The Wolf Of All Streets - The Rise Of OKX: How It Quietly Emerged As A Crypto Leader | Hong Fang

Episode Date: May 4, 2023

In this episode of the Wolf Of All Streets podcast, Hong Fang, the CEO of OKCoin and OKX, shares insights into the success of OKX and the company's values that have helped it become a leading cryptocurrency exchange. With a focus on delivering outstanding results and attracting new clients, Hong discusses how OKX's values have played a crucial role in achieving these goals. Tune in to learn more about the values and strategies that have made OKX a successful player in the world of cryptocurrency. Follow Hong Fang: Twitter: https://twitter.com/hfangca Linkedin: https://www.linkedin.com/in/hong-f-2114762/ ►►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   #OKCoin #OKX #Crypto 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.

FTX was nothing crypto. It's all Wall Street. It's all traditional finance. My opinion is that Sam Bankman Freed set the industry back a few years. Yeah. So we intentionally decided not to do trading, not to engage in some of the investments. We're not there. Investments. I think the American culture in essence is very much aligned with crypto. And yeah, people tell you, you should do this. But without actually doing it and losing money, for example, you actually don't know that. Actually, don't do that.

Speaking my language. The overwhelming narrative in crypto was all of the collapses of 2022. But quietly, there were companies and exchanges building during the bear market, expanding, hiring and gaining much greater market share. OKEx is one of them. I spoke with Hong Feng, the CEO of OKCoin and the president of OKEx, about how they became the second largest exchange in the world while everybody was talking about the exchanges that were collapsing. This is an incredible conversation about offering products to the

entire world that are going to facilitate mainstream adoption that will allow people to trade and invest in a centralized and decentralized manner. What they're building is rather incredible. You should listen to this. Let's go. You're the CEO of OKCoin and the president of OKEx, which the obvious first question is, do you ever sleep? I do. I actually sleep pretty well. I mean, you're running an international exchange effectively. And then also, as we like to very American-centric say, onshore, right? Because to Americans, onshore means America. Everywhere else in the world, maybe it means something else. But that has to be a 24-7, 365 job with endless stress.

Yeah, we have a good team, I would say. Obviously, our team is very global, but I think we have a very strong team. And we have also been lucky that over the last year, when the industry went through volatilities, we previously have been managing our counterparty risk very well. So we didn't have those stress and we know exactly what we need to work on and have been hiring very aggressively in very specific positions where we want to hire. So we have been able to grow our team very strategically and keep picking up strong talent. So I would say I'm blessed and grateful for the team that we have. Wow. You touched on the volatility. Some would call it contagion. Some would call it winter or outright collapse of last year. So you said that you've obviously been hiring aggressively in a time when most people have been scaling back or failing. And so not even on the team side,

you've also now become the second largest exchange in the world, effectively. So how were you able to continue to be successful and to grow while there was so much contagion and failure in the industry? Yeah, I think it really goes back to how we think about the business and what our role should be. I think our definition of crypto has always been that it's a tech company, it's a tech industry, it's a tech-driven industry. And for us, what we do as a business is also very tech-driven. We always focus on pushing for product innovation, focus on managing risk, focus on not taking the balance sheet risk or financial engineering ourselves. We never engage in those type of situations.

So I think it's all because of that, that along the journey, we've been making right decisions, you know, really building our product on the crypto native side, we really build our wallet, right? Web3 wallet, pushing all the kind of innovation that we can on toward a more trustless system, a non-custodial wallet,

more trustless way to verify reserve, the POR program that we put out. On the other hand, on the centralized exchange business, we really put internal controls in process so that we don't engage in some of those things that I think some of our competitors actually do. When everything happened out there, we looked at our own internal counterparty risk, and there is no counterparty risk that we have outstanding related to those parties. So we intentionally decided not to do trading, not to engage in some of the investments. We're not there to do those type of things. Yeah, we don't do that. It's just not our business. You're not quietly operating a hedge fund or counter trading against your customers. No.

Basically what you're saying in a very nice and political manner. And so you talked about the technological innovation and viewing it as a tech company effectively and as a tech asset class, which I love because I think a lot of centralized exchanges focus solely on that model. But you seem to have effectively decided to disrupt that model, even though you're running a centralized exchange, by offering the full breadth of services that exist within crypto. I don't think anybody else has done that to the extent that you have. So can you talk about, A, why you've decided to double down on the decentralized side? And B, what products you're then offering or you have on the roadmap to

continue that process? Yeah, absolutely. I think the future of decentralization is always a vision that we have. Obviously, before we get to a fully decentralized future, I think there's also debate of whether everything can be fully decentralized. There's always a interim where you have to have that connection point. And the centralized exchange is that connection point at this point, right, to welcome people on board and introduce people from the legacy system into the new system. But for us, for our platform, we really think about providing options, offering choices to our customers, and giving people the ability to choose what they want, helping them to make those choices and take control in their own hands.

And that's our firm belief. From a commercial perspective, we obviously have to be able to run a business that is profitable so that we can actually sustain the continued investment in the decentralized technology. But from a product perspective, if you actually go, say, download an OKEx app, you can actually see that in one app, you can access both the centralized exchange product as well as the decentralized wallet, the non-custodial wallet. And on the non-custodial wallet, you can actually access a whole list of things. In addition to the ability to save assets, to quote unquote house your own crypto assets across 50 plus chains you can also access nft marketplace you can access and decks you can access a depth aggregator yield aggregator everything in one place so that's theability, the ability to actually have choices and options in one place.

And the ability for customers to actually take ownership of their own choices is always something that we strive for. I don't think we as a platform should make that decision for the customer. We actually encourage people to take assets off and control themselves. But some people may choose to do more centralized activity than decentralized activity. And then for the centralized activity that we offer, obviously, the industry went through a whirlwind of changes where people were scared about whether the centralized platform actually have proper reserve for customer assets.

And ironically, we went through similar whirlwinds in the traditional financial industry right after that with banks. I do think that after those events, it is pretty clear that in a more decentralized future where everything is digital, everything actually moves in a second on chain, the more sustainable model is a 100% reserve. If you run a platform, if you run a platform. So for us in the crypto space, we do have 100% reserve, actually more than 100% reserve. And we want to offer our customers and even non-customers ability to see that we have that reserve in place real time. And we do that again on chain, trustless. The POR program that we have are all on chain. People can actually download

the code and run themselves if they want to. In audits, we actually would welcome audit from third party for those open source codes. The team is also working on ZK knowledge to further disclose the full liability side without compromising privacy. So those are the things that we're really pushing on technology front. We would love to get third party auditor as well. But as we can see from the traditional side of the experience, having a third party audit sometimes doesn't really help.

It doesn't help. And it seems like the big four generally don't want to touch crypto anyways. And the companies that we're willing to fully audit crypto exchanges just aren't because I guess fear of reputational risk or pushback or regulation or whatever it is. So it really does lead to self-regulation and on-chain proof of reserves. So I think that's the best you can do right now, being pragmatic and honest. Yeah. What we are doing is we want to pursue a combination, right? We want to really push on the technology side to develop better tools and visibility for people. At the same time, we will pursue traditional way of auditing, but we cannot rely

on that part. And nor should our customers rely on just traditional audit methods, because there are intermediary risks. And then if it's not 100% reserved, then there's liquidity risk that we see, the trust risk that we see with the traditional banking system. I was just going to say, you touched on it before, the issues that we've seen with the traditional banking system, they're all audited. And even just recently, I believe it was with First Republic, we're seeing a lawsuit. Of course, it's probably nonsense, but suing KPMG, I believe, and First Republic for not being transparent or for not realizing the issues with the reserves of the bank. Right. So, I mean, this even if you get a audit audited by one of the big four firms, that doesn't really tell you that your money is safe.

It's already been proven. Yeah, I mean, for banks, there's a totally different story. It's the business model issue, right? Is the business model sustainable in today's world where the velocity of everything is picking up, the velocity of commerce is picking up, the velocity of money is also picking up, and then you have social media. And then you have the reverse yield curve hanging there. Most people don't really realize that their deposit is actually not safe should anything happen. And it actually can happen really quick. So I think it's really a business model issue. So it's a different matter there. I think it's exactly because of that, that when we look at things, I think we are more convinced that what we are working on is actually meaningful and

impactful and we should continue to push it. I agree. There's been a lot of talk about Elon Musk taking Twitter and creating the Everything app. It seems like you guys are creating the Everything app for crypto. We'll see. Yes, we're trying to do that. Yeah. Do you think you'll be able to push beyond crypto? I mean, a lot of exchanges I've heard talk about traditional assets and tokenizing everything or right now is the focus really on what we have now and just offering all of that

to your customers. We have zero interest in anything that is not crypto. We don't really believe in tokenization of financial assets. I think everything should be native. When we think about Bitcoin, it is the digital native money. And when we think about the overall ecosystem that the industry is trying to

build, it has to be native to be able to succeed. Yeah, you talk about all of these services that you offer through the OKEx app and the wallets and these incredible things. And I'm American and I can't access them. No, you can't access the Web3. That leads obviously to you being the CEO of OKCoin as well, which is the US-based property. Yes. Are there unique and totally different challenges to running those two businesses and assuming so, what are they? I think for US practice, obviously the larger question is the regulatory clarity that everyone is talking about. I am still hopeful that we can

get to a point where the industry can find the right path forward with proper support. I know that people have a lot of debate around whether we need regulation or not, but I do think that we're at a point where there is no way going back and we should embrace it. We should embrace regulation, at least regulatory clarity so that there is a proper framework for entrepreneurs and engineers and developers to actually build for the future. We know what we can do and what we know what we cannot do instead of being pushed offshore, like what we've seen. Some of the names out there have been announcing that they're going offshore. I still believe, we still believe in u.s market

we still believe in this um culture i think the american culture in essence is very much aligned with crypto and and that's also why i'm very hopeful because i see a lot of people are actually standing up and trying to voice their point of view, including Coinbase. So I think there is still that playing out. For us, internally, we are really focused on building the product. To be honest, I think we still have a lot to do on our own internal product development in terms of providing the best on-ramp experience that is available out there for US market. That is our single biggest focus right now. All the payment experience, risk management experience, how to actually balance that for us, that's something that we're focused on at this point. I'm less

worried about crypto innovation because I think we have actually a lot that we can offer with the Web3 initiatives that we have on OKEx side that we would like to ultimately offer that as a whole package to the US markets. You know, A lot of the DeFi earn that we used to offer on OKCoin side, in the future, we would like to bring it back as well to the market. Right now, we're temporarily pausing it as we focus on building some of the other pieces internally. But I'm very hopeful that US market will continue to be a strong market for crypto I don't think that the regulatory ambiguity will last forever but um we'll see what what do you think I tend to agree I I think that it obviously can't last forever and I don't know if it just takes regime change or some sort of

large you know black Swan event of some sort to really push the needle. I mean, I hate to say, but my opinion is that Sam Bankman Freed set the industry back a few years. Yeah. Because I think that the tone before FTX's collapse, even after Voyager and BlockFi, well, I guess that technically came later, but they were already having issues in Celsius. I think there was still generally a positive tone from the government. We had the Lummis-Gillibrand Act proposal and quite a few things. And I think now they just have egg on their face and they're embarrassed and they've taken the completely opposite tack because they're afraid politically that they can't support it. That's really my sad, unfortunate opinion. The ironical fact is that what actually failed FTX was nothing crypto. It's all Wall Street.

It's all traditional finance. Yeah. And it's just fraud. There's nothing crypto about it. There's nothing crypto about it. But I do hope that we can get past it. And us, from our perspective, we're not stopping in our building for the U.S. market. We're still building for it.

We are here. We will continue to invest in this market. How challenging has the banking situation been for you on the U.S. side? Because we've obviously heard quite a few stories, some vetted, some unvetted about Chokepoint 2.0 or difficulty finding banking relationships after Signature, obviously, and Silvergate disappeared. So has that been a challenge on your side? It is. It has been a challenge, I think, as what we've seen with other parts of the industry. The matter of fact is there are not a lot of banks

that actually service crypto industry and service as well. And unfortunately, we lost two, plus 0.5 maybe overnight. There are still banks who serve crypto out there, but I think we'll take time for them to actually develop that infrastructure as what Silvergate and Signature have been able to and get back to where we used to be. So there is a little bit of a fluidity there, but we are dealing with it, I think.

This is a part of entrepreneurship and part of building an industry. You just have to work through it and adding more, adding more access and resilience into the system, into our own system, having more diversity, having more choices so that there is more backup. I think that's a lesson learned for us as well. We cannot take things for granted, even in US or maybe particularly in US. Especially in the US, I was going to say,

unfortunately. Especially. You talk about the banking infrastructure. So I guess there's some different aspects of banking for the crypto industry that people don't understand, right? I mean, there's simply where you can hold your accounts. But then there was, you know, Cignet and Sen, which were the actual settlement networks. Is that what you're talking about when you say it will take time for the infrastructure to be rebuilt? Is it that sort of on-chain side? Yes. Signature and Silvergate have their own internal settlement network that actually has been very helpful and efficient for the customers. Again, from our perspective, we at a platform, we are agnostic in terms of how customers want to settle their assets or where they want to hold their assets. We actually welcome our customers to take assets off our platform or,

you know, settle in other places. As long as there is that infrastructure available. And we're happy to develop that infrastructure in partnership with other players. But yeah, to your point, yes, that's part of it. It's very fragmented. Without those, it's up to different exchanges to do that. I think there are some banks out there who are trying to develop that as well. But again, I think we will take time. I agree. So you are one of the first guests I've ever had who just outright said, I don't believe in tokenize everything.

Right? And then it should be native. I should probably qualify that as my personal point of view. Of course. But that's interesting because I think for Web3 and people, obviously, who have believed in NFTs for a long time, that's been one of the bigger narratives in crypto is that we can effectively bring everything on chain, transact party to party, eliminate third parties from those transactions. So what about the idea of tokenizing everything doesn't resonate with you? I should say tokenizing everything resonate with me only in senses where if we have more nativeness in that. I don't believe in tokenized stock i don't believe in tokenize a uh a real estate uh securitization portfolio um i think that doesn't really that is basically a solution that is trying to find a problem to be solved um i i do think that there are room for more on-chain or token for other things, including NFT. I think there are actually signs of how NFT can be further utilized in real-life use cases in the future while still being native. But I think that the rounded NFT wave last year,

there is a mix of hype and a glimpse into future. Probably, like every other innovation, it's probably 80%, 90% hype and then 10% or 5% glimpse in the future. But I do see that there are potential in how NFT in itself can actually introduce something interesting in from, you know, business model from use case perspective. But there are nativeness that I think need to be required, i.e., know on-chain uh development of you know how actually some of the online um activities can be captured seamlessly into a token or nft then that can be

reflected uh and captured in in value um so so i think whenever there is a connection that we have to make between on-chain and off-chain, that's where the quote-unquote tokenization can be a bit more challenging. But if, for example, when it comes to, that's why we see crypto being successful in financial system in the first place, because financial system is all digital on-chain. I think that's also why the traditional idea of probably seeing more disruption in social media, in gaming, and some of these more natively digital pieces is probably where we can see a little bit more breakout. But I don't believe in tokenizing financial instruments. I love that you made the point that it's 90% hype and probably 10% real, because I think that describes every single one of these mini cycles that we've seen in the crypto space, whether it be DeFi summer, NFT summer, Metaverse fall, if you want to call it the recent AI wave, I think. Why do you think that we get so excited and so sort of overwhelmed with these ideas

and then we just see them sort of tail off as we did with NFTs last year? Yeah, I don't know, Scott. I don't think it's necessarily a bad thing. I mean, we as human are imaginative, right? We actually want something good and better and best before we even know what actually it is and what it entails.

That in itself is not bad because without that, we won't be able to progress. But at the same time, there's also a reality of technological development and kind of, you know, entrepreneurship, exploring what actually works and what is the real problem and how we are going to solve it and what's the solution. So I think there's always that curve for every new wave of technology and new initiative. You always, you know, see something that is really interesting and disrupting. And then our imagination and expectation go way ahead of what actually can be delivered at that certain point of time. But the direction, I think, is fine.

So I think when it comes to crypto, well, Web3 or whatever we call it, long-term horizon is really important. And then picking clear winners is really important. And then for everything else, you just make sure that you either actually are an entrepreneur and you work on it full-time, or if you're really kind of an investor or trader, really understand what you're doing and manage that risk. It's important, yeah. That's funny you talk about picking clear winners. of an investor or trader, really understand what you're doing and manage that risk is important.

That's funny you talk about picking clear winners. I would imagine that there's a challenge running an exchange and just picking what you can list. At this point on OKCoin, how do you even choose what assets you're going to make available in this regulatory environment? Yeah, we don't. To your point, we try not to pick the winners, but we kind of have to. At some point, there's a basic threshold that we have to. But for us, the basic threshold is more looking at red flags, looking at whether something is security or not, looking at whether it's a reputational red flag.

We also have a team looking at the protocol itself and see if there is any backdoor that is being built or loopholed that we don't feel comfortable with. But then, you know, there's so much we can judge. We, you know, we are not, we don't have a crystal ball. We don't know whether a protocol project will be successful or not. We don't have a crystal ball. We don't know whether a protocol project will be successful or not. So we can only do so much. Really just evaluating and screening out the projects that we don't feel comfortable and then leave the rest to the market.

Is there a fear that the SEC just comes out and says, if it's not Bitcoin, it's a security and you can't list any of it? I mean, would you become a Bitcoin-only exchange? What would happen in that situation? If that's really the fear, then I might as well just quit and not do it. I agree. When a congress cannot even get that answer straight forward from Gensler, it's hard for us as business people to get that answer straightforward from Gensler. It's hard for us as business people to get that answer. But for us, I think what matters for us is we want to make sure that we do things right. We do the right thing, meaning we have our evaluation framework.

We have consistency. When we look at every token, there is actually a consistent framework that we follow. And we make those decisions. Some assets we say yes, some assets we don't feel comfortable and we'll review later. And for some of those assets we don't list right away. It's not because it doesn't work forever. Maybe it's because the assets is at a time

where we don't feel comfortable making any decisions. So we'll wait and see how the protocol and community develops. But I think ultimately it's about what we do. Similar to your previous question of how you actually manage the industry volatility and manage the grill, I think ultimately a lot of the decisions have to be the you know the decision we have to make internally what business model you are uh you're building toward what are the principles um how are you going to conduct um in particularly tricky situations and that comes down

to in crypto when there is no where there is no clear rules and regulation, and even sometimes when there is, we probably have a different point of view and I think come down to our own principle, how we actually make judgment calls. I think that's a great segue into the other side, at least from outside looking in on why you've continued to grow so much. Obviously you sort of talked about all the internal practices that you had that allowed you to navigate that. But you guys have also been incredibly good at marketing, right?

And you know, I love Heider. I've had him on my show a number of times. But the McLaren Orange sticks in my mind anytime I think about KX now. And of course, the Manchester City Kits and the Tribeca Film Festival. But there's, I guess, I wouldn't say controversy, but argument as to how much marketing exchanges should do, where they should be doing it. And you guys have, I would say, chosen extremely wisely. And it's been a really interesting effort. So can you talk about the marketing side, why you've chosen to do the

deals that you've done, and where you see, I guess, the ROI from things like that. Is it because you're looking for a specific amount of people to sign up by an F1 relationship or is it just generally a billboard? What's the thinking behind it? Yeah, great questions. Why we choose to do those deals and why we do marketing. If you ask me and if you ask Haider, you'll probably, the number one rule that I think we are following is that we have to be authentic. When we pick a partner, for example, we want to make sure that we actually partner with someone who are aligned with our philosophy and value. And there is some fundamental common ground, right, that we share. I think that is a very important starting point. So when we actually look at some of those partnership potentials, what actually really excited us about McLaren, about Man City, about Tribeca is the

ambition for getting better, is the ambition for pushing for things that we, challenging the assumptions, right? Building for something new, asking for, asking, you know asking whether what we are doing right now is actually enough, is actually right, should we do something different? I think that level of aggressiveness and also resilience when it comes to sports, resilience is very important. And I think that those two, passion for change and and, you know, being unsatisfied with status quo, and then plus the resilience through volatility, I think those two actually defined us in the industry, particularly for those who are here for long term. And so I think that level of authenticity is really important. And when we

decide to go with those partners, I think there is a level of spiritual alignment, value alignment with senior leadership on those partners for us. And then the other piece I think that is really important when we think about marketing is also because I think it's really about connecting marketing to product, to what we are really offer to the customer in the industry. And we want to make sure that it's authentic, but also we are actually, you know, doing real things, right, to the customer instead of just, you know, talking. We actually need to walk so everything that we we work on internally you know has to be a customer first customer driven approach I think there's Still a lot that we haven't done yet. We just getting started to be honest in terms of kind of marketing and thinking about connecting with the community properly

and connecting with customer properly and bring those back to our product cycle too. We are really just getting started. So, you know, looking forward to do more on that front. In terms of ROI, I don't know if you have a better answer in your conversation. You've talked to so many people and leaders. If you have any ideas and suggestions, let us know.

I couldn't imagine that you'd be able to determine the ROI base of the deal or to be able to track how many customers you've signed up because they saw the awesome McLaren car or anything or anything like that. So I assumed that it was just general marketing and spreading the ethos. And in my opinion, it massively helps the industry as well. Yeah. Yeah. Yeah. Yeah.

As long as it's not the naming rights on the stadium for a company. But even at the time, though, I should say perhaps in hindsight, because we all cheered it. But I think that to a large degree, if you look back, FTX was literally just throwing money anywhere with no concern for how well it aligned. Yeah, yeah. It took us a long time to decide whether to do this and what to do and who to do this with. So I think we made the right choices. But again, as I mentioned, I think we still have a long way to go. It doesn't hurt that it's the most popular show on Netflix and we see OKEx all over it, right? On Formula 1's Drive to Drive. It's pretty cool. I was never into Formula 1 at all until I watched that show, actually. And then honestly, I went to Token 2049 last year. And because I happened to stop at the OKEx booth, I met Daniel Ricciardo, the driver,

because you guys had him there. And that's what I got super excited about Formula One. So it even worked on me. I didn't know anything about Formula One until last year when I was in Singapore at your booth. Yeah, I was new to Formula One too and I didn't realize that it is such a technology-driven business. There are a lot of technical details that go into it. Like everything else that we do, I think details really matter.

And for them, detailed consistency and constant optimization really make a huge difference. And I think that's another thing, right? You know, with Formula One, with Man City, with all our other brand ambassadors, what we see there that is, you know, pretty consistent theme across the board is that your focus, your consistence, and persistence in working on some of those details,

attention to details which really matter, really make a huge difference. And I think the same can be said for crypto, for trading, for hodling, whatever you're doing, right? So I think that is something that is more around kind of the brand authenticity that we want to build around and relate to our customers too.

Obviously, this market goes in cycles. Anyone who's been here for a while has maybe not been as surprised by this bear market as people who are new to it. Do you think that it gives you a tremendous advantage that you've not only survived, but thrived and been able to build through a bear market? Because I think historically, the best things of the next bull market are always built when nobody's watching crypto and nobody's concerned with prices. So really, it's kind of become a meme, but build during the bear market. I do believe in that. We have been around for a long time.

We have... Okay okay coin started in 2013 13 13 14. okx um was founded in 2017 so so collectively we have been actually through multiple rounds uh multiple cycles and every every down cycle was the time for us to build uh for us to transform ourselves and we are in one of those uh um uh very uh great moments uh internally um so we actually treasure the this kind of downtime because this is great for us to to focus uh internally we have quite a lot going on right now but again you know one of the major focuses around technology we we are investing a lot in web3 technology and and improving our web um wallet recently uh launched our npc um feature for the wallet

which i i believe is huge because it actually makes it easier for uh uh crypto native to to really try uh the non-custodial part of the um industry i think we all uh for for crypto natives uh we all get very excited about you're not your keys not your crypto, we're not your Bitcoin. But historically, we've seen that it's been really hard to push that envelope adoption of the non-custodial wallet. We all get very excited about it. We see the Twitter, we live in this echo chamber. But when we look at data, the adoption curve of that is really lacking compared to what we would like it to be. But I'm hoping that with MPC type of feature, it will make things easier for non-crypto native people to actually end up using non-custodial wallet a lot more.

Yeah. I think the reason we get excited about it is in theory, because it's the idea of being your own bank and securing your keys. But for a lot of people, then they're like, I have to write this down and lock it away and split it up. And it just becomes insane. Yeah. Right. It's a very special person. The risk of managing that is also pretty high, right? Can you talk about MPC, what that means? There might be people who are watching who don't actually know what that technology is or what you've added. Yeah, sure.

So our MPC feature basically take away the traditional seed phrases that are required for non-custodial wallet. So generally for a non-custodial wallet, you'll end up creating seed phrases. You have to write it down. It's generally 12 words, 12 phrases in case later you have to recover your own wallet. Or if you end up, if you use, say, OKEx wallet to open your own non-custodial wallet, and later you want to actually manage your assets from another wallet, then you can actually access your wallet from another provider by using the C-phrase to recover.

But that is extremely, as Scott mentioned, it's extremely inconvenient because you have to write it down and figure out how to actually keep that piece of paper safe. It's terrifying. It's terrifying. So what we have done is that we actually enable our customers to create a quote-unquote keyless wallet, meaning in this MPC wallet, instead of writing down the 12 C phrases, what you ended up getting is you just create your wallet and then you will end up having three pieces of keys. One key OKEx will hold for you, one key you hold for yourself, and then the third key you can choose to keep in the cloud. And for every transaction that you authorize for your own wallet, you will need two out of the three keys to manage.

So you still own your wallet transaction. OKEx as a platform won't be able to do anything with your wallet without your consensus. But in case you lose one of the two keys that you have, you can come and ask for help, basically. So that will actually help kind of alleviate the inconvenience with a traditional non-custodial wallet, but you still own your wallet. The ownership is not compromised there. And then we also allow some emergency exit, for example, in case you want to reset your wallet. You can actually restore and import your private key in case of an emergency to keep your assets safe. So I think this is kind of exciting that

we feel like we feel important for pushing the adoption of non-custodial wallet, providing that initial layer of convenience, which I think actually most people want, without compromising the self-ownership of your own wallet or own bank. Yeah, it's the perfect hybrid. I've been using Kasa multisig for years for my Bitcoin, but there's never really been a great solution that I've loved for anything else. And even three of five multisig is scary because you're geographically distributing all of these things and you have to go chase them down. So MPC is really one of the most exciting technologies because it really abstracts away some of the terrifying parts we were discussing before. So that's a huge innovation you've added. What else is on your roadmap that you're excited to release?

What are the things that you're most focused on that you think need to be included in the platform or the wallet in the next six months, year to two years? Yeah. A big piece of our wallet is around interoperability. think that is probably the underlying belief that underpins our product development on the non-custodial, on the Web3 side. Meaning we continue to add various support of the chain out there for both our wallet as well as the MPC capability. We will be adding Lightning to our Web3 wallet as well. Right now, we do support Lightning on the centralized exchange side. We will be adding that to the wallet as well for Lightning so that people can actually manage both Bitcoin as well as other assets

and actually end up using that if they choose to for payments. We obviously have a ZK zero knowledge technology that we are actually pushing forward. We also have a few other pieces that are in pipeline. I'm not going to talk about it yet because you probably see if you haven't realized that our style is not to talk too much about certain things until we are 90% there

or 100% there or even 120% there. We always have internal debate of whether we want to tease certain pieces, but at this point, we're still kind of more conservative in terms of what we actually talk about. But we do have quite a few things on the roadmap that we are pushing very heavily on.

So you're saying you don't do announcements of announcements like we've seen in the industry. Yeah, that's right. When we say we do Lightning, we do it. We already actually pushed out for POR, same thing, zero knowledge. When we talk about it, it's pretty certain that we're actually doing it. And if we do pre-announcement, it's one month away. We know exactly what we're doing and can launch. With some of these features, have you been, I guess, either side? Have you been surprised at how popular they've been? Or have you been surprised with any of them that there's been really no uptake or adoption? That's been one of the criticisms of Lightning that I've heard quite a few times, actually, is that in theory, people are very excited about it, but then the platform

uses it and it doesn't happen. I mean, even when Strike was added with Lightning payments to Twitter, that seemed huge and nobody really used it, right? Yeah, we added Lightning in 2020, I believe. So I think that's one of the areas where we see continued adoption, but definitely the adoption curve is behind the expectation, which probably makes sense because there are still a lot of

constraints in both the operation of the network as well as real use cases, how far it can go. Non-custodial wallet, I think, again, similar to what we talked about before. Conceptually, we would love to see it being picked up right away by millions of people, right, particularly after the bank failure. But in reality, I think the adoption curve is, you know, takes a bit more time. But from our perspective, I think the direction is right. It probably takes a little more patience and education and also external factors have to, the stars have to align, so to speak. So we are okay with waiting a little bit and investing gradually and gradually and then suddenly. So we're hoping that, you know, by

investing in some of these tracks long-term and doing it day in and day out at some point, it will pick up. You talk about external factors and I kind of giggled because in my mind, the sad truth is we just need prices to go up. Right? I mean, it's like one of those things we talk about building in a bear market, but the reality is you just need a bull market, then everybody will be excited about these things.

Yeah. But I think it goes hand in hand, right? Because in a bear market, you actually end up building. You realize what actually works and what doesn't work and actually end up building pieces. And in bear market, the real believers actually stay behind and actually focus on building. And yes, to your point, in bull market, when the price goes up, a lot more new interests come in. And that's where I really have a lot of respect for both hodlers and builders and traders, because without traders and speculators, we are not going to proceed.

You look back even just at the last bull market, and I think one of the biggest problems that caused a lot of the contagion and issues was that platforms had not built the infrastructure during the bear market that they needed to scale during the next bull market. And so they were woefully behind and a lot of things slipped through the cracks. I mean, when I spoke to CZ at that time, I can't remember, I had him on the podcast, but it must have been... It was really at the heart of the bull market and the Doge cycle. And he said, I'm doing customer service calls.

There's not enough people in the world for me to hire and train in time to handle the customer service. Voyager, he told me, we have a three-month, four-month, of course, they collapsed. Three-month, four-month waiting list for people to onboard because we just can't even service these people. So if those platforms had...

You can't anticipate the scale of the bull market, but if they had built all those structures in advance, then we probably wouldn't have had a lot of the issues that we had during that next market. Yeah. It's a learning process for all of us going through different cycles. Every cycle, we learn something new. And for us internally, again, we also learn a lot from the last cycle. And coming out of it, you know, we realized that we want to continue to invest in product, both external product for the customers, as well as internal product, to be able to allow us to deal with some of those challenges more effectively without throwing

bodies at the problem. So that's where we have been focused on right now, you know, right, both the external product serving the customer, and then internally, how we actually learn from our past challenges and failures internally and invest in those internal tools to improve operational efficiency, to improve the balance between business growth and risk management, improve customer communication effectiveness, and a lot of that. Actually, there's a lot of detail that go into it end to end. It's like doing puzzles, building Legos. You have to actually build the groundwork really solid. But without making mistakes, unfortunately, we don't learn as people tell you, you should do this.

Yeah, people tell you, you should do this. Yeah. People tell you, you should do this, but without actually doing it and losing money, for example, you actually don't know that actually. You're speaking my language. You're speaking my language. I've told my story way too many times. So you obviously should know that by now. How much of all these things that you're building,

if you're trying to differentiate between institutional, potential institutional business and retail business, how much of it is being built for each or are you solely focused more in one area than the other? I think there's a lot of infrastructure sharing between the two, but at the same time, different customer segments also have different, very bespoke needs. For us, we believe that we have to really go local and go vertical to really listen to customers and build based on what they actually need the most. So we do have team focused on institutions and focused on retail. But at the same time, there are infrastructure layer, product architect, internal tools and system,

and external network that we have to build that will also benefit both segments. So we're doing both, so to speak. We just have different people doing different things. But we are investing in all key areas and have been very busy. So good bear market for us to focus on investing. Absolutely. I know we're kind of running out of time.

Is there anything that you're particularly excited about for the industry, for the company that's coming that I might not have touched on or might have missed? Industry. I think the having would be interesting. I think it would be interesting to see how Ethereum evolve over time. I personally don't have any answer to that, but I think it will be interesting to see how these two work.

And then, you know, question mark around US regulation. That's the third biggest question mark around uh u.s regulation uh that's the third biggest question mark on my mind um every other jurisdiction has moved forward uh you know you can you can argue whether it's certain jurisdiction regulatory framework is yeah uh you you know there's there's obviously personal assessment for each but i think for every jurisdiction they they at least try right at least send of, okay, here's how we're going to do it. And then you can optimize on top of that. Um, us is still kind of wishy-washy. So we'll see. That's a nice way of saying it. So right here.

Right. I mean, you just got Micah, obviously, uh, Mika, Micah in, in Europe and whether, whether, you know, regardless of your feelings of it, as you said, at least you know what you can do and what you can't. I think that's all people want. Yeah. Clarity. Yeah. Yeah.

Clarity is everything. So where can people follow you? And then obviously check out everything you guys are building after this conversation. Sure. I'm on Twitter. My handle is hfangca. I'm actually keeping an open DM, so would welcome feedback on product for either OKEx or OKCoin.

Happy to chat. That's always very brave to keep the DMs open. I go back and forth. You never know what's going to come in there. You have a larger follower than I do, so I'm okay there. Well, hopefully you only get a very positive feedback and no angry people in your DMs. We do have a lot of feedback and I actually appreciate that. A lot of the customers actually, when they run into challenges, they reach out and we use those opportunities to identify internal hurdles and fix some of those issues. So yeah, we do get that and we appreciate having those. I'm glad we finally got to chat in person instead of just in Twitter DMs. It's really a pleasure.

And I hope we can do this quite a few more times in the future. I love having members of your team on, like I said, as well. So I really look forward to speaking with you again in the future. Same here. Very, very happy to be on. Thank you for having me. Thank you. Thank you, Scott.

Thank you.