Paolo Ardoino, CTO of Bitfinex & Tether discusses Bitfinex's failures in transparency, accusations of Bitcoin price manipulation, and Bitfinex's future plans

Episode 28 of The Scoop was recorded on Skype with Frank Chaparro, Larry Cermak, and Paolo Ardoino, CTO of Bitfinex and Tether. Listen below, and subscribe to The Scoop on AppleSpotifyGoogle PlayStitcher, or wherever you listen to podcasts. Email feedback and revision requests to [email protected].

In this episode of The Scoop, Paolo discusses several topics with Chaparro and Larry, including:

  • Bitfinex's failures in transparency and what they are doing today to be more transparent
  • Paolo's thoughts on the research report suggesting Tether manipulated Bitcoin prices during the 2017 bull run
  • Why Bitfinex saw success in raising capital for LEO 
  • Plans to launch options which will be available on Bitfinex via it's company iFinex Financial Technologies Limited
  • Tether's plans to launch a gold backed Tether Gold, with each coin directly linked to a specific gold bar
  • Bitfinex's partnership with a well known company to launch crypto gift cards


The transcript is provided for your convenience, please excuse any errors or typos resulting from the transcription process:

Frank Chaparro Ladies and gentlemen, thank you so much for tuning into what is a very special episode of the Scoop. We have, joining us, the Chief Technology Officer of Bitfinex and Tether Paolo. Thank you so much for joining us on the show today. We have a lot to talk about - you guys have been in the news a lot this past week. Paolo Ardoino. Am I saying that right? Did we get that? How would we how do we say--what's the correct pronunciation?

Paolo Ardoino It's Ardoino Yeah. Yeah.

Frank Chaparro (speaking italian) on joining us. Well, I think the best place to start is a lot of us know you from crypto Twitter. You know, an ardent defender of your company, even when there are bad headlines, negative headlines. Walk us through your role, though, because you're not, you know, the "Chief Twitter Officer." You are, you know, behind a lot of the technology, a lot of the business decisions, but you're also the face of the company. What else falls under your your your helm?

Paolo Ardoino So, if I may start with a brief history of my relationship with Bob Bitfinex and Tether: so I came in to Bitfinex in 2015, so there was two issues with the mentioned engine making time. No doubt quality of the changes was still a demand on my opinion. So I had experience in parallel computing, distributed networks and scalability. So basically I met John Carload, a senior to CFO. We liked each other, of course. We're Italians, so it's kind of easy.

Frank Chaparro That's the only reason why he came on the podcast

Paolo Ardoino Basically, yes, yes. Yes. So, the idea is that he asked me to improve the matching engine that was quite, well during the peak times, was lacking. And then I had to start working with a field porter and so on. And, you know, things start to become really interesting for me. And after a while that I was working there, the dimension engine was able to do 1000 times the decline, the number or the second that was doing when I came onboard. So basically, until that happens, it 2016. I was the guy behind the mission engine at the new WebSocket APIs. If you think back to late 2015, Bitfinex had only--it was refreshing the books and most of the changes was refreshing the book, a way of professional books only every 30 seconds by rest APIs. Now, so in 2016 I took your specs off X and basically matching engine web sockets, all the V2 API that you see I had been developed by me. So far I'm being still the main maintainer of all the core infrastructure in Bitfinex, when it comes to development, so developing the core tools, the course mic services, the match, matching engine, almost the entire derivatives platform that we that we are offering has been developed mainly by me, with the help of testers and of course risk management. But when it comes to code, I prefer to take on really risky tasks myself. And yeah, I mean, lately I'm being more involved on Twitter because I believe that unfortunately, it seems like if if you are a shy person or a shy company and you don't say many things publicly, then it means that you have something to hide. So I was physically I decided to enter in the battlefield on Twitter and am trying to defend the good work that both companies I worked for.

Frank Chaparro Great, Larry is kicking me virtually from thousands of miles away in Germany. Docs, Larry Cermak, our Director of Research, who's been following Bitfinex for most of his cryptocurrency career, is also on the line to help guide this conversation with Paolo. I guess my second question has to do exactly with what you just alluded to: Bitfinex is sort of--the role or the way folks view the company in this space, right, over the past few years, you know, whether it's the skeptics coming after you, or research tying you guys manipulation or popular Twitter accounts like Bitfinex casting this sort of shadow of shadiness or adding to what might be considered by some a questionable reputation. How how does this impact the firm and how do you navigate it? How do you navigate this notion that, as you said, there might be something wrong in the state of Denmark?

Paolo Ardoino So, I think that one interesting fact, if I can start with that, is that you would imagine that when days there are these troubles, I'm told, about the New York attorney general class action or, you know, when you share with your teams that we have a problem with crypto capital--about eight hundred eighty million dollars. You can imagine that people start -- your teammates start to be worried and start maybe screaming and so on because I mean, it's legitimate, right? But no one left really. No, we don't have anyone in the personnel that ever left the company and that is about company culture. So really more than what is being said on the outside, I care that my team is happy and everyone in the company understands that whatever is being said is just a door stroll central. So I mean, maybe I'm naive in my approach, but so far It worked. I've been spending a lot of time on the internal company culture and growing that. I mean, we are an army of basically sparked on scene in the sport compared to the size of the other teams. So of course, then, you know, it's not easy to navigate on a daily basis where you get to keep continuously adding up the good things that you do, all the good work that you did in the past as well. It's diminished. But, so you can see that a lot of people are appreciating our new approach to transparency, to visibility, to be more public. And that's also really good to see. We discussed with, you know, after the hockey doesn't 16, we have we had quite a few shareholders that converted to BFX tokenized and equity. So we had future few shoulders that suggested that that pushed us to become better in in in PR and marketing. So far, and keep in mind that we didn't have any marketing team and PR team until, basically, til this August, August 2019, because we were so focused in the coding all day long. I mean, we are in a tech first company and we didn't have any technical debt. Now we just hired the first two PR experts and the first two marketing experts. And you can see the change in the last month and a half where we started to publish more things. Also, we had we were able to accelerate on the number of projects that we were able to deliver, thanks to thanks to our thanks to the fact that our hands became more free after we did very successfully the futures product. So we spent honestly most of 2019 trying to figure out how to react to all these things that were said to us, and now I think that we are demonstrating a bit more, let's say, less naivety and more strength in the public face.

Frank Chaparro Out of all the criticisms that have been waged against the firm, whether it's the New York attorney general or some other questions of the skeptic, et cetera, what would you say is the most legitimate, or the one that internally has forced you guys to change direction or act differently?

Paolo Ardoino So, of course, having the crypto capital problem, it was not really nice, of course, that led us to the decision of issuing Leo. We didn't have any interest in the issuing LEO, because the company was so profitable that, you know, we even had and we didn't need any money. So in the company, no one takes a first class flight. Even if these 12 hours are all cheap guys, we eat on like fancy stuff. So you can see how a company like ours would not raise money if not necessary. So we basically at that time was kind of and we were forced to issue LEO. Someone says, well, LEO was in the plants since a while. But that is not that is not true. We just basically decided to issue that company token. And we got support by a lot of people that believed, in our roadmap, you know, white paper and eventually in 10 days. And we raised one billion dollars. And, you know, we at some point, yes, it was locked in my face because I say, well, look, this is not real you know, I'm dreaming. And I think it's crazy. I mean, but I mean, there are different reasons why that happen, I believe is that different companies and individuals in our space that really care about our industry and know our scenes, basically 2013, 2014 knew that. We know that we are good guys. And they basically they know that what is happening to us is also the way it has been presented publicly. Here was a way to take us basically down and create more craziness.

Larry Cermak There are some companies in this space that struggle to race way smaller sums. Some saw some club was having issues this year, raising way less than you guys raised. You know, you guys came in and raised one or one billion dollars in less than two weeks. So could you tell us a little bit more about the investor profile of the people that decided to invest? And what do you think led them to commit that much capital that quickly?

Paolo Ardoino So the number of investors that invest you know that Leo was a private sale. So we had this concept of starting with a product sale. Now, of course, the goal is selling first to find new friends and then basically go on a public sale. We were able to accomplish everything as a private sale. So, Leo. So we have a really big variety of investors. We I think the number two, the number of investor equals less than 100 and divide from different sizes from one billion dollars to 100 million dollars. I mean, it's a single it's a single more than 100 million dollar single person.

Frank Chaparro Damn, who's that guy? And that's a good friend.

Paolo Ardoino Yeah. Yeah. I can tell you that we I mean, there are different and different people that really care about us. And I mean, it is so it's so good because you see that people want to redeem it. We need to be leading that way. You know, our success long term. And, you know, no one would bet that kind of money on and on when a company that is deemed to fail. So if someone really paid or have that kind of money. I think that is a good sign.  

Frank Chaparro Larry and I would both agree. Right. But are a number of strikes to the company. Traders, for the most part are not abandoning tether, despite all the headlines. They find it as they find it as useful on ramp to the crypto currency market, helping them with their trading. And you know, the folks we talked to about the Bitfinex's liquidity speak fairly highly of the platform, especially the most professional and high speed trading groups there. They're still working with you guys. But at the same time, the transparency problem has hung over the company to a degree. Do you think the transparency issue you guys had was your own sort of doing.

Paolo Ardoino OK, I think that, well, you make a good point in the sense that while it touches what I was saying before, that of course we haven't been. I mean, someone can call it nontransparent find. But I mean, I can call it basically focusing on he's on our own work and not sharing information, being private companies. We didn't feel the need. You know, again, in a nice way to say more information that more information that what we were obliged to that I'm not sure it will be, you know, that he's better than me. Also, again, we didn't we didn't have any PR marketing teams whatsoever, not an audience of companies right now. What we decided to do is to go fully transparent and say, okay, fine. People want transparency. Let's change trying to change the game. We did it with LEO. We could easily show all the daily revenues. So it's really good. We show that we are making a ton of money. When it is a bad day and the volume is