RUIN: Money, Ego and Deception at FTX

Cryptocurrencies are a story about the future of

money

, about people's willingness to embrace it, and people are excited about that story. SBF, Sam Bankman-Fried. Sam Bankman-Fried. He runs one of the largest and certainly the fastest growing crypto exchanges. They can start to see that future and get a little nervous about whether I will have a place in that future. Sam Bankman-Fried, the king of cryptocurrencies. He is the most important man in cryptography. Many of these guys suggest that this is a once in a lifetime opportunity. You have to enter now, you have to enter from the ground floor.

It has to happen. He had an incredibly radical and dangerous predator model. FTX asked for special treatment. FTX could be entering bankruptcy proceedings. A liquidity deficit of around $8,000,000,000. I can't imagine a scenario where $8,000,000,000 simply disappears. The cryptocurrency industry has been left in tatters this year. Bankman-Fried's company had an estimated valuation of $40,000,000,000. One of the things about cryptocurrencies is that they seem to be rapidly repeating the worst lessons of traditional finance. Sam Bankman-Fried has been arrested in The Bahamas. He is detained in jail. Sam Bankman-Fried to be extradited to the U.S. Eight criminal counts: Bankman-Fried and his accomplices stole billions of dollars from FTX customers.

It is very unlikely that anyone will recover losses. I was surprised by what happened this month. We made a lot of mistakes. I think this will go down in history as one of the biggest financial crimes in history. Bankman-Fried pleaded not guilty. He is out on bail for $250,000,000. He has set a trial date for October 2. Demand, Marcos. Are you in? I'm in. I'm in. I'm in. I'm in. We are in. After the 2008 financial crisis, there was a lot of distrust in the financial system and there was a lot of frustration on the part of a lot of people.

It will be one of the decisive days in the history of financial markets. $700,000,000,000 in bad loans. Our country could experience a long and painful recession. Lehman Brothers filed for bankruptcy. There is no action the federal government can take to end the financial market turmoil and economic crisis. What a shame, what a shame, what a shame! What started in the United States last year has now spread to all parts of the world. The news from Wall Street has shaken the American people's faith in our economy. The greed that the banks had shown, the unbridled risk taking that they had undertaken basically left everyone in great financial harm, and Bitcoin was really born out of that.

So cryptocurrencies in a sense start with Bitcoin, which is meant to be a form of cash, right? It's as if the original idea of ​​Bitcoin was a substitute for cash. There is a problem if you want to try to send

money

to someone over the Internet. It's digital. Digital is easily copied. So people had to find a way to send some kind of exchange token that couldn't easily be stolen or spent twice. The way this is done uses cryptography, the science of secret codes, and by creating that technology we can create this whole new world of assets called cryptocurrencies.

There was a lot of interest at the time from people who valued privacy. They saw this as a way to exchange money peer-to-peer in a way that was somewhat outside of the government's control. A bitcoin is not backed by anything. It's just a Bitcoin. The only thing that makes it special is the fact that you and I and a community of people have agreed that maybe this token is worth something. In that period, cryptocurrencies had a rogue character. There was a decentralization movement going on, this idea of ​​sticking to the man and no regulations. This was especially attractive to people who wanted to be off the grid, were interested in unique technologies, and of course people who wanted to make money.

Sam Bankman-Fried seemed like a very smart guy who came from traditional finance and knew the layout of how finance works. I remember when they told me about him for the first time. They had a twinkle in their eyes and a kind of laugh like: "He's very, very smart, he's very capable, but he's unique and he takes a lot of risks." He is about someone who was born and raised in Silicon Valley. He is about someone whose parents worked at Stanford. Highly esteemed law professors, new people. He grew up in a wealthy area and went to a fancy high school.

He was super well connected. I ended up interning at Jane Street, a financial firm after my junior year and I really liked it. Jane Street is this elite quantitative trading firm on Wall Street. It's very difficult to even get an interview there, let alone a job. You have to be absolutely brilliant. They are obsessed with risk. And in many ways he fit the profile. I loved puzzles, I loved math, fresh out of MIT. Finance is a good place to turn puzzle-solving skills into a career, and often a very lucrative one. With Crypto you can solve things that no one has thought of before.

You're not as limited by regulations or having a boss who's been there for 20 years. ♪ I see you crawl ♪ ​​♪ I see you crawl ♪ ​​Sam left Jane Street and started Alameda Research. Alameda starts in Berkeley in 2017. Sam said he wanted to give it a harmless name, especially since he was working in countries that might be suspicious of a crypto hedge fund. A hedge fund takes money from its founders and partners and invests it in pursuit of profits. The bottom line is like a ship on a voyage to Treasure Island and the investors are the passengers, but the sea is unpredictable and there is a chance that the ship may not reach its destination or even sink.

The hope of riches is what keeps everyone on board. Sam's inner circle in Alameda consisted of people from math camp, MIT, and people he knew from Jane Street. They were all these math geniuses from Massachusetts and California. Sam founded Alameda with a very small group of people. If they can raise enough capital, they can do it. So, there are a couple of key players you should know. The first, and one of the most important, was Gary Wang, my roommate at MIT. Gary was the CTO, the guy in charge of technology and engineering, an extremely talented programmer.

Nishad was head of engineering, so he was the other key player on the technology side along with Gary. Then you have Sam Trabucco. We are a cryptocurrency trading company, which means we do the same type of things you do in traditional finance, but we do it as Bitcoin and similar products. He was co-director of Alameda with Caroline Ellison. Caroline and Sam met while working at Jane Street. Caroline Ellison was co-CEO of Alameda Research and, like her, won math competitions. I talked to Sam, who had just started Alameda, and he convinced me it was an exciting opportunity, so I decided to take a chance.

He started Alameda with money from friends and family and began trading cryptocurrencies and making profits that way. They found a way to buy cryptocurrencies in the United States, sell them in Japan and take advantage of that difference. This price difference was there, but it wasn't necessarily easy to take advantage of and the legend of Alameda was that they found a way to do it. They were founded in Berkeley, California and then quickly decided to settle in Hong Kong. In Hong Kong, at that time, the crypto scene was quite interesting. There were a lot of crypto people there.

I moved to Hong Kong in 2014 and started my career in venture capital there. Venture capitalists invest in new businesses. It's like giving a kid money with a great lemonade recipe to buy a bigger stand and more supplies. It's a gamble, but if the lemonade stand becomes a success, your small investment could turn into a big return. While in Hong Kong, Sam was able to connect with multiple investors and I think that's when everything really took off. We were investigating the Alameda opportunity and investing in Sam. Sam was an incredible figure. He's the kind of person you want to get back with.

He is very unique. He is one of one. And the trading strategies Sam was applying were very smart. Some of them were a little riskier than others, but the reason he was risky was because Sam was always ahead of the curve, and that was exciting for us. If he's taking technological risks, we love it. I'm a technology investor, that's what it's all about. We talked to some venture capital firms and our pitch was basically: "Hey guys, good news. A bunch of 25-year-olds, we don't really know what a Bitcoin is, but we're trading it. Plus, this is all crypto and we've created a new company.

None of us have run a company before and, ideally, we would like to receive $100,000,000 next Tuesday. It was one of the craziest diligence processes I've ever gone through. We kept discovering more and more strange things that dragged us deeper and deeper. One week he sent us his latest details and was significantly depressed. We were a little scared. We ask him what happened and he says, "Oh, I don't remember if I told you, but me and most of the senior team members had this idea for a crypto exchange. That's why we did it." "I've been losing money because I've lost my eye.

I just think it's a calculated risk for me, it's worth losing money here and not wasting time on it because this trade thing could be really big." And I actually kind of like this answer. I have invested in many of the largest cryptocurrency exchanges in the world. We can help him create an exchange and he says, "Oh, I think maybe you misunderstood me. This exchange we're working on is independent of Alameda Research." So I asked him, "Are there different people working on this exchange? Are they using separate intellectual properties, IP, and resources?" Alameda is buying and selling.

For example, he is trading his own book and trying to make profitable trades. FTX, you can think of it as infrastructure, is market infrastructure, that is, everything that is between a buyer and a seller. Therefore, FTX does not buy or sell itself, but rather it is a place where people can go to exchange cryptocurrencies. FTX is a public exchange. It is a place where other people come to exchange. A lot of cryptocurrencies are people who don't like banks and want to get the middlemen out of the financial system and their goal is to be able to send Bitcoin to buy things without anyone else being involved.

You just save your money and can send it without anyone's permission. It's like a big philosophical part of cryptocurrencies, but not having intermediaries, it's a little difficult. You have to download a bunch of weird software and set up wallets and think about passcodes and all these things that are kind of mentally exhausting and if you just want to buy something that goes up there are crypto exchanges that have good websites where you can go and buy without worry about much of the cryptography apparatus. FTX is a crypto exchange being built within Alameda. I guess two companies were coming along the same route.

He wanted to take our money for Alameda Research and he wanted to use that money to fund and help start a separate business that we would have no information or ownership of. And it was actually hurting our interest in Alameda. And I remember at the end I made a last-ditch effort to explain to Sam why we couldn't just negotiate a separate deal for FTX. He was just looking at me with wide eyes. He didn't really care about the moral implications of what he was proposing. It was almost like trying to explain the basics of business ethics to a baby.

And I realized that we were so far apart that it was too much. We couldn't make a deal with this guy. They launched FTX about 18 months after launching Alameda. We knew from our own experience launching a trade that the speed at which they operated was almost impossible for the size of the team they had. So I think a lot of cryptocurrency companies are very proud of operating with these incredibly small teams overall. Is this completely a facade? Is something happening behind the scenes? At that time, FTX had like 20 people. Kraken had 100 people on the security team alone.

Sam starts FTX in 2019 and this is when it really explodes off the cryptocurrency radar. People talk about SBF as unconventional in some ways. The gigantic and slightly crazy mop of curly hair, the t-shirts that fit half tight, the cargo shorts. It's the fact that he looks like he hasn't showered in a couple of days. And a normal financier looks at that and says, "Oh man, that seems like a red flag." But in the mind of a venture capitalist, right? That's proof that he's so smart that he doesn't care. It's like the equivalent of Wall Street, like having a very well-made suit.

I've been working with programmers since 1988. They were all Sam Bankman-Fried. They wore the same clothes as him, they wore Lamborghinis flip-flops. I have seen this moviebefore 1,000 times. Many people in the cryptocurrency world seem crazy or really promotional like the hype man. It seems like they are trying to sell a new vacuum cleaner door to door or something. At these Bitcoin conferences, people literally like to shout on stage like, "Bitcoin is going to the moon. Yes!" Like, “Bitcoin is going to save the world.” And let me tell you, we are truly changing the world as we know it.

Bitcoin! Court! The conference ended with a guy giving a speech about how Bitcoin would save El Salvador, literally crying. We die on this hill, I'll die on this damn hill. So today a country connects to the open monetary system and gives hope to its help. So in that world, Sam seemed pretty reasonable. So, I thought we should build the first Alexandra here in El Salvador. Bitcoin City. And the volcano will power the entire city and will also power mining. And then when you compare that stereotype to how Sam presented himself, which was definitely eccentric… But the things he said were really thoughtful and seemed thoughtful.

He also had this great personality. He had a way of seeming very honest, innocent. He seemed like he wasn't trying to fool anyone. There was enormous trust placed in Sam. He positioned himself as a guy trying to do crypto the right way. When he was a teenager, he had decided that he really wanted to dedicate his life to doing what was best for the world. He considered different things, like trying to be an animal rights activist. He considered politics, but then decided the best way would be to get very, very rich and then give that money away.

What we need is an ethical revolution so that we can figure out how we use this tremendous abundance of resources to improve the world. Over the past 10 years, my colleagues and I have developed a philosophy and research program we call Effective Altruism. In theory, it's always been one of my goals to figure out how I can have a positive impact on the world, and I got involved in the EA community in college and it's been a huge part of how I've decided what to do with my life. And so, effective altruism becomes something like that, essentially a community of people that develops primarily online.

He is very young and it is about giving as much money as possible in the most effective way possible. The effective altruists, like at the beginning, said, "Okay, we've studied it and we've come up with an answer. We should buy mosquito nets for all the people in Africa so they don't get malaria." And so these guys would go work on Wall Street, make some money, and donate it to this mosquito net charity. Their philosophy is utilitarian and that means: what will do the most good for the greatest number of people? It sounds unobjectionable on the surface, but as time went on, his ideas became increasingly bizarre and more science fiction-like.

They say: "We have to worry about the long-term survival of humanity." And as a result, they began to worry about the apocalypse. They say, "Okay, let's say there's something that could wipe out all of humanity, like killer robots. That would be very, very bad. So if we could do something to prevent that, that would be very, very bad." In fact, it's better than handing out mosquito nets." He goes so far as to say, "We need to stop AI from killing us. We need to stop the next pandemic." And that's the kind of effective altruism that Sam Bankman-Fried believes in.

AI will become more powerful and have the power to change the world for better or worse, and that will happen. We're not going to build AI and we're having difficult conversations about what role he should play. And this can be a dangerous way of thinking. It's almost like you're the hero of your own science fiction movie. You're definitely not going to save the world, but maybe you are. For example, when you take a few steps away from it, you see how morally twisted it is because the idea essentially is that it is better to go into finance than to become a doctor or a teacher.

It is morally superior and it is basically a philosophy designed to flatter the sensibilities of. the tech and finance experts, where now you don't have to feel bad about being in finance instead of helping people in your daily life. If we do it, maybe we'll save the world. Should I worry about similar securities laws. ? Maybe not. In fact, that could be bad. For example, if you don't save the world because you're too worried about what the Securities and Exchange Commission will think, maybe that makes you a bad person. It is a worldview that essentially justifies almost any current behavior that justifies an insane accumulation of wealth without necessarily paying society's fair share.

We have a new name for the coronavirus. The World Health Organization has officially named it COVID-19. The number of cases is skyrocketing today, more than 24,000 nationwide. COVID-19 can be characterized as a pandemic. Will you recommend to the governor that New York City shelter in place? We have to consider it starting today. Right now for many it means working from home, that is the new normal. You must stay home. But 2020 was a strange time in many ways. Most people simply didn't have an outlet for entertainment or community. They weren't spending money on the things they normally spent money on, so a lot of people just gravitated toward cryptocurrency trading.

As in 2020, cryptocurrencies were becoming much bigger. People were investing real money. The big institutions were talking about getting involved. It definitely wasn't your Wall Street type of hedge funds that did these things in 2020. It was largely driven by retail trading. Many former poker players started trading cryptocurrencies around that time. FTX launched at exactly the right time. It was really the beginning of the lockdown. A bull run is a time of hustle and bustle where investors chase higher and higher prices. Imagine a mechanical rabbit running down a dog track. When the rabbit speeds up, dogs have only one instinct: to run faster.

If you look at the chart of a company in the space that has been around for 10 years, there are only ups and downs, but they really caught the beginning of the bull market. So I think investors saw that and thought, wow, this company is just going up. It was kind of right place, right time. People were hungry for new platforms at the time and I think we always felt pretty good on the product side. Everything happened so fast. You had this crazy cryptocurrency boom that happened in 2020, 2021. I think the cryptocurrency price peaked in November 2021. In early 2022, that's when the whole world woke up and said, "Holy shit, this "This is maybe the future of finance." And you didn't have to be a believer in crypto to say that.

All you had to do was look at the money because it was so big. Over time, as FTX started to grow, it started to gain traction and the crypto scene started to change a bit in Hong Kong. In some parts of Asia there was a fairly strict crackdown on cryptocurrencies. China in particular had really intense cryptocurrency bans and I think there was a lot of nervousness. So finally, both FTX and Alameda moved in 2021 to the Bahamas. I think we've been eyeing The Bahamas for a while. They are one of the first countries to implement comprehensive regulation for cryptocurrencies, which we believe is extremely important for this space and a really positive sign.

The reason FTX was in Hong Kong and then the Bahamas is because everything they were doing would have been illegal in the US. That's why these crypto exchanges are offshore. And the Bahamas said, "Hey crypto, please come here. We'll let you do whatever you want." He created this image that he didn't care about money. He really liked to highlight the monk's lifestyle of him. Like, "I drive a Toyota, I sleep in a bean bag." Wait, where is your car? It's that one over there. That's like, what? A Toyota. Yes, it's a Corolla. And this place where he lived just didn't fit that because he lives in a penthouse in the most beautiful resort in the Bahamas.

Yes, nine colleagues and I together bought a large apartment near our office where we live. And it's not like that, I mean, I'm really lucky to be able to have a really comfortable life and never have to worry. For me, it's all about money, but I'm not particularly excited about immersing myself in luxury. I'm not crazy about yachts and I don't think it's what I should be doing with my money. I think I should think about how I can help the world with this, and it's not who I am. He didn't buy a Lamborghini, but he did fly in private jets.

He had this luxurious penthouse. They paid 30 million dollars for it. It is in one of the eight horseshoe-shaped buildings around this super marina. I grew up in The Bahamas and spent the first 18 years of my life here. The Albany Club is an exclusive, gated residential community that also includes a hotel and intense nightlife. It is a place where people like Tiger Woods, Justin Bieber have residences. I went to Albany and as soon as I got there I felt like I was on this luxurious alien planet. The grass was super green, the air somehow smelled better than the rest of the island.

It was super calm, everyone was very fit. Coffee costs like $9. There is a sign on the wall of the coffee shop that says, "Do not take pictures of celebrities in this coffee shop." It's not a place Sam would have fit in, but I think he could have justified himself by saying, "I'm going to donate so much money in the future that this amount of spending just isn't important." Maybe you gave away 50, 100,000,000 and got 50 or 100,000,000 worth of PR from it. How do I know you're not doing it just for show? So all these people who worked at FTX and in Alameda lived in this penthouse, so their whole life in the Bahamas was intertwined.

They had office parties all the time. They were wild. They could last well into the morning and were frequent. The vibe, as it seems, was more of a fraternity or sorority atmosphere. And they went out together. Sam and Caroline Ellison were in an on-again, off-again relationship. Caroline Ellison was one of the executives living in The Bahamas. So, I was interested in the idea that if Alameda has information about what clients are doing on FTX, they can make trades that have an advantage. It was seen as incomplete because it is a huge conflict of interest. He owns the stock market and has a large publicly traded fund.

Do you want to play online poker against the website owner? You'd probably like to cheat and look at everyone's cards. How do you make sure someone doesn't like to just look over someone's shoulder on the beach with a laptop? Very few people want to go on record saying something bad about Sam or FTX because Sam was too big in the crypto community. When you combine effective altruism, the long term, and this approach to life that I think Sam had that probably goes beyond money, which is like this game idea where you just try to accumulate as many points as possible, you start in a place that feels ethically and morally sound and you get to a place where you don't even have to worry as much about what's happening in the now.

It's just about making this as big as possible. FTX's strategy was basically to get in front of as many people as possible, whatever the cost. Sports and sponsorships were a big part of that. Second try, Hastings. Actually, this is really elite. Hi, I'm Shaquille O'Neal and I'm excited to partner with FTX. I'm Naomi Osaka and I'm proud to be associated with SBF. Hey Woo! That's my man! Demand, Marcos. Are you in? I'm in. I'm in. I'm in. I'm in. Oh, I'm in, bro. I totally agree, what about you? Of course I'm in. Why do you have to ask?

Create cryptocurrencies with FTX? I'm in. Is this the new FTX Arena? We are in. Our city, our team, FTX. Are you in Miami? Obviously, FTX got the naming rights to an arena. They have these patches on the umpires' uniforms like in Major League Baseball. There was a time when FTX was everywhere out of nowhere. FTX is great. And they got spokespersons like Tom Brady and Gisele. Yes, yes, an exchange. We tell everyone. It is not a commercial trade. I am trading cryptocurrencies. FTX is the safest and easiest way to buy and sell cryptocurrencies. I have to ask you about working with Tom Brady and Gisele Bundchen.

One of the sets of user feeds from people in the world that have absolutely massive reach and respect. It's hard to go against Tom Brady or Steph Curry or Louis Hamilton or... People think essentially what they're fed. If you have Tom Brady talking about FTX, fuck yeah, I'll trust FTX. I feel very comfortable endorsing this product because it offers a service and how it can help someone like me and thousands of other players. By the way, this also happens all over the world. So we're not just talking about sports leagues in the US. We're talking aboutFormula 1 and billboards and advertising campaigns in all sorts of different places, all over the world too.

FTX did this ad campaign with Steph Curry and I remember seeing this one of Steph Curry and feeling very uncomfortable. This is Steph Curry, the world's leading cryptocurrency expert. I am not. Because the premise of that announcement was that you didn't have to be a crypto expert to basically invest in FTX. Steph Curry repeatedly says, "I don't know anything about cryptocurrency, I don't know anything about cryptocurrency," which I'm sure is true, but then at the end of the ad he says, "And I don't have to know anything about crypto because I have this". I'm not an expert and I don't need to be.

With FTX everything I need to buy, sell and exchange cryptocurrencies safely. Now, look, I cover business and finance and I know it's not safe. You're talking about an incredibly risky asset class. Looking at the height of FTX and Sam Bankman-Fried's power, we can look at the Super Bowl of 2022. That was the moment where I would say cryptocurrencies really got on people's radar, right? Matt Damon did these crazy crypto.com ads and there were a lot of other advertisers and FTX was one of the big ones. I call it The Wheel. Hmm, I don't think so. What are you doing?

Wheel. Yeah, so does a bagel, okay? A muffin you can eat. The whole idea of ​​the Super Bowl ad with Larry David was like, oh, like throughout history there have been enemies, basically. People who don't see what the future holds for them. Edison, can I be honest with you? Eh, it sucks. As she said, it's FTX. It is an easy and safe way to enter the world of cryptocurrencies. Eh, I don't think so. And I'm never wrong about these things. Never. There was a question like, where does all this money come from? Sam and FTX were growing incredibly fast, but Sam's star was rising even faster than the exchange.

He for some reason decided to become the poster boy. It's not like Netflix's CEO is in every Netflix commercial, right? No one really thinks about the founders of most companies that most people use every day. At any American bank, ask the average consumer who banks at that bank, if they know the founder or the CEO, they won't say, "Oh yeah. I've seen all of their TikToks and YouTube videos." But Sam is front and center everywhere and I had a conference in Miami and the hotel I was staying at was across from FTX Stadium. When I went to San Francisco in July, it was like Sam and Gisele were staring at me from all these FTX mega ads.

And I see Sam's face at the bus stop. Oh my god, will this be my life now? The biggest flaw in my entire investing career is that he chases me non-stop. In the press they treated it as a really exciting story, a success story. One that you know provided, I would say, hope to the left. And even if you didn't agree with his politics, he was like a really interesting new kind of philanthropist, and that was exciting to a lot of people. I think the media had a bit of a love fest with him. He knew how to be flattering.

He was also extremely available. I think the media is definitely complicit in his rise. He said that he was aware of the fact that most people in his position would have journalists speak to their publicist first, but he made sure to always maintain an open line of communication with journalists. I will spend time talking to the press. I will dedicate time to interviews. I'll spend time on Twitter. I probably spend an hour or a day on Twitter. People wonder what was his secret to having such good press? He loved answering questions, he loved talking to reporters.

He would answer anything you asked him. Well, it's a good question. That is a good question. Yes, and it's a good question. That is a good question. It's a good question and, frankly... It's a good question. Well, that's a very good question. He wouldn't give you a canned answer. That apparent directness made him seem like a good person to write about. There was some kind of silly piece written by Sequoia. Sequoia is a big name in Silicon Valley. This is one of the best in terms of venture capital investors. And they had made a huge $200,000,000 bet on FTX.

The guy who wrote the article was clearly very taken with Sam. He crossed the line. He said: "As I was sitting there with Bankman-Fried, I realized that he was sitting with a future billionaire." One of the things they mentioned is that he was playing video games the entire time he was on this call with them, and everyone was very excited about it. They said, "Oh, wow, he's multitasking. He's focused on "League of Legends" while he talks to us. He's a genius." People love a wonderful guy, especially in the American context. If you had to design a marvel in a lab, you'd probably end up with someone like him.

He had the cool factor that people in Silicon Valley were looking for. He's like Mark Zuckerberg with his hoodies. I spoke to an FTX employee who asked Sam, "Why don't you get a haircut?" And he said, "I don't think it's a good idea financially for me to cut my hair." He was among the richest people in the world. Not only was he one of the richest people in the world, but he was a rich young man. It seemed very important to know and understand him and I think there was probably a fear of missing out on a profile of him when he seemed like such an important type of person, like a lynchpin in this industry.

SBF's reputation among those of us who work in crypto and are very active in crypto was not as positive as the mainstream media portrayed it. He was perceived rather as someone who was quite mercenary and a bit opportunistic. Already in 2020 I heard stories about how he mistreated counterparts who were in a weaker position. So I think a lot of us in crypto were a little more hesitant when it came to the kind of king status he was getting. I think a lot of us feel like maybe we should have spoken up, but at the same time it's hard when you have someone who becomes so popular and powerful so quickly.

And if you talk, you may not have all the evidence because a lot of this is based on hearsay. And then if you speak, you take a big risk. What's up, guys? I'm here with my boy Sam from FTX. We are at the Bahamas Crypto Conference. We'll start the day, make some TikToks for you and it'll be an amazing day. We will start. We will prepare with me. Sam, where are you going, brother? Crypto Bahamas was his big conference. They had hired Tony Blair and Bill Clinton to speak on this, presumably for huge speaking fees. Sam was going to interview them both on stage, and even by her leg-tapping standards, it was like his legs were going crazy.

It was like he had one leg and then he grabbed one leg and then the other leg started hitting. Like he grabs that leg. A point like Bill Clinton's almost like he patted you on the shoulder like, "Don't worry, buddy." Honestly, he was a little embarrassing. His interrogation was so bad that it was clear he hadn't prepared for it at all. The other strange thing about the conference was that many of the people I met there were promoting totally dubious schemes. It seemed incongruent with the way Sam liked to present the company. Being in the Bahamas brought Sam closer to the U.S.

He could travel more easily to Washington D.C., where he was doing a lot of lobbying. He had connected with policy makers and was helping to craft legislation. Sam was beginning to operate not only as a founder in the technological sphere in which we live, but he was negotiating directly with politicians, with world leaders, and that was serious. We have this genius kid who is now the face of the entire industry, he is leading the change of rules and regulations in the United States, he has the ears of politicians and regulators and whoever he wants. In 20 years we have never seen an industry that has caught up so quickly.

Shortly after the 2020 election a report came out that said he had donated a huge amount of money to Democrats. I think he was the second largest democratic donor. In fact, he spent $40,000,000 on racing. Hey, I made a donation to both parties. This year I donated about the same amount to both parties. This was not generally known because for some reason, in fact, no one can imagine the idea that someone in practice actually gave darkness. Then I do not know. All my Republican donations were obscure. People won't see them, and the reason was not for regulatory reasons.

It's because all the reporters freak out if you donate to a Republican because they're all super liberal and they didn't want to have that fight, so I made all the Republicans dark. And then in early 2022, he gave an interview in which he said that he would donate a billion dollars to the 2024 presidential campaign. Could you give a billion? Yeah, I think it's a decent thing to look at as kind of, I mean, I'd hate to say like a hard top because who knows what's going to happen between now and then, but at least as kind of a soft top. roof I would say yes.

One billion dollars and that's like 10 times what the biggest donor had ever been. When you talk about those numbers, when someone says, "I'm going to donate a billion dollars in the next two years, that gets everyone's attention." You have this guy who is on the edge of the law and at the same time is becoming part of the mainstream political establishment. My experience over the last 20 years was that I have been a financial regulator in the federal government. The advantage of being regulated if you are one of these companies is that ultimately financial institutions and traditional finance could invest in you and that is where the big dollars are.

Wall Street will not invest in cryptocurrencies until they are regulated. Many crypto people operate outside the rules. They often choose to operate in places where there are no rules. Cryptocurrencies have been poorly regulated in the United States. They often jump from one city or country to another depending on where they think is safest for them. FTX US it did much less and allowed its clients to do much less than you could do on the main exchange that only people abroad could use. But FTX U.S. It is a foothold in the most important financial market in the world.

Then suddenly cryptocurrency companies came in and said they wanted to be regulated. Number one is licensing regulation. That is the most important thing for our business. It is the most important thing for the industry right now. I met Mr. Bankman-Fried three times. He wanted to approve his request and needed my vote to do so. He had a fundamentally predatory model that was incredibly radical and dangerous. Better Markets is an independent nonprofit organization that advocates for the public interest in Washington D.C. Look, FTX had a two-pronged strategy in Washington. The first part was to buy and influence as many elected officials as possible to get the most favorable legislation possible, that is, the weakest legislation possible.

And the other way was to get the CFTC to approve this request. One of their talking points is that they are so different, so innovative that they basically need tailor-made regulation. Once you start digging into the technology, the types of commerce, the way the companies are set up, it seems very similar to other companies. So, I said, why would we deviate from what we know works? A couple of weeks before meeting with us, I received a phone call informing me that they were offering a million dollars or more if we supported their application at the CFTC.

Why do you think they spent hundreds of millions of dollars on marketing over the last few years? Why did you buy the Super Bowl ad? Why do they put their names on Major League Baseball umpires' uniforms? They wanted American retail to think about FTX, a legitimate, real, good place to do business. All of that was preparing the engine for the application that would be launched. The moment the request is approved, the application goes live, boom. Millions of FTX retail customers send tens of millions of dollars to FTX. CZ, Changpeng Zhao is his name. CZ is the founder and CEO of Binance, which is the largest and most liquid cryptocurrency exchange in the world.

Bitcoin cryptocurrencies in 2013, 2014, for me was one of those really unique opportunities where it was at an early stage, only a small number of people got it and it's going to be a great future. So I told myself I'm not going to miss it. That was the opportunity of a lifetime. CZ is a Chinese-Canadian businessman. He has been in crypto for a long time. He was also an investor in FTX. I think he saw them less as a competitor and more as if there was room for more of a major exchange. Binance was much bigger than FTX, but FTX was like Binance's main competitor.

These were two heavyweights in the cryptocurrency world. And Binance was like that a hyper aggressive exchange founded in China. And Binance founder CZ is incredibly similar to a pro-crypto billionaire guy. And Sampresented as an obstacle to that. Sam was American. Sam was giving money to American politicians. He was like the good guy to CZ's bad guy, right? That's how he processed himself at that time. He was trying to profile CZ. He lives in Dubai. Dubai, not everyone likes it, right? But it is an interesting place. It's this international city, really tall buildings and stuff. And I ask him, maybe CZ could tell me what he likes about Dubai, or show me around, give me a tour of the city.

This is your new home. He's very happy to be here and all CZ wanted to do was talk about his minivan. It's the kind of thing you'd wear to a VIP convoy. And I had bought this minivan because it had the same type of seats that you have in the cabin of a first class airplane, right? And he showed me, we're in the truck and there's like a couple of assistants in the back and CZ shows me how you can lower the seat, and he told me that he bought this truck because it was the only one where you could lower the seat completely. .

And he starts lowering the seat, presses the button and it's like, and it hits the knees of the guy behind us who's taking notes and the guy goes, "Ah!" And then CZ turns it over and opens it. But I thought it was pretty funny because he's so comfortable traveling internationally that he tries to replicate that even at his house. As I understand it, Sam's plan is that he is operating this type of offshore casino and would like the US government to give him a casino license. At some point the regulators will accept this and one of us will be the big winner, and Sam was trying to make that happen in the United States, which, of course, if you are legal in the United States, which the United States is. as the locus of the global financial system and I think CZ perceived it as a threat.

When we optimize our energy, it is much better for me to sit here and talk to all of you than to look at what FTX does or try to take market share away from you. For them, they may think it is bad to take away market share from us. But that's actually also a very, what do you call it? Limited mentality. They should try to grow the industry and not put pressure on other players. I don't think what FTX was doing was trying to kill its competitors. They were literally just trying to find a way to trade safely in the United States, and that is actually something that all exchanges were and are doing.

They just want to make sure they can have American investors in a way that is legal so they don't get sued for an inch of their lives. Whoever wins this market, whoever is first to market, will have a big advantage, but there is also something political going on where FTX presents itself as the American champion and gets the US government to keep Binance at arm's length for reasons policies. FTX has this token called FTT. This is typical of crypto companies and projects having their own affiliate token. So the FTT token is basically a token that gives you certain benefits on the exchange if you own it.

One of the strategies that FTX used and that Binance still uses is to issue a token for the exchange. The more you own, the less you pay in trading fees. In crypto, people often think of tokens as something like airline miles where if you use the product you get a reward, or when you have the stuff you can use it to pay for the product. So the value of that depends on how much you want to use FTX as an exchange. But the main thing Token does is trade and if people think the exchange is good then they could buy the token from that exchange as a way to stake on that exchange.

So if you are an exchange, you love issuing those tokens because they are essentially free to you. Let's say I create a coin, I'll call it Zeke Coin. Alright, now there are a billion Zeke Coins, I just did it. I just need to sell one of them to someone. It could be like my friend paid $1 and then the cost $1 times the bid, billion, made me a billionaire based on market value. And then I can go to banks that I like and say, "Hey, I'm a billionaire. Would you give me a loan?" But is it really worth that much?

I mean, in that sense it's kind of weird money. However, the problem is that the FTT token is not like Bitcoin or Ethereum, where the supply of the currency is completely fixed. With the FTT token, they were able to mint an absurd amount of tokens out of thin air and were able to change the supply of the tokens over time. For me, I always thought that the main aspect of a token like FTT is that FTX promised to use a portion of its trading revenue to buy back FTT tokens. And I think FTX said they were going to take a third of the proceeds and put it toward buying back the FTT tokens.

Therefore, people expected that the exchange would generate a lot of income and that their tokens would be bought back later at a higher price. Yes. I was actually in Singapore for about 10 years. Singapore had great regulation for hedge funds in general, but it was also very good for cryptocurrencies for a long period of time. Remains. So I settled there. We founded Three Arrows. We started it in 2012, focusing mainly on currencies and then we went completely crypto in 2018. We kept the business there and did a lot of trading, a lot of venture capital, a lot of investments.

Three AC was a crypto hedge fund, which is just another way of saying it was a giant pile of investment money. Let me tell you about Three Arrows Capital. These guys were like one of the biggest and most respected funds in crypto. And they were known as those brilliant traders who could do no wrong. These guys were kind of gods in the crypto space, right? They were idolized. And Sue was promoting this idea called the supercycle. The idea is more or less that the price of Bitcoin will never go down again. That will go up forever.

We just had this philosophy that as long as everything is going well, don't stop. Just keep going. I really thought we would all make it, and I think it was because I believed in the supercycle. I just thought there couldn't be such a big catastrophe because people would understand how bad it would be if we had big catastrophes. Everyone in the industry was saying, "This guy is a great trader, this is what's going to happen. And one of the things they were really into for a long time was this Terra and Luna ecosystem. There were two tokens involved.

One was called Terra, one was called Luna One of the things to understand about cryptocurrencies is that it's a way for people to find a community and Terra Luna for a while functioned very much like a meme stock, even within the cryptocurrency world. It was viewed with a lot of skepticism because it was paying an insane interest rate. It was clearly a Ponzi, so... A Ponzi is an investment that looks like a perpetual motion machine. It keeps paying high returns all the time. As new money keeps coming in and no one takes it out, it eventually runs out of people who want to invest and many crypto projects end up functioning as Ponzis even if they were not intended to.

Finally, when people started to get a little nervous about the value of this system and started trying to get their money out, it all came crashing down and collapsed spectacularly and spectacularly quickly. Three Arrows had borrowed so much money from so many different places that when they failed, it had a cascading impact on the cryptocurrency world. This was an event where $60 billion of market capitalization, two of the top 10 coins, were vaporized in a period of days. It was a very quick collapse for us and it was something we didn't really see coming. After the Luna collapse, there were many liquidity problems in all credit markets, so many companies that lent us to carry out these types of operations began to try to withdraw capital.

They owed people a lot of money and didn't have the money to pay it back. Once Terra Luna blew up and Three Arrows failed, all the people who had lent money to crypto funds said, "Hey, do we lend money to other people who are now bankrupt, like other people? Maybe we should ask everyone send the money." I come back just to check that they still have it, and then maybe we'll give it to them, lend it again later." Among the funds that were asked for their loans was Alameda. So, to these, as unrelated lenders, other companies It seemed to them that Alameda owed them several billion dollars.

And even though Alameda had not failed, the lenders said, "Hey, I just want to check, why don't you pay us back that money?" Let's make sure you can do it." So Alameda had to pay back billions of dollars in loans after Terra Luna collapsed. It didn't have the money. That's when, according to some of the other FTX executives, Caroline, Sam, Nishad and Gary got together and said, "What should we do? They asked us to send billions of dollars to lenders," and there were two options. Alameda could declare bankruptcy or they could tap FTX customer funds to pay off these loans.

And they decided, "You know what? Let's do it. Let's borrow the money from the clients' funds and we'll get it back later." I spoke to Sam about this and I was a little surprised because I thought he would deny that such a meeting had taken place. But he acknowledged that there had been this meeting, but he told me which just wasn't the case, it had seemed very important to him at the time. And that's where you get into the whole explanation of how Alameda was already borrowing money. Basically, Alameda was borrowing money from FTX and publishing its collateral FTT tokens.

Sam is reeling, as Alameda is struggling now and Sam's fame is rising. He comes out and puts up the facade that he is going to save the industry. Crypto FTX signed a deal with BlockFi today. The deal includes an option to buy the cryptocurrency lender. for up to $240,000,000. Increasingly, in the crypto community, you are known as the white knight. Anthony Scaramucci even told us that he considers him the J.P. Morgan of the industry. There's obviously a lot of turmoil right now. I think it's less about thinking about what we need here and more about identifying potential opportunities, if there are any, so that we can grow bigger and faster than we would by default.

This narrative began when Sam Bankman-Fried was the J.P. Morgan of cryptocurrencies. On the one hand he is being pressured, pressured by regulators, pressured by similar type of market conditions. And on the other hand, instead of basically going into survival mode, he's trying to somehow rise above it. You start to see the people in the Sam Bankman-Fried empire start to drift away. Brett Harrison, who was the CEO of FTX U.S., is leaving. Let's start with the news of the day with the departure of Brett Harrison. What exactly is happening? How long has this been in the works and where does it leave FTX U.S.?

Yeah, I mean it's not the kind of thing that would be made public if it hadn't been in the works for a while. Sam Trabucco, co-CEO of Alameda, is also leaving. He said something like, "I just want to sail my boat fast on nice water." One thing I definitely learned was how to manage a team. I knew how to manage a team when everyone was happy, but I had no idea how to manage a team when there was stress, when people were unhappy with each other, when there was conflict. I was presented with times when our team members disagreed with each other, especially me, and I didn't know what to do when people couldn't reconcile.

In the beginning, the level of cooperation even between competitors like CZ and Sam was largely cooperation because they were just starting out in the industry. They were the co-founders, so to speak. They were the two giants. Sam didn't think about what would happen if he sold 20% to CZ, but that's basically what he did. I think it's entirely possible that CZ invested in Sam from the beginning because he perceived him as a competitor and because having interest in a competitor was a good idea and he was also able to use that to stop certain aspects of Sam's plan.

That investment was truly a poison pill. Since Binance is a competitor, I think they knew that by taking a 20% stake, they could effectively block FTX's progress any time they wanted. So he's telling me this story. He begins trying to obtain licenses to operate in several countries in Europe and North America. And they ask: "Who is part of the company? Who owns it?" 20% CZ. That is why he has to reveal everything about who he is, where he is and where he has his assets. So he calls CZ and says, "Hey, look, we're trying to get this request.

You have to disclose it." And he said, "No, I'm not going to reveal it." He said, "Why?" Now, I don't know what CZ was doing here. No one does, only CZ, but he simply refused to comply. He's probably talking to management about him and now I'm speculating, but I think it probably all happened this way. What do we do with the CZ type? He's just not going to cooperate with us. He is a big shareholder. Someone probably said, "Sam, you have to buy it, you have to get rid of it." He seemsthat CZ took advantage of that to buy his position with a return on his investment of approximately 20 times.

That deal was closed for $2.1 billion. Nobody knew. And I only found out a few weeks ago because when Sam told me that, I said, "Wait a second, wait a second. You gave all your assets to CZ? How much of it was cash? I mean, you stripped off the balance sheet." of cash to buy this guy because he was playing hardball with you and not complying with regulators. Was that planned? What's that? FTT Tokens A story appears on CoinDesk about Alameda's balance sheet and the story has to do with the native FTX token and how Alameda has a lot of that on its balance sheet.

Speculation about FTX's solvency increased over the weekend. A report from CoinDesk revealed that Alameda Research's balance sheet is full of FTX's native FTT token. So, that story comes to light and then the next step is that CZ on the Binance exchange tweets that because of what has come to light, he's looking to sell a ton of. FTT CEO Changpeng CZ Zhao, a major holder of the FTT token, said his exchange would begin liquidating any remaining FTT he had on his books. Suddenly this report from CoinDesk, right? Which we don't know where it comes from, obviously it could have been leaked by a competitor, it could not be credible.

But now we're looking at a guy who is an investor in FTX who has a close relationship with Sam Bankman-Fried saying, "Yeah, there's something here and I'm going to get out of it." And as people lose faith in the exchange, a kind of bank run occurs where people try to withdraw assets. So many people are withdrawing that they are actually preventing people from even being able to withdraw their assets. That makes the panic spread even more and ask: Does FTX have enough money to give me back what is rightfully mine? The value of the stash of these tokens in Alameda was hundreds of millions of dollars.

But they were saying, "Look at our balance sheet, it's very good. We have hundreds of millions of dollars of these tokens and no one wanted to pay that amount of money for them." Crypto exchange Binance announced a deal to buy rival FTX.com. Glen Goodman, eToro's crypto consultant, joins us now to explain this. Glen, I just want to make sure I understand this correctly. We see Binance selling FTX tokens after a report last week, which questions the credibility of the business, which then sparks a liquidity story, which is then resolved when Binance steps in and buys FTX.com.

I have it clear? If so, this feels like the Wild West. Yes, you are quite right and it could be a masterful chess move, like one of the best corporate chess moves I have ever seen from Changpeng Zhao, the boss of Binance, or he just got into this position by accident and is now is benefiting from it. Binance when Binance comes in and takes a closer look at FTX and the FTX balance sheet total is so huge that CZ pulls out of this deal within 24 hours. Things really took a turn for FTX after a deal to sell the exchange to its main rival fell through.

Sam Bankman-Fried is hitting the pavement again, asking for money to keep FTX afloat after Binance canceled the deal to buy it, only this time everyone has a much better idea of ​​how bad things are. I sat down with Binance's chief strategy officer here in Chicago. He basically said that he was surprised by what they saw when they looked at FTX's numbers. Bankman-Fried told investors that the company faces a liquidity shortfall of around $8 billion. Many traditional financial observers look at this situation and have been saying for months that Sam is insolvent, right? He just judging by the actions, but the crypto industry itself couldn't properly digest that and instead said, "It's probably fine." He is the J.P.

Morgan in crypto. I guess CZ saw this as a great opportunity, right? He says: I'm going to sell all this, I'm going to crash your currency, probably make you a little insolvent and you won't be able to handle your clients' withdrawals anymore. Now I can buy you and I'll be done with you forever. However, we know that after he did this, he looked at the books and said, "My God, there's a huge $8 billion hole here. I'm not buying this entity at all. So you take away the guy's entire balance sheet." ". cash from him, he waits until there is a question about liquidity and hits him with the 550 million.

Poof, gone. He is brilliant, brilliant, brilliant, brilliant. Tonight, the cryptocurrency world is reeling after the collapse of one of its most popular operations. platforms The Exchange FTX filed for bankruptcy today. Cryptocurrency king Sam Bankman-Fried resigned as CEO of a bankrupt $32 billion company in just four days. This bankruptcy filing includes the Bankman-Fried quad business venture. , Alameda Research and 134 affiliated companies worldwide. There are places like Nigeria and Uganda, South Africa. I mean, everything is fair, love and war. I think there will be people who. Blame Binance for killing off FTX, right? I think this is all nonsense because I think even at the time CZ made that tweet, Sam still could have stopped trading him and restructured.

Sam tweeted: "At some point I might have more to say about a particular sparring partner, so to speak, but you know, glass houses. So for now all I'm saying is you played well, you won." Can you answer that? I think only a psychopath could write that tweet. So basically, in the span of a week, people's entire notion and understanding of who SBF is has completely changed. Basically, Sam has become a villain in everyone's minds. He was supposed to be a responsible guy who rescued people, and he needs a rescue? Who is this person? I also don't think he's the complete and utter super villain that he's been portrayed as in some posts and in some groups on Twitter, obviously.

These are people specifically who are on what we call crypto Twitter. It's not a real place, but it's kind of a place on Twitter where people interested in cryptocurrencies congregate, and what we've seen is that 96% of those people believe that SBF is a bad person. He needs to be held accountable and does not deserve a second chance in the cryptocurrency world. It just seemed like he was trying to do good to gain people's trust and there was really no authenticity, he always talked about how he wanted to give everything away and that people wanted to take care of him and then he drove like a Corolla, but it's worth like $10,000. 000,000.

There's a narrative that's telling that, right? And it just wasn't believable. You can say. After the bankruptcy, people expect Sam to stay off the grid. He probably won't want to talk to anyone until he sorts this out with his lawyers, but what he does is the complete opposite of what you'd expect. He's fucking ridiculous. I mean, look, I screwed up a lot of things. I absolutely did and I deserve a lot of shit for it. I should have been aware of this and I feel very, very bad and sorry that I wasn't and that a lot of people got hurt and that's on me.

He begins doing this round of interviews with absolutely every media outlet under the sun giving his version of what happened. There was oversight, failures, transparency failures, reporting like so many things we should have implemented. There was this moment for a month, right? He's in the attic, his world has gotten very small, and doing all those interviews in which he apologizes seems completely divorced from his own reality. And I think, how did that happen? Why did he process it in such a strange way? It's because I think for a long time he had been there, everything had been like an abstraction.

There is no world in which Sam's advisors, the people managing his crisis, told him that he was going to talk more. He seems to think that since he convinced him to talk his way into all this wealth, he can talk his way out of it. And, in fact, he continued to make things worse. What are your lawyers telling you right now? Are they suggesting that it is a good idea for you to speak up? No, they are not at all. And I think I have a duty to talk to people, I have a duty to explain what happened.

And he wasn't telling people what happened and seemed unpleasant and stuck up. He certainly showed regret but not remorse. I mean, he doesn't feel good right now. His lawyers definitely didn't want him to talk. After that they said, "Sam, we only have one thing to tell you. You have to promise me that you will never, ever say that you screwed up again. I tell them to fuck off. I don't." I don't think they know what they're talking about. I mean, whatever. They know what they are talking about in an extremely limited scope of litigation. They don't understand the broader context of the world.

This is like getting a listener to the point where their eyes glaze over and they stop listening. You would say, huh? Did I really get an answer to what I just asked? I am not a cryptocurrency expert. I'm not a financial expert Yes, but I don't think you answered my question. I always ask: Yes, did you know that FTX deposits were used to pay Alameda's creditors? Twitter and I were one of six people invited to ask SBF some questions. You described these client funds being sent to Alameda Research. Can you help me understand why that is not electronic fraud?

I'm sorry. To be clear, I will no longer be answering your questions after this. This is not a constructive approach, but I will answer your question. None of that has been like that. None of that was the case, Sam. You don't answer questions. I understand. No... I understand, so I'm going to answer this question. No you are not. Okay, I won't do it if you don't want me to. I listened to the rest of the questions and this was it: he was arrested five hours later. Samuel Bankman-Fried, former CEO of now-bankrupt cryptocurrency exchange FTX, was arrested today in the Bahamas.

This morning we unsealed an eight-count indictment charging Samuel Bankman-Fried with a series of interrelated fraud schemes that contributed to the collapse of FTX. We obtained an arrest warrant for him and that arrest was executed yesterday in The Bahamas. Everyone was waiting for the charges against SBF to finally be dropped, and when the charges arrive, they are numerous and somewhat shocking. He was charged with wire fraud, securities fraud, commodity fraud and also campaign finance violations. Bankman-Fried and his accomplices stole billions of dollars from FTX customers. He used that money for his personal benefit, including to make personal investments and cover expenses and debts of his hedge fund, Alameda Research.

Bankman-Fried, arrested last night in The Bahamas, faces eight criminal charges in the United States. Authorities allege he defrauded investors by funneling clients' money into his own hedge fund behind his back. As a result, they say $8,000,000 has disappeared. We hear from John J. Ray, this is the guy who is now the new CEO of FTX, who reveals this impressive list of accusations against SBF. This is the guy who oversaw the liquidation of Enron and he says he's never seen anything like it. Mr. Ray, you have compared FTX to being worse than Enron. There is literally no record kept.

Employees would communicate billing and expenses in Slack. They use QuickBooks, a multi-million dollar company that uses QuickBooks. Quick books? Quick books. There is no voice of the people that has really been represented in this. I mean, people forget about retail investors who in many cases have lost their life savings. I had about half a million dollars in FTX when it crashed. I lost more than 1.5 million. 180 thousand dollars 100,000 dollars. 80,000 more. I lost $50,000. He had just over $2,000,000. We understand that a judge in that court has denied his request for bail, stating that he is too much of a flight risk.

When they put him in that prison, yeah, I mean it's the first reality he's had to deal with, I don't know, maybe in his entire life, but certainly the first reality he's had to deal with in years. It must have been a shock. Bankman-Fried's hearings in a Bahamian court will resume tomorrow and he is expected to drop his fight against extradition to the United States. I announce that Samuel Bankman-Fried is now in FBI custody. He will be transported directly to the Southern District of New York and will appear before a judge in this district as soon as possible.

During the night, his plane landed at an airport in Westchester, New York, just outside New York City. Meanwhile, two of Bankman-Fried's former aides are pleading guilty to charges brought against them in connection with the collapse of the cryptocurrency companies. The Southern District of New York has filed charges against Caroline Ellison, former CEO of Alameda Research, and Gary Wang, co-founder of FTX, both of whom are cooperating with the Southern District of New York. Sam Bankman-Fried faces trial. He is free on $250,000,000 bail. He is on house arrest and awaiting trial in 2023. What's up guys? It's me, Tiff, and a few days ago, on December 27, 2022, I spoke with Sam Bankman-Fried in person for the first time at his parents' house in Palo Alto, California.

For thoseOf you who have no idea who the fuck I am, this was not a random encounter. I interviewed Sam twice in the past. I have visited him twice so far under house arrest. He seems like a relatively messy and chaotic person. There was like some clothes thrown on the floor. He looks as if he dragged his blankets and a pillow to the library. It seems like he's been sleeping there, so it seems like he's been chaotically writing down his memories of events and sleeping in that room and probably waking up and just writing more and taking more stock.

I didn't talk to his parents at all, but his father poked her head around the door. We were mostly in his library and just talking. A lot of news came out that we were trying to paint the picture of me meeting Sam for a sex date or something. I don't know, I think he's obviously ridiculous and frustrating, but I'm also sure he's kind of a lonely guy. I'm like, I'm sure you don't care about him, like a girl, like, "Hey, can I come?" And he's like a lonely guy in his parents' house. Watch this. Oh, Sam.

In fact, we've talked quite a bit about his mental health and his depression. I mean, he uses Emsam patches, I think they're antidepressant patches. He said that he has almost always been depressed, but he describes it more as anhedonia or feeling anhedonic. He mainly says that he doesn't feel happiness or too many positive emotions. The world is disordered. That's just the way it is and it's sad that it's complicated and I think it can be very frustrating, slow things down, slow people down and cause a lot of damage, but it's also an opportunity to try to make it better.

FTX was a good business, so I thought why would Sam throw this all away? The answer could be that Sam simply took incredible risks and didn't really care at all about the downsides. I've seen people respond to my tweets sometimes and say, "It takes a scammer to know a scammer," and I think the irony is that I don't think he's a scammer, but at the same time he understood what I was trying to do. I don't think at any point he even had a conception of whether he was right or wrong. I think he just had the mentality that he had to win.

I remember at one point, when they were describing the five to 10 million trade bug, they mentioned that it was like he just erased his hit points, his HP. You know, like in Pokémon or a video game, you have HP points and if your Pokémon's HP points reach zero, they pass out and you have to wake up in the Pokémon Hospital or something. A lot of people look at you and see Bernie Madoff. Yeah. I mean, I don't think he's who I am at all, but I understand why they say that. For years I had a lot of self-doubt as a venture capitalist and thought, "Do I need to do better or do I need to learn from this situation?" So, I have to say, in some ways, it feels really good to know that my instinct was right here.

But on the other hand, this was a horrible setback for our industry and is certainly a black mark. I think this will probably go down in history as one of the biggest, if not the biggest, financial crimes ever seen. The size, the scale. Millions of people were affected by this. School teachers, regulators and congressmen. Is incredible. I think the FTX debacle in DC will definitely cause a problem. Congress will attack this industry with just pincers. We have seen a much more aggressive stance from US regulators. We're also seeing traditional financial institutions, like the Wall Street banks, BlackRock, Fidelity, Citadel, starting to make their own kinds of pitches in crypto and saying, "Hey, there are areas of this that look really interesting." I would say that 95% to 98% of everything related to cryptocurrencies is just garbage, and then 1% to 4% is valuable, and then 0.1% is revolutionary.

At this point, so many people have spent so much time working in cryptocurrencies that it would be a bit surprising if nothing lasting good came out of cryptocurrencies. But Bitcoin is as old as Uber, it's as old as WhatsApp. It has existed and are you using it for something? Let's say the number stops increasing, what do I gain from this? Why would anyone use this? What is the point? The code itself, the Bitcoin software. That's all. It's just software. It is not nefarious, it has no bad intentions. It's all the people around you who do all these things because they're unregulated in unregulated places and they do what they want.

That's going to end. What is the difference between FTX and Enron? Nothing. It's not going to change. Energy markets did not change after Enron. It's just a bump in the road, will this be the last of its kind? No, this is the nature of capitalism. Get over. It seems very difficult to ever say the end of cryptocurrencies, but it was undoubtedly an existential crisis. Some people are willing to pick up and continue to advance the ecosystem. And I would say it's probably worth being a little more thoughtful for everyone involved. Finances are something that is truly an integral part of all of our lives.

It touches on technology, society, politics and power dynamics. It touches people's emotions. I'm not trying to say that money is religion, but in many ways it is something that people could put on that pedestal that would otherwise be occupied by God. There is an element that people should understand about the human condition that has been here since the beginning of time. Greed. Greed is powerful. You have to spend your whole life controlling it. I don't think I give a shit about my legacy. That's not what matters. I think what matters is the impact I have on the world in the end.

It doesn't matter if I make the world better or if someone else does. Better is better and if I can do something to help other people help the world, that's just as good. So obviously a part of me would love for my legacy to be generically positive, but I don't think that's what matters. In the end, what matters is the footprint we actually leave on the world, not the footprint we are perceived to leave on the world.