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Crypto is a story about
the future of money,

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YTS.MX

about people's
willingness to adopt this

and people get excited
about that story.

SBF, Sam Bankman-Fried.
Sam Bankman-Fried.

You run one of the biggest,

certainly the fastest
growing crypto exchanges.

They can kind of begin
to see that future

and they get a
little nervous about,

will I have a place
in that future?

Sam Bankman-Fried,
the king of crypto.

He's the most important
man in crypto.

A lot of these
guys suggest like,

this is a once in a
lifetime opportunity.

You gotta get in now,

you gotta get in on
the ground floor.

It's gotta happen.

He had a predatory model

that was incredibly
radical and dangerous.

FTX
was asking for special
treatment.

FTX might be heading into
a bankruptcy process.

A liquidity shortfall of
around $8,000,000,000.

I cannot imagine a scenario

where $8,000,000,000
just disappears.

Crypto
industry's been cut to ribbons
this year.

Bankman-Fried's company

had an estimated valuation
of $40,000,000,000.

One
of the things about crypto

is that it just seems
to be doing a speed run

of all the worst lessons
of traditional finance.

Sam Bankman-Fried has been
arrested in The Bahamas.

Is being held in jail.

Sam Bankman-Fried

will be extradited to the U.S.

Eight criminal charges-

Bankman-Fried and his
co-conspirators stole billions

of dollars from FTX customers.

Highly unlikely anyone
would recover losses.

I was
shocked by what happened this
month.

We messed up big.

I think this will go down as one

of the largest financial
crimes in history.

Bankman-Fried has
pled not guilty.

It's $250,000,000 bail bond.

A trial date has been
set for October 2nd.

Sue, Mark.
Are you in?

I'm in.
I'm in.

I'm in.
I'm in.

We're in.

After
the financial crisis in 2008,

there was a lot of mistrust
in the financial system

and there was a lot of
frustration by a lot of people.

Just gonna be one of
the watershed days

in financial markets history.

$700,000,000,000 in bad loans.

Our country could experience
a long and painful recession.

Lehman Brothers
filed for bankruptcy.

There is no single action
the federal government

can take to end the
financial market turmoil,

and the economic downturn.

Shame on you, shame
on you, shame!

What started in
America last year

has now spread to every
part of the world.

The news from Wall Street

has shaken the American
people's faith in our economy.

The
greed that banks had shown,

the unchecked risk
taking that they had done

that basically put everyone
in a lot of financial hurt,

and Bitcoin was really
born out of that.

So, crypto in a sense
starts with Bitcoin,

which is like meant to
be a form of cash, right?

It's like the original
idea of Bitcoin

is it's like a
substitute for cash.

There's a problem
if you want to try

to send money to somebody
over the internet.

It's digital.

Digital is easily copied.

So, people had to
figure out a way

to send some kind
of token of exchange

that couldn't be easily
stolen or double spent.

The way this is done
uses cryptography,

the science of secret codes,

and by creating that technology

then we're able to create
this whole new world

of assets called cryptocurrency.

There was a lot of
interest in it at the time

from people who valued privacy.

They saw this as a way to
exchange money peer to peer

in a way that was sort of
outside the government's
control.

A bitcoin is backed by nothing.

It's just a Bitcoin.

The only thing that
makes it special

is the fact that you and I
and a community of people

have agreed that maybe this
token is worth something.

In that period there

was a roguish nature
to cryptocurrencies.

There was a movement of
decentralization going on,

this idea of stick it to
the man and no regulations.

This was especially appealing

for people who kind of
wanted to be off grid,

were interested in unique
technologies and of course,

people who wanted to make money.

Sam Bankman-Fried seemed
like a very smart guy

who came from
traditional finance,

and kind of knew like the layout

of like how finance works.

I remember when they told me
about him for the first time.

They had this glint in their eye

and they sort of had
this chuckle like,

he's very, very smart,
he's very capable,

but he's very unique and
he takes a lotta risks.

This is someone who was born
and raised in Silicon Valley.

This is someone whose
parents worked at Stanford.

Very esteemed law
professors, new people.

He grew up in a wealthy area,
went to a ritzy high school.

He was super well connected.

I ended
up interning at Jane Street,

a finance firm
after my junior year

and really liked it there.

Jane Street is this super
elite quantitative trading firm

on Wall Street.

It's super hard to even
get an interview there,

nevermind a job.

You have to be
absolutely brilliant.

They are obsessed with risk.

And in many ways
he fit the profile.

Loved puzzles, loved
math, straight out of MIT.

Finance is a good place to turn

the ability to solve
puzzles into a career,

and often a very
lucrative career.

Crypto you get to solve things

that no one's
thought about before.

You're not as
constrained by regulation

or by having a boss who's
been there for 20 years.

♪ I see you crawl

♪ I see you crawl

Sam left Jane Street and he
started Alameda Research.

Alameda gets
started in Berkeley in 2017.

Sam has said that he wanted

to give it kind of
an innocuous name,

especially 'cause he
was working in countries

that might be suspicious
of a crypto hedge fund.

A hedge fund takes money

from its founders and partners

and invested in search of gains.

The fund is like
a ship on a voyage

to Treasure Island and
investors are the passengers,

but the sea is unpredictable

and there's a chance the ship

might not reach the
destination, or even sink.

The hope for riches is what
keeps everyone on board.

Sam's inner circle in Alameda
were people from math camp,

from MIT, and who he
knew from Jane Street.

They were all these math whizzes

from Massachusetts
and California.

Sam started Alameda with a
very small group of people.

If you can just get
enough capital together,

you can do that.

So, there are a couple
of key players to know.

First one, and one of the
most important was Gary Wang,

roommate from MIT.

Gary was the chief
technology officer,

the tech and engineering guy,

an extremely gifted programmer.

Nishad was head of engineering,

so he was the other key piece

to the tech side
along with Gary.

Then you have Sam Trabucco.

We're a cryptocurrency
trading firm,

meaning that we're sort of doing

the same sort of things you
do in traditional finance,

but we're doing it
in like the Bitcoin

and like similar products.

He was the co-head of Alameda
with Caroline Ellison.

Caroline and Sam

met when they were
working at Jane Street.

Caroline Ellison was Co CEO

of Alameda Research
and she like,

was winning math competitions.

I talked to
Sam who had just started Alameda

and he convinced me that it was

an exciting opportunity so ,

I decided to take
a chance on it.

He started Alameda with
money from friends and family

and just started
doing crypto trades,

and turning a profit that way.

They found a way to buy
crypto in the United States,

sell it in Japan and take
advantage of that difference.

This price difference
was sitting there

but it was not necessarily easy

to take advantage of and
the legend of Alameda

was that they figured
out a way to do that.

They were founded in
Berkeley, California

and then quickly decided to
set up shop in Hong Kong.

In Hong Kong At the
time the crypto scene

was pretty interesting.

There were a lot of
crypto people there.

I moved to Hong Kong in 2014,

and it's where I started my
career in venture capital.

Venture capitalists
invest in new businesses.

It's like giving a kid with
a great lemonade recipe

the money to buy a bigger
stand and more supplies.

It's a gamble, but if the
lemonade stand becomes a hit,

your small investment could
turn into a big return.

During their time in Hong Kong,

Sam was able to connect
with multiple investors

and I think was when everything
just really took off.

We were looking into
Alameda opportunity

and investing in Sam.

Sam was an incredible figure.

He's the kinda guy
you wanna back.

Like, he's very unique.

He's one of one.

And the trading strategies

that Sam was doing
were very smart.

Some of them were a little
riskier than others,

but the reason that it
was risky was because Sam

was always on the cutting edge,
and that was exciting to us.

If you're taking technology
risk, we love that.

I'm a technology investor,
that's what it's all about.

We
talked with some VC firms

and our pitch was basically,
"Hey guys, good news.

Bunch of 25 year olds,

we don't really know
what a Bitcoin is

but we're trading it.

Also, this is all crypto and
we got a startup together.

None of us has run
a company before

and we'd like $100,000,000
by next Tuesday ideally."

It was one of the craziest
diligence processes

I've ever been through.

We kept uncovering more
and more weird things

that dragged us
deeper and deeper.

One week he sent
us his latest data

and he was down meaningfully.

We were a little freaked out.

We asked him what
happened and he responds,

"Oh, I can't remember
if I told you,

but me and most of the
senior members of the team,

we actually had this idea
for a crypto exchange.

So, that's why we've
been losing money

because I've had my
eye off the ball.

I just think it's
a calculated risk.

It's worth it for me
to lose money here

and not spend time on it

because this exchange
thing could be so big."

And actually, I kinda
like this answer.

I've invested in many
of the largest exchanges

in crypto around the world.

We can help you build an
exchange and he responds,

"Oh, I think you maybe
misunderstood me.

This exchange we're working on

is separate from
Alameda Research."

So I asked him like,

"Is it different people
working on this exchange?

Are you using separate
intellectual properties,

separate IP,
separate resources?"

Alameda
is buying and selling.

Like, it's trading for
its own book and trying

to do profitable trades.

FTX, you can think of
it as infrastructure,

it's markets infrastructure,

so everything that sits
between a buyer and a seller.

So, FTX doesn't buy
and sell itself,

but it's a venue where people
can go to trade crypto.

FTX is a public facing exchange.

It's a place where other
people come to place trades.

A lot of crypto is people

who don't like banks and who
want to take intermediaries

out of the financial
system and their goal

is to be able to send
Bitcoin to buy stuff

without anyone else
being involved.

You just hold your money

and you can send it without
anyone's permission.

It's like a big
philosophical part of crypto,

but not having any
intermediaries, it's kind of
hard.

You have to download a
lot of weird software

and like set up
wallets and like,

think about pass codes
and all this stuff

that is somewhat mentally taxing

and if you just wanna buy
a thing that'll go up,

there are crypto exchanges
that have nice websites

where you can go and buy
the thing without worrying

about a lot of the
apparatus of crypto.

FTX is a crypto exchange
being built inside Alameda.

You had two companies coming
I guess, from the same route.

He wanted to take money from
us into Alameda Research

and he wanted to use that money

to finance and help
start a separate business

that we would have no
information about, no ownership
in.

And it was actually hurting
our interest at Alameda.

And I remember at the end I
tried one last ditch effort

to explain to Sam
why we couldn't

just negotiate a
separate deal for FTX.

He was just looking at me
very sort of wide-eyed.

He didn't care really about
the moral implications

of what he was proposing.

It was almost like
trying to explain

like business ethics
101 to a baby.

And I realized we
were so far apart

that it was just too much.

We couldn't possibly do
a deal with this guy.

They launched FTX
about 18 months

after they launched Alameda.

We knew from our own
experience launching

an exchange that the speed

at which they were operating
was almost impossible

for the size of
team that they had.

So, I think a lot of
cryptocurrency companies

actually are very proud

that they run on these
incredibly small teams in
general.

Is this completely a facade?

Is there anything happening
behind the scenes?

At the time FTX
was like 20 people.

Kraken had 100 people on
the security team alone.

Sam starts FTX in 2019 and this

is when he really explodes
outside of crypto's radar.

People talk about SBF as
being like unconventional

in some way.

The the kinda like crazy,
gigantic mop of curly hair,

the like t-shirts that
are like half fitting him,

the cargo shorts.

It's the fact that he looks like

he hasn't showered
for a couple of days.

And a normal financier
looks at that and says,

"Oh man, that that
seems like a red flag."

But like, in the mind of a
venture capitalist, right?

That is proof that he's
so smart, he doesn't care.

It's like the equivalent
of like on Wall Street,

like having a really
well tailored suit.

I've been working with
programmers since 1988.

They were all Sam Bankman-Fried.

They wore the same
clothes he wears,

they were in flip
flops of Lamborghinis.

I've seen this movie
before 1,000 times.

Just so many people in crypto

come off as like crazy or really
promotional like hype man.

Like they sound
like they're trying

to sell like a new vacuum
cleaner door to door or
something.

At this Bitcoin conferences,

people literally like
screaming on the stage like,

"Bitcoin's going to the moon.

Yeah!"

Like, "Bitcoin's
gonna save the world."

And let me tell you that
we are really changing

the world as we know it.

Bitconnet!

Woo!

The conference ended with
a guy giving a speech

about how Bitcoin would save
El Salvador, literally bawling.

We die on this hill,
I will fucking die

on this fucking hill.

So, today a country plugs
in into open monetary system

and gives their assistance hope.

So in that world,

Sam actually seemed
pretty reasonable.

So, I thought we should build

the first Alexandra
here in El Salvador?

Bitcoin City.

And the volcano will
power the whole city

and will also power the mining.

And so when you compare
kind of that stereotype

to how Sam presented, which
was definitely eccentric...

But the things he was saying

were really thoughtful
and seemed thoughtful.

He also just had
this great persona.

He had a way of seeming
very honest, guileless.

Like he seemed like he was
not trying to fool anybody.

There was a tremendous amount

of trust placed in Sam.

He positioned himself as a guy

who was trying to do
crypto the right way.

When he was a teenager,

he had decided that
he really wanted

to dedicate his life to doing
what was best for the world.

He considered
different things like,

he tried being an
animal rights activist.

He considered like politics,

but then he decided
that really the best way

would be to get
really, really rich

and then give that money away.

What we need is an
ethical revolution

so that we can work
out how do we use

this tremendous bounty of
resources to improve the world?

For the last 10 years my
colleagues and I have developed

a philosophy and
research program

that we call Effective Altruism.

It's always
been in theory a goal of mine

to figure out how I can have
positive impact on the world,

and I got involved in the
EA community in college

and it's been a really big part

of how I've decided
what to do with my life.

And so, Effective Altruism
becomes this like,

essentially a community

of people that mostly
develops online.

It's very young and
it's about giving

as much money as possible

in the most effective
way as possible.

The Effective Altruists,
like at first they were like,

"All right, we've studied it
and we've come to an answer.

We must buy bed
nets for everyone

in Africa so they
don't get malaria."

And so, these guys would
go work on Wall Street,

make some money and give
it to this bed net charity.

Their philosophy is utilitarian

and that means like what's gonna

do the greatest good for the
greatest number of people?

It sounds unobjectionable
on the surface,

but as time went on their ideas

got like weirder and weirder,
and more science fiction-y.

They say, "We have
to worry about

the long-term
survival of humanity."

And as a result,

like they started worrying
about apocalypses.

They're like, "All right,

let's say there's something

that could wipe out
all of humanity,

like killer robots.

That would be very, very bad.

So, if we could do something
that would prevent it,

that would be very, very good.

In fact, better than
giving out bed nets."

It gets to like, "We need
to stop AI from killing us.

We need to stop
the next pandemic."

And that's the kind
of Effective Altruism

that Sam Bankman-Fried believes.

AI is
gonna get more powerful

and it has the power
to change the world

for better or for worse,
and it's gonna happen.

We're not gonna not build AI

and that we are having
the hard conversations

about what role it
should be playing.

And this can be like kind of
a dangerous way of thinking.

Like, it's almost
like you're the hero

of your own sci-fi movie.

Like, you're not definitely
gonna save the world

but like, maybe you are.

Like, when you just take
a few steps away from it,

you just see how kind
of morally twisted it is

because the idea essentially

is it's better to
go into finance

than it is to become
a doctor or a teacher.

It's morally superior
and that it's basically

a philosophy designed to flatter

the sensibilities of tech
bros and finance bros,

where now like you don't have

to feel bad about
being in finance

instead of like
actually helping people

in your day-to-day life.

If we succeed we're gonna
save the world maybe.

It's like should I worry
about like securities laws?

Maybe not.

Like, in fact that might be bad.

Like, if you don't
save the world

'cause you are too
worried about what

the Securities and Exchange
Commission might think,

like maybe that makes
you a bad person.

It's a worldview that
essentially justifies

almost any behavior today

that justifies insane
accumulation of wealth

while not necessarily
like paying

your fair share to society.

We have a new name
for the coronavirus.

The World Health Organization

has officially
called it COVID-19.

The number of cases
soaring just today,

more than 24,000 now nationwide.

COVID-19 can be
characterized as a pandemic.

Are you gonna recommend
to the governor

that New York City
do shelter in place?

It has to be considered
starting today.

Right about now for many
it means working from home,

that is the new normal.

You must stay at home.

But 2020 was just a weird
time in so many ways.

Most people just didn't
have an outlet like,

for entertainment or community.

They weren't spending
money on the things

that they were normally
spent money on,

so a lot of people
just gravitated

toward cryptocurrency trading.

Like in 2020, crypto was just
getting like much bigger.

People were
investing real money.

Big institutions were talking
about getting involved.

It was definitely not your
kind of Wall Street hedge funds

that were doing
this stuff in 2020.

It was very much retail driven.

Many ex poker players started
trading crypto around then.

FTX happened to launch at
exactly the right moment.

It was really the
beginning of the bull run.

A bull run is a time
of hustle and activity

when investors chase
higher and higher prices.

Imagine a mechanical rabbit
zipping around a dog track.

When the rabbit speeds up,

the dogs have just one
instinct, run faster.

If you look at a company's chart

in the space that has
been around for 10 years,

it's just up and down
but they really caught

the beginning of
the bull market.

And so, I think investors saw
that and just thought wow,

this company just only goes up.

It was a
little bit of right place, right
time.

Like, people were hungry for
like, new platforms at the time

and I think we always felt
pretty good on the product side.

It all happened so quickly.

You had this crazy crypto boom
that happened, 2020, 2021.

Price of crypto I think peaked

sort of like November, 2021.

In early 2022,

that's when the whole world
kinda woke up and said,

"Holy crap, this isn't just

some kind of like weird like,
tech thing for libertarians.

This is maybe the
future of finance."

And you didn't have to be like,

a crypto believer to say that.

All you had to do
was look at the money

because the money was so big.

Eventually, as FTX
started to get larger,

it started to really
gain traction,

crypto scene started
shifting in Hong Kong a bit.

In parts of Asia there was a
pretty strict crypto crackdown.

China in particular had
really intense crypto bans

and I think there was
a lot of nervousness.

So, eventually both FTX
and Alameda relocated

in 2021 to The Bahamas.

I think that we've been looking

at The Bahamas for awhile.

They're one of the
first countries

to roll out any
comprehensive regulation

for cryptocurrencies,

which we think is extremely
important for this space

and a really positive sign.

The reason FTX was in Hong Kong

and then The Bahamas
is 'cause all the stuff

they were doing would've
been illegal in the U.S.

Like, that's why these crypto
exchanges are offshore.

And The Bahamas was
like, "Hey crypto guys,

please come here.

We'll let you do
whatever you want."

He created this like image

that he did not
care about money.

He really liked to play up
his monk-like lifestyle.

Like, "I drive a Toyota,
I sleep on a beanbag."

Hold on, where's your car?

It's that one there.

That's like, what? A Toyota.

Yeah, it's a Corolla.

And this place where he lived
just did not fit with that

because he's living
in a penthouse

at like the nicest
resort in The Bahamas.

Yeah,
nine colleagues and I bought

a large apartment together near
our office that we live in.

And I don't, I mean,

I'm sort of really
fortunate to be able to have

a really comfortable life
and not have to worry ever

about money for myself,

but I'm not particularly
excited to dive into luxury.

I'm not excited about yachts

and I both think it's not what
I should do with my money.

I think I should be thinking

about how I can help
the world with it,

and it also just isn't who I am.

He didn't buy a Lamborghini,

but like he did fly
in private jets.

He had this fancy penthouse.

They paid 30 million
bucks for it.

It's in one of like
eight buildings

that are in kind of
a horseshoe shape

around this super yacht marina.

I grew up in The Bahamas,

spent the first 18
years of my life here.

The Albany Club is a gated
exclusive residential community

that also includes a hotel
and a heavy nightlife scene.

It's a place where the likes

of Tiger Woods have
residences, Justin Bieber.

I went to Albany and as soon

as I got there I felt like I was

on this like luxurious
like, alien planet.

Like, the grass was super green,

the air somehow smelled better
than the rest of the island.

It was super quiet,
everybody was very fit.

Coffee costs like $9.

There's a sign on the wall at
the coffee shop that's like,

"Do not take pictures of
celebrities at this coffee
shop."

Not a place that
Sam would've fit in

but I think he
could have justified

it to himself by saying like,

"I'm gonna give away so
much money in the future

that this amount of spending
is just not important."

Maybe you've given
away 50, 100,000,000

that you've gotten 50

or 100,000,000 worth
of PR out of it.

How do I know that you're
not just doing it for show?

So, all these people
who were working

at FTX and at Alameda,

they lived in this penthouse

so their entire lives in The
Bahamas were intertwined.

They had office
parties all the time.

They were wild.

They could last you know
well into the morning

and they were frequent.

The vibe as it
seems was a lot more

a quasi like fraternity or
sorority type of atmosphere.

And they dated each other.

Sam and Caroline Ellison

were on again off
again relationship.

Caroline Ellison was
one of the executives

that lived down in The Bahamas.

So, I kind of got
interested in this idea

that if Alameda has information

about what customers
on FTX are doing,

they can place trades
that have an advantage.

It was kind of viewed
as like sketchy

because it's a big
conflict of interest.

Like, he owns the exchange

and he's got a big fund
that trades on the exchange.

Do you wanna play online poker

against the guy who
owns the website?

Like, he could
probably like cheat

and look at everybody's cards.

How do they make
sure that someone's

not just like peeking
over someone's shoulder

at the beach on a laptop?

Very few people wanna
go on the record saying

anything bad about Sam

or about FTX because Sam
was just too important

in the crypto community.

When you combine
Effective Altruism,

long-termism and
this approach to life

that I think Sam had that
probably goes beyond money,

which is like this gaming idea

where you're just
trying to like rack up

as much points as possible,

you start in a place
that feels ethical

and like morally sound

and you get to a place
where you don't even really

have to worry that much about
what's happening in the now.

It's just all about making

this thing as big as
it possibly can be.

FTX's strategy was
basically like,

get out in front of everybody
as many people as possible,

whatever it takes.

Sports,
sponsorships were a big part of
that.

Second down, Hastings.

This is actually really elite.

Hey it's Shaquille O'Neal

and I'm excited to be
partnering with FTX.

I'm Naomi Osaka and I'm
proud to partner with SBF.

Hey-
Woo!

That's my man!

Sue, Mark.
Are you in?

I'm in.
I'm in.

I'm in.
I'm in.

Oh, I'm in, bro.

I'm all in, are you?

Of course I'm in.

Why you gotta ask?

Creating crypto with FTX?

I'm in.

Is this about the new FTX arena?

We're in.

Our city, our team, FTX.

You in Miami?

FTX obviously like got the
naming rights to an arena.

They got these like patches
on the umpire's uniforms

in like Major League Baseball.

There was a time when FTX

was just everywhere
out of the blue.

FTX is dope.

And they got spokespeople

like Tom Brady and Gisele.

Yeah, yeah, a trade.

We're telling everyone.

Not a trade trade.

I'm trading crypto.

FTX is the safest and easiest
way to buy and sell crypto.

I gotta ask you about working

with Tom Brady and
Gisele Bundchen.

One of the user source
sets of people in the world

who have absolutely
massive reach and respect.

It's hard to go
against Tom Brady

or Steph Curry or
Louis Hamilton or...

People think what
they're fed, essentially.

If you have Tom Brady
talking about FTX,

fuck yeah, I'm gonna trust FTX.

I feel very comfortable
endorsing this product

for what it provides
is a service

and how it can help
someone like me

and thousands of other players.

By the way, this is like
all over the world too.

So we're not just talking like
sports leagues in the U.S.

We're talking like Formula 1

and billboards and ad campaigns

in all kinds of
different locations

as well around the world.

FTX did this ad campaign
with Steph Curry

and I remember watching
this Steph Curry one

and just feeling like
very uncomfortable.

This is Steph Curry,

the world's leading
expert on cryptocurrency.

I'm not.

Because the premise of that ad

was that you didn't need
to be a crypto expert

to basically invest on FTX.

Steph Curry sort
of repeatedly says,

"I don't know
anything about crypto,

I don't know anything
about crypto,"

which I'm sure is true,

but then at the end
of the ad he says,

"And I don't have to know
anything about crypto

'cause I have this."

I'm not an expert and
I don't need to be.

With FTX everything
I need to buy,

sell and trade crypto safely.

Now, and look, I cover
business and finance

and like I know
that it is not safe.

You're talking about a
incredibly risky asset class.

In looking at the height of FTX

and Sam Bankman-Fried's power,

you can look at the
2022 Super Bowl.

That was kind of like
the moment I'd say

when like crypto really got
on people's radars, right?

There was, Matt Damon did these

like crazy crypto.com ads

and there were a bunch
of other advertisers

and FTX was one of the big ones.

I call it The Wheel.

Hm, I don't think so.

What does it do?

It rolls.

Yeah, so does a bagel, okay?

A bagel you can eat.

The whole idea of
the Super Bowl ad

with Larry David was like,

oh, like throughout history

there have been
haters, basically.

People who don't see what
the future is gonna hold.

Edison, can I be
honest with you?

Eh, it stinks.

Like I was saying, it's FTX.

It's a safe and easy
way to get into crypto.

Eh, I don't think so.

And I'm never wrong
about this stuff.

Never.

There was a question like,

where is all this
money coming from?

Sam and FTX were growing
incredibly quickly,

but Sam's star was growing
even quicker than the exchange.
For whatever reason he decided

to make himself the poster boy.

It's not like the CEO of Netflix

is in all the Netflix
commercials, right?

No one really thinks
about the founders

of most of the businesses that
most people use every day.

Any U.S. bank, ask
the average consumer

who banks with that bank,

if they know the
founder or the CEO,

they won't say, "Oh, yeah.

I've seen all of his
TikToks and YouTube videos."

But Sam is front and
center everywhere

and I had a conference in Miami

and the hotel I was staying at
was across from FTX Stadium.

When I went to San
Francisco in July,

like it was like there
was Sam and Gisele

like staring down at me

from all these mega ads for FTX.

And I see at the
bus stop Sam's face.

Oh my god, is this
gonna be my life now?

The biggest blemish in my
entire investing career

is following me around nonstop.

In the press they processed it

as a really exciting
story, a success story.

One that you know provided
I'd say hope to the Left.

And even if you didn't
agree with his politics,

he was like a really interesting

kind of new sort
of philanthropist,

and that was exciting
to a lot of people.

I think the media did have a
bit of a love fest with him.

He knew how to be flattering.

He also was just
extremely available.

I think the media is definitely
complicit in his rise.

He said that he was aware

of the fact that most
people in his position

would have journalists
and reporters talk

to their publicist first,

but he made sure to
always keep an open line

of communication
with journalists.

I'll spend time
talking with the press.

I'll spend time on interviews.

I'll spend time on Twitter.

I spend probably an hour
or a day on Twitter.

People wonder like
what was his secret

to like getting such good press?

He loved to answer questions,

he loved to talk to reporters.

He would answer
anything you ask.

Well, it's a good question.

It's a good question.

Yeah, and it's a good question.

It is a good question.

It's a good question
and frankly...

It's a good question.

Okay, that's a
really good question.

He wouldn't give you like
some canned response.

That seeming openness
made him seem

like a good person
to write about.

There was a kind
of a fluff piece written by
Sequoia.

Sequoia is a huge name
in Silicon Valley.

This is one of the
best of the best

in terms of venture
capital investors.

And they had made a huge
$200,000,000 bet on FTX.

The guy who wrote the article

just clearly was
very taken by Sam.

He went over the top with it.

He was like, "As I was sitting
there with Bankman-Fried,

I could tell I was sitting
with a future trillionaire."

One of the things
that they mentioned

is that he was
playing video games

the whole time he was
on this call with them,

and they were all so
excited about that.

They were like, "Ah,
wow, he's multitasking.

He's focused on "League of
Legends" while he talks to us.

He's a genius."

People
love a wonderkind, especially
in the U.S. context.

If you were to design a
wonderkind in a laboratory,

you would probably end
up with someone like him.

He had just sort
of the cool factor

that people in Silicon
Valley were looking for.

It's like Mark Zuckerberg
with his hoodies.

I talked to an FTX
employee who asked Sam,

"Why don't you get a haircut?"

And he said, "I don't
think it would be

a good idea financially
for me to get a haircut."

He was among the richest
people in the world.

He was not only one of the
richest people in the world,

he was a young rich person.

He seemed so important

to know and understand and there

was I think probably
a fear of missing out

on a profile of
him when he seemed

like such an
important kind of guy,

like such a linchpin
in this industry.

SBF's reputation
among those of us

who work in crypto and
are very active in crypto

was not as positive
as he was portrayed

in the mainstream media.

He was perceived more as someone

who was quite mercenary and
a bit of an opportunist.

I heard stories already in 2020

about how he kind of
mistreated counterparties

that were in a weaker position.

So I think many of us
in crypto had a bit more

of a hesitation when
it came to the sort

of king status that
he was getting.

I think many of us
feel like perhaps

we should have spoken up,

but at the same
time it's difficult

when you have someone who gets

that popular and that
powerful so quickly.

And if you do speak up,

you might not have
all the evidence

because a lot of
this is rumor based.

And so you take a big
risk if you do speak up.

What's up, guys?

I'm here with my
boy Sam from FTX.

We're at Crypto
Bahamas Conference.

We're gonna start the day,

we're gonna do some TikToks

for you guys and it's
gonna be an amazing day.

We'll get started.

We'll do a get ready with me.

Sam, where you goin', bro?

Crypto Bahamas was like,
their big conference.

They'd hired Tony Blair and
Bill Clinton to talk at this,

presumably for like
huge speakers fees.

Sam was gonna interview
them both on stage,

and even by his
standards of leg tapping,

like his legs were going crazy.

It was like one leg
and then he'd actually

like grabbed a leg and then like

the other leg starts tapping.

Like, he grabs that leg.

One point like Bill Clinton

almost like kind of
like gave him like

a little pat on
the shoulder like,

"Don't worry buddy."

It was kind of
embarrassing, honestly.

Like, his questioning
of them was so bad,

it was clear he hadn't
prepared for it at all.

The other thing that was
weird about the conference

was that so many
of the people I met

there were promoting
totally dubious schemes.

It felt incongruous
with the way Sam liked

to present the company.

Being in The Bahamas brought
Sam closer to the U.S.

He could more easily
travel to Washington D.C.

where he was doing
a ton of lobbying.

He had connected
with policymakers,

he was helping to
design legislation.

Sam was starting to operate
not just as a founder

in the tech sphere that we live,

but he was negotiating
directly with politicians,

with world leaders,
and that was serious.

You have this boy genius

who is now the face of
the entire industry,

is leading the charge
on changing rules

and regulations in
the United States,

has the ears of politicians

and regulators and
whoever he wants.

In 20 years never
seen any industry

get up to speed this fast.

A report came out shortly after

the 2020 election that
said that he had donated

a huge amount of money
to the Democrats.

I think he was the second
largest democratic donor.

He actually spent
$40,000,000 on races.

Hey,
I donated to both parties.

I donated about the same amount
to both parties this year.

That was not generally known
because for some reason,

in fact is no one
can possibly fathom

the idea that someone in
practice actually gave dark.

So, I don't know.

All my Republican
donations were dark.

People won't see 'em,

and the reason was not
for regulatory reasons.

It's 'cause reporters
all freak the fuck out

if you donate to a Republican

because they're
all super liberal

and didn't wanna have that fight

so I made all the
Republican ones dark.

And then in early 2022
he gave an interview

where he said that he was gonna

give a billion dollars in the
2024 presidential campaign.

Might you give a billion?

Yeah,
I think that's a decent

like thing to look
at as a sort of like,

I mean, I would hate to
say like hard ceiling

'cause who knows what's gonna
happen between now and then,

but as like at least sort

of a soft ceiling
I would say, yeah.

A billion dollars and
it's like 10 times

what the largest
donor had ever been.

When you're talking
those numbers,

when someone says, "I'm
gonna give a billion dollars

in the next two years,

like that catches
everybody's attention."

You have this guy
who's kind of right

on the edge of the
law who is also

at the exact same
time becoming part

of the mainstream
political establishment.

My
background for the last 20
years,

I've been a financial regulator
in the federal government.

The advantage of being regulated

if you're one of these companies

is that ultimately
financial institutions

and traditional
finance might be able

to invest in you and that's
where the big dollars are.

Wall Street's not
going to invest

in crypto until
they're regulated.

A lot of crypto people
operate at the edge of rules.

Often they choose
to operate in places

where there are no rules.

Crypto has been pretty
thinly regulated

in the United States.

They often will hop from
one city or one country

to another depending
on where they think

it's honestly safest for them.

FTX U.S. did a lot
less and allowed

its customers to do a lot
less than you could do

in the main exchange
that only people overseas

were allowed to use.

But FTX U.S.,

it's a foothold in the world's

most important financial market.

So
the crypto companies all of a
sudden came in

and said they wanted
to be regulated.

Number one
is regulation in licensing.

That is the most important
thing for our business.

It's the most important thing
for the industry right now.

I met
Mr. Bankman-Fried three times.

He wanted to get his
application through

and he needed my
vote to do that.

He had a fundamentally
a predatory model

that was incredibly
radical and dangerous.

Better Markets is a nonprofit
independent organization

that advocates for
the public interest

in Washington D.C.

Look, FTX had a two-part
strategy in Washington.

Part one was to
buy and influence

as many elected
officials as possible

to get the most favorable
legislation possible,

which is to say the weakest
possible legislation.

And the other track
was to get the CFTC

to approve this application.

One of their talking points
is that they are so different,

they are so innovative

that they basically
need bespoke regulation.

Once you start to dig
into the technology,

the types of trading, the
way the companies are set up,

it looks very similar
to other companies.

So, I've said why would we
stray from what we know works?

A couple of weeks before
the meeting with us,

I got a phone call
that they were floating

a million dollars or more

if we would support their
application at the CFTC.

Why do you think they spent
hundreds of millions of dollars

in marketing over the
last couple of years?

Why did they buy
the Super Bowl ad?

Why are they putting their names

on Major League Baseball
umpires uniforms?

They wanted retail America
to be thinking FTX,

legitimate, real, good
place to do business.

That was all priming
the pump for the app

that was gonna go live.

The second the
application got approved,

the app goes live, boom.

Millions of retail customers
for FTX sending tens

of millions of dollars into FTX.

CZ, Changpeng Zhao is his name.

CZ is the founder
and CEO of Binance,

which is the world's largest

and most liquid
cryptocurrency exchange.

Bitcoin cryptocurrencies
back in 2013, 2014,

for me was one of those
really unique opportunities

where it was early stage,

only a small number
of people got it

and it's gonna be a huge future.

So, I told myself I'm
not gonna miss it.

That was an opportunity
of a lifetime.

CZ is a Chinese
- Canadian entrepreneur.

He's been in crypto
for a really long time.

He was also an investor in FTX.

I think he saw them
less as a competitor

and more as there's room for
more than one major exchange.

Binance was way bigger than FTX,

but FTX was like the main
competitor of Binance.

These were the sort
of two heavyweights

in the world of crypto.

And Binance was this
like hyper aggressive

exchange founded in China.

And the founder of Binance,

CZ is this really incredibly

like pro crypto billionaire guy.

And Sam kind of set himself
up as a foil to that.

Sam was an American.

Sam was giving money to
American politicians.

He was like the good guy
to CZ's bad guy, right?

That's kind of how it was
processed at the time.

I was trying to profile CZ.

He lives in Dubai.

Dubai, not everybody
likes it, right?

But it's sort of an
interesting place.

It's this international city,

really tall buildings and so on.

And I'm asking him,
maybe CZ could tell me

what he likes about Dubai,

or show me around, gimme
the tour of the city.

This is his new home.

He's so happy to be here,

and the only thing
CZ wanted to do

was talk about his minivan.

It's the kinda thing
that you would use

like for a VIP convoy.

And he had bought this minivan

because it had the
same kind of seats

that you have like on a first
class airplane cabin, right?

And he showed me, we're in
the van and there's like

a couple of assistants in
the back and CZ shows me

how you can lower the seat,

and he told me that
he got this van

because it was the only
one where you could lower

the seat all the way.

And he starts lowering the
seat, he presses the button

and it's like ,

and it like hits
the knees of the guy

behind us who's taking notes
and the guy sort of says, "Ah!"

And then CZ turns it
around, pops it up.

But it just, I thought
it was pretty funny

'cause like he's so
comfortable on the go,

international travel
that he's trying

to like replicate
that even in his home.

My understanding of Sam's plan

was that he's operating
this kind of offshore casino

and he would like
the U.S. government

to give him a casino license.

At some point regulators
are gonna accept this

and one of us is gonna
be the big winner,

and Sam was trying to make that
happen in the United States,

which of course if you're
legal in the United States,

like the United States
is like the locus

of the global financial system

and I think CZ perceived
that as a threat.

When we optimize our energy

so it's much better
for me to sit here

and speak to all of you than
looking at what FTX does

or trying to take market
share away from them.

For them they may think
it's mar it's meaningful

to take market
share away from us.

But that's actually also a
very, what do they call it?

Limited mindset.

They should try to
grow the industry

and not lobby against
other players.

I don't think what FTX was doing

was trying to kill
their competitors.

They were literally just
trying to find a way

to safely operate in
the United States,

and that is actually
something every exchange

was and is doing.

They just wanna make
sure that they could

have American investors
in a way that's legal

so they aren't sued within
an inch of their life.

Whoever wins this market,

whoever's first to market is
gonna have a huge advantage,

but also there's this
like political thing

going on where FTX
presents itself

as the like American champion

and gets the U.S. government

to keep Binance at arm's
length for political reasons.

FTX has this token called FTT.

This is typical
for crypto projects

and companies to have
their own affiliated token.

So, the FTT token is basically

a token which gives
you certain benefits

on the exchange if you hold it.

One of the strategies
that FTX used

and Binance still
uses is let's issue

a token for the exchange.

The more you own, the less
you pay for trading fees.

In crypto people often think

of tokens as being
something like airline miles

where if you use the product
you get rewarded in them,

or when you have the things

you can use them to
pay for the product.

So, the value of that depends

on how much you want to
use FTX as an exchange.

But the main thing
that Token does

is like it trades
and if people think

the exchange is good
then they might buy

the token of that exchange as
a way to bet on that exchange.

And so, if you're an exchange,

you love issuing those tokens

'cause they're free
to you essentially.

Let's say that I create a coin,

I'm gonna call it Zeke Coin.

All right, like now there's
a billion Zeke Coins,

I just did it.

I just need to sell
one of 'em to somebody.

It could be like my buddy for $1

and then the cost $1 times
the supply, 1 billion,

makes me a billionaire
based on the market value.

And then I can go to
like banks and say,

"Hey, I'm a billionaire.

Will you give me a loan?"

But is it really
worth that much?

I mean, it's kind of
funny money in that way.

The problem however is that

the FTT token is not
like Bitcoin or Ethereum

where the supply of the
currency is totally fixed.

With the FTT token,

they were able to
mint themselves

an absurd amount of tokens

out of thin air
and they were able

to change the supply
of the tokens over time

To me, I always
thought the main aspect

of like a token like FTT

is that FTX promised
to use a portion

of its trading revenues
to buy back FTT tokens.

And I think FTX said that

they were going to use
a third of the revenue,

and put that toward buying
back the FTT tokens.

So, people expected the exchange

to generate a lot of revenue

and have their tokens bought
back later at a higher price.

Yeah.

I was in Singapore for
about 10 years actually.

Singapore had great regulation
for hedge funds in general,

but it was also very good

for crypto for a
long period of time.

It still is.

So I was based there.

We founded Three Arrows.

We started it in 2012,

mainly focused on
foreign exchange

and later became
entirely crypto by 2018.

We kept the business there
and we did a lot of trading,

a lot of venture capital,
a lot of investment.

Three AC was a
crypto hedge fund,

which is just
another way of saying

it was this giant pile
of investment money.

Let me tell you
about Three Arrows Capital.

These guys were like
one of the biggest,

most respected funds in crypto.

And they were known as
these brilliant traders

who could do no wrong.

These guys were kind of gods
in the crypto space, right?

They were idolized.

And Sue was promoting this
idea called the supercycle.

The idea is more or
less like the price

of Bitcoin will
never go back down.

That it is gonna go up forever.

We just had this philosophy

that as long as it's
going well, don't stop.

You just keep going.

I genuinely thought that
we would all make it,

and I think it was because
I believed in supercycle.

I just thought that there
could be no catastrophe

that big because people
would get how bad it would be

if we had big catastrophes.

Everybody in the
industry was like,

"This guy is a great trader,

this is what is going to happen.

And one of the things that
they were really long on

was this ecosystem
of Terra and Luna.

There were two tokens involved.

One was called Terra,
one was called Luna.

One of the
things to understand about
crypto

is that it is a way for
people to find community.

And Terra Luna for
awhile operated

a lot like a meme stock.

Terra Luna, even within
the crypto world,

was viewed with like
a lot of skepticism

because it was paying like
an insane interest rate.

It was pretty much
clearly a Ponzi, so...

A Ponzi is an investment

that looks like a
perpetual motion machine.

It keeps paying
high returns as long

as new money keeps coming in

and no one takes
their money out,

but eventually it
runs out of people

who want to invest
and it collapses.

Many crypto projects
ended up working

like Ponzis even if they
weren't intended to be.

And so, eventually
when people started

to get a little
nervous about the value

of this system and began
trying to take their money out,

it all collapsed and it
collapsed spectacularly

and spectacularly quickly.

Three Arrows had
borrowed so much money

from so many different
places that when they failed,

it had kind of like a cascading
impact on the crypto world.

This was an event where
$60 billion of market cap,

two top 10 coins were
vaporized in a period of days.

It was a very rapid
collapse for us

and it was something

that we didn't really
quite see coming.

After the Luna collapse,

there were a lot of issues

with liquidity in the
entire credit markets,

so a lot of firms that lent to
us to do this kind of trades,

they started to try
to recall capital.

They owed people a lot of money

and they didn't have the
money to pay it back.

Once Terra Luna blew up
and Three Arrows failed,

all the people that
had lent out money

to crypto funds were like,

"Hey, do we lend money to like

any other people
who are broke now?

Maybe we should ask everyone
to send the money back

just to like check that
they still have it,

and then maybe we'll give it,

we'll lend it out
again afterwards."

Among the funds that had their
loans called in was Alameda.

So these like unrelated lenders,

other companies were
like Alameda owed

them several billion dollars.

And even though
Alameda had not failed,

the lenders were like,
"Hey, just like to check,

why don't you send
us that money back?

Let's just make sure you can."

So Alameda had to pay back like,

billions of dollars in loans
after the Terra Luna collapse.

It didn't have the money.

So that was when
according to some

of the other FTX
executives, Caroline, Sam,

Nishad and Gary had a
meeting and were like,

"What should we do?

We were being asked
to send billions

of dollars back to lenders,"
and there were two choices.

Alameda could go bankrupt,

or they could dip into
the FTX customer funds

to pay back these loans.

And decided like,
"You know what?

Let's go for it.

Let's borrow the money
from the customer funds,

we'll make it back later."

I spoke with Sam about
this and I was kind

of surprised 'cause I thought

he would deny that such a
meeting had even taken place.

But he acknowledged that
there had been this meeting,

but he said to me
that it just hadn't,

had seemed very important
to him at the time.

And that's where you get
into the whole explanation

about how Alameda was
already borrowing money.

Basically Alameda was
borrowing money from FTX,

and posting his
collateral FTT tokens.

So Sam's floundering, like
Alameda is struggling now

and Sam's fame increases.

Like, he goes out and
puts on this front

that he's gonna
save the industry.

Crypto FTX signed an
agreement with BlockFi today.

The deal includes an
option to purchase

the crypto lender for
as much as $240,000,000.

Increasingly in the
crypto community,

you're being known
as a white knight.

Anthony Scaramucci
even told us he thinks

of you as the J.P.
Morgan of the industry.

Obviously there's a lot of
turmoil going on right now.

I
think this is less thinking

about what do we
need here and this

is more identifying
potential opportunities

if there are any for
us to grow further

and faster than we
would by default.

This narrative started
of Sam Bankman-Fried

being the J.P. Morgan of crypto.

He's in one hand being
pressed, pressed by regulators,

pressed by the kind of like
conditions of the market.

And on the other hand,

rather than kind of like
basically going into survival
mode,

he is attempting to
somehow like soar above it.

You begin to see people

in the Sam Bankman-Fried
empire begin to step away.

Brett Harrison, who was
the CEO of FTX U.S. leaves.

Let's just start on
the news of the day

in the departure
of Brett Harrison.

What exactly is going on?

How long has this
been in the works

and where does it
leave FTX U.S.?

Yeah,
I mean it's not the kind

of thing that would
go public were it not

to have been in the
works for a little while.

Sam Trabucco, the
Co CEO of Alameda also leaves.

He said something along
the lines of like,

"I just want to ride my
boat fast over nice water."

One thing
that I definitely learned

was how to manage a team.

I knew how to manage a team
when everyone was happy,

but I had no idea
how to manage a team

when there was stress,

when people were
unhappy with each other,

when there was conflict.

I was presented with
times when members

of our team disagreed
with each other,

disagreed with me especially,

and I didn't know what to do
when people couldn't reconcile.

In the beginning, the
level of cooperation

between even competitors
like CZ and Sam,

it was very much cooperation

'cause they were
starting in the industry.

They were the co
- founders so to speak.

They were the two behemoths.

Sam wasn't thinking
through what would happen

if he sold 20% to CZ, but
that's basically what he did.

I think it's totally possible
that CZ invested in Sam

from the start because
he perceived him

to be a competitor
and because having

an interest in a
competitor be a good idea

and also he was able to use
that to slow certain aspects

of Sam's plan down.

That investment was
really a poison pill.

Binance being a
competitor I think knew

that by acquiring a 20% stake,

they could effectively
block the progress

of FTX anytime they wanted to.

So he's telling me this story.

He starts trying to get licenses

to operate in multiple countries

in Europe and North America.

And they ask, okay,
"Who's on the company?

Who owns it?"

CZ's 20%.

So he has to disclose
everything about who he is,

where he is, where
he has his assets.

So he calls CZ and
say, "Hey look,

we're trying to get
this application.

You gotta disclose."

And he'd say, "No,
I'm not disclosing."

He said, "Why?"

Now, I don't know what
CZ was doing here.

Nobody does, only CZ does,
but he just refused to comply.

So he's probably talking
to his management

and I'm now speculating,

but I think it's probably
went down this way.

What do we do with the CZ guy?

He's just not gonna
play ball with us.

He's a huge shareholder.

Somebody probably said,
"Sam, you gotta buy him out,

you gotta get rid of him."

It
seems like CZ leveraged

that for a buyout
of his position

with like a 20 x return
on his investment.

That deal went down
for $2.1 billion.

Nobody knew.

And I only found
out a few weeks ago

because when Sam told me that,

I said, "Wait a
second, wait a second.

You gave all your assets to CZ?

How much of it was cash?

Like, you stripped the
balance sheet of cash

to buy this guy out 'cause
he was playing hardball

with you and not being
compliant with regulators?

Was that planned?

Like .

What is that?

Of that 2.1 billion,

it sounds like the
majority was cash,

but 550,000,000 of
it was FTT tokens.

A story comes out in CoinDesk

about Alameda's balance sheet

and the story has to do
with FTX's native token

and how Alameda has a lot of
that on his balance sheet.

Over the weekend
speculation rose

about the solvency of FTX.

This came after
a CoinDesk report

revealed Alameda
Research's balance sheet

is full of FTX's
native token FTT.

So, that story comes out
and then the next beat

is that CZ at the
exchange Binance tweets

that because of
what's come to light,

he's looking to
sell a ton of FTT.

Binance CEO Changpeng CZ Zhao,

a sizable owner of
the FTT token saying

his exchange would
begin liquidating

any remaining FTT it
had held on its books.

Suddenly this CoinDesk
report, right?

Which we don't know
where it came from,

obviously could have been
leaked by a competitor,

it could be not credible.

But now we're seeing a
guy who's an investor

in FTX who has a
close relationship

with Sam Bankman
- Fried who's saying,

"Yep, there's something here
and I'm gonna get out of it."

And as people lose
faith in the exchange,

there's like a bank run

where people are trying
to withdraw assets.

So many people are withdrawing

that they actually
stop people's ability

to even withdraw their assets.

That makes the panic
spread even more wondering,

does FTX even have enough money

to give me back what
is rightfully mine?

The value of Alameda's stash

of these tokens was hundreds
of millions of dollars.

But they went around saying,

"Look at our balance
sheet, it's so good.

We have hundreds of
millions of dollars

of these tokens
and no one wanted

to pay that kind
of money for them."

Crypto Exchange
Binance announced

a deal to buy rival FTX.com.

Glen Goodman eToro crypto
consultant joins us now

to walk us through this.

Glen, I just wanna make sure

that I've got my head
around this correctly.

We see Binance
selling FTX's tokens

after a report last week,

questioning the credibility
of the business,

that then causes
a liquidity story,

which is then resolved
by Binance stepping in

and buying FTX.com.

Have I got that
straight and if so,

this feels like the Wild West.

Yeah, you've pretty
much got that right

and it could be either
a masterful chess move,

like one of the best
business chess moves

I've ever seen by
Changpeng Zhao,

the boss of Binance,

or he just got himself
into this position

kind of by accident and then

is now benefiting from it.

Binance as Binance goes in

and gets a closer look at FTX

and the whole in
FTX's balance sheet

is so enormous that CZ backs out

of this deal within 24 hours.

Things really took a
turn for FTX after a deal

to sell the exchange to
its top rival went south.

Sam Bankman-Fried again
pounding the pavement,

asking for money to keep FTX
afloat after Binance called off

the deal to buy it,

only this time everyone
has a much better sense

of just how bad things are.

I sat down with Binance's
chief strategy officer

here in Chicago.

He essentially
said he was shocked

at what they saw when they went

through FTX's numbers.

Bankman-Fried told investors

that the company is facing

a liquidity shortfall of
around $8,000,000,000.

A lot of traditional
finance observers look

at this situation,

have have been saying that Sam

is insolvent for months, right?

Just to judging by the actions

but the crypto industry
itself was unable

to kind of take that in properly

and instead it was just
like, it's probably fine.

He's the J.P. Morgan on crypto.

My guess
would be that CZ saw

this as a great
opportunity, right?

He says, I'm gonna
sell all this,

I'm gonna collapse your coin,

I'm gonna make you
probably a little insolvent

and you're not gonna be able

to handle your customer
withdrawals anymore.

Now, I can buy you and
I'm done with you forever.

We know that after
he did this though,

that he saw the
books and was like,

"Oh my God, there's an
enormous $8 billion hole here.

I am not gonna purchase
this entity at all.

So you strip the guy's
balance sheet of all his cash,

you wait till there's a
question about liquidity

and you hit him with
the 550 million.

Poof, he's gone.

He brilliant, brilliant,
brilliant, brilliant.

Tonight the cryptocurrency
world is reeling

after the meltdown of one

of its most popular
trading platforms.

The Exchange FTX filed for
bankruptcy protection today

has fallen crypto
king Sam Bankman-Fried

stepped down as CEO.

From a $32 billion company

to bankruptcy in a matter
of just four days or so.

This bankruptcy filing

includes Bankman-Fried's
quad trading firm,

Alameda Research, and
134 affiliated companies

all over the world.

You've got places like Nigeria
and Uganda, South Africa.

I mean, all is fair
and love and war.

That was a masterful move.

I think there will be
people that blame Binance

for taking down FTX, right?

I think it's all
kind of nonsense

because I think even at the
point that CZ did that tweet,

Sam could have still halted
his exchange and restructured.

Sam tweeted, "At some point
I might have more to say

about a particular sparring
partner so to speak,

but you know, glass houses.

So for now all I say is
well played, you won."

Can you respond to that?

I think only a psychopath
can write that tweet.

So basically within the
span of like a week,

people's entire notion
and entire understanding

of who SBF is has
completely flipped.

Sam has basically become a
villain in everyone's minds.

He was supposed to be a
responsible guy bailing people
out,

and he needs a bailout?

Like, who is this person?

I also don't think
he's the complete

and utter super villain

that he's been made out
to be in some publications

and in some groups on
Twitter, obviously.

These are people specifically

who are on what we
call crypto Twitter.

It's not a real place,
but it's kind of the place

on Twitter where people
congregate that are into crypto,

and what we've seen is 96%
of those people believe SBF

is a bad person.

He needs to be held accountable
and he doesn't deserve

a second chance in crypto.

It just seemed
like he was trying

to do good to gain
people's trust

and there was not
really authenticity,

always talking
about like he wanted

to give everything
away and he was wanted

to take care of people and
then he drove like a Corolla,

but he's worth like
$10,000,000,000.

Like, there's a narrative
he's telling with that, right?

And it just wasn't believable.

You can tell.

After the bankruptcy,

people kind of expect
Sam to go off the grid.

He is probably gonna
not wanna talk to anyone

until he figures this
all out with his lawyers

but what he does is
completely the opposite

of what you would expect.

It's fucking ridiculous.

I mean, look, I fucked
up a lot of things.

Like, I just absolutely did

and I deserve a lot
of shit for that.

I should have been
on top of this

and I feel really,
really bad and regretful

that I wasn't and a lot of
people got hurt and that's on
me.

He starts to do
this round of like interviews

with absolutely
every media outlet

under the sun giving his
version of what happened.

There were oversight failures,

transparency failures,
reporting like so many things

we should have had in place.

There was this moment
for a month, right?

He's in the penthouse,

his world has gotten very small

and he's like doing
all these interviews

where he's apologizing
seems completely,

completely divorced
from his own reality.

And I think like,
how did that happen?

Like why did he process
it in such a weird way?

It's because I think for
a long time he'd been,

everything had been
like an abstraction.

There is no world in
which Sam's advisors,

the people managing his crisis,
told him to go talk more.

He seems to think
since he talked him way

into his way into
all this wealth,

that he can talk
his way out of it.

And in fact he just kept
making things worse.

What are your lawyers
telling you right now?

Are they suggesting
this is a good idea

for you to be speaking?

No, they're very much not.

And I think I have a
duty to talk to people,

I have a duty to
explain what happened.

And he was not telling
people what happened

and he came across
as unlikeable, smug.

He certainly showed
regret but not remorse.

I mean, it doesn't
feel good right now.

His lawyers definitely
did not want him speaking.

They
said after that was that,

"Sam, we have only
one thing to tell you.

You have to promise
that you never, ever,

ever say you F'd up again.

I tell 'em to go
fuck themselves.

I don't think they know
what they're talking about.

I mean, whatever.

They know what
they're talking about

in an extremely narrow
domain of litigation.

They don't understand the
broader context of the world.

One thing
that Sam was great at

is like getting a
listener to the point

where like their
eyes are glazing over

and they stop listening.

You would come away like, huh?

Like, did I really get a
response to what I just asked
him?

I am no cryptocurrency expert.

I'm no finance expert.

Yeah, 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?

Uh...

There was like a
spaces on Twitter

and I was one of
maybe six people

who was invited to ask
SBF some questions.

You described that
these customer funds

were being sent to
Alameda Research.

Can you help me understand
how that's not wire fraud?

Sorry.

To be clear and I'm
done answering questions

from you after this.

Like, this is not a
constructive approach,

but I will answer your question.

None of it has been.

None of it has been, Sam.

You don't answer questions.
I understand.

You don't-
I understand,

so I'm going to
answer this question.

No you're not.

All right,
I won't if you don't want me to.

I listened to the rest

of the questions and that was ,

he got arrested
five hours later.

Samuel Bankman-Fried,

the former CEO of
the now bankrupt

cryptocurrency exchange FTX

was arrested in
The Bahamas today.

This morning we unsealed

an eight count indictment
charging Samuel Bankman-Fried

with a series of
interrelated fraud schemes

that contributed
to FTX's collapse.

We obtained a warrant
for his arrest

and that arrest was executed
yesterday in The Bahamas.

Everyone was waiting
for when charges

would finally drop against SBF,

and when the charges do come,

they're numerous and
kind of shocking.

He was charged with wire
fraud, securities fraud,

commodities fraud
and campaign finance

related violations as well.

Bankman-Fried and his
co-conspirators stole billions

of dollars from FTX customers.

He used that money for
his personal benefit,

including to make
personal investments

and to cover expenses and debts

of his hedge fund,
Alameda Research.

Bankman-Fried
arrested last night

in The Bahamas faces eight
criminal charges in the U.S.

Authorities alleging
he defrauded investors

by funneling customers' money

into his own hedge fund
behind their backs.

As a result, they say
$8,000,000 have gone missing.

We heard from John J. Ray,

this is the guy
that's now the new CEO

of FTX revealing
this stunning list

of allegations against SBF.

This is the guy that oversaw
the liquidation of Enron

and he's saying he's never
seen anything like this.

Mr. Ray, you have compared
FTX as worse than Enron.

Literally, there's no
record keeping whatsoever.

Employees would communicate
invoicing and expenses on Slack.

They use QuickBooks,

multi-billion dollar
company using QuickBooks.

QuickBooks?
QuickBooks.

There's no voice of the people

that's really been
represented in this.

I mean, people forget
about the retail investors

that have lost in a lot of
cases their life savings.

I had around half
a million dollars

in FTX when it went down.

I lost more than 1.5 million.

180 K.

$100,000.

80,000 plus.

I lost $50,000.

I had just over $2,000,000.

We understand a judge
in that courthouse

has denied his
application for bail,

declaring him too
much of a flight risk.

When he gets pulled
into that prison,

yeah, I mean that's the first
reality he's had to deal with,

I don't know, maybe
in his whole life,

but certainly the
first reality he's had

to deal with in years.

It must have been a shock.

Bankman-Fried's hearings
in a Bahamas court

will resume tomorrow
and he's expected

to drop his fight
against U.S. extradition.

I'm announcing that
Samuel Bankman-Fried

is now in FBI custody.

He will be transported directly

to the Southern
District of New York

and he will appear in
court before a judge

in this district as
soon as possible.

Overnight his plane landing

at an airport in
Westchester, New York,

just outside of New York City.

Meanwhile, two of
Bankman-Fried's former deputies

are pleading guilty to
charges brought against them

in connection with the
crypto firms collapse.

The Southern
District of New York

has filed charges
against Caroline Ellison,

the former CEO of Alameda
Research and Gary Wang,

a co-founder of FTX and
they are both cooperating

with the Southern
District of New York.

Sam Bankman-Fried
is facing trial.

He is out on bail
for $250,000,000.

He's in home confinement and
he is awaiting trial in 2023.

What's up guys?

It's me, Tiff, and a few days
ago on December 27th, 2022,

I spoke with Sam Bankman-Fried
in person for the first time

at his parents' home in
Palo Alto, California.

For those of you who have
no idea who the fuck I am,

this wasn't some random meeting.

I've interviewed Sam
twice in the past.

I've visited him
twice on house arrest so far.

He seems like a relatively

like sort of messy,
chaotic person.

There was like some clothes
thrown out on the ground.

It looks like he's
dragged his blankets

and a pillow into the library.

It looks like he's
been sleeping there,

so he looks like he's been
sort of chaotically typing up

his recollection of events
and sleeping in that room

and probably waking up
and just typing more

and making more balance sheets.

I didn't talk to
his parents at all,

but his dad kind of poked
his head in the door.

We were hanging out in his
library mostly and just talking.

A lot of news stories
came out that we're trying

to paint the picture
of me meeting Sam

for some like sexual
rendezvous or something.

I don't know, like I ,

I think it's ridiculous
obviously, and frustrating,

but I'm also like, I'm sure
like, he's like a lonely guy.

I'm like, I'm sure you
don't mind like a girl,

like being like, "Hey,
can I come over ?"

Like, and he's just
like a lonely dude

at his parents' house.

Look at this.
Oh, Sam.

We've actually
talked quite a bit

about his mental
health and depression.

I mean, he does
use Emsam patches,

I think they're
antidepressant patches.

He said that he's pretty
much always been depressed,

but he describes it
more as anhedonia

or he feels anhedonic.

He mostly says he
doesn't feel happiness

or too many positive emotions.

The world is messy.

That's how it is and it's sad

that it's messy and it can be
really frustrating I think,

and slow things down,

slow people down and
cause a lot of damage

but it's also an opportunity
to try and make it better.

FTX was a good business,

so I thought why would
Sam throw all this away?

Answer might be that Sam
just took incredible risks

and he didn't really care
at all about downside.

I saw sometimes people reply
to my tweets and say like,

"It takes a scammer
to know a scammer,"

and I think the irony
there that is like,

I don't think I'm a scammer,

but at the same time I
understood what he was trying to
do.

I don't think he even
had almost a conception

at some point that it
was wrong or right.

I think he just had the
mentality that he has to win.

I remember at one point
when they were describing

the five to 10
million trading error,

they mentioned that it was like,

it just wiped out their
hit points, their HP.

You know like in
Pokemon or a video game

you have HP points and if
your Pokemon's HP points

go to zero, they
faint and you have

to wake up at the Pokemon
Hospital or something.

A lot of people look at you

and see Bernie Madoff.

Yeah.

I mean, I don't think
that's who I am at all

but I understand why
they're saying that.

For years I had a lot of
self-doubt about myself

as a venture capitalist
and I thought,

"Do I need to do better

or do I need to learn
from this situation?"

So, I have to say
it feels pretty nice

in some ways to know that my
gut instinct was correct here.

But on the other hand,

this was a horrible setback

for our industry and it's
a black mark for sure.

I think this will probably go
down and history as one of,

if not the largest
financial crimes ever.

The size, the scale.

Millions of people
were impacted by this.

School teachers to
regulators, to congressmen.

It's incredible.

I think the FTX debacle
in D.C. absolutely

is gonna cause a problem.

Congress is gonna
come at this industry

just hammerin' tongs.

We've seen a much more
aggressive posture

from U.S. regulators.

We're also
seeing traditional financial
institutions,

so like Wall Street
banks, BlackRock,

Fidelity, Citadel, start
to make their own kinds

of overtures in crypto and say,

"Hey, there are pockets of this

that seem really interesting."

I would say somewhere
between 95 to 98%

of everything in
crypto is just garbage,

and then one to 4% is valuable,

and then 0.1% is revolutionary.

At this point so many
people have spent

so much time working on crypto

that it'd be kind of surprising

if there no lasting good
thing came outta crypto.

But Bitcoin as,
it's as old as Uber,

it's as old as WhatsApp.

Like, it's been around and like,

are you using it for anything?

Let's just say the
number stops going up,

what's in it for me?

Like why is anyone
gonna use this?

What is the point?

The code itself,
Bitcoin's just software.

That's all it is.

It's just software.

It's not nefarious, it
has no ill intentions.

It's all the people around it

that are doing all
of these things

because they're unregulated
in unregulated locations

doing whatever they want.

That's gonna end.

What's the difference
between FTX and Enron?

Nothing.

It's not gonna change.

The energy markets didn't
change after Enron.

It's just a bump in the road,

and will this be the
last of its kind?

No, this is the
nature of capitalism.

Get over it.

It feels very hard to ever
call the end of crypto,

but this was for sure
an existential crisis.

Some people are ready to
just like pick up and like,

keep moving the ecosystem ahead.

And I would say that
it's probably worth

being a little bit more
reflective for everyone
involved.

Finance is something
that is really integral

to all of our lives.

It touches technology, society,
politics and power dynamics.

It touches people's emotions.

I'm not trying to say
that money is religion,

but it in many ways is
something that people

might put on that pedestal that
God would otherwise occupy.

There's an element that
people should understand

about the human condition

that has been here since
the beginning of time.

Greed.

Greed is powerful.

You have to spend your whole
lifetime controlling it.

I don't
think I give a shit about my
legacy.

That's not what matters.

Like, I think what
matters is what impact

I have on the world in the end.

It doesn't matter if I
make the world better

or if someone else does it.

Better is better and
if I can do anything

to help other people
help the world,

that's just as good.

So, obviously sort of part of me

would love my legacy to
be generically positive,

but I just don't think
that's what matters.

In the end it's the mark

that we actually
leave on the world,

not the mark we're perceived

to leave on the
world that matters.