A Shark Dives Deeper into Crypto and Demystifies DeFi

Backed by a diverse group of strategic investors from the Boomer, Millennial and Gen Z generations and managed by a team of experienced Fintech builders, WonderFi will launch a platform ( in late September for potentially millions of consumers. Its Android, iOS and web-based apps promise to simplify user interaction with the emerging area of decentralized finance (DeFi) and make cryptocurrencies more accessible to the masses.

Shark Tank and Money Court TV personality Kevin O’Leary—Mr. Wonderful—went from being a cryptocurrency skeptic in 2017 to being one of the crypto’s most ardent flag bearers today.

“With WonderFi, I’m investing in the hundred million people that want to do this,” he told Advisors Magazine on a recent Zoom call.

Kevin OlearyO’Leary, who invests in many different companies and technology platforms, was attracted to crypto in late 2019. At that time, he saw that a large portion of his portfolio wasn’t even keeping pace with the rate of inflation.

“We started to look for the first time at alternatives and stablecoin at that time was yielding 4.5 percent,” he recalled. In short, a stablecoin is pegged to a less volatile reserve asset like the U.S. dollar or gold.

Structuring such an investment, however, did not go swimmingly for the Shark.

“I had to go to my internal compliance department and also deal with the regulatory environment that I report to because I’m an investor in so many issuing companies,” Mr. Wonderful explained. “And the whole compliance group said, ‘What? are you kidding? We can’t touch this stuff. This is radioactive waste.’”

With an eye on 4 percent or better returns, O’Leary was determined to find a way to structure properly his dive into digital currencies.

“It took me four months to figure out how I could be compliant,” he said. “I worked with various institutional platforms, my auditors and all that stuff. I realized, this is hell on earth. This is really hard to do.”

When his 27-year-old daughter called him up also considering investing in digital coins, he advised her: “It’s so complicated. It’s so difficult. It’s such a nightmare. Don’t even think about it.”

O’Leary added: “And that’s when it hit me. What WonderFi is all about is getting my daughter an app that she can actually get 3.5 percent interest with stablecoin. It’s that simple.”

Being compliant and simple to use was the key for him. Decentralized finance, or DeFi, can make one’s head spin. It’s a system by which financial products become available on a public blockchain network, bypassing financial intermediaries, according to Investopedia. WonderFi’s mission is to provide a proprietary platform that integrates the entire DeFi ecosystem.

“My daughter has to be compliant with the 1099. She’s got to be able to go and tell her accountants what she’s done. She’s got to be completely on board to be able to do it herself and do it easily,” O’Leary insisted. “And that’s what WonderFi is. I’m investing in the hundred million people that want to do this; they can’t afford to do what I did and hire four people to do it for them.”

Catching on across diverse generations

As an on-the-cusp Millennial, O’Leary’s daughter is one of the cross-generational demographics WonderFi is aiming to reach. Lining up strategic investors with millions of followers to introduce WonderFi to their own audiences is a core strategy. Another strategic investor is 19-year-old TikTok phenom, actor, musician and entrepreneur Josh Richards.

Wonderfi team1“The generational diversity of our strategic partners is something that’s unique for us and really compatible with the DeFi space,” Ben Samaroo, co-founder and CEO of WonderFi said on the same Zoom call. “And one of the areas that we’re really looking to access in an engaged, more meaningful way is the female audience.”

Samaroo added: “We’re really looking at all angles in terms of how we can create better access through these trusted voices and people that are really engaged with their audiences.”

He noted that WonderFi’s management team comes from the tech world and all have been involved in the cryptocurrency space. Dating back to 2016, WonderFi’s founding team has had experience with public companies like Argo Blockchain, in addition to Galaxy Digital, Hootsuite and others. Being in the space for a long time has allowed them to build products that solve problems.

“What we’ve focused on is accessibility. There is no DeFi without your average person whether they’re in North America, from abroad, regardless of age or income,” Samaroo said. “They should all have access to this in an equal way. And that’s how we, as a management team, approach the challenge.”

Samaroo explains that there is a segment of people that have already had exposure to DeFi and are crypto comfortable, but this is not WonderFi’s target market. The focus is on those people who have heard a lot about crypto and are hearing things about DeFi, and who want a simple on-ramp.

“There is a big group of people left out of the game because it’s so complex and there’s so much jargon that’s used,” he said. “With a lot of the conversations we’ve had with users and potential users, that is the biggest reason why they’re not accessing the space -- because it’s too intimidating.”

Nonetheless, WonderFi to date has amassed about $28 million in funding. Still in the beta phase at the time of this writing, WonderFi was also approaching thousands of users in this phase.

“There’s strong interest for sure,” Samaroo said. “And that’s without really any sort of marketing around the product.”

For Millennials and Boomers, the interest is concentrated around earning interest and the potential for asset appreciation. For Gen Z, Samaroo notices the asset appreciation angle, but also sees a movement toward taking firm control of their assets and their finances. They can look at money in a different way. Gen Z’ers, for example, more readily see the value of non-fungible tokens (NFTs)—something some others have trouble wrapping their heads around.

“But the common characteristic is it’s people that see there’s a better way to do finance,” Samaroo emphasized.

The war on fees

O’Leary’s interest, in large part, was driven by frustration. He was vexed by financial intermediaries that added no value. For decades he has invested in Swiss francs, euros, British pounds and other currencies, as well as buying equities or debt instruments in their home currencies.

“If you’re buying Nestlé on the native exchange, you’re buying that in Swiss francs,” O’Leary explained. “So, I have to go through an FX trader or currency trader — and they’re all friends of mine — but they add zero value. There is no value created whatsoever in getting clipped for whatever number of basis points I’m getting clipped for going in and coming out.”

O’Leary added: “And so the promise of DeFi, in the long run, is that it’s part of a payment system that has no friction. And you only pay friction where value is added, and that’s really what’s going on here.”

DeFi is also a path to productivity enhancement that will eliminate some financial middlemen. O’Leary’s message to them is if they’re not adding any value to today’s financial system, they’ll be gone. “I’m going into war on fees,” he said.

Talk of war aside, the name WonderFi is much more palatable and inviting than anything sounding like DeFi (think defy). A direct nod to Mr. Wonderful, the name is also pragmatic—and there are hints of spinoffs to come.

“A lot of the companies that I plan to bring to market will be ‘Wonder this,’ and ‘Wonder that,’ because I have millions of followers that understand what I’m all about,” O’Leary said. “I see no problem in helping [WonderFi] bring in customers at a lower customer acquisition cost. Josh Richards is part of the team. He’s got millions of followers too. He gets it.”

kvinwonder400O’Leary remarked that social media, media in general, and the ability to tell a story about the benefits of a company are already affecting market capitalizations.

“You saw it happen in the meme stocks, AMG, Robinhood, Reddit, all that stuff,” he said. “It’s not my fault that I have millions of followers, it’s my privilege. And I’m just going to tell the story about this company and what its mission is to them.”

As the story of WonderFi unfolds, people will make their own investment decisions. “We’re not cowboys here. We’re trying to take advantage of technology to make people’s lives easier and you cut their costs. That’s what I’m all about,” he emphasized.

“I want to show this service to my daughter, all her friends, all my son’s friends. And guess what? They’re all part of the millions of people that follow me,” O’Leary said. “So why not? I’m very proud of the WonderFi name; it’s an uplifting vibe. And it means that it’s part of my family of companies that try and solve these problems.”

And O’Leary thinks such problems will be getting solved regularly in three to four years.

“Hopefully sooner, but I’m a realist,” he said. “I think we’ve got a lot of work to do explaining how this works. We’ve got to get our beta product into final release. We have to do a lot of work explaining it. Certainly, with Ben’s team we have the right team here to do this. Nothing like this is easy, but I think we’re going to deliver an amazing value proposition.”

CEO Samaroo brings it all back to it being a social movement around fair and democratized access to finance.

“In a way, [WonderFi] is the Robinhood of crypto,” he said. “It’s really just trying to do everything we can from a product perspective, from an education perspective, and then from a reach perspective to get into these different demographics and just make this more accessible for people.”

Dipping into crypto

O’Leary mentioned that his portfolio has a 3 percent weighting in crypto investments across multiple assets. By year-end his goal is to increase that to 7 percent.

crypto coinsSamaroo suggests that getting exposure to the technology is the best way to get started. “It doesn’t matter how much,” he said, “just get in, play around and say, ‘I own my first $10 worth of Ether, Bitcoin,’ whatever.” Rather than diving in to get rich, Samaroo said the mindset of the average person should be to try and understand what the technology is and what it can do.

Meanwhile, O’Leary recently announced a relationship with Sam Bankman-Fried (founder and CEO of the cryptocurrency exchange, FTX). “I’m going to be using them for my institutional platform because they actually can meet the compliance metrics I have to deal with,” he said.

O’Leary describes the scrutiny on the institutional side as intense. “It’s a mark to market daily problem,” he noted. “The reason that crypto has not been adopted yet by institutions is they can’t get compliant. The infrastructure is not there yet.”

Despite all the buzz about Bitcoin and everything else crypto, when O’Leary talks to managers of sovereign funds, pension plans, and state plans, he tends to find no interest in getting involved because their compliance departments say there’s no way to integrate.

Much of that hesitancy stems from the nascency of the crypto industry, according to O’Leary. At the same time, therein lies the opportunity. He estimates that there’s a trillion dollars’ worth of interest in just Bitcoin alone once the compliance hurdle is cleared.

“The regulators are making noise, but I think there’s a lot of flexibility in thinking about innovation, financial services, but we’re not there yet,” O’Leary said. “And that’s why there is so much upside as these issues get solved.”

And as far as WonderFi is concerned, beyond its ease of use, O’Leary is convinced it will provide people with the reporting they need to be compliant with regulators and the IRS.


Issue 104

Issue 104

Shark Tank's Kevin O'Leary, Ben Samaroo, CEO of WonderFi, and TikTok phenom Josh Richards disrupt the world of traditional finance. Financial markets powered by technology, not banks. WonderFi taking Defi to the masses!

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