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Speaker 1
Hi. Welcome to Dig in the podcast brought to you by Dig Insights. Every week we interview founders, marketers and researchers from innovative brands to learn how they're approaching their role and their category in a clever way.

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Speaker 2
Hi, welcome back to Dig In. Today we're talking to Luke Jacobi from Benzinga. During his tenure at Benzinga. Luke has built products, managed operations and currently leads B2B partnerships. His contributions have led to wider distribution of Benzinga content and changed the way investors consume financial information. Throughout the past six years. Luke has helped produce content that has been consumed by more than 10 million people.

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Speaker 2
Good morning, Luke. Thanks so much for joining us today.

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Speaker 3
Absolutely. Thanks for having me.

00;00;54;27 - 00;01;05;17
Speaker 2
And so the big reason we're talking to you today is the future of crypto conference that's coming up in New York December 7th, I believe. Can you give us a little bit of background on that?

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Speaker 3
Yes, well timed. It's been a wild couple of weeks in crypto. You know, where there's a couple of things going on. One is we're in the midst of what was dubbed as the crypto winter. Right. A prolonged bear market for the crypto world. And so when this event was coming together and were thinking about what do we want to do, what does Benzinga want to do for its investor community in the second half of the year we said, Hey, let's plant our flag in the ground for this asset class.

00;01;34;26 - 00;01;57;02
Speaker 3
Now, it's an asset class that we believe is here to stay. We have millions and millions of readers who care about this asset class are invested in it. And so we said, Hey, even though we're in this bear market, let's bring the community together and get some answers as to what's coming next. Over the past couple of weeks, we saw the blow up one of the largest crypto companies in the world.

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Speaker 3
And so the event is is pretty quickly morphing into becoming the meeting place where the industry is going to come together and say, here's where we go next. It's the first time that the whole industry is gathering post RTX. And so we're basically going to map out here's how we restore consumer trust. Here's how we get proper information out to consumers, etc..

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Speaker 2
Yeah. So for those people who are not aware of of FDX and as you said, it's sort of a seismic impact that it's having on the total market, you know, the entire crypto market. You know, there's of course also been a lot of talk within the last, you know, really the last year about the correlation between crypto and the broader, broader market anyways for specifically the Nasdaq.

00;02;47;18 - 00;03;07;27
Speaker 2
But if we look at the impact specifically of this scandal, obviously it's had some impact on pricing across a lot of crypto. The biggest crypto of course, still being Bitcoin. But can you give us like a 10,000 foot description of sort of what happened with with SBF and crypto? Sorry. And FDX?

00;03;09;07 - 00;03;31;28
Speaker 3
Absolutely. So so RTX is one of the largest centralized exchanges. So it's one of these meeting places where users can go and say, hey, rather than me figuring out how to get bitcoin myself, I want you the exchange to go out. Find that bitcoin for me. Here's some cash. Give me the Bitcoin in exchange. And so it was one of the largest exchanges.

00;03;32;20 - 00;03;58;15
Speaker 3
Users had assets, they thought on that exchange. And a lot of those assets have been used to fund business operations, have been used for other investments that the business itself was making, not the client investments, but the investment the business was making. All of a sudden we get a run on the bank. And so a lot of those assets that consumers want to pull out, they're not able to get out because that money had been used elsewhere.

00;03;59;24 - 00;04;18;14
Speaker 3
Given that this was one of the largest crypto exchanges and it was probably the most widely used institutional crypto exchange. It causes ripples throughout the industry of everybody saying, Well, we thought this is one of the good players. This is a place where we were safe. Turns out we aren't. Who can we trust?

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Speaker 2
And it's been such a big scandal because it pulled in a lot of celebrities, too, like Tom Brady and his in his soon to be ex-wife and even Larry David. I mean, this has gotten a huge amount of exposure. And also, you know, all of these these conspiracy theories around the Democratic Party, although we do, in fact, know that that he was a large contributor to the Democrat Party.

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Speaker 2
You know, the details are murky around, you know, this the sister company that he had, this Alameda research. I think I pronounce that correctly.

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Speaker 3
Yeah.

00;04;57;03 - 00;05;29;22
Speaker 2
And what that company was doing. So obviously, all of this has had a big impact on everyone, everyone who's looking at crypto. In fact, we ran a survey. We're still running a survey. And I'll just share my screen with you right now. Looks among a thousand Americans gen pop. And we asked the question, you know, have you heard seen or read any recent news about FDX and an SBF, the Sam Bankman-Fried?

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Speaker 3
It's a good one.

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Speaker 2
And almost 40% of people have. I mean, that is really high awareness for a story that's I guess just like a little over a week old. Is that about right? Is that kind of what it is.

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Speaker 3
And it just story. Okay. So so 40% of what was who are you serving? Is it North Americans or.

00;05;53;03 - 00;06;12;17
Speaker 2
It was just U.S. citizens, a thousand gen pop people. And so far, we have 731 people. We just launched the survey this morning, 731 people out of 1000. So by the time this podcast airs, it'll be complete and we'll have it on our public dashboard for anybody to look at. But almost 70% of Americans.

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Speaker 3
40% of all Americans. That's crazy. Yeah. And that's a big story.

00;06;18;00 - 00;06;41;29
Speaker 2
Yeah. And you know, we asked them, how would you explain the story to someone who hasn't heard about it? And there's a lot of confusion. You know, some people kind of have it have it right. And and other people are not really sure. But, you know, descriptions like a major financial exchange that has collapsed due to fraud and abuse by its top management founder and CEO lost all his money and stepped down as CEO of the crypto company.

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Speaker 2
So they generally get it. They know that, you know, something something untoward happened here and it caused the entire exchange to tank. So people are definitely getting it right now.

00;06;53;02 - 00;06;58;23
Speaker 3
And you Rob, people know he's broke. Yeah. You know, I think that's pretty succinct.

00;06;59;11 - 00;07;21;18
Speaker 2
To the point. And then what we asked, you know, we asked people who had her, you know, either they'd read about it or they weren't necessarily sure. So I think we excluded from this question was the people said, no, I haven't heard anything. And we said, Has the scandal changed your impression of the cryptocurrency market? And and, you know, 48% of people have said yes for the worse, unfortunately.

00;07;21;18 - 00;07;27;26
Speaker 2
So definitely something that is going to have to be addressed by the remaining exchanges.

00;07;28;19 - 00;07;59;23
Speaker 3
And that's why we're doing this event. And that's what this event on December 7th in New York City is turning into. You know, we can feel anecdotally now, we know it, you know, quantitatively, without a doubt, given the research that you did. But anecdotally, we could feel that there is a big violation of trust that's happened. We need to come together as an industry, as consumers, as the businesses and as the media firms, and figure out where do we go from here?

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Speaker 3
What do we need to do differently to restore that consumer trust? I mean, 60% of people saying that this negatively impacts their impression of the crypto market and that hurts 50%. Yeah. Painful.

00;08;12;24 - 00;08;42;21
Speaker 2
Yeah. You know, of the 40%, you know, generally who've heard but you know some broader questions before we even got to the Sam Bankman-Fried and and FCX questions, you know, we asked people just how familiar they are with crypto. You know, 21% of people know something about it. 13% or 14% of people think they're fairly knowledgeable. And and 6% of people say they know more than the average.

00;08;42;21 - 00;09;02;21
Speaker 2
So there's still a relatively low level of people who really feel like they know a lot about crypto. But the you know, the overall percentage of people who said when we asked, again, this is gen pop of, you know, almost a billion people, how likely are you to buy any cryptocurrencies in the next 12 months? We're looking at almost almost 30% of people saying they definitely will or probably will.

00;09;03;06 - 00;09;31;23
Speaker 2
So even though there's obviously some concern from the FDX fallout that you still looking at 30% of gen pop saying, yeah, I probably will, and then another full 25% say they may or may not. So these people who are sitting on the fence are the exactly the type of people that your conference, you know, what comes out of your conference and how that how that messaging impacts the broader market or the broader communications that are being made.

00;09;32;03 - 00;09;39;01
Speaker 2
Could have could make a big difference, because we're talking about a quarter of the population saying they may or may not and they have not necessarily.

00;09;39;13 - 00;10;03;12
Speaker 3
Huge leads to is only so I was going to say one thing I think that speaks a lot of volumes on like the resiliency of the cryptocurrency market currently is if we look at question 12, roughly 43% of people have been denied access for to an exchange, whether it's with withdrawals or depositing or trading activity and we still have the sentiment we do all right.

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Speaker 3
Which I think shows kind of the resilience of the crypto market so far on that. You know, even if you go to your bank right now and you try to deposit or take something and they refused you, you're probably pretty angry about it. Yeah, the crypto space is still able to overcome that, which I think is, you know, speaks volume to the fact that people are really interested in the technology currently.

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Speaker 2
And so some of the people that are going to be at the conference, Kevin O'Leary.

00;10;27;18 - 00;11;01;05
Speaker 3
Anthony Scaramucci and both of those folks are interesting because they have some sort of personal connection to the FTC's story. They're on stage together. That's how we're kicking off the day. Kevin O'Leary is an equity investor and held assets at FCX, so we're going to see his perspective and where he's coming from then. Anthony Scaramucci sold about a third of his company to FCX in six months ago and so now he's got to figure out how does that get unraveled during the bankruptcy process, etc..

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Speaker 3
But to people with big dollars at stake, highly tied into this story, highly influential.

00;11;08;23 - 00;11;33;25
Speaker 2
And another part of that that I think makes it all much more complicated wasn't FDX. They're incorporated in the Bahamas. Right? So isn't there there's issues around if U.S. bankruptcy is recognized in the Bahamas? I mean, it's going to be and and here's my big question. I don't know if anybody has an answer for it. I've got two very knowledgeable people about crypto on the phone, Luke obviously from Benzinga.

00;11;33;25 - 00;11;52;13
Speaker 2
And then Erik Ferrara, who's our our resident crypto expert here at Digg where did all this money go? Like, it feels like it's just like lost in the clouds somewhere. Am I am I missing something obvious? Like there was billions of dollars there. And I know, obviously, that he made some errors in some some big bets that went wrong.

00;11;53;22 - 00;11;58;26
Speaker 2
But doesn't it feel like there's still like billions unaccounted for or that's what it's.

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Speaker 3
I mean, I think the key is that it didn't exist to begin with. Like a lot of it was coming from backed by this FTT coin, right. Which is propping up a lot of the value of it. And it turned out it just didn't have value. Right. So if all of a sudden someone said, hey, bitcoin right now actually is worth $50, you know, obviously a lot of money just disappearing from the market.

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Speaker 3
And I think that's kind of what we're seeing here a little bit. There is some money that does exist and that stuff is where hopefully, hopefully that Enron lawyer can can deal with that. But I think that's where a lot of the money has been going. I don't know about you. Look, yeah, I think that's definitely part of it is, you know, a lot of it existed arbitrarily in that we said it had value.

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Speaker 3
Thus there's value on some asset. There's a lot of illiquid assets as well. You know, they bought after bought a lot of private companies. They got on the cap table for a lot of private companies. You know, they bought naming rights to a big some major sports arena in Florida. You know, a lot of those assets exist. But if they're having a run on the bank and customers need assets today or tomorrow, you can't unwind $1,000,000,000 business that you bought in a day.

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Speaker 3
You know, you need six months in order to unload that. And then take a $100 million discount on it and then have $900 million available for customers.

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Speaker 2
Right.

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Speaker 3
Well, let's not forget to what I think is one of the craziest parts of this story is that after as everything was going down, $600 million just vanished in a hack.

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Speaker 2
Yeah, right.

00;13;42;00 - 00;13;44;28
Speaker 3
Yeah. That's a huge chunk of change, too. Yeah.

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Speaker 2
Well, we, you know, we asked another question in the survey again, this was only asked of people in this case of people who'd actually, you know, ever, ever, ever used an exchange. But cryptocurrencies are traded on exchanges, which the following exchanges have you ever heard of. And the biggest is Coinbase in terms of awareness, followed by crypto dot com, then Robinhood, then Binance, then FDX.

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Speaker 2
So FDX was definitely a massive exchange. But there's, there's other exchanges that had at least broader awareness. And in many, at least from a reported point of view, you know, crypto, Coinbase had more people said that they never used it. Has it shaken the confidence in any of these other any of these other exchanges, do you think?

00;14;36;28 - 00;14;56;18
Speaker 3
I would say yes. In the combination of this question, plus that hack that I just mentioned that happened on FTC's or a couple of the key questions we're going to be trying to answer at this event. All right. We want to come together and figure out, okay, what do consumers need to hear in order to trust that their money is safe somewhere?

00;14;57;10 - 00;15;15;20
Speaker 3
What do we need to do as the industry for consumers to say, okay, I'm going to give you $100 and I feel really good about the fact that I can get $100 back whenever I want to any point in the future. And let's start pointing consumers towards those good actors as well.

00;15;16;15 - 00;15;40;29
Speaker 2
Right. Well, the last thing is we asked a whole bunch of agreement statements. We said, how much do you agree or disagree with each of the following statements? Cryptocurrencies need to be more regulated. Cryptocurrency exchanges need to be more regulated all the way down to. Do you agree with the statement, eventually only Bitcoin will be left. And you know, we sorted we're sorting those answers from largest to smallest here.

00;15;41;16 - 00;16;23;26
Speaker 2
And I think it's really interesting to see that the two most agreed to statements were a cryptic currencies need to be more regulated and cryptocurrency exchanges need to be regulated. 66% of people somewhat or completely agreed with the statement. Cryptocurrencies need to be more regulated now. We didn't do this pre the FTC's scandal, but I have to feel like this this desire for more regulation has to have been impacted significantly by FDX because I think before one of the one of the biggest attraction attractive points to bitcoin was it's somewhat it's it's it's it's less regulated position.

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Speaker 2
Do you think that's true?

00;16;25;23 - 00;16;52;03
Speaker 3
Look, yeah, that was definitely a that was definitely a drawing point is that hey you don't have government institutions interfere. And I think that our industry's mood or opinion on this topic has changed in that is still a big advantage is that you don't have central banks, banks that are inflating or deflating or manipulating the value of the currency.

00;16;52;03 - 00;17;24;16
Speaker 3
So so we still have that, that that's a positive. But again, as consumers, we need to be able to trust these businesses. And so I think that that the direction that we're headed in, again, I will talk about this at that December 7th event and where we want to go. But I think that, you know, we we want to have the level of regulation that can give consumers trust that, again, I give you $100, I can get $100 back, but not the level of overregulation that's impacting asset prices.

00;17;24;25 - 00;17;27;01
Speaker 3
Who I can transact with, etc..

00;17;28;00 - 00;17;41;18
Speaker 2
Well, it's definitely going to be an exciting conference. I think there's a lot to talk about and a lot of people are going to have a lot of very strong opinions about what happens next. What's the talk that you're most excited about there? Luke.

00;17;42;22 - 00;17;46;07
Speaker 3
Kevin O'Leary and Anthony Scaramucci That's going to be a good one.

00;17;46;25 - 00;18;00;18
Speaker 2
I've seen Kevin talk before, and he never seems to. He never minces words. He comes right out with his opinion, and I think that's going to be really interesting to see. So I think it's going to be a really exciting conference. If people want to check out more about the conference, what should they do? Go online to find it.

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Speaker 3
So just search Benzinga Future of crypto. Just type that into your bar and you'll get it.

00;18;07;03 - 00;18;13;01
Speaker 2
Fantastic. Any any final thoughts or anything you want to leave us with today? Luke Before for me sign out here.

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Speaker 3
I'll say this. My email address is just Luke at benzinga.com. Looking at benzinga.com, we love to talk markets, as do all of us market junkies over here at Benzinga. So if you have any thoughts or opinions, feel free to shoot me a note. Questions about the conference, shoot me a note and let's keep the conversation going.

00;18;31;20 - 00;18;34;20
Speaker 2
Fantastic. Thanks so much for your time today. Really looking forward to the conference.

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Speaker 3
Absolutely. Thanks to you. And thanks, Eric.

00;18;41;02 - 00;18;48;00
Speaker 1
Thanks for tuning in this week. Find us on LinkedIn at Digg Insights. And don't forget to hit subscribe for a weekly dose of fresh content.