The FTX Disaster Part 1

Crypto has been rocked over the last few days by the biggest disaster ever to hit the industry. While it has experienced its fair share of crises over its short history, the collapse of FTX and Alameda Research is the gravest challenge crypto has faced thus far and the true extent of the damage may not become apparent for some time.

 

In today’s episode, Mike and Guy sit down to talk through what happened and what may come next. Many of the details are still unclear and new information is coming to light every day, so much of what’s discussed here will be focused on the background to this whole debacle. 

 

You’ll hear about the origins of Alameda Research and FTX, as well as the story of the man who founded them both and is ultimately responsible for their collapse. You’ll also hear about how concerns about Alameda started to bubble up at the beginning of November and how both it and the world’s second-largest crypto exchange were essentially brought down by a single tweet.

 

We’ll update you with more information on this extraordinary, tragic story next week. New twists and turns occur daily, while rumour, speculation, vitriol and despair swirl around the crypto community. Make no mistake, this is crypto history unfolding before our eyes. 

 

We hope you enjoy the show.

 

Executive Producer for iHeartMedia: Noel Brown

Editor: Sam Moult

Theme music composed by: Noel Brown

 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
The Coin Bureau Podcast is a production of My Heart Radio.
Do you let something that you know to be rotten?
Do you let that carry on? I mean people of
people could have carried on pouring money into ft X.
I mean this is this is a company that was
making f t X, was making eight figures every single day.

(00:30):
Welcome everyone to the coin Bureau Podcast. My name is
Guy and I am here with my very dear friend
Matt Mike Mooch. Hey, how are you? I've got to
be honest, I have been better. It has It has
been you know, one of those questions when you ask

(00:50):
and it's kind of like it's it's rhetorical. You know,
we're all feeling it at the moment um, and and
things are not as rosie as maybe we've painted on
some of the other podcasts, which always end in upbeat,
glowing sort of horizons. But yeah, this this week has

(01:11):
been crypto interesting. I think cryptoged. If you thought Enron
was big, do you know what it's interesting you should
say that because this, like a lot of people have
been saying, this is Crypto's Enron, And like the parallels

(01:33):
don't end there. Because the guy actually now brought in
two clean up f t X, you know, to basically
oversee it being wound down. It's the same guy who
was brought in to do that with anyone. Um, so yeah,
there are some there are some uncomfortable parallels. Anyhow, for
for anyone listening, I don't know. I imagine most people

(01:55):
listening to this will kind of have as at the
very least of a guy year of what has gone down.
But for those, the breaking news is Mount Cox is over.
Mount Cox is no longer the biggest catastrophe in all
of crypto. Mount Cox has been booted down the rankings. Yes,

(02:15):
so to quickly recap last week f t X, which
was the second biggest crypto exchange in the world, it collapsed.
And it is safe to say that not many people
saw this coming and it has. It has hit the

(02:37):
crypto industry like a bomb, like an atomic bomb. Really,
and yeah, there is a lot too, There is a
lot to unpack. And I should say at this point, Mikey,
it goes without saying really, but obviously this is a situation.
We're recording this on Tuesday, November. This all started happening

(02:58):
about a week ago, and as we speak, this is
going to be going out a few days later on
the Friday as we speak. Obviously things are happening, so
there will be this story will have kind of developed
by the time people are listening to it. But I
think maybe you'll be fixed. You never know. Wow, that

(03:19):
is that is optimism. I didn't know you possessed sir. Yeah. Maybe,
but I would say the chances of that are so
infintestable that we may as well. We may as well
park that right now. But hey, stranger happened. And you
know what, Mikey like this week, some of the things

(03:39):
that have happened this last week or so have been
so extraordinary that I I am literally willing to believe
pretty much anything I hear at the moment. My critical
thinking has taken such a battering because some of this
stuff is like you literally couldn't make it up. So
what I thought? We did a fire first of crypto this? Yeah, yeah,

(04:02):
I think that's I think that's a good one. I
think that's a good one. Did did fire festival happen
in the Bahamas? Yes? Okay, yeah, it did happen in
on some on some island. That was Pablo Escobars or wasn't.
I don't know. Yeah, yeah, okay, Well f t X
was what's left of it still is based in the Bahamas,

(04:25):
so yeah, there's a there's a definite parallel there. There's
there's several parallels. So anyhow, what I thought i'd do today,
I I remember messaging you sort of a few days
ago and being like, are you you are aware of
what is happening? And I got to sort of guarded
yes in reply. So what I thought this would be

(04:45):
a useful episode to do was I would bring you
up to speed with what happened, um and give you
a bit of background, give you and the listeners a
bit of background into into what's been going on, how
this was able to happen, and maybe kind of speculate
on where exactly we go from here, because this is

(05:06):
a real kind of the crypto industry itself. I think
it's fair to say it's kind of going through like
a massive existential crisis at the moment. And this at
the end of a year which has already been like
quite a part of you know, without FDx happening, this
would still have been one of the worst years for
crypto ever. So it's it's it's only getting worse. So

(05:30):
it's it's a difficult time for the industry. So I
think it might be, you know, it might be good
to come of look ahead and try and try and
speculate where where we're going and what might happen next,
and if they're you know, how we can possibly try
and move forward from this, you know, as an industry sector,

(05:50):
because we will and you know we have to and
we will. But my word, there's a lot of this
is a this is a hard one to to slow.
It really is, it really is, and we'll we'll get
into why that is in a moment or so. I also, Mikey, like,
I know, I know you and I have been talking
crypto for for a while now, and so I wouldn't

(06:13):
classify you as like, yeah, a complete outside of the crypto,
a complete new because obviously 're not. And actually, I
mean you've been buying crypto for for for longer than
I have. But I wouldn't say, I wouldn't say you
quite have the status of an industry insider just because
you sort of oh, well, I'm I'm insulted, but also

(06:33):
agree I have you know, I've I've had the opportunity
when we were at Bitcoin Miami and when when I've
been I've been around you and the guys at coin Bureau,
I often think to myself, you know, I've got a
really big opportunity to immerse myself in among some crypto
uh sort of sages, and then I get distracted by

(06:56):
anything else and and and ignore that giant opportunity and
carrying on with my life. Willie nially, So, yeah, I
have the opportunity to to to learn a lot, but
I choose not to. Sure, Okay, And I mean, yeah,
I guess. I guess the crypto industry sort of held
out its hand and said, come on in, Mikey, come

(07:18):
on in, and you you sort of ignored it. And
I bet you're feeling pretty pretty pleased about that at
this Well, if I was paying attention, I would be,
but I haven't, so I'm indifferent. Okay, Okay, Well, I'm
I'm gonna say, I'm gonna I'm gonna classify you as
a kind of as an outsider looking in. Albeit. Yeah,

(07:39):
I'm a casual I'm a casual crypto fan. I suppose observer.
So I'm there for the heavyweight battles, and I think
one of the heavyweights is down for the count at
the moment, one of the heavyweights is splattered all over
the canvas at the moment. Yeah, So as I'm keen
Mikey sort of after or I've kind of talked you

(08:00):
through what has happened, and as I say, like, there
is so much more to this story. So anyone listening,
you know, a few days from when we record this,
there will be other stuff. So we'll keep you up
to date on our other models. But I'd be interested,
Mikey at the end of this once I've explained it
a little bit too, to get your thoughts on not
only this instant, not only what's happened over the last

(08:22):
week or so, but kind of how this makes crypto
look and outsider's view of crypto, because I think one
for me, one of us, one of the hardest things
to bear about all this is that it is just
the worst advertisement for an industry that I that I
love and care very deeply about, and it just looks

(08:43):
so bad at the moment, or that's how I see it.
So yeah, just part that for the time being, and
then maybe you know, I just want to say that
that is the equivalent of you know, someone on the news,
you know there has been some great tragedy or something
like that, and they just go to some every man
in the street who has absolutely no idea, has no
grounding or perspective on the topic, and they asked him

(09:05):
for a sound bite of what has happened. And they
are looking for something deep and meaningful, and just what
gets regurgitated is just just drivel. So I'm i'm I'm
I'm honored. But also if I was a listener, I'd
be insulted that you're asking me for my opinion. And
that's all we've got time for this week, folks. I'm

(09:26):
talking my way out of this podcast very quickly. No, no, no,
I I know what you mean. I'm interested in crypto UM.
I skim it. I don't live and breathe it like
like you guys do. Uh. And but there have been
ripples that were sort of the way I noticed it
was the memes, do you know what I mean? I saw,

(09:47):
I saw, I was. I was on LinkedIn actually, UM
and I saw some people posting about the toxic um
uh work like sleep at work sort of memes that
were happening and how that sort of and I just
saw someone's comments and saying, we well, look we can
all see how that turned out. Um, and it's later

(10:11):
come to light that it was in reference to the
head of the f F F t X or whatever
sleeping on a beam bag or something like that. Yeah. Yeah,
that's that's how I got the news. Well, this is
the twenty one century after all. Yeah. So, I mean
like you're going to very much be that man in
the street asked to ask to share his drivel, share

(10:32):
the inside of his brain with And I'm not going
to try and say something too bigoted is essentially what
That's what I'm going to do. If you could do
your best, that would be great. I mean if you can't, um,
and we'll have a discussion about your contract after that. Okay,
So all right, well you mentioned, um, you mentioned Sam

(10:54):
Bankman Freed, not by name, but the guy you're talking about, yeah,
is the head was the head of F t X,
And I think it's probably good to start with him, um,
because this is the guy, like you know, this is
the guy at at whom every finger is pointing at
the moment, and rightly so. So I think let's let's

(11:16):
start with SPF. So, um, Sam Bankman Fried, Okay, Now
he is I guess you'd say a relative newcomer to
the crypto industry. He's not a crypto o g in
any way, shape or form, and he kind of first
came to prominence a kind of around and I'll give

(11:40):
you a bit of background on him. He's he's the
child of Stanford law professors who seemed to be very
very well connected with people in Washington, with people in
kind of us you know, US regulatory circles if you
like um, and with people I think with the Democratic

(12:01):
Party as well, which is which is something that's you know,
it caused a lot of incited a lot of attention
over the last few days as well. We'll get back
to that. Anyhow, he graduated from from M I T.
And he went to work for a kind of traditional
finance trading company called Jane Street. And he was working

(12:22):
there for a few years kind of doing you know,
kind of regular fire trading stuff, and one way or another,
discovered crypto and he realized that there was an easy
way to make money. Now, this is not what this
is not the sort of easy way that that that
a lot of people discovered. This was something he basically
realized that bitcoin on exchanges in Japan and I think

(12:50):
South Korea as well, was actually trading at a lower
price than it was on exchanges in the United States.
So or was it the other way around. Yes, no,
that's right. Bitcoin was more expensive in Japan than it
was in the United States. So he would buy bitcoin
on US exchanges and sell it on Japanese exchanges. This

(13:13):
is a you know, a classic kind of arbitrage trade,
and he would pocket the difference, and he set up
a company to do this that he called Alameda Research. Now,
one of the interesting things is Alometer Research obviously sounds like,
you know it kind of you know, very kind of
high brow, the recert thing obviously, and as he pointed

(13:36):
out in an interview after the fact, he said, well,
I called it that because in order to attract investment,
because if we called ourselves ourselves shipcoin trading company, then
no one would have no one would have invested. So yeah,
he was. So this grew from like, you know, this
this bitcoin arbitrage trade, and it grew, you know that

(13:59):
by this point they were they were trading lots of
different crypto is not just not just bitcoin, and they
made a ton of money doing it. They apparently started
with two hundred dollars and basically traded it up to
two millions, even billions, and Alameda he should sell a course,
actually make some money. Now, well, he's going to have

(14:21):
a good money from somewhere. He's got a big old,
big old hole to plug. So Alameda Research. Now we'll
come back to Alameda Research because this is this is
very much central to the whole story anyhow, Sam Bankman
Fried SPF and you know, you know, someone in crypto
is powerful when they start getting known by their just
their initials. F became one of the most well known

(14:44):
figures in all of crypto. And I don't know if
you've seen pictures of him. I don't know if you're
kind of familiar with what he looks like, but he's
basically Yeah, he's quite young, isn't he, or twenty nine
or something when he started it all. Yeah, he was
very he's I think he's just turned thirty and he
became I I think it may be fair to say
he became the youngest billionaire ever quite you know, quite recently. Um,

(15:08):
And yeah, he he's very sort of distinctive. He's got
this huge kind of mess of sort of curly blue
yeah boufony hair, um, and he became famous for sort
of just kind of dressing shorts and T shirt, you know,
not not noted for his dress sense or noted for
his dress all the wrong way. And but basically he

(15:30):
became one of the most well known figures in crypto,
very very well connected, not just through his parents but
also through contacts you know, at previous places that he'd
worked and and through M I. T as well. And
what this meant was that he spent increasingly a lot
of time in Washington sort of talking to US regulators,
and he was very much kind of front and center,

(15:51):
if you like, of the crypto industries efforts to kind
of engage with regulators in the United States to try
and kind of yeah, it gets worse, it gets worse.
So yeah, he was not the I wouldn't say he
was necessarily the poster poster child for the crypto industry,

(16:11):
but he was certainly one of its most well known figures.
And you know, there's there's there's no getting around that.
And obviously he attracted you know, a lot of people
admired him very much. A lot of people disliked him,
um intensely because you know, for various reasons, A few
more now maybe. Yeah, well, I was gonna, I mean, Mikey,

(16:33):
I've got some bad news to break to you here.
I think it's fair to say that he is now
he has taken that title of the most hated person
in crypto. So I'm afraid that titles seems to be
changing hands by the week. Yeah, yeah, the Yeah, I
think I can't see oh my word, I feel I

(16:56):
feel like I'm just tempting fate by saying this. I
can't see it changing hands again anytime soon. But I'm
fully clip it up. I fully prepared for that statement
to come back and haunt me. Yeah, it's sort of
it went from do kuon to you know, the founder
of Terror. It went it sort of past to Alex Mazinski,

(17:17):
the founder of Celsius. If it passed to the guys
who were in charge of Three Arrows Capital. It's been
kind of kicked around like a football, but it has
come to rest very much like a hundred meter relay race. Basically,
they're just passing that baton of hate and hopefully this
is the home stretch. Yeah yeah, I think I think

(17:37):
SPF is the man to take that bat on over
the line, certainly for two. But he this is crypto,
so let's not let's not rule anything out anyhow. So
SPF was kind of seen by it came to be
also seen by many as a kind of white Knight
of crypto. And this was in the wake of the
terror collapse. Now you'll remember this. This feels like ancient

(17:58):
history now because so much has happened this year. But
you'll recall in May this year was the last time
crypto is in absolute crisis, and that was the collapse
of terror, and that saw you know a lot of
contagions spreading through the industry, a lot of crypto companies
that were exposed to terror, and it's us T stable kin.
A lot of them kind of faced going to the wall,

(18:19):
and an SPF kind of charged in a bit like
a white knight and sort of to the rescue of
a lot of these companies. Um, now we'll come back
to terror because this is this very one thing that's
become clear over the last week or so is that
this collapse of f t X and Alameter Research is

(18:42):
very much as a result of terror. These things are
all interlinked, so linked in it's another domino effect that's happened. Yeah,
it's just this domino is that is kind of has
fallen a sort of a lot later on, and it's
a lot lot bigger than the previous domin those anyhow,

(19:02):
So yeah, he SPF kind of made himself quite popular
obviously also attracted a few enemies, as someone in that
position would do. Um. He was well known for donating
lots of money to political causes, and I think he
was the second largest donor to Biden's campaign in presidential
campaign back in I think the second second largest year.

(19:26):
He donated a serious amount of money to that campaign.
I think only George Soros, I think was the was
the largest and an SPF was in second. And I
should say he has donated to to to Republican causes
as well. But he's most well known for being a
big Democrat and Biden donor, and he has a lot

(19:47):
of ties to people who you would say move in
that circle. So he's been he's been kind of pictured
on stage that there are lots of pictures of him.
He at a at a FTX conference which I think
was large last year. He was on stage talking with
Bill Clinton and Tony Blair. And yes, so he's very much,

(20:08):
if you like, associated with kind of people on the
left of politics, or certainly you know, towards the left
of the political spectrum. And a few other things to
know about him, Um, he is he's a believer in
something called effective altruism, which is a kind of it's
hard to describe. It's a kind of philanthropic movement that

(20:30):
that kind of aims to give give money away sort
of in a in a kind of more efficient manner.
I think it's very much a data driven philosophy. It's
kind of circumnavigating the bureaucracy of a lot of traditional charities. Yeah,
I think so. I think so. And it's sort of
a but you know, it's very much a philanthropic endeavor obviously,
and he was well known for kind of talking about

(20:52):
it and making a big thing of it and as
many people will now say, kind of virtue signaling out
of it. But you know, he was, he was, He
publicized that that side of himself, and he was he
was again kind of famous. F t X set up
its headquarters in the Bahamas, and he was sort of
known to be basically living in um this kind of

(21:13):
shared house with a lot of his buddies from m
I t from Jane Street and from elsewhere, um who
helped him run f t X and Alameda. And yeah,
he was famous for kind of sleeping on a bean
bag in the f t X offices and just generally
being you know, very eccentric, very very you know, well known. Um,

(21:36):
you know you couldn't you couldn't miss him basically for
all sorts of reasons. And I think it's worth just
repeating this from his kind of from his Wikipedia page.
This is the personal life section of his Wikipedia page. Um,
assuming it hasn't been altered and defaced, but quote bankman

(21:57):
Fried is vegan. He lives in a penthouse in the
Bahamas with about ten roommates. He has a love for
the video game League of Legends, and allegedly played the
game while on a call attempting to secure an investment
from Sequoia Capital, a big sort of VC fan. Anation
by The Financial Times characterized Bankman Freed's win ratios in

(22:19):
League of Legends as average too bad. Anonymous employees of
f and Alameda reportedly told Coin Desk that bankman Freed
was dating coworker Caroline Ellison. Now this there's some of these,
but some of this may sound a little inconsequential, but
in light of everything that's that's kind of gone on,
it is actually it is actually all quite important. I mean,

(22:41):
I don't think that that League of Legends win ratio
is really how I like, that's what I need to
know what the CEO has win reissues before I invest
in any company. Absolutely, I mean, you know bad too,
what was it average to bad? Massive red flag? I'm
not investing if only we've known. Yes, But there's also
an argument saying that, well, if it's that bad, he's

(23:04):
obviously not spending that much time doing it, so that
could be a positive. Like it's it's what perspective do
you look at this? If he was phenomenal at it,
I don't think he would have secured that secure your investment.
You you may be onto something there, Mike, you may
be onto something, So you're welcome. Thank you. Yeah, as
as usual, Mike, you can be trusted to bring a

(23:25):
degree of objectivity to these conversations that I just don't
think we could find anywhere else. So thank you, sir. Anyhow, Yeah,
so let's I mean, let's go through that. So Vegan,
I think, well, I don't know, like there's a lot
of stuff all over crypto Twitter at the moment that
you know, basically, vegans are vegans are are very much
out of fashion in the crypto industry anyhow. But this

(23:45):
thing of him living in a penthouse in the Bahamas
now with ten roommates, now there's been a lot of
stuff come out about all this. Uh, these guys, as
I say, he's known for a long time, and they
appear to have been running the show. And yeah, it's
it's becoming increasingly clear that they were there because they

(24:06):
knew SPF a lot of them and were really fundamentally
unqualified to be to be doing what they were doing
like they you know, And actually Caroline Ellison is an
interesting one. Caroline Ellison was the CEO of Alameda Research,
and as this Wikipedia thing says, she and SPF had

(24:27):
known were known to have dated for a while. And
I think basically this whole group seemed to have been
kind of dating each other and you know, all all
very close and yeah, kind of CULTI yeah, it does
sound a bit culty, doesn't it. And you know, you'll
live in the Bahamas in a complex with all together,

(24:47):
you know, you're a dressed in weird ways and and
it doesn't end well, yeah, you will drink from the
same tub of kool aidol aid. Yeah. So yeah, it's
some this This guy obviously has you know, a very
sort of a very kind of odd past, if you like.
And what's becoming increasingly clear is the Alameda Research and

(25:12):
f t X were far too close for comfort because
they were different entities. Basically, f t X was an
exchange that took customer deposits and you know, and and
was supposed to be a custodian of those deposits. Alameter
Research on the other hand, as a trading company, so
it's making you know, it's making big old bets on

(25:34):
on the crypto market essentially. And the fact that these
two companies were so close, and the fact that the
CEO of one, Alameter Research, was working alongside the CEO
of another f t X, and the fact that they
were obviously very very close, even if they weren't kind
of you know, dating at the time or whatever that is.

(25:57):
You know, there's there's too much, you know, there's too
much information being shared there and Alameda had there's more
than just information, well, there's too much of the funds
from one company being shared with the with the the
speculators to the other. This is exactly, this is exactly

(26:18):
what happened. And I don't think, you know, I don't
think we're jumping the gun to say this. You know this,
this basically is kind of what is what happened. And
I should say as well, obviously Alameda as a trading
company had this huge advantage because if you're a trading company,
if you're making bets on the market, and you can
see in real time what's happening, what other people are

(26:41):
betting on, because you have you know, you theoretically have
access to this exchange's order books, that is a huge advantage.
You know, you're able to you're you're able to see
what the market is doing and place your bets accordingly.
So you are the bookies. Yeah, and your your book
is you're seeing what bets are coming in and you
can head your bets and sort of go, okay, cool,

(27:03):
well people are betting on that. I need to take
some bets on this and it should be unfunk up
herble should being the operative word. Yeah, yeah, And this
is one of the things like in the in the
kind of immediate aftermath of it, this was one of
the first questions, you know, I and and others here
at coin Bureau or kind of asking ourselves. It's like

(27:25):
these guys literally had, you know, everything going for them,
like they had a huge advantage, you know, and it
just goes to show you, especially, you know, especially if
you're you know, if you're one of these traders who
makes kind of leverage bets or anything like that, like
the market is is just rigged against you. It's like,

(27:46):
you know, these big guys they have so much, they
just have information that the rest of us don't see.
And this is going to be something, this is going
to be something that we're going to have to to
talk about as an industry a lot over the coming
over the coming weeks, as the fallout from this continues. Anyhow,
let's i mean, let's just cut two. Let's just cut

(28:06):
to the spoiler, because we've already kind of talked about
it a little bit. But basically, in the wake of
terrorist collapse, Alameda lost a bunch of money and the
basically SPF started plugging that hole with customer funds from

(28:27):
f t X. And you don't need to be you know,
you don't need to work in finance, you don't need
to agree in economics or law enforcement or whatever it
is to know straight off the bat that that is
just that is just for bolting. That's a that's naughty
unless you've asked for their permission. But I'm not sure
if they did. Yeah, yeah, they they They certainly didn't.

(28:50):
They certainly they didn't. So that all takes us, I
think to the next point that we'll pick up with
after we've had a short break. Welcome back everyone to

(29:15):
part two. It is time to it's time to sort
of go back just a few days now, it feels
like much longer, but a few days, a couple of
weeks to how this how the how everything started to
go downhill. We know now that that Alameda had lost
a lot of money in terrorist collapse. It was in

(29:37):
a lot of trouble and Sam Bankman Freed SPF was
propping this company up with user funds from f t X. Now.
On the second of November, Coin Desk, which is a
you know, a big industry website, big crypto industry website,
it published an article which about a leaked Alameda Search

(30:00):
balance sheet that it had that it had received. And
this balance sheet did not make for good reading and
basically it revealed that Alameda had a ton of money
in lots of very illiquid ship coins. So it was,
you know, it was it was a warning sign that

(30:21):
all was not well at Alameda and that you know,
if if it suffered a liquidity crisis, you know, if
you know, if if people start started wanting their money back,
then it was going to have a lot of problems,
you know. And obviously a lot of these ship coins
that invested in were right down in price. And again
this is you know, this is spillover from from terror

(30:44):
and everything that happened in the wake of that. So
this kind of set alarm bells ringing. Now I want
to go even further back in time because and this
is the sort when ft X was founded. As we know,
Bankman freed and made a lot of money. Him and
Alimeter Research had made a lot of money kind of trading,

(31:04):
you know, starting off with this arbitrage trade between the
U S and Japan. They built that up, they had
a lot of money, and they kind of realized that
the way to go, the next step if you like
to make real money, was to open an exchange. So
this is what they decided to do. And one of
their earliest backers was none other than Binance. Now. Binance,

(31:29):
as as everyone should know, is the largest cryptocurrency exchange
in the world. Um it has. Yeah, it is a hugely,
hugely powerful organization, the most active users, the most you know,
the most daily volume. It is. It is a beast
of a company. And so Binance put in put in

(31:50):
a lot of money to help get f t X
off the ground, and f t X sort of it
started and you know, didn't didn't sort of go anywhere
spectacular for the first few months or so, but then
kind of came along. Obviously we had a pandemic, everyone
kind of got interested in crypto, and then we had,

(32:11):
you know, all this kind of interest and ft X
sort of grew and grew. It kind of grew exponentially,
and it did particularly well out of out of what
was called DeFi summer back last year, back twenty one,
when all these de FI protocols, many of which IT
and Alameda were invested in, when they kind of really
took off. And and yeah, fd X kind of grew

(32:33):
from this kind of new upstart exchange to become you know,
I think it kind of it sometimes varied between it
and coin base but basically, you know, the the second
largest exchange, second or third largest exchange in the world,
second really only to to Finance. Finance obviously, and you know,
it was kind of early investor, but I think you know,

(32:55):
as as ft X got bigger, obviously it became more
of a rival to Binance. But what sort of seems
to have really kind of set the bad blood between
them flowing was the fact that SBF is now known
to have been basically bad mouthing Binance and Chang Pen
Chang Peng Jao, who's Finances CEO CZ basically bad mouthing

(33:20):
them behind their backs to his powerful contacts in Washington.
And I think it was you know, it was basically
meant to kind of put regulators onto Binance and off
and basically off f t X and try and basically
being regulators to try and and draft favorable regulations that

(33:42):
you know that would work for f f t X
but would be unfavorable for Binance. And that it's fair
to say that finance is not the most popular platform
with regulators because it's you know, it's spread, it doesn't
have a global headquarters, um it's spread over over many
different jurisdictions, and you know, it's it's wildly successful, so

(34:06):
it's kind of it's natural. I think it's it's not
all that surprising that regulators were kind of pretty suspicious
of it anyway, and it's had, you know, it's had
its fair few run ins with regulators, although I should
say like it's taken you know, it's taken a lot
of steps to you know, to jump through the necessary
regulatory hoops. Anyhow, um So, SBF was reportedly lobbying against

(34:30):
Binance behind the scenes, and he was also suspected of
f t X and him were suspected of being behind
leaks about Binance to kind of mainstream to the mainstream media,
and there were as kind of a string of hit
pieces sort of you know, this year and before published

(34:50):
about Finance and about CZ in general. And what became
what was very odd was that Finance had both both
Finance and t X had U S subsidiaries. So Binance
had Finance U S F t x F t X
US and the head of Binance US was a chap
called Brian Brooks, and he only lasted about four months

(35:16):
and then a while back kind of resigned very suddenly.
And it was it was a bit of a big
surprise to everyone. Anyhow, it later becomes clear that Brian
Brooks has very very close ties to f t X,
and he apparently attended you know, sort of at least one,
maybe maybe even more ft X events sort of very

(35:37):
shortly after leaving Finance US. Anyhow, So, as you can imagine,
not only are these two exchanges kind of locked in
a lot of rivalry, but Binance and CS are becoming,
you know, increasingly piste off about the fact that that
f t X is is lobbying against them behind the scenes,
author investing in them heavily initially. Yeah, so there's the kind, yeah,

(36:00):
the added kind of element of betrayal, I guess if
you like. But that's very important. We've got to remember
that because this is this is kind of key to
what happened next, the fact that Finance was a big
investor in f t X. So um. And also I
think these these kind of hit pieces on Binance, they

(36:21):
really reached a low point not that long ago when
when Reuters published a number of pieces that were very
critical of Finance and CZ but also kind of mentioned
c Z's children as well in at least one of
the articles. And you know that again, like you don't
need to be a journalist, you don't need to be
an expert on on these things to know that you

(36:43):
you don't go after you don't go after people's children.
That is just I mean, are they still children or
are they adults working in the industry. No, they are,
they're they're they're toddlers, I believe. Oh, well that's just yeah,
that's that's that's yeah, it's just yeah, it's it's it's
just not right. So, as you can imagine, CZ by

(37:04):
this point is is not a happy matter. Yeah, and
and who can blame him? Now, going back to the
fact that Finance was an early investor in f t X,
Finance now f t X once it has sort of
I think it was twenty twenty if I remember rightly, Uh,

(37:28):
and it was one f t X decided that it
kind of wanted to sort of, you know, part ways
with Finance. So basically, SPF negotiated to buy back those
f t X shares that Finance had, you know, had
invested in, that that Finance owned from its initial investment
back in and so in return for these shares, in

(37:51):
in return for kind of selling at stake in f
t X. Finance got a mixture of b U s D,
which is that Binance his own stable corps and um.
So it got about one point five billion dollars worth
of b U s D and it got five eight
million dollars of f t T. Now f t T

(38:14):
is f t X is exchange token. Okay, so this
is this is very important to remember. Basically, Finance, this
rival exchange that is piste off with the way that
SPF and f t X have been behaving, has a
large tonk and has an influence on on what what

(38:36):
happens at f t X. Does that does that know
what it means? Well, not so much an influence on
what happens at f t X, but it has the
it has the ability to crash the price of f
t T and this, oh what happened. So um let
me just get let me just make sure that I
get the dates right. Anyhow, So around about sort of

(38:58):
you know, early November, we are by now I think
this is about the fourth or fifth of November, this
speculation starts to mount that Binance is looking to sell
its stake of f t T. And this is a
round if you remember, around million dollars worth and ft
T is you know, it has m As other people

(39:21):
have pointed out, you know before the fact, it didn't
take an awful lot of ft T selling to crash
the price. So just the room that Binance was looking
to offload this massive amount of ft T was enough
to send f T T s price heading south. Okay, now,

(39:42):
what's what becase. What was odd is that on the
sixth of November, Caroline Ellison, who as you remember, dated
SPF and was CEO of Alameda Research. Caroline tweeted out
directly at CZ Binance, if you'll look to minimize the
market impact of your ft T sales, Alameda will happily

(40:06):
buy it all from you today at two dollars. Now,
this is a very weird and very stupid thing to
have done, because firstly, it suggests that you know, Alameda
is is very kind of nervous about, you know, about

(40:28):
these sales of of f T T and and that's
a price exactly, it's set right, and that tells the
market hang on the set. If ft T goes below dollars,
we got ourselves, you know, we got ourselves a you know, yeah,

(40:51):
we've got ourselves a blood bath. So or if it's
at thirty dollars at the moment, and they're they're valuing
it and they'll go, we'll buy it at around this price.
It was like, well, it's not worth that, then that's
what it's Worth's kind of just telegraphing what Yeah, a
very very weird thing to do. So, as you can imagine,

(41:16):
at this point, the market stuff, you know, the market,
and this is like for all the for all the
kind of chaos that is unleashed, for all the you know,
all the all the difficulties this has caused. To put
it mildly, like, this is a great example of the
free market in action. You know, markets just have this

(41:38):
ability to sniff out weakness. So this basically, you know,
the spect especially when it's tweeted, tweeted out, when it's
there for everyone to see. It's like, hey, you know,
I've I've had some tweets that I've gone back and gone, oh,
I wish I hadn't said that, do you know what
I mean? Like, you've said something tried to crack a

(41:59):
Joe called maybe mega of off remark and you know,
did that upset someone did that? But I've never collapsed
a financial exchange with a tweet. Um, that's got to
be a bad day on Twitter for you. There's still
time for you, Mike. You know, maybe maybe the next

(42:22):
stage of your checkered career could be the one day
crash cross it off the bucket list. Just yet, this
is crypto, so literally that that is that is not
that is not on the realms of possibility that you
could one day find yourself in charge of a major
exchange and and crash it with another. Hey, I'm prepared

(42:43):
to date or sleep with any of you CEOs c
Z if you like, if you like some bare action,
I'm your man. We're in a bear market, so it's
apt let's do this. Well. I never thought i'd say this,
but I certainly hopes CZ isn't listening or paying attention

(43:03):
her to this particular episode jealousy. I just yeah, I mean,
I don't take my muchie away, don't don't do this,
don't pimp yourself out to the nearest billionaire exchange owner.
How could you obviously this, um, you know, this kind
of set the markets off, and there was a lot
of short selling of f t T and the and

(43:26):
the price started to started to go down. Now, the
question that was on a lot of people's minds is
you know, why are why is al Ameter so desperate
to you know, to prop up the price of f
t T. And what it basically came down to is
the fact that people the market kind of sniffed out

(43:48):
that Lameter and quite possibly f t X. We're basically
using f t T as collateral for for crypto loans,
for loans that they had taken out, and they were
now worried that as the value of their collateral was
falling their loan they could defaulting. Yeah, would they would
basically get liquidated and lose everything. So if you like,

(44:12):
I mean, I think probably the best analogy here is
to just look at the you know, look at f
t X and Alameda. This whole setup as basically being
a kind of house of cards, and c Z has
just sort of whipped out, you know, or you know,
Binance has just kind of whipped or whipped out one
of the cards on the bottom, and everything is looking decidedly,

(44:36):
decidedly dodgy, flimsy. Now, seventh of November is when things
really started to kick off. And this again, this is
a this is a tweet from CZ and I think
I don't think it's kind of over overstating things to
say that this may go down as one of the

(44:57):
most sort of consequential earth shattering tweets in all of cryptohistory.
Quote this is cz Binance tweeting on the seventh of
November two. Liquidating our ft T is just post exit
risk management, learning from Lunar. We gave support before, but

(45:19):
we won't pretend to make love after divorce. We are
not against anyone, but we won't support people who lobby
against other industry players behind their backs onwards. So there's
a few things to unpack there. Basically, liquidating our ft
T is just post exit risk management. That is, you know,

(45:41):
casting casting doubts on you know, basically saying we're planning
to sell this FTT, so fi million dollars worth of
this is about to potentially hit the market. Um, we're
managing our risk, which suggests a lack of confidence in
f t X. And I think that really telling phrase
here is learning from Luna. So this is casting everyone's

(46:03):
minds back to what happened with terror, to what happened
with its Lunar coin and it's ust stable coin. And
you remember these two were kind of closely close a
created So I think by saying learning from Luna, and
as I said in a video we made about it's
sort of last week this, I don't think that lunar

(46:25):
thing just slipped out, you know. I think that was
obviously very very calculated, obviously set everyone's minds back to
May and what happened there. Um, And just to just
to sort of, you know, contextualize the rest of the tweet.
We gave support before, but we won't pretend to make
love after divorce. We're not against anyone, but we won't
support people who lobby against other industry players behind their backs.

(46:46):
You know, this is a real kind of mic drop
of a tweet. It's like, okay, you you bad mouth us,
You say nasty things about us two regulators. You put
the mainstream media onto me, you brief against me, and
you know you and results in articles that make reference
to my children. You do all of them. Well, sir,

(47:09):
it's my move now. Yeah. It's reminiscent of Whitey Boulger.
Do you remember him, the Boston's or Matthiosa He kind
of he he had ties with the law enforcement and
basically had carte blanche and was basically giving up other

(47:29):
I'm not suggesting that ba is Matthiosa or anything like that,
but they were sort of inhuts with with the government
or the government's law agencies. And then when the other
sort of players in that market found out, it did
not end well. Yeah, for Whitey Boulger. Yeah, well, I

(47:51):
mean I think the I think the comparison between you know,
with Whitey Boulger is between him and SPF really because
remember SPF was the guy with all the times you know,
sees as well known, as well known a figure as
he is. You know, I don't think has the same
sort of hasn't cultivated the same sort of connections, and
you know he's not that he's not as the same

(48:11):
kind of uh you know, well connected. Do that well
connected American that Sam bank Man Freed is so, yeah,
you know, second largest donator to to the Bieren administration. Yeah,
that that that opened some doors and and facilitates some conversations.
Absolutely absolutely, And this is stuff that is kind of

(48:31):
just reverberating all around the you know, the crypto Twitter
sphere at the moment, you know, And I mean, well,
well we'll get to that. Let's let's just I just
want to kind of talk through what happened with the
you know, what happened next as it were, so sees
he puts out this, you know this this tweet, I
mean this obviously sets So this basically started a bank run.

(48:53):
And again this is what happens, you know, and and
and you know, as people as people saw f t
t S price going down, that triggers a crisis of confidence.
So people started going, well, ftt you know, that shows
that all is not well at f t X. So
sensible people started going, Okay, I'm going to get my

(49:15):
money out. You know, I'm gonna I'm gonna withdraw my
funds from ft X, you know obviously, and again like
this is why this is why I think CZ's reference
to lunar is so important, because you know, it just
says like it just suggests like this, this could be bad. Folks,
we all remember what happened. They're like, don't get caught out.
So basically a bank run is is what started. And

(49:39):
people started, you know, withdrawing their funds from f t X,
and it basically kind of snowballed from there and the
rumors started circulating. And this is where things get. This
is where things get kind of really tricky. And I remember,
again it just feels like so long ago. Now it's
only about a week ago. But you know, I remember

(49:59):
seeing these rumors about about f t X, you know,
hearing this stuff on Twitter that f t X is
in trouble, and you think, I mean, is this true?
Like can it be true? Like this is a huge exchange.
Is it possible? Like, surely not. And we were having
these discussions here at coin Bureau between colleagues and some
people were like, I think, you know, it looks bad.

(50:21):
And other people were like, this is ft X. This
is a huge company. It's the company with its name
on a on you know, the Miami heat Stadium. You
know this, this is a company. It's CEO has got
ties to the Biden administration. You know that surely not. Anyhow,
this bank run sort of turned into a you know,

(50:43):
into a stampede, and it became, you know, it became
clear that that f t X didn't have the funds
on hand in order to meet to meet these withdrawal obligations,
and this just you know, this got worse and worse
and worse, and so the unthinkable happened. And I remember

(51:04):
so this. So this takes us kind of to the
to the eighth of November, and I think, you know,
at one point, I think it was on the Sunday afternoon, Sunday, Sunday,
the Sunday before last. You know, I think about a
billion dollars have been withdrawn from f t X. By
the evening it was sort of north of six billion dollars.
You know, there was just people panic withdrawing. This takes

(51:27):
us out and we'll we'll have a we'll take a
quick break after this. This takes us up to the
next sort of absolute bomb drop tweet from cz and
this is the eighth of November quote. This afternoon, f
t X asked for our help. There is a significant
liquidity crunch. To protect users, we signed a non binding
l o I that stands for letter of intent intending

(51:50):
to fully acquire f t X dot com and help
cover the liquidity crunch. We will be conducting a full
d D due diligence in the coming days. And this
was confirmed by SPF himself on Twitter, you know, around
the same time. Basically, yeah, you know, this is what's

(52:13):
happening finances. You know, our first investor has become our
last binances. You know, we've agreed to buy us out,
and at this point it's just it's just absolutely pandemonium. Pandemonium.
On that note, should we take a quick break and

(52:47):
we are back for parts three? How are you? How
are you holding up through all this? Mike? Is this
is this painful? Painful listening? Yeah, it's a it's a
it's a it's a horror show. Um, but it's kind
of yeah, and we all know how it ends. It's
not it's not it's not. It's not like the suspense

(53:09):
will will something happen at the end? Well, we know what,
we kind of know. But yes, So Finance issued a
statement that they're gonna try to to sort this situation
out by acquiring f t x UM and then the
did the Jude diligence report come back? It didn't well,

(53:29):
it didn't go well. It's important to note that at
this point, you know, the market is in full on
panic and all this speculation about f t X, the
price prices are just absolutely tanking across the board, and
funnily enough, like this, this this tweet from CZ that
they were that Finance was going to buy ft X,

(53:50):
and it was absolutely jaw dropping I mean, it's just
like the thought that the biggest crypto exchange would be
buying out the second biggest crypto exchange. It was just
just how unthinkable that was even a few hours before. Really,
and I must say, I remember seeing that tweet come
through and I thought I was hallucinating. I was just like,

(54:13):
what is this? What anyhow? So, um, what happens? So
the market kind of the market kind of recovered a
little bit, you know, not not to you know, it
didn't bounce straight back up but all the way back up,
but certainly it was like, Okay, maybe this can be
this situation can be resolved because by now, obviously f

(54:35):
t X has paused withdrawals SBF having tweeted out, you know,
and this is this is like another thing. There's so
many little details to this story. I'm naturally going to
miss a few out SPF had done what is now
kind of the classic part of the crypto platform, going
going to zero playbook having tweeted out. You know, f

(54:57):
t X is fine, assets are fine, you know everything, Okay,
this is just fun. Don't worry blah blah blah, crypto
collapse bingo, Yeah, have you checked off all of these things. Yeah,
it's it's absolutely and it's like again, people are sort
of the thing now is like, as soon as that
kind of the if you like, the meme or one

(55:18):
of the many memes going around in crypto at the moment,
is like, as soon as the CEO of a crypto
exchange comes out with a statement saying everything is fine
withdraw get out of there. That is that is that
is it. The house is on fire, you know. Um,
And we might touch on that later because obviously there's
been you know, there's been as you might imagine, concerns

(55:39):
over other exchanges as well. Anyhow, the thought was, you know,
going into the next day, we were like, okay, this
is this is bad, but you know this could look
this could be pretty good for finance. You know, Binance
is going to go from not only the biggest crypto
exchange in the world, but even bigger than it was before. Anyhow,
finance did I think you know, the due diligence process

(56:02):
went on for for for less than for a fewer
than twenty four hours, and they just you know, obviously
glimpsed into the abyss when they when they opened the
books and just went nope. And remember you know, l
O I this letter of intent that was never a
concrete agreement that was like, you know, we'll do this
so long as the due diligence shows there's not like

(56:24):
a nest of vipers just lurking in the books, which
they were. Obviously, they took a look at the balance
sheet and just went no, no, And I think if
I remember rightly, you know, there's been so many huge
numbers sort of bandied around over the last few days
or so, but I think the whole was about eight
billion dollars worth. You know, there was an eight billion

(56:45):
dollar hole in al AMDs balance sheet. You know, the
money had just the money just gone, you know. And
then we had we had a couple of others. We
had Justin Son, who is the it was the guy
who founded the tron Um crypto project and he's also
now that the owner of the Huobi exchange, you know,

(57:05):
a big kind of a well known crypto billionaire. He
was sort of apparently looking into buying it and just
clearly went no, thank you very much. So a few
days later over that basically going into going into last weekend,
f t X filed for bankruptcy. Um and this is

(57:28):
there were lots of rumors that you know, apparently f
t X is subsidiaries that you it's u S subsidiary
was apparently allowing withdrawals its subsidiaries, and I think it
was Turkey in Japan. I think users there were able
to withdraw kind of small amounts of crypto, but basically
the game was up and over the weekend I think
it was was it Friday night? I forget now, but yeah,

(57:51):
basically ft X filed for bankruptcy. Ft X and all
its subsidiaries, that is over one hundred and thirty companies
and entities bankruptcy. Um SPF resigned as as CEO to
be replaced by this guy, as I said earlier, who
was who was brought into kind of oversee the winding
down of Enron wonderfully apt And basically the crypto community

(58:18):
was having to come to terms with the fact that
I think FTX had around you a million customers, a
million users, so not all of them will have had
huge amounts of crypto on the exchange. But unfortunately we
saw a repeat of sorts of the situation that we've
seen earlier this year, people who had significant amounts of

(58:40):
money in some cases all their life savings tied up
in f t X and now having to come to
terms of the fact that it is gone. Um as
we've seen with bankruptcy filings from the likes of Celsius,
you know, there is a there is a chance that
they may get some of their song. Bear in mind,

(59:04):
I should say, Mikey that the bankrupt that those who
were that mounts mount when it went into when it
filed for bankruptcy about eight eight years ago, it's creditors
have still not been made whole. They are still waiting
for their for their bitcoin. So yeah, it's it's terrible

(59:27):
news for for f t X users. It's terrible news
for the whole crypto community. And you know that, I
guess the hardest the hardest part of it was that
it's happened again. We have we were here just a
few months ago and it has happened again, I should

(59:50):
say as well, Like you know, there were all these
conflicting reports coming out of f t X staff, like
most of them were completely in the dark. You know,
they didn't know what was going on at at the top,
you know, and it seems at this stage again you know,
we can't be we we don't have full clarity yet
over what was going on, but it seems at this

(01:00:10):
stage that basically SPF and a few other people at
the very top I knew what was going on. They
knew that Alameda had taken these huge losses. They knew
that fd X customer funds had been used to plug it.
They knew that Lameter and by extension, f t X
were on very very thin ice. But they kept stumped

(01:00:33):
either because are people going to go to jail for this?
That is a very good question. I think that kind
of leads on nicely to what you know, to kind
of the next stage. So at the moment, I should
say SPF is apparently under supervision in the Bahamas, which
you know, doesn't sound like under arrest, but he's under supervision. Now,

(01:00:57):
I should say like authorities in the US, like the
US just the the Justice Department, the SEC, the CFTC,
god knows who else, the National Guard, the FBI, you know, everyone,
I think probably has opened investigations into ft X. The
Royal Bahamas Police remember that ft X is based in
the Bahamas. They're investigating. So SBF is believed to be

(01:01:20):
kind of I think under house arrest in this huge
kind of penthouse that he was sharing, and I think
some of his some of the other people sort of
close to him are also under house arrest. Um, that
didn't stop him tweeting out a very well as his
League of Legends account being suspended yet because that I
think you've gotta hurt them where it matters. But yeah,
you've got to really, you've got to really hit him

(01:01:41):
where it hurts. Apparently not Apparently, there's there's I've seen
good evidence on Twitter that he has been playing online
whilst this whole thing has been going on. And earlier
today there was a New York Times piece. He was
interviewed for the New York Times and he sort of mentioned,
you know, he talked about playing it there as well,
sort of showing very little contrition. And everyone is kind

(01:02:03):
of up in arms at the New York Times about this,
you know, basically giving him a really easy ride, you know. Um,
he didn't comment on whether he'd be going to jail
or anything like this, But I mean, so as it stands,
we're we're sort of a bit starved of information at
the moment, but it appears like you know, the raw
Bahamas police are are keeping an eye on him as

(01:02:25):
I as we record this, he hasn't been arrested. You
would hope that this will happen soon. I said in
a video yesterday. I think the whole crypto community, just
for the sake of its collective soul, collective sanity, basically
needs to see some pictures of him in you know,
in a prison jumpsuit. Stat do you know what I mean?

(01:02:47):
There's got to be some sort of consequences for these
actions otherwise it's not going to stop. Yeah, and this
is yeah, and this is I think this is this
is a good point to lead onto, I should say.
Over the week and there was all sorts of speculation.
Some people were tracking what was believed to be his
private jet. They thought he was fleeing to Argentina. UM.

(01:03:08):
There were also rumors that he was trying to get
to Dubai. UM. And actually someone I a source of
mine here, a friend of mine who's who's sort of
very kind of well connected in in in government here,
texted me to say to me some information saying, um,
you know, Dubai fairly recently signed an extradition treaty with

(01:03:29):
the US, which these ft x Analoma people probably didn't realize,
So the likelihood of them coming to Dubai is very
very slim. Um. But yeah, the next the next stage
needs to be these these scumbags repercussions for your actions, repercussions.
They need to be accountability to answer for it. And yeah,

(01:03:51):
we just you know, we just don't know. Um, and
that's going to be should also say another development that
happened over the weekend was the FTX platform got hacked.
Now this is believed, this was believed to be an
inside job and it's thought that someone high up. I
think the hack was supposed to be originating in the Bahamas,

(01:04:13):
and what it looks like at this stage, this still
I think needs to be confirmed. It looks like this
was a high up fd X employee basically trying to
get money off the platform. Because I remember that withdrawals
were suspended. There were people on Twitter sort of trying
to bribe ft X employees to to to take them
through yeah, well to take them through k y C

(01:04:34):
procedures in the Bahamas, because apparently withdrawals in the Bahamas
were being authorized for a while, which again suggests because
I think it was mostly the top team in the
Bahamas so that suggests people like sp from those close
to him might well have been you know, extracting funds
from the platform when when regular yeah, yeah, rats, rats

(01:04:55):
fleeing a sinking ship. Undoubtedly, Yeah it's and and now
we're and now we're here, Um, apparently a crack and
the crypto exchange crack and has you know, identified the hacker.
But again, they're there, their identity hasn't been sort of
made public and all this sort of stuff. So we're
still waiting for a lot of this to come out.

(01:05:17):
But they're in a nutshell. And as I say, like
I've I've left out a lot of details for the
sake of time and just for the sake of there's
only so much you can kind of recall, you know, this,
This has been such a it's such a fast moving story.
There's been so much to take in. But they're in
a nutshell. Is kind of what happened, And yeah, the
questions that are now waiting to be answered is, yeah,

(01:05:39):
are these guys going to face justice? And I think
a lot of the concern is that because SBF is
so well connected, because he gave to the Biden campaign,
because his parents appear to you know, have be connected
with people like Gary Gensler, who is head of the SEC,
and well, let's touch on the SEC in a moment.
But yeah, there there are there are genuine fears that

(01:06:01):
this guy is so well connected that he some could
somehow wriggle off the hook, or you know, other FTX
employees could be made to take the fall, or any
of this sort of stuff. And I must say, from
the tone of this interview that he gave to The
New York Times, and from the fact that he's still
kind of tweeting out very cryptic stuff. He tweeted out
the word what. You know, it said number one what

(01:06:25):
and that was the tweet, and then number two h
and then nothing and then three A four P five,
you know, basically spelling out what happened. You know, this
is like he clearly seems to be utterly divorced from reality,
utterly kind of unaware, unwilling to acknowledge what he's done.

(01:06:46):
He was making noises on on Twitter, you know, throughout
this thing, even when even when it was filing for bankruptcy,
even when it was clear that the thing was in ruins. Oh,
you know, we're seeking external funding, We're going to make customers,
whole all the sort of stuff. So it appears that
he has kind of become pretty divorced from reality, and

(01:07:07):
the hope is that someone is going to reacquaint him
with reality in the sort of you know, sternest future.
I think I think it's it's again to reiterate the point,
just just if you've got any sort of crypto by
a fifty pounds, sixty pounds or eight cold storage and

(01:07:31):
get it on their air sp yeah, because that's the
only way that you're not leaving your money, your life
savings in the hands of a year old Bouffon League
of Legends playing vegan. Not that that has anything to

(01:07:51):
do with it, but but but it's just a fact
he was vegan apparently. Um that it's that is insane,
and I think we really do need to examine, um,
what happens if what what what the democracy? If nothing

(01:08:14):
happens to this this uh, this clown, if if he
gets off through through nepotism and cronies and and political donations,
you really do need to have a real look at
yourself and go, why why is this happening? This can't
this can't carry on? Yeah, that's depressing. It really is.

(01:08:39):
But it's it's what I also wanted to just ask,
so I know it's not binances fault because the actions
that the f t x UM did they had no
no influence over. But was it a petty sort of
because a lot of this is is confidence, isn't it?

(01:08:59):
And and if you if you intentionally ruin the confidence
of the markets, is that not cutting your nose off
to spite your face or is that just accelerating something
that was probably inevitable going inevitably going to happen. That
is a very good question, because well, I should put
it in a bit of I'll give you a bit
of extra context to it, because uh, CZ apparently this

(01:09:23):
is something this is something we saw again leaked on Twitter.
CZ sent an internal message around to all Binance staff
when this was going down, you know, after after FTX
had filed for bankruptcy, saying, you know, you shouldn't see
this as a win for Binance because this is this
is bad for crypto so and a lot of people,

(01:09:45):
a lot of people have sort of said, well, you know,
surely this is this is c Z's fault for for
precipitating this, And I don't think that's I mean, I
can see why they say that, but I don't think
that's that's fair because this this comes down to you know,
this comes down to SPF and and whoever else at
Alameda and f t X new And but it's interesting

(01:10:08):
to see this is I mean, this is something I
would I would very much like to you know, if
I ever get the chance to to to interview c
Z again, this is something I'd like to talk to
him about really, and I'd like to ask him because yeah,
in in a way, I mean, what he did was expose,
you know, expose the inherent weakness of f t X,

(01:10:30):
and I guess the question of whether the whether the
market would have found that out anyway, it's it's a
moot point. It draws parallels to sort of wiki leaks,
and it's it's like it's journalism exposing the truth about
what is happening. And it may have a detrimental effect
on on the government or the markets, but that is

(01:10:54):
what is happening. And do people need to know that
truth or do they want to live in ignorance? And
and uh uh you know blue Pillar, I suppose yeah, yeah,
do you I mean, and do you do you let
something that you know to be rotten, do you let
that carry on? I mean people have people could have
carried on pouring money into ft X. I mean, this

(01:11:16):
is this is a company that was making f t
X was making eight figures every single day on trading
even I think in a you know, even in a
bear market. This was a fantastically you know, rich company.
It was. It was very I mean it raised it
raised about a billion dollars recently on a I think

(01:11:37):
it was a thirty two billion dollar valuation. I've seen
it values as high as forty billion dollars. It was
a it was a monster. And you know, it's name
plastered all over stadiums. Tom Brady was one of its
Tom and Brady and Gisele were two of its big ambassadors. Again,
this is a you know, SPF was out pressing the
flesh in Washington. He was well connected. He was the

(01:11:58):
youngest billionaire ever. He's said he was going to give
all his money away. We kind of ye kind of
came to on that one, not not quite in the
way he imagined. And this was I mean, this was
one the most extraordinary things apparently he I mean, his
wealth has gone to zero and apparently it's I think
it's the fastest individual loss of wealth in history. Take

(01:12:24):
about that is phenomenal three words only in crypto. I
think it's fair to say so. Yeah. Um, it's a
very good question, Mike. Yeah, it's whether, yeah, whether whether this,
whether ft X would have would have collapsed anywhere. I mean,
looking at the seeing what what we know now about

(01:12:46):
the state of Alameda and the fact that you know,
f t X was was plugging this whole with customer funds,
I think I think probably it would have become perhaps inevitable.
It was. It was just it's speeding up the process
rather than uh, you know, being the count the straw
that broke the camel's back. It was, Yeah, it was happening.

(01:13:07):
It was happening anyway. It's just whether this was going
to happen now or the late at a future funk
up or or taking the packing the sick dog out
behind the barn and mom boy, let's go now go

(01:13:28):
for a little wiki. Can you quickly give me your
thoughts Mike before we go on, Like, how does this
look to you? As we said at the beginning, you know,
someone outside looking in very much, what does this what
does this say about crypto, Well, I was normally singing
from the same hymn sheet of Well, this happens in
in traditional banking as well, and to a certain degree

(01:13:52):
it kind of it kind of does you know we
had Lehman Brothers sort of collapse from the the two
thousand and seven eight financial crisis. We've got Bearings Bank
being brought down by one man um. I think it's
just crypto is is is? Uh? There is an element

(01:14:13):
of financial mismanagement and financial u abuse on steroids because
it is kind of uh, a new frontier about it.
So we're getting a lot of these stories recently, and
I think a lot of it is is also, as

(01:14:34):
we sort of alluded to in the earlier in the pod,
a domino effect of of once one thing goes, we're
also intrinsically linked, and investments from from from one one
exchange or one one company I get wiped out because
of lunar or terror or or now f t x UM.

(01:14:56):
It's it's a it's a scary time, and not everyone
is to to be as honest and truthful as as
as as you would hope they would be, because they're
they're interested in saving their own skins and trying to
stay above water. It's not the first time this has happened.
It's not going to be the last time. Unfortunately. Get
your things, get your get your your, your your coins,

(01:15:19):
your your your, your crypto onto cold storage, and sleep
a little bit easier at night. I think that is
a very good note to end it on. Mike. Yeah,
anyone listening, if you have any crypto on any exchange,
for God's sake, don't be don't be that person. Don't
be left holding the bag. Get a hardware, wallet, and

(01:15:39):
custody yourself. Please. If if we take anything from this situation,
because yeah, there's something there's something rotten. I think at
the core of crypto, you know, these centralized platforms, these
people with too much power and too little oversight, and
we've we've got to clean it up were you know,
it has to. There's so much there's so much work
to do from here. Crypto will survive, but I think

(01:16:03):
it's time. I think it's time crypto users took matters
into their own hands and just said enough is enough.
So please folks self custody is the only way. Mikey,
I'm gonna let you shoot off man. Thanks so much
for joining me. Let's catch up next noise. All right,
thank you so much for listening to the coin Bureau podcast.
If you'd like to learn more about cryptocurrency, you can

(01:16:25):
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