Binance Backs Out of FTX Acquisition — Transcript

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1. 0:00Jesse, what just happened? It was happening and suddenly now it's
2. 0:05not. Yeah, so it seems like there was a deal
3. 0:10between two of the largest exchanges of finance to acquire what might remain of
4. 0:15FTSE X, which from the outside looks like mostly a pretty big crater.
5. 0:21And I think they took a look at it and just decided this was a hole too big to
6. 0:24fill, you know, with too much kind of radioactive regulatory scrutiny around
7. 0:30it, which looks like it might have been a pretty big headache to deal with.
8. 0:34So unfortunately, right now it looks like FTSE might be heading into a
9. 0:40bankruptcy process, the likes of which, you know, we've seen frequently
10. 0:43recently, unfortunately. And, you know, for some, like the
11. 0:47clients of Voyager, you know, you might be aware that FTSE was just appointed
12. 0:52the sort of trustee to manage the or pay out process who acquired those accounts.
13. 0:59So it's history repeating itself here with crypto.
14. 1:01I mean, we saw a similar situation with Mt.
15. 1:03Gox back in 2014 when another trustee had deposited funds from Bitcoin Akka
16. 1:08into Mt. Gox, which subsequently got hacked and
17. 1:11clients got a double penalty. They're still waiting 10 years later to
18. 1:16be paid out. So hopefully it doesn't take that long
19. 1:18here. But yet, unfortunately, another black
20. 1:21eye on the industry. And it's going to be really tough times
21. 1:26for for the consumers and the clients of that exchange.
22. 1:29I asked Coinbase CEO Brian Armstrong the same thing I'm going to ask you would
23. 1:33crack and be interested in buying RTX. Yeah, I'm sure they have some assets
24. 1:39that that are interesting, that have some value.
25. 1:43You know, we've already got quite a bit of the same infrastructure.
26. 1:45You know, there's a lot of redundancy between exchanges.
27. 1:47So, you know, maybe we're talking about user accounts.
28. 1:50Maybe they have some subsidiaries that do specific things we'd be interested in
29. 1:54or possibly some licenses. But, you know, I don't think there's
30. 1:57gonna be value there, anything close to what the hole seems to be.
31. 2:02So, you know, I think the process is likely going to go into bankruptcy.
32. 2:07You know, there's gonna be an organized maybe auction for these assets at this
33. 2:11point. I'm not sure whether they even would be
34. 2:13allowed to sell these assets, you know, which which might belong to the
35. 2:16creditors at this point. Has RTX approached cracking at all?
36. 2:23We yes, sir, we have. We have spoken to them about this.
37. 2:27And, you know, we're in the loop and, you know, we're looking to get more
38. 2:30information at this point. Does crack and do you have any exposure
39. 2:36to RTX or Alameda? And if so, how much?
40. 2:41No, we don't. You know, we steered clear of the FTSE
41. 2:44token. We haven't lent them any money.
42. 2:46We don't trade FTSE on on the spot exchange or the futures exchange.
43. 2:51So we're we're in the clear on this one, fortunately.
44. 2:54We're very conservative business in terms of our operations.
45. 2:57You know, we don't operate a hedge fund on the side.
46. 2:59There are no strange relationships like that.
47. 3:03We're not trading with clients funds. We're not lending out clients funds, and
48. 3:07they don't know about it. So we're relatively conservative
49. 3:11business. You know, we've been around for eleven
50. 3:12plus years. So, you know, I think people should
51. 3:16really look at this space. You know, when they're looking at a new
52. 3:18venue to trade at, you know, look at that history.
53. 3:21Look at whether they've done something like proof of reserves, you know, which
54. 3:24crack and has done twice in the last year.
55. 3:26Look at their longevity in the space. I think the bear market is really the
56. 3:31tide going out. And you see who's swimming naked when
57. 3:35that happens in some of these newer venues, they're seeing their first bear
58. 3:39market for the first time and they're getting called out.
59. 3:42And it's become very apparent, you know, who is swimming naked.
60. 3:46So who is swimming naked? Our crypto funds next.
61. 3:50Hedge funds, for example. You know, there's a lot of leverage out
62. 3:56there. I don't think we've seen the end of it.
63. 3:59I think there could still be some some other quote unquote liquidity crises to
64. 4:03come. You know, I think there's are I think
65. 4:07that's a euphemism for, you know, it's sort of an insolvency.
66. 4:10I think that, you know, people are marking some of these really illiquid
67. 4:13assets, like FTSE, for example, which are are highly central, centrally owned
68. 4:18and controlled. They're marking at them 100 percent
69. 4:21value. You know, when when the reality is maybe
70. 4:23they should be marked at, know, 10, 20 percent of the value because the market
71. 4:27is so thin. You couldn't sell all that if you had
72. 4:30to. You know, it's heavily centralized in
73. 4:32the control. So there's an extreme risk here.
74. 4:34And what we saw in this case with finance and RTX was that finance, a
75. 4:38competitor of FTSE, owned a huge supply of this token that FTSE X was using as
76. 4:44collateral to borrow against. And when that when that asset started
77. 4:49declining in value, you know, I'm sure they started getting margin calls.
78. 4:53And, you know, it turns out that they just didn't have the money.
79. 4:57You know, I think to make good on those loans.