I think to myself, I would try my best to salvage the bad situation.

And it just feels to me like being on a beach in Bali is not doing anything to salvage the situation. In hindsight now, like, is there anything that you could have done to help salvage the situation. So for the two-week period between when we got the last margin call notice and the liquidation, that absolutely, I have lots of regrets that we really weren't doing anything else. We did no trades. We were not borrowing and lending. We were just sitting in a room and we were thinking about things that we could have done differently. We were thinking about the past too much. We were also trying to have

conversations with buyers and creditors. But if there was a way to drown out the people that didn't matter, like media and people that were not affected, like drown all of that out and instead focus only on creditors. How can we do restructuring? That critical period could have resulted in very different things. And or if the firm was put into a chapter 11, right?

Then we would still be in control. And then we would still be working with, you know, creditors to figure out the best way to go forward. I think a some of them better than others but uh basically that would be another way that people could uh get value and we and then we could have another project there would have been many other things but as it so happened we did not have the luxury we were put into a chapter 15 so if you ask me what i could have done in the the following three four months or whatever i there is nothing i could have done. Zero, absolutely zero. The only thing that I should have done is spend time with family because ultimately that is what actually matters.

And what about the criminals? And what about the clinics that say that you went to Bali because the US doesn't have an extradition agreement with Bali. You went there because it was a place where most countries didn't have an extradition agreement and that you that you could you know that was a place where you guys could effectively take refuge i mean if that's the right word like there's a lot of people there's a lot of people that that believe that you went to bali because that was the case well what's the answer

to those people i mean okay frankly people were not listening to me but the real reason that Bali actually does have extradition with the only country that matters to me I'm not American I'm Singaporean they could have easily sent me to Singapore at any time they

it never had anything to do with that at all I mean I was just in Spain when I did the latest article. I freely traveled around all over the place. So it had absolutely nothing to do with that. It generally is a good place to be. I mean, if you want to sit on a beach and kind of just disappear and relax and be with family and read books, it is a wonderful place to be. You know, Carl, I can't get my head around this and again maybe maybe i just didn't click on the onset

on what you said is the answer to the question but if i just lost a whole lot of money if i had lost billions of dollars if i'd probably lost my kids education funds and whatever else to me i think the last place in the world that i'd rather be is reading a book in bali i think i'd be i don't know i think i i was yeah okay um i was very much after about two months pushing because sue was also there uh pushing sue to like hey what's the next idea can we start like should we be starting the fun should we be doing this this is this and he was like you know what this is the time where the media is still going nuts right this is pre-ftx going down our biggest defamer at the time is spf right and he is out there saying outrageous things that we like borrowed off the same collateral multiple times he said that on some video and he said all sorts of stuff that get

like it's been over a year now if there were any of these kind of issues we you know we would have serious issues right but in fact there are none and so all of that was just pure straight defamation probably you know in their own interest right um but that was that context so yet for me to like like, I don't know, do a startup two months later. So to be clear, at this point, there is nothing that you can possibly do to help 3RS Capital. Like, we have no control. We have been relieved of our duties as directors. A new company has come in.

They are in full control. They take control of all the assets. It is their job to then sell them and and distribute them uh they they just sold some on some of the nfts on sotheby's like a couple weeks ago so it's similar 100 in their control is it similar to what happened when john ray took the company over from sba for it's like listen i don't want to talk to you get the hell hell out of here. Now I'm doing my job. Walk me through it. Because I would think naturally for me there would be an incineration to

try and help the liquidator recover as much as possible. Because I'd just feel bad for people who've lost money. And I'd feel guilty. Is there nothing that you can do to help yet? So we are required, actually, to provide a full affidavit, which we did, of all assets, and to hand over keys and things like that, which we did for everything.

So after that's done, no, there is nothing we can do. And it is entirely up to them to sell assets and move on. Okay, so before I ask the next question, I just want to get to a point where I understand this. But all CRS capital is gone. There's nothing that you can do. Actually, I'm going to be quite honest. I approached you at some point, Jen.

I said, Carl, is there a play here where I can raise money to buy your entire VST portfolio from the liquidator? And you said to me, the liquidator has an incentive to drag this thing out for as long as possible. There's no way that they would accept

a low ball bid. Because what I wanted to do was to try and raise money in the open market and give the liquidator a low ball bid for the assets. And you said to me, there's no way, this is a long drawn out process and there's no way for you to make this shorter.

I mean, you still stick by that, right? Almost every VC reached out to me, tried to do something similar, so much so that I wanted to do it myself. It's actually very popular in TradFi. If you have a debt firm that blows up, you then raise a second fund to go buy the liquidation of your previous fund, right? So that would have been a very good value for a lot of people. And if there's a fair auction process, then the creditors can also get a good value, right? Okay.

That is very much not what's happened. So if you look in the case of our liquidation, for example, it has now been a full year. There have been no distributions at all to creditors. And the first sales that I'm aware of are the NFTs that they sold on Sotheby's. Maybe they sold a dozen of them or something. So it is very much going to be, just look at it, and this is not specifically them, but this is the whole liquidation. Liquidators are not paid an incentive to act fast or early or get good value. They're paid by the hour. They want this to last a decade or more. And it will. There are creditor committees that have some influence. If the liquidators are negligent, then that's too far and they can actually be removed, right? But these lines are actually pretty far out there. And so, yeah, they have a lot of leeway to basically drag things on as long as they want.

Okay, great. So now TOS Capital is what's in the hands of the liquidator and then what we start seeing is we start seeing all the uh the funds the uncollateralized lenders or the lenders who had uncollateralized loans all start to collapse the dominoes start to fall so did you know in advance that these dominoes were going to fall like when you were sitting on the beach in bali did you think to yourself these guys are uncollateralized soon the tide were going to fall? Like when you were sitting on the beach in Bali, did you think to yourself, these guys are un-collateralized, soon the tide is going to go out

and we're going to see who's wearing a swimwear and who's not. Did you know that this domino of liquidations of the centralized lenders was coming? Did you have foresight to that? I had some ideas that some of them would have issues. I also had ideas that FTX was insider trading against us and would have issues for that too. But I don't have any idea of the total magnitude.

But you know, it's funny you should say that because I actually recorded a recent podcast. It'll be out maybe tomorrow or the day after. I'll let, you know, the guests and all that talk about, you know, be announced later when they come out with it. But it's actually a three hours creditor. And when asked what, you know, how they turn from a three hours creditor into like an open act investor and how they how what was that process for them that their answer to that is shocked to me i've never heard it before um he said uh thank you for uh the information of that time we are a small creditor of three arrows but we were potentially a large creditor of lots of other estate however when you went down i realized that we pulled all these fun and it saved us a shit

ton of money and that was just eye-opening to me but you can hear it from his mouth it in like a day or two well but but but at no point at no point in time at no point in time do you think to yourself, I have destroyed all these retail. The blow-up of my company has destroyed 60% of retail investors. At what point does the penny drop for you that as a result of your company getting these unsecured loans? Now, I'm not saying that you were at fault. I'm just saying because your company got so many unsecured loans. Now, I'm not saying that you were at fault. I'm just saying, because your company got so many unsecured loans

and your company collapsed, I think, and I don't have stats, but I'd say 50% of retail investors got wrecked as a result of that. Now, at any point in time, do you think to yourself, at any point in time, do you think to yourself,

as a result of what happened to my company, everyone here is getting rich. Let me answer this with another question back to you. Who were the largest profiteers of the credit bubble? They were the credit lenders. They were the firms. There was one that raised at a $14 billion valuation. There were others that raised at $3.5, $5 billion valuation. There were others that raised at three and a half, $5 billion valuation. Our equity, we never raised. We never monetized. We traded a fund, but I never raised at the three year old management company level. The largest incentives were very much at the lenders. And everyone had due diligence. So for a retail guy, they have a certain kind of due diligence that they do with a retail lending firm. And if there are issues there, like there's a misrepresentation or anything, then those retail lending firms are at fault. It's only institutions. I actually don't even know who's on the other side of a lot of these things.

I don't know. Don't care. Yeah, I know. I know in advance. I know in advance that was the case, but I'm saying afterwards. Not everything has happened. Everything has happened already. I'm asking you afterwards. At what point do you realize that about half of crypto retail is about to get...

No, no, no. So I don't realize that afterward because I don't know that FTX as a whole is about to collapse, right? I don't know that they've been taking client funds and doing what they did with it, right? So I do not know that like 50% of the market is about to get wiped out and all that stuff.

I, yeah, I just know that like 50% of the market is about to get wiped out and all that stuff. I just know that we face institutions, we defaulted on them, and then it's reasonable that maybe one or two of them may have issues, but I do not know that this is going to lead to anything more than that. And in the case of FTX, by the way, if you look back to their holes in their balance sheet, they happened earlier, likely, and they were on order of magnitude more.

And so I am not aware of that at all. Fair enough. Fair enough. Kyle, did you know how BlockFi Celsius, how they solicited their investments that they were lending to you? I mean, I know that they borrow from retail

and I know that they do various things. Celsius is mainly an internal ad fund. They were actually a very, very small creditor of us. Most of their funds, they traded themselves. I also know that BlockFi does something similar. We were actually an investor in BlockFi. And in their deck,

they talk about copying us. Pay top. Sam, we will bring you... Sam, I promise you, we will bring you some. So, Sam, I promise you we will bring you guys up. I just want to finish a few more questions with Kyle.

I promise you that we will bring you up. All right, Kyle, so at some point we realized this. Now, I must be honest.

I thought it was very, very, very gutsy, almost dumb of you guys to try and start up in crypto again.

After all the mud that was dumb of you guys to try and start up in crypto again. After all the mud that was thrown at you guys, you guys were labeled as scammers. I think we've now clarified. And in fact, let's just go one step back before I ask this question. Up until now, are there any fraud cases against you guys? Are there any

illicit activity cases? Is there anything other than the liquidation that's actually going on? Ron, we don't even have a civil case anywhere in the world, let alone anything else. So, absolutely not. And this is after our liquidator has all

our books, they see everything like, no, we don't have anything. And that's not to say that, I mean, people may try. I've learned many, many things over the past year. And one of the things I've realized is that people actually do frivolous cases all the time. But no one has even gotten to that step with us, which would be the entry-level step, like a fishing step, right? No one has even gotten to that level. So for us, yeah, I mean, I agree with you. It's an uphill battle. And we are, but you know what? I actually got some really, really good advice also in these, in this period. And, and someone, I won't say his name, but he's a very big guy in the industry.

And he said, ignore what's happening right now. Take permission from no one. Bounce back fast now. You have some of the best information about what's happening in the space, how to rebuild, how to do it better, even more so than maybe him, right? Because I had seen how things have broken. And he said, bounce back fast. And we just took that to heart. We thought about a couple of ideas. We pitched many different kind of concepts, but eventually realized that it was the bankruptcy process that we wanted

to focus on, because we knew that really well at that point. And so that's where, that first, the idea for OpenX. And I actually... Did I want to say something about Open actually, I want to talk about OpenX because we're going to speak about it because as you know,

I'm an investor. I said it publicly, so I do want to talk about it. I want to talk about it very openly and very kindly. Just two more questions. First question is, you mentioned that

there were a lot of shoes that dropped and that, you know, you realized that, you know, FTX dropped, etc. Now that you have a much fuller picture and you know who you owed money to and you know ftx dropped etc now that you have a much fuller picture and you know who you owed

money to and you know who went down and you know what the ftx looks like when you look at the crypto market now are there any are there any shoes left to drop i don't think so actually i think there are a couple of let's's say, old generation exchanges, which still may have holes. But in terms of the lending firms, there are none left. I mean, there is one. So is it only the lenders? Let me give you an example. I'll give you one example.

We know that DCG has a big portfolio. We know that DCG was in a little bit of trouble, we know there was Genesis, Gemini, that whole line, let's call it, for now. Is there anything that could fall there that could maybe rattle the market again? You guys

are making headlines. Okay, so to be clear, that whole string has not sorted itself out yet, right? Barry's still holding out over there. So, yeah, like that for sure has not been sorted. And there can be headline risk,

there can be all sorts of things, there can be unwind risk. But yeah, like, I think in terms of like, let's say the problem funds that may have problematic balance sheets, the only ones that I can think of that that might still be issues are a couple of like tier two exchanges. But other than that, I think broadly speaking, the shoes have generally fallen by now. good no one asked you so what what how do you have the gut to come back into crypto and to start an exchange what were you thinking like what are you thinking at this point to say hey we're going to come back to crypto um and we're going to start an exchange what's the thought process the thought

process is that i saw every i felt like i saw everything from the inside, what went wrong, to third parties. And I was a fund that was hunted by an exchange and had exposure to lots of lenders. So I'm kind of at the nexus of a lot of this. And I started thinking, how would you design a better exchange? And that basically is the heart of what OpenX is. And just to give, I won't go through the whole pitch, but just to give a very high level of what OpenX is, it is the next generation centralized exchange built on DeFi principles. So the architecture of the exchange is very different than the centralized bucket shop where everyone puts their money together. You don't know whose is whose.

This exchange trades against you. That model is just done and broken and over in my mind. The next generation needs to be better. And so we wanted a way to show that the exchange is probably solvent. And the way that's done is by the architecture of the exchange is probably solvent. All of the, so the, and the way that's done is by the architecture of the exchange. The collateral is on-chain. Against that, you borrow OUSD, and the OUSD is what you trade on the exchange. So you can see the collateral.

It is separate from the matching end. But what I mean, but I mean, shouldn't, but I mean, Kyle, shouldn't an exchange is, I mean, I want to call this a centralized exchange because it is a hybrid exchange, semi-cent don't want you to have to trust me i want to build an exchange there where you do not have to trust me not nearly as much as you have to trust any of the other centralized guys out there but i want it to be more performing than any of the decentralized ones out there and so if i write for i want to send my money i want i want to send my currency yep i want to send my money into your exchange because I want to trade on your exchange.

I'm watching the trade. I want to send my money to your exchange. Where does my money go? It goes... So you would stake... If you had AUX token, you could stake AUX token. If you had Ethereum, Bitcoin, whatever, that would sit on-chain in our custody,

but separate from the matching end. Against that, you would borrow OUSD, and you would trade that on the exchange. And you would know that, firstly, OUSD may not trade at the peg. It may not trade at a dollar. There are incentives for it too, but it may not. But you would know for sure that your collateral is okay, and you would know that the exchange is provably solvent. And also, you would know that it's provably fair. So one of the biggest problems at FTX is they could see your position, and if they know you're about to be liquidated, it costs money to move the market, but they could do so in a period of low liquidity, spike it, and liquidate. If we publish all the liquidation levels, there is no more God mode. Everyone is God, which means no one is God, which means that

it is provably fair. And these are basically the general principles of the interior of the exchange. Around that, we have some other cool innovations, like the idea of tokenized bankruptcy claims. If you have an FTX claim in about a week, you will be able to tokenize that and move it onto the exchange and trade that using that collateral. Separate from that, we have Launchpad, which is also done in kind of a different,

you know, unique way. So we have innovation around the exchange, but at its core, why would you do it? Because it is an order of magnitude more transparent. It is provably fair and is provably solvent. And that is something that no centralized exchange can do for you right now. before we go too deep down this rabbit hole. You kind of made a joke earlier where you said grayscale and you said I meant Genesis. Sometimes it's easy to get them confused or something to that effect. And we just sort of asked you about DCG. I think a lot of people question what has been reported as a somewhat incestuous relationship between Genesis, the lenders, GBTC, the GBTC trade. When you and I spoke in Dubai, we talked a bit about that. You said you don't think there's another shoe to drop, but back when we spoke last time,

it seemed like you had the impression that that was a major shoe that could still drop because there was a lot that was going on there that people didn't quite understand. Can you dig into that any deeper? Okay. So Barry is the master structure, basically, of businesses. to not even have DCG in bankruptcy yet. Right? And that he is... So I regard him as the godfather of that whole Lend-Me-This faith. And he's basically got it in a way that everyone's just on hold. If nobody moves, and if they allow him to keep the money, then in the market rallies, then they might be whole, right? Obviously he keeps the upside, right? But they might be whole, right? And I mean, I didn't have that luxury.

I got stopped out at the bottom, but somehow when he gets liquidated or gets called, he is able to hold it and he's now waiting for the market to go higher. So I don't know. I really don't know. I mean, he might be just the wizard behind the screen here that's able to actually pull that off. But there are a lot of smart minds out there that are also trying to get Bitcoin ETFs and other things and force conversions. And there are some really brilliant minds that are working on that side too. So I don't have a strong view. It's just not my background to know that answer. Yeah. I guess the real question, you obviously described that you had the cash and carry trade with GBTC that was printing money when there was that massive premium, but then Genesis was also a lender. And they've pointed to the fact that there's these Chinese walls between

all of their entities, but it really doesn't sound like that. Yeah, I mean, sure there are. I see David Bailey's laughing, obviously, over here as a, you know know deeply involved in the activist gbtc trade i'm just curious if then you think listen grayscale at this point is the only way that dcg is seemingly making money but they're trying to commit it to an etf and would effectively make no money so that seems like it could be smoke and mirrors but what happens if grayscale if g GBTC all of a sudden is not wildly profitable? Certainly. And what are the incentives for that?

Like, why is it that Genesis would lend against the entire value of the Luna position mark-to-market when no other lender would dream of touching that collateral? Why is that? I don't know. You've got to ask the pros. So who crashed Luna? I mean, in my humble opinion,

it was a coordinated FTX basically. Tell me why you think that because I'm probably more upset about it than you are. Tell me why you think that, because I'm probably more upset about it than you are. Tell me why you think it was an if-coordinate, an if-txt attack. Well, there's just too many things that happen all at the same time, right? So there is a giant borrow that happens from the genesis desk. Someone hits the curve pool at exactly the right time.

The amount of liquidity they would need is probably more than what they had. So they probably also would have had to do some client funds in there. And that whole triangle just doesn't quite add up. But frankly, I don't know. I'm not really the one to make the final conclusion here. There actually are investigations into that. And I'm sure they have all the internal chats and everything. They will get to the bottom.

There's a question. Go ahead. I think that's the historical question. I just want to try and understand. You start this exchange, talk about why you specifically partnered up with Flex, CoinFlex, etc. But

more interested in the... You guys got a very very very bad response when you started up the exchange or when you when you went public and when it came out that you that you were getting involved in crypto getting involved in an exchange you guys got you guys got roasted how did that feel walk me through walk me through the cheating because we're all human we have hearts we i know i you know i'm i've fallen down and got up? Walk me through the feeling because we're all human. I know I've fallen down and gone up again. Walk me through the emotion of you trying to start up again and everything's just going against you. Walk me through how that feels.

So, okay. First of all, I am used to like extreme defamation right like i'm used to people writing articles about me that say that i like barred from the mob and stuff right like really insane stuff um and uh and so i kind of had tough skin at this point um but I also am extremely motivated. I think one of the other things I did is I talked to other business people, and frankly, they just reached out, people that I didn't even know that well, that had seen multiple cycles. And they told me all of their stories from the dot-com bubble and from the 08 crisis and all that stuff and how they then bounce back and i just heard those and i thought you know what there are certain things that you can read in a book or you can learn from others but there are other things that you really have to experience like you will

never know what it's like for major publications to be writing horrible things about you unless you go through that yourself right and um and so for us i actually just saw it as a challenge um and and yeah and we we went on building things in a way that be you know we would turn that energy into something else so when we wanted to be transparent for example and prove we were known as traders how do you know i'm not trading on my exchange, right? We came out and said, okay, we're going to launch with the market making program on the same day that we open the exchange. What's that going to mean? There's going to be no liquidity. No other exchange would do that. Why did we do that? We did that because on the first day we had famously, you know, $13 a

volume. But it was announced as one. And so we used that media to like re-announce that and it became a very viral tweet right and uh and we got front page articles and bloomberg and uh you know every crypto uh media and all of those so um we we basically have we i think i just understand the ai of media uh actually one of the funniest things we like to do is ask chat BTC what they think of this product or us or whatever. And then I already know, basically, I already know

what the media is going to say. They're all just AI at this point. And so you can work with that. And yeah, it's just a very interesting kind of a concept. I cannot... Why don't you and Sir just be the front people for the exchange? I mean, everyone knows that you guys are behind the exchange. Why weren't you and Sue just the CEO and the MD or the chairman?

I mean, I don't know what you want to talk about positions. I'm not qualified. I'm not qualified. No one would hire me to run an exchange. But Mark has been building exchanges for 10 years. He dropped out of college when he was 19. Bitcoin hit $5 and said, I'm going to spend the rest of my life doing this. And built the first exchange in the UK.

It was doing 80% of volume. So what is your role? And what is Kyle? What is your role? What is Sue's role? What is Mark's role in this whole thing? To me, the reason why I started listening, again, full transparency to the audience, I bought the token on the open market at the same price, on the open market price quite

early because I wanted to back an entrepreneur that had failed and is rebuilding. Someone who had built $20 million into $5 billion. I just thought and I knew everything that you had said up until now, maybe not in as much detail. I decided that I wanted to back the entrepreneur. I was laughed at,

etc. I wanted to try and understand why, who does what? Because I backed you and sue um i don't know mark the only thing i know about mark is that he was you know in in a in a in a bit of a fight with with roger and uh and stuff like that um my perception of mark and mark and if you're in the audience or if he has a speaker forgive me if my perception of you was wrong but is that you know they had an exchange which was the the was it called coin flex and it was an exchange i didn't actually get much traction and i kind of thought well you know if you couldn't get much traction in a real bull

market maybe you're not the best exchange operator in the whole world or you didn't build the best exchange in the whole world so with that in mind walk me through who does what and you know, what is who's doing what here? Sure. So Mark is very much in charge of the team and operating things. By the way, in

you know prior to OpenX, his exchange CoinFlex was the favored to beat bidmex they bidmex was losing volume was losing tractions people were betting on you know a number of exchanges coinflex ended up losing but the favored if you look at their investor list it's uh you know sequoia was the largest investor in tiktok uh i'm sorry not sequoia, Susquehanna. Sorry. But also, you know, China Merchants Bank, huge player in the Asian market, DRW, massive market maker, you know, and another host of

other names, too. Actually, if you look at their list, it's not like CryptoWeb3, whatever's of this world, but it is like the real like you know the real market makers the real uh big hedge funds of this world were behind them and why because their tech was actually fantastic um what they ended up building so their matching engine was probably the only one that was audited by a third party right and the products that they built were actually incredibly innovative that that the Their problem was they were focused on the high-frequency trader and sophisticated trader side. They were not good at getting retail, designing things in a simple way, at marketing. And these were things that Sue and I came in and thought, actually, we can help with this.

And frankly, we can also help design some of the early architecture. But the builders themselves and some of the products they built, incredibly impressive. Way more impressive than a lot of the other exchanges that arguably I don't think are even innovating anymore. They're just paying higher refer fees or something. In terms of real innovation, just look at the stuff that openx has been putting up it's really cool stuff i can i can jump in there too if if you want so i think coin flex two of our strong suits or one of our tour of australia's product for the mm and like to his dp and like this especially especially was a stable coin that paid interest on chain to holders every eight hours. And it did the basis trade. So that trade that Kyle

talked about earlier where he would buy spots, sell futures, capture the yield, we actually created a stable coin that did that trade. And that kind of allowed the margin and the ability for traders to lever up, that allowed that to scale quite substantially on the platform. The AMM also kind of allowed people to do effectively like covered call, cover put selling in a few simple clicks. And that allowed the liquidity of the platform to grow massively relative to a very small user base. And basically what we were good at was building yield products that connected users directly into order books and connected users capital in a way where they were controlling all of it. It was all transparent to them directly in those order books for other users to trade against. And what we lacked and what we really saw after the downfall of both businesses, we saw as a potential ensuing Kyle is they had the

zeitgeist of the crypto population. They could tap into that. They understood it. They had a huge following. They knew how to market these products to this huge zeitgeist. And what we saw in partnership with Sue and Kyle is this ability to scale that up from a small user base to a massively large user base. So that's kind of what we're doing. Mark, let me ask you a quick question. And Rand and Scott, I know you've already asked this question. I want to ask it for a third time. Kyle, I mean this with all respect and going through the comments, it's a sentiment shared by others,

is, Mark, the question is to you. After what happened with Three Arrows Capital, whatever the reason is, I think Kyle gave a great story of the beginning, what led to it, the good and the bad, and how we got to today. Did you have initial concerns? What was your first thought?

What were the first feelings when Kyle or Sue reached out to you to discuss and to partner for OpenX? went insolvent and ours was going through a restructuring, theirs was going through a liquidation. I was regularly getting breakfast and lunches and stuff with both Sue and Kyle, and especially Sue. And we were just discussing all sorts of things. So it was life, it was what's coming next, what's philosophy, what went wrong with exchanges. We discussed FTX before it collapsed, after it collapsed. And basically, you know, we'd gotten to know each other on the internet prior to that, but that was when we really got to know each other in person.

And after all of this stuff, we just said, look, you know, I have no judgment. I get that you guys collapsed. I understood that there were no issues involved. It's not about business collapsing. The thing is that if it was just Three Arrows Capital collapsing, it's one thing, but with Three Arrows collapses and brings so many other companies down with it. Again, Kyle, I'm saying this with all respect, but I'm just being sincere. When it's just such a massive impact impact so many people impacted by it it just seems a bit out of touch and obviously you guys have done well coming back to the market exceeded the my expectations why did they hit mario i appreciate the question um

i don't see it that people fell directly i mean would you not talk about Doe like he also uh created Luna right like so um but at the same time I actually spoke I spoke to Doe a lot too actually and it was one of those things where you know where does the chain of judgment stop at some point you take responsibility for your investment right i lost a lot of money on um like on luna um you know i lost a lot of money on the ftx uh inner workings as well right but at the end of the day you know anyone that's seen multiple cycles in it and zoomed out would say all of these are risks that you took with rewards, right? And you could have easily just not taken them. You could have easily, you know, done it with a smaller portion of your money.

There are many things you could have done, but you did a risk reward. And that was true of everyone in this whole process. And so I don't blame Doe. We were thinking about even doing a recording with him at some point, just to talk through what he's thinking, what he's going through. I mean, a little bit busy right now, but I would be open to that. I'm sure he learned a lot of things too. And I would be very open to some of the lenders as well. I incentives and they had their own things. I don't know if they would do things differently, but frankly, all this stuff is investors with judgment taking risks and

getting rewards or losses accordingly, right? And Kyle, whether you knew it or not, or whether you know it now or not, there was a chain of commands and there was a point at which it wasn't just an investor. If you take the Celsius example, you called it a hedge fund. that they had invested in a savings account that was safer than a bank and because that drained out

their entire life savings that you know we we know people that literally it was it was for them it was not an investment now i'm not saying that you were at that that point or if you were at that chain but you when you borrowed from some of these companies that were completely misrepresenting people to drain their entire retirement, their entire lifetime savings, borrow against their houses, and do all sorts of stuff, the companies that at one point were beyond except responsibility, there was deep deep fraud and people are going to be indicted for this. They may not have happened yet, but it's coming.

And so to fob it off as just these were sophisticated investors and you were at the institutional stage, that may be how it felt for you at the time, and it probably did. But at some stage did you make the connection that there are actual pensioners that have been completely missold and completely misrepresented that are now in dire situations in their life as a result of these lending companies misrepresenting a hedge fund with a very safe lending product um and and did you you know is that was there a point at which you realized

oh shit this is systemic and we're all connected and i wasn't just simply um you know making huge bets with institutional money i actually was a hedge fund that was going to rent pensioners at some stage, whether you knew it or not. I would answer that by saying that best advice that someone gave me, bounce back, build back better. That's what people should be doing. I would say the same thing to Roger Ver. He lost money on CoinFlex.

I would say the same thing to anyone. What would you say to somebody that's 75 years old that has no chance in the job market today in a world of AI and crypto and blockchains and all sorts of shit. I wouldn't use my role to talk to that person, Simon, because I don't face retail. So if you're right, I understand.

I'm not playing, Simon. I'm not playing, Simon. I'm just wiping. Simon, I'm very interested to hear the opinion. Now I think we've heard a side of the story which I think a lot of people didn't actually hear. Based on what we've heard here today, I want to be critical.

I want to try to understand whose fault do you believe this collapse actually is? Simon, I'm throwing the question to you first. Mario, I'm coming to you. Scott, I'm coming to you. I really want to hear from everybody here, now that you've heard another side of the story, I want to hear who is to blame here and whether you guys still believe that Kyle and Sue should be blamed and if yes, why?

And if not, who is to blame, if anyone, for this contagion? Simon, starting with you. Okay. Yeah, I think the ultimate blame lies in two directions. One is the fraudsters that were completely misrepresenting and facing retail and lying to people in order to try and grow at all costs. And then doing... Give us some names. us some well yeah come on

my everyone knows uh salix mcginski in my case be verlic yeah you know those people that were point blanks lying to pensioners where a 75 year old person would travel to miami and say is my lifetime saving safe here while he's withdrawing money at the same time as them saying I need to, I'm all in on you and then looking them in the eye and saying yes everything's okay

the second the second that one the second is the regulators that allowed illegal securities to get to the size where they impacted that many people without actually realizing that there was a chain of commons. So it's cool that Raju is done, Alex Mashinsky is one, Gary Gensler is two, carry on. Yeah, that's where I'd say, you know, and obviously we've got the SBS and I think SBS was touching client money.

I want to ask you a question. Do you think, do you blame Kyle and Sudo? Do I blame Kyle? Kyle's here? Kyle's here? Yeah. Do you blame him for what happened? No, the question that I really had Was more along the lines of Did you

At what point did you realize That your trades Were actually trades that would be in place For retail pensioners Because is this the first time you're hearing this? Or did you realize it At a certain point i'm happy to answer that simon and by the way i agree with your your point i the way i would

answer this i would say i do not read the terms and conditions of what celsius is doing with their their retail or whatever right those every lender manages that manages money underwrites risks for their users, and they should be answered for whatever they have done. For our users, or for our fund, we accept those responsibilities. I simply do not need, like, I don't have the time, the energy, nor the responsibility to know what the terms and conditions are for a block fight. Like, if the SEC comes in and gives them a fine, which they did,

then what they did is wrong. But I am not that judge. It's not me. It is the SEC, or it is, you know, the person going through their terms and conditions or whatever, right? I don't even see that side. I only see the side that faces me. Yeah. The question I'm question on who's responsible so

uh i had two trades that blew up on me this year i'm a three arrows creditor and i'm a large gbtc bag holder okay who at the end of the day made those investments wasn't me so at the end of the day who's responsible for the losses? It's me, the investor, who put the money with those parties. So, you know, I... It's kind of the point that you're shirking the responsibility of like, hey, Gary Gensler's at fault for me losing money.

It's like, no, he's not. Like, I'm at fault. Yeah, but I mean, if Carl was, if Carl and Sue were not being transparent, and if they were doing illegal stuff, then you could blame them and say, look, you guys didn't disclose that you were doing something illegal. You're right. So, you know, I've been in crypto a long time bitcoin a long time i've lost money in a lot of

things um you know i don't fault someone for getting blown up people get blown up all the time the history of this industry is people getting blown up there's probably multiple people up here right now who've been blown up over their history in this industry. What I think matters is what you do after you get blown up. Like once you have knowledge of what's happened or what's gone wrong, what do you do then? And how do you act? And there are people in this industry who are scammers and they scam and they know they were scamming.

And what they do afterwards is the least honorable thing to try to preserve as much capital for themselves as possible. And, you know, honestly, I put Barry Silbert in that bucket. I mean, looking at these two investments and putting them side by side, like, you know, I just want to say people who are criticizing Kyle and Sue for doing something, I think that that's exactly what they should be doing. They should be doing something. But that's what I want to try and understand.

The only vested interest that I have is being very transparent about how important some tokens are in the open market. I don't know Kyle. I've met Kyle face-to-face, I think once, if I'm not mistaken, when I was in Dubai. I've had probably five conversations with him in my entire life. So I have no vested interest yet. I just want to, you know,

I feel very strongly about entrepreneurs that have failed and managed to get up again. And I feel much more strongly about entrepreneurs that have failed publicly and have gone up or are trying to get up again because it's happened to me. And I think we've got a good platform here to hear

another side of the story you know that's it i'm very keen to hear from anybody else if anybody here has any other views because i think this is the town hall we should open up to anybody and ask people if they have any other views kind of thing you know is anybody does anybody here having heard what they've heard today believe that that that you know these guys are scammers fraudsters um i've heard some big words being being thrown around and i'm i'm really interested to know if anybody you know if anybody wants to to have them out yeah i'd like i'm sorry i'd like to ask the question between so i i get the sentiment that um I blew up a lot of money. It's my money.

You know, I move on. It's that type of situation. But is there a connection between what you're doing right now? Just understand the sensitivity here. Like a bunch of people are hurting in a big way. They hear, okay, the chapter 15 process comes in and okay, so I sit on a beach in Bali and I come up with a business plan. And now I'm here to tell you about how we got the best exchange in the world. Is there any connection between the success of this exchange and the people, the creditors,

and the people that might have actually fell victim to some of this stuff? And I'm not passing blame on, as we said, SBF committed fraud, you touched on it, Alex Mazinski lied and committed fraud, and the regulators allowed illegal securities to get this big and wreck that many pensioners. You blew up, but through some crazy systemic situation, your trades were affecting pensioners without you being in the whole chain of command.

That all makes sense. But is there actually any connection here between those that have been hurt by this situation? So do they financially benefit from OpenEx, basically? Yes? That's the question. So, well, understand it, right? Because you're probably going to jump into a pitch of, oh, well, we'll allow you to sell your distressed claims and leverage your assets and degen and make a bunch of money trading. But is there any other connection? There definitely is. So we've actually gone and we even set up, I think, probably the first ever shadow recovery process, what we're calling it. And this SRP is a way for Sue and I to donate to creditors, which are early and supporting. So if there are

some that just don't want to deal with us, don't want to think about us, then whatever. They don't have to. It's everyone's free will. And also, this is entirely separate than the liquidation. Teneo is the liquidator. They will sell the firm's asset and distribute those to creditors separately. But we have a number of creditors who were early that are already whole or more than whole already. And we have this process by which we will donate over time, again, entirely voluntary. This is just something that we want to do. And it's only for people that wanted to participate. So if people don't want to, they don't have to.

If they do and they want to get involved and they supported us before and they're supporting us in the future, then by all means. Sorry, Kyle. Are you selling a tokenized security? Are you trying to get people to buy a security? No, no, no security no no no no no what I'm saying is Sue and I are donating

future earnings to this process there's no token here there's no tradeable asset or anything not of none I think there's no token here I just have

while thinking about life deeply with Mark and Sue, one of our, I mean, we thought about a lot of things, but one of the things we really believe in is karma and like something greater than all of us, right? And for some people that might be a kind of religion, some people might be more of a philosophy or whatever but we all have this in common we believe that there is something greater out there and so we very much believe in the idea that if um if we do good and we say you

know creditors who lost money they have a way to make the yield back um if um you know if if we do that and they do well then that's great and we think that's just good karma or whatever you want to call it. So yeah, we definitely have done these things we will continue to do them. Again, it's not for everyone it's for only people that want to participate Kyle, sorry to interrupt, what does that mean for them? What's the downside of timing?

If I want to participate, what's the downside? Well, the only thing that we ask is that you support in some way. So if you're a trader, you trade. If you're a market maker, you market make. If you just want to support publicly, that's fine too. But some kind of support. And definitely not defaming. If you are absolutely

defaming, then that's not part of the problem. Speaking of support, I've been watching the performance of the exchange. It's been... I think the word's probably disappointing, or should I say it's been quite a slow start to the exchange. When you look at the performance of the exchange, were you expecting more? Were you expecting better results than the exchange currently has? Were you expecting more volume? Or is this part of the plan? I see this as a journey. And I see this as very much, there's no official launch. This is a staged

launch, right? And our goal is to not have every single thing be successful on day one. Our goal with the liquidity, for example, we started with $13 of liquidity. I think we're trading over 50 million a day now, right? Still not amazing, but it's getting there, right? And same thing goes with the architecture of the exchange. We're aspiring to be this model of provable solvency and all that, but a lot of that's still not quite out there yet. I want to ask you a question. How do you think the next bull market will look in comparison to the last? And could we see next bull market's Luna, next bull market's 3 Arrows Capital? Will Barron

I think that there will be another crypto cycle and then there will likely be another buff at some point too. And I cannot predict what that will look like. I think the only thing that I can predict, for myself anyways, is that it's not going to look like. I mean, I think the only thing that I can predict, for myself anyways, is that it's not going to look like the last one, because people will have learned their lesson. So it's not going to be the Celsius, you know, BlockFi, blockchain.coms of this world, doing

the model that they had. Right? It'll be something different. But, it will be something. And I don't really know what that will be yet. It will be something, but presumably real quick. Grant, can you hear me? I don't know if you can hear me.

Grant, could you hear Scott? I don't think he could. No, you couldn't hear me. No, I couldn't hear you. Yeah, go ahead, Scott. Yeah, go ahead. Yeah, I could tell that there was some sort of technical issue there.

I guess, you know, what gets me here, Mario, in the question, what will the next cycle look like? It seems like there's just a disproportionate negative effect on retail and the people creditors, you're saying, Kyle, obviously they can participate and they can be incentivized to help you guys and make money back. That doesn't help the average person who's getting wrecked and wrecked and wrecked by each of these cycles. And so is there anything, obviously there's still a $650 million hole from three hours capital to Voyager that's in bankruptcy. You have all these other... Is there anything in the future where if you guys are successful, it would actually go back to those creditors? Because I don't really think anyone gives

a shit, frankly, about your institutional creditors who made a trade and lost money. And I'm not saying that's your fault. I'm just saying it's always the little guy that's going to get fucked perpetually in every one of these cycles. Yeah, so I mean, again,

I don't really have... So I think if Voyager at Parent Co. wants to participate, then that is for sure a possibility. And we can work with that. But I have a chance to do that as they're already solvent and have gone through Chapter 11 bankruptcy rights. That leaves the millions of creditors. They can't really participate in that.

Or I could be wrong. I'm just asking. Yeah. Well, OK. Basically, I don't have a way to reach retail at the three euros level. And with OpenX, I still, for these kind of things, I second Simon's idea. I don't want to be doing security kinds of things

and I don't want to be touching retail in ways that would be dangerous. And so for me, when it comes to the end Voyager creditor, that very much has to be through the Voyager bankruptcy process. It can't be that... Right, but that Voyager creditor, that very much has to be through the Voyager bankruptcy process. It can't be that- Right, but that high Voyager bankruptcy process is seeking $650 million from 3Harrows Capital.

And it's how those retail people get paid. Those retail people only get paid if somehow that hole is sealed, correct? Certainly. And I have, again, nothing to do with the liquidation process of 3Harrows. That is being done by a liquidator. And I have nothing to do with the liquidation process of three arrows. That is being done by a liquidator. And I have nothing to do with the end creditors. The only thing that I'm doing is I'm reaching out to... That would be Voyager Management, by the way.

So yeah, of course, there are ways to interface there. But yeah, it is for sure not my intention to go down and at three arrow, like for the three hours time to ever interact with retail we were not regulated to do so we did not have relationships with those kind of people we like we didn't we didn't we were not set up for that um if we had been set up for that maybe we would have done things very differently right but um or maybe we would have thought the system was broken there were many things that could have happened. But as it turned out, we were set up to faith institutions that had institutional agreements between them, and had their own due diligence processes and their own fiduciary responsibilities.

That is the way we were set up. So yeah. That makes sense. How much color do you have the liquidation process and how assets might be recovered and be distributed back. I have like no, I have less transparency there than probably like half the people on this call. I've heard heaps in here on the dollar right now. Try to hear what you said.

David, what'd you say? The last number I heard being floated was like between 15 and 25 cents on the dollar is like what claims are going for. There's been some successful recovery. Hey, Kyle, can you answer Ren's question on who do you think is to blame? Who do you think are the bad people?

I know you'd rather maybe not do that, but who are the bad people in this process? Okay, I think if there was serious fraud committed, particularly at a retail level, that is universally bad, right? And then there's levels of specifically what they did, right? And if you read some of the allegations against STX, a lot of those do seem quite bad, right? But again, I'm like, we're really not the judge. I'm not the right judge of that. So there are actually regulators

that do regulate that kind of stuff. Maybe they want to even improve some regulation, right, and change things around. But yeah, I actually strongly believe that there will be justice for a lot of that because there are processes ongoing. And yeah, you'll be able to see what happens. Let me try not to. Fiery silver, good or bad? Well, Barry is an interesting one because he didn't face retail directly,

but he did architect the whole thing. Our largest predator was also their sister company was giving us the largest trade that we did and holding the same collateral. So, David, I would direct that question to David.

David probably has a strong view. I mean, dude, GBTC has wrecked like 1 million retirees. GBTC is the worst offender of all of these. It's traded in people's 401k. It's at a whole nother level. I mean, I'm... So, guys, I want to, because I think we went way over time and first, um, you know, I appreciate the entire panel, Mark, Kyle,

thanks for giving us more time than we initially planned for. But look, the kind of the last question I want to kind of wrap up with it. And it's a, without getting philosophical, when does greed become bad? So, so if, if a VC, for example, receives an unlock of tokens, there's two options. You can either sell those tokens because the market is overhyped, capitalism 101. Hey, the market is overhyped. We've got the tokens. We tell the project we're going to sell them. Is that bad? Or is that simply because you're selling on retail investors? So for example, if you look at Three Hours Capital, There's no investigations.

There's no lawsuits you're dealing with, which obviously doesn't put you in the same category as Sam. But then again, you made decisions based on greed, which is not necessarily bad, but that money that you risked is money of retail investors and retirees that don't know how to determine the... Go ahead, Kyle. I think you understand where the question is coming from.

And I would kind of put this as a wrap-up question before I got ran to kind of finish off the space. Kyle, I'll let you in a way wrap it up and kind of look back at what happened and what would be your message to the industry as a whole, but also people that were affected by what happened so in the example you gave where uh bc gets privileged access to a deal gets tokens and then sells them upon unlock that is precisely what we did not do we held to exactly

so this is this is this is the So this is the positive side, Kyle. And I agree. I kind of use it as an example to kind of show like, hey, you made some decisions which many others did the opposite. A lot of VCs that everyone's ignoring right now did the opposite. And they dumped on retail investors. Simon, remember when you talked about it months and months ago during the bull market on a space. So that's kind of a plus you get there. But then that's why I kind of mentioned the other thing kyle which is the mistakes you've made the kind of i want to

get your thoughts on on when greed becomes bad and obviously reflecting back maybe a message to to people impacted so i believe in everyone's fiduciary responsibility uh first to themselves and then to you know any other fiduciary responsibility. First to themselves and then to any other fiduciary responsibilities that they have with whatever funds they're managing. And there is a chain there. And the chain is important because

you can't be responsible. Some people, even on Twitter, I see criticize me for the whole market going down. I sold Bitcoin and then they lost money on whatever other. To me, there needs to be more than that. If someone sells the S&P 500 and it goes down a little bit, are they now to blame for everyone in the world that lost a little bit of money? No, they are not.

People need to take responsibility. They need to build. They need to make change. They need to have agency, right? And ultimately we still need to protect retail. So there needs to be a layer there as well. But at the, you know, but there needs to be this clear line. So yes, that some of the allegations that we had against like uh being responsible for the whole market taking or things like this these are frankly absurd right um when do we take responsibility for losing the money in our fund absolutely majority our money do we take responsibility for the lenders absolutely right like they were the next um uh but at the end of the day like these bear market and adoptions how does this this, how do people, how does, like, what comes back? It's by building something of value and it's by creating new things. And that's what we are aspiring to do. And I thought, well, I'm going to do that. Kyle, I'm going to lie and ask one more question. Sorry, Kyle. And that's a question by previous

panelists. And it's the following. Why are both the SEC and the CFTC currently investigating you for misrepresenting your balance sheet and anything else you share regarding those two investigations they're not they're not okay then they have not I mean well they haven't contacted us for one but they they have absolutely not those are again people just making whatever out more and debut Wall Street well sure one more question well Shama asked one more question before I give it to you Wall Street and and and then, Wall Street, one more question. Wall Street, I'm going to ask one more question

before I give it to you, Wall Street, and then wrap it up. One more question, Kyle, is how, you know, what do you say to people that like,

hey, I'm not, you know, these guys had a chance with Three Hours Capital. They made the wrong decisions and obviously led to what happened.

Why should we trust them again when it comes to OpenX? How do we know that when, now we're in a bear market, everyone's being rational, but then when greed kicks in in the midst of a bull market, the same decisions are made

at the detriment of the company and taking risks that shouldn't be taken. Kyle, and then we'll go to WallStreetBets. I would say, I don't want you to trust me right now. I don't want you to trust anyone. One of the core tenets of crypto is that you shouldn't have to, right? And so the architecture of OpenX is very much the most transparent, the most provably solvent.

We believe the best architecture for any centralized exchange via margin. And that's important. But then when it comes to giving people whatever, second chances, things like that, I would say that's up to people's free will. And it comes down to the product ultimately. If it turns out that we are able to make a good product and we learn valuable lessons that can make things in better ways and people like it, then that's wonderful. If not, then judge me by my product.

We'll see, Bits. Yeah, so Kyle, you keep saying you only face institutions. You keep saying there is no fraud or anything improper. So I just have one simple question. Did you attempt to borrow any money from individuals after the point at which you knew 3AC was insolvent without fully disclosing the financial situation of the firm? Absolutely not. On June 10th, were you aware that the fund was insolvent? Never. No.

So we went insolvent at the point when we couldn't meet the final margin goal. So at June 10th, you weren't aware that you guys would have issues paying back these loans? I don't know what was happening on the 10th of June, but we did not we never misrepresented nor did we borrow from individuals past any point of

multiple if we did, there would be major if we did, there would be major repercussions. But as it turns out, people and institutions receive messages from you on and around June 10th where you were attempting to borrow money against the GBTC pledge.

You guys sent messages such as, I have a trade idea for your idle BTC, a loan versus GBTC pledge to capture the GBTC discount. So you have upside if the discount collapses. All you have to do is lend us BTC and we'll do the rest. 100 BTC would net around 120. That's on June 10th. Just four days later, on June 14th,

Sue tweeted, We are in the process of communicating with relevant parties and fully committed to working this out. And two days later, on June 16th, the Financial Times reported that 3AC was insolvent and unable to working this out. And two days later, on June 16th, the Financial Times reported that 3AC was insolvent and unable to meet market calls. The timing of that is quite strange that just four days before Sue tweeted that, you guys were DMing, messaging individuals and firms asking to borrow money without disclosing the financial situation.

Do you know who the last lender was? I don't. It was Sue. It was Sue. Sue was the last lender to the firm. Also, we did not borrow any funds with that bid. But you did pitch

people that. That saving which you are making did not result in any loans, but you were trying your fully solvent loan until the end anyway. After the point at which you knew you had issues paying back the loans that were already outstanding. No, we did not take any funds from an didn't say you were. Point of insolvency. No, we did not solicit after our point of insolvency. Not the point of insolvency, but that we did. Knew that there were issues. Surely you knew the financial situation.

No. No, I understand what you're saying. If we did take funds or if we did misrepresent, there will be repercussions. There are not. Why are there not? There are not for a reason. Because we did not. I think, by the way, Wall Street bets, good questions.

Look, guys, I think it was a great discussion. I do want to remind the audience two things that I forgot to remind during the space. First, give us your thoughts in the bottom right corner in the comments and try to be objective with your thoughts. It's very easy for you to say the cool thing, just being emotional and illogical. Let's stick to logic and you could be very critical. You could be more understanding or somewhere in the middle. I'm genuinely curious to get the sentiment of the audience because I felt like an audience here

listening to Ran and Kyle chat. So it'll be one. Number two, any project, any VC with a portfolio of companies, if you want to come on the show or work with an incubator or join the Shark Tank type show we're going to be doing

or the pitches that we've done and will be doing, hit us up. It's the pinned tweets or DM us. And Ran was sharing the experience of the last sponsor. That was pretty ecstatic with the results they've had. And the third thing I want to say is we're going to start hosting the show soon, in a few weeks, I guess, from the Crypto Town Hall account. So you see that little stupid red logo on the panel? That's our Crypto Town Hall account. So let us know how shitty the logo is and make sure you follow that account so you get notified of future spaces so make sure you go

on your phone and do that but otherwise that was right i swear that was one of my favorite spaces and um you know i didn't know you're a good interviewer until this uh you know i have a pretty bad um i had pretty bad expectations i'm'm like, Ryan's got to fuck shit up. But that was actually really, really interesting. Yeah, well, Mario, thanks. I'm trying to learn from the best, so I'm learning from Scott. How do you do?

Yeah, I think... Look, Kyle, first of all, thank you. I know this took a lot to actually come up here. We've been talking about doing this for a while. I know this took a lot to actually come up here. We've been talking about doing this for a while. I know this took a lot to come up here. I've obviously heard parts of the story. I heard some new parts of the story today, which were

pretty intriguing. And I must say from my side, respect for trying to rebuild in the face of all the headwinds that you guys are getting because I am watching the sentiment gauge

and I respect that you can, you know, despite all the negative sentiment, actually keep holding. And I respect, you know, I want to give you credit here. I know you probably got

a lot of criticism, but I want to give you credit. Now, we disagree on some things here when it comes to the discussion, but, okay, the team is giving me shit. By the way, any sponsors or advertisers hit us up, not just projects. Sponsors and advertisers. All right, guys, stop giving me shit in the background.

Ran, what I want to give you credit for is that you were very critical during the bear market. Even throughout recovery, you were very critical of 3L's capital. You were critical on our space. I think you've tweeted about it pretty critically. And then you changed your mind, whether people agree with you or not. That's your decision. I think you made the right financial decision. You've changed your mind and you were relatively unemotional and objective about it. I think that, and I don't give you credit often but I think even it could be you might have

made the wrong decision or that decision might backfire later or might end up being the best decision you've made in a while. I like the fact that you can pivot and change your mind when you start understanding something better. You can cope and cry about something or you can do something

about it. And Kyle and Mark, I hope y'all have much success in building this exchange and doing something about fulfilling on three AC creditors. Yeah. Look, Mario, I'll be honest with you. I took a lot of,

I took a lot of flack from a lot of people when I came out publicly, because I try and be quite transparent with all my positions. And the reason why I try and do that is because I don't want the community, where I said a community, this community, the YouTube community to ever believe that I'm not doing things correctly. And so I believe in full transparency. And so when I invested in the Flex token, I was very, very, very transparent about it. I said, look, guys, I'm not going to win a popularity contest for this, but I'm buying into Flex. And this is the reason why I'm buying into Flex is because if two people managed to build a portfolio from 20 million to 5 billion and they made mistakes,

I believe that they would have learned a lot from their mistakes and that there is a good chance that they may be able to do something similar again. If that's going to happen, I want to join for the ride. Now, look, I may be wrong. I may be wrong. And that's why I didn't put all my money into it. I took a small bet here. And so far, the bet has served me well. That's not to say that the bet is going to serve me well at the end, because you can only claim victory when you've gone through the finish line. And in the interim, it looks like the bet is doing okay. But again, it's very, very, very early in the race to claim any kind of victory. But for me, I took a chance backing entrepreneurs that had done it once before.

They'd fallen, they got up again, and they learned. And the reason why I did that, to be brutally honest, is because the same thing happened to me, not as publicly, but I built a company in the dot-com era. I lost everything. I lost my house. I lost every single thing in that company when that company went into liquidation. And then I got up and I rebuilt. And I landed up rebuilding and I built the biggest marketing company and sold the biggest

marketing company in Africa a few years later. So I know how hard it is to get knocked down from being, you know, I was at the top of my game. I got knocked down to zero into liquidation and then having to get up again. So I know how hard it was. And it must be much harder. The way I see it, it's probably much harder if you're doing it being so public. I wasn't as public as Kyle and Sue were because I wasn't as successful before.

So the forefront grace must be very tough. And I respect the guys that they got up. Now, I mean, early time will tell how the story plays out. But I thought it was important that we get the story out there and that people hear it. The panel was pretty balanced, I think. Scott, for example, being very, very critical and

others being less critical. To wrap it up, Scott, you know the story about Ryan losing money, making money in the O1 market? I heard that about 20 times during the Shark Tank show that we did, just FYI. Every project that pitches, we'll find out in the show,

in the episode, that Ran made $600 million and lost it and made it again. Are you going to hang up on me? No, no, no. I thought about it. I'm going to take a break a few days from doing it.

So no, I promise no. But respond, please. Don't believe. I promise. I'm going to take a break a few days from doing it. So no, I promise no. But respond, please. Don't believe. I promise I've traumatized you. Everyone, I love you all. Thank you so much. We'll see you again tomorrow. Let's go.