Bitcoin is ‘the only real thing in the crypto space,’ Swan Bitcoin CEO says

Swan Bitcoin CEO Cory Klippsten joins Yahoo Finance Live to respond to news of Binance acquiring FTX, the financial stability of crypto firms, various alt coins versus bitcoin, and more.

Video Transcript

AKIKO FUJITA: Well, let's get back to that developing story we've been tracking. Taking a look at crypto, where things are right now, Bitcoin down about 1% after crypto exchange Binance agreed to buy rival, FTX.com. Both FTX's Sam Bankman-Fried and Binance CEO Changpeng Zhao, known as CZ, confirming this on Twitter.

Joining us now for more on this is Cory Klippsten. He's CEO of Swan Bitcoin, a Bitcoin financial services company. Cory, in the lead-up to this announcement, there were certainly a lot of concerns, especially floating around on Twitter, about this liquidity crunch. CZ coming out today and saying this is the reason why we had the conversation with FTX. How should we be looking at this deal in the context of the space overall?

CORY KLIPPSTEN: Yeah, essentially, what's going on is that any centralized company operating in the crypto space that has taken long positions on large piles of altcoins is essentially playing a confidence game because traders understand that while Bitcoin is potentially a new global money and has value that everyone sort of agrees on, everything else is speculative and probably has a fair market value of 0.

And so it's very easy to get a lot of other people to agree with your thesis if you start a rumor, or you start shorting something, or there appears to be weakness on the balance sheet of a company like FTX and Alameda, which is very hard to divide between the two since they're both run by Sam and have a ton of cross-- business going across the two entities.

And so you're always at risk for a Lehman-type moment where as soon as actors in the market start to pile in against you, they can hunt all of your positions. And they also, because the balance sheet got leaked, you can see exactly what they own.

And so their large pile of Solana, their large pile of-- and most people actually knew what their positions were anyway because they were involved in pumping these pump and dumps in the first place. So it's very easy to sort of go and hunt all of their positions and kind of take the whole thing down very quickly.

[INTERPOSING VOICES]

AKIKO FUJITA: Cory, really quickly, you said to avoid a Lehman-type moment. I mean, is that what the risk was here?

CORY KLIPPSTEN: I mean specifically for them. I meant in the terms of, like, Lehman itself going to zero, not necessarily the contagion that we saw in '08 with Lehman spilling over into everything else. I think it's very clear from the price of Bitcoin and even the rebound in the absolute garbage FTT token that's like Sam Bankman-Fried's personal slush fund bouncing back on the Binance acquiring FTX news a little bit from its overnight lows. I think it's pretty clear that this is not something that people-- I mean, everybody's used to it at this point. There have been a lot of these businesses collapsing this year that had similar positions and similar structures.

AKIKO FUJITA: So people may be used to these kind of headlines, although it's incredible to kind of wrap my head around it. The concern when you think about FTX and Sam Bankman-Fried, though, was just sort of the proximity of all this, right? There's FTX. There's Alameda that was-- a significant part of the balance sheet was FTT, which is a token that was issued by FTX. I mean, what does this say about just how intertwined the space is and the risk that comes with that?

CORY KLIPPSTEN: Yeah, I mean, again, it's all sort of insiders stroking each other's backs, other than Bitcoin. So I think any time you're dealing with the altcoins, again, they're all literally a confidence game because they don't have any revenue, and they don't have any use case. And there's always government regulation hanging over their necks, like we saw yesterday with the precedent setting ruling in the library case that the FCC came down with yesterday.

So I think they're always just susceptible to these runs of essentially getting dragged way, way down at any point because people don't really believe that there's anything there. Crypto is good for trading, but the only thing that actually is real in the space is Bitcoin.

AKIKO FUJITA: And finally, we're looking at a chart here, red arrows across the board in the space today. But are we likely to see more fallout here? You know, what are you going to be watching in the days ahead coming out of this deal?

CORY KLIPPSTEN: Well, I personally am busy putting on a huge Bitcoin conference in Los Angeles this week, the Pacific Bitcoin conference. So that's pretty much what I'm focused on. But the nice thing about being into Bitcoin and believing and I think understanding what it will mean for all of us in the long run, it's like you can just stay focused on accumulating Bitcoin every day, and not have to worry about all these machinations in the sort of Wild West of crypto blockchain land.

AKIKO FUJITA: Yeah, it sounds like you're great, taking it in stride. Cory Klippsten, CEO of Swan Bitcoin, a Bitcoin financial services company, appreciate your time today.