I'm Caroline Hide of Blomberg's World headquarters in New York and Imed Ludlow in San Francisco. This is Bloomberg technology coming up old fashioned embezzlement, positioned to fail. Any regulation would have helped. They're just some of the CEO John Ray the third and the words he had to say of f t X. Understand Bankminfried. We dig into the
testimony and what's to come of it. And the fd X fallout is creating headaches at other exchanges, mainly Binance, which has seen nearly four billion dollars in outflows in the past week. And Bloomberg has learned Apple's potential solution to anti competitive concerns over its app store. But first, let's get back to that huge story of the day after ft x is swift collapse sent shock waves across
crypto markets. Of course, the House Financial Services commit he was out to get some answers from the senior f t X executives, a task that's been made are now more complicated by the fact that will He is arrested. Sa bakmafreed himself in the Bahamas on Monday. Williams Chris so much as with us on the latest. Just walk us through, Chris, what happens now from illegal perspective for
Sam Magminfried. Yeah, well, as we can see on the screen, things are breaking right now that he's uh denied bail and the Bahamas and it's gonna be in jail if I believe the report I saw said tebrutary eight. So that pushes things down the road from the immediate future to then and uh, you know he's apparently going to fight extradition, which could take a while, could take months,
could take years. Some people say, we've had people poor who have bought extraditions successfully or stolen the Bahamas and had not um. So it's a real question as to how that will proceed before he even gets here to face the charges that are facing him, which are pretty substantial. Chris, I've sat alongside you covering financial crime in the courtroom, preparing and anticipation of being in the courtroom. It's never straightforward. The burden will have to force the prosecution. Of course.
What is it that they'll have to demonstrate and prove when it comes to the action Sam Bankman free took or did not take, Well, they're going to happen to show that he used. You know, either he's charged with wire fraud, UM, securities fraud, commodities fraud, and conspiracies to commit those as well, So they're gonna have to show that he used basically that he lied to investors or lied to customers by misrepresenting the state of the company's
finances or omitting material facts about the company's finances. And when we say material, we mean things that would matter to a reasonable investor when they when they invest, if that would matter to them in their decision to invest with him or to give them money. Um, And that would be the burden that they would have to show on each of those accounts. The jury to convict Bloomberg's
christ almost there on the legal and court speat thank you. Meanwhile, f t X is new chief executive and the man handling its restructuring, John Ray the third did take the stand on Capitol Hill where he called the former ft X team as quote, grossly inexperienced and unsophisticated. Take a listen, not sophisticated at all. Sophisticated perhaps in the way, uh they were able to sort of hide it from people, uh frankly, right in front of their eyes. But this
isn't This isn't uh, you know, sophisticated whatsoever. This is just plain old embezzlement. Bloomberg Shnali Bassak on the ground in Washington following it blow by blow, What did we learn? F t x c O. John Ray really talking about how this is like a paperless bankruptcy and that he
doesn't trust a lot of the paper trail he sees. Meanwhile, on the lawmaker side, you have recognition by some such as Congressman at french Hill who says that the losses here could really dwarf what you saw even with Bernie made off so one of the biggest bankruptcies here in
American history. There's also this recognition of whether there could have been anything done to prevent something like this via regulation, via better rules of the law of land when it comes to what's happening in the United States when it comes to digital assets. But at the end of the day, you did have John Ray also saying this could have
happened anywhere. Remember you had charges civil and criminal here of fraud, and also the SEC saying that the commingling of funds here were happening as he was misleading investors about certain facts about f t X, and Alameda talked to us through Shannali, really what the answer is for
people who have lost money here? Was there any sort of explanation for those who have been so emotionally and but also financially involved in this as to where the buck will potentially flow for us or for international users. There's a few things here. You did have John Ray say that it's impossible to recoup everything, but you also had him say that in the United States it might be a little bit easier than other places given how
the firm structured. But I would also say that remember when you look at the sec complaint, for example, they talk about how the funds were used and where the funds were used, real estate purchases, political contributions, venture capital.
Remember we've already had the FTX executives say the venture capital in particular are assets, and how they treat that in the bankruptcy when they try to make customers whole again will be interesting because they're going to have to track all these assets down at the end of the day, and will they get full dollar for them at the end, and are they even going to be able to find all the assets? Meanwhile, I just want to go to
your expertise, HETIONALI in the contagion effect. You've been looking a lot at the other exchanges that edged on a light on some of the crypto related names that have been sunk by this. But there has been a lot of reporting and focus on Binance, for example, on Twitter and on other areas of the media. Is that something that you think Washington is paying attention to at the moment.
I think they're pretty tied up with f t X at the moment, So that's a great question if I asked anything about whether it's finance or stable coin industries or anything else. Really, the focus really here is on f t X right now because people have lost so much money and there is a lot of anger. But to the point that you're making their finance is a
largely international exchange. Of course, there's also finance US. But the issue you were talking about earlier in the show was net outflows to the tune of about four billion dollars in a week. I thought Nansen's analysis of this was interesting. Kind of not to fret this is the small percentage of total assets, but it does goes to show the cost to mur fears around holding money in
an exchange, especially as the industry gets more concentrated. Plus that issue with stable coin withdrawals, to keep an eye on as the industry faces pressure. What happens to the stable coin industry. Whenever you have a congressional committee hearing like this, Nali, Yes, you get the testimony from those called as witnesses. We also kind of get this broad range of opinion from those committee members that pose questions. Do we get any sense of what the committee members
want to happen next? What happens next based on what was discussed in that room? Well, one thing actually and no shocker here, but when there's frustration in the committee often it's backward looking, and so there were a lot of questions about what had happened, how does it happened?
But there was also a fair bit of frustration that he was arrested yesterday before he was able to testify here today under oath to give Americans more clarity on what had happened here, I would say also, if you want that clarity, go to the indictment from the Southern District of New York, go to the SEC complaint and
the CFTC complained. There's a lot of detail in there, but there was certainly a lot of frustration here we're not hearing from Sam BigMan freed himself under oath, which we know he had said he didn't have all the details because he didn't have all the data. Shanali Bassek just fantastic day of reporting in of course the White House or indeed in Washington or generally. We thank her so much, and let's just talk a little bit for
a moment about what's been happening. The update that, of course Sam Backminfried has been denied bail by a judge in the Bahamas in order to return to jail. We understand in the island country. Now what's interesting here is the judge is also setting the extradition hearing for bank Win freed for February the eighth, and learn the arraignment on Tuesday. Has Laways said that he would fight plans, of course, to send him back to the United States
to face charges. I mean, while coming up the future of the cybersecurity industry and as we head towards three, what that really looks like. We're going to get you the perfect insight an exclusive conversation. Palo Alto Neck Works CEO of Nikesha Aura US next a Bloomberg. We've got to talk cyber right now because it's been an increasingly important focus for companies, for governments, and of course this year we're going to talk about cyber crime as it persists.
Plo Alto Network CEO Nikesha Aura Choice US from its Global Cybersecurity Conference in Las Vegas, bringing together more than cybersecurity professionals to discuss just that the increasing nature and all encompassing global nature of cyber crime. Nikesh, But what
about cyber spending? We want to understand right now when you're getting up on your fireside chats, when you're thinking about innovation in the space, as you have been with the course with Glogle Cloud, are people still willing to spend as much as they used to in this this environment of economic downturn. Well, Caroline, first of all, thank you for having me as we kick off our IGNITE
conference in Las Vegas. I know there's a lot of conversation around the macro environment and what is going on with potential budgets and cyberspending and I T spending to be honest in the future, and whilst we are seeing some degree of caution from the customers out there. I don't think the demand is going away because there's a lot of historical debt that needs to be paid. Because we've built infrastructure over the last thirty years which needs
to be replaced. Because everyone's relying on technology and that requires a lot of our customers to upgrade their capabilities to get more and more up to speed with the current techniques in the market. And as you know, the bad actors aren't waiting in an economic downturn. They're attacking with fugusto they are. And therefore, what of the space, the competition in the space, the people, the customers do they turn to in this moment? Is it market shap
that's been growing for you? And how have you been winning that? If so? Well, Caroline, four and a half years ago we were a single product company. In the last four and a half years we have built a portfolio where we lead in thirteen categories of cybersecurity. This is a few which hasn't been done before by any cybersecurity companies. So, you know, the silver lining in this macroeconomic environment is that customers are looking to reduce their
total cost of ownership and increase their security posture. Security outcome as you'd like to call it, and that makes us a perfect partner for them because we have spent the time in the last four or five years trying to put our platform together and that's helping us because you know, people are coming to us in this consolidation seat of driven market the cash. It's been a busy week for Caroline and I'm we're only two days in.
We called Monday Merging Monday because of just the relentless news for an M and A. You're in ignite two of your friends and peers and industry colleagues. Historically, I look at your M and A track record, semin a an option for you guys right now. Well, you know we've bought seventeen companies so far since I've been here for four and a half years. So yes, you know we have appetite for M and A as you can
probably tell. But we really focus done expanding our product capability and product portfolio, and we've done M A slightly differently than traditionally an enterprise. We've actually looked for number one or number two in our in a particular category. We made sure that the founders have come to work at Bolt stayed with us. We made made sure they run our business. In fact, you know, I was noticed noting the statistics this morning. We have fourteen thousand employees.
Eighty percent of those people are new to Poulto in the last four years. So we have made sure that this transition that we've undergone through M and A and through organic development has been sort of balanced with increasing in our own capabilities. So we think we've paid off all the cybersecurity technical debt we've had to pay to build this into a large platform company for the future. I didn't I didn't hear enough. I didn't hear no. Yes.
Well I didn't hear yes either. Fair enough. Caroline made a really good point earlier when we were talking before the show that when it comes to cyber security, cyber crime is not moderating, even if the spend of your customers is. What are the drivers behind corporates who think, right, I better now protect myself and invest in this area. What are the key events from this year that has pushed executives to get their checkbook out? Well I did
last year. In two we had twenty confirmed randsomwhere victims, which means companies had to deal with an environment where their technology did not help them. They got breached, their systems were shut down, they had business interruption, and they either had to negotiate their way out of a situation or had to pay rand somewhere to get out of it, to get to you know, get back to business. Now that leaves boundarily of a scar on you. You're gonna sit down with your I T team and their security
teams like this should never happen again. So the market just in Mint Mint customers who are not paying attention to cybersecurity, and what's happening is, you know, the whole pandemic, the whole rework from home, the whole fact that you have you know, online was the only way to get
business done because your stores were closed. Has put a tremendous focus on making sure that your technology infrastructure is working at the time that requires it to be uninterruptable, It requires it to have business continuity, and their cyber becomes your biggest risk if something happens to your tech infrastructure.
Because you do a global cyber survey, and what caught my eye was not only just how everyone has experienced it was reported experience of cybersecurity incident, but What really interested me was the talent issue, and you talk about a cyber skills shortage, and that basically most respondents is saying that having to tend to automated ways of tackling cybersecurity because of talent shortage. How are you looking to
tackle that talent shortage in this market? So, Caroline, like you already gave the answer and what you said, I
don't think we have a talent shortage. I think we have a you know, sort of a perpetration of too many vendors, too much integration, which is done by our customers who in some cases don't have all the skills needed because they're running a two thousand, five thousand, ten thousand people organization, and they should be busy doing their business, not worrying about protecting their infrastructure by stitching cybersecurity solutions. That job should be our job, that should be the
industry's job. And that's kind of what we've been working on phil last four and a half years. Four and a half years ago, we went out and said, listen, this is a data problem, this is an AI problem. It was funny I was remarking earlier that I played with GPT three and chat GPT over the weekend, and it is giving you a little window into what AI
is capable of. How natural language processing should be able to answer you a question without requiring humans to get involved and looking at screens and trying to figure out what the problem is. So I think this is a data problem. I think this is an AI problem. We need more data and AI professionals, not really cybersecurity professionals. We can understand fifty different vendors in the infrastructure and stitch it one at a time for each customer. So
this is an automation problem. This is an AI problem. This can be solved, but our customers have to step up and embrace automation and AI because if they don't, we're gonna have more ransom of our victims next year than we had last year. We had a chat GBT ease there on a hands carry How familiar with that? Palo Alto Network CEO Nikesha are a really good to catch up, Caroline. Not grateful to have you on the show. Let's talk about Twitter's Trust and Safety Council. It's no
more a group of independent experts. It was created in to help tackle child sexual exploitation, hate speech, harassment other problems on the platform, but it's now been disbanded and a letter was sent to the team saying, as Twitter moves into a new phase, we are reevaluating how best to bring external insights into our product and policy development work.
Several members recently quit the group over concerns about the company's ability to police the platform for harmful contented Yeah, that's right, Kara and Apples making some changes of its own, preparing to allow alternative app stores on its iPhones and iPads as part of a sweeping overhaul to comply with strict European Union requirements coming in bloom Bus. Mark Goerman broke that story and joins us. Now, Mark, what have you learned in your reporting about the changes that Apple
is working on internally? Thank you both for having me. Yeah, have you explained it well. Basically, Apple has a major project in the works across its software and services organizations to really revamp the underpinnings of iOS and iPad os, some of its other operating systems to meet these very stringent and very broad requirements coming into place from the European Union. Now, as part of these requirements, they're really going to start making the iPhone a little bit more
like Android. Right. I'm sure some people aren't gonna like, uh, you know, to hear that comparison. But there's the reality. You're gonna see some sideloading, which means installing apps from third party app stores, from different websites, from other sources
on the Internet. You're going to see them begin to slightly open up the NFC processor on the phone, which is the chip that allows you to do mobile pay with Apple pay, so it's Apple to pay payments for the first time, may be able to come to third party apps like your bank or Venmo or PayPal. You're also going to see a change to the browsing engine. So there's third party web browsers available on the iPhone,
whether that's Firefox or whether that's Chrome. But what most people don't know is that those applications still use the underlying mechanics, the underlying engine of an Apple Safari web browser. There's also some work being done to open up the Fine My network. Do you remember Tile that Square competitors to the air tag. They've complained for months about not being able to have the same iPhone based pairing functionality as the air tag. So Apple is going to try
to bridge that gap as well. That's interesting, of course, because you bring up a competitor basically that Apple wouldam built something pretty similar to all of this is about competition. We've are gonna gotten thirty seconds left. But will this ultimately satisfied you think, because you're saying it's like Android,
but Google is also they think it's too powerful. As long as Apple hits all the requirements that the European Union is outlined with the Digital Markets Act for I'm not really sure what else people or the government can complain about. Out the downside for Apple if they don't comply. We're talking ten to of annual global revenue as fine switch for Apple as of last year. That's eighty billion dollars. Quite the chunk of change. Mark German Money talks always.
We thank you so much. Is always great to have him on with a scoot. Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York with Ed Ludlow in San Francisco, and you are always a busy man across our screens, but also by writing scoop after scoop. Just tell us about the SpaceX fundraising one. Yes, so Bloomberg has learned that Elon must SpaceX wants to sell insider shares at a price that would raise the company's valuation
to about a hundred and fifty forty billion dollars. According to sources, this makes SpaceX the most valuable private company in the US. It's up from a seven billion dollar valuation in July. That's according to pitchbook data. You know, this is a company that's dominated ting right the market for commercial space launch. They have Starlink, which is their satellite based internet and you know, in the past, Musk has said that Starlink could be spun off in a
listing right once cash flows more predictable. I'm really interesting your take on this story. You know, it's a tender offer. We don't know yet for certain if they'll do a primary as well. And I know, you know, you know this bending on for every seller, there's a buyer, and buyer there's a seller. But what what gets me is that there's clearly an appetite from investors to get involved in SpaceX, and when it's led by well, ostensibly one Elon Musk. I know that he of course has very
powerful CEOs and operational chief's female at that. But I'm interested in why on the one side, you're talking earlier about Tessa shares have been under pressure. Worry about the distraction, but then the privately held business people answer worried. Yeah. I mean it's a very hard one to answer. Gwin shot well, as you alluded to, you know runs day to day SpaceX. But Elon Musk is still involved, you know, in his pay testimony the other day, he's said that
that's still a key area of focus for him. So it's a question that overhangs both companies. But the private entity SpaceX at least seems more immune to this key man risk element that tests the shares appear to be under yeah for now, well, still going to the moon, it would seem in terms of overall valuation of that business. And let's talk about valuations and businesses private and whether
the exit strategies are still there. We want to talk about fundraise, we want to want to talk about deal sentiment. We've got great local focus for that here in New York. Cameron and Sary's with us board partner at Greycroft is also the former head of M and A at Pinterest. So basically, Cameron, you can talk about everything that we want to talk about the moment because it's a hot week for M and A and also clearly for valuations,
but all certain businesses just talk to us. You're very focused on flin texts, in particular to some consumer focused businesses. I know that the likes of billion under your focus. But talk to us about what the landscape feels like right now for these companies. Well, it's been a slow market for certainly for I pos F, M and A and for fundraising all the above right uh, and it's been down significantly. But I think in these last few weeks of the year, certainly on the fundraising front, you know,
we're seeing more activity. I'm seeing more companies trying to close deals before the end of the year. And then on the M and A front, you saw a very large deal announced yesterdayan text space where Coupa Software is going to be bought by Toma Bravo off the public markets for about eight billion dollars. So and that comes in the heels of Avolara, another software company is bought by um vis To Equity for about the same price
eight billion dollars about a month or two ago. So I think you're gonna see more and more these deals where private equity buyers see great valuations and and values really on the public market for some of these great companies that have um earnings but cash flow and that you know, the price that it's really been depressed in the last year, and that's we've throwed the needle for
us a little bit of whether there's any themes. Then you say, if they basically caught earnings, basically if they are a profitable business, so what do most of the companies in your portfolio more generally have that right now or more changes needed from within before they can go out and fundraise. Well, I think in the venture space obviously, when you're talking about early stage companies, the majority of them do not have a out of EBA D or profit.
They're they're focused on growth to maybe growing for a year, but they're still burning cash on the public markets. However, you have a number of great companies that went public in the last couple of years, particularly sas Space, um software companies that are still public but the valuations have come down significantly. UM you still have you know, Zora, Smartsheet, Docuside, dropbox, Box, um, HubSpot.
These are all terrific companies, and I'm you know, I'm willing to bet that the folks at this done too, Moravo and elsewhere, probably the salesforce, probably Adobe. They're shopping their pencils and look at these valuations and thinking, you know, when is the right time to make an offer for one of these businesses because those companies do have strong clients, good growth, good margins and cash. Cameraon Monday was I mean,
it was Merge of Monday. It was madness. I don't know where you were or what you were doing, but as those headlines kept coming, seventy billion dollars worth of deals Sunday night through Monday evening, what was your reaction to that? The timing, the volume, that the velocity at which those M and A deals are announced. Yeah, I mean, I think it ties back to the as we've talked about, which is you have a lot of strategics as well
as private equally firms of massive cash talg piles. You have attractive valuations in both the private and the public markets, and you have end of the year right, so it's that time where people want to get things on their books and try to get deals announced before folksy for the holidays, so uh, you know, we're seeing that, you know, even on the venture side, where people are trying to really get deals done and fundraising completed before uh, you know,
we hit the Christmas and years holidays. What happens next is the big question. You know, there are a number of private companies out there across subsectors. There are names that are associated with going public in the near term, long term. You know, I'm essentially asking you for your outlook and where you see this market going into. Right, we'll look in in one we had something like Nino I p o S and they raised about a hundred forty six billion dollars in proceeds. This year, we've had
roughly half of that. I think is is the ballpark metrics. So it's been down significantly, and even the companies that felt i P already I think have pulled back and are waiting. Um the two largest on the private side in the tech space, I think or Space Sex with you guys just mentioned, and then probably Stripe, the large payments company, which you know, many folks expect, you know, it is going to go public in the next you know,
who knows, six twelve months, maybe eighteen months. I think those are the two big kind of grand daddies that everyone's waiting for in the tech space to go public, and then their number of companies kind of behind that that are smaller um. But I think those are the ones that I really looked to to be bell Weathers for when when the market's kind of back open. You've got so much experience in house but also externally in
VC and early stage. I'm interested in your perspective at the moment in the lead the lamb of regulation because you are exposed to, say, by now pay data companies,
credit keeping one of them. The focus on fintech right now very very much in the crypto space, but more generally, do you think it's going to be a head wind or tail wind some of the businesses you're in Well, I think one of the nice things about fintech historically leaving crypto side, because crypto has famously been largely unregulated, but most of the fintech businesses that were involved in that I'm involved with. If it's a payments company, you
have to have money transfer licenses. If you're a lending company, you have to be a regular lender. If you're an insurance like you've gotta be licensed. So all of these businesses that by and large in the fintech space, whether it's payments, insurance, lending, are regulated. Uh, and you have to go state by state and these are complicated processes. You have to get bank licenses. But because if you do that, it makes it harder for someone to replicate
your company. It also takes several years to get started. Typically you can spend from you know, two to three years just getting from zero to your first loan or your first payment. But it adds a level, you know, obviously of sophistication of the business and oversight. So I think that you know, in the fintech space, by and large, you do have a quite a bit regulation already built in and with your expertise, your M and a hat
on as well. I mean, your perfect guests really to for the whole show because you're also was an early investor, I believe in most Palo Alto networks right a long time, like well, we just have the CEO then cashase terrific. Yeah, and Nikosh is a big m and a guy. You know, he's done what was it seven deals he said since he started. I'm interested in your respective M and A and regulation because look, you look at the deal with Activision,
Blizzard and Microsoft. People don't like these sorts of deals. How much do you think companies were big hefty pockets. Are they gonna be able to make purchases they want to do? Well? You've seen buying large and I see the Google Mandian deal. But but Google and Facebook and the big tech giants Apple, which is famously not very inquisitive anyway, they've been very quiet on the M and A front. They really have not wanted to do much because I think most of the deals do get scrutinized.
You know Facebook about Giffe and that deal is getting unwotot because of the European regulation. And you see the Adobe Figma deal, which is one of the larger deals in tech, twenty billion dollars, that's being scrutinized now potentially. So the large tech buyers are hesitant I think to make big splashy deals happen because they fear it is
gonna be subjects regulation. Now. The one exception is Amazon which bought Whole Foods and MGM, and you know the one medical and all these answorry businesses that but you know what The key point is those are not e commerce companies, right, so they're staying clear of buying things in their core wheelhouse because I think they feel these other businesses will have less of a chance of getting
scrutinized from a FC perspective. Cameron, I just want to go back to your your kind of career and your experience in deal making former head and of M and A pintrest now at great scale. You mentioned about some of the deals that might hit barriers, some of the deals that might not get done, deals that have got
done in the past. If you're sitting around the table right now with your bankers, with two CEOs that want to get a deal done, what do you imagine the frustrations are, or at least the I guess, the anxiety that if you proceed with with a deal then you know it might not happen anyway, certainly, And I mean I think you're seeing on these types of deals now a lot more safe cards being built in um s grows and people asking for you know, breakup fees and
kids the deal doesn't go through UM you know. I think one of the deals that was announced did not have a no shop so that the company is still allowed to look for other buyers and they might have been cooper um. So I think these are unusual provisions
that you to pebably don't see. But I think in this market where there is uncertainty, where buyers might try to back out, I mean, obviously Elon must try to back out of Twitter before the deal closed, uh, you know, pretty significantly, um, And so I think that's the reality of the current market. And I think in the boardroom that the venture investors and the others are making sure that these safe cards are put in and try to prevent um these deals from falling apart, or to at
least have backup options and insurance policies. All right, Cameron, and sorry a slip of the tongue there. I think I said that you worked at gray Scale, which is of course not true. You're a board partner at gray Croft and a former head of m and A at Pinterest, which I got right. And we're grateful to have you on. Thank you, Thank you. Now coming up, how will the
ft X implosion jump start crypto regulation? We have the perfect guest for the conversation, the Blockchain Association's Kristin Smith. But before we got to break let's take a look at how bitcoin has performed since Sam Bankman Free's arrest. Is not the most since FTX filed for bankruptcy. Some near term performance, but around just shy of the eighteen thousand u s thought us to taken. This is blatan dyk.
The ft X groups collapse, the implosion of f t X fair system from absolute concentration of control in the ends of a small group of grossly inexperienced, nonsophisticated individuals. Appears to have all the hallmarks of En Run and Bertie Maynoff blended together named Sam Bankman Freed. This is the antithesis of anything that is permitted in regulated markets. Failed to implement virtually any of the systems or controls that are necessary for a company and trusted with other
people's money, year assets. Justice seems to be you know, in process, which I think is welcome by those in the in the crypto industry. It's more more information comes to a lot. I suspect there is a good chance they'll be more people under the microsy go Sure. This isn't you know, sophisticated whatsoever. This is just plain old embezzlement. Busy, busy today, in the U. S. District Attorney Damian Williams, of course, calling the ft X scandal one of the
biggest financial frauds in American history. But from all the fallout of the ft X downfall, will regulators actually get a grip on crypto to make it fairer, more reliable, so this won't happen again. For more on the regulatory outlook, we turned to christ And Smith, the executive director of the Blockchain Association, which assists in key policy solutions among regulators, lawmakers,
public for the digital assets space in particular. You're, of course there are said sort of talking some would say lobbying on behalf of your members ever labs BH, digital bit dear, not f t X, not f t X, Thank goodness. We actually had tremendous differences on strategy with ft X, and so they were never part of the Blockchain Association, And so if there's a silver learning in all of this, it's that we don't have to be
competing with them for strategy in Washington anymore. Okay, So talk about strategy, talk about out out of the ashes, the roses that will grow that many will hope is is an easier playing field. More clear playing field, a more transparent playing field. Is that likely because we asked our audience, we had a Twitter poll, We asked and whether they're confident or not as to whether crypto regulation will meet the mark at this moment, and as we can bring up like say, don't hold your breath, people
are on the fence. Yeah, well listen. I think there was a really healthy discussion going on in Washington prior to the collapse of xd X on what we need to do to move forward with crypto regulation. I think there's two key areas. One dealing with fiat or dollar back stable coins and what those regulatory parameters should look like.
I also think we were starting to have a healthy conversation around what crypto exchange, you know, the spot markets, were consumers buy and sell crypto, what the appropriate regulation for that should look like. Those are two very clear gaps. I think the challenge we have now with this FTX situation is the conversation has moved from a small group of policymakers who had really taken the time to understand this space, to a much broader audience within Congress who
wants to get involved and do something. So I think this is going to slow the legislative process down. But I don't think it's going to end the legislative process. I think there are tens of millions of American consumers who own crypto. Crypto networks are providing incredibly valuable services that are going to be the future of a new internet, a future of new financial infrastructure. This is innovation that we cannot undo and we want to be competitive with
here in the US, and the regulation. Getting that regulation right is key to doing that. Kristen, it's good to see. I hope you're well. The mission statement of the Blockchain Association is to advance the future of crypto in the United States. Has what's happened with FTX, what we've learned about Sam bank Man Freed impacted or jeopardize that mission? Well, listen, think it's certainly a setback. I mean we've had today, we heard about the incredible shortcomings at at f t
X International UH and its related companies. UM, We've seen the charges in the indictments that have come down today. I mean, this is really serious stuff. But this is incredibly abnormal behavior compared to how most people in the crypto community operate. Most people are here because they want to empower people because they value transparency. Uh. This is a technology, Uh you know that that can empower good
for the world. And I think it's going to be incumbent upon us in the crypto industry to pick up the pieces that Sam has left with the mess that he has made um and I think it will take some time, but I'm optimistic that we will be able to move beyond this and return to having positive discussions
around policy. But more importantly, the builders in this space are continuing to create and they're they're bringing forward ideas and I think ultimately it will become incredibly obvious to everyday people that crypto is a force for good and it's here to stay. As you mentioned, Kristen sam Bankmin freed charged with eight criminal counts, including conspiracy and wire fraud.
What was interesting to me is during the testimony of the current FCS CEO, you know, he kind of laid bare some of the shortcomings of the humans behind f t X and Alameda, lack of financial controls, lack of experience. My question to you is, what did we learn about some of the structural issues in this industry? What are the concrete things that need to be fixed with the
crypto industry and also the underlying technologies that support it. Yeah. Well, I think my takeaway from listening to the hearing today was that this is not a structural problem within the broader crypto industry. This was a structural problem with f t X. They didn't have internal controls, they weren't following local laws, they weren't meeting their own in terms of service, they didn't have any record keeping. UM. I mean, this company was a mess. It was it was in some
ways barely a company. And I think that if you look at the way companies in the US that are regulated by state money transmitter licenses, who are registered with the Financial Crimes Enforcement Network as money services businesses, uh, these companies are doing the right things and have taken
the steps as required under law in order to protect consumers. Um. We've also seen companies take further steps and do things like proof of reserves, where they're able to show that all all customer assets are being held and segregated and accounted for. And so I think that this is something that policymakers are going to be grappling with as we
head into three. I do think that they're going to have additional hearings with the start of the new Congress starting in January, and we're going to see a lot of legislative proposals in both the House and the Senate that take in attempt to tackle different pieces of this. So I think there's a lot of work to do, a lot of discussion that's going on, but this is an important space and one that we need to make
sure a lot of maakers get reaped. Blockchain Association Executive Director Christin Smith, thank you very much, thanks for having coming up. Why the leaderboard of Bloomberg's Billionaire index shifted. This is Bloomberg going viral today. There's a new lineup of the world's richest people on the Bloomberg Billionaires Index. Elon Mask, once worth as much as three and forty billion dollars, was dethroned as the world's richest person today. Bernard oh No, the founder of LVMH, took the title
instead for now a mask of force. He has lost more than a hundred billion dollars just this year and it's now worth well only a hundred and sixty seven billion. His drop as the world's richest came as Tesla's market value fell below five hundred billion for the first time November twenty And of course this is amid concerns about the slowing demand for electronic vehicles and Elon Musk's focus running Twitter and ed we kind of come full loop here.
We've talked about the increasing overall valuation of SpaceX no distraction there, but the issue with Tesla, and of course that is behind in non Musk's wealth. Yeah, this is the first time Musk has dropped from the number one spot or since he's been number two since September of last year, and there's this micro focus on his wealth. But we use that Tesla proxy as a proxy for
kind of the confidence in him. But it is interesting that the valuation of SpaceX can continues to go up because his fate and their fates are kind of a weakly tied at least that's what it says in the regulatory filings exactly. And I mean, it's still it's interesting that we've got basically a focus on luxury and a focus on technology are the still the names that dominate
in terms of wealth and wealth building. They are still dominated by white males, largely at the top of the billionaires in next and we hope that that will change some way over in the focus on inclusion. But it is notable just how far the wealth has fallen just still told what was, it's basically half from where it used to be. For Elon Usk, Yeah, there's one thing you and I Carrow's stocks go up, and stocks go down,
and they go back up again. And I wouldn't be surprised to see you on us wealth climb a little bit more exactly. For now, he's number two that does it with this addition of Bloembang technology. Do not forget to check out our podcast