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Speaker 1: Pushkin. Hey, it's Jacob. As you may recall, I interviewed

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Speaker 1: Sam Bankman Freed on this show back in twenty twenty two.

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Speaker 1: Sam was a crypto mega billionaire when I interviewed him.

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Speaker 1: Several months later, his company blew up and he was

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Speaker 1: indicted on fraud charges. Right now, Sam is on trial

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Speaker 1: in federal court in New York City. Michael Lewis, who

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Speaker 1: hosts another podcast here at Pushkin, just wrote a book

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Speaker 1: about Sam Bankman Freed, and his podcast is covering the

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Speaker 1: trial really closely. On Tuesday of this week, I sat

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Speaker 1: in as a guest host for Michael Lewis and I

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Speaker 1: interviewed Lydia jeen Kott, who has been covering the trial

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Speaker 1: for Pushkin. I found the conversation really interesting and it

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Speaker 1: brought back some of the key themes I talked about

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Speaker 1: with Sam Bankman Freed when he came on this show.

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Speaker 1: So for this week's episode of What's Your prob we

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Speaker 1: are bringing you my conversation with Lydia Jean Coott about

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Speaker 1: the trial of Sam Bankman Freed. I hope you like it.

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Speaker 1: So I am delighted to be here today. It's week

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Speaker 1: two of the Sam Bankman freed trial, and today was

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Speaker 1: a very big day. Caroline Ellison, who of course was

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Speaker 1: the co CEO of Alameda Research and SBF's former girlfriend,

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Speaker 1: she took the stand today and Lydia Jean you of

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Speaker 1: course were there.

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Speaker 2: Yes, I came to the courthouse bright and early, and

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Speaker 2: it was a day that reporters were particularly excited for.

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Speaker 2: There are a lot of us, and I interviewed a

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Speaker 2: few as we were waiting for the court doors to open,

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Speaker 2: And I'm going to play some of that tape for

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Speaker 2: you right now.

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Speaker 3: I'm Sam Kessler, I'm an editor at Coindesker.

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Speaker 2: What are you looking forward to learning from Caroline Ellison's testimony?

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Speaker 3: Aside from the testimony itself, it's going to be really

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Speaker 3: interesting to see the line of questioning that, particularly the

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Speaker 3: defense decides to follow, and they're also going to maybe

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Speaker 3: touch on things around drug use and whether that makes

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Speaker 3: her an unreliable narrator. All that is going to be

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Speaker 3: really fascinating to see.

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Speaker 4: I'm Lose Lopato. I'm a senior reporter at the Verge.

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Speaker 4: I am super curious about why she did this, Like,

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Speaker 4: I don't know that she's going to talk about that,

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Speaker 4: but she didn't have equity and the boys did. I've

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Speaker 4: had some like lousy ex boyfriends in my time, but

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Speaker 4: nothing on the scale.

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Speaker 3: What's your name, I'm Kevin Dugan with New York magazine

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Speaker 3: The Sex.

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Speaker 1: I want all the details.

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Speaker 3: I want all the stories, all the spine tingling kind

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Speaker 3: of sensation of all the sex that happened in the Bahamas. Yeah,

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Speaker 3: that's really what I'm looking forward to.

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Speaker 1: Most, Lady Jean, I don't want the details of the sex.

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Speaker 2: Well, good news for you. There wasn't a lot of sex,

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Speaker 2: and there was a lot of spreadsheets what happened.

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Speaker 1: I mean, this is like truly a high drama moment, right,

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Speaker 1: Like you have this romantic history, you have this executive history,

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Speaker 1: and you have this alleged crime. So like, what's the

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Speaker 1: like Caroline walking into the courtroom moment.

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Speaker 2: Yeah, so the courtroom was packed and the prosecutor said

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Speaker 2: that they were going to call their next witness, Caroline Allison.

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Speaker 2: You could tell the reporters are all really excited. You know,

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Speaker 2: usually when there's an intermission, people start to talk, but

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Speaker 2: no one was talking. Everyone was looking at the door.

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Speaker 2: Someone whispered that it was a bit like a weird

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Speaker 2: wedding since we were waiting for her, walked down the aisle.

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Speaker 1: Oh, very good.

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Speaker 2: Someone went like, don don done, And then the door

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Speaker 2: opened and she walked through. She was wearing like a

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Speaker 2: reddish pinkish dress. She had on a blazer. She's really small,

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Speaker 2: she's even shorter than I am. She was holding a

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Speaker 2: water bottle and she walked really confidently down the aisle

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Speaker 2: as everyone was watching, to the witness stand and then

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Speaker 2: she sat down. The prosecutor immediately had her admit that

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Speaker 2: she had committed Finngel crimes, and she said that she

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Speaker 2: had committed them with Sam.

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Speaker 1: And just to be clear, she's already previously pleaded guilty

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Speaker 1: to these crimes.

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Speaker 2: Right exactly, she has. And then the prosecutor had her

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Speaker 2: point out Sam. She was sitting down, and then she

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Speaker 2: kind of stood up and she looked all over the

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Speaker 2: courtroom for him. She was looking in the jury box,

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Speaker 2: she was looking in the where the reporters were sitting.

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Speaker 2: It was a full thirty seconds, and it was the

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Speaker 2: longest thirty seconds ever. And then finally she found him

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Speaker 2: and she pointed at him when she finally saw him,

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Speaker 2: and I couldn't see his face, but people in the

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Speaker 2: overflow room said that they kind of smiled at each other,

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Speaker 2: and then the prosecutor said, can you say what Sam

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Speaker 2: was wearing? And she said he was wearing a suit?

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Speaker 2: And she laughed a little bit and sat down.

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Speaker 1: So I have a couple questions about that, one like,

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Speaker 1: wasn't he just sitting at the defense table or whatever? Like,

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Speaker 1: was she putting on a show? Did she act actually

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Speaker 1: not know where he was? What was going on there?

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Speaker 2: I don't think she was putting on a show. I

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Speaker 2: think it must be really overwhelming. Was probably her first

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Speaker 2: time in this courtroom. It was really packed. There are

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Speaker 2: a lot of people there. I'm assuming that that walk

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Speaker 2: down the aisle when we're all staring at her was

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Speaker 2: pretty terrifying, and I'm thinking it probably took her a

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Speaker 2: few seconds to orient herself. People have also speculated that

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Speaker 2: she hasn't seen him since he got his hair cut,

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Speaker 2: and she's never seen him in a suit.

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Speaker 1: Okay, I have another question about that. Why do prosecutors

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Speaker 1: do this? I mean I've seen it in like the

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Speaker 1: movies or whatever. You know, is he in the courtroom

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Speaker 1: with us? Can you point him out? But like Sam

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Speaker 1: Agrinfried was like there were pictures of him on TV

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Speaker 1: and in magazine, like, we all know who he is

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Speaker 1: and what he looks like. Is there some legal reason

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Speaker 1: they do it? Is it theater? I don't know.

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Speaker 2: There's a lot of pointing in court. Also, I learned

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Speaker 2: that our opening statements, it's really common to point at

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Speaker 2: the defendant.

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Speaker 1: Okay, so she's there, she's identified, Sam Bankman freed. We

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Speaker 1: got our drama. Like, are there a few key moments,

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Speaker 1: whether they are emotional moments or kind of substantive moments

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Speaker 1: in terms of, you know, the case itself that stand

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Speaker 1: out to you of what happened today? Like what are

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Speaker 1: the most important things that happen?

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Speaker 2: Yeah, Well, the prosecution started pretty early by having Caroline

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Speaker 2: talk about her romantic relationship with Sam and to characterize

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Speaker 2: a little bit what it was like. And she said that,

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Speaker 2: and I'm quoting from my notes that there is a

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Speaker 2: general theme where I would want more, but he was

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Speaker 2: being distant and not paying attention. So she kind of

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Speaker 2: characterized their on and off again romantic relationship as one

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Speaker 2: where Sam kind of had an upper hand. She also

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Speaker 2: said that Sam was her boss and that at times

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Speaker 2: made things awkward.

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Speaker 1: And what do you think is going on there? I mean,

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Speaker 1: I kind of get it, but like, what's the point

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Speaker 1: of that part of it?

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Speaker 2: Well, there's something that lawyers do called taking this sting out,

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Speaker 2: where they bring up things that they think the defense

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Speaker 2: is going to bring out on Cross and they say

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Speaker 2: it during direct So that way it kind of makes

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Speaker 2: it seem less bad because I'm sure that on Cross

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Speaker 2: the defense is going to say something like you dated

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Speaker 2: Sam and it didn't go that loud.

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Speaker 1: So the prosecution is just preempting the you're just the

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Speaker 1: bitter ex girlfriend kind of defense.

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Speaker 2: And they're also setting something else up, I think where

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Speaker 2: they talked about Sam and Caroline's professional relationship and they

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Speaker 2: talked about how in that relationship, Sam also had the

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Speaker 2: upper hand. Caroline talked about how her job at Alameda

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Speaker 2: was really the second job she's ever had before that

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Speaker 2: she worked at Jane Street with Sam, and she felt

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Speaker 2: really insecure and not prepared for that job, and she

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Speaker 2: checked in with Sam about all of the important decisions

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Speaker 2: that she made, and they made it sound like he

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Speaker 2: was very involved and he was overseeing what was happening

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Speaker 2: at Alameda, so any crimes that were happening at Alameda,

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Speaker 2: by extension, Sam would also know about uh huh, and

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Speaker 2: sign off on. They really emphasized that he was signed

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Speaker 2: off on everything that Caroline did.

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Speaker 1: That makes sense because I mean, clearly, very bad things

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Speaker 1: happened with FTX and Alameda, and the key question is

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Speaker 1: did Sam do them? Everybody else has admitted to doing them.

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Speaker 1: Did Sam do them? And the prosecution is trying to

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Speaker 1: prove that yes, he did. Okay, so they got there,

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Speaker 1: both their personal and their professional relationship. What else?

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Speaker 2: She also give us some interesting insight into Sam as

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Speaker 2: a person. They asked her about what his goals were

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Speaker 2: for himself for FTX, and she said that he was

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Speaker 2: very ambitious and that actually he told her one time

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Speaker 2: that there was a five percent chance that he believed

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Speaker 2: that he might be president one day.

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Speaker 1: You know, I'll say, when I interviewed him, like the

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Speaker 1: hubris was striking, which I mean, I guess that's probably

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Speaker 1: true for everybody. It's not like, oh my insight, but

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Speaker 1: it really is striking. When I interviewed him is when

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Speaker 1: he talked about helping trillions of people, not just the

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Speaker 1: billions of people who are alive today, but he said

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Speaker 1: the trillions or even hundreds of trillions who might someday live.

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Speaker 1: But then it was like, look, therapy, who have had

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Speaker 1: a huge impact on the world, why shouldn't it be me?

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Speaker 1: And like similarly, like rich people get to be president,

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Speaker 1: like it was super rich, maybe it could have been Yeah.

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Speaker 2: Yeah, I talked to some reporters who were like, there

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Speaker 2: was a time where it wasn't that crazy to think

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Speaker 2: that there is a five percent chance that he would

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Speaker 2: become president. The prosecutors also asked her about Sam's approach

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Speaker 2: to risk, and she said something that I found really interesting,

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Speaker 2: which is, imagine if you flipped a coin, and if

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Speaker 2: the coin landed on tails, the world would be destroyed,

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Speaker 2: and if the coin landed on heads, the world would

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Speaker 2: be twice as good as it is now. Sam would

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Speaker 2: believe in flipping the coin.

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Speaker 1: You know, it's funny you should mention that because again,

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Speaker 1: before he got indicted, he was on this podcast that

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Speaker 1: I like called Conversations with Tyler, with this kind of

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Speaker 1: economist public intellectual, Tyler Cowen, and there was a similar

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Speaker 1: thing in that interview where Tyler Cowan said said, if

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Speaker 1: there was a fifty one to forty nine percent chance

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Speaker 1: of a similar thing, either the universe twice as good

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Speaker 1: as the universe gets destroyed, do you take the bet?

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Speaker 1: And Sam said every time? And Tyler kwn was like, yeah,

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Speaker 1: but if you keep taking it every time, you're clearly

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Speaker 1: going to end with the destroyed universe. And Sam was like,

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Speaker 1: or a really awesome universe And I.

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Speaker 2: Was like what.

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Speaker 1: And then when everything blew up, that was what I

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Speaker 1: thought back to. There was another interview where this other

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Speaker 1: smart person, Matt Levine, sort of gets Sam to say

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Speaker 1: that what he was doing was kind of a Ponzi scheme.

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Speaker 1: Was basically a Ponzi scheme. But to me, the more

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Speaker 1: Sam thing was that I'll keep taking the bet. And

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Speaker 1: it seems like that is a sort of perfect metaphor

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Speaker 1: for what he did, or at least a very good

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Speaker 1: metaphor for what he seems.

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Speaker 3: To have done.

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Speaker 2: Yeah, I underlined in my notebook, like this is the

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Speaker 2: crux of the story is he flipped a coin and

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Speaker 2: it landed the wrong way.

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Speaker 1: For a while, it landed the right way right. That's

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Speaker 1: how you get to be worth many tens of billion

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Speaker 1: dollars when.

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Speaker 3: You're not thirty.

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Speaker 2: I would never flip that coin. I would not only

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Speaker 2: not flip that coin, I would leave the I would

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Speaker 2: leave the house.

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Speaker 1: That's why we're making podcasts, low risk, low return. Presumably

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Speaker 1: the prosecutors called Caroline Ellison because you know, they're trying

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Speaker 1: to convict Sam of a bunch of crime. So so

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Speaker 1: you know what was sort of the crime part of

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Speaker 1: her testimony?

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Speaker 2: Yes, okay, So remember that the crime that Sam is

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Speaker 2: accused of is using money that FTX customers thought that

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Speaker 2: they had safely deposited onto the FTX cryptocurrency exchange and

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Speaker 2: instead investing it through his investment firm, Alameda. Caroline is

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Speaker 2: the head of Alameda, and she said that when Alameda

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Speaker 2: used FTX customer funds, it was at Sam's direction.

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Speaker 1: Uh huh. So like that's the core, that's it, Like,

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Speaker 1: that's the.

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Speaker 2: Thing, that's the thing.

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Speaker 1: Yeah, that's like a good portrait of the day. One

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Speaker 1: of the things I've been interested in listening to the

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Speaker 1: other episode episodes you did with Michael and with Jacob Weisberg,

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Speaker 1: was what's the jury doing? Who was asleep today? I

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Speaker 1: find it striking that jurors are asleep, Like, were there

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Speaker 1: jurors asleep today? How many? Was it the same? Was

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Speaker 1: it the juror who works the overnight shift?

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Speaker 2: I think the jurors just like the journalists were actually

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Speaker 2: really interested in what Caroline had to say. And she

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Speaker 2: also sounded I had heard her on an interviews before,

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Speaker 2: and she sounded much more confident. I think her voice

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Speaker 2: was deeper, So I wondered whether she got some voice coaching,

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Speaker 2: and I wonder if that was part of why she

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Speaker 2: was able to keep the juror's attention. It was honestly

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Speaker 2: a very technical testimony. They showed a lot of spreadsheets

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Speaker 2: and balance sheets, and I was surprised. I kept looking

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Speaker 2: over at the jury, but I personally did not witness

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Speaker 2: a single sleeping jury today.

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Speaker 1: That is a real testament to how Compella and Caroline

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Speaker 1: Ellison must have been. So how did the day end?

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Speaker 1: Where did you get to in the trial? Today?

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Speaker 2: The prosecution didn't finish asking Carol questions, so they're going

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Speaker 2: to continue with that, and then I think we're all

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Speaker 2: really interested to see what's going to come out on

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Speaker 2: cross examination.

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Speaker 1: I'm very curious to hear what comes out in cross examination.

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Speaker 1: We'll be back in a minute with one last thing. Ladya, Gene,

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Speaker 1: we're back. Can you please give me one last thing?

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Speaker 2: Our one last thing today is about Gary Wong's testimony.

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Speaker 1: Okay, you and Michael talked about Gary Wong. He's the

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Speaker 1: guy who doesn't talk right. If there's one thing to remember,

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Speaker 1: he's co founder, but mainly is the really quiet guy.

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Speaker 1: And then when he talked, apparently said on the show,

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Speaker 1: we talked really fast.

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Speaker 5: It's kind of interest.

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Speaker 2: Yes, the guy get it over with once he took

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Speaker 2: the stand, did actually talk. And today was cross examination, okay,

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Speaker 2: and everyone was really impressed with how the defense lawyers did.

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Speaker 2: I think up until now they seemed really nervous. I think,

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Speaker 2: I said earlier one of their hands seemed to be shaking,

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Speaker 2: and today they moved very quickly. They hardly got interrupted

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Speaker 2: by the prosecution. They seemed very confident, and they did

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Speaker 2: kind of leave me feeling a little bit different about

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Speaker 2: Gary's testimony than I did earlier.

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Speaker 1: Interesting, So those are like the vibes, which is interesting.

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Speaker 1: What was the substance of the cross examination?

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Speaker 2: So to me, one of the most interesting things in

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Speaker 2: this trial is Sam tweeted shortly before FTX declared bankruptcy

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Speaker 2: FTX is fine. Assets are fine, And this has been

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Speaker 2: pointed over and over again to an example of Sam lying,

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Speaker 2: and on direct Gary said this was a lie because

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Speaker 2: FTX was not fine. Assets were not fine, right, But

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Speaker 2: the lawyers pointed out how Gary, in earlier conversations with

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Speaker 2: the prosecution, did not characterize this as a lie because

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Speaker 2: he said that depending on how you looked at it,

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Speaker 2: FTX maybe was fine and assets were fine. It just

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Speaker 2: depends whether you were talking about liquid or ill liquid assets,

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Speaker 2: uh huh.

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Speaker 1: Which is in fact a classic hard problem in financial crises.

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Speaker 1: Right liquid assets basically means assets you can turn into

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Speaker 1: cash right now, and ill liquid assets means, yes, we

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Speaker 1: have the money. Whatever I own a house, say, but

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Speaker 1: I just can't sell it and turn it into money

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Speaker 1: this minute. And so did he say on cross that, like,

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Speaker 1: maybe if you're considering I liquid assets, it would have

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Speaker 1: been reasonable to think that that FTX was fine.

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Speaker 2: He did seem to say that he said that Sam's

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Speaker 2: tweet was misleading since he was talking about ill liquid assets,

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Speaker 2: but he admitted that in early conversations with prosecutors he

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Speaker 2: did not call this tweet a lie. And I found

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Speaker 2: that cross examination to be really compelling.

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Speaker 1: Makes me only more interested to hear what happens when

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Speaker 1: Caroline Ellison undergoes cross examination. Thanks for having me, Lydia, Jen.

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Speaker 2: Bye Jacob talk to you soon.

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Speaker 5: This episode of Judging Sam was hosted by Jacob Goldstein.

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Speaker 5: Lydia gen Caught is our court reporter. Catherine Girardeau and

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Speaker 5: Nisha Venken produced this show. Sophie Crane is our editor.

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Speaker 5: Our music was composed by Matthias Bossi and John Evans

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Speaker 5: of stell Wagons Symphonette. Judging Sam is a production of

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Speaker 5: Pushkin Industries. Got a question or comment for me, There's

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Speaker 5: a website for that atr podcast dot com. That's atr

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Speaker 5: podcast dot com. To find more Pushkin podcasts, listen on

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Speaker 5: the iHeartRadio app, Apple Podcasts, or wherever you listen to

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Speaker 5: on our Apple show page