Ron Chernesky was a proprietary trader on Wall Street for eight and half years, working his way up to the head of U.S. equities trading at prop trading firm World Trade Financial Group (WTFG). As the game changed after the financial crisis and the passage of the Dodd-Frank Act, so did he, becoming the CEO and co-founder of fintech startup investFeed.
Initially launched as a social trading site focused on equities, Chernesky has pivoted fully to make investFeed into a social network for buyers and sellers of 235 out of the close to a thousand different cryptocurrencies, with Ethereum’s Ether being the most popular on the site.
“We’ve been a social platform attracting everyone in the financial services industry within investment and trading, but more of the millennial generation, who have been quickly adopting cryptocurrencies faster than anyone else,” Chernesky says. “The cryptocurrency space is like the beginning of the internet right now, so we wanted to take advantage and be first to market with our transparent social media platform for the cryptocurrency market.
“Making the transition to cryptocurrency the best thing we’ve ever done,” he says. “We hit it at the right time – the tide is so strong.”
VC fundraising, IPO, ICO or TGE? That is the question
Charnesky raised $500k with an angel round in 2015 and another in 2016, but he walked away from a traditional $5m raise from a family office, instead doing a kind of initial coin offering (ICO) that investFeed dubbed a token generation event (TGE), where cryptocurrency enthusiasts buy FEED Tokens ($IFT) using Ether or Ethereum-based smart contracts.
Chernesky asserts that a TGE is superior to the venture-capital model, even in the face of the SEC’s increased scrutiny of ICOs.
The TGE ran from July 23 to August 7, during with time investFeed collected 15,038 ETH with a market valuation of close to $4.5m from around a thousand contributors, almost equaling the family office’s investment offer.
Currently with approximately 15k members, investFeed users share cryptocurrency investing ideas and opinions and access peer-to-peer investor insights and price predictions, market analytics, crowd sentiment, breaking news and integrated asset portfolio and order management by connecting their brokerage account.
“A lot of traders are heavily dependent on Twitter, and anyone can tweet out anything they’re buying or selling, but there’s no way to tell if that person is actually buying the security they’re talking about,” Chernesky says. “Nothing is credible or verifiable, but people are making investment decisions based on what people are saying on Twitter.
“What was really happening versus what people were saying didn’t really add up, so we wanted to build up our new version of Twitter, but totally transparent, where traders have to share their brokerage account and portfolio holdings on our social investment platform.”
Career advice for traders
Chernesky has gleaned lessons from seeing prop trading wither away and many traders get out of the game, not all of them by choice.
“Sometimes you have to pivot, change direction in your career,” he says. “You have to be ready to move, not be so independent and just focus on one market, say the stock market, but rather look at other markets and exchanges.”
Don’t put all your eggs in all one basket hoping that volatility will pick back up in the stock market, because it could be years before that happens.
“If something’s not working and you’re waiting around for the markets to come back or volatility to come back up, you’re in trouble,” Charnesky says. “Things are changing so fast right now, and millennials are less interested in getting involved in trading the stock market.
“We see a large majority of them moving into cryptocurrencies right now, so we’re following the trends and benefitting from that,” he says. “It was very niche, with a lot of independent investors and traders, but now financial firms, including brokerages, hedge funds and even credit card companies, have had a chance to digest Bitcoin and Ethereum, understand that this is such a powerful networking system with vast capabilities to change entire industries, and they’re changing their underlying technologies to adopt blockchain technology.
“It feels like the internet is being completely reborn.”
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