July 28, 2026 • 35 mins
Where is crypto going? To find the answer, we tell the story of the astonishing rise and spectacular fall of crypto entrepreneur Sam Bankman-Fried. The chaos of the digital coin phenomenon has exposed a civil war amongst crypto enthusiasts…a conflict that has revealed the likely future of the cryptocurrency industry.
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Speaker 1 (00:03):
This is Red Pilled America.
Speaker 2 (00:06):
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(00:28):
and click support or shop in the topmenu. That's Redpilled
America dot com and click support or shop in the topmenu.
Help us save America, one story at a time.
Speaker 1 (00:39):
On January third, two thousand and nine, the Bitcoin network
quietly went live.
Speaker 2 (00:46):
At first, excitement was limited to a few computer coders
and anti Federal Reserve activists.
Speaker 3 (00:51):
Bitcoin is an electronic, online digital currency.
Speaker 1 (00:55):
But in the matter of just a couple years, Bitcoin
spawned a massive cryptocurrency industry that has taken America and
the world on a wild roller coaster riot. The value
of this money is like totally unpredictable. It fluctuates from
twenty dollars a unit to two hundred and sixty dollars
a unit, and all the way back down.
Speaker 4 (01:14):
Bitcoin on Wednesday hit a new all time high of
more than sixty six thousand US dollars.
Speaker 5 (01:19):
Christ is back and he's got bitcoin.
Speaker 6 (01:22):
Bitcoin is in free fall.
Speaker 3 (01:24):
It's almost seventy percent off its historic highs.
Speaker 7 (01:26):
Dam bankman freed arrested overnight in the Bahamas.
Speaker 3 (01:29):
It's the worst week in cryptocurrency history.
Speaker 1 (01:32):
With the cryptocurrency industry no longer in its infancy, it's
time to ask the question, where is crypto going. I'm
Patrick Curlcy.
Speaker 2 (01:43):
And I'm Adriana Cortez, and this is.
Speaker 1 (01:45):
Red Pilled America, a storytelling show.
Speaker 2 (01:49):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:54):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:57):
The media marks stories about everyday Americans. If the globalist ignore.
Speaker 1 (02:03):
You could think of Red Pilled America as audio documentaries.
And we've promised only one thing, the truth.
Speaker 8 (02:14):
Welcome to Red Pilled America.
Speaker 2 (02:25):
So we first took an interest in cryptocurrency in twenty
nineteen when we heard then President Trump's argument against bitcoin.
Speaker 9 (02:33):
A crypto is being talked about. The President actually weighed
in and tweeted about cryptocurrencies last night. He wrote in
part this, I'm not a fan of bitcoin and other cryptocurrencies,
which are not money and whose value is highly volatile based.
Speaker 8 (02:46):
On thin air.
Speaker 9 (02:47):
He writes, unregulated crypto assets can facilitate unlawful behavior, including
drug trade and other illegal activity. Rights the President.
Speaker 2 (02:54):
So we produced a three part series on the topic
and asked the question, is bitcoin dangerous to America? If
you haven't heard it, you should go give it a list.
We concluded, based on the President's argument that bitcoin wasn't
necessarily dangerous to America? But did we get it wrong?
Now that the crypto industry is no longer in its infancy,
we thought we'd revisit the topic by asking the question
(03:17):
where is crypto going? To find the answer, We're going
to tell the story of the astonishing rise and spectacular
fall of crypto entrepreneur Sam Bankman Freed. Along the way,
we speak to some influential thinkers in the crypto space,
including Doomberg, one of the most widely read financial newsletters
on substack, Dirty Bubble Media, an independent investigative journalist whose
(03:40):
reporting is credited with triggering the downfall of Sam Bankman Freed.
Peter Schiff, famed CEO and chief global strategist of Europacific Capital, Inc.
And Ben Armstrong, crypto enthusiast and creator of bitboycrypto dot com.
The chaos of the digital cash phenomenon has not only
created a divide between proponents and critics of cryptocurrency, it
(04:01):
is also exposed a civil war or amongst crypto enthusiasts
as well, a conflict that has revealed the likely future
of the cryptocurrency industry.
Speaker 1 (04:21):
It was a Friday evening in mid November twenty twenty two,
and Zain Tackett looked worn out, literally.
Speaker 10 (04:28):
Haven't slept the last two nights, so spin he etic.
Speaker 1 (04:32):
The thin, dark haired, twenty something looking white guy, was
appearing on a late night live stream of the up
Only podcast. At the time, Zain was the head of
institutional Sales at cryptocurrency Exchange FTX, or at least that's
what his title used to be.
Speaker 8 (04:48):
You see.
Speaker 1 (04:48):
About a week earlier, his employer FTX entered a firestorm
that placed Zane's job in limbo. News reports broke that
ftx's sister company, Alameda Research, was insolvent. Rumors began to
swirl that the problem spread to FTX as well. The
head of FTX who was also the majority owner of Alameda.
A guy named Sam Bankman Freed quickly tried assuring the
(05:12):
public that the rumors of ftx's insolvency were false.
Speaker 7 (05:15):
Over the weekend, speculation rose about the solvency of FTX.
This came after a coined ass report. So FTX CEO
Sam Bankman Free took a Twitter this morning to clear
something up. He said that a competitor is trying to
attack the company with rumors. He then says in the
same tweet, FTX is fine, assets are fine.
Speaker 1 (05:35):
Zaane Tacket was out of the country when the rumors
about his employer started heating up.
Speaker 10 (05:39):
I was in Portugal up until midday Monday, I got
European time, and then.
Speaker 1 (05:44):
Flew out, he said. By the time he landed in Miami,
his FTX boss, Sam Bankman Freed went completely quiet on
the growing controversy.
Speaker 10 (05:52):
Like the silence just became too much, and then I
was like, all right, there's got to be something deeper here.
Speaker 1 (05:56):
But even with the glaring red flags, Zay believed his
boss's assessment of the company's financial situation. Sam Embankment Freed
was a pillar of the crypto world and anyways, Alameda
Research and FTX were two completely different companies. The insolvency
of Alameda should have had nothing to do with FTX.
At least that's what Zain made himself believed to cope
(06:18):
with the situation.
Speaker 10 (06:20):
You know, I was trying to think, like all right,
like there's no way it's not bad. Like I feel
like they're just really afraid of, you know, trying to
tarnish this, like, you know, what's a pretty sterling reputation.
Speaker 1 (06:37):
But rumors and all. Zay still believed in FTX, so
much so that the day after he got back from Portugal,
he says, he deposited a large portion of his personal
wealth into the FTX cryptocurrency exchange.
Speaker 10 (06:50):
On Tuesday, I'd deposited like seven hundred and fifty k
in the FTX, like there's no way that this is
going to be adapt nail or you know, something that'll
bring us down.
Speaker 1 (07:02):
But then the thinkable happened, breaking news.
Speaker 11 (07:07):
It appears that FTX has stopped with draws for to pass.
Basically four hours.
Speaker 1 (07:13):
Zaine tackets seven hundred and fifty thousand dollars was now
locked up in the FTX crypto exchange. He could see
the balance of his account, but couldn't withdraw the funds.
With things beginning to unravel at FTX, Zayan turned to
his boss Sam bankman Fried.
Speaker 10 (07:28):
When I found out what was going on on Tuesday,
informed Sam and the executives that you know, I'd be
there to help the clients kind of weather the storm
and you know, get through this and try to help
them as much as possible, But after that I wouldn't
be able to continue on.
Speaker 1 (07:42):
However, a day later, he tried logging into his account
on Slack, the company's communication platform.
Speaker 10 (07:48):
All sudden, I went to go into flap and it
was gone.
Speaker 1 (07:51):
Something big was happening. As Zain sat there, exhausted on
that Friday night live stream explaining his week long ordeal,
things got even worse. A host of the up Only
podcast asked, delivered the bad news.
Speaker 12 (08:05):
So that's kind of going wild. Apparently FTX hot wallets
are currently being drained.
Speaker 1 (08:10):
Apparently FDx customer accounts were being drained of all of
their funds. Realization of the news swept over Zane. His
face went blank as further confirmation came in.
Speaker 12 (08:22):
So Zach has just tweeted that multiple former FTX employees
confirmed to me they do not recognize the transfers for
three hundred and eighty three million dollars. And one guy
that previously worked FTX has also sent out to me
on telegram and some people saying that if they log
into FDx, they have a balance of zero.
Speaker 1 (08:43):
Now, a stunned Zane became distracted typing away at his keyboard.
A few seconds later, he delivered the news by count zero.
He disappeared from the screen as more bad news arrived.
Speaker 10 (08:54):
Yeah, so it looks like ALLFTX dot com balances or
zero from everybody that's talking to me about it.
Speaker 1 (08:59):
Then Zane re entered the live stream, almost laughing through
the agony.
Speaker 10 (09:03):
I have no idea what's going on at the movement
of funds. I just went downstairs and asked for other employees.
They had no idea. One of them looked on social
media and said that she was seeing a rumor of
funds being stolen. What a good week.
Speaker 1 (09:17):
Zane Tackett was clearly distraught. If he was right, his
seven hundred and fifty thousand dollars was now gone. He
appeared like he needed a moment to process what just happened.
The up only hosts could obviously read the situation and
let Zane off the hook.
Speaker 12 (09:32):
All right, let you Joanna stand for a little bit.
Let Zane go all right.
Speaker 8 (09:36):
Thanks guys, quit dude, thanks for being with us.
Speaker 13 (09:39):
Have you ever experienced something anywhere near this insane and.
Speaker 1 (09:43):
Crypto Everyone watching the situation had one question, what just happened?
I mean, imagine putting seven hundred and fifty thousand dollars
into a bank account on Tuesday and by Friday the
account balanced reading zero. That's what happened to many ftx customers,
(10:05):
and even with the year's chaos in crypto, it was
still a stunning turn of events.
Speaker 2 (10:10):
FTX was thought to be the rock of Gibraltar of
the entire cryptocurrency industry. It was even bailing out firms
that were faltering just a few weeks earlier. Its young
founder and CEO, Sam Bankman Freed, was thought to have
the midst touch.
Speaker 14 (10:25):
In just the past five years, Sam Bankman Freed went
from buying his first bitcoin to becoming a multi billionaire.
The FTX founder is now worth an estimated eleven billion dollars.
Speaker 2 (10:35):
In the short time since ftx is founding in mid
twenty nineteen, the company grew to become the second largest
cryptocurrency exchange in the world, valued at thirty two billion dollars.
It was this meteoric rise that grabbed the attention of
the financial news desks, and they could not get enough
of the young crypto tycoon.
Speaker 15 (10:56):
And joining me now is Sam bankman Free, one of
America's youngest billionaires.
Speaker 1 (11:00):
They call him the JP Morgan of cryptom, Michael Jordan
of crypto.
Speaker 3 (11:04):
So just thrilled to have him here and get his perspective.
Speaker 16 (11:06):
How did you do this so quickly? I mean, your
company is two years old and you're doing something like
four hundred billion dollars worth of volume per month, which
is twenty five times what you did a year ago.
Speaker 2 (11:20):
CNBC, Bloomberg, Forbes, Fortune, and The New York Times all
gushed over the bushy haired cryptocurrency wonderkind. He was so
popular that he'd become known simply by his initials SBF.
As late as September twenty twenty two, SBF was a
front page stable throughout corporate media. But a little over
(11:40):
a month later, Zanetacket's nightmare began to surface.
Speaker 11 (11:44):
Newses came out that FTS is actually insolvent, and dirty
Bubble media actually went ahead and did a lot of digging. Well. Unfortunately,
I have some bad news to report. Currently, a bank
run is happening on FTX. It's reserved, specifically, ethernium is
being drained off by the hundreds of millions right now.
Speaker 6 (12:05):
Shocking crypto knows even I'm in disbelief.
Speaker 8 (12:08):
According to the block and on.
Speaker 11 (12:09):
Chain data, FTX appears to have stock processing withdraws.
Speaker 2 (12:13):
In just a matter of days, SBFS cryptocurrency Empire came
crashing down.
Speaker 4 (12:18):
FTX, the big exchange, has filed for Chapter eleven bankruptcy.
Speaker 10 (12:22):
Our company, the second largest crypto exchange in the world,
has become insolvent and followed from bankruptcy.
Speaker 6 (12:29):
In the space of all read.
Speaker 17 (12:30):
The company's controversial chief executive, Sam Bankman, freed, resigning a CEO.
Speaker 6 (12:34):
The embattled cryptocurrency exchange collapsing its stunning speed, customers frantically
trying to access their accounts, as Warner's reports at least
a billion dollars of client funds may be missing.
Speaker 17 (12:45):
Good crypto turned out to be the scam of this century.
Speaker 5 (12:57):
At its core.
Speaker 13 (12:58):
Actually, I think the FTX scandal is an example of
something that we actually learned from a famous short seller
in Australia named John Hempton. One of his expressions that
sort of sticks in our brain is 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 (13:16):
That's a representative from Doomberg, an anonymous team of former
science and financial executives. Doomberg is one of the most
widely read financial newsletters on the subscription based platform Substack.
Speaker 13 (13:28):
Also, be wary of manias, you know would be another
one separate from Hampton's famous quote. And here it seems
as though Sam Bankman Freed has latched himself onto a
mania in order to steal.
Speaker 2 (13:40):
To truly appreciate the impact of this historic moment in crypto,
we have to grasp how Sam Bankman Freed came into power.
Understanding his rise and eventual fall inadvertently illuminates where cryptocurrency
is going and the profound threat to your freedom that's
on the horizon. Welcome back to red pilled America. On
(14:05):
March sixth, nineteen ninety two, Sam Bankman Freed was born
on the campus of Stamford University.
Speaker 18 (14:11):
I grew up in the San Francisco Bay area, on
a Stanford campus.
Speaker 2 (14:15):
That's Sam Bankman Freed.
Speaker 18 (14:17):
And had a really nice, sort of quiet, suburban upbringing,
so to speak.
Speaker 2 (14:21):
But his wasn't your typical suburban experience. He was born
to Jewish parents, Joseph Bankman and Barbara Freed, both were
professors at Stanford Law School. From his first breath, Sam
was surrounded by the elite of the academic elite. As
a boy, he was one of those socially awkward kids
(14:42):
that preferred hanging out with the adults over his peers.
Speaker 18 (14:45):
Twelve year olds, and was I think, in some senses,
kind of boring, maybe bored and born sort of a
little bit of both. I wasn't sort of like really
into kid things, but but you're also in a position
where you're not really able to kind of like hang
out with a grown up so to speak. It's just
it was a weird in between states for me and felt,
you know, uncomfortable. But outside of that, I think is
(15:07):
a really good upbringing. Is nothing bad happened basically, and
you know, really got along with my family.
Speaker 11 (15:13):
Well.
Speaker 2 (15:14):
If he had any hardship, according to his mom, it
was extreme boredom. By all measures, Sam was a smart kid.
He attended Crystal Springs Upland School, an uber prestigious six
through twelfth grade private institution. Schoolwork was easy to him,
so easy that he hated class. At one point, when
he was in seventh or eighth grade, his mother says
(15:35):
she found him crying. When she asked what was wrong,
she said, he responded, Mom, I'm so bored, I'm gonna die.
So to give their son a challenge, his parents put
him in some advanced math classes, then enrolled him in
Canada USA Math Camp, an immersive summer program for gifted
math students. There, he was introduced to puzzle hunts, a
(15:57):
type of scavenger hunt where players have to solve progressively
challenging riddles. Inspired by this experience, he'd later design and
organize puzzle hunt competitions between his campus and other local
high schools. In parallel as the family narrative goes, Sam
(16:18):
began showing an interest in a passion of his parents,
a passion for an ethical philosophy called utilitarianism. Utilitarianism is
a philosophy that prioritizes actions that maximize the well being
of the collective instead of the individual. As a board
member of the Ethic Center at Stanford. Sam's mother brought
(16:40):
this philosophy into her classroom in a controversial paper in
(17:25):
The Boston Review. She'd later argue, quote, the philosophy of
personal responsibility has ruined criminal justice and economic policy. It's
time to move past blame end quote. Apparently, in her
ethical framework, blame for wrongdoing should no longer take the
driver's seat. This line of thinking began to infect young
Sam's mind when he was about fourteen. His mother claimed
(17:49):
that she caught him buried in a utilitarianism book. Sam
would later recall his parents' influence in this area.
Speaker 18 (17:56):
My parents were really concerned with, you know, what impact
they were having on the world and what they could
do there. They've tried to do a lot of things
with their life, which has been really kind of inspiring
to watch.
Speaker 2 (18:09):
During this time, Sam's mom claimed she was only slowly
creeping towards his philosophy while her husband and son were
becoming take no prisoners utilitarians. In other words, young Sam
Bankman Freed was apparently adopting a philosophy of maximizing the
collective good at all costs. When it came time to
(18:39):
select colleges, Sam was still undecided on which career path
he wanted to take.
Speaker 18 (18:44):
And sort of thought, you know, maybe he's gonna do
math or physics or I don't know. It wasn't The
plans were sort of very non specific. You know. It's
sort of like select which ever subject as doing best
at in school, and like that's what they're going to do.
Speaker 14 (18:55):
You know.
Speaker 2 (18:56):
He may have been wishy washy on his course of study,
but as far as schools went, he narrowed them down
to one of two prestigious colleges, either MIT or cal Tech.
In twenty ten, he basically flipped a coin to decide
between the two and it came up Mit again. Doomberg.
Speaker 13 (19:14):
He is clearly a very intelligent person. He's the son
of two law professors at Stanford University and earned his
way into the massachusettstitu of Technology for his undergrad degree,
and MIT, which is sort of considered among the top
five universities in the world. It's not a school that
you can get into via sort of legacy or to
(19:36):
buy your way in. It's a merit based, largely a
very much a merit based admission system.
Speaker 2 (19:41):
At MIT. Sam lived at epsilon Theta, a co ed
student house. It was basically a NERD's version of a fraternity,
where late night alcohol drenched parties were replaced with geekye
games like mind Puzzles, chess, and League of Legends, a
multiplayer online battle video game. At Epsilon Beta, Sam proved
to be a charismatic alpha a nerd, and he'd eventually
(20:04):
become president of the house. In his coursework, he majored
in physics with the minor in mathematics.
Speaker 18 (20:11):
And so into my tea and quickly learned there wasn't
going to be a physicist. I mean, it's like the
sur least favorite things that I'd done work. Try and
do physics research, but that doesn't sort of answer the
question of what Flora will do. And spend some time
in college try and think about what I could do
that sort of have the most impact.
Speaker 2 (20:29):
By sophomore year, he'd stumble into what would become the
cornerstone of his personal brand.
Speaker 17 (20:35):
My colleagues and I have developed a philosophy and research
prokram that we call effective altimism. It uses evidence and
careful reasoning to try to answer this question, how can
we do the most good?
Speaker 1 (20:48):
That Scottish philosopher Will mccaskell thought to be one of
the founders of the effective altruism movement.
Speaker 17 (20:54):
So effective altimism is about using your time and money
as effectively as possible to make the world a better place.
It's about going with high quality evidence, careful reasoning, and
in depth research to make your decisions, rather than merely
going with kind of what's emotional or what's sexy.
Speaker 1 (21:11):
At the time, Sam bankman Fried caught one of will
mccaskell's online presentations on effect of altruism, and it deeply
resonated with him, not only because it aligned with his parents' utilitarianism,
but because it could also help him decide on a
career path.
Speaker 17 (21:24):
If you want to use your life to make the
world a better place, what career should you pursue. When
I was a student, I was concerned by some of
the big problems in the world, global poverty, climate change,
gender inequality. So I wanted to know the answer to
that question. I tried asking friends and family what I
should do, tried going to the university career service, tried
going online in order to get advice from websites, and
(21:48):
one piece of advice that I just got over and
over again was want to make a difference work for
a charity. But I never think we found a rationale
for that. It just seemed to people like that was
the obvious advice.
Speaker 1 (22:06):
Will mccaskell came to a conclusion that to do the
most good sometimes meant entering a career field with the
highest earning potential.
Speaker 17 (22:14):
We've come up with a framework that enables young people
to help them make decisions about what careers they should
pursue if they want to really make a difference. And
this research has led to some fairly big changes in
my life. I've changed the focus of my other search
quite considerably. I've altered what I do in my spare time,
dedicating that to social entrepreneurship. And I've changed what I
(22:36):
do with my money, committing to donate at least fifty
percent of what I earn over the course of my life.
Speaker 1 (22:43):
If you listen to Sam Bankman Freed, the philosophy was
like a religious awakening for him. According to his mother,
the philosophy was what Sam had been thinking about since
his teen years, and now he had a name for it,
effective altruism. Sam intended a talk by Will mccaskell, and
it was around this time that his career path came
into focus as a physics major. An academic life is
(23:07):
often the most logical path, but Sam despised schoolwork. It
bored him, and the prospective salary for that line of
work was paltry compared to other fields. Sam wanted a
career path that would accumulate capital at a much higher
pace than a professor ever could. He began adopting the
effective altruism mantra he'd earn to give, and it was
(23:27):
quickly developing the viewpoint that it would be more effective
to live up to that mantra with a career on
Wall Street. Sam would eventually arrange a lunch with Effective
Altruism founder Will mccaskell, and it was at that lunch
that Will reportedly nudge Sam away from a career in academia.
Speaker 18 (23:44):
Ultimately met a group of people who are thinking about
similar things, the effect altruism community. Some turround my junior
year or sophomore year, I guess of college, and they
sort of said, like suggested, like, you know, hey, if
this is what you're thinking, like, you know, obviously there
are a lot of things you can do, but one
thing you should ask is like, if there's some charity
you think is cool, which they rather have, you know,
(24:05):
you working for them or you donating money to them.
Speaker 1 (24:07):
According to Sam, he thought he could do more good
by leveraging his math skills.
Speaker 18 (24:13):
And ended up at thinking about how I could donate,
you know, as much as I could, And that sort
of led me to quand finance.
Speaker 1 (24:23):
So he began asking around to people he knew working
on Wall Street.
Speaker 18 (24:26):
And I had some friends who had interned at Jane
Street said good things about it.
Speaker 1 (24:30):
Jane Street Capital is an influential global trading.
Speaker 18 (24:33):
Firm, and so I just started side. I don't know,
let's you know, try and interviewing, see how it is,
see if it seems like a good fit, and sort
of really like the interview, and now all of a sudden,
this seems like really high value, Like it seems like
I could potentially donate a lot of money this way,
and that seems great.
Speaker 1 (24:47):
So after mit he began working at Jane Street Capital
in twenty fourteen, Sam traded company stocks on stock exchanges.
Speaker 18 (24:55):
So I was a trader at Jane Street Capital for
about three years in New York, which is a blostnomy.
He's really had fun there, is really really nice. And
then you know, sort of after three years or so,
how to you know, serve a fork in the path
of like, am I going to sort of do this
for the rest of my life where I'm going to
try and do other stuff? And it's a tough call.
I really liked it, but sort of felt like I
(25:16):
want to explore, I want to try other things. I
want to see what you know that that maybe there
are huge upside doing other things too, And.
Speaker 1 (25:25):
He couldn't have picked a better time to get antsy.
You see, in twenty seventeen, all eyes were on the
startling rise of the cryptocurrency industry.
Speaker 4 (25:33):
Do you own any Bitcoin or ethereum? The recent spike
in the prices of the cryptocurrencies has gotten everyone from
your average Joe to hedge fund managers very interested in
getting a piece of the action.
Speaker 14 (25:45):
Something about the psychology of the market and the way
investors are approaching bitcoin significantly changed in the past couple
of months.
Speaker 4 (25:52):
Bitcoin, the original cryptocurrency, was worth one thousand dollars per
bitcoin at the beginning of this year, but it is
now priced at about twenty six hundred dollars.
Speaker 16 (26:01):
Listen a bitcoin more than Apple did last week, and.
Speaker 4 (26:04):
A newer cryptocurrency called ethereum has seen even grazier growth.
It's appreciated in value more than four thousand percent.
Speaker 15 (26:13):
This year alone.
Speaker 14 (26:14):
A decade from now, are we going to look at
this and think, oh my, this is now worth ten
thousand dollars at bitcoin or twenty thousand dollars to bitcoin.
Speaker 8 (26:22):
So so called cryptocurrency is soaring in value.
Speaker 17 (26:25):
At the start of the year, one bitcoin was worth
about one thousand dollars.
Speaker 3 (26:29):
As of today, they are changing hands from more than
thirteen thousand, three hundred dollars.
Speaker 14 (26:34):
Some of these exchanges are trading above fifteen thousand.
Speaker 3 (26:37):
As much as a fan of bitcoin I as I am,
this is a bit of a speculative frontitt.
Speaker 15 (26:41):
You know, look at the explosive move. Bitcoin is up
over tenfold this year. A lot of other cryptocurrencies are
up even more than that. People think that bitcoin is
digital gold, which it's not.
Speaker 2 (26:52):
Shortly after Sam bankmon Freed left Jane Street Capital, he
noticed the action happening in the cryptocurrency space.
Speaker 18 (26:58):
And so you know, I left, and Sureley's there after,
I mean seor checked out crypto markets, which this is
late twenty seventeen, and I mean markets are completely insane.
Speaker 2 (27:06):
Then that's when he noticed an opportunity. Bitcoins in Asian
markets like Japan were selling for much higher prices than
in the United States.
Speaker 18 (27:20):
So late twenty seventeen early twenteen, Japanese bigcoins are just
training like five to fifteen percent higher than American bitcoins.
Speaker 2 (27:27):
So theoretically he could buy bitcoin in America and sell
it in Japan for a profit. It's a standard trading
technique known as arbitrage.
Speaker 18 (27:36):
And the arbitrages were just gigantic and does serve my background.
Speaker 2 (27:39):
Sam did arbitrage trading at Jane Street Capital. An idea sparked.
Instead of trading stocks on a stock exchange, why not
trade cryptocurrency on a cryptocurrency exchange.
Speaker 18 (27:50):
There's billion dollars a day trading on each side, so
if you could do it, sort of seemed like maybe
you could do it big, which is pretty exciting cause
it's also like ten percent a day is a lot,
And so that's served how I ended up in crypto.
Speaker 2 (28:01):
In late twenty seventeen, Sam set up a cryptocurrency trading
company he'd eventually call it Alameda Research, and how he
came up with the name hints at a behavior that
would eventually get him into a lot of trouble. Do
(28:22):
you want to hear red Pilled America stories ad free?
Then become a backstage subscriber. Just log 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 in late twenty seventeen,
Sam Bankman Freed wanted to ride the crypto wave sweeping
(28:45):
the globe. He decided on tapping his Wall Street experience
by setting up a cryptocurrency trading firm. But the industry
had a shady reputation within the banking community, making it
hard for a crypto business to open a banking account.
So Sam chose to conceal the nature of his business.
He was setting up the company in the Alameda area
of northern California, a region near Berkeley, so Alameda could
(29:09):
be part of his company name. He'd later explain how
he decided on the full branding.
Speaker 18 (29:15):
Really where the name come from? We're like, all right,
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. The compliance department is going to take
one look at that and just like that, that's it.
We knew banks were going to shut us down. They're
not yet. US banks that were happy with Crypto.
Speaker 2 (29:36):
Sam ultimately wanted to avoid scrutiny. Crypto companies were thought
to be money laundering outfit. Sam wanted to come up
with the name that didn't set off any red flags
amongst the bankers. So he began to think.
Speaker 18 (29:54):
What name is never going to give us grief? You know,
what name is not going to stop us from being
able to do anything like research? No one doesn't like research,
you know, No one's like, I don't know of research.
I don't know if we can deal with that. That's
where it came from. It is a completely inoffensive name.
Speaker 2 (30:11):
Sam was concealing the true nature of his business, a
trait he'd seemed to continue over the coming years. To
staff Alameda Research, he turned to a social circle.
Speaker 18 (30:28):
I mean it was like people I knew from high school,
from college, from effective Altruism. With like fifty interns coming
in out over the first few months, I was just
like hordes of people.
Speaker 2 (30:37):
One of those people was a twenty four year old
woman named Caroline Ellison. Caroline was a coworker of Sam's
at Jane Street Capital. She was well, let's just say
she looked homely. She was white, had curly, dark hair
that reached down to her chest, and she wore big
tortoise framed glasses. If Sam embodied the male alpha nerd,
Caroline was his female counterpart, she'd rise to become a
(31:01):
pivotal player in this whole crypto fair but we'll get
to that later. Sam would also bring on a family member.
Speaker 18 (31:08):
After we closed.
Speaker 13 (31:10):
Today, I'm going to visit one of my sons who
has a startup Edinburgh place.
Speaker 2 (31:15):
That's Sam's father, Joe Bankman. At the time, in early
twenty eighteen, Joe was a respected professor at Stanford Law School.
He began assisting his son where he could.
Speaker 5 (31:25):
It was clare at the start that on things like law.
Speaker 16 (31:29):
I mean, the company didn't have any lawyers, so I
think my utility there was pretty obvious.
Speaker 2 (31:35):
No one in the company had any experience in crypto,
including Sam.
Speaker 18 (31:39):
Where they come from basically, you know software developers from
Google and Facebook and then quantitative traders from Wall Street
who had never touched crypto before, and then some some
friends of mine on the operational side as well, but
none of us had traded crypto before this.
Speaker 1 (31:54):
They were learning as they went. Sam began exploiting the
bitcoin price differences between Asia and America, at some points
shifting as much as twenty five million dollars a day,
But it wasn't long before the price differences started to shrink,
shrinking his profits along with it. Buying bitcoin low and
selling high was no longer the cash cow it once was.
(32:15):
Sam would need to do something different if he wanted
to make it big in the crypto world, and that
something different would be Crypto Exchange FTX again Duomberg.
Speaker 13 (32:25):
He went to work on Wall Shape that then was
early in the crypto trading space. You i'll post twenty seventeen,
twenty eighteen and the rebirth of bitcoin after the twenty
seventeen collapse. He seems to have ridden that grave. And
it was a wild wild West, no regulation whatsoever, and
fortunes made and lost over night. And anytime you have
such a man, you a gold rush, a crypto gold rush.
In this case, you have opportunities to commit fraud.
Speaker 1 (33:01):
The type of fraud that would put the entire higher
cryptocurrency industry and jeopardy of a complete.
Speaker 2 (33:06):
Collapse coming up on Red Pilled America.
Speaker 15 (33:11):
Extortion was involved, counterfeiting coins was involved.
Speaker 3 (33:15):
It was unbelievable what they were doing, and we came
to realize that they created a fake market on their site.
You're just like, well, I'm in the ponzi business and
it's pretty good. And did any of this require any
sort of like economic cases. Just like other people put
money in the box, and so I'm going to do too,
and then it's more valuable, so they're going to put
more money in And at no point in the cycle
(33:36):
did it seem to describe any sort of like economic purpose.
Speaker 4 (33:39):
Steph Curry is now a brand ambassador, has a share
in your Exchange FTX. Tom Brady is also a brand ambassador.
Speaker 7 (33:48):
So that apartment in the Bahamas that Sam Bankmon Freed
was very vocal about living in with all of his roommates,
reports are questioning what the dynamics were between the roommates.
Speaker 5 (33:57):
Here's the thing. If you're running any kind of currency
operation and involved in a polyamorous relationship with seven other people,
I gotta think you're whacky. Ten ten of the people
in total, what do they do? They just wear polyamorous
living in a house together.
Speaker 1 (34:12):
I'll live together in the same place in the Bahamas
and then I'll just bang each other.
Speaker 15 (34:15):
I mean, I didn't know just how bad it was.
Speaker 14 (34:17):
There's just so much fraud in the space, and the
prices of all these.
Speaker 13 (34:20):
Things are determined almost exclusively by entities like FTX.
Speaker 2 (34:25):
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 Redpilled America dot com and click join
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(34:46):
and click join in the topmenu. Thanks for listening.
This is Red Pilled America.
Speaker 2 (00:06):
Before we start the show, just a reminder to share, like,
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To support the show, please visit Redpilled America dot com
(00:28):
and click support or shop in the topmenu. That's Redpilled
America dot com and click support or shop in the topmenu.
Help us save America, one story at a time.
Speaker 1 (00:39):
On January third, two thousand and nine, the Bitcoin network
quietly went live.
Speaker 2 (00:46):
At first, excitement was limited to a few computer coders
and anti Federal Reserve activists.
Speaker 3 (00:51):
Bitcoin is an electronic, online digital currency.
Speaker 1 (00:55):
But in the matter of just a couple years, Bitcoin
spawned a massive cryptocurrency industry that has taken America and
the world on a wild roller coaster riot. The value
of this money is like totally unpredictable. It fluctuates from
twenty dollars a unit to two hundred and sixty dollars
a unit, and all the way back down.
Speaker 4 (01:14):
Bitcoin on Wednesday hit a new all time high of
more than sixty six thousand US dollars.
Speaker 5 (01:19):
Christ is back and he's got bitcoin.
Speaker 6 (01:22):
Bitcoin is in free fall.
Speaker 3 (01:24):
It's almost seventy percent off its historic highs.
Speaker 7 (01:26):
Dam bankman freed arrested overnight in the Bahamas.
Speaker 3 (01:29):
It's the worst week in cryptocurrency history.
Speaker 1 (01:32):
With the cryptocurrency industry no longer in its infancy, it's
time to ask the question, where is crypto going. I'm
Patrick Curlcy.
Speaker 2 (01:43):
And I'm Adriana Cortez, and this is.
Speaker 1 (01:45):
Red Pilled America, a storytelling show.
Speaker 2 (01:49):
This is not another talk show covering the day's news.
We are all about telling stories.
Speaker 1 (01:54):
Stories. Hollywood doesn't want you to hear stories.
Speaker 2 (01:57):
The media marks stories about everyday Americans. If the globalist ignore.
Speaker 1 (02:03):
You could think of Red Pilled America as audio documentaries.
And we've promised only one thing, the truth.
Speaker 8 (02:14):
Welcome to Red Pilled America.
Speaker 2 (02:25):
So we first took an interest in cryptocurrency in twenty
nineteen when we heard then President Trump's argument against bitcoin.
Speaker 9 (02:33):
A crypto is being talked about. The President actually weighed
in and tweeted about cryptocurrencies last night. He wrote in
part this, I'm not a fan of bitcoin and other cryptocurrencies,
which are not money and whose value is highly volatile based.
Speaker 8 (02:46):
On thin air.
Speaker 9 (02:47):
He writes, unregulated crypto assets can facilitate unlawful behavior, including
drug trade and other illegal activity. Rights the President.
Speaker 2 (02:54):
So we produced a three part series on the topic
and asked the question, is bitcoin dangerous to America? If
you haven't heard it, you should go give it a list.
We concluded, based on the President's argument that bitcoin wasn't
necessarily dangerous to America? But did we get it wrong?
Now that the crypto industry is no longer in its infancy,
we thought we'd revisit the topic by asking the question
(03:17):
where is crypto going? To find the answer, We're going
to tell the story of the astonishing rise and spectacular
fall of crypto entrepreneur Sam Bankman Freed. Along the way,
we speak to some influential thinkers in the crypto space,
including Doomberg, one of the most widely read financial newsletters
on substack, Dirty Bubble Media, an independent investigative journalist whose
(03:40):
reporting is credited with triggering the downfall of Sam Bankman Freed.
Peter Schiff, famed CEO and chief global strategist of Europacific Capital, Inc.
And Ben Armstrong, crypto enthusiast and creator of bitboycrypto dot com.
The chaos of the digital cash phenomenon has not only
created a divide between proponents and critics of cryptocurrency, it
(04:01):
is also exposed a civil war or amongst crypto enthusiasts
as well, a conflict that has revealed the likely future
of the cryptocurrency industry.
Speaker 1 (04:21):
It was a Friday evening in mid November twenty twenty two,
and Zain Tackett looked worn out, literally.
Speaker 10 (04:28):
Haven't slept the last two nights, so spin he etic.
Speaker 1 (04:32):
The thin, dark haired, twenty something looking white guy, was
appearing on a late night live stream of the up
Only podcast. At the time, Zain was the head of
institutional Sales at cryptocurrency Exchange FTX, or at least that's
what his title used to be.
Speaker 8 (04:48):
You see.
Speaker 1 (04:48):
About a week earlier, his employer FTX entered a firestorm
that placed Zane's job in limbo. News reports broke that
ftx's sister company, Alameda Research, was insolvent. Rumors began to
swirl that the problem spread to FTX as well. The
head of FTX who was also the majority owner of Alameda.
A guy named Sam Bankman Freed quickly tried assuring the
(05:12):
public that the rumors of ftx's insolvency were false.
Speaker 7 (05:15):
Over the weekend, speculation rose about the solvency of FTX.
This came after a coined ass report. So FTX CEO
Sam Bankman Free took a Twitter this morning to clear
something up. He said that a competitor is trying to
attack the company with rumors. He then says in the
same tweet, FTX is fine, assets are fine.
Speaker 1 (05:35):
Zaane Tacket was out of the country when the rumors
about his employer started heating up.
Speaker 10 (05:39):
I was in Portugal up until midday Monday, I got
European time, and then.
Speaker 1 (05:44):
Flew out, he said. By the time he landed in Miami,
his FTX boss, Sam Bankman Freed went completely quiet on
the growing controversy.
Speaker 10 (05:52):
Like the silence just became too much, and then I
was like, all right, there's got to be something deeper here.
Speaker 1 (05:56):
But even with the glaring red flags, Zay believed his
boss's assessment of the company's financial situation. Sam Embankment Freed
was a pillar of the crypto world and anyways, Alameda
Research and FTX were two completely different companies. The insolvency
of Alameda should have had nothing to do with FTX.
At least that's what Zain made himself believed to cope
(06:18):
with the situation.
Speaker 10 (06:20):
You know, I was trying to think, like all right,
like there's no way it's not bad. Like I feel
like they're just really afraid of, you know, trying to
tarnish this, like, you know, what's a pretty sterling reputation.
Speaker 1 (06:37):
But rumors and all. Zay still believed in FTX, so
much so that the day after he got back from Portugal,
he says, he deposited a large portion of his personal
wealth into the FTX cryptocurrency exchange.
Speaker 10 (06:50):
On Tuesday, I'd deposited like seven hundred and fifty k
in the FTX, like there's no way that this is
going to be adapt nail or you know, something that'll
bring us down.
Speaker 1 (07:02):
But then the thinkable happened, breaking news.
Speaker 11 (07:07):
It appears that FTX has stopped with draws for to pass.
Basically four hours.
Speaker 1 (07:13):
Zaine tackets seven hundred and fifty thousand dollars was now
locked up in the FTX crypto exchange. He could see
the balance of his account, but couldn't withdraw the funds.
With things beginning to unravel at FTX, Zayan turned to
his boss Sam bankman Fried.
Speaker 10 (07:28):
When I found out what was going on on Tuesday,
informed Sam and the executives that you know, I'd be
there to help the clients kind of weather the storm
and you know, get through this and try to help
them as much as possible, But after that I wouldn't
be able to continue on.
Speaker 1 (07:42):
However, a day later, he tried logging into his account
on Slack, the company's communication platform.
Speaker 10 (07:48):
All sudden, I went to go into flap and it
was gone.
Speaker 1 (07:51):
Something big was happening. As Zain sat there, exhausted on
that Friday night live stream explaining his week long ordeal,
things got even worse. A host of the up Only
podcast asked, delivered the bad news.
Speaker 12 (08:05):
So that's kind of going wild. Apparently FTX hot wallets
are currently being drained.
Speaker 1 (08:10):
Apparently FDx customer accounts were being drained of all of
their funds. Realization of the news swept over Zane. His
face went blank as further confirmation came in.
Speaker 12 (08:22):
So Zach has just tweeted that multiple former FTX employees
confirmed to me they do not recognize the transfers for
three hundred and eighty three million dollars. And one guy
that previously worked FTX has also sent out to me
on telegram and some people saying that if they log
into FDx, they have a balance of zero.
Speaker 1 (08:43):
Now, a stunned Zane became distracted typing away at his keyboard.
A few seconds later, he delivered the news by count zero.
He disappeared from the screen as more bad news arrived.
Speaker 10 (08:54):
Yeah, so it looks like ALLFTX dot com balances or
zero from everybody that's talking to me about it.
Speaker 1 (08:59):
Then Zane re entered the live stream, almost laughing through
the agony.
Speaker 10 (09:03):
I have no idea what's going on at the movement
of funds. I just went downstairs and asked for other employees.
They had no idea. One of them looked on social
media and said that she was seeing a rumor of
funds being stolen. What a good week.
Speaker 1 (09:17):
Zane Tackett was clearly distraught. If he was right, his
seven hundred and fifty thousand dollars was now gone. He
appeared like he needed a moment to process what just happened.
The up only hosts could obviously read the situation and
let Zane off the hook.
Speaker 12 (09:32):
All right, let you Joanna stand for a little bit.
Let Zane go all right.
Speaker 8 (09:36):
Thanks guys, quit dude, thanks for being with us.
Speaker 13 (09:39):
Have you ever experienced something anywhere near this insane and.
Speaker 1 (09:43):
Crypto Everyone watching the situation had one question, what just happened?
I mean, imagine putting seven hundred and fifty thousand dollars
into a bank account on Tuesday and by Friday the
account balanced reading zero. That's what happened to many ftx customers,
(10:05):
and even with the year's chaos in crypto, it was
still a stunning turn of events.
Speaker 2 (10:10):
FTX was thought to be the rock of Gibraltar of
the entire cryptocurrency industry. It was even bailing out firms
that were faltering just a few weeks earlier. Its young
founder and CEO, Sam Bankman Freed, was thought to have
the midst touch.
Speaker 14 (10:25):
In just the past five years, Sam Bankman Freed went
from buying his first bitcoin to becoming a multi billionaire.
The FTX founder is now worth an estimated eleven billion dollars.
Speaker 2 (10:35):
In the short time since ftx is founding in mid
twenty nineteen, the company grew to become the second largest
cryptocurrency exchange in the world, valued at thirty two billion dollars.
It was this meteoric rise that grabbed the attention of
the financial news desks, and they could not get enough
of the young crypto tycoon.
Speaker 15 (10:56):
And joining me now is Sam bankman Free, one of
America's youngest billionaires.
Speaker 1 (11:00):
They call him the JP Morgan of cryptom, Michael Jordan
of crypto.
Speaker 3 (11:04):
So just thrilled to have him here and get his perspective.
Speaker 16 (11:06):
How did you do this so quickly? I mean, your
company is two years old and you're doing something like
four hundred billion dollars worth of volume per month, which
is twenty five times what you did a year ago.
Speaker 2 (11:20):
CNBC, Bloomberg, Forbes, Fortune, and The New York Times all
gushed over the bushy haired cryptocurrency wonderkind. He was so
popular that he'd become known simply by his initials SBF.
As late as September twenty twenty two, SBF was a
front page stable throughout corporate media. But a little over
(11:40):
a month later, Zanetacket's nightmare began to surface.
Speaker 11 (11:44):
Newses came out that FTS is actually insolvent, and dirty
Bubble media actually went ahead and did a lot of digging. Well. Unfortunately,
I have some bad news to report. Currently, a bank
run is happening on FTX. It's reserved, specifically, ethernium is
being drained off by the hundreds of millions right now.
Speaker 6 (12:05):
Shocking crypto knows even I'm in disbelief.
Speaker 8 (12:08):
According to the block and on.
Speaker 11 (12:09):
Chain data, FTX appears to have stock processing withdraws.
Speaker 2 (12:13):
In just a matter of days, SBFS cryptocurrency Empire came
crashing down.
Speaker 4 (12:18):
FTX, the big exchange, has filed for Chapter eleven bankruptcy.
Speaker 10 (12:22):
Our company, the second largest crypto exchange in the world,
has become insolvent and followed from bankruptcy.
Speaker 6 (12:29):
In the space of all read.
Speaker 17 (12:30):
The company's controversial chief executive, Sam Bankman, freed, resigning a CEO.
Speaker 6 (12:34):
The embattled cryptocurrency exchange collapsing its stunning speed, customers frantically
trying to access their accounts, as Warner's reports at least
a billion dollars of client funds may be missing.
Speaker 17 (12:45):
Good crypto turned out to be the scam of this century.
Speaker 5 (12:57):
At its core.
Speaker 13 (12:58):
Actually, I think the FTX scandal is an example of
something that we actually learned from a famous short seller
in Australia named John Hempton. One of his expressions that
sort of sticks in our brain is 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 (13:16):
That's a representative from Doomberg, an anonymous team of former
science and financial executives. Doomberg is one of the most
widely read financial newsletters on the subscription based platform Substack.
Speaker 13 (13:28):
Also, be wary of manias, you know would be another
one separate from Hampton's famous quote. And here it seems
as though Sam Bankman Freed has latched himself onto a
mania in order to steal.
Speaker 2 (13:40):
To truly appreciate the impact of this historic moment in crypto,
we have to grasp how Sam Bankman Freed came into power.
Understanding his rise and eventual fall inadvertently illuminates where cryptocurrency
is going and the profound threat to your freedom that's
on the horizon. Welcome back to red pilled America. On
(14:05):
March sixth, nineteen ninety two, Sam Bankman Freed was born
on the campus of Stamford University.
Speaker 18 (14:11):
I grew up in the San Francisco Bay area, on
a Stanford campus.
Speaker 2 (14:15):
That's Sam Bankman Freed.
Speaker 18 (14:17):
And had a really nice, sort of quiet, suburban upbringing,
so to speak.
Speaker 2 (14:21):
But his wasn't your typical suburban experience. He was born
to Jewish parents, Joseph Bankman and Barbara Freed, both were
professors at Stanford Law School. From his first breath, Sam
was surrounded by the elite of the academic elite. As
a boy, he was one of those socially awkward kids
(14:42):
that preferred hanging out with the adults over his peers.
Speaker 18 (14:45):
Twelve year olds, and was I think, in some senses,
kind of boring, maybe bored and born sort of a
little bit of both. I wasn't sort of like really
into kid things, but but you're also in a position
where you're not really able to kind of like hang
out with a grown up so to speak. It's just
it was a weird in between states for me and felt,
you know, uncomfortable. But outside of that, I think is
(15:07):
a really good upbringing. Is nothing bad happened basically, and
you know, really got along with my family.
Speaker 11 (15:13):
Well.
Speaker 2 (15:14):
If he had any hardship, according to his mom, it
was extreme boredom. By all measures, Sam was a smart kid.
He attended Crystal Springs Upland School, an uber prestigious six
through twelfth grade private institution. Schoolwork was easy to him,
so easy that he hated class. At one point, when
he was in seventh or eighth grade, his mother says
(15:35):
she found him crying. When she asked what was wrong,
she said, he responded, Mom, I'm so bored, I'm gonna die.
So to give their son a challenge, his parents put
him in some advanced math classes, then enrolled him in
Canada USA Math Camp, an immersive summer program for gifted
math students. There, he was introduced to puzzle hunts, a
(15:57):
type of scavenger hunt where players have to solve progressively
challenging riddles. Inspired by this experience, he'd later design and
organize puzzle hunt competitions between his campus and other local
high schools. In parallel as the family narrative goes, Sam
(16:18):
began showing an interest in a passion of his parents,
a passion for an ethical philosophy called utilitarianism. Utilitarianism is
a philosophy that prioritizes actions that maximize the well being
of the collective instead of the individual. As a board
member of the Ethic Center at Stanford. Sam's mother brought
(16:40):
this philosophy into her classroom in a controversial paper in
(17:25):
The Boston Review. She'd later argue, quote, the philosophy of
personal responsibility has ruined criminal justice and economic policy. It's
time to move past blame end quote. Apparently, in her
ethical framework, blame for wrongdoing should no longer take the
driver's seat. This line of thinking began to infect young
Sam's mind when he was about fourteen. His mother claimed
(17:49):
that she caught him buried in a utilitarianism book. Sam
would later recall his parents' influence in this area.
Speaker 18 (17:56):
My parents were really concerned with, you know, what impact
they were having on the world and what they could
do there. They've tried to do a lot of things
with their life, which has been really kind of inspiring
to watch.
Speaker 2 (18:09):
During this time, Sam's mom claimed she was only slowly
creeping towards his philosophy while her husband and son were
becoming take no prisoners utilitarians. In other words, young Sam
Bankman Freed was apparently adopting a philosophy of maximizing the
collective good at all costs. When it came time to
(18:39):
select colleges, Sam was still undecided on which career path
he wanted to take.
Speaker 18 (18:44):
And sort of thought, you know, maybe he's gonna do
math or physics or I don't know. It wasn't The
plans were sort of very non specific. You know. It's
sort of like select which ever subject as doing best
at in school, and like that's what they're going to do.
Speaker 14 (18:55):
You know.
Speaker 2 (18:56):
He may have been wishy washy on his course of study,
but as far as schools went, he narrowed them down
to one of two prestigious colleges, either MIT or cal Tech.
In twenty ten, he basically flipped a coin to decide
between the two and it came up Mit again. Doomberg.
Speaker 13 (19:14):
He is clearly a very intelligent person. He's the son
of two law professors at Stanford University and earned his
way into the massachusettstitu of Technology for his undergrad degree,
and MIT, which is sort of considered among the top
five universities in the world. It's not a school that
you can get into via sort of legacy or to
(19:36):
buy your way in. It's a merit based, largely a
very much a merit based admission system.
Speaker 2 (19:41):
At MIT. Sam lived at epsilon Theta, a co ed
student house. It was basically a NERD's version of a fraternity,
where late night alcohol drenched parties were replaced with geekye
games like mind Puzzles, chess, and League of Legends, a
multiplayer online battle video game. At Epsilon Beta, Sam proved
to be a charismatic alpha a nerd, and he'd eventually
(20:04):
become president of the house. In his coursework, he majored
in physics with the minor in mathematics.
Speaker 18 (20:11):
And so into my tea and quickly learned there wasn't
going to be a physicist. I mean, it's like the
sur least favorite things that I'd done work. Try and
do physics research, but that doesn't sort of answer the
question of what Flora will do. And spend some time
in college try and think about what I could do
that sort of have the most impact.
Speaker 2 (20:29):
By sophomore year, he'd stumble into what would become the
cornerstone of his personal brand.
Speaker 17 (20:35):
My colleagues and I have developed a philosophy and research
prokram that we call effective altimism. It uses evidence and
careful reasoning to try to answer this question, how can
we do the most good?
Speaker 1 (20:48):
That Scottish philosopher Will mccaskell thought to be one of
the founders of the effective altruism movement.
Speaker 17 (20:54):
So effective altimism is about using your time and money
as effectively as possible to make the world a better place.
It's about going with high quality evidence, careful reasoning, and
in depth research to make your decisions, rather than merely
going with kind of what's emotional or what's sexy.
Speaker 1 (21:11):
At the time, Sam bankman Fried caught one of will
mccaskell's online presentations on effect of altruism, and it deeply
resonated with him, not only because it aligned with his parents' utilitarianism,
but because it could also help him decide on a
career path.
Speaker 17 (21:24):
If you want to use your life to make the
world a better place, what career should you pursue. When
I was a student, I was concerned by some of
the big problems in the world, global poverty, climate change,
gender inequality. So I wanted to know the answer to
that question. I tried asking friends and family what I
should do, tried going to the university career service, tried
going online in order to get advice from websites, and
(21:48):
one piece of advice that I just got over and
over again was want to make a difference work for
a charity. But I never think we found a rationale
for that. It just seemed to people like that was
the obvious advice.
Speaker 1 (22:06):
Will mccaskell came to a conclusion that to do the
most good sometimes meant entering a career field with the
highest earning potential.
Speaker 17 (22:14):
We've come up with a framework that enables young people
to help them make decisions about what careers they should
pursue if they want to really make a difference. And
this research has led to some fairly big changes in
my life. I've changed the focus of my other search
quite considerably. I've altered what I do in my spare time,
dedicating that to social entrepreneurship. And I've changed what I
(22:36):
do with my money, committing to donate at least fifty
percent of what I earn over the course of my life.
Speaker 1 (22:43):
If you listen to Sam Bankman Freed, the philosophy was
like a religious awakening for him. According to his mother,
the philosophy was what Sam had been thinking about since
his teen years, and now he had a name for it,
effective altruism. Sam intended a talk by Will mccaskell, and
it was around this time that his career path came
into focus as a physics major. An academic life is
(23:07):
often the most logical path, but Sam despised schoolwork. It
bored him, and the prospective salary for that line of
work was paltry compared to other fields. Sam wanted a
career path that would accumulate capital at a much higher
pace than a professor ever could. He began adopting the
effective altruism mantra he'd earn to give, and it was
(23:27):
quickly developing the viewpoint that it would be more effective
to live up to that mantra with a career on
Wall Street. Sam would eventually arrange a lunch with Effective
Altruism founder Will mccaskell, and it was at that lunch
that Will reportedly nudge Sam away from a career in academia.
Speaker 18 (23:44):
Ultimately met a group of people who are thinking about
similar things, the effect altruism community. Some turround my junior
year or sophomore year, I guess of college, and they
sort of said, like suggested, like, you know, hey, if
this is what you're thinking, like, you know, obviously there
are a lot of things you can do, but one
thing you should ask is like, if there's some charity
you think is cool, which they rather have, you know,
(24:05):
you working for them or you donating money to them.
Speaker 1 (24:07):
According to Sam, he thought he could do more good
by leveraging his math skills.
Speaker 18 (24:13):
And ended up at thinking about how I could donate,
you know, as much as I could, And that sort
of led me to quand finance.
Speaker 1 (24:23):
So he began asking around to people he knew working
on Wall Street.
Speaker 18 (24:26):
And I had some friends who had interned at Jane
Street said good things about it.
Speaker 1 (24:30):
Jane Street Capital is an influential global trading.
Speaker 18 (24:33):
Firm, and so I just started side. I don't know,
let's you know, try and interviewing, see how it is,
see if it seems like a good fit, and sort
of really like the interview, and now all of a sudden,
this seems like really high value, Like it seems like
I could potentially donate a lot of money this way,
and that seems great.
Speaker 1 (24:47):
So after mit he began working at Jane Street Capital
in twenty fourteen, Sam traded company stocks on stock exchanges.
Speaker 18 (24:55):
So I was a trader at Jane Street Capital for
about three years in New York, which is a blostnomy.
He's really had fun there, is really really nice. And
then you know, sort of after three years or so,
how to you know, serve a fork in the path
of like, am I going to sort of do this
for the rest of my life where I'm going to
try and do other stuff? And it's a tough call.
I really liked it, but sort of felt like I
(25:16):
want to explore, I want to try other things. I
want to see what you know that that maybe there
are huge upside doing other things too, And.
Speaker 1 (25:25):
He couldn't have picked a better time to get antsy.
You see, in twenty seventeen, all eyes were on the
startling rise of the cryptocurrency industry.
Speaker 4 (25:33):
Do you own any Bitcoin or ethereum? The recent spike
in the prices of the cryptocurrencies has gotten everyone from
your average Joe to hedge fund managers very interested in
getting a piece of the action.
Speaker 14 (25:45):
Something about the psychology of the market and the way
investors are approaching bitcoin significantly changed in the past couple
of months.
Speaker 4 (25:52):
Bitcoin, the original cryptocurrency, was worth one thousand dollars per
bitcoin at the beginning of this year, but it is
now priced at about twenty six hundred dollars.
Speaker 16 (26:01):
Listen a bitcoin more than Apple did last week, and.
Speaker 4 (26:04):
A newer cryptocurrency called ethereum has seen even grazier growth.
It's appreciated in value more than four thousand percent.
Speaker 15 (26:13):
This year alone.
Speaker 14 (26:14):
A decade from now, are we going to look at
this and think, oh my, this is now worth ten
thousand dollars at bitcoin or twenty thousand dollars to bitcoin.
Speaker 8 (26:22):
So so called cryptocurrency is soaring in value.
Speaker 17 (26:25):
At the start of the year, one bitcoin was worth
about one thousand dollars.
Speaker 3 (26:29):
As of today, they are changing hands from more than
thirteen thousand, three hundred dollars.
Speaker 14 (26:34):
Some of these exchanges are trading above fifteen thousand.
Speaker 3 (26:37):
As much as a fan of bitcoin I as I am,
this is a bit of a speculative frontitt.
Speaker 15 (26:41):
You know, look at the explosive move. Bitcoin is up
over tenfold this year. A lot of other cryptocurrencies are
up even more than that. People think that bitcoin is
digital gold, which it's not.
Speaker 2 (26:52):
Shortly after Sam bankmon Freed left Jane Street Capital, he
noticed the action happening in the cryptocurrency space.
Speaker 18 (26:58):
And so you know, I left, and Sureley's there after,
I mean seor checked out crypto markets, which this is
late twenty seventeen, and I mean markets are completely insane.
Speaker 2 (27:06):
Then that's when he noticed an opportunity. Bitcoins in Asian
markets like Japan were selling for much higher prices than
in the United States.
Speaker 18 (27:20):
So late twenty seventeen early twenteen, Japanese bigcoins are just
training like five to fifteen percent higher than American bitcoins.
Speaker 2 (27:27):
So theoretically he could buy bitcoin in America and sell
it in Japan for a profit. It's a standard trading
technique known as arbitrage.
Speaker 18 (27:36):
And the arbitrages were just gigantic and does serve my background.
Speaker 2 (27:39):
Sam did arbitrage trading at Jane Street Capital. An idea sparked.
Instead of trading stocks on a stock exchange, why not
trade cryptocurrency on a cryptocurrency exchange.
Speaker 18 (27:50):
There's billion dollars a day trading on each side, so
if you could do it, sort of seemed like maybe
you could do it big, which is pretty exciting cause
it's also like ten percent a day is a lot,
And so that's served how I ended up in crypto.
Speaker 2 (28:01):
In late twenty seventeen, Sam set up a cryptocurrency trading
company he'd eventually call it Alameda Research, and how he
came up with the name hints at a behavior that
would eventually get him into a lot of trouble. Do
(28:22):
you want to hear red Pilled America stories ad free?
Then become a backstage subscriber. Just log 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 in late twenty seventeen,
Sam Bankman Freed wanted to ride the crypto wave sweeping
(28:45):
the globe. He decided on tapping his Wall Street experience
by setting up a cryptocurrency trading firm. But the industry
had a shady reputation within the banking community, making it
hard for a crypto business to open a banking account.
So Sam chose to conceal the nature of his business.
He was setting up the company in the Alameda area
of northern California, a region near Berkeley, so Alameda could
(29:09):
be part of his company name. He'd later explain how
he decided on the full branding.
Speaker 18 (29:15):
Really where the name come from? We're like, all right,
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. The compliance department is going to take
one look at that and just like that, that's it.
We knew banks were going to shut us down. They're
not yet. US banks that were happy with Crypto.
Speaker 2 (29:36):
Sam ultimately wanted to avoid scrutiny. Crypto companies were thought
to be money laundering outfit. Sam wanted to come up
with the name that didn't set off any red flags
amongst the bankers. So he began to think.
Speaker 18 (29:54):
What name is never going to give us grief? You know,
what name is not going to stop us from being
able to do anything like research? No one doesn't like research,
you know, No one's like, I don't know of research.
I don't know if we can deal with that. That's
where it came from. It is a completely inoffensive name.
Speaker 2 (30:11):
Sam was concealing the true nature of his business, a
trait he'd seemed to continue over the coming years. To
staff Alameda Research, he turned to a social circle.
Speaker 18 (30:28):
I mean it was like people I knew from high school,
from college, from effective Altruism. With like fifty interns coming
in out over the first few months, I was just
like hordes of people.
Speaker 2 (30:37):
One of those people was a twenty four year old
woman named Caroline Ellison. Caroline was a coworker of Sam's
at Jane Street Capital. She was well, let's just say
she looked homely. She was white, had curly, dark hair
that reached down to her chest, and she wore big
tortoise framed glasses. If Sam embodied the male alpha nerd,
Caroline was his female counterpart, she'd rise to become a
(31:01):
pivotal player in this whole crypto fair but we'll get
to that later. Sam would also bring on a family member.
Speaker 18 (31:08):
After we closed.
Speaker 13 (31:10):
Today, I'm going to visit one of my sons who
has a startup Edinburgh place.
Speaker 2 (31:15):
That's Sam's father, Joe Bankman. At the time, in early
twenty eighteen, Joe was a respected professor at Stanford Law School.
He began assisting his son where he could.
Speaker 5 (31:25):
It was clare at the start that on things like law.
Speaker 16 (31:29):
I mean, the company didn't have any lawyers, so I
think my utility there was pretty obvious.
Speaker 2 (31:35):
No one in the company had any experience in crypto,
including Sam.
Speaker 18 (31:39):
Where they come from basically, you know software developers from
Google and Facebook and then quantitative traders from Wall Street
who had never touched crypto before, and then some some
friends of mine on the operational side as well, but
none of us had traded crypto before this.
Speaker 1 (31:54):
They were learning as they went. Sam began exploiting the
bitcoin price differences between Asia and America, at some points
shifting as much as twenty five million dollars a day,
But it wasn't long before the price differences started to shrink,
shrinking his profits along with it. Buying bitcoin low and
selling high was no longer the cash cow it once was.
(32:15):
Sam would need to do something different if he wanted
to make it big in the crypto world, and that
something different would be Crypto Exchange FTX again Duomberg.
Speaker 13 (32:25):
He went to work on Wall Shape that then was
early in the crypto trading space. You i'll post twenty seventeen,
twenty eighteen and the rebirth of bitcoin after the twenty
seventeen collapse. He seems to have ridden that grave. And
it was a wild wild West, no regulation whatsoever, and
fortunes made and lost over night. And anytime you have
such a man, you a gold rush, a crypto gold rush.
In this case, you have opportunities to commit fraud.
Speaker 1 (33:01):
The type of fraud that would put the entire higher
cryptocurrency industry and jeopardy of a complete.
Speaker 2 (33:06):
Collapse coming up on Red Pilled America.
Speaker 15 (33:11):
Extortion was involved, counterfeiting coins was involved.
Speaker 3 (33:15):
It was unbelievable what they were doing, and we came
to realize that they created a fake market on their site.
You're just like, well, I'm in the ponzi business and
it's pretty good. And did any of this require any
sort of like economic cases. Just like other people put
money in the box, and so I'm going to do too,
and then it's more valuable, so they're going to put
more money in And at no point in the cycle
(33:36):
did it seem to describe any sort of like economic purpose.
Speaker 4 (33:39):
Steph Curry is now a brand ambassador, has a share
in your Exchange FTX. Tom Brady is also a brand ambassador.
Speaker 7 (33:48):
So that apartment in the Bahamas that Sam Bankmon Freed
was very vocal about living in with all of his roommates,
reports are questioning what the dynamics were between the roommates.
Speaker 5 (33:57):
Here's the thing. If you're running any kind of currency
operation and involved in a polyamorous relationship with seven other people,
I gotta think you're whacky. Ten ten of the people
in total, what do they do? They just wear polyamorous
living in a house together.
Speaker 1 (34:12):
I'll live together in the same place in the Bahamas
and then I'll just bang each other.
Speaker 15 (34:15):
I mean, I didn't know just how bad it was.
Speaker 14 (34:17):
There's just so much fraud in the space, and the
prices of all these.
Speaker 13 (34:20):
Things are determined almost exclusively by entities like FTX.
Speaker 2 (34:25):
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 Redpilled America dot com and click join
in the top menu. That's red Pilled America dot com
(34:46):
and click join in the topmenu. Thanks for listening.
Hosts And Creators
Adryana Cortez
Patrick Courrielche
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