The Wolf Of All Streets - Beating the Banks with Alex Mashinsky, CEO of Celsius Network

Episode Date: October 15, 2020

Alex Mashinsky came to the U.S. as an immigrant in the 1980’s after living in both communist and socialist countries. His diverse background made him passionate about helping people and developing a "better bank" that rewards its customers rather than stealing from them. Fascinated with blockchain and fintech, Alex founded Celsius Network, a platform with unbeatable yields that would finally stand up to the banks, giving people the hard-earned money they deserve. Scott Melker and Alex Mashinsky further discuss moving to the U.S. in the ’80s, phone company monopolies, the urge to disrupt, creating Celsius Network, giving 80% of the profits to the community, bank bailouts, daytime robbery, beating the banks, crypto community fees, hedge funds in crypto, the name “Sushi” as a leading indicator, the corrosion of standards and voting with your wallet. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account. --- ELECTRONEUM Electroneum, has gained widespread adoption providing a mobile-first payment solution to the world's unbanked, attracting more than 4M users worldwide in less than three years. They have since launched a new freelance marketplace, AnyTask.com, which is providing thousands of freelancers the opportunity to sell their services to buyers globally, without the need of a bank account. Learn more at Electroneum.com. --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

I'd like to thank my sponsors, Voyager and Electroneum, for making this episode possible. Stay tuned for more info on them later. What is up, everybody? I am Scott Melker, and this is the Wolf of All Streets podcast. I'm beyond excited to chat with today's guest, Alex Mishinsky from Celsius, who I'm proud to say is the newest sponsor of this very podcast. Alex has founded or has been at the helm of eight companies companies with each success more impressive than the last. He's become an expert at raising funds and coordinating successful exits with raises and exits both in the billions with a B. With his newest venture

into crypto, Alex is already disrupting traditional banks and finance, which as you know, is what we like to see around here. Alex, it's a pleasure to have you here. Thank you so much for taking the time. Thanks, Scott. Thanks for having us. So before we get into the questions, just like to remind everybody that you are listening to the Wolf of All Streets podcast, which airs twice a week.

And we talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, anyone with a good story to tell. This show is powered by Blockworks Group, a media company with over 20 podcasts in their network. You can check them out at blockworksgroup.io. And if you like the podcast and follow me on Twitter, then check out my website where you can join my newsletter. That is at thewolfofallstreets.io.

So now let's get into it. Alex, as I touched on a bit in the intro, you have quite a background and a lot of experience starting and exiting companies. So can you tell us a bit about your background, I guess the revised version, because we could probably do an entire podcast on those eight companies. So, you know, I'm an immigrant. I came to the States in the late 80s. I actually grew up, I was born in Ukraine, grew up in Israel, and came to the land of opportunities. And for most Americans who haven't traveled abroad or whatever, we think we have problems here. It's still the land of opportunities. And really, I was lucky enough to be there

at the birth of the internet. I was working on communication networks and basically developed the original voice of IP protocols and patents back in 94, you know, a long long time ago and really kind of replaced these monopolies of the phone companies had with the free service like we're using right now, which most people in the 90s didn't think was possible, right? Everybody thought AT&T or Bell Atlantic had like a God-given monopoly to run these services. So we really kind of created a uh, good and then did well.

Uh, you know, took, took the company public on NASDAQ and, and then jumped into my next startup and next startup. And so on, like you said, uh, eight in a row.

Um, so I should be there hospitalized for that or, but then another project transit wireless, uh, uh, you know, like, uh, the wireless, like, uh,

the wireless network, the subways in New York didn't have wireless service. And, you know, it was like, just, it looked completely ridiculous to me that 8 million people use it every day. You know, the minute they went underground, they were disconnected from the world. So, uh, so I fought with the MTA for like seven years and then finally got a franchise to install that. And today, all of these 8 million people get to use it every day for free, right? We got the phone companies to pay for it and the people get it for free. So again, doing good and doing well.

And Celsius was really an idea that kind of emerged in 2017. I was trying to get into fintech for many years, but I couldn't find something that was really disruptive, and I think after seeing what cryptocurrencies can do, I realized, okay, we can take this, again, just like with AT&T, we can take this God-given monopoly that people think the banks have to make money for themselves and bring all that value back to us, the people who work hard and create the value through our labor, where they only really make money on our money because we don't know how to do it ourselves.

So Celsius created this platform that allows people to deposit their hard earned, you know, assets and have those assets earn double digit yield 100 times more than what JP Morgan or Citibank pays you. Right. It just sounds ridiculously crazy that we can pay 100 times more and still be profitable. Yeah, that calculation is going to become even more difficult when you start paying to keep your money in the bank and things go negative, right? Yeah. Infinity and beyond, you know, Exactly. The, the buzz light to your financial, financial model. So you, you touched on a word earlier that I was going to ask you about. So you said, you know, you disrupted AT&T

and these large companies and you were looking to get into crypto, but needed something disruptive to find a way to do it. Where does that core urge to disrupt come from? And where do you get, I mean, one in a million people would have the balls, frankly, to try to go against these corporate giants or come up with an idea that would fundamentally change

the way that we approach these problems and these industries. Where does that come from? Because I don't think most people have that in them. Yeah, my wife jokes that I live in the future all by myself. And sometimes the reality comes to me and sometimes it goes to a completely different direction, you know. But none of these things we're talking about or doing are crazy. Like if you think about, again, our relationship with banks, we the people have ceded our power to the banks. We're basically saying it's okay for a bank to charge us to withdraw money, right? Charge us $3 on an ATM.

It's okay for a bank not to pay us anything for our hard-earned cash. It's okay for a bank to charge us overdraft fees and checking fees and all kinds of other fees, right? No activity fees, you name it. They invented every fee possible, right? So, I just don't accept that, right? I just don't think that hardworking people should be paying anything when a bank like JP Morgan still generates 30 billion a year in profit and then get bailed out every 10 years when they make a mistake. So, I just feel that this is not a fair fight. It's not a fair equation because, you know, it's like the banks are using Caesar's rule, right? Divide and rule.

Because we did not collect all of our assets together and have concentrated power to act in our own best interest, the banks are basically taking advantage of that. They have a one-on-one relationship, and in a one-on-one relationship, they win every time. So all Celsius done is aggregate 200,000 retail users from all over the world. They gave us a billion and a half dollars and now we get to set the rules. We tell the institutions, the exchanges and everybody else how much we charge for these assets. And we increase what we charge every week. You've seen our rates go up. We actually, people told me,

oh, you have a hundred million, you can charge these high rates. But when you're going to manage a billion, you're not going to be able to charge 10 or 11%. And actually the opposite is true. The more assets we have, the more leverage we have over the institutions, just like the banks have over the government

and over you as an individual and so on. So we are taking exactly the same leverage or the same disproportionate relationship. And instead of taking advantage of it, right, we could have been sucking much more profits for ourselves. We've committed to give 80% of that to the community. And again, we've minted already 30 millionaires just from people who joined us from the beginning. And, and again, we've, we've minted already 30 millionaires and just from people who joined us from the beginning. And, and I hope to break all the records of anyone who's minted more millionaires by creating all this wealth and having everybody participate in it versus having

given only to the VCs or given to the founders or, or anyone else. So, so that's really the crux of the matter. It's not complicated. It's just no one has done it, you know? Yeah, you say it's not complicated, but I think the biggest question that people always come to me because I'm recommending your service,

I'm using it, you know, and there's a lot of other similar services that are offering yield now, sort of crypto banks. How do you do it? I mean, how do you offer 10%, 12%, you know, these numbers? Because banks certainly can't. And why can't they, I guess, is the better question, but you can answer both. So normally, in the normal conditions, I would just go to Wall Street and make this money that we're making for the banks or for the financial institutions,

right? It's much easier to do that. It's much easier to just go to Goldman Sachs, show them your resume and say, hey, I know how to generate these double digit yields, hire me and I will make you money on your money, right? It is harder to convince the general public to trust you and to work with you and build up all of this infrastructure. It takes much longer and it's much more work, but I can tell you, I wake up every morning and there's 10 or 15 emails in my inbox of people thanking me for changing their lives. And that is something you're never going to get working for Goldman Sachs. No one's going to send you a thank you email because normally again, you're making that money for the bank, not for the people.

A congressman might send you a thank you email. Exactly. So really, the formula is very simple. And I've done it on one of the AMAs. I actually went to the JP Morgan website and showed on their statement, on their quarterly statement, what is their return on capital, right? And it's about 17%, meaning the bank is making 17% for themselves on the money that they've accumulated. They just decide not to share most of that with you. So Celsius does

exactly the same thing. It just, we're not earning more than the bank. We don't have some magic formula that we figured out something they didn't, or we're doing something that no one has ever done before. I say the opposite. There's no SEC lending, the equivalent of securities lending is the safest business on Wall Street. And that's all we do, right? So I joke, I say the bees do it, the bears do it. We're doing exactly what the banks are doing every day. So there's no innovation there. The innovation is in, and again, I stole even the 80-20 from Wall Street

because as a rich guy, when I go to Wall Street, when I go to Goldman Sach, when I go to Goldman Sachs and I say, fine, I'll give you $10 million to manage for me. The split between me and them is that I get to keep 80% of the value. The LP, the limited partner gets to keep 80% and the GP, the general partner or Goldman's fund gets to keep 20%. So when you're rich, that is the arrangement. They don't charge you any fees. They don't charge you anything, right? The opposite. They take you to fancy lunches. They give you tickets to the games. They make sure to invite you to any event that happens, right? They

cater to your every need. But when you have $1,000 with them, that's when they steal from you because you have zero leverage. So all Celsius done is combine those two pieces together. The fact that 80-20 is the right way to do it and offer it to everybody on the planet, and the fact that if we did the same thing the banks and financial institutions do, earning that 17%, we can give 80% of that back to the users, and that would be 100 times more than what they pay you. JP Morgan, on average, pays you 0.1%.

Yeah. But they charge you 24% on your credit card. So how does that make sense? 10 years ago, before the 2000, 12 years ago, before the 2008 collapse, they actually earned much more. They paid you much more and they charge you less on the credit card. So their cost of capital went down from like 6% down to like zero, but your credit card charge went from 18% to 24%. It makes no sense whatsoever, right? They shouldn't be lowering their charge of credit card charges to 15 or 14 or 13,

because their cost of capital went down. So it just daytime robbery for all of us. And no one has the power, no one has the will to say bad things about banks. And I do that every day. And why can't the government do that for us? Or why won't the government do that? We're not here to act in your best interest. One of the largest lobbyists in Wall Street, in Washington, is Wall Street. Then, you know, who do you think is writing all those laws and all of the rules and everything else? Not me and you, it's not our representatives. It's a lobbyist who represents the banks, the insurance companies the drug companies and and again this you know a capitalism is a great system but it does corrode itself right and and and we have not been able to reset capitalism uh talked in our best interest and and i i'm a student of i was born in communism

i grew up in socialism. I tested all the systems and I'm thriving in capitalism, right? So it's not like I don't know the different systems. I'm telling you that we Americans have crossed the lines abusing capitalism. You know, this is not what I think our, you know, the people who wrote the Constitution were thinking about the United States of America, where 1%, 0.1% owns half of the assets. And the disparity between the rich and the poor is as great as it can be, right? I mean, how much more do you need? You know, so that's really the problem yeah it should be criminal i mean it should be criminal and we have a revolving door i mean at this point politics is almost an audition or job interview for a future job at a bank or pharmaceutical that's right or some sort of lobbying firm consultancy yeah exactly so so all these things are look again it's it's the greatest country in the world i'm not dissing america or saying look how horrible things are and so on. It's just that we took it too far. And you are seeing sprouts of change, like you're seeing the

business roundtable saying, okay, our customers and the communities is a constituents that we have to worry about. But that's all talk. That's not action. So, so the action is actually, uh, that we need to take is, is, is changing behavior. And part of what we're trying to do at Celsius is again, always put our customers first, always act in the best interest of the people whose future we are effectively holding, right? I mean, their financial future is in our hands. They're trusting us with their assets. So those are the things that I don't think any,

most people in crypto even, they cannot go on your show and say those things, right? I'm always acting in the best interest of my customers. So it's about greed and power. I mean, at the end of the day, they can pay the same rates that you are at a normal bank and they just choose not to. And they choose to raise, because it's funny when you hear people look at, you know, crypto and look at these high yields and say, there must be something wrong here, right? There has to be some sort of scam. They

can't do this. It must be high risk. But the reality is, is that you're just preconditioned by these banks and the old system to believe that it's impossible. It's just a matter of you sharing the earnings. Right. So I always joke that it's not that we're so good as the banks are so bad. But but specifically answer your question, how do we earn this money? There is friction of dollars going into crypto. So for example, I'll give you a few examples, right? If you are a hedge fund and you,

JP Morgan is your prime broker or Goldman Sachs is your prime broker and you go to them and say, here's, I have 10 million in assets and will you give me leverage? And they'll be sure in a second, they'll give you 5X leverage, right? But if you tell them you're trading crypto and you say, well, you're me leverage? And they'll be sure in a second, they'll give you 5X leverage, right? But if you tell them you're trading crypto

and you say, well, you're giving leverage, not just that they won't give you leverage, they will shut down your account, right? Instantly. So because of that, the cost of capital in crypto is actually higher than it is on Wall Street. So on Wall Street,

you'll pay on a four, five, 6% for that leverage, where on, on in, in, in the crypto world, you'll pay 12 to 17%. So all we do is we accept stable coins. We, we don't take dollars. We're not a bank, right? We accept stable coins. We accept Bitcoin, Ethereum, and then we lend that to these institutions who otherwise have to pay very high fees to somebody else. They just happen to pay it to us. They don't care if they borrow from us or Genesis or Galaxy or BlockFi or somebody else, right? They don't care if we have a mission of helping the average Joe, right? They just basically look at the rate and they say, how much are you charging? How much the other guy charges me? And so the prevailing rate, and again, these rates are now published in many, many places. When we created this business in 2017, we were the only guys doing it, right? And everybody looked at us and said, okay, you're a scam. This cannot be. But institutions were trading, were borrowing at these rates,

hush, hush, in 2017 and in 16 and 15. What didn't exist was that an average Joe could just come deposit his assets into some account and it automatically yielded, right? What we call DeFi today was really created by Celsius, right? I mean, Celsius was the first place that you could deposit stuff and be paid either in

kind, meaning in Bitcoin or Ethereum, or with a different token, as in not just like Comp, just like Uniswap, just like whatever. The first one that did that was cell token. So, and again, it's not about who did it first. My point is just that when that Pandora box was open and everybody realized, oh, I can do it also. Celsius doesn't have exclusivity on this. I can copy them and do the same thing.

All that is great, but we lend to institutions, exchanges. Yes, we also do DeFi, but that's maybe 10% of our business, where all of our copycats are lending to retail. And that's really the huge difference, right? So when you look at Compound, for example, right, the borrowers are 100% retail guys. So when there's a flash crash, they have to liquidate all those people because they're not going to give you more collateral.

They're just being liquidated. So March 12 was a great kind of test day for everybody in crypto. Some people walked away limping, some people shut down their doors and Celsius walked away smelling like a rose. We had zero liquidations that day, right? So I think the business people copied the idea, but they didn't copy the business model. They did not because it's very hard. It's very hard to sign up 300 and something institutions on board them. Do KYC AML, do continuous checks on them every quarter, verify their licensing or their bank accounts or their credit standing. That takes tremendous amount of effort.

No one wants to do that. It's much easier to just open a website and have 20,000 retail guys show up. And if they get liquidated, great, they get liquidated. Right? So I think we've done a great job at, again, protecting. Another great point, I just want to make that point because it's critical, right? So Compound, Aave, Uniswap, all great companies, but they're neutral. They sit in the middle.

They don't care about the borrower, the lender. They don't care what happens to those guys, right? We are not neutral. We only represent the depositor. We only represent the person who gave us the asset. Actually, our job is to aggregate all those guys and extract as much value as possible from the institution. So the roles are very different, right?

The function is very different. And because of that, I think we're doing a much better job for our customers. Yeah, that makes sense. So basically, anybody can open one, but not anybody can have the access or ability to actually onboard institutions. I mean, you can start a website, but it's hard to call someone who has a billion dollars under management and convince them that you're the place to borrow from. And they want orders of size, right? They're not going to ask you for, if you have whatever, 10 Bitcoin, they're not going to transact with you, right? They're not going to ask you for, if you have whatever, 10 Bitcoin, they're not going to transact with you, right? I think usually they transact a thousand Bitcoin,

2000 Bitcoin a pop, right? So I think it's also the aggregation service we provide, aggregating all these retail guys and having whatever 40, 50,000 Bitcoins, which is what we have today, allows us to fill every order for every institution, right? So they want to know. They don't want to call you and get the nine no's out of 10 orders, right? They want 10 filled orders out of 10 filled orders. Exactly.

And that's also why some of these platforms can't really have any, Compound can't really sign up institutions. Their rate changes every day. And also, if you check the rates on Comp compound versus the rates of celsius you'll see celsius is always higher rate on every coin so how is that possible because we blend all three sources of income right we when the exchanges pay us more we give the liquidity to the exchanges when institutions pay us more we shift the the liquidity to the exchanges. When institutions pay us more, we shift the liquidity to them. When DeFi pays more, we give some of it to DeFi.

But the blended rate is always higher than whatever just DeFi or just exchange or just institutions can pay. So I think that the business model, I know people call it CeFi. I don't really agree that it's CeFi. But the blended rate, all I care about is, am I paying the most possible to the user? That's all I care about. Well, the notion of C5 is kind of ridiculous and only now they say C5 because of this new wave of DeFi, right. And whatever we want to call those things, but, uh, it's not central.

It's still DeFi. I mean, as you said, you guys were the ones who basically founded it. And so to change the name is a bit misleading. So I don't like that either. But that does touch on this new DeFi craze and the insanity of what we're seeing. And I mean, it scares me a bit. And as we're recording this, actually, we're seeing a bit of a bubble pop on a lot of these smaller platforms and crazy food coins and things like that are really starting to

suffer. So, I mean, do you think that it puts the ecosystem in danger that there's so many projects and so many going to zero so quickly and, somewhat of a repeat of the 2017 ICO boom and bust on steroids in a lot of these DeFi coins and projects. So, yeah, look, I mean, the main problem is that they just fork and they don't innovate. Like if you're forking Uniswap and you're adding new functionality or you're doing something better or you're solving the impermanent loss problem or some other problem great i mean that then i take my hat off for you but if all you're doing is uh vampire sucking the liquidity from one exchange to another because you

are airdropping this or that token on people you're not going to have long-term longevity. And again, look, our mission was to bring a hundred million new people into crypto, create financial future for them. That is a long-term vision. That's not like, oh, I'm here for six months. I'm going to pop this thing and dump on my community and walk away and do something else. Right. So, so also the, again, all of this comes back to why are you here? Are you here really? Again, I have a 30 year track record of doing good. Right. So you check every project I touch and you will see that, that I put doing good ahead of doing well. Right. Even when I didn't have anything. So it wasn't like, Oh, now I got rich.

So I'm trying to become a Rockefeller and I'm just going to pepper some coins on everybody and make everybody think I'm a good guy, right? So most of the crypto community, unfortunately, is based on fees, one way or another, right? They all make their money charging this fee or that fee and so on. And we've built – Celsius has never charged a single customer a fee, right? Go on Twitter, go on Telegram, ask the hundreds of thousands of followers we have, if any of them has ever paid a fee to Celsius.

So we came in from day one and said, there is a business model in which we all win. The depositor wins, Celsius wins, and the community wins. And the only losers are the banks or the financial institutions who are just not acting in our best interest. They should be losing every day. So that is not what's happening with a lot of DeFi projects, right? They're not really here trying to help the average Joe. Like you said, they eventually dump on the average Joe,

and they're being left holding the bag because they're unsophisticated or they thought that this thing is going to the moon and they joined in the last minute and here we are dumping on them. So if you look at, for example, look at the price of sell token, right? I mean, it's a very, very slow moving thing, right? Recently, it's been going up like crazy, but for a very long time, it basically reflected the slow accumulation of customers that we had. And we're proud of that. We, you know, we think that all these projects, which are just basically, like, again, SushiSwap was just a perfect example of just a bad project doing nasty stuff, you know, and that's why it failed. I'm not surprised that it failed. Are you sick of paying ridiculous fees to trade crypto? It's time you try Voyager. It's hands down my favorite place to buy and trade

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I mean, I can't wrap my head around making, investing my hard-earned money in something that's named after food. But here we are. Food that lasts two days also just like the project it's actually the perfect name when you think about it in retrospect so you i think we all understand going back to your point about who you're actually lending to i think everyone understands why an exchange would need liquidity or need bitcoin who are the other institutional customers and what do they actually need to borrow crypto for? Yes, if you go on Twitter again,

you would see everybody talk about shorting and how this lending business that Celsius created is really helping bring down the price of Bitcoin or Ethereum or whatever. But really, that's just not true. I mean, the institutions are sophisticated guys. They're the top guys on Wall Street, right? I mean, when you leave Goldman Sachs, you go to work for one of these institutions

and manage money for them on this or that vertical. So what they do is actually publicly disclosed because most of these funds have to file with it. If you're over $ over a hundred million dollars, you're filing with the SEC and everybody knows your charter and what your asset allocation is and everything else. And, and they tell you very clearly if anyone bothers to read how much they're spending or how much they're basically deploying towards market making,

how much they're deploying towards arbitrage and how much they're deploying towards shorting and shorting is considered the most aggressive and risky position, meaning it has the lowest allocation of capital. Most hedge funds, banks now basically can do, I think, more than 2% or 3% in actually taking positions. And most hedge funds don't have directional betting, really. So most institutions we work with, if they tell us I'm shorting, we're like, sorry, I cannot take that risk. So it's too risky for Celsius. It's too risky for our customers.

But when they tell us, look, I'm just basically buying on Binance and selling on Bitfinex, right? Because there's a price gap between the two, right? And I need, I'm the exchange, I, the hedge fund need to borrow the assets because if while I'm doing this trading, Bitcoin drops 10%, I don't want to take the financial risk of losing 10%. So you, your community Celsius is long only, your guys are happy to hold this coin for a very long time lend me the coin I will do the hedging I'll extract my one or two percent margin and I'll pay you interest right so so they make one two three percent a month and they pay us

seven eight nine percent I'm talking about bitcoin per right? So obviously it's a very profitable business for them. It's a very profitable business for us. But arbitrage, market making, those are the things that are the main reasons they're borrowing from us. They're all dollar denominated. They want to offset the crypto risk. And it's good for them.

It's good for us. And look, again, there's a 100-year history on Wall Street of SEC lending or securities lending. Show me one example. Show me one instance in 100 years where a bank or a financial institution went bust because they did security lending. That is the safest business on Wall Street. It just happens that that safest business

in crypto is paying double digit rates, right? So just to explain to your viewers, because most of them don't understand, when each one of your viewers who have a Robinhood account thinks they got a super cool deal because they bought Tesla stock and they got to not to pay $4.95 for the trade. Robinhood takes that Tesla stock that you bought. You think it's just sitting in a Robinhood account, but it's not. They lend it to Fidelity. They lend it to Interactive Broker. They lend it to any order flow management company. And those guys charge 15, 20% to lend Tesla stock. Right now, if you want a short Tesla, it would cost you 20% per year, even more than Celsius earns on Bitcoin or Ethereum. How much of that is being shared with you, the holder of the Robinhood account?

Zero. Zilch. Zero. So all Celsius does is what Robinhood does. It gives you the trade for free. Plus, it gives you 80% of that income on that Tesla lending you're doing or how you make your margins, but just the business in general of lending and why. Because that also answers the question about institutional adoption, though, or whether institutions are here in this space, because that's so hotly debated in the Twitter community and the crypto community in general. Are institutions interested? Is there money here at all? And I think clearly it is, right? And I think that we've seen you started in 2017, which was maybe retail-driven bubble. But now I think this time we're seeing that there is real institutional interest in this space. Yeah, so a lot of small and medium-sized institutions were already in the game. The big guys did not participate until the OCC just two months ago announced that banks and financial firms are allowed to custody and trade in crypto assets. And they basically consider them assets that they can count on their

balance sheet they were not allowed to do any of that or most of them would not touch any of these assets so even though we all thought that everybody could participate and mike novogratz and all these guys coming in from wall street and kind of taking interest a um that was just not true in reality in reality again if you went to this or that bank and you said, hey, do you want to lend me or do you want to participate or do you want to borrow? The answer was you're trading in monopoly money. We're not going to touch any of these assets. I think today, again, the doors were opened about two months ago, but I think, again, the doors were opened about two months ago. But I think, again, it's going to take a while for many of these institutions to actually do anything about it and start using it

or providing services around these assets. Also, the market's not really big enough yet, right? I mean, for these really larger institutions to gain exposure, we need to have a much higher market cap. I mean, the price of Bitcoin needs to be much higher. I think a lot of people don't realize that actually we need higher prices and more involvement for people to even be able to get their money in and out of this market reliably if you're talking about those huge quantities, right? Yeah, I mean, we're excited that you know crypto is under 320 billion or whatever the market cap is today uh so companies like uh state street or or uh blackrock manage trillions of dollars right each one of them manages trillions of dollars so for them when

you come to them and say oh look 300 billion they $300 billion, they look at it and say, this is nothing. This is like, I'm not going to even waste time to participate. And, you know, BlackRock is a great example because they make, if you look at their financial statements, they publicly tell you that 61% of their quarterly income comes from SEC lending. It's the largest single source of earnings. They sell you that ETF, right? They sell you this or that, the QQQ or this ETF or that ETF. And then they take all the shares that are inside that ETF and they lend them out and make income from that and don't give you any of that back, right? So they're one of the most profitable companies out there on Wall Street, but they're not a participant in crypto, right? So when you see these guys come in, and again,

Fidelity is making big efforts in the space. Again, Mike Novica is very helpful in kind of, again, educating people and bringing them on and so on, but it's still early days from an institutional standpoint. I don't want anyone seeing this saying, oh, you know, Alex said the institutions are all here. We have, I think the most institutions, something like 360 or so institutions on boarded more than anyone else that I know. And that's not enough, right? There's about 850 hedge funds who've registered that they're going to,

they're touching crypto, basically. So we know all of them. We've elected to work with maybe a third of them. And many of them are just too small or they have risky strategies. But the biggest names are Wall Street. You're not going to find Goldman Sachs. You're not going to find JP Morgan. You're not going to find the biggest guys,

partially because what you said, the asset class is not big enough, and partially because they just don't know how to manage these assets. They can't open a MetaMask and dump some coins on Uniswap and farm unis and then stake them and then whatever, right? I mean, none of that, that doesn't follow their custody process, doesn't follow the risk management process. Who holds the keys? You know, one person sitting at home, you know? So there's a lot of issues that need to be resolved, and we're just not.

Yeah, that makes sense. So how do you, at Celsius, how do you continue to grow? I read, obviously, you have some new partnerships that are really exciting, Bitfinex line. Is it about just continuing to grow the brand, reach out to new partners, and basically just get the tentacles everywhere until the entire market knows about you and is using you. How do you continue to push this business forward? So, you know, when I did Voice of IP back in 94, 95, the selling that to the average person was really easy. Anyone you met and you said, look, you're making a local call it's 50 cents how about five cents to make the same call on voice of r.i.p you make an international call it's three minutes how

about 30 cents to make the same international call so so and if they tried my service and it didn't work well they could always go back and use at&t or use some other app and so on. So the adoption was very quick. Like within a few years, we had five, six, 700 million users. And now obviously billions of people use voice of IP every day for free. So the difference with the money, with fiat, is that people are much more conservative. It takes them much longer to trust you. And when the service is so complicated, like here, right,

they have to learn about keys, they have to learn about wallets, they have to learn about addresses and all that stuff. And most people just give up right there. And they do have to do KYC, ML, right? All of that is just like, okay, too much for me. So we have a lot of friction. That's why after almost 12 years we only have whatever 40 45 million active wallets right i know there's 100 million wallets out there i have 10 wallets so that

doesn't mean anything how many active wallets that actually transact so so our adoption has been much slower than expected that's part of why i created Celsius. I said, look, if we give people yield versus just allowing them to buy and sell or trade or whatever, if we pay them yield, they can't earn anywhere else. The adaption is going to accelerate. And we've done, I think, a reasonable job, you know, just like Coinbase, just like Binance, anyone else in kind of bringing the average person in. Again, unfortunately, it's 85% men and only 15% women. Complete failure bringing women into crypto. But what we decided to do about a year and a half ago

is to go to the people who already have this mass adoption, like Line Japan, which is part of SoftBank. They have 600 million users worldwide, right? They have different messengers. They have different services like Bitfront in the United States, for example, is an exchange to operate. And basically partner with them to basically broaden the appeal, broaden the reach on behalf of all these people.

So I think this approach, I think, and you can see it also with PayPal, you can see it with Robinhood, with a bunch of different services kind of launching crypto services, Venmo and so on. And I think that's what's going to bring that mass adoption. I think if we just rely on, hey, come trade in Bitcoin, we're going to be a very small club looking at each other saying, remember the days we were hoping Bitcoin was going to go to 100,000? It's also going to drive demand. And you have limited supply, more demand, prices go up.

That's basically the motor that's been driving our vision. And it includes CellToken. I mean, CellToken has increased over 2,000% in the last 12 months, mostly because of the rapid adoption of our service and having that limited supply. People keep asking me, so when are you going to mint more cell? I'm like, there is no more cell. That's it.

But aren't you mining it? No, there's no mining. There's nothing. We had one release, and that's it. There's not going to be any more cell created ever again. But the demand or the use has increased 10, 50, 100 times from where we were just a year ago. And what does the deal with Bitfinex look like? What's that partnership? So yeah, so Line is more focused on like new adoption for new users all over the world because they have this reach uh bitfinex

the partnership with them and that includes also bitwala in germany and mode in the uk and we have two dozen partners worldwide that kind of specialize like monarch for example has a wallet that gives you unique services that celsius doesn't do you know mode in the uk has a wallet that operates in pounds and has a bank account and a crypto account and earns interest. And we power that. So, so Bitfinex was very important because they have several million users and their willingness to offer all their users interest income was just something amazing, right? That's, that's just, it's not like, you know, Binance did it as a month,

a weekly auction where the first hundred people get to earn a little bit of interest up to capped up to a certain amount. This is uncapped, no fees, unlimited available to everybody. And that's the way to do it. So we're really excited about the partnership with Bitfinex. I think it's launching on October 15th. And if you're a user of Bitfinex, go ahead and earn your interest. You don't have to do anything. It's just whatever you have on deposit, you don't have to accept the T&Cs.

What an incredible addition for an exchange, right? Because, I mean, it used to have to be somewhere to earn yield and somewhere to trade and invest. And to put those two together at no cost to the customers, I mean, it's really incredible. To be able to trade and be earning interest on what you're trading actively while you're doing it for a trader is, it's like a unicorn. Exactly. Yes. But that's how it should be, right? That's how your bank account should operate. That's how your brokerage account should operate. And it should earn real yield, meaning high single digits, because they're earning that money on your assets, right? They're lending you assets. They don't just sit there. They're putting it to use.

So it's just a question of greed and allocations. Are you here to act in the best interest of the user? Are you here to grow the community? Or are you just here to extract as much as possible out of that user base that you accumulated? And that's a normal modus operandi for most companies, including crypto, right? It's just like, how do we put hidden fees or fees upon fees that people are not going to notice? And I always tell people, like, look at your account. Look at your cost. Look at the end of the year. Look how much interest they charge you, right?

Look how much they charge in transaction costs. And people get shocked. They're like, oh, my God, I didn't know it cost so much. Even DeFi. DeFi costs a lot of money. You know, like you think you made $5,000, but really $3,000 went to gas fees and, and, you know, liquidation fees and, and whatever else, you know? Yeah, absolutely. So I guess all of this, which we didn't touch on begs the question,

why Bitcoin and crypto in the first place? You said, I started looking at the space. I thought, hey, we could do something here. But I have a feeling that it's much bigger than that. Yeah, so for me, again, I've seen this movie before with Voice of RIP, right? Voice of RIP ran on the TCP IP network or UDP network. And it completely bypassed the infrastructure and the toll collectors that existed back then, which were the monopolistic phone companies. And each country had this giant phone company that basically said,

all transactions have to go through me. I decide how much to charge for it. And that's how business is going to be forever, right? And it's kind of exactly what banks do, right? So when you create a different infrastructure that bypasses the toll collectors, which is the blockchain and specifically, more specifically, Bitcoin and Ethereum, that allows you to transact much faster. The velocity of money on the blockchain is 10 times greater than it is on Main Street, right? And all of that basically creates a lot of opportunities. It's opportunities for yield, it's opportunities for income, it's opportunities for growth. And all of that basically creates a lot of opportunities. It's opportunities for yield. It's opportunities for income. It's opportunities for growth.

And all these things are really what pushes, you know, hundreds of billions of dollars away from Wall Street and into the crypto industry. So for me, it was obvious that these infrastructures are going to be basically a revolution. It's not going to be just a little bit. It's not like a bunch of geeks just playing with some coins, right? This is the foundation of what the financial system is going to look like

10 or 15 years from now. So what happens when Facebook comes in with Libra and central banks pick their own digital currencies and they basically do away with paper money and everything goes digital? So it makes it more difficult, I guess, for a digital currency to be raging back against the machine when everything becomes digital, right? So what is that going to mean when we see that? Because I view all of that as somewhat inevitable. Whether Libra makes it through or not, I don't know. But central bank digital currencies are certainly coming.

Yeah, I view this as a three-man horse race. So basically, you have the open public blockchain, which is what we use every day, Bitcoin, Ethereum, and so on, DeFi, competing against the corporate version. So the corporate version is JP Morgan has their own coin. Libra has their own coin, which is Facebook. And they have very different reasons why they're creating these things, right? They're creating these things to enhance their own monopoly. They're not creating those things to help you or me, right? And the third version is the government version. So basically, the Chinese government is saying, how do I get off the US dollar?

Well, let me create a blockchain-based currency. Yes, it runs on the blockchain. Yes, it's immutable, but it's definitely not limited supply, right? I mean, you and me know that neither the US government or the Chinese government is going to say, we're never printing more than X yuan or X dollars, right? So really it has nothing to do with Bitcoin or Ethereum, right? It looks like it, it looks and smells and walks like it, but it's something completely different. So I think the decision is each person, you, me,

all the people watching the show, each one of them has to vote with the wallet. Are they going to back what's in their best interest? Or are they going to back someone they know like Libra? Or are they going to back the government because it's the government. And where we park our assets is going to decide this battle. Back in the 90s, we were facing the same fork in the road. It was just the internet competing against intranets offered by corporate companies, competing against government versions of the internet. The Chinese had a government version that said, no public internet. Here, we created this and that. Use that, right? And so on. So the public internet won against the other ones because we, the people, voted to spend all of our time and use the services on the public internet, right? And we are just being tested again. Are we going to vote for something that

is in our best interest, the public domain, public blockchain, or are we going to be fooled to think that corporate solutions or government solutions are better for us and basically enhance their monopolies to act against our best interests? Yeah, it's going to be interesting to see how it how it plays out plays out certainly i think um i think that uh privacy is another obvious major concern they're uh worth discussing because at least you you maintain some semblance of it uh with the cryptocurrencies as we know today but i don't think if you have a government wallet that your money is going in and out of, they're going to have a hard time knowing where your money is going or how you're

transacting, which cash is still pretty good for, right? And look, we've seen several instances of centralization reaching their hand into decentralization. Like for example, I know everybody thinks DeFi is fully decentralized, but when you see USDC or USDT blocking for a good reason, right? But blocking certain coins and saying these coins don't exist, or these tokens are not really there. They got stolen and we blocked them. That is a form of centralization, right?

So, so you can tell me that DeFi is fully decentralized. That is a form of centralization, right? So you can tell me that DeFi is fully decentralized. That's a joke. It's trading in centralized assets like USDC. I don't think anyone would argue with me that USDC is not a centralized asset and it's doing it in a way that anyone can put the stop button, press the stop button and prevent this or that token from moving freely on the blockchain. So, so we, I think that whatever we do, we're going to have this, basically, you know, we have to really create, if we want to create a fully transparent service, like the internet, no one can stop the internet, right? We have to really design things that are designed for the public blockchain and today we're not today almost you know i would say half of all the services on the

blockchain could be easily disrupted by this or that centralized player so so we're just in the early days we are just getting started there's a lot of stuff to build. And we have one leg in centralization, one leg in decentralization. All the DeFi guys jumping around thinking, oh, look, we're fully decentralized. I'm sorry. I'm a techie. I'm telling you, that is just not true. And I'm saying we have to make it better. I'm saying we have to decentralize it further. I'm not saying we should stay 50-50 or 30-70 or whatever, but pretending like we are there is just fooling ourselves. So you said that obviously, if we see a digital dollar, digital yuan, that they will not be

deflationary. They will continue to print. It will be inflationary. What do you make of the commitment of the Fed and Powell to continue printing endlessly and this sort of exponential curve? I mean, we've seen them printing for years, but this real exponential growth in printing. Look, we, the idea, if you look at kind of like the fundamental ideas behind capitalism, you will see that basically they believe in economic cycles. They believe in a recession versus a good time. And you're supposed to save during the good times. So you have money to get through the bad times.

Over the last 20 years, we effectively, the monetary activity of the Fed and fiscal activity has basically told us that none of that matters anymore, right? The Fed or the government is going to jump in to save us every time, which means that there's no moral hazard. And financial players can take tremendous amount of risk, take 100 to 1 leverage. And if they blow up, the government is going to have a safety net and catch them and nothing happens. Me and you can't do that. We can get 100 to 1 leverage and have no consequences, right? But the big banks, the big institutions are being saved. Today, the Fed is buying all of their debt, effectively guaranteeing that their debt trades at a fair value, and they can issue record debt. Now, I understand, again, corona is a special case and so on, but the point is we should have had savings, we should have had reserves, because we had amazing 10 years of growth and innovation and so on.

But we've done the opposite. We've run deficits. Companies spend $7 trillion over the last 10 years buying their own stocks, taking their profits, and using their profits to inflate their value of their own stocks so they can get record bonuses, right? So, again, no moral hazard, right? No one's going to go to jail.

You know, like I remember when I came to this country in 1989, there was this crisis. Three thousand investment bankers and banks officer went to jail because they basically defrauded all of us. And then just 10 years later, when we had the fraud related to the 2000.com stuff, no one went to jail. 2008, no one went to jail, right? So again, this is corrosion of our standards, corrosion of what we all stand for. And unfortunately, again, the 99% is standing there looking at the 1% and saying, how can this be fair? How can they flip the coin every time and it lands on heads? And when we flip the coin, we have a 50% chance of losing all of our assets. So I don't believe in fixing that by going to Washington and trying to run for president or

becoming a congressman or whatever. I don't believe in that, unfortunately. What I believe in is if we created a system that acts in our best interest and we convinced enough people that we're doing all the right things for them, they will all join. And if they all join with all their assets, there's going to be nothing left for all these other guys who are doing all this shenanigans. So winning for me is about changing the infrastructure, changing the system,

not about trying to affect politically or economically this or that institution. I don't believe that that will ever happen. I think the people that do believe that will happen go there and end up a part of the system rather than trying to fix it just by the nature of the way that the machine works. Right. Or they convince us that they're going there to make change. And when they arrive there, they just help their friends instead of helping you. Right. So, so, but that's how politics have been for the last 3000 years. I don't think it's changed at all. And us, us expecting this or that person to really act in our best interest is just a folly. So I say that in almost every AMA, you know, don't watch what they say, watch what they do. If somebody is not taking action on your behalf and is not showing you every week or every day that they're doing what's in your best interest, then why are you trusting

them? You know, you fooled me first time, shame on me, but you, you know, shame on you, but you fooled me a second time, shame on me, right? Why am I continuing to do the same thing? So, so what we created in Celsius, we set the bar really, really high. Now, anyone who copies us has to set the bar even higher. DeFi, in its new incarnation, DeFi version 2.0, which is trying to copy Celsius with yield and everything else, has to give you more than 80%. That is the beauty of the system. They cannot give you 50% and stay competitive. So by setting the bar really high, we've set the bar for the entire industry and we forced

them to do something for you that we're not willing to do for the first 11 years, right? They weren't willing to do that in 2015 and 16 and during the bubble and everything else, right? So I'm very proud of that because effectively, no one can go below that 80%, right? They'll be out of business tomorrow. And if they can deliver more, great. That means that they're going to accelerate this adoption and bringing more and more people into crypto.

I love it. So I know that we're up against it here with time. I could probably ask a better two or three hours worth of questions, to be honest. But I guess parting thoughts, you know, what we can look for. I think you just touched on most of it for Celsius moving forward and for you. So the opportunity, you know, we can see the light at the end of the tunnel, but we can only get

there if we have enough assets, we have enough users, and we, all of us as a community, convince other people that this is really done in their best interest. And I know it's difficult for people to swallow because they were disappointed so many times. They saw all these false promises. Their politicians disappointed them. Their family disappointed them. Their employer disappointed them. Their employer disappointed them. So the older you get, the more you go and you say, this is just another fake story or scam or something. It just can't be true. I've seen this too many times. But again, we try to be as transparent as possible. We're adding this proof

of community, which is going to be the community cryptographically voting to confirm the assets, the yield, the earnings, the distribution, right? It's going to be impossible for us. And we open source the project, meaning anyone can audit the project itself or copy it and use it in DeFi and everything else. So it's going to be very hard for anyone to claim all the things that you hear them claiming today because we have nothing to hide. We want to show that. We publish almost every week how much we earned and where did it come from

and how much are we distributing to the community. So all these things put together are really, I think, should set the standard or the bar for the entire DeFi community and really help us convince the skeptics, the naysayers, because again, the few million people that join crypto today are the people who are true believers, right? We haven't gotten that mass adoption yet. We haven't crossed the chasm. And I think the yield, and I've been saying that consistently for three years, right? Yield is the best way to bring all these people across

because the banks, the financial institution, the central banks are not going to pay you anything for your money. They're going to deflate your money, if anything, for the next 30 years. So that is, it's ours to lose. The opportunity is right here in front of us. It's ours to lose. And it's a question is, are we going to vote?

We the people are going to vote with our wallets to act in our own best interest, or are we going to continue to allowing the institutions and the government to basically steal from us every, every day? Well, I know where I stand and I know, and I know where everybody who watches this is going to stand. So I think that doing very good and that hopefully people will get the message. And the more shows you can go on and the more we can talk about it, the bigger it will become.

So thank you so much. Oh, and lastly, where can everybody follow you and where can everybody sign up just to make sure that they don't miss that? Sure. And I wanted to point out also, Scott, all the work you've been doing. I think you do an excellent job explaining things to people and kind of clarifying things as well as creating a real community, which takes a lot of effort. People think, oh, it's easy. I just go on Twitter a few hours a day.

No. And it's hard work. And, and again, there's a lot of naysayers. You have to confront them. You have to educate them. You have to have an open conversation. So I appreciate really you being part of the community and helping us all move forward as to Celsius. We're we the website is Celsius.network or go to your app store or a play store and just download the app. That's the best way to get started and just open your wallet and test it out.

Put $10. There's no limits. Put $10. Wait for Monday. We took the worst day of the week. Yeah. So just the first, the second time you get that interest, you're going to be like, Monday, yeah. Yeah. So just the first, the second time you get that interest,

you're going to be like, wow, this is really works. And then it compounds and you realize, you know what? I can actually retire if I just put enough money to work here. So, so use the app,

use the website. We have a lot of resources on telegram, on Twitter, a Celsius network, and just become part of the community. Listen to what other people are saying. Again, we have hundreds of thousands of users. It's not like we have 50 users who get together once a week.

I love that it's every Monday, though, instead of monthly or quarterly or something, because you really, it's addictive. When you see it and you see your interest gaining interest. I mean, there's a reason that Einstein said that compounding interest was the eighth wonder of the world, right? I mean, this is how people have acquired and accumulated wealth since the beginning of time.

Not by trading. That's how Warren Buffett, yeah, that's how Warren Buffett really, his secret, he doesn't tell you that, but his secret is he invests only in companies that pay dividends. And then that dividend compounds over 30, 50, 70 years. And he has hundreds of billions of dollars.

He doesn't pay a dividend. He just invests in companies that pay dividends. So we pay interest every Monday. We pay rewards every Monday on 35 different assets. You choose what risk, whatever you want. You want gold, you want crypto, you want stable coins. We don't pick the assets. We just pay yield on all of them.

Love it, love it. And I can't wait to see everyone using it and taking their money away from JP Morgan. We're gonna beat the banks one day. So thank you so much for taking the time. I really do appreciate it. And unbank yourself, you know, and very much appreciate the kind words. Thank you. It means a lot. Thanks, Kyle. We'll do this

again soon. Like I said, I've got about two or three more hours worth of questions. Anytime.