The Great Wormhole Robbery

it came to cryptocurrencies. But that's all changed, and in the last few years some of the most important trading firms have started to make big investments in the space, and not just a trade bitcoin and ether and all the other digital assets, but to actually play a role in building out the infrastructure that connects these global decentralized

markets together. We're gonna talk to the president of a trading firm that has taken a big plunge in a crypto about what they're up to and where they see the industry going next. But filled down before we bring him in, I've I've got a bit of a bone to pick with you in that I was going through the brackets on the Bloomberg terminal. You know, if listeners aren't familiar, you can enter it an n C A A Brackett right on the terminal. You did not enter

a bracket. I'm very just. I didn't I know nothing about march madness. That's what thinks. That's exactly You're exactly the type of person who wins these things. Though. Then you know the rest of us, Yeah, we think we're a bunch of geniuses. We pick all the upsets for you. You you know, you could look at it like, oh, they gave me the answers. I'll take one over sixteen

and two over fifteen. Although my track record was with this type of stuff is so bad, as you know, and let the listeners know, I asked you who should I be betting on, and you never gave me any answers, So I have nobody to cheer for. I did tell you about on the Delaware Blue Hens, and that was probably not It was not a good call, not a good call at all. I should have said St. Peter's New Jersey City the truth, right, So yeah, from our native New Jersey. Yeah. Anyway, I want to bring in

our guest. His name is Dave Olson. He's the president and chief investment officer of Jump Trading Group. Dave, Welcome to the show, and thanks so much for joining us. Thanks for Donna, Hi Mike, Thanks for having me. Thanks Dave and Dave. I can only imagine if you put some of that brain power at Jump Trading to work on the brackets. I'm just throwing that out there. You know, Jump Trading in bracketology. You guys, you guys could be uh could be on this something there. But but why

do you talk to us um a little bit? Uh, let the listeners know about your background. I know you came from a long career at JP Morgan, uh to jump. Jump was a uh computerized trading firm in derivatives and and a lot of asset classes. You've sort of made that migration into crypto in recent years. Talk us through sort of the history of your career and how Jump got involved in crypto. Yeah, sure, so quite right. I

was at JP Morgan for about twenty five years. I had a chance over that span to work in a lot of different areas of the bank. The bank changed a lot. I think it was about employees when I joined in the corporate fans inning program, and I think when I left it was something like two hundred and seventy thousands. So uh, nothing like the merger and getting into the retail business to amp those numbers up UM. It was a terrific place to be right in the middle of a lot of the inner workings of finance

UH and the global developments, you know. The derivatives market grew a lot while I was there. I was involved in those markets quite a bit. I did some fintech venture capital work around one point, oh we didn't call it that back then, but the dot com days UH. And then the last several years of my career I spent running the clearing businesses and got to know a lot of quantitative trading firms UH, and got to know

more about Jump. And it was a natural progression to to be able to work for a company like Jump that I had seen handle a lot of alto markets, a lot of tough decisions, and really got to know him, at least from the outside before I had an interest in in coming over. It was actually shortly after I started at at Jump that we we started to scale into crypto. I joined Jump in starting in around we had been incubating an experiment with a group of students

at University of Illinois. They had come to work in a laboratory that we had set up in conjunction with the computer science and computer engineering departments there, and crypto was really a frontier back then. UH there were no organized exchanges to speak of. There are a lot of

homegrown solutions to liquidity in the crypto markets. We were interested in it, and it fit a really nice spot to work on with this group of students and interns where we wouldn't expose a lot of intellectual property of

the company. There wasn't much to trade in crypto. Bitcoin was still under a thousand dollars, Ether had not traded even one coin yet pretty early days, and as an exercise, UH several of several of the Jump Labs UH students and employees set about the work of building a really high performance infrastructure almost as a proving ground to trade crypto for the first time. It's never something you would have invested in as a business plan kind of matter.

There wasn't enough volume, the risks were too high, their whole litany of problems in solving the post trade and movement of FIAT. But as an exercise it was great, and it was just very fortunate timing that at the end of it we had really a world class infrastructure ready to go as soon as bitcoin started to lift off, in terms of both price action and volumes. So that

was really the genesis of how we got involved. It's so interesting to hear this backstory because I actually wanted you to talk about what building that crypto infrastructure actually looks like, what it entails, and then correct me if I'm wrong. But the Crypto division, the Jump Crypto division, you you announced that officially last year, right, and so how what do your goals look like in terms of how large of a player you want to be in the crypto space? Yeah? Um, yeah, so a bunch of

that question. The early days of connectivity were wild and wooly. Uh. I think one of the coolest thing about being a participant in the crypto markets is we're interacting with really bright, really talented people, many of whom have had no exposure

to finance whatsoever. Uh. They might be uh cryptographers, they might be a couple of guys in Slovenia that that ran a computer parts repair store that we're mining bitcoin after hours on the rigs that people had brought into fixed and all of them had come at similar problems with a totally fresh perspective. Um, And you know that leads to a lot of idiosyncrasies in how a matching engine works, or where the where the where the data

center is hosted, or how the cloud is used. So we really had our first opportunity to do um you know, sophisticated quantitative trading in the cloud because of cryptouh. So that was, you know, and now that is starting to lead into a lot of other areas of finance, and um, you know, we'll see where it goes from here. That was a big topic at the Futures Industry Association annual

meetings which took place last week. Um So crypto is really on the on the front edge of that because there's not not a lot of baggage with how things have always worked or what the cookie cutter approaches to building something in finance. That's a very very fun that's a very fun part of it. So you're you're right. Crypto did start, as you know, combination of a skunkworks

h stroke experiment. Also, I think we were careful in the early years to not tip our hand to the market that we were investing as much as we were in crypto, it was still relatively green field. There was still a lot of first mover advantage out there, so We were very tight lipped externally for sure. Even internally, we didn't promote or publicized too much, and we had a pretty small team working on things for the first

couple of years. But as it started to scale, so seen when it hit ten thousand in bitcoin for the first time, and through the crypto winter that ensued in and then kind of the grind up from there. We've

been constantly investing, We've been adding talent. We've become a pretty big part of the marketplace, not only trading that's where our heritage is, but we've become a pretty big venture capital investor in the infrastructure that we see as necessary to have crypto and DeFi flourish, and really, starting in the last couple of years, a lot of our focus has moved to building, so we've hired a lot

of blockchain engineering talent. We acquired a firm called Service One, we believe to be the best blockchain engineers in the world we were able to acquire, and we've been adding to that team. So all told, we're well over a hundred people in Jump Crypto. It is its own business unit. It's part of Jump Trading Group, but run really is a separate enterprise and continues to scale pretty substantially. I find it fascinating that, uh, you know, the origins date

back to the University of Illinois. You know, it used to be back in the day you try to hire the smartest coming out of undergrads are coming out of grad school. Now you go right to the school. It's all that I think. I'm gonna go back to college, maybe get get another degree, I don't know, get a fun internship. Good to get get that internship, get on the ground floor. But Dave, I want to talk about

some of the the infrastructure projects. UM. Obviously, one big one that you guys are heavily involved in, UH is what's known as Wormhole. And U me if I'm butchering the explanation of this, but the way I understand it, it's basically a bridge that lets you take assets trading on the Salona blockchain and carry them over the bridge, which is Wormhole, onto the Ethereum blockchain. UM. So you know,

so that there's sort of connectivity between the blue two blockchains. UM. Obviously, something uh what was it a month or two ago, went went horribly wrong. Someone was able to figure out UH software exploit on the Bridge and basically take what was it three million worth of ether uh and and

sort of disappear. Walk us through exactly what happened there and sort of how Jump was involved not only with the development of Wormhole, but but this whole escapade and how you guys came sort of the rescue of the project at the end. Yeah, um, the you're right. I think your description of Wormhole being across Chain Bridge is dead on. I think the you know, the way I

think of it in UH. An analogy that I think of when describing Wormhole is, let's say I've got a PayPal account and I go out to dinner with some friends, and if they're all using PayPal, were on kind of the same quote layer one payment system, and it's very easy for us to settle the bill or page other for the cab fare or whatever's going on. But if one of us uses the cash app or Venmo or or some other payment mechanism and I don't, there's no

way that I can communicate at all. They're just completely separate ecosystems. They're closed off from one another. You can't pay twenty bucks from from PayPal into UH into the cash app. UH. You have to either have them download the app, which is a big pain, or you know, heaven forbid. By the way, that's usually that's usually me when I'm out to dinner with a bigger up, I'm like, oh, sorry, guys, I got the app. None of you guys, use I'll

get the next one. All right, It's gonna cutch up with them to sign the check on the dashboard of the car. I'll be a parking lot, uh doing that. Um, And you know, for a long time, that's how that's how the blockchain world worked. If you had ether on the Ethereum network and and you were using that layer one blockchain, you had this very vibrant community. There were

smart contracts written their n f T platforms. You could do a lot with your ether, But if you wanted to spend that ether, or get yourself involved in a project, or buy an n f T on a different chain, you you either had to convert downstream into FIAT and then reload a different wallet and have different providers. It was very clunky. So wormhole Um isn't really linked to any one specific chain. So the only thing I would take issue with with your description is, uh, they're now

eight layer ones it's totally interoperable. We expect that number to grow well into double digits by the end of the year. There's a new layer one being added every couple of weeks or so. Uh. And that if if you've got Ether and you wanted to move that Ether to the Oasis network or Terra or Salana or Finance smart Chain or a bunch of different chains out there, Uh, You've got the ability to do that, uh pretty easily.

And important to note it's not just token movement. Uh. So this could be n f T s, this could be messages, it could be data. Really, anything that can exist on any of those blockchains can be ported over through wormhole to another blockchain. UM. Importantly you don't. It's not a hub and spoke model. So let's say that you moved Ether over to Salana and then you wanted

to move that wrapped ethereum over to Tara. You don't have to go back all the way through all the hops back to the home chain and then start back up. You can just move straight from one to the other. So a lot of functionality there. Uh. We first got involved, actually I've already mentioned Service one. UM. They were they were the group writing the first lines of code to develop Wormhole, and it's one of the elements that attracted us to that team. Um and the community started to

rally around the idea of across chain bridge. We're very enthusiastic about it, so we became UH sponsors and backers and and road code and tried to evangelize its use to the best we could. It is a decentralized project, so you know, it's it's out there and is a community effort. But we've had we've had a pretty high share of some of the early work that went into the thinking. UH. One of the reasons why we've got such conviction in a cross chain world is there's a

lot of creativity happening with layer ones right now. Some are really well designed for one attribute, let's say, extremely high throughput, very high performance. You know that's Salana right now is leading the layer one pack in terms of transactions per second to end low gas fees. That's very well suited for some areas that start to bleed into

what looks more like traditional finance. And then you've got the Ethereum blockchain, which has got this incredible community of passionate developers that are writing smart contracts and UH creating n f T marketplaces and things like that. And our firmly held belief is that the future is a multi layer one future, and that the comparative advantage of the different attributes of layer ones is something that should be celebrated and that we would expect to continue to scale.

So you know, right now, if you're an artist and you wanted to sell n f T s, UH Ethereum is where there is the most liquidity. It's where the biggest community for n f T s exists. But it's also one of the most expensive places to mint a new series of n f T s. So now you don't have to force fit yourself into doing everything on one layer one. If you wanted to mint on a much more efficient home layer one blockchain, you could pay much lower gas fees, importantly to a lot of artists

and certainly to me. You can use a much lower energy footprint, and then you've minted a thousand n f T s. If you wanted to move a dozen over the of those, your most rare copies over into open sea, you can use wormhole to do that, and you kind of get the best of both worlds. So that's some background on on what wormhole is and why we're so excited about it and uh and quite right. Uh. In February, we had uh, uh just so happened that about two dozen of us at Jump Crypto were down in Miami.

We were in some rented office space. We were spending time together going through our plans for the year, doing some deep dive on research, debating white papers, you know,

figure out where we wanted to build next. Uh. And in the middle of the afternoon, one of our one of our team members who who watches a lot of things that are happening on the blockchain like a hawk, noticed that there started to become a discrepancy between the amount of wrapped eth so uh, the amount of ethereum that should have had a one for one deposit locked in a smart contract on the ethereum blockchain started to those numbers didn't didn't match anymore. So he pressed the

proverbial big red button. We all happened to be uh in a tiny, tiny little room together, uh, and we we immediately identified that there was an issue. You know, The way I've described to people is it's it's basically a high tech check forgery where the attacker or attackers were able to spoof the destination chain. In this case, that was Salana into believing that ether had been locked up on the Ethereum blockchain, so they were able to kind of print out of thin air some new rappee.

Once you've got wrapped ether, you can do a couple of things. You can go back kind of to the cashier stand and say, okay, I've got this rapteef, I'd like to turn it in for the original please. Uh. And because of the way the system worked, that uh other ether that had been locked previously was made available to that person tendering the rap teeth. And you can

buy stuff with wrap teeth on different chains. So a little bit of a little bit happened if the second one, a lot happened to the first one, and all told, about a hundred two ether was compromised. Our first step was to try to bring the system down. UM. One of the one of the trade offs of decentralized world is, you know, you can't kick the plug out of the wall like you if it was all your own. Uh. You have to you have to put the word out

into the community. UM. The way wormhole works, they're nineteen guardians that attest to the transactions, and they're all independent. So we had to get the word out in the Wormhole community that there was there was an attack and we we needed to bring the system down. UM. That probably took twenty minutes. I would guess, Uh, there was a tense twenty minutes because obviously the vulnerability still existed and and you know, there was more value locked beyond

what had been compromised. UM. And then the next step was, Okay, what happened and is it over? Like? Have we have we effectively taken everything down? Do we know the totality of the problem? And then what what caused it? What was the was the root issue that was able to be exploited? And can we fix it in a way that's totally robust. In parallel, we had to make the determination, okay, what do we do about the stolen stuff? UM? You know? Do we you know? We we don't. We don't have

any Jump Trading group. Jump Crypto doesn't have any contractual responsibilities. We're not liable for anything. Um. But we made an elective decision, uh to swiftly make all the participants whole, uh, and to go out and acquire a D thousand eight ourselves and then inject that into the wormhole smart contract

to replenish what the attacker had had stolen. And let me just put in a sight if for listeners not familiar with the price of eight, you're talking about three thousand dollars roughly a token at that time, right something, so talking about what it was a round million dollars that we have to do that. Yeah, I feel like when someone pulls off a caper like this in crypto, eventually they get caught. It might not be right away, but you know, was that in your think, in everyone's

mind at all? Like, you know what, we can make everyone hole in this project, but we're gonna find whoever did this eventually and and recoup at least some of that. You know, is that part of the thinking that that motivates you to to sort of come to the rescue for the project like this, Uh, you know it. You don't know what is going to happen at the end of all the paths that you chase down. All we

know is we're going to chase down every path. We're working in very close consultation with government resources, with private resources. There is a lot of firepower that is expert at tracking down criminals like this, and we are in this fight permanently, UM, So this is not something that we will become distracted by next month or next year or or whenever this is Ah, this is a permanent condition. But I would say that didn't really factor into the question as to what our action should be in the

moment um. That was really motivated by a belief that not doing so would have been an enormous setback to a cross chain world in crypto and defight in general. Uh. Quite quite logically, it may have been the end of Wormhole entirely. Uh, And that that kind of a setback at this moment when such exciting foundational technology is being laid down, UM, would have been a terrible outcome, not

just for the marketplace. And you know, we're community minded for sure, but this wasn't totally an act of altruism. You know, this was an investment and what we believe is going to be an incredibly robust future for uh, for a lot of other projects that we're working on, investments that we've made, coins that we hold, just the the the entire scaling of a lot of DeFi capabilities Uh,

we think wormhole is going to be central too. So whether or not we ever recoup the money or what we do with the ether if we get it back, wasn't really top of mind in in thinking about it. It was more about this, this event could have blown up the your all your future ambitions and goals. I guess yeah, and and look you it. You don't know where these coins are. You don't know you know, you don't know who the attacker is, what type of attacker

it is. Um, you know it. Uh, they're just too too many uncertainties, especially as it's unfolding, to try to handicap you know, chance of success, of of trying to recoup it. You you already started answering part of my next question, which is I wanted to ask you who exactly you're working with in terms of recovering the funds, and then how close are you to recovering them. Well, you are quite a distance away from recovering the funds until you have them. So there's um uh, there's really

two states of the world. Uh. The the the agencies of the US government are uh both incredibly engaged and incredibly well resourced and expert. Um. This is thankfully, not something that we've had a lot of repetitions doing. So this is a little bit of a learning experience for for everybody a jump that has been involved in the in the pursuit of what's going on. But I've been terribly impressed by the resources within the US government to uh to to go after these type of criminals. Uh,

it's obviously a big number. Um. It's again it comes at a time when when hacking is at the top of the consciousness of of government and private industry. Um. It also happened to occur uh just a few days before the bitfin x successful capture was announced. So that timing was not only great because it made us feel good like, Okay, there's a there's precedent for success here, but I think also is motivating for the government agencies that are involved in a hunt that this is this

is not a waste of time. You know, it's not a it's not necessarily a cold case that you're never going to go anywhere with. And I also think that that case showed just how hard it is to move illicit funds around if they're in crypto form. You know, the bitfin x attackers, you know, it was reported that they were resorting to trying to spend was a four and a half billion dollars one dollars at a time with Walmart gift cards. You know, like that is not

a scaled solution. Um. And you know, the the great thing about crypto is it's a permanent, immutable movement by movement record that is available for everyone to see. The ether that was stolen in the wormhole attack has made exactly one move into the wallet that it was moved into. It has not moved since. Um, everybody is watching that wallet. Uh, every every big exchange and stable coin provider was fantastic in their response. That was something that happened minutes after

we knew that the money had moved. Was we called in blacklisted those wallet addresses. Everyone just dropped everything and blacklisted him except for one, uh, one pretty big provider who, um, for understandable reasons, I suppose said, listen, we need a we need either a court order or a police report to blacklist Waltz. We can't just have somebody call up

and you know, blacklist of wallet. And so we looked at each other and one of the one of the folks in the room, a pretty senior person to jump. Uh walked out of the office building into Miami and found the closest police precinct to where we were and walked in middle of the middle of the afternoon, walked into the police precinct and said. The officer behind the desk looks up and says, uh, yeah, And he says, yeah,

I'd like to report the theft. And the officer nods and he goes cell phone, he goes, no wrapped either, like the worst day. This coff is seen behind the desk, and it's fantastic. You know, we got the Maybe this is better for Chicago to paperwork, but you know, God bless him. We got the police report and uh went on our way. So a lot of a lot of weird stuff like that. That's amazing story. Well, Dave, you have my word that it wasn't me. Okay, I promised you.

I wouldn't know how to even begin to do this. I don't know about vil Donna. She is mysteriously in a condo in Florida. Now all of a sudden like that, you want to you want to give him up talking later sen million Dollar Valley. Wow, that's amazing. So all I was just just glued to that wallet forevermore. I guess, uh be fascinating to see how that turns out, Dave. I wanted to ask about another one of sort of the infrastructure projects that you guys are very heavily involved with,

and that's pith Um. And for listeners who aren't familiar, pith is basically UM. I kind of think of it as the SIP, you know, the stock market SIP, which is basically just the data feed of all the trades that have happened that's available to all market participants UM. And obviously with crypto it's much more complicated than that. There's everything from derivatives to crypto trades to to I guess equity and currency trades on it UM. But I wanted to tell us a little bit about that. But

I'm also curious how UM. Both Wormhole and pith to me have some common motivation, and that's that UM you're trying to sort of solve problems UM that seemed to originate with with ethereum, and the fact that it can kind of be sort of slow, you know, it's it's obviously the newer blockchain after Bitcoin, but compared to some of the more faster ones Um that have been developed since then. It's got this very dedicated community, as you pointed out of the developers building projects on top of it.

It got this core audience. But I can't help but wonder if you know, having to develop these you know, type of solutions for Ethereum problems, if if in your mind that sort of bodes poorly for the long term future of Ethereum. You know, is it you know, to to use sort of a tortured analogies that kind of putting you know, a new radiator and slick tires on an old super room when when really you know you're

waiting for that tesla to to arrive um. You know, is there a Salana or a more advanced blockchain that that really eventually we'll be able to do everything on you can do it on Ethereum just better, and that you know Ethereum is kind of doomed as a result. Is that? Is that to sort of pessimistic towards Ethereum,

to to think of it that way? You know, it's You're right on the score that a lot of the motivations for what we build are driven by problems or inefficiencies in the in the marketplace that we think I have got a big addressable market and the building blocks of using crypto and blockchain tools are really well suited to solve um. But you know, the way I think of PITH especially, it is it's because of ethereum success

that that the motivation for PITH really really started. I think that the you know, the development of smart contracts and the types of creativity that you see, you know it, We've used the analogy before, but it really does feel like the app store moment for finance, that instead of having to wait for you know, big software company to figure everything out and release it, you can have a small number of folks in a garage or a living room or the basement or or something like that come

up with a great idea, start coding it, and then release it into into a very welcoming environment. So I think that the you know, the the success of Ethereum is um is a necessary condition for something like that to exist. Uh. And I go back to the comparative advantage idea that there there are a lot of features with Ethereum that are terrific, that are going to endure, that are going to be part of this marketplace. I think for a very long time there are gonna be

other ones. You know. Um, the way the oasis layer one handles privacy uh and the ability to interact and do research on data in a partition way without exposing that data to the public. Blockchain very cool, very different than a lot of other layer ones. The speed of Salana and the low cost, so I think we see a multi chain opportunity for PITH. It's really the distribution of high fidelity market data that comes from the firsthand knowledge of having executed the trade or been the matching

engine where the trade has taken place. And then you know, instead of a top down approach, which has traditionally been how market data has been distributed in finance, this is

really bottoms up. So the so are the risk takers, the participants that have that were there at the moment that the trade was consummated, being a beacon to say, hey, you know, we we think the price of ether is you know, thirty one oh three, or we think the price of uh tesla is a thousand, or that you know dollar yen is is trading at one twenty or

whatever the whatever the instrument happens to be. You've got now more than fifty firsthand data participants, all streaming that into a arbitration engine on the chain and then feeding that out to anybody who wants to take it. It's a pretty radical change in the way data is distributed. Dave, I have one more question, sort of a bigger picture question that actually one of our colleagues sent over to

me emmilin Nicole in London. She covers script and she's been following your story and writing a lot about Warmhole, and she was wondering if the kind of contingency planning that or making everybody whole, is that the type of contingent planning that anybody in your type of role in crypto should be thinking about, And is there sort of a is that a dystopian way to be thinking about it? Um? You know, we've we've seen in traditional finance and in

defy and in crypto. You know, even the original Ether hack where the Etherean blockchain had to react very quickly.

These are realities, you know, the Equifax hack, the You know, there are reasonably sophisticated code bases that harden over time, and part of the way they harden is by uh finding their vulnerabilities when you go from a few hundred people reviewing the code and looking for problems to a few million people where there are very high stakes two and very high values associated with with vulnerabilities, and that's

how they get identified sometimes. So I think that's a reality, whether you're on chain or off chain, or a big company or in a hacker house or no matter where you are. Uh, that's kind of the progression that complex software has to go through. UM. You know, you're hopefully you don't have to do too many iterations of that. UM. You know, we mentioned a couple of minutes ago the ten million dollar bounty for the return of the hacked

Wormhole funds or the conviction of the perpetrators. We've also got a ten million dollar bug bounty for finding new unrelated bugs, where you can be a white hat hat hacker not be chased, you know, by governments around the world the rest of your life, but get an eight figure payoff from finding a critical vulnerability that's out there. UM. So I think, you know, we it wasn't the first time we had thought of how we would react when uh,

something went wrong. It wasn't that afternoon when we discovered the wormhole exploit. UH, you do, you do contingency plan for that sort of thing. You know, you hope it doesn't happen, and if it does, you don't you hope it's not of that magnitude. Um. But thankfully we had the financial resources in the in the conviction to to react immediately when it did. But I don't think it's

discoping at all. I think it's it's pragmatic and realistic that you gotta think that way kind of trial, trial under fire, you know, it's Uh, well, I'll say, if any listeners know where all that stolen EA through is, tweet tweets a thel Dotta and I will get you that ten million. I know, I'm not even gonna ask for a cut of a day, but yeah, something something like that day. If I wanted to sort of ask you a big picture question, um about sort of the

state of the world and how crypto fits into it. Obviously, for the world really changed about a month ago with Russia's invasion of Ukraine and the financial sanctions uh that came as a result from the U S and its allies. A lot of people sort of talking about while are

these oligarchs using crypto to to hide their money? Uh, it's also sort of I think, put some urgency behind the idea of central bank digital currencies at least you know, people thinking about, well, um, you know, should chin to make the digital uh e c N y um something that can be used internationally with a digital ruble a Russia to get out of, you know, around some of

these sanctions. And to me, you know, when you get back to the idea of like, well, all are sort of the sanctioned Russians trying to hide out in crypto, To me, that actually goes to one of the sort of you know, main fundamental selling points of crypto, getting around that financial censorship that a lot of people, um,

I think is important. But at the same time, I feel like it's also the biggest risk to crypto if you know that type of thing is being done on scale that uh, you know, the government regulators could really sort of crack down a lot harder and a lot faster than than maybe they would otherwise with with regulations.

How are you all thinking, how are you thinking sort of the state of crypto given all these crazy current events that we've seen, you know, is it, um, you know, is this a danger from their regulatory side to crypto or is it doesn't help it evolve into sort of the more mature version of the industry. You know what what's all mean to you? David give you props if you followed any of that all the way through and

you actually know what the question is. I've got a sentence diagram like we used to do in grammar school. Followed all of it. It's like when you go to the doctor and they say three words and they ask you to repeat the three words at the end of it. Uh and the So I think, you know, first things first, I think I can't imagine a worse tool for an oligarch to try to siphon money out of a bank

account or a sanctioned country. I think, you know, we we talked about the bit fitex hackers have any resort two hundred dollar Walmart gift cards it You know, if you've got a couple of thousand dollars and you want to sneak around in crypto, you know it, you might get lost in the See if you've got fifty million, and this is not oligarch money or or sovereign state money, we're talking about that these fifty million dollars a lot of money. It is tiny compared to the billions that

that are at issue with sanctions. There's nowhere to go, like, there is no off ramp that you can find to liquidate a crypto asset into something usable in the real world. It just it you're stuck. You know, firms like chain Analysis and a lot of other private companies are getting better and better and better at identifying the provenance of each coin's movements, where it came from, what the on

ramp was, where the off ramps going. You've got all the eyes in the world on it, and it's totally public, you know. The I think that, um, you know, I don't know. I don't know a good way to evade sanctions. I hopefully there are none, but I would imagine the crypto has to rank among the worst possible ways. Um. The you know, I will say for the record, Jump Jump Capital, Jump Crypto and Jump Trading Group are not

involved in minero, you know. We you know, there are some coins designed to specifically allude the types of analysis that we're talking about. We we have not traded one minero coin in our history. We've made a conscious decision not to. Uh, we don't want to be a conduit for something that would um, you know, veer into that

territory even if permitted by by rule or or regulations. So, UM, we're very much on the side of a transparent blockchain model, uh that authorities can use to hunt down bad guys and uh and bring him to justice or or enforced sanctions. So I'm much more in the camp that this will be an educational moment for the market that crypto is not some you know, another world back alley where you can't see what's going on and billions of dollars can

move and no one knows where they are. Um, you know exactly where they are, and there's just no liquidity, uh to get off the bus. It's uh. Maybe Speed three can be the sequel that Center Bulk is looking for for trying to find a crypto off ramp, but but it's not out there. Yeah. How about the the idea of cb D c S, I mean, does does this um, this whole financial sanctions environment sort of? Um, do you think it will hasten the development of CBD season And how how do you see them fitting in

to the crypto world? Are they just a completely different beast? You know? Were they in some ways. Could they be a competitor to to crypto, you know, at least in terms of just the the efficiency of a digital currency versus the old fiat currency. You know, I think that they'll be another tool in the toolbox. But it would be a big deal if a major sovereign nation decided

to to take their central bank currency digital um. Crypto has got a lot of elements that make it really well designed for the way global commerce works, for the way trading and markets work. You know, we've seen the introduction of seven markets at scale really for the first

time with crypto. Banking is not seven. So there's a little bit of a disconnect there, and that's one of the reasons why stable points have come to such such prominence is that they're immediately available in liquid no matter what hour the day it is, without the you know, the FED wire being up or the bank in Japan being open for business or or whatever you're trying to do. So I think that some of the elements that that crypto is well designed for central bank digital currency would

be fantastic. You know, it would be great to have a digital dollar that you could use for settlements at any moment, any any time throughout the day without regard to which bank your banking at. You can do that in kind of limited scale today. So, UH, if if you've got an account at at City Bank, and I've got an account at City Bank, and I transfer a hundred dollars UH using their app, that actually does move from my account into your account at two o'clock in

the morning on Sunday. You don't have to wait for the FED to be open for that movement to take place. But if you want to go from you know, your accounted City Bank to the ldna's account at JP Morgan, you've got to wait for you know, Monday morning when when the fedwire comes back up and gets open. So I think that it would be extremely well suited there. I think that would be It would promote growth in

crypto overall. UH, and we would just kind of move the rails of traditional finance one step further to being digitized and efficient and modern and safe and UH and more easily regulated. Frankly, all right, Dave, Well, we've got one tradition here. We can't let you go until we've heard the craziest thing you've seen in markets this week. But let's start with Phildon. I'm curious what Fildona's craziest thing is this week. Well, actually, I have a question

for you, Mike. Do you know what Doorja Kat and David Solomon have in common? They're both playing Lallapalooza. Yes, this is the thing everybody's talking about. You're in touch, You're you're with the cool people. So David Soloman, he's the CEO of Goldman. We learned his week This week

he'll be performing at Lallapalooza. I think it's in July. Anyway, the most interesting thing about this and following it for a couple of years now, is that and Mott Levina Bloomberg Opinion has written about this is that a lot of people thought that maybe he'd have to give up his djaying side gig when when he became the CEO of Goldman. But he has sort of just ignored all of that advice and he just keeps on playing. So

it's it's amazing to me. It's been good. It's been good for his DJ career being Yeah, it's been great. Spinner's got to spin, it's that easy. Yeah, So all you kids out there were aspiring DJs. That's one way to get famous, as the DJ is just go go get yourself a CEO job at one of the major Wall Street banks. That's pretty good. Filled down. I'll I'll set my hat to you on that one. How about you, Dave, Have you see anything crazy this week? So crazy? Um?

You know it? It's it's the lem story, uh and the saga that continues there the you forget this week. It's it's one of the craziest things I've seen in my career that a major exchange where there have been bona fide matches between buyers and sellers, no bad data feed or technology quirk on a rye or something like that, but you had the bulk of pretty much a full day of trading result in outcomes that were seen as bad. Then go retroactively cancel all the trades. That is just

bananas crazy, It really is. It's one of the craziest stories of the decade. I think we'll let me ask you, David. You know, is there a difference when you're talking about a physical uh commodity like nicol or safe it was oil or some something that's sort of you know, important to the functioning of the global economy versus a uh, financial asset. You know, does it kind of make sense for the elementy to do that? I mean, I know everyone's mad at them, and they're they're never gonna live

this down. I don't even know if they'll survive this. You know, there's so much anger towards them. But you know, in a way I can kind of see what where they're coming from. When it's you know, when you're pushing the price of a commodity that's needed to keep sort of the global manufacturing industry rolling. Is there a distinction there? Do you think that that should maybe be codified into the rules of exchanges? So a couple of reactions to that.

I think A specially because it's a vital commodity that the marketplaces decision of what the right prices with it where it should trade needs to be respected. And the buyer that needs nickel and is willing to pay a ton or whatever price and has arranged themselves so that they can afford that payment because it's vital to their UH, to their business, needs to know that they bought it um.

So I think it's it's probably an even heightened expectation that that bona fide trades need to stand when you're talking about real world goods UM, you know, no less so for for financial products. But I think that it's certainly the case with oil or nickel or anything else. And in the event that there are some price bands or or some circuit breakers or something like that, absolutely that is a sound market practice position. Limits should be in play. But all that needs to be done before

you start trading after. It's easy to say now in the REB mirror, like, well, you know, if they've just done these three things, that would have been pretty straightforward, except for the fact that those three things are done by almost every other major commodity exchange in the world

UH and and have been for for decades. But the the I think, once you've got a trade and hedges based on that position and UH and you know to to either save the institution or or stay u off other outcomes, I think you just have to kind of live with the trade and either step up and and recapitalize UM or UH or or take the medicine and and and have the consequences be that other capital needs to come in or you know that the bad outcomes have to kind of play out. Nobody's rooting for those outcomes.

But yeah, craziest thing I've seen quite a while, and certainly no one should accept that raped ether for an exchange for yeah, give me a buzz. All right, that's pretty good the good answer, Dave. I like that answer. You made me rethink how I'm thinking about all this. Now I'm gonna give you my crazy thing. Vildana. Are you much of a gamer? You play video games at all? No, not at all, not at all. Me neither. No basketball, no video games. She watches grammar videos on YouTube. That's her.

That's her main vie and I sports bet during football season, remember the bills only on the bills only on the pretty good season for you last year, then thank you bad ending. But yeah, anyway, I'm not much of a gamer either. Back in the day though, back in the seventies and eighties, I was pretty good. And have you

ever heard of Pong? Bildana, the game? I want to say, no, So this was, like I have told me about, I have a film, Dave played a mean game upon So this was probably I think the first video game it was, you know, in an actual arcade game. I don't know how many quotas I pumped in playing Pong and it's

really simple. It's basically video ping pong. You know, you got one line on one side of the screen that goes up and down, another line on the other other screen side of the screen that goes up and down in a ball in between. Anyway, A Tori made the first home version of it. I guess they made the arcade version two, but they made the first home version of it. In n Um. It's sold originally under the brand name of Sears for fifty bucks. Um. It's not

bad for today's dollars. I guess that was probably pretty expensive. In anyway, the guy who created it, uh, saved one of the prototypes, so pre manufacturers one of the first two prototypes, and this is what they took around the Sears and whoever else and tried to sell them this video games. The actual console, not the software for polling itself, but the hardware piece the home Yeah, the home console, the box that you would buy with the box. Yeah, and it was um it was a hardwired circuit board.

In other words, it wasn't you know. They eventually made it with a computer chip. I think there's kind of a pretty innovative as far as computer chips. UM and sort of accelerated the you know, development of smaller computer chips back in the day. Anyway, he sold this prototype. So, Dave, this is where we play prices right? What do you think the prototype for the original Pong home video game sold for at auction just recently? Weld you go first,

what's your what's your bid? I'll go with two million. I feel like the gamer community is pretty intense. Two million, All right, I'm gonna keep a straight face. This wasn't an n f T. This is the actual divice. Just my valuation a ten times the actual physical good. Who knows you could you could buy it and blow it up and turn that into an n f T. But

what do you think prices right? Rules are in effective? Okay, so I can if i'm over, I'm dead, I could get a dollar and if it's above two million, if it's if it under basically yeah, yeah, right, all right, I'm gonna I'm gonna take the over. I'm gonna I'm gonna say it's two point one million. You know what, I agree with both of you. I thought it would go for a few million. Actually went for a twitter and seventy thou come on that it's going to be

some exorbitant number set up. You know, the series story exactly, the whole spiel it should hire you the next time that they don't want to. Yeah, but then everybody will fall asleep and they'll wake up for the many product. The whole story got me thinking like, oh, this is important, this must be big. That's why he's beating it up. If you had never heard upon, you were still ready to bid two million for picture it in my mind, yeah, yeah, I Anyway, Dave, we'd love to get you back sometime

and talk more about all this stuff. We're really really insightful conversation and good luck to you and everyone at jump uh in your your endeavors. Well, longtime listener, it's fun to be on for the first time. I would love to be back any time I get the invite. Appreciate the opportunity. Thank you, Dave. Thanks what goes up? We'll be back next week and something. You can find us on the Bloomberg Terminal website and app or wherever

you get your podcasts. We'd love it if you took the time to rate and review the show on Apple Podcasts so more listeners can find us. And you can find us on Twitter, follow me at Reaganonymous. Bildonna Hierarch is at Bildonna hierarch. You can also follow Bloomberg podcasts at podcast What Goes Up is produced by Magnus Hendrickson. The Head of Bloomberg podcast is Francesco lev Thanks for listening. To see you next time. Just not wanting