The Wolf Of All Streets - ​​Celsius Whistleblower Reveals The Truth Behind One Of The Biggest Crypto Crashes | Jason Stone

Episode Date: May 2, 2023

In this video, Jason Stone shares his experience as a whistleblower at Celsius after it acquired his company, KeyFi. He sheds light on the unethical practices that he discovered regarding customer funds at Alex Mashinsky's company and the subsequent threats he faced from Celsius. Join us as he uncovers the truth behind what happened at Celsius and shares his personal account of the events. Jason Stone:  Twitter: https://twitter.com/0x_b1 Linkedin: https://www.linkedin.com/in/jason-stone-33396b161/ ►►THE DAILY CLOSE BRAND NEW NEWSLETTER! INSTITUTIONAL GRADE INDICATORS AND DATA DELIVERED DIRECTLY TO YOUR INBOX, EVERY DAY AT THE DAILY CLOSE. TRADE LIKE THE BIG BOYS. 👉 https://www.thedailyclose.io/   ►►BITGET GET UP TO A $8,000 BONUS IN USDT AND GET MASSIVE DISCOUNTS ON TRADING FEES! 👉 https://thewolfofallstreets.info/bitget    ►►NORD VPN  GET EXCLUSIVE NORDVPN DEAL - 40% DISCOUNT! IT’S RISK-FREE WITH NORD’S 30-DAY MONEY-BACK GUARANTEE. PROTECT YOUR PRIVACY! 👉 https://nordvpn.com/WolfOfAllStreets   ►►COINROUTES TRADE SPOT & DERIVATIVES ACROSS CEFI AND DEFI USING YOUR OWN ACCOUNTS WITH THIS ADVANCED ALGORITHMIC PLATFORM. SAVE TONS OF MONEY ON TRADING FEES LIKE THE PROS! 👉 http://bit.ly/3ZXeYKd  ►► JOIN THE FREE WOLF DEN NEWSLETTER, DELIVERED EVERY WEEK DAY! 👉https://thewolfden.substack.com/   Follow Scott Melker: Twitter: https://twitter.com/scottmelker   Web: https://www.thewolfofallstreets.io   Spotify: https://spoti.fi/30N5FDe   Apple podcast: https://apple.co/3FASB2c   #Bitcoin #Crypto #trading  Timestamps: 0:00 Intro 1:11 What happened with Celsius 7:30 Chapter 11 is only to protect the executives 13:10 We got screwed by Celsius 14:04 The first trigger 15:50 Spending $80 million on Cel token 19:00 Voayger & Celsius 23:30 Whistleblowing 26:50 What’s going on now with Celsius 29:00 Jason was threatened by Celsius 32:45 What is Jason working on right now 36:00 Why Celsius bought Jason’s company 40:00 The future of DeFi 43:10 Final thoughts The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

2022 was the year of crypto contagion. One of the biggest platform explosions, of course, was Celsius. And nobody knows more about what was going on inside Celsius than Jason Stone. Some have called him a whistleblower, but his company KeyFi was acquired, and then he eventually left because he saw all of the bad behavior that was happening within the company. We share quite a bit in this story about the inner workings of Celsius and these platforms. What was being done? What was being done wrong? What was maybe being done illegally? You do not want to miss this story. I feel like this is going to be the easiest podcast ever because it's story time, right?

It's story time. You effectively have an incredible story to tell and that's what you're going to share. So I think we can start maybe not all the way at the beginning, like birth and and uh bar mitzvah if you had one or something but i did i did obviously you had a pretty contentious relationship with celsius so we should probably start from the beginning and and then uh work our way up to where it's at now yeah yeah so uh celsius acquired my staking as a service company back in, or the transaction was supposed to occur back in mid 2020. We kind of joined the Celsius team. And by August 2020, we were starting the OXB1 account, which people kind of came to know as one of the largest DeFi yield farmers in Ethereum at the time, you know, as things evolved over the next six months from there, I kind of uncovered a lot of what the Federal Examiner uncovered recently and what a lot of people have been saying relating to, you know, the fraud or not just the fraud, the unknown unknowns that were going on at that company, right? And the different kind of segments of

executives trying to do different things with the company, with their own money, with the company's money, et cetera. So after I kind of uncovered this and clearly saw that I was being lied to and that things didn't make any sense, nothing added up, I kind of made my stand. I said, I don't want to be involved anymore. And I took a step back in March, 2021, a year and a half later, they ended up going bankrupt. And, you know, there was this, you know, massive disagreement as to, you know, what our original contract said, what really happened, what should have been paid to who, and that kind of finds us where we are today, which is we have an adversarial proceeding going on within the global Celsius bankruptcy. So

yeah, that's kind of where we're at. We ended up signing a litigation stay recently in the hopes to settle because for the most part, the monies that KeyFi still has are mostly in NFTs that, you know, the estate says is theirs, we say is ours. But at the end of the day, it's such a small amount of money that we've actually, Celsius has already spent more, almost more money than the actual dispute is over. Right. And it kind of, in the last few months, I've really seen this craziness in the U S bankruptcy system that has got to be addressed by someone, you know, it, it, it, it's like, we have this bankruptcy system so that U S citizens or creditors that are U.S. citizens of bankrupt companies can be taken care of. But then we have this situation where so many of them have happened so quickly. And you really just see these law firms charging exorbitant fees and making the estates so much smaller day in and day out.

There have been these crazy like emails we'll ask to liquidate some almost worthless nfts and then the lawyers on the estate side end up charging 10 times the amount of money just in emails back and forth to determine if we can sell those nfts then the nfts that are considering to be sold are worth you you know? And that's just like negative EV for everyone, except for big law, right? And what I realized in this process is something kind of incredible. It's not just the bankruptcy system

or slash the creditors that are hurting because of this, right? It's actually the taxpayer, right? Because the bankruptcy system is run by the Department of Justice, right? You have lawyers, judges, clerks, the US trustee, the FBI, you have all these organizations that the taxpayer is actually paying for, right? It's not just the estates that are being charged money by lawyers for legal fees on the side of, you know, trying to get back money. It's also the American people. So I look at this and I'm like, we've seen so much blow up and anger

around how SVB was run and how all of these systems and services that are run are, you know, not really in the benefit of the people. Right. And I just feel like this is a prime example of inefficiencies or wrongdoing as a function of how our government doesn't catch things, right? They set up these law firms to be in charge of these estates, be in charge of these estates, be in charge of these bankruptcy processes, but the incentives are not aligned.

The longer that these processes go on, the more that lawyers get to charge and the more it costs the U.S. taxpayer with all these different organizations that are being charged money. So it's kind of crazy. And I really worry that not just with my situation, but with creditors globally on all of these different bankruptcies that have happened over the last year, where's the end? Where's the end for everyone? I mean, I'm a Voyager creditor. I think everybody who listens to the podcast knows that. And looking back in hindsight, they'd simply just liquidated the day that they declared bankruptcy instead of declaring bankruptcy. We've gotten 75 cents on the dollar or something roughly like that. Every single day that passes, they're spending tens of million dollars a month on advisors, lawyers, as you said, a failed FTX deal that was poorly vetted, a potentially failed

Binance US deal, each delaying the payback, each, as you said, costing creditors. That's we're who pay for it. We're literally paying those lawyers for every one of those emails out of our balance, right? And the taxpayers, as you said, it's an absurd, fraudulent process itself that never ends well for the creditors. I mean, it's really disgusting now having gone through it, how long it takes, how much it's milked, and what the result is. And the part you didn't mention, the only reason that these companies largely are filing Chapter 11 is to protect the executives.

Yeah. Voyager decided... I'm sorry. I'm not putting my tin hat on. But Voyager decided bankruptcy was better than liquidation because Steve Ehrlich and his friends didn't want to go to jail. But does that really protect them from jail? Does it? Yeah. Yes. Part of the proceedings here have been largely to them to avoid the problems that they could have had. I mean, it's part of the negotiation and the process.

Listen, you're deep in the weeds of the process. I mean, what do you, listen, you're deep in the weeds of Celsius. Do you think Mashinsky gets in trouble at the end of this? Absolutely. Well, but I also, I've seen that there are

two completely separate processes, right? One of them is the bankruptcy system and the Department of Justice, you know, running through the bankruptcy court. And then separately,

there's, if there was criminal fraud, then that's a different arm of the government, right? That's building a case or might be building a case against him or other executives. So, and I do actually see why there is a separation of these things, right? On one hand, like it's, if there was, you know, criminal action taken and needs to be accounted for, then a certain organization or a certain three-letter agency goes after those people to hold them accountable. And then that does have an effect on the bankruptcy process, but isn't like directly part of it. You have to wonder if in certain cases they should be, I don't know what that would look like, but they should be merged together. It's hard, but we do live in a free society and we do have freedom of choice and will.

Yeah. The added wrinkle, obviously that then sort of the SEC or the regulators get involved and start to declare the assets that are involved in the bankruptcy as potentially securities and not securities and hold up the process further so while they are vague and refuse to make a decision the process goes on and creditors and taxpayers pay more money. It really feels fraudulent, like a fraudulent process having gone through it. Yeah, no, no, 100%. And I think that actually, hopefully that the last year's sequential bankruptcies and at the speed at which they happened and the number of people affected will actually spark some type of anger in Congress or something around how the business of big law relative to what's best for creditors and the US taxpayer.

Hopefully that starts to come into perspective because it seems like our government has created a system, or not our government currently, but history has created a system where almost like we want answers at the expense of people's benefits, right? Exactly right. Yeah, they'll spend all of people's money in order to get answers that won't make a difference, but that money could have made a difference to, you know, the pocket of each individual person. They should liquidate, as you talked about the process earlier, so what they should do is just liquidate and then litigate, right? I mean, give everybody their money back first and then sort out the rest. But the problem is then who's going to pay for it?

Right, right. No, it really is crazy. But I think that the anger, the thing that strikes a chord with me is like, it's one thing where creditors get charged for the bankruptcy process, right? That's where the money comes from now. But then people aren't thinking about the other side and the fact that there is another side, right? And it is our government. And we are the people that end up paying for that out of our taxes. So the longer that these things go on, the more, you know, the greater cost is borne by the taxpayer and by each of us individually, as creditors or by, you know, individuals as part of this process. It's just crazy. And I wish that

I mean, you can't, you can't conflate different types of situations, but, you know, there's such visceral anger around different types of things these days, whether it's, you know, banking run awry, whether it's the way that trans rights are addressed by different, you know, Congress people, right? congress people right there are these things that that are these fiery moments that people get super animated about and you have to think about like this is a huge group of people that's been affected right it's not just celsius not just voyager not just ftx it's all of the people you know probably millions of people in the u.s who have been affected by these crypto bankruptcies and it just to me i think it's it's kind of shown us so many negatives and inefficiencies in our processes, but no one seems to be doing anything about it. I'm not sure what can be done about it, to be honest. I'm just sitting here, you know, as kind of a part of the process. Yeah, same. But there's people smarter than us who are much more knowledgeable of the process. We could certainly figure out ways that you and I don't pay for these court cases indefinitely when we're already down and out and have lost money and know that we're only getting a small percentage of our assets back.

Yeah. Yeah. And it's really sad. I wish there was an oversight on how the law firms work, But then that's just another cost, you know? And it's like, where does it end? But did you guys get paid when they bought you out? No, sorry, excuse me. They paid us $65,000 for the technology assets that we had,

but it was supposed to basically be an earn out where we would make a percentage of profit based on the profits that we made for the business. And they said that they were hedging, but they said that they were hedging their entire business, which now we all know from the federal examiner that they weren't. So there weren't any profits to be had. So basically we didn't get paid. We just got screwed. And I'm not a, I didn't have major deposits at Celsius, but you know, what I had built out as my business, you know,, we didn't get anything out of. They were supposed to pay us a bunch of sell token, which we never got.

But obviously, that would have been worth it. So it's a crazy merry-go-round. It really is. Okay, so let's dig more into the weeds of the story then. While you were at Celsius, what was the behavior that you identified that was bad in as much as you can talk about it what you know raised your red flags what kind of got you panicked what caused you to leave because i mean as you said you built this company you sold it to them and then you bailed it must have been pretty bad yeah yeah um the the first trigger trigger was this situation where executives would basically lie to one another, I'll call it, and just tell each other things to induce other executives to do what Mashinsky wanted.

So there was this ethos at the beginning of, you know, we can only do d5 with um with international customer deposits so at first it was okay jason you're only touching international customer deposits then it was oh we don't actually have a separation of international versus us uh domestic customer deposits um we set up other entities that'll make this okay and i just saw like one executive telling another telling another, telling another that like things were going to happen. So like, let's just do it now. And that type of behavior when you're dealing with hundreds of millions or billions of dollars is just absolutely not okay. Right. Cause you're basically just passing the buck onto someone else or

some situation that doesn't exist. So that kind of came up. And I, you know, I was scared myself because I was the one actually deploying these assets. And I was like, well, what is or isn't legal? It was almost like a kid in a candy store. I saw a shiny object and they were like, go and do this DeFi stuff. And they said that the, everything was regulatorily compliant at the beginning. And that kind of story started breaking down. So, you know, then I started asking more questions, the answers got hairier and hairier. And then kind of we ended in in the place that we did. Another thing was just, I know that a lot of slack messages have come out in terms of, like internally, what people were saying about cell token, and, you know, what the internal company or the internal people believed about cell token

versus external people. And that's just like a microcosm of the true problem. I mean, one time, and I think it was January on Slack, one of the deployment execution guys told me that Alex had told him to just start buying cell token the year before I got there and spent like $80 million of customer Bitcoin on cell token just to, and there weren't questions asked about why that was right. But it, and now in retrospect, we all understand it was to boost the price to continue the flywheel, you know, them selling tokens at higher prices or borrowing against cell token, understand it was to boost the price to continue the flywheel you know them

selling tokens at higher prices or borrowing and sell token whatever it was um but that stuff just like jumped out at me and even in the microcosm i was in i was like this can't be right so it's a ponzi scheme so i don't okay it's not it's a it's a uh it's an iteration of a Ponzi scheme. Correct. Correct. I don't think that they were running their business thinking to themselves, this is a Ponzi scheme. And there's a difference between that and Madoff because... Yeah. He was totally intentional, of course. Totally, totally intentional. Right. And maybe intentions at the end of the day don't matter. Right. But from the perspective of end of the day don't matter. Right. But from the perspective of what I saw when I was there, they definitely did not believe that like, that they were operating any type of Ponzi scheme because they were, they were

looking at it like a startup and they were looking at it like, we need to do this to then make the probability of our success greater. And that is a reasonable, in a complete vacuum, that idea isn't bad. But when you're dealing as a bank, right? Or as some type of investment firm, you can't gamble your own equity against your customer's assets, right? So it's just crazy.

Yeah, I just don't think customers had any idea that their funds were being aggressively traded at a hedge fund, effectively. A, at a hedge fund, but B, to buy the assets of the very company that they were banking themselves with. And then you get into, obviously, the entire marketing scheme of Celsius, which I also fell hook, light, and sinker for. I had Machinsky on my podcast and listened to him explain how they made money and how JP Morgan lends securities. He didn't say anything

about going deep into DeFi. I'll tell you that. But I mean, unbank yourself, right? I mean, I think the biggest problem here was transparency, right? I mean, it's just, I think that the majority of customers of Celsius Worldwide and FTX and BlockFi believe that they were depositing their money into a bank to earn interest and didn't understand that they were actually putting in the hands of effectively a bunch of degenerates who are willing to go way down the risk curve to make sure they could continue to offer those huge yields.

I mean, listen, I've told the story, but I'll briefly tell it again. You and I met in Dubai, right? Well, I went off site for about two hours for an unplanned meeting with Three Arrows Capital. I know a lot of people that were there did those as well. I crashed it. It wasn't a meeting with me because I'm a Voyager creditor. And I had one question. I walked in.

Kyle saw me. He kind of gave a wince because I've obviously been critical of them. I said, Kyle, what the hell did you say or what lie did you tell to Steve Ehrlich to get him to give you $700 million with no collateral? And he laughed. He said, Scott, I swear to you. He's like, I've done a lot of things. We blew up.

I swear to you, Steve Ehrlich came to us and said, please take this $700 million. I need to put it to work. And I believe him. And I believe him. And then I said, so what balance sheet, what P&L did you send? He was like, he asked us for nothing. He came to us and said, listen, I have $700 million. I need to pass on 7%, 8%, 9% yields to my customers. This money has to be put to work to do that. Take it. Yikes. So coming back to the transparency and disclosures, if an email went out

to all Voyager customers and said, today, Voyager decided to give an unsecured loan to Three Arrows Capital Fund at $700 million, a lot of people would have withdrawn their money and that would have been their choice. It's crazy. Is that the same kind of behavior you were seeing at Celsius? It seems like they were more focused on utilizing customer deposits to basically recycle into Celsius token, which raised the price of Celsius token, which allowed them to pay more rewards, which allowed them to take bigger loans. I mean, I know that they were in anchor, you know, like a week before the Luna blow up. Right, right. You know, it's an interesting parallel that you draw there between the mindset of the Voyager execs versus Celsius execs. And the honest answer is I don't know. But I think it's interesting to consider, you know, the types

of people that are, that were running these businesses, right? What they were actually believing themselves at the time they were doing these things. Like in the Voyager example, just not being very familiar with it, just based on what you said, it's almost like someone who, it's almost like a startup executive who raised all this money, who instead of trying to build a business that he knows won't work, should just give back the money, right? But being somehow stopping themselves from making that mental jump that that's the right move right i agree i don't know that they were i don't know that they were like criminal in mentality at the time any of them i think that uh they were a victim of their own success to some

degree because yeah i mean i i can only i can speak to voyager but i remember kind of when that dogecoin boom happened yeah and Cuban was, you know, I guess an investor, a supporter of Voyager and the Mavericks took Doge and they had millions of people sign up who just basically wanted to trade Dogecoin. They weren't ready for that. Took three months to onboard people. But now you have a million more customers than you were prepared for or whatever the number is, and you need to give them yield.

Right. So basically the speed and velocity with which these platforms scaled because of the bull run, I think sent them just way further down the risk curve to not lose those customers. Because if you said one day, listen, we can't get the yield, it's going to be 1%. And BlockFi actually at one point did drop their rates almost, I think, to that level. Then people would have left. And I guess they probably feared losing their customers. Not an excuse, certainly. Yeah. Yeah. It's interesting because it's almost like building a business expecting the bull run, right? Or the continued... And this goes not just to crypto, but to the larger macroeconomic world where we've built a system of credit on credit, right?

And if the right levers aren't in place or the right controls aren't in place to manage that on the risk side and the kind of emotional mentality side, really bad things can happen, right, when the economy isn't continuing just to boom and go up. And we do, everyone it's we go through boom and bust cycles right so you you can't build a business on the on the theory of hope right the expectation of the never-ending bull market right that's what they were building their business on right that none of this stuff can ever go down sure and if it does not not being cognizant of the fact that they'd be completely screwed if it did i mean what else did you see there that was of great concern i mean i guess we should give some context too you said that you're sort of in internal litigation with

them in that capacity i mean to a degree you've become i guess an informant against celsius correct i mean is that the proper vernacular for it? Maybe the word that you're looking for there is whistleblower. I have had conversations with agencies in our government that are confidential relating to their looking at this company and the people that work there. And I do personally think that at some point they will, you know, file charges like they have against FTX executives. And it actually really interests me as to why, like what order those things happen in and like why they, it takes in some cases, many years to build a case against one executive at one place, but much less at the other? Does it have to do with political motivations? Or is there a reason? Is it harder to get information on one of them? I honestly don't know, and I guess we'll never know. But yeah, it's hard.

Yeah, I hate to tin hat, but I mean, SBF was the guy meeting with gensler and meeting with maxine waters and sitting with the politicians i think they had to act fast uh against him right so i think that he just was first by sheer virtue of the embarrassment and egg on the face of politicians who had sort of been involved or beating with him and stuff and the rest probably i think probably if machinesinsky or executives at Celsius to some capacity end up in trouble, that's probably more reflective of the normal process.

I think SPF got fast-tracked. Yeah, yeah, probably, probably. And honestly, Congress and our government is so in a vacuum, right? They're dealing with something that's brand new and they don't like have internal staffers who are necessarily experts on these things, right? So they have to like get up to speed

and they're being told that they need to make a decision on something that they fundamentally are just learning about at the time that they're being told to make a decision on it, you know? I don't know how much, I'm not like gonna place blame on Congress people or senators for you know being

you know uh swindled by some of what other people are saying or are the smartest people on this show i had sam bateman on this show like seven times you know what i mean probably between i mean we all thought listen we all want to believe in the people that we look up to right at the end of the day um as successful at time that they are. And that's really difficult. It's a difficult thing to internalize. I mean, you would know better than me. Maybe Celsius is just a more tangled web in trying to figure out exactly what they did

because what you described is less outright, I think, than, holy crap, the funds were being sent to Alameda instead of FTX from customer deposits. And I think maybe it was just more outright fraud like the funds were being sent to Alameda instead of FTX from customer deposits. Yeah. And I think maybe it was just more outright fraud and there's no way to explain, you know, $7, $8, $9 billion going missing in that context. But I don't know. You're right.

It's a tough... I don't understand exactly. It's a tough cookie. Maybe I got to get a lawyer. Yeah. Which also costs more money, right? So where do you stand now? So then where does your process stand now with Celsius?

And where do they stand in their bankruptcy proceedings? I've seen that of late, there's a lot more bidders and a lot more interest. I saw Michael Harrington was forming a company to potentially... I saw that too. And honestly, I haven't been following the main bankruptcy process like on a day-to-day basis from what i've heard there was this uh nova wolf uh bid that was going to be the only bid and then at the last minute these two other bidders came in which i guess is good for you know all creditors or people related to the estate the more people that want the assets hopefully the

price will go up right that's what an auction is. In my process, we're arguing over like, depending on what NFTs are worth at a given time, like $4 million worth of assets, $5 million worth of assets. The judge has allowed us to continue. And this is another dichotomy. Like it's really like,

I have a lot of respect for the judge and the FBI, the government, in terms of them taking the time to look at NFT DeFi and say, okay, until we figure out who really owns these assets, we're going to allow DeFi, which is the company that Celsius acquired, where the NFTs are held, still continue to farm and do um you know relatively delta neutral yield farming with these assets to earn interest while you know while we figure out it's interesting who actually owns these at the same time uh you have these situations where like they're so they're letting so they're letting us do that but then they're not taking action on the other side which is you know crazy to me but long short, where we are is we're in this litigation stay, which we've signed in the hopes to settle and basically sit down and say, this is what happened to all the assets. This is where they all went. This was the impermanent loss. This were the profits on dollar basis, coin know, hopefully some type of, you know, asset exchange and then, you know, walk away. But it's since we signed that, it seems like the lawyers, at least on the Celsius side, not the committee side, but the Celsius side have done everything they can to throw wrenches into the settlement process because I really believe that they don't want this to settle. Right. Because they get they'll they won't be continuing to charge fees if this settles. So they've already charged, to my knowledge, I think more than $4.5 million just on fighting me and we haven't gone to

litigation yet. And the total amount that we're arguing over is about that amount. So it's like, what? And it's just it's insane it's insane yeah but you know i'm i'm a small piece of the you know global celsius story and uh yeah i honestly wish i could have they were just they were threatening me after i left um you know and they had me followed for a while i was like i was truly fearing for my safety. I wanted to kind of come out and say, hey, I didn't know what avenue or format to come out at. I was hoping that they would honor their agreement, even though I left. They ended up not doing that. But regardless, they were threatening me.

And I was scared. They were doing sketchy things. I didn't know what they could do you know they might more into let's talk more about that i mean you they literally were following you like with the intention i mean i guess you don't know i have no idea but because you they were trying to like get something on you that if in the future i'm not sure i'm honestly not sure but i know that it happened for about the eight weeks after i initially left. They were having me follow it, I think, because at the time, because their internal processing

controls were so out of whack, at first they were accusing me of stealing $400 million. I was like, guys, you wouldn't be able to find me. I remember that. You basically came out, then they counter-accused you of something, right? I mean, isn't that kind of- Right, but this is a year before all those lawsuits. So this is just like, so if you go back to the year before, they were actually just in their mind thinking that, they were just thinking that, okay, he somehow stole $400 million from us. So we're going to make sure that he doesn't leave the country or something.

Meanwhile, a year later, once we actually went to court, they were like, oh, yeah, impermanent loss was that loss. He didn't actually steal that money. You know, it's like it's just making decisions based on bad information, which I think is a lot of what all of this comes down to, right? It's is the bull market going to be forever? What's going to happen tomorrow? Like, who are these people? Right. It's all just, you all just bad information and decisions

are being made based on that. And then we end up in these situations. There's so many crazy stories. I'm trying to remember surrounding Celsius at the time. Wasn't one of them, and I don't know if this was true or not, that one of the people managing hundreds of millions of dollars was a 21-year-old girl or a 23-year-old girl or something like that? That was even before I got there. So that had stopped by the time I got there. But she actually had some finance experience. There were other people that were like 21, 22, 23 who were just out of college, not even finance majors, who they were just like, oh, here's 100 million bucks, go deploy it on Curve Finance. What? You know, like, what?

Just, it's really crazy to see. It's really crazy to see what's happened. I mean, your personal litigation is nuts. And then you extrapolate that to the size of the entire thing. I mean, it feels like this just takes years to resolve it's really sad but i it it's i wish it i wish it wouldn't you know i think everyone wishes that i don't know yeah maybe it maybe it just does take years maybe that's just the world that we live in i don't know so what are you working on now? Now I've actually turned some of my learnings from the DeFi world into some theories about how our, I guess, society works in terms of what people need, in terms of liquidity, how they live their lives.

I think that what interests me the most these days is like, I guess, institutional DeFi or real world assets on DeFi. I think that there's a lot of lessons and notions that we can learn from how people operate in DeFi. Actually, you know what a really interesting fact is to me? The fact that like the most profitable, like people on chain, I think there was this article a couple of weeks ago, were basically the liquidators on Aave and Compound in the DeFi summer days, like late 2020, early 2021. And that's because they were basically serving this actual need, which was buyer of last resort, right? If someone is borrowing money against some illiquid asset, then it's the liquidator who actually safely makes

money. But I think that that, and while that might sound weird, I think it's actually a good thing, or it's a good model to live by, right? People have a lot of their wealth in paper equity, in collectibles, in things that are relatively illiquid, and being able to borrow against them, if there is a buyer of last resort, I think is a good thing, but it doesn't have to just be with crypto coins, right? It should be with any real world, any asset that people that some other group of people in the world attributes value to that you actually can,

that you can find a borrower that is willing to lend against, right? So even if you're paying a high interest rate, people have their stuff, they like their stuff, but they don't necessarily want to sell it. And they should be able to live their lives based on their total global wealth, as opposed to just kind of their banking level wealth. And I think that that is like one of the most interesting areas to me. And I think what that means is real world asset NFTs. And that can mean a lot of different things, but it's basically creating rails for real world assets to gain liquidity through on-chain mechanisms.

And people say NFTs are dead and all this stuff. And I think that they're talking about JPEGs and this whole world. Yeah, they're talking about PFPs. Come on. That's not what NFTs are about. Exactly. It's about technology. And I think that that's where the natural evolution of this show goes. Yeah. It's using that technology for... from Maple Finance recently. And I mean, that's kind of, you know, their, I guess, main goal is either tokenizing assets, but more just making real world assets available for lending, you know, within DeFi.

And it's a huge addressable market, literally endless. Imagine if you had one single, you know, platform where you could basically manage everything you own in your entire life digitally, right? Right.

It's incredible. But listen, I mean, I think the last part of this story basically manage everything you own in your entire life digitally right right it's right it's incredible but listen i mean i think the last part of this story is that you quickly built an incredible platform that was worth buying for celsius uh i would i wouldn't say it was quickly it took it took two years but um that's quickly quick quick not quickly for crypto, but that's quickly in the real world. Yeah. Yeah. No, I mean, listen, it was a technology that was specifically focused on making staking easier and getting the best yields out of the proof of stake version one, which was not even what DeFi is today. It was the Qtums, the Horizons, the dashes of the world, right?

But just the idea that grouping coins together would generate greater yield, doing that in non-custodial fashion, at least Celsius ideally wanted that. And that was the crazy dichotomy of it, right? They wanted to be this decentralized, honorable entity and ended up figuring out that the only way that they could get there was to do it the opposite way. I don't know. It really is something else, man. But so, I mean, you've got these ideas. Have you started building anything yet? Or are you just sort of waiting to see what fleshes out with Celsius first? No, I actually have started building a company with a friend of mine, not necessarily in blockchain space. I think it's more of a Web2 company, but it basically is trying to apply these DeFi ideals

to the real world, which is how do you match buyer of last resort with, and then lender and, and lender with borrower, right. And doing that for things that are, uh, not the most like commonly thought of, you know, assets that you can borrow against, right. Whether it be high-end collectibles, sports cards, high-end art, startup equity. I think that we need universal rails around those things. And hopefully we can build a company that can service those needs. Because I think that, you know, it also goes to this other point of like, how do you align interests, right? Like people, like Peter Thiel always says, people should go and build a startup, right? Because they get way more for the value of their time

out of doing a startup than doing a corporate job, right? But at the same time, then you get into these situations where these really successful entrepreneurs build something for a long time and then aren't able to get liquidity because it's just not the path for their company that they expected, right? Whether it stays private or they can sell secondaries at a big discount, but then they're not as incentivized to see the company's continued

success, right? If you created a market that was better versed around lending as opposed to sale, and those entrepreneurs and founders were still incentivized or the value gain is still directly correlated to the success of their business, then you create a much more fluid process for keeping these bright minds continuing to disrupt and continuing to build without necessarily needing to worry about, am I going to get that liquidity event? So it makes the jump from corporate to startup way more acceptable or way more palatable. And I think that that's kind of a human behavior change more so than... Yeah. I think that that's what we're seeing, right? Where people are angry about what happened with these bankruptcies. People are angry about how the world has evolved the last two years. I think even people were angry in 2008,

but this is like 10 years later where we all know better in a way, right? And now I think the anger is a little bit different to a place where we're ready to change our behavior, right? We're ready to be more accountable for our own well-being. And just taking a little bit more accountability for how we all act and the services that we rely on and how we interact with the financial levers in our lives, I think will lead to a much better structure for society. Has anything fundamentally changed in your view about DeFi now,

having been in it for all these years, seeing all the, well, it was CeFi wipeouts of 2022, to be honest, but the state of regulation, the aggressive stance by the United States government. I mean, do you still think that all this is as inevitable as you obviously once did when you chose to put your time and effort into building these things. What's the state of DeFi, the state of crypto in your mind in 2023? Yeah. So I actually, and I know people are going to hate hearing this, but I think that DeFi

is a great model for enterprise finance or for a new version of how existing processes and services are done, as opposed to doing something completely new, right? I love decentralized stable coins. I think that there's a reason for them to exist. And there's a lot of reasons for these decentralized money markets to exist. However, I think the underlying technology, like the blockchain technology and the transparency and the rails around utilizing the DeFi processes for regular finance is what DeFi will become, right? Because that's the much, as opposed to changing people's minds about, you know, go crypto or don't, just saying, okay, here's blockchain technology that mimics or enables you to get better access to, you know, lending, borrowing, other types of financial services,

just because they're on chain, because it's all more simplified, right? It goes back to the original ideals of like where we were in 2017 with let's cut the fat out of the finance industry, right? I think that, I don't know, maybe this is why crypto is so cyclical, right? We go through these iterations and then we realize that the whole idea of this thing is to cut fat out of the layers where there's basically inefficiencies due to how industry has grown in our country and how industry has grown with technology. Now we have better technologies that can make things more simple, that can make things cheaper for people or get people better rates.

And I think that we're seeing that with AI right now, right? With chat GPT, it's just another way that people are realizing that things can be done more efficiently, more cheaply, and then you free up a lot of value that was muddled before. And I think that that's kind of the ideals that I look for in moving forward in DeFi and just, you know, kind of blockchain technologies as underpinning, you know, financial services in the future.

But there's still hope in the original premise is still there. For sure. For sure. We always come back to square one. Yeah. Cypherpunks, right? Like, don't rely on the services that, you know, you take for granted because eventually they might not be there or you can't always trust the people running them. Right.

I think we've learned that from the banks of late, right? The banks, the not banks, the lending companies, right? Yeah. I guess we should actually be our own banks, but unbank ourselves, not with Yeah, I guess we should actually be our own banks, but unbank ourselves, not with Celsius, obviously. I mean, any final thoughts? People should just be a little more conscious with the services that they rely on on a day-to-day basis, right?

If your cell phone provider went bankrupt tomorrow, right? Or all cell phone providers went bankrupt, how would you call people? How would you get in touch, right? When you put your money in an ATM and it shows you a number in your checking account, unless it's in your hand, you're relying on someone else. So just being a little bit more conscious about the services that we rely on for everyday life, I think is incredibly important and will start to really affect and make people start to

change their behavior. Anything that I may have missed here before I let you go that you're dying to talk about, or did we cover it all? I think we covered it all. Yeah. Awesome, man. So listen, where can people find you keep up with you after this conversation? You can follow me on Twitter at zero XB one. I think my partner and I will be announcing something about this company that we're building in the next few months.

And yeah, always happy to talk to anyone who thinks that they can help effectuate change in the world. Awesome, man. Well, I appreciate it. I'm sorry for all that you've been through. Don't be. A rough few years for everybody, but you've been the brunt of it in a worse manner than most. Hey, we all got to do what we got to do.

Crazy story, man. Well, thank you for sharing. Thank you. Talk soon. Let's go.