Looking for a token issuance platform that can do it all? Today’s guest might have just the thing for you. John Patrick Mullin is the co-founder of SOMA.Finance, the world’s first globally-compliant multi-asset DEX issuance and lending platform. In this episode, he joins hosts Jeff Kelley, Eathan Janney and Josh Kriger to discuss their platform and the many use cases for customers. John is able to share about SOMA with incredible breadth of understanding. He speaks on everything from idea to execution and implementation. What makes SOMA stand out from other platforms? Tune in to find out. Plus, listen in as Scott Yeager, Chief Strategy Officer of IPrivata, chimes in for hot topics and discusses the details of digital identity in the NFT space. Stay tuned and keep updated with The Edge of NFT.
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John Patrick Mullin Of SOMA.finance On Building A Globally Compliant Multi-Asset DEX, Plus Scott Yeager Of IPrivata, And More…
This sponsored spotlight episode is brought to you by SOMA.finance and features its Cofounder, John Patrick Mullin. SOMA.finance is the world’s first globally-compliant multi-asset DEX issuance and lending platform. John is a FinTech entrepreneur, investor and educator living in Hong Kong. Besides SOMA.finance, he is also the Cofounder of MANTRA DAO, a popular decentralized finance platform.
Prior to this, he served as the Managing Director of Tritaurian Capital, a FINRA-regulated boutique investment bank focusing on providing financial services and capital raising solutions for startups and SMEs. John also has a traditional investment banking background, having worked at Guotai Junan Securities in Shanghai, China. As an educator, he has spoken at leading universities across the world, including Harvard, London Business School and Peking University. John, welcome to the show.
Thank you very much. I’m glad to be here.
John, welcome. You have quite a deep bench over there. Your cofounders and team members with banking and crypto backgrounds are super solid. They’re some of the deepest experiences we have seen in this space. How did you bring this crew together? How did the concept come to life?
Thanks so much. To be honest, it has been a work in progress for a long time. It has been iterated upon. I don’t want to say we stumbled upon the creation of SOMA.finance, but there were things happening and then not working. Finally, it clicked in and it all came together. At least it’s all coming together. For a bit of a background, we met the team or our cofounders, Bill and Jim, in a prior crypto exchange business that we were working on. It was relatively early on.
Around that time, we had the idea to create a regulated multi-asset exchange platform that could trade various asset classes, whether it was cryptos, equity, stocks or commodities. Back then, you didn’t have that NFTs, but in theory, you could have traded NFTs too and a bunch of different other things. This was all in a centralized exchange model. The Tritaurian guys have this broker-dealer license. We have the crypto experience. It’s this nice combination of the two sides.
There’s a little bit of an age gap, but we all get along well. That works. That’s good because they have the experience and we’re a little bit more in the weeds with the crypto bros. We went out and we were like, “Let’s take this license that they have from FINRA and this broker-dealer license, do exactly what we say we’re going to do and utilize this license to issue, distribute and do all this stuff with the securities license of this brokerage firm on a centralized exchange.”
We went to FINRA, which is the self-regulatory body governing broker-dealers. They’re like, “Do not do that. It’s not the same. It’s crypto. It’s blockchain. It’s different. Stop, cease and desist this thing.” Roughly a two and a half-year process later, we finally got the go-ahead to get this license. We created a pretty new and special license together with FINRA essentially. Since then, we believe we’re pretty much the only ones with the full breadth and depth encompassing what license we have.
This means that we can essentially connect both institutional as well as retail market participants through the type of offerings that we can do as well as do it on any different chain. That’s extremely important because it means that you’re not doing these things, which are effectively considered securities in the United States but let’s call them tokens for the time being. You’re issuing these tokens on a permissionless blockchain ledger. It’s on Ethereum, Solana or something like this rather than being issued on a permissioned chain like Hyperledger.
You had the ability to connect both the retail and institutional guys and then you could do it on a chain that everyone was familiar with. That allowed us to then say, “We can do all these types of DeFi activities that people are already doing on Uniswap, Compound, Aave and all these other places. We can do it in a compliant environment and utilize the existing regulatory body and framework that we have to then be able to do this in a way that is perceived to be the right way by the regulator of these.”
SOMA.finance: We stumbled upon the creation of SOMA.finance but there were things happening and then not working. Finally, it clicked in and it all came together.
That’s a big hurdle to overcome.
It took a lot of time.
To anybody who has ever looked into that world of FINRA, regulation and compliance, it’s not small even for doing traditional work like SEC-regulated work or financial work being a broker-dealer. Any of that stuff in the traditional sense is hard enough, but then you introduced crypto to it. Forget about it. It’s through the roof.
It throws them in a whole other loop.
It certainly creates a sustainable competitive advantage when you think about the possibility of doing that versus, “Let’s change our model.” That would have been the path that 999,000 people would have taken versus, “Let’s look at FINRA. That sounds like a fun time.”
To be honest, there was a lot of education throughout that process on teaching them how this stuff works and there’s still handholding. That being said, they legitimately are looking for a way to say, “We’re not the bad guys always.” At least in their mind and what their purview is, our job is to protect the US retail investor, whether that is protecting them. In some cases, maybe it’s not. That’s debatable, but that’s their job. They’re doing the best they can.
They’re bureaucrats at the end of the day. They’re trying to do the best they can. It is a process. That’s why it took so many years to finally get something. It’s still going to take some time. That being said, we believe that through that process of working with them to come together with this license as well as educating them about the technology that we’re building, we have gotten them a lot more comfortable with overdoing.
We don’t foresee these huge hurdles going forward. As the regulatory bodies and framework begin working together a little bit more in the United States, we see a path towards, ideally something a little bit friendlier. At least in our mind, it will be friendly and conducive to protecting the retail investors but still giving them access to the things they want, which are DeFi, NFTs, yield farming, and cool things.
It’s like having overprotective parents and letting them know, “I’m going to go to this party. It’s going to be fun, but I’m going to be responsible and get home in a reasonable time.” It’s like having nine other siblings waiting in the wings and saying, “Please do this for me.”
We honestly do think if this is done properly the way that we’re doing it, brought to market and then scaled properly, it can be quite a unique and big thing.
We had the idea to create a regulated multi-asset exchange platform that could trade a number of different types of asset classes, whether it was cryptos, equity, stocks or commodities. Click To Tweet
We’re talking about the first globally-compliant multi-asset DEX and token issuance platform. That’s a lot there. What does that mean from the user’s perspective?
The way that we’re doing it is you have a user experience that’s akin to a DeFi environment. That means you’re essentially logging on or connecting to our platform. We have both a web-based and a mobile platform via some Web3 decentralized wallet, whether that’s your MetaMask, Ledger or Coinbase wallet. It will allow you to connect and then you connect to the platform.
You’re holding your assets in a non-custodial manner. We don’t have custody of most of your assets. I say most because the one thing that we do have to custody is if you’re bringing us the traditional real-world assets. Let’s say that you’re going to be trading some tokenized versions of Tesla’s shares on our platform. You might have a tokenized version of Tesla in your wallet, which would be called S-Tesla, but the actual backing of the real-world asset and the paper security we hold in custody.
For every S-Tesla token that exists in our world or platform, you’re going to have a real share of Tesla in the background. What that means is that not only can you do all the fun things and have the composability of trading on an AMM yield farming with it and swapping your Tesla for Google or Bitcoin, but you also maintain ownership of the actual underlying asset if you have it in your wallet.
That means you get the actual dividends, voting rights and all these different things that are the good parts about having them in the real world, but then you get the additional good part about having the functionalities that are blockchain-enabled. Let’s go like that. You have this Web3 experience, but you have real-world accountability and assets that are being brought onto a Web3 environment.
The other thing that is important to note is that because we are doing this in a “compliant” way, that does mean that we will also have to go through an AML, which is Anti-Money Laundering, and a KYC process as if you were signing up for your Coinbase exchange account. Honestly, it’s a very similar process, but we do it by creating a walled garden around our system or products.
Everyone has to come through this compliance choke point or bottleneck and say, “This is the wallet that I’m going to be interacting with the system with and my personal information that I would use for any other exchange platform and whatnot.” One thing we want to do is create an NFT of this identity so you can go use it in other places. That’s another thing that we can get into later.
Once you’re in, we can know, “John is from America. He’s an accredited investor or a non-accredited investor. He can interact with all these different products and this one because maybe that’s for non-US people only.” We can permission them at the lowest level, which is the smart contract level. Only the people who we have approved can interact with the various products on-chain.
Going back to that Josh’s comments about tackling something that seems a little bit hairy, stuff like that always reminds me of a company like Stripe. Processing credit card charges for websites is relatively boring. There’s a lot of regulatory stuff you got to go through and get to that. If that’s the domain you want to get into, there’s so much potential opportunity. It’s like being the guy that can last the longest in the fight.
You brought up Stripe and I honestly think it’s a good example. The reason I’m saying that is because what we’re trying to do in essence in a lot of stuff is to abstract all that compliance and the plumbing away so that you’re interacting with this interface. It’s going to be easier for you to use but you don’t have any clue what’s happening in the background and in some complex shit that’s happening in the background both on the compliance side as well as on the technical side. It is a pretty interesting analogy you made there.
SOMA.finance: For every S-Tesla token that exists in our world or platform, you’re going to have a real share of Tesla in the background.
How does the SOMA token weave into all of this? What’s the utility there?
The easiest explanation that you can have is the SOMA token is an exchange. It’s not too dissimilar from an FTT, which is the FTX token, a BNB, which originally was the Binance exchange, or even Uniswap, although Uniswap doesn’t do anything at this point other than governance. It’s meant to be a token that governs and takes apart. It’s supposed to have economic value accrual through the exchange, the platform or the various products.
That’s the fundamental core, but the tricky thing here for many of these tokens that I named is that you’re treading that fine line between being a utility token and not being construed as security. This depends on your jurisdiction. Let’s use the US, for example, because honestly speaking, most things in the US are securities. You want to be able to try to avoid being construed as that because you’re trying to avoid all that compliance overhead, registration or all these other things.
It’s essentially our bread and butter. We’re straight up saying, “Irrespective of all these other places around the world, in the United States, we’re issuing this as a security.” I’m trying to move away from the acronym of STO or Security Token because it has a little bit of a bad memory from the 2018 and 2019 days of being the next big thing that never turned out to be. The reason why in my opinion, was because there was no retail involvement, real DeFi and this stuff that makes it useful.
We’re issuing it as a security, which means we can have all the elements that would make it a security, meaning we can straight up pay dividends to our token holders and do buybacks-and-burns and all these different things. The SEC would be like, “You’re a security. We don’t care.” We’re going to issue it as we’re going to issue it. We’re going to do it the compliantly but in a way that is retail-friendly. It has one unified smart contract across all countries. It’s not like you’re doing different token tranches for the US versus the EU. This is a pretty powerful thing.
You can have all these economic levers of value accrual, whether it’s fee rebates, dividend payments, buybacks-and-burns, and these things that are often avoided in many places. Uniswap straight up will not turn on the fee switch because they know as soon as they do that for the UNI token, while it might make the token go to the moon, it also means they’re immediately securities in the United States. Uniswap is based in the United States.
Uniswap Labs or whatever the name of their entity is, doesn’t want to get into that regulatory risk. We’re like, “We can do it. We’re going to call a spade a spade.” I believe if we’re able to gain any semblance of traction across the number of the very interesting products that we’re going to be launching with, in theory, the revenue and the potential for dividend payments on these tokens should be immense. That is not financial advice.
That’s a relative word. I have one follow-up there. It’s maybe a more complex question than I want it to be. What does that entail? Is it just that the SEC can watch you however they like? Do they check in at a regular clip and you have to report quarterly? What does that tend to look like when you say this is security even though it’s not a stock or something?
I’ll try to make it relatively simple. I won’t go too in-depth because it can be pretty in-depth. You have to do a couple of different things. It is all about reporting and generally how you’re offering them the actual asset, depending on how we offer it. Essentially, we’re offering it to a bunch of different types of investors, US retail for one. We would be doing it under what’s called the Reg CF or a Regulation Crowdfunding.
We can sell securities up to $5 million to US retail investors with the Reg CF exemption. We can sell $5 million worth of SOMA tokens to US retail guys in one tranche. You combine that with a Reg D, which is for US credit investors, or Reg S, which is for international investors. They all have various trading restrictions if you haven’t done a registration statement. How it will work is we will fundraise, show these tokens and then register the token itself.
We're pretty much the only ones who have the full breadth and depth encompassing of what license we have. This means we can essentially connect both institutional and retail market participants through the type of offerings that we can do as well… Click To Tweet
Once you’ve gone over a certain amount of token holders, it’s construed as public security. I believe it’s 2,000 token holders, which 100% we’re going to have over 2,000 token holders. We’re going to have to register, do some audits and different things and report requirements. Essentially, there’s an interesting difference. People think that going public means you’re going to go on NASDAQ. There’s a difference between going “public” and being listed. We’re not listing necessarily on NASDAQ, but we are going public.
There seems to be a major difference in liquidity potentially with something, but if you have liquidity on some crypto exchange, then maybe you don’t have a huge difference with liquidity.
Hopefully, we won’t at some point in time further down the line. It is an interesting thing because the requirements there are significant in getting listed on NASDAQ. Big companies take years with all types of reporting and compliance requirements to get listed on something like NASDAQ or ICE. In our case, it will be a little bit less stringent, but that doesn’t mean that we’re not going to at least hold ourselves to a similar standard of the things that we’re trying to achieve with the token and the products that are going to be on the exchange.
It sounds like you are for sure a high standard here. We want to go a little bit deeper into the roadmap here in a moment. Let me ask this from a 30,000-foot view. In current market conditions, what are the high-level problems that you’re trying to solve? What are some of those 30,000-foot solutions that we haven’t touched on yet?
It’s easy to break that down by product. When you talk about the issuance side of things, that’s a very easy place to start. Essentially, we touched on it a little bit with capital raise. Particularly for the US market, you’ve never been able to, as a US retail investor, legally access primary token issuances, whether it’s an ICO or STO. Let’s call them token issuances. You’ve never been able to access that. I can’t buy into token offerings. They either block US investors fully or require you to be accredited, which is not the majority of people.
How many coins list offerings for 100X frickin returns? We saw them. We knew they were amazing, but we couldn’t touch them. It’s crazy.
Essentially, what our licensing and our platform will allow us to do is to straight up say, “We can do it properly. We can directly sell to US retail investors,” which we think is going to be a huge opportunity, particularly as some of the people and partners that we’re working with are creating these very interesting tokens, which are across all different elements of not just Web3 but culture in general, whether it’s in sports, music, entertainment, art, NFT projects or whatever it may be.
There are interesting tokens that can be created with very high-quality IP, brands and people behind them that can then sell directly to US investors, but because we’re selling them as securities in the United States, there are these economic levers that can be switched on that you’ve never been able to do before. Let’s use a simple example. I’m not saying that this is happening tomorrow. Let’s use a sports team that wants to sell maybe 1% of its equity or 1% of its future royalties or revenue. You couldn’t do that before, but now you can legitimately sell that to your fan base.
They can have a legitimate share in the ownership of their favorite sports team. Don’t you think that’s going to incentivize people to want to go to more games, buy more stuff at the stadium, buy more merch and tell their friends about it, so they’re doing the same thing? It’s going to be this snowball effect of sorts. We think that you can do that in any industry. That’s a very interesting thing both for the retail guys who can now invest in these things but also for issuers who can now directly engage with a lot of their retail fan base in the United States. That’s one thing.
On the DEX side, you have a compliant place to trade all these things, which is going to be interesting. You can trade crypto assets, NFTs at some point, securities, tokenized equities and all these different things all in one place. We think that is also a very cool thing because most places don’t have the ability to do that. Some of the exchange platforms in many states have tried to put tokenized equities on their platform, but they haven’t been able to do it properly or the right licensing behind it. That’s one thing that we think is interesting.
SOMA.finance: You have this Web3 experience but you have real-world accountability and assets that are being brought onto a Web3 environment.
The third one that’s interesting is the retail yield and lending product that we’re going to be launching. You’ve seen many of the larger retail-focused lending and yield providers, whether it’s BlockFi, Celsius and Nexo. A lot of them have come into regulatory trouble. For example, they have been getting huge fines or settlements or even completely walking themselves back from even offering products like Coinbase.
Coinbase was going to launch Coinbase Earn. That was the 4% on the USDC product. They got hit by the SEC with a cease and desist and didn’t end up even launching the product. It’s because of the licensing that we legitimately have that we can do that. We can issue retail-focused yield products to the US retail customers who are not going to be able to access these products anymore on other platforms. We think that’s going to be very interesting as well.
Let’s frame this up for our readers in terms of your roadmap for 2022 and where we are at this moment in time. There’s complete liquidity around fundraising. Is hat completed? Is that next on the list?
We raised a seed round roughly at the end of 2021, but we announced it early in 2022, which was $6.5 million led by Animoca Brands with participation from GSR, Kenetic Capital, Griffin Gaming Partners and a bunch of others. We’re going to be finishing our liquidity round within May 2022. That’s another $15.8 million. We’re going to move on to the retail offering, which we will do through a combination of a Reg CF and a Reg S for the international tranche. Depending on how that’s going to go, the offering could be sizeable because we’re going to do some Dutch auctions within the public sale.
What happens after that? Are going to get into this DeFi yield farming world that we’re talking about?
The next step after we complete that process is we’re going to start going through the issuances of other projects as well, whether that’s a fan token, a sports token, a music token or an NFT project. We have a fairly sizeable pipeline across a number of different verticals. Once those have gone through those processes, they will be listed on our DEX to offer yield farming opportunities, staking pools, and all this fun stuff.
Life is more fun with DeFi yield farming, at least in my humble opinion. What’s next after that?
We’re working in two different veins. You have both the technical and product-specific vein, which is launching the DEX itself, other functionalities, limit orders, options, futures, other types of asset classes, commodities, etc. You also have the compliance side, which will be working in tandem. That’s going to be offering and acquiring new opportunities to get new licensing essentially, whether that’s through money transfer licenses, MSPs, a BitLicense or other types of banking licenses. This will all be working as well in the background.
One thing that’s interesting is the money transfer licenses will allow us to then be able to facilitate the transfers between crypto assets such as Ethereum and Bitcoin into cash via a DEX. In most cases, that’s not possible because, with fiat integration, you would need some level of KYC. We have that. You don’t normally think of fiat getting onto a DEX, but we will be able to facilitate those transactions. That is done through money transfer licenses. We’re pretty confident about being able to cover the bulk of the United States very quickly.
You mentioned this is the first-ever compliant token on the issuance platform. What’s that all about?
That will be what I was alluding to. We’re going to have all these different fan tokens and other things that are coming through the platform. Some will be one of those tokens as well, but we’re not going to be launching the SOMA token itself. We want to wait for the full suite of products. That would mean we can only do the issuances, but we want to add the actual DEX itself as well as the lending product so that when we launch with the SOMA token, there’s going to be a lot of stuff that you can do with it. You’re not waiting for all of us to come to light. We’re expecting this to be in the coming months. It’s the full launch of everything essentially.
We’re going to need to get you back to LA. You were here for NFTLA, and into the Upgrade Labs protocol that I’m going through because you’re going to need some serious theta wave production and recovery efforts with this type of ambitious roadmap.
I’m down. I’m happy to come back anytime.
We can be trading some theta waves on the DEX at some point. I don’t know how that works. What else do you have on the roadmap for the rest of 2022? We got through Q1 here. We’re into Q2. What can we look forward to?
I alluded to a couple of the things, but the second part of the year that we’re going to be looking at is other chain integrations. We’re launching initially on Ethereum. To be completely frank, that’s the chain that the regulators are the most familiar and comfortable with. That also means that we can then move from that onto other EVM-compatible options such as Polygon and Avalanche.
We’ve got to give the crew at SKALE a little bit of love too.
I’m blockchain agnostic even though we’re building our blockchain. That should tell you something about how I feel about various Layer 1 wars and whatnot. It’s very interesting to have a bunch of different kinds of protocols that all have their unique use cases, edges and things of this nature. We will look at SKALE as well. We will be launching on a bunch of different EVM-compatible chains. We’re building our chain, which is an EVM as well as IBC-compatible Cosmos and Tendermint chain called MANTRA Chain. That will be launching its testnet in May 2022 and the mainnet a little bit later on.
That will be one of the first major integrations of chains to the SOMA DEX and SOMA swap platform. There are big reasons for that, not just because of the actual integration but because of this other product, which we think is cool, which is how much is the retail yield product that I was alluding to. Essentially, how it works is you raise dollar base capital, whether it’s USDC or some other stablecoin, which then gets put into various other yield opportunities, whether that’s through a proof-of-stake validator node opportunity.
Maybe we go buy a bunch of LUNA and stake LUNA or buy a bunch of SOL. You’re earning some yield on that. You’re locked for a certain period, but then the token becomes essentially seasoned after that period. After a year, the tokens have been seasoned, but you’ve been earning yield the entire time. What that means is that this token is freely tradable and potential targets like us back can come in and be like, “I need to raise $10 million. You have a tranche of $50 million in this Luna Pool. Do any of your investors who have been earning 10%, 5%, or whatever want to take a piece of this into our seed round?”
You get a warrant into this new deal. You can say yes or no, you don’t have to, or get your yield and come out. It’s going to be a liquid trading token. You can essentially trade this token as a warrant for these other token shares. That’s going to be very cool. That’s also going to be all tied in with MANTRA DAO, which is the other project I’m a Cofounder of because we have a validated business and a chain that will support all this stuff. We can cross-pollinate and tie in a lot of this stuff together, which would be pretty awesome.
SOMA.finance: People think that going public means you’re going to go on NASDAQ. There’s a difference between going “public” and being listed. We’re not listing necessarily on NASDAQ but we are going public.
I get the feeling that you need a big team to do all of this stuff. We have a lot of stuff. You know about every single aspect and you’re sharing about it in great detail. This is what your dreams are like. You go to sleep and you’ve got all of this working on in your head. You’ve got the full plan rattling off constantly. It’s pretty incredible.
Thank you. To be honest, I wish I remembered my dreams. I don’t ever remember my dreams, but maybe that’s a good thing because this is my brain 24/7 when I’m awake, which is often. Maybe it’s good that I’m not thinking about this stuff at least overtly in my dreams because it’s 24/7 otherwise.
This is all cool and amazing stuff with a great roadmap. One of the things we like to ask our guests is where you draw your inspiration from. What’s happening in the space these days in the world of Web3 that inspires you daily?
There are so many cool projects and things being built and there are so many smart people coming into the space that it’s honestly hard to keep up. There’s one thing that is a good way to keep on the pulse. This is maybe a good thing for business but maybe not a good thing for my mental health and time. It’s spending a lot of time on crypto Twitter, to be honest, and NFT Twitter. You see all this different cool stuff even when there are crazy things happening.
We were talking a little bit about Otherdeed’s land mint. Even when that was happening, there were so many different ways that you could see different perspectives. It teaches you, “Maybe this is a good thing to consider when we’re doing some mint down the line.” Spending time on Twitter is maybe a little bit of a cop-out. I don’t know if that’s an inspiration, but it’s seeing what the lay of the land is there.
I’m going to help you because you have been big fans of a lot of the social impact projects in this space. That’s worth mentioning. When we talk about everything that we talked about, NFTs are part of your roadmap. It fits the same structures and frameworks that you’re building, but you have taken a liking to some of the social impact use cases for NFTs.
There are so many very interesting use cases for both NFTs, tokens and things of this nature that, when done properly, can affect a lot of cool changes. At the core, the inspiration for a lot of this stuff is doing it the right way. We’re not attempting to give the space a good name. That’s a little bit true, altruistic and out-there for what we’re trying to do.
We’re a for-profit business. We expect to make a lot of money and a lot of these things to grow and become massive movements, but you can do good things along the way. A lot of that is through supporting social justice causes or even being part of some of these up-and-coming artists, athletes or whoever that’s part of their story and giving them the opportunity to use Web3 to their advantage. That’s also a cool thing. That’s something that we think will be honestly some of the bread and butter.
Tokenizing a portion of a sports team is not going to be a deal that’s going to happen all the time in the beginning, but you might be able to create a bunch of different cool sports tokens or things for people who are trying to create a local basketball league or fundraise for some special event that they’re trying to create in some lower-income area. These things are all cool. We will be a little bit more frequent than these big marquee deals. That’s also very important for us to consider.
That’s about impact in a lot of ways. It’s not necessarily the absolute number or dollar in some of these things. It’s what’s the intrinsic impact.
The thing is, it’s not completely altruistic. We may issue these tokens and help them do this thing in a compliant and right way and maybe our fees are almost even pro bono to a degree. Still, if we can get on maybe 5,000 people from these various communities to then come and trade on our platform because this is a cause that they’re getting behind. Then we do that tens of hundreds of times over. That’s a snowball effect that we want to create to bring new people onto our platform and become aware of what we’re doing.
Some of the biggest influences in the world tend to spend from and grow from for-profit ventures. There’s nothing wrong with having a social mission in addition. That’s cool stuff. I have to throwback to the early days in some of our early episodes. You talked about spending that time in crypto Twitter. It’s hard to do because time is hard, but you could go down the rabbit hole and it’s a fun rabbit hole to go down.
The first person that talked about spending so much time there and highlighting some of the people we followed was this guy, Roman Tirone, from ZED RUN. He was one of the first folks that talked about doing that, going in there, having fun and following the Ja Rules of the world or guys. You might not have thought he had good alpha early on, but he was on point in so many different ways. He still is. It’s a fun thing to do. I wish we had more time to spend there and be part of the community in its truest sense.
One of my favorite Twitter profiles is @ValKilmer, the one and only. Jeff and I met him at one point in the past. He’s doing his things in NFTs. He loves the community. He’s right there in it. He’s a fun guy. If you’ve got an extra few minutes, check out Val Kilmer on Twitter.
Speaking of ZED RUN, we got to give a shout-out to Purple Elf, our horse. We still have Purple Elf. We didn’t get rid of Purple Elf.
She’s in a small stable. There’s a new horse racing game coming out. Maybe we will integrate her into another stable for another horse racing game. Why not?
She’s our girl. Go check her out and give her some love and likes in ZED RUN if you’re reading. We appreciate all this amazing info. Check out SOMA.finance. This is a killer roadmap with a killer team that’s well-positioned to go execute against this thing. We expect big things. You’re already doing big things, but we’re going to keep a close eye. We appreciate you sharing with us.
There’s no pressure but where we’re watching you. You can think of us as godparents.
Let’s take a moment, though, and shift gears. We would like to get your personal perspective on some questions. We call them Edge Quick Hitters. It’s a fun and quick way to get to know you a little bit better. They’re short 3 to 5-word responses, but we will go a little deeper here and there. There are ten questions. Are you ready to dive in?
I’m ready to go.
SOMA.finance: It’s because of the licensing that we legitimately have that we can issue retail-focused yield products to the US retail customers who are not going to be able to access these products anymore on other platforms.
Let’s do it. Question number one, what is the first thing you remember ever purchasing in your life?
I was thinking about this. It’s probably candy or ice cream. I go into a store where I would have my allowance money to go buy something back in the day. I’m in my hometown. Maybe that’s why I’m a little bit more in this line of thinking.
Was it chocolate or strawberry? What do you think?
I liked chocolate.
I remember the Push Pops. It’s citrusy.
I still like gummy worms and gummy stuff, but peach ones are also super good.
Here’s the next one. Number two, what is the first thing you remember ever selling in your life?
It’s lemonade. I had a lemonade stand.
Was that your own lemonade stand?
It’s me, my sister and maybe one of my neighbors.
You can say yes or no, you don't have to, or get your yield and come out. It's going to be a liquid trading token. You can trade this token as a warrant for these other token shares, essentially. Click To Tweet
It’s a joint venture.
Did you have any special sales strategy where you’re doing bundling or discounts in some way?
To be honest, if I was doing it with my sister and neighbor, they were doing most of the selling and I was doing most of the drinking, running around and being a menace because back then, I was a little bit rambunctious.
That would have been appropriate foreshadowing if you went to the local government and registered your lemonade stand as a business.
Maybe we can do a lemonade stand token on SOMA.
There’s something in there. Question number three, what is the most recent thing you’ve purchased?
It’s the flight that I took back to come to Cincinnati, where I’m at. I imagine it was that. I haven’t gone out and bought anything since.
Question four, what is the most recent thing you sold?
It’s almost certainly an NFT or some crypto token.
John generally doesn’t remember because I’ve been in that world where it’s all a little bit of a blur.
SOMA.finance: The next step after we complete that process is we’re going to start going through the issuances of other projects as well, whether that’s a fan token, a sports token, a music token or an NFT project.
In terms of blurs, we’re doing audits and stuff for a company at the moment. We had to go back and look at every single crypto transaction that has ever occurred from all of our company wallets, personal wallets and all this stuff. I’m like, “I had no idea when I sent $5,000 to the company and then they sent me back $2,500. I don’t know what this stuff is for.” I’ve done thousands of these transactions in my life. It does blur.
Question number five, what is your most prized possession?
Aside from family-related stuff, whether it’s pictures, heirlooms or things like that, it’s my watch collection.
How far back does this watch collection go?
It’s a couple of years back when I could afford nice watches.
I have some friends that started getting into it. Years ago, they started getting in and tried to rope me into that world. I love watches and collecting things. I didn’t pick up on it. It seems like the market has taken off.
It has gone crazy. It has pulled back a little bit. To be honest, I see it as a tangible hedge against my digital life and assets.
Did you get one of those NFT watches?
No. I do know some projects. Here’s a shout-out to 4K from Richard Li. He’s got a project that’s NFT-based luxury assets, whether that’s watches. You can even buy cars and crazy stuff. There’s a use for it. I would love to be able to buy more watches with crypto rather than have to constantly cash out and then buy with cash.
I love to buy more of everything with crypto. It’s crazy. We have been dealing with banks, all this stuff and limits. It’s craziness, but I digress. We continue. Question number six, if you could buy anything in the world, digital, physical, service, and experience currently for sale, what would it be? What do you have your eye on?
One of the things that I’ve been looking to buy is an apartment in New York City. I’m normally based in Hong Kong. Our SOMA.finance JV partners are based in the outskirts of New York, not exactly New York City. I’ve always wanted to live there. My sister lives there. I’ll be spending more time there. If I could buy an apartment outright, it would be dope. I wouldn’t necessarily always have to worry about renting it and having a mortgage and stuff.
Question number seven, if you could pass on one of your personality traits to the next generation, what would it be?
Generally, it’s my EQ for people and understanding of humans, people and feelings about people. That’s who I am through all elements of my life. That’s an important one.
Question number eight is the flip side. If you could eliminate one of your personality traits from the next generation, what would that be?
I’m an Aries. I was born in April. We are known to be able to have a little bit of a temper from time to time. I’m even-keeled 99% of the time, but I can light up pretty quick if I’m not pleased. Maybe get rid of some of the tempers. If it was my wife answering, she would say it’s the working all the time. A lot of people would probably say that, not just my wife.
We got the real answer then. Question number nine, what did you do before joining us on the show?
I went shopping for some ingredients for dinner with my parents and then we voted in the Ohio primary election.
What was the most interesting ingredient that you purchased?
To be honest, I was working when they were shopping. I was on my phone the whole time.
That’s the real answer to question number eight.
SOMA.finance: The money transfer licenses will allow us to then be able to facilitate the transfers between crypto assets such as Ethereum and Bitcoin into cash via a DEX.
You’re the master delegator. The parents will always do whatever you need in a pinch.
That being said, the flip side of that question is the place we went to was very interesting. We went to this place called Jungle Jim’s in Cincinnati, Ohio. They have everything from all over the world. They have all the crazy international food. You get samples of everything. Maybe that’s why I was a little distracted.
Were you walking around on your cell phone doing business and eating samples? Am I envisioning it perfectly?
I wasn’t on the phone. I was just texting.
You were texting and sampling.
I was looking at the questions for this chat.
We’re at the end. Question number ten is the last one. What are you going to do next after the show?
I’m going to have dinner and put on some basketball games. I have a couple of more calls. There’s basketball and hockey. I’m a huge sports fan. NBA Playoffs and NHL playoffs are starting. I have a couple of more calls and then I’ll go to bed because I have a 7:00 flight back to New York City.
You’re a busy guy. That’s Edge Quick Hitters. We appreciate you sharing with us. It’s always a good time for sure. The word on the street is that we have an interesting hot topic on the subject of KYC and AML. There’s some interesting stuff here. Eathan, let me pass it over to you.
“Athletes, artists, musicians and famous people can declare I Own Me and reference to their digital identity in a legal and technical construct called a Declaration Certificate in an IPrivata Community of Trust, link this Dec Cert with any new digital asset and be able to prove the non-fungible asset is theirs. Use this approach to prove I Am Me and I Own Me and my assets in a court of law by using a disciplined Chain of Custody approach, which timestamps all assets in the Community of Trust distributed digital identity management system. Link this root proof of trust to any NFT on any platform in any currency to substantiate the asset’s long-term value.” Lucky for us, we have Scott Yeager, the Chief Strategy Officer of IPrivata, here with us to discuss this hottest of topics. Welcome.
Thanks. I appreciate you for having me.
Scott, we had a chance to connect at NFTLA. We were talking about this and the need to have such a system in place. A lot of people have been dancing around it and trying to figure this out and get something propped up. Tell us about your system and why this is going to be the solution here.
We filed for and have a patent on the idea that people ought to own their digital identity. We combine that with a legal construct, some contracts that we have, and a private network infrastructure that lets anybody declare they own their digital identity and use that patent to help shore that up legally rather than relying on GDPR or CCPA laws just rights. They don’t give you the ability to declare you own yourself and take it into a court of law.
We have taken the position that people ought to be able to declare they own themselves. We’re starting with athletes, famous people, musicians or whoever already has something that’s of value. A lot of people’s digital identities may or may not be deemed valuable, but athletes and people who have a digital identity that can be monetized are a good starting point. That’s what we think.
My mom thinks I have digital value. That counts for something.
You do have digital value more so than others. Anybody that has a YouTube channel could argue that as well. They should be able to monetize it and fight in a court of law if somebody steals it.
To be honest, even though I’m sitting here and I could see I’m in tangible form, we’re all having our digital identities communicate with each other at this point around a Zoom call.
It is interesting, too, in a world where on one side there’s privacy. Being able to maintain that matters a lot. There’s another side of it where because of the construct of the system, you need something like this to say, “This is me here. I own me and this thing that is otherwise completely private.” You can’t even prove it otherwise.
We have some athletes. Lynette Woodard is going to be coming out. She’s a Women’s NBA Hall of Famer. She was the first woman to play on the Harlem Globetrotters. She’s an example. She can tell you multiple NFTs that are out there where she’s in them and she’s not getting a penny. From her perspective, those NFTs aren’t valid because they didn’t have the root proof of trust that she would say, “That’s my digital identity. I should have a percentage of that deal.” We think that people have to start at the beginning, which is, “I own me. I’m willing to protect my digital identity in a uniform manner.”
How many lawyers did you have to consult with and are on your team to figure all this out?
SOMA.finance: There are so many cool projects and things being built and there are so many smart people coming into the space that it’s honestly hard to keep up.
We have a law. I happen to have a legal regulatory background because I was involved in the commercialization of the internet in the early ’90s. We built fiber networks. I got a franchise in the city of Houston to build a fiber network to compete with the phone company. Back then, you had to fight legal regulatory battles. I went to Andy Lipman, who was our chief regulatory guy, and said, “If we come up with a bunch of new rules, can anybody stop us later?”
He’s like, “Not as long as it’s a private network. We establish that people own and control their selves and we don’t break the laws.” You have to follow the laws. We have a fair number of attorneys, both for the ownership of property and what we would call our contracts, which are the legal construct that comes with the deal.
I could see John here. He’s probably thinking, “Maybe we made a partnership.” They have to do a lot of KYC and stuff like this and deal with digital identity. What are you thinking about this project, John?
It sounds super interesting. Let’s use an athlete, for example. What’s the process that they go through to then own themselves, maybe on an operational as well as a technical level?
We would love to talk to you because our attitude is that we need to work with other players in the industry. We have the notion of a Community of Trust service provider or suite of contracts that enables a company like yours to leverage everything we bring to the table with your customer base. We would want to incorporate your capabilities into what we might offer to our athletes.
We are the notion of a distributed digital identity management system because my digital identity is the sum of me out there. Part of me might be my wallet, Coinbase, medical history or search history. Over time, we might do those kinds of things, but we’re starting with clean things initially. What happens is an athlete would say, “I’m going to declare.”
They will sign an agreement with our entity and say, “I need to start tomorrow.” They will put their driver’s license, passport and birth certificate into our system. Everything is timestamped. That’s a big deal because when the attorneys from the other side say, “How do we know you did that?” You want to have everything in what’s called a Chain of Custody that you can take into court.
Once all that is done, then you sign the digital document called a Declaration Certificate. That is more or less your declaration that you own yourself. We use the UN. All kinds of global laws are referenced in that. They’re like, “People own their selves in the physical world. They ought to own their selves in a digital world.” You clear that and bond it to the aspects of your digital identity.
Those are the final words of a Dec Cert. After that, you can put that into any hash you want and then bond it to any other digital asset you might want. An additional layer might be some of the stuff you are doing. You combine them to say, “I’ve already declared over here, but everything I do over here, I want to bond it to that too.”
That sounds super insane. It’s the connection you were mentioning, Eathan, with the KYC part because we will have a verifiably true identity as well. You can combine that with this I Own Me piece. You that, whether it’s this wallet or whatever, that token is legitimately theirs. You know that it hasn’t been hacked from maybe that WNBA player and that they’re trying to go take advantage of that. In our case, we know that it’s a wallet controlled by this person and then you have the verifiable ID behind it and all this stuff. Let’s talk offline.
SOMA.finance: There are so many very interesting use cases for both NFTs, tokens and things of this nature that when done properly can affect a lot of cool changes.
We love that type of pairing live on the show. It’s a lot of fun. If I want to own Eathan or if I want Eathan to own himself, where does he go? What’s next for him, Scott?
Let’s hope the first thing that they do when anybody comes to them asking to own another person is, “No, thank you.”
That’s against the law.
If I want to try to own Eathan and then your KYC caught me, what would I be doing there?
Part of doing athletes and other musicians first is the workflow process that we have developed is still in the de facto standard setting mode. For instance, would you first enter your passport and then bond it to the DEX? Once you go through that process and then create what we call an eBonder where someone is able to use that digitally and other places, then we’re working with those athletes initially. We’re not trying to sign up consumer-facing people yet because we want an athlete to draw in their fans later. Those would be the first time that we would start having the public be involved in this.
We have to track you on socials to keep in touch with what you’re up to.
You’re going to be hearing about us through the athlete channels because we have several athletes that would like to have their campaign like I Own Me and let people know about their digital identity.
Specifically, we will get some social links and a website and make sure we get that from you. I want to encourage readers. You’ve touched upon something very briefly. Go check out another episode we did where we talked with Brittany Kaiser. You vaguely referenced this idea of how much of us is digitally out there all the way from our medical records to our photos. They’re on these social media websites and this and that. She’s got some interesting projects. We will be spending some time with her at Davos. It’s coming up here soon. She’s hosting the Crypto House there and trying to help people manage what they own. Own your data.
There’s some data you want to share and some stuff that you want to be out there. You want to be open in a way that creates value for other people without hurting you, having awareness around those things that you don’t want to share and knowing that you have a choice in how to execute that. That’s an interesting conversation we had on a previous episode. Readers may enjoy that. Scott, before we run, let’s send people to exactly where they need to go to find out more about you.
Our website is IPrivata.com. We’re very cybersecurity-focused too. We glossed over that. We think that you need to have minimum cybersecurity standards in our legal framework and minimum privacy standards. As a result, we’re not a social network. Fox Ellis, our sister company that is part of IPrivata, is where all of that is happening. As far as IPrivata is concerned, our website is IPrivata.com.
We will go check it out. IPrivata, own your identity. Scott, thanks so much for joining us. We appreciate it. Best of luck to you. We will stay in close touch.
Thanks a lot. I’ll see you.
Take care. Thank you. IPrivata has exciting stuff. We normally take a moment to do a little fan and reader shout-out at this moment, but we want to do a little shout-out to a colleague of ours who we collaborated with on one of our projects that you will learn about here very soon. It’s a little app that we built. Maybe it’s not so little, but it’s pretty fun. We did it in part in collaboration with her class over at Pepperdine University. She used to be the Director of Blockchain at Pepperdine University. Lene Martin is an amazing person, leader and educator. If you head over to Coinbase.com and look at who’s heading up Crypto University over there, you’re going to find her name there.
That’s an amazing role she has taken on over at Coinbase, heading that entire process up over there. There are massive moves happening. There’s no better person you can imagine in the world to have in that position and help Coinbase take their education at least starting internally, but we know that they will head to the next level. Congrats to Lene Martin, big-ups. That’s our little shout-out. John, this is an amazing episode. We appreciate you joining us here. We want to make sure that all of our readers know how to jump on the SOMA.finance train if they’re not there already. Where can they go to follow you and all your happenings?
First off, thanks for having me. It was a pleasure. I’m looking forward to continuing to follow up down the line as we launch more stuff. We will be seeing each other physically, not just digitally in a few more places around the world in the not too distant future. I’m looking forward to that. The best places to get in touch with us are our Twitter @SOMA_finance and the other one would be Telegram at the moment. Look up SOMA.finance.
You can ping me directly if you have any questions at JP Mullin on Telegram. That’s a pretty easy one or our website, SOMA.finance. Hit us up on any of those. We’re going to be launching a new website pretty soon. You get the first version of it. Once you’re on the website, make sure to sign up for our waitlist. We have over 500,000 people signed up for it so far, which is a lot. Hopefully, there will be even more soon. That’s one of the next things you’re going to be asking. Maybe we can talk a little bit about how to get some people on the waitlist.
Let’s jump right into it. We got a little giveaway that we’re going to be doing here. We will have more details here soon. Do you want to share a little bit about what you had in mind there or some of the triggers to get people in the mix?
We can do a couple of things. Maybe what we can do is give out a couple of guaranteed white list spots to participants. I say guarantee with an asterisk because they will have the past KYC, but outside of the KYC part, we can put some people up into that list, which would be awesome. We will think of something on a little bit more fun level as well, whether some NFTs or something. I need to talk to our marketing team. We will get something going on that as well and give something away. We will get some white list spots going on. You were talking about how the record is $100,000, but hopefully, our white list spots would be worth more than that at some point. Let’s see.
You have pretty popular spots. That’s for sure. We appreciate it. Folks, follow us closely on our socials. You will see the details come out there. Keep a close eye. There are invaluable white list spots for sure and then some other goodies. We have reached the outer limit at the show. Thanks for exploring with us. We’ve got space for more adventures on this starship, so invite your friends and recruit some cool strangers that will make this journey all so much better. How? Go to Spotify or iTunes, rate us and say something awesome. Go to EdgeOfNFT.com to dive further down the rabbit hole. Lastly, be sure to tune in next time for more great NFT content. Thanks for sharing this time with us.
- MANTRA DAO
- Upgrade Labs
- Roman Tirone – Previous episode
- @ValKilmer – Twitter
- Purple Elf
- Brittany Kaiser – Previous episode
- Fox Ellis
- @SOMA_finance – Twitter
- Telegram – SOMA.finance
- JP Mullin – Telegram
- Spotify – Edge of NFT
- iTunes – Edge of NFT