CoinLaunch CEO Reuven Cohen talks about their crypto-platform. CoinLaunch is a privately held company that specializes in providing cryptocurrency issuance. Reuven talks about how crypto-currencies are launched and what uses they serve for businesses. He argues that blockchain can actually negate the need for liquidity within the traditional banking and capital markets system. For more information on the company their website can be found HERE.
James West: Reuven, thanks for joining me today.
Reuven Cohen: Thanks for inviting me.
James West: So Reuven, we’re here today to talk about Coin Launch. And what is Coin Launch going to do?
Reuven Cohen: We launch coins. Essentially, we have a platform that allows people to launch their own cryptocurrencies, crypto-assets, and related blockchains.
James West: Okay. So if I have Midas Letter and I wanted to create a Midas coin, raise some money through an ICO, I would come to you?
Reuven Cohen: So we provide a number of different capabilities. One, we provide the ability to create what we call tokens. A token can be a representation of a piece of value; that could be an event ticket, that could be anything that is represented on the Blockchain.
Next, we have the ability to create a structured crowd sale. This is a crowd sale that’s compliant, allows you to do things like KYC or know your customer, anti-money-laundering capabilities to make sure we know who is actually buying these tokens and done in a compliant way, and brings you through the entire structured offering.
Our business model is actually pretty simple: we take a piece of the back end of the crowd sale, or we take a fee for the actual issuance of a token or crypto currency.
James West: Okay. So is this going to be a publicly traded entity?
Reuven Cohen: So that, right now, no. if you look at what Blockchain and crypto assets do for the most part, is it negates the need to be publicly traded, and I think that’s what scares a lot of the sort of regulators around the globe. It’s a disintermediation; you don’t need to have that sort of central clearing house component, that’s what the Blockchain does, and that’s what it does really well.
So now the question is, do you actually need to go to an Exchange to have the same liquidity that you used to have to use for an Exchange. And in my opinion, the answer is no, you don’t. we can bypass that and create a more sort of peer-to-peer exchange of assets.
James West: Okay. That’s a very fundamental question I’d like to zero in on a bit, because the SEC has started to subpoena issuers of ICOs because they’re grappling with the idea that they have been disintermediated, as is evidenced by the failure of over 600 ICOs since the onset of the ICO craze, where wealth has been essentially vaporized. The requirement for an Exchange might not be there, and the requirement for a regulator in terms of oversight per se, in terms of structure, might not be there; but what about protecting investors from fraudulent actors?
Reuven Cohen: You know, that’s a really good point, and buyers should definitely be protected from fraudulent activities, in much the same way if you go to eBay, you expect that when you buy something from a partner on that platform, they’re not going to rip you off.
Now, the question is, does the SEC need to regulate eBay? You know, probably, maybe not, I don’t know? And not every ICO is a security, and some are. I think the rules in terms of just saying it is carte blanche an ICO is a security, is wrong. It’s like saying, if I’m giving you a 1992 baseball card that was originally worth $0.50 and is now worth $10,000, it’s a security. Well, it’s obviously not a security, it’s a baseball card.
So there needs to be a new set of rules and regulations that allow for this sort of new world, and not in a sort of protectionist system that says we need to protect these 100-year-old institutions that have always been there because we don’t know what the future looks like without them.
James West: Right. So I agree with you that, you know, we need to evolve. However, it’s interesting to me, the contradiction inherent in the entire Blockchain/crypto movement that says, we no longer need a trusted intermediary because this system is self-verifying, self-authenticating, replicating and immutable. However, the requirement for that system, and the need for it, and the demand for it, is based on the fact that we don’t trust each other. And trust is actually never part of the equation; in fact, I always joke with clients and customers who say, let’s just do a handshake deal, and I say, you know what, not that I don’t trust you, not that you don’t trust me, but a well-constructed contract eliminates the requirement for trust.
So in that respect, I see where the Blockchain ecosystem can emulate the well-crafted contract, because it’s build into the code, and it’s built into the system. However, at some point, and again, as we’ve seen, non-trustworthy actors, which in every white paper I’ve ever seen, there’s always a reference to the untrusted or the predatory, you know, aggressor who’s trying to break the system or gain the system or defraud the system.
So to me it seems that no matter what the evolution of Blockchain and all ICOs on blockchains, no matter where it gets to, there’s always going to be a degree of centralization, because even in the case of a decentralized Blockchain, it is centralized in its community.
Reuven Cohen: Yeah, I would say not centralized so much as regionalized. I think what we’re seeing is the protections for regional players. If there’s a regulator in Canada, United States or some other country that needs to have a level of oversight to make sure that these offerings are not fraudulent, you know, is certainly a requirement.
That said, when you mentioned 600 fraudulent ICOs, now my question is, how many fraudulent initial stock offerings have there been over the last 100 years? My sense is, a lot more than 600. There have been various securities frauds over the years, from the Wolf of Wall Street to Bernie Madoff, who all worked within the context of the SEC and their regulations, and still managed to take advantage of – you know, do a lot of bad things.
And I’m not saying that we want to be part of any of that; I actually don’t think that any of those guys should have been allowed to operate as broadly and as vastly as they did. So what I think we’re seeing, if we go back to Bernie Madoff, for example, multiple billions of dollars of assets he managed, it was completely fraudulent. It was fraudulent because it was opaque; you didn’t know what he was doing and how he was doing it, because he was cooking the books.
If he had had a crypto-based management and Blockchain-based environment, we could have went in there and said oh, these ledgers don’t add up; this doesn’t work, this is obviously a fraud. But we trusted him, for some unknown reason, and we trusted him with billions of dollars, and the more money he got, the more trust he seemed to have.
So my sense is, just saying that the old system is inherently better because it’s what we were used to, isn’t necessarily the right answer, because for every great example, there’s always going to be a bad example. So our best bet is to try to make sure we have systems in place that are transparent and visible, and protect us as individuals and as companies.
James West: That’s a good response. Now let’s talk a bit about your background, because it’s pretty interesting, as far as I’m concerned. So tell me, how did you come to be involved in the crypto space?
Reuven Cohen: So I’ve been a self-made sort of entrepreneur. When all of my buddies were sort of going off to university, I started a tech company. This would have been back in the mid-90s, and we focused initially, back then it was way too early, on video streaming; the company failed. I learned a lot from that failure, you know. One, being 21 years old and being bankrupt is not a good thing.
But what I took away from being 21 and bankrupt was the fact that I needed to build businesses that were sustainable. A lot of the tech companies you’ve seen over the last 20 years were not built on sustainability, they were built on venture-backed, get as much as you can, grow as fast as you can, and worry about that sustainability later.
I had to build things that needed to work without the assistance of anyone but myself, and the company and the people I chose to work with.
James West: So when you say sustainable, you mean, they had to make money?
Reuven Cohen: Well, they have to make money, they operate, it had to be in a way that was, you know, effective. So after having an early bankruptcy, when I started my second company here in Toronto actually, focused on what I called infrastructure as a service, nobody would touch me. One, it was in the height of the sort of dot com depression; money was hard to find, let alone Canada. So I had to build a business that was based on things that people actually wanted and needed.
So that was a key thing, and later, people refer to it as a lean start-up; then, it was just, you know, practical survival mechanism.
So the big takeaway from that, you know, kind of the old way of hosting infrastructure to what I call Cloud-based, which is basically hosting on someone else’s infrastructure, the Internet was the operating system rather than the desktop. It took the world a while to kind of come around to the concepts of Cloud-based infrastructure; I was rejected by 465 venture capitalists, which I think might be a world record for rejections.
James West: Wow.
Reuven Cohen: Ultimately, we grew the company, we ended up getting some venture capital from Intel and SAP, and a number of others; we raised 120 million. We grew the revenue to about $100 million, we ultimately went through the process of doing an IPO on the NASDAQ, hired a big Wall Street investment bank to do it, and right before we were about to do our IPO, we got an offer from IBM. A big cheque, for $1 billion even. And what do you do when you get an offer for $1 billion? You shop it. So luckily, EMC offered an additional 200 million; the deal was theirs. Four months after the deal closed, EMC was bought by Dell for $67 billion. It was kind of the gift that kept on giving.
James West: What a story. Okay, so what are the next steps?
Reuven Cohen: We focus again predominantly on international companies, for the most part. It’s definitely an interesting market to navigate; every day you wake up and there’s a new regulation, or lack thereof. So we’re diversifying our business into a number of different areas, right. We’re in the process of launching a sort of private Blockchain initiative that allows you to essentially launch your own version of the Ethereum Blockchain, completely implement it for your own use, independent of what they call the main net. So that’ll be coming out in a couple of weeks.
We are just seeing an incredible amount of interest; our traffic is growing 250 percent month-over-month, we’re seeing 100,000-plus visitors to the website; the company is four months old.
James West: Wow.
Reuven Cohen: It’s incredible.
James West: Okay. Well, that’s a great introduction. We’re going to have to leave it there for now. We’ll come back to you in three, four months’ time and see how you’re making out. Thank you so much for your time today.
Reuven Cohen: Yeah, thanks for inviting me. I appreciate it.
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