20 Burst results for "Sam Trabuco"
The Breakdown
"sam trabuco" Discussed on The Breakdown
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, November 7th, and we are back with The Breakdown. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. All right, friends, we are back from that anniversary trip that you knew about. Very rejuvenating, excited to be back with you all. And today, although it is by now long old news to all of you, for the sake of completeness, we are going to wrap up our coverage of the SPF trial. Now, I'm going to focus on some of the logistics, what happens from here, and of course, spend most of my time on community reactions. So, on Thursday night, Sam Bankman-Fried was found guilty on all seven counts of fraud and money laundering. Sam's defense attorney maintains his innocence and says they will continue to, quote, vigorously fight the charges. After the verdict was handed down, Damian Williams, the U.S. attorney for the Southern District of New York, delivered an ominous warning on the courthouse steps. He said that although the cryptocurrency industry is new, quote, this kind of fraud, this kind of corruption is as old as time, and we have no patience for it. Williams noted that Sam's case moved at lightning speed, which he said was a choice, not a coincidence. He said that this case was a warning to quote every single fraudster out there who thinks they are untouchable, that their crimes are too complex for us to catch or that they're too powerful for us to prosecute. Williams warned that if the remaining fraudsters in the crypto industry don't cut it out, quote, I promise we'll have enough handcuffs for all of them. Now, Sam's sentencing will be carried out in a separate hearing tentatively scheduled for the 28th of March next year. Sam faces a statutory maximum sentence of 110 years in prison. However, of course, he will likely be sentenced to far less than that, as terms of imprisonment are often served concurrently across all charges rather than consecutively. Katie Haun, a crypto VC who previously tackled high profile crypto criminal trials as a federal prosecutor, explained the way that federal sentencing guidelines work in this context. As Sam's crimes surrounded one of the largest fraud schemes in history, the guidelines place him in the highest possible bracket when considering the size of losses and number of victims. His sentence will also be enhanced by his leadership role within the scheme and the sophisticated nature of the fraud. Sam maxed out the scale as a result of these factors, which means the guidelines would suggest life in prison as the appropriate sentence. Even if the judge reduces some of the factors to fit Sam into a slightly lower sentencing bracket, the guidelines would still indicate a sentence of 27 to 34 years in prison. Katie wrote that Sam faces likely decades in prison. Now, aside from sentencing, the major question that remains in the legal process is whether additional prosecutions are still to come. Long before the trial, the Justice Department added charges related to campaign financing. These were not included in last month's trial due to objections from the Bahamas government that the charges were not agreed to when Sam was extradited. During her testimony, former Alameda Research CEO Carolyn Ellison discussed bribery of Chinese officials. That evidence would implicate Sam in breaches of the Foreign Corrupt Practices Act. With Sam now convicted of fraud, it's an open question whether the DOJ feels the need to pursue additional charges or is satisfied with the prosecution already carried out. There is a second trial tentatively scheduled in March of next year to deal with the campaign finance charge and other allegations from the revised indictment. Over the coming months, the DOJ is expected to inform the court whether they intend to proceed with extra charges, which will be unlikely to result in additional prison time for Sam. The political sensitivity, however, of the campaign finance charge could complicate that decision. The other question is whether additional people involved in managing FTX will be charged. The three executives who testified against Sam will be sentenced alongside him in March after pleading guilty. And although he was mentioned several times during the trial and implicated in decision-making at Alameda Research, we still have no real insight into why former Alameda CEO Sam Trabuco has not been charged. Similarly, significant testimony seemed to imply that the conduct of Sam's parents could rise to the level of criminal liability. Now when it comes to reactions from the crypto community, one of the big themes was a sense of relief. Crypto researcher Noelle Acheson said the verdict came as a huge relief. While it looked increasingly likely as the trial wore on, there was always the outside chance that SPF would yet again embarrass the industry by showing that crypto fraud can be hard to prosecute. That didn't happen. And the swift and unanimous decision from the jury definitively shows that fraud is accountable. The closure of the SPF phase should help to show the next wave of investors that crypto markets can be grown up. And hopefully now we can get back to building the capital market infrastructure the ecosystem deserves. Paul Brody, the head of blockchain at EY said, it's a wonderful moment for crypto. Accountability in the sense that bad actors will be punished is important, not just for deterring bad actors, but to give confidence to those who are operating with integrity. However, another reaction was that prosecutors are likely to be even more emboldened. Preston Byrne, a partner at Brown Rednick said, I would not read too much into the SPF trial result as a forward looking matter. What's done is done. SPF is off the board as a major player in crypto, probably for the rest of his working life. What this is, is a significant and decisive victory for the US attorney's office in the SDNY, convincing a jury that fraud is fraud, even in a context where complex novel technology is involved. I would expect that the USAO has a lot more confidence today than they did yesterday that they can win other big cases against bad actors in crypto. Now at this point, it's worth noting to me that one of the things that I was watching is whether the idea that this was the crypto industry on trial would actually take root. In other words, would this be characterized as the trial of SPF or as the trial of the crypto industry as a whole? In my estimation, it was much more, much more about SPF. Part of that was that the prosecutors were pretty clear about that. And indeed that speech at the end of it all from Damian Williams really drove it home. Yes, he was warning others in the crypto industry that if they were rotten, he was coming after them. But his bigger point was that fraud was fraud, regardless of what context it was in, and whether or not it used novel technology like cryptocurrency. In other words, the prosecution made a specific decision, presumably rooted in actual belief that the Sam Bankman Freed trial was a trial of Sam Bankman Freed. Now one really interesting conversation that has generated a lot of discussion is what the appropriate sentence for Sam actually is. Unchained podcast host Laura Shin wrote, I see a lot of people debating how long a sentence SPF should get. Curious to take the temperature. Also curious to hear if you think sentences are too short or long in general and sentences for white collar crime, financial crime, et cetera. Now of the choices she gave, which were one to nine years, 10 to 19 years, 20 to 29 years and 30 plus years, 30 plus years got 58.6% of the vote. Laura then noted that she had misjudged how many people think this will be a long sentence and revised her post. For that new poll, her options were one to 14 years, 15 to 29 years, 30 to 44 years and 45 years to life, 45 to life got the most votes at 44.1%. Now if that shows the general mood of crypto is particularly vitriolic towards Sam. There were some who said that his sentence should not be that long. Tiffany Fong wrote, I bet this will be my most hated post, but I personally do not root for life sentences or equivalent for nonviolent criminals. I lost my life savings to Celsius last year and obviously punishment is necessary, but I care far more about every penny getting clawed back to creditors and that they're forever barred from financial institutions. I don't personally benefit from or take pleasure in the prospect of SPF or Mashinsky sitting in prison for life. I'm sure this post will enrage people and agree to disagree, but that's just how I feel. ProPublica senior editor Jesse Eisinger said, SPF should not get 110 years. I'd say around five to seven reiterating my longstanding position that one, we should put fewer people in prison generally, two, but send more white collar criminals to prison with far shorter sentences, four, prison should be much, much more humane. Now this one generated a lot of response. DC investor wrote, understand that SPF caused serious financial harm and serious emotional harm. His fraud and his theft of user funds who believed they were being held as sacrosanct led to suicides. Five to seven years isn't nearly enough. He deserves at least 30. Eric David Paul from block tower put it a different way. He said, if the punishment for stealing 10 billion plus by defrauding hundreds of thousands of laypeople was five years in prison, it would be rational for most people in the world to commit the crime and the head of people like SPF. This is probability. They say X percent chance they get away with it. Y percent they don't. If they think 80% they walk away with 10 billion and 20% they go to jail for five years and keep nothing. It's a good trade. David Z Morris wrote, he won't get 110. That was never really on the table. And I understand the empathy, but based on the trial, he fully deserves 25 to 50. He has a callous manipulator who straight forwardly did not believe the law applied to him and still doesn't. He lied under oath repeatedly. DC investor followed up in another thread, give him only five years and O'Leary just funds his next startup. You either create consequences and thus a disincentive for bad actors or none of it even matters.
The Breakdown
A highlight from How Crypto Can Actually Move Past SBF
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Tuesday, November 7th, and we are back with The Breakdown. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. All right, friends, we are back from that anniversary trip that you knew about. Very rejuvenating, excited to be back with you all. And today, although it is by now long old news to all of you, for the sake of completeness, we are going to wrap up our coverage of the SPF trial. Now, I'm going to focus on some of the logistics, what happens from here, and of course, spend most of my time on community reactions. So, on Thursday night, Sam Bankman -Fried was found guilty on all seven counts of fraud and money laundering. Sam's defense attorney maintains his innocence and says they will continue to, quote, vigorously fight the charges. After the verdict was handed down, Damian Williams, the U .S. attorney for the Southern District of New York, delivered an ominous warning on the courthouse steps. He said that although the cryptocurrency industry is new, quote, this kind of fraud, this kind of corruption is as old as time, and we have no patience for it. Williams noted that Sam's case moved at lightning speed, which he said was a choice, not a coincidence. He said that this case was a warning to quote every single fraudster out there who thinks they are untouchable, that their crimes are too complex for us to catch or that they're too powerful for us to prosecute. Williams warned that if the remaining fraudsters in the crypto industry don't cut it out, quote, I promise we'll have enough handcuffs for all of them. Now, Sam's sentencing will be carried out in a separate hearing tentatively scheduled for the 28th of March next year. Sam faces a statutory maximum sentence of 110 years in prison. However, of course, he will likely be sentenced to far less than that, as terms of imprisonment are often served concurrently across all charges rather than consecutively. Katie Haun, a crypto VC who previously tackled high profile crypto criminal trials as a federal prosecutor, explained the way that federal sentencing guidelines work in this context. As Sam's crimes surrounded one of the largest fraud schemes in history, the guidelines place him in the highest possible bracket when considering the size of losses and number of victims. His sentence will also be enhanced by his leadership role within the scheme and the sophisticated nature of the fraud. Sam maxed out the scale as a result of these factors, which means the guidelines would suggest life in prison as the appropriate sentence. Even if the judge reduces some of the factors to fit Sam into a slightly lower sentencing bracket, the guidelines would still indicate a sentence of 27 to 34 years in prison. Katie wrote that Sam faces likely decades in prison. Now, aside from sentencing, the major question that remains in the legal process is whether additional prosecutions are still to come. Long before the trial, the Justice Department added charges related to campaign financing. These were not included in last month's trial due to objections from the Bahamas government that the charges were not agreed to when Sam was extradited. During her testimony, former Alameda Research CEO Carolyn Ellison discussed bribery of Chinese officials. That evidence would implicate Sam in breaches of the Foreign Corrupt Practices Act. With Sam now convicted of fraud, it's an open question whether the DOJ feels the need to pursue additional charges or is satisfied with the prosecution already carried out. There is a second trial tentatively scheduled in March of next year to deal with the campaign finance charge and other allegations from the revised indictment. Over the coming months, the DOJ is expected to inform the court whether they intend to proceed with extra charges, which will be unlikely to result in additional prison time for Sam. The political sensitivity, however, of the campaign finance charge could complicate that decision. The other question is whether additional people involved in managing FTX will be charged. The three executives who testified against Sam will be sentenced alongside him in March after pleading guilty. And although he was mentioned several times during the trial and implicated in decision -making at Alameda Research, we still have no real insight into why former Alameda CEO Sam Trabuco has not been charged. Similarly, significant testimony seemed to imply that the conduct of Sam's parents could rise to the level of criminal liability. Now when it comes to reactions from the crypto community, one of the big themes was a sense of relief. Crypto researcher Noelle Acheson said the verdict came as a huge relief. While it looked increasingly likely as the trial wore on, there was always the outside chance that SPF would yet again embarrass the industry by showing that crypto fraud can be hard to prosecute. That didn't happen. And the swift and unanimous decision from the jury definitively shows that fraud is accountable. The closure of the SPF phase should help to show the next wave of investors that crypto markets can be grown up. And hopefully now we can get back to building the capital market infrastructure the ecosystem deserves. Paul Brody, the head of blockchain at EY said, it's a wonderful moment for crypto. Accountability in the sense that bad actors will be punished is important, not just for deterring bad actors, but to give confidence to those who are operating with integrity. However, another reaction was that prosecutors are likely to be even more emboldened. Preston Byrne, a partner at Brown Rednick said, I would not read too much into the SPF trial result as a forward looking matter. What's done is done. SPF is off the board as a major player in crypto, probably for the rest of his working life. What this is, is a significant and decisive victory for the US attorney's office in the SDNY, convincing a jury that fraud is fraud, even in a context where complex novel technology is involved. I would expect that the USAO has a lot more confidence today than they did yesterday that they can win other big cases against bad actors in crypto. Now at this point, it's worth noting to me that one of the things that I was watching is whether the idea that this was the crypto industry on trial would actually take root. In other words, would this be characterized as the trial of SPF or as the trial of the crypto industry as a whole? In my estimation, it was much more, much more about SPF. Part of that was that the prosecutors were pretty clear about that. And indeed that speech at the end of it all from Damian Williams really drove it home. Yes, he was warning others in the crypto industry that if they were rotten, he was coming after them. But his bigger point was that fraud was fraud, regardless of what context it was in, and whether or not it used novel technology like cryptocurrency. In other words, the prosecution made a specific decision, presumably rooted in actual belief that the Sam Bankman Freed trial was a trial of Sam Bankman Freed. Now one really interesting conversation that has generated a lot of discussion is what the appropriate sentence for Sam actually is. Unchained podcast host Laura Shin wrote, I see a lot of people debating how long a sentence SPF should get. Curious to take the temperature. Also curious to hear if you think sentences are too short or long in general and sentences for white collar crime, financial crime, et cetera. Now of the choices she gave, which were one to nine years, 10 to 19 years, 20 to 29 years and 30 plus years, 30 plus years got 58 .6 % of the vote. Laura then noted that she had misjudged how many people think this will be a long sentence and revised her post. For that new poll, her options were one to 14 years, 15 to 29 years, 30 to 44 years and 45 years to life, 45 to life got the most votes at 44 .1%. Now if that shows the general mood of crypto is particularly vitriolic towards Sam. There were some who said that his sentence should not be that long. Tiffany Fong wrote, I bet this will be my most hated post, but I personally do not root for life sentences or equivalent for nonviolent criminals. I lost my life savings to Celsius last year and obviously punishment is necessary, but I care far more about every penny getting clawed back to creditors and that they're forever barred from financial institutions. I don't personally benefit from or take pleasure in the prospect of SPF or Mashinsky sitting in prison for life. I'm sure this post will enrage people and agree to disagree, but that's just how I feel. ProPublica senior editor Jesse Eisinger said, SPF should not get 110 years. I'd say around five to seven reiterating my longstanding position that one, we should put fewer people in prison generally, two, but send more white collar criminals to prison with far shorter sentences, four, prison should be much, much more humane. Now this one generated a lot of response. DC investor wrote, understand that SPF caused serious financial harm and serious emotional harm. His fraud and his theft of user funds who believed they were being held as sacrosanct led to suicides. Five to seven years isn't nearly enough. He deserves at least 30. Eric David Paul from block tower put it a different way. He said, if the punishment for stealing 10 billion plus by defrauding hundreds of thousands of laypeople was five years in prison, it would be rational for most people in the world to commit the crime and the head of people like SPF. This is probability. They say X percent chance they get away with it. Y percent they don't. If they think 80 % they walk away with 10 billion and 20 % they go to jail for five years and keep nothing. It's a good trade. David Z Morris wrote, he won't get 110. That was never really on the table. And I understand the empathy, but based on the trial, he fully deserves 25 to 50. He has a callous manipulator who straight forwardly did not believe the law applied to him and still doesn't. He lied under oath repeatedly. DC investor followed up in another thread, give him only five years and O 'Leary just funds his next startup. You either create consequences and thus a disincentive for bad actors or none of it even matters.
The Breakdown
"sam trabuco" Discussed on The Breakdown
"Now, one big issue with that testimony, FTX did have massive outages in 2020 during market volatility, so it's reasonable perhaps to think they could have been caused by a malfunctioning liquidation engine. The problem is that Sam's timeline contradicts both Gary and Nishad's testimony. During their time on the witness stand, a GitHub page was entered into evidence showing the original implementation of allowNegative. The page showed the feature was originally coded on July 21, 2019. Gary had even testified to a series of instructions from Sam, which had increased the negative balance allowed for Alameda from hundreds of millions to one billion and eventually to $65 billion, a number that Gary said was chosen to be, quote, so high it would never be hit. Sam's testimony then turned to Carolyn Ellison, who had taken over as co-CEO of Alameda Research after Sam stepped down in October 2021. We got a few brief references, by the way, to Sam Trabuco, the other co-CEO of Alameda, who has been conspicuously absent from this trial and has somehow avoided criminal charges. Sam said that shortly after being named as co-CEO, Trabuco started, quote, drifting away towards what I understood to be effectively early retirement. Sam was complimentary of Carolyn's management ability and said she was, quote, a good trader and very good at doing research for trades, writing mathematical models. Sam acknowledged that he stayed involved with Alameda, stating that, quote, I was an owner. I was the largest owner of the company. I cared about how well it did. And especially with Trabuco stepping back, it was an overwhelming job for any one person. And I felt that Caroline was doing quite well in many areas, but that there were some areas that it was important that she have help and support and was concerned about how things would go otherwise. Now, during her testimony, Carolyn had said that Sam's utilitarian belief system didn't have room for moral restrictions like not lying and not stealing. Sam didn't really address this, only vaguely mentioning that Caroline would often initiate philosophical conversations. He said, quote, Generally, she would stake out a position on some philosophical topic, usually a contrarian one, and we would debate it. Now, we'll go through some more of the contradictions between his testimony and Caroline's testimony. Caroline, for example, said that Sam's scruffy appearance was a carefully crafted image. Sam rejected that idea, saying that he wore T-shirts and shorts because they were comfortable and kept his hair long because, quote, I was kind of lazy and busy. He said that becoming the face of FTX had been an accident since he was, quote, somewhat introverted. At one point, the defense presented a photo of Sam at the Super Bowl posing with Katy Perry, Kate Hudson and Michael Keves of K5 Ventures. Caroline had previously testified that Sam was excited about the celebrity networking opportunities presented by Keves and had eagerly pursued the opportunity. To hear Sam tell the story, he had been randomly wandering the Super Bowl stadium and came across Keves and his celebrity friends who invited him out for dinner. When it came to those massive loans, Sam testified that he believed he was able to borrow funds from Alameda legally. He said, I owned Alameda, I was the primary owner of it and it had a few billion dollars to my understanding of arbitrage based profit over the past few years and far more than that in operating capital. So I saw no reason that I couldn't borrow funds from it. On political donations, Sam denied directing Nashad or FTX Digital Market CEO Ryan Salem to make political donations. However, he did acknowledge that the source of funds for the donations had been loans from Alameda. Now, one of the telling stories from Nashad's testimony was when Nashad recalled instructions from Sam asking him to manipulate FTX accounts in 2021 to ensure that the firm reached $1 billion in revenue. Nashad had explained that he found an intercompany transaction related to token staking, which could make up the roughly $50 million in revenue to hit Sam's target. In Sam's version of events, there had been a slight difference in revenue calculations between himself and FTX Head of Product, Ramnik Arora. Sam said that Ramnik had assigned Nashad the task of checking whether there were any sources of revenue that were missing from his calculation, which would get it over $1 billion. Sam downplayed the $1 billion, saying he just wanted to hit it because it's just a round number. Now, of course, while Sam distanced himself from that decision, Nashad's testimony had been quite specific about Sam's instructions. Nashad claimed that when he presented the additional revenues to Sam, he had been directed to backdate them to make them appear to have been generated throughout the year. So we're seeing this pattern of contradictions from Caroline's testimony and from Nashad's, but what about from Gary's? Well, one of the issues that came up during Gary's testimony was the FTX Insurance Fund, which Gary claimed was entirely made up. Gary's testimony had broken down how FTX came up with a publicly stated $100 million figure. He explained the number was simply a multiple of daily trading volume and didn't represent any actual funds held in reserve. Gary added that the fund was primarily made up of FTT tokens, which was of course the exchange token for FTX, which plummeted in value as the firm collapsed. By Sam's telling, the fund was only meant to represent, quote, that we were pledging to our customers that if there were any losses from a customer's account before socializing any losses to other users before clawing back funds, FTX would spend at least $5.4 million and $5.2 million FTT tokens in covering that amount. Now one interesting new set of details that has made some media coverage subsequently was Sam's testimony around his interactions with the crypto industry in the middle of 2022. At that time, Sam had been painted as the JP Morgan of the crypto industry, signing term sheets worth hundreds of millions of dollars to acquire bankrupt crypto lenders BlockFi and Voyager. In Sam's testimony, he expanded that he had also been in discussions with Genesis and Celsius. Caroline had said that Genesis had called in loans from Alameda, which gave rise to the infamous testimony about the preparation of seven alternate balance sheets. Sam said that he spoke with the Genesis CEO during that period and that, quote, we touched on Alameda's borrowing from Genesis, though it was not the primary topic. The primary topic was Genesis talking about potentially raising equity capital. Refuting Caroline's version of the story about the seven balance sheets, which had been prepared to satisfy concerns at Genesis, Sam said, quote, I recall her saying that she was tentatively planning on sending something like this out and that she had thought of a few different ways of constructing it. I don't remember any detail being discussed about that, and I remember looking over it and saying that it seemed reasonable to me. The balance sheets were presented from evidence, and Sam made it appear as if he had only ever viewed the final seventh balance sheet. However, Caroline had previously testified that she had detailed conversations with Sam about the balance sheets and how best to hide the problems that Alameda from Genesis, iterating on the document at Sam's direction. And that was really the beginning of Sam throwing Caroline completely under the bus. Turning to the crypto crash of May 2022, Sam said that Alameda's net asset value had plummeted from $40 billion to $10 billion. He claimed that he frequently asked Caroline to hedge Alameda's exposure and that he renewed that direction in May. He said that Alameda did not put on those hedges by June, even though he had suggested a $2 billion hedge. Sam told the court that Caroline had discussed her concerns that Alameda had nearly gone bankrupt during that period. Sam canceled the flight to Washington to stay in the Bahamas and deal with the situation. He said that Nishad told them there was a bug in the database which had caused Alameda's liabilities to be understated by $8 billion. Sam discussed the proposed shutdown of Alameda. Other witnesses had said it would be impossible due to the billions of dollars in outstanding liabilities owed to FTX. Sam acknowledged that he drafted a blog post about shutting down Alameda, a document which was reviewed by Gary and Nishad. But Sam downplayed their reactions, stating that, quote, they ultimately came back and said they didn't think it was a good idea. When asked whether they elaborated on why it would be a bad idea, Sam said, quote, I at the time did not feel confident that I had gotten a clear reason why. I do believe that they said something about it being difficult to shut down Alameda. And here you see another really common thread from this testimony, which is Sam arguing that he really didn't pay much attention to what was going on, and they didn't have nearly the recollection that these other witnesses seemed to have about his direction and clear instructions in cases of fairly significant importance. Another example of that came around the context of the very end of the company starting in the fall of 2022. During Nishad's testimony, he detailed a discussion with Sam in September 2022, where he confronted Sam on the balcony of their shared penthouse. Nishad had said that Sam had acknowledged, quote, the borrows we can't repay. To Nishad's telling, Sam had said that this problem of a massive shortfall had been, quote, taxing me some 5 to 10% of my productivity for this year. Sam's recollection of the conversation was much more vague, stating that, quote, I don't remember it being specified more clearly than what I'm about to say, that liabilities had gotten far larger than they used to be or that we thought they were. Nishad said he didn't know what to do and wanted my thoughts on the scale of liabilities. I think he may have thrown out a number of 8 billion or so. Sam claimed that he told Nishad that he was, quote, also concerned about Alameda's liabilities and that they were larger than I would have wanted them to be as well. He added that he thought, quote, Alameda's net asset value was around a positive 10 billion dollars and that it was still making money trading. He said that he wasn't concerned about making up for the shortfall, stating that he would add assets to Alameda's balance sheet from an entity known as Paperbird. Paperbird was a shell corporation set up to hold Sam's FTX equity. He said, quote, I was more than happy to pledge everything I had. Sam also discussed a conversation with developer Adam Yedidiah. Yedidiah had very specifically testified that he had a conversation with Sam near the Paddle Tennis Courts about a hole in Alameda's balance sheet in the summer of 2022. According to Yedidiah, Sam had said that, quote, we were bulletproof last year, but we're not bulletproof this year. Sam didn't remember where this conversation took place, despite being in the courtroom for Yedidiah's testimony. According to Sam, Yedidiah wasn't inquiring about the gigantic hole in Alameda's balance sheet, but was simply asking what Alameda's risk profile looked like after the market crash. So to wrap things up, Sam's lawyers asked questions for the entire day Friday and expected a few hours of additional direct testimony on Monday morning. That of course would be followed by the prosecution's cross-examination, which the prosecution said would be quote-unquote substantial. Still, even with that, prosecutors expected to be finished by Tuesday, and the trial is expected to conclude with closing statements on either Friday or early next week. The jury will then retire to consider their verdict, which will take as long as it takes. Overall, Sam's prepared testimony seemed to be putting forward the defense that Sam started all the way back in his media tour last December. That he was not a fraud, but just a failed entrepreneur, struggling to manage a rapidly growing business. During his testimony, he repeatedly contradicted testimony from the other senior FTX executives who have already pled guilty. Sam claimed to have misunderstood warnings about the hole in Alameda's accounting and generally presented his deputies as taking actions without his direction, which led to the collapse of FTX. Now while it was expected that Sam would refute the testimony of other witnesses, one of the most striking things about Friday's testimony was how often Sam misrepresented facts in low stake situations. On numerous occasions, for example, the testimony about how Alameda got its name, Sam gave a version of the story which would be easily contradicted by evidence. These are exactly the sorts of issues that could deeply harm his credibility with the jury, and based on the early reporting that I'm seeing, the prosecution seemed to notice this as well. Laura Shin of Unchained characterized Sam's testimony saying, "...over and over again it felt like all of these things had been done by other people and he would discover them after they had been done. He said he never really knew how they had come about." I initially thought Sam's testimony was starting off pretty strong, explaining the origin of some of the special privileges to demonstrate they weren't initially put in place for nefarious purposes, overall demonstrating a bit of remorse, a little bit of humanity. I did personally feel, though, that when he began giving his retelling of these key pivotal moments and conversations, it began to fall apart. Everyone else's testimony sounded very credible and lined up with each other. Sam's attacking the credibility of each of these testimonies turned it into a he said she said, where there's two different narratives here and one of you has to be lying. Tiffany continued, "...I feel the jury is a little bit more likely to believe the prosecution's witnesses over Sam, who has the most incentive to claim he doesn't have responsibility and place blame on others. I think from the jury's perspectives, if they think Sam is lying about one of these retellings, they're likely to assume he was lying about all of them." So unfortunately we are going to stop this story here at this very in-between moment. Obviously the big thing is the prosecution's cross, which is happening literally as I'm saying that. For now, a thank you once again to my sponsor for today, Kraken. Go to kraken.com slash the breakdown and see what crypto can be. Until next time, be safe and take care of each other. Peace.
The Bitboy Crypto Podcast
"sam trabuco" Discussed on The Bitboy Crypto Podcast
"Yeah. All right. That's all I got. All right. Where's the video where Drew teaches you how to dig a hole and make your own underground bunker. Where is that video? We should do the time-lapse, you know, like build an Amazonian resort with a pool and like three bedrooms. Don't don't you need like two small Taiwanese men to do that and dig it all out by hand with their shovels. You know about small Taiwanese men, right? No, but Sam Trabuco does. Oh, look at that. That's another deep cut here from discover crypto. I've never been to Thailand ever. All right. Uh, yeah. People are really agreeing with, uh, our heart hair takes people. Yeah. Soap is poison. What is, what the hell is up with crypto YouTube and liking to talk about other people's hair? Well, you have pretty good hair. My hair is mid. I don't give a, I don't give two shits about my hair. Uh, Jeremiah Dixon says, Nick, I saw the Napoleon trailer. It looks wicked. Awesome. Can't wait, dude. I'll tell you what, I have a small bust of Napoleon in my house and I'm going to continue to collect dictators. Um, that's right. You heard me here. I know I will collect them. I want a menagerie of dictators in my house. So I can just look upon my field of dictators every morning. Let's talk about Jerome Powell folks, speaking of dictators. All right. Jerome Powell, uh, voted in by Trump, uh, still there. I know Medispawn Taiwanese are not from Thailand. Okay. I know that I said two different things. All right. Uh, fed reserve chairman Jerome Powell on Thursday paved the way for the central bank to keep interest rates unchanged at its November meeting, uh, given the uncertainties and risk and how far we come, we're proceeding carefully. Uh, we'll make decisions about the extent of additional policy firming and how long a policy will remain restrictive based on the totality of the incoming data, the evolving outlook and the balance of risks. That is a great example of words salad. He said a whole lot without saying anything is like, he almost tried to make it as complicated and jargony as possible there. All right. So, uh, yeah, it looks like, it just increased the odds of no rate change. Yeah. Well, he's, uh, got a note. I wanted to show you right below that. He did say that the path that they're on is unsustainable. So yeah, I got that tweet. Um, hang on, hang on. Standby standing by. Yeah. Okay. Jerome Powell, fed chair says current fiscal path run is unsustainable. Breaking water is wet. Yeah, this is, so this is the, um, like the kind of circular language that bankers use when they know that they have screwed up royally. So they'll say things that, that has seemed dovish and some things that seem hawkish. So it can be purposely misinterpreted. Um, ended a video this morning about how people are misinterpreting drone Powell's speech. It's just a bunch of gobbledygook right now, because they don't know, uh, they know that they cannot raise the rates anymore because they won't publish the rest of the world. Number one being China, number two being, uh, number one being Japan, number two being China. And, um, they know that they're about to kill the real estate market. Like that's, that's dead now. And so where is that going to fall out? Have they caused a banking crisis and drone Powell's like, Oh no, what have we done? We've we're so locked in on unemployment and inflation that they don't know what they're doing anymore. So it's, it's kind of scary to have Jerome Powell, um, come out and say this kind of stuff. He can't, he can't set the mark. He used to be the guiding hand, right? Like he would say, he would make like markedly dovish or markedly hawkish statements. And when it's mealy mouthed, not good, not good. And the X minute stands for the Twitter minute, but you call it Twitter. I call it X. Uh, we do have a little bit of bright news here. Oil prices drop as us ease the sanctions on Venezuela amid the conflict between, uh, Hamas and Israel here. So basically we have sanctions on the South American country. Then it's all this turmoil over here and we're like, Oh man, we really got to get them going over here. Cause they kind of slow things down over there. Let's go ahead and increase that spigot right there. And then it makes you wonder, well, why the heck were we putting sanctions on that guy in the first place? All right, let's move on here. A swift shakeup, uh, the Yuan dethrones Euro as a runner up in trade, uh, trade finance markets here. So a Euro was on the ropes. We knew this was going to happen. And then there's a lot of predictions. Well, this will eventually overtake the dollar. Some people say five years. Some people say never, uh, we'll, we'll end up, uh, keeping a close eye on that one. So another shift for China's growing presence here and, uh, the diminishing role of the EU billionaire bond King. He's warning about the us dollars reserve currency status at risk due to national debt. It's just skyrocketing folks. So, uh, yeah, it's just more and more news that look, the empire, the age of empires for America could be coming to an end. We could be losing our status as the main world reserve currency. I think that's going to be a lot further down the line, but you know, we'll, we'll be the number two economy and we'll maybe still have this top reserve currency for a short period. Uh, that's my macro prediction, but guys, this could still be 20 years away, 30 years away. I was talking about the treasury department here or to recognize cryptocurrency mixers as laundering tools. A code is free speech. Let's not forget that. Uh, and free the tornado cash devs. Uh, that's what I say. The Biden administration preparing to designate international cryptocurrency mixers as money laundering centers that pose a threat to national security, uh, poses threat to the powers that be this action. Now they're using one of their most powerful tools that they have to fight finance crime. Today's action underscores their commitment to combating the misuse of convertible virtual currency mixed by a wide range of illicit actors. Uh, the move has received bipartisan risk, poor, uh, support, surprise, surprise with more than a hundred lawmakers from both parties expressing concerns of some groups are raising millions of dollars through cryptocurrency. A lot of this has been debunked folks. Uh, you might see a headline Hamas link wallet, and then a sleuth will go into it and they're like, literally, what are you talking about? That wallet has $17 in it. And no one's transacted with this wallet since 2020, but this is this huge Hamas link wallet. We got to shut it down. They're just using it as an excuse to create cryptocurrency as the boogeyman. They want to create the boogeyman here. So we can't have another Canadian trucker freedom convoy where they try to shut down the bank accounts of Canadian truckers while leaving open Hamas bank accounts, by the way, that's a different story. They want to shut down the Canadian trucker bank account. Then they don't want to give you the freedom to give them funds like Bitcoin. So this is a threat against their, their control. It's a threat against their power here, uh, in an op-ed in the wall street journal, which has lost basically all credibility over the past two years, three years, Warren, are you that decentralized finance companies should be subject to the same anti money laundering rules as banks, not investment advice. Uh, well, what about when it's just code existing in the ether? There's no entity behind it. You had some nerd pay for the domain name, 10 years. You paid in Bitcoin. You don't know who it is. And it's on some third party, third country domain hosting site. And it's just code that's existing. What do you do? How is that illegal? Where's the entity? Who are you going after? Oh, they go after the users. They're going after you. They're taking your power. That's what they want to do there. Uh, so we got to keep an eye on that. Let's talk FTX. Let's do it. What is law? Does law abide by law? Code is law. What is law? What is love? Baby don't hurt me. All right, let's talk about, speaking of blind, I'm not going to make a comment on anyone's looks here. Don't do it. Inside SPF's trial, FTX general counsel quit after he learned of the massive hole in the balance sheet. I think I might be Sam Bankman freed for Thanksgiving. I'm going to just eat cucumbers only for Halloween.
Crypto News Alerts | Daily Bitcoin (BTC) & Cryptocurrency News
"sam trabuco" Discussed on Crypto News Alerts | Daily Bitcoin (BTC) & Cryptocurrency News
"Contrarily, the bulls will again attempt to push and sustain the price above the moving averages if they can pull it off. The pair can jump to 1,746. This level is again likely to witness a strong selling by the bears. So there you have it. And as I mentioned earlier, breaking news, a new all-time high hash rate yet again. And as Max shares here, the implied hash rate adjusted at 440 quintillion exahashes per second is $340,000 for BTC. Let me know if you agree or disagree with the high priest. And as Charles Edwards from Capriola Investment shares here, the Bitcoin hash rate's going absolutely bonkers, up three X since 68 thou. The level of investment is insane. Normally, the HR growth drops in bear markets, but this is the first time it's increased. This is a step change in mining industrialization. Energy companies and governments are here, preach. And someone shared earlier, all wars are banker wars, and in which Max responded, all wars and violence are fiat money central bank calls. Bitcoin fixes this with unconfiscatable property that creates for the first time individual sovereignty and the demonetization of war and violence, preach, and massive shout out to the high priest of Bitcoin. Let me know where you feel the Bitcoin price is likely to head next. And with that being shared, now let's break down breaking news regarding the next to testify against SPF, regarding the ongoing FTX scandal with Sam Bankman-Fried. So let's break this one down next, shall we? Here we go. And last week, it was Caroline Ellison. We covered all the, basically, the bombshells which were released. And now, according to reports from SPF's criminal trial on October 16th, Singh said, while Caroline Ellison and Sam Trabuco led Alameda, Bankman-Fried was ultimately in charge of the company. The former engineering director reportedly testified that SPF would unilaterally spend Alameda's money despite his supposedly separate role at FTX. Also threatening to fire Caroline Ellison, quoting him here, I learned of spending at Alameda after the fact, he said. I'd complained about the execs and flashiness which I found different than what we were building the company for. SPF would say, I didn't understand. He was out there interacting with people. I thought we were fleeced for $20 million. He said, I was sowing doubt. Sam is a formidable character. I came to distrust him. That speaks volumes right there. The former engineering director reportedly cited investments in artificial intelligence startup, Anthropic and 5K Global, the investment firm linked to high profile figures, including former US Secretary of State, Hillary Clinton and Hollywood celebs. And according to Singh, SPF ordered him and former chief technology officer Gary Wang to go ahead with $1 billion investment in K5 Global co-owners Michael Kives and Brian Baum's venture capital firm. Quitting him again, I asked that it be done with Sam's money and not FTX's money. And lo and behold, guess whose money they were using? You already know. Now Singh's testimony came on the ninth day of Bankman-Fried's criminal trial which kicked off in New York October 3rd. Members of the jury already heard from Caroline Ellison and Gary Wang, Ellison, Wang, Singh and former FTX director market CEO Ryan Salami, I don't know if that's Salami or Salame, whatever, pleaded guilty to fraud charges related to Alameda using the FTX funds for investments without users consent. So everyone, all the executives of FTX admits the fraud. However, SPF is still trying to play the innocent role. Salami is not expected to testify in the trial and it was unclear if the defense team intended to put SPF on the stand. And prior to Singh, prosecutors called on FTX user Tarek Mourad October 16th to speak to the understanding of how the crypto exchange planned to use his deposits and his perception of Bankman-Fried's influencing his decision to invest with the firm. Mourad reportedly testified that amid reports of withdrawal issues of FTX in November of 2022, he believed SPF's assets were just fine. And as we all know, clearly those assets were not fine. The story goes, they were basically offloading all of your precious crypto, including your Bitcoin, immediately sending it to Alameda and then doing whatever fraudulent investments claiming to be borrowing it and it would be paid back. But borrowing it without your consent means stealing. And lo and behold, they can't pay it back because they lost it all due to bad investments. So we're keeping you posted with the latest of what happens here with the ongoing SPF FTX trial, which takes us to our next story of the day. Do you know the United States government is one of the largest hodlers of Bitcoin, currently controlling roughly $5 billion worth of BTC? That's right, let's break this down, shall we? The United States government has become one of the largest Bitcoin holders with over 200,000 BTC, worth more than $5 billion despite selling a few thousand Bitcoin worth millions earlier in the year. Also wanna point out the absolute largest hodler is the Grayscale Bitcoin Trust. GBTC currently controls over 600,000 BTC. Could you understand why that would be so phenomenal for them to get their product converted to a spot Bitcoin ETF? You already know, let's get it. According to the data analysis based on public filings, crypto firm 21 estimated that the US government still holds 194,188 BTC estimated to be worth $5.3 billion. The firm noted in its analysis that these are the lower bound estimations of the US government holdings based on publicly available information. The analysis tracked the Bitcoin movements to the US government wallets associated with three of the largest Bitcoin seizures since 2020, namely Silk Road seizure of 69,000 Bitcoin in November of 2020, the Bitfinex hack seizure of 94,000 Bitcoin in January of 2022, and the James Zhong seizure of 51,000 Bitcoin in March of 2022. So the government Bitcoin stashes kept primarily offline and encrypted storage devices, as we know as hardware wallets kept under the Justice Department and the IRS. The US government made two significant seizures in 2022. Now seized assets do not instantly belong to the government. The US Marshall Service, the primary agency charged with the selling of the seized property, only receives the possession of the seized Bitcoin after a court issues a definitive forfeiture judgment. The US government also sells a portion of the seized Bitcoin from time to time through an auction system based on the court liquidation order. The most notable government auction dates back to 2014, when billionaire venture capitalist Tim Draper made an OG move buying up 30,000 Bitcoin from the US government auction. Back then, what a incredible return on investment, right? However, in recent years, US government turned to crypto exchanges to sell their seized Bitcoin over public auctions. One such sale came in March earlier this year when the government sold 9,118 BTC to Coinbase as confirmed through the public filing. Now collect, I mean, it is what it is. I personally feel the government will do what it is that they do, they'll continue seizing as much cryptocurrency as possible, but will they hold it is the million dollar question. I think they'll offload it as soon as they possibly can, but you never know what the future holds. Maybe as other countries start putting more and more Bitcoin on their balance sheet, the game theory kicks in full effect, maybe the United States government will soon realize why should we sell this when there's power and holding it and hodling it, the price is only going to continue to go up, if you know what I mean. Like I bet you they regret selling all of that Bitcoin fortune to Tim Draper, you know what I mean? He made a hell of a, you know, return on investment, but that could have been the government, you know what I mean? Anyways, fam, that's what it is. Now let's break down our next story of the day, discuss the latest updates from Bitcoin Amsterdam Conference with the infamous Eric Snowden who spoke at this event. Here's what Snowden had to share. Shout out to Snowden by the way, a true freedom revolutionary. We are contorting ourselves to pass through the key hole of tyranny, Snowden's words to the audience at the packed Genesis stage hall of Bitcoin Amsterdam, stressing the preeminent crypto ever increasing importance in a world beset by creepy government surveillance, devaluing fiat currencies and restrictive policies. Preach, the renowned whistleblower, his address summed up the reoccurring theme during the conference driving home the role of decentralized protocols like Bitcoin and Noster to give individuals some control over their wealth and privacy. Now, Cointelegraph spoke to prominent Bitcoin developers, investors, builders and supporters attending the two-day conference at the Sweet West Park neighborhood of Amsterdam. How many of you have been to Amsterdam? That's the place to be, one of my favorite places in the world, fam, let me know. Anyways, amid the ongoing crypto bear market, the event attracted a couple of thousand of attendees searching for the latest news and insights into the Bitcoin industry. Here's a photo taken from the stage, which looks pretty epic to me. Now, while many prominent figures highlighted the value proposition of Bitcoin as a store of value against the diminishing purchasing power of fiat currencies, Snowden was critical of the continual focus on the value of Bitcoin over its importance as a decentralized tool. Quoting Snowden here, ''We are all a part of a bigger game and Bitcoin is one of the strongest levers in that. The system that we are influencing, that we are exerting leverage on, such as payments and finance, will shape what the world of tomorrow looks like. Facts.'' Snowden's address arguably attracted the biggest gathering of visitors during the conference as he revisited Bitcoin's role in his journey, rebelling against the US government and its wonton surveillance of citizens. If you don't know, in 2013, Snowden used Bitcoin to pay for servers that hosted classified information sent to journalists that would reveal the national security agency's overreach into the lives of American citizens. And as Snowden elaborated, Bitcoin's growing prominence has led to increasing opposition from governments, lawmakers, and legacy financial institutions. Quoting him here, ''We don't want to focus on things like ETFs. We need to focus on the fundamentals.'' Snowden added that the potential influence of Bitcoin ETFs on the value of crypto represents subordination, a kind of subjugation, a process of taming that is being played out by institutions that regulate traditional financial spheres. Snowden also shared his belief that Bitcoin has a privacy problem, highlighting the emergence of obfuscation tools like coin join and mixers as important but equally indicative of the pressure facing the decentralized protocol. So there you have it. And to hear it directly from Snowden's mouth, check the show notes below the video in the description, and you can check it out here. I'm gonna leave you with a couple more quotes from Snowden. ''Acting in secret is not freedom, the necessity of coin joins and so on. That is because you are unfree. Proof of funds is proof of unfreedom. Preach.'' He also says, ''All the people tracking price and looking at headlines involving the SEC, Gary Gensler is not daddy Bitcoin. I don't really care what he thinks and I don't think you should either. More power to him, screw Gary Gensler.'' I think we've all had enough of that chairman to say the least. Anyways fam, let me know if you agree or disagree with the words by Snowden. Let me know your thoughts. And that's gonna lead us to our next story of the day. And that's $180,000 Bitcoin price prediction coming from this top crypto analyst. Let's break this down and they'll be updating you with the latest of the Bitcoin ETF approval and all the rumors circulating right now. Here we go. A trader who actually called the end of Bitcoin's 2021 bull market thinks that the king crypto will once again meteorically rise due to the inevitable return of money printer. Money printing continue to go. Synonymous analyst Pintoshi shared on X that it's only a matter of time before the US government turns on the money printers. Once again, according to Pintoshi, Bitcoin will begin its parabolic surge once the US government decides to base the dollar to pay off its massive debt. Burden to the tune of $33.5 trillion, putting him here. When the printers come back to inflate away the debt and they will and always have. Just remember, Bitcoin is fundamentally the hardest asset in the world with both programmatic monetary policy and fixed supply. There's always another cycle. And check out this chart. This shows you his trajectory or where the Bitcoin price and how is likely to surge. He sees Bitcoin rallying to the new all time high of 180,000 per coin, suggesting a move of roughly 570% from the current prices. Now while Pintoshi believes there'll be another bull cycle for the king crypto, he says that it is unclear when the Fed will start cutting rates. Quoting him again, really have no way of knowing when tightening will end and it can extend for years or it can just end up in years of stagflation. The crypto strategist is also keeping a close watch on the chart for the Bitcoin versus M2 money supply. The M2 is a global liquidity indicator that takes into amount the liquid money moving around the system. Crypto traders like Pintoshi believe the Bitcoin tends to ignite the bull when the M2 or global liquidity is on the up and up. The analyst shares a chart, which you can see on your screen showing the Bitcoin versus the M2 appearing to be gearing up for a big breakout. So there you have it. And lo and behold, what are we witnessing right now? A big fricking breakout and we are just getting started. Now let's break down our breaking story of the day and let's discuss everything surrounding this Bitcoin ETF approval. The rumor got shared and within a few minutes, Bitcoin spiked by over $2,000 just like that. But Cointelegraph apologized and said it was a rumor and only a mistake. So let's break this down, baby. Let's do it. As you can see, here we go. Bitcoin jumps the 30,000 then dumps as false spot ETF approval report circulates. Womp womp, but we're still pumping. Anyways, Bitcoin surged from 27,900 to 30,000 after the false report of a spot Bitcoin ETF approval was posted on social app X, formerly Twitter, leading to nearly 100 million worth of liquidations. Within an hour, the false post was deleted after nearly 30 minutes, but sparked enough interactions to impact the price significantly. Bitcoin has since fallen from 30,000 back above 28,000 following skepticism from analysts as well as the reporters, BlackRock confirmed to CoinDesk that the report is false. Check out this chart just based on the false rumor of the ETF approval by one company, Coinbase, making a simple tweet, Bitcoin surges $2,000. It just goes to show you once we get the real thing, we're gonna continue pumping. We are going to get a God candle. We will resurrect Bitcoin back to all time highs. We will enter price discovery mode. You already know CoinGlass data shows that 81 million worth of short positions or bets against the higher prices were liquidated on the move to 30 Gs and 31 million in longs or bets on higher prices were liquidated during the correction. Liquidation refers to when the exchange forcefully closes the traders leverage position due to a partial or total loss of the traders initial margin. It happens when a trader is unable to meet the margin requirements for a leverage position, failing to have sufficient funds to keep the trade open. Now the SEC website shows no approvals at this time for the spot Bitcoin ETF. Bloomberg also reported that the BlackRock app is still under review. Here's Cointelegraph apologizing. We apologize for a tweet that led to the dissemination of inaccurate information regarding the BlackRock Bitcoin ETF. Well, thanks for the pump anyways, right? An internal investigation is currently underway. We're committed to transparency and we'll share the findings of the investigation with the public. Okay, we're gonna hold them accountable. Now it was reported last week that the SEC won't appeal the loss to its case against Grayscale, which is thought to boost the chances of GBTC eventually being converted to a spot ETF. Bitcoin rose 4% in Asian morning hours on Monday on a continuation of Friday's reaction to the US SEC decision to not appeal the recent Grayscale ruling. And speaking of Grayscale, more breaking news, the Grayscale GBTC discount falls to 16% as the markets bet on the Bitcoin ETF approval. That's right, Grayscale's Bitcoin investment vehicle, Grayscale Bitcoin Trust is trading at its lowest discount in nearly two years as spot Bitcoin ETFs continue to inch towards potential approval in the United States. The latest data from Y chart shows GBTC's discount on Bitcoin's net asset value has narrowed to 15.87% as of October 13th. The discount in this percentage measures the amount that a mutual funder ETF is trading below its net asset value. This metric is used to track how far a security is trading from the true value. Now check this out, fam. Data shows that GBTC's discount began to narrow when BlackRock and several other financial institutions filed the spot Bitcoin ETF applications back in mid-June where the discount fell from 44% June 15th to 26.7% by July 5th. And since then, the figure has continued to narrow. Now the last time GBTC's discount was at a similar level was early December 2021. Yeah, that was like right after the all-time high we hit in November of 2021, right? Now, yeah, we all know we hit 69,000 November 10th. Now Bitcoin advocate Oliver Velez believes the market is pricing in the spot Bitcoin ETF approval by the year's end. Other analysts such as Lyle Pratt believe GBTC's discount will continue to evaporate over the next week or two as the spot Bitcoin ETFs near approval. And quoting Scott Melker, the wolf of all streets, the GBTC discount has narrowed to 16% as the market bets on a Bitcoin spot ETF approval. Grayscale's Bitcoin trust, commonly known as GBTC, has experienced notable changes in its market dynamics at the start of the year. GBTC was trading at a substantial discount of 48.31%. And reports emerged that the US SEC wouldn't appeal the Grayscale decision on October 13th, leading Bloomberg ETF analyst James Safart referring to spot Bitcoin ETF approvals as a done deal in an October 13th post. Now on October 15th, Grayscale reportedly delivered a statement noting that the SEC's 45-day period to seek a rehearing had passed, meaning that the court would issue its final mandate within seven calendar days. Quoting them here, the Grayscale team remains operationally ready to convert GBTC to an ETF upon the SEC's approval. And we look forward to sharing more information as soon as practice, sorry, practiceable. Is that, wow, yeah, practiceable, interesting. The commonly reported company report said, now let me know how you feel this is likely to play out. And I'm gonna leave you with this. We all know Bitcoin should truly be trading in the hundreds of thousands of dollars right now. As Max points out, with the existing Bitcoin hash rate, Bitcoin should be $340,000 per coin. Let me know if you agree or disagree with the high priests. And who knows how high the Bitcoin price would have climbed in the fourth quarter of 2021 if scam bank men freed and FTX wasn't offloading all of your precious Bitcoin, dumping it onto the open market to suppress the Bitcoin price at under $20,000. You know what I mean? Lo and behold, it's the name of the game. So at least these fraudsters are being eliminated one by one Now, massive shout out to everyone in that live chat. I appreciate each and every one of you. And don't forget to check out cryptonewsalerts.net for the full premium experience with video and to participate in the live Q &A. And I look forward to seeing you on tomorrow's episode, huddle. Two, three, follow.
The Breakdown
"sam trabuco" Discussed on The Breakdown
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Saturday, October 14th, and that means it's time for the weekly recap. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link at the show notes or go to bit.ly slash breakdown pod. Hello, friends. Happy weekend. Today, I have another conversation between Scott Melker and I. This was recorded yesterday morning, and there are a couple of things that I think you will find valuable in here. One, although we do spend a fair bit of time on the SPF trial, as opposed to just giving the play-by-play, which I've been doing on the show, this is a lot more a subjective reading and interpretation of the events, what they mean for the industry, what I think we learned. So in true weekly recap fashion, I think it does a little bit more of that. Now, the second topic that I think will be of interest to a lot of you is JP Morgan and real world assets. We had some interesting news there. And finally, there is a little bit of ETF intrigue and what might be happening on that front. So friends, I hope you enjoy this. Let's dive in. NLW Men, how are you today? I am good. I'm having a great week, better than a lot of the weeks of people we're going to talk about today. I'll tell you that. For sure. I don't think Sam's having a great week. And there's someone else we have to give an honorable mention to who's finally having a bad week. And that, of course, is Steve Ehrlich from Voyager Digital. You guys may not have seen this, but he's being sued by the CFTC for fraud, for neglect, negligence of customer assets, for lying about FDIC insurance, for taking risky bets while saying that customers assets were safe and they were only taking safe bets. He told this to me personally via text message and phone and on interviews almost until the last day. I was unable to withdraw crypto unlike everyone else who could have gotten their assets out because Voyager had done me a favor and put protection on my account that they refused to lift for two months that I asked them to when I saw problems with Celsius. I have a personal feeling about this, but I think the worst part, and Nathaniel maybe is someone who's slightly outside the situation, give me some perspective, but the worst part is that everybody knows that Voyager declared bankruptcy to protect the executives from criminal charges, right? It was pretty clear at the time they could have just liquidated the assets. We would have gotten roughly 75 cents on the dollar, but instead to protect themselves from suits that had already been filed so those would be erased and suits they knew were coming, every insider knows this, they decided to declare bankruptcy. We ended up getting back 35% of the assets, but really 24% of the value on the day that it happened. This is a civil charge, of course, so he still is criminally protected, but to see him get in trouble anyways after doing all of that to us just to protect himself gives me extreme mixed emotions. I mean, how do you view this as like, I guess, a third party who was not luckily a creditor to Voyager? Yeah, so a couple things. One is I think that this is going to get us nicely into, I think, the SPF case as well. The consequences for this set of executives is incredibly important for the evolution of this industry, right? And I think that the mixed emotion of it probably should have been worse, but at least there is this set of actions which could result in not just penalties financially and things like that, but real prohibitions on what this person is able to do in markets in the future is important. I think that for a little while, and this is sort of, again, a preview of what I'll say about about SPF too, for a little while, I think that the crypto industry is going to have to just deal with the fact that there is more evidence that it's just sort of full of scams and frauds like the critics have always claimed. But in the long run, what these cases are actually serving to point out is that it's not just the industry being inherently or a priori dirty, it's specific people making specific decisions to lie, to commit fraud, to change balance sheets, to do things that regardless of the industry would be fraudulent, would be criminal. And ultimately in the long run, especially as a new wave of actors comes in, both from the traditional financial sector and a new class of entrepreneurs who are going to specifically, I think, position themselves as the opposite of this generation of folks, it will be important that we have on record that what happened was specific instances of fraud and criminal behavior, not just that's what happens in crypto. It will also be really important as a deterrent for future actors who come in to realize that there is punishment for these actions, even if it's in the unregulated wild west of crypto. Yeah, listen. That's a very important part because we've seen Mashinsky, we've seen SPF, of course, maybe BlockFi, we haven't seen anything yet. I don't know if there's anything to see there, but it is nice at least to see this in the press and that people don't see Ehrlich completely skate by as if nothing happened and there was no dereliction of duty here. What's crazy is the guy hasn't spoken a word since any of it happened. And he had a statement today, the talented management team at Voyager created and maintained our platform in full compliance with the existing regulatory structure. Our team consistently communicated and worked closely with our regulators when literally everybody knows that the risk management team was just left out of every decision. There's been reports of it, that it was literally like, Steve decides we need yield. We're going to go do this. It's Steve. Everyone said that. And so like, listen, his quote is the exact one that his lawyer would write up, obviously, and send out on a PR release and then we won't hear anything else. But these people have to at least be punished in the court of public opinion, even if it's not a huge fine or if he has no money or if he doesn't go to jail, people need to see this in the press. I mean, we saw how much of American politics, like the broad American politics was shaped by the lack of consequences for the financial industry in 2008, a huge part. You're talking Occupy Wall Street on one side. You're talking about the Tea Party on the other. This was a major, major impact because I think that many people who have kind of a historical point of view will point to this as one of the single biggest failures of the Obama administration to not hold to account that group. So yes, it's brutal to live through right now, but it is an incredibly important exercise to actually dredge up and figure out who needs to be held to account for what happened in the space. Yeah. I can't really tell if it's cathartic or just makes me angry and triggers emotions again, but either way, I think it's a good thing and that has to be our natural segue right here into what's happening at the Sam Bacon free trial. I actually signed up for the Wall Street Journal just to keep this update going on the recommendation of Misha, the producer. Never thought I would have a Wall Street Journal subscription again, but it is really great that they're just giving these constant updates on what's happening here. But nobody's better probably for giving the constant updates on what's happening here than you. Let me flip it around to you though. I was thinking about this. I would love, same way you asked me for kind of outside context, I have a lot to share sort of that has a little bit of insider perspective. What's your big broad strokes impression of sort of this testimony this week from Caroline and where it leaves things? Well, to be clear, I don't think it's really anything new. I think that a lot of it aligns with the assumptions that we had of how things were going. There's been previous articles extensively about the misbehavior there, the alleged fraud and all the things that were going on. But to hear it from the horse's mouth, so to speak, is really impactful. And so the levels that they went to just work outside the system to commit fraud, to lie to existing lenders, to lie to potential lenders, to lie to customers. It's very, very clear that this paints a picture of him as an outright criminal mastermind from day one. It's impossible to even look at his effective altruism without looking through it that lens. It really seems like as kind of ADHD and Ritalin and Adderall dependent that he was and all over the place, that there was a very direct focus on a goal that he had and he was willing to do anything to do it. They kind of talked about his utilitarian side of it and that he could lie and nobody else could because he had a goal. I just think from the outside, it's exceptionally clear this guy is guilty. He should go to jail forever and they should throw every book they have at him to make sure that nobody tries this again. Yeah. I think that the story is getting unbelievably clear. And to your point, a lot of it is what sort of has started to become working assumptions from the crypto industry, but that has really been articulated now. So if we look at last week and Gary Wang, I think that the biggest impact on the jury from that testimony will be how early these sort of activities started. Gary being asked to code the ability to the negative accounts all the way back in July of 2019. Gary kind of walking through that first Alameda was allowed to withdraw up to FTX's revenue, which is $150 million, and then that was increased to a billion, and then that was increased to infinite, $65 billion. That story. So we sort of got the dispassionate version of the story that's just, here's how Sam directed this to be put into code, the use of customer money. What we got from Caroline this week is how explicit it was, how acknowledged it was that this was customer money, how she knew throughout. And it was, you know, by all accounts eating her, you know, sort of psychologically that she knew that that was the only source of revenue. And so, you know, it was a hole that she was just directed to keep digging deeper and deeper and deeper. And I think that the sort of, you know, if Gary kind of gave the timeline, what we got from Caroline's testimony was that, to use your word, Sam really was the mastermind determining this from day one. It seems very intentional that it was the four people, you know, the three who have turned basically state's witness and Caroline who knew what was going on, that Sam always called into these meetings. And Trabuco, I've got to be in there, man. I don't know where this guy is, but we can talk about that later. Go ahead. Yeah. Yeah. And I think that the, you know, so you sort of have a dispassionate set of behaviors that are articulated. Then you have sort of a lot of color about Sam. You know, I mean, listen, Sam's, the argument that he didn't know what was going on was completely blown out of the water this week. And I think that the additional layer is we really started to get some worldview kind of color that I think will help jurors explain or understand how this could be. You know, Caroline explained something that had widely been my assumption, which was sort of an ends justifies the means kind of thing, that Sam held himself as fundamentally separate from the rest of the world. You know, this is sort of the biggest, angriest moment in the podcast that I did right after the whole thing went down, where I kind of imagined Sam sitting there, even now, as he had been caught, thinking the rest of the world was just too stupid to take power the way that he knew how, rather than all of us understanding that every day we're confronted with these decisions where we can do the right thing or do the wrong thing, and we decide not because the right thing is easier to do the f***ing right thing. And I think that that's really what was articulated as part of this as well, that he just didn't believe in the conception of lying or fraud. There was no such thing. It was all just, would it be a positive expected value calculation on his ability to impact things? You know, he was willing to play the most serious game and it exploded, you know, and this is one of the possible outcomes. So now he's got to kind of live in it. And I still believe he thinks he's innocent, to be quite honest. And one point that you made is that Caroline really blew a hole in the idea that he was not the mastermind, right? He's saying it was her fault, pointing fingers everywhere else. What it also blows a hole in is the idea that it was a small hole that maybe was a small mistake and then they just sort of, you know, tried to fill it and it got worse and worse and oh woe is me. That's actually to some degree what I believe happened with Voyager, right? I think Steve Ehrlich, and he talked about it even in the past, offering 9% to our customers. Well then Doge got popular, a million people signed up in a day and we had to find a way to give a million, now 2 million people, 9%. And that sets us further down the risk curve and the further down the risk curve you go, obviously, the bigger chance there is that you're going to blow up, victims of their own success, either the customers leave or you have to go further down the risk curve to offer that yield. So maybe in a situation like that, it was a snowball going downhill that just got bigger and bigger and bigger. This was 2019 before even the bull market for SPF, where he's put these systems in place. This wasn't like, oh, we blew up with Luna, what are we going to do and started committing fraud to fill the hole. This was fraud from the very beginning. It was a criminal enterprise set up to be that way. I think that the, you know, when the dust settles, what will be clear is that it turns out that for Sam, it was Alameda all along. Alameda was his personal fiefdom. It was his big financial power vehicle to do whatever he wanted to do. An opaque set of accounts that he could direct to politicians, to investments, to whatever. And even ultimately, as big as FTX got, it was still a subsidiary in his mind of Alameda, which was his personal power bank, you know, the bank for his power bank. And that's why he never even considered it was just a play to get customers to unknowingly fund his various world changing ventures. You know, I put that in serious air quotes there. Yeah, I know we have other stories to get to, but it's hard not to continue to talk this to death. I mean, there's some incredible highlights. SPF tried Thai sex worker wallets to unlock frozen funds before bribing Chinese officials. He ended up bribing Chinese officials to get OKX and Huobi accounts open that were frozen. I mean, there was literally no length this guy would stop at to avoid doing what he wanted, to your point. I mean, it's really crazy. He tried to go to the kingdom of Saudi Arabia and lie to them about an investment. Can you imagine? Yeah, we haven't even Saudi Arabia invested and then found out about this. Yeah, MBS doesn't exactly have the cleanest record of people who double crossed him. I don't know if that's the highest expected value calculation, Sam. No, I mean, what were the most to you? Like what were the most astounding revelations here? Was there anything like this? I mean, these are these are small details, of course, Thai sex worker. It makes for a good headline. But like there are things here that even you were like, wow. I think that the brazenness that I mean, the utter brazenness that like so there was a so John Ray in Michael Lewis's book, Lewis focuses on him very he's more critical of John Ray than he is of Sam, which is part of the reason people are so frustrated. But one of the things that John Ray said in that book is that there are kind of criminals who are born and criminals who are made, you know. And I think that what's interesting and this sort of is what you're saying, you were just painting a picture where for a lot of these institutions, they maybe just got in over their head. They made a stupid set of decisions that had sort of, you know, a cascade of impacts that they were caught up in their own, you know, problems. And that's sort of how it went down versus I set out to acquire, you know, the fact that he was explicitly trying to get finance targeted so that their customers like he was using he was trying to use the US government to shake down finance for FTX's benefit. Right. By the way, that ended up we haven't talked about how that ended up being the single thing that ultimately brought him down. You know, it's it's become not popular to talk about this fact, because obviously in the wake of, you know, Sam and CZ like CZ set the train in motion when he sent that tweet about FTT. Let's not deny it. They were playing a very serious game of who's got a who's got a bigger billionaire D that they can throw around and CZ bitch slap Sam into the next century. And it was because very clearly Sam had been running his mouth all over D.C. trying to use that very inelegantly. I mean, Sam was a two bit mafia wannabe, basically, you know. So I think that the brazenness really shows up. The Chinese official bribe is another area where it's just, you know, it is not a normal behavior for a kid who's in his first CEO ship within about a year of doing it to be willing to bribe Chinese officials. That is born criminal is arguably American ones as well. But we don't need to go there. James Murphy met a lawman yesterday, was on the show, and we're going to keep talking about this. We'll cook through the other stories in a minute, but pointing out yesterday that the buyout of CZ from FTX was with customer funds and theoretically could be for a massive clawback. Right. Well, that's I mean, that's a that's a whole thing that another dimension of this story, which is extremely problematic for for for other parts of this industry. And the other thing. So if we're let's let's segue to the other parts of the industry implications. That's a big one, right. Is what the estate is going to do vis-a-vis that sort of financing. Now, Binance is so on the ropes via, you know, vis-a-vis the U.S., you know, who knows how that'll that'll happen. But the other one is there are now big questions or people starting to ask questions about how much Genesis knew when. Right. And what that relationship looked like. Because, you know, the very prominently part of the most damning testimony from Caroline was that Sam very clearly knew to authorize, you know, to pay back Genesis with customer funds, which creates a clawback situation for them, which doesn't seem that there's any possible way that DCG could handle if that if that comes this way. You know, so. Yeah. And she created seven fake balance sheets to show to everyone, which in and of itself is slipping away for literally ever. I mean, this is a crazy part of the story that the balance sheet that triggered the whole thing. Right. Like I said, CZ threw it down the mountain with his FTT tweet. But, you know, it was started with the Coindesk report that was the sanguinized of the seven choices of balance sheets. The one that they had cooked that was the least damning was the one that still damned them. And it's insane. A fake balance sheet was enough to cause a complete cascade and death of FTX. Imagine if we had seen the real one. Obviously, we can't even imagine. One question that I have, I guess, last before we move on to Bill 2. Do you think that we'll see any of the politicians brought up in this trial? Gary Gensler, Maxine Waters, et cetera? I don't think so, because the prosecution has no interest in doing that and they've got him buried. Yeah, so so so exactly. So there's a couple of reasons why we won't. One is that to when you go after ultimately this the SDNY is not putting Congress on trial right now, even if they'd like to. And when you go after that type of target, you have to have it dead to rights. And I don't believe I believe that there's probably a lot of messages out there where Sam was sort of intimating bribes or, you know, but I would be very surprised if there was actual sort of full on like Chinese official bribery behavior yet. Now, give him one. You just gave him donations. You can do that much easier here. Give him give him one more election cycle. And I mean, listen, even when it happened, I think to the extent that we want to find some solace in this situation, the amount of power that Sam was able to accrue in about 18 to 24 months coming from zero from a standing start is so unbelievable relative to anything we've seen basically in modern history, that the horror of imagining him being able to accumulate power for three or four more years before being found out one another crypto cycle probably would have cleaned up the I wouldn't have cleaned up the balance sheet, but it would have made FTX able to handle things. You know, it would have gone through that sort of like, oh, yeah, they were bad in the past, but like they were able to kind of clean it up. So I don't know if we could take any solace to the fact that this every every day that it would have gone on longer would have been much potentially worse for the world. Absolutely. Absolutely. And the final thing before we move on, how much impact do you think it had on the last market cycle as far as the price of the assets? We saw a revelation that he had told Caroline to keep Bitcoin under 20,000. I kind of reread that. I don't think that's really what he was saying. I think he was saying sell, keep selling above 20,000. Exactly. So I don't think that he was purposely manipulating the price, as maybe you've seen, on X. But do you think that this behavior and FTT being in the market and all of the VC activity they did with FTX customer funds dramatically impacted the structure of the last cycle? One hundred percent. Absolutely. I mean, you've you've you've even seen post the collapse of FTX how much more organic market movements have looked right. I mean, it just it took out this force like where the even without the intention to goes explicitly manipulate market prices, which, frankly, like, you know, if we got Sam Trabuco's testimony, I would be very surprised if there wasn't some amount of actual straight up market manipulation attempts.
The Breakdown
A highlight from SBF Trial, ETF Progress, JPM Onyx Milestone: The Crypto Weekly Recap
"Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Saturday, October 14th, and that means it's time for the weekly recap. Before we get into that, however, if you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link at the show notes or go to bit .ly slash breakdown pod. Hello, friends. Happy weekend. Today, I have another conversation between Scott Melker and I. This was recorded yesterday morning, and there are a couple of things that I think you will find valuable in here. One, although we do spend a fair bit of time on the SPF trial, as opposed to just giving the play -by -play, which I've been doing on the show, this is a lot more a subjective reading and interpretation of the events, what they mean for the industry, what I think we learned. So in true weekly recap fashion, I think it does a little bit more of that. Now, the second topic that I think will be of interest to a lot of you is JP Morgan and real world assets. We had some interesting news there. And finally, there is a little bit of ETF intrigue and what might be happening on that front. So friends, I hope you enjoy this. Let's dive in. NLW Men, how are you today? I am good. I'm having a great week, better than a lot of the weeks of people we're going to talk about today. I'll tell you that. For sure. I don't think Sam's having a great week. And there's someone else we have to give an honorable mention to who's finally having a bad week. And that, of course, is Steve Ehrlich from Voyager Digital. You guys may not have seen this, but he's being sued by the CFTC for fraud, for neglect, negligence of customer assets, for lying about FDIC insurance, for taking risky bets while saying that customers assets were safe and they were only taking safe bets. He told this to me personally via text message and phone and on interviews almost until the last day. I was unable to withdraw crypto unlike everyone else who could have gotten their assets out because Voyager had done me a favor and put protection on my account that they refused to lift for two months that I asked them to when I saw problems with Celsius. I have a personal feeling about this, but I think the worst part, and Nathaniel maybe is someone who's slightly outside the situation, give me some perspective, but the worst part is that everybody knows that Voyager declared bankruptcy to protect the executives from criminal charges, right? It was pretty clear at the time they could have just liquidated the assets. We would have gotten roughly 75 cents on the dollar, but instead to protect themselves from suits that had already been filed so those would be erased and suits they knew were coming, every insider knows this, they decided to declare bankruptcy. We ended up getting back 35 % of the assets, but really 24 % of the value on the day that it happened. This is a civil charge, of course, so he still is criminally protected, but to see him get in trouble anyways after doing all of that to us just to protect himself gives me extreme mixed emotions. I mean, how do you view this as like, I guess, a third party who was not luckily a creditor to Voyager? Yeah, so a couple things. One is I think that this is going to get us nicely into, I think, the SPF case as well. The consequences for this set of executives is incredibly important for the evolution of this industry, right? And I think that the mixed emotion of it probably should have been worse, but at least there is this set of actions which could result in not just penalties financially and things like that, but real prohibitions on what this person is able to do in markets in the future is important. I think that for a little while, and this is sort of, again, a preview of what I'll say about about SPF too, for a little while, I think that the crypto industry is going to have to just deal with the fact that there is more evidence that it's just sort of full of scams and frauds like the critics have always claimed. But in the long run, what these cases are actually serving to point out is that it's not just the industry being inherently or a priori dirty, it's specific people making specific decisions to lie, to commit fraud, to change balance sheets, to do things that regardless of the industry would be fraudulent, would be criminal. And ultimately in the long run, especially as a new wave of actors comes in, both from the traditional financial sector and a new class of entrepreneurs who are going to specifically, I think, position themselves as the opposite of this generation of folks, it will be important that we have on record that what happened was specific instances of fraud and criminal behavior, not just that's what happens in crypto. It will also be really important as a deterrent for future actors who come in to realize that there is punishment for these actions, even if it's in the unregulated wild west of crypto. Yeah, listen. That's a very important part because we've seen Mashinsky, we've seen SPF, of course, maybe BlockFi, we haven't seen anything yet. I don't know if there's anything to see there, but it is nice at least to see this in the press and that people don't see Ehrlich completely skate by as if nothing happened and there was no dereliction of duty here. What's crazy is the guy hasn't spoken a word since any of it happened. And he had a statement today, the talented management team at Voyager created and maintained our platform in full compliance with the existing regulatory structure. Our team consistently communicated and worked closely with our regulators when literally everybody knows that the risk management team was just left out of every decision. There's been reports of it, that it was literally like, Steve decides we need yield. We're going to go do this. It's Steve. Everyone said that. And so like, listen, his quote is the exact one that his lawyer would write up, obviously, and send out on a PR release and then we won't hear anything else. But these people have to at least be punished in the court of public opinion, even if it's not a huge fine or if he has no money or if he doesn't go to jail, people need to see this in the press. I mean, we saw how much of American politics, like the broad American politics was shaped by the lack of consequences for the financial industry in 2008, a huge part. You're talking Occupy Wall Street on one side. You're talking about the Tea Party on the other. This was a major, major impact because I think that many people who have kind of a historical point of view will point to this as one of the single biggest failures of the Obama administration to not hold to account that group. So yes, it's brutal to live through right now, but it is an incredibly important exercise dredge to actually up and figure out who needs to be held to account for what happened in the space. Yeah. I can't really tell if it's cathartic or just makes me angry and triggers emotions again, but either way, I think it's a good thing and that has to be our natural segue right here into what's happening at the Sam Bacon free trial. I actually signed up for the Wall Street Journal just to keep this update going on the recommendation of Misha, the producer. Never thought I would have a Wall Street Journal subscription again, but it is really great that they're just giving these constant updates on what's happening here. But nobody's better probably for giving the constant updates on what's happening here than you. Let me flip it around to you though. I was thinking about this. I would love, same way you asked me for kind of outside context, I have a lot to share sort of that has a little bit of insider perspective. What's your big broad strokes impression of sort of this testimony this week from Caroline and where it leaves things? Well, to be clear, I don't think it's really anything new. I think that a lot of it aligns with the assumptions that we had of how things were going. There's been previous articles extensively about the misbehavior there, the alleged fraud and all the things that were going on. But to hear it from the horse's mouth, so to speak, is really impactful. And so the levels that they went to just work outside the system to commit fraud, to lie to existing lenders, to lie to potential lenders, to lie to customers. It's very, very clear that this paints a picture of him as an outright criminal mastermind from day one. It's impossible to even look at his effective altruism without looking through it that lens. It really seems like as kind of ADHD and Ritalin and Adderall dependent that he was and all over the place, that there was a very direct focus on a goal that he had and he was willing to do anything to do it. They kind of talked about his utilitarian side of it and that he could lie and nobody else could because he had a goal. I just think from the outside, it's exceptionally clear this guy is guilty. He should go to jail forever and they should throw every book they have at him to make sure that nobody tries this again. Yeah. I think that the story is getting unbelievably clear. And to your point, a lot of it is what sort of has started to become working assumptions from the crypto industry, but that has really been articulated now. So if we look at last week and Gary Wang, I think that the biggest impact on the jury from that testimony will be how early these sort of activities started. Gary being asked to code the ability to the negative accounts all the way back in July of 2019. Gary kind of walking through that first Alameda was allowed to withdraw up to FTX's revenue, which is $150 million, and then that was increased to a billion, and then that was increased to infinite, $65 billion. That story. So we sort of got the dispassionate version of the story that's just, here's how Sam directed this to be put into code, the use of customer money. What we got from Caroline this week is how explicit it was, how acknowledged it was that this was customer money, how she knew throughout. And it was, you know, by all accounts eating her, you know, sort of psychologically that she knew that that was the only source of revenue. And so, you know, it was a hole that she was just directed to keep digging deeper and deeper and deeper. And I think that the sort of, you know, if Gary kind of gave the timeline, what we got from Caroline's testimony was that, to use your word, Sam really was the mastermind determining this from day one. It seems very intentional that it was the four people, you know, the three who have turned basically state's witness and Caroline who knew what was going on, that Sam always called into these meetings. And Trabuco, I've got to be in there, man. I don't know where this guy is, but we can talk about that later. Go ahead. Yeah. Yeah. And I think that the, you know, so you sort of have a dispassionate set of behaviors that are articulated. Then you have sort of a lot of color about Sam. You know, I mean, listen, Sam's, the argument that he didn't know what was going on was completely blown out of the water this week. And I think that the additional layer is we really started to get some worldview kind of color that I think will help jurors explain or understand how this could be. You know, Caroline explained something that had widely been my assumption, which was sort of an ends justifies the means kind of thing, that Sam held himself as fundamentally separate from the rest of the world. You know, this is sort of the biggest, angriest moment in the podcast that I did right after the whole thing went down, where I kind of imagined Sam sitting there, even now, as he had been caught, thinking the rest of the world was just too stupid to take power the way that he knew how, rather than all of us understanding that every day we're confronted with these decisions where we can do the right thing or do the wrong thing, and we decide not because the right thing is easier to do the f***ing right thing. And I think that that's really what was articulated as part of this as well, that he just didn't believe in the conception of lying or fraud. There was no such thing. It was all just, would it be a positive expected value calculation on his ability to impact things? You know, he was willing to play the most serious game and it exploded, you know, and this is one of the possible outcomes. So now he's got to kind of live in it. And I still believe he thinks he's innocent, to be quite honest. And one point that you made is that Caroline really blew a hole in the idea that he was not the mastermind, right? He's saying it was her fault, pointing fingers everywhere else. What it also blows a hole in is the idea that it was a small hole that maybe was a small mistake and then they just sort of, you know, tried to fill it and it got worse and worse and oh woe is me. That's actually to some degree what I believe happened with Voyager, right? I think Steve Ehrlich, and he talked about it even in the past, offering 9 % to our customers. Well then Doge got popular, a million people signed up in a day and we had to find a way to give a million, now 2 million people, 9%. And that sets us further down the risk curve and the further down the risk curve you go, obviously, the bigger chance there is that you're going to blow up, victims of their own success, either the customers leave or you have to go further down the risk curve to offer that yield. So maybe in a situation like that, it was a snowball going downhill that just got bigger and bigger and bigger. This was 2019 before even the bull market for SPF, where he's put these systems in place. This wasn't like, oh, we blew up with Luna, what are we going to do and started committing fraud to fill the hole. This was fraud from the very beginning. It was a criminal enterprise set up to be that way. I think that the, you know, when the dust settles, what will be clear is that it turns out that for Sam, it was Alameda all along. Alameda was his personal fiefdom. It was his big financial power vehicle to do whatever he wanted to do. An opaque set of accounts that he could direct to politicians, to investments, to whatever. And even ultimately, as big as FTX got, it was still a subsidiary in his mind of Alameda, which was his personal power bank, you know, the bank for his power bank. And that's why he never even considered it was just a play to get customers to unknowingly fund his various world changing ventures. You know, I put that in serious air quotes there. Yeah, I know we have other stories to get to, but it's hard not to continue to talk this to death. I mean, there's some incredible highlights. SPF tried Thai sex worker wallets to unlock frozen funds before bribing Chinese officials. He ended up bribing Chinese officials to get OKX and Huobi accounts open that were frozen. I mean, there was literally no length this guy would stop at to avoid doing what he wanted, to your point. I mean, it's really crazy. He tried to go to the kingdom of Saudi Arabia and lie to them about an investment. Can you imagine? Yeah, we haven't even Saudi Arabia invested and then found out about this. Yeah, MBS doesn't exactly have the cleanest record of people who double crossed him. I don't know if that's the highest expected value calculation, Sam. No, I mean, what were the most to you? Like what were the most astounding revelations here? Was there anything like this? I mean, these are these are small details, of course, Thai sex worker. It makes for a good headline. But like there are things here that even you were like, wow. I think that the brazenness that I mean, the utter brazenness that like so there was a so John Ray in Michael Lewis's book, Lewis focuses on him very he's more critical of John Ray than he is of Sam, which is part of the reason people are so frustrated. But one of the things that John Ray said in that book is that there are kind of criminals who are born and criminals who are made, you know. And I think that what's interesting and this sort of is what you're saying, you were just painting a picture where for a lot of these institutions, they maybe just got in over their head. They made a stupid set of decisions that had sort of, you know, a cascade of impacts that they were caught up in their own, you know, problems. And that's sort of how it went down versus I set out to acquire, you know, the fact that he was explicitly trying to get finance targeted so that their customers like he was using he was trying to use the US government to shake down finance for FTX's benefit. Right. By the way, that ended up we haven't talked about how that ended up being the single thing that ultimately brought him down. You know, it's it's become not popular to talk about this fact, because obviously in the wake of, you know, Sam and CZ like CZ set the train in motion when he sent that tweet about FTT. Let's not deny it. They were playing a very serious game of who's got a who's got a bigger billionaire D that they can throw around and CZ bitch slap Sam into the next century. And it was because very clearly Sam had been running his mouth all over D .C. trying to use that very inelegantly. I mean, Sam was a two bit mafia wannabe, basically, you know. So I think that the brazenness really shows up. The Chinese official bribe is another area where it's just, you know, it is not a normal behavior for a kid who's in his first CEO ship within about a year of doing it to be willing to bribe Chinese officials. That is born criminal is arguably American ones as well. But we don't need to go there. James Murphy met a lawman yesterday, was on the show, and we're going to keep talking about this. We'll cook through the other stories in a minute, but pointing out yesterday that the buyout of CZ from FTX was with customer funds and theoretically could be for a massive clawback. Right. Well, that's I mean, that's a that's a whole thing that another dimension of this story, which is extremely problematic for for for other parts of this industry. And the other thing. So if we're let's let's segue to the other parts of the industry implications. That's a big one, right. Is what the estate is going to do vis -a -vis that sort of financing. Now, Binance is so on the ropes via, you know, vis -a -vis the U .S., you know, who knows how that'll that'll happen. But the other one is there are now big questions or people starting to ask questions about how much Genesis knew when. Right. And what that relationship looked like. Because, you know, the very prominently part of the most damning testimony from Caroline was that Sam very clearly knew to authorize, you know, to pay back Genesis with customer funds, which creates a clawback situation for them, which doesn't seem that there's any possible way that DCG could handle if that if that comes this way. You know, so. Yeah. And she created seven fake balance sheets to show to everyone, which in and of itself is slipping away for literally ever. I mean, this is a crazy part of the story that the balance sheet that triggered the whole thing. Right. Like I said, CZ threw it down the mountain with his FTT tweet. But, you know, it was started with the Coindesk report that was the sanguinized of the seven choices of balance sheets. The one that they had cooked that was the least damning was the one that still damned them. And it's insane. A balance fake sheet was enough to cause a complete cascade and death of FTX. Imagine if we had seen the real one. Obviously, we can't even imagine. One question that I have, I guess, last before we move on to Bill 2. Do you think that we'll see any of the politicians brought up in this trial? Gary Gensler, Maxine Waters, et cetera? I don't think so, because the prosecution has no interest in doing that and they've got him buried. Yeah, so so so exactly. So there's a couple of reasons why we won't. One is that to when you go after ultimately this the SDNY is not putting Congress on trial right now, even if they'd like to. And when you go after that type of target, you have to have it dead to rights. And I don't believe I believe that there's probably a lot of messages out there where Sam was sort of intimating bribes or, you know, but I would be very surprised if there was actual sort of full on like Chinese official bribery behavior yet. Now, give him one. You just gave him donations. You can do that much easier here. Give him give him one more election cycle. And I mean, listen, even when it happened, I think to the extent that we want to find some solace in this situation, the amount of power that Sam was able to accrue in about 18 to 24 months coming from zero from a standing start is so unbelievable relative to anything we've seen basically in modern history, that the horror of imagining him being able to accumulate power for three or four more years before being found out one another crypto cycle probably would have cleaned up the I wouldn't have cleaned up the balance sheet, but it would have made FTX able to handle things. You know, it would have gone through that sort of like, oh, yeah, they were bad in the past, but like they were able to kind of clean it up. So I don't know if we could take any solace to the fact that this every every day that it would have gone on longer would have been much potentially worse for the world. Absolutely. Absolutely. And the final thing before we move on, how much impact do you think it had on the last market cycle as far as the price of the assets? We saw a revelation that he had told Caroline to keep Bitcoin under 20 ,000. I kind of reread that. I don't think that's really what he was saying. I think he was saying sell, keep selling above 20 ,000. Exactly. So I don't think that he was purposely manipulating the price, as maybe you've seen, on X. But do you think that this behavior and FTT being in the market and all of the VC activity they did with FTX customer funds dramatically impacted the structure of the last cycle? One hundred percent. Absolutely. I mean, you've you've you've even seen post the collapse of FTX how much more organic market movements have looked right. I mean, it just it took out this force like where the even without the intention to goes explicitly manipulate market prices, which, frankly, like, you know, if we got Sam Trabuco's testimony, I would be very surprised if there wasn't some amount of actual straight up market manipulation attempts.
The Breakdown
"sam trabuco" Discussed on The Breakdown
"And now a word from our sponsor. Now, from there, we got to one of the craziest parts of the testimony, which actually is not even really supposed to be the subject of this trial, because it's going to come up in a separate trial that Sam will face at the beginning of next year. The context and setup for this part of the testimony was the prosecution talking about using signal and self-deleting message apps as a primary way of communicating. And when Caroline was asked to recall an example when speaking in coded terms was deployed at the firm, it prompted one of the more insane stories to have come out of the whole affair, and one which, as Matt Walsh put it today, makes it extra sad how crappy Michael Lewis's Sam apologist home was. So Caroline began to explain what happened when, quote, Alameda paid what I believe was a large bribe to Chinese government officials to get some of our exchange accounts unlocked. Apparently, in 2021, Alameda had around $1 billion in funds frozen across Huobi and FTX. They were told the funds were frozen due to a Chinese government money laundering investigation, which was looking into a former Alameda trader. Alameda engaged lawyers in China but were unsuccessful in getting the funds released. After that failed, Caroline claimed that, quote, on OKX we made several accounts using the IDs of different people who I believe were Thai prostitutes. Alameda then attempted to conduct very imbalanced trades against these accounts using their frozen funds. The hope was that they could use what had become known as the Thai prostitute accounts to make money and be able to withdraw it. Ultimately, this strategy was unsuccessful, so Alameda turned their attention to doing things the, quote, David Ma Wei. The Alameda employee had apparently suggested that they simply bribe their way out of the situation. Now, another Alameda employee named Handy, who is the daughter of a Chinese government official, objected to this course of action, saying she thought it was a bad idea and would get us in trouble. During the discussion about what should be done, Sam apparently yelled at Handy and told her to, quote, shut the F up. Handy quit shortly afterwards. Caroline then told the court that Alameda forged on with the bribery plan, distributing around $100 million across a number of crypto addresses in November 2021. The funds were released, but Handy's split with the firm was acrimonious. At one stage during a months-long dispute about severance payments, Sam Trabuco, who was then co-CEO of Alameda, wrote to the executive team, did Handy's father immediately turn us in or something? SPF simply replied, lol. This whole incident and the negative $150 million that were spent on these bribes ultimately made it to a spreadsheet as, quote, the thing. Now, again, this wasn't necessarily supposed to be the subject of this trial. And after a lengthy sidebar, the judge ended up explaining to the jury that Sam isn't on trial for this conduct and that they should only consider it as evidence of motive. From there, prosecutors moved back to the summer and fall of 2022 and the desperate attempt to keep FTX afloat by gathering additional funds. At that time, FTX was in the middle of acquiring crypto lender BlockFi. Caroline said that, quote, Sam suggested that we could get some of either BlockFi to loan more money to Alameda or get BlockFi's assets moved on to FTX. Caroline was asked about her relationship with Sam at the time, and she said that they had broken up a few months prior and that she was trying to avoid spending much time with him or attending one-on-one meetings. In August, however, they had an in-person discussion about the state of Alameda's finances. According to Caroline, Sam started saying that he thought Alameda should have hedged way more earlier in the year and that it was a big mistake and that it was my fault and that I was largely responsible for the financial situation that Alameda had ended up in. The meeting apparently got very tense, with Sam ending up screaming at her and Caroline ending up crying. Later in the fall, Alameda did hedge by shorting several billion dollars worth of Nasdaq futures, using two billion dollars of collateral to put on the position, which Caroline admitted came once again from FTX customers. Now hedging was the first item on Caroline's infamous Things Sam is Freaking Out About list, which she said was updated frequently. The list was placed into evidence and included attempting to acquire or buy stock in Snapchat and trading Japanese government bonds. Another point on the list was, quote, getting regulators to crack down on Binance. To that point, Caroline said that Sam, quote, thought that was one of the best potential ways for FTX to improve its market share. He said that if there was regulatory action taken against Binance, that a lot of Binance customers might move to FTX. And various regulators had been promising him that this would happen for a while, but it never happened. Another detail that came out through her testimony was just how intentional Sam had been in cultivating the image of himself with the scruffy hair and the crappy car. Indeed, apparently when they got to the Bahamas, Caroline and Sam were both assigned luxury company cars, but Sam had them downgraded to a Toyota Corolla and a Honda Civic because he thought it was better for their image. The prosecution also discussed a range of political and charitable donations that were made throughout 2022, including some made after external loans were repaid in June, implying strongly that they were made after Sam knew the only source of capital was customer funds. Now coming into the final week of the company, when customers were withdrawing funds at a rate of over $100 million per hour, Caroline said, I was terrified. This is what I had been worried about for the past several months and it was finally happening. I thought that at this point, everything about FTX and Alameda was going to come out. Caroline discussed some of the damage control that was being done as the deposit run escalated. She said that she found Sam's communication misleading, specifically when he had tweeted FTX is fine, assets are fine. Sam had also posted that delays in processing withdrawals were just related to anti-spam checks and capacity issues, but Caroline said, I believe the primary problem was that FTX just didn't have enough assets to process all the withdrawals. And indeed, at the same time that he was making public statements that FTX had enough assets to cover customer withdrawals, Caroline said that he privately acknowledged that they only had enough to cover about one third of deposits. Now, one of the pivotal moments that you might remember from that whole thing was when in the wake of Binance CEO CZ saying that he was going to sell their holdings of FTT, Caroline responded that Alameda would buy it all at $22, which basically everyone agreed was a stupid decision as soon as we saw it. But the new revelation wasn't just that it was dumb, but that it was originally drafted by Sam himself and workshopped with Nishad as well. Apparently, after spending around $100 million, Sam made the call to give up on defending FTT's price. The prosecution then introduced a text conversation between Caroline and Sam from the last Monday at FTX as customer withdrawals had hit their peak. Earlier, Caroline had written to Sam, if things got a lot worse, I don't think I'm going to handle it well. She replied to her own comment and wrote, that was such a bad prediction. This is the best mood I've been in in like a year, to be honest. Sam responded, wow, congrats because shit's exciting. Caroline replied, When asked why she shared these feelings with Sam, Caroline said, Now in terms of how those tears went over, YouTuber Coffeezilla tweeted, Now, Caroline is back for the bulk of her cross-examination today. And after that, it's expected the prosecution will call BlockFi CEO Zach Prince as their next witness. See, they said that the cross-examination has anything other than just the judge being really upset at the defense. I will, of course, cover it on a future show. But overall, obviously, this was devastating to pretty much all of Sam's arguments. Sam's defense has rested on two things. Some combination of I didn't mean to break any laws and I didn't actually know what was going on on Alameda. It's nearly impossible, I think, to hear this testimony and believe that Sam didn't know what was going on at Alameda. Basically, at any point. On top of that, which I think we all assumed, I resonate strongly with what Zeke Fox wrote when he said, Simply put, this was a guy who not only didn't believe that the rules applied to him, but that the very idea of rules was a false construct. One for sillier, stupider people. But so far, everything in this case subsequent to the collapse has suggested that, yes, Sam, the rules apply to you, too. Anyways, guys, a crazy couple days at the SPF trial. It certainly drowned out pretty much everything else going on. Hopefully, tomorrow we will have something to discuss that's not just former crypto cycle drama. But for now, that's going to do it. I appreciate you guys listening, as always. And until next time, peace.
The Bitboy Crypto Podcast
"sam trabuco" Discussed on The Bitboy Crypto Podcast
"Speaking of terrible, here's one of the shirts that came out of Wuhan recently. Oh, my God, dude. Geez, that's a little much. That one was a little much. All right. You know what? I think we need to talk about FTX here. So since the collapse, Trabuco, you know, he's one of the co-CEO here. Co-CEO knew about the bribe because he was in the signal chat where it was discussed. So Trabuco, he's remained conspicuously silent. Adding to the intrigue, the opulent yacht recently surfaced in the bankruptcy discussions with bank men suggesting Trabuco discreetly quiet quit. Ellison also highlighted the descent of a former trader known as Handy. Handy was very popular at the polycule, by the way. Handy expressed unease over the alleged bribes when Handy confided in Ellison and she told her boss SBF alleged retort was a curt. Shut the fuck up. OK, I didn't want to say it there. While the judge permitted this testimony, the jury was reminded it wasn't a formal charge. I thought it was I thought that said a different word right there, too. That's that's where my brain went. I'm sorry. It's like PUSD coin anyways. All right. With Trabuco's name now splashed across the trial, associating him with the rumored bribery of Chinese dignitaries, his fate hangs in the balance. Although four top tier officials have extended the cooperation of the prosecution, there's still this shroud of mystery surrounding Trabuco's involvement, much like the shroud of mystery that surrounds a Thai prostitute. But surrounding this, even if he's under scrutiny. I didn't need to do that, did I? You just can't let it go. It was there. It was hanging low. It was low hanging. Adam's apple and the elbows. That fruit was right there. It was just hanging right there. I know. Just going right up and I'm knocking it over. Anyways, rumors are swirling that he might be evading the spotlight, living it up on his lavish yacht. Dubs, soak my deck. He did have a look. He had a former Magic the Gathering back. Am I? Am I in love with Sam Trabuco now? Does this guy not kind of sound kind of awesome? I mean, he played Magic the Gathering. He's got a MTG pun. I mean, pun on his yacht. Yeah. The dude's living kind of like John McAfee lifestyle. Minus the hammocks, hopefully. Yeah, hopefully. And then he's got... Not that there's anything wrong. There is something wrong with that, actually. A yacht. Soak my deck. That's kind of awesome. All right. Well, you know what? That begs the question here. Where in the world is Sam Trabuco? Yeah, he is a Grand Theft Auto character at this point, in my mind. Yeah, in a good way. He would be a mission. He would give you missions. Like, oh, let's go see Sam on his yacht. Yeah, this is going to be the character in the movie that's going to be played by, like, the Justin Timberlake style. He's like a little bit too much swag. It's the sea of nerds, the DNGs, the dorks, nerds, geeks, the sea of DNGs. And then you're going to have him. He's like still a nerd. But in that scenario, he's like Chad. He would be like Michael Cera. Michael Cera would play him, but he would be like somehow the coolest of the nerds. Like Michael Cera and this is the end. Yeah, yeah, yeah. Like cool Michael Cera. You know, he does. That's a funny movie. That is a funny movie. All right. Don't threaten. Hey, Deadwood says veteran crypto. Don't threaten me with a good time. They come out here. I'll call it early Christmas. All right. Careful who we speak of. We don't want to be Hillary. I don't get the reference there. What does that mean? What does that mean? Kind of sounds like a very qualified presidential candidate. Am I? You know, I mean, a lot of votes, right? You know, didn't collapse on 9-11. Anyways, we have Jesse Powell. Love this guy. Yeah. We love Jesse Powell here. We're big Jesse Powell fans. We're a fan of all the slack channels in his company as well. We told investors this when they came to when your competitor seems to be eating your lunch. Sometimes it's actually just fraud. I remember those times. Turns out not having those pesky thing like laws or not robbing your customers can allow you to ship faster and grow your KPIs. We told investors this. No controls plus fraud. To them, the efficiency was evidence they had something special, a secret sauce, not like the polycule sauce, something that allowed them to operate at 20x speed with 120th the staff. Kraken and Coinbase must just be bloated, uncreative, lazy, and bureaucratic. So the signs were there. You know, if something's too good to be true, probably is. All right, FTX. There's an Ellison to-do list that she had sought regulators. One of them cracked down on Binance. Get the regulators to turn their eye towards CZ in his fast, great pickup. Sorry, his push-up form. You guys see his push-ups? No. Man, it is freaking speed, dude. The guy's in shape. He's got a great form. Something about tech billionaires. You know, they went from slovenly like limp-wristed pencil necks. And all of a sudden, what was the genesis of this? What started it? I think it was JB. Bezos kind of set the tone for I'm going to be the HGH, the Lex Luther of CEOs. Because before that, it was like Steve Jobs, who's essentially like a testicle. And then Steve Ballmer, who's like this sweaty, used car salesman. And then Steve Jobs, who was kind of like this wayfish narcissist who didn't eat meat. So that was who you were looking at. And then Jeff Bezos was like, hmm, I see that. You're right. Elon Musk was also kind of this like hairless nerd. It was like the nakedest photo from Kim Possible. I remember. You're right. It was this photo. When this photo came out, that's when it happened. Yeah, Mark Zuckerberg was like, oh my God. Yeah, with Jeff Bezos, he freaked everybody out. You know, their penis inverted. You know, they're like, oh my God, I can't be in the same room as this guy unless I start doing some grappling with Lex Friedman.
The Bitboy Crypto Podcast
"sam trabuco" Discussed on The Bitboy Crypto Podcast
"Do you guys remember when Jeff Bezos got hacked? Oh, yeah. They hacked Jeff Bezos' phone and that's how they found the naked photos of Jeff Bezos. Wait, there's naked photos of Jeff Bezos? He did a very good job of suppressing that. Well, he owns Washington Post and he had a firm hand in burying that story. A firm hand in it. He had a firm hand in burying it. Were these like, was he thirst trapping? I never watched it. I never saw it. Usually something like that happens. Like you can't help but see it on the timeline. So I'd be like, ah, I didn't want to see it. Someone in the chat look it up. No. No. No. But anyways, I was going to say he got hacked by a MBS text. Yeah, probably through Pegasus. I think it was when they buried malicious code inside a JPEG. They sent him a picture. That's Pegasus in the NSO group. Shout out to Drew. I'm good. I'm doing a refresher on that. That's coming out in the next two weeks. MBS. Oh, blockchain basement. I think I have to go with that one. A zero click infiltration spyware device called Pegasus where all it has to do is be put onto your phone. You don't even have to accept it. Yep. It basically just shows up as a text message. You have to click a link and then it has all the access to everything on your phone. It's called Pegasus. Very scary. All right. Also, it's a good creature type in Magic the Gathering. All right. Well, back to Ellison here. I was going to say speaking of crew. I'm not even going to say that one there. Speaking of Ellison's emotional state here, she mentioned feeling a sense of relief when the business was failing as she no longer had the lie. She also stated that after all the financial maneuvers, FDX only had 4 billion to cover $12 billion in customer holdings. As for October 11th, according to a report, one of the most pivotal moments came when she testified that her notes from a conversation with SPF included a directive to keep selling Bitcoin if it's above 20K, a revelation that gives significant implications for the allegations of market manipulation. You know who was pissed off about that, Nick? Was the miners. I saw a lot of miners saying, look, it was very difficult at that moment because, you know, the fall in price didn't really change, you know. With the hash rate. The hash rate too much. And so it was still very expensive to mine that Bitcoin. And, you know, these people were losing money, losing money trying to mine that Bitcoin, especially, you know, you get a block reward at a $17,000 Bitcoin and you're like, shit, I just paid $20,000 in electricity. And so a lot of people are upset about that. Well, also there's more. There's also a bribery bombshell, Thai sex worker scandal. Oh my God. Guys, this story's getting thick, right? It's getting a little crazy. It's getting juicy. I got to say, Sam Trabuco, out of anyone at FTX, Sam Trabuco has the look of being the most likely to hire a Thai lady boy. Let's not have a whole like Elon Musk, Thai submarine moment. I wasn't even going to go there and you did.
Crypto Banter
"sam trabuco" Discussed on Crypto Banter
"All right, let's talk about sweet Caroline and how her testimony may actually send SBF to jail for life. I want to know from you, how many years do you think that SBF, tell me before, let's talk about it now before in the comments, how many years do you think SBF is going to do? Tell me now, and then tell me again after we talk about, after we talk about the next section. So I want you to tell me in the comments, I want you to tell me how many years you think SBF will do. Either he's going to do life or he's going to do 20, 30, 40 years, or he's going to get away scot-free. Let me know in the comments, what you think. Just before we get into the Caroline story and before I want to just, I just, I just want to remind you guys. I know a lot of you guys have been talking to me about the bybit lucky draw. Don't forget the bybit lucky draw. If you don't have an account, get an account. If you get an account on bybit, you sign up, you deposit a hundred and trade 500, get 30 bucks, deposit a thousand, get 2000. You can get huge signup on his, but more importantly, right now they've got this lucky draw and you do certain things. You get a, you can win an iPhone, you can win an Apple watch. All you do is you do certain things and then you press the spin button and then you can win all these things. I think it's a great, great, great, great, great campaign. All right, let's talk about Caroline. Let me know. Okay. I see Jafit says 17 years. Lim Eugene says forever. Carl Fowler says 10. Blacksell says 12. GM says 20. Dave Roy says 10. Now let's go into what Caroline actually said yesterday. Okay. So what happened yesterday? It was mind boggling and sorry guys, just remember, by the way, if we get to 1200 likes and I see we've very, very, very, very, very close, then I'm going to show you the indicator that shows me that this, that it's been worrying me. It's turned from a worry into an opportunity. I'm very happy. And I'm going to show you why it could be, it could explode the bull market. So I haven't forgotten about that. 1,200 likes. I see we, we, we pretty much there. We're pretty much there. All right. So this was Caroline's testimony yesterday. This is why I think she may put her ex boyfriend in prison for life yesterday. She took the stand again. Okay. Let me tell you, it was mind boggling what came out of there. It was mind boggling. Not only, not only did she admit to manipulating the markets and trying to keep Bitcoin under 20,000 using your money. If you were on FTX, she doctored different internal external versions of Alameda's balance sheet that removed certain line items that included FTT tokens in the balance sheet. I'll show it in a second. She admitted that there was a Chinese bribe in order to draw $1 billion stuck on OKX. Alameda used wallets of Thai prostitutes on the exchange. Caroline said Ryan Salami confirmed identities of the Thai prostitutes. Caroline referred to the bribe as the thing. Trabuco knew about the bribe. He was in the signal chat. Sam yelled at Caroline and made a cry saying it was her fault. Alameda was in such bad condition. Sam wanted to raise a billion dollars from the Saudi prince to help fill the hole. And okay, I'm going to show you some other things here. So that's what happened yesterday. I mean, I want you to understand how delusional SPF was. So SPF had a shopping list, okay, or a wish list on his wish list. Get this. He wanted to buy Snapchat. He wanted to buy BlockFi. Eventually did buy BlockFi, but the deal didn't work out. He bailed them out. And then he said he wanted to be president. And when he said he wanted to be president, the judge, the prosecutor was like, president of what? Like, just confirm that me and you are seeing the same thing, that he actually wanted to be president of the United States. Because I mean, the guy is absolutely fucking delusional. Anyway, here is why she may actually put her boyfriend in jail for life. This comes from inner city press. Let me make go here. I think it's just easier to watch. And we can watch together. Just as soon as I put my volume on. Sam Beckman free trial. And it's great. We are Matthew Russell Lee inner city press here during a break in the Sam Beckman free trial. And it's been a doozy. It's been a doozy. Carolyn Ellison on the stand today, October 11th. And it finally got into the Chinese bribes. Now this is a count that the Bahamas has put on ice, said that they didn't agree to it when he was extradited. And it seems like they could. Okay. So hear this out. Remember that SBF was extradited from the Bahamas. And when they extradited him from the Bahamas, they cited a certain number of charges that they're extraditing him for. Then SBF lawyer said, hold on a second. No, there's certain charges that you've levied against us that you can't actually try in a court because they weren't included in the list of extradition charges. But doesn't mean that they're going to go away. It just means that in this trial right now, they can't be used amongst those charges. The count might go away, except that it was brought in today to show motive, method, knowledge. And here essentially is what it consists of. A million dollars of net FTX's investment capital was frozen in China as part of a money laundering investigation. They wanted to get it out. There was a guy called Mr. Ma working for FTX. He tried to get a lawyer over there. No, they tried to get a lawyer over there. It didn't work. Mr. Ma had another solution. And the solution ended up involving bribes to Chinese government officials to the tune of $100 million through a count in the name of Thai prostitutes. Yes, it's true. This case has it all. So there were multiple objections by Bankman Freight's counsel, Mr. Mark Cohen. And Judge Kaplan agreed to a number of them, but then came back with a curative instruction or a limiting instruction that these were not being offered for the proof. Now, what's interesting is that mentioned more than once during Ms. Ellison's Chinese bribery testimony with Sam Trabuco, her co-CEO. He talks about SBFA. They talk about a bribe, a bribe charge in China. And I imagine that the jail time that you will do for bribing a Chinese, I mean, the guy's going to jail. I'm not going to say for life because I want to hear what you want to say. Other things that came out yesterday.
Bankless
"sam trabuco" Discussed on Bankless
"The SBF trial has begun, David. This is getting mainstream attention to it's not just crypto. I'm not I'm not trying to say this as big as the 90s OJ trial. OK, but it seems like it's a it's a big deal here. And the stakes couldn't be higher for SBF. OK, on the one side, he could be acquitted of all of his criminal charges here. On the other side, he could be facing 110 years in prison. A lot of years. OK, that's a lot of years. So give us the update. The trial just started this week. What's going on? Yeah, specifically on Tuesday in Manhattan, federal court in Manhattan. So just to set the table here, SBF, he's pleaded not guilty to seven accounts of wire fraud and securities fraud and other conspiracies. He's maintained his innocence since his arrest last December, while also starting to try to shift to blame to others, including FTX's lawyers, as well as his former business partner and ex-girlfriend, Caroline Ellison, who headed up Alameda, of course. He's just blaming everyone else. He's just not taking zero responsibility. Blame, blame, blame. OK, so how long will this trial last? It's expected to last up to six weeks. And so this could this is going to be a theme. We're going to probably have this in the next five weekly roll ups. The expected defense. We started to get like snapshots of things to come because we are three days into this whole thing. And so the defense of SBF, what is this? Is that SBF is an inexperienced businessman and was simply in too deep and never really actually knowingly committed fraud. That's what he's going to say. He's going to say, hey, I didn't know I just got ahead of my skis here and, you know, I was just trying to do this crypto thing. Crypto's hard, everybody. But, you know, oopsies. TLDR, they're going for the Sam was just a kid argument. They're also going for the Sam acted in good faith argument throughout his time as SBF. So they're they made a plea to the jurors. We're going to talk about who the jurors are in a second. They made a plea to the jurors of as SBF, as FTX was operated, as it was run, as Sam made choices, he was acting in good faith. So they're not they're asking they're pleading to the jurors to not judge SBF in hindsight. They're asking them to fill the position of Sam as he was put through various big decisions and asked for them for their empathy to understand that some hard choices were made by Sam and that they were made in good faith. That is what is being requested. I think they're going to have some tweets to explain. I'm pretty sure during this crisis, some of the SBF tweets are not making a lot of sense if this person is acting in good faith. Yes. The opening statements from the prosecution actually cited tweets from Sam that Sam has since deleted. But, you know, you can't really delete anything from the Internet. OK, so what would happen if he's convicted and how about some of his cronies, like you mentioned Caroline earlier? Yeah. So you gave out the up to one hundred and ten years in prison is potentially on the table for Sam. I'm sure he's not going to get all of those. But I mean, if you get that would be the max to be the theoretical max. Ellison, Wang and one more Singh. I don't know who Singh is. Also, he's an executive, right? Yeah. Oh, yeah. Gary Wang is the CTO of FTX, Caroline Ellison of Alameda. One more executive. They all face potentially decades in prison, but they are likely to get a reduced sentence because they are cooperating against SBF. So when SBF is like it was them, they are all like it was him. Of course, classic prisoners. Yeah. So we also got an artist's rendition. If you want to go to the next tab, right here. That's beautiful. Here's an artist's rendition of Sam in court. And that is not that's not accurate. But that's I don't know if this is much more flattering than the CNN photo that was just here. They gave him a haircut with crazy eyes in his cartoon. OK, so ready for the jurors, the jury selection, because that was day one. Yeah. Yeah. So jury selection matters a lot. It matters. Actually, it's kind of like the bulk of it. Right. Like most of it is his faith. Twelve jurors that decide his fate. Where do these people come from? Are they DeFi users that were crypto users that were screwed over by SBF? Yeah. Tell us about the jury selection data. So in the jury selection process, it was asked by the jury selectors, are you familiar with this case? And I'm guessing that if they jurors selected said yes, then they were asked to not be jurors. They were like, OK, you get out. And so the jury is composed of a bunch of professions that are like pretty far away from crypto and finance. There is a train conductor. We have a nurse, a retired corrections officer, a social worker. A corrections officer? A corrections officer, yeah. A social worker, postal service worker, a stay at home mom, a high school librarian, one retired investment banker with a Stanford MBA. That would be the closest in relevance that any of the jurors are. So like notably absent in the jurors are like people that work in tech, legal and finance. Now, like what's the significance? A lot of regular people, though. Regular, regular people. Yeah. Like not crypto deejans, like normal, normal people. I don't I'm this is not I'm understanding court dynamics is outside my wheelhouse. I would my gut take is that like if they were closer to tech and finance and legal, then Sam would have a worse situation than the current situation. But Martin Shkreli, who is familiar with these dynamics, Martin Shkreli, of course, the guy that went to jail for... Absolute terrible human being, not a friend of The Bankless Show. Yeah, pretty, pretty not a great human. He went to jail for like jacking up EpiPen prices. But a subject for a different day. He's also he's actually in crypto. He's actually in crypto. He was the guy that Pleaser Dow bought the Wu-Tang Clan album from. And that's why he is bitter about Pleaser Dow, if you remember. This is all aside. Anyways, he just seems like a bitter person. But he does know his jury selection. He does know his jury selection. From first-hand experience. What was his take on this? He generally summed it up as a disaster for SPF. So looking at who these people are, he's just saying, here's what the social worker will do based on like the meme of what a social worker is. They'll convict him. Yeah. Non-for-profit fundraiser will convict. The special education teacher will convict. The librarian will send SPF to hell. Now, Martin Shkreli might be trying to drum up some engagement on Twitter. He might be doing that. Yes, I'm sure he might be. So but I mean, he's got probably one of the best perspectives out there. So take this with a grain of salt. But I think it's useful. But his TLDR is that the jury selection does not favor SPF. I don't think it does. And that was just day one was jury selection. Okay. Day two, which was yesterday, I believe. That's where opening arguments began. Yesterday was Wednesday. Opening opening arguments were that. Okay. So the prosecution opened with their arguments that were generally perceived to be cleaner and easier to follow than the defense. I mean, I think it's pretty easy to present the case that SPF was a fraud. So they use very simple words like SPF lied and SPF stole very repeatedly. The line Sam Bankman Freed used his company to commit fraud on a massive scale was a quote, another quote. The money he was using to build his empire, he stole from customers. And then this is when they cited previous SPF tweets that SPF has since deleted. But again, the Internet never forgets. In contrast, they didn't use those fancy finance words, right? Like margin or collateral or liquidity or any of those scary words. In fact, that's these are the words that the defense used. The defense gave a little bit more of a convoluted story line that was a little bit harder to follow that Mackenzie Sigolos from CNBC even said that for crypto people, it was kind of hard to follow. So not great. SPF's lawyer, Mark Cohen, gave the line, he was a math nerd who didn't like to drink or party and called him Sam a lot. So, you know, like trying to target the heartstrings like good old Sam. He was acting in good faith. He didn't drink, didn't party. Don't mention the amphetamines though. OK, so the defense asked the court, hey, can we can we strike from the record all talk about recreational drug use? And the court was like, oh, absolutely not. That is a very relevant factor. True story as a part of this whole thing. OK, OK. But they had witnesses to where the witnesses we have. This is the next phase of this court. Yesterday, Wednesday, we had the first witness, Mark Antoine Julliard, who is a FTX customer, lost one hundred and fifty thousand dollars with FTX. Mark was asked to explain kind of his like due diligence on FTX and also his due diligence on why he kept his money inside of FTX while FTX was imploding. So Mark explained that he perceived SPF as wanted to do good by the industry. He said that SPF's tweets in the days leading up to FTX's collapse assured Mark that his money was safe so that he decided to not withdraw his funds. Mark. Yeah, Mark. Not getting that back. Right. So that was when his number one witness, number two, Adam Yedidia was a close friend of SPF. He lived in the penthouse. The thirty five million dollar Bahamut penthouse with like nine other roommates, software engineer at FTX, trader at Alameda, said that he resigned immediately from FTX when he learned that SPF directed FTX to repay Alameda loans with customer deposits. So like pretty damning to say like SPF acted in good faith when one of the employees was like, yo, I am out of here. And that was yesterday. Those two witnesses. We have some interesting witnesses coming up that are actually on Thursday as of today at the time of recording, which they will have already given testimony by the time you hear this. And who are those, David? Yeah, very interesting people. Matt Huang of Paradigm. So one of the two Paradigm co-founders. Why Matt Huang? Well, they were an investor in FTX. So they have some information that we would all like to know. Gary Wong, the CTO of FTX. And so, you know, this is the prisoner's dilemma. And Gary Wong has chosen defect. So what does Gary Wong have to say? Sam Trabuco, who we have not heard from in a very long time. Who's he again? Remind me, who is he? The the guy that Caroline Ellison eventually replaced, Sam Trabuco yeeted himself out of Alameda forever ago. No one really knows why. Why did he do that? That's right. Yeah, I think we know why. I think we might find out. But it's going to be the first that we've heard from Sam Trabuco since forever. And so I think it's a safe assumption to say that he's also choosing defect on the prisoner's dilemma and he's chosen to cooperate with prosecution so that he doesn't go to jail. You know, what's also interesting this week. OK, so we've been waiting for this for a long time. But famed financial writer Michael Lewis, author of The Big Short, actually writing author of The Big Short. What else? Moneyball turned into a movie. The Big Short turned into a movie. Flash Boys. Remember Flash Boys, which is a fantastic book I read. The Blind Slide is also him. Yeah, so I think one of one of your finances most influential writers, I would say, in telling stories, telling narratives, he was actually with SBF. Well, all of this was going down because he was prepared to write a story about SBF, write a book, essentially. And all of this went down. And so he apparently went on 60 Minutes last Sunday, David. I didn't see all of the interview, but we've got a few clips. And I got to say, he had a completely different portrait of SBF than the one you've probably heard and are used to from Bankless. So should we play some clips? These are the first time I've heard these clips, so I'm kind of excited for this. OK, let's take a look. Oh, by the way, his book is out. His book is out as of a couple of days ago. I think he knowingly stole customers money. Sam, put that way, no. So there's another side of this in the very no. OK, Michael Lewis says no, he doesn't think SBF knowingly stole money. Let's hear why. Should we let him explain? Let's explain money into so that it would go to FTX. But it was held in Alameda Research, Alameda Research bank accounts and eight billion something dollars piles up inside of Alameda Research that belongs to FTX customers that never gets moved and never gets transferred, never gets transferred. That sounds like a problem. It's a huge problem. What's the toughest question you think Sam's going to have to answer? How do you not know that eight billion dollars that's not yours is in your private fund? I mean, really, how do you not know? Explain eight billion dollars is in your private fund that belongs to other people. And you're saying you didn't know. Please explain how that's possible. Did you do that? Yeah, I did. What do you say? He said you have to understand that when it went in there, it was a rounding error. That I felt like we had. Why does that mean that SBF didn't know that he stole customer's money? I don't know that. What is the logic there? It's because apparently FTX couldn't get bank accounts. And so this is why. I don't know. So that's my conclusion here. It's the toughest question you think Sam's going to have to answer. How do you not know that eight billion dollars that's not yours is in your private fund? I mean, really, how do you not know? Explain eight billion dollars is in your private fund that belongs to other people. And you're saying you didn't know. Please explain how that's possible. Did you do that? Yeah, I did. What do you say? He said you have to understand that when it went in there, it was a rounding error. That I felt like we had infinity dollars in there and that I wasn't even thinking about it. I can see people watching. Oh, that, that I think is very revealing that that is how SBF treated FTX. I have infinite money. I was like, where did I put that five billion dollars? Is it under my desk? Like, who did it? Who put that five billion dollars somewhere? Like, yeah. The thing here, though, is this is customer deposits. Yeah. Right. And the reason why they had to send it to Alameda is because they knew FTX could not get bank accounts. It's not like, oopsies, we don't have bank accounts to send it to Alameda. Like that's their biggest problem. All right. Well, let's let Michael finish his statement here. Here you go. Come on, guys. This is Elizabeth Holmes and cargo shorts. And this is all a ruse. Don't fall for the shtick. This is a bad actor. It is a little different supplying, you know, phony medical information to people that might kill them. And in this case, what you're doing is possibly losing some money that belonged to crypto speculators in the Bahamas. Whoa. This is possibly losing the money on crypto speculators in the Bahamas, really belittling what actually happened. Wow. Yeah, I think I think so. You could see Michael Lewis, right? Speaking on kind of both sides, but almost the sympathetic kind of clip for for SBF. It's it sounds like he just hung out with SBF for a long time while writing this book and got like the SBF. I'm a innocent autistic kid charm. That's what it feels like. But you'd you'd have to think that Michael Lewis, author of The Big Short, you know, he's hung out with you find penetrate this. Yeah. You'd you'd have to think that he's a journalist would be able to figure this out. So here's where the interviewer flat out asked him, was this a Ponzi scheme? Right. Fun story. And it's crypto in the Bahamas. But this is the oldest architecture of a financial collapse that's been going on for centuries. This isn't a Ponzi scheme. Like when you think of a Ponzi scheme, I don't know, Bernie Madoff. The problem is it's there's no real business there. The dollar coming in is being used to pay the dollar going out. And in this case, they actually had a great real business. If no one had ever cast aspersions on the business, if there hadn't been a run on customer deposit, they'd still be sitting there making tons of money. And no. No, yeah. So it continues like this. So, of course, well, many people. Yeah, it continues like this. A lot of equivocation for SBF and the predicament he was in almost sounds a bit like a defense attorney might present this court in case. So I'm not sure where Michael Lewis was coming from on this. But of course, you know, the Internet had a lot to say about this in particular corners of crypto. This is Rahm Alawalia. What does he say, David? He says Michael Lewis is a great storyteller, but he delivers narratives rather than true understanding. FTX was a money losing business that led to fraud. FTX was getting arbed by their own clients. An exchange can withstand any run on the bank because its deposits are never rehypothecated if it's a good exchange. Basically, Rahm is saying FTX was not a good business. They were not making money. And that's where the hole came from. I mean, he sums it up here. FTX raised two billion in venture capital, but it had 10 billion in losses, raised two billion. You have 10 billion in losses. That's how bad of a business FTX was. What was the difference between those two numbers? Customer funds, fraud, eight billion worth of fraud. It's a pretty simple story, honestly. So I guess read the book to get Michael Lewis's full take. But yeah, that's how it's going. But here's a plot twist, David. So apparently, FTX invested in a company. Of course, it was investing in all sorts of things. One of the things it invested in is equity in a company called Anthropic. What is Anthropic? And why is that a plot twist? Why is that relevant here? It's an AI startup. It's an AI startup that FTX invested in at a very early round. And Anthropic is currently looking to raise for another round that would boost its valuation to 30 billion dollars, which would make FTX's ownership worth quite a lot. In fact, so much that it might actually be enough to plug the hole that FTX owes creditors if they can find liquidity on their deal. So if they can sell their Anthropic ownership on the secondary market to interested buyers, they in theory have enough money to pay back creditors because they made a venture bet that somehow paid off. That massively paid off. Like 10, 20, 30, 40, 50 or something like this. And it's now the stake in Anthropic could be worth three to four and a half billion dollars if they can find liquidity for it. And with that, they could help FTX creditors receive 100 percent recovery. OK, so do you think FTX's defense is just going to be like, hey, no one got hurt. Look, good investments. Think they'll be able to use that as part of the defense here? Sam doesn't need to go to jail. Well, he didn't lose any money. He just delayed effective altruism. He doesn't like to justify the unreal. It's going to be interesting, but that could be a very good outcome for for creditors, which, of course, is, you know, a happy state here. Wow. That was just week one of the FTX SBF case saga. So I'm sure we'll have more to talk about in the weeks to come. But David, you want to get to the E futures derby? Yes. Yes, I do. That's more exciting. Yeah. So the E futures derby is now underway. The starting pistol went off on Monday morning at 930 in the morning. And so now there are a bunch of E futures ETF from a various number of issuers, VanEck, ProShares, Bitwise, Valkyrie, Kelly, volatility shares. And so they're off. This is the SEC doing the thing of not king making any one particular ETF. And so they're allowing nine of them to all launch at once. And so this has created a competition between all of the ETF issuers who, in their first moments of inception, really need to clamor for market share and mindshare, which has created some really awesome marketing efforts by some of these organizations. I'd like to highlight one VanEck with two big moves. First, their big move number one, some absolutely hilarious marketing. We don't have enough time to watch all of their video ads about their E futures ETF. But they are really good, I'd say. And very zoomer. Yeah. Let's watch this one. Just close your eyes to enter the ether. The ether is within you. Prepare to harness the potential of a theory. Now, finally, in an ETF. Coming soon. There's just a goat at the end that bozz. I don't know why. There are. OK, if you go to the van, you want some entertainment, go to the van Twitter account, just like scroll down, because like there's there's some they're getting excited about ETFs right now. Yeah. Yeah. And like, I'm not going to do it. The point is that they are actually advertising these to like, try it. This is not for the people. This is for tradfi. Yeah, that's big move number one, some of their most hilarious marketing. And again, I can't emphasize enough some great zoomer meme videos that are worth watching. Big move number two out of VanEck. Donating 10 percent of their futures ETF profits to the Protocol Guild. What's the Protocol Guild? The Protocol Guild is this organization. It's kind of like this Dow that is an effort to unbundle the EF. And so a lot of Ethereum core developers are a part of Protocol Guild who are building and maintaining the Ethereum code base, just like the core devs and related people. And so 10 percent of the VanEck ETF futures ETF profits gets donated to the Protocol Guild. This tweet thread announcing this and talking about like their decision behind this got three thousand five hundred likes, which is a lot. We got Tim Bako retweeting it, saying, very cool to see a tradfi company directly fund Ethereum core development out of its profits. Hope that they can set an example for many of the businesses in this space that are building on top of open source protocols. I everyone liked that. So here's a bunch of tweets that I just like put into a Photoshop. We got David Evey from Polygon saying VanEck understood the assignment. Talking about, you know, giving back to open source protocols. We got light clients, Matt saying, wow, thank you. We got Liam saying public goods are good. We got crypto Texans saying this is pretty bad ass. We got no sleep. John saying based whoever runs the VanEck crypto stuff. Def has a dot eth alt probably. Great stuff. That's good stuff. I mean, who said Wall Street was just full of a bunch of greedy schmucks, huh? This is them giving back. Good job, Wall Street. We're the only one that released an ETF as well, right? That's why we called it a derby, because they're the horses were off to the race. So Bitwise as well was one of the others. Their ticker is AETH and there are a couple of others as well. We outshone Matt Hogan, who we've had him on the podcast, wrote this thread about why ETFs are such a great opportunity. We're not going to read it because it's actually about why ether is such an opportunity, because that's what is in an ether ETF and why ether is such a compelling asset. If we read this, listeners would be like, guys, we've heard you guys say this. We know a thousand times. We know the point is that TradFi still doesn't, which is why Matt and Hogan is writing this thread. And so, yeah, that's kind of the TLDR. Big question. OK, now that ether future ETFs are out in the market, how have they done? How did they do? Ryan, how did they do? Not great, David. Pretty meh, honestly. So ether ETFs as a group, two million, that was their first day. And that's about normal for a new ETF. But if you compare that to the Bitcoin ETF, that did the futures ETF, that did 200 million in the first 15 minutes. Yeah. OK, at the top of a bull market in October 2021. So very different phases of crypto acceptance. I don't know. Is that cope, David? Are you coping right now? I think Eric, actually, the ETF analyst thinks this is still pretty a pretty good sign, though. He says this. I think for the crypto world, it would be dumb to get bummed about this. He's talking about the low volumes for the first day. If you are a long term investor, you should look at these ETFs as new bridges being built to a wider TradFi audience that will facilitate traffic over time versus, say, a quick trade opportunity, in my opinion. Do you agree with that? 100 percent. I think if the listener is listening to this and they are bummed about like, TradFi didn't like ether, they don't like us. That means that it's still early. Eventually, they will like us. And if this was like an absolute bang out of the gate, it would be it would mean that we are further along in the social maturation acceptance of ether. So, I mean, this is just like, you know, it's still early dot JPEG. Yeah, one thing we should specify, of course, this is a futures ETF. Bitcoin has already had a futures ETF for a while. This is the first ether futures ETF in the U.S. to be listed. And that is not as good as and not the same as an ether spot ETF. That's what we're all kind of gunning for. Yeah, it's not futures when you're actually buying ETF, you're actually buying an IOU for ether on the other side. That would be a spot ETF. And Bitcoin is gunning for that as well. So it's a little bit different. And in good fashion, the Vanek Twitter account tweets out in all caps, low volume, just like your JPEGs. Bro, who is running this account? That one hurts, actually. There are some second order effects here, too, David. This is Brian Quintenz. He says by approving ether ETFs based on ether commodity futures contracts, the SEC has officially provided clarity on the ether status as a non-security. He's saying by approving an ether futures ETF, now the SEC is capitulated. Yes. Now, it's quite obviously a commodity or a non-security. Yes. This is an official statement implied that ether is not a security by the SEC. Yeah, I think it's got to be. How else would this hold up in court? A take from Nate Jurassic says that this just makes the inevitability of the Bitcoin spot ETF approval come sooner than expected. Matt Hogan says this, that I expect we'll see a spot Bitcoin ETF this calendar year. Whoa. Twenty twenty three. Wow. Vanek CEO says it looks like in early 2024, we will probably see a spot product. So, I mean, just the likelihood of a spot Bitcoin ETF coming soon TM is up. On that note, there are a ton of pending ETFs related to crypto stuff. So there's like Vanek Bitcoin Trust, Bitwise, Bitcoin ETP Trust, iShares Bitcoin Trust, Franklin Bitcoin ETF, Grayscale's Ethereum Futures Trust. There's so many pending financial products, both spot and futures for Bitcoin and ether that are waiting to get approved or denied soon TM. So the line to get access to get approval is large. And the claim here is that the SEC is running out of ways to say no. One of the big news is here is that Grayscale filed to convert their ETH eTrust, their Ether Trust into an ETH ETF. So, again, this is just like the amount of pressure, the amount of like ETF approvals that are pushing on the door of the SEC saying approve, approve, approve is like large. Eventually that door is going to break. Yeah, absolutely. And that ETH price, I just looked at it a couple of weeks ago, it was trading off like 30% ETH spot price, so 30% off NAV. I bet that's going to catch a lot of people off guard. That could correct. Like fast. David, what do we got coming up next? Coming up next, the Celestia token, TIA is out. We actually missed this last week, so we're covering it this week. Are you eligible? How valuable is Celestia? We'll talk about that. OP stack finally getting some fault proofs a day to think that Layer 2 is on Ethereum, we're never getting fraud proofs. SEC gets another L in the Ripple case. How many L's can Kerry take before he retires? He's going for all-time highs. We're going to get to all of that and more. But first, I want to talk about some of this fantastic sponsors that make this show possible, especially MetaMask and MetaMask Portfolio. As you are gearing up to be bullish, make sure that you know how to use MetaMask Portfolio. If you already use MetaMask, you already have a MetaMask Portfolio, so you should go open it up. There is a link in the show notes. MetaMask user. Well, you're listening to Bankless, so of course you are. The wallet you know and love just got a whole lot better. MetaMask Portfolio is the ultimate one stop shop for all of your crypto needs. It gives you a holistic view of your crypto portfolio across multiple chains and multiple addresses all at once. You can easily view and manage all your coins, tokens and NFTs in one convenient place just by connecting your wallet. MetaMask Portfolio goes beyond just viewing your portfolio, though. Inside the portfolio, you can do all the incredible money verbs that make DeFi so powerful. You can buy, swap, bridge and stake your crypto assets with ease. It's like having a powerful battle station for all your DeFi moves right at your fingertips. So if you're looking to do more in Web3 your way, MetaMask Portfolio is the answer. I already know that you have MetaMask wallet, so go check out your MetaMask Portfolio. Learn more at metamask.io slash portfolio. Uniswap, it's the world's largest decentralized exchange with over one point four trillion dollars in trading volume. You know this because we talk about it endlessly on Bankless. It's Uniswap, but Uniswap is becoming so much more. Uniswap Labs just released the Uniswap mobile wallet for iOS, the newest, easiest way to trade tokens on the go. With the Uniswap wallet, you can easily create or import a new wallet, buy crypto on any available exchange with your debit card, with extremely low fiat on-ramp fees, and you can seamlessly swap on Mainnet, Polygon, Arbitrum and Optimism. On the Uniswap mobile wallet, you can store and display your beautiful NFTs, and you can also explore Web3 with the in-app search features, market leaderboards and price charts. Or use Wallet Connect to connect to any Web3 application. So you can now go directly to DeFi with the Uniswap mobile wallet. Safe, simple custody from the most trusted team in DeFi. Download the Uniswap wallet today on iOS. There's a link in the show notes. Estia, which is a data availability network, just initiated its Genesis drop. They're dropping a token. It's called TIA. David, give us the details here. Six percent of the total supply is being airdropped. That's 60 million tokens. So 20 million tokens are being airdropped to developers and researchers, including contributors to public goods and key protocol infrastructure, ETH research and early builders of the modular ecosystem. 20 million TIA tokens are being airdropped to 576,000 on-chain addresses. Many of those are active users of Ethereum roll-ups. 20 million TIA to stakers and IBC relayers of the Cosmos Hub and Osmosis. And so this is one of the more interesting airdrops in that it is a multi-chain airdrop because Celestia is a modular data availability chain. It's meant to be in the multi-chain ecosystem. So tokens are going to serve all the chains, right? So like if you're a Cosmos user and Ethereum roll-up user, a core dev of Ethereum, like they're just spraying the tokens all over the place, because that's what makes sense in the modular world. Ryan, did you claim yours? No, I didn't, David, because Gary says I can't. If you live in the US, the Genesis drop is not available. In your country, it's been fully geo-blocked because Gary doesn't want you to have free money. So how much money would you have gotten? I'm actually not sure. It depends on the value of the token, but I will tell you, Celestia's implied valuation. This is a fully diluted valuation based on kind of the fully diluted market cap of all TIA tokens. 2.75 billion. Whoo! Whoo! That's big, right? That's large.
Crypto Banter
"sam trabuco" Discussed on Crypto Banter
"Coming speaking about alts. So let's look at the alts that are actually running. Solana, getting ready for DEVCON, Render getting ready for Solana DEVCON, Matic up 10 percent. One of the co-founders yesterday actually left Polygon Labs. I don't think it's anything to worry about. It's one of the co-founders who turned around and said his name is Jaynti Kanani. And he says, after kickstarting Polygon in 2017, around six months back, I decided to step away from the day-to-day grind. I'm more confident in Polygon's bright future and passionate community. I'll be focusing on new adventures. Sandeep and him seem to have, you know, he says, man, this makes me emotional. What a ride we've had together, brother. But it's just a start for Polygon. So I don't think that's anything to worry about. You know, when I would be getting worried is if he would have said, like Sam Trabuco said, he said, I'm going to buy a yacht and I'm going to go spend time on a boat. Or if the guy like the guy from Binance, when he said his wife wants him to do more chores around the house. So that's when I start to worry when people tell me that their wife is telling them that they need to do more chores around the house. Do you feel like running a poll, Josh? OK, let's run a new poll. OK, let's run a new poll. OK, now here's the poll. So Kyle Dupes gets Wednesdays off, right? He doesn't work on Wednesdays because Annie does his show in the morning. She didn't do show today, but Annie does his show in the morning. And then later on. So Kyle takes the day off on Wednesdays. And I've seen him here every single Wednesday. I see Kyle here. He doesn't go home. He's here every Wednesday. So the question is, is he here because he actually loves the office or is he here because he doesn't want to go home to his girlfriend? Let's run a poll and let's see what the community says. His girlfriend's amazing. I'm kidding. Don't run the poll. His girlfriend's amazing. I'm just joking. And yes, ladies, Kyle Dupes does have a girlfriend. So he's untouchable. He's untouchable. Did you see the picture of Kyle Dupes that I posted on the weekend? I mean, this is a shirt. Hold on a second. Hold on a second. Let's quickly go. We have to, I mean, we have to look at this shirt. Ladies, let me know what you think of this shirt. Hold on. I've got to find it quickly. Hold on. Aha. Aha. Here we go. Let me know what you think of Dupes' shirt. Oh, hold on. Hold on. People are saying go to the Twitter scene. Oh, is that not, is that shirt not just sexy? Is that not the sexiest shirt? Doesn't that remind you of, on that scene from Brokeback Mountain? No, we love Kyle. We love Kyle. We love Kyle. All right, let's carry on. Let's carry on. Let's get a little bit more serious here. We were talking altcoins. Yes, we were talking altcoins. I saw that Avalanche had a little bit of a pump because they got this competitor to FriendTech. It's called Stars Arena building on Avalanche. But then I heard that it just got hacked. So be careful. Be careful. Be careful. I heard that it just got hacked. Someone says, Kyle is busy building Wells School on Wednesdays. That's crypto school saying that. Kyle was sitting in the office here, guys. Anyway, this chart here says, I don't understand how anyone can be bearish on altcoins after seeing this chart. Possibly the best time to invest, to be well positioned for the coming bull. And now is the time to lay the foundation for 100x profits, in my opinion. I think I agree, but you've got to be, you've got to call the narratives right for the next altcoin season. You can see that, that we are in a slight uptrend since the middle of September, but, and we broke, you know, this is, this is total three. This is the total three chart, which is, yeah, let's just take a quick trend line here. You can see where, it depends how you draw your trend line. You can do something like that. You can see we've kind of broken out there. So you've got, you've got total three actually now breaking out. So keep your eyes on alts. Even though the dominance is going up, the good alts are actually running. Yeah, I think that that's, that's happening. Okay. We did get economic data in the US. The jobs data came out. 207,000 versus 204,000. Previous estimated was 210,000. Yeah, really nothing, really nothing to write home about. It does look like the economy is starting to slow down. Like I'm seeing, I'm seeing, I'm seeing that the mortgage purchase applications in the US are starting to fall, which means the housing market is starting to cool down. You've got UK housing, as I say, slowing down. You've got banks not giving credit. One very, very, very interesting thing that I've seen is that the oil price is coming down. Now when the oil price comes down, what it means is that the market is starting to worry that the economy is not going to be as heated as they thought it was going to be. And you can see that now the oil price is actually starting to come down. But we'll break that down with Gareth. He's going to be with us in a couple of minutes, in probably less than 10 minutes. Remember also that next week we have an inflation reading. So it's, is it next week Thursday? What's the date today guys? Today's the fifth. So next week, this time we're going to get the inflation numbers. There's no forecast yet. Remember the last reading was 3.7.
The Bitboy Crypto Podcast
"sam trabuco" Discussed on The Bitboy Crypto Podcast
"Close your eyes. Who do you see doing that? Drew, I'm kidding. Drew Drew's that you don't do that, do you? You do it, don't you? Allegedly. Huh? Allegedly. Only allegedly. Guys, if you're camping, it's fine. If you're at the workplace lunchroom, it's a little weird. He doesn't do that, folks. He doesn't do that. But yeah, camping, it's cool. Camping, it's encouraged. Lunch room, you have to go see HR. All right, well, we had someone in the chat where they say here, are we moving SBF trial today? No, we just the shows. We just want to get it out earlier. We found that we kind of got the news and then we kind of sit on our hands for an hour. So, yeah, we move that up and we also move ATB up as well, partly because I'm getting in super early. This way I can leave a little bit earlier. To catch them all, the SBF trial is today. We don't know what they're going to uncover. Well, we have your guide to the Sam Bankman Free trial starting today, but you're right. Most of the news is actually going to be tomorrow and I'm going to tell you why here. So here is your guide. Here is the silhouette of Deezy in a bozo the clown wig, I think, because that's the telltale hoodie, right? Oh, no, wait, that might be Sam Bankman Free. All right, so from charges to testimony to strategy, here's everything you need to know to follow the biggest fraud trial, I would say, of the millennium. Oh, yeah, the entire millennium. Yeah, OJ was 90s. That was the court of that century. That was the trial of that century. Glove didn't fit. What are we going to do, huh? Not saying he did it, but the glove didn't fit, you know what I mean? You must have quit, right? You must have quit. All right, so why did we bring up, you know, the alleged head chopper of Nicole Brown? Geez, that's so bad. Anyways, back to the courtroom here, not Cato Kaelin. The trial is scheduled to last six weeks with court incessant on average four days a week. So we're going to be looking at four days a week. We got some pretty fun things happening. They take a day off. Judge Luz Kaplan is a 78-year-old Harvard Law School graduate pointing to the bench by all slick Willy himself, Bill Clinton here. And then here we go. So here's why really nothing is going to happen today, folks. This is the breaking news. You're going to hear first, you're going to see some, oh my God, I want to tell you what's really happening here. Here's what's really going to happen. The first day at least we'll be taken up with the jury selection. So big moments likely like the opening statements won't come until Wednesday at the earliest. So don't expect any big bombshells. And as far as the witnesses, well, first before we get into the witnesses, just what are your broad thoughts on Sam Bankman-Fried? Great haircut. Great haircut. Yeah. He really put out a cucumber. Really drives a Toyota Corolla, but lives in a $33 million mansion. So, you know, yeah, that beanbag was probably cheap. Oh yeah. So that's an interesting, it's an interesting case, but what's crazy is that October historically has been good for cryptocurrency, but what kind of bombshells are we going to get with this whole case? I wish this was like an Amber Heard, Johnny Depp situation where we could just watch. So, you know, it would be cool if we had cameras, but similar to the Johnny Depp Amber Heard thing, this is going to last weeks. This is going to be, you know, two day thing. This is scheduled to last until November, I believe November 9th. Bob from accounting. I have not forgotten Bernie Madoff. I say this is bigger than Bernie. Oh, way bigger. You know, a lot of it, even if it doesn't hit the dollar amount, the political implications here, I think is a little bit more damning and telling here. All right, well, let's talk about the witnesses and we'll break that down for a bit. Me and Rod here, Caroline Ellison. She's the former Alameda CEO and Bankman's on again, off again girlfriend. And she was among the former associates who accepted plea deals, agreeing to testify against their former boss in exchange for shorter sentences. Let me click, just get that, get off, move. It doesn't want to move folks. All right. Also expected to take the stand is Nishad Singh. He's a former FTX director of engineers. He played a role in the ledger scheme of political straw donors. He also may testify to be being aware that they're misusing customer funds. Gary Wang, co-founder of Alameda and FTX also going to be there. Hey, they met in high school math camp and they're roommates at MIT. But this guy was serious because he was a former Google staffer and he also helped oversee their charitable efforts guided by the ethos of effective altruism. Other major figures won't testify, including two that have been very pled guilty. The CEO, Ryan Solomay and Dan Freeburg, who held various top legal roles. The first person to roll was the other Sam, nor will the other major figure who hasn't been charged, Sam Trabuco. He was the co-CEO for a time with Caroline Ellison, but left the firm before its collapse and the revelation of fraud. He set sail on a yacht paid for by FTX and his current location seems to be unknown. Also, he was the first one, I believe in that book, first one to roll over. First one to roll over there. So what are your thoughts on the rogues gallery of characters we're going to be seeing? Yeah, very interesting. Cause the other Sam guy, you could tell he knew the writing was on the walls. Like he knew that a lot of the internal stuff that was going on is pretty shady and he got out. Well, the game was good. What are your thoughts on that? Is it a rat fleeing a sinking ship or is this a smart guy just saying, hey, you know, writing on the wall. So do you think he was a party? I mean, this guy's, we're just saying what it appears like. We're not saying we know or have any kind of inside information, but would you say it appears like he knew what was happening and then maybe just turned a blind eye or is it, he didn't know what was happening. And as soon as he saw, he turned to the authorities. I think he knew what was going on. And I think that the only, obviously the only reason why FTX collapsed was their balance sheet was exposed. And then of course, you know, CZ making a tweet saying he's selling all those FTT. So those two things I think brought it down, but I think he knew, I think everybody working there knew it was kind of like, there's no way this could go on forever. And Caroline, man, I mean, she's not going to be pulling any punches because SBF did go to the New York times with her personal diary, which is petty. And so they rolled over on him first. They went missing. She was seen in what, New York, you know, near the FBI headquarters or something like that in that area, some sort of law enforcement department, but man, they all rolled over on him quick, which is, was insane to me, but it makes sense. They're a bunch of like, you know, nerdy people, you know, they're not like gangster or mafia. They're going to roll over quick to get a lesser sentence and plead guilty and stuff like that. Yeah. They rolled over faster than a cucumber. Like, like you said, yeah, they're not going to have, you know, the Sopranos vibes going on, like, you know, sleep with the fishes before I even tell them buddy who did a misdemeanor. No, they're, they're like, ah, I didn't do it. I didn't know it wasn't me. Do you think Sam is doing pushups to get ready for prison? No, no. Um, it's my understanding like they're, they're the inside information. Martin Shkreli has been posting a lot of like rumors and we don't know what's real and stuff, but I said, no, there's zero exercising happening in the jail cell, uh, was not taking this seriously at all. And for someone who's really, really, really smart, you would think, uh, physical capability would be high on the list of things you should take care of before you're going there. But apparently that that wasn't an issue to him. Maybe he was just like, you know, pressure gets well, I'll give you some Bitcoin when you're released. Oh yeah. Yeah. That's his plan. Maybe. Well, he was going up to everybody offering him easily. He was talking to the Bahamian government. I'll give you $10 billion a pay after debt. Like I'm sure he's talking to people in prison. Okay. I'll give you money when I leave and stuff like that. You know, even mafia members snitch, especially today. I felt like that was less the case in the sixties and seventies and the eighties. Uh, so what changed? I don't know. Maybe we just got softer folks. He was part of it. Uh, probably talking about Sam Trabuco. He left early before things could really be pinned on him. I can't imagine you're that high level and you don't see something, uh, suspicious, or at least if it's not crossing the line, it is against the line and towing the line and, you know, hovering over the line and, you know, like, Oh, I'm not over the line. You know, I'm just kinda, you know, in the middle of it there. All right, well, let's talk about their defense here. Uh, there's, uh, so they got the defense or signs that the, the broader argument for letting them go rest on shaky grounds. I don't think they're going to let them go. Uh, you know, he does have a lot of money. Plus in crypto, you can keep a seed phrase in your brain. Seems like it'd be a little bit of a flight risk there. Uh, but, uh, here we have, uh, talking about their parents here, uh, Barbara and Joseph, uh, pressured their own son for a million dollar annual salary for Papa. Papa got paid a 80 K a month. Hey, what's, what's 20 K a week amongst friends. She's that, that whole situation was insane. Cause we saw the emails and it looks like Sam Bankman freed was only paying him with 200 K a year. That was his initial salary. And his dad's like, Sam got to pay me a little more. Yeah. Oh yeah. He did need a little more, about $10 million here. Uh, he also got the gift of 10 million, uh, for his parents. A lot of that, I think it was, uh, for the mansion, uh, that I think is the snow knows the Bahamas mansion, not the one that he's currently living in right now, or it was, uh, uh, leading up to the trial here. Uh, the sentence he's facing seven specific charges, uh, wire fraud, securities, conspiracy to commit them, but even convicted, he tastes, uh, it's only a potential total only 115 years. So, uh, I don't know if you'll live that long, you know, subsiding on, uh, cucumbers and I, you know, I'm not even going to say what he might be eating in jail, but, uh, you know, who knows, who knows? Uh, but yeah, so he's facing over a century folks of 115 years. But the upshot, even in the worst case, he's more likely to be sentenced to between 10 and 20. What do you feel about between 10 and 20? I want to, I want to hear from both you here. Yeah, I think that's reasonable. Here's the main reason. I think that if he was another guy that wasn't connected, like the way he's connected, he probably would get, he get the full force of the law. But you know, the fact that Congress has to maybe subpoena sending a subpoena to Gary Genzer. So for those FTX, you know, private conversations, he, maybe he knows more than we think he knows and maybe more become uncovered during this whole trial. But I definitely think he's going to get a slap on the wrist compared to a hundred years. Definitely not going to. Yeah. Yeah. All right. Uh, we got some, uh, red meat for the XRP community. So there are people who are, you know, running ops against, uh, you know, the detractors here. There's basically people championing and cheerleading Sam Bankman freed. I think anyone who saw the 60 minutes interview felt a little bit, well, why are we like kind of celebrating this guy? Why are we, why are we really just saying what he did? You know, Hey, there's $8 billion of missing funds. And if you watch that 60 minutes interview, they, they use a lot of weird language and it's like, Oh, he just reallocated 8 billion to his other company. That's all he did. And they, they make it seem like the 8 billion is still there. Like, Oh yeah, he just reallocated the 8 billion. No, he reallocated it for mansions, Tom Brady, Steph Curry. He didn't just reallocate into a new company. They did that and then spent all the money. Uh, so XRP lawyer, we're talking to John Deaton here. He destroyed an expert who blamed Binance and the FTX crash. Uh, CZ ended up, uh, responding, uh, this clown literally blamed CZ saying, if no one had cast aspersions on the business, calling it bank run, he would be making tons of money today. He can't be that stupid. Here's what the, the comedy is talking about by toughie. You should just know the last name like toughie. Come on. Uh, right. Yeah. I mean, what's a big, you know, I'm calling out toughie. He's in the chat. I'm dropping the bomb on this guy because here's the thing about cryptocurrency exchange. They don't, they don't have the same luxuries banks do where banks don't have to hold all your money in the bank, right? Technically they don't have to, but cryptocurrency exchanges need to have your, the reserves one to one. Like if they have a hundred billion dollars with the cryptocurrency in there, you better have a hundred billion dollars ready to get the customers. So to say CZ was the one who's, he helped the bank run because he said he was, you know, selling his shares. And when the number one exchange in the world says they're going to sell their shares of a company, it's like, we don't like that company anymore. Everyone else is going to do it, but still shouldn't have been a pause in withdrawals. You know, it's, it's, it's an operation and then a day you're not supposed to commingle customer funds. So like, even if we all wanted to withdraw in a day, sure. It might be some issues as you have to move from cold wallets to hot wallets, but CZ has had a severe runs and he's like, yeah, you know, like removing some transactions. And then you see whale wires, like CZ, you know, Binance move a thousand Bitcoin 10 times. And you're like, oh, so he's actually doing what he's saying. Yeah. Uh, I agree with that. All right. FTX customers who lost millions maintain faith in crypto because despite major losses, fundamental reason why we buy Bitcoin has not changed. Uh, but I will say probably a fundamental way in which they hold Bitcoin has changed. So Evan Luthra lost 2 million. Uh, the fundamental reason why we buy Bitcoin, why we use Bitcoin has not changed. Uh, this person lost 60% of their portfolio sold his bankruptcy claim for a fraction of his worth to reimburse. I want to get a reinvest. I mean, he wanted to get the cash from bankruptcy claim primarily to invest in crypto. And ongoing faith in industry amongst these investors comes under the shadow of the collapse here, but yeah, we're here for the longterm. A lot of these people, I think, uh, here's a good question. Drew, you know, I want to know answered Rodney chat. 10 people get burnt by an FTX. Let's just say 80% to a hundred percent. How many people stay? How many people leave forever? 10 people. Well, the, the, the heinous thing about FTX and centralized exchanges is that they're the gap between us or as weirdos and crypto and the normies. So you have Tom Brady, Steph Curry, all of these people promoting FTX, you think it's safe. You lose, you know, whatever, a significant amount of your net worth or whatever, maybe a large portion of money. You don't trust crypto forever, but you don't understand that it's a centralization issue. It's not a Bitcoin issue. Right? So I think that this may scare the people who are just kind of like investing the crypto, just, you know, casually and don't really know about the DeFi space. So if you understand the DeFi space, you understand that I'm not your keys, not your crypto cliche, that all of us like talk about, but it's true because when these guys go bankrupt, it goes to crypto. So centralization issue for sure. Yep. All right. Let's, let's get into three reasons. And then we're going to look at charts with Kelly here. Three reasons. This is according to John Reed Stark also, you know, XRP community, probably no stranger to this name. Three reasons why he will be convicted according to an SEC lawyer, not DZ is not legal advice, everybody. All right. So you took the social media and let's see the three reasons. Number one, many high profile executives have already turned. They've already pled guilty to reduce their criminal sentences. So that's a, that's sign number one. All right. So you got, well, everybody else in the company, they have been, you know, essentially convicted of a crime by pleading to some lesser charges here. Number two, we have a powerful lineup of cooperating witnesses. It's arguably unprecedented for a financial fraud crime. So including his ex-girlfriend and John J. Ray, handlings of the exchange will likely weigh against its founder. And then last but not least, he believes that they, they likely handed the government most of its finding. So lastly here already incriminated himself through his post FTX public relations campaign. So we got a lot of people stacking against him. So star studded lineup of witnesses, other people already guilty. And then last but not least his, his Twitter rants. Some said it was fueled by amphetamines. I I'm not making that allegation. Just is what it appeared like to me though, but Oh, definitely the, the method up tweet binges is what people are saying here. I mean, like if you're a lawyer for SBF in this situation and watched him go on this crazy, like I'm innocent campaign, like while incriminating himself is insane to me. But I mean, he's like, he's, he's just, he didn't know what to do. So his, his form of like getting through this was just going on everybody's show in crypto and like even talking to coffee's ill on the phone, I believe. Right. And then saying, I'm not guilty. This is what's going on, but at the same time kind of incriminating himself. So the crazy, like a Fox theory, the best one I've heard, I think I heard it from all in pockets. I can't remember if it was Chamath or Jason, uh, the, the crazy, like a Fox. All right. So is there like some 3d chess move happening here? The 3d chess potentially, I guess we'll find out over the next couple of weeks, the 3d chess move could be, he's portraying himself as someone who was not in his right mind due to outside influences. Some could say it's chemical, you know, so, uh, due to the chemical solution that he's ingesting, he wasn't making his right mind. And then you can kind of, you know, lean on that as like, see, clearly he's like out of his mind. Yeah. And so you can't be responsible for the actions he committed while he was out of his mind to me. Yeah. He's got to be responsible. Oh yeah. There's no way like what he, he didn't, he didn't seem like, I don't know, like when you look at like, you may be typical situations where someone pleads guilty or it's not, you know, convicted because of like insanity. That's not it. He's just, he's just feel sorry for what he did. And this is how he's trying to, you know, kind of get over it and get through it. And I think, uh, Jeremiah, uh, keeps her different times. Hey, don't worry. We're sticking here. 10 30. All right. Uh, Kelly, he's waiting in the wings. He's pacing. He, hopefully he's not on a, any kind of a FTX cocktail here. Kelly, what is going on? What do we got? Hey man, everybody's getting so excited cause we pushed up a thousand dollars and they think we're going straight to the moon. We got to, uh, we got to, we got to be a little patient and talk is off the edge. Well now we're down 3%. And so I think we're going to a 10 K.
The Breakdown
"sam trabuco" Discussed on The Breakdown
"Welcome back to The Breakdown with me and LW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on guys? It is Tuesday, October 3rd. The SBF trial has begun. This is all the background that you need to know. Of course, before we get into all of that. If you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review. Or if you want to dive deeper into the conversation, come join us on The Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Hello Breakers. As you can imagine, this is a fairly weird time for me. A year ago at this time, I was deep in the midst of planning FTX's second Super Bowl ad. And yet a month later, I had resigned, the company had declared bankruptcy, and the world had discovered a rotten core of fraud around Sam and his closest consigliaries. Now, I did a very long episode about the experience of the week of the collapse from the inside last November 14th. It was called Sam Bankman Fraud to give you a sense of how I felt about it. Since then, I've been covering the FTX bankruptcy and Sam's legal battles as I would any other crypto story. In other words, just part of the necessary cleanup of the last cycle, but ultimately something that is hopefully for the past and not for the future. When it comes to the trial, I've spent a long time deciding about how to approach it. The reality is, for the next five or six weeks or however long this takes, this is going to drown out a lot of other things that are happening in the space. I have to imagine that most products will choose not to launch during this time for fear of being outshined because everyone is just laser focused on this. The question then of course is how much time to give it. Is there a risk of over focusing on it? You bet. It's going to have lots of drama. But does it need to be covered? I think that the answer is also ultimately yes. This is something that has to get concluded for the industry to fully move on. It is in many ways an exorcism that just has to be done. And on top of that, I think that this trial and everything that surrounds it will have some impact in shaping how much the external world sees the crypto space as itself inherently fraudulent versus Sam as specifically fraudulent. So how is the breakdown going to cover this? Well, I talked to a lot of you listeners and the general request mirrored my own thoughts, which is to every few days do an update, sometimes with a guest discussion. This won't be then an everyday thing. At least there won't be some big feature every day. But you will get all the salient details as they come up. And with that in mind, I thought it would be valuable to try to create a bit of a definitive primer, something that if you haven't been paying attention at all, if you were barely watching last year, you could pick up and listen to and feel pretty well prepared to get into what you're going to see over the coming weeks. What that means is that today we're going to go over the charges, the rough timeline of events, the key witnesses, what we expect from the defense, the latest procedural news and info from the bankruptcy and the trial schedule. I don't think we'll have time to get into people's very strong feelings about Michael Lewis's book that just came out, but I imagine that that will be on the docket for later this week as well. However, where we begin is with the charges of which Sam faces seven. Those include two charges of wire fraud, two charges of conspiracy to commit wire fraud, as well as charges of securities fraud, commodities fraud and money laundering. More generally, Sam is accused of fraudulently dealing with customer funds in a multitude of ways. The most damning allegation, and the one prosecutors will likely focus on establishing, is that Sam knowingly diverted customer funds to FTX-affiliated hedge fund Alameda Research. Alameda, of course, served as the primary market maker on FTX. Now, FTX is widely understood not to have been able to obtain bank accounts, and so in many cases used accounts held by Alameda Research to receive funds from customers. The thing that prosecutors will seek to demonstrate is that Alameda not only held customer funds, but that it racked up billions of dollars in debt to FTX, which it could not repay. Evidence has been put forward that Alameda did not have the same risk controls as other entities when it traded on FTX, and that the lack of limits allowed Alameda to continue to operate while carrying a large negative cash balance. To put a fine point on it, the prosecution will allege that this large negative cash balance represented improperly using customer funds to trade and lose on the exchange. Now of course, Alameda had a significant balance sheet of assets held against this negative cash balance, but these assets were crypto tokens largely created by Sam and FTX. They were far too illiquid to realize it anywhere close to their full book value. The SEC summarized the allegations in their separate lawsuit by stating that Sam, Put more simply by Bloomberg's Matt Levine in an article published yesterday, It was pretty much entirely because Alameda had lost it. Now the key to proving these allegations will be establishing that Sam was aware of this financial artifice being run using Alameda. Fraud isn't fraud if it was caused by a mistake or an oversight. Prosecutors will need to show that Sam was either aware of the fraud or willfully blind to it. As the judge put it during a hearing last week, Now let's move on to the timeline of events. Much of the DOJ's case will center around the fateful final weeks as the FTX empire came crashing down. The beginning of the end came on November 2nd when Coindesk's Ian Allison published an expose on the Alameda balance sheet. There had been some rumors of trouble at Alameda prior to that, but with a partial copy of the balance sheet, this piece of reporting blew the lid off the situation. TLDR, what the balance sheet showed was that a huge portion of Alameda's holdings, the were pretty illiquid tokens and in particular, the native exchange token of FTX, FTT. Now in terms of a huge portion of their assets being in FTT, there were also a bunch of other Sam coins from DeFi projects that barely got off the ground, which in some cases had Alameda representing up to 95% of the overall token supply. According to the Financial Times, just $900 million in assets on this balance sheet could be easily sold. The next major event was the very public sparring between Binance CEO CZ and Sam. Binance had been an early investor in FTX, but at that time had been bought out of their stake for $2.1 billion. That repurchase, a theoretically pretty good return on an $80 million investment, had been paid out in a mix of stablecoins and FTT tokens. On the Sunday following the Coindesk article, CZ tweeted that quote, Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. He said the firm would attempt to do so in a way that quote, minimizes market impact over the next few months. But of course, when you have CZ, the single biggest player in the industry, saying dump FTT and run for the hills, guess what happened next? Within the hour, Carolyn Ellison absolutely pissed gasoline all over the situation. She had taken over as sole Alameda CEO just a couple months prior and tweeted to CZ quote, If you're looking to minimize the market impact of your FTT sales, Alameda will happily buy it all from you today at $22. The market immediately plunged, with FTT's price being very visibly defended against Throughout the week before, FTT had traded around $25 and a market cap of $3 billion. By Tuesday night, with Alameda's traders and balance sheet exhausted, the token settled at $5 and FTX closed withdrawals. Now like I said, I gave my account of being on the inside. And while Tuesday when FTX closed withdrawals was clearly a final moment in the coffin for many of us inside, for me when it was clear that something very nefarious had gone on was on Monday, when I started getting hit up by other friends outside of FTX in the industry who were asking if I had heard anything about an FTX emergency fundraising round. Now of course, as an exchange that was supposed to be fully backed and given Sam's recent statements to the team that we had around $2 billion in cash and liquid assets thanks to trading revenue as well as recent fundraising, the only way in the world that we would need an emergency fundraising round was if Sam had been using FTX customer funds for purposes other than sitting on FTX's books waiting for those customers to reclaim those funds. Anyway, in the middle of that week after withdrawals were closed, there was also a weird sham sale announced to Binance, which they very quickly backed out of. And by Friday, with most FTX staffers having already fled the Bahamas, Sam finally capitulated to bankruptcy. Now to this day, Sam claims that he was forced by external lawyers to place the FTX empire into bankruptcy and appears to continue to be holding onto the idea that the exchange could have raised an emergency fundraising round to make customers whole. For most people, that might be where the event ended, but not so much for Sam. What followed was a bizarre string of press interviews, an incredibly disjointed Twitter thread, and basically an odd media tour that attempted to paint Sam as a wayward and naive CEO in over his head rather than a perpetrator of criminal fraud. This tour was capped off by a live broadcast interview with Andrew Ross Sorkin of the New York Times on November 30th. During that sprawling interview, Sam claimed that he, quote, didn't ever try to commit fraud on anyone. Authorities disagreed, and on December 12th, Sam was arrested in the Bahamas at the request of the US government. Although initially defiant, Sam ultimately agreed to be extradited to face charges and was released on bail. Once again, for any normal person, that might be the end of the story until we get to trial, but not for Sam. Although he was confined to his parents' house in California, Sam managed to continuously test the boundaries of his bail conditions. February, Sam was hauled before the judge on allegations that he had used encrypted messaging apps to contact the General Counsel of FTX US as well as using a VPN, which Sam claimed was just to watch NFL games. To the former General Counsel of FTX US, Sam had reached out to see if it was possible to, quote, have a constructive relationship, use each other as resources when possible, or at least vet things with each other. The DOJ characterized this communication as an attempt to taint a potential witness. At that point, the judge decided not to revoke Sam's bail, but instead expressly forbid Sam from using encrypted messaging apps and VPNs. And yet, in July, Sam stepped over the line once again by leaking the private journal of Carolyn Ellison to the New York Times. The judge agreed that providing this material to journalists was, at best, an attempt to embarrass Ellison, if not a brazen attempt to intimidate her and discredit her in the public eye. During the course of that hearing, it was uncovered that Sam had held more than 1,000 phone calls with journalists, including over 100 with the New York Times reporter who published the story. And thus, by early August, Sam had his bail revoked and was locked up at the Brooklyn Metropolitan Detention Center to await his trial. Since then, it's basically just been a never-ending set of appeals to try to get Sam out of jail, but alas, jail is where he remains. Next up, let's talk witnesses. What became clear quite fast was that there was a cohort of around four people, including Sam, that seemed to know about the extra special privileges that Alameda enjoyed and the fact that for all intents and purposes, customer funds on FTX were just used as a slush fund for their hedge fund traders. And it turns out that while Sam was still in the air being extradited from the Bahamas, multiple FTX executives were revealed to be collaborating witnesses. Of those, Carolyn Ellison is the one likely to get the most attention. As well as being the CEO of Alameda, Ellison was also Sam's former girlfriend. The couple split prior to the collapse of FTX and there will no doubt be extensive cross-examination which questions Ellison's motives in giving evidence against Sam. Although Ellison was only at the helm of Alameda for a little over two months, recent reporting describes her as essentially in charge of the trading firm for much longer, at least as much as anyone could be in charge of the firm relative to Sam himself. Nominally, Ellison and Sam Trabuco, another Sam in this story, had been appointed co-CEOs of the firm in October of 2021 when SPF stepped away from the role. However, Trabuco had recently been described as almost entirely checked out at that point, leaving Ellison in charge of day-to-day operations. Ellison is expected to give evidence regarding the inner workings of FTX and has acknowledged that she knew about the hole in Alameda's balance sheet prior to the collapse of the exchange. Nishad Singh and Gary Wang are the other two executives known to be cooperating with prosecutors. Singh acted as engineering director while Wang was the exchange's CTO and co-founder. These two basically built all of FTX from the ground up, so anything going on with the codebase is basically going to be mostly just their work. Nishad is expected to give a first-hand account of how the Alameda backdoor was enabled in the code. Nishad was reportedly extremely distressed and wracked with guilt during the final weeks at FTX and was confrontational with Sam during that time. Gary was one of the last employees left in the Bahamas as the exchange collapsed and famously coded almost the entire platform by himself. Some have speculated about how he will be as a witness given that he is notoriously quiet. Now, each of these three key witnesses have already pleaded guilty to criminal fraud charges and have agreed to testify in exchange for a lighter sentence. Prosecutors will need to demonstrate that each one is presenting an honest account of events rather than merely throwing Sam under the bus to save themselves. There are also complicated personal relationships between each of these executives and Sam, which could be used by the defense. All three cohabitated with Sam in a Bahamas penthouse and were some of Sam's closest friends as well as employees. To give an indication of how hostile cross-examination could become, last week a DOJ motion to prevent the defense from asking questions about recreational drug use was denied. The defense will need to provide notice to the court before asking witnesses about their drug use, but the subject was not ruled to be out of bounds. Another FTX executive who has pleaded guilty to criminal charges is Ryan Salem, who served as CEO of FTX Digital Markets. FTX Digital Markets was the operating company for the Bahamas. Now, Salem was particularly involved in the political campaign side of things for Sam and was charged with violations of campaign financing law in relation to making straw donations to politicians on Sam's direction as well as operating an unlicensed money-transmitting business. Unlike the other three, Salem is not cooperating with prosecutors as part of his plea deal, but could be called to testify as a non-cooperating witness. Alameda co-CEO Sam Trabuco has not been heard from since he stepped away from the company last August. He has not been disclosed as a witness and has not been charged at this stage. The DOJ has also flagged that they have at least two additional witnesses set to testify under a grant of immunity but have not publicly identified them at this stage. By and large, speculation about who those witnesses might be include not only Trabuco who we just mentioned, but Daniel Friedberg who served as FTX's chief compliance officer and who had formerly been implicated in a major online poker scandal, and Constance Wang who was FTX's COO and was described as Sam's right hand during fundraising efforts. Now in addition to FTX executives, the DOJ will also call multiple customers and investors to give brief testimony. Prosecutors have flagged that they will call upon retail customers who traded tens of thousands of dollars on the platform, as well as institutional clients who traded millions of dollars. The high range could imply notable industry figures will make an appearance on the witness stand. Several high profile market makers are listed as top creditors of FTX and are no doubt none too happy about their funds being locked up in the bankruptcy process. Both customers and investors are intended to present their understanding of the FTX terms of service and representations made about the use of customer funds, which could be crucial in refuting possible defenses. Which indeed brings us to that section of this primer, what are the defense strategies that Sam might try to employ? SPF's legal team have flagged a few potential arguments. In a filing on Monday, they sought clarification on a few issues they may wish to present. The filing asked whether the defense could argue that FTX International was not regulated in the US and therefore did not have to follow applicable rules. They also asked whether Sam could discuss the likelihood that creditors could see massive returns from the bankruptcy process. Still, the primary defense expected from SPF relates to instructions from legal counsel. In August, SPF's team flagged a plan to argue that he relied on advice from both in-house attorneys as well as lawyers from Fenwick and West in basically all elements of FTX's operation. Sam sought to introduce advice from lawyers on topics ranging from his use of self-deleting messages, unconventional banking relationships, and intercompany financial arrangements. The DOJ objected to this defense, claiming that not enough detail had been provided, but the judge reserved their decision on this point until later in the trial. The judge said that they would make rulings on individual advice of counsel arguments on a case-by-case basis as they come up. Outside of what indications we've gotten from Sam's team, the industry and the wider world at large have had no problem speculating about how he might defend himself as well. Bloomberg's Matt Levine paraphrased his view of a likely defense as The crypto market crashed, there was a run on the bank, and the run on the bank is what evaporated the customer's money. It was an accident, perhaps a careless accident but not theft. Certainly, in media commentary, SPF has been focused on the bank run, rather than the hole in Alameda's balance sheet as the cause of FTX's collapse. Now, of course, there are some obvious issues with that defense, particularly if witnesses establish that Alameda had effectively commandeered customer funds in contravention of the exchange's terms of service. Another plank of Sam's defense will likely be to rely on prosecutors being unable to In a New Yorker article published last month, the journalist wrote, Going back to his article, Matt Levine again sketched out a plausible way that Sam could brush off an $8 billion balance sheet hole as a careless oversight rather than willful fraud. He suggested Sam could claim he thought FTX had so much money that $8 billion was a rounding error. From Levine's back of the napkin math, at its height, FTX had somewhere approaching $100 billion in crypto assets on its books. Finally, it's also expected that Sam will seek to blame Caroline for mismanaging Alameda. The publication of excerpts from Caroline's journal was an attempt to paint her as a naive child way out of her depths, and some of Sam's leaked writings also showed a belief that Alameda had failed to hedge correctly, as if that was the main issue here. Now, one thing that's important to note is that when considering defenses, SPF does not need to prove his innocence. He only needs to introduce a shred of doubt in the minds of the jury. To convict, the 12 jurors must be convinced beyond a reasonable doubt that Sam is guilty and reach a unanimous decision. Prosecutors often fail to get their cases over the line due to being unable to entirely convince each juror of the defendant's guilt. This can be even more of a difficulty when the case involves complicated financial crime which can be difficult to fully understand. And yet, many commentators are convinced that the case is damning. Daniel C. Silva, a former prosecutor who participated in the BitConnect case, said, Now, in terms of the latest from the bankruptcy, as the trial gets underway, the FTX bankruptcy process is entering its 10th month and has had no shortage of intrigue. The current focus has been on pursuing clawbacks from people and organizations that had been, in the estimation of the bankruptcy estate, unjustly enriched by FTX. On the very top of that list are Sam's parents, Joseph Bankman and Barbara Fried. Two weeks ago, the estate sued Bankman and Fried, claiming that they had received over $26 million in gifts from FTX, including a luxury property in the Bahamas. The lawsuit alleges that Bankman was intimately involved in the operations at FTX and used his position to enrich himself. You may have seen the now-famous email where he tried to raise his salary to a million dollars by threatening to involve Sam's mother. Now, speaking of Sam's mother, Barbara Fried is alleged to have directed political donation efforts at FTX. This included instructing Sam on how to structure donations to avoid donation limits. She is also alleged to have knowledge of loans made to FTX executives, which were then used to fund election campaigns. All in all, the lawsuit alleged that the pair, quote, Now, for their part, Sam's parents immediately hit back at the lawsuit through lawyers saying, A last note on the bankruptcy, while current FTX CEO John J. Wray has no doubt been cooperating with prosecutors in providing internal documents, he is not currently expected to testify as a witness. Now, in terms of the latest trial procedural stuff and timeline, today was technically the first day of the trial with jury selection the goal. Both sides have alleged the other is attempting to bias the jury pool. The DOJ claimed that Sam's questions for the jury about effective altruism, political donations and ADHD are intended to paint him in a sympathetic light. In particular, prosecutors are concerned that asking about charitable and political donations could improperly introduce the idea that Sam's actions were justified outside of evidence. The defense, meanwhile, have complained that the DOJ are treating Sam's fraud as an established fact in their jury questioning by omitting the word allegedly. They also claim a question about being stopped or questioned by the police is intended to racially filter the jury in a manner irrelevant to the case. Last week, as I intimated before, SPF placed a last minute appeal to be released from jail for the duration of the trial. Sam's team claimed that his incarceration would be an unreasonable barrier to adequately preparing for each day's hearing. Unfortunately for him, the judge found this argument insufficiently convincing and stated that they consider Sam to be a flight risk. They said, Sam was granted some concessions to be allowed to meet with his lawyers early at the courthouse each day, as well as during jail visiting on off days. Now, while a decision is yet to be made on exactly how Sam can introduce the concept that he relied on the advice of lawyers, limits were placed on what can be said during the defense's opening arguments. Specifically, Sam's lawyers have been prohibited from mentioning any advice of counsel arguments while presenting their case. The judge ruled that this argument may confuse or prejudice a jury when presented without specifics and evidence. The trial is currently scheduled to take six weeks. Jury selection is expected to be completed by the end of today's hearing, although before I was recording this, there were some indications that it might go into tomorrow morning as well. In either case, tomorrow we will likely see the beginnings of opening arguments. After that, the prosecution will present its case and call its witnesses. The DOJ has estimated their case will take four to five weeks. The defense will then have an opportunity to present their case, which they have estimated will be much shorter, taking around a week and a half. Now, the defense is not compelled to present a case and can simply choose not to if they are confident the charges have not been proven. We don't yet have any indication of whether SPF will speak in his own defense. Traditional legal strategy suggests that defendants should never take to the witness stand to avoid giving prosecutors an opportunity to cross-examine them. However, this is no ordinary trial and SPF is no ordinary defendant. Judging from how extensively Sam has defended himself in the media, I would not be surprised if his lawyers have a tough time keeping him out of the witness box. Hearings will be held four days a week with a short break after three weeks. If the trial takes longer than six weeks, it will be extended, but the consensus seems to be that it will be all over by Thanksgiving. And won't that be something to be thankful for? Now, even if Sam escapes a guilty verdict, his legal troubles will continue well into next year. The DOJ will present additional charges related to bribery of Chinese officials, as well as political donation violations during a second criminal trial, which is scheduled for March. Sam will also face civil lawsuits from the SEC and the CFTC after the first criminal trial is concluded. Beyond that, there's still the possibilities of lawsuits from the FTX bankruptcy estate, as well as from former customers and investors. So my friends, that is the lay of the land. That is what we are going into. Like I said at the top, for me, the most interesting thing, the thing that I will be watching most closely, is actually the meta-narrative analysis around this. I want to know how much, especially mainstream media looks at this and treats this like what it is, which is Sam Bankman-Fried going on trial, versus what I fear it might become, which is the entire crypto industry being put on trial. But in any event, this truly is a scenario where the only way out is through. So get on your boots, friends, because we are getting into the muck. Until next time, be safe and take care of each other. Peace.
The Breakdown
A highlight from The Sam Bankman-Fried Trial Begins - Everything You Need to Know
"Welcome back to The Breakdown with me and LW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on guys? It is Tuesday, October 3rd. The SBF trial has begun. This is all the background that you need to know. Of course, before we get into all of that. If you are enjoying The Breakdown, please go subscribe to it, give it a rating, give it a review. Or if you want to dive deeper into the conversation, come join us on The Breakers Discord. You can find a link in the show notes or go to bit .ly slash breakdown pod. Hello Breakers. As you can imagine, this is a fairly weird time for me. A year ago at this time, I was deep in the midst of planning FTX's second Super Bowl ad. And yet a month later, I had resigned, the company had declared bankruptcy, and the world had discovered a rotten core of fraud around Sam and his closest consigliaries. Now, I did a very long episode about the experience of the week of the collapse from the inside last November 14th. It was called Sam Bankman Fraud to give you a sense of how I felt about it. Since then, I've been covering the FTX bankruptcy and Sam's legal battles as I would any other crypto story. In other words, just part of the necessary cleanup of the last cycle, but ultimately something that is hopefully for the past and not for the future. When it comes to the trial, I've spent a long time deciding about how to approach it. The reality is, for the next five or six weeks or however long this takes, this is going to drown out a lot of other things that are happening in the space. I have to imagine that most products will choose not to launch during this time for fear of being outshined because everyone is just laser focused on this. The question then of course is how much time to give it. Is there a risk of over focusing on it? You bet. It's going to have lots of drama. But does it need to be covered? I think that the answer is also ultimately yes. This is something that has to get concluded for the industry to fully move on. It is in many ways an exorcism that just has to be done. And on top of that, I think that this trial and everything that surrounds it will have some impact in shaping how much the external world sees the crypto space as itself inherently fraudulent versus Sam as specifically fraudulent. So how is the breakdown going to cover this? Well, I talked to a lot of you listeners and the general request mirrored my own thoughts, which is to every few days do an update, sometimes with a guest discussion. This won't be then an everyday thing. At least there won't be some big feature every day. But you will get all the salient details as they come up. And with that in mind, I thought it would be valuable to try to create a bit of a definitive primer, something that if you haven't been paying attention at all, if you were barely watching last year, you could pick up and listen to and feel pretty well prepared to get into what you're going to see over the coming weeks. What that means is that today we're going to go over the charges, the rough timeline of events, the key witnesses, what we expect from the defense, the latest procedural news and info from the bankruptcy and the trial schedule. I don't think we'll have time to get into people's very strong feelings about Michael Lewis's book that just came out, but I imagine that that will be on the docket for later this week as well. However, where we begin is with the charges of which Sam faces seven. Those include two charges of wire fraud, two charges of conspiracy to commit wire fraud, as well as charges of securities fraud, commodities fraud and money laundering. More generally, Sam is accused of fraudulently dealing with customer funds in a multitude of ways. The most damning allegation, and the one prosecutors will likely focus on establishing, is that Sam knowingly diverted customer funds to FTX -affiliated hedge fund Alameda Research. Alameda, of course, served as the primary market maker on FTX. Now, FTX is widely understood not to have been able to obtain bank accounts, and so in many cases used accounts held by Alameda Research to receive funds from customers. The thing that prosecutors will seek to demonstrate is that Alameda not only held customer funds, but that it racked up billions of dollars in debt to FTX, which it could not repay. Evidence has been put forward that Alameda did not have the same risk controls as other entities when it traded on FTX, and that the lack of limits allowed Alameda to continue to operate while carrying a large negative cash balance. To put a fine point on it, the prosecution will allege that this large negative cash balance represented improperly using customer funds to trade and lose on the exchange. Now of course, Alameda had a significant balance sheet of assets held against this negative cash balance, but these assets were crypto tokens largely created by Sam and FTX. They were far too illiquid to realize it anywhere close to their full book value. The SEC summarized the allegations in their separate lawsuit by stating that Sam, Put more simply by Bloomberg's Matt Levine in an article published yesterday, It was pretty much entirely because Alameda had lost it. Now the key to proving these allegations will be establishing that Sam was aware of this financial artifice being run using Alameda. Fraud isn't fraud if it was caused by a mistake or an oversight. Prosecutors will need to show that Sam was either aware of the fraud or willfully blind to it. As the judge put it during a hearing last week, Now let's move on to the timeline of events. Much of the DOJ's case will center around the fateful final weeks as the FTX empire came crashing down. The beginning of the end came on November 2nd when Coindesk's Ian Allison published an expose on the Alameda balance sheet. There had been some rumors of trouble at Alameda prior to that, but with a partial copy of the balance sheet, this piece of reporting blew the lid off the situation. TLDR, what the balance sheet showed was that a huge portion of Alameda's holdings, the were pretty illiquid tokens and in particular, the native exchange token of FTX, FTT. Now in terms of a huge portion of their assets being in FTT, there were also a bunch of other Sam coins from DeFi projects that barely got off the ground, which in some cases had Alameda representing up to 95 % of the overall token supply. According to the Financial Times, just $900 million in assets on this balance sheet could be easily sold. The next major event was the very public sparring between Binance CEO CZ and Sam. Binance had been an early investor in FTX, but at that time had been bought out of their stake for $2 .1 billion. That repurchase, a theoretically pretty good return on an $80 million investment, had been paid out in a mix of stablecoins and FTT tokens. On the Sunday following the Coindesk article, CZ tweeted that quote, Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. He said the firm would attempt to do so in a way that quote, minimizes market impact over the next few months. But of course, when you have CZ, the single biggest player in the industry, saying dump FTT and run for the hills, guess what happened next? Within the hour, Carolyn Ellison absolutely pissed gasoline all over the situation. She had taken over as sole Alameda CEO just a couple months prior and tweeted to CZ quote, If you're looking to minimize the market impact of your FTT sales, Alameda will happily buy it all from you today at $22. The market immediately plunged, with FTT's price being very visibly defended against Throughout the week before, FTT had traded around $25 and a market cap of $3 billion. By Tuesday night, with Alameda's traders and balance sheet exhausted, the token settled at $5 and FTX closed withdrawals. Now like I said, I gave my account of being on the inside. And while Tuesday when FTX closed withdrawals was clearly a final moment in the coffin for many of us inside, for me when it was clear that something very nefarious had gone on was on Monday, when I started getting hit up by other friends outside of FTX in the industry who were asking if I had heard anything about an FTX emergency fundraising round. Now of course, as an exchange that was supposed to be fully backed and given Sam's recent statements to the team that we had around $2 billion in cash and liquid assets thanks to trading revenue as well as recent fundraising, the only way in the world that we would need an emergency fundraising round was if Sam had been using FTX customer funds for purposes other than sitting on FTX's books waiting for those customers to reclaim those funds. Anyway, in the middle of that week after withdrawals were closed, there was also a weird sham sale announced to Binance, which they very quickly backed out of. And by Friday, with most FTX staffers having already fled the Bahamas, Sam finally capitulated to bankruptcy. Now to this day, Sam claims that he was forced by external lawyers to place the FTX empire into bankruptcy and appears to continue to be holding onto the idea that the exchange could have raised an emergency fundraising round to make customers whole. For most people, that might be where the event ended, but not so much for Sam. What followed was a bizarre string of press interviews, an incredibly disjointed Twitter thread, and basically an odd media tour that attempted to paint Sam as a wayward and naive CEO in over his head rather than a perpetrator of criminal fraud. This tour was capped off by a live broadcast interview with Andrew Ross Sorkin of the New York Times on November 30th. During that sprawling interview, Sam claimed that he, quote, didn't ever try to commit fraud on anyone. Authorities disagreed, and on December 12th, Sam was arrested in the Bahamas at the request of the US government. Although initially defiant, Sam ultimately agreed to be extradited to face charges and was released on bail. Once again, for any normal person, that might be the end of the story until we get to trial, but not for Sam. Although he was confined to his parents' house in California, Sam managed to continuously test the boundaries of his bail conditions. February, Sam was hauled before the judge on allegations that he had used encrypted messaging apps to contact the General Counsel of FTX US as well as using a VPN, which Sam claimed was just to watch NFL games. To the former General Counsel of FTX US, Sam had reached out to see if it was possible to, quote, have a constructive relationship, use each other as resources when possible, or at least vet things with each other. The DOJ characterized this communication as an attempt to taint a potential witness. At that point, the judge decided not to revoke Sam's bail, but instead expressly forbid Sam from using encrypted messaging apps and VPNs. And yet, in July, Sam stepped over the line once again by leaking the private journal of Carolyn Ellison to the New York Times. The judge agreed that providing this material to journalists was, at best, an attempt to embarrass Ellison, if not a brazen attempt to intimidate her and discredit her in the public eye. During the course of that hearing, it was uncovered that Sam had held more than 1 ,000 phone calls with journalists, including over 100 with the New York Times reporter who published the story. And thus, by early August, Sam had his bail revoked and was locked up at the Brooklyn Metropolitan Detention Center to await his trial. Since then, it's basically just been a never -ending set of appeals to try to get Sam out of jail, but alas, jail is where he remains. Next up, let's talk witnesses. What became clear quite fast was that there was a cohort of around four people, including Sam, that seemed to know about the extra special privileges that Alameda enjoyed and the fact that for all intents and purposes, customer funds on FTX were just used as a slush fund for their hedge fund traders. And it turns out that while Sam was still in the air being extradited from the Bahamas, multiple FTX executives were revealed to be collaborating witnesses. Of those, Carolyn Ellison is the one likely to get the most attention. As well as being the CEO of Alameda, Ellison was also Sam's former girlfriend. The couple split prior to the collapse of FTX and there will no doubt be extensive cross -examination which questions Ellison's motives in giving evidence against Sam. Although Ellison was only at the helm of Alameda for a little over two months, recent reporting describes her as essentially in charge of the trading firm for much longer, at least as much as anyone could be in charge of the firm relative to Sam himself. Nominally, Ellison and Sam Trabuco, another Sam in this story, had been appointed co -CEOs of the firm in October of 2021 when SPF stepped away from the role. However, Trabuco had recently been described as almost entirely checked out at that point, leaving Ellison in charge of day -to -day operations. Ellison is expected to give evidence regarding the inner workings of FTX and has acknowledged that she knew about the hole in Alameda's balance sheet prior to the collapse of the exchange. Nishad Singh and Gary Wang are the other two executives known to be cooperating with prosecutors. Singh acted as engineering director while Wang was the exchange's CTO and co -founder. These two basically built all of FTX from the ground up, so anything going on with the codebase is basically going to be mostly just their work. Nishad is expected to give a first -hand account of how the Alameda backdoor was enabled in the code. Nishad was reportedly extremely distressed and wracked with guilt during the final weeks at FTX and was confrontational with Sam during that time. Gary was one of the last employees left in the Bahamas as the exchange collapsed and famously coded almost the entire platform by himself. Some have speculated about how he will be as a witness given that he is notoriously quiet. Now, each of these three key witnesses have already pleaded guilty to criminal fraud charges and have agreed to testify in exchange for a lighter sentence. Prosecutors will need to demonstrate that each one is presenting an honest account of events rather than merely throwing Sam under the bus to save themselves. There are also complicated personal relationships between each of these executives and Sam, which could be used by the defense. All three cohabitated with Sam in a Bahamas penthouse and were some of Sam's closest friends as well as employees. To give an indication of how hostile cross -examination could become, last week a DOJ motion to prevent the defense from asking questions about recreational drug use was denied. The defense will need to provide notice to the court before asking witnesses about their drug use, but the subject was not ruled to be out of bounds. Another FTX executive who has pleaded guilty to criminal charges is Ryan Salem, who served as CEO of FTX Digital Markets. FTX Digital Markets was the operating company for the Bahamas. Now, Salem was particularly involved in the political campaign side of things for Sam and was charged with violations of campaign financing law in relation to making straw donations to politicians on Sam's direction as well as operating an unlicensed money -transmitting business. Unlike the other three, Salem is not cooperating with prosecutors as part of his plea deal, but could be called to testify as a non -cooperating witness. Alameda co -CEO Sam Trabuco has not been heard from since he stepped away from the company last August. He has not been disclosed as a witness and has not been charged at this stage. The DOJ has also flagged that they have at least two additional witnesses set to testify under a grant of immunity but have not publicly identified them at this stage. By and large, speculation about who those witnesses might be include not only Trabuco who we just mentioned, but Daniel Friedberg who served as FTX's chief compliance officer and who had formerly been implicated in a major online poker scandal, and Constance Wang who was FTX's COO and was described as Sam's right hand during fundraising efforts. Now in addition to FTX executives, the DOJ will also call multiple customers and investors to give brief testimony. Prosecutors have flagged that they will call upon retail customers who traded tens of thousands of dollars on the platform, as well as institutional clients who traded millions of dollars. The high range could imply notable industry figures will make an appearance on the witness stand. Several high profile market makers are listed as top creditors of FTX and are no doubt none too happy about their funds being locked up in the bankruptcy process. Both customers and investors are intended to present their understanding of the FTX terms of service and representations made about the use of customer funds, which could be crucial in refuting possible defenses. Which indeed brings us to that section of this primer, what are the defense strategies that Sam might try to employ? SPF's legal team have flagged a few potential arguments. In a filing on Monday, they sought clarification on a few issues they may wish to present. The filing asked whether the defense could argue that FTX International was not regulated in the US and therefore did not have to follow applicable rules. They also asked whether Sam could discuss the likelihood that creditors could see massive returns from the bankruptcy process. Still, the primary defense expected from SPF relates to instructions from legal counsel. In August, SPF's team flagged a plan to argue that he relied on advice from both in -house attorneys as well as lawyers from Fenwick and West in basically all elements of FTX's operation. Sam sought to introduce advice from lawyers on topics ranging from his use of self -deleting messages, unconventional banking relationships, and intercompany financial arrangements. The DOJ objected to this defense, claiming that not enough detail had been provided, but the judge reserved their decision on this point until later in the trial. The judge said that they would make rulings on individual advice of counsel arguments on a case -by -case basis as they come up. Outside of what indications we've gotten from Sam's team, the industry and the wider world at large have had no problem speculating about how he might defend himself as well. Bloomberg's Matt Levine paraphrased his view of a likely defense as The crypto market crashed, there was a run on the bank, and the run on the bank is what evaporated the customer's money. It was an accident, perhaps a careless accident but not theft. Certainly, in media commentary, SPF has been focused on the bank run, rather than the hole in Alameda's balance sheet as the cause of FTX's collapse. Now, of course, there are some obvious issues with that defense, particularly if witnesses establish that Alameda had effectively commandeered customer funds in contravention of the exchange's terms of service. Another plank of Sam's defense will likely be to rely on prosecutors being unable to In a New Yorker article published last month, the journalist wrote, Going back to his article, Matt Levine again sketched out a plausible way that Sam could brush off an $8 billion balance sheet hole as a careless oversight rather than willful fraud. He suggested Sam could claim he thought FTX had so much money that $8 billion was a rounding error. From Levine's back of the napkin math, at its height, FTX had somewhere approaching $100 billion in crypto assets on its books. Finally, it's also expected that Sam will seek to blame Caroline for mismanaging Alameda. The publication of excerpts from Caroline's journal was an attempt to paint her as a naive child way out of her depths, and some of Sam's leaked writings also showed a belief that Alameda had failed to hedge correctly, as if that was the main issue here. Now, one thing that's important to note is that when considering defenses, SPF does not need to prove his innocence. He only needs to introduce a shred of doubt in the minds of the jury. To convict, the 12 jurors must be convinced beyond a reasonable doubt that Sam is guilty and reach a unanimous decision. Prosecutors often fail to get their cases over the line due to being unable to entirely convince each juror of the defendant's guilt. This can be even more of a difficulty when the case involves complicated financial crime which can be difficult to fully understand. And yet, many commentators are convinced that the case is damning. Daniel C. Silva, a former prosecutor who participated in the BitConnect case, said, Now, in terms of the latest from the bankruptcy, as the trial gets underway, the FTX bankruptcy process is entering its 10th month and has had no shortage of intrigue. The current focus has been on pursuing clawbacks from people and organizations that had been, in the estimation of the bankruptcy estate, unjustly enriched by FTX. On the very top of that list are Sam's parents, Joseph Bankman and Barbara Fried. Two weeks ago, the estate sued Bankman and Fried, claiming that they had received over $26 million in gifts from FTX, including a luxury property in the Bahamas. The lawsuit alleges that Bankman was intimately involved in the operations at FTX and used his position to enrich himself. You may have seen the now -famous email where he tried to raise his salary to a million dollars by threatening to involve Sam's mother. Now, speaking of Sam's mother, Barbara Fried is alleged to have directed political donation efforts at FTX. This instructing included Sam on how to structure donations to avoid donation limits. She is also alleged to have knowledge of loans made to FTX executives, which were then used to fund election campaigns. All in all, the lawsuit alleged that the pair, quote, Now, for their part, Sam's parents immediately hit back at the lawsuit through lawyers saying, A last note on the bankruptcy, while current FTX CEO John J. Wray has no doubt been cooperating with prosecutors in providing internal documents, he is not currently expected to testify as a witness. Now, in terms of the latest trial procedural stuff and timeline, today was technically the first day of the trial with jury selection the goal. Both sides have alleged the other is attempting to bias the jury pool. The DOJ claimed that Sam's questions for the jury about effective altruism, political donations and ADHD are intended to paint him in a sympathetic light. In particular, prosecutors are concerned that asking about charitable and political donations could improperly introduce the idea that Sam's actions were justified outside of evidence. The defense, meanwhile, have complained that the DOJ are treating Sam's fraud as an established fact in their jury questioning by omitting the word allegedly. They also claim a question about being stopped or questioned by the police is intended to racially filter the jury in a manner irrelevant to the case. Last week, as I intimated before, SPF placed a last minute appeal to be released from jail for the duration of the trial. Sam's team claimed that his incarceration would be an unreasonable barrier to adequately preparing for each day's hearing. Unfortunately for him, the judge found this argument insufficiently convincing and stated that they consider Sam to be a flight risk. They said, Sam was granted some concessions to be allowed to meet with his lawyers early at the courthouse each day, as well as during jail visiting on off days. Now, while a decision is yet to be made on exactly how Sam can introduce the concept that he relied on the advice of lawyers, limits were placed on what can be said during the defense's opening arguments. Specifically, Sam's lawyers have been prohibited from mentioning any advice of counsel arguments while presenting their case. The judge ruled that this argument may confuse or prejudice a jury when presented without specifics and evidence. The trial is currently scheduled to take six weeks. Jury selection is expected to be completed by the end of today's hearing, although before I was recording this, there were some indications that it might go into tomorrow morning as well. In either case, tomorrow we will likely see the beginnings of opening arguments. After that, the prosecution will present its case and call its witnesses. The DOJ has estimated their case will take four to five weeks. The defense will then have an opportunity to present their case, which they have estimated will be much shorter, taking around a week and a half. Now, the defense is not compelled to present a case and can simply choose not to if they are confident the charges have not been proven. We don't yet have any indication of whether SPF will speak in his own defense. Traditional legal strategy suggests that defendants should never take to the witness stand to avoid giving prosecutors an opportunity to cross -examine them. However, this is no ordinary trial and SPF is no ordinary defendant. Judging from how extensively Sam has defended himself in the media, I would not be surprised if his lawyers have a tough time keeping him out of the witness box. Hearings will be held four days a week with a short break after three weeks. If the trial takes longer than six weeks, it will be extended, but the consensus seems to be that it will be all over by Thanksgiving. And won't that be something to be thankful for? Now, even if Sam escapes a guilty verdict, his legal troubles will continue well into next year. The DOJ will present additional charges related to bribery of Chinese officials, as well as political donation violations during a second criminal trial, which is scheduled for March. Sam will also face civil lawsuits from the SEC and the CFTC after the first criminal trial is concluded. Beyond that, there's still the possibilities of lawsuits from the FTX bankruptcy estate, as well as from former customers and investors. So my friends, that is the lay of the land. That is what we are going into. Like I said at the top, for me, the most interesting thing, the thing that I will be watching most closely, is actually the meta -narrative analysis around this. I want to know how much, especially mainstream media looks at this and treats this like what it is, which is Sam Bankman -Fried going on trial, versus what I fear it might become, which is the entire crypto industry being put on trial. But in any event, this truly is a scenario where the only way out is through. So get on your boots, friends, because we are getting into the muck. Until next time, be safe and take care of each other. Peace.
Crypto Critics' Corner
"sam trabuco" Discussed on Crypto Critics' Corner
"And then I talked to his dad later in the day. How much money were they giving you? They were talking about, I've said this before, they were talking about a billion dollars, which seemed, you know, a lot of money, but certainly would be manageable in the context of the size of the business. But later in the evening, that number went from a billion to four and a half billion. And then I said, okay, that was obviously a problem, and it's a bigger problem than they want to admit to. And so I made the decision that evening. I got on my phone, I booked myself a JetBlue flight down to the Bahamas, and I wanted to see for myself what was going on. You know, listen, I put my name and reputation at stake. I introduced Sam to a lot of people. Brett and I, one short year ago, and I believe you were there with us, we had Crypto Bahamas at the Baja Mar Hotel. Brett and I organized a dinner for the likes of Tony Blair and Bill Clinton and a whole host of luminaries. One short year ago, he fast forward, it's sort of still hard to believe that we're where we are right now. And so I needed to see it for myself. And so I went down there and I would say that the war room was despondent. And this was an exchange that should have no duration issues. That means for at least several days before FTX declared bankruptcy, at least according to Scaramucci's version of the story, and the lawsuit also alleges he was down there and part of those talks to get emergency fundraising. He knew FTX was insolvent. I don't know what's going to happen, right? I want to clarify, as usual, that we're not lawyers, we don't pretend to be, we aren't going to suggest that we would have any better idea of what's going to happen with any of this than anyone else. What's being described sounds like fraud. It sounds like a breach of fiduciary duties. It sounds like fraud. It sounds like criminal. And I don't know how that plays out. We're going to get an idea based on how the co-defendants in the FTX Alameda stuff who have already pled, what happens to them? I don't know yet. Nobody knows. I can presume they're going to get a lot less time than SPF. I really believe that. I don't know if it'll be true. We're going to find out. My belief is strongly that they will see a significantly less amount of time in prison if they get prison time at all. Outside of Sam Trabuco, who we still haven't heard from, I think when he does decide to appear, we'll be doing a lot of time in prison. We should add, in the interest of journalistic fairness, that lawyers for Joseph Bankman and Barbara Fried issued a statement to several outlets where they say, these allegations are nonsense. That house we lived in and referred to as our house and that was paid by FTX funds was in no way criminal or fraudulent, yada, yada, yada. And then they throw in some stuff about how, uh, John Ray is wasting all this money and this is a distraction. This is meant to inflame people right before our son goes on trial. And so some version of that is their statement. And that's, that's the liberty I'll give it. And we've talked about this before as well. They already put it down in writing. They can say whatever they want now. I don't really fucking care if they deny it. You sent the emails, guys. You sent the emails. You literally put it in writing. The one thing you shouldn't do- Out of context, Cass. Yeah, out of context. My fat ass, dude. We've said it before. I don't know if you're going to do crime like this on this level, if you're going to be doing, you know, moving tens of millions, hundreds of millions of dollars at a time in the name of, you know, crime. I mean, sorry. Um, not of the, not of the criminal sort, but if you're going to be doing this, don't write it down. It's super simple. Do a phone call. Like, why wouldn't you do a phone call instead? Idiots. You guys are law professors. Are you- What if the lines are tapped? Right. I don't know, man. These guys are law professors. It's hard to believe, but it makes you question everything. And this is, this is the last point I want to make. It makes you question everything. These guys had crazy reputations in Silicon Valley and the education world, right? Upper education world. They, they were well known for their, for their essays and their, their statements about tax law and, and freed particularly about criminals and, you know, treating them correctly and all this stuff. It didn't take that much money for them to completely give up their reputation and do the exact opposite of what they'd been teaching for decades. That's crazy. That's crazy. And it's not just them. And, and, and I hope people realize that. Like, it just makes you question everything so much more because who, who, who are you going to rely on now? People are going to throw away their decades long reputations in academia and everything that they once stood for, for some millions of dollars in some property. I mean, that is, that says something. And, and I don't know if that's an American societal issue. It's a global issue. I don't know, man, but it's troubling to me. There's certainly issues with many of the elites in America. I think both Joseph Bank and Barbara Fried spent a lot of time around people who were richer than them, who they thought they were smarter than, and had at some level a belief that this was finally their chance to be both smart and rich. Warped, warped and sad. And certainly a statement on the, the, the way academia, higher education in America works, especially at these private institutions. It's super sad and super corrupt. And if you want to stop that, if you want to do something about, you know, if you want to do something to stop this kind of gross academia stuff, this fraud, donate to Castcoin guys. It's super simple. Anyway, I think that's going to do it for this episode. Remember, hit the like and subscribe button and all that stuff. I hate it when people say it, but I know I have to. Thanks for listening.
The Crypto Overnighter
"sam trabuco" Discussed on The Crypto Overnighter
"Rockstar Energy Punched, bringing a bold and unapologetic flavor packed with energy through a blend of B vitamins, guarana extract, and 240 milligrams of caffeine to fuel what's next. Rockstar Energy Drink. Good evening and welcome to the Crypto Overnighter. I'm Nick Ademus and I will be your host as we take a look at the latest cryptocurrency news and analysis. So sit back, relax, and let's get started. And remember, none of this is financial advice. And it's 10 p.m. Pacific on Sunday, September 3rd, 2023. Welcome back to the Crypto Overnighter, where we have no sponsors, no hidden agendas, and no BS. But we do have the news, so let's talk about that. Tonight we delve into FTX's mysterious multi-million dollar transfers and asks what it means for the platform's future. Then we unpack the emotional confession from the former BitBoy Ben Armstrong and the implications for his career in the crypto community. Plus, we explore why Ethereum's co-founder is dumping MakerDAO, how Grayscale is hoarding Ethereum in an intriguing manner, and the absurdity of the UK's crypto inheritance tax. Folks, if you think this FTX story is just about transfers, you're in for a ride. Wait till you hear about the yachts and courtrooms. Hit that subscribe button, you're not going to want to miss this. Bankrupt Exchange FTX has been making some eyebrow-raising moves lately. A cold wallet owned by the exchange transferred almost $10 million in altcoins from Solana to Ethereum since August 31st. The altcoins involved include Link, Sushi, Luna, and Wi-Fi. These transfers were conducted via the wormhole bridge. The reasons behind these transfers remain undisclosed. In another development, a recent filing revealed that FTX's debtors used company funds for internal cash payments to executives and direct transfers to the American Yacht Group. The list includes over $900 million in transfers to Sam Bankman-Fried, labeled simply as cash payment, $15.5 million in cash transfers, and a $3.5 million transfer to ex-Alameda CEO Caroline Ellison. The filing also showed a $2.5 million payout to the American Yacht Group for ex-Alameda co-CEO Sam Trabuco. Now here's what I'm thinking. The movement of $10 million in altcoins from Solana to Ethereum is significant. Solana has been touted as an Ethereum killer, yet here we have FTX moving assets back to Ethereum. What does that tell us about the confidence level in Solana's ecosystem? We're going to be talking more about Solana and Ethereum in a later segment. For now, the $900 million transfer to Sam Bankman-Fried is another red flag. This isn't pocket change, it's nearly a billion dollars. It's hard to ignore the distrust this breeds, especially when the Justice Department alleges that Bankman-Fried quote, misappropriated and embezzled FTX customer deposits. The $2.5 million yacht for Sam Trabuco is the cherry on top. It's a glaring example of how too much power can lead to questionable decisions. Trabuco announced his resignation a few months before the company's collapse, and yet he walks away with the yacht. But just when you thought the financial maze couldn't get more intricate, another key player makes a move that could be a game changer. Robinhood is a platform that's no stranger to making headlines. And here they are, making headlines again. The common thread here, FTX founders in their complex web of financial and legal entanglements. Robinhood's decision to reenter the scene not only alters the landscape, it adds another layer of complexity to the ongoing saga. Robinhood repurchased a significant stake previously owned by FTX founders Sam Bankman-Fried and Gary Wayne. The shares, amounting to $55 million, were initially seized by the U.S. Marshals Service as part of a criminal case against Bankman-Fried. The repurchase cost Robinhood $605 million. The shares were owned through a holding company called Emergent Fidelity Technologies. Wayne pled guilty to multiple charges, including wire fraud and conspiracy to commit securities fraud. SBF, on the other hand, continues to plead not guilty to similar charges. The repurchase agreement was approved by the U.S. District Court for the Southern District of New York. Now let's dig into the implications of this massive repurchase. First off, Robinhood's willingness to spend $605 million to buy back these shares speaks volumes about its aggressive growth plans. But what's even more intriguing is the timing. This move could be seen as a strategic play to distance themselves from the legal entanglements surrounding FTX and its founders. And let's not forget the role of the U.S. government here. The involvement of the Marshals Service in seizing and then selling these shares back to Robinhood could be perceived as the government having too much control over private assets. This is especially concerning for anyone that values financial freedom and is wary of government intervention. Robinhood's $605 million repurchase is more than just a business transaction. It's a complex web of legal, ethical, and financial considerations that could have far-reaching implications for the crypto world. And as always, it's crucial to stay vigilant and question the motives behind such significant moves in the crypto landscape. All that said, there may be something of a silver lining for some people here. As I recall, when FTX tumbled, those Robinhood shares were worth around $585 million, which by my calculations means there's some $20 million in profit here. That money should be going to FTX's creditors, another $20 million towards making things right. I mean, I hope that money isn't going to the federal government or the Marshals Service. They certainly don't need it more than the creditors do. Ever wonder what happens when the idols of crypto reveal that they've got feet of clay? Ben Armstrong's emotional spill is up next. Like and follow so you're always in the loop.
Daily Crypto Report
"sam trabuco" Discussed on Daily Crypto Report
"It's 8 a.m. Eastern, September the 3rd, and this is your daily crypto report. Bitcoin is down slightly at $25,927, ETH is down slightly at $1,633, and Binance Coin is down slightly at $214. As a person with a very deep voice, I'm hired all the time for advertising campaigns. But a deep voice doesn't sell B2B. And advertising on the wrong platform doesn't sell B2B either. That's why if you're a B2B marketer, you should use LinkedIn ads. LinkedIn has the targeting capabilities to help you reach the world's largest professional audience. That's right, over 70 million decision makers all in one place. All the big wigs, then medium wigs, also small wigs who are on the path to becoming big wigs. Okay, that's enough about wigs. LinkedIn ads allows you to focus on getting your B2B message to the right people. So, does that mean you should use ads on LinkedIn instead of hiring me, the man with the deepest voice in the world? Yes, yes it does. Get started today and see why LinkedIn is the place to be, to be. We'll even give you a $100 credit on your next campaign. Go to linkedin.com slash results to claim your credit. That's linkedin.com slash results. Terms and conditions apply. Ethereum co-founder Vitalik Buterin has sold his remaining 500 MakerDAO tokens worth around $580,000. This move followed MakerDAO's CEO Rune Christiansen's announcement of plans to re-implement the project on a new blockchain, potentially based on Solana. Christiansen highlighted the technical quality of Solana's codebase, its resilience following recent events, and successful forks like Pyth Network as reasons to explore Solana. He also proposed MakerDAO's new chain as a bridge between Ethereum and Solana, enhancing the multi-chain economy's network effect. A recent filing from FTX's debtor showed that the company funds were utilized for personal cash transfers to executives and other payments. The list includes over $900 million transferred to former FTX CEO Sam Bankman-Fried as cash payment, $15.5 million in cash transfers, and a $3.5 million transferred to former Alameda CEO Caroline Ellison. Notably, there's a $2.5 million payout to the American yacht group for ex-Alameda co-CEO Sam Trabuco, who purchased a boat before resigning from the company. These revelations are all part of ongoing legal proceedings against SBF with allegations of misappropriation and embezzlement of customer deposits. While prominent crypto venture capital firm Paradigm is parting ways with its CFO Nathan Apsell and their general counsel, this announcement comes from an internal email that was obtained by the publication of the block. COO Alana Palmedo expressed gratitude for their contributions, mentioning the growth and achievements Paradigm has seen during their tenure. Katie Byber, the chief legal officer who joined over a year ago, will continue to lead the legal team. Paradigm intends to announce a new CFO in the coming months with no reduction in overall headcount, considering recent hires in other areas. And finally, in September 3 crypto projects, Apecoin, Aptos, and Optimism are set to unlock a total of over $100 million worth of tokens into the circulating supply. The governance token of Apecoin DAO Ape will release 40 million Ape tokens on September 17, with the majority of these tokens going to launch contributors. Optimism's OP will unlock 24 million OP tokens at the end of September, where 33 million core contributors and investors will receive portions of those tokens. And Aptos's APT will release 4.5 million tokens on September 12, which is 2% of their circulating supply, valued at 25 million. Community members and the Aptos Foundation will receive those tokens. Well, that's all for us today. Visit us at dailycryptoreport.io for sources and links. And listen to us everywhere else you podcast under Daily Crypto Report. Hey, my name is Lovan Rumph, and I've been working my ass off as a celebrity stylist by day. And a podcast host by night. At the Low Life Podcast, it's all about keeping it real. We're talking fashion, beauty to religion, sex, drugs, mental health. I mean, there's no topic off limits here and vulnerability is mandatory. You can find my podcast, The Low Life, that's L-O, no W, everywhere and anywhere you listen to your podcasts. New episodes are out every Thursday. We'll see you then.
Crypto Critics' Corner
"sam trabuco" Discussed on Crypto Critics' Corner
"And Lifeboat was around before EA existed, but it shares many of the same philosophies and crypto people were super into that as well. So it's like a certain brand of person, a fear-mongering individual, seems to be quite attracted to these. That's not to necessarily suggest, as you said, that it was founded with those principles at top of mind. I do want to talk about, though, how much this affected SBF, the way he did business. In case you're unaware, SBF and Tara McElhay, who founded Alameda Research, they're both effective altruists. And so was Caroline Ellison. So a lot of the people involved in or she sort of was. I know Sam Trabuco as well, like a bunch of these people who were involved in this were effective altruists, and they took it very, very seriously. There's a document shown in one of these lawsuits or whatever, where it shows that Sam Bankman-Fried made a list of what he was doing that was harming people versus the good that he was doing or future good that he could do and how he was trying to weigh those concerns and weigh them actually monetarily. It wasn't just some weird system that he invented. He was actually weighing every dollar and cent as a good or bad thing. To me, that is proof positive that this philosophy played a key role in how he ended up committing fraud. Yes. But I think also you should detail how those effective altruists were very specifically involved right at the very founding of Alameda Research, because I think that kind of points at some of these issues, because Tara and some of the other people they were able to connect Sam with was the money that got Alameda Research to where it was, right? Yeah. No, I mean, that's it. Exactly. And I think a community in general was also, a lot of them were the cheerleaders for SPF, right? The benefits they were receiving were millions of dollars in donations, and ultimately that is how they measure whether their goal is succeeding or not. So again, the reason I want to talk about this, though, is because after acknowledging it, so if you go back, William McCaskill, you said there's another, sorry, who's the other gentleman involved in the beginning of EA, the founding of EA? Well, there's, I think, several people who come before McCaskill. Like I would point towards Toby Ord at Oxford and Peter Singer as both like effective altruists and stronger philosophers and writers than McCaskill. But McCaskill's like particular place of prominence in this story comes because in the United States, he acted as what a friend of the show, David C. Morris, called an effective altruism power broker, where he was connected to so many of these groups, so many of these funders and so many of these things that even in 2018, when effective altruists leaders were warned about some of Sam Bankman-Fried's improprieties, including his lies and sleeping with subordinates, it was McCaskill that like pushed to keep Sam Bankman-Fried centered in kind of this effective altruism community under this belief that like Sam Bankman-Fried would eventually be able to bring all of these other benefits to their broader community, that it was worth sacrificing and perhaps some of these earlier points in order to achieve this bigger goal. And that I think is kind of the rod at the heart of effective altruism, right? And like the reason it can be really hard to create like a coherent utilitarian moral philosophy is that it becomes really easy to use the ends to justify the means in a way that allows the means to just continue getting worse and worse and worse. And that is compounded if you effectively place an infinity on one side of your balancing scale by saying, no, this will kill all humans who will ever live in the future. And so represents the thing that it would be okay if we killed 90% of humans now, if it meant saving that entirety of humanity forward, right? It's possible to concoct that kind of justification when you get really into kind of the long-termist EA stances, and that has just obvious harms. Well, it's funny that you say this because I'm looking, so just to be clear to everyone, McCaskill did address this right around when FTX collapsed back in November. So he did address this, and what he specifically said talks about what you are exactly suggesting. He says, for years, the EA community has emphasized the importance of integrity, honesty, and the respect of common sense moral constraints. If customer funds were misused, then Sam did not listen. He must have thought he was above such considerations. A clear thinking EA should strongly oppose ends justify means reasoning. I hope to write more about this soon. In the meantime, here are some links to writings produced over the years. So he specifically says that ends justify the means isn't a healthy EA perspective. And yet, right? Like it's hard for me to fathom EA existing if you don't have some level of ends justify the means. If you don't have some, well, you have to weigh out the good versus the bad. That's part of the whole thing. And that has to be met with ends justify the means because otherwise you don't really have a philosophy at all. So it's a confusing kind of backwards statement to me. I feel confident that that statement from McCaskill was not written by a philosopher but by a public relations executive. Because like I kind of already alluded to here, like common sense, moral, whatever, isn't something that exists a priori, right? Like the fundamental basis of the philosophy that drives this is that you determine what's moral by assessing on balance it's good and it's bad. And there's variations of utilitarianism like rules-based utilitarianism where you modify that statement to say this type of action as a rule is more good than bad. And that gets around some of the issues but still fundamentally to presume that there was an obvious set of moral actions that the EA community agreed on and that Sam Bankman freed was clearly in violation of is particularly suspicious in light of the fact that time reporting suggests that William McCaskill personally advocated to keep Sam Bankman freed in the community after he knew he was violating common sense moral frameworks by lying and sleeping with his subordinates. Again, my issue with this statement now and that he's back, that he has not addressed any of this is that at the end of this statement in November, he specifically says, I was probably wrong. I will be reflecting on this in the days and months to come and thinking through what should change. He also says, if FTX misuse customer funds, then I personally will have much to reflect on. Sam and FTX had a lot of goodwill and some of that goodwill was the result of association with ideas I have spent my career promoting. If that goodwill laundered fraud, I am ashamed. So if he's so ashamed and he feels like his ideas about this philosophy indeed helped create this fraud, which is kind of like what is being suggested, I don't think anyone has denied that now at this point that the philosophy helped drive their decision making. Why has he not said anything about it? Why is he not saying like, look, I am wise? I mean, I know why, right? Like you said, there's legal reasons and other things. He was an unpaid advisor and all that for the Founders Fund. He was involved in other ways. I am sure they've accepted who knows how many donations. So I'm sure there's some legal reason for this, but that's such a bullshit excuse, especially when your whole shit is about your philosophy. I'm not surprised. I'm not even disappointed. Why would a cult address allegations against the cult? I do just want to ensure that people keep this perspective in mind as he tries to come back into the public fold and the public sentiment. We're talking about the philosophy of effective altruism and all these things and taken just as like a philosophy, as a thing you're thinking about and perhaps using like personally to guide yourself may have somewhat limited harms. I think what's particularly interesting in this case is how some of these social dynamics have developed around effective altruism. There's another community that calls themselves the rationalists and many of the people in this community that congregates in places like Les Rung consider themselves effective altruists. And like these communities often have a type of norm where you're expected to kind of present your ideas in a certain way, address other people's ideas in a certain way, and it's a sort of kind of epistemic detachment that you're supposed to maintain when you're interacting with it.