WEBVTT - A Post-FTX Reality Check with Joe Weisenthal 0:00:02.560 --> 0:00:06.520 This is Bloomberg Crypto Daily, Bloomberghart Podcast, and I'm Stacy 0:00:06.600 --> 0:00:10.520 Marie Ishmael, Managing editor of Crypto for Bloomberg News. It's Wednesday, 0:00:10.600 --> 0:00:27.400 November twenty three. Have you heard the one about the box? Well. 0:00:27.920 --> 0:00:32.120 In April two, long before Sam Bankman Freed was tweeting 0:00:32.200 --> 0:00:35.559 rambling threads about the collapse of his FTX empire, he 0:00:35.680 --> 0:00:39.880 joined the Bloomberg Odd Lots podcast and talked about the box. 0:00:40.440 --> 0:00:43.600 What this protocol is, It's called protocolize. It's a box 0:00:43.640 --> 0:00:45.280 and you take you can take it token, and you 0:00:45.280 --> 0:00:46.600 can take it theory, and you can put it in 0:00:46.640 --> 0:00:48.880 the box, and you take take it out like you 0:00:48.920 --> 0:00:50.600 put it in the box, and you get like, you know, 0:00:50.640 --> 0:00:53.280 an IOU for for having to put it in the box, 0:00:53.320 --> 0:00:55.600 and then you can redeem that IOW you back out 0:00:55.640 --> 0:00:59.080 for the token. The box was Bankman Freed's metaphor for 0:00:59.160 --> 0:01:02.320 describing the crypt to a practice of yield farming, and 0:01:02.400 --> 0:01:06.039 his description at the time raised many an eyebrow because 0:01:06.040 --> 0:01:10.679 it seemed well both too blunt and too good to 0:01:10.720 --> 0:01:14.760 be true. I'm joined today by Joe Wisenhal, co host 0:01:14.800 --> 0:01:17.760 of the Odd Lots podcast, who at that Time ended 0:01:17.800 --> 0:01:21.280 that episode with a deeply relatable comment, I don't know 0:01:21.319 --> 0:01:24.280 how to feel about it. I feel weird. We all 0:01:24.319 --> 0:01:36.959 feel weird. Joe, welcome to the show. Thank you so 0:01:37.040 --> 0:01:39.759 much for having me. Yeah, and you know, you range 0:01:39.920 --> 0:01:45.080 from like what's happening with trucking supply chains to Guyana 0:01:45.319 --> 0:01:49.240 to interviewing Sam Bankman Freed. So for the for the 0:01:49.240 --> 0:01:52.200 purposes of this episode, we're going to talk about that interview. 0:01:52.360 --> 0:01:56.600 In April two. This was right before the Salt conference 0:01:56.640 --> 0:02:00.600 in the Bahamas. Things were still um, i'll use the word, 0:02:00.600 --> 0:02:04.280 frothy and optimistic. The vibe was very much, you know, 0:02:04.320 --> 0:02:07.520 to the moon, as the bitcoin folks like to say. 0:02:07.640 --> 0:02:10.520 And Bankman Freed came on the show, which was co 0:02:10.639 --> 0:02:12.760 hosted by Tracy, and had a special guest to parents 0:02:12.760 --> 0:02:15.519 from Matt Levine. Among many other things he talked about, 0:02:15.560 --> 0:02:17.840 one of the things was about defy and yield farming, 0:02:18.880 --> 0:02:21.679 and at that point, you know, he had this metaphor 0:02:21.760 --> 0:02:23.840 about the box, which was like you put money in 0:02:23.960 --> 0:02:25.720 and kind of money comes out, and what happens in 0:02:25.760 --> 0:02:29.880 between is mysterious. And I really listened to that episode 0:02:30.160 --> 0:02:32.640 before we recorded this one, and I just remember you 0:02:32.760 --> 0:02:37.280 Tracy and Matt's all doing variations on like what it's 0:02:37.320 --> 0:02:41.160 interesting because the box comments. I think it's about twenty 0:02:41.280 --> 0:02:43.720 or so minutes into the episode, and I do think 0:02:44.280 --> 0:02:46.160 that if you sort of listened to the full episode, 0:02:46.280 --> 0:02:49.280 just the tone of it, we never quite recovered or 0:02:49.320 --> 0:02:51.840 got back on the track after that. I think that 0:02:51.960 --> 0:02:54.800 we were all like a little like flabbergasted, a little 0:02:54.800 --> 0:02:59.000 bit surprised by the bluntness these sort of you know, 0:02:59.160 --> 0:03:02.919 after he just arrived Yield Farming as like this sort 0:03:02.960 --> 0:03:05.320 of magic money box where you put money in and 0:03:05.360 --> 0:03:09.120 then money comes out. And Matt's first response was like, 0:03:09.160 --> 0:03:11.200 to be honest, that sounds like a Ponzi scheme, and 0:03:11.240 --> 0:03:12.920 I was like, wow, it doesn't really seem like there's 0:03:12.960 --> 0:03:16.799 any economic value created at all. My expectation at that 0:03:16.880 --> 0:03:19.440 moment in the conversation was that he would push back 0:03:19.480 --> 0:03:21.880 a little bit, like he would say something like, oh, well, 0:03:22.000 --> 0:03:24.359 that's just sort of like the structure of it, but 0:03:24.800 --> 0:03:28.120 something cool and productive could theoretically happen in the box. 0:03:28.680 --> 0:03:32.000 So it surprised me at the time was not even 0:03:32.120 --> 0:03:35.680 the metaphor per se, but after Matt sort of said 0:03:35.720 --> 0:03:38.280 this sounds like Ponzi, after we all kind of said 0:03:38.480 --> 0:03:41.080 where's the value? There was like no pushback or anything, 0:03:41.080 --> 0:03:42.920 and I think that was actually the part, more than 0:03:42.960 --> 0:03:46.640 anything else that I found to beat jarring. And then yeah, afterwards, 0:03:46.760 --> 0:03:48.720 like you know, we got to the end and Tracey 0:03:48.720 --> 0:03:50.600 and I are did our outro, and I think we 0:03:50.680 --> 0:03:52.680 just sort of like stammered a little bit because after 0:03:52.760 --> 0:03:56.480 that moment, we didn't really know what to say except wow, 0:03:56.520 --> 0:03:59.280 that was in a in a weird way, it seemed 0:03:59.360 --> 0:04:02.840 very honest, seemed like he was being extremely candid about 0:04:02.840 --> 0:04:05.520 what he thought cynical. But it you know, it almost 0:04:05.520 --> 0:04:07.840 came off as like, well, yeah, here's a crypto person 0:04:07.880 --> 0:04:10.520 saying what many people outside of crypto believed to be 0:04:10.560 --> 0:04:14.400 the case about the industry. You, like many other people, 0:04:14.480 --> 0:04:18.440 have read the Vox story in which which was essentially 0:04:18.480 --> 0:04:22.280 like he was texting with a Fox Reports and there 0:04:22.360 --> 0:04:25.640 was so much in there in which he indicated just 0:04:25.839 --> 0:04:30.359 how savvy he was about his public persona and the 0:04:30.440 --> 0:04:32.560 kinds of things that he had to say in order 0:04:32.600 --> 0:04:35.880 to seem credible. But you also get the impression that 0:04:35.920 --> 0:04:38.480 this is a person who while he was doing that, 0:04:38.520 --> 0:04:42.040 while he was playing this part to some extent, believed 0:04:42.120 --> 0:04:45.000 that he was above the free right that he was 0:04:45.120 --> 0:04:47.920 to use a very old phrase in finance, actually still 0:04:47.960 --> 0:04:50.280 the smartest guy in the room. Well, you know one 0:04:50.320 --> 0:04:54.760 thing that I long thought about Sam and being separate, 0:04:54.880 --> 0:04:56.760 and so I don't know if above is right, but 0:04:56.960 --> 0:04:59.359 you know, maybe he did think of himself but definitely separate, 0:04:59.640 --> 0:05:02.400 which is that you know, in his public persona like 0:05:02.600 --> 0:05:07.040 on Twitter, etcetera. He never really made the case that 0:05:07.120 --> 0:05:12.320 crypto is good. Most people in the space argue that, yeah, 0:05:12.320 --> 0:05:14.159 of course, you know, they don't really talk about all 0:05:14.200 --> 0:05:16.960 the money they're making or they were making anyway. They 0:05:17.040 --> 0:05:19.480 talked about, oh, we're changing the world and we're gonna 0:05:19.480 --> 0:05:22.920 bring transparency and trustlessness and you're not gonna have your 0:05:22.960 --> 0:05:24.720 money de valued by the FED and you're not gonna 0:05:24.720 --> 0:05:28.000 have to trust JP Morgan, etcetera, or this sort of 0:05:28.480 --> 0:05:31.280 other version that it's like, oh, well, people in emerging 0:05:31.320 --> 0:05:35.600 markets without access to reliable payments, there stable whatever it is. 0:05:35.680 --> 0:05:39.359 They're all these stories that crypto people tell the public, 0:05:39.560 --> 0:05:42.159 and I think to a large extent, tell themselves to 0:05:42.240 --> 0:05:45.280 put this gloss on making a lot of money so 0:05:45.360 --> 0:05:48.200 that sounds like important and world changing. And he never 0:05:48.560 --> 0:05:50.279 did that as far as I could tell, it was 0:05:50.360 --> 0:05:55.200 always about the money, not just in that conversation but elsewhere, 0:05:55.200 --> 0:05:56.800 And so I always thought, you know, I remember, like 0:05:56.839 --> 0:05:59.080 even a friend of mine several months ago asked me 0:05:59.120 --> 0:06:03.080 what I thought of um SPF. I thought it was 0:06:03.120 --> 0:06:06.520 sort of refreshing that he didn't sort of like position 0:06:06.800 --> 0:06:08.560 making a lot of money and crypto is sort of 0:06:08.560 --> 0:06:11.719 there's noble thing. And basically he was like he and 0:06:12.080 --> 0:06:14.280 the various Lamenta people who are on Twitter or like, 0:06:14.440 --> 0:06:17.320 they really just talked about the money. And they talked 0:06:17.320 --> 0:06:21.520 about the money. Obviously, there was this backdrop, whether you 0:06:21.560 --> 0:06:23.960 believe that it was sincere or not of you know, 0:06:24.000 --> 0:06:26.880 what's called effective altruism, but the idea is like you 0:06:26.920 --> 0:06:28.800 make a bunch of money and eventually maybe you change 0:06:28.839 --> 0:06:32.600 the world. But it was also the way that they 0:06:32.600 --> 0:06:35.159 talked about the money was very matter of facts. And 0:06:35.279 --> 0:06:38.920 I think, in addition to what you're identifying about the 0:06:38.920 --> 0:06:44.080 the self righteousness that can infuse crypto Twitter, sometimes there's 0:06:44.120 --> 0:06:46.720 also a lot of mud slinging. Right there's as it 0:06:46.760 --> 0:06:51.480 is happening right now, various similarly disgraced crypto founders of 0:06:51.560 --> 0:06:55.240 spending quite a lot of time on Twitter, redirecting attention 0:06:55.480 --> 0:06:58.279 towards you know, sound back when Freedom FTX right now, 0:06:58.640 --> 0:07:01.200 there were a couple of times I remember, you know 0:07:01.240 --> 0:07:04.360 when back when Freed talked about like coin based earnings 0:07:04.360 --> 0:07:07.840 and various other things. But for the majority of his presence, 0:07:08.040 --> 0:07:11.720 he was talking up or talking about like his own entities. 0:07:11.760 --> 0:07:15.840 And there were many when you were interviewing other folks 0:07:15.840 --> 0:07:17.600 in the ATO space, and you've talked to a lot 0:07:17.640 --> 0:07:20.360 of them, what was their perception of what was happening 0:07:20.360 --> 0:07:23.920 at Alameda f t X, Bakman, Freed himself. That's a 0:07:24.000 --> 0:07:26.440 good question. So I don't think in any of our 0:07:26.720 --> 0:07:29.560 interviews that we've actually done on the podcast that we 0:07:29.640 --> 0:07:33.040 actually like talked about f t X and or Lameda 0:07:33.120 --> 0:07:36.400 or SBF. What I do know is that, you know, 0:07:36.440 --> 0:07:40.240 when I spoke to traders just sort of independently or 0:07:40.240 --> 0:07:43.520 my curiosity about the industry, they really like trading on 0:07:43.640 --> 0:07:45.280 f t X, And I think this is like it 0:07:45.400 --> 0:07:48.080 from my perspective again, you know, sort of going back 0:07:48.120 --> 0:07:52.480 and like rethinking things, Like one of the through lines 0:07:52.600 --> 0:07:56.640 was that professional like crypto hedge fund traders, etcetera, thought 0:07:56.680 --> 0:07:59.120 it was a really high quality product for a number 0:07:59.160 --> 0:08:02.440 of reasons that there was a high level of customer support, 0:08:02.720 --> 0:08:04.640 that there was a high level of up time. If 0:08:04.640 --> 0:08:07.200 you recall, sites like coin base have had some pretty 0:08:07.200 --> 0:08:09.440 big down times from time to time, it didn't seem 0:08:09.480 --> 0:08:11.920 like f t X had any I remember talking to 0:08:11.960 --> 0:08:15.160 a trader who once told me that, like, basically, you 0:08:15.200 --> 0:08:18.080 can buy with a tremendous amount of leverage, so it's 0:08:18.080 --> 0:08:21.040 like ft X and binance, etcetera. And then if the 0:08:21.280 --> 0:08:23.760 position moves against you, you you get the position liquidated and 0:08:23.760 --> 0:08:27.080 your collateral gets taken away from you. But of course, 0:08:27.120 --> 0:08:30.000 any algorithm that determines with when your collateral is gonna 0:08:30.000 --> 0:08:32.040 get taken away from you, you know, it's gotta it's 0:08:32.080 --> 0:08:35.320 based on some sort of like, you know, probabilistic measure, 0:08:35.320 --> 0:08:37.160 I don't really know the math, but some sort of 0:08:37.200 --> 0:08:40.600 probabilistic measure of your in risk of losing the exchange money. 0:08:40.960 --> 0:08:42.800 And what I was told by one trader is like 0:08:42.880 --> 0:08:45.440 that f t x is liquidation engine works so well, 0:08:45.440 --> 0:08:47.199 and they're like, oh, f t X is gonna take 0:08:47.240 --> 0:08:50.000 over the world because their liquidation engine is so much 0:08:50.040 --> 0:08:52.480 better than everyone else's that they've trade with. There was 0:08:52.520 --> 0:08:55.080 also a cross margining abilities, so you could post one 0:08:55.120 --> 0:08:57.319 type of token as a collateral and get leverage against 0:08:57.360 --> 0:08:59.920 the different asset you apparently could not get on buy 0:09:00.040 --> 0:09:02.960 It's so I think there was another aspect in which, 0:09:03.000 --> 0:09:05.360 you know, you sort of like if you were to 0:09:05.400 --> 0:09:08.320 think about from an investor perspective, like doing due diligence 0:09:08.400 --> 0:09:10.319 on a company, we want to talk to do the 0:09:10.360 --> 0:09:13.840 customers like the product? And my impression always was that 0:09:14.280 --> 0:09:17.120 customers really like trading on FTX. Do you have this 0:09:17.200 --> 0:09:21.559 combination of software that seemed to be pretty decent, right, 0:09:21.600 --> 0:09:24.360 and insofar as the value that the ft X trading 0:09:24.360 --> 0:09:28.439 platform is providing to institutional investors, a lot of intelligence, 0:09:28.640 --> 0:09:31.480 a lot of people who were all about the money, 0:09:32.000 --> 0:09:34.520 and yet the size of the losses that whether it's 0:09:34.559 --> 0:09:38.000 between eight or ten billion dollars, seems to have stunned 0:09:38.120 --> 0:09:39.840 a lot of people just in terms of the share 0:09:39.880 --> 0:09:43.320 scoope of it. Yeah, and I do believe that like 0:09:43.440 --> 0:09:46.120 where the money went is still a mystery, But what 0:09:46.280 --> 0:09:52.160 seems like very plausible is that al Amita was lost 0:09:52.200 --> 0:09:54.600 a lot of money trading. I mean, on some level 0:09:54.840 --> 0:09:57.600 or another that seems to be the case. And you know, 0:09:57.679 --> 0:10:01.120 this is something that like I said, I never really 0:10:01.120 --> 0:10:04.320 heard people talk that much about al Amida. But you know, 0:10:04.360 --> 0:10:08.040 of course, um Sam had a background at the famous 0:10:08.240 --> 0:10:11.360 quant trading shop Jane Street, as did some of his colleagues, 0:10:11.840 --> 0:10:15.920 and so the presentation of Alameda was that it was 0:10:15.960 --> 0:10:19.720 sort of like this market neutral, quantitative trading shop. And 0:10:19.760 --> 0:10:24.480 I'm pretty sure on the Alameda website they also talked 0:10:24.480 --> 0:10:26.880 about that they were a market neutral firm, so not 0:10:26.960 --> 0:10:30.400 taking big directional bet one way or another. But that 0:10:30.600 --> 0:10:32.959 being said, and you know, if you're like thinking, okay, 0:10:32.960 --> 0:10:35.520 like let's go back and think more about red flags, 0:10:35.960 --> 0:10:39.400 I do recall, you know, and people have since pointed 0:10:39.400 --> 0:10:41.240 these out, but I do remember thinking at the time 0:10:41.280 --> 0:10:46.040 that the former CEO of Alameda, Sam Trabuco, who left 0:10:46.080 --> 0:10:48.680 the company earlier in the year, at some point this summer, 0:10:49.000 --> 0:10:51.840 he did have these threads that did not seem like 0:10:52.120 --> 0:10:55.440 very quantity, did not seem like market neutral. And one 0:10:55.480 --> 0:10:57.720 of the threads that people point to, if I recall 0:10:57.760 --> 0:11:01.520 it like basically like we went long doorge coin ahead 0:11:01.520 --> 0:11:05.640 of Elon Desinel, which maybe, you know, maybe a fine trade, 0:11:05.640 --> 0:11:07.720 although I think that was the peak, but it's like, 0:11:07.760 --> 0:11:10.200 oh man, this is not exactly what I thought what 0:11:10.320 --> 0:11:12.520 my impression of what el Ameda was doing. And I 0:11:12.559 --> 0:11:15.160 thought what he was doing was, you know, making markets 0:11:15.200 --> 0:11:18.160 and collecting spreads between the price of a coin on 0:11:18.160 --> 0:11:20.240 one side and the price of a coin on another side, 0:11:20.280 --> 0:11:22.840 or the price of a coin on a centralized exchange 0:11:22.960 --> 0:11:25.960 versus the price on the defied exchange. So I did, 0:11:26.440 --> 0:11:28.360 you know, I didn't think too much about it, but 0:11:28.400 --> 0:11:30.600 I did think, I guess I that it did seem 0:11:30.640 --> 0:11:33.800 different what I than what I thought Elamo was doing. 0:11:35.320 --> 0:11:38.280 We'll be right back with more from Bloomberg's Joe. Wisn'tal 0:11:50.600 --> 0:11:53.199 you said the friends of the show, Katie and Tim 0:11:53.240 --> 0:11:55.319 that one of the signs that crypto is immature is 0:11:55.400 --> 0:12:00.199 that it's too hard to launder money, yeah, without getting caught. Well, 0:12:00.240 --> 0:12:02.160 this is like so something I mean, I've been you know, 0:12:02.200 --> 0:12:05.040 from day one. It's like, this is the question. It's like, well, 0:12:05.080 --> 0:12:08.360 what is crypto good for? Right? We probably both of 0:12:08.440 --> 0:12:11.240 us have asked this question a million guys Like, Okay, 0:12:11.600 --> 0:12:14.760 it's fun as journalists we like looking at the lines 0:12:14.800 --> 0:12:16.960 going up and down, and it's probably fun is traders 0:12:17.000 --> 0:12:19.640 like you know, big big swings, but like, what is 0:12:19.679 --> 0:12:21.720 it good for? Right? What is the point of any 0:12:21.760 --> 0:12:23.640 of this. And you know, one of the things you hear, 0:12:23.679 --> 0:12:25.960 particularly from the bitcoins side the world, just like, well, 0:12:26.000 --> 0:12:29.560 it's good for censorship resistant payments, doing the payments that 0:12:29.600 --> 0:12:31.720 the state doesn't want you to do, doing the payments 0:12:31.720 --> 0:12:35.080 that would Venmo or PayPal or zel or your bank 0:12:35.120 --> 0:12:37.920 would kick you off for right trust less money. And 0:12:38.040 --> 0:12:40.480 yet it doesn't seem to be that good for that 0:12:40.600 --> 0:12:42.679 either as far as I can tell. And so, like, 0:12:42.920 --> 0:12:45.800 you know, even the sort of like bare minimum things 0:12:45.920 --> 0:12:49.240 that like crypto proponents often say, which is like, well, 0:12:49.280 --> 0:12:51.679 person a, can some person be money and persons? He 0:12:51.800 --> 0:12:54.720 can't say no, I'm not even convinced that it's true, 0:12:54.760 --> 0:12:56.920 because again, I think in the you know, the context 0:12:56.960 --> 0:12:59.480 we were discussing was like, there was a big test 0:12:59.520 --> 0:13:02.240 of this with a Canadian trucker protests earlier this year, 0:13:02.880 --> 0:13:05.199 and a lot of that money got seized or blocked, 0:13:05.320 --> 0:13:07.760 and that was people trying to donate to the protesters. 0:13:07.800 --> 0:13:10.040 And so, regardless of what you think about the protesters 0:13:10.480 --> 0:13:13.120 mission or cause, it struck me as kind of a 0:13:13.160 --> 0:13:17.079 test of like cryptos as particularly bitcoins main claims, and 0:13:17.120 --> 0:13:18.680 I don't think I really lived up. They didn't really 0:13:18.679 --> 0:13:21.400 have a way of getting bitcoin to the protesters in 0:13:21.440 --> 0:13:25.640 a way that was trust list and could avoid blockage. Well, 0:13:25.640 --> 0:13:27.640 one of the things that the truckers did is they 0:13:27.880 --> 0:13:30.920 like put a bunch of wallet addresses on their signs 0:13:30.920 --> 0:13:32.400 and the size of the trucks, and they're like, you 0:13:32.600 --> 0:13:34.839 send us money here, and then various regular says, We're 0:13:34.840 --> 0:13:38.480 like we're just gonna But you know, on the other hand, 0:13:38.520 --> 0:13:41.000 like there's no like I think, you know, I remember 0:13:41.080 --> 0:13:45.079 so after that happened, I remember seeing these discussions even 0:13:45.160 --> 0:13:47.320 among many like sort of bitcoin proprimis like oh, they 0:13:47.320 --> 0:13:50.959 shouldn't have like, uh, you know, made the wallets address 0:13:50.960 --> 0:13:53.720 just so public, which fine, maybe, but I don't think 0:13:53.880 --> 0:13:58.400 I ever saw like a great alternative solution. And you know, 0:13:58.480 --> 0:14:01.240 it's like, Okay, let's say you are going to be 0:14:01.520 --> 0:14:05.079 the focal point for disbursing the money. I'm going to 0:14:05.160 --> 0:14:06.680 send it to you, and you know who the truckers 0:14:06.679 --> 0:14:08.800 are privately, and you're gonna dispurse it. How do I 0:14:08.840 --> 0:14:11.160 trust you? How do I know you're not gonna pocket it? Etcetera. 0:14:11.400 --> 0:14:13.240 And so even like if you could find a way 0:14:13.280 --> 0:14:16.120 like around the public wallet episodes, like you still have 0:14:16.160 --> 0:14:20.280 the problem of trusting the intermediary is so it's very tricky, 0:14:20.320 --> 0:14:22.040 and so I thought that that was like a pretty 0:14:22.040 --> 0:14:24.720 good test of whether, you know, like bitcoins core claims 0:14:24.720 --> 0:14:28.440 of censorship resistance could be defended, and I thought it 0:14:28.480 --> 0:14:31.800 was lacking. Is there anything that you're seeing in the 0:14:31.840 --> 0:14:35.600 response to the fallout from algorithmic stable coins three Arrows 0:14:35.600 --> 0:14:39.520 Capital Celsius Voyager SPF f t X that is suggesting 0:14:39.600 --> 0:14:41.800 what the next crisis could look like. So it did 0:14:41.840 --> 0:14:45.320 actually have one thought on this specific question, which is 0:14:45.320 --> 0:14:47.960 that one of the things you're hearing about now in 0:14:48.000 --> 0:14:51.080 the wake of f t X is this concept where 0:14:51.120 --> 0:14:55.240 they say, okay, crypto entities, particularly centralized ones, if they're 0:14:55.240 --> 0:14:57.760 going to be centralized, should produce some sort of proof 0:14:57.800 --> 0:15:01.760 of reserves. And this idea that with cryptographic technology, you 0:15:01.800 --> 0:15:05.200 don't necessarily have to reveal your entire balance sheet or 0:15:05.280 --> 0:15:07.320 all the items on it, but you could prove your 0:15:07.320 --> 0:15:10.480 solvency in some way, and so you have some snapshot 0:15:10.480 --> 0:15:13.680 of coins that are yours, and you could prove your solvency. 0:15:13.720 --> 0:15:17.080 And the first thought that went to my mind was sure, 0:15:17.280 --> 0:15:19.360 you might be able to do that, but how do 0:15:19.400 --> 0:15:21.720 you know that the marks are true? And of course 0:15:21.800 --> 0:15:24.320 in traand FI, you know, two thousand and eight, two 0:15:24.320 --> 0:15:27.040 thousand nine, it was always like level on, level two, 0:15:27.160 --> 0:15:31.120 level three acid Mark Smith. That's right, And we saw 0:15:31.200 --> 0:15:33.000 that a bit with f t X because part of 0:15:33.000 --> 0:15:34.920 the story is how much of the f t T 0:15:35.160 --> 0:15:37.760 and seram tokens they had, and I think many people 0:15:37.800 --> 0:15:40.520 would say that those coins were marked Smith. You know, 0:15:40.600 --> 0:15:44.280 if the next stage of okay, what lessons learned from 0:15:44.320 --> 0:15:46.800 f t X, every exchange has to sort of like 0:15:47.000 --> 0:15:50.040 have some sort of cryptographic proof of solvency, then I 0:15:50.040 --> 0:15:52.280 think the next crisis after that could have something that 0:15:52.360 --> 0:15:54.880 was like, yeah, but where do these prices come from 0:15:54.920 --> 0:15:57.080 and how reliable are they? Because we do see that 0:15:57.160 --> 0:15:59.840 of course with the f t T and serum question 0:16:00.000 --> 0:16:01.880 at f t X, and I'm not sure that like 0:16:01.920 --> 0:16:03.800 a proof of reserves, had it been in place for 0:16:03.880 --> 0:16:07.840 f t X, would have necessarily been a robust against 0:16:07.840 --> 0:16:10.200 that failure. Thank you so much for coming on the show. 0:16:10.240 --> 0:16:13.120 Thanks for having me. You can find more of Joe's 0:16:13.120 --> 0:16:15.680 work on the Bloomberg Terminal and on Bloomberg dot com, 0:16:15.720 --> 0:16:18.040 and of course on the Odd Lots podcast as well 0:16:18.120 --> 0:16:20.400 as the Odd Lots news letter and be sure to 0:16:20.480 --> 0:16:29.040 check out our twice weekly news letter, Bloomberg Crypto. This 0:16:29.080 --> 0:16:32.120 is Bloomberg Crypto, a daily podcast from Bloomberg and I 0:16:32.200 --> 0:16:35.480 Heart Radio. For more shows from I Heart Radio, visit 0:16:35.480 --> 0:16:38.520 the I Heart Radio app, Apple Podcasts, or wherever you 0:16:38.560 --> 0:16:42.600 get your podcasts. Send us your comments, questions, or suggestions 0:16:42.600 --> 0:16:48.280 for the show to Crypto at Bloomberg dot net. The 0:16:48.320 --> 0:16:51.880 supervising producer of Bloomberg Crypto is Vicky very Galina. Our 0:16:51.920 --> 0:16:55.760 senior producer is Janet Babin. Our producers are Mohammed Faruke 0:16:55.800 --> 0:16:59.200 and Sharon Barriro. Our associate producers are Ty Butler and 0:16:59.280 --> 0:17:03.560 Moses on Them. Desta wonder At is our engineer. Original 0:17:03.640 --> 0:17:08.359 music by Leo Sidron. I'm Stacy Marie Schmal. We'll be 0:17:08.400 --> 0:17:09.000 back tomorrow