Michal Pospieszalski Podcast Transcript
Michal Pospieszalski joins host Brian Thomas on The Digital Executive Podcast.
Welcome to Coruzant Technologies, Home of The Digital Executive Podcast.
Brian Thomas: Welcome to The Digital Executive. Today’s guest is Michal Pospieszalski. Michal Pospieszalski is a seasoned tech leader with a track record of pioneering innovative solutions in the crypto world. As the chief technology officer and co-founder of Swiss Fortress and CEO, co-founder co-investor of MatterFi, Michal merges visionary strategy with hands on tech know how, propelling both companies towards defying the future of digital asset management.
Having spearheaded MatterFi since 2020, Michal’s leadership has been pivotal in developing a groundbreaking security platform that paves the way for a future where bespoke security and unparalleled ease of use converge, unlocking immense potential in the world of consumer and institutional finance. His prior experience as president and co-founder of RuneWallet, acquired by MatterFi, led to the creation of both off chain and on chain hardware and software wallets, enabling crypto transactions to be accessible as PayPal. Michal has authored nine patents at MatterFi.
Well, good afternoon, Michal, welcome to the show.
Michal Pospieszalski: Thanks for having me.
Brian Thomas: Absolutely. Love doing this. Appreciate you making the time. I know you’re kind of out of that hurricane Milton out of the way a little bit.
Michal Pospieszalski: I’m in Wyoming, so not anywhere close. I was in Miami, moved out of Miami like a year ago. So yeah, we have different kinds of storms here and actually they’re just, you have a big snowstorm. That means you get to go ski and snowmobile the next day, like crazy. So. And the place I live is Two-Hundred peaks right behind my house. So yeah, I enjoy my winter here.
Brian Thomas: Awesome. Big change from Florida. Well, I appreciate you making the time regardless. We’re just an hour apart. Michal, I’m going to jump right into your first question.
You’ve co-founded both Swiss Fortress and MatterFi, pioneering in digital asset management and security. What inspired you to dive into the crypto space? And how did your early experiences as a hacker and chief technology officer shape your approach to security in this evolving industry?
Michal Pospieszalski: The reason I’m doing this is very simple. It’s to create safety, accessibility and trust in the crypto space and in fintech in general, because I just kind of got tired of constantly hearing about theft and fraud. So like just last month there was you know, two exchanges got robbed for almost 300 million.
Some guy lost his wallet for another 55 million. This is all because of addressing problems and problems with custody on the architecture side. And we’ve, you know, fixed all that at MatterFi, like in Swiss fortress, we, we’ve, we fixed it all. With our tech deployed, like these things just basically will not happen, 90 percent reduced.
So, I mean, I’ve been a hacker my whole life since I was 15. And then for a spell there, I was working inside the beltway as a chief technology officer for a company that was doing Intel software for the Navy. And then I got into software security at a place called Cigital, of the original sort of companies that pioneered the idea of software security as a commercial business.
All these things got, like all three businesses I worked at, which was IntelliBridge, they all got bought out eventually. And I was one of the sorts of early employees at all of these places. Yeah, I mean, I, I learned that you can break into anything because it was my job to break into anything. So, I would act on voting machines and slot machines and websites and just embedded software.
You know, I just realized that basically the world is insecure, so there has to be a better way. And that’s what MatterFi is, right? So MatterFi, we basically took the idea of blockchain, which has this. Crypto proof for a spend, right? So, like when you have, when you’re spending Bitcoin, you whip out your private key and you sign an instrument, a digital instrument that in the minor says, okay, well, this is a legitimate instrument.
I can just verify that. And therefore, I can instantly process it. So, then we took that, and we made it work along with my co-founders, which is Justice Ranvir and Chris Odom. So, Chris Odom invented off-chain financial crypto and Justice Ranvir invented bit 47, which is what our sent the name system is, you know, those elements are in the sort of final commercial product.
And then I wrote a bunch of patents around it and improved upon it with the team and we wrote a lot of code to go about 5 years to get this thing to like to the state it is now, which is production ready and we made something that’s, you know, to a large degree, way less. I mean, there’s no such thing as unhackable, but it’s by far.
The most unhackable piece of software ever written, I would say, in the sense that it’ll, you know, really prevent theft and fraud in the crypto space and in fintech in general. So that’s, you know, that’s the journey I’ve been on. It’s basically to help people.
Brian Thomas: Thank you. I love the story and we see stories, countless hundreds, dozens, probably tens of thousands of stories of people getting hacked.
Losing again, lack of security or just, just lack of awareness, lack of education. And I appreciate you coming out of that space as a hacker and into making the industry a more secure place. Love these stories. Mihael, MatterFi is described as a groundbreaking security platform combining bespoke security with ease of use.
Can you share some key milestones in MatterFi’s development and how these innovations are shaping the future of consumer and institutional finance?
Michal Pospieszalski: I mean, so I would say we’re at the beginning of reshaping it, but it’s, it’s seriously taking place. We have some, you know, fortune 100 clients now that I can’t reveal yet because the sort of official press release hasn’t come out.
And so, our way of doing it is being adopted by the major players, not just smaller crypto players, which we have. So, like those, I can talk about, we have Swiss fortress, which is obviously a company that I also helped start because I wanted. Like, the best possible client for MatterFi and there’s a lot of advantages to running out in front out of the EU for our EU customers.
But we also have Casper as a client, we have some smaller clients like space dogs, some meme coin, we have you tribe, which is a gold token, and we have some really big ones, like very major crypto projects that everybody knows that are currently in process with us for basically getting on boarded onto the platform.
So, and the, I guess the question is like, why is this happening? Right? Because we’re. You know, fairly still a small team. We’re like 15 people. We’re, we’re about to get become a way bigger team, but you know, why are we sort of disrupting the space in this way, you know, despite not having raised like, you know, we raised like 5 million bucks almost, but not, you know, 500 is customer.
I would say our pioneering approach. So, like one thing that we did is we created, we wanted to make it easy to use because like one thing that you just said was, well, maybe because it’s a lack of understanding of the users. Right? So usually when people say that, what I imagine is the thing that most commonly happens, which is, you know, they get address poison.
So, for example, they get fished. And then they think they’re talking to Binance on Telegram, but actually it’s a hacker and they, they think they’re going to get some crazy investment deal or get their token listed or whatever. And they, they get talked into sending like 10K of Bitcoin or a hundred or whatever, you know, into an attacker’s address.
And they don’t understand that that address that they’re given doesn’t actually belong to the entity that they think they’re talking to. Right. And the reason they don’t know that and can’t know that is there’s no cryptographic proof between the identity and the address. And so that’s how all phishing happens, whether it’s DeFi phishing or just, you know, talking someone into sending money to a lookalike address where like the beginning and the end are the same as what they’re used to.
Like say they’re sending payments, you know, typically to address a, and then the hacker can generate a new wallet where address a, the attacker’s address is very similar to address a, where the beginning and the end are identical, but the middle is different. And it’s easy to. Confuse that right and like a computer will instantly know that these are not the same things, but a person will not right and so it’s not really the user’s fault.
All this keeps happening, right? Because even if they’re like using the best hardware wallet available today, which be like a ledger or treasure, right? They still have to confirm some address on the screen and they have to understand, like, what an address is, what it means, like, what the security implications of getting it wrong are the loss of funds, et cetera, right?
Then the same thing happens though in institutions all the time too, right? So, the classic, you know, I have a friend, Michael Turpin. You know, he, he was one of the original guys that, you know, got a lot of crypto stolen from him. And generally, the way these things happen is the custodian does not know that the withdrawal being done by the user is not actually being done by the user, right?
So, a phone gets stolen, a SIM gets hacked, somebody gets into a phone, right? And they change your Coinbase password and they say, withdraw to this address, which is obviously not your address. So how is the custodian supposed to know that that’s your address? And the answer is they can’t because there’s no cryptographic proof.
So, we created a system that’s like PayPal for all the crypto, including custody, where everybody just has a name. The name has a KYC proof or can have many multiple decentralized KYC proofs attached to it. And these KYC proofs can come from any KYC provider. So, we’re not a KYC company. We just provide the infra to make this cryptographic proof happen.
So now you can just send money to me how. Like, so in my system, my ideas, like me house, if you go to Swiss fortress. com and you just download it and set up a name and beta, all the names are free. You can just send money to me how, and the wallets will automatically compute to receive addresses every time and foul, but you don’t even have to understand them.
In fact, they’re pretty much hidden in our UI. You can use our wallets, the same as a regular, you know, meta mask or what have you, but you can now. Instead, you can just send the name. And the one of the major advantages of this is you can, you can be like a public figure, for example, and say, people say, this is my cash app idea.
This is my Venmo, right? Well, in crypto, you can’t do that because if you’re using like unstoppable domains or ENS or friend. tech or, for example, Fireblocks network, these things all expose the addresses publicly, right? So, like a little-known fact, everybody on Fireblocks network, all their customers can just look up each other’s balances.
All day, every day, it’s trivially easy to do. So, it, you know, generally people have been avoiding using these easy-to-use systems that were preexisting because of that problem, right? So, you’re not going to send a million dollars to somebody at their name. If the name’s well known now, the attackers know, oh, me how’s got a million dollars.
So, let’s go try to exploit him. Let’s see if we can fish him on telegram or what have you. Right. This lack of privacy in the current solutions is really, really sort of tragic and causes all sorts of problems. So, we did is, you can just send the name, and you can provide a proof of your identity to your counterparty, and it’s a cryptographic proof.
So, it’s not fallible. It’s not fakeable. So, phishing and theft and fraud are basically done. It’s very difficult to perform the current kinds of attacks that are stealing, you know, 10 million a day, probably on average from people with our tech. So that’s the one huge element of the, of the pioneer is the sent a name, AML features that we have, which then also lets all of our customers, which are businesses and their users comply with KYC, ML laws.
Right? So, it’s also very regulatorily friendly. So, it’s like, imagine it’s the easiest to use Bitcoin ever. It’s just like PayPal, but at the same time, you’ve you’re, you’re fully KYC compliant and it actually, it’s stronger KYC than it’s currently done because it’s a cryptographic proof of the, of where the funds are coming from and how much, and et cetera.
So that’s 1 side of it. The other side of it that we innovated is we made a completely new custody system that also uses end to end crypto proofs. So, like, normally right now, like, if you’re using any custody system, like, okay, you deposit your funds to some random address and you pray that that’s the right address, right?
But say you successfully deposit the funds to Coinbase or what have you, and then now you’ve got to manipulate the funds. Say you want to do a trade. Well, what do you do? You log into a website with your username and password again, right? And then you, you do some trading, but your wallet has nothing to do with that.
Right? So how does the website know that it’s really you doing it? And the answer is, well, they maybe do some 2FA. They’re reasonably sure, but they’re not a hundred percent sure. The best way to be sure would be to make it just like Bitcoin, where you know that the off-chain transactions are being done with a private key signed instrument.
So that’s what we did. In our custody system, there is no like, you don’t have to have people sitting around with keys to process withdrawals. It’s just all done automatically. Therefore, those people with the keys can’t steal the money and you have all these other advantages to the off-chain processing.
Like, there is no, there’s no web three. There’s no place for an attacker to mess with it. It’s just the off-chain experiences right in the wallet alongside the on chain experience. So that’s our custody system in sort of like a, you know, 2 2nd pitch of it.
Brian Thomas: Thank you. That’s awesome. And really, I appreciate that because we are in the, this platform, our platform, obviously is there’s a web two component, but we have a web three as well.
We love blockchain. We support crypto. So, whenever we get someone on here to talk about this stuff, we just eat it up. So, thank you. Appreciate you diving into that. Nihao RuneWallet, which was acquired by MatterFi, aimed to make crypto transactions as seamless as PayPal. And you’d mentioned that. What were some of the biggest challenges in creating off chain and on chain wallets?
And how has MatterFi built upon those foundations?
Michal Pospieszalski: Well, MatterFi bought RuneWallet and it also bought StashCrypto and like a stock swap. You can just look it up online. It was like an 8 million stock swap because we had to file with the SEC for that. So, we’ve taken those original ideas and we added nine more patents and we wrote a lot more code.
And we’re up to 1 million lines of proprietary code right now with a little bit of it being open source. And we just made it commercial. Right. So the original ideas of those places was a lot of the stuff I was talking about, but the one thing that didn’t exist at all until MatterFi was the sent to name originally was sent to pay code.
So, pay codes were this idea that you have a reasonable payment address. It looks like a regular crypto address, but it’s the same number and you use it across all the chains to generate, receive addresses. But then we realized like so early last year that no one wanted to use that either because it was just yet another number.
So then I came up with this infrastructure where user doesn’t have to understand pay code crypto address at all. It’s just a name. Right. So that’s where the as easy as PayPal thing came from. And I think in your question, you kind of make it sound like the RuneWallet came up with that. I kind of doubt it.
I don’t recall me because I would work at RuneWallet. I don’t recall me having that idea yet then maybe, maybe we, it was already part of our pitch, but really, it’s not as easy as PayPal to like, you can use basically something that looks like an email to send and receive. Right. So that’s a matter of innovation.
So that’s how we improved upon the original IP. And then on top of that, there was many years of fixing code basically, right? Like just getting stuck. Cause it’s, there’s a big difference between like prototype code, which is where I would say it was say three years ago when we did this acquiring transaction.
And then. Like stuff that you can, you can go to Swiss fortress. com right now and download the wallet and, you know, start playing with it. And very shortly that’ll be in production along with a lot of these other customers. So that’s boring. It’s not very exciting work. It’s like, you know, debugging and like refactoring, but it’s necessary and it takes a lot of time and effort.
You know, I would say that the big innovations are, you know, we made all the original ideas commercial. We did a lot of IP creation in that process to make the original ideas commercial because they weren’t like there yet really before. And then obviously we created sent the name, which I would say of those 3 things I just mentioned is kind of like the coolest.
And that really changed the company. Like I would say that until we got that right, we were kind of a struggling startup and then after that we weren’t. So that’s the right answer for you.
Brian Thomas: I appreciate that. And you did bring some clarity to the question. Obviously, you’ve taken a pretty solid platform and made it much better, obviously with some work, but that is one of the things that makes you stand out in your field.
So, I appreciate you sharing that. And me, how last question of the evening, looking ahead, where do you see the biggest opportunities for innovation in digital asset management and how do you envision Swiss fortress and MatterFi contributing to his future?
Michal Pospieszalski: I mean, one thing that I want to clarify just first is what’s the difference in MatterFi and Swiss fortress.
So, so Swiss fortress is a Swiss AG. It’s one of the MatterFi clients. It’s also where we run currently our infra. Out of Switzerland because of the super clear regulatory environment there, right? So, it’s you can be 100 percent confident running a crypto project in Switzerland because you know exactly where you are legally and you’re not going to get like a random phone call from Gary Gensler at the SEC being like, I just don’t like it.
Here’s a lawsuit, right? Which has been happening a lot in the U. S. Sort of in the us system, right? Which is seems like there is arbitrary enforcement around crypto. And sometimes it’s, okay, this makes sense. These guys were frauds or whatever. Right. But other times it’s like, you know, Ripple’s been around forever.
You know, they settled like, right. So, so, so there’s a lot of that happening. Right. So, what we ended up having to do is sort of create this bifurcated structure so we could just operate. And at some point, when there is regulatory clarity, which I’m hoping, you know, starts in 2025. Then we’ll also be operating in for a year as well.
You know, there’s a lot of stuff happening in the space. I think it’s very exciting. But before we even get there, so there’s, you know, 1 thing is I just want to get, like, the biggest innovation is just getting normal people to use crypto because right now, like, every project is like, you know, All the new projects in crypto tend to be DeFi, right?
And DeFi is still just used by like crypto geeks. Like grandma’s not waking up being like, yeah, I’m going to bust out. I’m really happy with this DeFi contract. I’m going to do, you know, staking and, and flash loans, you know, in the same block because I’m like super elite fintech grandma, like that’s just not happening.
Right. So, the biggest problem with digital assets right now is they’re still just reserved for nerds. Like either, you know, some combination of crypto and fintech nerds. Right? So maybe everybody’s like holding a little crypto, like maybe, you know, there’s a lot of people that hold, for example, Bitcoin, but they’re not holding it in a self-custodial wallet.
They’re usually holding it in some exchange and then whoops, it disappears or there, you know, holding it in an ETF. And really, the reason ETFs happened is because everybody was like, well, we like crypto. It’s a deflationary asset like Bitcoin, you know, outperforms real estate, outperforms everything over the last decade.
Right. So obviously it’s a great source of value and it, you know, it’s a really huge player in the world economy. Right. But people still don’t really know how to use it. So, I wouldn’t say that. You know, there’s some super sexy innovation that needs to happen, like today, what needs to happen is people need to start using sent to name our tech, you know, or the equivalent, which as far as I know, nothing else exists except us.
That’s the answer, right? The answer is look, it’s as easy to use as PayPal. You just don’t have to worry about. You know, the under the hood the software just takes care of all of it. So that’s the 1st innovation and it doesn’t sound super sexy, but it’s sorely needed because it also prevents all the theft and fraud, which goes back to my original thing of creating trust and trustless environments and safety, accessibility and trust being things I’m really into.
And then the other ones AI, right? So that now that’s a. Really cool, sexy thing you can talk about from a tech point of view, because, you know, the prediction is that very soon everybody’s going to have all these agents running on our behalf, you know, so, like, an individual user will be able to tell an AI, whether that’s on their computer or robot running around the house.
They do this, right? Now, necessarily that robot’s going to have to be able to transact. Like you’re going to have to give it some spending money because if it can’t spend some money, then it’s not really that useful, right? It’s like having an assistant, but the assistant doesn’t have a wallet. Okay. Now, how do you prevent the AI from getting robbed?
And how does the AI know that the person it’s giving its money to or spending with is the right person? So far, you know, what everybody’s concluded is, well, the AI’s all got to have crypto wallets, right? But then how do they discover addresses and stuff? So, it turns out that our sent a name and our custody system where we can have the AI agent running inside of the custody system and inside the wallets, we have a lot of IP patents around the tech.
Where, you know, you substitute the word AI for user, and now you have this really cool decentralized way for the AI agent to know who it’s supposed to, first of all, to discover who it’s supposed to transact with, and then transact with the right person infallibly while not revealing its balances. You know, the biggest problem with AI agents, like if they get rolled out enmasse today, they’re going to get robbed just as much as the regular users.
Right. Cause it’s probably going to be easier to fish an AI than the person. So that I think is a huge opportunity just having AI for FinTech. So, we actually have a little, you know, a small team and next week I’ll be able to demo the AI agent, you know, running a wallet. So, we actually got this to be autonomous.
So, you can have like your own AI running on your own phone or your own computer and you give it like instructions. Like if I receive money from this person, I’ll put it in this other account or invest it here and the AI will just do that. And we have all that working and it’s all using RSN to name system, our KYC system, like all these FinTech fundamentals that I just talked about.
It’s interesting that the revolution for getting increased usability also makes it really easy for robots to do the same thing. That’s one of the things that we’re focusing on as a company.
Brian Thomas: That’s awesome. And like you said, what else is there to do for innovation, but your kind of really married the two in that conversation around AI and how AI can be your personal assistant and be able to manage some of this stuff using your secure platform.
I think that’s awesome. And what’s really exciting is you were able to kind of get into the weeds tonight. We have a lot of technologists in our audience. I’m a techie by trade and been doing tech a long time and love this space. So, I appreciate you making the time and diving into some cool stuff as, as we all get the geek out on.
So, thank you, Michal. Thank you, Brian, for having me. I appreciate it. Absolutely. It was such a pleasure today and I really look forward to speaking with you real soon.
Michal Pospieszalski: All right. Sounds good, Brian. Thank you again.
Brian Thomas: Bye for now.
Michal Pospieszalski Podcast Transcript. Listen to the audio on the guest’s podcast page.
