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Crypto is a story about the future of money,

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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.