July 29, 2026 • 42 mins
Where is crypto going? In part two, we continue the story pf the astonishing rise & spectacular fall of Sam Bankman-Fried. You’ll hear about his father’s discovery of a growing scheme in crypto fundraising – a scheme Sam ended up using – and how the young tycoon set the stage for an epic battle with a crypto heavyweight, CZ of Binance.
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Speaker 1 (00:03):
This is Red Pilled America.
Speaker 2 (00:06):
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save America one story at a time.
Speaker 1 (00:18):
Previously on Red Pilled America.
Speaker 3 (00:20):
Over the weekend, speculation rose about the solvency of FTX.
Speaker 1 (00:25):
It appears that FTX has stop woodraws, so.
Speaker 4 (00:28):
It looks like all ftx dot com balances or zero.
Speaker 1 (00:31):
Sam Bankman Freed was a pillar of the crypto world.
Speaker 4 (00:34):
I grew up in the San Francisco Bay area on
a Stanford campus.
Speaker 2 (00:38):
From his first breath, Sam was surrounded by the elite
of the academic elite.
Speaker 5 (00:44):
Effective autism is about using your time and money as
effectively as possible to make the world a better place.
Speaker 2 (00:49):
Sam set up a cryptocurrency trading company. He'd eventually call
it Alanita Research.
Speaker 4 (00:55):
We want a bank account and if we're bitcoinn arbitraged
trading shop founded by a bunch of twenty year olds,
if that's the name of our company, we're not getting
our bank account.
Speaker 1 (01:06):
I'm Patrick Carlci.
Speaker 2 (01:07):
And I'm Adriana Cortez.
Speaker 1 (01:09):
And this is Red Pilled America a storytelling show.
Speaker 2 (01:13):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:18):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:21):
The media marks stories about everyday Americans at the Globalist ignore.
Speaker 1 (01:27):
You could think of Red Pilled America as audio documentaries,
and we promise only one thing, the truth. Welcome to
Red Pilled America. We're at part two of our series
(01:51):
of episodes entitled Crypto Revisited. If you haven't heard the
first episode, stop and go back and listen from the beginning.
We're looking for the answer to the question where is
cryptocurrency going? By telling this story of the astonishing rise
and spectacular fall of crypto entrepreneur Sam Bankman freed so
to pick up where we left off. In late twenty seventeen,
(02:13):
Sam launched a cryptocurrency trading firm he named Alameda Research.
He chose research because Sam knew that the banking community
wasn't too keen on the crypto world, but everyone liked research.
The name was a perfect way to conceal the nature
of his business. A problematic behavior was initiated.
Speaker 2 (02:35):
Sam's band of crypto novices began exploiting a Bitcoin price
difference between the Asian and American markets, where they purchased
bitcoin in the United States and re sold it at
a higher price in countries like Japan. Sam would eventually
move Alameda Research out of the United States at.
Speaker 4 (02:52):
This point, whereas most of crypto happening, it's not in
the States, it's in Asia.
Speaker 2 (02:56):
That's Sam bankman Free explaining his company's move, and so.
Speaker 4 (03:00):
It also kind of became clear that, you know, we
really want relationships with their customers. The police to be
was well, at least somewhere in Asia.
Speaker 2 (03:07):
Sam chose Hong Kong.
Speaker 4 (03:08):
And then why Hong Kong, Well, we thought about a
bunch of different things here, including like what's centrally located,
where is the bulk of crypto happening, what's the relationship
of the country like to the important jurisdictions in crypto,
and how easy is it for foreigners to get to
set up shop there, and sort of all of those.
Speaker 1 (03:27):
Mind together more.
Speaker 2 (03:29):
In markets like Hong Kong also didn't have the tight
regulations that were in place in the United States. Sam's
Alameda Research was at times shifting as much as twenty
five million dollars a day, but the good times didn't
last for long. The bitcoin price difference began to shrink,
shrinking Sam's profits along with it. By late twenty eighteen,
Alameda Research was already in trouble. The algorithm SAM created
(03:52):
for automated trading ran up a series of losses on
some bad trades. SAM was in need of money, so
Alameda began to approach investors for loans. They missed high returns,
as much as twenty percent. And here's the kicker. They
promised their investors that there was no risk. In one
(04:13):
presentation deck, Alameda Research claim to quote, these loans have
no downside end quote in the world of finance, guaranteeing
this level of return while promising no risk should have
been a giant red flag.
Speaker 3 (04:28):
Be wary of fast growing financial services companies because ultimately
anybody could grow a financial services company quickly if you
just give away a lot of stuff.
Speaker 2 (04:36):
That's a representative from Doomberg, one of the most widely
read finance newsletters on subscription based platform Substack. We'll be
hearing more from Doomberg throughout this series. Alameda's presentation deck
went on stating, quote, we guarantee full payment the principle
and interest enforceable under US law and established by all
parties legal counsel. To any seasoned finance veteran, it was
(05:00):
a staggering claim. No less so because of who was
likely shepherding Sam's legal efforts.
Speaker 6 (05:07):
I was the one that hired our early lawyers.
Speaker 2 (05:10):
That's Sam's father, Joe Bankman, in an August twenty twenty
two podcasts discussing his early work with his son. According
to Joe, Sam had been asking him for help in
the early days of his cryptocurrency ventures.
Speaker 7 (05:22):
I wanted to make sure that I could do it
and be useful. But I think from the start, whenever
I was useful, I lend a hand, And it was
clear at the start that on things like law, I mean,
the company didn't have any lawyers, So I think my
utility there was pretty obvious.
Speaker 2 (05:41):
From the beginning. There was a problem with Alameda Research's
business model. To make big money in the trading business
of buying low and selling high, you need to be
right practically every time. If you're wrong, if you instead
buy high and sell low, you can lose everything in
one day, Especially for using algorithms to trade in the
volatile ecosystem of crypto. The smart money in a world
(06:03):
of finance typically tries to go a different route. They
try to become a middleman, where fees are made on
both sides of a trade. As a middleman, you don't
have to be right all the time. You just need
to be in the room, matching buyers with sellers and
shaving a little off the top in the form of fees. Now,
in the early crypto world of just bitcoin, a middleman
(06:24):
may not have had as many opportunities to be this matchmaker.
Imagine one or two stocks trading on the stock exchange,
not much action. But if the ecosystem expanded a bit,
if there were more things to trade, there may be
enough trades to make a killing as a middleman. And
that's exactly what was developing in the world of crypto.
Speaker 1 (06:49):
By twenty eighteen, the industry was quietly undergoing an evolution.
Just as the bitcoin price difference began to fade, a
new type of cryptocurrency was flooding the market. Bitcoin was,
no doubt that dominant crypto, grabbing all the headlines, but
there were new cryptotokens popping up outside of the mainstream
that started to change the character of the crypto community.
(07:11):
Before we explained the significance of this phenomenon. We should
give a quick refresher on Bitcoin and the initial problem
it was purportedly created to solve. Bitcoin was the original
decentralized cryptocurrency, launched in early two thousand and nine by
an anonymous figure or group of figures no one really knows,
known as Satoshi Nakamoto. Bitcoin was pitched as a digital
(07:34):
cash that looked to bypass the out of control dollar
printing press of the Federal Reserve, the United States central
bank that was causing massive inflation and wreaking havoc on
the American economy. To bypass the Federal Reserve, Satoshi needed
to overcome a critical problem that until the two thousand
and eight financial crisis, had gone unsolved. For decades. Prior
(07:55):
to the crisis, computer programmers called cryptographers had been trying
to figure out how to create a digital coin that
could only be possessed by one person at a time.
When I send an email to someone, both I and
the person receiving it have a copy of the email.
So Toshi's technology devised a way to send what some
consider a digital object to someone without leaving a copy
(08:16):
with the sender. He called that digital object, the bitcoin.
So when I send a bitcoin to someone, I no
longer have a copy of the bitcoin. The person I
send it to now has sole possession of the digital coin.
It's handed off, just like cash. The technology that performs
this task is called the blockchain. It records the transaction
into a public ledger through an automated system of computers
(08:39):
throughout the world, removing the costly middleman like Bank of America, Visa,
and PayPal that deduct large transaction fees. Bitcoin was thought
to be the first functioning Internet cash. Instead of gold
coins or paper dollars, this new internet cash used bitcoins.
A crucial feature of this bitcoin system is that there's
(09:02):
a limit to the amount of bitcoins in circulation. Unlike
the US dollar that can be printed by the Federal
Reserve at will. The maximum number of bitcoins that will
ever exist is twenty one million, and the bitcoins come
into existence in a not so easy way. Computers raised
to solve the complicated math problems of the blockchain, and
when they do, they're rewarded with bitcoins. This is called
(09:23):
bitcoin mining. The bitcoin system was designed to mimic the
old gold standard, where the number of US dollars were
confined to the amount of gold in the Treasury Department.
This is a very important point today. As the Federal
Reserve continues to print money, the US dollar loses purchasing
power over time because there are more dollars in circulation.
(09:43):
If you think of dollars as shares of stock in
the United States, the more dollars that there are, the
smaller the share of the United States you own. So
the value of a US dollar decreases from year to year.
That's why the price of products continue to rise every year.
It's because your dollars are losing value. Sotoshi Nakamoto allegedly
wanted to solve the this inflation problem by limiting the
(10:04):
number of bitcoins that could ever be in circulation to
a finite number that's twenty one million, so from year
to year. Unlike the US dollar, bitcoins can't just be
printed at will. When the Bitcoin network first launched on
January third, two thousand and nine, almost no one was
paying attention, but as a single bitcoin went from zero
(10:26):
to one hundred, then to one thousand, then to nearly
twenty thousand dollars, a crypto gold rush infected the globe
and people wanted in. By twenty eighteen, hidden behind the
bitcoin headlines, a dramatic shift was underway. Speculators entered the
market wanting to make fast money on crypto, but it
was a bit too late to ride the bitcoin shuttle
(10:47):
to the moon. Gone were the days of buying a
single bitcoin fo one hundred dollars, then watching the price
skyrocket to twenty thousand. These speculators needed something new to
happen in crypto so that they could try to ride
the wave. And that's something new was a whole new
job of cryptotokens going against Bitcoin's decentralized ethos. Hundreds of
(11:10):
unscrupulous characters began creating their own cryptocurrencies controlled by the
person creating them. Bitcoin's decentralization ethos went out the door,
and these new tokens presented an opportunity, an opportunity that
Sam Bankman Freed and his inner circle appeared to recognize.
Speaker 6 (11:34):
After we close today, I'm going to visit one of
my sons who has a startup in Berkeley.
Speaker 2 (11:41):
That's again Sam Bankman Freed's father, Joe Bankman. In early
twenty eighteen.
Speaker 6 (11:46):
It's a business and my father was a businessman and
while I'm not quite evidently, I feel my father jumping
into my skin a little bit and appreciating the intricacies
of the business's built.
Speaker 2 (12:00):
Joe was a law professor at Stanford, but in the
early days of Sam's crypto ventures, Joe had a side
hustle helping his son. While Sam was busy trying to
grow alume to research his father, Joe was exploring some
of the legal issues surrounding cryptocurrency.
Speaker 8 (12:14):
Welcome to Stanford Legal, where we look at the cases, questions, conflicts,
and legal stories that affect us all every day. I'm
Pam Carlin along with Joe Bankman.
Speaker 2 (12:23):
Joe co hosted at Stanford Legal podcast. Just as hundreds
of new cryptocurrencies flooded the market, Joe and his co
host were introducing the industry to his audience.
Speaker 8 (12:33):
So, Joe, suppose that you and I decide to go
in on a gift certificate to send a beloved friend
to a day spa, and I owe you a bunch
of money for it. I could hand you the cash
as I did, or I could I could write you
a check. You could tell me your bank account please,
and then I could make a deposit or else, maybe
a withdrawal. I could use a credit card if I
(12:55):
was buying the gift certificate from the spy itself, where
I could use PayPal, although I wouldn't. Those aren't the
only ways to pay people these days.
Speaker 6 (13:01):
That's right. You could also also use blockchain technology. Blockchain's
kind of a master electronic ledger that records transactions. It's
often used with a cryptocurrency like bitcoin, and supporters say
that blockchain technology is actually faster and cheaper as a
way of sending money.
Speaker 2 (13:22):
By September twenty eighteen, most people had already heard of bitcoin,
but far less new about the alternative crypto tookens flooding
the market. Joe Bankman asked two crypto experts about some
of the growing oddities within the industry.
Speaker 6 (13:36):
How about these things that are called icos. There's thousands
of cryptocurrencies. I don't know if you'd call those digital assets.
Tell us about those.
Speaker 9 (13:48):
Icos are at the next level of complexity.
Speaker 2 (13:50):
An ICO is an abbreviation for initial coin offering. It's
probably not an accident that ICO sounds a lot like IPO,
or initial public offering, when a private company issue shares
of its stock to the public for the first time,
the expert went.
Speaker 9 (14:05):
On, Generally, icos describe a system that's going to use
something like blockchain technology at some point in the future
to do something that isn't done now, and you most
frequently pay for these icos by using crypto now. In
my own personal opinion, the large majority of these icos
(14:28):
or frauds or they're going to fail.
Speaker 1 (14:30):
I'll totally agree with that.
Speaker 2 (14:31):
By the way, according to these experts, a new type
of fraud was entering the crypto community, and it was
entering through these initial coin offerings. These new digital tokens
may have used blockchain technology, but in many ways they
were controlled by the companies that created them. The cryptocurrency
world was taking a detour away from the ethos of bitcoin,
(14:51):
where bitcoin was about freedom and used the blockchain to
create a decentralized digital cache that bypassed the central banking system.
These new digital tokens were something entirely different. Joe Bankman's
(15:12):
co host asked the expert to elaborate on these initial
coin offerings.
Speaker 8 (15:16):
Can you give me a for instance of like, what
is it they promised to you?
Speaker 9 (15:18):
Sure, let me use one that the sec sued. It
was called Munchies all right, that if you sent crypto
to the people who are going to issue these Munchie tokens,
you would in the future get a token or a
coin or a bit of code that would allow you
to get discounts at restaurants, and in return for that,
(15:39):
you would instagram photos of the food, you'd write reviews
of the food. So it would be a mini economy
built around food and restaurants and the like, and the
currency that you would use would be these Munchies.
Speaker 2 (15:53):
In essence, these new types of cryptocurrencies looked more like
vehicles to invest in a company rather than a form
of digital cash. At least that's what the Security Exchange
Commission thought.
Speaker 9 (16:03):
The SEC wasn't thrilled with this, and they actually went
and they sued the people that were launching the Munchies.
They said you had to register these. You didn't register them,
and they settled and they withdrew the plan to raise
crypto for the Munchies.
Speaker 2 (16:20):
Sam Beakman Fried's father seemed dumbfounded by the scheme.
Speaker 6 (16:23):
You know, it's so outlandish that I'm tempted to accuse
you of just making that up. How many of these
have been sold? Who's buying them?
Speaker 1 (16:31):
Encounter.
Speaker 10 (16:31):
You're twenty seventeen. There was about three billion dollars raised
through icos this year. In twenty eighteen, year to date,
you've already had ten billion dollars raised through icos. So
it's actually increased a lot, and I don't see it
slowing down a any time real soon, in part because
I think we haven't seen as many regulators get as
aggressive as I think they probably should in regulating what
(16:52):
is a little bit of a chaotic market.
Speaker 2 (16:54):
Joe Begman concluded the discussion with an obvious question.
Speaker 6 (16:57):
Let me maybe close by covering something a lot of
people are wondering about, which is, how do we value
these assets? I mean, bitcoin goes from nothing to fifteen
thousand to six thousand, however useful they are, how do
we know what they're worth?
Speaker 9 (17:14):
The short answer is, who the hell knows. They're all
sorts of theories. I don't think a single one of
them actually works. I have profound concerns about the reliability
of information in the market. This isn't a market like
the SEC where we know that we have credible information
about secondary market trading and the like. It is very
easy to spam. The information networks have false transactions, have
(17:38):
false prices, and the like a lot of it is
who the hell knows?
Speaker 2 (17:44):
These ico tokens sounded outlandish to Joe Bankman, but this
new genre of digital token was clearly making money, big money,
with very little regulatory oversight. People were, in essence, issuing
company stock in the form of a private cryptocurrency token
without having to undergo much of the oversight of an
initial public offering, and this is where the opportunity was presented.
(18:14):
Creating a cryptocurrency and becoming a middleman in the trading
of them could be very lucrative, much more so than
being a trading firm like Alimta Research, where you need
it to be right on every trade to make money.
Sam Bankment, Freed and its inner circle could no doubt
see the possibilities and they wanted in on the action.
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(19:44):
Welcome back to Red Pilled America. So by twenty eighteen,
the cryptocurrency world was quietly undergoing an evolution. Bitcoin was
monopolizing the headlines, but new types of cryptocurrencies were entering
the market. Unlike Bitcoin, where computers had to work hard
solving mathematic problems to mine a limited number of bitcoin.
(20:06):
Some of these new cryptotokens were just created at will.
They looked less like digital cash and more like an
initial public offering of a stock. In fact, they were
even called by a similar name, Initial coin Offering or ICO.
Joe Bankman thought the whole scheme sounded outlandish. How could
the value of these lines of computer code even be determined,
(20:28):
he thought out loud. But the astonishing thing is. Within
a matter of months, his son, Sam Bankman Freed decided
he wanted to become a crypto middleman and use his
own initial coin offering. To get that idea off the ground,
Sam reached out to an old friend, a guy named
Gary Wang, a Chinese American. Gary first met Sam way
(20:50):
back in high school when they both attended a math
summer camp. The two became roommates at MIT. Gary got
a degree in mathematics and computer science and could write
the code necessary to build a cryptocurrency exchange and also
any backdoor in the system that could be used to
hide shenanigans. The two became co founders in Sam's new idea,
and in May twenty nineteen, Sam announced his crypto middleman
(21:13):
venture to the world.
Speaker 4 (21:15):
We also recently launched a derivatives exchange in crypto called FTX.
Speaker 1 (21:19):
FTX was in exchange where people could trade and store
different cryptocurrencies. With Gary's knowledge of writing code and Sam's
experience working as a Wall Street trader, the two could
create a cryptocurrency exchange that had the look and feel
of a legitimate stock exchange platform, a platform so sleek
that it could attract the traditional trading community. As Sam
(21:40):
and Gary were developing FTX, alternative cryptocurrencies got a jolt
of credibility.
Speaker 8 (21:45):
Facebook announcing a new digital currency called Libra, and Facebook
says this digital currency aims to make it as easy
to send money around the world as it is to
send a photo.
Speaker 1 (21:55):
With Facebook entering the race, the crypto gold rush expanded,
no doubt. Seeing the opportunity, Sam quickly jumped in the game.
In July twenty nineteen, he launched his own initial coin,
offering the same type of cryptocurrency offering that his father,
just a few months earlier learned was rife with fraud.
Speaker 9 (22:17):
Now, in my own personal opinion, the large majority of
these icos are frauds or they're going to fail.
Speaker 10 (22:23):
I'll totally agree with that.
Speaker 1 (22:24):
By the way, Sam called his new cryptocurrency FTT. It
may have been a digital token like bitcoin, but unlike
Satoshi Nakamoto's brainchild, FTT was not mined by computers performing
massive amounts of computational work. Sam just made FTT tokens
himself out of thin air. These tokens functioned kind of
like a stock in his company FTX. He now just
(22:48):
needed investors to put their money into that stock.
Speaker 2 (22:53):
It was around this time that a man entered Sam's life.
Speaker 11 (22:57):
So I was born in China and then I moved
to Canada when.
Speaker 6 (23:00):
I was twelve.
Speaker 2 (23:01):
That's Chong Peng Chow that goes by the moniker CZ.
CZ got his feet wet in finance working at Bloomberg.
Speaker 11 (23:12):
And then in two thousand and five, I returned to
Shanghai to do a startup together with five other funders.
Speaker 2 (23:18):
While at this startup, cz began to hear about something
called bitcoin. And at the time in twenty thirteen, many
people from traditional Wall Street were let's just say they
weren't too fond of this new cryptocurrency.
Speaker 8 (23:29):
I just had to get your thought on bitcoin.
Speaker 2 (23:32):
Famed investor and vice chairman of Berkshire Hathaway, Charlie Munger
was asked for his thoughts on bitcoin.
Speaker 12 (23:39):
This digital currency that's out there that people say, oh,
it might be the next big thing. What do you think.
Speaker 1 (23:46):
I think it's rat poison.
Speaker 5 (23:49):
Put him down?
Speaker 3 (23:50):
Is on de side.
Speaker 5 (23:53):
Do you understand what they're trying to do with it?
Speaker 1 (23:55):
No, but I regard it as deep belief.
Speaker 2 (23:57):
Lagy CZ, coming from a traditional Wall Street from Bloomberg,
may have taken Charlie Munger words on the matter is
gospel that then he attended an event, But the.
Speaker 11 (24:06):
Thing that turned for me was the Vegas conference in
December twent thirteen.
Speaker 6 (24:11):
Where are you coming from Toronto?
Speaker 3 (24:12):
He recommended to other people, and I'm going to recommend
to everybody so I find the best compass of event.
Speaker 2 (24:17):
Series Inside Bitcoin's twenty thirteen was one of the industry's
first large scale bitcoin conferences. Again CZ, so I went there.
Speaker 11 (24:30):
I went to Vegas to learn about bitcoin and met
a bunch of people, but it was really a group
of nice people. They're non money driven, they're very nice.
Speaker 2 (24:38):
CZ understood the blockchain technology behind bitcoin and thought it worked.
Speaker 11 (24:42):
So after that conference, I said, Okay, if this is
the community that's around. I'm very happy to join this industry,
and I know that it will be the future, So
I know, basically it's like he's covering the Internet. In
nineteen eighteen nine, by.
Speaker 2 (24:54):
The end of the conference, CZ decided to leave the
startup he was working.
Speaker 11 (24:58):
At and I decided to jump full into crypto. Back then,
he was called the bitcoin industry. So I worked at
a couple other cryptic changes first, and then by two seventeen,
we thought the timing was about right. We want to
take a shot at it.
Speaker 2 (25:12):
CZ launched Binance, a cryptocurrency exchange.
Speaker 11 (25:16):
We just said, well, let's take a shot at see
if it works. When we started staling seventeen, most of
the exchanges are unusable on half of the days because
of the volumes too high, so we thought we could
improve that.
Speaker 2 (25:27):
So by the time Sam bankmin Freed was developing FTX
in twenty nineteen, CZ was as veteran as they come
in the cryptocurrency industry. He was running a wildly successful
crypto exchange himself and was just the type of man
that Sam needed to put his crypto exchange FTX on
the map. CZ would later recall his early relationship with
(25:49):
Sam Tulana nineteen.
Speaker 11 (25:51):
Sam and I actually talked about potentially collaborating our futures
exchange together. Somehow you didn't pan out, but we actually
ended up investing in FTX.
Speaker 2 (25:59):
By the end of twenty nineteen, Cz became one of
the first major investors in FTX, and in return for
his investment, Sam gave Cz a bundle of FTT tokens.
To get others to invest in his venture, Sam offered
FTX users rewards and discounts if they stored their funds
in his FTT tokens. In a way, Sam was getting
(26:19):
people to buy a kind of stock in his company,
but all they really owned were bits of computer code
that Sam created out of thin air. Money began flowing
into Sam's coffers. He was not only making a fee
from the trades on his ftx platform. People used ftx
to store their cryptocurrency like a bank account, so he
also acquired access to ftx users crypto funds.
Speaker 3 (26:43):
Again, Dumberg, when you study the history of frauds in
the middle of Manias, again, there's sort of I think
there's two categories of frauds. The frauds that happen all
the time, those con games and conference schemes. But then
there's people who are attracted to manias with the maybe
not the intent originally to commit fraud, but very early
on occurs. And we wrote about this in one of
(27:05):
our pieces, sort of incrementalism. Once you institutionalize stealing a penny,
stealing a nickela diamond, a quarter become a lot easier.
Speaker 2 (27:13):
Alamina Research may have had an unsustainable business model that
with FTX, Sam's crypto ventures began to stabilize, just long
enough for Sam to catch a ride on a crypto's tsunami.
Speaker 13 (27:24):
We begin tonight with the growing concern as the toll
from that deadly coronavirus now grows, spreading from Wuhan, China,
and tonight that first case here in the US, the
patient in isolation now being treated by that robot.
Speaker 14 (27:37):
The coronavirus outbreak maybe battering stock prices, but it's boosting
the fortunes of bitcoin. The value of the cryptocurrency is
now hovering at around ninety three hundred dollars. That's up
nearly ten percent over just the last week.
Speaker 1 (27:49):
As the price of bitcoin rose. In twenty twenty, Sam
Bankman Freed began to explore his effective altruism, But in
practice the philosophy looked familiar.
Speaker 4 (27:58):
When you think about how much impact something like the
presidency can have on the world. I mean, whatever you
think about it, you know, whoever you think would be
good or bad at it, it clearly matters.
Speaker 1 (28:09):
I let me to research. Donated five million dollars to
Joe Biden's twenty twenty campaign, making Sam the second largest
donor to Biden's campaign. Sam's brand of effective altruism looked
a lot like old fashioned political lobbying.
Speaker 4 (28:22):
You know, you could look at like the budget, you know,
and like how much impact does the president have on
the budget? You know, I think we're up to like
twenty trillion dollars over a term or something like that.
Speaker 1 (28:31):
He'd spread his effective altruism donations to other politicians as well,
on both sides of the aisle. After Biden's win, Sam's
business exploded along with the price of bitcoin.
Speaker 3 (28:42):
You know, we have low volumes between Christmas and New
Year's Yet Christmas Eve to Sunday it rose or over
twenty percent, breaching that twenty eight thousand.
Speaker 12 (28:50):
I mean, can this actually last?
Speaker 9 (28:52):
So the next level we're kind of looking at year
is the thirty thousand level, which is really astonishing thinking
about from where we started at the beginning of the year.
Speaker 12 (29:00):
Bitcoin it broke through the fifty thousand dollars level just
a short time ago. It's now at more than seventy
percent since January first.
Speaker 9 (29:09):
The price of bitcoin has passed sixty thousand US dollars
for the first time this weekend.
Speaker 13 (29:14):
But take a look at this to the moon.
Speaker 1 (29:16):
As Bitcoin's price rose, the price of Sam's FTT token
skyrocketed along with it. FTT tokens went from roughly three
dollars and fifty cents on election Day twenty twenty to
nearly sixty dollars a token just six months later. At
the time, no one quite understood why ftt's price rose.
Sam and his inner circle looked like geniuses that could
(29:38):
do no wrong, an idea that they started buying into.
The team became a bit drunk with their crypto success,
so drunk that they became sloppy in public. Sam tweeted,
quote stimulants when you wake up, sleeping pills if you
need them while you sleep. The CEO of Alameda Research,
Carolina Ellison, even tweeted, nothing like regular amphetamine use to
(29:59):
make you appreciate how dumb a lot of normal, non
meta cadd human experience is. The crew obviously felt invincible,
and Sam started spending money as if he was printing
it himself. He lathered the wallets of the world's biggest
cultural influencers, and it was around this time he got
the attention of corporate media.
Speaker 9 (30:19):
Sam, it's good to have you.
Speaker 4 (30:20):
Yours exchange is the one that Tom Brady and does
Giselle Bunch and now have an equity stake in what
is going on there. Yeah, it's been super fun working
with them and talking with them. You know, I think
they've been interested in crypto for a while and they're
obviously extremely impressive people.
Speaker 3 (30:34):
Again, Dumberg, it was when bitcoin was at sixty five thousand.
It was our first introduction to Sam Bank my feet,
of all people, he was on CNBC in his pajamas,
looked like he hadn't showered in several days, and they
were treating him. And I thought to myself that this
guy must be a billionaire, Like, what am I doing wrong?
This guy's clearly a billionaire, and they'd never heard of
him before, and here was and I saw his name,
and his name flashed up on CNBC and I was
(30:56):
looking at this guy on television and look, I've never
been on CNBC, but I would wear a suit, i
would comb my hair, I'd probably have a shower. This
guy was in a bean chair, basically in his pajamas,
with a big moth on his head, and they were
treating this guy like he was a guru.
Speaker 8 (31:10):
How did you do this so quickly?
Speaker 10 (31:12):
I mean, your company is two years old and you're
doing something like four hundred billion dollars worth of volume
per month.
Speaker 3 (31:24):
And having been around a few of these market cycles
like I'm sure you have, I just couldn't believe what
I was seeing now. Of course it was way too early,
and you know, Bitcoin did its thing, but from the
moment I saw the man, it stuck to me.
Speaker 1 (31:35):
But the finance world was buying into Sam's sloppy persona literally,
Sequoia Capital, one of Silicon Valley's most storied venture capitalist firms,
jumped in line to give Sam money. I mean, this
was a firm that invested in Google, PayPal, Instagram, Zoom,
and Apple. But Sam seemed unimpressed by their track record.
When he pitched the firm. He was playing the video
(31:57):
game League of legends. The team at Sequoia Capital swooned
over this homeless she crypto boy. I love this, founder,
said one partner. I'm a ten for ten, added another.
They felt so strongly about Sam that they chronicled their
reaction to his antics on their company website, again Doomberg.
Speaker 3 (32:16):
In the history of financial manias. At their apex, they
all suffer from the same characteristic, which is fear of
missing out. So we've been asked, how is it that
one point eight billion dollars of VC money from the
most prestigious venture capital firms in the world would find
its way into Sam bankmcfreed's scheme, if you can convince
(32:37):
the world that you're the hot deal, you can get
away with anything, and he did. And I do think
this is sort of a universal trait of humans and
con artists and grifter's play onto this trait. The fear
of missing out is a very intoxicating drug.
Speaker 1 (32:54):
Sequoya eventually forked over two hundred and ten million dollars
to Sam bankman Freed and Sam was just getting started.
Speaker 3 (33:03):
And if you look literally the terms of those investments
that Sekoja and soft Bank and the Antaro Pensions Fund
and Dan Low and pick your favorite big name investor
who has you know, Forducier obligations to their own investors
to do some semblances due dilligence in this regard. Literally,
the terms of engagement were here's the price, here's the timing.
You fund by Friday, or you're not in the deal.
(33:24):
And they just said, I'm in. I'd rather be in
the deal because in a mania, access the deals is
the number one driver of returns, and so people who
were willing to do due diligence were just left out
of the deal.
Speaker 5 (33:36):
He pitched us in that seventeen billion dollar round.
Speaker 2 (33:39):
That's famed Canadian American venture capitalist Chamath Polyapatia recalling the
time Sam and his team pitched his firm in the
summer of twenty twenty one.
Speaker 5 (33:48):
And I did a zoom with him, and after the zoom,
I'm like, this doesn't make much sense, but I'll have
my team do some work. We did some work, and
we sent him a two page deck and we said,
here are our recommendations for taking the next step.
Speaker 11 (34:00):
One was the.
Speaker 5 (34:01):
Formation of a board and was the creation of dual
class STOC. The third was some reps and warranties around
affiliated transactions and related party transactions, and the person that
worked there called us back in literally and I'm not
kidding you said go yourself was quote unquote the response
to us.
Speaker 2 (34:21):
The finance world was throwing so much money at Sam
with no questions, asked that he could tell investors like
Chamath to go pound sand. When he was done with
his fundraising tour, FTX raked in an industry record nine
hundred million dollars. FTX, a company that created their FTT
tokens out of thin air, was now valued at eighteen
(34:42):
billion dollars.
Speaker 11 (34:43):
Can I talk to you about something?
Speaker 1 (34:45):
Yeah, we talked about it. I got another ten years left,
maybe fifteen, not that this is big.
Speaker 2 (34:50):
With his windfall, Sam began running ads for FTX with
celebrity endorsements like Tom Brady and Giselle.
Speaker 4 (34:56):
FTX is the safest and easiest way to buy and
sell crypto.
Speaker 9 (34:59):
It's the best way to get in the game.
Speaker 2 (35:02):
By September, Sam moved his companies from Hong Kong to
the Bahamas, and when he stated his reason for the move,
he hinted at a plan that was in motion.
Speaker 10 (35:11):
What was pushed you over the edge to need to
move the company away?
Speaker 1 (35:16):
From Hong Kong.
Speaker 4 (35:17):
Yeah, so I think the biggest things that we're thinking.
We'd never had a single sort of formal headquarters before
and we were really excited about establishing one. And the Mhammads,
I think the biggest things. First of all, they passed
a really progressive, forward looking bill regulating the crypto industry.
Speaker 15 (35:32):
There.
Speaker 4 (35:32):
It's one of the only countries in the world that
has a comprehensive licensing him from crypto exchanges. That's really exciting.
Speaker 2 (35:38):
Sam appeared to have something up his sleeve. By the
end of twenty twenty one. A plan was in motion,
a plan to take out his biggest competitor, Finance, owned
by his friend CZ. You see, a few months earlier,
Sam decided to distance himself from CZ by buying out
his stake in FTX. He then proceeded to bad mouth
(35:59):
CZ's efforts in complying with government regulators.
Speaker 4 (36:02):
How you viewede what's been happening with finance throughout the
world in recent months of weeks. Yeah, it's been quite
the barge. I guess you know. Something else say is that,
you know, we try really hard to be as cooperative
as we can with regulators. We try to be proactive
about doing what we think is not just compliant but
also you know, within the intentions of where regulators want
(36:25):
to go. When you don't do that, and when you
sort of appear less flexible or responsive, I think that
more likely to lead to cases where regulators might feel like,
you know, they have no choice but to start, you know,
bringing the hammer.
Speaker 2 (36:38):
It appeared that SAM was trying to position himself as
regulator friendly, while as primary competitor CZ was not. As
the end of twenty twenty one approached, SAM was openly
talking about the need for regulations in the cryptocurrency industry.
Speaker 4 (36:53):
And I think you know you've heard share Genzler say,
you know again again, Look, we would love to see
crypto platforms coming in register.
Speaker 2 (37:00):
Gary Gensler is a chairman of the Security and Exchange Mission,
the federal commission that sets some police's stock market regulations.
Speaker 4 (37:07):
If I guess, I would guess that you know, he
and the SEC have been thinking about what the regime
like that might look like. I would not be surprised
to see developments over the.
Speaker 1 (37:16):
Next year on that.
Speaker 2 (37:20):
If Sam could influence the industry's US regulator, he could
help enact rules that his companies could meet, but his
competitors could not. All he'd need to do is become
the go to voice in Washington, d C. On the
crypto industry. Do you want to hear red pilled America
stories ad free, then become a backstage subscriber. Just log
(37:43):
onto Redpilled America dot com and click join in the
top menu. Join today and help us save America one
story at a time. Welcome back to red Pilled America.
So around mid twenty twenty one, it appeared that Sam
Bankment Freed had a plan in motion. If he could
influence the industry's US regulators, he could help enact rules
(38:04):
that his company could meet but that other competitors could not.
All he needed to do was become the go to
voice in Washington, d C. On the crypto industry. By
the close of the year, Sam Bankman Freed's political donations
seem to have paid off.
Speaker 3 (38:21):
Mister Bankman Freed, you are now recognized for five minutes
to present your oral testimony.
Speaker 4 (38:27):
Thank you Chairwaters, Ranking Member mckenry, and all the members
of the committee for having me here today to testify.
It's an honor to be here.
Speaker 2 (38:35):
Sam testified before Congress about the future of finance, and
he argued for the need for more regulations in the
cryptocurrency industry.
Speaker 4 (38:43):
I think that it is coming, and I think it
is important, and I think that is healthy that the
industry will be regulated. I think it is also already
regulated in a number of ways. I think that there
are points that need to be addressed to give oversight
of various aspects of the industry that do not have
sufficient oversight right now, and I also think that it
is important to do so in a reasonable and common
(39:04):
sense way that understands the industry. Well.
Speaker 15 (39:07):
If you look at the history of FTX, what you'll
see is there is a constant need to defeat opponents.
Any competitor to FTX as an exchange or Alameda is
a VC arm They went after their competitors.
Speaker 2 (39:22):
That's been Armstrong, crypto enthusiast and creator of bitboycrypto dot com.
Speaker 15 (39:27):
And I always say, you know, the easiest way to
become the tallest building in town is to tear down
all the other buildings, and that was what they were
trying to do. They were trying to create a monopoly
through tearing other companies down.
Speaker 2 (39:37):
It appeared that Sam was making a play to gain
monopoly control of the American crypto industry by taking out
his primary competitor, CZ's crypto exchange finance that Sam wasn't
the only alpha predator in the crypto space, you see.
(40:02):
To buy out he's investment in FTX, Sam gave CZ
a bunch of his FTT tokens as a part of
the deal, and when he did, he unwittingly gave CZ
a deadly weapon.
Speaker 15 (40:13):
When you really look at you know, CZ vers Sam
for about six months there was a deterioration of that relationship.
Is I believe Caz found out more and more about
what Sam was doing, and then at some point he
found something out that was like, Okay, now I can't
I can't look back, I can't turn away. At this
point I got to, you know, slam down on this
and do something.
Speaker 1 (40:32):
That's what he did. Coming up on Red Pilled America.
Speaker 3 (40:36):
This guy's just flippantly saying we had people wired to
Alamito's bank accounts because FTX quote didn't have banking is incredible,
Like you're just admitting wirefrad which is all the more
incredible when you consider that his parents are professors at
Stanford University.
Speaker 12 (40:51):
I think there's been a number of headlines, as you
know about FTX, the company buying a lot of real
estate up in the Bahamas. But then there's also reports
that your parents signed and were effectively provided with what
seemed like a vacation home.
Speaker 4 (41:06):
I don't know the details of that house for my parents.
Speaker 15 (41:09):
And when they needed more money, they would just print
more FTT and then they would be able to immediately
add value to their balance sheets.
Speaker 16 (41:16):
I am no cryptocurrency expert of no finance ex but
I don't think you answered my question. I always ask, yeah,
did you know that FTX deposits were used to pay
off Alameda creditors?
Speaker 4 (41:31):
I don't know of FTX deposits being used to pay
off Alameda creditors.
Speaker 2 (41:38):
Red Pilled America is an iHeartRadio original podcast. It's owned
and produced by Patrick Carrelci and me Adriana Cortez of
Informed Ventures. Now. You can get ad free access to
our entire archive of episodes by becoming a backstage subscriber.
To subscribe, visit red Pilled America dot com and click
join in the top menu. That's red Pilled America dot
(41:58):
com and click join in the top menu. Thanks for listening.
This is Red Pilled America.
Speaker 2 (00:06):
Before we start the show, just a reminder to share, like,
and subscribe to this podcast wherever you're listening to it,
and please give us a five star rating. Help us
save America one story at a time.
Speaker 1 (00:18):
Previously on Red Pilled America.
Speaker 3 (00:20):
Over the weekend, speculation rose about the solvency of FTX.
Speaker 1 (00:25):
It appears that FTX has stop woodraws, so.
Speaker 4 (00:28):
It looks like all ftx dot com balances or zero.
Speaker 1 (00:31):
Sam Bankman Freed was a pillar of the crypto world.
Speaker 4 (00:34):
I grew up in the San Francisco Bay area on
a Stanford campus.
Speaker 2 (00:38):
From his first breath, Sam was surrounded by the elite
of the academic elite.
Speaker 5 (00:44):
Effective autism is about using your time and money as
effectively as possible to make the world a better place.
Speaker 2 (00:49):
Sam set up a cryptocurrency trading company. He'd eventually call
it Alanita Research.
Speaker 4 (00:55):
We want a bank account and if we're bitcoinn arbitraged
trading shop founded by a bunch of twenty year olds,
if that's the name of our company, we're not getting
our bank account.
Speaker 1 (01:06):
I'm Patrick Carlci.
Speaker 2 (01:07):
And I'm Adriana Cortez.
Speaker 1 (01:09):
And this is Red Pilled America a storytelling show.
Speaker 2 (01:13):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:18):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:21):
The media marks stories about everyday Americans at the Globalist ignore.
Speaker 1 (01:27):
You could think of Red Pilled America as audio documentaries,
and we promise only one thing, the truth. Welcome to
Red Pilled America. We're at part two of our series
(01:51):
of episodes entitled Crypto Revisited. If you haven't heard the
first episode, stop and go back and listen from the beginning.
We're looking for the answer to the question where is
cryptocurrency going? By telling this story of the astonishing rise
and spectacular fall of crypto entrepreneur Sam Bankman freed so
to pick up where we left off. In late twenty seventeen,
(02:13):
Sam launched a cryptocurrency trading firm he named Alameda Research.
He chose research because Sam knew that the banking community
wasn't too keen on the crypto world, but everyone liked research.
The name was a perfect way to conceal the nature
of his business. A problematic behavior was initiated.
Speaker 2 (02:35):
Sam's band of crypto novices began exploiting a Bitcoin price
difference between the Asian and American markets, where they purchased
bitcoin in the United States and re sold it at
a higher price in countries like Japan. Sam would eventually
move Alameda Research out of the United States at.
Speaker 4 (02:52):
This point, whereas most of crypto happening, it's not in
the States, it's in Asia.
Speaker 2 (02:56):
That's Sam bankman Free explaining his company's move, and so.
Speaker 4 (03:00):
It also kind of became clear that, you know, we
really want relationships with their customers. The police to be
was well, at least somewhere in Asia.
Speaker 2 (03:07):
Sam chose Hong Kong.
Speaker 4 (03:08):
And then why Hong Kong, Well, we thought about a
bunch of different things here, including like what's centrally located,
where is the bulk of crypto happening, what's the relationship
of the country like to the important jurisdictions in crypto,
and how easy is it for foreigners to get to
set up shop there, and sort of all of those.
Speaker 1 (03:27):
Mind together more.
Speaker 2 (03:29):
In markets like Hong Kong also didn't have the tight
regulations that were in place in the United States. Sam's
Alameda Research was at times shifting as much as twenty
five million dollars a day, but the good times didn't
last for long. The bitcoin price difference began to shrink,
shrinking Sam's profits along with it. By late twenty eighteen,
Alameda Research was already in trouble. The algorithm SAM created
(03:52):
for automated trading ran up a series of losses on
some bad trades. SAM was in need of money, so
Alameda began to approach investors for loans. They missed high returns,
as much as twenty percent. And here's the kicker. They
promised their investors that there was no risk. In one
(04:13):
presentation deck, Alameda Research claim to quote, these loans have
no downside end quote in the world of finance, guaranteeing
this level of return while promising no risk should have
been a giant red flag.
Speaker 3 (04:28):
Be wary of fast growing financial services companies because ultimately
anybody could grow a financial services company quickly if you
just give away a lot of stuff.
Speaker 2 (04:36):
That's a representative from Doomberg, one of the most widely
read finance newsletters on subscription based platform Substack. We'll be
hearing more from Doomberg throughout this series. Alameda's presentation deck
went on stating, quote, we guarantee full payment the principle
and interest enforceable under US law and established by all
parties legal counsel. To any seasoned finance veteran, it was
(05:00):
a staggering claim. No less so because of who was
likely shepherding Sam's legal efforts.
Speaker 6 (05:07):
I was the one that hired our early lawyers.
Speaker 2 (05:10):
That's Sam's father, Joe Bankman, in an August twenty twenty
two podcasts discussing his early work with his son. According
to Joe, Sam had been asking him for help in
the early days of his cryptocurrency ventures.
Speaker 7 (05:22):
I wanted to make sure that I could do it
and be useful. But I think from the start, whenever
I was useful, I lend a hand, And it was
clear at the start that on things like law, I mean,
the company didn't have any lawyers, So I think my
utility there was pretty obvious.
Speaker 2 (05:41):
From the beginning. There was a problem with Alameda Research's
business model. To make big money in the trading business
of buying low and selling high, you need to be
right practically every time. If you're wrong, if you instead
buy high and sell low, you can lose everything in
one day, Especially for using algorithms to trade in the
volatile ecosystem of crypto. The smart money in a world
(06:03):
of finance typically tries to go a different route. They
try to become a middleman, where fees are made on
both sides of a trade. As a middleman, you don't
have to be right all the time. You just need
to be in the room, matching buyers with sellers and
shaving a little off the top in the form of fees. Now,
in the early crypto world of just bitcoin, a middleman
(06:24):
may not have had as many opportunities to be this matchmaker.
Imagine one or two stocks trading on the stock exchange,
not much action. But if the ecosystem expanded a bit,
if there were more things to trade, there may be
enough trades to make a killing as a middleman. And
that's exactly what was developing in the world of crypto.
Speaker 1 (06:49):
By twenty eighteen, the industry was quietly undergoing an evolution.
Just as the bitcoin price difference began to fade, a
new type of cryptocurrency was flooding the market. Bitcoin was,
no doubt that dominant crypto, grabbing all the headlines, but
there were new cryptotokens popping up outside of the mainstream
that started to change the character of the crypto community.
(07:11):
Before we explained the significance of this phenomenon. We should
give a quick refresher on Bitcoin and the initial problem
it was purportedly created to solve. Bitcoin was the original
decentralized cryptocurrency, launched in early two thousand and nine by
an anonymous figure or group of figures no one really knows,
known as Satoshi Nakamoto. Bitcoin was pitched as a digital
(07:34):
cash that looked to bypass the out of control dollar
printing press of the Federal Reserve, the United States central
bank that was causing massive inflation and wreaking havoc on
the American economy. To bypass the Federal Reserve, Satoshi needed
to overcome a critical problem that until the two thousand
and eight financial crisis, had gone unsolved. For decades. Prior
(07:55):
to the crisis, computer programmers called cryptographers had been trying
to figure out how to create a digital coin that
could only be possessed by one person at a time.
When I send an email to someone, both I and
the person receiving it have a copy of the email.
So Toshi's technology devised a way to send what some
consider a digital object to someone without leaving a copy
(08:16):
with the sender. He called that digital object, the bitcoin.
So when I send a bitcoin to someone, I no
longer have a copy of the bitcoin. The person I
send it to now has sole possession of the digital coin.
It's handed off, just like cash. The technology that performs
this task is called the blockchain. It records the transaction
into a public ledger through an automated system of computers
(08:39):
throughout the world, removing the costly middleman like Bank of America, Visa,
and PayPal that deduct large transaction fees. Bitcoin was thought
to be the first functioning Internet cash. Instead of gold
coins or paper dollars, this new internet cash used bitcoins.
A crucial feature of this bitcoin system is that there's
(09:02):
a limit to the amount of bitcoins in circulation. Unlike
the US dollar that can be printed by the Federal
Reserve at will. The maximum number of bitcoins that will
ever exist is twenty one million, and the bitcoins come
into existence in a not so easy way. Computers raised
to solve the complicated math problems of the blockchain, and
when they do, they're rewarded with bitcoins. This is called
(09:23):
bitcoin mining. The bitcoin system was designed to mimic the
old gold standard, where the number of US dollars were
confined to the amount of gold in the Treasury Department.
This is a very important point today. As the Federal
Reserve continues to print money, the US dollar loses purchasing
power over time because there are more dollars in circulation.
(09:43):
If you think of dollars as shares of stock in
the United States, the more dollars that there are, the
smaller the share of the United States you own. So
the value of a US dollar decreases from year to year.
That's why the price of products continue to rise every year.
It's because your dollars are losing value. Sotoshi Nakamoto allegedly
wanted to solve the this inflation problem by limiting the
(10:04):
number of bitcoins that could ever be in circulation to
a finite number that's twenty one million, so from year
to year. Unlike the US dollar, bitcoins can't just be
printed at will. When the Bitcoin network first launched on
January third, two thousand and nine, almost no one was
paying attention, but as a single bitcoin went from zero
(10:26):
to one hundred, then to one thousand, then to nearly
twenty thousand dollars, a crypto gold rush infected the globe
and people wanted in. By twenty eighteen, hidden behind the
bitcoin headlines, a dramatic shift was underway. Speculators entered the
market wanting to make fast money on crypto, but it
was a bit too late to ride the bitcoin shuttle
(10:47):
to the moon. Gone were the days of buying a
single bitcoin fo one hundred dollars, then watching the price
skyrocket to twenty thousand. These speculators needed something new to
happen in crypto so that they could try to ride
the wave. And that's something new was a whole new
job of cryptotokens going against Bitcoin's decentralized ethos. Hundreds of
(11:10):
unscrupulous characters began creating their own cryptocurrencies controlled by the
person creating them. Bitcoin's decentralization ethos went out the door,
and these new tokens presented an opportunity, an opportunity that
Sam Bankman Freed and his inner circle appeared to recognize.
Speaker 6 (11:34):
After we close today, I'm going to visit one of
my sons who has a startup in Berkeley.
Speaker 2 (11:41):
That's again Sam Bankman Freed's father, Joe Bankman. In early
twenty eighteen.
Speaker 6 (11:46):
It's a business and my father was a businessman and
while I'm not quite evidently, I feel my father jumping
into my skin a little bit and appreciating the intricacies
of the business's built.
Speaker 2 (12:00):
Joe was a law professor at Stanford, but in the
early days of Sam's crypto ventures, Joe had a side
hustle helping his son. While Sam was busy trying to
grow alume to research his father, Joe was exploring some
of the legal issues surrounding cryptocurrency.
Speaker 8 (12:14):
Welcome to Stanford Legal, where we look at the cases, questions, conflicts,
and legal stories that affect us all every day. I'm
Pam Carlin along with Joe Bankman.
Speaker 2 (12:23):
Joe co hosted at Stanford Legal podcast. Just as hundreds
of new cryptocurrencies flooded the market, Joe and his co
host were introducing the industry to his audience.
Speaker 8 (12:33):
So, Joe, suppose that you and I decide to go
in on a gift certificate to send a beloved friend
to a day spa, and I owe you a bunch
of money for it. I could hand you the cash
as I did, or I could I could write you
a check. You could tell me your bank account please,
and then I could make a deposit or else, maybe
a withdrawal. I could use a credit card if I
(12:55):
was buying the gift certificate from the spy itself, where
I could use PayPal, although I wouldn't. Those aren't the
only ways to pay people these days.
Speaker 6 (13:01):
That's right. You could also also use blockchain technology. Blockchain's
kind of a master electronic ledger that records transactions. It's
often used with a cryptocurrency like bitcoin, and supporters say
that blockchain technology is actually faster and cheaper as a
way of sending money.
Speaker 2 (13:22):
By September twenty eighteen, most people had already heard of bitcoin,
but far less new about the alternative crypto tookens flooding
the market. Joe Bankman asked two crypto experts about some
of the growing oddities within the industry.
Speaker 6 (13:36):
How about these things that are called icos. There's thousands
of cryptocurrencies. I don't know if you'd call those digital assets.
Tell us about those.
Speaker 9 (13:48):
Icos are at the next level of complexity.
Speaker 2 (13:50):
An ICO is an abbreviation for initial coin offering. It's
probably not an accident that ICO sounds a lot like IPO,
or initial public offering, when a private company issue shares
of its stock to the public for the first time,
the expert went.
Speaker 9 (14:05):
On, Generally, icos describe a system that's going to use
something like blockchain technology at some point in the future
to do something that isn't done now, and you most
frequently pay for these icos by using crypto now. In
my own personal opinion, the large majority of these icos
(14:28):
or frauds or they're going to fail.
Speaker 1 (14:30):
I'll totally agree with that.
Speaker 2 (14:31):
By the way, according to these experts, a new type
of fraud was entering the crypto community, and it was
entering through these initial coin offerings. These new digital tokens
may have used blockchain technology, but in many ways they
were controlled by the companies that created them. The cryptocurrency
world was taking a detour away from the ethos of bitcoin,
(14:51):
where bitcoin was about freedom and used the blockchain to
create a decentralized digital cache that bypassed the central banking system.
These new digital tokens were something entirely different. Joe Bankman's
(15:12):
co host asked the expert to elaborate on these initial
coin offerings.
Speaker 8 (15:16):
Can you give me a for instance of like, what
is it they promised to you?
Speaker 9 (15:18):
Sure, let me use one that the sec sued. It
was called Munchies all right, that if you sent crypto
to the people who are going to issue these Munchie tokens,
you would in the future get a token or a
coin or a bit of code that would allow you
to get discounts at restaurants, and in return for that,
(15:39):
you would instagram photos of the food, you'd write reviews
of the food. So it would be a mini economy
built around food and restaurants and the like, and the
currency that you would use would be these Munchies.
Speaker 2 (15:53):
In essence, these new types of cryptocurrencies looked more like
vehicles to invest in a company rather than a form
of digital cash. At least that's what the Security Exchange
Commission thought.
Speaker 9 (16:03):
The SEC wasn't thrilled with this, and they actually went
and they sued the people that were launching the Munchies.
They said you had to register these. You didn't register them,
and they settled and they withdrew the plan to raise
crypto for the Munchies.
Speaker 2 (16:20):
Sam Beakman Fried's father seemed dumbfounded by the scheme.
Speaker 6 (16:23):
You know, it's so outlandish that I'm tempted to accuse
you of just making that up. How many of these
have been sold? Who's buying them?
Speaker 1 (16:31):
Encounter.
Speaker 10 (16:31):
You're twenty seventeen. There was about three billion dollars raised
through icos this year. In twenty eighteen, year to date,
you've already had ten billion dollars raised through icos. So
it's actually increased a lot, and I don't see it
slowing down a any time real soon, in part because
I think we haven't seen as many regulators get as
aggressive as I think they probably should in regulating what
(16:52):
is a little bit of a chaotic market.
Speaker 2 (16:54):
Joe Begman concluded the discussion with an obvious question.
Speaker 6 (16:57):
Let me maybe close by covering something a lot of
people are wondering about, which is, how do we value
these assets? I mean, bitcoin goes from nothing to fifteen
thousand to six thousand, however useful they are, how do
we know what they're worth?
Speaker 9 (17:14):
The short answer is, who the hell knows. They're all
sorts of theories. I don't think a single one of
them actually works. I have profound concerns about the reliability
of information in the market. This isn't a market like
the SEC where we know that we have credible information
about secondary market trading and the like. It is very
easy to spam. The information networks have false transactions, have
(17:38):
false prices, and the like a lot of it is
who the hell knows?
Speaker 2 (17:44):
These ico tokens sounded outlandish to Joe Bankman, but this
new genre of digital token was clearly making money, big money,
with very little regulatory oversight. People were, in essence, issuing
company stock in the form of a private cryptocurrency token
without having to undergo much of the oversight of an
initial public offering, and this is where the opportunity was presented.
(18:14):
Creating a cryptocurrency and becoming a middleman in the trading
of them could be very lucrative, much more so than
being a trading firm like Alimta Research, where you need
it to be right on every trade to make money.
Sam Bankment, Freed and its inner circle could no doubt
see the possibilities and they wanted in on the action.
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Welcome back to Red Pilled America. So by twenty eighteen,
the cryptocurrency world was quietly undergoing an evolution. Bitcoin was
monopolizing the headlines, but new types of cryptocurrencies were entering
the market. Unlike Bitcoin, where computers had to work hard
solving mathematic problems to mine a limited number of bitcoin.
(20:06):
Some of these new cryptotokens were just created at will.
They looked less like digital cash and more like an
initial public offering of a stock. In fact, they were
even called by a similar name, Initial coin Offering or ICO.
Joe Bankman thought the whole scheme sounded outlandish. How could
the value of these lines of computer code even be determined,
(20:28):
he thought out loud. But the astonishing thing is. Within
a matter of months, his son, Sam Bankman Freed decided
he wanted to become a crypto middleman and use his
own initial coin offering. To get that idea off the ground,
Sam reached out to an old friend, a guy named
Gary Wang, a Chinese American. Gary first met Sam way
(20:50):
back in high school when they both attended a math
summer camp. The two became roommates at MIT. Gary got
a degree in mathematics and computer science and could write
the code necessary to build a cryptocurrency exchange and also
any backdoor in the system that could be used to
hide shenanigans. The two became co founders in Sam's new idea,
and in May twenty nineteen, Sam announced his crypto middleman
(21:13):
venture to the world.
Speaker 4 (21:15):
We also recently launched a derivatives exchange in crypto called FTX.
Speaker 1 (21:19):
FTX was in exchange where people could trade and store
different cryptocurrencies. With Gary's knowledge of writing code and Sam's
experience working as a Wall Street trader, the two could
create a cryptocurrency exchange that had the look and feel
of a legitimate stock exchange platform, a platform so sleek
that it could attract the traditional trading community. As Sam
(21:40):
and Gary were developing FTX, alternative cryptocurrencies got a jolt
of credibility.
Speaker 8 (21:45):
Facebook announcing a new digital currency called Libra, and Facebook
says this digital currency aims to make it as easy
to send money around the world as it is to
send a photo.
Speaker 1 (21:55):
With Facebook entering the race, the crypto gold rush expanded,
no doubt. Seeing the opportunity, Sam quickly jumped in the game.
In July twenty nineteen, he launched his own initial coin,
offering the same type of cryptocurrency offering that his father,
just a few months earlier learned was rife with fraud.
Speaker 9 (22:17):
Now, in my own personal opinion, the large majority of
these icos are frauds or they're going to fail.
Speaker 10 (22:23):
I'll totally agree with that.
Speaker 1 (22:24):
By the way, Sam called his new cryptocurrency FTT. It
may have been a digital token like bitcoin, but unlike
Satoshi Nakamoto's brainchild, FTT was not mined by computers performing
massive amounts of computational work. Sam just made FTT tokens
himself out of thin air. These tokens functioned kind of
like a stock in his company FTX. He now just
(22:48):
needed investors to put their money into that stock.
Speaker 2 (22:53):
It was around this time that a man entered Sam's life.
Speaker 11 (22:57):
So I was born in China and then I moved
to Canada when.
Speaker 6 (23:00):
I was twelve.
Speaker 2 (23:01):
That's Chong Peng Chow that goes by the moniker CZ.
CZ got his feet wet in finance working at Bloomberg.
Speaker 11 (23:12):
And then in two thousand and five, I returned to
Shanghai to do a startup together with five other funders.
Speaker 2 (23:18):
While at this startup, cz began to hear about something
called bitcoin. And at the time in twenty thirteen, many
people from traditional Wall Street were let's just say they
weren't too fond of this new cryptocurrency.
Speaker 8 (23:29):
I just had to get your thought on bitcoin.
Speaker 2 (23:32):
Famed investor and vice chairman of Berkshire Hathaway, Charlie Munger
was asked for his thoughts on bitcoin.
Speaker 12 (23:39):
This digital currency that's out there that people say, oh,
it might be the next big thing. What do you think.
Speaker 1 (23:46):
I think it's rat poison.
Speaker 5 (23:49):
Put him down?
Speaker 3 (23:50):
Is on de side.
Speaker 5 (23:53):
Do you understand what they're trying to do with it?
Speaker 1 (23:55):
No, but I regard it as deep belief.
Speaker 2 (23:57):
Lagy CZ, coming from a traditional Wall Street from Bloomberg,
may have taken Charlie Munger words on the matter is
gospel that then he attended an event, But the.
Speaker 11 (24:06):
Thing that turned for me was the Vegas conference in
December twent thirteen.
Speaker 6 (24:11):
Where are you coming from Toronto?
Speaker 3 (24:12):
He recommended to other people, and I'm going to recommend
to everybody so I find the best compass of event.
Speaker 2 (24:17):
Series Inside Bitcoin's twenty thirteen was one of the industry's
first large scale bitcoin conferences. Again CZ, so I went there.
Speaker 11 (24:30):
I went to Vegas to learn about bitcoin and met
a bunch of people, but it was really a group
of nice people. They're non money driven, they're very nice.
Speaker 2 (24:38):
CZ understood the blockchain technology behind bitcoin and thought it worked.
Speaker 11 (24:42):
So after that conference, I said, Okay, if this is
the community that's around. I'm very happy to join this industry,
and I know that it will be the future, So
I know, basically it's like he's covering the Internet. In
nineteen eighteen nine, by.
Speaker 2 (24:54):
The end of the conference, CZ decided to leave the
startup he was working.
Speaker 11 (24:58):
At and I decided to jump full into crypto. Back then,
he was called the bitcoin industry. So I worked at
a couple other cryptic changes first, and then by two seventeen,
we thought the timing was about right. We want to
take a shot at it.
Speaker 2 (25:12):
CZ launched Binance, a cryptocurrency exchange.
Speaker 11 (25:16):
We just said, well, let's take a shot at see
if it works. When we started staling seventeen, most of
the exchanges are unusable on half of the days because
of the volumes too high, so we thought we could
improve that.
Speaker 2 (25:27):
So by the time Sam bankmin Freed was developing FTX
in twenty nineteen, CZ was as veteran as they come
in the cryptocurrency industry. He was running a wildly successful
crypto exchange himself and was just the type of man
that Sam needed to put his crypto exchange FTX on
the map. CZ would later recall his early relationship with
(25:49):
Sam Tulana nineteen.
Speaker 11 (25:51):
Sam and I actually talked about potentially collaborating our futures
exchange together. Somehow you didn't pan out, but we actually
ended up investing in FTX.
Speaker 2 (25:59):
By the end of twenty nineteen, Cz became one of
the first major investors in FTX, and in return for
his investment, Sam gave Cz a bundle of FTT tokens.
To get others to invest in his venture, Sam offered
FTX users rewards and discounts if they stored their funds
in his FTT tokens. In a way, Sam was getting
(26:19):
people to buy a kind of stock in his company,
but all they really owned were bits of computer code
that Sam created out of thin air. Money began flowing
into Sam's coffers. He was not only making a fee
from the trades on his ftx platform. People used ftx
to store their cryptocurrency like a bank account, so he
also acquired access to ftx users crypto funds.
Speaker 3 (26:43):
Again, Dumberg, when you study the history of frauds in
the middle of Manias, again, there's sort of I think
there's two categories of frauds. The frauds that happen all
the time, those con games and conference schemes. But then
there's people who are attracted to manias with the maybe
not the intent originally to commit fraud, but very early
on occurs. And we wrote about this in one of
(27:05):
our pieces, sort of incrementalism. Once you institutionalize stealing a penny,
stealing a nickela diamond, a quarter become a lot easier.
Speaker 2 (27:13):
Alamina Research may have had an unsustainable business model that
with FTX, Sam's crypto ventures began to stabilize, just long
enough for Sam to catch a ride on a crypto's tsunami.
Speaker 13 (27:24):
We begin tonight with the growing concern as the toll
from that deadly coronavirus now grows, spreading from Wuhan, China,
and tonight that first case here in the US, the
patient in isolation now being treated by that robot.
Speaker 14 (27:37):
The coronavirus outbreak maybe battering stock prices, but it's boosting
the fortunes of bitcoin. The value of the cryptocurrency is
now hovering at around ninety three hundred dollars. That's up
nearly ten percent over just the last week.
Speaker 1 (27:49):
As the price of bitcoin rose. In twenty twenty, Sam
Bankman Freed began to explore his effective altruism, But in
practice the philosophy looked familiar.
Speaker 4 (27:58):
When you think about how much impact something like the
presidency can have on the world. I mean, whatever you
think about it, you know, whoever you think would be
good or bad at it, it clearly matters.
Speaker 1 (28:09):
I let me to research. Donated five million dollars to
Joe Biden's twenty twenty campaign, making Sam the second largest
donor to Biden's campaign. Sam's brand of effective altruism looked
a lot like old fashioned political lobbying.
Speaker 4 (28:22):
You know, you could look at like the budget, you know,
and like how much impact does the president have on
the budget? You know, I think we're up to like
twenty trillion dollars over a term or something like that.
Speaker 1 (28:31):
He'd spread his effective altruism donations to other politicians as well,
on both sides of the aisle. After Biden's win, Sam's
business exploded along with the price of bitcoin.
Speaker 3 (28:42):
You know, we have low volumes between Christmas and New
Year's Yet Christmas Eve to Sunday it rose or over
twenty percent, breaching that twenty eight thousand.
Speaker 12 (28:50):
I mean, can this actually last?
Speaker 9 (28:52):
So the next level we're kind of looking at year
is the thirty thousand level, which is really astonishing thinking
about from where we started at the beginning of the year.
Speaker 12 (29:00):
Bitcoin it broke through the fifty thousand dollars level just
a short time ago. It's now at more than seventy
percent since January first.
Speaker 9 (29:09):
The price of bitcoin has passed sixty thousand US dollars
for the first time this weekend.
Speaker 13 (29:14):
But take a look at this to the moon.
Speaker 1 (29:16):
As Bitcoin's price rose, the price of Sam's FTT token
skyrocketed along with it. FTT tokens went from roughly three
dollars and fifty cents on election Day twenty twenty to
nearly sixty dollars a token just six months later. At
the time, no one quite understood why ftt's price rose.
Sam and his inner circle looked like geniuses that could
(29:38):
do no wrong, an idea that they started buying into.
The team became a bit drunk with their crypto success,
so drunk that they became sloppy in public. Sam tweeted,
quote stimulants when you wake up, sleeping pills if you
need them while you sleep. The CEO of Alameda Research,
Carolina Ellison, even tweeted, nothing like regular amphetamine use to
(29:59):
make you appreciate how dumb a lot of normal, non
meta cadd human experience is. The crew obviously felt invincible,
and Sam started spending money as if he was printing
it himself. He lathered the wallets of the world's biggest
cultural influencers, and it was around this time he got
the attention of corporate media.
Speaker 9 (30:19):
Sam, it's good to have you.
Speaker 4 (30:20):
Yours exchange is the one that Tom Brady and does
Giselle Bunch and now have an equity stake in what
is going on there. Yeah, it's been super fun working
with them and talking with them. You know, I think
they've been interested in crypto for a while and they're
obviously extremely impressive people.
Speaker 3 (30:34):
Again, Dumberg, it was when bitcoin was at sixty five thousand.
It was our first introduction to Sam Bank my feet,
of all people, he was on CNBC in his pajamas,
looked like he hadn't showered in several days, and they
were treating him. And I thought to myself that this
guy must be a billionaire, Like, what am I doing wrong?
This guy's clearly a billionaire, and they'd never heard of
him before, and here was and I saw his name,
and his name flashed up on CNBC and I was
(30:56):
looking at this guy on television and look, I've never
been on CNBC, but I would wear a suit, i
would comb my hair, I'd probably have a shower. This
guy was in a bean chair, basically in his pajamas,
with a big moth on his head, and they were
treating this guy like he was a guru.
Speaker 8 (31:10):
How did you do this so quickly?
Speaker 10 (31:12):
I mean, your company is two years old and you're
doing something like four hundred billion dollars worth of volume
per month.
Speaker 3 (31:24):
And having been around a few of these market cycles
like I'm sure you have, I just couldn't believe what
I was seeing now. Of course it was way too early,
and you know, Bitcoin did its thing, but from the
moment I saw the man, it stuck to me.
Speaker 1 (31:35):
But the finance world was buying into Sam's sloppy persona literally,
Sequoia Capital, one of Silicon Valley's most storied venture capitalist firms,
jumped in line to give Sam money. I mean, this
was a firm that invested in Google, PayPal, Instagram, Zoom,
and Apple. But Sam seemed unimpressed by their track record.
When he pitched the firm. He was playing the video
(31:57):
game League of legends. The team at Sequoia Capital swooned
over this homeless she crypto boy. I love this, founder,
said one partner. I'm a ten for ten, added another.
They felt so strongly about Sam that they chronicled their
reaction to his antics on their company website, again Doomberg.
Speaker 3 (32:16):
In the history of financial manias. At their apex, they
all suffer from the same characteristic, which is fear of
missing out. So we've been asked, how is it that
one point eight billion dollars of VC money from the
most prestigious venture capital firms in the world would find
its way into Sam bankmcfreed's scheme, if you can convince
(32:37):
the world that you're the hot deal, you can get
away with anything, and he did. And I do think
this is sort of a universal trait of humans and
con artists and grifter's play onto this trait. The fear
of missing out is a very intoxicating drug.
Speaker 1 (32:54):
Sequoya eventually forked over two hundred and ten million dollars
to Sam bankman Freed and Sam was just getting started.
Speaker 3 (33:03):
And if you look literally the terms of those investments
that Sekoja and soft Bank and the Antaro Pensions Fund
and Dan Low and pick your favorite big name investor
who has you know, Forducier obligations to their own investors
to do some semblances due dilligence in this regard. Literally,
the terms of engagement were here's the price, here's the timing.
You fund by Friday, or you're not in the deal.
(33:24):
And they just said, I'm in. I'd rather be in
the deal because in a mania, access the deals is
the number one driver of returns, and so people who
were willing to do due diligence were just left out
of the deal.
Speaker 5 (33:36):
He pitched us in that seventeen billion dollar round.
Speaker 2 (33:39):
That's famed Canadian American venture capitalist Chamath Polyapatia recalling the
time Sam and his team pitched his firm in the
summer of twenty twenty one.
Speaker 5 (33:48):
And I did a zoom with him, and after the zoom,
I'm like, this doesn't make much sense, but I'll have
my team do some work. We did some work, and
we sent him a two page deck and we said,
here are our recommendations for taking the next step.
Speaker 11 (34:00):
One was the.
Speaker 5 (34:01):
Formation of a board and was the creation of dual
class STOC. The third was some reps and warranties around
affiliated transactions and related party transactions, and the person that
worked there called us back in literally and I'm not
kidding you said go yourself was quote unquote the response
to us.
Speaker 2 (34:21):
The finance world was throwing so much money at Sam
with no questions, asked that he could tell investors like
Chamath to go pound sand. When he was done with
his fundraising tour, FTX raked in an industry record nine
hundred million dollars. FTX, a company that created their FTT
tokens out of thin air, was now valued at eighteen
(34:42):
billion dollars.
Speaker 11 (34:43):
Can I talk to you about something?
Speaker 1 (34:45):
Yeah, we talked about it. I got another ten years left,
maybe fifteen, not that this is big.
Speaker 2 (34:50):
With his windfall, Sam began running ads for FTX with
celebrity endorsements like Tom Brady and Giselle.
Speaker 4 (34:56):
FTX is the safest and easiest way to buy and
sell crypto.
Speaker 9 (34:59):
It's the best way to get in the game.
Speaker 2 (35:02):
By September, Sam moved his companies from Hong Kong to
the Bahamas, and when he stated his reason for the move,
he hinted at a plan that was in motion.
Speaker 10 (35:11):
What was pushed you over the edge to need to
move the company away?
Speaker 1 (35:16):
From Hong Kong.
Speaker 4 (35:17):
Yeah, so I think the biggest things that we're thinking.
We'd never had a single sort of formal headquarters before
and we were really excited about establishing one. And the Mhammads,
I think the biggest things. First of all, they passed
a really progressive, forward looking bill regulating the crypto industry.
Speaker 15 (35:32):
There.
Speaker 4 (35:32):
It's one of the only countries in the world that
has a comprehensive licensing him from crypto exchanges. That's really exciting.
Speaker 2 (35:38):
Sam appeared to have something up his sleeve. By the
end of twenty twenty one. A plan was in motion,
a plan to take out his biggest competitor, Finance, owned
by his friend CZ. You see, a few months earlier,
Sam decided to distance himself from CZ by buying out
his stake in FTX. He then proceeded to bad mouth
(35:59):
CZ's efforts in complying with government regulators.
Speaker 4 (36:02):
How you viewede what's been happening with finance throughout the
world in recent months of weeks. Yeah, it's been quite
the barge. I guess you know. Something else say is that,
you know, we try really hard to be as cooperative
as we can with regulators. We try to be proactive
about doing what we think is not just compliant but
also you know, within the intentions of where regulators want
(36:25):
to go. When you don't do that, and when you
sort of appear less flexible or responsive, I think that
more likely to lead to cases where regulators might feel like,
you know, they have no choice but to start, you know,
bringing the hammer.
Speaker 2 (36:38):
It appeared that SAM was trying to position himself as
regulator friendly, while as primary competitor CZ was not. As
the end of twenty twenty one approached, SAM was openly
talking about the need for regulations in the cryptocurrency industry.
Speaker 4 (36:53):
And I think you know you've heard share Genzler say,
you know again again, Look, we would love to see
crypto platforms coming in register.
Speaker 2 (37:00):
Gary Gensler is a chairman of the Security and Exchange Mission,
the federal commission that sets some police's stock market regulations.
Speaker 4 (37:07):
If I guess, I would guess that you know, he
and the SEC have been thinking about what the regime
like that might look like. I would not be surprised
to see developments over the.
Speaker 1 (37:16):
Next year on that.
Speaker 2 (37:20):
If Sam could influence the industry's US regulator, he could
help enact rules that his companies could meet, but his
competitors could not. All he'd need to do is become
the go to voice in Washington, d C. On the
crypto industry. Do you want to hear red pilled America
stories ad free, then become a backstage subscriber. Just log
(37:43):
onto Redpilled America dot com and click join in the
top menu. Join today and help us save America one
story at a time. Welcome back to red Pilled America.
So around mid twenty twenty one, it appeared that Sam
Bankment Freed had a plan in motion. If he could
influence the industry's US regulators, he could help enact rules
(38:04):
that his company could meet but that other competitors could not.
All he needed to do was become the go to
voice in Washington, d C. On the crypto industry. By
the close of the year, Sam Bankman Freed's political donations
seem to have paid off.
Speaker 3 (38:21):
Mister Bankman Freed, you are now recognized for five minutes
to present your oral testimony.
Speaker 4 (38:27):
Thank you Chairwaters, Ranking Member mckenry, and all the members
of the committee for having me here today to testify.
It's an honor to be here.
Speaker 2 (38:35):
Sam testified before Congress about the future of finance, and
he argued for the need for more regulations in the
cryptocurrency industry.
Speaker 4 (38:43):
I think that it is coming, and I think it
is important, and I think that is healthy that the
industry will be regulated. I think it is also already
regulated in a number of ways. I think that there
are points that need to be addressed to give oversight
of various aspects of the industry that do not have
sufficient oversight right now, and I also think that it
is important to do so in a reasonable and common
(39:04):
sense way that understands the industry. Well.
Speaker 15 (39:07):
If you look at the history of FTX, what you'll
see is there is a constant need to defeat opponents.
Any competitor to FTX as an exchange or Alameda is
a VC arm They went after their competitors.
Speaker 2 (39:22):
That's been Armstrong, crypto enthusiast and creator of bitboycrypto dot com.
Speaker 15 (39:27):
And I always say, you know, the easiest way to
become the tallest building in town is to tear down
all the other buildings, and that was what they were
trying to do. They were trying to create a monopoly
through tearing other companies down.
Speaker 2 (39:37):
It appeared that Sam was making a play to gain
monopoly control of the American crypto industry by taking out
his primary competitor, CZ's crypto exchange finance that Sam wasn't
the only alpha predator in the crypto space, you see.
(40:02):
To buy out he's investment in FTX, Sam gave CZ
a bunch of his FTT tokens as a part of
the deal, and when he did, he unwittingly gave CZ
a deadly weapon.
Speaker 15 (40:13):
When you really look at you know, CZ vers Sam
for about six months there was a deterioration of that relationship.
Is I believe Caz found out more and more about
what Sam was doing, and then at some point he
found something out that was like, Okay, now I can't
I can't look back, I can't turn away. At this
point I got to, you know, slam down on this
and do something.
Speaker 1 (40:32):
That's what he did. Coming up on Red Pilled America.
Speaker 3 (40:36):
This guy's just flippantly saying we had people wired to
Alamito's bank accounts because FTX quote didn't have banking is incredible,
Like you're just admitting wirefrad which is all the more
incredible when you consider that his parents are professors at
Stanford University.
Speaker 12 (40:51):
I think there's been a number of headlines, as you
know about FTX, the company buying a lot of real
estate up in the Bahamas. But then there's also reports
that your parents signed and were effectively provided with what
seemed like a vacation home.
Speaker 4 (41:06):
I don't know the details of that house for my parents.
Speaker 15 (41:09):
And when they needed more money, they would just print
more FTT and then they would be able to immediately
add value to their balance sheets.
Speaker 16 (41:16):
I am no cryptocurrency expert of no finance ex but
I don't think you answered my question. I always ask, yeah,
did you know that FTX deposits were used to pay
off Alameda creditors?
Speaker 4 (41:31):
I don't know of FTX deposits being used to pay
off Alameda creditors.
Speaker 2 (41:38):
Red Pilled America is an iHeartRadio original podcast. It's owned
and produced by Patrick Carrelci and me Adriana Cortez of
Informed Ventures. Now. You can get ad free access to
our entire archive of episodes by becoming a backstage subscriber.
To subscribe, visit red Pilled America dot com and click
join in the top menu. That's red Pilled America dot
(41:58):
com and click join in the top menu. Thanks for listening.
Hosts And Creators
Adryana Cortez
Patrick Courrielche
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