The Wolf Of All Streets - How This 29-Year-Old Crypto Billionaire Is Pushing Crypto To The Masses | Sam Bankman-Fried, FTX

Episode Date: July 22, 2021

Sam Bankman-Fried is leading the charge towards mainstream adoption of crypto, seemingly single handedly marketing to the masses. He has put the name FTX on a stadium, MLB, Tom Brady and others, bringing more new eyes to Bitcoin than ever before. He believes that crypto is in the early innings and that the future is bright. Perhaps most importantly, he asserts that institutional adoption has just begun, and that a flood of money is soon to enter the space. Sam Bankman-Fried: https://twitter.com/SBF_Alameda --- Build on Harmony, run on all chains. Harmony is your open platform for assets, collectibles, identity, governance. Be the ONE to bridge to all blockchains. Harmony is an open and fast blockchain. Their mainnet runs Ethereum applications with 2-second transaction finality and 100 times lower fees. Harmony’s secure bridges offer cross-chain asset transfers with Ethereum, Binance and other chains. https://thewolfofallstreets.link/harmony --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe. This podcast is presented by Blockworks. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworks.co ーーー Join the Wolf Den newsletter: ►►https://www.getrevue.co/profile/TheWolfDen/members

This episode is brought to you by Harmony. Please stay tuned for more information about them later in the episode. What is up, everybody? I'm Scott Melker, and this is the Wolf of All Streets podcast, where twice a week I talk to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, and politics, basically anyone with a good story to tell. Today's guest is a certified legend in the crypto space. As the CEO of both FTX Crypto Exchange and Alameda Research, SPF is known for his talents in arbitrage trading, building fascinating tech, creating top of the line trading systems and bringing crypto to the masses. The last time I interviewed SPF was last December, so it's safe to say that a lot has changed in the past seven months. It's my hope that he will share

his thoughts on what's going on with the market, what it may take to turn things around. I also want to talk mainstream adoption and the massive moves being made by FTX in that direction. Sam Bateman Freed, thank you so much for being here once again. Thanks for having me. So listen, the last time you were on, I asked about how you manage six screens at a time and the effects on your neck. Now I want to talk about your beanbag chair and if that's one of the secrets to becoming a whale. Oh, certainly. I can't do it without that. Is it literally impossible to accumulate wealth without a beanbag? That's right. So does, do you just go back and forth between your main chair and the beanbag chair, depending on the, depending on the mood? Yeah, well, I usually go to the beanbag to rest or sleep.

And I mean, it's certainly not always the most comfortable bed in the world, but it's super convenient. And it's sort of right back there. And the other things that helps me stay in sort of a work mindset and keep a lot of the context in my mind that I'd either serve otherwise serve like lose, you know, for a full night's sleep in, in another venue. So I don't know. Do you ever get a full night's sleep or are you always in work mode?

Yeah. So I do sometimes, I mean, I slept a lot over the last day, actually probably a good solid, you know, 12 hours or so, but, but,, like, I'll often, you know, take, you know, two different four-hour naps over the course of the day or something. It totally depends. And it really depends on my schedule, you know, as much as everything else. Like, just sort of when have things been scheduled. And, you know, part of the problem sometimes is I'll have calls scheduled with people like all across the world.

And so I'll have sort of like little kind of, you know, splashes of calls at, you know, four different segments throughout the day. And I'll kind of look at it like, yeah, you know, I see that period there, kind of got nothing going on for those four hours. Like, yeah, it looks like a tempting period to sleep. Pretty intense.

So listen, as I touched on in the introduction, you're pushing me, obviously, crypto towards the masses on a level that I don't think we're seeing anyone else doing. And it's funny because I've seen the criticisms where people are like, well, Major League Baseball, that's not a crypto audience. And I kind of shake my head and say, that's kind of the point, marketing to the same people

that already know about you seems pointless. So can you talk about the moves that you're making, why you're doing it and what you think the future impact of that will be? Totally. And, you know, I think a lot of this comes down to where we came from as a company. Um, you know, the fact that, uh, that, you know, a lot of the success that we've had, we've had because of our product. And, you know, I think that's always been the thing we felt proudest about. And the thing that, that we feel like we really have a lot to offer this space. And on the flip side, we're really late. We didn't launch anywhere till 2019. We didn't launch in the US till 2020. And, you know, by that time, there's already you know some adoption for for the

biggest players um and so you know i think it's sort of like you know part of the is is like we think we're we're ready in terms of you know getting uh in terms of really getting more you know more getting our name out there more getting more uh more more sort of adoption and more users uh we we also have sort of historically been lagging behind um in terms of of you know mass users and so i think for both of those reasons you know we're pretty excited to be, to be getting out there more. And I think part of your point about, you know, which audiences are we targeting? Well, I mean, the answer to the answer is, I don't know, all of it, right? Like, like, the answer is like anyone who might be a crypto user at some point. And of course, the hope is that that's, that's a lot of people.

And, and so, you know, we're sort of thinking about like well what are the things that could really reach a lot of people is that why you're going for sports uh i mean it's obviously the it's expensive i have to imagine to be you know have to have patches on major league baseball umpires it's a partner with tom brady and the arena everybody knows. So, I mean, you have to have a very firm belief that this is going to be something that's mainstream and that everybody is talking about or interested in. Yeah, so it's, you know, there aren't that many things that reach really a mass audience and that reach a mass audience in a way that that that is actually engaging and that people actually care about and and I think you know sports it's one of the few things that really brings people together um and so you know when you're thinking about what are things that tens of millions of people follow closely and and really

care about like it's a short list um and so i think that's you know that's a lot of it another thing i'll say sort of on in terms of the cost is i know these are always sort of weird things to think about but um you know it costs uh it's not it's not cheap certainly um but it's not like they i don't know we're surfing a fortunate place where it's actually not not you know as much sort of as like the scale of a business um and so you know it's not one of these things where it has to triple the size of our business to to justify itself um and uh and so I think that's sort of like, you know, a key piece of it.

And part of what we're thinking is look like, when you look like who is the typical FTX user right now, like who's the person who is most likely to be an FTX user? It's someone who spends six hours a day thinking about crypto, right? It's someone for which crypto is a lot of their life. But it's actually not easy to just take dollars and turn it into adoption amongst that demographic. It's very easy to take a lot of other things, to take energy, to take time, to take product,

and turn it into adoption. But dollars are actually not exactly the currency that matters the most there because they already know who FTX is. It's not like we have to run some math like, oh, FTX, that's a crypto exchange. Yeah, maybe you should think about that. No, they've already spent 30 hours of their life thinking about FTX. So, and, and so I think that that it's really on the massive option front that you see much bigger returns to you know, to, to, to branding and marketing. Well, I remember you sort of breaking down actually in our last episode that your, your donation to Biden. And if you extrapolate out the numbers,

how little actually 5 million is relative to the impact that it could have depending on who wins. I have to imagine you think of it sort of the same way that it's not, you don't need a direct metric in ROI on dollars and a certain amount of time to know that it's really cool to have the Miami arena in your name and that people are going to see that for years. And maybe the 20th time they walk in that arena, they sign up for the exchange. And sort of, right, exactly. And sort of our, you know, one way to think this is, I don't know, you know, more or less than a 2% increase in our business. Like, you know, that's sort of, you know, the bar has to hit. And from that perspective, like, you know, I don't know. I mean, it's like, you know, 25% of the sort of like mass branding, you know, that we've done. It's how a lot of people

who have heard of us know about us it's you know i think it's one of these things where it's not even just about sort of direct user base growth you know it gets our name out there in a way which is really hard to replicate with other things yeah that that makes perfect sense and if it's really a one point one to two percent if it even completely quote-unquote fails just the uh the the pr around it in the news uh covering it seems worth it almost exactly i know people are thinking about what have you gotten so far from it and on the one hand i think actually a fair bit and the other hand like he doesn't even start it you know like it's i mean i mean it's like we haven't even started the first NBA season in which we have the

figurine. And already, it's paid off a decent amount. Yeah, that makes sense. I'm curious, and everybody's probably asking you, but Tom Brady and Gisele, I'm just curious the evolution of that. And if you guys effectively got him interested in crypto, if he was genuinely interested and then you approached him because of that and it evolved that way? So it's actually not quite either of those. We approached him

in a number of other people not knowing how interested they were or weren't. And then after approaching people, we sort of learned pretty quickly that he actually had already been interested in crypto. And I think that's one of the things that made the deal actually come together, is that it was something that, I mean, they're just actually excited about this. And that made us a lot more excited about them. That's so awesome. And so when you guys are considering these sort of endorsement deals, ambassadorships, are you casting a wide net sort of, as you just said? I mean, because Major League Baseball maybe wouldn't come to mind as the first place to go. I don't know. Or is it people come to you knowing that you guys are actually open to or amenable to

these sort of sponsorships that maybe other people haven't done? So we approach people and people approach us. But honestly, there's a lot of adverse selection here to the people who approach you. We've had, you know, probably half of all the professional sports teams in America reach out to us at this point thing that they're having a lot of trouble offloading on anyone and so the really popular thing right now frankly it's um the nba jersey patches right are the popular thing for i did try and offload on someone and and what what what teams are doing here is you know there's sort of like two metrics that took this one of which is like you know well we've also looked at um you know we've looked at stadium naming rights and you know a jersey patch is about two-thirds the cost of a stadium naming right which is a lot um considering that like these the naming rights are huge i mean sort of you know everyone knows about those the jersey patch patch is like, I don't know,

name to me an NBA Jersey patch, right? I can name you one because I saw it in the news this week, which is the other StormX on the Blazers, but I had never heard of or thought about it before in the past. Exactly. And so on the one hand, it's just like no chance it's worth two thirds of a stadium. Like that seems off by like a factor of like five to me or something. Or another way to think about it is like, you know, comparable sort of, you know, comparable sizes like patches for one NBA team or, you know, all of MLB.

And it's sort of like, I don't know, you just get these like kind of skewed ratios here, which make it seem pretty clear that like these things are not being really efficiently priced by the market and that like um you know they're not uh i don't think they're worth what they're going for but you know what's happening is that teams just realize like oh wow i can like get sponsorship for another thing as well like why not you know um and um and and, you know, we get reached out about a lot of things that we have no interest in from the sponsorship side. And, you know, we, we tend to sort of like, I, I really tend to like hold off until we find something that we're really excited about that we think might really move the needle with prospective users. It's incredibly interesting to me

to hear how you assess the opportunities because it just sounds like trading. Looking for an inefficiency in an opportunity that perhaps has disproportionate upside. I think that's been one of our biggest takeaways from a lot of this is that, yeah, you know, there's, there's not that much magic to this. In the end, it's not like, oh, like, you know, if you don't know the rain dance for endorsements, then like, well, obviously you're not going to make good decisions. You know, like, it's sort of like, I don't know, you sit down, you think about it, you think carefully about the impact it'll have.

You're running by a lot of people like, you know, you can actually sort of get a sense of like what realistically speaking are the impacts of the various things that you can do. And yeah, what's the highest return impact thing that you can do? What's the thing you can do, which is going to have the biggest impact on on potential users, you know, given whatever resources you're spending on it. Yeah. I think that, uh, the greatest football player of all time and arguably his wife is probably the number one supermodel of all time probably swings in the, uh, disproportionate upside direction. Exactly. Right. It's not like we're like, well, we did all these branding studies and they surprisingly told us that Tom and Giselle were popular. Like, no, you know, you don't like, no, that they are, you know, it's a bit of an argument that way.

But I would imagine that most people who are doing these sort of endorsements, ambassadorships are probably hiring the classic team of PR agents and agencies who are digging into the focus groups and numbers. And it seems that above that, that, that sort of of our sense not that they don't matter but that like they're that's sort of like not all there is to it um and that a lot of that can be replicated with like you know well i don't know who do you think holds the best um and and our sense also is that some of the mistakes people fall into here is that they end up listening too much to like they in this weird position you know where they have like they have their committee or their whoever it is you know

whether it's sort of an agent who isn't really aligned with them whether it's a committee whether it's their budget department or and whatever somehow they end up in a position where like they make a decision oh well we could do x or it could do y and they sound semantically quite similar but y is only half the cost so let's do y and they consider it like a good business decision and huge cost savings and you know what they've done is that they've changed from like you know tom brady to like you know the the 12th best quarterback in the league right now and it's sort of like yeah you know that i don't know i'm not saying they're not good but like there's a reason that there's a discrepancy there and like if you sort of stop for a second and just like ask like literally anyone you'd ever met like anyone

like what they thought the relative values of those were they actually would have gotten more right than your process did oh hundreds of times uh hundreds of times. Because Tom Brady's a unicorn, right? I mean, the difference between Tom Brady and like Eli Manning on a, you know, whatever. Exactly. Eli Manning's actually a huge name. He's won some Super Bowls, but there's no one else. There's no one else, right?

And it's a classic, you know, you trade Manning brothers or something for like a 30% discount, right? So true. Guys, I'm really excited to be sponsored by Harmony. I know all of us have traded their coin one in the past, but what they're fundamentally doing is a game changer. Harmony is your open platform for assets, collectibles, identity, and governance. Think of it as the one to bridge all blockchains. Harmony is open and insanely fast with two second transaction finality and a hundred times lower fees than Ethereum.

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and build something yourself at thewolfofallstreets.link slash Harmony. That's thewolfofallstreets.link slash Harmony. Build on Harmony, run on all chains. So listen, if you're able to aside a theoretical ROI on the naming rights and if it's worth it, that means that you have an idea of the value of FTX. I'm not asking you to give me a number,

but how do you value, how do you get a valuation of a company like yours that's growing so incredibly quickly? The metrics are changing on a month-to-month basis, I would imagine. We just went through this massive bull run. Yeah. And I think one of the interesting things we see here, actually, when we go through this, especially when we talk to a lot of other outside people about it, is this interesting confusion where sort of what happens is we don't quite naturally fit into any of their boxes. On the one hand, it's like a fast-growing tech company, and they have a box for that. Fast-growing tech company is a well-known paradigm. But on the other hand, it's already a pretty profitable tech company.

And there's also a paradigm for that, but there actually basically isn't a paradigm for fast growing profitable tech company that's young. It fits awkwardly somewhere in between the growth fintech bucket and the you know, mature social media, FinTech type things. And, and so that's definitely something actually that's like makes it a little bit more complicated to value. Because it's not clear how you put those together. But, you know, I think that when we think about it, there are a few pieces that one, obviously, we have numbers, you know, we just look at where are we today right another thing we can look at is where might we be just really straightforwardly in the next few years if you don't project out anything

that we think is like you know probably won't happen and you only project out the things which like you know the growth that seems like the most likely for us and you don't project out with you know 100 probability or anything you know but you just think seems like the most likely for us, and you don't project it out with, you know, 100% probability or anything, you know, but you just think, well, okay, here's sort of like a demographic we do quite well with, like, we've been growing quite quickly with it. Here's how big the whole space is in terms of that. Here's how big we are, you know, and from that, here's sort of an amount of growth we might get from it. And so I think that's sort of like, you know, another approach is looking for like the most straightforward potential pieces of growth and then looking at like, you know,

what would our business look like after those in terms of, you know, in terms of revenue, basically. And, you know, we're fortunately in a position where most of the things that we're doing aren't super cost intensive, right? And so because of that, you know, there isn't so much just like really complicated sort of like, you complicated, well, okay, that's the revenue side, but are you going to be profitable at it? Are the costs going to outweigh it? I don't know. Trading fees, they're net positive. It's how it is. I'm not super worried about net losing money on trading fees. And so that's another thing. But then the third thing that we do when we think about the business is there are some things that are none of those. There are

some things that are very different than what we're doing right now. And I think you look at things like FTX pay as an example of that. And frankly, you look at the real consumer retail market where we are not very big right now, but obviously we're trying to make big plays in. I think about, well, what does the market there look like and what might we be able to get? I think those are the kinds of things that we're adding together. And obviously, you know, there's some more twists on it, right? Like, you know, we're not just looking at sort of crypto native ecosystem growth because, you know, we also have the equities, you knowities internationally. And I mean, have a broker to your license in the US, it's pretty clear where that's sort of going and heading

towards. And so I think all of those things are like things that play a role in it. Yeah. It's funny to hear you say that fast growing tech company, but fast growing tech company with income, it's like you're actually spending money you made as opposed to spending money you raised. Money that we're raising. Exactly. And it almost just doesn't compute in a way for something. They're sort of like, oh, that's sort of weird. I don't know. We talk to these places, they have two funds. They have their growth fund and they have their public markets fund. And they're just sort of like, it doesn't quite't it's like it doesn't quite fit neither you know like it's and they're sort of like look you know i don't know maybe we want it best but like i don't i don't know we're gonna have to see

if we have a fit for it anywhere like if we have any any fund we've raised that has the right mandate for this yeah you don't have like five angry guys in suits asking you why you made a decision with their money. Exactly. And I think that's also like a big thing from our perspective is like, we have to be nimble. Like, you know, the only way we've gotten where we have is by being nimble, it's by being able to adapt and by being able to do what's right for the company, you know? And that's like super, super important to us. Like we don't want to lose that. And, you know, we don't like, you know, playing through the valuation game. It's not a necessary game for us if we don't want to.

And so, you know, we certainly wouldn't want to do that at the expense of our ability to run the business the way it needs to be run. Yeah, it makes you question how most businesses are run and the model because it literally just drives people towards trying to build a business to sell and not trying to build a business that's the best business. Oh, certainly. I mean, we had one call where someone was trying to talk to us about, well, you should build this product instead of this other product because it's a higher multiple product. We're not doing a higher multiple product. So like, well. Companies in this sector tend to have a higher valuation to revenue multiple. Then this other sector, I'm thinking, first of all,

I really don't think we should be building our company based on revenue multiples to valuations for VCs. That's not the ultimate game that matters here. But, and then second of all, there's this thing of like, well, okay, but what if one has more revenue, right? Like you're talking about sort of like the multiplier on revenue that you get from it. But like, what if one just actually grows the business? And it's a very weird conversation,

but did sort of really strongly just make us feel like, look, like this isn't, a lot of people aren't thinking about this, frankly, in terms of like, what's best for the business. Yeah, that's usually what's best for the investor. So that said, we just had this sort of massive bull run, obviously, and prices corrected. And it was just reported, I believe today that across exchanges, it was about a trillion in trading volume in June after doing 2 trillion plus in May. So what do you think accounts for that? I mean, you know, I think it is just like, you know, bull runs are subsiding. And we saw really,

really high volumes going up in May. I think in June, what we saw was a few things. You know, first of all, obviously, a price decrease, also just a little bit of a hangover effect. A lot of people being more wary. We saw a lot of people saying, look, we're still going to do crypto, but we're just sort of like taking it slow for a bit. Like, getting kind of see what happens. You know, it's been really non-volatile, all things considered. In June and in July. And so it's not just the price decrease, but a little bit of a period of consolidation

for the industry as a whole. We'll see where all this goes, but there's definitely been a lot of pulling off in a number of ways, not just price pulling off. And there's just been this really, really big torrent of bad news coming out for crypto, a lot of which, I think, frankly, isn't obviously that bad of news long term.

And I think especially with the China minor ban, where frankly, I think if you'd asked people a few months earlier, they would have said, look, a big risk for the industry is the concentration of mining in China. What can we do to get miners out of there? But, you know, certainly it's, you know, not generally good news when there's, you know, negative government action. But I think also in general, this is just an opportunity for all the governors to dump their shit on Bitcoin. You know, they sort of felt like, look, like we can't get rid of it anymore and we can't ignore it. But we actually do have a lot of like regulatory things we want to say. If we talk

about regulating Bitcoin when it's extremely hot, no one's going to like us. So let's, you know, wait for the dip and, you know, use that opportunity to say all the bad things we need to say about Bitcoin. I think we saw that across a lot of different governments. Yeah, I mean, everybody's piling on and it's not just governments, obviously, when I think the government start, then the media obviously runs with it. And then you just get the fully fake news. Exactly. Right. Like any bad story anyone had saved up, like, man, now's the time, you know? Yeah. You don't really think you're guessing about the reputational risk of saying things that are bad when an asset is running, you know, from 10,000 to 65,000 in a matter of months, but it's really easy after a

50% drop. Exactly. Exactly. And it's sort of like, what gets ratings? Right now, all of a sudden, you've got a lot of concerned people. And so if you can play into the concern, it's great. Whereas previously, you just had a lot of people looking to FOMO. And if you could plant that FOMO, that's what really got you there. So I think that we're seeing sort of media cycles, which are starting to align with the market cycles. Yeah, for sure. I'm curious if you think that huge drop is generally retail that speculated it came in late and panic selling sort of because they're impatient and got scared they're going to lose everything they put in, or do you think bigger players are actually unloading at this level? I mean, there's a lot of metrics on chain that say

that whales are accumulating, but we all know that it's hard to really gauge that just by looking at those metrics. That's right. So I think it was both of those, but I think, I mean, liquidations were a lot of it, right? Like you saw what $20 billion liquidated in the few days of the biggest drop. And it's like, yeah, sure. You know, you look at $20 billion of position. There's going to be price decreases from that, you know? And so like, I think that was just like a big piece of this. And, you know, outside of that, like, you know, I think that it's not clear you would have had nearly as big of a drop without that. And so I think a lot of this was big players getting kind of forcibly selling, right? And then I think sort of like the cessation of the inflows.

Like I think we're seeing massive retail inflows during April, March, April, May. And I think that those have slowed down a lot. And so I think especially if you look on the platforms that are sort of notorious for huge, huge retail flow, I think that's where you'll see the drop off the most clearly. Yeah, I mean, summer is historically slow. I mean, if you kind of look back, do you think that's what we sort of have to look forward to for the next few months? Well, there's some of that.

I mean, frankly, the summer slow effect happens in equity markets as well. Yeah, everywhere. And for those who don't know, I think the most common thought here is sort of like a surprisingly dumb one. Dumb isn't like, oh, well, that's what moves market. What it is is like, well, I don't know, it's summer. They're beaches. The bankers, instead of thinking about new deals, are literally on the beach. The hamptons. is like, you know, the bankers, instead of like, think about new deals are literally on the beach. And so like, right, like literally, like, there's less volatility, because there's less activity,

because everyone is like, getting off work at 2pm on Fridays to go to Long Island. And so so there really are just like effects like that, that affect markets broadly, including now, you know, probably crypto, frankly. Yeah, it makes perfect sense. Sell and may and go away has been a thing for a very, very long time. So I'm curious with all this, as you said, sort of, they're probably waiting to dump their news or their FUD on the market. How much of that as an exchange CEO concerns you that there will actually now be more regulatory action or anything that could affect your business? So there certainly is going to be more regulatory action. And I think it was inevitable. I don't

think this is causing a ton of action that never would have happened. But I think that it's being expedited because of this. I think people really do see a good opportunity right now to regulate. And so I, you know, I think it's, I'm not sure it's bad for us, particularly, I think, you know, one of our advantages, frankly, is being, you know, a sort of international global business that sort of understands, you know, Western regulators and how to, how to interface correctly and, and, you know, it's going to be responsive to them. But, but, but, you know, it's going to be a lot of work. Like, I think a lot of this is like, you know, licenses are coming out now at like a pretty steep rate. And, and so I think that like, you know, in regulatory regimes, like faster than sort of

like we had been seeing before. And so I think that just means like, well, you know, it's coming, it's coming quickly. We have to be ready for it. And I think especially given the global nature of the business, you know, often it's sort of like working on many things at once. You know, we are sort of like, you know, trying it's sort of like working on, on many things at once, you know, we're,

we're sort of like, you know, trying to coordinate with many, many governments at once right now to, to get licenses and stuff. Yeah. I sort of joked with you last time that you probably had more lawyers than employees because of that. And you said something that was really brilliant. Something to the effect of you'd rather stay up late than lose sleep, I think was the gist, but I imagine I'd have to stay up later. Well, there's a limit to how late one can stay up in the end, but yeah. Yeah. It makes a lot of sense. I'm just curious if you still view regulation sort of as the largest threat to everything that you're doing into this market in general?

Is there something else that we're missing? Or is the Lindy effect fully employed and we're going to be here no matter what they do? Yeah, I think like I don't see it quite so much as the threat to the business. I think it's a threat to some businesses. I think there are some companies in the industry that are going to have a hard time with regulators. I think that for us, we see it as, you know, a potentially socially valuable time sink. You know, it's something which is, it's going to be a speed bump because there's just going to be a lot.

I mean, the number of forms that we're filling out is like, you know, every time you want to try to apply for license somewhere, it's like, all right, there's another hundred pages. But, you know, so be it. And so I think that, like, you know, we see it much more as like, you know, a big thing that that is going to soak up time and energy rather than a fundamental threat to the business. But I think a lot of that is because we've sort of been trying to build this business so that it makes sense in a regulated environment. And we know that crypto is unregulated in a lot of jurisdictions right now, but that isn't going to be true forever. And you can't always guess exactly what you're going to need to do.

And we're going to be to do. And, you know, we're, we're going to, we're going to be learning that as, as time goes, but, but you can, you can at least sort of like build the fundamental blocks such that you think they're going to be compatible with where things are going to be going. And, you know, you can figure out some of the details later, but, you know, we want to build a business that fits into licensing regimes as they come out. The one thing I will say about that, and I think the most awkward piece of this is that very, very few jurisdictions have come out with regimes for derivatives. And that's sort of like time and time again, what we come back to is like,

there are some jurisdictions that are coming out with licensing regimes. For crypto exchanges, almost none of them are doing it with derivatives in mind, even though derivatives are two thirds of the volume in this space. But almost all of them, and it's not that they are actively saying, we don't think we should. It's more like, look, we haven't gotten there yet. This was step one. Come on, it's better than nothing. We'll get there. And, and, and, but I think it

just means that like, you know, for, for a lot of the, you know, international business, you know, it's sort of a year's long roadmap for there to be licensing regimes even. So this is gonna be a long slog basically, because I mean, the UK is the first i've even heard like of any of the huge countries talking about derivatives and obviously that was just a somewhat irrational we're just going to kind of ban it and see what happens right and i think again this is sort of like they're like look we want to do something right now we don't have time to do like uh you know it's i don't know it's like i don't know you know they know they don't know how to build a whole thing right now it's like i don't know what can's like, I don't know. You know, they know they don't know how to build a whole thing right now. It's like, I don't know, what can we do overnight? You know? Yeah. So potentially,

are we looking, I mean, you talked about the Chinese miner situation, which I totally agree. In my opinion, it's sort of a short-term pain for a long-term gain situation. Let the market absorb it, let the difficulty drop, let, you know, the hash rate drop 50%, but we know that it'll move more towards renewables and more decentralization. Is that how you view regulation as well, that we'll sort of have these events that the market will have to absorb, but long-term, it'll give a lot of direction and there won't be the uncertainty? Mostly with some caveats. And I think the big caveat here is it depends on exactly how the regulation, what exactly happens. And I think the big caveat here is it depends on exactly how the regulation, you know, what exactly happens. And I think, frankly, you end up in a lot of places where, like, you know, like, there's a lot of pretty reasonable pieces of regulation that I think would be helpful for the industry long term.

We give it clarity and legitimacy and probably help weed out some bad actors. I think there are also some that are kind of poison pills. And I think that the big thing that we're going to have to see is how does that shake out, right? And like, you know, I think that if sort of regulators and industry were great at cooperating with each other, as a general statement, it would end up good. But I certainly wouldn't confidently make that as a general statement, it would end up good. But I certainly wouldn't confidently make that as a general statement. And I think that like, whenever you see breakdowns in communication, something that could have looked like, you know, regular to say, hey, here are three things we're worried about, interest is like acknowledged, here are seven sort of caveats on this that are important context and are really important for the business. And it's like, that makes sense.

How about these two new initiatives, These seem like they'd be a little bit of a pain, but wouldn't really cut at your core business, but that these would mostly take care of the problems we're thinking of. And then, you know, industry would say, yeah, but can we please change this wording of this one? And, and, and, you know, where it goes like, yeah, that's reasonable. And then all of a sudden you have a new licensing regime. That's not, that's sort of the goal, right? But that's often not what happens. Instead, you know, regulars are like, fuck you guys, the fuck are you doing? And then industries will fuck you too.

And like, all right, if that's how it starts, right? And it sort of started with the regulars saying that, but maybe they weren't the first ones, right? Like maybe it starts with like someone doing something egregiously illegal, right? In this space. And we're like, fuck that. And like,reels will fuck you and like it could have been diffused at many steps in that process you know but you could have

been it could have been like okay yeah that that that really needs to clean itself up but like that's not most of it and we'd really like to talk to you about the rest of it um but but but if you sort of end up on the bad path there um then what you get is regulators struggling to get done the things they need to get done. And when they do things, they sort of like almost accidentally, sometimes or randomly end up as a big blocker for a lot of legitimate businesses, because there wasn't this sort of like cooperative and, you know, cooperative interactivity necessary to come up with a version of it that didn't also shut down businesses. And I think that's the biggest worry is just like poor communication, lack of communication and cooperation leads to a strife on both sides.

Do you think that that's a two-way street? I mean, you kind of alluded to it, but is that a two-way street? Or do you think that it's reactionary by the industry to, I mean, we see these boomers and like the older, just basically with this blanket statement, criminals, I mean, we see these boomers and like the older, just basically with this blanket statement, criminals, energy suck, all the usual FUD, the Elizabeth Warrens and the mongers and the Warren Buffetts, of course. So do you think that the industry just reacts to that? Or do you think that we do have some reasonable people on both sides and it could happen? Or do you think that

there's just too much of a divide in who's regulating and the nature of the makeup of the people in our industry? I think it could happen. And, you know, I think, right, like part of, look, we actually think it doesn't seem like that many very bad things are happening here. But like, he's going to have to fit in some regime. Then you can have a more relaxed conversation, you know, about, look, like, what's the future of this look like? What are some productive first steps to take? Instead of regulators being like, all right, we got like a month to do something here. Like, that's not enough time to come up with the regime we want, but so be it. Like, we don't, you know, we're going to have to run with the regime we get instead.

And so I think that's one thing that can really help if, you know, and look, like there are always going to be times when regulars look at our business and they're like, yeah, we have a slightly different regime in mind. You know, and we're like, okay, you know, talk to us about that, you know, about what you're thinking about there. And that's fine. What we never want to happen is a regular looks at our business and like, holy shit, that's what they're doing again. Come on guys, it's like, it's ferocious, right? We never want that to be the case. And if we're doing something like that, we're making a mistake. And I certainly would like to know about, to hear that as soon as possible so we can fix that but you know i do i do think it goes both ways there um and and we've seen

examples you know he's on a call with you know a bunch of people and uh you know singaporean regulatory body and you know ms was trying to be really cooperative and reasonable and like again and again and again said, that's interesting. Tell us more about this. What's important here? You know, here's how we were thinking about it. Tell us if there are things we're missing, like, you know, lots of good overtures. I think we also see sometimes when governments will just come out and like just randomly ban shit, you know, sort of like with no explanation or warning or cooperation. And so I do think that there's really spectrums on both sides. I mean, the bankers get a full revolving door with regulators.

So shouldn't we at least get like a little taste or something? Right. You think so. And there's, there's starting to be some attempts to do that. And I think it's going to happen and it'll be good if it does, you know, frankly, like people talk, there are some really bad parts of these revolving doors, but there are some good parts too, right? The hope is that communication can lead to like cooperative outcomes that are good on both sides, as opposed to just like, you know, nepotism or something.

But, you know, I think a lot of people in crypto, I mean, everyone in crypto, myself included, just don't have the connections in the same way that the traditional financial industry does. And there's sort of a scramble to get those together, but it's not, you know, it's not there yet. So on the run up, obviously, I mean, you talk about how the regulators come down when price is down. We had some pretty exciting narratives on the way up that seemed to have cooled off as well. Institutional adoption, of course, being one, you know, institutional floor. But then, of course, supply side shock, you know, institutional floor, but then of course, supply side shock, you know, outflows from exchanges, things like that. Do you think that all of those narratives were, we were just sort of being hyperbolic and euphoric and they weren't

real or do you think they're dead? Do you think they've come back? So, you know, and I think that like on the one hand, the one which I think is the biggest and was right was that institutions are coming. We talked to a lot of institutions and they all said they were coming. Like that was the order they got on from on high was do something. We don't know what, just do something in crypto, right? Like take the first step. Make it such that we can tell our clients that we don't do nothing in crypto. Don't look bad.

Exactly. And we'll do it the rest later. But that's what matters, right? Is taking the first step. Like it's how do you get to an institution heavily involved in crypto step by step, right? And I think even Silvergate, right, which is now basically a crypto institution, basically it's just a normal bank. And it took some crypto customers and it's like, wait, there's a huge underserved area

here. And it took some more. And it's like, wait, this is actually like underserved area here. And it took some more. And it's like, wait, this is actually like, this is most of our business now, you know? And so I think that like, that's what needs to happen. And I do think that that narrative was true then and is still true now, although probably got delayed by three months. You know, I think everyone's sort of like FOMOing in less and so like less desperate to get in, but I do think people are still planning to get in. So that's sort of one side of this. And I think the other side, you know, there is certainly some hype.

And I think that like there were real institutional inflows into Bitcoin. You know, they weren't absolutely massive, but they were a sign of massive things to come. I think that there's sort of like a trickle of interest in Ethereum. I don't think the inflows made it to Ethereum, but I think that there's sort of like a trickle of interest in Ethereum. I don't think the inflows made it to Ethereum, but I think that there was sort of like signs that there was likely to be future institutional interest in Ethereum. To some extent though, I think that's not how it ended up. Like how it ended up sort of narrative wise, you know, I think the narrative and I think someone posts, I don't remember who,

someone posted on Twitter, like, man, like we really, we really just convinced ourselves that this was Goldman Sachs, you know, buying Ethereum, but actually it's just us. And, and I think that's what happened, right? I think that there is real signs of institutional coming interest in Ethereum, but I don't think they influenced it. And I think when people saw the massive price increase and were like, that's the institutions coming in, that wasn't. That was the crypto native people buying in anticipation of institutions.

We front ran ourselves on a trade that was never going to happen. Awesome. Well, maybe it was going to happen too, though. It just unfortunately didn't happen prior to getting liquidated. Right. Yeah. But you have to imagine that they look at those liquidations, sort of what you said, and those cascades. And I mean, we had like 2 million individual retail investors basically liquidated and fully, you know, they're smart.

So you would think that maybe they see this as an opportunity if the narrative hasn't changed. Yeah, I think that some of them are, you know, I think some of them are quietly buying some here. I think some of them are sort of like, so note that moving quickly isn't necessarily the strength of a lot of these institutions, right? They have massive, massive impact when they do move somewhere. But many of them aren't like the fastest people to get there and so i think like uh that that is sort of like a necessary like a necessary correction on this is like their muslim can't sort of opportunistically jump in. Muslim can opportunistically lumber in.

Right. So do you think that we need a new, fresh, bullish narrative to bust out of this range and start heading back up? Basically. Yeah. Yeah, I think so. And it'll probably happen. But, you know, I do think it has to happen.

I mean, it wasn't enough for it to be El Salvador, a legal tender and other companies starting to follow. I mean, are we literally so, is it so sad that we have to sit and wait for Elon Musk to say something exciting and Tesla's going to take Bitcoin again? Yeah, right. Frankly, I mean, I think that would help. I mean, I don't say, but yes, that man moves markets. And, you know, I mean, he contributed that would help. I don't know what to say, but yes.

That man moves markets. And, you know, I mean, he contributed non-truthfully to the run-up, right, in Dogecoin. And, you know, I think, like, it's – and, you know, I think if he, you know, really got behind Bitcoin, I think it's like, I think people see it as almost a little embarrassing that like, oh, I can't even get Elon. Like, he was your one big supporter. Right, yeah. It really is interesting. You look at the chart, you know, even just simply at price,

and, you know, price ran from 20 to 42, and then consolidated for a month, and it took a $1.5 billion buy by Tesla to break that range and break up. And now we're just ranging back where we were before Tesla came back in at one point. It's basically like you eliminated everything, the entire Elon Musk effect and are back to 30 to 40. Exactly. And when we're at 30 or 40, it's an incredibly bullish narrative, right? So exciting. Right? And now it's sort of like, we've been here before.

Come on. Can't we go back up there? And I think a lot of people will say, well, wasn't it so bad then for the space that we had this run up and crash? Doesn't that mean volatility is bad? And I think people are just trying to get the good without the bad, right? They want all the excitement and all the attention, all the new users from running up to 60K. And they're trying to get that without having actually run up there in the first place. And I don't think you do. And I think like, I don't know, it's a trade-off. There's a

lot of hesitancy, but the fact that people are hesitant implies that they're considering it in the first place, which wasn't even true for a lot of people prior to the big run up. I mean, it's crazy during that run that you saw Bitcoin on the ticker on every mainstream media source right next to every other asset. And it was I mean, it was part of every single news story. No, absolutely. And it's never imagined that it would happen. Yeah, no, it's it was absolutely sort of amazing. And I knew, frankly, you walk down the street right now, and like, are people talking about crypto? You know what they might be. You know, yeah, crash, people actually might still be talking about it.

There's still a lot of interest in it. And I think like, you know, there's frankly more than before any of this started. Yeah, I definitely agree with that. I 100% agree with that. So I'm curious if you have, I mean, since we are just trading between 30 and 40 endlessly now at seven or eight weeks when we're recording this, do you have a really strong feeling on which way this will be? And I'm not saying like in the next six months, but a year from now, two years from now, do you think that we can still hope for up only? I think so. I mean, you never get up only, right? And it's sort of like amazing how true it seemed for a while. But the real answer is, you can only go up if if you can go down right right nothing

can go up continuously forever or it's a horribly inefficient market and the answer is it should have just gone up earlier and what happens people realize that until they start buying in anticipation the market gets more efficient but it also means you quickly more quickly reach a state where it's already realized in expectation all the inflows and maybe it overshot maybe it undershot and so maybe it'll sort of keep going up or down but but I, you know, we're not going to get up only, but that doesn't mean we can't get up. Right. But does that to me, to you mean that we had a bull market, we just ended that bull market and we're in a bear market? I hate, by the way, I hate even having to make the determinations. To me, it's like we had a

bull market up to 65, we're correcting And now we might get another bull market, but that one's sort of over. Yeah, that's my thought. We're kind of like, I don't know. You know, anything could happen next, right? Like, but I do think that on the medium to long-term, we still see a lot of bullish things, so to speak, right? Like there's still the institutions.

They still haven't come in and they're still kind of planning to. And so I do think that's still there, but that's not, it's not going to happen tomorrow. And, and so short-term anything could happen in long-term, a lot of things could happen. Like that's just one factor, you know, and like, there are still a lot of other things that I think could have pretty big impact. So I'm curious, totally, totally pivoting. What is the balance of your day to day?

You sort of touched on the fact that like you have meetings every four hours, middle of the night. Are you, are you, are you like, are you trading? Are you running the business? I mean, it seems like you have a thousand, are you doing endorsement deals? You know, you're obviously an incredible multitasker because like, I don't know, I have ADHD, so I have to do like three things at once, but it's always amazing hearing your typing, like kind of all your time. And I know that you can do like 10 things at once. Yeah. It's, you know, I would say that recently it's been a lot of business things. And sort of what I mean by that is like, markets have been more quiet. There's been a lot less sort of like in the moment,

like needing to address things. And there's been a lot more like what's an important thing for FTX? Like what do we need to be focusing on medium term? What are the products where in six months, we're going to be really sad if we don't have them and we're going to be really happy if we do. And what do we need to do to get from here to there you know what do we need to make sure we are starting on today so that six months from now we are where we want to be and then and then how do we do that those are i think the things that i've been thinking about the most and so we you

know whereas i think often while like this barrage of like seven small to medium features planning to release over the next week. Now I feel more like we have this barrage of seven absolutely massive like business changing features, which we're planning to release over the next year that we're sort of like working on in the background. And so it's, I don't know if it's sort of more or less per unit time that we're coming out with. But it's certainly like bigger, slower things. That's really interesting because a lot of people have commented always in hindsight, of course, that like the best time to build is the quote unquote bear market. I'm not saying that we're in a bear market, but I have to imagine when price is raging like that, that you have to be fully focused on maximizing all of the opportunities that come with that. Frankly, we're like, look, you could be building out the business or you could be doing KYC right now. Fucking do KYC, right?

Like, I don't care if that's not your job. Like, it's like there's so much. Right. And then sort of like things calm down for a bit. And, you know, it's easier to maintain, you know, there's just like fewer things that have absolutely massive short term payoffs. And so it makes more sense to repurpose more of your firepower for the medium term. Are there any of those things that you're looking to build that you can talk about? I think most of them aren't super old, but again, one which I guess is the one we decided to leak or something.

I don't know. I mean, it's like semi leaked so many times. But like, you know, I mean, we have we have worker deal license right in the US. Like it's sort of pretty clear where that was headed. And, you know, I think that's something on the next few months timescale that we're thinking about, hopefully having released. So. So what does that look like? So it's, I wish I could tell you exactly what it looks like. And actually, frankly, some of what, like some of what we're trying to figure out is exactly what it looks like but you know broadly speaking it you know there's a chance to offer more than just crypto products um and you

know we've obviously done this internationally we haven't done it in the states yet but we're looking at that and i think that there's a lot of complicated operational and regulatory questions around exactly how products interface with each other in the States. And part of this is that like, we think a lot of existing players have made choices that aren't the chases we'd make. In terms of how to structure things, you see a lot of non-integrated products. You see a lot of pretty sort of like sectioned off products where it's kind of awkward um and we're sort of you know which is very different than like how ftx.com works right where like you know by default just like i got one wallet you put whatever you want in it all cross margin

right and you know without sort of futures or leverage in the, it's a little bit of a different story. But I think we're still thinking about what exactly is FTX US? And what I mean by that is, when we say it's an exchange for crypto, that means 12 things. It means it's an exchange of wallet, information engine, like custody, clearing, you know, GUI, mobile app, API, customer relationship, MLKYC. I don't know, you look like stocks, for instance, right? Those are all different, or there's something like different pieces or like different parts of it, right? Often you have like six companies involved in a trade, occupying like different subsets of it like what what you know why is that what's the right way to do things what are your options um i think those are sort of like those are all sort of like things that we're thinking about that i don't know that i know the answer for sure too um but i think there's super interesting

questions which get to the heart of like, when we look at the way that a lot of products are built today, they're not how we build them. And why is that? And is there actually an opportunity to do it the way we think makes the most sense? That makes sense. Watch out Robin Hood. So I know we're out of time here. Can you tell everybody where they can follow you after this and see what you guys are up to moving forward? As always, Twitter is where I am most active. You can go to FTX.com, check out our product, FTX.us if you're in the States.

And I mean, all roads lead to Rome in terms of where you start and where you'll end up. Absolutely. Well, I'm glad to see that they've freed you from captivity because I know that you were somehow doing all of this in a hotel room for two weeks. Yeah, definitely going a little crazy by the end of it. I'm glad you made it out. Thank you so much for taking the time to do this

and I'll start prepping for round three. Sounds good. Thanks, Sam.