 So everybody welcome back to the office. We're in Houston for a couple weeks going back to hot meta activity of coronavirus to El Paso maybe in two or so but today there's been some questions about Celsius and they actually reached out and they said hey let's whatever questions that you have Rob and digital asset news we would love to answer them and thankfully Alex Mishinsky the CEO of Celsius came on here to answer the questions and if you don't know Alex was the creator of voiceover in our protocol now more so for the money over in our protocol or MLIP he's already gone through a couple of businesses had some successful exits and Alex here you are today thanks for taking the time really appreciate it thanks for having me back right on so let's break into it huh everybody's busy let's see what we got I'm going to share my screen real quick here's the different questions that we have brought to you by digital asset news and all the subscribers so the questions are first we'll start with the ones that we had come up with there's five what was really for how is yield created with Celsius how is the Celsius total created and how does it hold value does Celsius ever invest in perpetual swaps and futures is the rehypothecation or rehypothecate in the terms and conditions for Celsius for lenders or borrowers collateral and then we'll get to the others afterwards but most of the same types of things so the first question we have I think this is a big question anybody everybody's mind is how is yield created with Celsius and in our actuality Alex went over this in his last Celsius AMA and what's great about the AMA is that they're all time-stamped so he talked about this in 1556 how is yield created and you can go from 1556 to 22 which I listened to and it was a lot of answers but there was really no answers answers and one of the things that you talked about was hey if you want to know how yield is created in Celsius go do a google search for finance magnets with with Miko and I google that and I saw this one it's an hour and 11 minutes long it's great information Alex but I didn't hear anything about how is yield actually created I heard a lot of good structure and different opinions about what could eventually happen water flowing down from the banks and bypassing them and into Celsius good information but the question still remains how is yield created in Celsius yeah so thanks for asking it again and if it wasn't clear I'm happy to clarify that in my AMA I was focused more on trying to explain to people that not all yield is the same meaning that they really have to dig in and like you are doing right now ask very very specific questions and and let's let's dive into it so so we create yield in a very simple way right we lend coins or dollars to institutions or individuals and they pay us interest right and we have to worry about them returning the asset the underlying what we lend them and the interest that is acute accrued or accumulated on the asset so the the interest is yield right so if we if I gave you a hundred dollars and I charge you ten dollars a year that's a ten percent yield and if I earned ten percent I'm going to pay eight percent to the community it's as simple as that there's no there's nothing else complicated or like sophisticated computers doing algorithms or any of that stuff it's very very simple it's hard to become an institution that borrows from Celsius we reject over 50 percent of people that come to us and say I want to borrow coins from you because we think that those counterparties are too risky and in most of the cases they are just small hedge funds or small institutions who don't have a balance sheet and we just feel it's too risky to lend them coins and the decisions we make every day are should I lend to some of the more to the some of the largest institutions on Wall Street who are my customers or should I take a small customer instead and the answer almost every day is I rather lend more to a billion dollar balance sheet company and take more risk with them than on board a five million or ten million dollar hedge fund so that's kind of half of the equation the other half is what we call margin lending so if you give me one Bitcoin and it's worth $18,000 and you want to borrow money from me I can lend you $9,000 or 50% LTV right and I'm still going to charge you 9% interest or 10% interest and again in this case I have an asset I have a very liquid asset that I use as collateral and you are a retail borrower this is not institutional this is retail borrowing where you can borrow dollars or stable coins against your main assets got it so that's part of that so let's backtrack for a second so you talk about institutions how many different institutions do you actually work with now I know you can't give me names specifics and things like that but just in a general terms of speaking how many different types of institutions are out there that you actually lend to and these are big institutions I would assume like you just talked about yeah so so we lend to over 350 institutions these are all on-board at KYC ML and most these people hold licenses either with the SEC or the CFTC and they're almost all of them are onshore meaning they're not sitting in the Bahamas or sitting in whatever they're onshore entities that we work with right so we know that they're regulated we know that they're that when they give us a financial statement that it's real and we do under diligence I mean we we had several attempts for example of people giving us fake information we call the auditor an Ernst and Young auditor and he said yeah that's my signature but I know I never audited this company so we we our level of the diligence goes all the way down to verifying the identity of the owners verifying that they are really the legal owners of these companies that when they sign an agreement that means something and verifying that the information they give us the financial statements really represent a true and real status of those companies so and when you see hacks or when you see money being stolen most of the time it's because other people just don't take the time or the effort to go and dig deep because again our job number one is to return the coins if we make one mistake obviously that that hurts our community right so okay that makes sense and then so getting into institutional lending so you've said this many times over the course of years that it's all collateralized lending so and then I remember in the AMA you said if you can prove to me that anybody else has gotten a special sweetheart deal where there is no collateralization then I will give you x amount of dollars and so far you haven't had to put that in so I don't I mean that only makes sense right to collateralize so if somebody wants a thousand dollars worth of x you have to give up 1500 dollars worth of blah to get this type of asset back and then they can do whatever they want with it that is essentially how it all works so there should be no instance where there anything would ever come up short that's what I as I see it is that right and no that's not right because unless everybody gives you collateral and that is one to one meaning if somebody gave me bitcoin and a lent them bitcoin then there's zero risk but because normally the two assets are not matching meaning if you borrowed bitcoin and you gave me dollars and bitcoin doubled and you don't return it my community has exposure right so it's so there's definitely a risk of default if I cannot collect additional collateral as the value of these coins moves very quickly so like if you look at the last two months where bitcoin went up 50 60 percent we had many margin calls to these institutions right and you would say wait a second these are famous big institutions why would you margin call them because their collateral was not sufficient to cover the loans they took right so we we don't care that you are famous and you have you know like your your address is one wall street or whatever we don't care about any of that stuff right all we care about is we have an agreement you were supposed to give us 150 percent and now it's 120 percent and you either return the coins or give us more collateral right those are kind of like their relationship the way the relationship works so the risk we're taking on behalf of the community is that some of these institutions will not perform on their margin calls right and and when you see a company blowing up or going out of business it's because they couldn't collect either the underlying or the additional collateral and basically the value of what they lent out and exceeded what they had in assets and basically they have to file for chapter 11 or something like that so as I mentioned on my AMAs on every AMA I state if we have any bad debt if we have any defaults if we have any uncollected asset and to date we'll be in business now for three years we haven't had any of such events right so so that goes back I'm not saying there will be any I'm sure 100 I can tell you right now a hundred percent certainty that there will be somebody that we lend to who will not pass back and that's why we committed to use our own balance sheet first to pay back for any losses before we go and tell our community hey we lost some money and so on so and currently we have over 700 million dollars worth of assets in our balance sheet so you know I laugh when I hear these people say oh I have insurance credit had insurance they can they're not going to collect the dime from the insurance right so so all I'm saying to your viewers is that you have to understand that sometimes people use words that don't don't really mean anything and and that you have to do your homework and unless you have time to do your homework you shouldn't put your money because you're putting it at risk so we try to make it as as clear and as simple as possible but I agree with you sometimes these words and these sentences get to be too long and people look at this and say I don't understand and either I'm not taking risk or I'm taking a little bit of risk and and that's that's where we end up right so let's let's simplify everything right let's take institution a comes to alex comes to celsius and says hey I want to borrow bitcoin okay I want to have 10 bitcoin so what do they have to give you to get 10 bitcoin so if you're uh I would say less than a 50 million dollar about a balance sheet company probably will ask you for between 150 and 200 percent collateral okay so so collateral being being exactly what so what kind of so if you borrow bitcoin uh this would be either cash collateral or a different asset like ethereum for example so I prefer to take ethereum because ethereum moves mostly in the same direction as bitcoin or other assets so so because of that I have less of a chance that I you will get a margin call because there's a high chance that they both are going to move in the same direction at the same time but if somebody wants to give me cash that's fine we'll take the cash and basically if you don't respond to the margin call I immediately go and buy bitcoin with the cash you gave me and I try to cover as much of that position as possible and if you return the coins great I'll return the cash to you at that time so yeah gotcha so so it sounds like to me it's like a lot of these institutions are coming to you and doesn't sound like it's all cash it sounds like it's ethereum for bitcoin or um xrp for matik or something like that is that what's going on yeah so so if if it's an asset that's volatile because xrp is obviously much more volatile than bitcoin is okay then I may require 250 instead of 150 so so each each asset has its own volatility ranking and obviously dollar being the least volatile and and we don't accept any of the shit coins right so you can't come to me and say I'm giving you whatever some coin that barely trades right we don't we're not going to take it so I would say we take probably the top five coins as collateral and obviously if you want to give me USDT or USDC all those things are are are acceptable but again we say no to trades every day so again I would say we filled maybe 50 to 70 percent of trade requests that we get okay thanks so here's another question that I have and that's these so these institutions are swapping things out and they want bitcoin or they want whatever they want right so let's say let's just take bitcoin it's the easiest one right now I think I'm getting around four and a half to five and a half percent interest on celsius some around there so let's say you make seven or let's just make just one point above so that's great so celsius has to make money that's fine right it goes the other other part goes back there the institution has to pay a little bit more so when they take that bitcoin they give a bunch of ethereum up bitcoin comes back to these institutions what exactly are these institutions doing with the bitcoin that would make them or want them to pay a higher interest rate than anything else now I know institutions cannot they cannot custody uh cryptocurrency there is there is laws against it sec might change that OCC has talked about it but here we are so real quick yeah they they I agree with they cannot make money just putting it in custody right so so that that's not a business right paying seven or eight percent and then not doing anything with it so the only reason an institution would borrow it is because they see an opportunity to make money right and they don't want to take the directional risk of bitcoin going up or down meaning if they use their cash to buy the bitcoin and bitcoin drops 10% that day they lost 10% but if they gave us cash borrow bitcoin bitcoin dropped and they returned the bitcoin they still got all the cash they gave us oh yeah I mean that makes yeah for me sorry to interrupt but for me the cash makes sense right the cash goes in bitcoin goes up 25% like I only get eight so I'm good but if they're going to stay in the bitcoin it's kind of weird right so so again if they long if I agree with it they're long ethereum meaning they're already holding it that is a different scenario than if they gave us cash right so so let's talk about both of them separately so let's talk about the cash first and basically there's really only three activities main activities that these hedge funds and institutions do I know I know everybody keeps it really secretive and it's like harsh harsh but I can tell you that there's nothing special nothing special to it they either do shorting which is a business that we don't really believe in and we think it's very risky and shorting means I believe that XRP is going down and I am going to borrow the XRP from Celsius and give them some kind of collateral and I'm going to sell it on an exchange wait a little bit and then buy it at a low price why because I know there's some news coming out or I know that somebody's about to dump a lot of it or I know that for example the XRP foundation is needs to sell some coins and I'm going to sell them ahead of the foundation right so just again hypothetical these are all hypothetical of course yeah right so so and I'm not picking on XRP specifically I'm just explaining to people what are the example right so shorting is definitely a good business there are few people in the world who are exceptional in it but on average it's a very very risky and very very bad game because if you're wrong you can get your face ripped off because anyone who shorted Bitcoin at 9,000 and 10,000 11,000 got liquidated right several times over so so you may be right but the market will prove you wrong right so so it doesn't matter what you think right and what your what your direction is so we we in writing we ask almost every one of our counterparties are you shorting right and if if their strategies are more than 20% short meaning whatever we lend them at least 20% of that is used for shorting we we normally would not lend to that institution right so because we see that as a very risky strategy for us right for the chances of us getting the coins back so let's talk about the other two strategies okay well real quick what you said about that you know like we're going to ask them they're going to short like we're not going to show it now but yeah look they have to put it in writing so so if you're a regulated institution and putting it in writing and and lying about it is is actually a pretty big problem with sec it's not uh it's not a little offense right so because you have to you have to state in your charter when you tell the sec what you do you have to state in your charter what kind of activities you perform including the cftc and so on so so if you're not doing shorting you cannot just start doing shorting the next day right so things like that so so can somebody lie to us of course but i think most of these people are are you know if they need the coins for shorting they'll just go and borrow them from somebody else not from Celsius you know so sorry to interrupt you now talk about the other two things before i rudely interrupt you i'm sorry no no problem so the other strategy which we actually like is market making market making means that orders buy orders and sell orders don't come to market at the same time and meaning there could be a huge buyer coming in but it came five minutes after a huge seller finished selling right so so who fills that void right who actually fills and is always there to make sure that all the buyers and all the seros can match their orders right and that's what market makers do and market makers effectively look at statistical volumes look at directional volumes and things like that and they know when they can buy and when they can sell but again market makers don't want to take directional risk they don't want to own the bitcoin in case it drops or in case it even goes up by a lot right because they don't know which direction the coins are going so they much rather borrow the asset do market making and what what we charge them for a year they usually make in a month so when you say who's going to pay you seven or eight percent when you look at jump trading or cumberland or all these giant companies that that represent 20 30 percent each 20 or 30 percent of all the volume on the new york stock exchange or the nasdaq and they make all their money market making right it's called hft high frequency trading and and basically they know how to create value just from the fact that buyers and sellers don't show up at the same time so the same thing exists in bitcoin ethereum and so on and we lend a lot of coins to these market makers which is a great low risk strategy because again they're not betting in any direction they're just filling orders and third third strategy which is again very simple every one of us can do it is arbitrage what does it mean arbitrage bitcoin is traded on over 300 exchanges and at every moment of the day there is at least a two or three percent gap between us exchanges and asian exchanges and european exchanges so if you had coins in all the right places you could buy on binance for example and sell on coinbase and lock in one percent gain in a second right and imagine doing that 10 20 30 times a day right so so again if you're a big enough institution you can park 10 million dollars worth of coins on a bunch of different exchanges wait for the price to vary and in a day you can make what we right we charge you eight percent a year or nine percent a year if you did one transaction like i said once a month you would be ahead of the game and they do once a day not once a month so so that the point is is that those are normal strategies nothing that i described to you including lending coins which is called sec lending on wall street you can go to google and look up sec lending we do exactly the same thing but instead of lending securities we lend coins so none of these practices are practices that are unique or proprietary to crypto there we actually copied all of it from wall street and if you do a search about sec lending on wall street on your google search bar you will not find a single institution in a hundred years that ever went out of business because of sec lending they went out of business because of real estate loan and because of you know cdo's and and clo's and all this other stuff but not sec lending sec lending is considered one of the safest businesses on wall street and what what sales to us created was bringing the sec lending business into crypto and giving the community 80 percent of that value which no one does on wall street fidelity or interactive brokers or even robinone does not they make hundreds of millions of dollars lending your tesla stock lending your facebook lending your apple stock you get none of it so the big change the big innovation about celsius is that we decided to give 80 percent of that to the community gotcha so out of these ones so thanks for clarifying out of these ones that we just talked about the three that you talked about that market makers and arbitrage which one is like the highest percentage that you guys do over at celsius is it equal amongst those three is it kind of like well we see a lot of you know market makers or arbitrage yeah so i would say it's it's probably 60 percent market making 30 percent arbitrage and maybe 10 percent directional short it doesn't mean they only shorten like sometimes people borrow things to go long right so sometimes like right right now today everybody wants to borrow dollars because they want to go long on bitcoin they have it they use the dollars or usd t to buy bitcoin but that is a directional bet right for us it's a risky bet it's not a non-risky bet yeah people like to talk about doing these things i'm not really keen on it but that's just me because i'm not a big gambler but that's how it works okay and i i i i salute you on it because i think bitcoin is such a volatile asset that you don't need leverage on it to become successful because if you do take leverage and it goes in the wrong direction you can you stand to lose everything but if you don't have leverage no one will take your coins away from you well Alex you can't you can't make you can't become a millionaire overnight without leverage don't you know that's how it works of course that's that is sarcasm sales looks the celsius community is a perfect example of what i'm talking about right we have we've created 64 millionaires who just bought cell token without leverage to your point right and just look at our top 200s they're all listed on our website and how much cell token they hold and many of these people bought it at three and four cents when uh you know when we were just preaching people teaching people about what is the flywheel how does it work where does the income come from and i think one of your next question is it's talking about that so let me answer it directly thank you that leaves me my next question like you just said how was the celsius token created and how does it hold value because i think we're looking at a max supply of 699 698 million is that right 695 million okay so so we created how does it hold value yeah so the word limited supply is used there by many many people in very very different ways for example not to pick on xrp but i have to use them again xrp has limited supply but that limited supply is something like 100 billion or just a crazy number right so right so so when you have limited supply but it's you know every person on the planet can have 10 10 of those coins or 100 of those coins then it doesn't really mean much so limited supply for us being scarcity and bitcoin has scarcity it's 21 million coins in total uh celsius has scarcity 695 million tokens ever going to be created they're already created they're already minted we don't have mining so there's no way to create more and more tokens and these were all created in ico they're all listed on our website you can see exactly what each token is allocated to again half of these are held by celsius celsius has not sold a single token and from its treasury since we were created right so we we are a buyer of token we're not a seller of token every week we have to pay interest we go to market and we are the largest buyer still the largest buyer of sell token on liquid and on other exchanges so in circulation right now how much is in circulation 285 300 million yeah so so basically besides the tokens that are held by celsius there are other things that are locked up they're either locked up for partners or they're locked up for for other purposes and if you go on liquid or if you go on coin gecko or anywhere else you can see exactly how much is in circulation i think it's either 275 million or 285 or something like that so whatever whatever the uh circulating supply is is listed on the on the different coin mark there is a little gap like i i like coin gecko i think is the most accurate coin market cap does not have an accurate number because for some reason coin market cap does not include coins that are listed that are held by our users inside celsius meaning the people that are earning interest inside celsius which makes no sense so just use the coin gecko number yeah so coin gecko i just pulled it up circulating supply 379 million roughly and then the total supply is 695 million so the 379 was all from the interest paid to users who said okay i'm going to take this and i'm going to sell it off because the ones that are locked up those are locked up for the developers for celsius for i think you had something for the employees as well yeah so we so to to correct that that we we obviously had an ico and we sold some tokens to the ico there's still many many people who hold these tokens since the ico we we publish every week how many tokens we bought so i think again i'm doing it for memory i don't have it in front of me but it's something like 46 million tokens is the total number that we bought from the market and gave to our community as interest yeah so it's definitely it's definitely not the majority of that 370 something million so the majority of that is either ico or uh tokens that were like recently for example we gave them employees a one-time bonus which was 25 million tokens it's locked up for three years but it's already in their wallets right so so there's all these things are broken up on our website if you go to sell token on the celsius.network website you can see all the wallets you can click on them you can see what the activity is and you can track all the stuff all that is fully transparent and again the key is that there's limited supply we're not going to make any more of it and every week we go to market them buy more and more of that token so we're talking about so the next part was how does it hold value that's one of those things that you just said however like when we talk about the yield that is actually accrued from somebody who not in america but let's say in europe i believe they can put in bitcoin they can put in ethereum they get a percentage they can be paid in celsius those tokens get taken from from celsius go right to those people and that's where it sounds like it holds value so the original amount the 695 million that you had someone's i see why went to ico other went to people that's where it holds value when you pay it out to those people they can do whatever they want to is that what is that correct or incorrect so yeah there's several ways that uh value is created so first the um we basically um when we sold these tokens right the there is a market out there right so every day there are buyers and sellers that show up to the market and they really decide what the price is we don't decide what the price they're like we go and say it's seven dollars or it's five dollars or it's 50 cents so if there are more sellers than buyers the prices will go down and if there's more buyers and sellers the prices will go up in mathematical terms we are very similar to what b&b does right so if you're familiar with the bindings b&b token basically bindings takes a portion of the earnings and goes to market buys those tokens and burns them we don't burn them we just buy the token and pay them as interest so it's very similar but the end use is a little bit different now the the the people that hold those tokens hold them for two reasons one is they believe that they want to basically earn the five percent interest right they want to earn the which is the yield on the sell token if you deposit it with Celsius right and the second piece is they they're earning more interest so that four and a half percent for example on bitcoin turns into a 6.2 percent if you have at least 25 percent of your assets in sell token in your wallet so that's a utility that you get just like you get miles from American Airlines or just like you get whatever points from American Express right so so there are multiple utilities and because people retain them or hold them there are that causes it to have less sellers and more buyers right so less sellers more buyers the price goes up so exactly so so our job at Celsius is to guarantee that we have more users more deposits more deposits means more loans more loans means more interest and if we have more interest being paid to us then we have to go and pay that interest out to our community we have to take 80 percent of that and pay to our community now half of our community said to us don't pay me bitcoin on bitcoin don't pay me xrp on xrp i wanted in sell token and i won my 30 percent bonus so every week and we publish those numbers if anyone can go on our twitter account or youtube or whatever and see exactly how many we have a graph that shows you exactly or go to Celsius hub.com that's an independent group that is auditing us every day and you can see exactly how or Celsius.com there's many many sites that track this every day so but the point is is that every week as we earn more and now we have 2.6 billion in assets right so it's like huge numbers basically we have to buy more and more and more coins and when you buy more and more coins there are more buyers and sellers so so it's just a natural flywheel which is described very clearly in on this website again not our site we don't they pull all the data from the blockchain and they do their own math and again you can contact the people around those sites and ask them questions and and validate or invalidate what they're telling you okay got it all right thanks next one let's move along shall we does uh Celsius ever invest in perpetual swaps and futures yes i saw several articles claiming that we do that stuff we don't have any positions in options or futures or swaps or anything like that that's not our business right so if we do that that would be taking great big risk on your behalf and that's not what our business is to earn the highest yield but take the lowest risk right i never understood some businesses they have a great model and then for some reason they try to make more and more i'm like just stick to the model don't be exactly easy just make it and have make sure your customers are delighted like Warren Buffett says and everything works itself out i never understood that but i guess it is the human element okay and the next one coming on the last ones rehite rehypothecation is the rehypothecate and in terms of condition for lenders or borrowers collateral lenders you know rehypothecate sure but the borrower so borrower comes to you here's my ethereum here's 150 percent of it you're going to hold it in there do you do anything else with that that they give to you do you lend that part out yeah so so the word rehpothecate just means lending right so so just a sophisticated word that the most people can't even pronounce but the answer is it's just lending so the question is do you lend the collateral that you get from me as a borrower and the answer is yes for us we have a pool of btc we have a pool of eth right so we don't look at your eth as just some eth that's sitting in some bucket it's being added to the pool and we look at the entire pool and we say okay here's a pool of eth we have let's say whatever 200 000 eth right now in deposit let's put 10 percent of that in case somebody wants to withdraw it and the rest of it we try to lend as much as we can we don't care if it came from borrower it came from a depositor or it came from collateral actually the pool is made out of those three components borrower depositor and who and collateral okay so just to clarify rob comes in rob peter jerry they've all got 100 000 ethereum you now 300 000 ethereum you give that away institution comes in and says hey i want 300 000 ethereum sure give us 450 000 they give that to you now you have so that 300 goes away the 450 that is there for collateral does that just stay there or do you all lend that out we we lend that out as well yes so so so again we banks have what's called fractional reserves we don't do fractional reserve that's illegal for us we're not a bank but we are allowed to rehypothecate or lend out the collateral so the only place in that in the model where we have any leverage is through rehypothecation of the collateral lending the collateral so that is where we make money when you ask yourself well how come if Celsius gives 80 percent of the value back to the community where is it making money one of the places where we make money is the collateral because we don't pay interest on the collateral gosh so the collateral that's there you say look we got to loan that out let's say something happens black thursday like it happened in march again and for some reason overextended here especially for the the collateral that's been put in what happens then margin or things get called back can you say yeah so march march 12 is exactly the was a test for everybody in this industry and we've seen record liquidations i think bitmax liquidated over a billion dollars in a few hours you've seen maker dow liquidate 270 million dollars in a few hours right costing people 16 percent in in fees for that liquidation Celsius at zero liquidation zero not a single liquidation right so so the reason for that is that again for us you either return the coins or you give us more collateral so for us there is no we match the book at all times right so we always have just enough on all sides to make sure that we have zero net exposure we ourselves are never long bitcoin or ethereum or anything else and when we don't have enough of something then we ask everybody to give us that as cloud so if we don't have enough cash we ask for cash as cloud we don't have enough if we ask for ethus cloud to balance the books and march 12 we had over 600 margin calls and not a single liquidation all the institutions brought us or paid what they had to pay and like i said on the on my am a we walked out of it smelling like a rose and obviously that was not the case for many of our competitors that is true and the story yeah it was uh i think what do you say like three or four actually got liquidated as opposed to the bit mix but uh that is what it is yeah in total since since uh march 7 retail liquidation so these are retail users maybe uh they bought a thousand dollars or five thousand dollars not not one of them was i think more than 15 thousand dollars and they are people who said to us look just keep some of my coins right so they're not they didn't even close the loan they just said keep some of my coins but zero institutional liquidations gotcha okay so here's the questions from the people i'm not going to keep you forever because there's a lot of there's a lot of redundancy because we go over everyone you're never going to get uh back to celsius so let's just let's just sign up like this the big thing i heard about was insurance so tell us about insurance because there's two types of insurance there's something that happens in the hot wallet and there's also the insurance when you loan it out which is the collateral that we talked about so this is this is what i have on my exchange and wallet fees which i always list you guys always talk about it but as far as insurance crypto itself is is insured so there is a link i send everybody to and it says here fire blocks and prime trust our custodians both provide insurance on assets how would we generate interest rewards by lending out the assets to onboard partners when these assets are went out they are not insured which we talked about already that's the whole thing with the collateral making sure it's there so the question then is for insurance in the beginning we talked about cred and their model that just was not good at all they had insurance insurance is not going to touch them so for insurance here for the hot wallet how does that work how much is it because like with the fdic it's $250,000 right yeah for here in the situation how does that work here at celsius yeah so so uh fire blocks and i should update that site and fire blocks insurance is $30 million for the hot wallet right so if for everything yeah for everything right so if money moves inside that wallet and then that moment the hacker or somebody jumps in and grabs it the insurance company will pay up to $30 million right so so it covers the transition of the assets between our facilities or our call storage and the customer or where the customer is right so and again when when you see other companies claim that they have 200 million insurance or 100 million insurance those are only for cold wallet storage right so as long as as long as it's sitting in gemini uh block five has a hundred million dollars insurance but if it's lent it to an institution like we do right they don't have any insurance on it so so just understand that it's not it's not that we have insurance and they don't or the other way around uh i think celsius the only company that has hot wallet insurance and we don't have cold wallet insurance because it doesn't mean anything for at any moment all of our assets are lent out so why ensure an empty wallet right so so and we state clearly on the side that when it's lent out there is no insurance right you're relying on celsius judgment uh to make sure that we lent it to an institution that's going to return it and as we stated several times if something goes bad we're going to go to our own pocket first look i personally i have over 100 million dollars personally in the celsius wallet sitting next to if you have money with us it's sitting next to your money if you have btc it's sitting right next to my btc you have usdc it's sitting right next to my usdc so so if if if we suffer a loss i suffer the same loss pro rata with you right so so i'm protecting myself just as much as i'm protecting you and i built celsius for myself it just happens that 230 000 people and i use it as well you know so so i'm not i'm not on the other side of the trade right you you can call a zack from blockfire and ask him how much money does he have the block fight right he's not going to tell you a hundred million dollars right so or more so i'm not bragging about the money i'm just telling you that if i if something happens to celsius that is a substantial loss for me i can't just what you know wipe it and and keep walking right so so we take this stuff very seriously and and uh and because of that everything we put together if you look at it and read it carefully you will see that it is acting in your best interest right gotcha and for the most part like like we talked about before you know it's not about it's there's a scam here there's a scam there or whatever else it that's not how it is it's just bad business bad business practices of what gets people in uh and real big trouble it's not that people are are purely evil or purely good it's just one of those things so sure it might make sense so the last thing well you have to you have to worry about the scams and the bad business it's two it's two things you have to worry about yes yeah we try to get rid of as many scams here as we possibly can because there are so many out there and uh i mean in 2021 when a lot of the baby boomers are going to come in which they are what are they going to do they're going to fall for these scams okay alex is the last one and we're going to get to the dns propagation like we had talked about and then we'll finish up and i'll get you out of here back to dinner with your lovely wife so the dns propagation happens last week correct yes there was there was a transfer over from from your website and your app and there was going to be some upgrades there's something that you guys are going to do so you contacted go daddy and said hey we need to update this sure there's going to be a dns propagation and the site went down for 36 hours something like that although i will say this youtube also went down and a lot of other uh uh websites did go down so i know from experience because i've done this myself on my websites uh when i call go daddy because i use go daddy too and i say uh hey i need to upgrade sure it's going to be a dns propagation how long is it going to last they'll tell me it's going to be 24 to 72 hours make sure you tell your people because it will be down so i told them seven days five days three two one day of 24 hours and when it came back up which was actually 36 hours so bring us through that whole thing with as many as little details as you got yeah so thanks for the opportunity and and uh there's no question that we should have announced the maintenance window earlier that we should have communicated the possibility that there will be propagation we didn't even think there was propagation but there was uh again these are actions that actually go daddy took not that we took that caused the propagation and because go daddy detected some things internally that are related to them not to us they decided to lock down their account right so they locked down our account we didn't lock down our account and when we reached out to them normally like as you know you when you reach out to them they go back to you in an hour and so on but something happened inside go daddy and that's why uniswap was down and liquid was down and a bunch of other sites were down and and so it's not just something that happened to celsius right it happens that celsius did maintenance on the dns exactly at the same time but something else was going on inside go daddy and we're waiting for them to tell us what and how and so on but there's a big difference between us and liquid and uniswap and others and the difference is that there's nothing you can do on the celsius site you cannot put your password you cannot withdraw coins you cannot transact you you can do anything there right it's just an informational site and everything that happens happens on the blockchain and on our app which are completely separated and segregated from our website so because of that everybody who's watching this can be assured that none of their information was compromised right so again if you look at the point where blocker was compromised right where everybody with with the hacker stole all of their passwords and all the names and all of the balances that people had and which is what was reported in coin telegraph and coin desk and so on that was because that site accepted all that information and the hacker managed to get through right so so there was definitely an event here we should have made informed people better and the site was shut down because godaddy wanted to make sure that there was no hack there was no penetration there was no illicit activity but there was definitely a brute force attempt on the celsius dot network site meaning somebody tried to break the password godaddy shut it down because they had other things happening with other sites and as you saw liquid had a problem and so on they had a major problem right celsius didn't have any problem because again there was nothing to steal so that's the kind of like the the quick versions and we're still waiting for that report and i hope to publicize at the minute we get it unless godaddy tells us you're not allowed to we will publicize the report well i would just say this some other places may be a little bit more quick to rush to appease the users so i'm glad that you kept it locked down for that amount of time i've already had my data breach in other different places equifax being one of those places so thanks for not making those huge mistakes so again alex thanks for coming on the show i really appreciate it and i will just say this that there are two things that i always liked from not just your company i like your company i like you and i actually believe in you what you're talking about but when you say you must first do good then do well that's a great saying i think it's it's good for everybody and there's another thing you talked about as far as like life there should be something that you look forward to there should have goals and someone to love and those three things are pretty much a secret to life so those two things i appreciate the wisdom that you pass on so again thanks for coming to the show really appreciate it anything else we should know or is that we cover everything we took me i think we're like an hour someone to love something to do and something to look forward to yes those are the three you got those three don't you shouldn't be worried about anything else uh look i i wish everybody health i mean this is a very difficult time for everybody especially like you in houston it's being hit pretty hot pretty badly and hopefully we next time we meet we'll be talking about you know all the great things that are going on instead of worrying about our health and and and and the things that uh you know all all of the things we just talked about are completely irrelevant in the context of keeping your health and and uh you know and your family and everything else very true without health and family what do you have absolutely nothing all right alex thanks i appreciate it and uh i'll see you on the next thanks for having me