WEBVTT - President's Day Redux - Joe Weisenthal on Sam Bankman-Fried 0:00:03.080 --> 0:00:06.280 This is Bloomberg Crypto, a daily Bloomberg Ihad podcast, and 0:00:06.320 --> 0:00:09.840 I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News. 0:00:10.480 --> 0:00:24.599 It's Monday, February twenty hill, Stacy Marie here today in 0:00:24.640 --> 0:00:26.800 the US, it's a holiday, so we thought this would 0:00:26.800 --> 0:00:29.200 be a good opportunity to reshare an episode that we 0:00:29.240 --> 0:00:32.720 had previously recorded with my colleague from Odd Lots, Joe. 0:00:33.120 --> 0:00:35.400 And as an aside, you should definitely be listening to 0:00:35.440 --> 0:00:38.159 the Odd Lots podcast. We first recorded this episode in 0:00:38.200 --> 0:00:40.920 the immediate aftermath of the collapse of Crypto Exchange f 0:00:41.000 --> 0:00:45.640 t X. Joe's comments are insightful and as always quite entertaining. 0:00:45.880 --> 0:00:51.120 I hope you enjoy. Have you heard the one about 0:00:51.159 --> 0:00:56.320 the box? Well. In April two, long before Sam bankmun 0:00:56.360 --> 0:00:58.920 Freed was tweeting rambling threads about the collapse of his 0:00:59.040 --> 0:01:01.920 f t X empire, uh, he joined the Bloomberg Odd 0:01:01.960 --> 0:01:06.600 Lots podcast and talked about the box. What this protocol is, 0:01:06.720 --> 0:01:09.080 It's called protocol Eye. It's a box and you can 0:01:09.160 --> 0:01:11.000 can take it token, and you can take a theory 0:01:11.040 --> 0:01:12.240 and you can put it in the box and you 0:01:12.240 --> 0:01:14.440 can take it out like you put it in the 0:01:14.480 --> 0:01:16.200 box and you get like, you know, an I owe 0:01:16.240 --> 0:01:18.440 you for for having to put it in box, and 0:01:18.440 --> 0:01:20.680 then you can redeem that I owe you back out 0:01:20.720 --> 0:01:24.160 for the token. The box was bankman Fred's metaphor for 0:01:24.240 --> 0:01:28.120 describing the crypto practice of yield farming, and his description 0:01:28.200 --> 0:01:32.920 at the time raised many an eyebrow because it seemed well, 0:01:33.520 --> 0:01:37.360 both too blunt and too good to be true. I'm 0:01:37.440 --> 0:01:40.160 joined today by Joe Wisenthal, co host of the Odd 0:01:40.200 --> 0:01:43.679 Lots podcast, who at that time ended that episode with 0:01:43.760 --> 0:01:46.839 a deeply releasable comment, I don't know how to feel 0:01:46.840 --> 0:01:50.480 about it. I feel weird. We all feel weird. Joe, 0:01:50.880 --> 0:02:03.600 Welcome to the show. Thank you so much for having me. Yeah, 0:02:03.720 --> 0:02:07.000 and you know you range from like what's happening with 0:02:07.120 --> 0:02:12.760 trucking supply chains to Guyana to interviewing some bankman Freed. 0:02:13.360 --> 0:02:15.720 So for the for the purposes of this episode, we're 0:02:15.720 --> 0:02:19.480 going to talk about that interview. In April two. This 0:02:19.639 --> 0:02:23.000 was right before the Salt conference in the Bahamas. Things 0:02:23.040 --> 0:02:27.000 were still um i'll use the word frothy and optimistic. 0:02:27.440 --> 0:02:30.080 The vibe was very much, you know, to the moon, 0:02:30.320 --> 0:02:33.920 as the bitcoin folks like to say, and bankman. Freed 0:02:34.000 --> 0:02:36.600 came on the show, which was co hosted by Tracy 0:02:36.600 --> 0:02:38.560 and had a special guest to parents from Matt Levine. 0:02:39.120 --> 0:02:40.960 Among many other things you talked about, one of the 0:02:40.960 --> 0:02:44.919 things was about Defy and yield farming, and at that point, 0:02:45.160 --> 0:02:47.960 you know, he had this metaphor about the box, which 0:02:47.960 --> 0:02:49.760 is like you put money in and kind of money 0:02:49.760 --> 0:02:53.240 comes out, and what happens in between is mysterious. And 0:02:53.240 --> 0:02:56.440 I really listened to that episode before we recorded this one, 0:02:56.440 --> 0:02:59.239 and I just remember you, Tracy and Matt all doing 0:02:59.320 --> 0:03:05.040 variations on what it's interesting because the box comments, I 0:03:05.080 --> 0:03:07.880 think it's about twenty or so minutes into the episode, 0:03:07.919 --> 0:03:10.520 and I do think that if you sort of listened 0:03:10.520 --> 0:03:12.800 to the full episode, just the tone of it, we 0:03:12.919 --> 0:03:16.320 never quite recovered or got back on track after that, 0:03:16.560 --> 0:03:19.359 I think because we were all like a little like flabbergasted, 0:03:19.520 --> 0:03:23.480 a little bit surprised by the bluntness these sort of 0:03:23.800 --> 0:03:27.760 you know, after he described yield farming as like this 0:03:27.800 --> 0:03:30.200 sort of magic money box where you put money in 0:03:30.320 --> 0:03:34.200 and then money comes out, and Matt's first response was like, 0:03:34.240 --> 0:03:36.240 to be honest, that sounds like a Ponzi scheme. And 0:03:36.280 --> 0:03:38.800 I was like doesn't really seem like there's any economics 0:03:38.840 --> 0:03:42.400 value created at all. My expectation at that moment in 0:03:42.440 --> 0:03:45.000 the conversation was that he would push back a little bit, 0:03:45.040 --> 0:03:47.480 like he would say something like, oh, well, that's just 0:03:47.520 --> 0:03:50.560 sort of like the structure of it, but something cool 0:03:50.640 --> 0:03:53.920 and productive could theoretically happen in the box. So what 0:03:54.080 --> 0:03:57.920 surprised me at the time was not even the metaphor 0:03:58.120 --> 0:04:01.120 per se. But after a sort of said that sounds 0:04:01.120 --> 0:04:03.840 like Ponzi, after we all kind of said, oh, where's 0:04:03.880 --> 0:04:06.240 the value, there was like no pushback or anything. And 0:04:06.280 --> 0:04:08.360 I think that was actually the part, more than anything 0:04:08.360 --> 0:04:11.760 else that I found to beat Jarring. And then yeah afterwards, 0:04:11.800 --> 0:04:13.800 like you know, but yeah to the end and Tracey 0:04:13.800 --> 0:04:15.680 and I are did our outro, and I think we 0:04:15.760 --> 0:04:17.760 just sort of like stammered a little bit because after 0:04:17.800 --> 0:04:21.520 that moment we didn't really know what to say except wow, 0:04:21.560 --> 0:04:24.320 that was in a in a weird way, it seemed 0:04:24.400 --> 0:04:27.279 very honest. It seemed like he was being extremely candid 0:04:27.640 --> 0:04:30.159 about what he thought cynical. But it you know, it 0:04:30.200 --> 0:04:32.599 almost came off as like, well, yeah, here's a crypto 0:04:32.640 --> 0:04:35.520 person saying what many people outside of crypto believed to 0:04:35.520 --> 0:04:39.480 be the case about the industry. You, like many other people, 0:04:39.560 --> 0:04:43.520 have read the Vox story in which which was essentially 0:04:43.520 --> 0:04:47.360 like he was texting with a Fox Reports, and there 0:04:47.400 --> 0:04:50.720 was so much in there in which he indicated just 0:04:50.920 --> 0:04:55.440 how savvy he was about his public persona and the 0:04:55.520 --> 0:04:57.640 kinds of things that he had to say in order 0:04:57.680 --> 0:05:00.960 to seem credible. But you also got the impression that 0:05:01.000 --> 0:05:03.520 this is a person who, while he was doing that, 0:05:03.600 --> 0:05:07.120 while he was playing this part to some extent, believed 0:05:07.160 --> 0:05:10.080 that he was above the free right that he was 0:05:10.160 --> 0:05:13.000 to use a very old phrase and finance actually still 0:05:13.040 --> 0:05:15.360 the smartest guy in the room. Well, you know, one 0:05:15.400 --> 0:05:19.840 thing that I long thought about Sam and being separate, 0:05:19.960 --> 0:05:21.800 and so I don't know if above is right, but 0:05:22.040 --> 0:05:24.440 you know, maybe he did think of himself but definitely separate, 0:05:24.760 --> 0:05:27.600 which is that you know, in his public persona leg 0:05:27.680 --> 0:05:32.039 on Twitter, etcetera. He never really made the case that 0:05:32.160 --> 0:05:37.360 crypto is good. Most people in the space argue that, oh, yeah, 0:05:37.400 --> 0:05:39.240 of course, you know, they don't really talk about all 0:05:39.240 --> 0:05:42.080 the money they're making or they were making anyway. They 0:05:42.080 --> 0:05:44.520 talked about, Oh, we're changing the world, and we're gonna 0:05:44.560 --> 0:05:48.000 bring transparency and trustlessness and you're not gonna have your 0:05:48.000 --> 0:05:49.760 money do valued by the FED, and you're not gonna 0:05:49.800 --> 0:05:53.080 have to trust JP Morgan, etcetera, or the sort of 0:05:53.520 --> 0:05:56.320 other version that it's like, oh, well, people in emerging 0:05:56.360 --> 0:06:00.640 markets without access to reliable payments, there stable, whatever it is. 0:06:00.720 --> 0:06:04.400 They're all these stories that crypto people tell the public, 0:06:04.640 --> 0:06:07.240 and I think, to a large extent, tell themselves to 0:06:07.320 --> 0:06:10.320 put this gloss on making a lot of money so 0:06:10.400 --> 0:06:13.240 that sounds like important in world changing. And he never 0:06:13.600 --> 0:06:15.360 did that, as far as I could tell. It was 0:06:15.440 --> 0:06:20.240 always about the money, not just in that conversation but elsewhere, 0:06:20.279 --> 0:06:21.880 and so I always thought, you know, I remember, like 0:06:21.920 --> 0:06:24.120 even a friend of mine several months ago asked me 0:06:24.200 --> 0:06:28.159 what I thought of um SPF. I thought it was 0:06:28.160 --> 0:06:31.599 sort of refreshing that he didn't sort of like position 0:06:31.880 --> 0:06:33.640 making a lot of money and crypto is sort of 0:06:33.640 --> 0:06:36.640 this noble thing. And basically he was like he and 0:06:37.160 --> 0:06:39.320 the various Lamenta people who are on Twitter or like, 0:06:39.480 --> 0:06:42.360 they really just talked about the money. And they talked 0:06:42.400 --> 0:06:46.600 about the money. Obviously there was this backdrop, whether you 0:06:46.640 --> 0:06:49.000 believe that it was sincere or not of you know, 0:06:49.040 --> 0:06:51.919 what's called effective altruism. But the idea is like you 0:06:51.960 --> 0:06:53.880 make a bunch of money and eventually maybe you change 0:06:53.880 --> 0:06:57.640 the world. But it was also the way that they 0:06:57.640 --> 0:07:00.160 talked about the money was very matter of facts, and 0:07:00.360 --> 0:07:03.960 I think in addition to what you're identifying about the 0:07:03.960 --> 0:07:09.160 the self righteousness that can infuse crypto Twitter, sometimes there's 0:07:09.160 --> 0:07:11.880 also a lot of mud slinging. Right there's as is 0:07:11.920 --> 0:07:17.000 happening right now, various similarly disgraced crypto founders of spending 0:07:17.120 --> 0:07:21.360 quite a lot of time on Twitter redirecting attention towards 0:07:21.400 --> 0:07:23.360 you know, Sam Bankman, Freed and ft X right now. 0:07:23.720 --> 0:07:26.280 There were a couple of times I remember, you know 0:07:26.320 --> 0:07:29.400 when bank when Freed talked about like coin based earnings 0:07:29.400 --> 0:07:32.360 and various other things, but for the majority of his 0:07:32.440 --> 0:07:35.800 presence he was talking up or talking about like his 0:07:35.880 --> 0:07:40.120 own entities. And there were many when you were interviewing 0:07:40.200 --> 0:07:42.400 other folks in the crypto space, and you've talked to 0:07:42.440 --> 0:07:44.960 a lot of them, what was their perception of what 0:07:45.000 --> 0:07:48.880 was happening at Alameda, ft X, Bankman Freed himself. That's 0:07:48.880 --> 0:07:51.280 a good question. So I don't think in any of 0:07:51.280 --> 0:07:54.400 our interviews that we've actually done on the podcast that 0:07:54.480 --> 0:07:58.080 we actually like talked about f t X and later 0:07:58.160 --> 0:08:01.480 or SBF. What I do know is that, you know, 0:08:01.520 --> 0:08:05.320 when I spoke to traders just sort of independently or 0:08:05.320 --> 0:08:08.600 my curiosity about the industry, they really like trading on 0:08:08.720 --> 0:08:10.360 f t X, and I think this is like it 0:08:10.480 --> 0:08:13.160 from my perspective again, you know, sort of going back 0:08:13.200 --> 0:08:17.520 and like rethinking things. Like one of the through lines 0:08:17.640 --> 0:08:21.680 was that professional like crypto hedge fund traders, etcetera, thought 0:08:21.720 --> 0:08:24.200 it was a really high quality product for a number 0:08:24.200 --> 0:08:27.480 of reasons, that there was a high level of customer support, 0:08:27.800 --> 0:08:29.640 that there was a high level of up time. If 0:08:29.720 --> 0:08:32.240 you recall, sites like coin base have had some pretty 0:08:32.240 --> 0:08:34.480 big down times from time to time, it didn't seem 0:08:34.520 --> 0:08:37.000 like f t X had any I remember talking to 0:08:37.040 --> 0:08:40.200 a trader who once told me that, like, basically you 0:08:40.240 --> 0:08:43.120 can buy with a tremendous amount of leverage, so it's 0:08:43.160 --> 0:08:46.319 like ft X and binance, etcetera. And then if the 0:08:46.320 --> 0:08:49.000 position moves against you get the position liquid and your 0:08:49.000 --> 0:08:52.400 collateral gets taken away from you. But of course, any 0:08:52.440 --> 0:08:55.240 algorithm that determines with when your collateral is gonna get 0:08:55.240 --> 0:08:57.440 taken away from you, you know, it's gotta it's based 0:08:57.480 --> 0:09:00.439 on some sort of like you know, probabilistic measure. I 0:09:00.440 --> 0:09:03.000 don't really know the math, but some sort of probabilistic 0:09:03.000 --> 0:09:05.960 measure of your in risk of losing the exchange money. 0:09:06.000 --> 0:09:07.840 And what I was told by one trader is like 0:09:07.920 --> 0:09:10.520 that f t x is liquidation engine works so well, 0:09:10.520 --> 0:09:12.280 and they're like, oh, ft X is going to take 0:09:12.280 --> 0:09:15.079 over the world because their liquidation engine is so much 0:09:15.120 --> 0:09:17.559 better than everyone else's that they've trade with. There was 0:09:17.600 --> 0:09:20.400 also cross margining abilities, so you could post one type 0:09:20.440 --> 0:09:22.480 of token is a collateral and get leverage against the 0:09:22.480 --> 0:09:25.760 different asset you apparently could not get on binance. So 0:09:26.000 --> 0:09:28.280 I think there was another aspect in which, you know, 0:09:29.120 --> 0:09:30.880 you sort of like if you were to think about 0:09:30.960 --> 0:09:34.120 from an investor perspective, like doing due diligence on a company. 0:09:34.400 --> 0:09:36.640 We want to talk to to the customers like the product, 0:09:37.120 --> 0:09:40.520 and my impression always was that customers really like trading 0:09:40.520 --> 0:09:44.440 on ft X. You have this combination of software that 0:09:44.520 --> 0:09:47.560 seemed to be pretty decent, right and insofar as the 0:09:47.640 --> 0:09:50.400 value that the ft X trading platform is providing to 0:09:50.480 --> 0:09:54.680 institutional investors, a lot of intelligence, a lot of people 0:09:54.720 --> 0:09:58.160 who were all about the money, and yet the size 0:09:58.240 --> 0:10:00.480 of the losses that whether it's between eight or ten 0:10:00.520 --> 0:10:03.880 billion dollars, seems to have stunned a lot of people 0:10:03.960 --> 0:10:06.880 just in terms of the share scoope of it. Yeah, 0:10:06.960 --> 0:10:09.600 and I do believe that, like where the money went 0:10:09.920 --> 0:10:13.480 is still a mystery, but what seems like very plausible 0:10:13.600 --> 0:10:18.240 is that Alameda was lost a lot of money trading. 0:10:18.320 --> 0:10:21.200 I mean, on some level or another, that seems to 0:10:21.240 --> 0:10:23.680 be the case. And you know, this is something that, 0:10:24.120 --> 0:10:27.559 like I said, I never really heard people talk that 0:10:27.640 --> 0:10:30.880 much about Alameda. But you know, of course um Sam 0:10:30.960 --> 0:10:34.840 had a background at the famous quant trading shop Jane Street, 0:10:34.960 --> 0:10:38.800 as did some of his colleagues, and so the presentation 0:10:39.000 --> 0:10:41.640 of Alameda was that it was sort of like this 0:10:42.000 --> 0:10:46.600 market neutral quantitative trading shop. And I'm pretty sure on 0:10:46.760 --> 0:10:50.439 the Alameda website they also talked about that they were 0:10:50.440 --> 0:10:53.280 a market neutral firm. So not taking big directional that 0:10:53.800 --> 0:10:56.720 one way or another. But that being said, and you know, 0:10:56.760 --> 0:10:59.000 if you're like thinking, okay, like let's go back and 0:10:59.000 --> 0:11:02.920 think more about and flags, I do recall, you know, 0:11:03.120 --> 0:11:05.080 and people have since pointed these out, but I do 0:11:05.160 --> 0:11:08.840 remember thinking at the time that the former CEO of Alameda, 0:11:09.360 --> 0:11:12.520 San Trabuco, who left the company earlier in the year. 0:11:12.520 --> 0:11:15.360 At some point this summer he did hit these threads 0:11:15.440 --> 0:11:19.000 that did not seem like very quanty, did not seem 0:11:19.000 --> 0:11:21.839 like market neutral. And one of the threads that people 0:11:21.920 --> 0:11:25.079 point to, if I recall it like basically like, oh, 0:11:25.120 --> 0:11:29.200 we went long doorge coin ahead of elon Esnel, which maybe, 0:11:29.320 --> 0:11:31.440 you know, maybe a fine trade, although I think that 0:11:31.520 --> 0:11:33.600 was the peak. But it's like, oh man, this is 0:11:33.640 --> 0:11:36.160 not exactly what I thought. What my impression of what 0:11:36.200 --> 0:11:38.920 Alameda was doing, And I thought what he was doing was, 0:11:39.080 --> 0:11:42.120 you know, making markets and collecting spreads between the price 0:11:42.200 --> 0:11:44.280 of a coin on one side and the price of 0:11:44.320 --> 0:11:45.920 a coin on another side, or the price of a 0:11:45.920 --> 0:11:49.000 coin on a centralized exchange versus the price on the 0:11:49.080 --> 0:11:52.559 DeFi exchange. So I did, you know, I didn't think 0:11:52.559 --> 0:11:54.439 too much about it, but I did think, I guess 0:11:54.440 --> 0:11:57.000 I that it did seem different what I than what 0:11:57.160 --> 0:12:01.439 I thought Alameda was doing. We'll be right back with 0:12:01.480 --> 0:12:16.360 more from Bloomberg's Joe, wisn't all you said? The friends 0:12:16.400 --> 0:12:18.880 of the show, Katie and Tim that one of the 0:12:18.920 --> 0:12:21.120 signs that crypto is immature is that it's too hard 0:12:21.160 --> 0:12:25.319 to launder money. Yeah, well, without getting caught. Well, this 0:12:25.480 --> 0:12:27.200 is like so something I mean, I've been you know, 0:12:27.280 --> 0:12:30.120 from day one. It's like, this is the question. It's like, well, 0:12:30.120 --> 0:12:33.440 what is crypto good for? Right? We've probably both of 0:12:33.520 --> 0:12:36.280 us have asked this question a million guess like, Okay, 0:12:36.679 --> 0:12:39.800 it's fun as journalists we like looking at the lines 0:12:39.840 --> 0:12:42.199 going up and down, and it's probably fun is traders look, 0:12:42.360 --> 0:12:44.800 you know, big big swink, But like, what is it 0:12:44.880 --> 0:12:47.000 good for? Right? What is the point of any of this? 0:12:47.320 --> 0:12:49.280 And you know, one of the things you hear, particularly 0:12:49.280 --> 0:12:51.040 from the bitcoins side of the world, just like, well, 0:12:51.040 --> 0:12:54.640 it's good for censorship resistant payments, doing the payments that 0:12:54.679 --> 0:12:56.720 the state doesn't want you to do, doing the payments 0:12:56.800 --> 0:13:00.200 that would Venmo or PayPal or zel or your bank 0:13:00.200 --> 0:13:03.320 would kick you off for right, trustless money. And yet 0:13:03.920 --> 0:13:05.920 it doesn't seem to be that good for that either 0:13:06.040 --> 0:13:08.200 as far as I can tell. And so, like, you know, 0:13:08.320 --> 0:13:11.280 even the sort of like bare minimum things that like 0:13:11.320 --> 0:13:14.679 crypto proponents often say, which is like, well, person a 0:13:14.840 --> 0:13:17.400 can a person be money and persons? He can't say no, 0:13:18.120 --> 0:13:20.640 I'm not even convinced that it's true, because again, I 0:13:20.679 --> 0:13:22.760 think in the you know, the context we were discussing 0:13:22.920 --> 0:13:24.960 was like there was a big test of this with 0:13:25.000 --> 0:13:28.600 the Canadian trucker protests earlier this year, and a lot 0:13:28.640 --> 0:13:30.880 of that money got seized or blocked, and that was 0:13:30.920 --> 0:13:33.600 people trying to donate to the protesters. And so, regardless 0:13:33.640 --> 0:13:36.520 of what you think about the protesters mission or cause, 0:13:36.920 --> 0:13:38.800 it struck me as kind of a test of like 0:13:38.920 --> 0:13:42.560 cryptos as particularly bitcoins main claims. And I don't think 0:13:42.600 --> 0:13:44.240 I really lived up. They didn't really have a way 0:13:44.240 --> 0:13:47.240 of getting bitcoin to the protesters in a way that 0:13:47.840 --> 0:13:50.960 was trust list and could avoid blockage. Well, one of 0:13:51.000 --> 0:13:53.520 the things that the truckers did is they like put 0:13:53.559 --> 0:13:56.120 a bunch of wallet addresses on their signs and the 0:13:56.160 --> 0:13:58.520 size of the trucks, and they're like, send us money here, 0:13:58.559 --> 0:14:01.040 and then various regularly says well, like we're just gonna 0:14:02.440 --> 0:14:04.280 but you know, on the other hand, like there's no 0:14:04.679 --> 0:14:07.400 like I think, you know, I remember so after that happened, 0:14:07.720 --> 0:14:11.000 I remember seeing these discussions even among many like sort 0:14:11.040 --> 0:14:14.000 of bitcoin proromis like oh, they shouldn't have like, uh, 0:14:14.120 --> 0:14:17.720 you know, made the wallets address is so public, which fine, maybe, 0:14:18.000 --> 0:14:20.400 but I don't think I ever saw like a great 0:14:20.440 --> 0:14:24.920 alternative solution, and you know, it's like, Okay, let's say 0:14:24.960 --> 0:14:28.840 you are going to be the focal point for disbursing 0:14:28.920 --> 0:14:30.840 the money. I'm going to send it to you, and 0:14:30.840 --> 0:14:32.840 you know who the truckers are privately, and you're gonna 0:14:32.880 --> 0:14:34.640 dispurse it. How do I trust you? How do I 0:14:34.640 --> 0:14:37.160 know you're not gonna pocket it? Etcetera. And so even 0:14:37.200 --> 0:14:38.880 like if you could find a way like around the 0:14:38.920 --> 0:14:41.760 public wallet episodes, like, you still have the problem of 0:14:41.760 --> 0:14:45.840 trusting the intermediaries. So it's very tricky. And so I 0:14:45.880 --> 0:14:47.680 thought that that was like a pretty good test of 0:14:47.720 --> 0:14:51.080 whether you know, like bitcoins core claims and censorship resistance 0:14:51.520 --> 0:14:55.480 could be defended, and I thought it was lacking. Is 0:14:55.520 --> 0:14:58.000 there anything that you're seeing in the response to the 0:14:58.040 --> 0:15:01.960 fallout from algorithmic stable call Three Arrows, Capital Celsius Voyager 0:15:02.280 --> 0:15:05.200 SPF f t X that is suggesting what the next 0:15:05.240 --> 0:15:07.800 crisis could look like? So I did actually have one 0:15:08.120 --> 0:15:11.120 thought on this specific question, which is that one of 0:15:11.160 --> 0:15:13.680 the things you're hearing about now in the wake of 0:15:14.120 --> 0:15:16.720 f t X is this concept where they say, okay, 0:15:16.760 --> 0:15:21.280 crypto entities, particularly centralized ones, if they're going to be centralized, 0:15:21.280 --> 0:15:24.160 should produce some sort of proof of reserves. And this 0:15:24.240 --> 0:15:27.840 idea that with cryptographic technology you don't necessarily have to 0:15:27.880 --> 0:15:31.360 reveal your entire balance sheet or all the items on it, 0:15:31.400 --> 0:15:33.920 but you can prove your solvency in some way. And 0:15:34.000 --> 0:15:36.560 so you have some snapshot of coins that are yours 0:15:36.720 --> 0:15:39.760 and you could prove your solvency. And the first thought 0:15:39.800 --> 0:15:42.760 that went to my mind was sure, you might be 0:15:42.800 --> 0:15:45.000 able to do that, but how do you know that 0:15:45.040 --> 0:15:47.960 the marks are true? And of course in trand FI, 0:15:48.280 --> 0:15:50.920 you know, two thousand, two thousand nine, it was always 0:15:50.960 --> 0:15:55.520 like level on, level two, level three, Mark Smith, That's right, 0:15:55.560 --> 0:15:57.360 And we saw that a bit with f t X 0:15:57.440 --> 0:15:59.400 because part of the story is how much of the 0:15:59.520 --> 0:16:02.560 ft in seram tokens they had, and I think many 0:16:02.600 --> 0:16:05.600 people would say that those coins were marked Smith. You know, 0:16:05.680 --> 0:16:09.320 if the next stage of okay, what lessons learned from 0:16:09.360 --> 0:16:11.840 f t X, every exchange has to sort of like 0:16:12.080 --> 0:16:15.080 have some sort of cryptographic proof of solvency, then I 0:16:15.120 --> 0:16:17.800 think the next crisis after that could have something that's like, yeah, 0:16:17.840 --> 0:16:20.840 but where did these prices come from and how reliable 0:16:20.920 --> 0:16:22.800 are they? Because we do see that of course with 0:16:22.840 --> 0:16:25.800 the f t T and serum question with f t X, 0:16:25.960 --> 0:16:28.000 and I'm not sure that like a proof of reserves, 0:16:28.040 --> 0:16:30.000 had it been in place for f t X, would 0:16:30.040 --> 0:16:34.400 have necessarily been robust against that failure. Thank you so 0:16:34.480 --> 0:16:36.080 much for coming on the show. Thanks for having me. 0:16:37.120 --> 0:16:39.000 You can find more of Joe's work on the Bloomberg 0:16:39.000 --> 0:16:41.560 Ceminal and on Bloomberg dot com, and of course on 0:16:41.600 --> 0:16:43.920 the Odd Lots podcast, as well as the Odd Lots 0:16:43.960 --> 0:16:46.040 News less Of, and be sure to check out our 0:16:46.160 --> 0:16:55.160 twice weekly news less of Bloomberg Crypto. This is Bloomberg Crypto, 0:16:55.360 --> 0:16:58.680 a daily podcast from Bloomberg and I Heart Radio. For 0:16:58.720 --> 0:17:00.960 more shows from I Heart Radio, visit the I Heart 0:17:01.040 --> 0:17:04.760 Radio app, Apple Podcasts, or wherever you get your podcasts. 0:17:05.560 --> 0:17:08.120 Send us your comments, questions, or suggestions for the show 0:17:08.280 --> 0:17:14.480 to Crypto at Bloomberg dot net. The supervising producer of 0:17:14.480 --> 0:17:18.639 Bloomberg Crypto is Vicky Verglina. Our senior producer is Janet Babin. 0:17:19.280 --> 0:17:22.880 Our producers are Mohammed Faruk and Sharon Barriro. Our associate 0:17:22.920 --> 0:17:26.680 producers are Ty Butler and Moses on Them. Desta wonder 0:17:26.760 --> 0:17:31.840 At is our engineer. Original music by Leo Sidrin. I'm 0:17:31.840 --> 0:17:34.040 Stacy Marie schmal, We'll be back tomorrow.