Full interview: Choise.com CEO and Founder Vladimir Gorbunov, November 2023

Nov 08, 2023
10:11
2 min reading

Choise.com team

Full interview: Choise.com CEO and Founder Vladimir Gorbunov, November 2023

In our extensive interview with Choise.com's Founder and CEO, Vladimir Gorbunov, from November 2023, we delve into the company's journey through the crypto winter, the evolution of its business objectives over the year, and the reasons behind the team's unwavering optimism about the company's future prospects.

1. Vladimir, good afternoon. How are you? How's Choise.com?

Hi! Thanks for asking. We are expecting a crypto summer after the next Bitcoin halving. Recent events and B2B development have influenced our plans. Choise.com is having a great year, exceeding expectations despite the prolonged winter in the crypto market. We're optimistic about our prospects.

2. Let's take a moment to look back at the origins of Choise.com. Have your perspectives on market needs evolved over time?

Choise.com started with Crypterium in 2017. We aimed to solve the initial issue of connecting cryptocurrency and fiat markets. Since there was no available infrastructure, we had to build it ourselves. We integrated products, connected new exchanges, and created everything from scratch. We invested tens of millions of dollars in creating a crypto-fiat service infrastructure. If someone wanted to create an ecosystem like ours today, without automated banking systems or integration with the central bank, they would have to start from scratch. In 2017, we set out with the ambitious goal of enabling people to buy, exchange, store, and pay with cryptocurrency just like they do with regular fiat currency. At that time, fees to buy bitcoin/crypto were as high as 25%, and everything was very inconvenient: there were no easy-to-use apps, and banks or processing services weren't equipped to work with crypto companies. We successfully met this challenge. Crypterium launched the first globally available plastic cards, providing services in 100+ regions worldwide, developing the service, and offering users an innovative product. Over 1 million users registered, a clear proof of our success.

Of course, the market has changed a lot over time. Many new players arrived, and new companies invested heavily. As a result, the market grew significantly. It was clear that the market would continue to grow. However, we were aware that it was not regulated. We understood that regulation would eventually come. Therefore, we knew it was essential to create a foundation for transparent, high-quality work with both clients and regulators from the outset. I believe we've not only survived, but also grown for many seasons because we've consistently stuck to our decisions made 5–6 years ago, which turned out to be correct.

3. You mentioned other companies in the market. How do you think crypto banks themselves have changed over time?

Crypto banks have evolved significantly. Firstly, it's challenging to differentiate between a crypto bank and a non-crypto bank. For example, Choise.com offers card, transaction, purchase, exchange, and storage services. Similarly, Revolut provides cards, processing, and other services in addition to cryptocurrency. Should we consider them alike? It remains unclear. What is evident is that cryptocurrencies have become an integral part of the global financial system. As banks continue to integrate crypto services, crypto companies are integrating fiat services.

We see that 5-6 years ago, customers favored cheaper options due to the hefty fees. However, now, customers prioritize convenience when buying and handling cryptocurrencies. The changes have also affected regulation, in 2017-2018 companies called themselves "crypto banks," but many were not even legitimate businesses and frequently failed.

The market has transformed a lot, and today's audience is much more professional. Those who call themselves crypto banks already at least have to show licenses, a live audience, and working products. In the past, you could just say "I am a bank" or "I am a crypto bank".

4. How much did it cost to establish a crypto bank in the past? How was the project funded during that time and at present?

When the market lacked any kind of infrastructure, meaning there was nothing already in place, we had to start from scratch. Our goal was to connect with exchanges and carry out hedging transactions, but there was no existing system we could rely on. We had to develop it ourselves, and as you can imagine, it came at a significant cost. In the early years, we were spending an average of $10-14 million primarily on R&D annually. This funding went towards maintaining a large team that built various essential components from the ground up, such as KYC (Know Your Customer) and AML (Anti-Money Laundering) processes, integrations with partners and exchanges, liquidity providers, internal systems, organizing crypto-fiat exchanges, and a multitude of other tasks that we wouldn't have to do today. However, it was through the creation of this infrastructure that our company gained complete control over the situation.

I have witnessed numerous instances where companies in their early stages depended on someone else's unfinished infrastructure, often resulting in legal violations. These companies ended up losing money and even their businesses. We took a different approach by building everything ourselves, which required a significant amount of resources. Each integration with a banking partner, connection with payment processors, obtaining licenses, and signing KYC contracts came with a price tag of millions of dollars.

Furthermore, the lack of knowledge and resources in the early stages led to significant inefficiencies and financial losses. Some operations were not properly hedged, while others experienced disruptions in card programs, necessitating compensation to clients using our own funds. The expenses incurred were substantial.

Currently, the barriers to entry in the cryptocurrency banking sector remain high. Launching such services requires a significant investment, far beyond 100 or 500 thousand dollars, or even a million dollars. To compete in this market, a company must emulate traditional financial institutions by implementing compliance measures, engaging with regulators, and integrating complex technological solutions. Even with average execution, this undertaking demands millions of dollars. When you are building a real top-notch product exceeding expectations, the costs can easily escalate to tens of millions of dollars.

5. Regarding profitability, what revenue streams did you have, and were you profitable?

From the very start, Crypterium has always focused on transactional revenue as it formed the basis of our business model. Transactional revenue includes earnings from customer transactions: exchanges, wallet top-ups, deposits and withdrawals, card issuance, and card top-ups. This is a classic transactional, non-banking business model. Banking business models also include credit revenue and the ability to earn from credit products.

As for profitability, we've had different periods. Mostly, we were not profitable and were funding projects and development. Especially in the early days, without creating infrastructure, building the product, supporting that product, mobile and web versions, and various integrations, we wouldn't have been able to do anything. So, we had long periods of non-profitability, especially during crypto winters.

But in the last crypto summer, we were profitable for about 8 months, and our profit was in the seven digits, and all metrics grew tenfold. For example, we conducted transactions worth a million dollars in one of the first months of 2020, and literally 7-8 months later, we were processing transactions worth 25-30 million dollars per month. But crypto summers don't last long, and another crypto autumn cycle has arrived. We had to fund the business again, which wasn't easy, as we had to rely solely on our resources. On one hand, in market downturns, transactional activity decreases, and the company generates less revenue. On the other hand, funds also start investing less actively. We hardly attracted funds from investors and sustained the business independently. If we hadn't supported the company on our own in recent years, it would have long since died. But we didn't do it without reason.

We do it because we believe in a bright future. And the results we see in the product today prove that we did the right thing in the past few years when we didn't follow the example of numerous other companies. It's essential to understand that fintech businesses, in general, are not very profitable, especially within a transactional business model. When you're B2C and you have a transactional business, your margins are small, and you need to constantly attract an audience. Often, such business models do not bring significant income.

If we talk about B2B, transactional businesses here can be profitable because the transactional product easily integrates into a large number of other services. A developed transactional business is a good guarantee for further development. If the business is successful, it generates a large audience and can either attract investments effectively or provide opportunities for new revenue generation channels. We set the same goals for ourselves, so the lack of profit was understandable to us.

6. Let's talk about the company's tokens. How did the CRPT token participate in the company's operations, and how effective was the tokenomics that was built around it?

Crypterium is a transactional business. Users come to us and perform transactions, which is the main driver of our business, and this is precisely what we have incorporated into our tokenomics. How does it work? Every time a crypto-to-fiat transaction occurs within our product, a portion of that transaction burns a certain amount of CRPT tokens. To be more precise, we take a part of it as a fee and then allocate that fee to buy tokens from the market and burn them. Consequently, the more transactions take place within our product, the fewer tokens remain in circulation. This is the primary structure of our tokenomics.

If the business starts generating tens of thousands, then hundreds of thousands, then billions of dollars in transaction volume, the number of tokens being burned exponentially increases, reducing the supply in the market. In other words, with billions of dollars in monthly turnover, the number of tokens we would have left after a year and a half would be ten times less than it is now, and this could stimulate price growth.

The core idea behind Crypterium (and CRPT is also used on Choise.com) has always included this mechanism. The more transactions we generate, the more CRPT gets burned, and the more of these tokens get removed from the market. Has this tokenomics proven itself? It's hard for me to say. It has been five years, and we have barely burned 5% of the total emission. Is this solely our achievement? Not entirely, of course. The market with its long winter cycles, periodic distrust in crypto banking, and more things have played a role. Our CRPT community of holders should also help increase transaction volume. We all need to work together, and it will all work out.

Our strategy is to attract more users to the product who will carry out transactions and increase the burning of CRPT. However, we can't attract users at a loss. When you spend, for example, $120 to acquire an active user, and they bring in $10, you can't invest millions in it because it would be unprofitable for you. This is what happens during the crypto winter – attracting an audience becomes unprofitable. In the crypto summer, we were growing by hundreds of thousands of users every quarter. If the crypto summer had lasted longer, we would have reached a significantly higher burning volume much earlier. For now, we continue to seek a balance: on the one hand, we wait for the "summer," and on the other hand, any transactional businesses within us will always stimulate the burning of CRPT tokens. However, I am confident that the tokenomics embedded in CRPT has great potential. As the company develops, the number of transactions will inevitably increase, which will organically influence the demand for the token. Personally, I consider both CRPT and CHO to be among the most undervalued tokens in the market. After all, we have technology, real business, not just wrappers.

7. Why did you decide to rebrand to Choise.com? What were the reasons, and how does Choise.com differ from Crypterium?

The main reason was that Crypterium was launched as a transactional business. Even at the time when we made this decision (about rebranding), we saw that the market had entered a "late autumn" mode in the second half of 2021. We understood that the "winter" would come very soon, and we were living in a transactional business model. We realized that we needed to add an even more profitable model and transition to this new business model. We thought a lot, analyzed a lot, and tested a vast number of hypotheses. It was evident to us and the entire market that there were essentially two main options.

The first option was the yield solutions market. Many banks that started later than us, with worse products and lower service quality, transformed into yield services. What does this mean? Essentially, it involved providing customers with deposit products. It's like a crypto bank where you can buy, exchange, store, and sell cryptocurrencies, but on top of that, you can earn, for example, 10% on your USDT. Many companies appeared in this space: Nexo, Celsius, BlockFi, SwissBorg, Voyager, and others. All of these companies appeared after us. However, we were always stronger technologically. These companies carved out their niche in the market and began to grow actively, accumulating billions and tens of billions of dollars in assets in just a year and a half. This part of the market was growing, and the number of services was increasing. We realized that it was time for an aggregator to emerge, which would bring together these yield products in one place and provide access to all of them through a single interface, just as it happened in other niches when demand and supply increased, a marketplace was needed.

If other banks were already moving in this direction, and we were stronger than them in terms of infrastructure and already had a good user base, why shouldn't we enter this market segment? We could strengthen the transactional business model with a revenue share model, where you earn money for customers and receive a portion of that income. The margin here can be tens of times higher than in the transactional business.

The second thing we noticed during that period was changes in the decentralized solutions market. Decentralized protocols and various new tools that contributed to earnings had emerged, but nobody understood how to use them. It was as wild west as the centralized market five or six years ago.

We decided to focus on these two directions. First, users should not have to choose between CEX and DEX - it should be an integrated solution. This would already be a massive product with high value. Second, we focused on yield solutions so that we could aggregate dozens of different services that offer yields today, bring them together in one place, and stop competing. Want Celsius? We have Celsius. Want the Uniswap protocol? They are all available on our platform, all gathered in one place.

That's why we named the product Choise.com. You have the choice of different products. For us, this positioning was thoroughly tested and proven by the market, which saw growth in both yield solutions and the entire DeFi space. We couldn't sleep and were constantly thinking about when we would implement this.

8. Did you anticipate what would happen in 2022?

In 2022, when the market was growing at an incredible pace, we launched the rebranding of Choise.com and received tremendous support, including from funds. We allocated small allocations to funds, and everyone wanted to support us, everyone wanted to join us. At the same time, we understood that in 2022, the "winter" would definitely begin, and we updated our business model with that in mind. But we couldn't have imagined that the "winter" would start precisely in our sector. The fall of Luna, where people lost $60 billion, followed by the fall of Celsius, where people lost $20 billion, and subsequent falls in BlockFi, Voyager, and another dozen others, all of this hit the yield segment, which we had targeted. Consequently, the greatest distrust from users was formed in this segment. The worst-case scenario for us actually happened. If not for this, I believe that in six months, we could have entered the top 5 companies in the segment because we created a product of a qualitatively new level.

Of course, we didn't stop. We tested dozens of hypotheses for various yield products, wrote our protocol, implemented staking, aggregated DEX solutions based on our Charism protocol, launched the institutional direction, and did a lot more. However, we quickly realized that this segment of the market would not recover soon. But I have no doubt that it will recover eventually.

Everything we implemented in Choise.com will be in high demand in the crypto summer. But the fact is that the crisis began in the direction we focused on.

9. How were the interests of CRPT token holders taken into account when developing CHO?

We prepared for this transition for almost a year and a half because we didn't want to in any way hurt our CRPT users. CRPT is the main token of Crypterium, where the company began. It has a large, multi-thousand-strong community of engaged people. When we created Choise.com and entered the market with a new token, we did it solely in the interests of our community.

I should mention two important things. First, tokenomics can be divided into old and new. Old tokenomics are mechanisms that emerged from 2016 to 2018. These mechanisms were characterized by the fact that projects sold nearly all of their tokens, around 85-90%, to the community, retaining only a small portion for themselves. If you kept 20% for yourself, the community would ask why you kept so much. Back then, there were no staking and other mechanisms.

More modern tokenomics were constructed entirely differently. First and foremost, they addressed the main problem of old tokenomics - distributing 90% of all tokens. With such an approach, for a token to grow 10-20-30 times, you needed to generate hundreds of millions of dollars in revenue through the product, which was often only possible through transactions worth billions of dollars. This was practically impossible for a new startup.

In new tokenomics, only a small allocation of tokens is sold, and as the business grows, new tokens are released into the market. This allows the token to move more smoothly up or down, and the community understands that there is no hyperinflation of tokens. This is what distinguishes "old" tokenomics from "new" tokenomics, and we applied all the best principles to the CHO token.

Of course, we looked at the top companies in the market. If you look at Crypto.com, for example, much of its success is due to the fact that it introduced a second token in its ecosystem. Ultimately, they killed the first token, which I consider a mistake, but they introduced the second token with a low supply, and they managed to create enough demand for this token from the start. This demand supported the first token and allowed the second token to grow in market capitalization to $26 billion. This enabled the company to issue a portion of tokens on the market, and use these funds for payments, attracting a new audience, integrations, development, PR, marketing, and everything else. Many companies followed the same path.

We also understood that in the current CRPT tokenomics, we couldn't provide our community with what they expected from us. We needed to do this in a bundle, by launching a second token, and this second token had to be tied to a new business model. We didn't touch the transactional part; it remained with CRPT, but the income from yield, staking, integration with DeFi products, aggregation, and fees for using centralized and decentralized solutions, all of which should form the basis of the CHO tokenomics. This should lead to even more significant user volumes coming to us, and more people conducting transactions, and these transactions would help CRPT develop even more actively. It's a combination where both tokens help each other.

10. You have mentioned the yield market multiple times. In your opinion, why did such a significant liquidity outflow occur in the yield market, and can it recover in the future?

In the crypto market, there are several instruments that allow you to earn more than in the traditional financial world. "More" doesn't mean "a thousand times more" or "hundreds of annual percentages," like various pyramid schemes. Let's take a classic example from the yield market. You invest money in liquidity (in a pool or protocol), and there is an organic exchange of coins, with a commission being charged for these exchanges. The pool or protocol then pays out all the collected fees to those who have provided liquidity. It's a great business model. Even now, you can earn 5-10-20% annually. Or consider the option of staking cryptocurrencies in various centralized staking services, like Ethereum 2.0. There's also an options market with a range of instruments for generating 10-12-15% returns in dollars. There are loans, which are objectively more expensive in the crypto market than in the centralized traditional market. Mining is also a wonderful tool for generating good returns, with 20% or more annual yields, especially in the "summer" period. These are all income-generating tools.

If the companies that raised customer funds had invested them there, exactly there, everything would be fine. But scam companies emerged that started attracting customer funds at 20-30-50% per annum. At the same time, these companies, of course, didn't explain what they were going to do with the funds. Luna became a massive scam, creating its virtual stablecoin backed by who knows what. They did this by offering a 20% return on dollar deposits. This was in 2021. At that time, you could deposit 20% annually in dollars in any amount with them, even a billion dollars. They were growing at a rate of 5-10 billion dollars a month. People went crazy, saying, "Why do anything with your money at all?" They asked me personally, "What are you doing? Take the money, put it in Luna, and earn 20% annually!" But we never invested a penny there because I have an economic education. I work in this market. I understand that it's impossible to generate 20% annual returns on a scale of tens of billions of dollars without having a real business. It can only be a pyramid scheme. What could it be backed by? How can you pay interest on 10 billion dollars a year? What kind of business would you need to guarantee such payments at any investment volume?

Unfortunately, a vast number of investment funds during that period were accumulating customer funds at 12% and investing them in Luna. This was the basic model. They borrowed, for example, from Celsius at 10-12-15% and simply invested this money in Luna, receiving their interest every month. When Luna collapsed, Celsius fell a month later because they requested the money they had lent to these funds, which were already bankrupt because they had all used Luna. The impact of this Luna situation spread further to BlockFi – they went bankrupt, Voyager – they went bankrupt, and dozens of other companies. In fact, this was the reason for the future collapse of FTX. Because Alameda itself placed money in Luna, they lent money to customers at the same 12% they were placing in Luna because unsecured lending was normal at the time.

During that period, a large number of institutional investors entered the market because all these protocols were accumulating huge amounts of money and investing them in marketing. They sponsored football matches, while ordinary investors were just looking for 20% annual returns. And they were paid these returns until one day a collapse occurred. I talk a lot about this issue, but it's important.

It's important to understand that trust will be restored, but time must pass, and regulation must appear. Now we can't just give money to someone who simply says, "I offer 15% annual returns." Today, you need to be an audited and regulated company, showing what you are doing with client assets and how you manage their money. This is what is trending today, both among High-Net-Worth Individuals, Private, Family Office companies, and retail investors. Today, this market is under tremendous pressure and has not fully recovered. When it does recover, it will look very different.

11. How do so-called crypto market seasons affect the B2C market? What do companies do when they enter the "crypto winter"?

In general, the B2C segment of the crypto market consists of three categories of players. These are year-round traders, investors (large companies, funds, and so on), and the so-called "retail audience" – ordinary cryptocurrency holders who buy cryptocurrency with the aim of making a profit. Usually, crypto seasons change like this: during the "winter" period, no one talks about Bitcoin and the crypto market. Consequently, the retail audience is "dormant." Some small institutions carry out operations, traders continue their activities, and there is some limited market activity. Then the Bitcoin halving occurs, and in the six months following it, a deficit forms, and Bitcoin starts to rise. Other coins also begin to rise alongside it.

This is when discussions start in all media: "Bitcoin sets a new record, coins have grown by so many times, the crypto market has grown by so many times." Of course, the first to react to this is the retail audience. They start buying coins, these coins appreciate, they buy more, and they continue to appreciate. A characteristic of the crypto season – everyone considers themselves a successful investor. Everyone makes money, queues form for Lamborghinis, and everything is going well for everyone. But then the market starts to decline rapidly. Often after this decline, people don't exit the market; they think, "It's just a correction. I'll wait it out; it will really go up from here."

And sometimes it does indeed go up further. But after that, a rapid decline begins, and the market enters the autumn phase, and people start losing money. They don't manage to sell for more than they bought, and they are not ready to cut their losses, losing more with each passing day. Bitcoin falls further, and at this point, people start selling everything. They say, "To hell with this crypto market," and leave, apparently forever. But not forever, but for some time, until they hear about a Bitcoin price surge on television again. And the cycle starts anew.

But what happens to businesses during this period? In the crypto summer, people are looking for places to buy cryptocurrency. They need wallets, they need cards, they need all the infrastructure, and they need any products. The indicators of products for the retail audience increase several times. When the market falls, activity drops by 95%, and the audience simply exits the market. People don't have the desire to say, "I'll stay, observe a bit more." No. Usually, the crypto market falls so rapidly that it leaves no hope and chance for people. The same Bitcoin that was priced at $69,000, fell to $15,000, meaning it dropped by four and a half times, an 80% drop. Ethereum dropped by 80%, many coins dropped by 90% or more, and a large number of people lost money. So, are there cycles? Of course, they exist. The right behavior for the retail audience is to buy cryptocurrencies in the winter and sell them when the market is high. Unfortunately, the crypto winter period is tough for crypto projects.

12. And how do projects fund themselves during this time?

It is difficult to fund your business during such periods. Projects that have a pool of funds formed since the summer continue to live on auto-pilot. 60-70% of projects do not survive, do not attract funding and simply close down.

During the crypto winter period, not only retail leaves the market but also funds. At this time there is no way to get money, you can sell tokens, or look for new solutions to earn money. Therefore, either projects have some fat, or project funders, as in our case, have some other sources of funding that they are simply using to support the business. Of course, companies are optimizing, and laying off staff - everyone is doing it: Crypto.com, TRON, everyone is trying to survive as possible, but not everyone succeeds. This gives ground for new companies to emerge, on the one hand. On the other hand, if a business does not know what to do during the crypto winter, it is better not to enter the market at all.

13. What did Choise.com do when the crypto winter began?

First and foremost, we did the same thing we did during the previous winter period – we started testing hypotheses. We realized that the market had entered a crypto winter, and it was pointless to continue with transactional business. The yield market was dead, and it took the most significant hit. The only thing to do was to change tactics and wait for the next summer. That was our main task. So, we conducted a vast number of experiments. Initially, we conducted experiments around the yield market, analyzing whether it was still viable. We launched NFT deposits, an NFT marketplace, stacking, and a transaction builder protocol. We introduced various services in DEX. Then we tried the NTO story. We were among the first to attempt to sell coins at a discount but in the form of NFTs. This had a certain effect. We began preparing educational programs and testing a series of hypotheses. I can say that it was thanks to this series of hypotheses that, when you asked me at the beginning of the interview about our situation, I replied that everything is going very well, and we feel better than ever. That's because one of these hypotheses brought us the long-awaited results.

14. Let's discuss how you decided to enter the B2B market. Was it a planned step, and how different is B2B from B2C?

It was not a planned step at all. When some potential clients came to us, they said, "Can you make the same product for us? We like Choise.com, we like Crypterium, do the same for us!" We've always said that we're not a custom development studio, and we're not going to do anything for anyone. Likewise, we analyzed the market a lot, what is profitable all-season, are there any all-season businesses that, you know, not that they're always growing, but at least they don't have these 90 per cent ups and downs. It turned out that these businesses are mostly in the B2B segment. For example, we've been attracting our audience to our users to buy various cryptocurrencies from us through our processing. And other companies simply integrated their processing into dozens and hundreds of services, and if there was an audience somewhere (and somehow or other, it somehow persists, it just becomes less), they don't spend money on attracting it. Someone provides wallet infrastructures and exchanges. Someone provides analytical systems and modules. Others provide services for CRM systems. Businesses are living, and they have to spend money on it, one way or another, pay for it. That became such a starting point for thinking about it.

When we just started analyzing the demand, we said, "Well okay, if we launch B2B, are there any customers?" Because we realized that we have a cool, very powerful infrastructure, we have invested tens of millions of dollars in it. There's international support, cards, processing, wallet infrastructure, KYC/AML - a huge number of solutions that any business would do, if they went into the crypto market, they would have to do it. Even some regular real estate tokenization service would still have to build these things into their product.

We had them. And of course, when we first announced it and just started collecting demand, it turned out to be enormous. Companies were willing to pay upfront just to ensure that we gave them our solution, that we booked them to get it soon. And that's how we got to that point. It was October-November of last year. We had done some kind of experimentation and testing before that, but here was October-November of last year, when we explicitly said in seriousness that we were moving towards B2B, and started essentially building a customer list, which instantly had numerous companies lined up.

15. What is the key difference between the B2B and B2C markets?

The primary distinction lies in the omni-seasonality, where each contract generates revenue for three years after being sold to a client. Another significant difference is the cost of these contracts, which generates about $600,000 per contract. For instance, if you network at a conference and obtain ten contacts, you potentially obtain two contracts valued at $1,200,000. In the retail industry, turning billions of dollars is necessary to achieve significant profits, and it's important to note that profit margins are much lower in this sector. B2B businesses have a unique ability to generate revenue by signing long contracts and assisting other companies in their development, making it a key value proposition. Additionally, B2B customers are typically less demanding than their B2C counterparts. B2C consumers must frequently update their products, add features, operate at a loss, and give away items for free or at a discounted price. In contrast, B2B transactions are straightforward: you serve a B2B client, charge a monthly fee, receive payment for onboarding, earn a profit on all transactions, and do not need to attract an audience. This is crucial. When we integrate our B2B product and infrastructure with a partner, we offer a white-label solution that allows them to attract an audience to their product. We earn transaction revenue from their product, which is now powered by our solution. This approach is more profitable for the business, as it requires less investment and eliminates the need to build our own product from scratch, saving millions of dollars in development and support costs. Client paid $10,000 per month for our product and $100,000 for onboarding. As a result, he obtained a white-labeled product within a matter of weeks.

16. Can you specify who your B2B solutions cater to, and what prompts them to invest in these services?

Great question. We have three key customer groups. The first is, of course, crypto companies. Any crypto company with its own token needs its own application or website where it can trade. To allow users to buy it with cryptocurrency, there needs to be some exchange capability, which means integration with exchanges. Wallet infrastructure is required, along with transaction control and customer support. If you want your token to be purchased using cards, you need processing capabilities, on/off-ramp features, and licenses, KYC/AML, and some form of authorization. We provide all of this to businesses 20 times cheaper and faster than if they were to do it themselves.

The second segment of our B2B clients is banking and fintech. This is the largest potential customer group because, in our view, banks will become the main source of generating a new audience in the market in the coming years. Banks already have a desire to integrate crypto solutions since there is demand for them, but they lack the expertise, technology, and people to do so. We offer a turnkey solution for banks.

The third segment is ecosystems. Essentially, any company with a large audience. If you have hundreds of thousands or millions of users, and you want an additional monetization channel, we say, "No matter what you have, whether it's a geo-service, a social network, a news portal – integrate White Label into your product, and you'll issue cards, have your processing, and serve customers within your service. We'll do all the work, and you'll simply earn extra money."

These segments may change, but it's important to note that Vault is not a crypto company; it's a fintech infrastructure company. We already have a range of clients. We provide not only crypto infrastructure but also traditional fiat infrastructure: IBAN, SWIFT, SEPA, and various transaction and transfer capabilities. About 40% of our clients are not related to the crypto market. They are traditional companies entering the digital banking market. They choose us because, in our product, alongside traditional fiat functionality, there is also crypto functionality. So, there are many tasks and cases, and the market is still significant. We estimate the market to have around 150,000 customers.

17. Let's delve deeper into Vault. Can you provide an update on the current situation, the ongoing status of the project, and the issues that are currently being tackled?

Vault has become one of the fastest-growing companies I've ever created in my life. The company isn't even a year old yet, but it has already signed 32 contracts that will bring in more than $15 million in contract revenue, with margins of around 50-60%. This is a super-profitable direction.

We spent a long time building the product. Earlier this year, we didn't have Vault, and we didn't have our own B2B solution; we were creating it in partnership with another company. We provided one part of the solution, and the partner provided another part, resulting in a lengthy service launch process. Client onboarding took up to 3 months, and queues formed. We prepared for August and the launch of Vault 2.0, which radically changed the game in the industry.

The difference with Vault 2.0 is that it's a platform where you can assemble almost any product from various modules, with or without crypto-fiat services like cards, processing, exchanges, purchases, wallets, deposits, and many more.

The concept of Vault 2.0 is a marketplace. On one side, we can provide customers with ready-made white-label solutions in the form of web solutions or applications, and on the other side, we can integrate almost any services into them via API, the services integrated into Choise.com. The key difference from the previous version of this product is the rapid launch; now, this process happens tens of times faster. Today, we position Vault as a unique company that can turn any company into a digital bank or crypto-fiat bank in a matter of days, a week at most, by providing the necessary functionality.

So, today, we see enormous demand from customers: 32 signed contracts, and 15 more contracts to be signed by the end of 2023. In 2024, we plan to launch 100 new contracts with revenue exceeding $60 million. With the upcoming crypto summer, demand for such products will grow rapidly. We've already launched the first three clients, and four more are in progress, by the end of this year, we aim to launch all 45 client services. It's important for us to ensure execution at the team's process level, the infrastructure should have global cards, various in-service solutions, and so on. These are our current tasks.

18. What are Vault's plans for the next year, and how will this direction change in the light of the upcoming crypto summer?

Our main plans involve developing and launching current clients, as well as onboarding new ones. We see growing demand for this product, and I believe it will continue into the next year. We have two main areas of development. The first is the marketplace. Next year, we plan to launch services that allow external companies to integrate their services into Choise.com and distribute them through us as white-label solutions that we create. It's similar to Stripe and Salesforce.

The second direction is scaling our own infrastructure, integrating new partners, including card, banking, and processing products with a focus on key regions for us. The task is labor-intensive and expensive, even for entering the US market; you need millions of dollars to pay, at the very least, legal fees.

19. What does Vault mean for the Choise.com community? How will the community benefit from this direction, and what is the connection?

Vault represents a new strategic direction for our company. After six years since our inception, we are now in the process of transitioning from a B2C (Business-to-Consumer) model to a B2B (Business-to-Business) model. It's important to note that this transition doesn't mean we will cease our B2C operations. Our primary objective is to continue testing hypotheses, exploring new and promising directions like Vault, and supporting our community and its interactions.

Vault has been a remarkable discovery for us; we didn't anticipate this direction growing and becoming a core focus of the company so rapidly. As a result, we are currently undergoing an internal transition phase within our team, product, and focus. Adapting Vault to the B2C part of Choise.com isn't fully realized at this point, but what we do know is that everything within the Choise.com ecosystem, including Vault, will always be aligned with the benefit of our community.

Currently, we are entering into contracts with numerous partners who will utilize our infrastructure. Our next step is to integrate the fundamental aspects of our tokenomics and products to enhance the value within the Choise.com ecosystem. This shift hasn't been long in the making; just last spring, we were more B2C-focused, but now, our focus has shifted firmly toward B2B. This internal transition process will take some time to fully manifest. It's a pivotal period where we can already report revenue and substantial contracts, but we

must determine how to align this with the expectations of our community. It's a substantial endeavor. The emergence of a B2B segment with such potential within the Choise.com ecosystem will undoubtedly bring value to all, but the exact manner in which this will happen is what we're actively working on with our team, figuring out how to seamlessly integrate everything.

20. What are the prospects and plans for the B2C direction?

The B2C division must wait for the crypto boom. In the meantime, we will conduct more tests to validate our hypotheses. We have restructured the team, and the B2C division now has its own CEO, while the B2B division remains under the leadership of Vault's CEO. The primary obstacle is identifying and predicting the verticals with the greatest potential demand in B2C.

We're exploring various avenues, including DemoTrade, a trading simulator, and CoinsClub, which offers discounts on purchasing various coins. Internally, we are testing hypotheses at B2C Choise.com and preparing to relaunch card programs with upgraded rates, discounted BTC purchases, and deferred buying options. We will implement the most successful hypotheses to attract the maximum audience to our platform. We require transactions under both the transactional and revenue share models, crucial for us and our community.

21. Please comment on the functionality of Choise.com's cards and other products that have not been working for several months. When can we expect the service to be restored?

In recent years, there have been numerous regulatory changes. The number of audits has increased, and we are required to comply with regulatory requirements and expand our legal infrastructure. For many years, Crypterium relied on a single company with an Estonian license. Today, we are opening our sixth company, all of which are part of a unified framework that allows us to support various business processes and deploy products in different regions.

The limitation on fiat operations is due to the transition from an Estonian license to a Lithuanian license. We hoped that this would take less time, but the process required a restart of nearly all our products and processes. This isn't just about recruiting new people to the team and conducting additional audits. Since regulatory requirements have undergone significant changes, and they are different in Lithuania compared to Estonia, every onboarding and processing, every card – absolutely everything is now being issued differently.

Imagine you have a 100-story skyscraper, and you just need to build the 101st floor. Often, this is more challenging than building a house from scratch because you need to change and break the existing infrastructure. We have already relaunched several services, reinstated purchases, and will soon bring back the cards, effectively reaching a plateau. There is certainly nothing good about the technical problems we are experiencing as a company, but there are also positives. Now we are confident that all processes are being set up correctly, and we can restore the service to its full functionality during the crypto winter when user activity is reduced. In this way, we are also preparing for the upcoming summer. And I have good news for our users – we are simultaneously adding several more companies with multiple licenses, which will make us even more reliable.

22. Let's address the topic that concerns our community. Over the past few months, the cryptocurrency market's capitalization has significantly decreased. Tokens CRPT and CHO have also experienced significant declines. Why is this happening?

First and foremost, we are currently in a crypto winter, and the entire market is declining. Crypto.com's market capitalization has dropped from $25 billion to $1.2 billion. This represents only 5% of its 2022 price, meaning a 95% decrease. Some coins have fallen by 80%, some by 90%, and some even by 99%. Why? Because the retail audience is leaving, demand is decreasing, and the audience lacks trust in the crypto market during the crypto winter.

It doesn't matter how much a coin has fallen – whether it's 10%, 20%, 50%, or 100% – it signifies that at this stage of the market's life, there is a lack of trust and insufficient demand for the coin. We have seen a significant decrease in the number of transactions within the service, and the suspension of fiat services has added fuel to the fire, affecting the market value.

On the one hand, perhaps this is not ideal. On the other hand, those who bought BTC at $4,000 and sold it at $69,000 made huge profits. Crypto winter is an excellent entry point into the market. What matters is not how much a coin is worth right now, but how much it will be worth in crypto summer and how it will grow, how demand for it will transform when the audience returns.

I believe that the frustrations about the declining coin prices are exaggerated. Those who remain in the market during this period should understand that the market bottom can be anywhere. The most important thing is where we will be in crypto summer. If your goal is to buy a coin now in crypto winter and sell it in two weeks, this is not the best time for such actions. Now is the time to invest, enter the market, and buy assets for the long term. It's essential to buy low today and sell high later. Perhaps what is happening with our tokens and other coins on the market is an excellent entry point for those who approach the market with long-term strategies.

In the summer, the retail audience will return, transaction volumes will recover, and people will buy, trade, sell, hold, and perform operations, leading to the growth of tokens. The main thing is for the project to survive.

Often, I don't fully understand what affects the market capitalization of our coins. Choise.com is a company with a six-year history, a large audience, own infrastructure, licenses, and real products. We help people achieve financial goals and fulfil financial tasks. Meanwhile, some meme coins can be worth billions of dollars without having anything behind them, while we may not be worth much. Perhaps the laws of the market do not always correlate with the token's price, and we need to adapt our products to more current mechanics when working with our community next summer.

Perhaps we need to explain and communicate more to our users. We will work in that direction in the near future, but we will certainly not interfere in questions about the token's price and liquidity volumes. The market's task is to determine the value of our coins. If they are worth 1 cent, it's an excellent opportunity to buy them for 1 cent. And when the crypto market returns to the summer cycle, to profit from it.

We have the infrastructure, years of life and work, substantial investments. We are not just some meme coin. Choise.com is an ecosystem with a large team of people, serious products at a global level. What can we do as a company to support the value of our tokens during the crypto winter? Exactly the same as we usually do: attract a new audience, establish partnerships, launch new products, and test hypotheses. We don't engage in market-making. It's not the right approach and those who do so pay the price later. Our approach is organic. If the community needs our tokens, and if we can help people, we undoubtedly provide assistance. As a product and as a company. If it doesn't yield the desired results, we need to study the situation. The issue could lie in the market, in its mismatch, or in tokenomics. But that's not our case.

23. Please comment on the recent news about the suspension of CRPT trading on Coinbase. Why did this happen?

It's important to understand one crucial detail. We were not involved in the decision-making process for listing the CRPT token on this exchange! They made this decision independently, and we did not apply for the listing. Now they have decided not to delist the coins, but only to suspend trading – that's all we know. We have already sent a request to Coinbase but have not received a response yet.

It's important to note that, after the FTX collapse, Coinbase is currently under investigation regarding the coins they added to their platform. It's evident that they are restricting coins, especially those without a US headquarters and US licenses. Perhaps in this way, the SEC is pressuring Coinbase to significantly reduce the number of unregulated coins within the US territory.

Has anything changed in our company's life that wasn't the case six months ago? No. We continue to focus on developing our business. The community that has a long-term perspective with us understands that there will be new listings and other opportunities. In the end, crypto summer will come. In crypto winter, a lot can happen, and the lower the coin's price at that moment, the better it is for those who can buy or accumulate it, in my opinion.

There are things we cannot control. There are exchanges we interact with, and they have specific requirements, which we strive to meet. However, we have no agreements or requirements from Coinbase. They initiated the trading suspension process not because something was wrong with our business. It's crucial to understand this! This affected not only CRPT. And, it will likely happen again with other coins. The only thing we can do in such a situation is to send an official request to Coinbase, which we have certainly done.

24. Can other exchanges also suspend trading for the CRPT token?

Exchanges can suspend trading for coins if their conditions are not met. These conditions often involve minimum trading volumes, and I believe we haven't had any issues in this regard, nor have we ever. Alternatively, there might be directives from regulators, but nothing of the sort has happened in our business. We continue to operate as we always have. There is a decline in the value and market capitalization of our coins, as with other coins in the market, but everything is progressing as usual. We see no reason for restrictions on exchanges.

The main goal of our B2C direction is to create new revenue streams and attract a new audience to our B2C products. This will enable us to generate transactional activity and organically influence the demand for our coins through the utility functions of tokens. This is precisely what we are doing, and the primary assistance we can provide to both our tokens and the entire ecosystem. Supporting the token's value through market buybacks? Firstly, we are not legally allowed to do so as a legal entity. Secondly, what would be the purpose of this? For what reasons would we repurchase our own tokens during a crypto winter? It's necessary to create organic patterns and rely on market mechanisms. These are the ones that will have a long-term impact.

25. Let's discuss our community, specifically CRPT and CHO holders. What advice can you offer them at this moment?

Consider the long-term nature of your goals. The crypto winter is the best time for buying. I recommend that any crypto market community buy during the crypto winter and sell during the crypto summer. This is not investment advice but a personal recommendation. This is what I and many experienced holders do. If you currently have a source of income, it's better to enter the market now and sell later when the coins significantly increase in value.

I recommend our community to have patience, which is perhaps the most important quality. There is always a temptation to sell, but it's essential to remember that significant profits are made by those with patience. It was Warren Buffett's patience that helped him build a fund with immense capitalization; he never rushed.

In the near future, we will announce new community engagement programs for the development of our products. There will be an opportunity to earn in conjunction with the development of the B2B segment of Choise.com, and we will launch a separate ambassador program while improving the existing one. We will introduce new services and thank the community for their involvement, testing, and feedback. In our view, the primary work between the community and the project during the crypto winter period revolves around feedback, which guides the project's development in the right direction.

To reiterate, our main goal is to select from a series of hypotheses those that will be most appealing to a broad audience, and in turn, this audience will increase our transactional activity. Transactions will generate demand for coins, and this demand will support everything else. This is the engine we must assemble side-by-side with our community and launch.

26. When do you believe the crypto winter will end?

I cannot be 100% certain, but if we follow the patterns of the crypto market cycles, the crypto winter has always ended after the BTC halving. To be precise, an impulse has typically formed after the halving, which later transitions into the crypto summer.

The BTC halving is expected to take place in a few months, approximately in April 2024. BTC is still the dominant coin in the market, and nearly 90% of coins are still tied to BTC, rising and falling in its wake. When the halving occurs, the issuance of BTC is cut in half, creating an organic deficit. The current price of BTC reflects the current demand for it. When the issuance is reduced by half, that demand will create a deficit. This is usually the pattern marking the end of the crypto winter. All other indicators, in my opinion, have already been met, so I would describe the current state as crypto spring, with crypto summer approaching.

27. In your opinion, how do you think the market will evolve in the years 2024-25?

As for 2025, it's challenging to predict. In 2024, the market should transition into the crypto summer phase, with BTC demonstrating its all-time high (ATH). This has been the pattern in previous cycles. Then, in 2025, we can expect another crypto summer boom, attracting many new players to the market. There are several reasons for this anticipated growth, such as the acceptance of BTC ETFs, the emergence of new major institutional players, and more. One thing is certain: the upcoming crypto summer will be a season of a regulated market, given the significant changes that have occurred in recent years.

I believe that banks will actively offer cryptocurrency services to their clients. Decentralized services will become simpler and more interoperable. This will create a niche for numerous companies. We have ambitious plans for 2024-2025. We intend to build a multi-billion-dollar company based on Vault, discover a range of new hypotheses for Choise.com, and achieve leadership by ranking among the top 20 companies globally in terms of transaction volume and asset capitalization. It's going to be an exciting time.

28. Could you please elaborate on your future strategies, your current thoughts, and your blueprint for the company's growth?

We are optimistic in our outlook. It's a paradox, but despite the extreme drop in the value of our coins, we are achieving remarkable results. This phenomenon illustrates the disconnect between the actual state of our business and how the market reacts to it.

Right now, we are fully charged for success. We have signed dozens of contracts and plan to sign hundreds more in the next 12 months, with a considerable number of integrations in the pipeline. We plan to invest even more in building our infrastructure and testing numerous hypotheses. Anticipating the crypto summer, our confidence that we are heading in the right direction is strengthening. We are in the right place at the right time.

The next step is the transformation of our business. It began in 2021 and is now nearing completion. During this time, we've identified the direction we'll be moving in, the scaling points of our business, and, finally, we are making money even in the crypto winter period. This is something to be proud of and talk about. We are optimistic both in terms of the mid-term perspective and long-term planning. I believe the company deserves its place among the market leaders. We've come a long way, experienced various situations, honed our expertise in different areas, and weathered several winter-summer cycles. I hope that where we are right now will bring success to both the Choise.com team and our community as a whole.