The Fake Genius: a $30 BILLION Fraud.

I'm very excited to introduce you to Sam bankman freed everybody likes a story about an underdog he's the CEO of the cryptocurrency exchange FDX the wealthiest person under 30 in the world someone out of the ordinary what makes him so different and so rich he said you always wanted to get rich but not for the reasons you might expect an unlikely genius who comes once in a lifetime living with roommates sleeping on a bean bag in his office yeah the guy's a nut he doesn't sleep Sam is a genius and Michael Jordan of crypto if

you will somebody who wants to change the world for good he decided that he wanted to dedicate his life to doing good for the world this is not one of those stories in the span of about one week sand bank and freed went from a crypto billionaire to bankruptcy the southern district of New York has confirmed the arrest of FTX founder Sam bankman freed the once crowned king of crypto now adorned in handcuffs in the month of November 2022 one of the biggest Tales of financial fraud was unraveling this is worse than theranos this is

worse than Madoff and it all centered around one man and a Web of Lies spun over the course of a few years the devil in nerds quote is a stunning fall from someone who is what's considered kryptos Golden Boy many out there who believe he's just a pathological liar I remember watching it unfold and wondering how everyone seemed to believe it from Wall Street to celebrities here's my boy Sam from FTX and even Washington DC is ftxt were among the top political donors the multi-billion dollar class action lawsuit accuses FTX its former CEO and around

a dozen celebrities of causing some 11 billion dollars in U.S investor losses over the last few months I wanted to find the pieces of the puzzle a puzzle that had managed to fool so many but what I found was a story that left people broken it felt like everything I worked up to this point in my life has been swept away and my biggest fear that this is not over some people think this Story begins and ends with Sam Bachmann freed but that's wrong it is doomed to repeat itself [Music] thank you first for the

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want to make money and they want to make it fast it can be out of greed it can be out of desperation but if you tell someone that there is a box that they can put their money into and that box will return back tenfold what you gave it how could you not be tempted from the years of 2020 to 2021 the world of cryptocurrencies had become that box for regular people what is bitcoin what is up with Bitcoin people are getting rich from it everyone's chasing it Bitcoin is going up forever Deirdre the mentality

was simple you think of crypto you think of getting rich he became a millionaire at 24 all by investing in Bitcoin I made Millions with crypto you probably made Millions as well we all knew someone that never talked about investing before and suddenly saying how they're putting their money into crypto that it's the future from a struggling music producer from bankrupt to a millionaire it's a millionaire this is basically winning the lottery become the next crypto millionaire even celebrities were getting into it you have jumped into the world of cryptocurrency I'm going to Tweet out

the information on how you can buy this nft look at this and look like they could be friends they're Buddies the question really became how do I get my piece of the pie to understand the story that's about to unfold I feel like the Super Bowl of 2022 is the best place to start not because of the sports but because of the ad breaks an advert appears featuring Larry David an actor who hasn't been in a commercial ever the ad takes you through various inventions in history the wheel toilets coffee voting light bulbs at each

stage of a new invention it shows how many critics dismissed and laughed at them only to be proven wrong can I be honest with you it stinks however the real Twist of this ad came at the end like I was saying it's FTX it's a safe and easy way to get into crypto and Larry responds yeah I don't think so and there it is big bold letters don't miss out on crypto nfts the next best thing and right next to it the logo [Music] if you wanted to buy crypto most regular people would have to

do it through a cryptocurrency exchange think of it like a central location that you deposit your money into and from there you can place orders to buy and sell cryptocurrencies the exchange's job is to match you with those buyers and sellers and once you've made your riches you withdraw your money from The Exchange into your bank account they are the easiest gateways into the world of crypto accessible from the very phones in your pocket within the top three cryptocurrency exchanges at the time you had binance at number one owned by a guy called Chiang pen

Xiao nickname CZ in second you had coinbase owned by a man named Brian Armstrong and then finally FTX I'm excited to be partnering with FTX if you're wondering well what is FTX FTX is like the best exchange they're a safe exchange where people can trade things like cryptocurrencies the first crypto company to win naming rights to a major US Arena FDX is a platform where they offer 85 lower fees than their top competitor they have the most coins they have giveaways or they give free coins FTX is the best crypto Exchange in the world with

no fixed fees but this week I actually want to tell you about Sam he's the young super billionaire and founder of the FTX Exchange so we arrive at Sam bankman freed nickname SBF all right Sam tell us about yourself yeah yeah my name is Sam bikeman freed I'm the yo co-founder of FTX did you ever imagine that at 25 when you got involved you would now be one of the most important people in the crypto world and have become a multi-billionaire no I well no although not only one of the nicest people in crypto but

one of the smartest as well SPF thanks for taking the time out of your day down in the Bahamas to join us how you doing over there at only 30 years old this guy had an estimated net worth of 26 billion dollars I mean Forbes had already done an article on him save for Mark Zuckerberg no one in history has ever gotten so rich so young Sam is a genius an effective altruist and he's also the wealthiest person under 30 in the world his hair was disheveled his clothes usually consisted of loose fitting t-shirts and

a pair of shorts you'd see pictures of him sleeping on bean bags in his office you trust the guy more when you see the car he drives he's worth like 20 billion dollars first of all his appearance he's only 29 years old and he typically wears a t-shirt or a sweatshirt that has the FTX logo on it khaki shorts very often when people get wealthy they buy fancy suits and so forth you haven't gone to that phase yet right not too much it sounds a little bit like most tech Bros I went to college with

not showering a ton a really messy desk he was very much the tech nerd genius stereotype you searched him up online pictures with him and celebrities like Tom Brady with politicians like Bill Clinton and Tony Blair then you find out that FTX was founded in 2019. in other words nobody knew who this guy was a few years ago I spoke with Sam earlier this month where he alluded to his plans to give most of his fortune away Sam's biggest Advantage was this image he had built himself an image of a billionaire dedicated to giving his

wealth away what's not to love about that the guy you see next to me is the most generous billionaire in the world do you have a sense of how much of your fortune you'd be willing to give away in the end I mean in the end I think almost all of it right like I'm not particularly excited you know to to dive into luxury I'm not excited about Yachts uh crypto billionaire plans to give away 99 of his money what about your own legacy Sam what impact would you want to leave on the world in

the end my my goal is is to do as much good as I can for the world second proof I mean to the world that this isn't that I really do mean it yeah around May of 2022 a guy called Mark cahodi's starts publicly broadcasting his views about FTX and sandbagman freed on Twitter in the world of Finance kahodi's is what you would call a short seller somebody that bets against the success of a company's stock and if they're right they make money only a few months after his initial tweets he had sent an email

to Bloomberg asking them to investigate sambachman freed and FTX kahodis was skeptical and one of his biggest questions was related to Sam and his background we just who was this guy really and how did he achieve his status in such a short period of time [Music] it was a fair question foreign to save the world don't get a job at a charity go work on Wall Street that was the title of a post on a forum in 2013 nine years before the Super Bowl of 2022. it was written by a guy called William mccaskill he

is the associate professor of philosophy at the University of Oxford co-founder of the effective altruism movement for the last 10 years my colleagues and I have developed a philosophy and research program that we call effective optimism he has pledged to donate everything you earn to organizations he believes will do the most good effect of altruism is a philosophy and the community that's about trying to figure out how can we do as much good as possible with the time and money we have what it boil down to in its simplest form was figuring out how to

make the world a better place using the most evidence-based approach one strategy was known as earning to give which meant maximizing your own wealth so that you could give away more to charitable causes or as others might put it get filthy rich for Charity's sake he described a student who had been convinced by the philosophy and now works in finance at a trading firm called Jane Street giving away 50 of his income to charitable causes in the same year he made that Forum post mccaskill heard of another student at MIT that may be a good

fit for the movement a 24 year old physics undergraduate went by the name Sam backman freed and just like that sambachman freed was introduced to effective altruism it was a mathematics nerd with a passion for utilitarianism and a vegan who already engaged in animal rights activism mccaskill persuaded sander instead of working for charity directly he could make a greater impact by pursuing a high-paying career then donate a substantial amount of his income to charitable causes Sam was convinced and just like the student mentioned in mccaskill's Forum post Sam decides to get a job at the

same trading firm known as Jane Street it was a popular firm amongst other effective altruists little did mccaskill realize just how much damage his new convert would cause the movement in the years to come [Music] in the summer of 2021 sambangman freed gets on a zoom call with partners of Sequoia capital a venture capital firm these were people who had invested in apple Google Instagram and I could go on the point is Sam was here to talk about FTX in the hopes of convincing Sequoia to invest money into the company he tells them his vision

for the exchange I want FTX to be a place where you can do anything you want with your next dollar you can buy Bitcoin you can send money in whatever currency to any friend anywhere in the world you can buy a banana they were impressed a few months after that Zoom call they lead a round of Investments for FTX which totaled almost a billion dollars and a year after that Zoom call two months before the collapse Sequoia Capital releases this 45-page article titled Sam banglund freed has a savior complex and maybe you should too in

that article they reveal that throughout the zoom call Sam had been playing one of his favorite video games League of Legends the article goes on to talk about Sam's commitment to the effect of altruism movement and when the author sits down with him for an interview he becomes convinced that Sam is the real deal and may very well become the world's first trillionaire they even go as far as saying that unlike other crypto companies FTX has a unique selling point their ethical Behavior there's this image of who Sam was that people were buying into an

effective altruist a crypto genius a nerd who played video games whilst casually pitching billion dollar investors Sequoia wasn't some exceptional case you know they were just one of the many big institutional names investing into FTX I mean we're talking temasek SoftBank BlackRock Ontario teachers pension who cares what the big boy institutions are doing right I mean none of that means anything to the average person remember 2021 was the year that everyone saw crypto as this Fountain of wealth for those that put their money into it to reach these people FTX had to do one thing

get in front of the things that they cared about the Miami Heat arena famous for hosting the Miami Heat NBA team well in March of 2021 it became the FTX Arena after signing a 19-year deal for 135 million dollars with FTX this year they've been spending big bucks to get mainstream name recognition TSM the popular Esports organization most known for their League of Legends team forget that it's TSM FTX now thanks to a 10-year deal with FTX for 210 million dollars FTX is putting their name everywhere Tom Brady one of the greatest quarterbacks in football

history well he's not only an ambassador for FTX now he's also given equity in the company and the same goes for the Brazilian fashion model and Brady's wife at the time Gisele Bundchen the entirety of Major League Baseball well thanks to a five-year partnership FTX were to become the official cryptocurrency exchange of the MLB every single umpire had the FTX logo embroidered on their uniform Formula One teams the international cricket Council a baseball Superstar Golden State Warriors you guys may have seen their ads they're everywhere now I'm not an expert and I don't need to

know and who could forget Kevin O'Leary one of the Sharks on the popular show Shark Tank had been rather critical of the cryptocurrency space it is a useless currency it is a useless currency to me it's garbage become the crypto boom of 2021 and Kevin signs a 15 million dollar deal with FTX to become an official spokesperson for the exchange if there's ever a place I could be that I'm not going to get in trouble it's going to be an FTX even some of the most popular Finance influencers who generally gave safe investment advice were

taking on sponsorship deals with FTX ftxus has been a sponsor here on the channel for the majority of the year I love FTX among the cheapest fees out there check out our sponsor ftxus a lot of these influencers bought into Sam's image just as much as actual institutional investors did the real question was how much of that image was real or just a facade foreign [Music] Street Sam decides to quit he had an appetite for risk and by staying there he felt like he could be missing out on other opportunities one of his colleagues at

the time a 22 year old named Caroline Ellison witnessed it herself just like Sam she too was an effective altruist with a love for mathematics she thought it was unusual I mean Sam was quitting his high-paying job just because there may be other opportunities out there of course Caroline Ellison had no idea at the time just how much her own career and personal life would become entangled with Sam's without a job Stan starts writing a list of directions for his life those things included becoming a journalist venturing into politics fundraising for a non-profit and building

a startup he would go on to achieve almost all of those things but before making a decision William mccaskill offers him a job at the center of effective altruism a company for the EA movement to conduct various activities and whilst there he befriends another member of the movement a Woman by the name of Tara McCauley who was head of operations that's when Sam started noticing something overall biggest winner today Bitcoin rallied more than 10 today it's up 438 for 2017. the cryptocurrency has pushed past seven thousand dollars you just crossed the 16 000 threshold it

is in the next 20 years a million dollars a call at this point Sam didn't have much of an interest in cryptocurrencies but in 2017 the cryptocurrency world was entering a Mania although it was only a smaller scale to the one that followed in 2021 it got on Sam's radar this is late 2017 when you know you walk down the streets you hear two people talking you're like that's probably about Bitcoin I mean I don't know but you know pretty likely more importantly Sam Bachman freed had spotted something that others had not and he needed

to act fast in that same year of 2017. Sam and his fellow colleague Tara McCauley start a new company together they call it Alameda research see this this is it right here everything everything that was to come it all begins with Alameda research [Music] when you look at the name alone Alameda sounds like a research company in fact that was intentional misdirection if you named your company like we do cryptocurrency Bitcoin Arbitrage no one's going to give you a bank account that's your company name but everyone wants to serve a research institute alameda's true purpose

was to operate as a cryptocurrency trade in firm in other words they would be using their own money to invest into crypto related assets in order to make a profit but like I mentioned Sam had noticed something to purchase Bitcoin most people used exchanges and the price of Bitcoin generally remain the same across all exchanges in the world with one exception at the time some countries in Asia had been selling Bitcoin for in some cases five thousand dollars more than what it was on other exchanges in other words you're looking at five thousand dollars profit

per trade sitting on the table it was practically free money just one problem there were far too many obstacles in the way Capital controls Financial regulation anti-money laundering laws and so on and so forth most people couldn't work out how to make the trade Sam however had a card up his sleeve effective altruism thanks to a Japanese member of the EA Community Sam was able to skirt around some of these obstacles Sam also secured funding from wealthy effective altruist members specifically a loan for 50 million dollars from yarn tarlin the co-founder of Skype Alameda research

would first buy Bitcoin on a U.S exchange then sell it at a higher price on a Japanese exchange with the help of their Japanese friend now the accounts differ on how much this made Alameda research some putting the figure at 10 million dollars others are 30 million dollars either way it was a success but there's just one problem with opportunities like this they don't last forever once people start to catch on the markets tend to adjust themselves and it no longer becomes profitable by January of 2018 Alameda could no longer exploit the opportunity and then

something happened in April an event that would be kept secret for a long time an event that would rock the foundations of Sam's first company an event that would expose a side of his character in the wood foreshadow much of what was to come in Sam bangman freed always wanted to get into politics since leaving Jane Street many years ago and in 2021 he had a strong reason to follow that calling Finance has kind of been in trouble in a lot of countries in terms of regulatory issues Finance the world's largest cryptocurrency exchange and how

it just got banned in the United Kingdom Finance has been banned from Ontario Canada not authorized to operate in Japan either throughout that year Regulators across the world were setting their sights on cryptocurrency exchanges more specifically binance you know the most popular cryptocurrency exchange at the time owned by a guy called Chiang pen Zhao the UK Japan Singapore Netherlands and more were all warning finance that they were not authorized to operate within their countries Sam wanted to make sure that FTX wouldn't go down that same path how have you viewed what's been happening with binance

throughout the world in recent months a week I guess you know something else is that you know we try really hard to be as Cooperative as and with Regulators then came a sign of Hope in September of 2021 FTX was granted regulatory approval in the Bahamas not long after that Sam relocates the headquarters of both FTX and Alameda research to the city of Nassau Sam saw the Bahamas as a country that could be at the heart of this industry as Silicon Valley for crypto you're right for the presence of FDX underscores the Readiness of the

Bahamas to be at home for global leaders in the crypto space but that wasn't the only place Sam had his eyes on throughout 2021 he was looking at another prize Washington DC only months after moving to the Bahamas Sam recruits a new member into the FTX team a guy called Mark Witcher wedgen was a former commissioner for the cftc a regulatory agency in charge of regulating derivative markets in the U.S in other words he was Sam's key to the doors of U.S politics and regulation what followed was pretty impressive only a month after hiring wedge

and Sam appeared in Congress to testify for a hearing on digital assets and the future of Finance the industry has the potential to improve a lot of people's lives and we're also happy to talk with other Regulators about potential products in the United States right there in that room Sam was the face of cryptocurrency Regulation I mean rather than resist it he was embracing it FTX went on to make regulatory wins throughout 2021 we're talking Japan Europe Africa Australia they had gone down an entirely different path to binance Sam went on to become the sixth

largest U.S political donor in the two years leading up to the midterm elections we're talking an estimated number of 40 million dollars in donations other FDX Executives had also contributed I mean by the end of 2022 political donations associated with SPF and FTX Executives exceeded 70 million dollars [Music] same payment freed is the devil he is the devil in crypto this guy's literally trying to ruin crypto permanent and you know what he says oh that's not what I'm doing you liar you lie Sam Bateman free bassam's political Ambitions they started to rub people the wrong

way one of the bills that Sam had been supporting was known as the dccpa ACT a bill that would essentially make the cftc the sole regulator of the crypto industry but many in the crypto space accused this bill of being destructive to the cryptocurrency ecosystem the Sam was trying to claim a monopoly on the industry Sam Beckman freed was trying to get some kind of legal Monopoly over the crypto industry there was kind of this like culture of Silence in crypto around not opposing him opposing his views and perhaps it exposed a side to Sam

that people hadn't seen before the part of him that believed that the ends justify the means or a desire for his crypto Empire to come out on top no matter what if people would know what had happened at Alameda research in 2018 during that month of April then perhaps everyone might have seen it coming foreign co-founder of Alameda research Tara McCauley was growing frustrated not just her but many of the Alameda research employees whilst their initial trades of Bitcoin between the U.S and Japan had been successful they were now losing money and most of that

blame was being put on the other co-founder sambachmann freed now was this growing concern over Sam's alleged Reckless actions including poor trading decisions being made by him in a post made on the effective altruism Forum an alleged employee describes how he constantly displayed a flagrant disregard for legal structures and safeguards a belief that rules do not apply to him an inclination to see the ends justifying the means I mean the picture that they painted of this guy was not of a genius but of a young inexperienced Reckless individual who was harming the company with poor

management and trading decisions so Tara along with other high-level employees decide to confront Sam I mean they tell him directly you have to leave the company you Behavior can no longer be tolerated that month of April would be known internally as the April Fiasco Sam's response he refused to leave not long after that Tara McCauley and close to half the employees at Alameda many of whom were effective altruists queer allegedly those former employees raised concerns to hire members in the effective altruism Community warning of Sam's Reckless Behavior and how he was a bad representative for

the movement those allegations were supposedly ignored or not taken seriously this piece of the puzzle right here it's the one that foreshadows everything but by the time people would find out about the April Fiasco it would already be too late with a large chunk of his employees gone from Alameda research Sam had to re-establish his team first you've got Gary Wang I mean he joined Alameda research from its Inception at only 24 years old Wang supposedly met Sam at a math summer camp in 2008 he was very much the technical brains of the business nishad

Singh Facebook employee only five months before joining Alameda research age 21 years old much like Wang he helped with the technical infrastructure at Alameda then you have Caroline Ellison remember her the former colleague of Sam's at Jane Street who saw him quit turns out Sam managed to convince her to leave that job she joined Alameda research not long before the April Fiasco as a Trader then we've got Andy Krogan former employee to another trading firm and now the Chief Operating Officer of Alameda research he was the adult in the room Krogan had once told Sam

to cut his hair to which Sam replied I think it's important for people to think I look crazy now when you look at this team one thing sticks out they're very young with the trading firm like Alameda research the more money they have access to the more they can trade and the more they can profit so the Alameda team decides to put together a pitch deck a presentation that's designed to attract potential investors to invest their funds with Alameda I mean it was filled with all sorts of insane claims we're the best crypto trading firm

in the United States we haven't had a losing week in six months they boasted high returns of 15 with no risk these loans have no downside I mean to to claim no risk and to say that they hadn't had a losing week which seems to go against all accounts of what happened during the April Fiasco it felt as though Alameda was desperate for money it's unlikely that this pitch deck was successful but I guess that didn't matter because Sam had been working on a secret project so uh you got involved because you thought it would

be in a creative new area to get involved with I always want certain exchange because it just seemed like really important products in the crypto ecosystem that were worth a lot you see crypto exchangers make their money by charging a fee for every trade a person makes on their platform right so in other words they make money regardless of whether the person making the trade is losing money in May of 2019 Sam launches a brand new cryptocurrency exchange FTX he would be the majority owner whilst Gary Wang who helped build the infrastructure for it would

own 10 Sam now owned both a cryptocurrency exchange and a cryptocurrency trading firm see there's something already bizarre about this all and not just the fact that these companies are being run by Young and arguably inexperienced people but also the conflict of interest Sam owning an exchange is fine whatever but owning his own trading firm Alameda research which uses FTX as a platform you see that opens up a gaping hole for example how exactly does FTX ensure that no special privileges are given to Alameda yeah the Super Bowl of February 2022 was this defining moment

for the crypto space I mean some even called it the crypto Bowl because of how many crypto related companies were advertising during the event these companies had grown incredibly Rich over the last few years riding the waves of new investors from both institutions and regular people all handing over their cash definitely been an exciting year across crypto Bitcoin has a great track to 100K by the year end the bright orange future that is Bitcoin when you're riding high on the good times everyone and their mother was like yeah Bitcoin to 100K to a million to

10 million in 10 years the notion that the music building for the last few years could stop I had everything in a group and against my better judgment I didn't cash out seems impossible I'm not an expert and I don't need to be like I was saying it's FTX it's a safe and easy way to get into crypto until yeah I don't think so until it does [Music] FDX already started off successful I mean thanks to Alameda research they were able to provide volume to The Exchange right from the Jump by July 2019 SPF was

already in talks with investors by August that same year they managed to raise 8 million dollars not only were they getting investments from Venture Capital firms they were also raising money from their competition you remember binance right the top crypto exchange owned by a guy called CZ well in December of that year finance invests an undisclosed amount into FDX also taking an equity ownership in the company it sparked what seemed to be a friendly relationship between CZ and SBF little did Sam realize that the very man who invested that money into his company would deal

the final blow to his Empire years later but perhaps one of their smartest moves was the creation of ftt a piece of the puzzle that would become instrumental in the years to come see in the world of cryptocurrencies anyone can start their own coin I mean all they are is programmable money put on a database or as others might put it magical internet money from nothing that has no real value other than what people speculate as value to be on July 29 2019 FTX launches their token coin called ftt with a total supply of 350

million most of which was owned by Alameda and FTX the launch was a success I mean by August the price of FDT Rose to 1.81 cents which made FTX and Alameda supply of FDT tokens worth millions of dollars just like that magical internet money right but that's not the real stroke of Genius here you see the truth is since they were the majority holders of the token they could never really sell all of it I mean the price of the tokens would completely crash if they tried to do that no but what they could do

was point to their ftt tokens that are valued in the millions of dollars and use it as collateral to take out loans or to Simply say oh look how much we have in assets even though part of that is really just ftt tokens whose value is mostly tied to speculation it's almost insane to think about but it worked story of the week was the collapse of Terra Luna it was a rough rough week for crypto investors does Tara Luna just crash in five days from ninety dollars 99 down to 72 Cents Only months after the

Super Bowl of 2022 a catastrophe in the cryptocurrency space was unfolded Tara and Luna were two cryptocurrencies that had just crashed in value wiping out an estimated 60 billion dollars in the crypto space I don't think there's ever been a crypto event a bad event this large in crypto history Luna to book all my monies what was 115 Grand about a month ago was now about two dollars man the collapse of Terror and Luna was like suddenly you go from relaxing to being jolted awake on high alert because everyone is looking around and they're all

asking who will be the most affected by this who will be next after the terror and lunar cryptocurrencies collapsed The Dominoes began to fall bit by bit crypto hedge fund three arrows Capital ordered by Court to liquidate it had exposure to the now collapsed Terror USD stable coin everyone is intertwined in some way more pain in the world of crypto Voyager digital files for chapter 11 bankruptcy protection should I left my money in Voyager with all my life savings in the bid a major crypto lender went from managing billions in assets to filing for bankruptcy

I did just get by Celsius last week this is the third major crypto company to file for bankruptcy coinbase is laying off workers along with blockfi and crypto.com what is going on throughout all of this FTX and sandbagman freed were not only doing fine they were doubling down on the industry I mean in fact Sam was trying to rescue some of the companies that were going bankrupt by either giving them a line of credit or just straight up buying them out crypto world is now gonna get a bailout Sam bankman free CEO of crypto exchange

FTX is keeping the industry as prices take a hit he's keeping them stable today it was announced that Sam bigman freed up FTX was going to buy Voyager for roughly 1.4 billion dollars Sam's Empire wasn't shrinking amongst the chaos it was growing he was being pitched as this savior I mean you had people coming out and calling him the JP Morgan of the cryptocurrency industry you bailed out some companies yeah uh what money did you use to do that do you still have enough cash if you needed to do another bailout yeah they call them

the JP Morgan of crypto there's a relatively understated life for a billionaire he drives a Toyota Corolla to ftx's offices in the Bahamas he lives with 10 roommates and a golden doodle named gopher they want you to focus on this weirdo who sleeps on the beach in a commune all shucksy has CNBC down and not look at what's really going on whether it's money laundering or crime or covering a job or what's really going on behind the scenes investors believed in Sam or at least the very idea of him allegedly Andy Krogan would make sure

that investors visiting the headquarters would be able to see Sam sleeping on a beanbag and then have him wake up and enter the meetings usually wearing shorts it was intentional Sam knew that more powerful than just a balance sheet is a story by early 2022 FTX had raised billions of dollars from investors and was valued at 32 billion dollars not a single one of ftx's big name investors sat on the board of directors to oversee Sam's operations which was usually common practice investors would report that Sam wanted to run his company with little oversight and

if anyone was interested in investing they should support that decision take it or leave it in July of 2021 Sam solidified his ownership over his Empire when he decided to buy back chang Peng Xiao the founder of binance's stake in his company for a sizeable chunk of ftt tokens in return sambachmann freed was the reigning owner of his Empire with his Focus primarily on FTX Alameda research was being run by two individuals Caroline Ellison was the first who we already know of but in 2019 Sam hires a 27 year old named Sam trabucca to join

Alameda as a Trader alongside Caroline Ellison Trabuco first met SBF at a maths camp in 2010 and then two years later reconnected at MIT there were some pretty bizarre tweets made by Trabuco in 2021 at one tweet detailed alameda's strategy of holding a position in Dogecoin a cryptocurrency created from a meme based on tweets by Elon Musk and in that same tweet thread Trabuco brags about their ability Alameda to make good bets I mean it paints this picture of Alameda research one that doesn't seem like a place with sophisticated individuals making calculated trades based on

proper risk assessment yeah absolutely could pull it off without my math degree I used very little math use a lot of like Elementary School math some Bang in October of 2021 I know what you're thinking I mean of all the pieces of the puzzle so far how could things possibly go wrong from here but you're not paying attention all the pieces they are there leading up to November 2022 something started happening in August Sam Trabuco the co-ceo of Alameda research with Caroline Ellison resigns from his position stating that he's chosen to prioritize other things a

month later Brit Harrison president for the U.S subsidiary of FTX resigns from his position then a month after that an article comes out from the Block saying that Jonathan Cheesman head of over-the-counter and institutional sales left FDX last month as well something was up Sam bankman freed had managed to build himself this Empire in only a few years but the throne that he was sitting on was made of glass and then it finally arrived the coindesk rapport foreign cryptocurrency publication releases an article titled divisions in sambachman Freed's crypto Empire blur on his trading Titan alameda's

balance sheet someone had leaked Alameda researchers balance sheet and coindesk had managed to get their hands on it see a balance sheet can tell you a lot about the health of the company namely how much money they have access to and how much money they owe that coindesk report outlines that there are two divisions to sandbachman Freed's Empire FTX his crypto exchange and Alameda research his crypto trading firm but this we already knew even though these two divisions were supposed to be completely separate from one another coindesk stated that those divisions become a little bit

blurry when you look at Alameda research's balance sheet out of the 14.6 billion dollars of assets shown on Alameda researchers balance sheet a large portion of those assets with the ftt token in other words the majority of Alameda researchers Equity was coming from an illiquid crypto token created by their own sister company that report confirmed the fears that FTX and Alameda are closer linked than previously imagined or followed would be a week of disaster the founder of binance tweets to his millions of followers that he plans to sell all of the FDT tokens that binance

holds If You Remember Violence had received a batch of FDT tokens when Sam backman freed repurchased binance's shares in FTX a year prior with that single tweet alone hit the fan my dad says it will liquidate its entire position in the FTX token Finance CEO disclosed plans to exit the ftt positions as part of risk management strategy per tweets shared over the weekend are you scared are you worried that your bags are gonna go to zero Finance selling their chunk of FDT would mean driving down the value of those tokens in the process but perhaps

even worse was the Panic that that tweet caused or anyone else could see from the outside was that binance the top crypto exchange didn't believe in FTX anymore why a few hours later Caroline Ellison makes a tweet she asks if CZ would be willing to sell his FDT tokens directly to Alameda research for 22 in other words preventing a massive crash in the price of ftt of course that would be an Alameda research's benefit given that most of their assets were literally made up of FDT tokens easy basically refuses tweeting that we won't pretend to

make love after divorce and that we won't Supply people who Lobby against other industry players behind their backs what you're looking at is a showdown between two of the biggest cryptocurrency exchanges all happening on Twitter whilst this is going on the value of FDT tokens has been dropping rapidly panic and fear in situations like this are lethal if you know CZ you know he never sells anything he has a policy of long-term holding and this the way he framed it made it sound like something was truly wrong with Alameda Finance is selling it Sally at

all okay they're not even trying to hide it you see the news about Alameda it wasn't just a reflection on Alameda it was a reflection on Samberg and freed and FTX as well I mean think about it if you had your money deposited in FTX all your life savings and you find out that its sister company is facing troubles and that another Titan of the industry from an even bigger exchange doesn't want anything to do with FTX what would you do well you probably want to get your money out of there all of a sudden

massive massive massive outflows from FTX all of a sudden everyone starts getting scared in banking there's this concept known as a bank run if people start to lose their confidence in a bank for whatever reason customers are likely to start withdrawing money from their accounts however if the bank doesn't have enough money in its reserves to fulfill all of those withdrawals It ultimately collapses crypto exchanges sort of operate like Banks you deposit your money into them and for the most part your money stays in that exchanger's account until you eventually withdraw right now with FTX

anyone who doesn't want to withdraw will look at everyone else and go well I didn't want to withdraw but I also don't want to be the victim of a bankron so I kind of have to as you can imagine it's a pretty deadly cycle and nothing fuels it better than panic and confusion as the withdrawal requests on FTX start piling up Sam puts out a tweet saying that FTX is fine there's nothing to be worried about they have enough money to cover all their customers deposits and then there's silence [Music] it's easy he's now tweeting

that FTX has asked for his help he's saying that they were facing a liquidity crunch but he signed a non-binding letter of intent to buy out his Rivals company and save them from their time of distress the biggest story in all of crypto land to exchange binance announced a deal to buy rival ftx.com probably the most dramatic deal I've ever seen in the history of the crypto industry for a moment there was hope this is a Chokehold this is fighting your competitor and telling your competitor actually asks for your home this has uh been one

hell of a roller coaster if FTX was facing a liquidity crunch it simply meant that FTX has the money to support withdrawals it just isn't able to get to that money fast enough it's an issue that's solvable Elise that's what we all thought only a day after CZ announces his potential buyout Bloomberg and the Wall Street Journal both publish articles stating that for months the SEC and the cfdc both U.S regulatory agents in charge of Securities have been investigating FTX specifically whether FDX has been mishandling customer funds now hold on up to this point the

biggest concern was FDX having a liquidity crunch being unable to fulfill on customer withdrawal requests these investigations though they were suggesting something much more sinister Finance as a result of corporate due diligence as well as the latest news reports regarding mishandled customer funds we have decided that we will not pursue the potential acquisition of ftx.com Finance the largest crypto Exchange in the world is highly unlikely to go through with its proposed acquisition of struggling rival FTX after less than a day what just happened it was happening and suddenly now it's not Finance said quote Our

Hope was to be able to support ftx's customers that the issues are beyond our control or ability to help basically I couldn't believe it like you're you're I was in complete disbelief this isn't happening no this isn't real this isn't real and that was it the death sentence Sam comes out with a Twitter thread saying that he's sorry in that thread he said that he's going to do right by the users that he's doing everything he can to raise liquidity that they're in talks with a number of players tonight the cryptocurrency world is really just

moments ago FTX filed for bankruptcy from a 32 billion dollar company to bankruptcy in the matter of just four days or so there's so much we don't know there's so much we don't know well here's what we know he's broke and he's in big trouble he's in big trouble up to this point nobody truly knew how did one of the largest crypto exchanges run by a man who was only a month ago seen as this savior to the crypto space within a week suddenly filed for bankruptcy there was a sense of what the hell just

happened whatever had gone wrong whatever Sam had been hiding throughout all of these years it was time for it all to come to light just a few days after declaring bankruptcy Sam begins his now Infamous tweet thread which just began cryptically as one what over the next few hours he starts tweeting a string of letters eventually forming the words happened I don't even know what is going on here I mean the incompetency here is absolutely mind-boggling here from SBI like who does this like why would you do this what what is he trying to get

attention is he just like toying with us I saw what Sam was doing it was like adding insult the injury then came the media reports about how FTX may have been taking customer deposits and loaning them out to their sister company Alameda research some figures citing 10 billion dollars worth of loans now you have a situation where not only has the fall been so sudden but there are accusations of seriously fraudulent Behavior you're not gonna believe this between one billion and 2 billion of FTX customer funds disappear it's been one of the most depressing one

of the most difficult 48 56 hours of my life FTX what is going on here right there's a lot of alarm bells ringing there's not a lot of answers that are currently circulating there's this Rising feeling of panic and confusion and anger people were basically picking up their pitchforks and going who is responsible for this and of course some of the first people to feel that anger were the former promoters of FTX I can't trust anybody now that had any very pissed off at these YouTube fluffers who have been promoting FTX over the past year

or so all paid eye-watering amounts of money to promote to this garbage I can't even begin to share how devastated and sorry I am A-list celebrities plus Kevin O'Leary told you what a great firm it was I don't think that guy has an evil bone in his body Kevin O'Leary Mr Wonderful is going around and in a Despicable way he's still standing up for Sam bankman free you can love him or hate him given what's happened but he was one of the most brilliant Traders in the crypto Universe Tom Brady Gisele Bundchen Larry David Naomi

Osaka and Steph Curry are among the celebrities accused in a class action lawsuit class action lawsuit alleged that the crypto platform FTX misled customers leading to billions of dollars in lawsuit if you had money there if you trusted them if you played by the rules your money's gone people wanted answers how could this have happened how didn't anyone see this happening most importantly what just happened then came the bankruptcy filings from John Ray never in my career have I seen a complete failure of corporate controls and such a complete absence of trustworthy financial information has

occurred here those were the infamous words from John Ray the new CEO of FDX whose job it was to preside over the bankruptcy proceedings John Ray was the same person who oversaw the bankruptcy of Enron one of the largest cases of corporate fraud in American history in the FTX filings John Ray paints this picture that starts to look really daunting I mean first have a look at this this right here is just a taste of how convoluted and complex Sam backman Freed's Empire really was every single box you see is a company all of which

fit under a particular silos of the Empire including Alameda research and FTX all of which have their majority ownership tracing back to Sam bankman freed John Ray outlines how the empire fell under hands of a very small group of inexperienced unsophisticated and potentially compromised individuals I mean the stuff that came out from those filings just became more and more insane SBF had supposedly been using applications to communicate which was set to Auto delete after a short period of time encouraging other employees to do the same they had been using software to conceal the misuse of

customer funds one part in particular mentioned how Alameda research was specifically given an exemption from the Auto Liquidation protocol which is a mechanism designed to stop customers on FTX from borrowing more money than they should be from the exchange it reveals some absolutely mind-boggling things including amongst others the fact that FTX didn't even have an accountant as all of this is going on I think most people expected Sam to go on the run right or or just to stay silent anything that wasn't what he actually did the first big announcement came from the New York

Times They were hosting an event with some well-known speakers and among those speakers was none other than Sam Bachmann freed the shock to everyone was threefold I mean first that Sam is still active and staying in the Bahamas seemingly facing no consequences for what's happening second that the New York Times is platforming what may be the biggest Financial criminal of the last decade and third that he isn't running he's doing a damn media tour Sam bankman free joins us right now live from the Bahamas I didn't ever uh try to commit fraud on anyone I

I was excited about the prospects of FTX a month ago was there co-mingling of funds that's what it appears like it appears like there's a genuine commingling of the funds that are of FTX customers that were not supposed to be commingled with your separate firm I ain't knowing leeco mingle funds some admitted that mistakes were made but pretty much denied any sort of fraudulent Behavior the first Network interview with Sam bankman freed the founder of the cryptocurrency exchange FTX so you do know and you did know that FDX deposits were being funneled to Alameda so

I was vaguely aware that that was how some wires were being sent in the first place um didn't that set off alarm bells in your head look I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there here's what Mark Cuban has to say about that yep he said if I were him I'd be afraid of going to jail for a long time then when our stories coming out about FTX and its senior Executives including Sam Bachman Freed's very own family spending

up to 300 million dollars on property in the Bahamas other stories about how most of Sam's inner circular FTX and Alameda were living in the same luxury Penthouse apartment in the Bahamas rumors and allegations that all 10 had been involved in romantic relationships with each other old tweets of Caroline Ellison were brought to the surface of her use of amphetamines at the picture that was being painted was of young inexperienced and Reckless Executives running a company responsible for billions of dollars some described it as a operation ran by a gang of kids in the Bahamas

while Sam had all the Limelight it wasn't quite clear what was going on with other players in the story Caroline Ellison had been missing and some people reportedly spotted her in AIDS Starbucks Gary Wang also became a topic for conversation namely who the hell was this guy where did he come from because there was barely any information about him out there and his partner is a guy named Gary Wang and no one can find on Gary Wang and the only thing you can really find on Gary Wang on the Internet is one picture and a

picture of his back facing a computer where he was a advisor to Sequoia I think Sam was convinced that if he continued speaking if he could keep telling people that his goal was to make customers whole that he would be fine you're certain that it's once the dust is settled and once all the investigations have happened that you won't be arrested for fraud I don't think I will be I don't think that I I I don't think I tried to do anything wrong um the once Crown King of crypto now adorned in handcuffs former billionaire

FDX founder Sam bankman freed arrested in the Bahamas today on the 12th of December Sam mcmen freed was eventually arrested in the Bahamas at the behest of the United States very shortly after that both the SEC and the cftc file complaints against sandbachman freed and FTX those documents they alleged even worse allegations bangman freed raised more than 1.8 billion dollars from investors unbeknownst to those investors bangman freed was orchestrating a massive years-long fraud diverting billions of dollars of the trading platform's customer funds for his own personal benefit and to help grow his crypto Empire it

just got progressively worse these documents allege that from the very beginning of ftx's creation FTX would take the money their customers deposited into their accounts and provide Alameda research unlimited access to them those funds would then be used to make speculative Investments pay for lavish real estate and even large political donations then when the crypto Market started crashing in 2022 Alameda research couldn't pay back the loans that were now being demanded from them so FTX and the orders of sambachman freed directed billions more of customers assets to Alameda research to pay those loans quote there

was no meaningful distinction between FTX customer funds and Alan meet his own funds we're now just recapping the news that just broke the SEC filing charges against Sam bankman freed unbeknownst to those investors Sam Beckman free was orchestrating a massive years-long fraud diverting billions of dollars the cftc has now sued Sam bank and freed for violations of federal Commodities laws there are also claims that those Executives took hundreds of millions of dollars in loans from Alameda and used it to buy stuff like real estate over the years trusting customers had been putting their money into

FDX accounts unbelanced to them their money would be taken and used for whatever means Sam backman freed saw fit I was following the situation quite well after all of this and I was horrified how did this go up for so long how can I do this kind of these kinds of things without no oversight this morning we unsealed an eight count indictment charging Samuel bankman freed ftx's founder with a series of interrelated fraud schemes that contributed to ftx's collapse well tonight he's in jail in the Bahamas facing U.S charges and what a federal prosecutor calls

one of the biggest Financial frauds in American history those charges included committing and conspiracy to commit wire fraud on customers and lenders Securities fraud money laundering and violation of campaign Finance laws a total of eight criminal charges based on that information alone Sam was looking at 115 years in prison the southern district of New York has filed charges against Caroline Ellison the former CEO of Alameda research and Gary Wong a co-founder of FTX in connection with their roles in the frauds that contributed to ftx's collapse both Miss Ellison and Mr Wong have pled guilty to

those charges the once Inner Circle members of sambang and Freed's Empire had now turned against him from his jail cell in the Bahamas Sam Bachman freed would agree to be extradited back to the United States where he pled no not guilty to the charges levied against him setting himself up for a trial in October of 2023. in the meantime Sam bankman freed remains on house arrest at his parents home in California only a month ago this was a man who was at the height of his Fame and reputation that was all shattered in a matter

of weeks FTX had exposed a resounding failure on so many fronts and ultimately the price was paid not by Sam bangman freed but by the real victims in this story it's easy to throw around headlines with big million dollar figures of losses but the real losses came from those who didn't have millions to lose it felt like everything I worked up to this point in my life has been just like there were different memories flashing in my head of all the races you get that were approve all the money you get Christmas bonuses it would

be all the same if I just took those checks and burned them and thrown them into the wind or whatever what would you say to if you if you could speak to him if I could appeal to his Humanity if there's any left just ask him to make it to make it right and you can't even imagine what this did to people that are way less fortunate than you and how it really destroyed lives I wish I could say that this story ends here but I don't think that's the case arguably one of the biggest

catalysts for ftx's collapse began with Chiang pen Xiao otherwise known as CZ the owner of the largest cryptocurrency Exchange in the world finance Finance throughout its years has struggled with regulators and plagued with allegations of allowing money laundering through its platform a hackers group called Lazarus which funds the North Korean weapons program Hydra which is a dark net drug dealing Network Grand effects which is run by organized criminals the thing they have all got in common is they used a crypto exchange platform called binance Finance just like FDX has their own token called BNB and

just like FTX binance are the majority holders of that coin Chiang Peng Zhao in addition to being the majority owner of binance is associated with two other crypto trading firms much like Alameda research one of which has been reported to have received around 400 million dollars from the U.S Finance exchange now it's unclear whether that money came from customer funds or not and binance has said that these findings are outdated but without any further elaboration after the events of FTX binance releases a proof of Reserve ordered from a third party in an attempt to Showcase

their transparency and prove that all customer assets on the platform are fully backed that report has since been taken down by the firm who performed the order citing concerns over the way these reports are understood by the public and that they have limitations when providing assurances to customers this is this is a little bit of a red flag for me while they would pull this Finance has some weird stuff going on right now they essentially said that the audit only covered what binance wanted them to see to this day CZ has not clearly specified where

binance is headquartered some big moves in the crypto space this hour the cftc suing the world's top exchange binance and its founder CZ over several years we've found that binance has been evading U.S law their lawsuit Begins by identifying binance as an exchange quote emerging through an opaque web of corporate entities the binance has acted with intentional disregard for federal law including laws designed to prevent and detect money laundering and Terror and financing is ban in the UK is under investigation by U.S justice department for money laundering 8 billion dollar money from Iran the regulator

should be thinking carefully that's a walking time bomb you want to know the worst part about the FTX story it's that I don't think it's the last