Sam Bankman-Fried: House of Cards, Part 1 (Guest Hosts, Trader Koz and Crypto Dale along with JP)

[00:00:01] We're back. Episode, lucky number 13. I don't know if it's lucky giving what we're talking about but it is episode number 13. And if you're watching this, you see that it's only me on here.

[00:00:37] But you're going to see some logos here because I'm about to introduce our two guests host this week. So Joel and Alan have a lot going on. We'll get into that in a little bit. They'll be back next week.

[00:00:46] But I'm going to call this episode, episode 13 House of Cards, part one because the house of cars started to come down. But let's introduce our guest here. We have Trader Cause and Crypto Dale from Twitter class of 2017. Boy is welcome. Thank you. It's good to be here. Yeah.

[00:01:07] Yeah, of course. Of course. I'm glad to have you guys on. We've done some live streams on my stream before. I think we're on causes stream once. And it's good to have you guys in because you're class of 2017 and if there's a crypto class of 2017.

[00:01:20] So if there's been a scandal, you guys have seen it. You've experienced it. And oh boy, I'm excited to put this one in context. But I feel like since some people may not have overlapped with you guys, I give you a little bit of the background.

[00:01:31] So ask you to tell people about yourself a bit? Yep. So I started in crypto 2017, buddy of mine in college was like, hey, I'm using this TA stuff to trade light coin and I was like, wow, that sounds kind of interesting. Got into it.

[00:01:45] Lost a bunch of money in 2017 told myself I'd try and figure things out so that doesn't happen to me again. And every year we get a little bit better but main focus trading had some fun in the NFT

[00:01:58] space this past year and kind of whatever else gets hot and crypto. But yeah, that's a little bit of money. Nice, perfect. Thank you. And Mr. Dale, how about yourself? Yeah.

[00:02:10] So like, cause I got in in 2017, made some money at first and then proceeded to lose it all. Thinking I was a god tier trader and in fact was not and still not. You know, active in the space.

[00:02:23] I like the decentralization aspect of it background before crypto is traditional finance. So see the need. And yeah, like cause I'll trade whatever's hot. I'm not a maxi by any means. But tomorrow. Nice. Yeah. Yeah.

[00:02:40] It's funny because your guy's story is not getting in like it makes money lose that money. Like the space though doubled down and the payments have successfully hit around. And it's funny.

[00:02:51] I bring that up because I think there's going to be a lot of people listening to this or a lot of people in crypto that just kind of had that same experience. They all just had where it was like I came in in 2020 was shit got hot.

[00:03:02] I made some money. I thought FTX was untouchable. I put some money on there and here we sit on November 16th, 2022 and the golden god of crypto or self-proclaimed sandbag when free it is broke.

[00:03:19] You should be going to jail and this all started 14 days ago guys two weeks ago. Can you believe that? It's crazy. I'm going to yeah, I was just going to say and like I think we're just at the beginning

[00:03:34] with a lot of the fallout of all this stuff. I mean it's kind of surprising to me how well the market has held up thus far. Like with everything that's come out it's like how it was Bitcoin not at like 12k already or something like that.

[00:03:45] But I know we're probably just at the beginning of hearing all the firms that were that had all their money on FTX and have gotten screwed and who knows what else is coming

[00:03:55] with all the drama whenever Sam decides he wants to tweet a new letter and tell us stuff that we already know but I don't know it's we're in for a while right. I think you're right. I'm going to real quick.

[00:04:07] I want to set up the direct events that led to where we were and I say direct meeting within last 14 days. We can get into the other stuff too which really goes back years and I have some extremely hot takes that just a little spoiler alert.

[00:04:20] I'm pretty sure Sam was a fucking fraud all along. I'm pretty sure he was a fraud all along. If you look at his background and what he was doing and how he got his money it's disgusting.

[00:04:30] But let's talk about the things that started on November 2nd because this kicked off November 2nd. On November 2nd, Coin Desk reported 40% of L.M. It has assets. We're an FTX's FTT token. FTT is essentially equity right. Am I categorizing that correctly? FTT is essentially equity in FTX.

[00:04:53] It's kind of like a security token. I remember owning FTT, the only reason I owned FTT was you got discount of trading rates on FTX. But who's that was just going to pop in. We went ahead of that.

[00:05:04] Well yeah, I was just going to I mean you pretty much covered there. It was kind of you'd think of it as equity in FTX but then you also got a little bit of the discount and I don't remember you got something for stake in it.

[00:05:18] I remember when FTT was like four bucks, I was stake in a bunch of it but yeah. I don't remember all the same. I still I stakes I think you had to stake 500 to get like the best. Oh that's right. Yeah.

[00:05:31] It was something crazy and then I literally looked at it because I did the same thing. I think I think it was $1 or $2 or $3. I was like oh my god this is 46 bucks. I'm gonna stake this. I'll take this 10x and I'll write off.

[00:05:41] Then I stopped trading at that point in FTX because there was a lot of other issues. But what happened after the second so coinless reports that and on the sixth CZ the CEO of Binance sends out this tweet kind of out of nowhere.

[00:05:56] I mean I remember seeing it and just by the way, the reason why we haven't been on here is we had a baby right like my wife and I had a baby. I was sitting in the hospital looking at this going like, no that's kind of weird.

[00:06:07] Why did why it's CZ say he's gonna get out? Like that's pretty pretty wild. And he says that they're gonna liquidate $2.1 billion worth of FTT because they were an investor in FTX part of them the.

[00:06:21] Uh, mingling I guess getting out getting their equity out of FTX was getting paid in BUSD and FTT so they had $2.1 billion worth at this point in the FTT I think it was worth like 28 bucks. Um, like FTT itself. FTT itself was $28 per token.

[00:06:38] It's a lot of rumors start going about it. You know what he's selling all of it and he made some like weird, um, like he alluded to Sam going after him right? He said, uh, we like that people's backs or something like that.

[00:06:57] I'll link the tweet in the show notes. But yeah, he tweeted saying or I saw it come up later where he tweeted a threat or something about how the exchange was attacked by a, um, competitor. But luckily they use Mark instead of index price or something.

[00:07:16] And yeah, if they use the other, everyone would have been liquidated. Something like that. But some. So so that was a little while back. Um, but, but yes, what he said was we're gonna sell on the sixth.

[00:07:32] We're gonna try to do it with a minimize his marketing impact. We encourage this is what I was trying to get for. We encourage collaboration between industry players regarding any speculation as a whether this is a move against the competitor.

[00:07:44] It is not our industry isn't necessarily, uh, isn't, is in its nation scene. Every time a project publicly, uh, fails or a project publicly fails and hurts every user, we typically hold tokens for the long term, blah, blah, blah, blah, blah, blah.

[00:07:59] And then he came out and said it was hard for me to do that when this person was going after me personally. And apparently Sam was going after CZ politically, okay? Like he was trying to box everybody out. So by an end.

[00:08:16] US, which does exist not officially, you know, associated with, with Binetra's like FTX.us was an officially, so, associate with that. The expert clearly was. Um, they, he used like trying to box easy out and that ended up being the

[00:08:31] straw of the brock to camels back because essentially from that point on, people started looking as to what's going on. Right away, and this is the part that kills me guys. Caroline, the CEO, the remaining CEO of Elameda, tweeted, and I remember seeing this.

[00:08:48] If you want to minimize market impact, because he said he did in this little tweet thread will buy it all right now for $22 share $20 a toe. Dale, where did that money come from? Where was that money going to come from? The, or pocket.

[00:09:07] Yeah, I was just going to say they would probably probably would have struck a deal and told based off what we know now. They probably would have struck a deal with something or just increased APR to attract the posits and the customers funds to pay that. That's right.

[00:09:26] They essentially would have pulled money in somehow and just straight ripped it and given it to CZ, right? 100%. It's a, it's unbelievable. And so you start to hear this that hey, first it's $22 a toe getting a buy it.

[00:09:48] Sam comes out and says someone's trying to go after us with false rumors, FTX is fine, assets are fine. We have enough to cover all holding just leg or lies and tweets and now. That's a lot of words. Oh my, sets are fine. We are fine. We're fine.

[00:10:03] You'd any time anybody says that they're done. Okay? They're done. One day later. Okay. That's the seventh. The day my daughter, was born by the way. One day later, FTX pauses with thralls. FTX says they've agreed to turn

[00:10:20] through the Binance on an acquisition that Binance is going to buy FTX. When that literally my brain almost exploded, when I heard that because there's no freaking way that would ever happen. Like when you heard that, cause what did you think? Honestly,

[00:10:43] that was kind of out of left field. It was funny seeing some tweets later on about people who were like predicting it or like, that CZ is going to acquire FTX. I don't know. It was hard to believe that it was actually going to go through

[00:10:56] when it kind of brought up more questions than answers. It was like, okay, so do you just withdraw from FTX? It's going to go to FTX. It'll redirect you to Binance. Like I don't know. It was, I was shocked. I didn't really know what it meant going forward

[00:11:13] and definitely had some doubts about whether or not it would go through. But at the time the market was responding as if it was a certainty that Binance was going to buy FTX. Yeah, and like I think a theory went like $1600. No, we saw some crazy, crazy movement.

[00:11:30] I remember FTT pumped a bunch too and I was talking with you on Telegram. I was like, I think I'm going to close this FTT long like because I got into it. Or I think it was like right when I saw the tweet just bought some FTTS.

[00:11:44] Like that sounds good and then it was actually only for, I don't know, 20 minutes that it seemed like this deal could be real and then as soon as CZ tweeted, gosh, I don't remember the exact words in his thread. But he was like,

[00:11:59] it basically made it sound like it wasn't actually going to happen. Like they're going to try but like it's not super likely and then I'll say okay, game over. Yeah, yeah, so I'm just curious, Dale, you've been doing this a long time.

[00:12:11] Obviously you're in a ton of power groups, power users back from before the class of 2017. What were people saying when CZ and when Sam tweeted, they weren't agreeing with Binance? What was everybody saying? What was your thought? So, you know, I didn't actually,

[00:12:28] so I had a surgery on that day too. And before I went into surgery, I just was watching everything unfold as well and then I'd come out and saw the news and, you know, Normie friends texted me saying, Binance is really going to buy FTX

[00:12:42] and I was like, what the hell is this? So obviously I rushed to Telegram and you know, Jared, you'd sent me a message too and I saw that and I was like, oh okay and then in these groups, people were like, there's zero chance Binance is buying

[00:12:57] and they're probably just doing this to give Sam some time. Like they thought, you know, the D-D-D might... So right away, they kind of do that. Oh absolutely. They're like the D-D, you know, would take a couple weeks, hopefully by then Sam can actually find someone to acquire

[00:13:14] and then Binance can even be the good guy and say, hey, you know, we helped facilitate, you know, whoever to purchase FTX and then everyone comes out like, for me it was thinking they sold into that news. I don't know who Sam or Seize the year something

[00:13:32] but they got everything to pump off a one-tweet. They could have just been like, all right, Tom, they cash out some of this FT-D. Yeah, yeah, I don't know. It did feel that. It felt like it was just like a straight prop play

[00:13:45] and, you know, they said they're gonna take a look with their books. And it only took a day for Seizee to say, no, we're out, we're out, man. And when he said interestingly, but I've read two things, one, he wanted FTX.us as part of the deal,

[00:14:03] which Sam said right away, FTXUS is fine, we're looking at moving in with Binance and FTX.com, whatever. Seizee wanted FTXUS, including the deal, initially is what I read, which is, you know, he's a Chinese national. Okay, that's like very complicated at that point

[00:14:23] for that dude to own that company, right? But not even a day later, they back out. And part of it was like, because of all the weird and crazy shit Sam did, immediately the SEC is looking into it and immediately they're going, we need full view into this.

[00:14:40] So there's no way, you know, a Chinese billionaire is gonna be like, yeah, sure, let me be party to this. So they back out and right away, things start falling apart. And I wanna take a pause here because if we've seen anything in crypto, my three years,

[00:14:55] you guys, a lot longer than that. When there's blood in the water, what happens? Sharks come out. Yeah, sharks. I think that there is an alternate timeline where that what Dale just described about like buying time to allow him to get out actually occurs.

[00:15:22] But people start looking a little more closely. People start asking, see, is he, tell us that what you saw, man, when you looked at the books? And all of a sudden, the house of card starts crashing down because it turns out they had $8 billion.

[00:15:43] Negative equity, liquidity, the liquidity, didn't have it. The stuff that they were saying that was Sam I liquid to people on the outside who don't know anything about crypto, might believe that. Anyone whose in crypto would go, there's no fricking way

[00:16:03] you're getting $10 billion out of oxy and maps in serum. And what they were doing, it turns out was manipulating the price of tokens they launched in which they held the majority of supply for to show on their balance sheet, which by the way,

[00:16:23] some questions need to be asked that people who were lending to these fucking guys. Because they said, look, we have $14 billion. We want a loan for x hundreds of millions and they were like, sure, all of a take as one person at those places lending to go,

[00:16:40] in maps, in oxy of which 200 million tokens are out but you have $10 billion of them. So what they were doing was manipulating the price of the tokens to artificially inflate its value, to then take loans against that artificially inflated value.

[00:16:59] Guys, it is a story as old as time. That's illegal. Dale, you're in the financial space. What's that called in the financial space? Rob. Money lawn. Yeah. I mean, take your pick. And the craziest part about it to me is,

[00:17:19] they would kind of might go deep web here so apologize. Please, they will take that money. You know, Alameda would or FTAx, let's just lump them as one. They would take that. Yeah, what's the difference? There is not very exactly right. So let's just calm dipshits. Just kidding.

[00:17:38] They would take that money. They would loan it to three arrow. Say. Three arrows would in turn turn around and buy Luna with that. Right? And then it's just like they would all list it on their financials as assets and liabilities. One is really, it's the same.

[00:17:59] I mean, you can't do that. It's the same money. Right? Yep. So it's, yeah, I mean, it's such a headache looking and hearing about that stuff. It's so online. Do we know how CZ was able to look at the books? Like why didn't that happen before?

[00:18:26] Well, so that's part of the acquisition process is due diligence. So if you say what it was, no, no, no, no. These are original tweet where he was like, I learned some stuff about FTAx. I'm going to be selling at $2.1 billion. Yeah, that's a good question.

[00:18:38] I don't know. I don't think those details have come out yet because you're right. He essentially got wind of them artificially inflating their assets. And like I think everybody kind of knew that because even among the three of us, when we talk about FTT or talk about FTT

[00:18:57] or oxyver maps or whatever, we'd all be like, it's fucking bullshit. Look at their fully diluted value. I mean, FTT for sure. Right. Yeah. You've got like, it's fucking, you know, like before. Like, like, year ago, I remember being like, I mean, who the fuck's?

[00:19:12] Who's fallen in line for serum? I mean, serum could be sweet. But like, you know, whatever. The really the best thing they had was Solana and they milked the crap out of that, right? They milked the crap out of it because they helped launch Solana.

[00:19:24] But Solana is actually fairly well insulated from this. And Solana, that'll be, that's an interesting topic going forward. It's gonna continue to be too. But we'll see what happens. So suffice to say they were just a big Ponzi and what Dale just said is exactly right.

[00:19:45] Because it was essentially like $1 was printed somewhere and it was loaned out invested, taking loans against invested somewhere else. And there was a tweet that was like, son of a bitch, crypto really is just $3 leverage a million times. That's all crypto is just $3 leverage a million times.

[00:20:05] And that's exactly right. That's what ended up happening where we should never have the run that we did because it was just all artificially inflated. And it's a little worrisome. It's very worrisome. I mean, I guess that's understatement of the year right there. Yeah.

[00:20:23] But like, so what actually is crypto without all that leverage? You know, I think that go ahead. You know what it makes and I hate saying this. But you know what it does really make me feel is that we really are super, super early.

[00:20:42] Like earlier than what I had predicted and I hate when people say we're so really we're so we're so we're so we're we're early. Yeah. And so but honestly like looking back, because you know what what are we with with in crypto?

[00:20:59] What where does this put us now? It definitely sets us back. But I think I think a good. Sorry. No, go ahead. I was just going to say I think a good way of saying it so that we don't sound like

[00:21:13] the cliche Twitter dudes who are like, oh, don't worry you guys are still early. You can make it this money is just saying like crypto itself is still very young. Yeah. Like we might have missed the seed round of a Bitcoin.

[00:21:29] But now it's like there are raising their yeah, yeah exactly. But I mean, I don't think we can say early in the sense of like, I mean, who knows what's going to happen. But like a lot,

[00:21:44] a lot of money has been made in crypto by a lot of people and in that sense. Like I don't think Bitcoin is going to 500 x you know, which I don't think is far easy to say.

[00:21:56] But like the industry definitely is still young and it behaves very young still. Yeah, the thing that really bothers me. I guess. Alan and Joel and I talked about this couple episodes ago.

[00:22:16] Maybe more in that could be five steps out to go where when you saw a lunafal and some of these other major protocols fall and they were kind of out it as being artificially propped up in bullshit where we took the conversation.

[00:22:35] Then was that the next cycle will be based on proper valuations, okay? Think of it like the dot com bubble, right? Pet's dot com was worth a trillion dollars or something as night.

[00:22:48] It wasn't. But like you got some crazy valuation for no reason in the 99 dot com bubble. Because it was just like, oh, it's a website for pets. That's going to be worth lots of people have pets.

[00:23:00] You know, like it was, you know, that and their valuation went up and then it was like, I turns out this is like some dude in his basement, you know, like making dog food and shipping that to people, right?

[00:23:07] Like that that's what it was goes like, okay, that's kind of bullshit. And then when it's not like the internet went away, it just got a lot more sophisticated. It became more, what are you doing? Are you making money, et cetera?

[00:23:17] So the conversation we had before was, okay, you know, this is the dot com boom of crypto. And then next cycle is going to be show us your financials. Are you a profitable protocol where are you investing strategically?

[00:23:34] Are you doing something that's actually unique in that just another main Ponzi add-on, right? Which I thought made sense at the time and I still think does. But the part that really has bothered me throughout this more than anything else is

[00:23:52] crypto added its core was launched by Satoshi whoever the hell that was. As a response to centralized banks stealing from John Hugh public, right? Essentially the oh, oh, and financial crisis it was symbol shit. They just bailed out these banks that for making bad decisions.

[00:24:14] Essentially now we just have exchanges doing the same thing. Right, and so it's all come full circle to where we're like we started because of this crazy stuff. But where do we decide to put our money as crypto was kind of emerging through its nation sea?

[00:24:30] Inter-centralized exchanges, okay? The reason why all those Bitcoin maxies were super annoying through this entire run over the past two and a half years, three years was because They were talking about payment systems and how stupid it was.

[00:24:44] And it was like you don't have to use Ethereum because you can send money back and forth through the lightning network. Really, yeah, doesn't do anything shut up.

[00:24:50] But what people on the left doing was taking that money and putting it in centralized exchanges and just recraving the same system that Bitcoin was designed to leave

[00:24:59] And I sent you guys an article this morning, it's literally on coin desk and I think it's something everybody should run in read and internalize And think about when it relates to crypto.

[00:25:12] And the article is called the end of the centralization era in crypto and I think that's ultimately what this is going to be. I think damage has been caused at a level that it's going to take more years than it will be weeks, okay?

[00:25:24] It's going to take a long time because retail is unable to easily grasp decentralized exchanges and decentralization on chain, but you know what they can grasp. I opened an account and I connect my bank account.

[00:25:40] I deposit money in and so many handles all the tough stuff for me. We just burned every retail person that joined in the last two and a half years. A lot of them. But well, I get well, I guess.

[00:25:56] We burned all the people who wanted to be leverage traders. Which is fine. Yeah. Well, I mean like my friends who I've talked about crypto and have gotten into crypto never really opened a bit max by the FTX account.

[00:26:17] They got their coinbase because they don't really know anything else. They're banks linked up to it. They'll send some eTH to meta masks and so on to phantom, but I mean we've done a ton of that we.

[00:26:30] A ton of damage has been done because of this whole FTX thing. And yes, I agree. A ton of retail is crushed not only because of like mostly because of the side effects. I don't know. I mean, I guess I'm retail and I was on FTX.

[00:26:46] Yeah, so let me say this to clarify my point a little bit further. Yeah. When I say burn, I don't even necessarily mean financially. Okay. Larry David did a commercial Tom Brady in Giselle. Steph Curry did commercials for FTX. Yeah. We were building credibility as an industry.

[00:27:05] So even if you had zero money on FTX. Seeing this happen. What do you think about crypto right now? Even if you were like maybe thinking about investing, what do you think crypto is about right now? If you're one of those people.

[00:27:21] FTX was the biggest name in the United States and crypto. You think crypto is a Ponzi scheme. That's right. They'll. I mean, I've been in, you know, for five and a half six years and I'm pretty disgusted right now myself.

[00:27:38] So I can't imagine what I've been in someone that isn't into, you know, day to day, pop up and would feel. And I think that takes a long time and everyone needs to fully embrace decentralization. It needs to embrace being on chain only.

[00:28:06] The article that I'll link in the show notes. The end of the centralization era in crypto. Draws is literally the first paragraph. Drawing a straight line from Mt. Gax to Voyager to Celsius, not FTX. Shows how cryptos largest problems are often corporate failures. And that's 100% true. 100% true.

[00:28:30] The biggest failure of an on chain protocol apart from hacks would have been Luna. But Luna was leverage on its fucking mind. And that's how they got to where they are.

[00:28:44] That's how they got to the point where they were just absolutely destroyed because they ran too far to be able to cover because theoretically, Luna should work all the time. Bitcoin price goes down. Okay. We're buying back based off the previous peg price and we can repopulate UST.

[00:29:04] So they essentially got in bed with 3AC and Sam. It's set or et cetera. And this could occur further. Yeah, Caroline. Yeah, literally figuratively. Yeah, I wouldn't talk about that. There's another article I'll talk to. That literally is the Tumblr account of the XE of Alameda.

[00:29:22] And how they literally were in polyqule. I thought that was joke man. It's for real. All these people were living together in Bang. Like that's what they were doing. So like very bizarre. She was like posting about it on Tumblr.

[00:29:34] Like Dale outlining all of it and what they used to do and how it was like Caroline was posting on Tumblr. Yeah, dude. I essentially, they're article literally. Somebody grabbed her Tumblr or a blog. And pulled, I mean, she deleted it but they, now before they got it.

[00:29:52] Oh yeah, Tumblr blog like yeah. Yeah, yeah, yeah. Yeah, no that's weird. That's some weird stuff. It's super weird. So it's going to take forever. But so the part of the bar, there's me is that for all these people that are supposed to espouse the values of crypto.

[00:30:07] Myself being guilty of this as well. Right? We're supposed to espouse crypto and decentralization. We ended up on centralized exchanges. And that money got stolen by crooks like Sam. So real quick, because I want to talk about what happens next.

[00:30:23] But you guys are both around for Mount Gauks. How does this compare? I think it's a, I think Mount Gauks was a go ahead. Oh, sorry. I was just, I think it's worse mainly because Mount Gauks was a hack and this is of, you know, a figurehead.

[00:30:47] Someone that was in the C trying to push regulation for crypto, you know, and, and I mean, whether we want to and I mean, whether we want to admit it or not, he was the face of crypto for a while. FTX was everywhere. They were there.

[00:31:04] You saw them in the world series on vampires, you know, the baseball empire, badge or whatever. The Miami arena, they're everywhere. So the person that, you know, that's leading the charge on adoption just pulled the biggest Ponzi in the entire world.

[00:31:23] I should make it an entire world, but could be. Well, in this episode, yeah, it's a big. Yeah, sure. I don't know. Yeah, go ahead, guys. I would agree. I do think it's bigger. I wasn't, I mean, I think Mount Gauks happened a little bit a while before.

[00:31:41] Yeah. I was in the crypto. It wasn't Mount Gauks like 2012. But like the re-precise sheet, like you kept hearing about it in 2015, 2016, whatever. But yeah, I mean, similar to what Dale was saying is like, that's a hack, hacks suck, you know? Yeah. But they happen.

[00:32:00] Bad people do bad things, but it's not like a hacker that you trusted for years. And having someone who's like in charge of an exchange, a public figure, someone who we thought was lobbying for us in the political atmosphere, turned out to be a scammer.

[00:32:20] And I think the main lesson is don't trust someone who says they're vegan, and then gains a bunch of weight over the next two years. Yeah, how do you know how to do it? True enough, man. How does that even happen? You just like, I don't know.

[00:32:34] I don't know. Can any bars like what are you doing? I don't know. But he did have ex-inous fridge, which is also a little interesting. That's not very vegan. It's not very vegan. I think that maybe this is on me for my own personal experience.

[00:32:53] Obviously it's not on me to find and report to others, but on me for not knowing this. But looking at how FTX started and how Elamade was funded and then how that was spun into FTX. You know, Sue Sue from 3AC's been having this like,

[00:33:09] come back, Ark, or trying to untwitter which is its own thing when I have to start. I don't know what I mean when I have to start. Stupidly single. It literally is, but he talked about in 2019 being like,

[00:33:19] what the hell are these people talking about when they're trying to raise money? They had $5 million total, $5 million. Elamade did and they were trying to raise from 5 million. They had a leveraged capital balance of 55 million.

[00:33:37] Then raising 200 and their initial white paper guys is something that if any of the three of us would have read today about a new token. Our response would have been bullshit. Why? No way I'm touching that. Why would this lead members see this?

[00:33:58] Yes, I know how to, how did this never come out before? Like, dude, how did no one reading this thing where it says we guarantee 20. There is T with no downside risk. 15% no downside risk. If I've read that today at my grocery store, I short you to say.

[00:34:21] And they were able to turn 5 million in equity in a $200 million on a white paper that was 15% guaranteed returns no downside. It's ridiculous. Like, I guess what I'm most upset about is how did that not come out sooner? That no one talked about that. I don't know man.

[00:34:44] That's just because in hindsight and not even just in hindsight. Like everyone's saying oh in hindsight like yeah if you saw the signs it was obvious. No, in real time if I heard that it would have been obvious. Yes. But yes, none of this information was out.

[00:34:59] So you guys thought he just left it again right. Did he know? I'm just a shrapnel. I'm excited. I need to unblock really quick. I know. He just said 20 or shrapnel. Oh, no, he tweet, well this was 41 minutes ago. It was like 5 more tweets in his thread.

[00:35:22] Oh, yeah, I didn't even see it. Okay, I'll read it. Number 19, once upon a time a month ago FTX was a valuable enterprise. FTX had 10 to 15 billion of daily volume roughly one billion of annual revenue 40 billion of equity value. Fuck you, fuck you, Sam.

[00:35:40] Sorry, I don't people get upset when I cuss a lot. Mainly Alan's dad, which I put on the website. So I'm sorry, Alan's dad. But this needs it. And we were held on parigons where we were held as parigons of running an effective company. This is number 20.

[00:35:55] I was on the cover of Ever Magazine and FTX was the darling of Silicon Valley. We got overconfident and careless number 21. And problems were brewing larger than I realized. Again, these numbers are approximate to the best of my knowledge, et cetera.

[00:36:08] Leverage built up five billion dollars of leverage to back by 20 billions of assets which were. And then literally he said kind of a green with what we just said, well, they had value. FTT had value in EV, but they had risk.

[00:36:24] And that was risk correlated with the other collateral with the platform and then the crash came. In a few day period there was historic crash over 50% in the most correlated assets with no bit side of the quiddly.

[00:36:34] And at the same time, there was a run on the bank. Roughly 25% of customer assets were withdrawn each day four billion. As it turns out, I was wrong. Leverage wasn't five billion. It was 13 billion.

[00:36:46] 13 billions of leverage total around the bank total collapse and asset value all at once, which is why you don't want that leverage. And then he just said, shrapnel. So essentially he said, we were on pace for a billion dollars annually, 40 billion dollar valuation.

[00:37:00] It was just because of the fact that there was this bank run that caused everything to collapse, which by the way guys, you guys both know that I started in equities and futures. Then I moved over the crypto. Wow, all this is happening.

[00:37:12] Nasdaq and the S&P are like ripping as well. That's right. That's part of the most annoying thing. If none of this happened, Bitcoin's sitting now like 30k right now. It might be like, high 20s anyway. And like there were close to 3000. Yeah.

[00:37:27] And we were like, we were bullish. The market was looking good. And then all of a sudden we get hit by this and the timing appeared to be good with like timing it with equities. And yeah, it just sucks.

[00:37:39] What absolutely blows my mind is that Sam is tweeting. So there's been a lot of like tin foil hat shit going on on Twitter right now about like man if you just buy off your political.

[00:37:51] Buy off the political people then you can say whatever you want because no person in their right mind would be speaking. Right based on what he's looking at right now. This is nothing short of fraud and bezel man wire fraud laundering you name it.

[00:38:09] This dude should never see a sunrise of freedom ever again. And he's here tweeting. Yeah, and somehow not just tweeting. He's having like I don't remember who was Bloomberg financial time something right like positively viewed argument about real.

[00:38:29] And then what's his name I forgot his real name Mr. Awesome Kevin and later on Shark Tank yeah Kevin and Larry says he invest like he back him again for another venture. Like are these people?

[00:38:44] Are they like delusional or did they just like not have any of the like is the media. He's like everyone outside of crypto Twitter like seeing a completely different side of this story. They've got to be like how would that continue and like how does that.

[00:39:01] I don't get it man it's super frustrating. Yeah, I feel like you have more to say man you like you like brooding over there.

[00:39:08] I could tell you it's so frustrating because like cause says that this is anyone else and I don't know if it's because he's you know the number two donor and the democratic party last election cycle or what the case is but if this is anybody else like.

[00:39:24] We the heart he would they would be a jail they would have been hunted down. I mean it's it's pressure yeah have you seen who his like family is and all those parents are law professors.

[00:39:38] And the experience I'm already sure is dad and his dad like works with Gary Gensler so that that's fair. Like just it goes so. Oh yeah, I don't know it goes so it goes so yeah and he is that Sam's dad I think worked with the Clintons.

[00:39:56] Correct yes you have like really bizarre. Highbacks to the democratic party. Nothing matters to me there's I'm sure there's plenty of Republicans too that were.

[00:40:10] Happy to meet with his dude those that were digital friendly so I'm not going to force the fact that it's ties to the government. Yeah, I'm sure politics aside the fact that it looks like money was just being funneled like to. I don't want to.

[00:40:25] Yeah we don't want to know. He's still absolutely hysterical. To be yeah yeah I'm not trying to think it's absolutely it's absolutely. He's going to be that like even 15 hours ago he said I know you've all seen this but here's where things stand today roughly speaking.

[00:40:38] Liquid were negative $8 billion. So it's just semi liquid $5.5 billion. I'll liquid $3.5 billion okay so he's saying that they have more. Or value in assets that was a number 17 on the chain.

[00:40:54] I'm going to be said and yeah maybe that nine billion liquid mark to mark it isn't worth nine billion plus one billion net. But I want to go it was worth 18 billion plus 10 billion net so essentially like he still holding dude.

[00:41:08] No one is touching any of those tokens or protocols ever again. It's so even tweeted that and he said let's have a Dutch auction for your assets as they are let's see where they stand.

[00:41:19] We'll start them at whatever market value you want we'll just keep dropping price until people want to step in buy those assets.

[00:41:25] See if you can get yourself out of the crisis you're in and obviously nobody responded to that but he's 100% right dude I would never ever touch a single thing. This dude does ever again but you know what's going to happen I know what's going to happen.

[00:41:40] He's going to escape mega jail time I think he'll serve time but it's going to be some bullshit we're all going to be if you're infuriated about and then he's going to go into the closet and we're never going to hear his name again

[00:41:52] And then some a non dev running some a non decentralized exchange is going to come up and we're going to be like this is sick.

[00:41:59] Oh man look at it is and he's going to come back in some non dev and he's going to make a trillion dollars for some ridiculous kill he's just going to be able to get away Scott free.

[00:42:07] It's going to be insane this dude is toxic you should never be allowed to be in charge of anything ever again. But if you pay politicians you too.

[00:42:21] In escape I saw a room that's like wow dudes out here tweeting I need to start a Ponzi and donate to people and offense today like right now because apparently that means you get out of jail. Scott free absolutely Scott free dude anyway. Good.

[00:42:37] Well, I was just going to say I had two things I can't remember the first or the second thing one of them was 3.5 billion in e-lick with assets to me that just screams we bought a bunch of. And we bought a bunch of NFTs for real. Yeah.

[00:42:56] Well theoretically guys and just to to give it its due okay if you look on the asset sheet of almata there's protocols there's also companies they've invested in.

[00:43:09] And so what's the fact that they've invested in the asset sheet of the stock is one of those companies Joel and alms company okay.

[00:43:15] And they're shielded from this okay they have very little to do with that other than their investors which is beautiful for them I'm thrilled for those guys that they never really gotten bed with Sam they never really didn't anything they wanted to do that with threatened them but they theoretically those are liquid assets costs.

[00:43:33] And they're a path they're a part of that because they have equity and path but it's a liquid you can't just sell I mean unless there's a new raise there's no way to get that money out.

[00:43:45] So that's one of the ways in which those ventures which Sam was like in retrospect we shouldn't have been so aggressive with the ventures used to bar cash to buy equity and companies that we would never be able to touch that equity again instead we just want to pretty much a bullshit coins and take loans against that way is essentially what he was saying the subtext.

[00:44:02] Of that what do you expect? Yeah in retrospect we shouldn't have been investing in 135 million dollars for FTX arena. We should have been doing other things which we could have taken loans against and then love scamming more people but.

[00:44:15] Really long short of this I want to do a better job but it's kind of get away from me because I feel like we just need to kind of get our emotions out here but. What happened.

[00:44:26] And all of this is a couple of things but I want to go back one step further.

[00:44:32] So we already outlined how this was built up five million dollars in liquid assets levered to 55 to be able to do a raise value that 200 million which isn't sane okay like only in crypto would you ever see that happen. Fine.

[00:44:49] Along the way one of their rivals was 3AC. Brear was capital which we all know was caught up in the Luna. Uh, Celsius you know whatever that whole time Celsius is different but the Luna collapse 3AC was. Well they've been rivals since 2019. And as the story goes okay.

[00:45:11] Story goes like this someone within 3AC was leaking their books to Sam some within 3AC that had access to their positions was leaking their books to Sam. So Sam knew that if he killed Luna. He would kill 3AC and he fricked hated those guys he hated them.

[00:45:41] Look there's a lot of crossover investors who will talk back and forth go back and look on Twitter those dudes haven't had like a respectful discourse like ever even before okay then never really did.

[00:45:54] So the rumor is this hubris got Sam that he saw I can kill 3AC if I crush Luna. So we did. But what he also did was he crushed elementic because element it was almost as exposed as 3AC was. What an idiot. What an idiot is that.

[00:46:15] And so having yeah having destroyed 3AC he also destroyed his investment arm of element and there's a moment in this article that I'll link in the pod. Essentially at that time when everything fell apart. Sam had two choices.

[00:46:32] One at that moment, element at an FTX we're fairly wild off one let element of fold as well. But who was running element it's time. Let's go for a hand. Right so do I let element of fall or.

[00:46:56] Do I take customer funds to service the debt that element ahead and keep prop in this moment. He prop in this motherfucker up and that's what he did there was that that fork in the road moment.

[00:47:12] But the most ironic thing to me in this whole experiment is Sam caused the fork by going after 3AC because the fork. If he wasn't trying to be big swing and dick Sam bankman freed then this never happens guys and I guess all.

[00:47:37] What if you have common on the comment but more than that. We know now this was in him is it better or worse that he did that because if he didn't do with then might he have done it later. It's going to what's better.

[00:47:54] It's still being the super. I've got it out of the way. Yeah. Gosh, to imagine. Roll that back though like what if Luna never goes down? I would say if Luna never happens bitcoins that like probably consolidating somewhere between like 30 and 45k.

[00:48:19] Because we are around there for a while. We were speechless guys by a name. So what we're saying is to summarize real quick here Sam built an empire off bullshit.

[00:48:40] Because I'm going to link the article you guys are going to read this for yourselves anybody's listening to this. The way that he raised they did actually have they had a better liquidation engine for FTEX okay so that is true.

[00:48:54] They did have technology that was better than anybody else in the space but it's not like that can't be quickly and easily remedied okay. It can but they did have something so based off one good idea on liquidation engines they turned 5 million into 40 billion.

[00:49:10] On one idea and then over leveraging everything and the most ridiculous part about it is his hubris took him down by wanting to kill his competitor. Is that not the most entiled spoiled rich kid mind is bigger than yours fucking thing you've ever heard.

[00:49:38] It's pretty bad and like if you're about to go after someone why don't you like make sure you're you're buttoned out first. Like don't be over leveraged if you want to go get in a you know little battle here right and also how

[00:49:56] Man, it's just crazy like well boggles my mind the most is these dudes had every single possible edge. They were trading against us on their own platform and they go bankrupt anyway.

[00:50:10] Great making literally a billion dollars of profit annually you get to you get in soul I like what was it five cents.

[00:50:19] Yeah, but but like yeah and it runs at 240 240 dollars and they still screw it up the part that is wild to me is if he was just communicating with element of better.

[00:50:32] They could have just played the whole Luna collapse and solved any financial issues they had like think about their rumors that there are people on crypto Twitter or just very rich people who saw what was happening with USD and took out.

[00:50:50] Billings of dollars loans in USD that they converted to US DC then is repeated over and over and over again until USD fell apart and then you were able to repay nine figure loans with pennies. And they did. It's a thing that they did.

[00:51:08] If they did, how do they get your men it's literally the greatest display of incompetence I've ever seen and this disgusting part to me is a little bit ago I talked about how this is the end of this entire relation era in crypto which I truly believe it is.

[00:51:21] What's about to happen for crypto. After all of this.

[00:51:29] Oh yeah well that for sure it's regulation we're going to be I mean I still think that the death stroke for crypto has even happened yet it's going to be Tom Brady sitting in front of a congressional here talking about why he agreed to be face of FTAx which was scamming people.

[00:51:48] And you want to talk about killing. People's interest in something put. The greatest quarterback of all time on staying in front of the house of representatives also a mission graduate. I'm not talking about Rex person.

[00:52:08] This guy on a bash bears guy but yeah no that's that's going to be pretty. Pretty so it's going to result on additional regulation we just talked about was. All of crypto needs to move towards decentralization. These move towards decentralization. Not your keys not your calls.

[00:52:26] I do move toward that yeah. Yeah those two things kind of work against each other. They do so so what happens Dale. All right I'm going to tell you what happens. So first off I'm asking you guys this do you think that. The contagion on this.

[00:52:45] That you know I personally I don't know if we're going to see the same cell off that we did with 3AC because there's really no one. No one sell because there's no coins.

[00:52:56] I think the big cell off you'll see is going to be like I'm going to call it a spook cell off because there's going to be companies places that keep coming out. Keep coming out that they're financially ruined. And you'll see people think oh shit.

[00:53:15] I'm going to be like huge players where they're selling you know eight figures of crypto it's going to be five five to six maybe figures. You might see that but what I think is going to happen is.

[00:53:31] I think we're going to like you said Jared we're going to see. Like Tom Brady going in front of Congress Congress for hearing we're going to see back those kind of things play out and I think we're going to get.

[00:53:43] And then I think we're going to arrange sideways for six eight months and then I think you might see a cell off a boredom cell off there and that's going to be the bottom.

[00:53:56] Could be and then I think you know the happening is what how many months away. 24. Probably like at this point yeah no it's 24 so probably like 14 months maybe maybe 14 to 16 months I don't know. Let's bring the 24 be that easy again.

[00:54:15] It's worked every time but again we're in an unseen waters where an uncharted waters here with a macro environment and this FTAX.

[00:54:25] But I still think you know so we're going to sideways see the dump and then I still think we're going to rally end up next year and then through the have a name have another.

[00:54:36] And let me tell you why I think this large part is because cause you you might remember this in 2018, 2019 we're coming up on the have a name and I see I'm seeing a lot of similarities as far as sentiment although this is by far the lowest sentiments ever been in my opinion since I've been in crypto.

[00:55:01] But people are saying it's done it's dead it's over it's never coming back all those same things that we heard in 1819 mainly 19. But I think where I do honestly think we're close.

[00:55:19] I just think you're you just have to buckle down and say I don't think crypto is going to be dead because I saw a lot of the same things back in 19.

[00:55:31] A lot of the same things and but I know some people are arguing what we saw so many top things signs and it continued on for a year. But we're we're six seven eight months into this now. Good point.

[00:55:46] So guys what you thought is that it's here in the cause daddy. On like next. Where we go. Where we go. In terms of like what happens next yeah where we go from here. I think.

[00:55:59] Okay so first of all I think it's pretty remarkable bit coinc still at 16,500 dollars as of November 16th. From a technical standpoint I think we probably bought them somewhere around 11.

[00:56:14] I don't know when that happens I think a likely scenario could be ranging between 14 and 18 four months kind of like what Dale was talking about like just boredom.

[00:56:28] I mean, like who who is going to pump us right now you know it's kind of like Bitcoin at six k bit coin at three k.

[00:56:35] When just not much is going on you're stuck in this little range people are given up on crypto but at that same time who knows there could be some people behind the scenes who are just loading that in that range.

[00:56:50] And then maybe we spike down to 11 at some point or maybe we like range in that region as well, but from a technical standpoint I think 11 is where I'm like all right this is.

[00:57:03] I mean, where I'm buying Bitcoin if it doesn't work out you know then maybe we're not right about crypto. So but as far as how long that takes like I do think it could be over a year.

[00:57:20] And I think the other wrinkle that I have no idea how to factor in is how bad them well I mean I guess not as bad as it had been before but macro doesn't look good.

[00:57:32] Yeah, macro doesn't look great right now macro doesn't look like it's in a bull run you know like we're still raising rates and who knows how long who knows how long that's going to last for on the impact that that's going to have on crypto because ever since I've been in crypto.

[00:57:49] So, the equities have been basically in a bull market like a big picture we've had a few drops like the COVID drop in March of 2020 and things like that but other than a couple spikes down like that for the most part equities have been in a bull market since.

[00:58:05] I don't know what year you want to say it but a long time. I mean really don't know. Yeah, right. So as long as crypto's been around and so yeah. It's hard to know how it could react if it could be a good idea.

[00:58:23] Yeah, I agree and quite frankly. I love your prognostication. Dale, I hope you're right. Maybe I saw the Dale on this. I hope you're right.

[00:58:39] Like the pragmatist did me like part of me is like I was going to sound super cheesy but like part of me is like super heartbroken about this like I think's both you and I was like just sad and I'm just sad.

[00:58:50] In general about this like there was a lot of crap that came out that I was like you know man you want actors not big enough to take this thing down and I sit here I'm just very disappointed.

[00:59:01] Everything that is kind of come out where it's like how how could we let this fraud operate like he did and what it's going to mean long term because here's the thing. I'm going to bunch my buddies that have made it obviously you two among them.

[00:59:19] Like I have said to me like I'm never talking to another person my crypto ever again and like that's not a terrible thing right now because a lot of people got their friends and they got smoked. There was somebody in my telegram room that said.

[00:59:33] I shielded like my parish priest and they're about to lose everything was on ftx. And there's like you know what man why would you ever tell people about this now and if that's the general feeling where it's like hey come to this thing where at one point the.

[00:59:51] The empires and I'm majorly baseball had ftx logo on the jersey and it turns out it was a burn a key level Ponzi scheme. Like this.

[01:00:01] The one person who could do the most damage to crypto didn't like one guy in the crypto space who could hurt crypto the most it was saying.

[01:00:13] It's right it literally I think it was not up only Kobe said I'm trying to imagine something that would be worse than this and he goes the only I can imagine if like Satoshi came back out of being gone and it's just like fuck this to ask him and he starts selling all those Bitcoin he's like short of that there's nothing else that could have happened that would have been worse overall.

[01:00:34] And I'm like it's true like wells could have happened like even sailor being like I was wrong guys Bitcoin's just can who cares like that's clown you know like worried about it.

[01:00:44] That's far there's very little else that could happen so yeah I'm just I'm just generally sad and it kind of finished my point like. If we are truly entering a recession which I believe we are for a multitude of reasons.

[01:00:59] I think if we only stop at 11k we will be the luckiest people on earth. I think that when I look at a chart I could see you know for digit Bitcoin like.

[01:01:15] 500 dollar Ethereum I mean like I think it's going to get that bad because you're right what if all of a sudden like the yes right now is at 3900. Okay yes at 300 the pre-COVID highs with 3400 the COVID lows was 2200.

[01:01:37] What if six months from now we're hanging out around 2500 S&P. I mean then you hope Bitcoin isn't completely correlated with the market like you hope the narrative starts that it's like.

[01:01:54] I don't know which I don't think now is the time for crypto to have a bullish narrative certainly not. I don't know I do think I think 11ish k is the best looking support on the chart doesn't mean holds.

[01:02:10] But on the other hand like I think a good way to play it if any of the listeners are not like super active you just wait through some of this storm see if it breaks down below there.

[01:02:22] Wait wait wait don't care about catching the bottom as soon as it gets back above 11k you get in and you hold on tight. Yeah like as we get closer that might be how I end up playing it if things are looking super grim.

[01:02:37] I mean I'm not really interested with catching a bottom I'd rather buy into some strength that won't be the first the first person second bounce concept second bounce concept you got to be the first second mouse gets killed by the master have second mouse gets.

[01:02:53] I mean the script's already been the trap is already been sprung. All right so so we're over time when I said we let you go I want to get out of here but real quick I got each of you.

[01:03:06] Now what your defy live answer on the record does Sam end up in prison yes or no, Cas. No. Oh my god. I mean obviously.

[01:03:23] Yeah I don't want them to be in there for the rest of his life but I just have a feeling there are way too many political things going on in the background for it to actually happen.

[01:03:35] I'm not saying I disagree I just laugh I laugh to stop from crying they'll agree no. There's just I don't know I want to I want to see him in there I want to see him in there for.

[01:03:50] Mainly because he's you know a lot not lost to gamble with people's life savings a lot of people lost a lot of money but. He might get convicted of something that I think he gets pardoned. Can you imagine you was crazy.

[01:04:09] Could you like think about how many people might of I mean this is going to get really grim but how many people could have taken their lives because their wife savings was just lost because that's. Yeah.

[01:04:24] And then he had the audacity in that article to say I'm not having problem sleeping. Oh my god I was do my face was hot I was so mad my face was red I was angry reading that New York Times article. It's disgusting. Squirrels absolutely disgusting well.

[01:04:46] Obviously this has been a little bit of a different episode I'm hoping.

[01:04:51] The fellas are kind of getting able to peek out from their head underwater not they're not underwater but you know I'm saying like they're grinding right now Joel and Alan next week and I think we'll have a little bit of different perspective I mean.

[01:05:02] Alan is alluded on this show he's like yeah sat on phone calls with Sam several times once a month we have a call and so I mean it'd be this disingenuous for me not to ask him about that and talk about those things I think that's going to be different.

[01:05:14] I really value you guys coming on you've been in the space for a long time you're both widely respected you got tens of thousands of followers each people that look up to you.

[01:05:22] One I'm glad to hear you guys are okay through this I don't think any of us got out of this without at least a scratch but some better than most and.

[01:05:30] I do really appreciate you guys coming on and chatting about what happened and you know saying hello to the crypto parable podcast audience. Yes sir it's been a pleasure be happy to come on again if anyone wants me back.

[01:05:42] Yes they must I had one final party boards to people I know yes you know going through the last crash I want from four figures to six back down to four.

[01:05:54] And you know like Messiah I don't know if you follow me but if you do I think he said it best is you just have to.

[01:06:03] Save what you can as far as capital and the market eventually will turn again and you will have I promise you'll have another opportunity so just stay with it don't give up because we're on the back to our right.

[01:06:17] All right, that's right like this is people who are new to crypto this is the turning point where it's like all right I'm going to focus up I'm going to learn I'm going to make sure this doesn't happen to me again or it's the.

[01:06:32] All right this crypto experiment wasn't wasn't too fun I'm calling it calling it quits and like those are the two paths you can go down and.

[01:06:42] You know if you if you can stomach it I would encourage you to stick with it that's what I've done and it it worked out just far so hoping hopefully run back again.

[01:06:57] I'm certain there will be another bull run I'm not doubting that at all and also Dale thank you for picking this up a little bit man felt like a funeral here for a little bit. You know they're with this will rise again I think we will.

[01:07:11] I think you're right you know I kind of got in right at the start of this run like I got in five months before the 2020 crash so I kind of saw.

[01:07:21] Not great time but then I've been living through through bull runs whole time so I'm not going anywhere I think it was the first thing I tweeted where it was like you know this is all fucked up to take a long time but I'm not leaving because I love the space and I think it's where we need to go.

[01:07:33] For humanity and quite frankly I'm somewhat like there's a silver lining to me about what happens next because if we do.

[01:07:40] Rededicator ourselves to decentralization to auditing people's holdings to making them show proof of their claims we will all be better for in the long run we're just heading both into winter in North America not over here listen for America but we're heading into winter for crypto too so.

[01:08:00] The spring will be glorious when it comes again we'll all get out golf and you know have fun and all that stuff but. And he called for a while so on that bright note stay involved guys hopefully you enjoyed this episode let me play this. Thanks again guys.

[01:08:16] Smooth bassline. It goes. It's live as baby. Crypto Fairbale and podcast episode. Catch Trader Cods and crypto data go follow my Twitter.