1 00:00:00.000 --> 00:00:02.130 Kevin Travers: Hi, we're here at the Blockchain Center in New 2 00:00:02.130 --> 00:00:06.270 York with Harumi Urata-Thompson, the CFO of Celsius Network, a 3 00:00:06.270 --> 00:00:10.620 cryptocurrency lender founded in 2017. Harumi, can you tell me a 4 00:00:10.620 --> 00:00:13.110 bit about yourself and about the project? 5 00:00:13.630 --> 00:00:15.430 Harumi Urata-Thompson: Absolutely, Kevin, thank you so much for 6 00:00:15.430 --> 00:00:18.460 asking this question. And thank you for inviting me to have this 7 00:00:18.460 --> 00:00:23.650 interview. So Celsius, as you as you mentioned, was founded in 8 00:00:23.650 --> 00:00:28.090 2017 has raised the first capital, if you will, through 9 00:00:28.090 --> 00:00:32.830 ICO towards the end of that crazy, crazy ISO era, using that 10 00:00:32.830 --> 00:00:37.060 capital. The basically what's what's the equivalent of a sec 11 00:00:37.060 --> 00:00:40.390 lending but the backed by the cryptocurrencies lending, the 12 00:00:40.390 --> 00:00:44.020 main business line is crypto lending. So basically, people 13 00:00:44.020 --> 00:00:46.900 give us their coins as collateral and then we loan out 14 00:00:46.990 --> 00:00:50.920 US dollars, the stable coins. That's the the bread and butter 15 00:00:50.920 --> 00:00:54.760 of business lines. So that is actually something that really 16 00:00:54.760 --> 00:00:59.350 picked up fast. And to date, we have accumulated over $10 17 00:00:59.350 --> 00:01:04.240 billion worth of loans just in less than two years. So I think, 18 00:01:05.110 --> 00:01:10.240 I think that's, that's a proof of how, where we can take this 19 00:01:10.240 --> 00:01:10.900 business to. 20 00:01:11.140 --> 00:01:13.930 Kevin Travers: So how exactly does this work? It's, it's not 21 00:01:13.930 --> 00:01:15.460 trading, it's not securitization. 22 00:01:15.460 --> 00:01:18.840 Harumi Urata-Thompson: we take the coins, we support 40 or so 23 00:01:18.840 --> 00:01:18.990 Kevin Travers: Cool. Well, having trust in your lender or 24 00:01:19.840 --> 00:01:21.420 different coins. And some of them are what we call 25 00:01:21.420 --> 00:01:25.110 cryptocurrency. Some of them are what we call stable coins. And 26 00:01:25.110 --> 00:01:28.440 we have a couple of gold based token as well. So all these 27 00:01:28.440 --> 00:01:32.580 different types of tokens, what whichever the tokens coins that 28 00:01:32.580 --> 00:01:37.410 the clients have, they transfer the coins from their wallets 29 00:01:37.410 --> 00:01:41.580 into Celsius wallets, where we take the custody, if you will, 30 00:01:41.610 --> 00:01:45.120 we're not the custodian, we are not the custodian bank, we just 31 00:01:45.120 --> 00:01:49.860 take the custody of these coins from where we actually use these 32 00:01:49.860 --> 00:01:54.180 coins to make money. And we pay the rewards on all these coins 33 00:01:54.180 --> 00:01:56.970 to all of the customers. Now you have to remember that these 34 00:01:56.970 --> 00:02:00.780 individuals who transfer the coins into our wallet are not 35 00:02:00.810 --> 00:02:05.550 not all millionaires or anything like that. And some of them are 36 00:02:05.580 --> 00:02:10.140 trusting us with their life savings, right? So we have to be 37 00:02:10.350 --> 00:02:14.700 we have, we have to be very responsible with what we do with 38 00:02:14.700 --> 00:02:17.370 their coins. So we're not going to bring the coins to some high 39 00:02:17.370 --> 00:02:21.570 risk, high return sort of marketplace and make money off 40 00:02:21.570 --> 00:02:25.380 of that kind of situation. We actually use the coins that 41 00:02:25.380 --> 00:02:25.650 borrower is very important, especially this year with COVID. 42 00:02:25.650 --> 00:02:30.660 people transfer into our wallet, use that as a base to actually 43 00:02:30.660 --> 00:02:34.980 make loans by taking and and also take the collateral. And 44 00:02:35.010 --> 00:02:39.030 majority of the loans that we make are over collateralized, 45 00:02:39.060 --> 00:02:42.480 meaning, let's say something happens, like let's say we you 46 00:02:42.480 --> 00:02:45.420 and I do the collateralized loan business, right and the you are 47 00:02:45.420 --> 00:02:49.230 the borrower, I am Celsius Network. And then you come to me 48 00:02:49.230 --> 00:02:53.130 asking if you can borrow $1,000 from me, right? And then I say 49 00:02:53.130 --> 00:02:53.740 But as you've already said, your business has been successful 50 00:02:53.740 --> 00:02:57.510 okay, sure, I will, I will lend you exactly $1,000 worth, then 51 00:02:57.510 --> 00:03:02.130 you give me 4000 up to maybe $4,000 worth of cryptocurrency 52 00:03:02.130 --> 00:03:05.910 as collateral. So let's say something very bad happens to 53 00:03:05.910 --> 00:03:10.440 during COVID. What can you tell me about that? 54 00:03:05.910 --> 00:03:11.310 you. And you, you can exactly we we know that you are very, very 55 00:03:11.310 --> 00:03:11.520 Harumi Urata-Thompson: A lot of businesses not just the 56 00:03:11.520 --> 00:03:13.860 good, you're very, very good borrower, you're going to give 57 00:03:13.860 --> 00:03:16.290 me all the interest and you're going to pay back the whole loan 58 00:03:16.290 --> 00:03:20.940 at the end of the term. But let's say not everyone, 100 59 00:03:20.940 --> 00:03:24.270 people, 1000 people that you make loans to not everybody will 60 00:03:24.270 --> 00:03:28.200 be able to meet that obligation for one reason or another. Just 61 00:03:28.200 --> 00:03:31.320 in case something like that happens loans are almost all the 62 00:03:31.320 --> 00:03:35.430 loans over collateralized means like, if I give you $1,000 as a 63 00:03:35.430 --> 00:03:39.960 loan, we take more than $1,000 worth collateral. So in case 64 00:03:39.960 --> 00:03:43.230 something bad happens, the collateral is more than 65 00:03:43.230 --> 00:03:46.950 sufficient to make up for what may have been lost. So that's 66 00:03:47.190 --> 00:03:49.620 that's how we do our business. On the flip side on 67 00:03:49.620 --> 00:03:53.760 institutional business. Also, that's also the main line of 68 00:03:53.760 --> 00:03:57.300 business to do the crypto lending. But with institutions, 69 00:03:57.900 --> 00:04:01.830 what kind of coins can exchange hands, there's a little bit more 70 00:04:01.830 --> 00:04:04.950 variety. So with individuals, it's only the US Dollars or US 71 00:04:04.950 --> 00:04:07.860 dollar, the stable coins that will end up with the 72 00:04:07.860 --> 00:04:11.490 institutions, we can also do coin to coin kind of crypto 73 00:04:11.490 --> 00:04:14.640 lending. So that's a little bit different business model there. 74 00:04:14.640 --> 00:04:16.020 But the idea is the same 75 00:04:29.050 --> 00:04:32.110 financial institution, but basically economy after we went 76 00:04:32.110 --> 00:04:38.110 into COVID-19 lockdown, we went into a brief time of real 77 00:04:38.110 --> 00:04:43.330 hardship, right and every financial institutions also so 78 00:04:43.360 --> 00:04:48.790 all of the money being withdrawn investments sold. We also saw 79 00:04:48.790 --> 00:04:51.310 some withdrawal was came immediately after March two 80 00:04:51.310 --> 00:04:54.790 hours after the crypto really kind of went down. What was 81 00:04:54.790 --> 00:04:57.520 really great for us though, is that because we got I think 82 00:04:57.520 --> 00:05:00.910 because we got into lockdown and because people became even more 83 00:05:00.910 --> 00:05:04.150 diligent about what kind of financial institutions they want 84 00:05:04.150 --> 00:05:08.350 to bank with, or they want to provide their life savings to, 85 00:05:08.650 --> 00:05:11.770 in order to make sure that they can retire safely at the end of 86 00:05:11.770 --> 00:05:17.290 the you know, at the end of their career. Just after a week 87 00:05:17.290 --> 00:05:22.240 or two, we began to see a record number of signups to open up the 88 00:05:22.240 --> 00:05:27.190 accounts with us. And since then, every week, we are getting 89 00:05:27.220 --> 00:05:33.640 pretty much net net positive Cohen transfers coming into our 90 00:05:33.640 --> 00:05:36.940 wallet, then how much withdrawals that goes out of a 91 00:05:36.940 --> 00:05:40.300 wallet, which is which is really very great. And and that's how 92 00:05:40.300 --> 00:05:45.070 we basically established going from $500 million, give or take 93 00:05:45.070 --> 00:05:50.560 when I became the CFO to over $2.2 billion today, especially 94 00:05:50.560 --> 00:05:54.430 in the last few weeks, this increase has been accelerating. 95 00:05:54.460 --> 00:05:59.710 And I am responsible as an as a CFO, one of my responsibilities 96 00:05:59.710 --> 00:06:03.310 is to make sure that we are earning enough to make sure that 97 00:06:03.310 --> 00:06:07.000 we can pay out enough rewards to everybody who transfer transfer 98 00:06:07.000 --> 00:06:10.360 their coins to us right. Today, if you have if you have US 99 00:06:10.360 --> 00:06:14.860 dollars with any banks, how much of you make 0.01%? Not very 100 00:06:14.860 --> 00:06:18.310 much. Exactly. We pay out depending on what coins you're 101 00:06:18.310 --> 00:06:23.440 giving to us, we pay out anywhere between five to 16%, 102 00:06:23.650 --> 00:06:26.320 depending on which coin you're giving with us. And and also 103 00:06:26.320 --> 00:06:30.460 depending on, if you have certain ratio of cells, our 104 00:06:30.460 --> 00:06:33.940 tokens as part of your wallet, depending on all these different 105 00:06:33.940 --> 00:06:36.460 combinations, you could make that kind of money on an 106 00:06:36.460 --> 00:06:41.410 annualized basis, paying out making making the our obligation 107 00:06:41.410 --> 00:06:46.120 to pay out that kind of return on a weekly basis, we have to 108 00:06:46.120 --> 00:06:48.760 make sure that we keep earning right because you cannot 109 00:06:48.760 --> 00:06:51.880 continue paying out what you don't make. You cannot pay out 110 00:06:51.880 --> 00:06:55.120 what you don't have. So that's something that I'm responsible 111 00:06:55.120 --> 00:06:59.020 for. And then every week, I see more more coins coming in. And 112 00:06:59.020 --> 00:07:02.350 I'm thinking, what else am I going to do to make sure that we 113 00:07:02.350 --> 00:07:05.440 continue earning money. So it's a little bit of a thrill that I 114 00:07:05.440 --> 00:07:08.620 feel every week, but something that I really, really do enjoy 115 00:07:08.620 --> 00:07:10.480 seeing all these coins coming every week. 116 00:07:10.560 --> 00:07:13.830 Kevin Travers: So Bitcoin broke 16,000, just this week, what can 117 00:07:13.830 --> 00:07:15.840 you tell me about how that affects your lending business? 118 00:07:16.140 --> 00:07:19.260 Harumi Urata-Thompson: Absolutely. So just like any other 119 00:07:19.260 --> 00:07:22.680 collateralization business, we do have something called margin 120 00:07:22.680 --> 00:07:26.760 call. And if the market goes down, in order to bring the 121 00:07:26.760 --> 00:07:29.850 collateral level up to the original level, we may call a 122 00:07:29.850 --> 00:07:33.210 few more coins. But as the market goes up, something 123 00:07:33.240 --> 00:07:36.780 reverse happens that not everybody practices and and that 124 00:07:36.780 --> 00:07:40.590 is called a reverse margin call. So as the market starts going 125 00:07:40.590 --> 00:07:44.910 up, the value of the collateral against how much loan has been 126 00:07:44.910 --> 00:07:49.050 sent out, goes up, right. And then we actually at some point, 127 00:07:50.490 --> 00:07:54.390 if it goes beyond certain percentage, we actually give 128 00:07:54.390 --> 00:07:59.670 back these coins to the borrowers. So that also like 129 00:07:59.700 --> 00:08:03.210 just like we bring up the more the collateral level to the 130 00:08:03.210 --> 00:08:06.690 original level, we bring down the collateral level to the 131 00:08:06.690 --> 00:08:10.050 original level as well. That's that's how the reverse margin 132 00:08:10.050 --> 00:08:13.830 call works. And like I said, not everybody practices it, but we 133 00:08:13.830 --> 00:08:16.410 think that it's only the right thing to do for the for the 134 00:08:16.410 --> 00:08:21.870 customers to to be fair, both downside and upside. So that's 135 00:08:21.870 --> 00:08:22.770 something that we do. 136 00:08:22.950 --> 00:08:25.290 Kevin Travers: So they're benefiting double for Bitcoin 137 00:08:25.290 --> 00:08:25.800 doing well. 138 00:08:26.230 --> 00:08:29.410 Harumi Urata-Thompson: Absolutely. So yes, their their overall sort 139 00:08:29.410 --> 00:08:32.710 of like an underlying value has gone up. And then they can use 140 00:08:32.710 --> 00:08:37.300 those reverse margin coins to maybe borrow even more money or, 141 00:08:37.780 --> 00:08:41.620 or maybe even sell it to lock in the lock in the profit, whatever 142 00:08:41.620 --> 00:08:45.190 they want to do. So earlier, I think I mentioned about our cell 143 00:08:45.190 --> 00:08:49.030 token going from eight nine cents when I joined to almost $2 144 00:08:49.240 --> 00:08:54.670 basically in one year, this cell token has gone up almost 3,000% 145 00:08:54.970 --> 00:08:58.570 And when you think about your investment for portfolio, let's 146 00:08:58.570 --> 00:09:02.020 think about the funds or maybe even individual equity that you 147 00:09:02.020 --> 00:09:06.010 might have, how many investments can you actually say going up 148 00:09:06.580 --> 00:09:11.290 going up by 3,000% in one year, it's not that easy to find 149 00:09:11.320 --> 00:09:14.650 exactly that many investment vehicles so we are very very 150 00:09:14.650 --> 00:09:17.140 proud of how Cell has been performing. 151 00:09:17.770 --> 00:09:19.000 Kevin Travers: So where do you think you're gonna go from here? 152 00:09:20.150 --> 00:09:23.651 Unknown: Because we have such still it's such a young company, 153 00:09:23.717 --> 00:09:27.812 we just only close the series A, just a few months ago and you 154 00:09:27.878 --> 00:09:32.106 know we are going to get bigger we are going to raise more money 155 00:09:32.172 --> 00:09:36.135 and we are going to find more than more and more territories 156 00:09:36.201 --> 00:09:40.099 that we can do the lending business in. So we are really in 157 00:09:40.165 --> 00:09:44.194 the middle of expansion, not just the in terms of asset size, 158 00:09:44.260 --> 00:09:48.554 but also how many people we will be we will we will be talking to 159 00:09:48.620 --> 00:09:52.584 how many people we love to have joined in our community. How 160 00:09:52.650 --> 00:09:56.415 many countries we will be operating out of and we will be 161 00:09:56.481 --> 00:10:00.510 a you know today a lot of crypto crypto companies are not yet 162 00:10:00.576 --> 00:10:04.672 fully regulated not because we don't want to because but a lot 163 00:10:04.738 --> 00:10:08.305 of countries are still in the middle of developing the 164 00:10:08.371 --> 00:10:12.203 regulations. But in just the next few months, we will be a 165 00:10:12.269 --> 00:10:16.364 regulated entity in the UK and in Australia to begin with, and 166 00:10:16.430 --> 00:10:19.931 several other places to follow. Also in the US in the 167 00:10:19.997 --> 00:10:24.225 specifically in the states where stricter regulations exist, and 168 00:10:24.291 --> 00:10:27.990 therefore, you have to get separate bit licenses or loan 169 00:10:28.056 --> 00:10:31.755 rights and things like that. We are looking at all these 170 00:10:31.822 --> 00:10:35.983 different states and what we are supposed to be doing to become 171 00:10:36.049 --> 00:10:40.079 more even more regulated entity to begin with, so that we can 172 00:10:40.145 --> 00:10:44.108 confidently say to any clients around the world, that we are 173 00:10:44.174 --> 00:10:47.940 compliant, and then we are trying to do everything right. 174 00:10:48.570 --> 00:10:50.557 Kevin Travers: Well, thank you so much for being here with us 175 00:10:50.601 --> 00:10:52.200 at the Blockchain Center in New York. 176 00:10:52.560 --> 00:10:54.240 Harumi Urata-Thompson: Thank you so much. I really enjoyed this 177 00:10:54.240 --> 00:10:54.780 interview.