WEBVTT - Douglas Borthwick on Crypto (Audio)

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<v Speaker 1>All right, let's get back to the cryptocurrency story really

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<v Speaker 1>grabbing global headlines. It's Binances. It backed out of its

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<v Speaker 1>takeover of FTX dot com Big Big Blue. For investors

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<v Speaker 1>that were hoping that Binance would support ft x's customers

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<v Speaker 1>to give them liquidity. Let's get over to Douglas both Week,

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<v Speaker 1>chief business office at I n X Limited. Douglas so

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<v Speaker 1>give us a sense of what happened here and whether

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<v Speaker 1>we should be concerned about this being the canary in

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<v Speaker 1>the coal mine. Well, I think that we all knew

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<v Speaker 1>this was can happen um a couple of days ago

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<v Speaker 1>when cz over A Binance tweeted that he was looking

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<v Speaker 1>into f t X, didn't like what he saw and

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<v Speaker 1>he was going to start selling aggressively their token. I

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<v Speaker 1>think it was five million dollars of it, so it

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<v Speaker 1>certainly telegraphed as he did that. Obviously there was a run.

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<v Speaker 1>That run on the bank essentially meant that f t

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<v Speaker 1>X I think it was six billion dollars of outflows

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<v Speaker 1>and it seems that they couldn't cover it. Um. Then

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<v Speaker 1>they signed a non binding l o I, and I

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<v Speaker 1>think we all agree that a non by lloy means

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<v Speaker 1>very very little today cz command said, you know what,

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<v Speaker 1>we're not going to buy it after all, and you

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<v Speaker 1>saw continued contagion in the market. So obviously bitcoins taking

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<v Speaker 1>a bit of a hit, a lot of all coins

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<v Speaker 1>are taking a hit. It's it's a bit of a mess.

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<v Speaker 1>I think the media right now is concentrating on the

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<v Speaker 1>people that invested in the equity rounds at f t

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<v Speaker 1>X and how much they're going to get hurt. But

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<v Speaker 1>you have to remember there's a lot of investors that

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<v Speaker 1>have their money now locked in at f t X,

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<v Speaker 1>and who knows when that money is gonna be allowed

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<v Speaker 1>to come out again. I mean, there's a bit of

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<v Speaker 1>stink on this isn't there from the way that c

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<v Speaker 1>z JAW handled this and the way that it unveiled

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<v Speaker 1>or rolled out. From a regulations standpoint, well, I think, well,

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<v Speaker 1>on a regulatory stand standpoint, neither of these companies seemed

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<v Speaker 1>regulated inside the United States. None of them are public companies,

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<v Speaker 1>neither of them are audited in the United States and

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<v Speaker 1>so and neither of them way I believe can have

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<v Speaker 1>US investors invest in them, um and so that that's

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<v Speaker 1>one point. But you know, I think that one of

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<v Speaker 1>the big stinks that's coming out is that it seems

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<v Speaker 1>that f t X was using their own token and

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<v Speaker 1>perhaps buying that with customer funds that were deposited on

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<v Speaker 1>the exchange, pumping up the price of it, and then

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<v Speaker 1>using that pumped up price to then go out there

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<v Speaker 1>and purchase other companies. UM. And that sort of thing

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<v Speaker 1>I think people look at and think that's that doesn't work.

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<v Speaker 1>That's very off, very odd. But do you know, asking

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<v Speaker 1>you whether this was the current canary in the comn

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<v Speaker 1>I was referring to f t X, do you think

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<v Speaker 1>the many others like this out there and what does

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<v Speaker 1>it tell you about the crypto space? But I certainly

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<v Speaker 1>think that there's a lot of palaces that are built

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<v Speaker 1>on sand, and I think that we need to remember

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<v Speaker 1>that and a lot of guys that kind of rushed

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<v Speaker 1>out to the Facebook model and break it then fix it. Um.

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<v Speaker 1>They did that with a m l K y C.

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<v Speaker 1>They've done it obviously with the way that they've not

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<v Speaker 1>really had auditors in making sure that they do things

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<v Speaker 1>that they say they're doing. UM. I think that a

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<v Speaker 1>lot of folks are now looking at other these exchange

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<v Speaker 1>tokens and how are they you Easton. How are they

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<v Speaker 1>manipulated by other companies that have exchanged tokens. My company

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<v Speaker 1>has an exchange token, but it's a registered security. It's

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<v Speaker 1>the only fully registered security public security that exists for

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<v Speaker 1>an exchange, and so we're audited. Um, We've got rules

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<v Speaker 1>that we have to follow as a company, and none

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<v Speaker 1>of these other companies seem to have these rules. It's

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<v Speaker 1>very hard to know, you know, the the finances. Uh

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<v Speaker 1>and um, you know, we don't know obviously, you know,

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<v Speaker 1>you don't know when someone's cheating. But it's very worse.

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<v Speaker 1>And because sam Banquan Freed and FTX had been almost

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<v Speaker 1>a savior of sorts for a number of other exchanges

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<v Speaker 1>and another other a number of other companies, you know,

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<v Speaker 1>sort of backstopping them. If you'd asked me a week ago,

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<v Speaker 1>you know whether or not this company was very likely

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<v Speaker 1>to to fall into this kind of trap, I just said, oh,

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<v Speaker 1>it's probably one of the least likely. Well. I think

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<v Speaker 1>that this is an interesting thing here, and that there's

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<v Speaker 1>been a lot of distressed assets, both on the minor

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<v Speaker 1>site and exchanges in the market, and I think that

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<v Speaker 1>Binance and f t X have both been bidding for

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<v Speaker 1>them and there's been a bit of a back and

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<v Speaker 1>forth between the two and CZ certainly that's the head

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<v Speaker 1>of Binance certainly went out there and said, look, I

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<v Speaker 1>don't like how we're being dragged through the mud in

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<v Speaker 1>terms of the regulators, and I think that that sort

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<v Speaker 1>of personal TIFFs sort of set off everything else, and

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<v Speaker 1>that he decided he was going to kind of pull

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<v Speaker 1>up the curtain on on what was going on at

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<v Speaker 1>f t X and obviously has created this. But you know,

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<v Speaker 1>it's an absolute mess. Canarian the coal mine is correct.

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<v Speaker 1>But you know, this is the third time we've seen this.

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<v Speaker 1>We saw Celsius go down doing similar type things, we

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<v Speaker 1>saw Voyager go down similar type things, and now we

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<v Speaker 1>see f t X going down, and you know, I

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<v Speaker 1>think people are wondering who's going to be next. Well,

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<v Speaker 1>this is it, isn't it. I Mean the thing is

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<v Speaker 1>crypto clients who have kind of shunned the industry from

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<v Speaker 1>being regulated may well start demanding, as you put it

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<v Speaker 1>in your notes, regulation with regards certain where does that

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<v Speaker 1>leave things? You know, Mike Mike Tyson always said that

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<v Speaker 1>everyone's a champion until they get punched in the face.

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<v Speaker 1>And I think that everyone wants to be bankless until

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<v Speaker 1>the company they're dealing with goes bankrupt, and then they're

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<v Speaker 1>wondering why the regulators aren't stepping in, where's my f

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<v Speaker 1>D I C insurance, where's the regulators, where's the backstop

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<v Speaker 1>from the Fed? And then the reality is I think

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<v Speaker 1>that we're going to see more regulation and more safeties,

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<v Speaker 1>certainly for US investors. It's been tough for for coin

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<v Speaker 1>Base and and robin Hood. Uh, you know, slightly different

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<v Speaker 1>businesses obviously, but those stocks are down in just two

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<v Speaker 1>days of trading. Um, we'll have to leave it there, Douglas,

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<v Speaker 1>Thank you. Douglas Boorthwick, Chief business Officer at I n

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<v Speaker 1>X Limited,