1 00:00:02,600 --> 00:00:06,400 Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg Views, 2 00:00:06,800 --> 00:00:10,480 Speaker 1: and this is Bloomberg Crypto at Daily Bloomberg. I heard podcast. 3 00:00:10,680 --> 00:00:24,640 Speaker 1: It's Wednesday, August three. It's safe to say that coin 4 00:00:24,720 --> 00:00:28,040 Speaker 1: Base has had a rough couple of months. The company 5 00:00:28,120 --> 00:00:31,320 Speaker 1: has had to manage an internal employee position about its management, 6 00:00:31,840 --> 00:00:36,040 Speaker 1: response to speculation about bankruptcy, and even been the subject 7 00:00:36,080 --> 00:00:39,839 Speaker 1: of intense regulatory scrutiny. And that's before we get to 8 00:00:39,880 --> 00:00:43,560 Speaker 1: its share price. And then in late July, things got 9 00:00:43,600 --> 00:00:49,080 Speaker 1: even trickier. Federal prosecutors charged a former coin based product manager, 10 00:00:49,520 --> 00:00:52,560 Speaker 1: as well as his brother and a friend with allegations 11 00:00:52,560 --> 00:00:56,240 Speaker 1: of insider trading. The cherry on top the security is 12 00:00:56,240 --> 00:00:59,440 Speaker 1: an exchange commission, followed with its own allegation the coin 13 00:00:59,480 --> 00:01:02,840 Speaker 1: Base has been running and illegal securities exchange. Here's to 14 00:01:02,840 --> 00:01:05,319 Speaker 1: help us understand what's at stake for coin Base. One 15 00:01:05,319 --> 00:01:08,080 Speaker 1: of the leading crypto exchanges in the world and for 16 00:01:08,120 --> 00:01:19,000 Speaker 1: all digital currency uses is Bloomberg Business Week columnist Max Chafkin. Max, 17 00:01:19,280 --> 00:01:21,400 Speaker 1: go to have you on the podcast. Great to be here. 18 00:01:22,040 --> 00:01:25,080 Speaker 1: You are one of those folks who I've said this 19 00:01:25,160 --> 00:01:27,319 Speaker 1: to other other folks on the podcast, Like, when you're 20 00:01:27,319 --> 00:01:30,160 Speaker 1: on to talk about a company, it's probably not good 21 00:01:30,200 --> 00:01:33,560 Speaker 1: news for the company that we're going to talk about. 22 00:01:33,560 --> 00:01:36,200 Speaker 1: So today we're gonna talk about coin Base. What's been 23 00:01:36,240 --> 00:01:39,839 Speaker 1: happening with coin Base? Okay, so a handful of things. 24 00:01:39,840 --> 00:01:43,120 Speaker 1: I mean, one is and and maybe important context of course, 25 00:01:43,200 --> 00:01:45,320 Speaker 1: is the crypto markets have not been great, you know, 26 00:01:45,400 --> 00:01:47,160 Speaker 1: as a result, they're going through a lot of the 27 00:01:47,200 --> 00:01:50,160 Speaker 1: same issues that pretty much everyone in this space is 28 00:01:50,200 --> 00:01:53,520 Speaker 1: going through. But then there's this other thing that's going on, 29 00:01:53,600 --> 00:01:57,280 Speaker 1: which is that July one or thereabouts the d o 30 00:01:57,400 --> 00:01:59,920 Speaker 1: J arrest the Department of Justice one of yeah, the 31 00:02:00,000 --> 00:02:04,080 Speaker 1: Parlament of Justice, excuse me, arrested a former product manager 32 00:02:04,160 --> 00:02:07,840 Speaker 1: somebody who had been working on new token listings and 33 00:02:07,880 --> 00:02:12,520 Speaker 1: accused him of basically insider trading, of of taking information 34 00:02:12,639 --> 00:02:14,560 Speaker 1: about listings that we're going to go on coin base 35 00:02:14,880 --> 00:02:18,320 Speaker 1: and passing them to his brother and another investor and 36 00:02:18,440 --> 00:02:21,480 Speaker 1: profiting from that. And at the same time, and this 37 00:02:21,520 --> 00:02:23,560 Speaker 1: is where it starts to gett even worse for coin base. 38 00:02:23,800 --> 00:02:27,320 Speaker 1: Y SEC comes out and issues its own insider trading 39 00:02:27,320 --> 00:02:29,960 Speaker 1: complaint and says, oh, by the way, some of these 40 00:02:30,120 --> 00:02:34,800 Speaker 1: tokens that were being insider traded are not assets, they 41 00:02:34,840 --> 00:02:37,880 Speaker 1: are securities. And the implication, of course, is that coin 42 00:02:37,919 --> 00:02:40,839 Speaker 1: base would be operating an illegal securities exchange, which would 43 00:02:40,880 --> 00:02:43,880 Speaker 1: be bad and which would put aspects of their overall 44 00:02:43,880 --> 00:02:46,919 Speaker 1: business at risk. And you know, it's important to say so. 45 00:02:46,919 --> 00:02:50,200 Speaker 1: So this is a really this this indictment, it makes 46 00:02:50,200 --> 00:02:53,600 Speaker 1: for really good reading. It's very colorful. This guy who 47 00:02:53,680 --> 00:02:57,560 Speaker 1: was busted was busted because of a crypto influencer named 48 00:02:57,600 --> 00:03:02,320 Speaker 1: Kobe who basically spotted these transactions tweeted about them, and 49 00:03:02,360 --> 00:03:04,679 Speaker 1: then that tweet found its way first to coin base 50 00:03:04,760 --> 00:03:07,200 Speaker 1: and ultimately to the Department of Justice. So that's sort 51 00:03:07,240 --> 00:03:09,919 Speaker 1: of a bad look for coin base. Um, but but 52 00:03:09,960 --> 00:03:12,160 Speaker 1: it's important to say, you know, no one's accused them 53 00:03:12,200 --> 00:03:14,640 Speaker 1: of wrongdoing. But then, at the same time, as Bloomberg 54 00:03:14,639 --> 00:03:17,680 Speaker 1: reported just a few days later, the SEC is also 55 00:03:18,160 --> 00:03:21,480 Speaker 1: looking into basically this very question. Was coin based operating 56 00:03:21,600 --> 00:03:24,480 Speaker 1: or is it operating an illegal securities exchange? Is it's 57 00:03:24,520 --> 00:03:27,600 Speaker 1: selling securities that have not been vetted by the SEC 58 00:03:27,720 --> 00:03:30,320 Speaker 1: in the proper way? And that's something that coin Base, 59 00:03:30,680 --> 00:03:33,560 Speaker 1: you know, really cares about because it could imperil their 60 00:03:33,560 --> 00:03:36,240 Speaker 1: business create all sorts of regular problems for them down 61 00:03:36,280 --> 00:03:38,040 Speaker 1: the road. Last year, remember this is when it really 62 00:03:38,080 --> 00:03:42,280 Speaker 1: started to get very contentious between the industry and the agencies. 63 00:03:42,360 --> 00:03:44,600 Speaker 1: And you know what Brian Armstrong said at that time 64 00:03:44,640 --> 00:03:46,320 Speaker 1: is they refused to tell us why they think it's 65 00:03:46,320 --> 00:03:49,280 Speaker 1: a security and instead subpoena a bunch of records from us. 66 00:03:49,360 --> 00:03:52,880 Speaker 1: We comply, demand testimony from employees. We comply, and then 67 00:03:52,920 --> 00:03:55,000 Speaker 1: tell us that we they'll sue us if we launched 68 00:03:55,000 --> 00:03:57,240 Speaker 1: certain products. A lot of this is being done through 69 00:03:57,360 --> 00:04:02,080 Speaker 1: enforcement rather than rulemaking itself. So until the agencies decide 70 00:04:02,320 --> 00:04:04,840 Speaker 1: what's a currency, what's a commodity, and what's the security, 71 00:04:05,120 --> 00:04:08,120 Speaker 1: it's going to be very difficult for the industry to 72 00:04:08,120 --> 00:04:11,520 Speaker 1: to work around that. That was about Brian Armstrong, who's 73 00:04:11,560 --> 00:04:14,280 Speaker 1: the CEO of coin base. Clearly there's a lot of 74 00:04:14,280 --> 00:04:17,039 Speaker 1: stuff going on here, So I want to kind of 75 00:04:17,040 --> 00:04:20,400 Speaker 1: tease apart a few different things that you said, and 76 00:04:20,440 --> 00:04:22,640 Speaker 1: I sort of want to start with the you know, 77 00:04:22,680 --> 00:04:25,440 Speaker 1: the how all of this came to light. In April 78 00:04:25,640 --> 00:04:29,719 Speaker 1: of this year, coin Based, seemingly out of nowhere, published 79 00:04:29,720 --> 00:04:31,680 Speaker 1: a blog post that was like, here are some changes 80 00:04:31,680 --> 00:04:34,240 Speaker 1: that we have made that would make it more difficult 81 00:04:34,279 --> 00:04:36,960 Speaker 1: for people to inCider trade in tokens. We're not saying 82 00:04:36,960 --> 00:04:39,200 Speaker 1: that that has happened, but if it were to happen, 83 00:04:39,320 --> 00:04:41,719 Speaker 1: it's now harder to do. And at the time, you know, 84 00:04:41,800 --> 00:04:44,360 Speaker 1: various of us were like interesting, and now we know 85 00:04:45,080 --> 00:04:47,640 Speaker 1: that the reason that that post went out on the 86 00:04:47,839 --> 00:04:51,120 Speaker 1: coin based medium blog in April was related to them 87 00:04:51,240 --> 00:04:55,320 Speaker 1: finding out that this former employee had been engaging in 88 00:04:55,360 --> 00:04:58,000 Speaker 1: this kind of behavior and the you know, the company 89 00:04:58,040 --> 00:05:02,240 Speaker 1: has confirmed as much. My question back to you about 90 00:05:02,279 --> 00:05:06,520 Speaker 1: this is when we are reporting on these kinds of companies, 91 00:05:06,520 --> 00:05:10,039 Speaker 1: on these kinds of investigations, who in a lot of 92 00:05:10,080 --> 00:05:13,160 Speaker 1: other senses and crypto like to say like we're super transparence. 93 00:05:13,160 --> 00:05:15,359 Speaker 1: We always tell everyone what's going on. But when it 94 00:05:15,400 --> 00:05:18,400 Speaker 1: has come down to here are weird things that are happening, 95 00:05:18,480 --> 00:05:20,280 Speaker 1: they get a little bit kg, they get a little 96 00:05:20,279 --> 00:05:24,840 Speaker 1: bit traditional, and it's really contrasted to you know, Brian Armstrong, 97 00:05:24,839 --> 00:05:26,479 Speaker 1: the CEO of coin Based, willing to go on twister 98 00:05:26,560 --> 00:05:29,320 Speaker 1: and just like yell at the SEC but they weren't 99 00:05:29,360 --> 00:05:33,279 Speaker 1: necessarily forthcoming about the fact that this thing has happened. 100 00:05:33,600 --> 00:05:36,719 Speaker 1: What do you think explains that tension? Well, I mean, 101 00:05:37,120 --> 00:05:39,920 Speaker 1: this probably just gets to my own being a cynical 102 00:05:40,000 --> 00:05:42,520 Speaker 1: journalist and having followed, you know, tech companies for a 103 00:05:42,520 --> 00:05:45,280 Speaker 1: long time. I mean, I just think, you know, we 104 00:05:45,320 --> 00:05:49,240 Speaker 1: shouldn't take the ideology that seriously, at least the ideology 105 00:05:49,279 --> 00:05:52,920 Speaker 1: of transparency. Yeah, exactly, at least insofar as we're like 106 00:05:52,960 --> 00:05:56,760 Speaker 1: trying to understand the actions of a very large public company, 107 00:05:56,760 --> 00:05:59,000 Speaker 1: which is what coin Base is. They've done a lot 108 00:05:59,040 --> 00:06:01,839 Speaker 1: of stuff over the past couple of years. It's funny 109 00:06:01,880 --> 00:06:03,960 Speaker 1: because I've been familiar with this company a long time. 110 00:06:04,000 --> 00:06:06,240 Speaker 1: I met with the founders, you know, back in you know, 111 00:06:06,320 --> 00:06:08,320 Speaker 1: kind of like the mid s when they were this 112 00:06:08,400 --> 00:06:11,600 Speaker 1: sort of hot shot Silicon Valley company, and their whole 113 00:06:11,640 --> 00:06:13,679 Speaker 1: thing back then was that they were like the most 114 00:06:13,720 --> 00:06:17,040 Speaker 1: conservative crypto company. They were the one that like followed 115 00:06:17,040 --> 00:06:20,120 Speaker 1: all the rules. They had like much stronger k y C. 116 00:06:21,120 --> 00:06:23,599 Speaker 1: That's know, your customer rules. You know, you needed basically 117 00:06:23,640 --> 00:06:25,679 Speaker 1: need a bank account, you need to show a driver's 118 00:06:25,760 --> 00:06:28,680 Speaker 1: license if you wanted to buy tokens. And really they 119 00:06:28,720 --> 00:06:30,840 Speaker 1: only sold bitcoin, I mean for the for the really 120 00:06:30,839 --> 00:06:34,880 Speaker 1: long time, Bitcoin ether, I think light Coin, maybe one other. 121 00:06:35,520 --> 00:06:37,560 Speaker 1: But of course something flipped, and and the thing that 122 00:06:37,600 --> 00:06:40,080 Speaker 1: flipped was that the market for tokens boomed, and you 123 00:06:40,160 --> 00:06:44,120 Speaker 1: had a couple of other exchanges, I think most importantly Binance, 124 00:06:44,520 --> 00:06:47,360 Speaker 1: you know, really move aggressively into listing all these other 125 00:06:47,400 --> 00:06:49,960 Speaker 1: tokens um taking their market share, and there was like 126 00:06:50,000 --> 00:06:53,880 Speaker 1: a clear choice that was made I think starting probably 127 00:06:53,920 --> 00:06:58,360 Speaker 1: around eighteen, but that became even more pronounced when they 128 00:06:58,400 --> 00:07:01,560 Speaker 1: went public, which was best year in May of or 129 00:07:01,720 --> 00:07:05,800 Speaker 1: April of one, where basically they just went way more aggressive. 130 00:07:05,839 --> 00:07:07,760 Speaker 1: And when you do that, that puts you at odds 131 00:07:07,760 --> 00:07:10,560 Speaker 1: with the SEC and and in the US government, and 132 00:07:10,560 --> 00:07:13,280 Speaker 1: at the same time they were sort of adopting this 133 00:07:13,680 --> 00:07:18,680 Speaker 1: kind of edgier regulatory pose. Brian Armstrong, the CEO, kind 134 00:07:18,680 --> 00:07:21,880 Speaker 1: of comes with this new sort of positioning for the company, 135 00:07:21,920 --> 00:07:24,840 Speaker 1: which is this like bad boy in a couple of 136 00:07:24,840 --> 00:07:29,240 Speaker 1: different ways. One is that in September of you know, 137 00:07:29,520 --> 00:07:32,640 Speaker 1: as protests around George Floyd's murder we're going on, there's 138 00:07:32,640 --> 00:07:35,080 Speaker 1: a lot of activism inside of coin Base, he comes 139 00:07:35,120 --> 00:07:37,400 Speaker 1: out and basically declares that, you know, when we're gonna 140 00:07:37,440 --> 00:07:40,080 Speaker 1: be a no politics company, we're gonna be anti woke, 141 00:07:40,560 --> 00:07:42,360 Speaker 1: and that is a way to like that that generates 142 00:07:42,360 --> 00:07:44,520 Speaker 1: a lot of attention, and then we see, you know, 143 00:07:44,600 --> 00:07:46,800 Speaker 1: kind of throughout the last couple of years him taking 144 00:07:46,800 --> 00:07:50,280 Speaker 1: as you said, this kind of very muscular communications approach 145 00:07:50,280 --> 00:07:53,160 Speaker 1: where he's like trash talking the SEC and things like that, 146 00:07:53,480 --> 00:07:56,320 Speaker 1: and at the same time spending huge sums of money 147 00:07:56,360 --> 00:07:59,440 Speaker 1: on lobbying, you know, working really hard to kind of 148 00:07:59,520 --> 00:08:01,960 Speaker 1: work the things you know in Washington. And I think 149 00:08:02,120 --> 00:08:05,440 Speaker 1: this is all related because they see this fight coming 150 00:08:05,880 --> 00:08:07,880 Speaker 1: and now it's here, and they've been sort of preparing 151 00:08:07,920 --> 00:08:11,000 Speaker 1: for it, and that preparation includes, you know, lobbying, it 152 00:08:11,000 --> 00:08:13,560 Speaker 1: includes all this legal work and sort of messaging around 153 00:08:13,600 --> 00:08:16,920 Speaker 1: their process, and of course it includes a cultural component. 154 00:08:18,880 --> 00:08:24,080 Speaker 1: We have sometimes received cranky emails from listeners of this 155 00:08:24,160 --> 00:08:27,520 Speaker 1: show about the idea that there could be a cultural 156 00:08:27,560 --> 00:08:32,920 Speaker 1: component to crypto, that crypto is like politics neutral, value neutral, 157 00:08:33,360 --> 00:08:37,520 Speaker 1: and it's about the purity and sanctity of the blockchain, etcetera, etcetera. Um, 158 00:08:37,640 --> 00:08:41,319 Speaker 1: and folks listening cannot see this. Max's giggling, and Max, 159 00:08:41,440 --> 00:08:43,400 Speaker 1: you know what you're saying is that no, there is 160 00:08:43,440 --> 00:08:48,080 Speaker 1: there are some explicitly politicized elements to the way this 161 00:08:48,120 --> 00:08:50,800 Speaker 1: fight is shaping up. Yeah. Absolutely, And I mean you 162 00:08:50,840 --> 00:08:53,040 Speaker 1: can look at their their spending. I mean, you know, 163 00:08:53,080 --> 00:08:55,920 Speaker 1: they're their lobbying spending is open. I mean the last 164 00:08:55,960 --> 00:08:57,839 Speaker 1: time I looked, I think it's like a couple of 165 00:08:57,880 --> 00:08:59,880 Speaker 1: million bucks over the last I think I can't remember 166 00:09:00,040 --> 00:09:01,440 Speaker 1: last year or last two years, but you know, they're 167 00:09:01,440 --> 00:09:04,920 Speaker 1: spending significant sums of money in Washington, and you can 168 00:09:04,960 --> 00:09:07,200 Speaker 1: see it in the way that Armstrong is communicating, you know, 169 00:09:07,240 --> 00:09:11,120 Speaker 1: he you know, there was a Republican SEC commissioner published 170 00:09:11,160 --> 00:09:15,560 Speaker 1: a sort of like counterpoint yeah to this, and so anyway, 171 00:09:15,679 --> 00:09:19,000 Speaker 1: they're like they have allies, they have conservative allies, they 172 00:09:19,000 --> 00:09:21,439 Speaker 1: have you know, politicians that they're trying to work and 173 00:09:21,440 --> 00:09:24,720 Speaker 1: and and of course it's political because yes, like coin 174 00:09:24,760 --> 00:09:28,320 Speaker 1: base is promoting many of these values, as you said, 175 00:09:28,320 --> 00:09:32,280 Speaker 1: transparency and so on, but it's also a public company, 176 00:09:32,520 --> 00:09:34,360 Speaker 1: you know, with the headquarters in the United States, and 177 00:09:34,400 --> 00:09:37,720 Speaker 1: it's under the jurisdiction you know, the US government, and 178 00:09:37,840 --> 00:09:40,040 Speaker 1: it has tried to use those things to help it. 179 00:09:40,080 --> 00:09:42,280 Speaker 1: Like I said along the way, like coin Base, one 180 00:09:42,280 --> 00:09:43,960 Speaker 1: of the ways it got customers early on is that 181 00:09:44,000 --> 00:09:46,000 Speaker 1: it was seen and I think maybe still is seen 182 00:09:46,400 --> 00:09:49,480 Speaker 1: as safer, more reliable and so on, compared to some 183 00:09:49,520 --> 00:09:52,560 Speaker 1: of these more aggressive exchanges. We'll be right back with 184 00:09:52,559 --> 00:09:55,400 Speaker 1: more from Bloomberg Business we call umnist Max Chafkin on 185 00:09:55,440 --> 00:10:05,959 Speaker 1: the future of coin base. Bloomberg has learned that coin 186 00:10:06,000 --> 00:10:10,040 Speaker 1: base is facing a US investigation on cryptocurrency listings. This 187 00:10:10,080 --> 00:10:12,840 Speaker 1: move comes as a chorus of US regulators to do 188 00:10:13,000 --> 00:10:16,520 Speaker 1: work to oversee the crypto industry has grown louder. One 189 00:10:16,559 --> 00:10:21,000 Speaker 1: of the things that hurts them earlier this year is 190 00:10:21,400 --> 00:10:24,320 Speaker 1: Brian Armstrong on Twitter kind of coming out and saying, 191 00:10:24,920 --> 00:10:27,640 Speaker 1: you know, hey, and he in this thread that was 192 00:10:27,679 --> 00:10:32,120 Speaker 1: about an otherwise very unremarkable like SEC required filing, use 193 00:10:32,240 --> 00:10:35,640 Speaker 1: the B word like invoked bankruptcy, and he's like, in 194 00:10:35,679 --> 00:10:39,160 Speaker 1: the in the unlikely event that anything were to happen, etcetera, etcetera. 195 00:10:39,200 --> 00:10:42,200 Speaker 1: But of course people on Twitter don't read. They just 196 00:10:42,760 --> 00:10:45,000 Speaker 1: they just saw a coin based plus bankruptcy and there 197 00:10:45,040 --> 00:10:48,360 Speaker 1: was just a lot of freaking out about that. So 198 00:10:48,920 --> 00:10:51,200 Speaker 1: in the grand scheme of if you were a coin 199 00:10:51,240 --> 00:10:53,600 Speaker 1: basis PR company, or you know, you were somebody like 200 00:10:53,640 --> 00:10:56,440 Speaker 1: helping them with image management, what would be some of 201 00:10:56,440 --> 00:10:59,920 Speaker 1: the things you might expect to see them change, if anything, 202 00:11:00,320 --> 00:11:02,160 Speaker 1: over the next couple of months as they get much 203 00:11:02,200 --> 00:11:07,120 Speaker 1: more into this fight with regulators. Well, I think and 204 00:11:07,160 --> 00:11:09,640 Speaker 1: maybe we're already seeing it. I think they're gonna be 205 00:11:10,640 --> 00:11:14,520 Speaker 1: again less aggressive in terms of marketing, in terms of 206 00:11:14,920 --> 00:11:17,360 Speaker 1: like anything you do to say, you know, your crypto 207 00:11:17,360 --> 00:11:19,520 Speaker 1: investment is gonna is gonna make you rich or whatever 208 00:11:19,800 --> 00:11:22,480 Speaker 1: is going to create some potential exposure with the SEC. 209 00:11:22,760 --> 00:11:24,840 Speaker 1: And I mean I think the SEC is like very 210 00:11:24,880 --> 00:11:28,679 Speaker 1: attuned to the prospect that like regular people could get 211 00:11:28,760 --> 00:11:32,600 Speaker 1: hurt by buying you know, dumb stuff. And coin Base 212 00:11:32,720 --> 00:11:35,800 Speaker 1: has been selling a lot of stuff, you know, I 213 00:11:35,840 --> 00:11:37,640 Speaker 1: don't want to say it's dumb, but of maybe a 214 00:11:37,720 --> 00:11:41,640 Speaker 1: questionable that when you look at yes, sire risk assets, 215 00:11:42,000 --> 00:11:45,160 Speaker 1: and they've done some things to try to kind of 216 00:11:45,679 --> 00:11:47,880 Speaker 1: you know, walk a line where I think certain tokens 217 00:11:47,920 --> 00:11:51,440 Speaker 1: are labeled differently. But again when you when you look 218 00:11:51,480 --> 00:11:54,320 Speaker 1: at where they were, you know, a few years ago, 219 00:11:54,760 --> 00:11:56,640 Speaker 1: and you look at where they are today, Like some 220 00:11:56,720 --> 00:12:00,920 Speaker 1: of these tokens are very lightly traded. They're not companies 221 00:12:00,960 --> 00:12:03,840 Speaker 1: that you would have heard of. It's definitely closer to 222 00:12:03,840 --> 00:12:06,640 Speaker 1: to to a penny stock. And and of course there's 223 00:12:06,840 --> 00:12:09,520 Speaker 1: those are those are very volatile assets, and so I 224 00:12:09,559 --> 00:12:12,320 Speaker 1: think we're going to see them backing off, you know, 225 00:12:12,360 --> 00:12:14,800 Speaker 1: in terms of the sort of messaging. A couple of 226 00:12:14,800 --> 00:12:18,680 Speaker 1: weeks ago, they ended their affiliate affiliate marketing program, which 227 00:12:18,720 --> 00:12:21,160 Speaker 1: was kind of interpreted as some kind of oh no, 228 00:12:21,320 --> 00:12:23,200 Speaker 1: like that maybe the company's in jeopardy. But I do 229 00:12:23,320 --> 00:12:25,880 Speaker 1: wonder if if that may be part of an effort 230 00:12:25,880 --> 00:12:27,960 Speaker 1: to be like a little bit less aggressive in how 231 00:12:28,000 --> 00:12:30,640 Speaker 1: they message to prospective customers and how did their affiliate 232 00:12:30,640 --> 00:12:34,840 Speaker 1: marketing program work. So I believe that you were basically 233 00:12:34,920 --> 00:12:37,440 Speaker 1: if you signed up a new investor as an a 234 00:12:37,480 --> 00:12:42,000 Speaker 1: crypto influencer, you would get yeah, there's a link, and 235 00:12:42,040 --> 00:12:44,840 Speaker 1: then every trade they make for a certain period of time, 236 00:12:45,160 --> 00:12:47,319 Speaker 1: you're getting a cut of their commission. That's this is 237 00:12:47,480 --> 00:12:52,080 Speaker 1: something that finance has used really aggressively and very effectively. 238 00:12:52,559 --> 00:12:55,680 Speaker 1: It does have some sort of multi level marketing vibes, 239 00:12:55,720 --> 00:12:58,320 Speaker 1: it does. It kind of creates, you know, this this 240 00:12:58,400 --> 00:13:00,679 Speaker 1: sort of sort of third party that you know is 241 00:13:01,280 --> 00:13:03,320 Speaker 1: kind of acting on behalf of the company. But to me, 242 00:13:03,400 --> 00:13:05,200 Speaker 1: that feels like it could be something that was done 243 00:13:05,760 --> 00:13:07,559 Speaker 1: less as a cost cutting measure and more as a 244 00:13:08,000 --> 00:13:10,320 Speaker 1: let's try to you know, kind of back off some 245 00:13:10,360 --> 00:13:13,320 Speaker 1: of the more aggressive marketing practices. The biggest question that 246 00:13:13,360 --> 00:13:16,319 Speaker 1: a lot of people have right now in this environment 247 00:13:16,400 --> 00:13:20,520 Speaker 1: where you know, lenders have frozen withdrawals, other types of 248 00:13:20,559 --> 00:13:25,480 Speaker 1: crypto companies have been largely in distress. Is okay, Well, 249 00:13:25,720 --> 00:13:28,720 Speaker 1: I have large deposits of coin base, or I'm one 250 00:13:28,760 --> 00:13:32,280 Speaker 1: of the people who has allowed like my paycheck to 251 00:13:32,280 --> 00:13:34,800 Speaker 1: be paid into my coin based account. Like what's next 252 00:13:34,840 --> 00:13:37,440 Speaker 1: for me if all of this regulatory stuff happens, Like 253 00:13:37,480 --> 00:13:39,440 Speaker 1: how do you see any of the shifting to me? 254 00:13:39,640 --> 00:13:42,120 Speaker 1: Like if you were had a lot of coin bax exposure, 255 00:13:42,160 --> 00:13:44,960 Speaker 1: should be more worried about your crypto exposure rather than 256 00:13:45,400 --> 00:13:49,120 Speaker 1: the particular risk of like coin Base getting hit by 257 00:13:49,120 --> 00:13:52,080 Speaker 1: the you know, SEC because you know, I don't think 258 00:13:52,200 --> 00:13:54,520 Speaker 1: like customer deposits and that sort of thing are going 259 00:13:54,559 --> 00:13:56,280 Speaker 1: to be at risk, and I don't think people should 260 00:13:56,280 --> 00:13:58,800 Speaker 1: be thinking about it that way. It's more, you know, 261 00:13:59,400 --> 00:14:03,600 Speaker 1: what is the to coin base stockholders, people who our 262 00:14:03,720 --> 00:14:08,520 Speaker 1: own equity in the company itself and who right yeah, 263 00:14:08,559 --> 00:14:11,000 Speaker 1: positioned itself as like this is the future of finance. 264 00:14:11,160 --> 00:14:13,000 Speaker 1: Like maybe it's not the future of finance. Maybe it 265 00:14:13,080 --> 00:14:15,600 Speaker 1: was just this kind of flash in the pan thing 266 00:14:15,679 --> 00:14:17,920 Speaker 1: that took advantage of a of a boom that is 267 00:14:18,040 --> 00:14:20,040 Speaker 1: not going to exist for a long time. It could 268 00:14:20,040 --> 00:14:22,400 Speaker 1: also get muscled out by, like I said, some of 269 00:14:22,400 --> 00:14:25,080 Speaker 1: these other competitors finance for instance, So I think it's 270 00:14:25,120 --> 00:14:28,320 Speaker 1: more about that. I think there you know, questions about 271 00:14:28,720 --> 00:14:32,920 Speaker 1: you know, exactly what tokens are able to be marketed 272 00:14:32,960 --> 00:14:35,000 Speaker 1: in the future. So that's going to have you know, 273 00:14:35,120 --> 00:14:39,000 Speaker 1: implications for entrepreneurs and and so on who are building 274 00:14:39,000 --> 00:14:42,120 Speaker 1: businesses on this platform. I think it also has implications 275 00:14:42,200 --> 00:14:44,440 Speaker 1: for some of the big venture capital firms, some of 276 00:14:44,520 --> 00:14:48,120 Speaker 1: these like institutional crypto investors, who were you know, using 277 00:14:48,160 --> 00:14:51,000 Speaker 1: the tokens as a way to to make their investments 278 00:14:51,000 --> 00:14:53,680 Speaker 1: alongside equity. I mean, there are a lot of questions about, 279 00:14:54,120 --> 00:14:56,800 Speaker 1: you know, exactly what happens to that if there is 280 00:14:56,960 --> 00:15:00,160 Speaker 1: greater regulation in the US. So so definitely don't think 281 00:15:00,200 --> 00:15:03,360 Speaker 1: there's a lot of risk for just like regular people 282 00:15:03,680 --> 00:15:06,280 Speaker 1: beyond like assets going down or going to zero, which 283 00:15:06,280 --> 00:15:08,560 Speaker 1: I think is the thing people should be most worried about. 284 00:15:08,800 --> 00:15:11,000 Speaker 1: It's definitely think a lot of people are worried about 285 00:15:11,120 --> 00:15:13,880 Speaker 1: right now. So amazing. Well, Max, thank you so much 286 00:15:13,880 --> 00:15:18,360 Speaker 1: for joining us. Thanks for having me. You can find 287 00:15:18,360 --> 00:15:21,080 Speaker 1: more of Max Chafkins columns and reporting on the Bloomberg 288 00:15:21,160 --> 00:15:24,960 Speaker 1: terminal on Bloomberger dot com and on Twitter. He's at 289 00:15:25,360 --> 00:15:31,520 Speaker 1: Chafkin that c H A F K I N On 290 00:15:31,560 --> 00:15:35,680 Speaker 1: the next episode of Bloomberg Crypto. Digital by Now pay 291 00:15:35,800 --> 00:15:39,960 Speaker 1: later options skyrocketed over the last several years, and they 292 00:15:39,960 --> 00:15:42,720 Speaker 1: were definitely everywhere in the early days of the pandemic. 293 00:15:43,280 --> 00:15:46,600 Speaker 1: And now the NPL has come for crypto through a 294 00:15:46,600 --> 00:15:51,400 Speaker 1: decentralized finance lender called Teller. Is this really a good idea? 295 00:15:51,960 --> 00:15:54,880 Speaker 1: Bloomberg proportsa Mr Lena Gulf of Polo will join me 296 00:15:54,960 --> 00:15:58,080 Speaker 1: for a discussion on how by now pay later fits 297 00:15:58,120 --> 00:16:05,240 Speaker 1: into the crypto economy. H This is Bloomberg Crypto, a 298 00:16:05,320 --> 00:16:08,720 Speaker 1: daily podcast from Bloomberg and I Heart Radio. For more 299 00:16:08,720 --> 00:16:11,400 Speaker 1: shows from I Heart Radio, visit the I Heart Radio app, 300 00:16:11,640 --> 00:16:15,760 Speaker 1: Apple Podcasts, or wherever you get your podcasts. Send us 301 00:16:15,760 --> 00:16:18,640 Speaker 1: your comments, questions or suggestions for the show to Crypto 302 00:16:18,720 --> 00:16:21,840 Speaker 1: at Bloomberg dot net or find us on Twitter. We're 303 00:16:21,880 --> 00:16:27,800 Speaker 1: at Crypto. The supervising producer of Bloomberg Crypto is Vicky 304 00:16:27,920 --> 00:16:32,000 Speaker 1: very Galina. Our senior producer is Janet Babin. Our producer 305 00:16:32,080 --> 00:16:36,440 Speaker 1: is Sharon Burriro Associate producer is Ty Butler. Desta Wonder 306 00:16:36,520 --> 00:16:42,240 Speaker 1: at is our engineer. Original music by Leo Sidrin. I'm 307 00:16:42,240 --> 00:16:44,480 Speaker 1: Stacy Marie schmal We'll be back tomorrow.