The Collapse of FTX | 24 hours later

Transcript

thank you bake the station another emergency episode for you today we are 24 hours after learning about the collapse of FDX and a lot has happened since our last live stream in the last 24 hours so we felt a need to call this emergency episode live stream part time here we are again round two uh are you feeling exhausted David uh yeah I'm pretty pretty exhausted um yesterday it was like exciting uh maybe dare I say fun um but then today is a little bit more oh no this is real uh this is bad uh this is something that we will have to

get over as an industry um not to get over this for this big ass hurdle I think that that's the theme is basically what what are the consequences of people's actions what uh what is happening what is the Fallout going to be and I think some themes for this episode yesterday was kind of like what happened now we're dealing with the Fallout the contagion we're in damage control mode and we're still trying to assess this I mean there's a lot of big questions people have it seems to be there is a hole on fdx's balance sheet uh there was talk yesterday the direction seemed to be a CZ would kind of ride bring the Cavalry in and save the day save depositors unsure if that's going to happen we don't know how large the hole

actually is that is the question how big is the hole and is the whole acceptably small enough for somebody to willingly take on the challenge to plug it absolutely is it worth it for CZ uh yeah is it even salvageable if that's the question um also another big question which we didn't have an answer to yesterday now we have more clues I think David was FDX playing with depositors money Alameda FDX seems like these entities were somewhat tied at the hips yeah uh and uh more so than we uh previously thought yeah more so than definitely more so than it was uh appropriate more so than we previous thought some of these details are coming to light so we felt

the need to give you all of those details and just have a conversation with the community about this because price are down bad a lot of people still have funds Frozen in FTX so guys uh this is the emergency live stream that you're tuning into right now David and I can get into all of the details but before we do we want to thank the sponsors that made this episode possible arbitrim1 is pioneering the world of secure ethereum scalability and is continuing to accelerate the web 3 landscape hundreds of projects have already deployed on arbitrum 1 producing flourishing defy and nft ecosystems with a recent addition of arbitrum Nova gaming and social daps like Reddit are also now calling arbitrum home both arbitrum 1

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link in the show notes to join over 5 million users who are getting the most out of their crypto guys we are back at 24 hours after the collapse of FTX it certainly looks like things have deteriorated things have uh collapsed David let's give folks a recap for those that didn't catch the episode yesterday now I I will say if you didn't catch the episode yesterday uh on the RSS feed in YouTube there's a way to go check out Dave and I give a kind of a timeline of events that gets you all the way from early November up to November 8th so you can hear what happened then we're picking this story up the next 24 hours and by the way in that previous episode we've got takes from Eric Voorhees uh Brian Armstrong dropped in and and said hello gave his takes we

also had Ryan selkis weigh in on the regulatory front but David catch us up with this recap what has happened what tweet are we looking at uh what's happened I guess in this whole course of events to get people up to speed yeah so this is a tweet thread out of wassi lawyer who I thought did a pretty damn good job of summarizing everything but it it starts the thread with the the conclusion that out of all people all entities that FTX might have chosen to get a buyout from they chose binance and so there's already significance in that choice as well was he gives a recap and says there were there were many options available to SPF seek emergency debt financing which was reported that SPF did go and do into Wall to Wall Street

seek new money investment or liquidate all their assets to buy time yet they chose to get emergency debt financing from binance and so the Washi lawyer continues and goes via seeking bankruptcy to protection to facilitate Sam has chosen to seek a bailout from binance the very party that triggered the bank run in the first place is what we talked about yesterday what we can gather from this is that FDX was indeed lending out customer funds to other parties because why else would a bank be a crypto Bank be insolvent like likely to Alameda and this means that as Wazi lawyer speculated earlier FTX was working on a fractional Reserve model and it was not prepared to me with the withdrawals from the run on the bank which which CZ triggered like we we know

this because like this FTX stopped with uh with processing withdrawals this is the facts that we that we concluded with yesterday um but again the speculation that everyone in crypto Twitter in the world of crypto is is assuming to be true is that Alameda had FTX deposits had FTX money and Alameda this is uh going on to tweet number four here Alameda itself did not have the liquidity to return the funds to FDX that uh thus leading it into the liquidity crisis that caused all of this drama uh uh that we have seen so forth um uh and so wassi lawyer continues but this was not the the returns of money from Alameda to FDX was not enough since customer confidence was not returning

this is kind of the run on the bank that CZ triggered there were no deposits only withdrawals uh some sort of external third party funding was required to meet the outbound cash flows out of FTX uh and so wassi lawyer continues and says instead of seeking Finance from any other party or to buy more time by throttling withdrawals SPF bent the knee to by names does this mean that FTX was in such a deep hole that they weren't talking about emergency swing line but full-on rescue financing as in there were other less significant ways to plug this Gap that might have FTX might have chosen but they seemingly went for the most nuclear option which is the most expensive option yes the worst possible Right like an option that no one would

it's the loan shark option basically the option that no one would choose unless they were in completely desperate Straits uh yeah right exactly and so this is what wazilar is is concluding that FTX had a massive hole in the balance sheet that could not be plugged by other financiers uh which forced SBF to Kiss the Ring so this is the recap of where we are thus far uh and and no to the comment in the chat we are not here just on YouTube to uh to read out tweets uh this was just I thought a particularly good recap to to catch us up on the last 48 hours uh but that was yesterday right that was yesterday uh I think the key thing here is like what we can gather was that FTX wasn't was uh lending out customer funds to other parties likely to Alameda that's crazy

so SBF FTX and Alameda looks like they were co-mingled Alameda of course was a three arrows Capital style fund and that was combined with uh FDX in exchange one is essentially a bank where you're supposed to inside of a bank you're supposed to deposit your fund they keep it safe um you know not not to be traded not to be speculated with an Alameda of course is a completely different business model it is a three arrows Capital highly risky and of course we saw what happened to three hours Capital went completely bust uh back in was that may of this year yeah and it looks like some of the funds were co-mingled that's what we can infer from this data a few other implications I think I was thinking

about this uh you know yesterday at the close of yesterday so I was uh you know uh think reflecting on the day one SBF has been downgraded from billionaire to millionaire David there's a report that he lost 96 percent of his net worth and I think continuing to drop right right he's one of the richest people in the world I mean 20 22 billion dollars was on Forbes list I think he may have made the cover of forks he has now downgraded uh two millionaire I'm sure he's just going to be just fine except I'm also not sure about um you know kind of the the legal implications of this if this looks like something a bit more like fraud yeah if it's one thing first off it's a he's a

millionaire he's a hundreds of millionaire he's got a net worth of like over 500 million so I don't I don't I'm not like he's doing the whole crying with cash on his eyes thing right now well we'll see I mean we'll see he might be doing that in jail yeah it doesn't really matter yeah it doesn't matter how much money you have if you uh I have to go to jail but we'll talk about that later this is a key implication one of the mighty um like I mean everyone looked up to this guy Arthur Hayes even as recently as this morning called him a once in a generation Trader yeah and uh he's been kind of gone like reputational ruined second FDX becomes a vassal of binance seems like that is is happening they've already bent the knee whether binance purchases FTX or not we'll see uh CZ I

think he's on track to become the richest person alive uh certainly if if this deal well he's he's definitely up there to begin with if this deal goes through uh I don't think much New Wealth ghost is easy but so much more power goes to CZ power and then just think about like kind of next cycle once crypto is going to recover once it does CZ will own this Market from a banker perspective it's just like CZ and Brian Armstrong kind of standing right yeah um speaking of Brian coinbase gains the major legitimacy here doing things right didn't have any assets on FTX like they come out looking squeakly squeaky clean and thank God we have them in the U.S because you know the U.S Regulators are looking at crypto

and being like yeah you say you guys aren't the wild west like look what just happened right exactly and this is why I think uh you know sbf's dccp uh PA bill is dead completely dead he was giving that a lot of credibility and we've lost a lot of that credibility in in DC my conclusion is after we all of the events of this year I felt like over the past uh 18 months you know two years this this a lot of this bull market cycle it's been kind of the era of like Finance Bros almost like I mean like there's been a whole camp in crypto that has hasn't been here for the the OG crypto values uh and um they've been completely like wiped out fairs Capital

Luna you know Celsius uh taking these shortcuts doing things on MAR margin algo stable coins that like clearly uh couldn't hold up to the the true pressure and scrutiny of the market and now FDX it's the end of an era and I think what's going to happen David is almost like a a Reformation type movement in crypto where we sort of go back back to some of the roots of this industry go back to First principles and why like trustless ownership of assets and not your not your keys not your crypto going back to stuff like that say it again not your keys not your crypto like it's crazy Ryan that we have to do this it's crazy that this happens over and over and over again it's crazy but one

thing is I don't think it happens twice to the same people all right so the people who got mount goxed I'm betting did not get fdxed yeah just now big time it's so the reason we have to keep repeating this is because we have no new cohorts it's like every class every crypto generation has to learn these lessons and look before 2022 Mount gox was like an artifact of the past 10 years ago before we had smart contract platforms before we were more sophisticated before the professionals like SBF and suzu uh and do Quan were had entered who no Finance know how the space works right now gox what does that

stand for Magic the Gathering online Exchange right like right exactly different level of sophistication and so what has to happen is is the new cohort the new class has to um you know has to learn these lessons but let me ask you David um I I know I was talking to you this morning and um you're pretty down right like what what's your mood Ben about this it's like yeah like I said yesterday it was there was drama and drama on crypto Twitter like crypto Twitter jokes were like really good uh and like drama as a Content producer is kind of fun but then I wake up this morning and I'm like oh now we have to clean up now we have to now we have to now yeah now we have to

grab a mop and like clean up after the mess and this is the problem of people like do Quan and people like three hours Capital any anybody who takes on significant responsibility and then Burns that responsibility we have to clean up their mess and I and now let we have like the third tied for a second biggest Exchange in crypto going under like after three hours capital is gone after Tara loon is blown up like there's less and less people to clean up this mess as the bear Market goes on and so like now the responsibility of of fixing the the pr branding of crypto uh is like falling on fewer and fewer people's

people's shoulder shoulders because people are like fed up people like I have not seen Ryan more people talk about like Kobe today Kobe was like I have thought about leaving this industry many times before but today I came so close to the brink of just leaving and getting out of here did you think about that did you think about leaving no I no I can I can't leave I don't have anywhere to go dude has no home but like where'd it go it's just like what how many times are we gonna do this like so okay so that sounds like uh to me that sounds like frustration yeah like big frustration you're you're mad so I tweeted this out just mad or sad do a poll right and it's like I feel like

these are the I guess some of the early stages of grief it's either you're you're angry yeah or you're sad but you just reflected on on something that uh uh is cleaning up after the party um yo can someone tell our lawmakers the FTX thing with C5 again not D5 right okay it's going to take so and like the thing is this is we're going to preach about this is why we defy this is what D5 is here to do if you were in D5 you were fine we have been yelling that take for the past like 12 months no one cares anymore like no one even cares about defy imagine you're Jake trevinsky so I I I said this and Jake travinsky's like on it but like imagine thank you Jake thanks imagine you're Jake trevinsky you're working with lawmakers on to try

to get like good defy language or to try to get that excluded from the dccpa they barely understand Krypto and the Egg uh committee agriculture committee and then this happens this week what do you think that does to our credibility in DC people like Jake people like the D5 education fund SPF is no longer going to have a place at the table obviously right completely delegitimized our industry yet again and people are going to have to try to pick up these pieces and try to tell lawmakers like what really happened but I think we're going to get broad brushed here right which is so unfortunate that's why it costs us so much these types of things cost us so much the legitimacy of the space the

reputation of the space um I mean people can't differentiate between C5 to your point okay so you're frustrated I think just like at this point after Terra Luna after three arrows Capital now after the third largest the reason why this hits extra hard is because like you could be forgiven for not knowing who three hours Capital was if you weren't in crypto but FTX went on huge promotional campaigns they bought an arena in Florida Tom Brady they had Super Bowl commercials and that's what went under so like now there's FTX Arena now which is now FTX is now worth uh Miami it's the old Miami Heat arena okay

um I think that's right I mean it's one sports thing it's not going to be next year I mean someone else is going to have to I guess they give it back to Wells Fargo I guess I guess so yeah but like the the problem is that like FTX was so public and then they burned they to a lot of people FTX is crypto and so when they go under like it it's the it's the scar on the pr of crypto is so much worse it just kind of reminds me of like the Ico era where like the only reason why the bear the bull market started in 2020 was because people finally forgot that the Ico era existed and so I've been bullish on this bear market up up till recently just because like oh that's not so bad like three hours

Capital like yeah uh dokwon Tara Luna algorithmic Sable coins great we learned that lesson we learned the lesson that was new for us we learned the lesson that the algorithmic stablecoin is not a good thing we had already learned this lesson and it was the third second biggest exchange crypto exchange of all time and so like like now at this point I'm just like capitulating on the ideas like now the only like way to get more people excited about crypto is to get them to forget about 2022. yeah I I so I was reading the the chat log as as you were somebody's asking if there's another like down coming um we'll get to that I think the answer uh could very well be yes some people are yeah the facts there's differing opinions out there yeah but but let me ask you more about your mood because

what I'm hearing now is uh this afternoon David is uh frustrated and angry right but this morning David when I talked to you you were like the first like words out of your mouth were like I'm sad yeah and I think that's the that's the other mood that and and I want to ask the chat too like uh bankless Community how are you guys feeling about this yeah like how are you doing you guys you guys okay um let us know they want us to stop talking about uh our our emotions no just be why it wants to why I think the entire crypto industry is uh is saddened by this as well can you can you tap into that uh for a minute I mean a lot of people still have their funds on FTX and they don't know

if they're going to get their money right all right yeah I actually chat if you have funds on FTX like drop a message in the chat so I'd like to know if how many people like what that watch Bank list like you also use FTX and like lost money in FTX because like because now now there are like there are people offering uh hey I'm selling all of my I'm willing to put an offer of like my one million dollars that I have in in FTX at like 70 cents on the dollar like I we've seen tweets like that so people are selling their FTX accounts for a discount for people that would like to take the gamble that uh that you somebody might pull through and make them whole I'm saying like like maybe 20 of the chat is saying yes I have funds on FTX 80 maybe saying saying

no okay uh so thankfully a lot of bankless listeners avoided that but um look if if you were among those who still have funds in FTX okay um let me just tell you it's not it didn't just happen to the the people who are new in crypto yeah I mean David do you see some of the people who are like look we got completely wrecked researchers like researchers Tom from Delphi I saw no I think he just was giving his con uh condolences Larry Cermak From the Block said he would he got his biggest day one loss of all time because he trusted FTX guys right yeah these are super smart sophisticated individuals that I would not blame that that was a calculated choice and like

honestly no one saw this coming no one saw this coming not at all no one saw no one okay so I think look here's the thing we have to protect ourselves against I think we know the general principle of not your keys not your coin right like and that should be evident so like do you remember uh Andreas man I go back to the ogs you remember Andreas Antonopoulos he's like he's like an exchange should be like a public bathroom you get in do your business get out get out right right like that's how we should treat exchanges and we didn't not us I'm talking about like many in the industry didn't yeah and had funds in FTX but it's like so I am I'm also tapping like I feel that uh a lot of people lost a lot of money and the other

the other piece here that that saddens me is like it didn't it's just it's another David it's another self-inflicted wound okay that's gonna set us back just like Luna Terra three areas Capital self-inflicted wounds like literally the shotgun and we're shooting ourselves in the foot it's just it didn't have to be like this SPF is a genius I think he like saying that now sounds really but like I think he is a brilliant once in a generation Trader built like FTX was a great product except for the insolvency thing but like it worked they added features very quickly like it was in some ways ahead of like coinbase and some of its

contemporaries I mean execution kind of got them there and then he made this mistake and it's all self-inflicted and like I'm sad because it's cost a lot of people a lot it's cost your industry a lot and I think it set us back I didn't I can't put a timeline like has it set us back a year at least has it set us back 18 months yeah like two years I mean we we already had debts to pay with like three hours capital and Luna and all that stuff um but yeah it's just added more debt to pay for sure David someone wants to um in the chat wants to see if we'll publicly apologize to bitcoin for being uh or sorry to bit boy um were we wrong about bit boy yeah uh so I was talking to somebody from from

the bank side of things about like all right why is everyone in the chat saying like bitboy was right uh apparently Bitcoin big boy like a while ago was like get your funds out of FTX uh so uh if you said that like yeah good job bit boy uh that's great um that's the take that I heard and like I need to go let's go and find out where he actually said this but like the take that I hear is like bit boy kind of says a lot of things but if you said that then that was great and if people listen to him then that's great look but generally let's let's apply that to get your funds out of all exchanges like hey you know uh no one knows the next exchange to to kind of uh go bust uh and this is why we have to go

bankless um can we talk about the story can we continue the story here yeah all right yeah so now now we're gonna that was the the emotional recap now we're going to talk about some of the things that have happened today yeah um let's talk about uh yeah so this can all start with CZ yeah and um this is where it starts this morning too what's he tweeting you yeah so CeCe says in the spirit of transparency you might as well share the actual note uh and actually like a memo sent to the binance team uh so apparently binance uh employees are called by nancians uh and CZ says given the events that transpired over the last couple days I want to reiterate a few points uh one we did not master this or anything related to it it was less than 24 hours ago that SBF

called me and before that I had very little knowledge of the internal state of things at FTX I could do some mental calculations with our revenues to guess theirs but it was it would never be accurate uh I was surprised when he wanted to talk my first reaction was he wants to do an OTC deal but here we are two as a due diligence for the deal is ongoing I want to remind everyone everyone do not trade ftt tokens if you have a bag you have a bag do not sell or buy as soon as I finish the call with SPF yesterday I asked our team to stop selling as an organization yes we have it back but that's okay more importantly we need to hold ourselves to a higher standard than even Banks three obviously do not comment on the deal publicly or internally if you are not directly

involved do not ask we have a good team handling it things will play out that's about the audit that they are finances auditing ftx4 FTX going down is not good for anyone in the industry do not view it as a win for us user confidence is severely shaken Regulators will scrutinize exchanges even more licenses around the globe will get harder and people now think that we are the biggest and will attack us more uh that that's that's okay we're used to being open and leaning into headwinds in fact we Embrace scrutiny we must significantly increase our transparency proof of reserves Insurance funds Etc a lot more to come in this area we have a lot of tough work ahead of us not to mention prices swinging wildly five speaking of prices as I've said many times over the years ignore the prices let's keep our

heads down and focus on Building Products people use it has worked for us for years and today is unless they know obviously no exception and lastly I want to say that I'm proud of each and every one of you for all of your hard work as a team thank you we have so many challenges ahead let's continue to push ahead and help increase the freedom of money all around the world steadily and consistently Ryan what's your what's your reaction to this memo um look I mean people said it's transparent and I totally agree although I think it's extremely transparent yeah but there is a side of like um uh yeah true transparency shares everything of course and this is like selective transparency which is which is interesting so um look I I think uh czs2 strategy boss to like I'm like he knows he's very he knows exactly what

he's doing he's totally in command so he well this is a transparent I'm sure this is a real internal memo uh he also chose to share it very strategically everything everything he does is very intentional yep yes so I I will give it that context so the question is like what is he saying and uh and why is he why is he saying it I think um that you know the point to due diligence for the deal is still ongoing right um so he's just re-establishing that like no Finance has not acquired FTX there's an Loi and we're still doing due diligence and um you know fourth he's kind of giving a reason that this is this is not good for

everyone in the industry so maybe that is a driving force for why uh CZ comes in and rescues the thing um I guess the big question to me is like because maybe we'll get to this but reports after this have been saying that uh CZ binance is considering walking away from the deal right right and hearing that is also kind of to be expected as well as part of like art of the negotiation are the deal type stuff right like you just maybe will walk away like you know in order to get the best terms but it's just I guess it's hard to know uh what to what to believe at this point or what cz's uh true intentions are and maybe he doesn't know until they fully do the due diligence hear the blow

back from the community um David the government may even be stepping in here in some way like they're a little bit too late conversations we're not privy to um the the chat is uh being much more skeptical on on CZ than we are um people are saying that he is a mastermind he a um coordinated orchestrated everything uh I don't know I kind of I'm ready to take CZ at face value to be honest I don't know I think both of these things can be true it's like I think he is a mastermind um but I also think that um he's played the law long-term game in crypto somewhat at least much more so than SPF or SPF wouldn't be in this place of weakness yeah so this is uh a tweet out

of a ledger who is uh saying that Sam is deleting tweets uh and the Tweet being deleted is a tweet that says FTX is fine assets are fine and another tweet that says FTX has enough to cover all client Holdings we don't invest client assets even in treasuries uh the idea is that these tweets are being deleted because uh they're wrong at best and perhaps lies at worst and if they're lies then that's fraud uh let's be clear on two things one Sam you can't delete things from the internet yeah still God and number two I'm doubtful this was actually SPF I'm sure it's I think I think it's been I think it's been legal team and lawyers and PR uh for the past at least 36 hours 48 hours yeah but

David let's remember what he said November 7th the context for this afternoon assets are fine FTX is fine FTX yeah has enough to cover all client Holdings we don't invest client assets even in treasuries these are if any of these things are not true I mean what is what do you call this tweet out outright lying yeah right like it's just like fraud is just like a lie that's in court I think there's I I don't think you can yes I think this like you know I don't know what the legal distinctions between these things are um but but Friday fraud is certainly a crime especially when you're a crypto exchange and a banker

this was a this was a big oof uh and so here's a picture of an old Sam tweet that says uh uh biggest things here are making sure no one goes under it's making sure that one it's not to unsuspecting retail two that risks are properly disclosed in three no contagion uh and so this was a this was when it was back in June uh and so it's just like a big oof because this was after in the context of after three hours Capital right down right right and then Sam's weighing in on this yes exactly and he's like it's not what is he saying here uh if if something goes down you have to make sure number one it doesn't affect unsuspecting retail number two the risks were properly disclosed and number three

it's no contagion I think we got all those boxes checked yeah I don't think retail and FDX is feeling particular really good about this I think they're feeling pretty affected right now I don't think the risks of depositing funds into FTX were fully disclosed and by the way do you know David the chat was saying this um you can still deposit funds and debts you can still deposit money into FTX if you deposit it down right and because like you know people sometimes people don't check they are they aren't in crypto Twitter they aren't following the news uh so if you deposit money tax it's just like and it's gone you know that Meme that means the bank of like you give the money to the bank and then they say and it's gone it's literally that yeah

I'm sure there's you can watch it on chain people are actually sending money to FTX right now and number three no contagion uh we're definitely oh we're definitely talking we're well beyond yeah that's what we're talking about next yeah even Edward Snowden is is Tunica giving his takes here uh so this is Edwardson deleting the Tweet about uh or retweeting the Tweet about slam deleting his tweets saying and they call me a criminal um I think this is one of the bigger questions is like is SPF in legal trouble uh and I think the answer to that question is going to be a function of how big the hole is on the FTX balance sheet we do not know how can we say yes he's in legal trouble we just don't know how much at this point we just don't

know how much yeah I mean can't we just like let's connect some Dots here yeah I mean yeah things are going to Courts at the very least I think whether he is personally in legal trouble is perhaps still up in the air now this is a spf2 uh investors this is a letter that um appears to be legitimate from the mouth of SBF and he says this this was yesterday to his investors of course the investors in FTX I'm sorry I've been hard to contact the last few days I wish I could have been a more communicative uh communicative during this process but unfortunately I wasn't able to be things were coming together dynamically well that's an understatement we've entered into a non-binary finance to buy FDX what does

this mean exactly that's a good question fortunately I don't have a perfect answer for you because the details are still being hashed out we'll keep you updated as we learn more over the next days and weeks this is key our first priority he says is to protect customers and the industry that's been guiding what we do has it we're optimistic that we'll accomplish all of these which means that we'll soon be focusing on our second priority our shareholders first depositors second shareholders that should be the stacking order again I wish I had more details for you guys right now I don't yet I'll give them as they're hashed out but protecting our shareholders is our highest priority outside of non-negotiable ones I am likely to be very swamped for the next few days so unfortunately I probably

won't have much time for a bit and then he refers to somebody on the team who might be uh have some more time and he says he'll write back soon later when he has more details that is the message from SBF what do you make of this uh it's uh I think if you scroll down I think uh Aubry Strobel had a really good take yeah there we go that's my opinion you're on your own you're on your own pew pew pew we're out of here uh basically saying you guys are a last to get reimbursed now this is something I think that is uh that is breaking actually so this was a a story from this morning from coindesk saying binance is strongly leaning towards scrapping FDX David I think uh well we've started live

streaming we may have a different report I have an additional report a developing report yeah so so this is what came out this morning it's like ooh binance took a look at the balance sheet and they got real scared uh the most recent report which chat was just uh blowing up about uh one dollar binance ftxt deal is off the table unless FTX us is a part of the package which uh FTX us and FTX are different entities same brand in the same way that binance us and one dollar binance so that's that is how much uh binance or uh FTX is worth so FCX is worth why wait one dollar one dollar uh because they have a x number of billion dollar hole on their balance sheet so they owe money and so

the reason why somebody like binance would buy FTX is because they have employees they have a network they have branding they have uh a dollar is just a symbol it's just a sign yeah it's basically ability it's not asset you are buying liabilities not assets right um it could be ten dollars it could be sixty nine dollars it could be 420 but it's one in this yeah you you are buying debt so you like it's not it's not cool to go buy this FTX thing you are buying liabilities uh so like I mean Ryan you want to go buy MTX for one dollar I do not do you wanna do you want to take on the responsibility of repaying billions of dollars or customers deposits uh no thanks well see neither does CZ unless allegedly uh FTX us is a part of the

package all right well you know what this headline reads to me negotiation yeah this is CZ negotiation yeah uh I want FDX too what's say I'm gonna say I mean he's going to say yes sir you can have FDX as well like what what other uh choices I I don't again I don't know I'm not a lawyer uh but if the choice is saying yes or going to jail that might be the Rock and the hard place that Sam finds himself in and one of those choices is easier than the others which one uh saying yes to CZ versus going to jail not going to jail not going to that one yeah yeah that'd definitely be the preference uh what are we looking at here this is a headline from Bloomberg whose main main street uh mainstream media financial news is

reporting on this yeah so the headline here uh Sam bankman Freed's FTX Empire faces us probe into client funds and lending uh and so this is the the this is of regulators coming for crypto because we messed up uh we didn't self-regulate wait me we yes us all of us we did we did we as an industry messed up I have a hard time with that I understand that take yes I also have a hard time with that um Regulators coming in it's frustrating I'll go to the SEC now and it's frustrating that this is happening after the fact not before uh but yet here we are but now FTX is getting a probe so I

think we can expect uh if not willing Clarity then Force Clarity because of SCC and cftc probes um so um the the three four-letter institutions are now getting involved I I think the big question which we're still going to get to a little bit later in all of this the acquisition all of this uh and even kind of the investigation by the authorities is how big is the whole how big is the hole well that's what we need to to get to eventually but so what happened this morning yeah so this is another quote out of DB um uh I don't know the source but uh they saying the legal and compliance teams all just quit um oof uh I mean you you what other message can you take away from how big

the hole is when you see the legal and compliance team just like oh everyone they're just abandoning yeah they're like hey hey guys do you want to help us like plug the holes in this ship and they're like no we're bailing out yeah we're out of here nope yeah we're taking on too much water yeah we don't want to end up in an orange jumpsuit either um this is crazy though just to kind of zoom out and if uh apparently the chat Brian is uh binance is officially walking away from the chat I think that's supposed walking away from the what excuse me the chat the deal I think that's supposed to be regardless of uh whether or not uh uh FTX us is involved or not oh my God uh you want to pull up the Bitcoin chart The Ether chart let's see what that's done today

do do I have to uh yeah let's do it that's that's what the uh okay well I mean we're at the lows but we haven't broken down any further okay but so where's this uh sourced here uh Wall Street Journal that's a Wall Street Journal yeah wow yeah the headline here if you're listening to this binance walks away from FDX deal according to 240 that was five minutes ago according to uh according to uh well so maybe it's more than negotiation posturing here David um can we Linger on that for for just a second yeah what would it mean if binance walks away from this deal

uh I really I think we are assuming that binance is the most willing purchaser of FTX us as in deepest Pockets the deepest Pockets the most relevant company uh and if they are saying that they are walking away from the deal that means FTX is such a toxic balance sheet that no one will touch it and whatever few remaining assets will be liquidated and the courts are going to determine who gets what uh and oh my God if you have money in FTX you are going to after years of Courts Court battles you are going to be returned probably Pennies on a dollar depending on how big the hole is in FTX which again we do not know

the so I think what this is implying is if if CZ if binance walks away then all FTX depositors have just been machinskied it's been Alex machinskied yeah which of course is uh where Celsius has gone I'm going to show you from the hip here and say less than 15 cents on the dollar so this is what's uh crazy about some of these crypto Bank lending institution failings right is um you had Celsius Alex machinski that's going to Bankruptcy Court uh people aren't getting their money back anytime soon if they do it'll be Penny cents on the dollars um after you know years of proceedings um you know another comparison is is

Mount gox you've been machinsky you've been mount goxxed with some of the the crypto bank failures like block five for instance um there was a bailout for depositors but David guess who bailed them out uh tell me who bail that blockify you remember this oh yeah it was FCX what do we do oh my God chat can you can you link the uh the the uh Wall Street Journal Post in in chat oh yeah we need to get to The Source on that look at this David um as we're as we're kind of getting the the source and confirming that a little bit um further there was um a tweet uh from depression BTC

bro he even said there might be an effing air drop for people that leave their funds on his exchange dude it's so bad it's so bad he didn't actually say it but SPF retweeted a tweet that said I can't wait for my FTX airdrop for not moving any of my funds and SPF retweeted that I hope that's actually the SPF account it could be that could be wrong um but like if that people are saying it is and everyone's saying it so I'm kind of running with it on the seventh trying to prevent Bank Run doing it by any means necessary if you're really willing to tweet something about a prospective airdrop what else are you willing to do are you willing to like lend Alameda FTX depositors funds in order to try to keep them solvent for some temporary period of time

I think the answer that question is yes the Alameda research site is uh is also gone uh completely wiped off the internet right now yeah element of research that website is dead uh you can we can I think safe we were speculating on this when I said uh when the ftt token fell below 22 that was the death of Alameda research I think that that's now that the website's gone I think that we are can confirm that David we're looking at the Wall Street Journal uh the team just dug up a link here uh binance says it will walk away from the deal to buy FDX crypto exchange decision come as it conducts due diligence on FDX so uh the fact that it didn't take them that long to make that decision it took them what 24 hours

maybe a little bit more 24 hours uh implies the hole is Big the hole is too big yeah real big this isn't just a flesh wound a gunshot this is like a chocolate ball to the chest okay I think um unless you want to go into something else we can go into that tweet thread Ryan that uh explains the connection as to why and how that hole got so big you want you ready to go down that rabbit hole are you talking about um was it Lucas's tree or the who did this that was let's see Lucas uh yeah this one this one yep yep this is the one this is speculation that but it's pretty good speculation theory yes yesterday and it seems to be like the evidence is um coming out that this this Theory could be more correct than not so uh yeah

what's the theory of how all of this happened and how yeah the whole guy is so big so this is uh when we started the live stream yesterday uh I I kind of proposed this question as to like why didn't Alameda research blow up like everyone else after the three arrows Capital contagion like why were they different uh because that that did kind of stick out why was three why was FTX able to buy up everyone uh while everyone else was bleeding I mean back in back in may like when we thought we flushed all the crap down the toilet yeah and all the leverage and all the d-gen was kind of flushed out of the system and Bitcoin dropped to what definitely under 20K

right eth dropped to like triple digits 800 yeah right uh you would have thought Alameda would have gotten flushed out in that whole right process yeah another djan hedge fund like everyone got addicted to leverage in in 2021 and so everyone that was on Leverage Alameda was supposed to get fleshed out yet Alameda didn't why didn't why didn't Alameda get flushed out so again this is just speculation but this Lucas newsy guy it throws in a very good thread of some on-chain snooping that we'll go ahead and read out here and he begins and says I found evidence that FTX might have uh provided a massive bailout for Alameda in Q2 which came which now came back to haunt them 40 days ago 100 173

million ftt tokens worth over 4 billion USD became active on chain and a rabbit hole appeared and so this is the rabbit hole that Lucas goes down that day September 8th over 8.6 billion dollars of ftt was moved on chain that was by far the largest daily move of ftt in token's existence and one of the largest erc20 daily moves we have ever recorded at coinmetrics oh if this guy works at coinmetrics yeah oh he does he did yeah he's a great great Snoop um uh tweet three I went through all the transfers that happened that day using coinmetrics Atlas and ranked them I found a particular peculiar transaction that interacted with a contract from the ftt Ico this 2019 contract automatically released 173 million ftt tokens from the tokens Ico address uh the recipient of the 4.2 billion dollars worth of ftt

tokens was no one but Alameda research so what question mark Alameda and FTX were intrinsically connected from day one and Alameda obviously participated in the FTX Ico but what happened next was interesting Alameda then sent the entire balance to the address of the deployer of the ftt erc20 which was controlled by someone at FTX in other words Alameda Auto vested 4.2 billion dollars of ftt just to immediately send it back to FTX here's what I think happened Alameda as a conclusion of this Alameda blew up in Q2 along with Trio's capital and others it only survived because it was able to secure funding from FTX using the collateral of the 172 million ftt tokens that was guaranteed to vest

four months later once vested all tokens were sent back as repayment remember the ftt Ico contract vests automatically had FTX let Alameda implode in May their collapse would have ensured the subsequent liquidation of all ftt tokens invested in September it would have been terrible for FTX they found a way to avoid this scenario before you go on David so what he's saying is the theory of how Alameda survived pass-throughs capital and the big blow up of all of the the leveraged margin funds that were taking on due risk which Alameda was probably part of that cohort um was they got funding from FTX using ftt tokens and remember that is the

Loyalty token pseudo Equity asset of FTX um which which I I believe in titles ftt owners too some portion of of trading fees something like that so it's like this weird pseudo Equity thing that's supposed to go up in proxy with uh the value of FTX that's the only reason they survived so they would have been blown out of the water like all of the rest if it wasn't for Daddy FTX that um lent them some funds based on the value of ftt tokens this is like a huge self-dealing uh kind of I don't know um I it's Shady Shady practice here right and I'm I'm assuming this this

might be speculation on my part but just to understand this uh Alameda uh had ftt tokens vesting 4.2 billion dollars of ftt vesting so they had that but they didn't have that available so and they needed money to not blow up and so I'm assuming F uh FTX sent Alameda like dollars under the contract I might be speculating here under the contract that they that FTX will get ftt tokens that Alameda will vest in the future and then when uh Alameda did vest the ftt tokens in the future they immediately sent them to FTX and so I'm assuming that those were the customer deposits that people need to fact check me on this the the customer deposits that got created the

whole in FTX that we see today where the was the money that was sent to Alameda so Alameda wouldn't blow up and Alameda signed an agreement with FTX to give them their ftt tokens once they vested I think that is what's going on does that make sense yeah it does uh let's continue okay I'll go on to uh tweets let's see uh yeah tweet number seven the timing makes sense Alameda and FTX essentially put all the chips on the table in Q2 and use that cash to bail others out the solidified FCX image as a solvent and responsible institution which helped ftt's price and that honestly that's what we were saying on Bank list right that's like yo yesterday our speculation

no like for the past like six months like FTX bought block five they bought like Sam bankman freed won the bear Market because FTX was so solvent and so profitable that it was able to buy up all the blood yeah everyone was saying yeah they looked like the responsible player the responsible players left were like you know of course like you know Gemini they're doing fine crack is doing fine but the big the responsibilities with Deep Pockets were like uh coinbase Brian Armstrong uh but they weren't in acquisition mode binance and SPF and binance and SBF were kind of the bailout Kings consolidating all of these things and they they looked pretty clean Alameda looked like looked like the fun that didn't blow up right

right exactly you know even even in these chaotic market conditions but it looks like maybe they did right and that was the start of uh SPF using depositor funds training some ftt type tokens uh the co-mingling kind of like continued there because he didn't want Alameda to go under right at that point in time right yeah so this is this is why the price of ftt was so important to Alameda research they were like we'll buy it all at 22 guess what it's at right now Ryan I'm gonna look are we talking about ftt tokens ftt tokens okay last time yeah yeah three it's 310 on your chart it's

two twenty two dollars and a quarter on FTX look at this look at this job this is this is post um is this the market this most recent candle here is this the market figuring out about um yeah no one's coming to save ftt yeah I mean this is what what what the chat is saying right now um by the way should I be using something other than coin gecko for for Life yes but it's it's it's I think it's I find it endearing right that you're not a charter right yeah um okay so back back into the back into the Lucas ride just to finish this thing off uh the Alameda bailout likely put a dent on ftx's balance sheet to the point where it was no longer solvent this would be fine if the price of ftt didn't

collapse in a bank run would it Sue this is why Alameda tried to their best to protect ftt's price uh and then it does continue uh and then here's where things get crazier there's a chance the folks from binance knew about this Arrangement between FTX and Alameda an opportunity emerge this is where we're kind of like getting into the idea that uh CZ was a mastermind playing 4D chess uh which he when he made his memo was like no we I'm not a 40 chess Mastermind I'm just a guy making deals uh but if you believe that CZ is a 40 HS playing Mastermind you might be into this uh so there's a chance that the folks from binance knew about this Arrangement between FTX and Alameda and opportunity emerged as large holders of ftt they could start deliberately tanking the market to force

FTX to face a liquidity crunch which is ultimately what happened in the last 48 hours long and behold binance comes to FTX rescue did CZ just walk out with one of his largest competitors at the expense of a relatively large ftt bag which he was going to unwind anyways huge if true and so then uh all of this right is basically 24 hours later 21 hours uh four hours ago Lucas adds to the thread saying evidence that supports this hypothesis keeps coming out FTX U.S president Brett Harrison steps down a day before the September 28th transfer of FDT tokens and speculates that maybe he wasn't on board with a transaction that might look like outright fraud wow okay so I think the the base of this Theory checks out the last part I'm not

sure that checks out is this all part of uh cz's 40 chess move to take out FTX I mean I think part of that could be true but um I mean this doesn't serve the interests of binance or CZ if they walk away from this deal crypto prices are down real bad this sets the industry back by 18 to 24 months we take a major black eye with Regulators like that's not in cz's and binance's interest am I wrong about that yeah I think that's right none of us want that to happen right yeah I mean even even kind of like shark business motivated CZ if that if that's your model of him uh he wouldn't want that to happen either right and and just to tie this thread off we'll go we'll skip to

tweet number 14 the very last one and then click the tweet that that is retweeting uh it's because that that tweet is retweeting SBF saying SPF uh rotating a few FTX walls today mostly non-circulating we do this periodically might be a few more coming won't have any effects so he's just saying hey we're doing some wallet stuff the FTX exchange is doing some wallet stuff uh and this was uh the transfer of ftt tokens to Alameda uh and so this is this is what that was and so he was on Twitter saying hey we're going to send some ftt tokens around normal operations nothing to look don't look beyond the curtain uh so how long ago was that that was in September 28th um yeah crazy guys uh there's more to talk about we got to talk about some

more of the contagion I I think we want to talk about like the emotions and the market like the market oh my God no the contagion is so crazy Ryan uh 10 of multi-coin capital had their their fund on FTX uh and so that's a fund that is related to all of their Investments and that's not just like the contagion conversation's huge all right well uh don't jump too far ahead of us because David we gotta it's a bear Market we have to pay for the show uh I guys we'll be right back we'll talk about all this talk about Solana a little bit more and maybe talk about some of the uh the regulation as well but before we do we want to thank the sponsors that made this episode possible and all of my years in crypto I have never been hacked scammed or lost money to a thief and a

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while prioritizing high security and low fees you can be a part of a cross's story by joining their Discord and using a cross for all of your layer 2 transferring needs so go to across.to to quickly and securely Bridge your assets between ethereum optimism polygon arbitrum or Boba Networks okay guys we're back uh we got to talk about uh some of the contagion talk about some of the the response from around the space there's also been some uh breaking news coming out of binance that um we we want to cover just a tweet new tweet just dropped maybe nothing breaking from us just dropped yeah um I think uh before we get to that binance tweet another thing I was reading in the chat chat logs uh during during the break here and people were upset about the nexo commercial that we just put on

yeah um Let me let me just comment on that guys so um I have used crypto is this a confession time I have used crypto Banks and exchanges in the past including centralized lending companies um not very much mostly just to test um nexo has been among those so is Celsius so is block fi I had my funds um like I'm never getting my funds out of Celsius um just to test right nexo is a company that came out of the you know three years Capital contagion three errors Capital contagion uh they seemed strong

okay they seemed like they were in a place to be able to weather the storm but I just want to emphasize that we have no idea if it's a centralized exchange if it's a crypto bank if it's a lending and borrowing facility neither David nor myself know for sure whether it's solvent I don't know if Wells Fargo is solvent I don't know if Chase is solvent I don't know if the banks I used my everyday life are solvent so this is a risk anytime you give up your private keys and custody it with a third party it's a risk if you have funds in coinbase right now there is a risk I trust coinbase I trust Gemini but I don't I I do the

um public bathroom thing I don't keep my funds in there I go in I'm in and out okay and so I just want to make it clear that we are not sure where the next contagion to happen is we sign these sponsors kind of like three months in advance and so we have to finish our commitment with nexo we'll definitely be reevaluating what we do with centralized companies in the future um and um as far as we know everything's fine with nexo but like we don't know for sure and this is the beauty of D5 whenever possible guys we're going to put sponsors in front of you that are a hundred percent defile lined and 100

bankless tools but sometimes they won't be you know and so next up is an example of like you can use it choose cautiously um I would recommend not keeping a lot of your funds on exchanges at this point in time uh in general and so just if you ever choose to do that just enter it with caution small part of your portfolio right and we all have to remind ourselves like banklessness is a spectrum uh some people are not ready to take on private Keys uh that is also a risk that I think if you're watching this live stream you're probably ready to take on that risk but many other people are not ready to take on that risk so they're all tools and we consider them all I mean my dad David he's like I think it's a greater risk for like

some people like my dad yeah so custody his own private Keys yeah and like risk losing it uh versus holding on somewhere like coinbase for example so we have to take that two into account okay what is this tweet from Finance okay sorry um we'll get to the charts later um if you need to learn how to use trading view dude okay he's fine he's never failed me yeah okay all right uh back back to binance finance just tweet tweeted this out uh new binance just dropped uh as a result of corporate due diligence as well as the latest news reports regarding mishandled customer funds an alleged U.S agency investigations we have decided that we will not pursue the potential acquisition of ftx.com that dropped

seven minutes ago almost already has 10 000 likes uh well that's that no one's coming to save us that's so when Banks fail there's no bailout for us we don't get bailouts yeah we don't get bailouts and that's what we signed up for isn't it no bailouts yeah uh yeah that's what we signed up for yeah we don't get bailouts that's the rules it sounds like you're contemplating that you're like uh I was just I was just like well if you're a centralized thing you get bailouts sooner than a defy thing no one ever is ever going to bail out maker Dao or uniswap or Ave uh what I'm saying is when I say bailouts it's not like a

private company bailout like that makes sense to me that's a business decision I think when people think of bailouts in the way I just used it is like uh 2008 yeah financial crisis bailout where you start losses and so okay so like uh socialize your losses like printing money right we printed money to save the banks in 2008. you know what I remember Ryan like two weeks ago we were talking about how FTX was uh teasing dabbling with a new stable coin yeah they were going to Mint their own stablecoin and bail themselves out because they knew they had a hole in the balance show me that that's what they were going to do they had insolvency they were going to Mint their own stable coin and and print their stable coin all this is coming out does it okay so did it seem weird when

we were doing that live stream with SPF and and Voorhees like two weeks ago now that you think about now you look back on it right did we talked to SPF before did he seem like off his game yes nervous to you you seemed like and everyone saw it everyone saw that like Sam felt cornered and like on and we you and I were both like you know props to Sam for like being public and engaging these conversations publicly uh but like I think he was like running out of tools in the tool belt like he was running out of ammo well imagine if you like imagine the stress that he'd be on right yeah at that point in time just like the pure and like um he just seemed very distracted uh there was like

decent amount of kind of like movement jittering that sort of thing and now that I look back on that conversation um which by the way some people have said kind of Kick this whole thing off I don't know if that's true or not but um it was a different Sam than the Sam we talked to yes I don't know back in it was a very different Sam of last year whatever um all right so let's talk about contagion oh yeah what's what's that crypto condom who this is actually a Twitter account that we've actually used before so despite the uh the uh less than professional name uh we don't really care about professionalism he's a good good Twitter account and he goes calling all researchers threat incoming but this contagion this is a contagion we know of so far please provide info in the replies if you know of any other so

I can compile and share a lot more contagional come out entities with FTX and Alameda exposure will be short targets and so he goes through a list of all uh entities or things that are should be considered when we talk about contagion uh kucoin has some exposure Galaxy digital for 76 million uh Solana a six billion dollar Bart market cap right now I'm pretty sure that's less ftt the token is as now less than four dollars it's a little bit above two uh Stargate allegedly bought a bunch of ftt tokens Voyager ooh Voyager again uh FTX series C investors jump Capital multi-coin wait what's multi-coin let's open a multi-coin uh they just had a ton of FTX exposure and in addition to

that we'll talk about this next they had a lot of assets on FTX itself like 10 right yeah 10 of their funds so their fund is down 10 okay um Aptos had investment from FTX in their series a sui had FTX investments from their series a um tezos like so all these people he what this uh crypto condom is doing and saying hey calling all researchers go investigate these things go Snoop uh go see how bad the contagion is um hopefully the cancer isn't that bad but FTX was at the very epicenter of a lot of just crypto C5 David did you see that that the headline is like uh Tom Brady was like a headline 650 million or something of their their their net worth tied up in FTX yeah and uh related Investments yeah double down on FTX over

and over and over again yeah FTX Arena all right so quick comment in the chat guys what's going to happen to FTX us uh uh probably nothing I think two separate entities and honestly you have to capitulate and this is what the other frustrating thing Ryan is is about is like FTX us is probably fine because it's a regulated onshore exchange that is not connected those things are separate they are separate right and so FTX us is com is largely solvent as far as we know in the same way that coinbase is because of regulations David David they're gonna need a Rebrand after this yeah that's that's for sure yeah I think uh this but but when you look at this list right it's interesting is we got

um nothing really affecting Bitcoin and then kind of Fallout price Fallout like the liquidity uh slippage Bitcoin is being liquidated to pay for insolvency yeah nothing really like affecting like the coinbase of the world right not too much in the ethereum community yeah it's kind of this is a question of like after the Dust settles how do we rebuild and what communities come back stronger and faster like I know we're going to get to this but um I mean it's been a rough times for Solana we'll we'll pull up some Solana charts later but this is what you're talking about multi-coin Capital hit by FDX collapse they had 10 of their funds AUM stuck on the exchanges wow right what does that mean the token still exists

no no they're they're funds they're AUM right okay so somani's for what what's multi-coin Worth right billions billions yeah now I mean what not not today maybe 10 less 10 10 of that investor funds was locked inside of FDX we're not talking about like down from all-time high we're talking about money that's not recoverable money that's lost right I'm confused about like Alameda was like this hedge fund that was like playing trading games and and like liquidating people left and right and making a ton of money and then but like okay then where's their money like where'd it go David like who's got all the money the

money went somewhere who liquidated Alameda Kyle samani didn't know about this all right I keep do you see that tweeted he tweeted out I think is like on a Sunday or Monday uh he was like I'm paraphrasing ignore the fud and it just like also an investor in FTX uh so if he doesn't know he's got his his multi-coin funds on FDX right and he's part of that kind of inner investor circle of like FDX I'm not gonna lump Salon in this but FTX you know like he should be in the know here right and he's got exposure yeah uh Galaxy digital uh reveals 77 million dollars of exposure to FTX in Q3 so

these are not only people being hit by contagion but also creating contagion as well uh so when somebody's hit by a contagion they pass along that contagion what a year for our friend Novo yeah sorry nobody brutal yeah it's rough uh like dovigrats uh so Frank chaparro out of the block uh just lists out all the FTX investors who you know spent money on something that is worth significantly less now BlackRock Sequoia Paradigm tiger Global SoftBank Circle multi-coin van X Ontario pension fund this is pensioners money in this thing wow that's bad that's that's what triggers The Regulators if we don't like that geez how long is it going to be until pension do you remember the meme of like the Pension funds are coming that's

what's 2000 oh God yeah so this is what vitalik was saying was like hey uh let's not like try to go for the ETF thing because of stuff like this like let's not integrate ourselves with tradfy too soon because uh yeah um the C5 regulations are coming my friend right big time Big Time drums are beating so here's the Tweet not only does FTX have this Salon exposure that they have to upload but they also have led the series a round for both Aptos and sui so Aptos and sui are going to have a hard time keeping their token valuations propped up when they have a persistent seller um so there's that the audacity of leading these seed rounds when you have like if what really happened is alameda's like went broke right and like

and you're still doing this yeah wow yeah this is uh FTX us saying it's not impacted by the liquidity separate entities I mean but it's got to be impacted right everyone's got to be withdrawing from probably I mean like I wouldn't keep my funds in there yeah um this is back to like the sad versus math yeah so here here the crypto Twitter takes yeah what's this one from foodbar this is a Xerox Foo bar real talk and this these are the sort of the takes that I like woke up to this morning Ryan so I was like oh we have to clean this up uh so Fubar says Real Talk the FTX news is the saddest I felt about the industry since joining previous blow-ups were either obviously failed mechanisms

or Prop Shops with a series of bad bets that's Terra Luna and then three hours Capital even Celsius gave sufficient warning with their fake yield products uh saying like well the writing was all on the wall for Celsius uh uh where any continues whereas SBF and Company had a clear ride to the top one of the best products around doing incredible revenue on honest business alone everyone knew about the alamina commingling but it was assumed it was a small block on otherwise successful business and that Ryan is the part where I realized that like this isn't just like uh popcorn time where you watch billionaire War Games happen uh FTX one of the best products around created a ton of value made useful services and useful products for many many people and then because

they leverage their customers deposits and they took risky bets those products and services will be destroyed this is a capital destruction event you know you know the metaphor of like uh the broken window of capitalism where like if you go and broke break a window do you create economic activity because you go and spend money at the repair shop and you spend money for the contractor this is that fallacy like if you break the big one of the biggest exchanges this is a capital destruction event the world is off in a worse off place because we do not have access to the good products and services that FTX produced as a result of this um and then Fubar continues and goes then the lying the cheating the stealing comes out that level of losses doesn't happen on accident why the need

for such Grace why the need for such Creed why he's saying like SPF one he won he made one of the biggest exchanges in the shortest amount of time but he kept on rolling the dice billionaire status like confirmed right um that wasn't enough yeah and I think he followed he finishes that and says I got tricked and I think that is what a lot of people in this industry uh feels like you want to read this one yeah this is from Kobe um speaking of uh getting tricked by the way we're doing a A bankless plus up only live stream all right never thought possible therapy session live stream therapy session yeah definitely coming together at uh 10 pm Eastern tonight so

come back for that it's gonna be a different flavor I mean in this episode we're going through the day's events in that episode I don't know what we're gonna be talking about it's uh up only so it could be anything but Kobe's saying Arthur uh can't do a show today I guess he's talking about Arthur Hayes I'm going back to bed my decade of crypto this exchange rug is by far the worst ever almost no time to react and lots of long-term and smart crypto people impacted by it almost no time to react this is exchange rug is by far the worst ever all right so he's saying this is worth some three hours Capital it's worse than Luna Terra it's worse than Mount gox it's worse than all of them what do you think about this steak do you feel like this is worse when Kobe

says that this is the worst drug of all time that is something to sit and reflect upon uh I don't think he's just shooting from the hip with this take I don't think Kobe does that when Kobe says that this is the worst of all time uh and he's been in crypto longer than you and I have Ryan he's seen it all he's been since before Mount Cox and he's saying that this is the worst why do you think that so I I don't know if it'll have quite the impact in terms of total Supply or like uh total market cap like I mean percentage of market cap destroyed but I think in you know I guess there's one element of um I think people thought that they could trust FDX right that was like all over San Francisco bro yeah every time he's a sports arena yeah he bought

a goddamn Arena that's that's a problem here yeah I mean if you were doing the algo stablecoin thing right that's one thing you kind of like you're doing some and back in 2013 Mount Cox I mean what do you expect we're like three years into this crypto experiment it's a magic to get like what do you expect right uh this is different I mean this was again the professionals right we're supposed to be doing the right thing here this was the guy that was in DC this is uh this is a three hours level capital of irresponsibility and he was also lobbying he was our interface to The Regulators uh today was the most depressing day I've seen this is Tom Shaughnessy of Delphi digital so take that into account where like Delphi Labs had a significant exposure to Terra Luna and so that's

what Tom's like bad day bad day of a bad day and he is saying that this day is the most depressing day he's seen in his three crypto bear markets oh wait no that's Tom that's I mixed up Tom's I mix up Toms that's not right wrong Tom wrong Tom no no this is are you sure that's Tom from Delphi oh that is that is Tom that is Tom okay never mind yeah you did you got the right Tom uh he said it's the most depressing day if affected you will recover um outside of the toxicity remember that there are smart high integrity people building the space forward David um we will recover from this yeah we always will I'm not worried about crypto like in the long run but um yeah I think a lot of people got hurt today uh the most depressing day I guess I don't know

I understand why a lot of people feel that way particularly those affect it um this is a Larry Cermak From the Block who's uh also replying to a crypto Anon account uh the a cat themed crypto Anon account if you want to scroll up Ryan uh assuming FTX funds are gone this is the biggest one-day loss in cat's life you need to do it in catboys David I don't know what a cat voice is right uh the maybe the saddest part is cat May no longer sponsor streamers art software open source projects because cat lost a million dollars a year money was always number cat will still live in nice hotels it's okay uh and Larry ceramac from the Block says biggest one-day loss for me as well funny since I actively said people should withdraw even if sub

one percent chance that fgx would be insolvent but I was too lazy to do it myself and when act and actually naively trusted Sam and multiple employees who all said everything was above board real back bounce back we'll bounce back cat so these are our people these are the crypto Twitter tribes these are the people that got duped by Sam's like heir of trustworthiness people that knew better and will admit that they knew better but they were still um smashed by this right and this is where I have to say it's like um uh there again we said this about kind of Luna Terra there should be no grave dancing about this uh I mean it you are just fortunate that something

like this didn't happen to you you may think it's because you're smarter you may think it's because uh you listen to the right advice you went bankless sooner all of those things can be partially true but also I mean like we really mean it when we say crypto is risky it's not for everyone right you could lose what you put in that can happen to you on this crypto journey and uh we can try to minimize our risk in lots of ways but I think it's important that uh we just remain compassionate to those on the journey that just got wrecked today uh as we uh take some no phone for their own uh yeah so here's tensei Capital he's saying uh looking to sell my FTX balanced DME of interested serious

offers only because his balance is a million dollars plus so this guy had a million dollars on the exchange and he's taking offers for somebody to uh you know give himself Pennies on the dollar uh here's Eric Eric Connor uh retweeting an article that's talking about ftx's excuse me Sam Baker's reads lost in net worth so Sam bankman's freeze 53 stake in FTX was worth about 6.2 billion dollars before Tuesday's takeover which is now happening so that actually might be worth zero uh according to Bloomberg's billionaires index based on that funding round and subsequent performance of publicly traded crypto companies FCX wasn't Sam Baker Street's most valuable asset though his trading crypto trading from Alameda research which I believe he owned 90 of Ryan um contributed 7.4 billion dollars to

his personal Fortune which might also be at zero now um the Bloomberg wealth index assumes existing FTX investors including SPF will be completely wiped out by binance's bailout and the root of the exchange's problem stems from Alameda as a result both FTX and Alameda are given a one dollar value might as well call it zero uh that leaves fbf's net worth to be about one billion dollars down from 15.6 billion dollars heading into Tuesday the 94 loss is the biggest one-day collapse ever among billionaires tracked by Bloomberg great vote of confidence for crypto still still got a billion dollars though uh for now I mean we'll see yeah there could be lots of legal Fallout from this of course um this is uh this is tweet what are we

looking at here yeah so there's I I the the section of tweets that we have next is all about the salon ecosystem because Solana is caught up in the crossbow look at the chart real quick first I want to pull up in the chart you can do right there yeah coin gecko yeah I'm using coin gecko yeah all right guys sorry I suck he's told that chat to eat it I'm sorry it's me I suck all right uh what are we looking at here should I do seven day uh yeah I might as well do seven days scroll down a little bit so we can see the uh the the down Badness uh in the percentage um if you scroll down it'll show you how bad it's down over seven days oh 60 down 60 in seven days uh this is just like Association SPF was a big Salon investor

remember spf's uh bags sell me sell me all your soul at three dollars and then F off tweet um and so you know by the way if anyone ever says that to you just for for future bear markets when you get you know all drunk on kind of the upward price movements if anyone ever says something like that just run head to the exit that it's he that was at three dollars so he's still up uh 5x on all of that sold yeah well he's he's upgrading it um do you know in this in this Solana Community too there's some massive unlocks that are happening like concurrently with this it's like a massive investor unlocks yeah uh hang on the chat saying SPF has filed for bankruptcy I'm gonna Google

search that what guys give us uh get us a link if you can uh no I don't think that's right I don't think that's right okay well I mean uh we'll see I'll do this right all right so back to Soul Community Solana is just like caught in the crossfire right because like uh multi-coins down bad has a bunch of Soul on the balance sheet FTX is down bad has a bunch of soul in the balance sheet Sam himself personally probably own soul uh so there's a bunch of just like cell pressure for Solana uh and so uh that's unfortunate for Solana however Ryan uh I think there's a big question right now is is Solana mutually sufficiently independent from all of the people that own uh Seoul uh and will the Solana

ecosystem survive yeah I I think yes yes I think I think yes it will take a long time to repair and the price may never like it may take years if ever for it to reach all-time highs um this is a this is a massive event I mean I know a lot of people who are in Solana just because SPF supported them uh Solana so much it was kind of like sbf's pet uh you know layer one right um what's this uh so this is the data nerd saying 47 million uh Soul Talk which is almost a billion dollars at the previous price so that's less now will be unstaked by the end of epoch 370 uh up from 18 million reported earlier I

think this might have already happened by now but basically like Seoul is being unstaked now uh as the price is going down a billion dollars unstaked by the end of epoch 7 30. that's like today right uh yes that's that's today uh can you Ryan 13 of the supply yeah yeah uh can you open up trading view um and we'll guide you through some charts because uh ether is about to break through eleven hundred dollars yeah okay there's your eth BTC uh just yeah type in eth uh Ethan do the coinbase uh fourth down oh that's the market cap of eth and then and then you zoomed in okay uh so uh go back up to the ticker in the

top left we don't want this one uh yeah type in ETA coin fourth one down ethusd coinbase one more there we go oh yeah here we go okay so you know this is new loads for ether uh we'll pull up Bitcoin in a second uh so ether about to break through eleven hundred dollars uh let's pull up Bitcoin it's it's new lows it's not Lowe's uh can we just scroll out like what is Lowe's yeah so go go up to and hit with the one hour thing you guys see do you see what I have to deal with when Ryan has to try David David is teaching me real time give me yeah give me one day yeah so here we are yeah and then we can zoom in a little bit to like 2022 just just when you're 20 20. yeah there it is right so yeah

this is this is getting down uh and then uh okay so go go back up and see the Vault the volume below uh in the top left corner you can uh hit the eyeball with that if you hover a little bit lower a little bit lower uh so yeah so we are getting down to the near the basically the lows uh of ether uh you wanna you wanna pick out um Bitcoin yeah I think someone's also saying uh check Bitcoin uh check binance Twitter I wonder hey Dave uh Dave in the chat uh can you um see if CDs or binance to read anything uh yeah binance or Bitcoin ooh below 1600. that that is a low that is a

that is a low that is a low sense across Nest all-time lows for uh no right bull market lows right bull market the cycle lows for Bitcoin for eth and then we are we've we've exceeded yeah um Lowe's last last low was I guess around the 1700s and now we're at 1600s wow could you imagine David seeing 10K Bitcoin again yeah that's how low do we go 10K God strike fear into my heart we're close 50 off I mean that's real close yeah um you wanna okay can you pull up I'm sorry to do this can you pull up ultrasound.money oh God I don't know should I why uh I mean this is not

she qualified uh so we're just burning a ton uh so they're people know that people think about this right now I put a I put a tweet I was like oh like Ethan's finally ultrasound and Udi worth heimer's like not now David I'm sorry I feel that way David this is the one nice Shining Light on a week of yeah it depends I just think this is it's it's it's okay it's a pain chart all right David David thinks it's okay I say give it some space yeah um all right so what about I guess other crypto prices anything else we should we should look at yeah we can go back to the FDI ftt token but that's about can I just look at market cap we are 873

billion so down from a trillion big time I don't remember seeing it below 900 billion before I think this might be lows on the market cap crypto I think this could be Market capitals yeah significantly again yes uh okay what about regulatory David maybe that's uh we don't really know too much right now because Regulators are like they're they're like the FED they're a lagging indicator not a leading indicator um uh and so it's like oh sweet the feds have finally showed up great um uh I just think the big meta question is is SPF in legal trouble um which we do not know okay so uh sum this up for us David um

I think because um yeah um so what happened over the last 24 hours for people late to this or just to summarize what what's happened now I mean and by the way at the beginning of this uh live stream we're in a different place than we are now yeah it does look like binding down here has definitively walked away from the deal so uh I guess what are the implications where are we now and what what can we look for in the next 24 hours um I'm sure Sam and FTX are going to go and solicit other investment [Music] um I'm not optimistic about anyone else coming to the rescue because like I said

earlier if binance isn't doing it then who else is going to they are the most relevant tell me what that means for depositors even Brian Armstrong was like it doesn't even make sense for us to do it um depositors uh maybe there's some fumes left in the tank I but I think there's going to be a moment where SEC cfcc steps in and says all right we're taking over freeze everything we're going to the courts uh and there will be a liquidation event of ftx's remaining assets to to pay off um creditors there's going to be a squeeze to get into the door to get money back whether you are an FTX investor trying to get your money back if you are a depositor into FDX you uh are in line to get your money back

everyone it's it's like 2008 Ryan everyone is lining up to get whatever remaining funds are available and it's going to go to the court because people are wanting to get in the front of the line to get get paid back first and it's going to be the courts that decide that and so this is this is the story that when markets break down we end up back in courts and so that is what's going to happen I think the most the first thing Ryan that people need to pay attention to is lawyers are going to step in and they're going to start giving their opinions as to whether if you are a customer depositor into FTX where do you stand in line are you first or are you after investors I think that's the most important information that I could see kind of coming out in

the near term I think that's the thing to pay attention to next guys I I think that's all right and I don't want to sugarcoat this neither David nor I do this is uh this is a pretty big deal um this is um this is more than a a flesh wound this is a cannonball to the chest yeah uh it's gonna take a while to recover from this yeah um so I'll say that um on the bright side because you know like don't don't look for for weeks for this these charts to recover uh maybe not even months uh it could take a very long time on the bright side um I think David this could be the final capitulation uh we need out of this out of this bear Market if it I I had a

feeling I had a feeling there was still some nastiness left right like nothing quantifiable but like intuition telling tell me it's like whether it's Mac or something I had a feeling we would visit uh triple digit eth again and like we're on the Press we're we're probably 132 away we're going there okay are you buying um double triple digit Absol freaking lutely 900 or you're gonna wait for 800. um I'll probably start 900. yeah here's the thing um foreign a lot of you guys will be tempted to leave right now right throw up your hands in frustration even Kobe was like hey I've been here for a while and like I'm I'm kind of done all right if you're still here

you're doing it right bear markets are the time you make the money yep not the bull markets those that's the feel good that's kind of the carbs and sugar right uh bear markets are when you're actually making money these are when your buys at these low low prices when it's super painful they will turn green yeah when the bear when the bull market uh they will be the most green does this end like when the words sound hollow and when it sounds cliche and at some level when you don't want to hear it because you're like Ryan shut up this is too painful right that's when you should be looking to buy and I'm not saying right now I'm not saying all lump sum you get dollar cost average you can

do different things but this is how you play the crypto market and the bear Market that's right as you buy when there is what is Buffett say blood in the streets on the streets there's this there's lots of blood there's blood and it might flow for a while longer we don't know we don't know when the bleeding's gonna stop you got to stay here if you're not staying here you're not playing the game uh right um you know so I guess that's uh that's what I would say and David I know we've got uh kind of a Moment of Zen something to leave folks with as we exit but uh remind us to uh what else is happening right and Bank list because we're doing a live stream tonight there's another another time we're going to talk about it first the chat wants to remind you

that that wasn't Financial advice um but I would like to ask the chat all right you chat you give me Financial advice I want to know what price yeah where are you buying so I can I can layer in my bids Perhaps Perhaps just before yeah can we crowdsource and some Bitcoin and ether prices um but okay uh so tonight uh we're doing our live stream with up only um I think uh we probably won't be sharing tweets I don't think we're going to be at screen sharing but yeah Kobe and Ledger we're gonna we're gonna uh live stream with them at 10 p.m eastern time uh and so stay tuned for that that is in five and a half hours yeah uh and so oh yeah wow okay people are talking about 600 eth oh God ow ow I don't I don't want that to say it I didn't know

it's too loud that's too long that's too low uh so okay anyways where can people catch that live stream David right here right back here so we will see you guys in five and a half hours we're gonna talk to Kobe and Ledger we're gonna get Kobe's perspective as to why he thinks this was the worst worst exchange rug pull in his time being here maybe we'll throw in and try and get some other people here we offer the invitation to CZ you didn't respond but if CZ wants to show up that is an open invitation bankless after dark I am going to be drinking a drink I will have a a drink with me I don't know about you Ryan but I'll be drinking some whiskey I could say I will no longer be drinking coffee at that time will you be drinking something even that is uh too late for

me we'll see we'll see what I show up with maybe a VB special something like this maybe special LOL um after dark uh we haven't done that before you know what uh we appreciate you you sticking with us and bankless like uh we're not leaving we're going to be here in the bear Market with you this is the time we do the best we build the best things I'm Gonna Leave risks and disclaimers and then I think guys like And subscribe yes first like And subscribe and we have a Moment of Zen after these risks and disclaimers none of this has been Financial advice it never freaking is on Bank list never ever never has been never will be eth is risky Bitcoin is risky you could lose what you put in but we're headed west this is the frontier it's not for everyone but we're glad you're with us

on the bank list Journey David let me tip This Moment of Zen I hope it works did you share a screen with sound there we go like I was saying it's FTX it's a safe and easy way to get into crypto yeah I don't think so and I'm never wrong about this stuff never if you don't laugh you'll cry take care guys we'll see you in the Stream tonight goodbye everyone