Welcome back. The Middle East is fast becoming a hub for crypto and big investors, and as that market grows, so does the need for loans. One company wants to help. Ibis launches this week with a platform that uses blockchain technology to make credit easier to get in emerging markets. It is also backed by $250 million in credit from FalconX, but the timing is obviously tricky. The same week this company launched, Binance was hit by the biggest crypto hack ever, about $6.3 billion. Joining us to discuss this is the founder and CEO of Ibis, Cooper Emmons. Cooper, welcome to the show.
Thank you so much for having me. It is a pleasure to be on.
Let’s start with the big news making headlines overnight. Does a hack this big make big investors more nervous about lending money in crypto?
Great question. Absolutely, without a doubt. Counterparty risk is something institutional allocators always have to underwrite. However, that is a big part of the platform we have built, to enable 24/7 monitoring of these types of quantitative and qualitative threats. We think security has always been the most important, and will continue to be the most important, for people like us and also our partners. It is important to understand that many of the greatest trading firms, who we hope to offer great services to or have use our platform first, are able to use great custodians. That is a big part of the partnership we have made and announced with folks like Anchorage Digital, who effectively allow people to keep assets off some of these exchanges, to really underwrite and take away some of that risk.
Let’s talk about Ibis. What does it do, and how do you keep money on your platform safe?
Ibis is a frontier credit platform. We connect the best businesses that lack access to the financing they need to scale with capital and allocators who want to back them. Our technology automates and speeds up the whole process and makes it very easy for allocators to understand these businesses, so they can finance the next generation of innovation that many of these great businesses have been locked out of.
Why is the Middle East important for your business?
We see the region building some of the most forward-looking frameworks for digital assets of any place, and there is an enormous amount of institutional capital there. That is exactly why we built Ibis: to bridge the gap, connecting capital from these places, in forward-looking jurisdictions that offer great guidance and regulatory clarity, with frontier businesses that need access more broadly.
Trading firms, banks and tech companies are also moving into the region. How can Ibis help them?
If you are a technology-focused business that lacks access to financing, and we have found this given the seven-plus years of experience I have had on the digital asset side, and you need to grow, we built Ibis for you. And if you are an allocator looking for exposure to the frontier economy and financing these types of opportunities, which the legacy system has largely locked out, we want to give you access to opportunities that were historically reserved for a select few. We want to open up broader access and make it available to everyone.
You are also working with Anchorage Digital and Innovating Capital. How do they fit into the equation?
We built the full stack with institutional rigour, so institutional allocators can be comfortable from day one, with the best partners. Anchorage Digital is serving as our design partner and helping on custody, banking and a lot of the different rails that are needed. Innovating Capital is partnering with us to bring expertise in the underwriting and structuring portion, to make these opportunities fit and feel the way they have in private credit for years, but applied to a new asset class, with the same level of comfort and clarity.
Why is it hard for crypto companies to borrow money? And is the news about Binance a contributing factor to the safety of borrowing in crypto?
Many of these frontier businesses, especially in crypto, are incredibly profitable and growing fast. But at a very high level they lack access to financing, not because they are bad businesses, but because of headlines like you saw yesterday, and because the legacy system refuses to innovate and understand them. So we are paving a path forward so these companies can have the access to financing they need. And as I brought up at the beginning, a lot of these great trading firms have all of their capital off exchange and are still providing liquidity on a lot of these venues. That is one of the most important aspects in terms of being able to underwrite and offer these opportunities to prospective users and institutional allocators on the platform.
Why use blockchain for lending specifically, and how does it help?
From our perspective, private credit today is totally opaque, slow and largely inaccessible. I know we just saw Apollo say they are going to move forward with 24/7 pricing, and that is a big hurrah moment, but that should have been done years ago. Allocations go to a select few, and it is very hard to get liquidity for these assets or a clearing price, because all these legacy businesses want you to keep your dollars in the system so they can make their fees. Putting it on chain automates the accounting and the reporting. It gives you pricing around the clock, and it makes these assets largely more liquid. We want to build an environment where people have access to these opportunities and access to liquidity almost instantly. And most importantly, it opens up access. Hundreds of millions of people and a growing number of major institutions already run on blockchain rails, and they have been locked out of this market. And obviously there is the instant settlement component as well.
Investigators say North Korea was behind this hack, but Binance says they are okay and will cover every dollar lost. If a single device can open the door to $6.3 billion, how safe is crypto really, especially when it comes to lending?
You touch on a very interesting component there, which is a great proof point of why we are building the business we are, and that is around Binance being able to plug up to a $6 billion hole overnight. Why does that exist? Because Binance has become one of the most profitable businesses in the world over the past several years, and many businesses within the frontier industry, whether crypto, AI, robotics or any of these technology infrastructures, have as well. Then, on the security piece: we are seeing crypto as one of the first targets, but we believe cybersecurity is of the utmost importance for all traditional rails, all of our assets. We are lucky to say we give a lot of our borrowers access to custodians, and they take all of their funds effectively off chain to these custodians, which are incredibly secure. However, we think this is a wake up call for all financial industries, not just crypto, to put security, specifically cybersecurity, as of the utmost importance. Because again, this was not the lack of one device. This was a very sophisticated attack that occurred. And I think it should be a wake up call for traditional financial institutions across Wall Street in New York as well.
It is going to be interesting to see what happens in the coming months. Cooper, best of luck to you. Thank you so much for joining us this morning here on Capital Markets.
Thank you so much for having me.
