WEBVTT - TX Empire Goes Bankrupt in Sudden Fall 0:00:01.840 --> 0:00:04.480 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.519 --> 0:00:07.320 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.360 --> 0:00:09.880 you the latest news from the world of business and finance, 0:00:09.960 --> 0:00:13.680 of technology, politics, economics, all parnessing the power of Business 0:00:13.720 --> 0:00:17.200 Week reporters and editors, not to mention our journalists and 0:00:17.200 --> 0:00:20.040 analyst in more than one twenty countries. You can download 0:00:20.040 --> 0:00:23.480 Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You 0:00:23.520 --> 0:00:25.479 can also listen to our radio show at two pm 0:00:25.520 --> 0:00:28.400 Eastern Time on Bloomberg Radio, or watch us on YouTube 0:00:28.440 --> 0:00:32.640 search Bloomberg clovel News. Obviously, the breaking news today is 0:00:32.680 --> 0:00:37.800 that Crypto Exchange f t X filing for Chapter eleven bankruptcy. 0:00:37.880 --> 0:00:41.599 This story has moved incredibly fast. Let's bring in Crypto 0:00:41.760 --> 0:00:44.639 reporter for Bloomberg News, Olga Career if she joins us 0:00:45.080 --> 0:00:47.520 over zoom right now, Olga, I want to go back 0:00:47.560 --> 0:00:53.159 in time to last Friday. This How shocking would it 0:00:53.200 --> 0:00:56.360 be if I told you that fast forward one week 0:00:56.400 --> 0:01:01.520 f t X the Empire, It's in bankruptcy protection. Completely shocking. 0:01:01.680 --> 0:01:06.400 Last week was very quiet overall, so people worried about 0:01:06.560 --> 0:01:10.160 low volatility in the markets, and how are they changes 0:01:10.319 --> 0:01:15.120 gonna you know, make hands meet until you know something happened, 0:01:15.160 --> 0:01:18.200 And people generally said, well, nothing is going to happen 0:01:18.280 --> 0:01:22.120 now until they economy improved, so not much to expect 0:01:22.120 --> 0:01:24.440 in the next year or so, and then here we go, 0:01:24.840 --> 0:01:28.319 here we go, um olga. The latest headline here is 0:01:28.360 --> 0:01:31.800 that the f t X withdraws derivatives clearing plan from 0:01:31.959 --> 0:01:35.240 us C f TC I mean shocker coin desk is 0:01:35.280 --> 0:01:37.920 also reporting that f t x u s stop processing 0:01:37.920 --> 0:01:41.720 withdrawals midday Friday. What do you think the headlines are 0:01:41.720 --> 0:01:45.200 going to be over the next forty eight hours. Well, 0:01:45.240 --> 0:01:51.520 I think everybody's waiting to see what Sam Bankman Freed says, 0:01:51.760 --> 0:01:57.280 either on Twitter or in upcoming sort of bankruptcy fightings. Uh. 0:01:57.560 --> 0:02:03.560 It's gonna be uh interesting to see the financials as 0:02:03.600 --> 0:02:07.720 well as maybe get some commentary on what happened, what 0:02:07.880 --> 0:02:11.960 went rowing in a In a series of tweets earlier today, 0:02:12.120 --> 0:02:16.480 Sam promised sort of to describe exactly what happened. So 0:02:17.040 --> 0:02:19.880 I think a lot of people are waiting for that. 0:02:20.680 --> 0:02:24.920 It is amazing SPF just tweeting through it. I don't know, 0:02:25.000 --> 0:02:26.600 I'm thinking like wouldn't someone tell them to be like 0:02:26.639 --> 0:02:29.360 shut it down? Yeah, I would. I would log out 0:02:30.000 --> 0:02:32.720 so rarely what I log out, but probably in this situation. 0:02:32.760 --> 0:02:35.880 But Olga, let's talk a little bit about the fallout here, 0:02:35.880 --> 0:02:39.200 because we've heard a lot about contagion. I want to 0:02:39.240 --> 0:02:42.040 know where to look next. We've already seen block five 0:02:42.080 --> 0:02:46.000 for example, halting withdrawals, the shutdown of Alameda, of course, 0:02:46.160 --> 0:02:50.560 SPFS trading arm where else should we be looking? So 0:02:51.080 --> 0:02:54.720 a lot of funds uh in companies kept their funds 0:02:54.800 --> 0:02:59.040 on fds, so they will obviously be affected. A lot 0:02:59.080 --> 0:03:02.080 of companies over tweeted out or put out statement and 0:03:02.160 --> 0:03:06.600 saying we don't have much exposure, but some do and 0:03:06.600 --> 0:03:09.440 and so we'll see the ripple effects of that in 0:03:09.480 --> 0:03:14.280 the coming days. Also f t X and Alameda another 0:03:14.320 --> 0:03:20.079 company that uh SBF owned uh they had their tentacles 0:03:20.120 --> 0:03:23.760 and pretty much throughout crypto, they were investors in a 0:03:23.800 --> 0:03:28.040 lot of projects and some of these projects kept their 0:03:28.240 --> 0:03:31.760 treasuries on f t X. So but we'll see some 0:03:31.840 --> 0:03:36.240 ripple effects from that as well. So of course uh 0:03:36.400 --> 0:03:40.119 SAM was a big supporter of projects like Salona, and 0:03:40.480 --> 0:03:45.600 obviously the token is getting crushed partially because of people 0:03:45.600 --> 0:03:48.120 are still trying to figure out what they impact on 0:03:48.240 --> 0:03:51.480 Salona might be. Are there any other tokens out there 0:03:51.520 --> 0:03:54.160 that have the same kind of intricate relationship with its 0:03:54.200 --> 0:03:57.040 parent company or an exchange that could be in the 0:03:57.080 --> 0:03:59.120 same kind of spot where it was used as a 0:03:59.160 --> 0:04:02.440 loan or as called lateral, etcetera. Are there other worry 0:04:02.520 --> 0:04:06.880 spots like this? So, of course f t t the 0:04:06.960 --> 0:04:11.480 token connected to the extra ft X exchange, crashed and burned. 0:04:11.880 --> 0:04:14.920 As a result of this, it's probably going to be 0:04:14.960 --> 0:04:19.119 in the center of investigations into sort of what happened here, 0:04:19.320 --> 0:04:23.280 why and where did the money from ft X go? 0:04:24.279 --> 0:04:29.960 Um so, so that that token sort of plummeted over 0:04:30.000 --> 0:04:34.840 the last week. Um and there can be other tokens 0:04:34.880 --> 0:04:38.160 that are impacted. But you know, honestly, f t X 0:04:38.240 --> 0:04:41.800 was such a huge presence in the entire ecosystem, I 0:04:41.800 --> 0:04:45.400 think it's probably easier to name, you know, major tokens 0:04:45.440 --> 0:04:49.400 where f t X did not have much influence than 0:04:49.520 --> 0:04:53.160 the ones where where it did. Yeah, No, definitely. I 0:04:53.200 --> 0:04:56.800 mean his empire was so far reaching, and I mean 0:04:56.839 --> 0:04:58.960 one of the places that it did reach was the 0:04:58.960 --> 0:05:02.839 Salona blockchain, and it's probably not surprising that after f 0:05:03.000 --> 0:05:06.320 t T we've seen a lot of pain in the 0:05:06.320 --> 0:05:11.359 Salona token. What's the bowl case left for the Salona token, 0:05:11.400 --> 0:05:14.560 the Salona blockchain, because I mean I think Salana, I 0:05:14.560 --> 0:05:19.640 think Alameda, I think SPF Sure, that's a good question. 0:05:19.800 --> 0:05:28.360 So a Salona was built for as a competitor for ethereum, 0:05:28.600 --> 0:05:30.640 you know, as a as a block chain to handle 0:05:30.960 --> 0:05:34.359 uh financial transactions, and of course it was handling some 0:05:35.160 --> 0:05:40.599 financial transactions for a SBFS businesses. So I guess what 0:05:40.760 --> 0:05:43.960 we'll see in the coming weeks is just how much 0:05:44.000 --> 0:05:49.359 adoption has it had outside of SBFS empire. Uh. You know, 0:05:49.400 --> 0:05:52.480 a lot of people say this is a good technology, 0:05:53.080 --> 0:05:56.320 it's it has it's a big ecosystem, it's bigger than 0:05:56.440 --> 0:05:59.839 a spf um, and b'll see how it plays out 0:05:59.839 --> 0:06:02.640 in the coming gays. Yeah exactly. I really think a 0:06:02.640 --> 0:06:04.600 lot of people probably wish that bit quindon trade over 0:06:04.640 --> 0:06:07.400 the weekend. Now at this point, thank you so much, 0:06:07.400 --> 0:06:10.200 Oga curryve joining us on f t X. That latest 0:06:10.200 --> 0:06:12.120 headline Katie that f t X with draws rid is 0:06:12.120 --> 0:06:15.679 clearing plan from us C f t C. I mean, like, yeah, 0:06:16.279 --> 0:06:18.760 I would think so, but nonetheless it is now official 0:06:18.800 --> 0:06:20.839 that that is happening. Probably would have been bigger news 0:06:20.960 --> 0:06:23.960 if they hadn't at this point. But I mean, I'm 0:06:24.000 --> 0:06:25.880 sure we're going to get more and more headlines like 0:06:25.920 --> 0:06:28.160 that over the cooming. It's like a drip feed, right 0:06:28.200 --> 0:06:30.240 because since no, It's like, if there is no regulation, 0:06:30.320 --> 0:06:32.200 then how do you sort of go after someone when 0:06:32.200 --> 0:06:34.680 there was no regulation. It's a great question. I wish 0:06:34.680 --> 0:06:40.680 I had the answer. This is Bloomberg. This is Bloomberg 0:06:40.720 --> 0:06:44.360 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:06:44.440 --> 0:06:48.200 Stinovic on Bloomberg Radio. It's time now for our Business 0:06:48.240 --> 0:06:50.040 Week segment. This is when we dive deep in when 0:06:50.080 --> 0:06:53.520 Business Week stories of the day, and this time we're 0:06:53.560 --> 0:06:58.560 talking about gaming has a hated CEO who's now crushing 0:06:58.600 --> 0:07:01.360 and crashing into the meta verse. I didn't know who 0:07:01.360 --> 0:07:03.320 the CEO was. I didn't know anything about him, but 0:07:03.320 --> 0:07:06.600 apparently his reputation is not so great. So joining us 0:07:06.600 --> 0:07:09.039 now to break this all down for us is Bloomberg 0:07:09.160 --> 0:07:13.400 News Technology and Venture capital reporter Priya Ann and Bloomberg 0:07:13.400 --> 0:07:16.920 Business Week editor Joel Weber. Joel, let's start. First of all, Hey, 0:07:16.920 --> 0:07:19.000 it's been a while haven't talked to you in a bit. Hello, 0:07:19.160 --> 0:07:21.160 it's good just to chat with you. First of all, 0:07:21.360 --> 0:07:23.840 talk me through the headline of the story and what 0:07:23.880 --> 0:07:28.280 was behind the article. So the story is written by 0:07:28.320 --> 0:07:32.120 Austin car Jason Tryer and and Priya. And this is 0:07:32.160 --> 0:07:35.320 a really interesting guy. You you you're right, not exactly 0:07:35.360 --> 0:07:40.120 a household name, except once you um here where he's been, um, 0:07:40.160 --> 0:07:42.960 you might be familiar with sort of some of his legacy. 0:07:43.000 --> 0:07:46.560 And so we're talking about John Rick Rick Tellio, who 0:07:46.640 --> 0:07:50.240 is the CEO of a company called Unity UM. And 0:07:50.400 --> 0:07:53.840 Unity is a really interesting company because not probably not 0:07:53.880 --> 0:07:57.120 a household name, but in the gaming world, UM, they 0:07:57.160 --> 0:08:01.200 are known for basically, uh, doing a platform that allows 0:08:01.240 --> 0:08:05.520 a lot of very nimble games and advertising. UM. But 0:08:05.720 --> 0:08:09.760 before he was there, he was at e a UM 0:08:09.800 --> 0:08:13.000 where he was definitely um, not loved. But one of 0:08:13.000 --> 0:08:15.800 my most favorite anecdotes from the story was, actually, you know, 0:08:16.600 --> 0:08:18.800 he's like one of these executives that can go from 0:08:18.840 --> 0:08:21.960 industry to industry. He was actually Sarah Lee Bakery. This 0:08:22.200 --> 0:08:24.640 get this the pound cake. He took it from sixty 0:08:24.640 --> 0:08:28.920 announces to twelve no longer a pound That's that's kind 0:08:28.920 --> 0:08:32.360 of one of the legacies that we ran across. But 0:08:32.360 --> 0:08:34.480 but Pria talked to us about what his legacy has 0:08:34.520 --> 0:08:37.400 been like in gaming and and sort of what his 0:08:37.520 --> 0:08:41.800 vision for the metaverse is looking like, because that's really 0:08:41.800 --> 0:08:46.280 where we tried to center this narrative. Yeah, so, actually 0:08:46.280 --> 0:08:50.160 writing the story, the metaverse conjures everything and nothing. These days, 0:08:50.200 --> 0:08:52.600 it's a hot it's a hot hot hot news space. 0:08:53.000 --> 0:08:56.640 Mark Duckerberg is very interested right naming his company meta 0:08:57.000 --> 0:09:00.920 and John Dractello is known for, uh jumping into the 0:09:00.960 --> 0:09:04.080 next big shiny thing. I mean, and he's a he's 0:09:04.120 --> 0:09:07.480 a marketing guy through and through people we spoke would 0:09:07.480 --> 0:09:10.160 phrase his marketing skills. When he was at Hagen Daz. 0:09:10.200 --> 0:09:13.880 At one point he recruited director of Magic Um to 0:09:14.240 --> 0:09:18.199 make their shops into unforgettable tasting events that celebrate the 0:09:18.240 --> 0:09:21.040 experience of being alive. So this is someone who really 0:09:21.679 --> 0:09:26.880 jumps into things when he's interested. And um at Unity 0:09:27.120 --> 0:09:31.080 he has been talking up the metaverse as well and 0:09:31.280 --> 0:09:34.720 all the applications in and outside of gaming that his 0:09:34.840 --> 0:09:39.080 company can help different sorts of clients with UM. We 0:09:39.160 --> 0:09:42.160 did finding reporting out this story that there were plenty 0:09:42.200 --> 0:09:46.160 of examples that he shared with our reporting team that 0:09:46.520 --> 0:09:48.520 later on when we went to the customers, they said 0:09:48.520 --> 0:09:50.640 they were exaggerated, you know, they were like, we don't 0:09:50.640 --> 0:09:53.240 actually use Unity for these things. So that was a 0:09:53.240 --> 0:09:55.960 bit interesting in terms of the strategy there to share 0:09:56.000 --> 0:09:59.240 those kinds of examples with us. But Unity is is 0:09:59.280 --> 0:10:01.840 best known as the company that you might not have 0:10:01.880 --> 0:10:05.080 heard of that put all those ads into the mobile 0:10:05.080 --> 0:10:08.120 games that you play that some people might consider a 0:10:08.160 --> 0:10:11.080 little bit spammy. So one question is like, if we 0:10:11.120 --> 0:10:13.360 do get to this world where we're all in the metaverse, 0:10:13.840 --> 0:10:16.400 it does seem like if Unity is a part of 0:10:16.400 --> 0:10:19.679 that future, we can probably say with at least some 0:10:19.760 --> 0:10:22.319 degree of likelihood that ads are going to be part 0:10:22.320 --> 0:10:24.079 of that world too. If you if you thought you 0:10:24.120 --> 0:10:26.160 couldn't have more ads in your world, just wait for 0:10:26.200 --> 0:10:28.760 this digital world to take over your life. Oh, many 0:10:28.800 --> 0:10:31.640 would say that this whole metaverse employ is just a 0:10:31.760 --> 0:10:36.199 cash grab, but we think about Mark Zuckerberg going big 0:10:36.200 --> 0:10:39.120 on the metaverse. Uh, it isn't too far a stretch 0:10:39.200 --> 0:10:43.000 to say that shareholders haven't loved that, if you could 0:10:43.040 --> 0:10:44.840 just look at the stock price for that. But how 0:10:44.920 --> 0:10:47.880 is it going over at Unity? What is the response 0:10:47.960 --> 0:10:50.720 been like from investors? From employees or they on board. 0:10:52.920 --> 0:10:55.240 Well for Unity, you know, they're a bad projects that 0:10:55.280 --> 0:10:57.880 have started. They've had projects that have stopped the company 0:10:57.880 --> 0:11:02.600 and CEO addressed to staff in an internal memo before 0:11:02.640 --> 0:11:08.720 our story published saying, you know, UM, projects start and stop. UM, 0:11:08.960 --> 0:11:12.560 they don't always complete themselves. UM. You know this is 0:11:12.720 --> 0:11:17.080 something that's at early stages. So it definitely is early 0:11:17.160 --> 0:11:19.400 days to the Metaverse, and we don't quite know yet 0:11:19.400 --> 0:11:23.240 what is going to happen there. UM. But the question 0:11:23.520 --> 0:11:25.840 this week is, you know, with all the layoffs at Meta, 0:11:25.960 --> 0:11:28.079 what's going to happen with other companies that are also 0:11:28.080 --> 0:11:31.560 operating in the metaverse space or trying to writ I mean, 0:11:31.640 --> 0:11:35.400 what's going to come of all these heavy, heavy investments. Um, 0:11:35.440 --> 0:11:38.839 when we're already starting to see that many companies, perhaps 0:11:38.920 --> 0:11:43.040 over higher got too excited. Okay, so there's the challenges 0:11:43.080 --> 0:11:45.720 of actually building the metaverse and and what that looks 0:11:45.760 --> 0:11:48.560 like and what those applications are could look like. I'd 0:11:48.640 --> 0:11:50.800 like to come back to that. But the other thing 0:11:50.880 --> 0:11:53.680 that UM was was pretty juicy in the story was 0:11:54.000 --> 0:11:57.600 you know, there's there's also the what what Ricky Tellio 0:11:57.760 --> 0:11:59.439 is like in real life? So would you guys learn 0:11:59.480 --> 0:12:04.240 on that front. You Yeah, John Riccotello is UM controversial 0:12:04.280 --> 0:12:07.680 for for several reasons, one being that he is not known. 0:12:08.520 --> 0:12:13.640 He has known for for sometimes really catching people in 0:12:13.760 --> 0:12:17.400 unexpected ways during meetings. And you know, if you get 0:12:17.440 --> 0:12:20.240 his attention and you hold his attention, great, If you don't, 0:12:20.640 --> 0:12:22.839 you're gonna hear about it in ways that some people 0:12:22.840 --> 0:12:27.880 can find unpleasant. Um. You know, sometimes they're shouting, sometimes 0:12:27.920 --> 0:12:31.800 there's some really brushed talk going on. And then notably, 0:12:32.640 --> 0:12:34.520 John held a meeting a couple of years ago in 0:12:34.600 --> 0:12:36.640 his office where he shared with staff in the a 0:12:36.800 --> 0:12:39.040 dream of their office that he had been dating the 0:12:39.040 --> 0:12:42.840 head of HR at the company. And that made that 0:12:42.920 --> 0:12:46.280 made a number of employees we spoke with uncomfortable because 0:12:46.840 --> 0:12:49.240 you know, who do you report any personnel issues too? 0:12:49.880 --> 0:12:53.840 If the head of DHR is dating the CEO UM 0:12:53.960 --> 0:12:56.559 the company said that he had reported his relationship to 0:12:56.640 --> 0:13:00.160 the board, that it was above water. Um that out 0:13:00.160 --> 0:13:03.400 of HR lets just Brown eventually less the company and 0:13:03.440 --> 0:13:06.959 they've since married. Um. But it did strike a lot 0:13:07.000 --> 0:13:11.920 of folks as something unconventional and less not great taste 0:13:11.920 --> 0:13:16.760 in some employees. Now, okay, well it's interesting, right, So Okay, 0:13:16.800 --> 0:13:20.240 back to the metaverse. UM, when you know, what could 0:13:20.280 --> 0:13:23.280 this look like? To give him just a little bit 0:13:23.320 --> 0:13:26.360 of credit for like what you know, this is the 0:13:26.360 --> 0:13:30.480 future future getting to the future sometimes a little bumpy, 0:13:30.559 --> 0:13:34.040 but best case scenario, what is Unity potentially look like? 0:13:35.520 --> 0:13:38.319 Best cass scenario for them would be UNIT is involved 0:13:38.360 --> 0:13:42.480 in creating these these digital worlds already right, um and 0:13:42.600 --> 0:13:46.520 helping the creators monetize them. And UM, in the best 0:13:46.559 --> 0:13:49.480 case world, they'll be involved that and what John calls 0:13:49.960 --> 0:13:53.320 uh sort of like the three D digital world, which 0:13:53.360 --> 0:13:56.320 which is the metaverse as we've been saying, UM. And 0:13:56.440 --> 0:13:59.400 so you know, they see themselves as if this thing 0:13:59.480 --> 0:14:02.600 really take soft, they'll be front and center in helping 0:14:02.640 --> 0:14:06.440 to build those spaces and help people monetize them. Um. 0:14:06.559 --> 0:14:08.840 And and as we know on the Internet, ads are 0:14:08.840 --> 0:14:13.679 a huge portion of you know, how people make money UM, 0:14:13.720 --> 0:14:16.439 and they see themselves as really capitalizing on that. At 0:14:16.440 --> 0:14:20.440 the same time, they're looking at, you know, applications that 0:14:20.520 --> 0:14:25.080 and they've touted applications to our reporting team that aren't 0:14:25.120 --> 0:14:28.200 necessarily even related to things like games. For example, they 0:14:28.240 --> 0:14:30.880 said an architecture firm was using their help to design 0:14:30.920 --> 0:14:33.800 a stadium alright, guys, we've gotta leave it there. Thank 0:14:33.840 --> 0:14:36.400 you to Joel Webber and prey on on on one 0:14:36.440 --> 0:14:39.800 of gaming's most heated executives, crashing the metaverse. You can 0:14:39.800 --> 0:14:43.000 find that in the latest issue of Bloomberg Business Week. 0:14:43.240 --> 0:14:48.360 And this is Bloomberg Business Week on Bloomberg Radio. You're 0:14:48.440 --> 0:14:52.400 listening to Bloomberg Business Week with Carol Messer and Bloomberg 0:14:52.480 --> 0:14:56.640 Quick Takes Tim Stinovic on Bloomberg Radio. Let's get back 0:14:56.640 --> 0:14:59.120 to crypto. It's my favorite topic. It's the story of 0:14:59.160 --> 0:15:02.960 the day f t X filing for Chapter eleven bankruptcy. 0:15:03.000 --> 0:15:04.920 We're going to dive into that with Timothy Totally. He 0:15:05.080 --> 0:15:08.960 is chief executive officer at zell Core Technologies. That's a 0:15:09.040 --> 0:15:13.400 multi asset ecosystem that helps investors navigate all major exchanges 0:15:13.440 --> 0:15:18.520 and blockchains. Timothy joins us on zoom from Boston. And 0:15:18.720 --> 0:15:21.720 when we think about the events of this week, I've 0:15:21.720 --> 0:15:25.800 heard it described as a Lehman event in n Ron moment. 0:15:25.880 --> 0:15:29.480 I've heard some describe it as an extinction event. Timothy, 0:15:29.520 --> 0:15:33.400 how would you describe it? Well, thanks for having me on. 0:15:33.720 --> 0:15:36.400 I think I would. I would probably describe it as 0:15:36.440 --> 0:15:39.240 a lot of short term pain, but long term it's 0:15:39.840 --> 0:15:41.920 it's going to get blockchain back to where it was 0:15:41.920 --> 0:15:44.840 supposed to be right, which is a really high level 0:15:44.880 --> 0:15:50.120 of transparency, and to eliminate a lot of this counterparty 0:15:50.240 --> 0:15:54.760 dealings that were behind you know, closed room arrangements, and 0:15:54.800 --> 0:15:59.600 that's this isn't yet another example of that happening. Um. 0:15:59.640 --> 0:16:03.080 I think the other big issues are relates to FTX 0:16:03.120 --> 0:16:07.120 and and Alameda Research. They participated in somewhere in the 0:16:07.120 --> 0:16:11.320 neighborhood of three companies invested in three D companies either 0:16:11.400 --> 0:16:15.000 directly or they held their treasuries. So there's gonna be 0:16:15.000 --> 0:16:18.960 a lot of impact here both in these projects. And 0:16:18.920 --> 0:16:22.840 the other thing is there's a lot of counterparty. Uh, 0:16:22.960 --> 0:16:26.520 the biggest counterparties to most of these exchanges are other exchanges. 0:16:26.840 --> 0:16:29.840 So wouldn't surprise me next week to see another shoe 0:16:29.880 --> 0:16:33.720 to drop. What would that shoe look like? Like? How 0:16:33.760 --> 0:16:36.920 do we know where the contagion actually might end? I 0:16:36.960 --> 0:16:38.720 mean you might say, oh, well, people should have known 0:16:38.720 --> 0:16:41.200 the risks, but even Scaramucci was like, I feel duped, 0:16:41.240 --> 0:16:47.120 I feel betrayed. Yeah, I don't. I wouldn't even want 0:16:47.160 --> 0:16:51.320 to speculate to guess where other exchanges but I'll just 0:16:51.360 --> 0:16:52.920 give you example. And by the way, I don't think 0:16:52.920 --> 0:16:55.760 either one of these are exchanges are in trouble binance 0:16:55.800 --> 0:16:59.480 and coin based, but the biggest counterparties of each one 0:16:59.520 --> 0:17:04.120 of those is each other. So uh, there's more transactions 0:17:04.119 --> 0:17:07.240 between each other than anybody else. So I would probably 0:17:07.280 --> 0:17:10.480 look at other places, other exchanges that have in the 0:17:10.560 --> 0:17:13.680 past had a lot of historical transaction has been big 0:17:13.720 --> 0:17:17.439 counterparties of FTX, and so, I mean, one of the 0:17:17.440 --> 0:17:20.600 pushbacks that I've seen is that you know, this is 0:17:20.640 --> 0:17:24.320 what happens when you trust a centralized exchange. This is 0:17:24.320 --> 0:17:27.400 supposed to be decentralized finance. There's not supposed to be 0:17:27.880 --> 0:17:32.040 this level of interconnection centrality. I mean, where do you 0:17:32.119 --> 0:17:36.000 fall on that I don't know. Is this is this 0:17:36.119 --> 0:17:39.720 sort of revealing the promise of defy as a myth 0:17:39.800 --> 0:17:42.920 or would you probably not go that far? I would 0:17:42.920 --> 0:17:46.639 say it's reviewed. I think this is probably the biggest misnomer. 0:17:47.320 --> 0:17:51.600 These centralized exchanges are traditional finance with a crypto mask. 0:17:52.280 --> 0:17:55.280 Um they're the same old thing where they have their 0:17:55.320 --> 0:18:00.280 own proprietary database where they track what they owe you 0:18:00.480 --> 0:18:02.960 and what they owe other parties. Um, that's not what 0:18:03.040 --> 0:18:06.480 blockchain and defy was intended to be. It's that the 0:18:06.560 --> 0:18:10.560 blockchain technology is for the first time at scale to 0:18:10.680 --> 0:18:12.800 have the technology for you to have a one on 0:18:12.800 --> 0:18:16.560 one relationship directly to your assets. So I think this 0:18:16.720 --> 0:18:19.720 is very good for DEFY and crypto and the long run. 0:18:20.000 --> 0:18:24.800 You know, our company believes strongly in non custodian self custody, 0:18:24.880 --> 0:18:29.159 and so this is another validation as to why I 0:18:29.200 --> 0:18:31.240 believe it's the right way to go and that on 0:18:31.480 --> 0:18:34.720 chain processing is is the way to go. Most of 0:18:34.760 --> 0:18:37.720 the problems with FTX have been as a result of 0:18:37.720 --> 0:18:41.560 off chain processing. So at the end of the day, 0:18:41.720 --> 0:18:45.479 do these kind of exchanges become thanks do they compend 0:18:45.720 --> 0:18:48.359 brokerage firms? Like? Is that what it's eventually going to 0:18:48.440 --> 0:18:51.400 have to in some ways look like? I think it's 0:18:51.400 --> 0:18:57.440 gonna be a hybrid environment where you have both defied 0:18:57.640 --> 0:19:02.639 decentralized organization and some kind of centralized but they're gonna 0:19:02.640 --> 0:19:06.080 have to be regulated. And the reality is, you know, uh, 0:19:06.119 --> 0:19:09.000 these central efed changes in crypto today are very there 0:19:09.720 --> 0:19:13.440 anomalous to the exchanges that we all think of today, Fidelity, 0:19:13.440 --> 0:19:16.720 Schwab or whoever. It's just that the ladder are very 0:19:16.760 --> 0:19:21.200 regulated by you know, US entities and international entities. That's 0:19:21.240 --> 0:19:24.639 not the case with crypto. So we're gonna have to 0:19:24.640 --> 0:19:29.439 move to more more regulations. But uh, defy and self 0:19:29.480 --> 0:19:31.320 custody is going to be a big part of the future. 0:19:32.160 --> 0:19:36.639 Let's talk about institutions and whether this really scares away 0:19:36.760 --> 0:19:39.280 sort of the trad five players, because again, if I 0:19:39.280 --> 0:19:42.120 go back to a year ago, I've found myself wanting 0:19:42.160 --> 0:19:44.280 to go back in time often this week. But let's 0:19:44.320 --> 0:19:45.720 go back to a year ago. We were close to 0:19:45.760 --> 0:19:48.080 a record high on bitcoin, and if I think about 0:19:48.080 --> 0:19:50.840 the rallying cry of the bulls at that time, it 0:19:50.960 --> 0:19:54.760 was sort of this institutional embrace. You know, we saw 0:19:54.800 --> 0:19:58.040 the launch of the first US Bitcoin futures e t 0:19:58.240 --> 0:20:01.159 F that was supposed to usher in a whole class 0:20:01.160 --> 0:20:03.240 of investors who had never really been able to get 0:20:03.280 --> 0:20:07.639 access to the crypto industry before. But I mean, after 0:20:07.680 --> 0:20:11.000 the events of the past week, the past few months, 0:20:11.040 --> 0:20:12.840 the summer, you know, you think back to what we 0:20:12.880 --> 0:20:16.280 saw with three Hours Capital even I mean, is it 0:20:16.760 --> 0:20:20.840 have you seen any indication that institutions are rattled here 0:20:20.880 --> 0:20:24.280 and they're not coming back? Um? I don't think so. 0:20:24.359 --> 0:20:27.960 If you look at what's happened in the last ninety days. 0:20:27.960 --> 0:20:33.320 In particular, I think institutions committed to being all in UM. 0:20:33.840 --> 0:20:36.199 I think we just get we get hung up on 0:20:36.320 --> 0:20:42.679 these um UH the volatility of this asset class, in 0:20:42.720 --> 0:20:46.320 particular about the it's the technology that's gonna win the 0:20:46.400 --> 0:20:50.359 day at the end of the day, and crypto often 0:20:50.400 --> 0:20:52.320 refer to it as we're in the first inning of 0:20:52.440 --> 0:20:55.280 the uh, the first batter of the first inning of 0:20:55.320 --> 0:20:58.040 the game. You wouldn't pick finance as a use case 0:20:58.080 --> 0:21:01.840 if you had choice, right, we are right. There's plenty 0:21:01.880 --> 0:21:04.160 of other use cases and that's why I think traditional 0:21:04.200 --> 0:21:07.480 finance will move here. UM. It's a much more economical 0:21:07.560 --> 0:21:10.960 solution for them UM. And and they're showing that over 0:21:11.000 --> 0:21:14.040 the last ninety days in particular, you know, whether it's 0:21:14.040 --> 0:21:19.280 Fidelity offering direct trading to their customers, etcetera. I don't 0:21:19.320 --> 0:21:22.680 think they're going away. I think we've gotta live with there. 0:21:23.200 --> 0:21:25.960 Timothy Telly, CEO of zel Core joining us there and 0:21:25.960 --> 0:21:28.120 the collapse of f t X, what it means where 0:21:28.119 --> 0:21:30.080 they broader industry kind of women get our feet out 0:21:30.080 --> 0:21:34.320 from under us of this crisis. This is Bloomberg, this 0:21:34.600 --> 0:21:38.360 is Bloomberg Business Week with Carol Messer and Bloomberg Quick 0:21:38.400 --> 0:21:42.800 Takes Tim Stinovic on Bloomberg Radio less than fifteen minutes 0:21:42.800 --> 0:21:46.320 to the closer. Trading on an insanely wild week here 0:21:46.440 --> 0:21:49.199 in the United States. You have the SMP continuing it's 0:21:49.320 --> 0:21:51.520 rally up by about full one percentage point, the NASTACK 0:21:51.600 --> 0:21:54.240 up two percentage points. We had the biggest rally in 0:21:54.320 --> 0:21:56.719 stocks yesterday that we've seen in two years. We were 0:21:56.760 --> 0:21:59.800 able to build on that. You had you mish you 0:21:59.840 --> 0:22:03.320 know see Michigan Sentiment Index lower than estimated, inflation expectations 0:22:03.359 --> 0:22:05.520 a little bit higher, yet stocks were able to continue. 0:22:05.840 --> 0:22:08.600 Uh their rally also significant as you had the Bloomberg 0:22:08.640 --> 0:22:12.400 Dollar Index being able to drop again. Um, euro was stronger, 0:22:12.480 --> 0:22:15.639 every G ten currency was stronger, the dollar really taking 0:22:15.640 --> 0:22:18.560 it on the chin. Is this a real reversal that 0:22:18.600 --> 0:22:21.000 we're finally seeing in the markets. Yes, I know we 0:22:21.080 --> 0:22:23.159 have crypto crashing, I know we have f t X, 0:22:23.200 --> 0:22:26.240 and that's one huge story. But the other is are 0:22:26.240 --> 0:22:27.760 we finally going to see a FED that's going to 0:22:27.840 --> 0:22:30.639 pair back those rate hikes or is the market in 0:22:30.680 --> 0:22:32.920 a bit of a fake out. So let's get more 0:22:33.040 --> 0:22:36.440 on this with Ryan Dietrich, the chief market strategist over 0:22:36.480 --> 0:22:39.040 at the Carson Group. Ryan, what do you think the 0:22:39.119 --> 0:22:42.040 market is pricing in right now with the kind of 0:22:42.080 --> 0:22:45.359 moves that we've seen over the last forty eight hours. Yeah, guys, 0:22:45.400 --> 0:22:48.000 First of all, things are having in happy veterans date everybody, 0:22:48.040 --> 0:22:51.719 So listen, listen this historic move. I mean, here's something 0:22:51.760 --> 0:22:54.000 to think about, guys. Assuming the SUPs up one percent 0:22:54.119 --> 0:22:56.240 today and I know we're close, there's could be four 0:22:56.280 --> 0:23:01.280 straight Friday's the SMP gained that's never happened in history. Okay, 0:23:01.320 --> 0:23:03.119 we've got a lot of these never happened in history 0:23:03.160 --> 0:23:06.000 type of deal, just yesterday's five bounce. But here's what 0:23:06.080 --> 0:23:09.360 we think right Sure, short term overbought after this rally, 0:23:09.440 --> 0:23:12.840 but we are optimistic. We made another major market low 0:23:12.960 --> 0:23:17.000 in October. Six of the last seventeen bear markets ended 0:23:17.080 --> 0:23:21.240 in October. This could be another one. And again, expectations 0:23:21.240 --> 0:23:23.840 are so low that any good news like we saw 0:23:23.960 --> 0:23:26.919