7-Mar-23
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[00:00:00.000 –> 00:00:04.000] Joe Rogan, why can’t I check it out?
[00:00:04.000 –> 00:00:06.000] The Joe Rogan, experience.
[00:00:06.000 –> 00:00:09.000] Train by day, Joe Rogan, podcast by night.
[00:00:09.000 –> 00:00:10.000] All day.
[00:00:10.000 –> 00:00:13.000] Nice to meet you, man.
[00:00:13.000 –> 00:00:14.000] Hey, thanks a lot, man.
[00:00:14.000 –> 00:00:18.000] I appreciate what you do, but you do is a very valuable service.
[00:00:18.000 –> 00:00:21.000] Because you go so deep on some of these scammers.
[00:00:21.000 –> 00:00:23.000] It’s like it’s so important.
[00:00:23.000 –> 00:00:26.739] Because there’s so many people that just, they don’t really understand what’s going,
[00:00:26.739 –> 00:00:29.539] like the FTX thing, for example, the best one.
[00:00:29.539 –> 00:00:31.620] Cause I was so in the dark about this thing.
[00:00:31.620 –> 00:00:32.859] I was like, what is happening?
[00:00:32.859 –> 00:00:34.140] Like what are they doing?
[00:00:34.140 –> 00:00:35.820] Try to break it down for us.
[00:00:35.820 –> 00:00:37.659] Like what, first of all,
[00:00:37.659 –> 00:00:41.179] what is a, it’s a crypto exchange, right?
[00:00:41.179 –> 00:00:43.340] So how does that work?
[00:00:43.340 –> 00:00:48.399] So the first question is when you get in, when you learn about crypto, you’re like, it’s this magic internet
[00:00:48.399 –> 00:00:49.399] money.
[00:00:49.399 –> 00:00:50.399] Magic.
[00:00:50.399 –> 00:00:53.000] How do you get some of that? How do you get some of that magic internet money? Well, you
[00:00:53.000 –> 00:00:57.280] have to go somewhere to buy it. And so it’s a crypto exchange is where you kind of go.
[00:00:57.280 –> 00:01:04.680] You put your fiat on your dollars or whatever, euros or whatever, and you put it into this
[00:01:04.680 –> 00:01:06.760] crypto exchange. They have a bank and
[00:01:07.120 –> 00:01:11.980] They work with that bank then they exchange that money for some type of crypto token
[00:01:11.980 –> 00:01:17.299] There’s a lot of different tokens out there and explain tokens because I don’t understand tokens
[00:01:17.299 –> 00:01:24.099] I know there’s crypto and there’s tokens like what is the difference between the two? Yeah tokens like is the individual you can think of currency
[00:01:24.099 –> 00:01:25.480] Right? So it’s like the individual.
[00:01:25.480 –> 00:01:27.799] So Bitcoin is, you have Bitcoin,
[00:01:27.799 –> 00:01:29.920] then you have, it’s one of the cryptocurrencies.
[00:01:29.920 –> 00:01:33.319] You have Ethereum, you have Dogecoin,
[00:01:33.319 –> 00:01:37.200] you have Safemoon, you have FTT,
[00:01:37.200 –> 00:01:40.219] which is what FTX was using as their native token.
[00:01:40.219 –> 00:01:43.319] So a lot of these guys, you’ll start a crypto exchange,
[00:01:43.319 –> 00:01:45.519] and then you’ll launch your own token
[00:01:45.519 –> 00:01:49.280] that people can invest in, sort of like they’re investing almost in your crypto exchange.
[00:01:49.840 –> 00:01:55.200] And so that was actually one of the ways that FTX really perpetuated their fraud.
[00:01:55.200 –> 00:01:58.239] I mean, I can break it down. How much do you know about the FTX situation?
[00:01:58.239 –> 00:02:00.400] Let’s break it down for people that don’t know about it.
[00:02:00.400 –> 00:02:05.359] Yeah. Let’s do it. So FTX was this crypto exchange located out in the Bahamas, which is a great place to put your… Why do they do it so at the acts was this uh… crypto exchange located
[00:02:05.359 –> 00:02:06.719] out in the Bahamas
[00:02:06.719 –> 00:02:09.919] which is a great place to put your uh… what are they doing in the Bahamas
[00:02:09.919 –> 00:02:11.360] because it’s unregulated
[00:02:11.360 –> 00:02:15.439] so the problem with doing stuff in the united states
[00:02:15.439 –> 00:02:17.759] or you know some
[00:02:17.759 –> 00:02:21.199] something like europe or something like that is your you are subject to all
[00:02:21.199 –> 00:02:24.639] these regulations which require you to be a little more careful
[00:02:24.639 –> 00:02:25.919] all those are pesky.
[00:02:25.919 –> 00:02:27.520] Yeah, they’re annoying.
[00:02:27.520 –> 00:02:31.479] So like the famous example is like Coinbase is in America
[00:02:31.479 –> 00:02:33.879] and they have to file all these forms.
[00:02:33.879 –> 00:02:36.159] They have to be, they’re a regulated entity.
[00:02:36.159 –> 00:02:37.360] They’re a publicly traded company.
[00:02:37.360 –> 00:02:38.979] So they have to report everything.
[00:02:38.979 –> 00:02:41.159] So if you’re offshore, you can kind of not do any of that.
[00:02:41.159 –> 00:02:42.919] You can play fast and loose.
[00:02:42.919 –> 00:02:45.680] And for some people, they think that’s better.
[00:02:45.680 –> 00:02:49.319] They can offer, let’s say, 100x leverage.
[00:02:49.319 –> 00:02:53.120] You have a dollar, I’ll let you trade with $100.
[00:02:53.120 –> 00:02:56.520] And that’s gonna be one reason you come to my offshore exchange.
[00:02:56.520 –> 00:02:58.039] I can offer you more leverage than the guys
[00:02:58.039 –> 00:03:01.159] who are like Coinbase or something like that.
[00:03:01.159 –> 00:03:04.520] So FTX launches, let’s start with who Sam Bankman Fried is.
[00:03:04.520 –> 00:03:05.979] He’s kind of at the center of all of this.
[00:03:05.979 –> 00:03:12.500] Sam Bankman freed is this guy who comes, he’s the son of two Harvard lawyers. Then he comes
[00:03:12.500 –> 00:03:19.259] up prep school. He’s kind of like built for success, right? He goes to MIT, goes to Jane
[00:03:19.259 –> 00:03:24.039] Street as this quantitative trader. And then he goes into the crypto space and he launches
[00:03:24.039 –> 00:03:31.360] FTX. He’s very young, right? How old is he? I think he was. He is young. I’m not, maybe you can look that up, Jamie.
[00:03:32.400 –> 00:03:38.080] 31. He launches Alameda Research First, which is just like this trading firm,
[00:03:38.080 –> 00:03:42.479] which basically the idea here is we have some ideas. We’re going to raise a little bit of money,
[00:03:42.479 –> 00:03:45.180] and we’re going to do these trades that are profitable and crypto.
[00:03:45.180 –> 00:03:47.180] So the way he first made his money
[00:03:47.800 –> 00:03:50.479] Was he did something where he bought
[00:03:51.199 –> 00:03:52.840] Bitcoin in
[00:03:52.840 –> 00:03:56.580] The US and he sold it on these Japanese exchanges where it was worth more
[00:03:57.080 –> 00:03:59.219] so this there he was
[00:04:00.159 –> 00:04:07.800] arbitraging this difference in prices and then after he made his money that way, he launches FTX in 2019.
[00:04:07.800 –> 00:04:10.199] And that’s a crypto platform where,
[00:04:10.199 –> 00:04:11.560] honestly, you can make a lot more money
[00:04:11.560 –> 00:04:13.479] than just with a trading firm.
[00:04:13.479 –> 00:04:17.000] So FTX, quickly skyrocketed in popularity.
[00:04:17.000 –> 00:04:19.959] They bring on people like Tom Brady to promote it.
[00:04:19.959 –> 00:04:21.600] Larry David and the Super Bowl.
[00:04:21.600 –> 00:04:25.920] They kind of get buy-in from all these big sort of names
[00:04:25.920 –> 00:04:32.360] and also reputable people like BlackRock, Sequoia Capital, they all invest in this guy.
[00:04:32.360 –> 00:04:36.360] Kevin O’Leary famously promoted it for like $18 million.
[00:04:36.360 –> 00:04:38.519] They gave him $18 million to promote it?
[00:04:38.519 –> 00:04:40.399] He says he lost it on the platform.
[00:04:40.399 –> 00:04:46.480] He says the $18 million was on FTX or whatever and he never he never got a dollar out of it
[00:04:46.800 –> 00:04:52.240] But that was what the deal is for so they were paying everybody to promote this FTX
[00:04:52.720 –> 00:04:56.199] Crypto exchange and the idea was is this is the next
[00:04:56.959 –> 00:05:00.639] The next big thing right and this is where you’re gonna make money
[00:05:00.680 –> 00:05:05.240] There was a lot of fear of missing out or FOMO in the markets
[00:05:05.240 –> 00:05:06.240] at the time.
[00:05:06.240 –> 00:05:10.319] Everyone thought, oh, cryptos, you have to get in now, right?
[00:05:10.319 –> 00:05:13.519] Because if you get in now, you’re going to make some money.
[00:05:13.519 –> 00:05:20.759] So people invested in FTX thinking that this is going to be a safe platform.
[00:05:20.759 –> 00:05:22.920] This kid is smarter than everyone else.
[00:05:22.920 –> 00:05:24.480] He’s the son of Harvard lawyers.
[00:05:24.480 –> 00:05:25.899] We just can’t lose.
[00:05:25.899 –> 00:05:28.600] And nobody paid attention to some of the red flags
[00:05:28.600 –> 00:05:30.899] that were going on until ultimately was too late.
[00:05:30.899 –> 00:05:34.399] It turns out he was pilfering FTX,
[00:05:34.399 –> 00:05:38.000] the customer deposits, and was using it in Alameda Research,
[00:05:38.000 –> 00:05:41.199] which was his trading firm to try to make extra money,
[00:05:41.199 –> 00:05:42.199] and he lost it.
[00:05:42.199 –> 00:05:45.720] And so this is all because it’s unregulated.
[00:05:45.720 –> 00:05:48.399] Like if he was doing this, like Coinbase can’t do this.
[00:05:48.399 –> 00:05:49.399] Is that correct?
[00:05:49.399 –> 00:05:51.639] Yeah, Coinbase is much more heavily scrutinized.
[00:05:51.639 –> 00:05:54.680] They actually have to file with the SEC.
[00:05:54.680 –> 00:05:57.160] They have to say what they have, where they’re putting their money.
[00:05:57.160 –> 00:06:01.040] They’re subject to more regulation about like how they take care of customer deposits.
[00:06:01.040 –> 00:06:05.920] One of the big things with FTX was they told people, hey, you put your money with us, we’re not gonna touch it,
[00:06:05.920 –> 00:06:06.759] we’re not gonna move it.
[00:06:06.759 –> 00:06:09.079] That’s what FTX said in their terms of service.
[00:06:09.079 –> 00:06:11.959] So one of the really big problems was they actually
[00:06:11.959 –> 00:06:13.480] weren’t doing that, but nobody knew,
[00:06:13.480 –> 00:06:15.600] because nobody had to look at their books.
[00:06:15.600 –> 00:06:18.720] Like it was very opaque, nobody knew what was going on
[00:06:18.720 –> 00:06:19.800] behind the scenes.
[00:06:19.800 –> 00:06:21.600] So even though they said, like, we’re not gonna touch your
[00:06:21.600 –> 00:06:24.199] money, as soon as you deposited Bitcoin,
[00:06:24.199 –> 00:06:25.959] I mean I talked to some of the insiders at Alameda,
[00:06:25.959 –> 00:06:29.839] they said they had this backdoor system
[00:06:29.839 –> 00:06:33.800] to where they could see you, Joe, deposit a Bitcoin on FTX.
[00:06:33.800 –> 00:06:35.319] They could grab that Bitcoin and start trading
[00:06:35.319 –> 00:06:36.160] with it immediately.
[00:06:37.680 –> 00:06:38.759] Even though they were never supposed
[00:06:38.759 –> 00:06:40.199] to be able to touch your money, obviously.
[00:06:40.199 –> 00:06:41.040] That was the whole point.
[00:06:41.040 –> 00:06:42.279] It’s like, you deposit with us,
[00:06:42.279 –> 00:06:43.600] we’re not going to do anything with your money.
[00:06:43.600 –> 00:06:44.439] It’s your money.
[00:06:44.439 –> 00:06:46.319] It’s almost like a bank,, you deposit with us. We’re not going to do anything with your money. It’s your money. It’s almost like a bank.
[00:06:46.319 –> 00:06:47.800] You deposit with a bank.
[00:06:47.800 –> 00:06:52.759] Your bank isn’t supposed to go ahead and take your money and go start trading with it unless
[00:06:52.759 –> 00:06:55.360] obviously we have FDIC insurance, stuff like that.
[00:06:55.360 –> 00:06:56.920] But they didn’t have that.
[00:06:56.920 –> 00:07:01.160] They just take your money, go trade with it, and that’s where the disaster started.
[00:07:01.160 –> 00:07:05.000] I really enjoyed you catching him on Twitter spaces.
[00:07:05.000 –> 00:07:06.000] I really enjoyed that.
[00:07:06.000 –> 00:07:07.000] I listened to that whole thing.
[00:07:07.000 –> 00:07:15.000] Because before that, you have this guy who’s this, you know, whiz kid who you listen to
[00:07:15.000 –> 00:07:17.000] him talk as an answer for everything.
[00:07:17.000 –> 00:07:18.000] He’s so articulate.
[00:07:18.000 –> 00:07:19.000] He’s so knowledgeable.
[00:07:19.000 –> 00:07:22.000] Like I listened to previous interviews before he got busted.
[00:07:22.000 –> 00:07:25.800] And then when you have him on, there’s a lot of them.
[00:07:25.800 –> 00:07:28.199] I wasn’t aware.
[00:07:28.199 –> 00:07:29.920] I’m not sure.
[00:07:29.920 –> 00:07:31.480] I’m not aware of that.
[00:07:31.480 –> 00:07:32.879] I don’t know.
[00:07:32.879 –> 00:07:37.800] There was all this hemmen and hawn and a lot of ums and aus
[00:07:37.800 –> 00:07:39.920] and you just kept on them.
[00:07:39.920 –> 00:07:43.839] It was amazing that he, first of all, it was amazing that he
[00:07:43.839 –> 00:07:45.480] felt like he could do something
[00:07:45.480 –> 00:07:46.480] like that.
[00:07:46.480 –> 00:07:49.600] Like, why would he publicly communicate?
[00:07:49.600 –> 00:07:51.279] This is one of the…
[00:07:51.279 –> 00:07:53.720] This is why it’s so interesting to me to look at fraud.
[00:07:53.720 –> 00:07:57.600] Like, this is why it fascinates me as well as I think it’s an important thing to expose.
[00:07:57.600 –> 00:08:02.240] But, like, I’m interested in the characters who perpetuate fraud because they’re such
[00:08:02.240 –> 00:08:04.720] interesting psychological case studies.
[00:08:04.720 –> 00:08:08.759] Sam Bankman-Freed, you could probably write a whole book about the fact that this guy,
[00:08:08.759 –> 00:08:14.560] he got away with lying so long and perpetuating this image of himself as this generous billionaire,
[00:08:14.560 –> 00:08:18.920] you know, he’s sort of the next Warren Buffett, that when everything goes wrong,
[00:08:18.920 –> 00:08:23.720] he thinks he can reestablish control because he’s so smart, he is such a good liar,
[00:08:23.720 –> 00:08:25.360] that he’s like, I can just lie my way out of it.
[00:08:25.360 –> 00:08:26.959] So I think that’s why he ultimately talked.
[00:08:26.959 –> 00:08:30.019] His idea was if I lied my way into it,
[00:08:30.019 –> 00:08:31.600] I can sort of lie my way out of it.
[00:08:31.600 –> 00:08:32.679] And this is what he did.
[00:08:32.679 –> 00:08:36.240] So prior to this, I’d interviewed him twice before
[00:08:36.240 –> 00:08:39.039] and I had kind of gotten hamstrung with the like,
[00:08:39.039 –> 00:08:41.000] you know, he’s just so good at dodging stuff.
[00:08:41.000 –> 00:08:44.240] Did you interview him before the scandal?
[00:08:44.240 –> 00:08:45.600] No, not before the scandal. So
[00:08:45.600 –> 00:08:49.120] it’s like as it was going down. As it was going down, he goes on all these Twitter spaces.
[00:08:49.120 –> 00:08:54.559] He doesn’t want to, he’s doing interviews with everybody. I ask him and he doesn’t want to talk
[00:08:54.559 –> 00:08:59.679] to me. So he, but he’s going on these Twitter spaces. So I keep, I like was tracking when he’d
[00:08:59.679 –> 00:09:03.759] go on a Twitter space and I would contact the people ahead of time and say, Hey, at the end,
[00:09:03.759 –> 00:09:07.240] when you’re like ready for this thing to go down because I know as soon as I get on, it’s going
[00:09:07.240 –> 00:09:08.679] to end pretty quickly after.
[00:09:08.679 –> 00:09:09.679] I said, let me on.
[00:09:09.679 –> 00:09:12.919] Let me ask him some real hard questions because all these guys are like Sam, you know, we
[00:09:12.919 –> 00:09:14.120] appreciate your transparency.
[00:09:14.120 –> 00:09:18.639] I’ll kind of kissing up a little bit, but I was just like somebody has to ask him some
[00:09:18.639 –> 00:09:19.639] real questions.
[00:09:19.639 –> 00:09:25.279] So I had two prior little Twitter space interactions with him. And he kept getting away with the fact that
[00:09:25.279 –> 00:09:30.279] he blamed all the wrongdoing of FTX on Alameda research.
[00:09:30.639 –> 00:09:32.820] And he said, I don’t control Alameda research.
[00:09:32.820 –> 00:09:34.279] Even though he was the owner,
[00:09:34.279 –> 00:09:36.519] he’s no longer the CEO as of 2020.
[00:09:36.519 –> 00:09:37.779] He hands it to this,
[00:09:39.200 –> 00:09:41.000] a girl he actually had a relationship with,
[00:09