Bitcoin: The Ultimate Weapon for Financial Freedom ft. Mauricio Di Bartolomeo

31:06And we fought the charges. The charges were dismissed after many, many years, but my family never went back. My brother now lives in Spain. My parents live in Italy. I live in Cayman. And while I will always say that finding Bitcoin and hyperinflation is a blessing and I love the life that I live today, it's incredibly painful to have to separate your family after you were so united i was super close with my family growing up we were we were a unit and now i see them once a year now i do zoom birthdays now i do zoom christmas you know um

31:54and bitcoin fixes a lot of things but it it can't fix that right and so um this is why i have a bit of a a different view when it comes to bitcoiners in politics because i do believe that the highest roi thing we can do if you've been successful in bitcoin is to go back to politics and try to fix the root of the issue. Because we cannot opt out forever. There will eventually be no places to opt out to. See, most people see Venezuela and say, yeah, but that was different, that's hyperinflation. People don't realize the debasement of currency is happening on a globalized basis of all fiat currency by about 8 % a year by my measure.

32:39That's 8 % a year, your money's being devalued. add a 3 % inflation on top, it's 11 % a year you're getting poorer. And that's almost a more cruel way. At least with hyperinflation, you kind of know what's happening. This, nobody understands it. They just get angry and angrier that they're getting left behind. And then it takes a while. And once you realize if you can denominate yourself in Bitcoin, the problem goes away entirely. it it does and and listen now going back to this theme of politics right bitcoin can either be an uh an agent for change or an agent for you to opt out and in the case of argentina is an agent for change because it was able to put so much pressure people in argentina were able to opt out of their own currency and when you opt out of your own currency you basically throw the fia that they're printing back into their pot and it starts and it keeps moving around and creates this heat and this friction that they just can't sustain and eventually the the the pain on the population is so much that they go to the polls and they elect someone else in venezuela we've gone to the polls the polls were taken away from us all the bitcoin in the world won't give you a fair election in venezuela so all you have left in venezuela is to use the bitcoin to get out it's It's like the raft you use from Cuba to sail to the US.

34:01It's the same thing. There is virtually no way of using your Bitcoin to affect political change and restore democracy in Venezuela. Other than funding the opposition party, which by the way, Bitcoin is the only way you can send them a donation. Because they've been blocked out of the banking system by the incumbents. Out of interest, why the fuck didn't the US ever get involved? Was it because of the oil and they just wanted the oil off the market? Why? I never understood. Such a huge, potentially resource-rich, you know, all the farms got stolen. All the food supplies got destroyed. The oil system got destroyed.

34:45Why did the Americans allow it? So without trying to come off as politically biased, right? You should be all Venezuelan. You've seen the situation. There should be a reason. So one of the biggest points of frustration for me was how foreign policy in the U.S. allowed Chavez to perpetuate its grip over America, over the America, the continental America, right? If you look at – and I think that came because of a few reasons. One, the U.S. was in its Obama era. So the U.S. was looking inwards. The U.S. was not looking outwards. They were focused on foreign policy in the Middle East. They were focused on foreign policy in Europe, but they certainly weren't looking at foreign policy and what was happening in America.

35:30Because I saw it happen. Chavez, and this is one of the funny things that happen when you're in a commodity-based country. Chavez wins the election in Venezuela. This is a maniac that came from an argument, had never been a politician, and ran on a populist agenda. okay the interesting thing about commodity markets is when they see the fourth largest oil producer in the world take take over get taken over by a wacko is that it makes the commodity that that country produces sore in price because it assumes they were not going to be able to produce it at that rate anymore and so you have this really poisoned feedback loop where chavez wins the election and oil prices rally.

36:13And all of a sudden, the Venezuelan budget gets increased. Chavez has all this spending power and he uses this new oil wealth that he himself created by his craziness and introducing that into the markets. He then takes that and starts monetizing that extra revenue by setting up allied governments in Brazil. He sets up Lula in Brazil or Dilma in Brazil. So Brazil goes red. He sets up Rafael Correa in Ecuador. Ecuador goes red. He sets up Cristina Kirchner in Argentina. Argentina goes red. This was all Chavez doing this. Yes. He sets up Evo Morales in Bolivia. Bolivia goes red. And basically he corners the superpowers in America.

37:02And he starts making a lot of noise in places like the United Nations and OAS, because he learns very quickly to do these resolutions that the vote of the United States is worth the same as the vote of St. Vincent Grenadines. And so he starts going to St. Vincent Grenadines and says, hey, that airport looks awfully old. You guys should just get a brand new airport. Here's some money for the new runway. And it's like the Hugo Chavez International Airport. And now when they're up at the OAS or they're up at the UN, when some countries want to put out a resolution to assess and the horrible regime of the Chavez, you know, Chavez in Venezuela, everybody's like, abstain, deny, abstain, deny, abstain, deny, they're great.

37:48So he learns how to use democracy at a sort of intergovernment agency level to further his agenda, right? Many people remember that it smells like sulfur speech at the United Nations after George Bush. And people clapped at it. I remember part of me losing my mind was coming to the U.S. and Canada and getting picked up by a cab and they would ask me where I'm from and I'd say Venezuela and I'd say, Chavez, my friend, smells like sulfur. And I'm like, do you know what he's doing to the country? You had Joseph Stiglitz, Nobel laureate economist, raving about Chavez's policies on the New York Times.

38:32It was bizarro world. It was bizarro world. So I think that was a huge strategic mistake on behalf of the US. Massive, because, hey, that's not my problem back in 2008. Where's your migration crisis coming from right now? Yeah, but I think my personal opinion is they let it implode on purpose, because obviously it's very heavy crude in Venezuela. They couldn't refine it. They didn't have the ability. So it just got taken off the market. And guess what? The US is the world's largest crude oil producer. And so they're like, great, you keep them out of action. We don't need to do anything. Slap some sanctions on as well.

39:11And they're entirely out of the equation. Yes. And not to mention that there's something also very, I don't know what the right word to say it is, but it's almost like nefarious about the way immigration works. Why? Because when the country starts falling apart, the people that are first to leave are your most qualified, business owners, highly educated. You saw that in Miami, right? Rich people went to Miami first, bought all the fancy apartments, all Venezuelans and Argentinians. Correct. And so you scoop the top, right? You're saying this country falls apart. To your point, strategic oil production benefits for America, great.

39:53Then you get strategic GDP per capita because you're bringing in the creme of the crop. You must have sold billions of dollars of Miami apartments for the rich Venezuelans. the problem becomes there's a saying when you when you talk to enough immigrants that i've had to go through this there's a saying that goes the first immigrants leave by plane they get investor visas the second immigrants leave by bus they got work permits the third immigrants they walk across with nothing the first immigrants everybody wants the second immigrants meh, that's such a big burden. The third immigrants, you've got a crisis.

40:31And so no one bats an eye when it's these guys or when it's these guys. But by the time you get to these, the gates cannot be closed. And so that's the problem, is that the early stages of a collapse of a country or a failing nation benefit everyone, everyone around them, right? The trade partners benefit because they produce less. They have to buy more things from them. They also benefit from the new migration that's coming their way because it's phenomenal. People migrate their capital so their financial systems get better because you eject your money from the existing financial system and you start moving it to banks in your neighbor countries.

41:08Everybody benefits when a whale dies at first, except the people that can't leave the whale. You're getting eaten. Everybody's eating you. And so you get to this very unfortunate point where Chavez's government got in cahoots with the military. They basically started taking over the, and I'll say this openly, the Venezuelan regime is the biggest organized crime group in the planet. I'm fairly certain that they're involved in drug trafficking at a state level across the world. And so when you have a government that cannot get voted out or a government that is basically so far gone with what they've done that the second democracy is reinstated, you have a one-way ticket to The Hague, right?

42:02You have a one-way ticket to jail if you're Maduro and his cronies. If you or anyone in the military that has enabled this, you have a one-way ticket to jail. You're both one of the same group. Are you going to allow democracy? See? Hell no. And so... That's the same with Assad and Syria. You have to go to the end. You will end up being killed. And it's how long it is before you get killed. You got it. And so right now, people ask me, what's next for Venezuela? Is there a chance for change? Is there a chance for change? And my answer is, I don't see it. I don't see it because we've tried the democratic way.

42:42the venezuelan government is is the venezuelan army the army shoots real bullets at us in the protests i have heard them go and that's exactly the point where i'm like okay we gotta leave um i i have photos of me throwing back smoke grenades in the in the protest with my friends back when you could still protest it was those protests when some of my friends started dropping and never coming back up. And that was when I said to myself, it's not a fair fight. It's not worth fighting for. I would rather fight and build a tool that lets more people get out. And that's what I did. That story alone explains why you've been so passionate about Bitcoin, right?

43:30Because it matters not as a business opportunity. It matters at a personal level. as a way to give financial freedom, or not just financial freedom, but freedom to people that didn't exist. Now, whether it's in any regime, whether it's in Iran or whether it's in Syria or whether it's in anywhere, it's giving people a chance. Yes. Once I saw what Bitcoin did for people in Venezuela, for me it's been always very obvious that the world doesn't live like the US if you think of what the world is the world like where I'm living right now like how many people get this shared life experience of a stable currency and a strong democracy and no assassinations for your presidents or no coup d 'etats like how many people get to experience that it's a fraction Most of the people I spoke with in my travels lived in some way or form much more similar to how we live in Venezuela.

44:38And when I saw the way we were able to opt out, I knew everyone would want the same. And the fact that you don't want to opt out in the U.S. yet or in Europe yet is because of strategic reasons. But the mechanics are the same. The mechanics are all the same. You have different strategic advantages because your domino in the fiat system is way further here. It's also just slower, so the migration is slower. I've always said it's a migration into this new system, but because they're not abusing it to excess, really how I think about it is what we're all paying is about a 10 % a year put option on the system.

45:20Because when you devalue your currency, the collateral values go up and the system doesn't go bust. So you're actually paying 10 % for a put option to not have the big debt unraveling. Is that terrible? Maybe not. But it's still significant because it hurts people and it holds out the middle classes and stuff, but it does it over time. So over time, you see the migration. You didn't have the mass rush that you had in Venezuela and other countries, but it's still happening and people are migrating. And even Larry Fink talks about it. And maybe really wants to admit to the debasement of currency.

45:56But, you know, we know it. So let's get to the story of Leiden. So you and Adam decide to set up a lending business. Is that right? Was that the first iteration as was? That's right. So we wanted to solve our own problem, which was we needed to pay our bills in fiat. But we didn't want to sell our Bitcoin. So we wanted a product where you could put your Bitcoin as collateral, get the cash you need. When you repay the cash, you get the Bitcoin back. pretty simple, right? Same thing you can do with your house or even your phone. People lease phones and they lease all sorts of assets, but nobody was lending against Bitcoin.

46:29And I saw a huge potential in that, A, it was an asset that lent itself for a lot more transparency. You as a user could have a lot more visibility on what we did and make sure we did what we said we would do. The second was, it's a global asset. So if I could get it right in Canada, we could bring this product to everyone else. And that was a really exciting part for us. And the third part was because the asset was global. It was the first time in my understanding of history that I could treat you, Raul, and the Caymans and your Bitcoin in the same way as Miguel from Baruta, which is a small town in Caracas, with his Bitcoin.

47:11Because I was judging the credit quality not on you, but on your asset. And for the first time ever, your asset and his asset were the same. Yeah, because this is the first, and I say this a lot, this is the first globally homogenous asset. Gold is the other one. I'll give it that. But gold is not as easily tradable. You have the quality standards. You don't know. It's not the same thing. But this is a truly homogenous global asset, the same in Caracas as it is in Lagos, as it is in New York City. And you're right. And gold, by the way, gold in a vault in Venezuela, it's not worth the same as gold in a vault in the US.

47:50A Bitcoin in cold storage controlled by someone in Venezuela that can be sent to me is worth the exact same as the Bitcoin controlled by your cold storage that could be sent to me. The exact same. So I really can't, and this is one of the things that fills me with pride today, is that at Letton, a person from Colombia and a person from the US applying for the same loan will get the same interest rate. And I don't think there's a single bank or financial entity in the world that can say the same thing. And that is what I think leveling the playing field is and looks like. And many people don't get that yet.

48:26So you launched Ledin. How do you start acquiring customers? What does it look like first? Then we'll go through the battle. And then we'll talk about where we are now and where it's going. So building trust in an industry that is designed not to trust but verify is an interesting exercise and has been one of the most intellectually exciting things I think I've ever done. Is to turn somebody that is designed not to trust into trusting a solution that ultimately requires you to trust them taking care of your Bitcoin while you have the loan. So a lot of that stuff, a lot of our first clients were early Bitcoiners that knew me for many, many years back, that had seen my family story, that had seen what we were trying to build and who we were as people.

49:20And trusting us, frankly, trusting us, we built the platform that was fully regulated, fully up to speed with all the existing regulation. we went and set up ourselves with BitGo, which at the time was the only qualified custodian. So it was a way of showing people we're working with the best in class here so that you can feel safe. You know, there will be, we want to have the best of everything, right? And so the first clients were miners and industry owners in the Bitcoin space, particularly in Canada. And they were, many of them were prominent figures in the Bitcoin community. So when they took loans from us, it made other people curious.

50:02Also, at Ledin, in the early days, we were just like the industry we were building on. We wanted people not to trust us, but to verify. So at Ledin, you could see, our first clients could see that the collateral asset that they sent us on chain remain on that address. And that the assets stayed there for the duration of their loan. so we made ourselves we opened ourselves up for verification but what's to stop you or not you but a bad actor doing the same thing just saying well there it is on chain i check it and then you just take it and fuck off with the bitcoin for sure so that that was the other thing that we wanted to assure people like we are happy to be regulated the canadian government and all of the regulators wherever we've been they've been we have been only up front and above board about our activity right that was what we saw value in having a regulated entity if we run away you can sue us you can come after us we are we are here they know who we are and we're not running away here we want to and that was another thing that laden was very different about we wanted to put the faces of the people at the front of the business because this industry was was getting was getting everything was getting abstracted away it's like you're always it's always a contract it's always of contract for us we wanted people to understand that there were real people behind this that have made this our life's project and our life's work to to basically build something that we always push free would have had and i see a massive opportunity if we can get this right so we've always been people first i've always put my hand up and said if you have any questions on this business, come to us.

51:48We're going to be here when the market's up. We're going to be here when the market's down. You're always going to be able to talk to us. And so that was when we started getting that first base of clients. And this was in 2018. And if you remember 2018 to 2019, 2020, it was a pretty dark period. So we were grinding in the bear market for about two years. Then we started getting some upside towards the end of 2019. Things started doing fairly well. And then COVID hits. And basically, the market crashes from$8 ,000 to$3 ,000. And because we are Bitcoin collateralized loans, when the value of the Bitcoin drops and the client either doesn't top up or doesn't want to top up, we have to sell Bitcoin to make the loan whole.

52:32So that forces loans to get closed and liquidated. And as any other platform back then, there were liquidations for our book. And I distinctly remember I got on the phone at the time we had, I think it was just north of 400 clients. I got on the phone with every single one of them. And I wanted them to understand why we had to do what we had to do. I knew we wanted to share that we didn't want to close your loan. It hurts us. It brings down our book. The last thing we want is for a loan to get liquidate it because you come to us because you don't want to sell it. We work very hard to earn your trust and build a book.

53:11When the liquidation happens, both of us lose. So I wanted to go to them and say, we did everything we could. But unfortunately, this is the reality of our business. If the price goes down, I don't have any other collateral than to sell your loan. And they said, many of them cried on the phone with me. It was almost a therapeutic week for me. It was a hard process, but I called every single one of them. And at the time, our book was fairly decimated after that drop. And people were questioning Bitcoin. They were questioning, is this going to be around? Bitcoin had$3 ,000. Our view would let in, when you build a team of people that have such high conviction on something, it's going to take a lot more than that to shake us off.

53:59So our view of that was, we're just going to put our heads down and we're going to keep working. And we're going to work through this, whether it's a global pandemic, whether it's whatever it is, we're just going to put our heads down and keep working. And so shortly after they announced the Stimmy checks and Bitcoin goes, whoop, three to five. And then we start seeing a lot of the clients that had gotten liquidated just a few weeks ago come back and basically take our services many times to buy more Bitcoin. And we had noticed that they were coming back and they were also bringing their friends.

54:27We saw people from similar addresses all bringing in more and more Bitcoin. And I got talking to a few of them. And they said, oh, Mao, don't worry. I mean, I had positions. I had loans with you and a few other people. I got liquidated with all of them. But I love how you liquidated me the most. And so when I needed the service again, I loved the experience that I had with you guys the best. You guys treated me great. You always reached out to me. You were always clear about what was happening. So I came back. And when my friends needed it, I suggested you guys. And so they come and use their product when Bitcoin's at three and at four and at six and Bitcoin goes to 12 to 20.

55:04All these people are making a lot of, they're seeing their wealth ballooned. So they're mainly going to buy more Bitcoin at this point, right? Many times, yes. But also to buy or to meet living expenses that they just didn't want to sell Bitcoin. Yeah, because they didn't want to sell Bitcoin, yeah. And so in either case, you saw your wealth double, more than double, and then double again, and then double again. And so it creates this reflective, once you get a taste of what it is like to see Bitcoin appreciate for just holding it long term, and you understand that the value of holding it long term, nobody wants to sell it, which is a great deal of what you're seeing now.

55:39Right? Like today, our numbers are exploding. But I think it's because now that we've hit about$100 ,000, it's dawned on people that all those who hold it for four or more years do very, very well. Without mentioning a name, but as somebody you obviously know and I know, somebody bought, and I was at his house, who bought$2 million of Bitcoin at three.

56:04God bless them. And still holds it. Well, not all. I'm sure he sold some as he's gone to cover expenses. But just the compounding of wealth from the best performing asset of all time is something. I find people are so overly obsessed with the cyclicality that they don't see the secular trend. I mean, if you'd have bought those Bitcoin at 3 ,500 that were for sale, I think I was buying at 6 ,000 back in 2020. You know, just do nothing. But life happens. And so that's why, you know, again, people ask me, it's funny, like, how do you sell loans and stuff? Loans, you don't Nobody wakes up and says It's a great day to take a loan You know, I really feel like taking a loan today You're going about your life Something comes up Whether it's an investment opportunity A capital call Bitcoin's 2 million bucks And you want to upsize your house Things happen in you, in your life And, you know, I'll always say this to people If you can find the dollars Without borrowing them Or find the dollars from a bank Without having to put your Bitcoin as collateral you can get a better rate.

57:14Definitely. Use your portfolio as you see fit. But most people don't understand they're sitting on the world's best collateral. Yeah. The only issue with the collateral, it's a 70 vol asset. Correct. So your probability of getting cold is higher than if you're borrowing against the house. Just simple as that. Correct. But there's ways of understanding that vol going into it and planning accordingly, right? Because I have clients, Our loans start at 50 % loan to value. We built a cushion to withstand that volatility so that it's a product that you can go to bed at night. You're not on this constant fear of liquidation.

57:53We've built quite a few tools to help you meet top-ups if you need to or margin calls if you need to. We've created this option where you can leave a set amount on your custody account, your transaction account, and the system just sweeps it when the loan needs it, if you're going to be traveling, if you're going to be indisposed. sometimes people send over collateralize it like some people you can also work out the math you say oh i want to put enough bitcoin here so that this thing won't get sold until we hit a price of 5k you know and and some people go and do that proactively by the way we let you take out the excess collateral too right it's it's so we've also built a tool that lends itself so that people can protect themselves in as many ways as they can so you survived 2020 you build a book everything's great 2022 happens and the entire lending industry nukes

58:50um not easy building a business in this industry that's what that much i'll tell you no it's it's uh and unfortunately people wrongfully associated the collapse of of lending in 2022 with the activity itself. Lending against your Bitcoin is something that can be done very simply, very responsibly, and I would argue with better assurances than lending against any other asset. If I'm taking your Bitcoin and I'm keeping it in custody and I'm lending you dollars, it's very hard to miss that. Are you not hampered by the fact there's no smart contracts? Because you could make it even easier. Or you can use wrapped Bitcoin as well.

59:32That's all coming and stuff. Yeah, so there's ways of doing it in centralized and decentralized, and there's ways that you can do it through a smart contract. Our view is that Bitcoin, to your point, you can't program smart contracts on Bitcoin. So we give you a legal contract, right? Like we work with a qualified custodian on the back. Here's the legal contract. It says what we're going to do. It shows you where it's going to be. And you meet your obligations. We meet ours. You get the Bitcoin back. So it wasn't a limiting factor because we bridge the two worlds, right? So we give you the services that you would get at a fintech with the uptime that you get in Bitcoin and crypto and the responsiveness that you get in Bitcoin and crypto.

1:00:11So we basically built a product that can give you a lot of those traditional financial and banking type services that you need, but you can't get in this industry. and we needed to do that so that it would map the working hours of our clients and the working hours of our clients are always all the time. So we built the service that lets you do that. Mind you, if you come out and you get a loan application and you want a million US dollars disbursed on a Saturday, we'll have to wait for the banks to reopen. I'm sorry. But if you're asking for that disbursement to be done on stable coins, you'll get it.

1:00:47It's basically like a smart contract that lives and breathes. So you're saying that there were two different types of lending markets. It was the kind of over collateralized Bitcoin lending that you guys were doing. And then there was, I guess, the intermarket broker market maker lending stuff that was going on with Three Arrows. Did that not pollute you? I mean, how did your book survive that? Because most people didn't survive regardless of what they were doing? So the answer is, it's a multi-part answer, but like I was saying earlier, the collapse of the entities in 2022 was not because of what they were doing, it's because of how they were doing it, right?

1:01:32So if I'm servicing a loan to you and you give me your Bitcoin and I keep it safe and I give you the dollars you need and then I just wait, that is very difficult to mess up. If you're giving me the Bitcoin and I'm giving you the then I'm turning around and I'm lending that Bitcoin to someone else. And I don't know what that someone else is doing with that Bitcoin. Or they're giving me another asset in collateral and I'm going out and trading that other asset because I want to make that extra juice on the assets that I'm holding. That's when you open the company up for all sorts of problems. You and I talked about this over a glass of wine the other night.

1:02:06The issue is, is in a bull market when there's somebody driving the cost of borrowing down or the lending up, you become uncompetitive because you're not doing the rehypothecation, re-lending, so you can't offer higher yields. I mean, that's hard, right? That was very hard. And we did lose a lot of client assets to places like Celsius or Voyager at the time because they were dangling carrots in front of clients that were off market. you know they were paying 14 when we were paying 10 and back then i remember these conversations because they still had i had their some of these are still fresh in my mind because i'm a very competitive guy right i want to keep my book i want to keep my clients and when somebody came to me and said hey i'm going to celsius because they're paying me 12 i said first of all i respect competition i i welcome competition i do this for a living i don't know where I could deploy that and earn enough to pay you 12 and sleep at night.

1:03:11So you should ask them how they're getting 12. I'll show you where my 10 is coming from. You are giving me those dollars and I'm paying you 10 and I'm lending those dollars on the other side at 12. My rates are posted. My spread is two. You can see it. It's a sustainable business. How can they be paying you 12 when they're turning around and lending that money at one? Their posted loan rates range from six to one. So how are they paying you the 12th? But in the bull market, to your point, Raoul, nobody asked those questions. And also there was no regulatory guidance on what you could or couldn't do as one of these operators.

1:03:47So when you sprinkle zero interest rate environment with a hyper growth industry and no diligence from the client side, the result 99 times out of 100 is going to be trouble. And so we didn't partake in any of this stuff. So for example, Ledin has only supported a handful of assets that are deeply liquid, USDC, USDT, Bitcoin, and we just added Ethereum. During that 2022, we didn't even support Ethereum. So as you start adding more and more of these assets, the biggest flags for me were A, the platform has a token. The platforms with tokens have all sorts of ways of doing financial engineering and shenanigans to print that thing and to play games with it so that was the first one the second one was how many assets do you support because there's assets that are liquid as you know and there's assets that are not if i'm letting you take a loan on smoking chicken fish how which prime or which bank am i going to post that for for liquidity right like who who serious what serious player will take something like that yet it's the quickest way to add assets on your platform because everybody wants you to support the new fastest growing thing.

1:05:04And when you support it and you add financial services for it, all of a sudden that community now loves you, right? And now what the groups like Celsius were doing is they were adding anything under the sun, Chainlink, Doge, whatever came out, they were supporting it. You could offer yield on something, but if that something doesn't have demand for a yield service on the other side, you then have to go take that smoking chickenfish, turn it into Bitcoin, lend the Bitcoin, and you need to hedge both legs because there can be a situation where Bitcoin crashes and smoking chickenfish doesn't. So what these guys were doing is they were opening themselves up to asset liability, so asset mismatch.

1:05:46So you owed something, but you held something else. Then they had another problem, which was duration mismatch. They were taking open-term deposits and investing it in five-year payout mining infrastructure projects. When people show up to get their money back, you can't go liquidate a mine, right? So they had asset liability mismatch. They had duration mismatch. They were supporting assets that shouldn't have been supported. There was little to no regulatory guidance. Where does your yield come from then? So our yield came from, on the dollar side, it came from the loans that we issued. And on the Bitcoin side, where we did underwrite or we still do underwrite credit, we took what we thought were very basic risk management principles and guidelines that we apply here at Leiden.

1:06:36Like, for example, asking people for financial statements. And I know that sounds ludicrous. But back then, we were the only ones asking groups like 3ROs for a financial statement. Which I wouldn't give you. We wouldn't give us and that was why we denied loans to them three times, back to back to back. And they were losing it, that we were the only group that wasn't lending to them. But at the same time, because of that, our risk team, John started saying, I don't like that other people are lending to these guys without seeing an income statement. so anyway the point was we didn't lend to them we were incredibly diligent with those that we we did lend to and the other thing which was a massive became massively apparent with the with the voyager uh bankruptcy is voyager had 63 of the entire book to one counter party three hours capital all right as i said with you over drinks i've seen this all before this was long-term capital management.

1:07:39It was exactly the same story. There was one client. Yeah, there was a few other smaller ones that all got blown up, but it was one client that almost brought down the entire banking industry, prime broking industry. Same thing. And nobody knew there was one client. So as this started unraveling, and I think there was many other reasons, Raoul, why we survived and others did it. Another example was Terra Luna. How did Lenin survive Terra Luna collapsing because we never deploy client assets on DeFi protocols for yield. Never. And when this thing starts unraveling, everything, by the way, is on chain.

1:08:17Nobody sees Ledin running for the door or withdrawing because we're not involved. But they did see Celsius and Three Arrows withdrawing to the bejesus. And then when you start seeing people on chain withdrawing assets from a falling house of cards, you look at those entities and you're like, I want to take mine from that entity just as a precaution and it was the it was the the abrupt request for withdrawals on celsius and three arrows that basically made them forced them into declaring insolvency uh so that was another reason we were we we never use so you guys survive just by being conservative just running a good business doing not doing stupid stuff and not getting carried it away for the extra few hundred basis points and you're going to lose clients because of it but if you want to last in business because then you survive so where's the business today how have you grown since then so let in is uh i'm happy to share let in we've we've had the best month ever in the business uh in the month of november so far december is on track to blow november out of the water.

1:09:24So we, just to give you a sense, last month, we originated close to, I think, 66, I believe, million dollars in loans for the month. So far this year, we're up to like 25, and it's the 11th. So it's, you know, we're on average, I think we're pumping now three or four million dollars in new loans per day. And as it stands right now, so far into December, the The business is much more profitable than it ever was at the peak of 2021. We've been basically profiting. We've been profitable for well over, I would say, a year and a half, almost two years now. And so that's been fascinating to see. The banks, they went from not wanting to pick up the phone two years ago to now they are our biggest funding partners.

1:10:13We had an event with groups like BlackRock earlier this summer. we get constant inbound from some of the names that we would have never imagined wanted to get close to Bitcoin companies a few years back we have great support from our investors like Dan Tapiero who you know very well and others so they are incredibly excited about the future of Letend so that's been a tailwind as well and now we believe we're going to be looking at a big change of the tides in regulators globally stemming from changing in the US. And then another part is our clients are making a lot of money, Raoul. And that's the best thing for any business.

1:10:58What are most people doing? Are they buying real estate? Are they buying lifestyle chips? Or are they still using leverage for market price action? What are people borrowing for right now? So great question. The main use cases, we've seen a big uptick in real estate related loans. So many people are buying the house of their dreams. They find they've been saving for putting, whether it's a down payment or a full out purchase with a letter loan. Our loans don't have monthly interest payments. So a lot of people use them for very long term purchases. They don't have monthly interest payments. No, all interest fees accrue until you decide to repay it.

1:11:34So you basically buy it and you don't have to think about it other than managing your collateral LTVs until you're ready to repay the loan. And you can roll it. We have clients that have rolled their loans three and four years. And a couple of interesting ones. We had guys that use our loans to buy homes a couple of years ago. And now the value of the Bitcoin has basically more than repaid. The appreciation of the Bitcoin has more than repaid the house they bought. And now they have the house and the fully repriced Bitcoin. And so those are the stories that we live for, right? Similarly, I had guys that didn't want to sell the Bitcoin but needed to pay for medical bill or needed to pay for this.

1:12:12And now they're seeing their wealth double and they were able to get their service done. And so the product works, right? And that is, I think, the biggest tailwind we have going for us is that everyone that's used their product and managed it responsibly has built wealth. And they tell their friends, right? And friends try to meme, oh I thought you sold your Bitcoin no no no I didn't actually I took a loan I took all the upside oh so you bought the house and you also got the upside on the Bitcoin how did you do that actually check out this company called be careful Bitcoin is volatile but if you do it right you get the house and you get the Bitcoin and so people are saying oh my god and so when you're thinking about buying Bitcoin most people looking at Bitcoin today are not looking at a trade they're looking at a 4 year position a 3-4 year position and you feel a lot better about a four-year commitment when you know you can get some liquidity out of it and keep the upside at any point during those four years.

1:13:09So we have the old cohort. Especially because most of us run 100 % of our liquid net worth in crypto. There's no half pregnant here, right? You're either on the sideline or you're fully in. And so the people that are the old cohort have seen their wealth exponentially grow. They don't want to sell it and take a capital gains tax, but also the banks won't give them anything. So they're coming to us and they're saying, I'm going to buy that house. Here, let it take a couple million off my Bitcoin. Give me a mil. I'm going to go buy the house I've always wanted. And I have enough Bitcoin to manage this for the foreseeable future.

1:13:41Then the guys that are coming into the new position, they're saying, oh man, I want to get, I want to buy a million bucks. Man, I would buy more if only I could access some cash along the way, because I might have these two things coming up that prevent me from going an incremental old mill. But when you know that you can now take a loan, you say, oh, I'm going to go into the full clip that I wanted, and I'm going to keep something here at Letton to draw from this loan whenever I need to, right? And so the new guys are looking at this as a tool to hold for longer and with more conviction. The old guys are seeing it as a way of monetizing the wealth they've already built.

1:14:17Final question for you, because we've gone a long time already. How do you think about managing the next cycle? Let's assume there's still cyclicality as there is with all assets. You've gone through several learning periods as we all do. How do you think about that now? Great question. So for me, one thing that's true for Bitcoin is volatility, right? And every time you think it's gone, it just comes roaring back and it shows you that it's still here, right? so we are almost to a fault uh obsessive about working with our clients to expect and protect against a sudden move in price down right so even though the market's running high even though everybody's at all-time highs and excited we're going to people and saying did you know about auto top-up did you know that you can use this feature to meet collateral uh calls if and when your loan needs it did you know that we don't punish you for over collateralizing your loan if you want to have an extra buffer.

1:15:19And so what we have found is that over time, when we get these 30 % drawdowns, like the Japanese yen on wine was the most recent one. I think it was August. Every time we see a 30 % drawdown, we see a smaller percentage of our book get liquidated and smaller and smaller and smaller and smaller and smaller because, and we see more people utilizing things like auto top up. We see more people proactively sending Calaro on chain. We see more people sending more Bitcoin to the loan as the market starts rolling over, such that when the market does move does happen, everybody can just bounce back and be happy, right?

1:15:58So education is a big part. One of the things that we are, like I mentioned, our clients are smart people. If I tell you where the goalposts are, you'll figure out how to score or not get scored on, right? So we're pretty obsessed about here's the goalposts. Make sure you're planning to score and not take any goals against you. That number one. Then number two, educational one. Then tools. Auto top-up, we've had for now over a year. I am happy to report that 99.999 % of the people that have used the feature have seen their loan protected. One person in this cohort left some dust on the transaction.

1:16:38So it worked, but it just moved over dust. and the level just led through butter. And he stops me for saying 100%. But I can tell you that everyone that's used this tool has benefited from it. And our team, if you go online and look at what our team is going to do, if you ever need something at LetIn, we'll get back to you like this. And we'll assist you, whether you need to reset a password, whether you need to change your tool of faith for whatever reason to log into your account and be able to top up that loan. We're here 24-7. Marussia, super interesting. It was a great conversation, great story, and just really interesting to see a new business developing like this.

1:17:17And you've gone through the whole ups and downs of it, the learnings, and building something that's very useful because people have an enormous amount of wealth in this asset. and they need to be able to access some of that wealth in ways that if they were a billionaire and they had art, they can go to UBS and borrow against their art. If they've got gold, they can borrow against their gold. If they've got houses, they can borrow against their houses. Yes, this is a 70 vol asset, so you can't borrow as much money against it. But if you can borrow it in a safe way, it kind of makes sense. and it's a 70 vol asset today uh because i think that as people and more and more people figure out that this will be the reserve asset of the world vol goes down yeah i see this trading a lot more with gold's vol what is what's gold vol at 20 like i don't really know what i don't know but let's assume yeah of course over time as you hit deeper adoption all right my friend thank you so much.

1:18:21And let's see how the rest of the cycle plays out as well. Always a pleasure. See you soon on the island. See ya. Well, Maurizio's story is one hell of a story. But it's not just him. There's millions and millions or tens or if not hundreds of millions of people trapped in similar regimes where they need to find a way out to find a desperate solution. His story of selling anything at any bid just to get dollars is terrifying. But that happens all across the world. It's happened obviously in Zimbabwe, Venezuela. It's happened in Argentina. It's happened all across Africa. It's happened in so many countries.

1:19:01Everything is fine until it isn't. And Bitcoin and this parallel financial system gives us a way out. And once you've opted into that financial system, there are new services being built for that new crypto economy. And that gives us all a chance to secure our future. Anyway, I hope you enjoyed it and I'll see you next time.

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1:21:34Thank you.