At home in Sydney with Finder’s Fred Schebesta as he waits out the crypto winter

He reminds me he hasn’t drunk alcohol for nearly four years, in a bid to boost productivity. The clear implication is that getting high is out too, so I take a chug. It tastes like a Splice.

We’re briefly interrupted by a burly tradie, who turns up to repair a shattered glass fence that separates a narrow stretch of grass from the clifftop’s edge. “Wild party?” I ask my host. “Lawnmower hit a rock,” Schebesta replies, conjuring an unexpectedly suburban image for a guy who lives in a house that is somewhere between Berlin nightclub and Malibu mansion. It’s one that reflects his lifestyle, which is these days more domestic dad than crypto-influencer.

His partner, Brenda, and two-year-old son, Wolf, live with him in the seaside castle, while his daughters from a previous marriage, Tsaatchi, 10, and Portia, 13, are there half the time. Having stepped down as chief executive of Finder last year to take on a (slightly) more hands-off chairman role, Schebesta now has more time to spend with his children, along with the portfolio of crypto and non-fungible token projects funded by his Schebesta Ventures and Hive Empire Ventures investment vehicles, both of which are Finder Group subsidiaries.

As we get past small talk, Schebesta reveals a vulnerability that stands in stark contrast to his colourful persona of wide-open grins and signature hand gesture pointing upwards to the sky, rocket emoji-style. “I’ve been doing a lot of reflecting,” he says. “It’s been a challenging time.”

Schebesta got his start building websites for small businesses after receiving a laptop from his mum in his early 20s – a gift he now describes as “life-changing”. He dramatically undercut the market, charging just a few thousand dollars to create online platforms for businesses from scratch in the days before off-the-shelf templates existed. For the then university student enrolled in actuarial studies, the realisation he could charge people for playing around with computers – an activity he would have done for fun anyway – was another life-changing moment.

He founded Freestyle Media with his old schoolmate (and now Finder chief executive) Frank Restuccia in the early 2000s, buying up internet domains in the hope they would be sought after. The pair sold it in 2005 to ASX-listed Q Limited, earning them $1.36 million. Schebesta was 23 at the time.

Two years later, he and Restuccia launched Finder. The business aimed to harvest a commission by directing consumers to credit cards and home loans using the dark arts of search engine optimisation (SEO).

They found some early success, having worked out how to game the internet by cramming Finder full of web-friendly keywords. But in 2011, Google decided that Finder had breached its marketing guidelines and penalised it, resulting in an 85 per cent crash in its traffic.

Sailing a little close to the wind in the pursuit of innovation is a Schebesta leitmotif. Around 2016, he fell hard down the cryptocurrency “rabbit hole” and started to turn Finder into Australia’s go-to destination for information about how to trade bitcoin and other nascent digital assets.

In November 2021, when bitcoin was trading at historic highs and interest rates were at record lows, the company went a step further, launching a crypto product called Finder Earn, offering a stable, deposit-like return well above the official cash rate. All customers had to do was switch Australian dollars into crypto, specifically a “stablecoin” called TrueAUD.

In advertising materials, Finder said Earn was “not a banking product [or] savings account”. But the claim caught the attention of the Australian Securities and Investments Commission, which in December sued Finder on the basis that the product was a debenture and therefore needed to be offered via a financial services licence. Finder disagrees and is expected to defend the proceedings – although it has shut the product and paid back money to investors.

Beyond ASIC’s concerns, commentators have questioned the product for being riskier than Finder had claimed, given it would monetise the deposits by trading them in notoriously volatile crypto markets, where there was a very real chance they would be wiped out. The product offered a fixed return but, importantly, did not guarantee one.

Asked whether, in hindsight, bringing Finder Earn to market was the right thing to do, Schebesta buries his hands in his thick, black beard and closes his eyes in thought. “One of Finder’s principles is making things faster and simpler to do,” he replies cautiously. “That’s a principle we build products around.”

Nudged by his PR adviser, he declines to answer any more questions about the Finder Earn case, given it is currently before the courts. But he does reveal that Finder was on the cusp of launching the product in the US.

“It would have been huge,” he says. “But the market moved against us dramatically.” The project was abandoned, he says, in the wake of the Australian lawsuit and last November’s collapse of mega-exchange FTX, which led investors around the world to reassess the risks attached to crypto ventures and shut their purses.

Schebesta says he and his co-founders can handle the heat of negative media coverage and legal disputes, but he feels for his 400-odd employees. “People who work at Finder are committing to such a vision and put their trust in their leaders,” he says. “I just want them to know we’re working ultra-hard to guide the organisation.“

He said as much to staff at Finder’s Christmas party at the end of last year. “As much as we’ve got adversity right now … opportunity comes from that,” he said, according to a snippet of the speech he uploaded to TikTok. He referenced the Google penalty from 2011, insinuating Finder knew a thing or two about comebacks. Finder not only believes it will survive its current challenges, but thrive. Indeed, it still harbours plans to list on the Australian Securities Exchange in the not-too-distant future.

“We’re definitely preparing,” says Restuccia, adding that Finder has been hiring people with capital markets experience, although he declines to single them out. Despite the inherent controversy now attached to crypto-adjacent businesses, the CEO hopes Finder – which was last valued at $770 million in November 2021 and had about $5 million in crypto assets on its balance sheet at June 30 last year – can carve out a niche on the ASX, sitting somewhere between media, tech and financial stocks.

“It does take a bit of time for the investment community to understand our business,” Restuccia says. “But once they do, they see the uniqueness.”

The FTX connection

The year 2022 was an annus horribilis for the global crypto industry. A string of insolvencies spread through the market across the 12-month period, leaving scores of investors around the world out of pocket.
But the most damaging by far was the swift and dramatic demise in November of FTX, perhaps the sector’s most high-profile player – a marque sponsor of the Miami Heat US basketball franchise and the Mercedes-AMG Petronas Formula 1 motor racing team.

The company and its Millennial founder, Sam Bankman-Fried, have been charged with multiple accounts of fraud. FTX’s administrator, John Ray, called its corporate governance the worst he had ever seen (and his career included administering the collapse of Texan energy giant Enron after the accounting scandal of the early 2000s).

More than one million regular customers are now FTX creditors (including about 30,000 Australians). The FTX incident hit the public’s perception of crypto hard. If the sector’s leading proponent could be this ridden with problems, what does it say about the rest of the players? Brands ripped up advertising deals and venture capitalists closed their chequebooks.

The Australian Financial Review had revealed in November that Finder had been a beneficiary of an M&A blitz by Alameda Research, the FTX subsidiary at the centre of the alleged Ponzi scheme. The HiveX cryptocurrency platform Schebesta launched with Restuccia in 2018 was sold to Alameda for $300,000 during the COVID-19 pandemic’s first wave. It was a relatively modest transaction in the scheme of the then-$US300 billion cryptocurrency market, but it raised eyebrows after the FTX collapse given the sudden notoriety of Bankman-Fried.

It’s a connection Schebesta says is overblown. He says he never met Sam Bankman-Fried, Alameda chief executive Caroline Ellison or any of their top brass. The only person he met was a “fairly lowly” business development officer who handled the transaction in New York. “We sold it, and they never spoke to us again.”

While he might not have known Bankman-Fried personally, Schebesta arguably carved out a similar role as the domestic industry’s de facto leader. On TikTok, where he has 108,000 followers, Schebesta blends his crypto-evangelism with slapstick humour and motivational speaking.

In one video, he expresses his joy when bitcoin goes “on sale”, clutching a designer puppy in his arms and skateboarding down the castle’s hallway. In another, Gen Z influencer Fonzie Gomez asks Schebesta why he likes bitcoin so much. “It’s the people’s money,” he replies.

He co-hosted a podcast series with crypto-friendly NSW senator Andrew Bragg last year and advocated for Web3 technologies at parliamentary hearings in Canberra, as Sam Bankman-Fried often did before US Congress in Washington.

Asked for his opinion on the downfall of FTX and allegations against its high-profile founder, Schebesta describes them as “bad actors” who had to be “cleaned out” from the market. But he also makes clear he is still one of blockchain’s true believers. “It made me think that . . . decentralisation is going to go even further,” he says. “Now, decentralised finance is going to be enormous, because people are saying they don’t trust centralised exchanges. There were too many people involved – too many humans.”

Over the next eight or so minutes, Schebesta launches into an impassioned monologue about the virtues of cryptocurrencies. They are not only blameless, in his view, for the frauds and misdemeanours perpetrated by humans in their name. They are “beautiful”, offering society a monetary system free from the corrupt tinkering of governments and central banks.

The speed and scope of the speech has me occasionally wondering whether the can of soft drink I’m still sipping on really did have the mind-bending tetrahydrocannabinols removed. “You can’t stop this thing,” he says. “We’ve finally got self-sovereign money.”

Beneath the typical “crypto bro” bluster and hyberbole, there is genuine conviction. His worldview, borrowing from the likes of Milton Friedman and Ayn Rand, seems to be one in which self-rule is paramount and entrepreneurial creativity must be protected from ruinous intervention
by the state.

It is textbook techno-libertarianism. But the way in which it’s articulated – logical, thoughtful – gives a glimpse of the Schebesta behind the TikTok caricature: the computer nerd and competitive chess player; the would-be actuary educated at the elite Sydney Grammar School. “Crypto hasn’t failed,” he says in conclusion.

“The constructs on top, some of them have failed.” It’s a line that is technically accurate, and one adopted with gusto by the global crypto lobby. In the case of FTX and most of the other crypto-related scandals of the past few years, it was not the underlying blockchain technology that caused the core issue, but human greed and incompetence. That said, it is also a convenient ruse, deflecting somewhat from the industry’s trust deficit and increasingly poor track record for such a nascent market.

In May last year, six months before FTX’s demise, there was the near-collapse of the terra-luna algorithmic stablecoin network. Terra (and its related cryptocurrency, luna) were meant to be pegged to the US dollar, but came unstuck after an attack by a hedge fund.

The depegging debacle, and subsequent fallout in which the value of luna plummeted to zero, left thousands of victims in its wake, many of them young and inexperienced traders who had been lured in by crypto-influencers. The incident also called Schebesta’s own trustworthiness into question.

Having previously described terra as a “beast to be reckoned with”, and been vocal about his ownership of luna, the Financial Review in May last year asked Schebesta about the extent of his losses. He claimed he had sold all of his luna holdings before the crash (although he added that he couldn’t recall when), sparing him the fate of many.

But, three months later, he confessed to his Instagram followers that he had “lost quite a bit of money” in terra-luna. He later clarified that the loss was from his personal portfolio (not Finder’s) and that it amounted to about $20,000 – which is a fraction of his $200 million-plus fortune. Nonetheless, this was entirely inconsistent with what he had said in the immediate aftermath.

Sipping our luminescent beverages on one of the castle’s terraces, I ask whether it was simply a lie.

Schebesta launches into a detailed explanation that he had sold some of his luna holdings, but had set the remainder aside to validate (that is, earn yield by lending out crypto assets to help verify and strengthen the underlying blockchain) via a now-suspended third-party service known as Anchor. Technically, he still owned these units in luna at the time of the crash, but was unable to access them. Once they came back into his possession, they were effectively worthless.

“I logged in [about a month after the incident] and said, ‘oh crap, I left it in that validator thing,’ ” he says. “There was no way of getting it out anyway.”

“So, there was no deliberate omission on your part?” I ask.

“Man, I literally forgot.“

I’m keen to know whether the episode has in any way dented his enthusiasm for trading or investing in crypto assets. “Are you still buying?” I inquire. His eyes light up.

“Absolutely.“

While he hasn’t been afraid to dabble in fringe-dwelling “altcoins” (also known as shitcoins), Schebesta is enthusiastic about the two largest tokens by market capitalisation: bitcoin and ethereum. “The media was asking whether it’s the final nail in the crypto coffin,” he says. “I was like, ‘time to buy.’ ”

He says he first bought bitcoin at about $6000 a coin in the run-up to its first major boom and bust in 2017. He confirms a tabloid newspaper report that he sold a beachside apartment in Sydney’s Tamarama last year mainly to load up on more of the digital currency. And he is still exceptionally bullish on its prospects, saying he expects its value to rise before a scheduled “halving” event next year, when global supply will reduce.

As for ethereum, he is buoyed by a recent tech update known as ERC4337, which he says will allow applications such as video games built on the network to be used by regular consumers outside the crypto universe, dramatically boosting their target market.

“But that’s not financial advice,” his PR adviser interjects. Schebesta nods.

AI on the radar

Restuccia, who last year took the reins as Finder’s CEO, seems less convinced on crypto. On one hand, the former accountant, who has ridden the journey with Schebesta since the early 2000s when they were squatting on internet domains, says he has no regrets about Finder following Schebesta down the crypto rabbit hole. “I’d still do it again with the information that we had at the time,” he says. “It’s in our DNA to consistently try to innovate.”

But, given the court case and the state of the market, adding more crypto products or services to Finder’s repertoire is “not in the immediate road map”. Instead, that’s all been relegated to the two venture capital businesses, mostly overseen by Schebesta. Restuccia is eager to give his old friend “space” to pursue new ideas. “I’ve known Fred since we were 12, and he’s always been that big thinker: eccentric, energetic. That’s served us well, but it’s also served me well.”

And as for the next big thing, both are in agreement that it’s artificial intelligence. Holed up in the castle, Schebesta’s early experiments with AI have found a few potentially promising use cases, such as automated product comparisons or voice-based personal finance conversations with your smartphone. “These are not official products we’ve launched or anything,” he clarifies. “[But] it’s been really exciting.”

At the time of my visit, AI is heavily trending in the news. But Schebesta says he came to AI the same way he came to crypto: by “just curiously turning up rocks” – an approach he says is inspired by Amazon founder Jeff Bezos.

Being able to continue doing that is why he stepped back from the CEO role, he says. While the market viewed the decision as an attempt to distance Finder from the colourful Schebesta and his crypto-shenanigans, he says it is just the latest in a decades-long pattern of “firing himself” and moving to the next thing.

Schebesta says he was lucky that free thought and entrepreneurialism were encouraged by his parents, suburban doctors who owned their own practice on Sydney’s northern beaches. But he worries that many other budding entrepreneurs in Australia are turned off by a culture that tears down tall poppies or feel isolated from the hotbeds of tech and innovation overseas.

“Here, if you have a failed business, people are like ‘eww’. In America it’s just normal,” he says. “You clean up and you move on and you go create again. What they know in America, because they are so hard up against the wall of capitalism and innovation, is that it is so hard to get up! And everyone benefits from it.“

The topic has set Schebesta off again. Suddenly, his conversation starts to soar. “Australia would have a space program if it had more innovative companies that were allowed to go and create and innovate and fail,” he says. A possible antidote lies in his charitable initiative, through which he donates laptops to entrepreneurial teenagers who can’t afford them. “This kid was building websites and selling T-shirts on his phone. Man!“

Within minutes, he’s moved on to the state of Israel, which he says Australia should emulate as a supporter of innovation. Then, it’s the world’s first computer network, the US taxpayer-funded Advanced Research Projects Agency Network, which paved the way for the world wide web. Next, it’s tax reform. “You can’t just keep taxing a start-up that wants to give equity in their organisation to try and get it going,” he says. “It’s archaic!“

Finally, somehow, he’s onto parliamentary term limits and the Australian constitution and … he stops himself. “Sorry,” he says. “I probably shouldn’t talk about politics.“

I’m left wondering where he would have taken it next. Maybe an announcement of his own candidacy for the federal parliament? After all, there is a coveted NSW Senate seat up for grabs alongside his mate and fellow traveller Andrew Bragg. It seems unlikely, and Schebesta would make a most unusual senator. But being seen as strange has never deterred the King of Crypto Castle.