Signatory FTX Made Easy

Signatory ftx

everyone welcome back to the crypto in do YouTube channel I've got a very very special guest for those of you that are on Twitter and that have been watching the recent drama on Twitter I've got the CEO of FTX to kind of talk a little bit about himself talk a little bit about the project and kind of clear some things up so how you doing today Sam Jim well how are you I am good and you guys see him he is the CEO of FTX so let's go ahead and get started let's find out a little bit about you Sam so as far as your professional background goes um what did you do before he got into crypto yeah so before crypto I was at Jane Street doing quantitative trading of international E&T offices or basically us-listed funds that hold foreign stocks and so he's doing I you know sort of quantitative trading arbitrage and OTC of those for about three years on Wall Street and then left in 2017 okay so you've got quite a bit of experience in in trading and markets and all kinds of stuff yep all right so what was your motivation well first off tell us what FTX is yeah so FTX it's a crypto currency exchange sort of specializing in derivatives um and you know right now it basically has four pet roles and quarterly futures on something like 20 different underlyings including you know the top coins some index features and it has some volatility products some leverage tokens it has some spot markets and it has an OTC desk so you guys are pretty much like the most well diversified margin trading platform in crypto currently because you guys offer you can short and long all different crypto currencies and you guys have your coin index you want to tell us a little bit about that yeah definitely so yeah so you know in addition to having futures on you know Bitcoin B&B eos tron things like that we also have some index features as our future said track a sort of a basket of underlying tokens and one of them is as you said the shake coin index so this is you know an index of something like you know I 100 tokens that have low but not extremely low market caps yeah I think it's like you know I selected from numbers like 50 through 200 on markup and I yeah it's basically you know the the features on this are a way to put on a sort of leveraged long or short position on you know a whole basket of low liquidity coins at once I think that's awesome cuz I I love ship coins I love trading them so I think it's really cool I actually did a new story on you guys cuz I saw that on Twitter when you guys I want to say when either almost when you guys first launched I saw that yep this is awesome it's really really great marketing tactic because you know we all call crew you know anything that's not Bitcoin is a call yep so I thought it was really really cool and it was very interesting it's fun it does it makes it fun crypto is fun it's about you know it's you know financial freedom but at the same time we also community does a lot of memes and ship posting anyway so yeah thought it was good so let's get into the juicy part of the interview so let's talk about I was on Twitter and I saw some drama between dudx and dunno if you guys don't know dude X is also a nother margin trading platform there's been some drama be high you know surrounding them and I want you to just tell us tell us a story tell us what happened because I saw these posts and I was like hey yeah what the heck sorry this kind of stood clear of everything that's watching and I reached out to you I was like I want it what did you have to say I'm going I'm gonna tell me what's going on such houses going on yeah so I you know the basic answer is I sort of looking into I did you know dude X platform I I look into most other you know cryptocurrency platforms for a number of reasons um and uh and you know I saw that serve Jude X was you know becoming more popular on Twitter engaging with influencers a lot and so I wanted to sort of educate myself on on what the platform was like so um certainly I sort of dug around it a bunch you know um and I I don't know I serve a bunch of things became clear from doing so it and you know I ended up sort of posting a series of tweets where he summarized a lot of the findings I had I you know from investigating the platform and you know I think some of some of the the tweets are not super important I mean there's some typos in in some places but whatever that doesn't really matter you know I think there whew meteor thinks as well you know I think that one thing I saw was some pretty confusing volume numbers on their site which you know as it turns out I think were uh you know basically typos they're sort of static numbers that I were supposed to be updating but weren't which is you know bug judging is probably gonna be fixed soon um you know another few things it looks like there is its own probably paid a bunch of bots too like a lot of their Twitter posts um and I and and then sort of the last thing and maybe the medius is that I you know a lot of the trades on the order look somewhat suspicious they serve if they weren't the most suspicious like there are some extensions that just clearly have fake trades going on and these were not sort of the provably fake impossible type traits but they were I I would say you know one or two steps away from that and and so I anyway sort of you know noticed a bunch of things like that about the platform and then sort of posted a series of tweets summarizing them yeah because I did notice the one that kind of caught my eye was the by bit ones because it looked like it was everything that's copied and pasted directly from buy bit on to there I want to say the FAQ page yeah so I think that ain't that something other people posted about as well to be frank that's not something that I care about as much I mean it's you know yeah dudx is sort of copying a lot of things about by bit but that's not chalking I mean most crypto currency exchanges sort of liberally you know take ideas from other ones that's sort of how industries evolve usually and you know if you want you could say look a whole host of exchanges FTX included are using perpetual swaps which are a certain idea pioneered by bit Mac's years ago um and so you know III think that like I it's obviously it's a little bit embarrassing like I think they copy pasted some help or explainers from-from by bit and forgot to change the name by a bit to do decks but I but I just think that like on the grand scheme of things this is not that big of a deal like that that one in particular I think it's I you know whatever it's not great quality control in some written materials but ever in ever and Fox shows up sometimes and um and fundamentally I mean you know there's everyone's being everyone else to some extent in the you know crypto derivative space and and sort of crypto exchanged States more generally and I think the bets you know it's one of the ways that the industry grows is by people learning from from each other so one of the things you're talking about was the volume that they claimed to have yeah so this one was and I think this is something that has been mostly cleared up at this point so they have or and so sorry for this you're referring I'm guessing to the total volume number not to the question of whether the daily volume numbers are real or not yeah so on their website if you looked at the sort of contract description for the for their contractors a Bitcoin perpetual feature on it you know there's a bunch of statistics that they knew about it one of them was a total volume there's no more description other than total volume but it was eleven billion dollars which is I think twenty times as much as dudx has traded in its history and and there's also an open interest number of eighteen billion so he's also probably wrong um and I and so anyway I sort of pointed out that like those you know the claimed total volume number was off by by a factor of twenty from the actual total volume traded I think the you know Zeo has since commented on it saying that basically this was an error in their webpage that this was meant to be a live updating figure but instead was they basically put a placeholder number there um and I Jim she's gonna look up right now because I can do it whether this has been fixed at this point um and you know just to clarify I think that like you know this in particular is just not I I think this isn't great I think it's like a bit worse than the other thing because I you know because it is sort of I making claims about the you know about the the volume and sort of health of the platform which are wrong but it also seems to have been sort of an honest mistake and you know it doesn't seem to be what you do if you're trying to sort of like really face that number as well as possible and so you know I think again this is a sort of thing where it's a new platform they're gonna be errors and you know presuming that they thought they clean up things like this one they're pointed out um you know I think that one I'm willing to chalk up to sort of an honest mistake of a growing platform and through you know mediocre quality control rather than you know it's sort of active attempt to be misleading and I think that's like something that matters a lot here is that you know you create a new platform they're gonna be typos in it there's gonna be things you haven't cleaned up yet like that's sort of inevitable and and you know I totally understand that and I don't mean to like say that you know you have to have the best health talks in the world published before you can you don't watch anything on but but I think the big thing here is like you know are these attempts to mislead people into thinking about the platform something it's not or esis just a typo that'll get fixed and you know and yeah I do think that there's like a pretty big difference between those two I guess looking at the page right now it looks like that lines just been entirely removed so it looks like there's no longer a claim about a open interest or about total volume on the webpage that's something that they should have on their webpage though is as an exchange so open interest they definitely should have I think that's it's not the most important piece of information like you can trade without knowing the open interest but I think it is something they should be releasing you know the total volume ever I think is not a super important number like you can calculate it yourself just by adding up all the daily volumes it's not super standard it's not the number most people look at when they're evaluating an exchange so I you know I think what I'd say is like I definitely think that they should add back open interest once they have an accurate calculation Friday it's not great that they don't have it now you know the total volume ever I think it's it's not it I it's not the most important number so do you think it's important though for an exchange like if you're gonna launch and I'm gonna do like a massive marketing campaign don't you yep that you should have all your ducks kind of in a row so I basically do you think that and I think that like you know why did I serve point out some of these things that I think aren't that big of a deal I think that there's sort of two parts to this and one part of it is what you said is that you know dudx you sir has been doing very very aggressive marketing and you know it's not serve coming out and saying hey here's a new platform try it out give us feedback you know it's it's been sort of very aggressive on Twitter recruiting a lot of a lot of people to to pitch it and I think that like you know the heavier heavier you go on on marketing a product I think sort of the more you're putting yourself out there and you're saying hey guys this is a product ready to use like this is not a beta mood this is not like a first draft like we're trying to go for all the users right now and we think our platforms ready for that and so I do think that that means that like you know you should be held to a somewhat higher standard and and I think that sort of the accumulation of a lot of these you know a lot of these issues I think means that like the platform's marketing got ahead of its product and I think you can also see some of the liquidity on the exchange which is it's not terrible but it's not it's not good and it's not you know I think it's not ready for large volume traders it's not it's not gonna survive large orders you know it's got pretty small volume right now and I think your books enough for that but it's not enough to grow much so do you think that there's a little bit of putting the cart before the horse here um I totally understand the position there and on the other hand like you know in a competitive industry you don't want to sit there for years refining your help articles before you can launch and get passed by so you know I understand the business decision there I don't think it's the worst thing in the world but I but but yeah I do think that like the platform could use a fair bit of cleanup in a lot of ways now this is sort of not addressing what I think is probably the most serious of the issues that I found with it you know this is sort of addressing that the middle tier of like things that are not great but that are really better not that bad all things considered okay what is a moat what is the most severe show you think in your opinion yeah so if all of these I think that there is I think they sort of one that stands out maybe two one I mean buying Twitter likes and retweets is not it's not a great look again I don't think this is a huge deal but it's just like really not an accident like as opposed to a lot of these other things which are just like poor quality control like you don't accidentally pay someone to recruit a lot of BOTS to like and retweet all of your posts and so I think that you know now of course I don't have proof that's due to X themselves that did this it is possible that some party did this I'd be a little weird but it's possible but buddy I mean it's pretty pretty transparent here that these are all BOTS right so so that's something which again it's not the worst thing in the world like it's not like fake Twitter likes are are really costing people out much you know that much it's it's more just like I think more clearly intentional but I think the biggest thing is is the is whether the volume is real and I think that's like obvious has been sort of a hobby horse of mine for a while is looking at which exchanges in crypto have real volume which have fake volume and I think that that's a pretty serious thing I mean everyone knows that the volume numbers you publish are you know one of the primary things that people are going to use to judge your product and that it's how traders decide if it's an active platform it's of a pop if it's a platform that has liquidity that can support large volume that other people have decided they should you know trade on and and so I think that's a sort of thing where that's you know thinking volume I think it's both extremely intentional and and like really misleading and sort of really misleading towards customers on now on that I think I will say is it was not the most clear-cut case in the world um you know we've seen a lot of exchanges that have just completely bleeding we faked volume you know these are exchanges that just have an order book that's a percent wide and print a ton of trades up mid at an impossible price for ten times the size on the order book and just like physically can't happen um and it's just completely unambiguous that that all their volume is fake um and this was not that um and I also haven't done a deep dive on this like it you know it's possible that had come out with a different impression if I looked into it more um but the thing that I saw was a bit suspicious it may be more than a bit suspicious you know what it was basically was some of the trades looked normal but a lot of the trades looked like basically someone would petty the offer and then like a millisecond later someone else would lift that offer and that would just like happen every second could that end that's though maybe well right so it could be BOTS and they they weren't physically impossible trade so it can't rule out that it was organic behavior um but it's um it's not like you very very rarely see that organically like organic that you would almost see if it was just about taking they'd just be lifting the offer they wouldn't be waiting for someone to Penny the offer and done lifting that um but now of course you can tell the story well no it's that there's an offer at you know eighty three the bought didn't wanna buy it a III and then someone kept offering eighty two halves and then it would buy so he's willing to buy at a to half and not at a three so so far at that story serve holds up as plausible but then I tried something else which is I penny the offer so I place it offer at a teach you have a small offer and no one lifted my offer at the bot that was taking stop stop lifting at eighty two half as soon as it was me on that offer and then someone started placing an ad to offer and the vodka flip think that and so that sort of really cut a hole in the theory of like what's going on here is there's just one participant who's willing to sell at eighty to have another he's willing to buy there but neither willing to budge from that and that's why it's not actually like not you know actually printing on the offer because if that were the case the person who's buying shouldn't care whether it's me or this other thought that keeps panning who they're buying from they should be fine either way so again this isn't a proof of anything like it's I you know it's I can't see behind the scenes obviously I don't know which accounts are doing this but but it's really weird behavior it's pretty hard to explain as organic behavior and and there's a pretty natural explanation for it which he's pretty compelling which is that someone wanted there to be a lot of trades going up but only want to trade with themselves didn't want to trade with some other party in order for that to make sense given that their fees it had to be someone who's also collecting the fees an internal trading desk and and that also fits with like that sort of motivation here which is to increase the reported volume of the exchange and it was you know done in a more sophisticated way than typical fake volume is but not that much more sophisticated so again isn't a proof of anything but I think it's like pretty suspicious um and I and I think like would certainly lead me to believe that the odds were fairly high that this was you know likely to be an internal trading desk by self trading to fake volume in order to make the exchange seem more active than it was and I think that sort of the most serious thing that I noticed of all of these my they have they're claiming that they don't have like the internal trading desk that's right they've claimed that very publicly and again this is one of these things we're like you know in sort of pointing that out my point wasn't so much to say you to comment on whether it's good or bad to have an internal trade just as to say like they're making a big deal of not having one this is like one of their big selling points but I think there's like reasonably strong evidence that they probably do and again this isn't proof like this could be someone else doing it I can't imagine why they'd be doing it but it could be them similarly you look at the liquidity on the books it's super consistent what the pattern is like it doesn't look like just a bunch of random market participants sort of running into each other in random ways it looks like there's exactly one desk that's providing all the liquidity here and that's also something about like a you know serve points towards this and again I think more what I'm pointing out here is a little bit of policy a little bit of like you know if you're gonna if you're gonna make a big media push this is gonna be one of your big selling points all over Twitter it's it's not a good look if that's not true what you can now have proof of but it's it's that's certainly what what it looks like do you guys have an internal trading desk so it's a really good question and the answer there is I it depends on on what you mean by that the technically the answer is no there's no FGX an internal train yes there's no you know F Jack's as an entity doesn't do this but you know as is the extremely public like alameda research does trade on FDX alameda research is one of the primary liquidity providers there and obviously FTX is sort of an organization that's one out of of alameda research and so i think i'd call it like you know a sort of you know closely related or affiliated or or something like that trading desk and and i think that you know the nuances I think it's worth something but like I you know I think for a lot of intents you know all often times and purposes here you know the effective answer is you know yeah there's like there's a core liquidity Fryderyk here that has a relationship you know to the exchange so I and and so you know I would never like make a big deal of like oh yeah definitely that's one of the big selling points of FTX like no really trading desks I think I'd be a pretty really pretty obviously you to control over Alameda like if they do have their internal trading desks like on FTX you have control over that or that's like something that exchanges don't have control over what the internal training desk so what you mean have control over well because like because du/dx is claiming we don't have this internal trading decks it's revering with our volume and then you're saying that your guys are partnered kinda with Alameda and they may have that so like because our FTX and Alameda are two separate entity I am here under what you're saying so yeah so so let me say sir if a few things on that and obviously there's a lot of sort of tangled things here and so I'm not sure I can answer all the questions but you know one thing to say is like Alameda does pay fees on FTX they do have any specialty deals they're just you know going this is a typical fee schedule um and and so you know hollowmade would pay fees also you know things like Walsh ring are just banned by the matching engine on FDX it just doesn't let an account trade with itself and you know obviously we monitor pretty closely to make sure there's an you know any attempts to - you know inflate volume that you know trades are done for sort of legitimate purposes and I and you know at the very least that if not like people are paying fees on that and I think that that sort of gets want the big things to cheer which is like one of the big worries is easy only if an entity that's not paying any fees which is probably the exchange itself and so there's no disincentive to wash trade and it pumps up the volume on and and NCI I mean I you know you can i you can also just like take a look at the trades and see that like you know the trades that are done are checks or against resting orders and you know typically against resting ORS that had been there for more than like a millisecond or whatever and so anyone could have traded against that order if you place an order there instead like you'll get filled as well you know it's not I there's no I know trade desk on on FTX that it's like specifically you know has the ability or a motivation to target trading against themselves or a particular counterparty okay so that's so you guys don't have an internal trading desk that's right for for the purposes of this that that's correct again I want to like you know be a little bit careful about this if someone could say yeah well okay but you have Alameda and and and they deserve the realities there are two separate knees that's right and and Alameda is you know it's just acting as a liquidity fighter there and it's not you know doing any sort of like wash training or volume pumping or some things like that and exchanges do have liquidity providers they have makers and takers and all different types of stuff because it kind of helps with volume in liquidity it's pretty standard procedure for all exchanges correct that's right I mean you know all exchanges obviously try really hard to have liquidity fighters you know with some the liquidity fighters have a closer relationship to the exchanges and others for some it's it's you know a long process to get a lot um you know obviously one of the things about if TX and you'll one of the big things about starting a new exchange in general which makes it tricky is it's really hard to convince liquidity providers to provide mcquoddy on exchange if there's no volume but it's really hard to get volume if you don't have any liquidity exactly and so there's this chicken in the egg from that's hard to solve and obviously having Alameda there from day one friend liquidity on FTX was you know one of the things that helped get it off the ground okay so I've got some other questions so today on Twitter somebody posted a chart and I want to say it was it FTX chart where the price skyrocket NK so can you talk about that at all oh yeah absolutely um so what happened there um first of all sorry about that so what this was the spot Bitcoin USD market on FTX um basically as bots were refreshing the order will cleared out for a second and then a Bitcoin printed at ten thousand dollars so I you know on the one hand there's no liquidations based on the spot markets and we have lots of production lots of protections on all of the markets that can trigger liquidations against large prints you know including price bans and things like that um but there were obviously you know stop losses for instance can trigger based on this price on that market it's not good so FGX has compensated all users who got filled about price there and i we did that I you know a few hours ago I once we looked into what happened and also like have you know taken steps to ensure that like this doesn't happen in the future I think that we'd put substantially less effort into preventing large prints on the spot markets the futures markets because of the basically because of the lack of liquidations but obviously given that stop losses are order types that exists like I you know you still have things triggering based on the price and so it's still not great but you guys comp you guys saw that that was an issue you guys compensated every that's right I have anyone who got filled above what market what mark any is pretty clear and it's not like there there is a ton of prints in you know continuous line up there's like you know boats pop eat bitcoins or something like that total that printed you know a thousand bucks above fair and all of those trade prices have been adjusted to what the actual market price was before anything went crazy okay so my next question is there was a lawsuit that came out and I can't remember if you fit was against FTX or if it was against down right can you speak about that at all yep so the first thing that I will say is you know the amount that I'm I sort of allowed to say about this publicly is obviously somewhat constrained but um and you know there is a blog post site that surveilled me to wrote on this on I you know and and largely what I'm going to be doing is to sort of like repeating that but I but you know from a high level basically like I you know the alleged trading behavior is not something that I'll need it does I it's I you know full of false it false claims there's sort of no teeth behind it it's I you know just accusing Alameda of things I didn't do um and I you know you know one of the only kind of real core pieces of evidence I did was a since for you know twice retracted tweak on on the matter stemming from misunderstanding um and I and and yeah it's just like I unfortunately is the case that it's like super easy to file a lawsuit in the u.s. you know basically these do it and I and you know we don't see it as having merit and and I all maybe address one other specific part of it which is the part that says Jeff checks which is at FTX and ftt are not offered in the United States and so you know they website blocks IP blocks the United States okay non-us kyc is required in order to access ftt and and and so thatthat sort the other thing and that's sort of where the you know the claims intersected with FTX so you guys so you guys are gonna be fight well Alameda is going to be fighting that now cuz FTX you guys are like that has nothing to do with us you know Ryan obviously can't give details on this but but yeah we were like I basically think it's a you know serve a nonsense student are gonna be fighting it okay so basically people should that are in the United States are not supposed to be trading on your guys's platform anyways correct that is absolutely correct and you know not supposed to not allowed to IP blocked kyc blocked um and I I and you know I that's I obviously I think that a lot of cryptocurrency exchanges are doing right now given the regulatory landscapes in in in the United States alright anything else you want to add before we get going because I think you did a really great job of kind of clearing things up at clearing up what why are you are on the dudx website what you were looking yeah because it is very normal for competitors to kind of you know look at each other and say okay what can we do better what can help you beat the competition it creates you know it's creates healthy competition and that's what we want in crypto we want to have the best of the best and we want to be taken seriously by the masses so that's you know to me that makes sense that you kind of went ahead and did that and that you posted that tweet and whatnot and you know there's still some salt going on on Twitter yep yep and and you know yeah I totally agree like you know competition is good here and you know we've obviously taken ideas from other exchanges other exchanges they've taken ideas from us I don't I don't regret them that that that's legit like you know obviously if taking idea means call yourself FTX that's not okay but but you have taken idea he's you know a lot of exchanges now thank doing a trading competition is a good idea that you know go for it um and um and you know I guess so one last thing I will say is that you know obviously there is some sort of harsh words explain you know exchange between some parties but you know I will say that that both a the Dudek CEOs um you know posts on the thread I thought were we're totally respectful and reasonable I I didn't take issue with them at all I appreciate that he sort of owned up to some of them you know I think he sort of dodged some of the the maybe more biting bullet points which I'm not at all surprised by but they put him in a tough position and you know I'm guessing he's looking into those internally so I you know I have no beef at all with how he handled it and uh and you know Minette him I have nothing against him it you know and and hoped that I you know thought that all of these things are cleaned up and and you know sort of wish him the best okay yeah I met him in Vegas he was a cool guy so yep meet a lot you meet a lot of people these conferences and stuff oh yeah so they're fun but anyways I appreciate you Sam you coming you taking the time to come on and kind of talk about what happened and explained it to people and if you guys are interested and you want to learn more about FTX Sam is also on Twitter I'm going to tag him in this I'm sure you can go ask him questions you can pop in their telegram group and and whatnot so before we get going anything that people can expect from FTX in the future that you want to talk about and whatnot yeah absolutely so um you know I guess what what we have served on the docket here um you know I think we're probably launching more volatility contracts you there's certain like contracts which you call move contracts so expect some some more of those longer dated ones coming out soon expect some pretty cool trading algorithm features in the next month or two and and a bunch of other potentially cool that I can't that they don't want to quite reveal yet because it's not not not you know certain not over the finish line but but we've got a lot of exciting things in store awesome well thank you so much for coming on and kind of talking about all the stuff that happened in kind of explaining it in your own words I appreciate that I try to get the scoop for anybody that's watching I always try to get the scoop before it happens or you know after it happens and kind of get you know people to kind of clarify what's going on I think this is an important conversation for people that do margin trade and do use both platforms or do you know currently want to maybe switch from one to the other so I appreciate you coming on in it was great talking is great being on here thanks for having me alright thank you