#1574 Evgeny Gaevoy | Who’s Really Buying Bitcoin Right Now

Evgeny Gaevoy is the Founder and CEO at Wintermute, and he is on the quest to be become the richest man in the world. In this conversation we discuss who is buying bitcoin right now, data behind retail and institutions, why ethereum is so popular right now, derivative products, regulation, stablecoins, how Wintermute was started, and future plans for Evgeny. ========================This episode is brought to you by Figure, the platform to Earn and Borrow. Need liquidity without selling your crypto? Figure offers Crypto-Backed Loans, allowing you to borrow against your Bitcoin or Ethereum with 3-month terms and no prepayment penalties. They have the lowest interest rates in the industry at 9.9%, allowing you to access instant cash or buy more Bitcoin without triggering a tax event. Unlock your crypto’s potential today. Visit https://www.figure.com/pomp to apply for a Crypto Backed Loan today! Figure Lending LLC dba Figure. Equal Opportunity Lender. NMLS 1717824. Terms and conditions apply. Visit figure.com for more information.========================Bitwise is one of the largest and fastest-growing crypto asset managers. As of December 31, 2021, the company managed over $1.3 billion across an expanding suite of investment solutions, which include the world's largest crypto index fund and other innovative products spanning Bitcoin, Ethereum, DeFi, and crypto equities. Whether you’re an individual, advisor, or institution, Bitwise provides intelligent access to crypto with your unique circumstances in mind. Visit www.bitwiseinvestments.com to learn more. Certain of the Bitwise investment products may be subject to the extreme risks associated with investing in crypto assets. Visit www.bitwiseinvestments.com/disclosures/ to learn more.========================Xapo Bank, the world’s first fully licensed Bitcoin-enabled bank, offers military-grade security with an unmatched blend of physical and digital security, as well as pioneering regulatory oversight, so your funds are always protected. Beyond secure storage, they enable you to grow and use your Bitcoin. Earn daily interest in Bitcoin, spend with zero FX fees using a global card, and make instant payments via the Lightning Network for unrivalled access and convenience. Visit https://www.xapobank.com/pomp to join.=======================Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Speaker 00

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• 0:30Speaker 01

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• 0:58Anthony Pompliano?

  What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode.

• 1:26Speaker 03

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 1:50Anthony Pompliano?

  What's going on guys? Today's episode is with Yevgeny Galyavoy. In this conversation, he's the founder and CEO of Wintermute. They're massive. Most of you probably never heard of them before, but they dominate crypto markets and he's on a quest to become the richest man in the world. I'm serious. When you hear exactly what goes on in this conversation, you're going to better understand Wintermute, but also all of the things that feed into why Bitcoin. Bitcoin, Ethereum, and all these other coins, they go up and they go down. This is who you are competing against in terms of exchanges, OTC desks, and building companies in this industry. And maybe my favorite part of the conversation is we talk about how crypto companies like Wintermute are turning their attention and potentially going after traditional market players as well. This is the future of finance and Wintermute is sitting at the tip of innovation and trying to push forward for the entire industry. Here is my conversation. I hope you guys enjoy it.

• 2:36Anthony Pompliano?

  All right. I thought a great place to start this conversation is Bitcoin, obviously just hit a brand new all time high. Everyone knows that there's more buyers than sellers is why the price is going up. But Wintermute has this new report that just came out that says that actually a lot of the Bitcoin movement is being driven by traditional firms, not crypto firms and not retail. Can you unpack a little bit as like what you guys are seeing? Give us like the, what is like the data that you guys have access to that maybe the market doesn't really understand who's buying Bitcoin here?

• 3:00Speaker 04

  Right. So pretty, pretty, pretty big change for the last six months has been basically what we see is two main drivers.

• 3:09Speaker 04

  Basically, trend five institutions. So think of it like big banks, BlackRocks, Fidelities of the world on one hand. And basically pretty big retail aggregators, basically Robinhood on the other side. And those two big groups are basically driving a bunch of Bitcoin, but also Ethereum trading in general. It's a lot more than it used to be. And like all other types of OTC counter parties we see is actually reducing the like Bitcoin and Ethereum exposure and well, or interest in general. So yeah.

• 3:39Anthony Pompliano?

  Okay. So put aside kind of everything else. Let's just focus on the Bitcoin thing. So you're saying the BlackRocks, the Fidelities, like the really big financial institutions. And then also Robinhood in terms of a counterparty for you guys or others is really aggregating a bunch of retail flow together. But that's where you're seeing most of the buys come from is these really, really big buyers, not the, you know, thousands of individual kind of retail buyers that maybe people might talk about online. But that's not really who's driving this huge move in Bitcoin.

• 4:09Speaker 04

  Exactly. But also if you unpack it more like who is basically behind, well, BlackRocks especially, like it's still. Well, it is still like high net worth individuals who buy in ETFs, but it's also retail who is buying those into those ETFs on traditional exchanges like NASDAQ, for example.

• 4:24Anthony Pompliano?

  Yeah, it's not principal capital, basically. It's either asset management or like a platform, like a fintech type thing.

• 4:28Speaker 04

  Yeah.

• 4:29Anthony Pompliano?

  Okay, now, one of the things that's interesting in the report is that Bitcoin interest is exploding with the traditional firms. Crypto-related firms, kind of crypto native firms, is down 5%, I think. So what do you kind of attribute that to? That's fascinating, right? Bitcoin's going to all time highs, but the people in the industry, they actually don't have their eyes on Bitcoin, maybe they have their eyes on something else.

• 4:48Speaker 04

  I think it's typical, kind of typical for our industry is people are always looking for Bitcoin better, effectively, like trying to get a better exposure to Bitcoin by, I don't know, going to like Solana or like something else.

• 5:01Anthony Pompliano?

  Try to outperform it.

• 5:02Speaker 04

  Yeah, trying to outperform Bitcoin. So it's kind of typical.

• 5:05Anthony Pompliano?

  So in a weird way, maybe the traditional firms are trying to outperform their benchmarks by using Bitcoin. Bitcoin outperforms, so like that, they're good enough, they don't have to push further on the risk curve, but if you want to outperform Bitcoin, and Bitcoin's the hurdle rate, then you gotta kind of push further out in these people's eyes, they're gonna go try to find something that can outperform Bitcoin. Okay. What are people coming to you guys for? Spots, derivative, like what are the things that you guys actually see the capital flowing to in terms of the like way people are expressing their view in something like Bitcoin?

• 5:33Speaker 04

  Yeah, pretty big change this year.

• 5:37Speaker 04

  Options is, yeah, there's really a lot of interest in that, and part of it is just inherent leverage, and also instruments compared to spot. And part of it is these options, for example, you can get a lot more creative with what kind of setups you can do on the trading side.

• 5:53Anthony Pompliano?

  And do you think that's because you have more sophisticated, kind of larger, traditional players coming into the market now, and so they're used to these types of tools? Or is this like, if you give leverage to retail, they're gonna, you know, just go full degenerate and try to use as much leverage as possible?

• 6:06Speaker 04

  I think it's kind of both. Like on TradFi side, they're both, they're definitely much more accustomed to more complex strategies. But also there is a lot of education going on with crypto native counterparties, basically to teach them, okay, you can actually use more complex tools to achieve what you want.

• 6:22Anthony Pompliano?

  Yeah. And then what, how does like Robinhood or public.com or, you know, the E-Toros of the world, like these fintech platforms that have retail on them, but they're really aggregating flows? How's that changed the market, or do you see anything different there?

• 6:33Speaker 04

  I think what we'll see, well, I mean, Etoro has been offering CFDs for ages, but.

• 6:37Anthony Pompliano?

  That's their secret, right? If you don't know, you see if these are illegal in the US, but in Europe, you can use them, right?

• 6:42Speaker 04

  But if you look at Robinhood, they just announced that they're gonna do perpetuals, for example, for European clients and beyond. Like, I'm pretty sure they are really working with CFTC to get them approved in US as well. But yeah, things leverage, basically offering the customers leverage is gonna be a pretty big thing for them.

• 6:59Anthony Pompliano?

  And that's because you think that the retail investor, they're just max bullish. And so the more leverage you give them, the more they'll use, kind of, you know, give a man a money printer, he'll print money. Give, you know, retail investor leverage, he'll use the leverage.

• 7:12Speaker 04

  Pretty much like, if you have hundred dollars, like you'd rather use, yeah, put them to work on leveraged, like three X, four X, hundred stacks, just like on some platforms instead of just doing spot.

• 7:23Anthony Pompliano?

  And do you guys have data in terms of like win-loss ratios there? Or like, is, I'm assuming that the traditional firms like much more skilled at using these tools than retail, but is that actually true? Like, you know, there's stories all over the place, people on Bitmex or Binance or, you know, nickname a Dara Bit or whatever, where they've used this, these tools and done pretty well for themselves. So like, how do you see those tools in terms of like being used successfully versus just being used?

• 7:50Speaker 04

  Yeah, I think it's a lot of it, for example, if you look at options, a lot of it is basically around extra yield generation, for example, like several selling covered call strategies, which win-loss ratio like might, might not be the right way to look at it, because, yeah, people ultimately looking, okay, I would sell my Bitcoin at whatever, hundred fifty K or whatever. So I can just sell this cow would call it hundred fifty K strike. And if it goes there, sell it. If it doesn't go there, at least I get yield. So win-loss ratio would not necessarily be like the good measure of success for this particular strategy. It's just, it's just a better tool for them to use.

• 8:28Anthony Pompliano?

  Because they're basically taking the yield and then they're just reinvesting in more Bitcoin or more options until they figure out what happens. Okay. Let's talk about the OTC desk. I think there's another component to the market that the average kind of analyst doesn't really pay attention to. They're looking, you know, beauty of Bitcoin or crypto is that you can look on chain. So they see, you know, how much Bitcoin is sitting at the exchanges. They can see how much Bitcoin's moving on chain. You can start to see like how much Bitcoin's sitting at the OTC desk on chain to a degree. But it does feel like OTC desks are becoming much, you know, more important part of the market than say, you know, definitely 10 years ago, maybe even five years ago. So why would somebody be using the OTC desk versus some of these more sophisticated kind of low-cost exchanges?

• 9:09Speaker 04

  Yeah, I think. Part of it is, yeah, Bitcoin Ethereum, like, not so much, but especially if you look at Alts, it's, yeah, it is very visible what you do. Like, if you sit in a big, I don't know, Solana position or HyperLiquid position, yeah, the whole market will see once you start moving your tokens to a centralized exchange. So it's somewhat better to just deal with a single OTC desk and effectively trade with them because they can also delay the market knowing that you actually sold or bought, for example. So it's, you basically get a better execution this way. So I think that's a primary reason.

• 9:43Anthony Pompliano?

  But, so people, if you went ahead and still transacted with the OTC desk, they would know, but the OTC desk has the ability to kind of have time variance involved. And once you introduce the time variance, now it's harder for people to kind of understand what's happening.

• 9:56Speaker 04

  Ultimately, it's just much harder for people to, for lack of a better word, to front run the transaction, yeah.

• 10:02Anthony Pompliano?

  Got it. And then when you think about the most popular assets, Bitcoin, Ethereum, I'm assuming two largest, they've got to be up there. What are some of the other assets that people have been interested in, you know, let's say in the last six months or so?

• 10:13Speaker 04

  Yeah, it really varies. Like, it's, it's very semantic, like, beginning of the year is with a lot of crypto AI stuff, meme coins, always interesting. And then it really depends, I mean, last few months, HyperLiquid has been a lot of, there has been, has been a lot of interest in HyperLiquid. I'm pretty sure, well, recently Ethereum has been very interesting on OTC side, so it's.

• 10:40Anthony Pompliano?

  Ethereum has. Why do you think so many people are interested in Ethereum all of a sudden?

• 10:44Speaker 04

  I think big part of it is just it out, it underperformed Bitcoin for so long and people are just looking, okay, what is going to be the next big thing? And over the last week, for example, you definitely see this reversing quite significantly.

• 10:58Anthony Pompliano?

  Yeah. Yeah, but see, like, I always go back to, yeah, you can look at it from a reversal story, or you can look at it as like, things in motion stay in motion, right? I think that ETH, it never reclaimed its all-time high from November of 21, right? I think it slowed down like 40%.

• 11:12Speaker 04

  People see it as, okay, this is my potential upside. Right, like it has to.

• 11:17Anthony Pompliano?

  They feel like they missed Bitcoin, so then they go to the next one.

• 11:19Speaker 04

  Exactly, yeah.

• 11:19Anthony Pompliano?

  Yeah. And then what about in terms of all of the derivatives and like those types of products? Should we assume that everything that's available for Bitcoin is also available for Ether? And maybe the top 10 coins, the top three coins, like how far does some of this derivative products really go? In terms of what people can use?

• 11:39Speaker 04

  Without the C desk, I would say it would be, yeah, you would get pretty much the same instruments, definitely for top 25. Further down the line, it gets like, it gets a bit harder to price like really complex option strategies. But covered calls, for example, should not be an issue for like top 200.

• 11:57Anthony Pompliano?

  Yeah. So that was gonna be one of my questions is like, you guys are ultimately in the risk game, right? And in a weird way, I think people look at you as kind of a liquidity solution. They can use it in different ways, long, short, you know, derivatives, et cetera. But you are underwriting risk. And so most people who I think look at this from kind of that elementary view would say, wait a minute, you have like 80 to 150 full assets, you know, there's not a lot of information sometimes, especially as you push further and further, you know, in the coin list. How do you start thinking about underwriting the risk and the principal risk that you guys are taking or balance sheet risk that you may take versus, you know, kind of riskless type trades where you're more so just acting as an intermediary that, you know, you're not really kind of injecting yourself into the trade itself?

• 12:39Speaker 04

  Well, ultimately Bitcoin, Ethereum, it's all very vanilla. There are markets on derivatives, there are markets on CME. It's very simple to price them, like everyone can do it. We have been active in outs since forever, since pretty much when we started. And we always kind of specialized in them to a big degree. Like we're still very good in Bitcoin and Ethereum, like all the majors, but alt is.

• 13:01Anthony Pompliano?

  That's really where, like, when I first started hearing about you guys, that's really where I think you guys saw a wedge into the market was, we're gonna go and we're gonna serve a bunch of assets that maybe these other desks aren't gonna do. Is that, was that the strategy?

• 13:12Speaker 04

  Pretty much, yeah. And we understand it really well. And it also comes from us basically serving different parts of the market. So it's on one hand, yeah, we're very big on OTC side of things. We're very big on centralized exchanges, but we all. Also very big on DeFi and that's where a big chunk of liquidity is for a lot of those DeFi tokens, for example. And we are pretty uniquely positioned on one hand to, yeah, get access to this liquidity, which not all of our competitors can do. And on the other hand, also understanding it really well, because we are like, our research team is very advanced in understanding like, how a lot of those protocols work, like how to price them, how to understand the risks, like what happens if they upgrade their protocols, like all those kinds of things.

• 13:53Anthony Pompliano?

  Yeah. Well, what's your story? Like you got like the kind of cool, smart, like Russian programmer vibe going on. And you built this big business, but like what was like your, uh, your, your background or like, how did you end up actually wanting to start the business?

• 14:06Speaker 04

  Yeah. Where do I start? I guess, I mean, on the Russian side, like I was actually never, well, I was a programmer like for a very brief time, but my, basically my education is economics. So basically I started in Moscow at the high school of economics, which was basically like the most libertarian university back in Russia and possibly like in, almost in the world, I would say back then in nineties, because it's like, it was, yeah, like a temple of libertarianism, I guess.

• 14:32Anthony Pompliano?

  Hardcore libertarianism.

• 14:34Speaker 04

  Very hardcore, like so I got like properly.

• 14:36Anthony Pompliano?

  How does that work in a place like Russia, though?

• 14:38Speaker 04

  In nineties, it was perfect because, yeah, it was, I keep, I keep telling people this, it's like Russia in nineties was very similar to crypto in a way.

• 14:47Anthony Pompliano?

  Okay.

• 14:48Speaker 04

  Because it was very, like, it was very hardcore capitalism, hardcore, like, a lot of opportunities, a lot of different things available, but also a lot of risks as well. So you had to navigate yourselves really properly and some people were successful and some people were very not successful.

• 15:06Anthony Pompliano?

  Yeah. I read a lot of books about, you know, kind of the nineties and even just like the, the late nineties, early two thousands. And there's people, Americans who went over and did all kinds of things to, to figure out, you know, where there was value or how to invest and some of them have amazing stories that some ended up, you know, uh, not so good.

• 15:22Speaker 04

  Very, very time. And my father was an entrepreneur back then.

• 15:25Anthony Pompliano?

  Okay.

• 15:26Speaker 04

  He was very successful, like in the first part of nineties and the second part of nineties, he just couldn't adjust to market maturing, like

• 15:33Anthony Pompliano?

  Yep.

• 15:33Speaker 04

  Things becoming like more proper.

• 15:35Anthony Pompliano?

  What type of business?

• 15:36Speaker 04

  He did like export import initially and then he transitioned into company relation, very random, but it's kind of like what you had to do. And then basically he sort of like finished his career by trying trading. Funny enough. There you go. But he was doing very different kind of trading because I'm doing market making. So it's very, yeah, like it's basically like very, I would not say like not risky, but it's like very scientific and very like. Yeah, but you also understand, you understand the risk better than maybe if you're just actually guessing. He basically did technical analysis. So he was like, he was basically, he would have been my counterparty effectively in the markets. Yeah, he transferring money from his wallet to your wallet, right?

• 16:16Speaker 04

  And then basically when this 2007 crisis hit, he, well, 2008 crisis hit, he basically just lost it all. Because he, he was just like on the market and he like his top losses were somewhere, but market crashed way more than his models told. Yeah. Could crash and he was just wiped out. Okay. And then so how do you get the idea for Wintermute? So basically I was, so after, after Russia, I basically went to start in the Netherlands and then I got into. So you're a libertarian Russian who goes to the Netherlands? Yeah, I mean. That makes sense. Honestly, it's, I went there because it was the easiest, well, not the easiest, but like it was the shortest master's program I could find in Europe.

• 16:57Speaker 04

  It was just one year and I just wanted to get, get it, get it over with, with masters. Um, and was in Maastricht, so it was pretty nice city. And then afterwards, I basically found a job at one of the really top HFT firms back then, but still now called Optiva. In TradFi and there basically for 10 years I was building the ATF market making desk. And I left in, basically I left in, what, 2017? Uh, because Optiva was, yeah, doing all the TradFi stuff, but it was not really interested in like any of the more funny, fun things. And basically grew from this like. Late-stage startup wipes to proper corporate wipes.

• 17:38Speaker 04

  And I just felt myself very constrained, but also I wasn't even sure like, do I want to do this trading thing or not? And I basically left Amsterdam for London, started looking around. And basically, that's when I stumbled upon Bitcoin. And I remember I bought it on Coinbase app, paying just like ridiculous 2% credit card fees, like literally just riding in a tube and doubled in price like in a week. And I was like, yeah, you definitely got my attention.

• 18:05Anthony Pompliano?

  This is interesting.

• 18:06Speaker 04

  Because like it's, you look at tradFi markets back then, like you can have maybe 10 exciting days a year. And otherwise volatility is like pretty boring. In crypto, you have like maybe 10 not busy days a year.

• 18:21Speaker 04

  So it's like very, very different, very refreshing. So.

• 18:24Anthony Pompliano?

  And when you reached the first idea you have in crypto or you did something else first?

• 18:27Speaker 04

  Yeah, because I knew how to do market making. I knew how to like basically run algos. And one thing I enjoyed the most was actually building desks, building your desks, managing people and basically competing as well. Not necessarily just, I mean, making a lot of money is also nice, but I just really enjoyed this building aspect of it. So building my business, yeah, did sound really interesting and exciting. And so basically teamed up with two other ex-October people and yeah, built.

• 18:52Anthony Pompliano?

  And what like, how do you get the first customer? You just like call up a friend that he knows in crypto or like, what do you, like, how do you start getting some flows?

• 18:58Speaker 04

  Well, basically, like the initial idea was back in 2018, we basically started serving,

• 19:08Speaker 04

  basically we went to market making for projects, for protocols and.

• 19:11Anthony Pompliano?

  Two of the projects that hey, I'll market make for you.

• 19:13Speaker 04

  Exactly. And our initial idea was, okay, there was 2017 ICO boom, so there's a lot of protocols. All these protocols need market makers and a lot of market makers back then and actually still now. Not like of a good variety, like they basically promote like pumping and dumping the tokens, doing.

• 19:30Anthony Pompliano?

  It's crazy.

• 19:30Speaker 04

  Like wash trading, like crazy stuff that still for some reason happens. And we wanted to position ourselves as a market maker who doesn't do the stuff. So we went there, but 2018 was pretty much the worst time to start it because all those ICOs were pretty much dying. And so we had to quickly pivot into more traditional prop trading, basically market making majors, but also alts. And so OTC business didn't really start for us back then. We, our first OTC business, I think it was somewhere in 2020, when we basically started market making for.

• 20:04Speaker 04

  Market making for protocols again because it was starting to revive again. I think pretty sure our first OTC counterparty was Filecoin.

• 20:12Anthony Pompliano?

  Uh, not Filecoin Foundation, but actually Filecoin employees because we're effectively market making for Filecoin token. Yep.

• 20:18Speaker 04

  And we onboarded quite a few employees back then to help them to sell their Falcon tokens.

• 20:23Anthony Pompliano?

  Yeah.

• 20:24Speaker 04

  That's kind of how how we kickstarted our OTC business and we started developing.

• 20:28Anthony Pompliano?

  Now, where Wintermute the name come from? I'm always fascinated about how people come up with the name.

• 20:33Speaker 04

  Yeah. So basically, yeah, it's a funny story. So yeah, back in 2017, when I started, I I kind of like knew crypto ethos a bit like I was not very cyberpunk back then. I just knew like what the vibes are and the vibes were like, okay, it's a lot of geeky people. So I basically Googled top 10 science fiction novels of all time.

• 20:51Anthony Pompliano?

  No way.

• 20:52Speaker 04

  I wrote like list of characters from all those novels and one of them is basically called Neuromancer. It's basically origins of cyberpunk. Uh, it's basically like one of the first cyberpunk books I've written. It's actually really good, but I haven't read it back then. And basically Wintermute was one of the characters. It was actually like sort of like evil AI character in the book.

• 21:12Anthony Pompliano?

  Okay.

• 21:13Speaker 04

  I didn't know that. So I just really like how Wintermute sounded. So, okay, I'll just pick that.

• 21:18Anthony Pompliano?

  That's incredible. All right. And so you go to your partners and you're like, hey, here's what I think the name is. What do they think? They're like, yeah, it sounds good. Let's go.

• 21:25Speaker 04

  Yeah, yeah, like, because it was easy.

• 21:26Anthony Pompliano?

  Yeah, they didn't care as much. Okay. All right. Um, now talk about, uh, you built pretty much all the business outside the United States for a long time, right? And a lot of that was like regulation or what?

• 21:36Speaker 04

  Well, I mean, I wouldn't say it was outside of yes, we basically haven't operated.

• 21:41Anthony Pompliano?

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• 22:26Anthony Pompliano?

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• 22:34Anthony Pompliano?

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• 23:19Anthony Pompliano?

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• 25:14Speaker 04

  I wouldn't say it was outside of US. We basically haven't operated in US for our, like, very actively. But at the same time, I don't know, we had one of the largest market shares in Coinbase and Kraken. We are very big on Robinhood Crypto, for example. So we have been trading in US, but we haven't been, like, we haven't set foot in US on the office side of things, simply because we saw it as a pretty dangerous thing. It was barely previous.

• 25:40Anthony Pompliano?

  That's crazy.

• 25:41Speaker 04

  Yeah, previous admin, SEC specifically, yeah, it just was.

• 25:45Anthony Pompliano?

  All right, we're here now, you're live here in the flesh. So what's the plan now?

• 25:49Speaker 04

  No, plan now is to expand pretty massively in US. We do see it as a, yeah, pretty much the main market for us to grow over the next years.

• 25:59Anthony Pompliano?

  How many total employees do you have?

• 26:01Speaker 04

  Total is about 140, and we have currently around five or six in US.

• 26:07Anthony Pompliano?

  Okay, and then what do you think, let's say, five years from now? You think, like, majority of your employees will be in the US or split?

• 26:11Speaker 04

  It's a very good question. It really depends where the business develops. And one interesting development is generally, will crypto stay on the sort of like fringes of finance or will it just completely merge?

• 26:23Anthony Pompliano?

  Yeah, I think it's gonna merge. What do you think?

• 26:25Speaker 04

  I also think it's going to merge.

• 26:26Anthony Pompliano?

  So US can be a big part then?

• 26:28Speaker 04

  On one, well, that that as well, but also it means that as a proper infirm, we cannot stay focused on crypto forever. So we actually have to expand the trade file. We have to expand to the pretty much all asset classes. And if we do that, it makes perfect sense to have our main base of operations for trade fires. It's in US.

• 26:45Anthony Pompliano?

  So in a weird way, like, forget Republican, Democrat, all this nonsense, right? But just like having a government that now says like thumbs up on an industry. You guys are like a perfect example where like you literally are going to come on shore. Now you're going to build out the company, you're going to hire people, like all the things that that the academics talk about. You guys are a perfect example.

• 27:02Speaker 04

  Pretty much. And also invest and yeah, hire people, invest, support local ecosystems. Yeah.

• 27:08Anthony Pompliano?

  Okay. Um, what are you most interested in the traditional financial system?

• 27:13Speaker 04

  Well, yeah, it's, I guess it's basically how crypto will change it is a pretty interesting thing. So.

• 27:21Anthony Pompliano?

  Tokenized securities.

• 27:23Speaker 04

  Yeah, tokenized securities is probably like the most obvious one because yeah, how we transition from current uh like legacy system which operates on fiat currencies, which operates basically five days a week, doesn't doesn't operate on the weekends, is closed on. It's closed on like however, holidays, for example, like how do we transition from that? From a pure 24 seven with and solving for all the challenges with how do you handle car protections? How do you handle dividends? How do you handle like basically this 24 seven aspect, which crypto is super comfortable with?

• 27:55Anthony Pompliano?

  Of course.

• 27:56Speaker 04

  Um, that's very interesting. Also, how do we move it from fiat rails to stablecoin rails? Which which is a massive unlock, I think, for legacy exchanges, but also for crypto exchanges.

• 28:06Anthony Pompliano?

  Do you guys make money on stablecoins?

• 28:08Speaker 04

  Yeah.

• 28:08Anthony Pompliano?

  Yeah. What do you guys do?

• 28:09Speaker 04

  We pay, I mean, it's a bunch of things. So it's on one hand, it's settlements for our derivative business. So it's it's very convenient to effectively margin counterparties and stablecoins. On the other hand, just basically, yeah, being there for them for fiat to stablecoin transactions.

• 28:26Anthony Pompliano?

  Guy, you just take a percentage or whatever.

• 28:28Speaker 04

  Well, it's more like bips, but yeah.

• 28:29Anthony Pompliano?

  Yeah, whatever. Okay. And then, uh, how much money do you guys make? Like you guys got to be printing cash, right?

• 28:36Speaker 04

  I'm in defense, yeah.

• 28:37Anthony Pompliano?

  Yeah. But how should people think about it, right? So like when you got a business, you got 140 people. Right? I always think about it in terms of the best businesses in crypto. I think historically have been the exchanges. But now I think that there's a bunch of, if you look at traditional finance, Citadel's doing pretty good. A bunch of these, you know, different firms that are either in the market making business or they're doing some sort of, you know, OTC component, like all the things that you guys do, but just for the traditional world. Those businesses are incredible in the traditional world. So it seems like there's been a corner of the crypto world that most people like, they've just been unaware of, right? In terms of how successful you can be doing this stuff without having to go run an exchange or, you know, some sort of consumer facing like fintech type product, right?

• 29:18Speaker 04

  Yeah, I mean, basically market makers, property firms, they have been successful for decades. Like I was at Octava before, like Octava has been and still is.

• 29:27Anthony Pompliano?

  Like, how big are they, you think? Are the numbers public or no?

• 29:30Speaker 04

  Uh, no, no.

• 29:30Anthony Pompliano?

  No, okay.

• 29:31Speaker 04

  Last majority of market makers are private. Like you have, you have.

• 29:35Anthony Pompliano?

  They're so good, they don't want anyone to know.

• 29:37Speaker 04

  Well, basically, like the only exceptions I know are the arch and float traders that are public. And but most market makers, they don't want their numbers to be known. Well, for example, look at Jane Street, for example, Jane Street numbers were public like last year and the year before. I think they definitely contributed. I think they made like, well, tens of billions, basically.

• 29:57Anthony Pompliano?

  Tens of billions?

• 29:58Speaker 04

  Yeah, they are, they've been super successful. But ultimately it's, and still are, but ultimately that's also like, nobody wants to draw attention to that.

• 30:06Anthony Pompliano?

  Yep.

• 30:06Speaker 04

  Because on one hand, you basically will have all your competitors looking at you and saying, okay, how can we invade? Like float traders went public, I remember when float traders went public, because it's also a Dutch firm. And that was at October back then, and float traders went public. And basically they said, like, they don't say where they make the money, but we knew that their main business was actually OTC business. While for October on the ETF side, it was mostly on screen, basically on centralized exchanges. And basically, October was making, I don't know, one basis point on volume, like on total volume trade, it was trading. And float trades, I think it was making something like five basis points on this OTC business. And Octava and like other competitors were like, okay, yeah, that sounds really interesting. Let us actually start OTC business as well. And so it's.

• 30:50Speaker 04

  It's basically like you even buy like even by showing aggregate numbers you just disclose so much that it's really

• 30:56Anthony Pompliano?

  It's not hard. People are smart. They figure it out.

• 30:58Speaker 04

  Well, especially market makers. Yeah.

• 30:59Anthony Pompliano?

  Yeah, okay.

• 30:59Speaker 04

  So it's, it just doesn't make sense to broadcast.

• 31:02Anthony Pompliano?

  What numbers can you share with us about winter mute that wouldn't give away uh things like are there things to help people understand just like how big of a business that is 140 employees, right? You guys are growing really fast.

• 31:12Speaker 04

  Yeah, how much we trade. So it's anywhere between like five to 10 billion a day in volumes.

• 31:17Anthony Pompliano?

  That's a, that's a ton, right? Yeah. Are you guys the biggest, you think?

• 31:20Speaker 04

  Depends. I think it's like it's one of the questions I get a lot is like basically who are our competitors? And it's very different because I think we are still very, very unique in crypto because we do everything. So we trade on centralized exchanges like Coinbase or Binance. We trade on DeFi. We trade, we do a bunch of OTC things. We trade with Robinhood. And we have very different sets of competitors and in all those different niches, like we have a very different set of competitors in DeFi, very different set of competitors on Binance, very different set of competitors on Coinbase. And again, like different set of competitors on Robinhood, on OTC businesses as well, depends whether it's spot or derivatives. It's also a different set of competitors.

• 32:02Speaker 04

  And most of them are focused on their specific niche, but we are the only ones that are actually doing it all. And that basically allows us to be a lot more efficient across the whole space.

• 32:11Anthony Pompliano?

  Got it. Okay. Well, you didn't say that Citadel Securities or anybody is your competitor. I would have thought you would have picked the big guys.

• 32:17Speaker 04

  Citadel, I think they will come, but I'm, I don't think they say yet, but.

• 32:21Anthony Pompliano?

  No, I'm not, not them come to crypto. I'm saying you go to traditional, we'll go compete on their turf.

• 32:25Speaker 04

  Oh, yeah, no.

• 32:26Anthony Pompliano?

  Yeah, you're coming, right?

• 32:27Speaker 04

  I'm coming. It'll take some time. It'll take some time. Like it's, I was like big child, big, big, big reason I actually moved to crypto was I was a bit sick and tired of uh TreadFi because it's. It's basically a massive rat race when it comes to latency. People are building this like microwave towers and like there are like radio waves bouncing off atmosphere like it's it's crazy like what what you

• 32:51Anthony Pompliano?

  For like a millisecond advantage.

• 32:52Speaker 04

  It's like nanoseconds in certain cases like it's it's basically like it's it's very competitive and it's not

• 32:58Anthony Pompliano?

  Is it that competitive in crypto?

• 32:59Speaker 04

  It's not, but it's primarily a function of crypto exchanges just not allowing this kind of throughput, this kind of latency, like because most of the crypto exchanges are still basically based on AWS

• 33:09Anthony Pompliano?

  Yeah.

• 33:09Speaker 04

  in Fry and it just doesn't allow this like

• 33:12Anthony Pompliano?

  Optimizations.

• 33:13Speaker 04

  nanoseconds or the microsecond optimization. Yeah, it's just like

• 33:16Anthony Pompliano?

  So the the traditional exchanges, they just open up for business that whatever, however fast you guys can be.

• 33:20Speaker 04

  Yeah.

• 33:21Anthony Pompliano?

  Yeah, interesting. Why doesn't a crypto exchange do that?

• 33:25Speaker 04

  Uh, I think part of it is it wouldn't like they would need to be do pretty big investments uh into this, but another thing is like, it's pretty interesting. Basically, like a lot of times I go to this, like those crypto exchanges do events for traders that operate there and traders keep like asking those exchanges, please increase throughput, please like let us allow to send more and more orders per second, blah, blah. But the ironic thing is like if basically let's say Binance improves their latency to a CME level, vast majority of those market makers will be competed away by basically like lots of jumps or city

• 34:01Anthony Pompliano?

  Yeah, yeah. So in a way it protects the crypto natives.

• 34:04Speaker 04

  And also makes markets more liquid on those exchanges as well because it basically levels the playing field quite a bit. So from that perspective, it actually for those crypto exchanges, it makes sense to keep the status quo because they can keep like a pretty, a much bigger mix of uh market makers around.

• 34:20Anthony Pompliano?

  Who, given how successful you guys are, who do you think is the best in crypto? Right, Lili? Who do you respect the most in terms of other people who have built businesses?

• 34:29Speaker 04

  Uh, like on a competitor side or?

• 34:31Anthony Pompliano?

  It could be competitor or it could just be a different type of business.

• 34:35Speaker 04

  Yeah, like I still, I really like jump trading, for example, like it's before they sort of like exit, like they exited a lot of, a lot of parts of crypto, like they're coming back now, but they're basically, we're doing pretty much what we do on the, like in terms of building diversified business, because they were like doing ventures, they were on DeFi, you know, like they were trading on Robinhood, they were pretty big and still are on centralized exchanges. So it's like diversified businesses, what we, I wouldn't say copied, because Opto was like this as well, but definitely was a big inspiration for us. And yeah, I really respect them as competitors. Um, like from the other, other chunks of it.

• 35:16Speaker 04

  Yeah, I think like what Hyperliquid built is very impressive, I would say, because they have built a really impressive business, which is decentralized and which is basically like ultimately set up to compete with all the big exchanges. Um, yeah, obviously Binance is just amazing how they continue to, yeah, be big and relevant and not be out, outcompeted by everyone else.

• 35:41Anthony Pompliano?

  If we talk in 10 years, you think that you can be one of the great traditional financial firms? Like you think you can compete against them? Yeah.

• 35:48Speaker 04

  That's, that's basically, that's kind of the question I.

• 35:50Anthony Pompliano?

  That's the next mountain to go climb.

• 35:52Speaker 04

  It's kind of like a question I asked myself, uh, well, asked myself like last year, for example. Like, I'm not a very like needy person. And so in, in terms of like needing a lot of money, like I don't need like yachts and, and cars and everything like I def, I definitely have like enough money to last me till I die.

• 36:08Anthony Pompliano?

  You're rich, you're good.

• 36:09Speaker 04

  Like I'm, I'm like, I'm fine. So kind of like why I'm doing all this.

• 36:13Anthony Pompliano?

  Like fine or like fine, fine? Like, like are, is your bloodline, like everyone in your family forever is rich or like just like rich?

• 36:19Speaker 04

  Yeah, I mean, like it's, they have enough. And I think, I think we created this culture inside the family as well. They didn't like, my two, my kids are also not gonna go for like yachts and supercars and.

• 36:29Anthony Pompliano?

  But maybe their kids will, like third generation, maybe like, hey, we don't know who grandpa was, but like, look at my 400 foot yacht.

• 36:35Speaker 04

  I kind of hope that it will continue this like internal family culture forever. But ultimately, yeah, like in terms of like, we are not, we don't need that much money.

• 36:46Speaker 04

  So I definitely like multiples of what I actually need. So why I'm doing this is, I guess, like the best way I describe it to myself is it's kind of like I see this like leaderboard. So I see my competitors, I see like, I don't know, other rich people on the planet. And I kind of just want to keep competing and keep climbing up, not for the money itself, but just like, yeah, kind of like meaning of life.

• 37:10Anthony Pompliano?

  Do you have like a, um, you won't be satisfied till number one, you gotta be top 100, top 1000. Like, do you ever thought about like how high on the ladder would be the point where you're like, all right, like that's a milestone?

• 37:24Speaker 04

  Yeah, I guess like number one is probably.

• 37:26Anthony Pompliano?

  Number one?

• 37:26Speaker 04

  Sounds, sounds crazy, but like that, that's when I really like, okay, what should I do next?

• 37:30Anthony Pompliano?

  Yeah.

• 37:31Speaker 04

  But until that is like.

• 37:33Anthony Pompliano?

  But if number three, you wouldn't be satisfied because you're not number one.

• 37:35Speaker 04

  But that's, that's the best thing about it. Just like keep competing, keep growing it. That, that's, that's like number one is, yeah, it's pretty hard.

• 37:43Anthony Pompliano?

  Yeah, well, of course, there's only one person who does it in the world.

• 37:46Speaker 04

  Yeah, but it's, it makes the whole journey like much more fun and yeah, it is a grind, but it's kind of, I just enjoy it. Like I'm quite competitive. I like, I really like competitive games. I, well, I like games in general. Like I think I see it as a prism of game.

• 38:00Anthony Pompliano?

  Yeah. You know, I say investing is like the professional sport for people who like to think.

• 38:04Speaker 04

  Yeah.

• 38:04Anthony Pompliano?

  Right? Like to me, that, that's a huge piece of it is, uh, I, I don't know about you. I, I'm pretty athletic, but not athletic enough to play professional sport. So this is the only thing we got left, right? Is to use our brains.

• 38:15Speaker 04

  Yeah, no, exactly.

• 38:17Anthony Pompliano?

  All right. I got one, uh, two last questions for you. Uh, when you interview people at Wintermood, I've been to some of these firms and, uh, I walk in and where they interview people, they got the big whiteboards and ask them all kinds of crazy questions. Is that what you guys do to hire people?

• 38:30Speaker 04

  Not, not crazy questions. No, like it's.

• 38:33Anthony Pompliano?

  Like what's, what's the craziest question that you think that you guys ask people?

• 38:36Speaker 04

  Yeah.

• 38:37Anthony Pompliano?

  Like how many golf balls go in an airplane or something like that?

• 38:39Speaker 04

  Like we would, we would ask some bullshit like this sometimes. Yeah.

• 38:42Anthony Pompliano?

  See, but you think it's bullshit too, right?

• 38:44Speaker 04

  Yeah. I mean, it's, it's basically, it's, it's a good, uh, it's a good way to like judge how people think.

• 38:50Anthony Pompliano?

  Yeah.

• 38:50Speaker 04

  Like it's, it is bullshit.

• 38:51Anthony Pompliano?

  It does work. Yeah.

• 38:52Speaker 04

  Yeah, it works. Like it's, it works. Like I got the same questions when I was a plaintiff of Optima, for example, like it's, it works.

• 38:58Anthony Pompliano?

  Yeah. Yeah. Okay.

• 39:00Speaker 04

  It's a good proxy.

• 39:01Anthony Pompliano?

  All right. And then, uh, when you die, what do you want your tombstone to say?

• 39:08Speaker 04

  Boo. I honestly don't care. Like.

• 39:12Anthony Pompliano?

  That might be the best answer.

• 39:13Speaker 04

  Nice.

• 39:14Anthony Pompliano?

  Cause you're not gonna read it.

• 39:15Speaker 04

  Yeah, exactly. Like it's, I honestly don't care. Like it's, I think it's, I don't think about like, I'm not that afraid of dying. Like I just wanna, yeah, keep it.

• 39:23Anthony Pompliano?

  Are you excited about it?

• 39:25Speaker 04

  Excited about dying? No.

• 39:27Anthony Pompliano?

  No? Okay. All right. Why are you not afraid of me?

• 39:29Speaker 04

  No, it's just like, I think you've, like, I would want to, like, when I would have a line in my bed and, on my bed and like,

• 39:38Anthony Pompliano?

  Yeah.

• 39:38Speaker 04

  I know I'm gonna die like soon. I just wanna make sure, make sure that I look behind and think, okay, that was actually like cool life.

• 39:45Anthony Pompliano?

  Yeah.

• 39:46Speaker 04

  That's basically it. Yeah.

• 39:47Anthony Pompliano?

  I feel like that's winning, right?

• 39:48Speaker 04

  Yeah.

• 39:49Anthony Pompliano?

  It's part, part of the whole thing is to make sure your kids don't get yachts.

• 39:52Speaker 04

  That's why I also don't quit because like I think like if I quit now and then like whatever 50, whatever, maybe a hundred years from now, like I die and then I think like, yeah, why did I quit? Like I could have like kept it going and maybe go to number one, right? So, yeah.

• 40:05Anthony Pompliano?

  That's what we should make the title of this. It's the quest to be the richest man in the world.

• 40:08Speaker 04

  Yeah.

• 40:10Anthony Pompliano?

  All right. Well, thank you so much for taking the time to do this. I'm super excited for you guys coming to the US and we'll do it again in the future.