“I am really big on Polkadot,” James Wo told Nairametrics in a Zoom interview; where the LedgerX board member and CEO of Digital Finance Group (DFG), a global blockchain and digital asset investment firm, discussed FTX’s acquisition of LedgerX.
As previously reported by Nairametrics, FTX acquired LedgerX, a cryptocurrency derivatives platform regulated under the Commodity Futures Trading Commission (CFTC), Swap Execution Facility (SEF) and Derivatives Clearing Organization (DCO).
At almost 4 years old, LedgerX is a pretty successful company that had cleared over 10 million options and swaps contracts. When asked about the major catalyst for its acquisition by FTX, James Wo explained that it was a win-win situation for both companies.
“FTX has tremendous experience operating a successful futures trading platform and they seem to want to go legit in the U.S. There are only 5 licenses issued by the CFTC and this is something FTX will be happy to get because it’s a good thing for them.
“For LedgerX, it creates the opportunity to become a top tier derivate platform in the U.S; which is a very good outcome for the company,” James said.
“For us (early-stage investors), we have been early supporters since 2017 and we are happy to see the deal sail through. It benefits LedgerX, it benefits FTX, and we also get some return on investment,” he further stated.
Taking James back to his comments on getting returns on investment, Nairametrics asked how much FTX acquired LedgerX.
“It was a pretty big deal,” James responded, explaining that the terms of the agreement had a confidentiality clause prohibiting the disclosure of the acquisition figures.
After the announcement of its acquisition by FTX, LedgerX released a publication stating that the acquisition will have no material impact on LedgerX’s operations as the platform will continue to provide its current services to its existing customer base. Nairameterics asked James if there were any major changes on LedgerX’s board, to which he replied:
“FTX will be a major shareholder on the board because previously, LedgerX had 2 board seats for Terry and me. Both of us are still on the board and we also got other people on the board, like the CEO of LedgerX, Zach; and the Chair of LedgerX, Larry, who was a former commissioner of CFTC.
“Previously, Jeremy Liew of Lightspeed was on the board, but he isn’t anymore. There are other board members like Tom from Miami International Holdings as an independent director.”
James concluded by stating that no changes were made to the management team.
Referencing Coinbase’s announcement to get into the crypto futures market, James was asked what innovations are in place to keep them competitive in the market.
“First is, we are looking to list more coins. Right now, LedgerX and other options platforms only list Bitcoin, so listing new coins is something that we definitely want to do. The other is more related to the product. On options trading platforms right now, we don’t offer leveraged trading but, in the future, we are looking to offer it,” James explained.
When asked if LedgerX had plans to expand its reach to the African market, James explained that while he has Africa in mind, the company is currently focused on establishing itself in the Asian market.
“LedgerX was previously focused on the U.S market but now, there are plans to definitely expand into the Asian market, in countries like Singapore. For Africa, we have to take it step by step… first expand a little bit outside the U.S and then we will consider other jurisdictions. Expanding into Africa is definitely a part of the long-term plans of LedgerX,” he said.
James shared his opinions on the current regulatory climate of cryptocurrencies and he explained that protocols like staking and DeFi will be difficult for regulators to oversee.
“When cryptocurrencies become bigger, regulations will definitely come. In 2017, cryptocurrencies were way too small for regulators to look at, but now that the market capitalization is over $2 trillion, although still relatively small compared to much bigger assets, it is big enough to attract the attention of regulators.
“I believe the U.S is pretty positive although you would see the recent news of Coinbase and the SEC and all these kinds of stuff, but it is necessary for the government to come in and take a look at all the industry and determine the best way to really regulate the market.
“This can be very complicated because we have CeFi services which is relatively clear because you have custody of other people’s assets and fitting into the current financial system, you have other assets that have similar regulations like LedgerX being regulated by the CFTC.
“But when you refer to protocols or DeFi, it is very hard to define. Bitcoin is easy as it is definitely a commodity but if you have things like Staking and other protocols like it, it takes time for regulators to have a clear definition of it,” James stated, adding that once regulators take a look at the details, it’s only a matter of time until they figure out a way to regulate the business.
The Digital Finance Group (DFG)
Besides being on the board of LedgerX, James Wo is also the CEO of DFG, a global blockchain and digital asset investment firm with more than $1 Billion Assets Under Management (AUM). When asked about what led him to create DFG, he stated, “In 2013, I started trading crypto and then, it was only Bitcoin and Litecoin. I started doing research of cryptocurrencies and I found it interesting and saw it as a way to fix the problems of traditional financial systems or at least a part of the problems.
“After this, I realized that this was something I wanted to fully commit to. So, in 2015, I started DFG. I have a financial background and it made more sense to me to start an investment firm to support entrepreneurs in this industry to mature. In 2017, we started shifting a little bit because ICOs become popular and the idea of tokens was still relatively new. The industry started to mature as cryptocurrencies grew to be something more than just cross border payments and we started seeing a lot of new use cases and infrastructures come out. This made us shift our focus a little bit. We continue to invest in the CeFi businesses but we are spending more time and capital on the token side. So, we invest in protocols like NEAR and Polkadot. Polkadot is one of the most significant investments of the firm and we are pretty diversified on different types of ecosystems,” he said.
Top Crypto Picks
To wrap up the conversation, James was asked his top 5 cryptocurrencies and he stated he was bullish on Polkadot. He told Nairametrics:
“I am not sure you’re aware of this but I am a really big believer of Polkadot. One reason I hold so many tokens is that I am a big early-stage supporter and hold the tokens so far because I never sell and I am pretty bullish on it. Of course, there are other layer 1 solutions like Solana, Terra, NEAR and Avalanche that have become good these days but I believe Polkadot is the one that has a lot of great potential in the future to grow.
“In the ecosystem, we have a lot of top tier products. Speaking of the other layer 1 protocols, Kusama is definitely one because I believe it will be more independent in the future with different kinds of functionality, although it is part of the Polkadot ecosystem. Generally, I am so bullish on Polkadot ecosystem protocols.”