WEBVTT - Understanding Risk Of Crypto Lending With Alex Mashinsky 0:00:04.600 --> 0:00:07.680 So the big question is this, how do investors like 0:00:07.880 --> 0:00:11.800 us get access to the ideas, information, and most importantly, 0:00:12.039 --> 0:00:14.880 the right people that give us the tools of information 0:00:14.960 --> 0:00:19.000 we need to make informed and educated decisions to have success. 0:00:19.600 --> 0:00:22.360 That is the question, and this podcast will give us 0:00:22.360 --> 0:00:25.520 the answers. This is Mark Moss, your host. Let's get 0:00:25.520 --> 0:00:28.319 this started. Hello, and welcome to another episode of the 0:00:28.360 --> 0:00:31.800 Market Disruptors podcast. Today I am joined by Alex Maschinski 0:00:31.880 --> 0:00:35.760 from Celsius. We get into some really good conversations. So 0:00:35.880 --> 0:00:39.080 we talk about their business model, how they're out competing 0:00:39.120 --> 0:00:42.320 the banks at what they do. We talked about growing 0:00:42.360 --> 0:00:44.200 in a bear market and the trajectory of their growth 0:00:44.240 --> 0:00:46.680 over the last year, having started in the boom market 0:00:46.720 --> 0:00:49.040 and growing to the bear market. And then we get 0:00:49.080 --> 0:00:52.000 into the risks of crypto lending, looking at some of 0:00:52.000 --> 0:00:55.960 the risk the pitfalls, and we talk about the biggest danger, 0:00:56.400 --> 0:00:59.400 the number one thing, the biggest risk to crypto lending 0:01:00.120 --> 0:01:01.960 and what they're doing about it. So, anyway, lots of 0:01:02.000 --> 0:01:05.240 your conversation with Alex us I just jump right into it. Hey, guys, 0:01:05.480 --> 0:01:08.080 welcome to another episode of the Market Disruptors show. I 0:01:08.120 --> 0:01:12.080 am here with Alex Maschinski from Celsius. He probably doesn't 0:01:12.080 --> 0:01:14.959 need much of an induction introduction, but welcome to the show, Alex, 0:01:15.840 --> 0:01:18.920 thanks for having me. How are you. I'm doing great, 0:01:18.959 --> 0:01:21.520 Thanks so much for thanks for joining. I. Uh, like 0:01:21.520 --> 0:01:23.319 I said, you probably don't need much of an introduction. 0:01:23.400 --> 0:01:27.240 You're pretty well known throughout the industry because you're one 0:01:27.280 --> 0:01:29.400 of the hardest working guys around the industry, I guess. 0:01:29.959 --> 0:01:31.640 But but for those that maybe don't know, just tell 0:01:31.720 --> 0:01:34.160 us a little bit about you know, how you got 0:01:34.160 --> 0:01:36.720 to the space and what you're doing right now. Sure, 0:01:36.840 --> 0:01:41.480 and so I founded the Celsist Network with Daniel and 0:01:41.720 --> 0:01:46.120 two years ago, and our mission was too really scale 0:01:46.160 --> 0:01:48.320 the industry. We felt that the industry is kind of stuck, 0:01:49.280 --> 0:01:51.880 uh with the number of users, with like the type 0:01:51.920 --> 0:01:53.760 of people that are in it, and we couldn't get 0:01:53.760 --> 0:01:56.800 to like mass adoption. So we thought that if we 0:01:56.920 --> 0:01:59.480 created a product that acted in the best interest of 0:01:59.480 --> 0:02:02.920 the community and earned the yield, we could bring seven 0:02:02.960 --> 0:02:05.400 and a half billion people to crypto because that's what 0:02:05.440 --> 0:02:07.680 everybody's looking for. So we think that we found kind 0:02:07.720 --> 0:02:13.040 of like that the magic utility that everybody wants, right 0:02:13.120 --> 0:02:15.919 and uh, I guess we're doing good because everybody is 0:02:15.960 --> 0:02:19.840 now trying to copy us coin Base and Finance and 0:02:19.880 --> 0:02:23.440 all these guys. I now, even charl Schwap stopped charging 0:02:23.560 --> 0:02:27.760 fees for you know, so it's like, so we're dragging 0:02:27.800 --> 0:02:31.400 everybody with us, but still Celsia space six seven times 0:02:31.400 --> 0:02:35.080 more than everybody else, and we paid more bitcoin to 0:02:35.320 --> 0:02:38.200 our users and all the other guys put together, So 0:02:38.639 --> 0:02:41.760 we have a lot of very happy customers. Yeah, So 0:02:41.840 --> 0:02:43.919 to to kind of break that down, I mean, you're 0:02:43.919 --> 0:02:46.800 wearing a shirt that says total um. So for the 0:02:46.840 --> 0:02:49.080 people that want to hold all that one just they 0:02:49.120 --> 0:02:51.080 don't want to sell, they want to hold. It gives 0:02:51.120 --> 0:02:53.600 them an option to start earning interest on those tokens 0:02:53.600 --> 0:02:55.360 as opposed to selling them if they want to access 0:02:55.400 --> 0:02:59.639 them for liquidity, which seems like a pretty good method. Now. 0:03:00.120 --> 0:03:02.400 I know when we talked in the past, you really 0:03:02.400 --> 0:03:05.000 wanted to give people an option other than the banks, 0:03:05.000 --> 0:03:07.640 because the banks are basically taking money on deposit and 0:03:07.639 --> 0:03:09.240 loaning it out, but they don't pay anything, right, So 0:03:09.240 --> 0:03:12.040 that's kind of what you're trying to go after. Yeah, 0:03:12.080 --> 0:03:16.000 the competition is between the crypto community and the banks. Right, 0:03:16.040 --> 0:03:18.280 all of us give our money for free to the banks. 0:03:18.280 --> 0:03:20.760 The bank's turnaround landed on the credit card to our 0:03:20.760 --> 0:03:24.680 neighbor charge them. They keep all that profit to themselves. 0:03:25.160 --> 0:03:27.440 Well what if you and me as depositors could get 0:03:27.440 --> 0:03:30.160 all that profits. Associates does the same thing the banks do, 0:03:30.760 --> 0:03:32.800 but it takes eighty percent of the profit that gives 0:03:32.840 --> 0:03:35.480 it to the depositors instead of the banks taking eighty 0:03:35.520 --> 0:03:38.040 percent of the profit and giving it to their shareholders. 0:03:38.600 --> 0:03:41.320 So it's a very simple concept for people to understand. 0:03:41.840 --> 0:03:43.880 And you can afford to do that because you don't 0:03:43.920 --> 0:03:46.960 have a skyscraper in uh in the Financial District in 0:03:47.000 --> 0:03:50.560 New York, in a fancy apartment in Manhattan. Yes, but 0:03:51.520 --> 0:03:54.760 I can afford that because it's the right thing to do. 0:03:54.880 --> 0:03:57.640 I think you very rarely in life you can do 0:03:57.760 --> 0:04:00.040 good and do well at the same time. I'm and 0:04:00.080 --> 0:04:01.720 it's to do it several times. If you look at 0:04:01.760 --> 0:04:06.080 my history, Celsius, my eighth company, the company before that, 0:04:06.120 --> 0:04:08.280 I put wireless in the subways in the ark after 0:04:08.320 --> 0:04:10.560 a hundred year there was no years that there was 0:04:10.600 --> 0:04:14.240 no connectivity or communications in the subways, right, So that 0:04:14.400 --> 0:04:16.960 was fighting with the city and so on. And now 0:04:17.000 --> 0:04:19.600 eight million people use the service for free. I did 0:04:19.680 --> 0:04:22.200 Voice of i P before that four billion people use that. 0:04:22.360 --> 0:04:24.560 I know most people won't believe it. Just go old 0:04:24.600 --> 0:04:27.800 Wikipedia and put my name in there. So so this 0:04:27.880 --> 0:04:30.960 is again the same thing I've done my entire life, right, 0:04:31.080 --> 0:04:36.039 create opportunity for other people, Uh, give them something they 0:04:36.120 --> 0:04:40.279 thought that they didn't deserve. And here I am part 0:04:40.320 --> 0:04:42.760 of the one percent, but I found a way for 0:04:42.839 --> 0:04:48.000 everybody for the basically take advantage of all these magical 0:04:48.120 --> 0:04:51.480 things that the one percent does only for themselves. And 0:04:51.480 --> 0:04:54.839 what we do is without getting sidetracked, but maybe just 0:04:54.880 --> 0:04:57.200 a little bit um you know. So you know, someone 0:04:57.240 --> 0:04:58.960 like yourself, like you're talking about you kind of have 0:04:59.000 --> 0:05:02.719 this track record of of creating things to help other people, right, free, 0:05:02.760 --> 0:05:06.400 free connectivity, right for phones or whatever. Uh, finding a 0:05:06.440 --> 0:05:09.880 way to give back profits um and and so, like 0:05:09.920 --> 0:05:11.760 you said, you are part of the one percent. But 0:05:12.200 --> 0:05:14.560 isn't it almost something like like I've always believed that 0:05:14.600 --> 0:05:16.880 if you help other people get what they want, then 0:05:16.920 --> 0:05:20.240 you get what you want. My parents I was born 0:05:20.600 --> 0:05:23.039 in Russia and the US are and my parents taught 0:05:23.080 --> 0:05:26.760 me from the first day that giving is receiving, right 0:05:26.839 --> 0:05:29.359 and and uh so I'm a given right. I was 0:05:29.400 --> 0:05:31.720 just born that way. I was brought up that way. 0:05:31.839 --> 0:05:35.240 And the more give, the more happy I am. I 0:05:35.360 --> 0:05:37.920 find happiness in that. I don't find any happiness in 0:05:38.040 --> 0:05:41.680 hoarding and dying with the most dollars in the bank account. 0:05:41.680 --> 0:05:43.840 I mean, that just doesn't do anything for me. So 0:05:44.040 --> 0:05:46.480 I did I do well only because all these other 0:05:46.520 --> 0:05:49.000 people are doing well. And Celsius now is over four 0:05:49.080 --> 0:05:53.160 hundred million dollars in deposits, and we earn again six 0:05:53.240 --> 0:05:56.119 seven eight percent on that. If you keep twenty percent, 0:05:56.240 --> 0:05:58.440 that enough to pay all the bills for the company. 0:05:58.480 --> 0:06:02.320 It's enough to pay my bills. Everybody's happy, Yeah, So 0:06:02.400 --> 0:06:05.000 let's talk about that. So UM, it's been about two 0:06:05.080 --> 0:06:08.240 years since you launched UM kind of launched kind of 0:06:08.279 --> 0:06:12.000 like right in the crypto boom with Seeen or whatever. UM. 0:06:12.040 --> 0:06:15.000 But even through the downturn the bear market, you've continued 0:06:15.000 --> 0:06:17.440 to grow at a pretty rapid pace. What's the growth 0:06:17.480 --> 0:06:19.719 been like over the last years? Wearing the huddle shirt 0:06:19.760 --> 0:06:22.440 and it was very unpopular. People kept coming to me 0:06:22.480 --> 0:06:25.680 at conferences and saying, isn't it time to get rid 0:06:25.680 --> 0:06:28.039 of this huddle shirt? Because a bit that went down 0:06:28.080 --> 0:06:31.680 from I think sixteen thousand down to thirty it was 0:06:31.720 --> 0:06:35.320 a very unpopular shirt. Now people are saying, where can 0:06:35.400 --> 0:06:38.560 I get this shirt? Alex, come on, give me the shirt. 0:06:38.680 --> 0:06:43.440 So look ups and downs. The Hoddlers stay Hoddlers, right. 0:06:43.480 --> 0:06:46.560 The people who were sold out, as we know, always 0:06:46.560 --> 0:06:48.560 sell out at the wrong time because of when our 0:06:48.600 --> 0:06:55.520 emotions come to play. Unfortunately, that's exactly what the traders 0:06:55.680 --> 0:06:58.800 prey on. They prey on fear, they prey on despair, 0:06:59.040 --> 0:07:04.200 they prey on you losing your uh faith. And I mean, 0:07:04.480 --> 0:07:07.080 you're a hoddler and you're earning that six or seven 0:07:07.120 --> 0:07:09.440 percent on top of it, that just gives you more 0:07:09.960 --> 0:07:13.400 comfort to It gives you that extra few months that 0:07:13.520 --> 0:07:17.600 sometimes you need to weather the storm. I'm curious from 0:07:17.640 --> 0:07:20.320 someone like you who's kind of been in the technology 0:07:20.400 --> 0:07:24.560 niche right with void um and you've been an early adopter, right, 0:07:24.560 --> 0:07:27.240 so you've been building it before it was popular, So 0:07:27.280 --> 0:07:29.640 you've kind of seen this play out before. And so 0:07:29.720 --> 0:07:31.600 we went through this bear market where a lot of 0:07:31.640 --> 0:07:34.280 people folded up shop or kind of just just just 0:07:34.520 --> 0:07:37.760 held back, but you pushed forward and built more, right. 0:07:37.800 --> 0:07:40.480 I mean, do you think, um, I mean, is that 0:07:40.520 --> 0:07:42.040 because you just believe in the industry, and now it's 0:07:42.080 --> 0:07:43.880 kind of starting to pay off or you're still building 0:07:43.920 --> 0:07:47.640 waiting for it to come. Look, the early days of 0:07:47.720 --> 0:07:49.640 Voice of Our p were just as hard when we 0:07:49.680 --> 0:07:52.720 went out and try to convince people that they can 0:07:52.760 --> 0:07:55.720 stop using their phone company and they can switch to 0:07:55.760 --> 0:07:57.760 this little company that no one knew back then it 0:07:57.840 --> 0:08:01.080 was called urban It and and people laughter us. They're like, 0:08:01.120 --> 0:08:03.320 I'm never gonna trust you. Who are you? You know, 0:08:03.360 --> 0:08:06.440 like you are nobody and using this weird technology that 0:08:06.480 --> 0:08:09.440 nobody else has, you know, like I we can't trust 0:08:09.480 --> 0:08:13.160 you for anything. Uh So it wasn't easy, right, But 0:08:13.200 --> 0:08:16.840 that convincing people to switch from one phone company to 0:08:16.920 --> 0:08:20.600 another is definitely not as hard as convincing people to 0:08:20.760 --> 0:08:24.560 deposit money. Stop depositing money with City or JP Morgan 0:08:24.960 --> 0:08:27.120 and giving it to you. So I think the bar 0:08:27.240 --> 0:08:30.400 is much higher, and that's why we have that slower adoption. Right. 0:08:30.400 --> 0:08:33.120 If you look at the speed at which the Internet scale, 0:08:33.640 --> 0:08:36.600 we are scaling one tenth that speed. And part of 0:08:36.640 --> 0:08:38.920 what I dedicating the rest of my life too is 0:08:38.960 --> 0:08:41.880 really make sure that seven billion people have access to 0:08:42.000 --> 0:08:44.520 this because the banks are not going to change their way. 0:08:44.600 --> 0:08:47.080 The politicians are going to change their way. The Fed 0:08:47.320 --> 0:08:51.839 just injected two hundred and eighty billion dollars in two weeks, right, 0:08:51.880 --> 0:08:54.000 they created poof two and an eighty billion. No one 0:08:54.040 --> 0:08:57.840 they paid any attention to it. So when people are 0:08:57.840 --> 0:09:01.360 gonna realize that all of that is hidden inflation that 0:09:01.480 --> 0:09:04.719 just eats away your money, right, we're gonna realize when 0:09:04.720 --> 0:09:07.840 it's too late. Yeah, if a catapult was eating your house, 0:09:08.160 --> 0:09:10.240 you would go to the exterminator and take care of 0:09:10.240 --> 0:09:13.360 it right away. Well, guess what, this caterpillar is eating 0:09:13.400 --> 0:09:15.840 a dollar and you're not doing anything about it. So 0:09:16.800 --> 0:09:21.760 I think again, bitcoin is the best doomsday insurance out there. 0:09:21.920 --> 0:09:25.360 It's the cheapest doomsday insurance out there. And anyone who 0:09:25.400 --> 0:09:27.839 does not have one to five cent of their money 0:09:28.000 --> 0:09:32.600 in it doesn't understand what's happening every day. I'm curious. So, 0:09:32.679 --> 0:09:34.200 like I said, you know, you started in the in 0:09:34.240 --> 0:09:36.559 the peak of the of the boom, and then you 0:09:36.679 --> 0:09:39.920 built all through the bear market. But I've seen other 0:09:40.040 --> 0:09:42.800 people in the industry, coin Base and others like reporting 0:09:42.840 --> 0:09:46.439 good numbers like good signaps um good. You know, we 0:09:46.480 --> 0:09:48.640 see a bunch of new wallets coming online. Hash power 0:09:48.760 --> 0:09:52.680 super strong, but your business has continued to grow as well, right, So, like, 0:09:52.760 --> 0:09:54.120 can you tell us a little bit like what the 0:09:54.200 --> 0:09:56.440 growth curve may have been like over the last you know, 0:09:56.480 --> 0:09:58.800 eighteen months. Has it been kind of steady up or 0:09:58.840 --> 0:10:00.480 do you take a dip? Is are we on a 0:10:00.640 --> 0:10:03.560 big up trend right now? So people are excited about 0:10:03.559 --> 0:10:06.880 coin based Binance. Those are trading businesses, right They go 0:10:07.000 --> 0:10:10.520 up and down in volume based on the hype of 0:10:10.559 --> 0:10:15.559 the trading. We consistently make six seven eight percent on 0:10:15.559 --> 0:10:18.440 our a U M. And we from day one we 0:10:18.520 --> 0:10:20.960 had the same growth. We did not have slowed down. 0:10:20.960 --> 0:10:22.600 We did we were trying to speed it up. We 0:10:22.640 --> 0:10:25.640 can't do that either. It's between a hundred and fifty 0:10:25.679 --> 0:10:28.920 and two hundred people every day. Then we got between 0:10:28.960 --> 0:10:31.240 two and three million dollars and deposits every day. And 0:10:31.240 --> 0:10:34.360 now sometimes I can tell you when Binance announced the 0:10:34.559 --> 0:10:37.880 lottery interest income and everybody went to their site and 0:10:37.920 --> 0:10:40.200 found out that I can't actually learn anything. We got 0:10:40.200 --> 0:10:42.319 fourteen million dollars that day and the next day we 0:10:42.400 --> 0:10:45.280 got like nine million dollars. So we we definitely had 0:10:45.280 --> 0:10:48.520 a rampop because other people were trying to copy us, 0:10:48.720 --> 0:10:51.559 but they didn't deliver, right, So, but consistently we do 0:10:51.679 --> 0:10:55.360 two to three million. Our average depositors twenty tho dollars. 0:10:55.400 --> 0:10:57.800 The average coin based deposited about a thousand dollars. So 0:10:57.840 --> 0:10:59.960 we have the cream of the crop of the crik 0:11:00.000 --> 0:11:03.520 To community. We have the Hoddler community, the coin Base, 0:11:03.720 --> 0:11:07.720 the Bindance have the trader community, right, the speculator community. 0:11:07.800 --> 0:11:11.000 So these are different communities that have different behavior and 0:11:11.040 --> 0:11:15.160 we serve different purposes. Right. Our job is to protect 0:11:15.280 --> 0:11:19.880 to create yield. We always represent the depositor. We don't 0:11:19.920 --> 0:11:22.640 represent the hatch fund. We don't We're not a neutral player. 0:11:23.520 --> 0:11:26.000 I can assure you that coin Base cannot look at 0:11:26.000 --> 0:11:28.080 you in the face and tell you I'm always acting 0:11:28.080 --> 0:11:32.319 in your best interests or Bindance or anybody else. Right, So, 0:11:32.480 --> 0:11:35.720 I I heard something about a new milestone that was 0:11:35.760 --> 0:11:39.839 passed where you guys have reached a record of of 0:11:39.880 --> 0:11:42.480 assets under management a u M. Right, like something about 0:11:42.520 --> 0:11:45.839 four million or so. Yeah, we'll just crossed the four 0:11:45.880 --> 0:11:49.360 hundred million. And again that's a few into some pretty 0:11:49.480 --> 0:11:52.800 rare air up in the top. I think, uh, probably 0:11:52.800 --> 0:11:54.680 one of the probably at least one of the biggest 0:11:54.720 --> 0:11:56.960 funds in all of crypto I would imagine at this point. 0:11:57.960 --> 0:12:01.720 I think officially it says is number two, right behind 0:12:01.800 --> 0:12:03.959 the Great Scale. So there were a few other people 0:12:04.040 --> 0:12:08.200 up there, and it looks like we're sucking assets up 0:12:08.240 --> 0:12:11.200 from everybody. Right. So again, if if you're not paying 0:12:11.280 --> 0:12:15.280 your customers uh for depositing assets with you, and we are, 0:12:15.320 --> 0:12:17.600 why would they keep the oussets with you? Why wouldn't 0:12:17.600 --> 0:12:20.160 they swim over? Right? So, so I think we've proven 0:12:20.160 --> 0:12:23.080 over two years that were consistent, we pay we you know, 0:12:23.120 --> 0:12:25.840 the funniest the best thing is that we took the 0:12:25.840 --> 0:12:28.080 worst day of the week, which is Monday, and we 0:12:28.160 --> 0:12:29.720 made it the best day of the week because we 0:12:29.760 --> 0:12:32.480 pay interest. Monday morning, most of our customers wake up 0:12:32.840 --> 0:12:36.920 and there's interest in their uh inbox, you know, just 0:12:36.920 --> 0:12:40.920 waiting for them and a smile and the fifty people 0:12:41.000 --> 0:12:45.040 faces every every Monday morning. Yeah, that's great. So that's 0:12:45.080 --> 0:12:48.400 a great milestone. Congratulations on that. So, you know, the 0:12:48.480 --> 0:12:52.200 business model of paying out you know whatever four or five, six, 0:12:52.240 --> 0:12:58.760 seven sometimes interests is amazing, um almost two good to 0:12:58.800 --> 0:13:03.640 be true? Right? Uh. You know I've talked about earning 0:13:03.679 --> 0:13:06.480 interests on stable coins and and other cryptocurrencies, bitcoin and 0:13:06.520 --> 0:13:08.600 stuff and so I've I've got a lot of feedback 0:13:08.679 --> 0:13:11.000 from from users. A lot of people just say, oh, 0:13:11.040 --> 0:13:12.960 Alex seems like such a great guy. I just trust 0:13:13.040 --> 0:13:15.400 him because I see him talking all the time. But 0:13:15.400 --> 0:13:19.760 but realistically, um, nothing is risk free in life, right, 0:13:19.880 --> 0:13:22.040 Doing nothing is not risk free? Right, as you already said, 0:13:22.080 --> 0:13:23.800 the worms eating the house. If I leave my money 0:13:23.800 --> 0:13:26.319 in the bank, I know I'm losing money there. Um, 0:13:26.360 --> 0:13:29.200 So we know there's risk, but UM, I know some 0:13:29.280 --> 0:13:32.280 of it is counterparty risk. And so you're taking that 0:13:32.320 --> 0:13:35.880 money loaning it out to earn income. Uh. Some of 0:13:35.880 --> 0:13:38.720 the things I've heard would be that, like you loaned 0:13:38.720 --> 0:13:40.680 the bit fin x and bit fin x is potentially 0:13:40.720 --> 0:13:42.680 going to be in trouble with the n Y, you know, 0:13:42.760 --> 0:13:45.920 a g over tether and whatnot. What can you say 0:13:45.920 --> 0:13:49.640 about something like that? So we we longed to about 0:13:49.640 --> 0:13:53.800 a hundred eight institutions. We loaned to bit fin x, 0:13:53.920 --> 0:13:57.199 We loan to many others, and for each one of 0:13:57.240 --> 0:14:00.000 them we have a risk profile. So we don't land 0:14:00.000 --> 0:14:01.880 than anybody unless we on board. Then we do full 0:14:01.920 --> 0:14:04.880 ky CML. We get to see their balance sheet and 0:14:04.920 --> 0:14:07.080 we get to understand what the risk is because we 0:14:07.160 --> 0:14:10.280 represent the community right if if if we make a mistake, 0:14:10.760 --> 0:14:13.160 we have to pay for it from our treasury and 0:14:13.200 --> 0:14:16.680 make the community good right. So so we have a 0:14:16.679 --> 0:14:19.480 counterparty risk. In this case, the counterparty would be bit 0:14:19.520 --> 0:14:23.320 fin x, or it would be a trading firm mostly 0:14:23.360 --> 0:14:26.200 hedge funds, or other major Wall street firms that trade 0:14:26.240 --> 0:14:31.240 in bitcoin, and specifically to bitfin x. We have seen 0:14:32.000 --> 0:14:35.640 assurances from them in the form of audited financials, in 0:14:35.640 --> 0:14:39.720 the form of their uh A deposit on hand, in 0:14:39.720 --> 0:14:43.320 the form of their insurance. That makes us feel that 0:14:43.400 --> 0:14:46.000 we can trust them with some of our assets. Now 0:14:46.040 --> 0:14:48.480 we also bore from them, so at any time we 0:14:48.560 --> 0:14:51.080 try to balance that risk, meaning the amount that we 0:14:51.200 --> 0:14:53.480 give them. We may give them ripple, or we may 0:14:53.520 --> 0:14:56.760 give them life coin. Most people think we give them bitcoin, 0:14:56.800 --> 0:15:00.400 but bit foin x pay is less than one percent 0:15:00.640 --> 0:15:03.880 a year on bitcoin, so obviously we're paying four and 0:15:03.880 --> 0:15:05.800 a half percent, So you can't make four and a 0:15:05.840 --> 0:15:08.240 half percent if you land at one percent. We don't 0:15:08.280 --> 0:15:11.840 land bit finex any bitcoin, but the coins that they 0:15:11.880 --> 0:15:15.280 do want, where we can earn a nice heel, we 0:15:15.360 --> 0:15:18.320 then borrow other things for them. We borrow other assets 0:15:18.320 --> 0:15:21.080 that offset the risk, meaning if they default for any reason. 0:15:21.160 --> 0:15:23.400 We hold enough assets where we have zero risk or 0:15:23.480 --> 0:15:26.280 zero exposure, and we do that with everybody like we 0:15:26.800 --> 0:15:29.000 you know, even like we we land and bore from 0:15:29.040 --> 0:15:32.520 Galaxy Digital, for example, and at any time we have 0:15:34.120 --> 0:15:38.000 a net zero exposure in most cases with them and 0:15:38.040 --> 0:15:42.040 with other major institutions. Galaxy Digital is a public company. 0:15:42.080 --> 0:15:44.840 You can see their assets, so it's very easy for 0:15:44.880 --> 0:15:47.520 you to know, for you, meaning for Celsius, to know 0:15:47.560 --> 0:15:52.640 what's our risk exposure and manage that properly. So um 0:15:52.760 --> 0:15:56.360 your bank, any bank did you deposit dollar with, and 0:15:56.600 --> 0:16:00.360 does the same thing if you happen to uh the bank, 0:16:00.400 --> 0:16:02.840 for example, with Deutsche Bank, they'll leverage fifty two one, 0:16:02.920 --> 0:16:07.160 meaning they took for every dollar that you gave them 0:16:07.160 --> 0:16:10.440 a deposit, they lent out fifty dollars out there, and 0:16:10.520 --> 0:16:13.080 so they have tremendous We We never have more than 0:16:13.120 --> 0:16:16.800 one to one leverage. So we are under leverage compared 0:16:16.840 --> 0:16:19.360 to any bank or any major financial institution in the 0:16:19.480 --> 0:16:21.960 United States. So it would be hard for me to 0:16:21.960 --> 0:16:25.880 say we're less risky because we're not ABAC insured and 0:16:25.960 --> 0:16:29.560 we're not all these other things, but we're definitely less 0:16:29.680 --> 0:16:33.640 much less leverage than most of these guys you're talking 0:16:33.680 --> 0:16:36.720 about most of the other financial institution that people think 0:16:36.800 --> 0:16:40.840 are safe havens. So really, then, I mean, whether it's 0:16:40.880 --> 0:16:43.800 bit fin X or any other number of people, I mean, 0:16:43.840 --> 0:16:47.000 it's always counterparty risk. So if I loan money to you, 0:16:47.200 --> 0:16:48.760 I know you and I've talked to you. But when 0:16:48.760 --> 0:16:50.560 I lean money to you and you leaned to somebody else, 0:16:50.600 --> 0:16:53.640 then I lose that relationship. UM. And so whether it's 0:16:53.680 --> 0:16:56.200 fifin X or whoever, there's counterparty risk. And basically what 0:16:56.240 --> 0:17:00.520 you're saying is that UM, you guys manage that, UM, 0:17:00.600 --> 0:17:05.000 spread the risk around by institutions, and then offset the 0:17:05.080 --> 0:17:08.480 risk with borrowing and lending. I guess that's that's the answer, right, 0:17:08.480 --> 0:17:12.159 So we we we manage on behalf of fifty depositors. So, 0:17:13.240 --> 0:17:16.520 like like I said to you before we started recording, right, anyone, 0:17:16.760 --> 0:17:19.720 any person can go open account of bit finis and 0:17:19.800 --> 0:17:23.560 lend them XRP directly and earned twenty more than what 0:17:23.760 --> 0:17:26.560 we pay you. Out Right, you can bypass us go 0:17:26.600 --> 0:17:29.679 directly to any of these institutions, but you will have 0:17:29.760 --> 0:17:32.160 to create a hundred a D the relationship. You're gonna 0:17:32.200 --> 0:17:34.920 have to do PSCML and all of them, you're gonna 0:17:34.960 --> 0:17:37.480 have to manage the accounter, party risk and everything else. 0:17:37.880 --> 0:17:41.680 So if you think about us just charging for that, 0:17:42.200 --> 0:17:45.879 I think that is definitely a reasonable uh kind of 0:17:46.680 --> 0:17:49.199 it's a fair deal for both sides, right, that's what 0:17:49.200 --> 0:17:53.040 we're trying to say. What about what about regulatory risk? 0:17:53.680 --> 0:17:56.560 So that would be something also, right, So let's say 0:17:56.600 --> 0:18:00.480 that the regulators, whoever they may be right, they're they're 0:18:00.560 --> 0:18:03.240 very unclear on what's going on. So they want to 0:18:03.240 --> 0:18:06.120 come in and freeze your accounts because of the cell token, 0:18:06.320 --> 0:18:09.000 or because you did business with tether, or because any 0:18:09.080 --> 0:18:11.399 number of reasons. So what kind of what do you 0:18:11.400 --> 0:18:15.840 think about that risk? Full disclosure? We are filed DI 0:18:15.920 --> 0:18:19.960 reg D with SEC where fins and registered. If you 0:18:20.080 --> 0:18:23.879 check all the other people that do this kind of 0:18:23.920 --> 0:18:26.920 stuff in the business or based in the Seychelle Islands, 0:18:27.040 --> 0:18:31.199 or based in in Malta or based in the b 0:18:31.320 --> 0:18:33.679 v I or whatever, you would see that none of 0:18:33.680 --> 0:18:36.639 them have any SEC filings of FINS and filing. So 0:18:37.760 --> 0:18:42.159 we actually work with regulators. We work with enforcement agencies 0:18:42.200 --> 0:18:44.600 when they need to find certain assets and they're trying 0:18:44.640 --> 0:18:48.560 to track different accounts. If somebody comes to us and 0:18:48.600 --> 0:18:52.240 asked us that I'm talking about regulators or enforcement agencies. 0:18:52.720 --> 0:18:55.320 We are there to co operate with them, right, So 0:18:55.359 --> 0:18:58.720 we are a good citizen in the financial system. Uh. 0:18:58.760 --> 0:19:03.000 And unlike most of the projects in the crypto space 0:19:03.080 --> 0:19:06.600 which did like you've seen us recently paid twenty four million, 0:19:06.640 --> 0:19:09.440 they'll fine. The reason they paid a fine is because 0:19:09.480 --> 0:19:11.800 they didn't do what Celsius did. They did not file 0:19:11.880 --> 0:19:14.560 a reg D when they did their race. If they did, 0:19:14.680 --> 0:19:16.720 they wouldn't be paying the twenty four million all fine. 0:19:16.840 --> 0:19:20.160 So we are the example. We have the highest standard 0:19:20.680 --> 0:19:24.840 in our industry today. Celsius is probably the only company, 0:19:24.880 --> 0:19:26.639 the only i c oh in the United States that 0:19:26.720 --> 0:19:30.199 did not receive an sec S a letter or an 0:19:30.240 --> 0:19:36.600 action letter or any kind of action. Look, look we 0:19:36.600 --> 0:19:39.920 we again. We we have a compliance department. We did 0:19:40.000 --> 0:19:42.919 KYC from day one. We didn't do KYC after we 0:19:42.960 --> 0:19:45.760 had ten million customers and we decide, oh my gosh, 0:19:46.000 --> 0:19:48.840 we forgot to do KYC. Let's do And that's part 0:19:48.840 --> 0:19:51.320 of what slows our growth. I mean, we have we 0:19:51.400 --> 0:19:54.680 have a hundred and twenty thousand downloads and we only 0:19:54.680 --> 0:19:57.439 had forty five thousand people that pass KYC. So we 0:19:57.600 --> 0:20:00.920 paid for it in the form of not admitting tens 0:20:00.920 --> 0:20:02.800 of thousands of people. We either don't know how to 0:20:02.840 --> 0:20:05.400 do it or they'll get scared when we asked them 0:20:05.480 --> 0:20:08.480 for the social security or for their driving license. So 0:20:09.080 --> 0:20:11.120 it's not easy for us. It's not like, oh, look, 0:20:11.200 --> 0:20:13.879 can't I see it's so easy? Right? We lose half 0:20:13.920 --> 0:20:18.359 of our customers because of that. But compliance and protecting 0:20:18.359 --> 0:20:21.760 our community right, making sure we don't admit any bad apples, 0:20:22.240 --> 0:20:26.159 because that's again, I represent the community. If I screw 0:20:26.240 --> 0:20:30.520 up for the community, I will lose uh everybody, right, 0:20:30.560 --> 0:20:34.600 So our job and that's why we only promising midicine 0:20:34.720 --> 0:20:37.960 single digits. We're not trying to get you, right, So 0:20:38.000 --> 0:20:41.840 we're trying to balance the risk with providing great security 0:20:41.880 --> 0:20:45.440 blanket for the entire cryptic community that that uses us. 0:20:45.680 --> 0:20:48.520 So if I'm a potential user and I'm looking at 0:20:48.520 --> 0:20:50.600 this and saying, shoot, I'd like to make some percent 0:20:50.720 --> 0:20:54.879 return on my crypto or stable coin um and I 0:20:54.880 --> 0:20:57.080 want to do my due diligence or whatever, what, what 0:20:57.160 --> 0:20:59.639 would you say is the number one risk that I 0:20:59.640 --> 0:21:04.720 should watching out for. So look, you you you don't 0:21:04.760 --> 0:21:07.320 have to trust us at all. You can verify all 0:21:07.320 --> 0:21:09.760 of our assets. You can verify the loans with issue. 0:21:09.840 --> 0:21:12.800