Crypto is a scam? Who actually runs Wall Street? Financial advice? You want to get me jailed—just don’t build a scam.
In this episode, we sit down with Michael Sitalo, an experienced fractional CFO who brings a deep understanding of traditional finance and Web3 space. Michael shares valuable insights on why finance professionals are important to crypto, what makes a project attractive to investors, and how founders can avoid common pitfalls when raising funds. Are you building a crypto startup or looking to invest in one? Then, this conversation is packed with real-world advice, candid opinions, and practical takeaways. Let’s dive in!
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Tanya: Hello, Michael.
Michael:
Hello, hello! Thank you for having me.
Tanya:
Michael, let’s kick off with your story. Tell us about your background.
Michael:
Yeah, it’s pretty adventurous, actually. I don’t even know where to start.
Academically, I have a Bachelor's in Marketing, and I got my Master’s in Finance in Germany at a business school. While I was studying finance, I was also selected for a portfolio management program run by a Swiss fund with €2 billion in assets under management. They were looking for promising students and gave us €1 million to manage over two years, along with mentorship from their portfolio managers and professors.
So, I joined that program. For two years, I managed the €1 million, and every Friday I had mentorship sessions with fund managers and professors. In the end, my team actually came in first place. We invested purely in equities and bonds—no crypto. I advocated for investing in Bitcoin, but it was impossible back then. There were no rails to do that in such institutions.
I had the chance to climb the corporate ladder in traditional finance, but the crypto market was too attractive to ignore. That’s how I shifted into crypto—starting with a small crypto fund alongside friends from Ukraine. I ran that for another two years, and then decided it was time to conquer New York. I moved to Manhattan for over a year and a half, where I built Starbridge Fund—a crypto fund. We connected with the top-tier VCs and startups in the industry, especially in places like New York and Williamsburg.
Tanya:
Wow! That's already quite a journey!
Michael:
Yeah, I kind of went down a rabbit hole with that story. Feel free to stop me—I can go on forever. Oh, and I didn’t even mention my work as a fractional CFO.
Tanya:
Please do!
Michael:
Sure! While working with startups—because I know financial modeling, projections, DCFs, and so on—I noticed that many founders, especially from tech or marketing backgrounds, lacked financial acumen. So I started helping them with their financials. It started small and grew by word of mouth—I never advertised it. Just pure referrals. I've helped over 10 startups with financial models.
Tanya:
Really cool. You have such a diverse background—from marketing to finance. That gives you a strong edge when building startups. You know how to promote, advertise, and handle the “boring” part—finance—which many people don’t enjoy.
You also had experience living in New York. That’s interesting, especially now when the U.S. seems to be moving toward mass adoption of crypto. Are Wall Street guys still calling crypto a scam—or are they starting to get it?
Michael:
They’re definitely getting it. I went to a lot of meetups in New York—almost every other day there was one. Bitcoin, DeFi, TradFi—you name it.
I met tons of finance guys, including investment bankers from Wall Street. I’d split them into two groups:
One group is leaving TradFi to join crypto—they’re moving to companies like Coinbase or starting their own crypto startups.
The other group represents the institutions themselves. These firms are adopting Web3 internally. The main issue is that institutional setups are highly regulated and complex. Same thing I experienced in the Swiss fund—despite being a portfolio manager, I couldn’t buy Bitcoin because there were no legal rails or available products like ETFs.
Now that’s changing. You can buy ETFs, and some institutions have even built staking platforms. These are actually TradFi platforms on the back end—running traditional algorithms and strategies—but using crypto infrastructure on the front.
Wall Street’s old infrastructure is slowly dying.
A good friend of mine—he’s an MD at Morgan Stanley and a former lecturer at Harvard and MIT—told me, “My job will not exist in 10 to 15 years.” Crypto is simply building better infrastructure, and Wall Street knows it.
Tanya:
Really interesting. So you’re saying that we’re seeing two things: crypto companies adopting Web3 models and institutions using more crypto-related products like ETFs?
Michael:
Exactly. For example, Tether is now one of the biggest holders of U.S. Treasuries—more than BlackRock, I believe.
The big issue with Wall Street is that it’s mostly only accessible to U.S. citizens, especially accredited investors—meaning you need to earn over $250K a year. If you're outside the U.S.—say, in Ukraine, Poland, or Africa—good luck accessing derivatives via Morgan Stanley. It’s nearly impossible.
But crypto rails can solve that. The world is bigger than the U.S., and crypto offers global infrastructure that’s accessible to all.
Banks know this. If they don’t adapt, they’ll become obsolete.
For example, there’s a company called ON Finance run by ex-Wall Street and hedge fund people. Their business model is a staking platform, but on the back end, it uses traditional finance instruments like treasuries and bonds. They’re essentially becoming the new Morgan Stanley.
Tanya:
Interesting! Let’s talk about MiCA. You mentioned Tether and global access—but what’s your opinion on Europe? MiCA is supposed to regulate crypto, but the region is clearly lagging in innovation.
Michael:
That’s probably my weakest area—regulations and legal details. I’m not deep in the legal side of things.
But my take is: crypto is unstoppable. No regulation can stop it.
People in my crypto network are unstoppable. No matter what legal acts are passed, people will continue to use decentralized infrastructure. China tried to ban crypto. Didn’t work. It's just not possible.
Tanya:
True. In China, people work for crypto companies but hide their identities to avoid government attention.
So, Michael, let’s go back to your work as a fractional CFO. What exactly is that?
Michael:
A fractional CFO provides clarity on a business’s numbers.
Take a marketing agency in New York. They’re great at SMM strategies but terrible at financials. They input revenue and costs manually into Excel, without proper labeling or structure.
As a fractional CFO, I come in, clean everything up, and provide financial guidance—basically, I help them understand where their business is heading, financially.
Tanya:
Got it. And what’s the most common issue you see when working with Web3 startups?
Michael:
Lack of understanding.
Most Web3 founders have no idea what should go into financial planning. They can’t forecast the next month. There’s no budgeting. When the actual numbers come in, they’re shocked by how far off they were.
The variance between planned and real numbers is massive. Their biggest blind spot is simply not knowing what financial models are or how to use them.
A lot of founders don’t even know how to use Excel or Google Sheets properly—they're unfamiliar with formulas and basic functionalities. But they don’t necessarily need to know that. They bring other skills to the table. What’s important is helping them understand that answers to their questions already exist—other businesses have gone through similar challenges and found solutions. The key is adapting those solutions for your own startup. It’s really an educational effort to show them that it is possible.
Tanya:
And when it comes to established Web3 companies—there are a few on the market already—do you think they’ve figured it out? Or are they still struggling with similar problems?
Michael:
It depends on the company. For example, FTX used QuickBooks, which is normally accounting software for small startups. I don’t have anything against QuickBooks itself, but it’s not ideal at that scale. I haven’t worked as a fractional CFO for large corporations—that’s a different ball game. The skill set is technically the same, but the complexity is on another level.
At that size, companies already have dedicated CFOs and finance teams in place. I work more with new startups who are just trying to get to that level. So yeah, mature companies generally have their systems sorted—because if they didn’t, they wouldn’t be operating at that scale.
Tanya:
So, in your opinion, FTX didn’t fail because of poor accounting or a lack of financial understanding?
Michael:
No, definitely not. FTX didn’t collapse due to an accounting issue—it was a Sam Bankman-Fried (SBF) problem.
I’ve heard quite a few stories about him. For instance, we’ve worked with Hack VC, run by Alex Pack, who invested early in Alameda. He was also given a chance to invest in FTX in its early days but declined.
Why? Because SBF was overly confident and didn’t keep his books legally compliant. He was essentially mixing the financials of two separate entities—FTX and Alameda—which is a legal violation. So it wasn’t about poor planning. It was outright illegal behavior.
Tanya:
Right. It wasn’t a mistake—it was knowingly breaking the law?
Michael:
Exactly. For instance, he ran a $30 billion company using QuickBooks—a tool designed for small startups. At that scale, you’re supposed to have a professional finance team: CFOs, CPAs, bookkeepers.
But again, the biggest issue wasn’t the tool—it was the fact that he co-mingled funds between FTX and Alameda. That’s why everything fell apart.
Tanya:
Makes sense. Let’s zoom out for a moment. In crypto circles, people often reference traditional finance or “TradFi.” Can you break down how Wall Street actually works? Who runs it?
Michael:
Wall Street is a complex system, but at its core, it’s run by investors. These investors put money into investment vehicles that are managed by investment managers—also known as general partners (GPs). The investors themselves are referred to as limited partners (LPs).
The GP creates an investable product that’s risk-optimized and has a compelling risk-to-reward profile. There are many types of these vehicles: private equity funds, hedge funds, pension funds, global macro funds, arbitrage strategies—you name it.
Anyone with a clear investment thesis and a strategy to capture value from inefficient markets can launch one of these vehicles, attract LP capital, and deploy it using various investment algorithms.
Tanya:
And who keeps everything in check?
Michael:
In traditional finance, regulatory bodies like the SEC make sure there’s no wrongdoing and that everything is transparent. So it’s all quite structured. And in the end, the “best offer wins.” Whoever has the best product gets the most investor interest.
Tanya:
How does that compare to Web3?
Michael:
Well, Web3 is still largely unregulated. That means the spreads—the differences between buying and selling prices—are much bigger than in traditional finance. In TradFi, if you want to, say, buy an exotic swap, Morgan Stanley might charge you five basis points, but Goldman Sachs across the street could offer it for four. It’s all arbitraged down to razor-thin margins.
But in crypto, there aren’t many players who can even offer these types of products. The market is less competitive and less regulated, which leaves room for bigger profits. That’s why many savvy GPs and fund managers are building strategies around these Web3 spreads—they’re trying to capture that LP money.
Tanya:
Let me dive a bit deeper. In big hedge funds like Fortress, Millennium, or Citadel, there’s a centralized risk management structure.
These firms hire hundreds of independent investment teams and allocate capital to them based on specific strategies or weightings. The teams invest freely, but the firm manages risk centrally. If one team fails and loses everything, it might only impact 2% of the overall portfolio.
This makes it very attractive to LPs because it’s highly risk-adjusted.
Michael:
That’s actually one of my ideas—creating a “Fortress of crypto.” Bringing together 20+ market-making and arbitrage firms into one investable product, with centralized risk management based on market theory.
I know I’ve thrown around a lot of technical terms, but anyone who understands this space would recognize how compelling that concept could be.
Tanya:
Yeah, it sounds super interesting, but also massive and complex.
Michael:
It is a huge machine. Wall Street is extremely tough. People burn out—badly. I’ve seen it happen firsthand. I know a trader from Citadel who took a sabbatical because he just couldn’t take it anymore.
In that structure, you have 100 teams. If you don’t perform, you’re out. Even if you’re average, you might be allowed to stick around for a month or two, but if you don’t improve, they’ll replace you with someone who delivers better returns.
Of course, performance is partially based on skill. But there’s a big element of luck. You have to be mentally sharp every single day, constantly delivering profits. It can eat you alive. The pressure to always make money is relentless.
And the second you stop performing, your career could be over—just like that.
Tanya:
Investment banking is similar in some ways. At conferences, I’ve met many people with traditional finance backgrounds transitioning into crypto. Why? Because competition here isn’t as fierce. People in crypto still have room to make mistakes. If you mess up a crypto arbitrage, it’s fine. The next day, you’re still around — because there’s no one better waiting to take your place.
That’s why I see more and more TradFi professionals moving into Web3 — it's a fresh, less saturated market. Especially since 2021, even though the initial curiosity started back in 2017, interest has grown massively, especially after the last bull run. It’s still early, and there’s plenty of room to grow. Compared to traditional finance, crypto is less competitive, and that opens up opportunities.
Michael:
Exactly. But it’s evolving fast. In the early days, you had crypto founders pulling off big projects with no degrees or traditional experience. Now, we’re seeing more competition from Ivy League graduates entering the space.
Still, knowing the community matters. Crypto people think differently — there’s a certain decentralization mindset you need to understand. If you don’t “get” that, you won’t connect with the ecosystem or create meaningful results.
Tanya:
Totally agree. Now, let’s shift to one of the most interesting topics for any founder — funding. You’ve invested in crypto startups yourself. So:
What makes a project truly interesting to investors? How can I, as a crypto founder, raise money?
Michael:
Start with the basics: build a product that provides real value or generates revenue. There’s no magic formula to make something investable out of thin air. You need to solve a problem — beyond the hype of short-term trends like memecoins.
My personal approach is value investing. I look for vision and fundamentals. If your business improves lives or optimizes processes, and you can communicate that clearly — investors will compete to back you.
Here’s an example: I met two 20-year-olds from Boston building a crypto product. I won’t name it yet, but they had a clear vision. I believed in them. I started connecting them with people in my network — because I saw substance.
If you have a solid foundation and a strong idea, raising funds is actually the easy part. The hard part is getting those fundamentals right.
Tanya: So, to attract investors: 1. Have a clear vision. 2. Show tangible value. 3. Build trust.
And I guess, there should be some chemistry between the founder and investor, right?
Michael:
Absolutely. And here’s a red flag for me as an investor:
If a founder’s main goal is to raise money — not to build a valuable product — I’m out.
Why dilute your equity early if you believe your business is really valuable? These days, especially with AI tools, you can launch an MVP with very little budget — sometimes even $100 and a few days of work.
Founders raising $5M for something a single dev could build in a weekend? That’s a bad sign. I’ve seen it happen, and to me, it screams misaligned priorities.
So if your entire strategy is to raise money with a flashy pitch deck and no real substance — it’s unlikely I’ll invest. Neither will the people I know.
Tanya: Makes sense. So your advice is to test the idea first, maybe with a $10K budget, get early traction from real customers — not investors — and only raise money if you need to scale?
Michael:
Exactly. Once you have a working business and paying customers, you’re not chasing investors — they’ll find you. You just put the word out: “We’re scaling.” And they’ll come knocking.
Tanya:
And what about early-stage projects with no product yet? How do they raise money?
Michael:
In early stages, you’re essentially selling your vision. Some of my friends raised money with nothing but a whiteboard sketch and a solid conversation. No product, just a clear idea.
In these cases, what investors are looking for is:
- The depth of your thinking
- The assumptions you’re making
- How you see different scenarios
Forget about the perfect financial model. At that point, it’s mostly just a tool to show how your brain works.
Tanya:
Got it. And what about the founder profile? Does experience matter?
Michael:
I’ve seen everything — 20-year-olds raising $15M–$20M with no job history, and 50-year-olds launching their first startup.
What matters most is:
- Are you trustworthy?
- Are you committed?
- Do you have a clear end goal that makes sense?
That's what builds confidence.
Tanya:
And the classic: how do I pitch without sounding like a scam?
Michael:
Simple: don’t build a scam.
If you’re worried about sounding shady, it’s probably because something’s not right.
Most investors can feel it. If you're genuine and passionate, it shows — even if your pitch is messy. I’ve seen founders freestyle pitches in rhyme, with zero data, and still raise money — because you could feel their commitment and vision.
It’s not about saying all the right words in a suit and tie. It’s about being real, showing a clear vision, and being able to explain your idea in two sentences on a napkin.
Tanya: That’s gold. Last question:
What’s your #1 financial tip for Web3 founders?
Michael:
Get a bookkeeper.
Not a fractional CFO — start with the basics. Use QuickBooks or even Excel — but structure everything. Don’t mess up your financials from day one. If you do, fixing it later will be a nightmare.
Think of it like building a skyscraper. If your foundation is shaky, your whole business will be too. Get your books right from day one — and everything else will be easier to scale.
Tanya: That’s a great way to end. Thank you so much for the insights — and for everyone watching: don’t forget to like, subscribe, and leave a comment. See you in the next episode!
Michael:
Thanks for having me!
Alex Shepel
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