Binance-FTX Cancelled and Meta's Job Cuts

this show. Plus eleven thousand employees at Meta laid off as Mark Zuckerberg admits his Metaverse vision was a mistake. We're going to dig in and Reid Hoffman joins us to talk about the next decade of tech innovation and how big the future is for AI. Plus Gary tan is with us to talk about how he thinks tech and Silicon Valley survive a looming recession. But first, before we get a check of the markets. You may have read that this is my last week coasting bloom Brick

Technology after twelve years sitting right here. I'm going to be expanding our coverage with new shows focused on the most important people and issues at the heart of Tech, Business and Culture. I'm not gonna cry. I'm gonna try not to cry yet. Um, but I might tomorrow, which is going to be my last day officially in this chair. So I don't want to linger now, but I do want you to know that every day has been special

and there's so much more to come. Meantime, US financial regulators are investigating whether f t X properly handled customer funds as Finance walks away from a deal to save Sam Bankman Freed's exchange bloom Brigs. Katie Greifeld covers the markets with us. Katie, what has happened in the last twenty four hours. You know, almost as quickly as Finance said it was going to come to the rest you, it's already backing away from this deal. And it seems

that there's two big concerns here. There's that big financial hole that Finance was looking into when it actually looked at ft X is financing. There's great reporting on the Bloomberg terminal breaking just in the last few minutes that Sam Bateman Freed told investors that f t X was going to need a cash injection or it's going to file for bankruptcy. They SPF told investors that the company faced a shortfall of up to eight billion dollars. That

is quite the hole that we're talking about. The other side is what is going on with the customer funds. Another Bloomberg News exclusive today breaking the news that US regulators are looking at that issue, whether f t X improperly handled customer funds. You look at the statement that Finance put out, it seems that both of those issues were top of mind when they were considering whether to

actually go through with this takeover. Katie. Brian Armstrong, the CEO coin Base, called into the show yesterday to talk about his take on the deal, and we asked whether coin based had thought about acquiring f t X. Take a listen to what he said. I had a number of conversations with people over the last twenty four hours, and um, there's reasons why that would not make sense, and I're not quite at liberty to share the details

right now. I think I'm gonna let other people share that if and when they're ready, or probably all come out eventually. Some foreshadowing there maybe what should we be looking out for going forward? I think the big question, among many big questions is what actually happens to f t X users right now. And also in that interview which I was tuned into, that was a great get. I mean, Brian Armstrong also made the point that if the deal does fall through, then f t X customers

would face losses. And that's what's at stake here, because if you think back all the way to yesterday, we got a tweet from SPF saying that all asserts will be covered one to one. This is one of the main reasons why we've asked finance to come. And so without finance there to provide liquidity for those massive withdrawals that FTX is facing, it's unclear what happens here to those actual customers. All right, Bloomberg's Katie Greifeld another one.

We're going to continue to watch every twist in turn. Thank you for that update. Meantime, Meta CEO Mark Zuckerberg saying the company will cut more than eleven thousand jobs. This is the first major round of layoffs in the social media giants history. From where I want to bring in Bloomberg's Alex Brinka, Alex, eleven thousand is a lot of people. Where are the what departments are these people coming from? And how were these decisions made? Emily, No

team was spared here. Mark Zuckerberg told the organization this morning that every single app, Facebook, Instagram, WhatsApp would be affected, as well as their metaverse efforts which sit in reality labs. But there are two that I want to point out that seemed to have been hit the hardest. That is recruiting as they also have a hiring free still in effect, and some of their business teams that will be restructured now.

In a memo that went out to employees that was reviewed by us here at Bloomberg existing employees who are staying, it was said that the highest levels of leadership actually made these decisions and most managers didn't actually find out about it until this morning, of who would be staying on their team and who would actually be departing amongst those eleven thousand employees. Let's talk about Mark Zuckerberg's words here and what he took accountability for. I believed to

even used the word sorry. He said, I want to take accountability for these decisions and how we got here. I know this is tough for everyone, and I'm especially sorry to those impacted. How much further did he go in terms of talking about the big metaverse pivot. Yeah, he said frankly. Um, he got it wrong. Not so much about the metaverse pivot, but the bet they're making right now that this big shift to online shopping and spending more time online that we saw during COVID would continue.

They staffed up to be ready for that. And not only is that bet, um kind of flailing here, Emily. To your point, they have this massive bet on the metaverse they're now spending too, so a really tough time for them. The shares are down this year, even with that little pop that we saw today. Um, and maybe some questions for where Mark Zuckerberg is guiding both the social media part of the business and this new bet, this decade long bet that will all spend more time

potentially in virtual reality in the metaverse. What's the mood like inside Facebook right now? My sources are telling me that seemed a little random in terms of how the decisions were made. Uh, folks weren't necessarily consulted. They found out early this morning. Um, you know, power folks feeling. Yeah, it's pretty gloomy, Emily. If you can imagine, you know, it's hit or miss in terms of who is staying

on teams. Also, you know, we're hearing that this restructuring could take some time, so what the company would look like that's not you know, written in stone as of today, on the back of the Twitter news on their big layoff a week ago and tacking on um these additional eleven thousand jobs, that's about fifteen thousand people in social media that are out of a job in the last week.

So not only is it gloomy on the inside, but if you spend any time on LinkedIn today, you see folks looking for new prospects, and you've got to think it's a tough world if you're a social media expert in terms of who might hire you once you're out the out the door meta. All right, bloombergs Alex Barnka, thank you so much for that update. We'll continue to

watch your reporting on this meantime. Earlier today, President Biden said Elon Musk's ties to other countries are worth looking at, though he declined to say if he felt Elon Musk has been doing anything inappropriate. Uh, We're gonna talk a little bit more about Twitter later in the show. Reid Hoffman will be joining us to talk about that and much more with a wave of tech layoffs, including now

met up. What does this all mean for the Silicon Valley ecosystems, from startups to the world of venture capital. I want to bring in Gary Tan now for more on this. He is the founder of Initialized Capital and the incoming chief of the very popular startup accelerator y Combinator. Gary,

thank you so much for joining us. As you know, it's a special week for me and for this show, and you know, so much has changed since I started covering Silicon valid I'm just wondering where you were twelve years ago when Bloomberg Tech launched, Oh gus, I was a software engineer working on my startup, Posterous, which was a y C company. I hadn't even become a partner at y C yet, and two thousand and eight we actually closed our seven hundred thousand dollars seed round the

day Lehman died. So, you know, for people who are watching right now who might be affected, you know, I really do feel for you because you know, this type of day, it's such a shock. Um. But you know, also two eight two tho nine was such an incredible time to start companies, and you know that you have to take the good with the bad. Eleven thousand people laid off at Meta alone today. How bad does this get in your view? You know, I really feel for

those families. I feel for every single person who is going through you know, that type, that magnitude of layoff. UM. But one of the things that I'm sort of excited about that, you know, there there is a silver lining in that these are really smart, really dedicated people. You know, Facebook has an incredible hiring bar, and I think about a lot of human capital, a lot of human heart and minds that now can be applied to Frankly, all of these other problems that you know are sort of

facing societ idea and humanity UM. And I'm excited about what gets unlocked here because you know, for the for practically, I don't know, three five years, the number one thing that frankly startups really faced was how do we find people who are as smart as you know, a Facebook engineer or almost any of those roles. And so, you know, on the one hand, this is a sad day. On the other hand, you know, I'm kind of excited to see where all of these people are going to go.

And some of those people are going to start new companies that actually become the next Facebook, the next Meta, and uh, you know, I think that that is something that I'm excited to see. There are some people saying Silicon Valley is turning into a waste land at San Francisco is over, and they were saying this, you know, before these layoffs even started to happen as a result of the changes from the pandemic alone. I know you're very steeped in the culture of San Francisco, and I'm

guessing you disagree, But what do you think? Yeah, I think San Francisco from time immemorial was a place for dreamers and doers to come and try to you know, try their hand at their own future. But you know, there's something very special about technology in San Francisco, which is we've you know, brought together some of the smartest minds and then they go on to create products and services for a billion people. And um, you know, we might have gone through are a big wave over the

last decade, but there's a new wave. You know, I keep meeting new you know, twenty five year olds, thirty year olds like you know, people who are sort of just starting their career um and some of them might be sort of leaving some of these tech giants. And there we're realizing that, hey, we can start a company, we can create a product or service, and it comes from actually solving real problems for customers. Right and so, you know, whether it's crypto or you know, sass software,

sort of across the board. You know, even though this is a time of sort of destruction, there is creation and that is growing out of you know, sort of the ground from you know, the wreckage of some of these uh, you know, quite regrettable situations. Right now, you know,

the seed uh is in there and it's growing. And we were we were going to hear about the next you know, meta, the next billion dollar or decacorn company that is sort of starting exactly like you know, a startup like my startup started, uh the day Lehman died. So what does this actually mean for early companies right now and for investors like yourself at the earliest stages. How do you make decisions about where to put your money and whether to put money in anything at all,

given the way the economy is going. Yeah, I think the very special thing about early stage is that you know, you are starting from small numbers. You know, a startup. As Paul Graham wrote in his famous essay, a startup equals growth. And when you're small, you can outrun any macro situation. You know, the macro situation might be the heights of one when we were starting to tell people, hey, you know, be where there might be, you know, recession ahead.

And you know that was something that we started saying towards the end of last year, you know. Or we might be all the way down on a day like this where I think all of us are sort of trying to figure out, like what does this mean and how much lower does it go? But in that in that time or this time, there is the ability for a small team to build a product or service and

grow to x four x ten x per year. And so if the mac even if the macro situation goes down from here, like if an individual company can show that it can grow three x, five x ten x, you know, a hundred x over a hundred x over several years like that, that will outrun you know, the worst, even a great depression if you can do it. And

the thing is this is impelled by technology. You know, their new problem MS and you know, things like Generative AI right now are just blowing people's minds, and you know, I think that they're the fruit of the next great companies. It really comes from that technology and from the builders who are being unlocked right now. Well, speaking of building and disrupting, Elon Musk taking over Twitter, you're a Twitter

power user. I'm curious what you think of what he's done so far and what the plan seems to be, and maybe if as a power user, you have any advice for Elon Musk. That's a great question. I mean, I love Twitter, and you know, I think the number one thing is I'm also feeling for my friends over there, who are you know, sort of sleeping under their desks, you know, working through it. So all I can say is, you know, take care of your people, and you know,

take care of us as users. And you know, I know that he's uh much maligned by certain people right now, but you know, I'm rooting for them. I'm rooting for Twitter as a come company and as a user. I've spoke with Representative Rocanna earlier. You're going to hear part of that conversation in a moment, but he called for more regulation of big tech, which may be more unlikely depending on how the votes shake out. I know you're heading to the White House next week with one of

your portfolio companies. What do you think the role of Washington should be in the next generation of tech innovation and perhaps not repeating some of the mistakes or lack of action that we've seen in the past. Yeah, so

I'm headed to d C with Beeper. It's one of our initialized companies that's creating a universal chat app, and one of the things they really want to do is sort of take away the green bubble blue bubble problem and that you know, that's just kind of a silly example in one sense, in one sense, but it is

actually uh emblematic of a much bigger problem. And those are things that we hope to solve with the Innovation and Choice Act Online and the Open App Markets Act, which frankly, we really hope Senators Humor will actually bring to the floor. You know, he's claimed that the votes aren't there, but we're pretty sure there are more than enough votes. And you know, for me, when I look at early stage, it's really about making sure there's a fair and level playing field, and it's really clear to

me that we don't have that right now. Apple and Google certainly mean well, but they're still looking out for their main interests, and we want choice and freedom and we need to protect the ability of founders, you know, perhaps in the garage in San Francisco and Mountain View, wherever they are in the world. Even we want them to be able to create something that touches a billion people. And you know, that's really what we want with these two bills. We want a fair and open dialogue and

a way for consumers to actually win. I have a minute left, Gary, and I'd love to get your advice now. For the folks who are let go today, what would you say to them? I mean, go home and hug

your kids, you know, if you got them. Um. But at the same time, you know, maybe if you've been playing it safe like this whole time in your career, um, it might be time to go out and find you know, some frontier tech, something that you're interested in, and um, you know, research the startups, research what you think might change the world. And you know you don't have to, you know, take a job offer, but interviewed a bunch of them and figure out, you know, is there a

fit is this place right for me? And um, you know, building equity and helping build new things that have never existed before. It is the most exhilarating experience that I've ever had professionally. UM, and I just really hope you know, I think that it's just a hard moment right now. Um, and you know, the future is a little bit uncertain in terms of you know, what might whether there's a recession or not. You know, the macro picture doesn't look

that great. But I just want people to remember that that there new technology is still being built and are companies big and small that are still you know, fighting that fight, and uh, you know they need your help. So you know, dust yourself off, and you know we're going to go build the future. Build indeed, Gary Tan, thank you so much for joining us and sharing all

of that on a on a hard day. And of course we're also excited about your next chapter two, founder and partner at Initialized Capital, and of course incoming head of y Combinator, thanks for having me coming up. Thank you my discussion with California Representative Rocana about the outcome of the mid terms and Elon Musk his thoughts next this is Bloomberg back to the mid terms and what impact it will have on the future of big tech

regulation in Congress. Representative Rocana was with us earlier. Take a listen. First, it's just on a human level. I'm sad and concerned about the layoffs. I as you know, represent the district of the Bay Area and so many of those people and their families are in my district. But more broadly, we're gonna need more investment in uh, content moderation that respects the First Amendment, but that is not allowing speech that incites violence or that is spreading

blatant conspiracies and lies just to get more attention. And that's something that Congress needs to regulate. We haven't uh, and we need to regulate on privacy. But otherwise those uh social media platforms are spewing often uh, real poison into our democratic discourse. You've got a new label on your Twitter profile identifying you as a US representative. Some

accounts are already be being labeled official. What's your opinion on the approach Elon Musk is taking a Twitter so far and the difference between the right to free speech and the right to amplification of free speech. Well, look, I know Elon Musk, and I will give him the same advice privately as I do publicly, which is he shouldn't be running Twitter, just like Jeff Bezos doesn't run the Washington Post, and people who own CNN don't run CNN. Uh,

and Michael Bloomberg doesn't sit there running Bloomberg Television. I think he should appoint an independent board of people who will make the day to day decisions. Some of the ideas of getting rid of bots, those are good ideas. I mean, the bots are responsible for some of the worst algorithmic amplification. But I don't think Ellen wants to be sitting there making a decision about which tweet should

be on and which tweet should be off. Full interview with representative Kanna at Bloomberg dot com and of course we'd like to know. Mike Bloomberg is the founder and majority owner of Bloomberg LP and the parent company of Bloomberg News. Welcome back to Bloomberg Technology. I'm Emily Chang in San Francisco. Computers are now creating never before seen the images in seconds, think apps like Dolly or Crayon. It's called generative artificial intelligence and Silicon Valley investors are

betting big on the future of this emerging technology. Reid Hoffman is one of them. The Lincoln co founder and partner at Greylock Partners recently sold a collection of his own AI art for charity, and he joins me now and read, thank you so much for joining us. You've been such a huge part of this show for the last twelve years, and for that I am very grateful, Um. And I'm just so curious to hear your thoughts on what is going to find to define the next decade

of innovation and technology. If it was networks for the last decade, is it AI for the next it is I think actually is as hot as it seems this year, even next year it's even gonna be hotter. Um. I think the question about having essentially the equivalent of professional aid like Microsoft product called Copilot for engineers, I think that will be within five years present for every profession.

It'll be for journalists, for dcs, you know, for uh, you know, journals like you know, just doctors, lawyers, the whole thing and those tools will start and they will be central to how we we've been doing. In Senate, Greylock We've been investing this for years because we've seen this coming, um you know. So we have adept in Crest and Snorkel, and of course I co founded Inflection

with Mustafa. But I think this will be a trend of human amplification through these artificial intelligence technologies which we've never seen its like before in human history. The question is how do we maintain the human So, for example, how do our everyday lives are, everyday working lives intersect with a future of work and AI. Well, this is

one of the reasons when open ai launched. Dolly I wrote this essay that was on LinkedIn because the natural thing to worry is that, oh, it will take the jobs from graphic designers and like graphic designers will be out of work. And actually, what I realized by having the time to play with it is that whether whatever your graphic skills were between none, a little, a lot, it's an amplifier. Now what you'll have to do is you'll have to learn it. It'll be like learning Adobe

Photoshop or Figma. It's it's I need to have now have this as part of my professional tool for how I'm operating. And that's what's going to be true for all of it. So there will be changes and it will be you know, like transitions, you have to learn a new tool, and one of the things that you know, when you're an older professional like me, learning a new tool can be a little stressful and challenging, but but it's doable. And you know, currently it goes by the

geek name prompt engineering. Um, hopefully we'll have a better term than that. I mean, we're not so good at marketing and you know that guy to communication generally speaking within the tech industry. But I think those tools will then amplify all of us. And I think that's actually what's coming across everything. You know, doctors and lawyers and and and graphic designers and coders and writers and journalists

and research channel lists and dcs. Generator of it AI specifically is getting so much attention, and you've been talking about it for a long time. Just how big is this going to be and how much money is there to be made? Is this where the next Facebook or Google is going to come from? Well, we certainly hope. So that's part of the reason why, you know, grey luck we made all these investments and you know, it's you know, everything from a dept to inflection and others.

And um, you know what I think it is is it'll be it'll it's kind of like this, it'll be even more of an amplifier. I think in terms of what you've seen from everything from Microsoft Office and the Internet. Um, I think that because is when you think about you take a LinkedIn definition of what the breadth of professional is, which is you can get better at your job and you kind of output some thinking and decisions and information.

AI will be helpful across all events. Now, there's a lot of work to go on to make it happen. It will take years for adoption. It'll take you know, kind of crafting it to make sure that it's the right kind of human application versus you know, potentially you know, destructive effects. Um, but I'm fully optimistic on the human amplification part of it. Let's talk about amplification. We've just

gone through a midterm elections. You yourself have said that mid terms often signify major turning points in American politics, And I'm curious what the turning point you think is that's happening now. We saw candidates who amplified the big lie get more engagement we saw social media platforms then profit from that engagement. How dangerous could this get? Well, it's super dangerous, which is one of the reasons why the protection of democracy is I think the most important thing.

It's part of the reason why I've been engaging in a little bit of a you know, kind of saying this is an important issue for business people on LinkedIn because LinkedIn is kind of about business and kind of amplifying that. I do think the results of the midterms have been good. They've been generally bad for the election deniers, for the proponents of the Big Lie, it's generally been bad. Like it's it's generally a pro to Santist, anti Trump, uh,

you know, kind of spread within the Republican Party. I think it's maybe the best uh you know kind of result for a midterm result for a president in the last twenty years, so, you know, as normally it's really bad for the sitting president of their party, and the fact that it's actually the best in the last twenty years, I think is a positive endorsement of Biden. Uh. And I think the general view is to be uh, like, democracy matters, piece whole transition of power matters, rule of

law matters. Uh, And in the fact that we have a democracy by which we vote for who our election representatives are, and we should not encourage insurrections or acts of violence like January six. That's bad, and all of us as Americans, all of us as leaders, all of us as business people, need to firmly get behind it. I think we're seeing that, you know, broadly through the elections. Obviously there's this this in that election, which I still have problems, but I think it's been a general good

referendum in these bed terms. You and Elon Musk go way back, and I know you haven't commented publicly yet on his takeover of Twitter, so I have to ask, what do you think? What do you think of what he's done so far? Well, Ellen, which is no surprise,

is one of the amazing entrepreneurs of our generation. I mean, revolutionizing multiple industries and doing so against people like me saying I don't think you know, I don't think it wouta work like Space X. I think I was second or third birthity pitched too, and I was like, ah, that's like a deep difficult Adam Space governed subsidy industry, and he revolutionized and create a new one with satellites, revolutionizes electric vehicles so amazing entrepreneur strong vision, you know,

drives through brick walls or through multiple brick walls, and all of these industries. Now, I wouldn't have handled Twitter at all the way he's doing it. I think the the chaos of it, I think the suddenness of the layoffs and a bunch of other things. Obviously have a different kind of view on the politics of it. I disagree with his vote Republican. I would say, vote anti MAGA or anti election de nine. That would be the thing and the thing I would say, And it's whether

it's democratic republican, is you know, relative to your specific race? Um? And so I think, you know, I think he's got a hard challenge in front of him. Um we I think we all want him to succeed. Uh. And I think that even though I wouldn't do Twitter the way he's doing it. Uh, you know, he's he's proven me wrong before by the kind of the the sheer, you know, and determination and vision. Uh. And I always respect that

about him. And I think we want a public square that's healthy, that has you know, an emphasis on the human and anti bots. And everything else Where do you draw the line between the right to free speech and the right to the amplification of free speech. And I'm so curious if you've talked to him at all about this or or any part of it and how he's responded. So I haven't, so I don't have any inside uh information. I'm obviously Elon's a friend. I'm always uh delighted to

help with you were to call um. But the I think the key thing is is, look, there is a right to freedom of speech within the political arena, which is the government cannot quell you, and we do that so that we have an ability to not have our best ideas and emms quelled by the government or by

political institutions and power. It's slightly different for business, ecosystems and all the rest of this, and so the whole like or all freedom of speech is a little bit different between the business side, which is part of the reason why we have a clean, well wiped place and LinkedIn with a clear design for it and all the

rest um. And you know, if you look at LinkedIn, you get part of how I think that these things should be designed, which is like, yes, you should maximize a bunch of of of kind of expression from individuals, but you should also think about the health of the group and the health of the ecosystem. And like, for example, let's take something less charged than you know, partisan issues like vaccine deniers, you know, enormously bad for for the health of a society, for the health of of of

of of not just the country, but the world. And you go, okay, then, and there's clear medical expertise against that, Well, that should not be given reach. Someone should be able to come out and say, well, I think vaccines were invented by Martians and they're here to try to control us. Fine, beyond your little soapbox say that, but actually, in fact, the medical side of it is part of what allows

our society reorder functions successfully. It's part of flu vaccines and a bunch of other things proven through you know, centuries of work, and so that kind of thing. You have to distinguish between freedom of speech and freedom of reach, and you do so with a very broad view of also the health of society, the health of the network in it. And I think that's you have to do both. It's not just individuals, it's not just network and society it's both and you have to you have to be

good stewards of that. So let's talk about the health of Silicon Valley. Eleven thousand people just laid off at met Up, thousands of people laid off at Twitter, Hiring freezes at Apple and Alphabet, layoffs happening in a lot of places. You have seen so much, uh of Silicon Valley history. How does how does the valley survive this? What does it look like on the other side, and how bad does it get before we get there? Well, I think it'll certainly continue bad for at least six months,

you know, could go you know, a year plus. Um. The value has gone through multiple recessions actually, in fact, some contractions, just like what makes business efficient is good for refocusing, you know, for kind of saying, look this, this is what our business is fundamentally about. This is how we do it. I think it's a good thing. Obviously painful for families and and and and and this kind of changes. On the other hand, I think Silicon value will continue to thrive. There's a lot of capital

investing in the future. I think a lot of these folks will be able to find other jobs reasonably soon because I think there's still lots of companies being created Greylock. We've been investing in them, not just AI companies, but also enterprise companies, security companies, a whole range of approaches,

and other venture firms are also doing the same. And so I think it's it's the ability to to go and still create the future is still there, and it's one of the things that I think silicon value has gone through multiple, multiple recessions, and it's it's a crucible, it's a it's like a it's a temp bring function because you need to also be efficient and effective and not just oh, everything always works. It's like no, no, you have to be like, how is this good for

your customers, how is this good for employees? How is this good for society? And be focused on doing a few things and doing a few things well. And I think that's that's the period we're going through. But I think that's while as painful as it is, a downturn is just another phases business as usual. So it sounds like you are long San Francisco, a long silicon valley um,

which is what I expected. Read always appreciate you joining us and your optimism read Hoffman Greylock partner, founder of LinkedIn. Thank you all right, coming up Cracking, Jesse Powell talks about the importance of having reserves in the wake of the latest crypto blow up. He joins us next, this is Bloomberg. We're seeing this in real time. How this is unfolding is in real time, but we saw it in the spring as well, in real time that UM

investors are getting hurt, lack of disclosure, opacity. We've seen the use of other people's money and trading ahead and and and using other people's money, but we've also seen the use of leverage. A SEC chair Gary Ginsler there in the wake of crypto turmoil, cryptocurrencies tumbling after Finance backed out of the f t X acquisition, CEO Chung Pung Joo saying Finance will start sharing proof of reserves

to garner trust within the crypto community. Now the US is investigating f t X. Jesse Pal is the co founder and outgoing CEO of the crypto exchange Kracking, which has been transparent about proof of reserves. Jesse, what just happened?

It was happening and suddenly now it's not. Yeah, So it seems like there was a deal between two of the largest exchanges finance to acquire what might remain of of f t X, which from the outside looks like mostly a pretty big crater, uh, you know, and I think they took a look at it and just decided this was a whole too big to fill, uh, you know, with too much kind of radioactive regulatory scrutiny around it, um, which looks like it might have been a pretty big

headache to deal with. So unfortunately, right now it looks like ft X might be heading into a bankruptcy process the likes of which you know, we've we've seen frequently recently, unfortunately. Um. And you know, for some like the clients of Voyager, you know, you might be aware that f t X was just appointed the sort of trustee to manage the voyage or payout process who acquired those accounts, um, you know.

So it's history repeating itself here with crypto. I mean, we saw a similar situation with mount Gox back in when another trustee had deposited funds from Big Coin into mountain Ox, which subsequently got hacked and clients got a double penalty there still waiting ten years later to be paid out. So hopefully it doesn't take that long here. Um. But yet, unfortunately, another black eye on the industry, and it's gonna be really tough times for for the consumers

and the clients of that exchange. I asked coin by c O'Brien Armstrong the same thing I'm gonna ask you, would crack and be interested in buying f t X. I'm sure they have some assets that that are interesting, that that have some value. Um. You know, we we've

already got quite a bit of the same infrastructure. You know, there's a lot of redundancy between exchanges, so you know, maybe we're talking about user accounts, maybe they have some subsidiaries to do specific things we'd be interested in, or possibly some licenses. Um. But you know, I don't think there's going to be value there anything close to what the whole seems to be. So, you know, I think the process is likely going to go into to bankruptcy.

You know, there's going to be an organized maybe auction for these assets. At this point, you know, I'm not sure whether they even would be allowed to sell these assets, you know, which which might belong to the creditors. At this point, has f t X approached cracking at all. Um. We yea, sir, we we have. We have spoken to them about this and you know we're we're in the loop and um, you know we're looking to get more

information at this point. Okay, does cracking do you have any exposure to f t X or Alameda and if so, how much? No, we don't. You know, we steered clear of the f t T token. Um. You know, we haven't lent them any money. We don't trade f t T on on the spot exchange or the futures exchange. So, um, we we're in the clear on this one fortunately. Um. You know, we're very conservative business in terms of our operations. You know, we don't operate hedge fund on the side.

There are no uh you know, strange relationships like that. We're not trading with clients funds. We're not lending outcience funds you know, and they don't know about it. Um. So we're a relatively conservative business. You know, we've we've

been around for eleven plus years. So you know, I think, um, people should really look at this space, you know, when they're looking at a new venue to trade at, you know, look at that history, look at whether they've done something like proof of reserves, you know, which cracking is done twice in the last year. Look at their longevity in the space. You know. I think the bear market is really the tide going out, and you see who's swimming

naked when that happens. And some of these newer venues they're seeing their first bear market for the first time, and they're getting called out and it's become very apparent. You know, who's swimming naked. So who is swimming naked? Are crypto funds next hedge funds for example? You know, there's a lot of leverage out there. I don't think we've seen the end of it. I think there could still be some some other quote unquote liquidity crises to come. You know, I think there's are I think that's a

euphemism for, you know, sort of an insolvency. I think that um. You know, people are marking some of these really liquid assets like FTT for example, which are highly centraled, centrally owned and controlled. Um, they're marking at them value, you know, when when the reality is maybe they should be marked at the value because the market is so thin you couldn't sell all that if you had to, you know, it's heavily centralized in the control um, so

there's an extreme risk here, you know. And what we saw in this case with Binance and ft X was that Binance, a competitor of f t X, owned a huge supply of this token that m f t X was using as collateral to borrow against and U. When that when that asset started declining in value, you know, I'm sure they started getting margin calls, and you know, it turns out that they just didn't have the money, you know, I think to to make good on those loans.

Al Right, Well, the situation continuing to unfold. Really appreciate you joining us to share your perspective on it. Crack and co founder outgoing CEO Jesse Powell, thank you. Some other stories were following. In China, the world's largest iPhone factory will still face some tough COVID restrictions. The city of Jung Joe ended a lockdown in the district where the plant is located, but some areas are still considered high risk, including one where the Fox con factory is.

The restrictions have led Apple to warn Little Ship fewer iPhones than anticipated in the US, the likelihood of a prolonged housing slowdown is rippling through the industry. Redfin is shutting down its home flipping business and laying off more than six workers. That's about of the staff. Since the end of April, the company has reduced his workforce by Here's what CEO Glenn Kellman told me back in August

about that first wave of layoff. Back then, we laid off six percent of our workforce and I'm the one accountable for that. I feel so ashamed about it. I was so blue. I still am, but it's what we had to do to run a profitable business. And now I think we feel more optimistic about the future, but we're still running on an ice edge. And Tesla CEO Elon Musk sold more than three point nine billion dollars worth of shares in the electric car maker just days

after closing his buyout of Twitter. He's now unloaded about thirty six billion dollars worth of shares in the company in the last year. According to Gen Munster of Luke Venture's quote, he's preparing for Twitter to be a money

hold and that does it. For this edition of bloom Brick Technology Thursday, we've got a very special lineup AMD CEO Lisa Sue will be joining us A Lee Lee and Jenny left Court, some of the most prolific venture capitalist It's going to be a very special special show for me, and I'm gonna try my best to get through it um and I hope you all will watch. Thank you so much for tuning into this edition of Bloomberg Technology. I'm Emily Changing in San Francisco. This is Bloomberg