WEBVTT - The Mark Moss Show Nov 21, 2022 0:00:00.160 --> 0:00:02.960 Hello, and welcome to another episode of The Mark Moss Show, 0:00:02.960 --> 0:00:06.400 where we talk about the decentralized revolution. We are talking 0:00:06.400 --> 0:00:09.160 about how the world is changing, of course, right before 0:00:09.160 --> 0:00:10.600 our very eyes, and of course we look at it 0:00:10.640 --> 0:00:15.400 through the lens of politics, finance, and technology, politics, finance, 0:00:15.400 --> 0:00:19.520 and technology. And today, man, we are going to talk 0:00:19.560 --> 0:00:24.160 about the biggest news in all three of those areas, politics, finance, 0:00:24.160 --> 0:00:26.920 and technology. Of course, those three things are interconnected, and 0:00:26.960 --> 0:00:29.120 that's where I like to focus, and so I got 0:00:29.160 --> 0:00:32.040 a big, big, big, big, big show to talk about. Today. 0:00:32.159 --> 0:00:36.520 We are going to talk about the second largest cryptocurrency 0:00:36.560 --> 0:00:42.559 exchange blowing up and taking down everything in its wake. 0:00:42.680 --> 0:00:45.320 Let's just say everything. It's taking down the cryptocurrency industry, 0:00:45.360 --> 0:00:49.200 it's taking down the political industry, it's disrupting the finance industry. 0:00:49.560 --> 0:00:52.240 I mean, this is really, really, really big news, and 0:00:52.240 --> 0:00:54.000 I want to look at it from a couple of ways. 0:00:54.600 --> 0:00:57.360 I've already done two videos on my YouTube channel, digging 0:00:57.520 --> 0:01:01.560 deep into this, where I've shown on on the you 0:01:01.600 --> 0:01:04.600 know here on the here what I'm just talking to you. 0:01:04.640 --> 0:01:06.559 I just have to kind of talk to you verbally 0:01:06.560 --> 0:01:08.120 and you kind of have to take my word for it. 0:01:08.600 --> 0:01:11.080 On YouTube. I'd like to bring what I call the receipts, 0:01:11.160 --> 0:01:14.000 and this is I want the graphs, the headlines, the facts, 0:01:14.000 --> 0:01:17.160 the figures to show you, because man, some of this 0:01:17.240 --> 0:01:19.360 stuff is unbelievable. But I want to talk to you 0:01:19.360 --> 0:01:20.720 today and I want to dig in a little bit 0:01:20.760 --> 0:01:22.920 more in some way and discuss some things that I 0:01:23.000 --> 0:01:25.760 haven't put out anywhere else. And so I want to 0:01:25.840 --> 0:01:27.840 run through, first of all, I want to explain to 0:01:27.880 --> 0:01:32.520 you how this all works. And it's super important that 0:01:32.600 --> 0:01:35.880 you understand this part because I've said some things on 0:01:35.920 --> 0:01:39.520 Twitter that have made a lot of people angry. And 0:01:39.600 --> 0:01:44.960 I said that this might have been the last cryptocurrency 0:01:45.080 --> 0:01:48.760 bull run that we'll see again. And I said that 0:01:48.880 --> 0:01:52.160 because of regulations that will come. And people are like, oh, Mark, 0:01:52.880 --> 0:01:55.800 you don't know, like they'll just go off shore and 0:01:55.880 --> 0:01:59.600 regulators can't stop it. And I would agree with both 0:01:59.600 --> 0:02:04.080 of those things. However, if you don't understand how the 0:02:04.120 --> 0:02:09.000 market works, then you won't understand why regulations will put 0:02:09.040 --> 0:02:11.520 a let's say, put the brakes on this thing. Now. 0:02:11.560 --> 0:02:12.919 I'm not saying it's gonna go away. I'm not saying 0:02:12.919 --> 0:02:16.119 it's gonna kill You can't stop innovation. I'm all for that, 0:02:16.480 --> 0:02:19.079 but if you don't understand how this works, then you 0:02:19.120 --> 0:02:21.760 won't understand the impact that it has. So anyway, I'm 0:02:21.760 --> 0:02:24.840 gonna explain how this all works, how this got built up? 0:02:25.760 --> 0:02:28.640 All right, Then we're gonna talk about, um, you know 0:02:28.760 --> 0:02:31.440 what they did, what ft X, what Sam Bankman fried, 0:02:31.520 --> 0:02:36.919 what Alameda did, um in in in ties with the regulators, 0:02:36.919 --> 0:02:40.440 the SEC, the CFTC, with the Democratic Party. Uh, we're 0:02:40.440 --> 0:02:43.280 gonna talk about the ties they have with the globalist um. 0:02:43.480 --> 0:02:46.519 Then I want to go into um this massive backlash 0:02:46.560 --> 0:02:49.120 that's happening, what potentially these regulators may or may not 0:02:49.240 --> 0:02:52.320 do after it? Um, And then what's gonna happen next, 0:02:52.360 --> 0:02:55.520 What other companies are at risk at danger, what happens 0:02:55.560 --> 0:02:58.919 with the overall industry after this? And so much more? 0:02:59.160 --> 0:03:02.680 Um Man the big It's a big, ambitious goal to 0:03:02.680 --> 0:03:04.080 get through all this in the show. So I'm gonna 0:03:04.080 --> 0:03:05.720 have to talk really fast that you're gonna have stick 0:03:05.760 --> 0:03:08.200 with me, and you are not going to want to 0:03:08.240 --> 0:03:10.919 miss any of this. So let's just dig in. So UM, 0:03:10.960 --> 0:03:13.799 I want to explain to you first how this works, because, 0:03:14.000 --> 0:03:15.560 like I said, all these people on Twitter, they're all 0:03:15.600 --> 0:03:17.200 mad at me today because I said that we may 0:03:17.200 --> 0:03:20.120 see the last crypto bul run. So first off, let 0:03:20.120 --> 0:03:23.840 me just say right off the bat, I and if you, 0:03:24.080 --> 0:03:25.840 if you, if you tune into my shows regularly, you 0:03:25.840 --> 0:03:27.680 should already know this, but I'm gonna tell you anyway. 0:03:27.720 --> 0:03:31.959 As a disclaimer, I am a freedom maximalist. I don't 0:03:31.960 --> 0:03:34.120 know what political party I'm in. I'm a freedom maximist. 0:03:34.120 --> 0:03:36.480 I'm for the party that gives me more freedom and 0:03:36.680 --> 0:03:42.120 less government. I believe, as an American everything is free. 0:03:42.280 --> 0:03:44.280 I believe that we are in the land of the free. 0:03:44.720 --> 0:03:47.160 I believe in the country that my grandfather went to 0:03:47.200 --> 0:03:50.560 war defending, my father went to war defending. I believe 0:03:50.560 --> 0:03:53.640 every we are free people and everything is free. The 0:03:53.720 --> 0:03:57.200 government does not give us freedoms, nor do they tell 0:03:57.280 --> 0:04:01.080 us what we're allowed to do. The government does make 0:04:01.240 --> 0:04:06.480 laws which takes away our freedoms, but unless there's already 0:04:06.480 --> 0:04:10.720 a law there, then we are free. I am not 0:04:10.800 --> 0:04:15.400 for regulations, um. I believe that we should have uh 0:04:15.520 --> 0:04:19.680 as little as regulations as possible. So don't take this 0:04:19.760 --> 0:04:23.840 episode as I am asking for or I want regulations 0:04:23.880 --> 0:04:28.000 to happen. But as an investor, I believe that we 0:04:28.120 --> 0:04:32.200 invest in the world as it is, not as we 0:04:32.279 --> 0:04:35.200 want it to be, not as we think it should be, 0:04:35.560 --> 0:04:38.680 but as it is. So I'm not for regulations, I'm 0:04:38.720 --> 0:04:41.040 not for big government. I don't want this to happen, 0:04:41.360 --> 0:04:43.400 but this is what I see happening. Okay, So let 0:04:43.440 --> 0:04:45.480 me just let me just let me just preface that. Okay, 0:04:46.000 --> 0:04:48.880 Now that being said, let's dig into this story. By 0:04:48.880 --> 0:04:51.400 the by this point, you had to have seen it 0:04:51.600 --> 0:04:54.440 all over the internet. It's the largest story because it's 0:04:54.440 --> 0:04:58.200 the largest cryptocurrency exchange. We're talking about over ten billion 0:04:58.640 --> 0:05:02.640 or really the company was I had at thirty two billion, 0:05:02.800 --> 0:05:05.760 thirty two billion dollars and it basically got viscerated overnight. 0:05:06.000 --> 0:05:08.159 And when I say overnight, over a couple of days, 0:05:08.760 --> 0:05:11.240 um about eight days probably from the time the story 0:05:11.279 --> 0:05:12.919 broke to the time it kind of got wrapped up, 0:05:12.920 --> 0:05:15.719 although of course the story is not wrapped up, and 0:05:15.800 --> 0:05:18.839 it's not a funny story. It's not a story to 0:05:18.839 --> 0:05:24.760 be taken lightly. Ten billion dollars were fraudulently taken away. 0:05:25.160 --> 0:05:27.960 And that's not just some numbers on the screen. That 0:05:28.000 --> 0:05:34.240 represents probably hundreds of thousands of people, hundreds of thousands 0:05:34.279 --> 0:05:38.400 of families who might have had their entire life savings 0:05:38.839 --> 0:05:41.400 wiped out. So this is not funny. I don't take 0:05:41.400 --> 0:05:46.280 this lightly. I take this very seriously. So I might 0:05:46.320 --> 0:05:48.880 be laughing about some of this because it's just so idiotic, 0:05:48.920 --> 0:05:51.560 but I but I don't take this lightly. Uh. And 0:05:51.600 --> 0:05:54.600 I feel bad for anybody caught up in this. However, 0:05:55.200 --> 0:05:57.600 you know the saying I don't lose, either win or 0:05:57.640 --> 0:06:01.200 I learned. So if you've lost, take it as a lesson. 0:06:01.440 --> 0:06:04.280 Learn from this. And if you didn't lose, consider yourself lucky, 0:06:04.320 --> 0:06:06.599 but still learn from this, and hopefully you can learn 0:06:06.600 --> 0:06:10.039 from other people's mistakes. All right, Um, And I'll also 0:06:10.160 --> 0:06:13.839 say just now that I hope, um, Sam Bankman, Freed 0:06:13.839 --> 0:06:16.839 and everybody else involved in this pays for this. Alright. 0:06:16.960 --> 0:06:20.080 I we need real accountability. I'm afraid we may not 0:06:20.360 --> 0:06:22.760 get it. And of course that's the state of the 0:06:22.800 --> 0:06:25.200 United States at this point. But let's talk about this. 0:06:25.240 --> 0:06:27.080 So how did this work? And like I said, this 0:06:27.160 --> 0:06:29.640 is the key piece to understand. First of all, So 0:06:29.680 --> 0:06:32.520 there's two companies now now I'm gonna explain f t 0:06:32.800 --> 0:06:36.320 X and Alameda, but this is the whole industry. Okay, 0:06:36.400 --> 0:06:40.000 So there's two companies f t X, which is an 0:06:40.040 --> 0:06:44.120 exchange and exchange is like a broker So if you 0:06:44.120 --> 0:06:46.760 want to buy stocks of Facebook or Tesla or Google 0:06:46.839 --> 0:06:49.040 or Amazon or whatever, it's not Facebook and More. It's 0:06:49.040 --> 0:06:50.200 met Up. But if you want to buy any of 0:06:50.200 --> 0:06:53.200 those stocks, you would need a brokerage account and that 0:06:53.240 --> 0:06:55.640 would be you know, E Trade or Charles Schwab or 0:06:55.640 --> 0:06:58.800 Interactive Brokers or something like that. Okay, so that's where 0:06:58.839 --> 0:07:00.400 you can go and buy and sells off. You can 0:07:00.440 --> 0:07:03.840 exchange things, all right. Then that so ft X was 0:07:03.880 --> 0:07:06.880 an exchange. Then there was another company, a sister company 0:07:06.920 --> 0:07:10.280 called Alameda, and Alameda is what's known as a market maker. 0:07:10.800 --> 0:07:16.200 That means they make markets. That means that they artificially 0:07:16.280 --> 0:07:20.760 create demand and artificially create a price around that. All right. Now, 0:07:21.120 --> 0:07:24.200 some of you go might go, oh, Mark, that's conspiratorial. 0:07:24.240 --> 0:07:27.200 Market makers just provide liquidity. Yeah, they do. They do 0:07:27.240 --> 0:07:31.160 provide liquidity, but they also create artificial prices in this case, 0:07:31.280 --> 0:07:33.440 and so I'm gonna explain how that works, all right now. 0:07:33.480 --> 0:07:35.400 I do want to point out that in the point 0:07:35.440 --> 0:07:40.880 of stocks, Amazon, Facebook, Tesla, etcetera. Stocks are what we 0:07:40.960 --> 0:07:45.280 consider securities equities, right, So when I buy a stock 0:07:45.280 --> 0:07:47.680 in a company, I'm actually buying equity. I'm actually an 0:07:47.680 --> 0:07:53.280 owner of that company, and that security is is the stock, 0:07:53.320 --> 0:07:57.000 all right. And what that also means is that those companies, 0:07:57.040 --> 0:07:59.440 in order to release that stock into the public that 0:07:59.440 --> 0:08:02.400 I could buy stock certificates are um they're not certificates 0:08:02.400 --> 0:08:05.160 anymore now it's just all digital but their stocks. But 0:08:05.160 --> 0:08:06.400 in order for our company to do that, they have 0:08:06.440 --> 0:08:08.440 to file all types of paperwork, they have to meet 0:08:08.480 --> 0:08:11.360 all types of requirements, they have to spend lots of 0:08:11.440 --> 0:08:14.559 money in lawyers and fees and and things like that, 0:08:14.880 --> 0:08:16.400 Lots of due diligence they have to go through, and 0:08:16.400 --> 0:08:19.560 they have to, you know, basically prove their legitimate and 0:08:19.600 --> 0:08:24.120 they're not full of they're not fraught. Then the exchanges 0:08:24.160 --> 0:08:26.840 where you exchange those the etras, the child schwabs, et cetera. 0:08:26.960 --> 0:08:31.000 Tdum are trades. Those aren't just exchanges. Those are brokerages 0:08:31.600 --> 0:08:35.319 that are licensed to allow you to buy and sell 0:08:35.400 --> 0:08:38.560 these securities. Now, all of that is meant to protect you. 0:08:39.240 --> 0:08:41.439 I'm not for the government imposing that. I think we 0:08:41.480 --> 0:08:44.920 should be able to protect ourselves. But this is the system. Okay, 0:08:45.400 --> 0:08:48.679 the crypto space, what FTX and others are doing is 0:08:48.720 --> 0:08:52.000 completely opposite. F t X runs in exchange that does 0:08:52.080 --> 0:08:54.400 not sell securities. But that's the piece we're going to 0:08:54.480 --> 0:08:57.240 come back to. And because they're not selling licensed securities, 0:08:57.280 --> 0:09:01.439 then they're not licensed either, which is ripe for massive 0:09:01.440 --> 0:09:03.360 amounts of fraud. Now I'm not saying we need government 0:09:03.360 --> 0:09:05.199 regulations for that, but I want to frame that up. 0:09:05.559 --> 0:09:07.679 But more importantly, I want to talk about how all 0:09:07.720 --> 0:09:12.080 this crypto space makes so much money and leads to fraud. 0:09:12.280 --> 0:09:13.800 So we're gonna talk about that. Like I said, I've 0:09:13.840 --> 0:09:15.960 got a lot of big ambitius show to go through. 0:09:16.240 --> 0:09:17.800 You do not want to miss it. If you're just 0:09:17.840 --> 0:09:20.120 tuning in right now, you're listening to the Mark Moa show. 0:09:20.120 --> 0:09:22.679 We're talking about this ft X blow up and what 0:09:22.760 --> 0:09:25.480 that means. I got a lot to cover. You don't 0:09:25.480 --> 0:09:27.560 want to miss it, so don't go away, all right, 0:09:27.600 --> 0:09:29.679 Welcome back. If you just tune it in. You are 0:09:29.720 --> 0:09:32.160 listening to the Mark mass show. We're talking about the 0:09:32.200 --> 0:09:34.640 ft X blow up. This is something I've been I've 0:09:34.640 --> 0:09:39.320 been covering extensively. Um I've done too really really deep 0:09:39.320 --> 0:09:41.400 dive like forty five minute videos on my main YouTube 0:09:41.440 --> 0:09:46.160 channel Mark Moss, very very deep investigative journalism, so to speak, 0:09:46.320 --> 0:09:47.920 even though I wouldn't consider myself that. If you want 0:09:47.920 --> 0:09:49.679 to watch those super deep dives, you can go check 0:09:49.679 --> 0:09:52.160 it out. Just search Mark Moss on YouTube. Also, if 0:09:52.160 --> 0:09:53.760 you miss any part of the show, don't where I 0:09:53.800 --> 0:09:55.240 got your back. You can catch it on your favorite 0:09:55.240 --> 0:09:58.959 podcast player. Just search Mark Moss Show or check me 0:09:59.000 --> 0:10:02.240 out on YouTube. Um on the Market Disruptor channel, you 0:10:02.280 --> 0:10:05.079 can watch and listen there. Um And I've been putting 0:10:05.080 --> 0:10:07.840 out the playboo, but this story is going so fast. 0:10:08.240 --> 0:10:10.120 I've been putting this on the play by play on Twitter. 0:10:10.320 --> 0:10:11.800 So if you're not following me on Twitter, check that 0:10:11.840 --> 0:10:14.360 out at one, just the number one, Mark Moss at 0:10:14.360 --> 0:10:16.440 one Mark Moss. So anyway, getting back to this, so 0:10:16.440 --> 0:10:19.360 there's two companies, Alameda and ft X, and so here's 0:10:19.400 --> 0:10:22.000 how it works. As a matter of fact, I'm gonna 0:10:22.080 --> 0:10:26.480 tell you, I'm gonna redo directly from Sam Bankman Freed SPF. 0:10:26.600 --> 0:10:28.800 He's the founder of f t X and Alameda, and 0:10:28.880 --> 0:10:32.839 he actually explained exactly how it works in an interview 0:10:33.080 --> 0:10:36.360 on April two thousand two. Now, if you've been listening 0:10:36.400 --> 0:10:39.160 to the podcast for a long time since April. I 0:10:39.280 --> 0:10:41.240 originally read this to you back then, but I'm gonna 0:10:41.240 --> 0:10:43.120 read it to you again here. So this is directly 0:10:43.200 --> 0:10:48.280 from his own mouth. Okay, he says, uh, okay. The 0:10:48.320 --> 0:10:50.440 cryptocurrency world is split into two. This is not from 0:10:50.520 --> 0:10:52.640 him yet, but the cryptocurrency world is split into two 0:10:52.640 --> 0:10:57.160 different visions. One group of fundamentalists seeing some coins like 0:10:57.200 --> 0:11:01.760 Bitcoin as unchanging, static line of code that can active 0:11:01.760 --> 0:11:04.439 stores with vious. So that's bitcoin, Bitcoin's over here. And 0:11:04.480 --> 0:11:09.200 then there's another group experimenting at an increasingly frantic pace 0:11:09.440 --> 0:11:12.800 with new ways to create money. Right, Bitcoin and crypto, 0:11:12.880 --> 0:11:15.320 they're not the same. Bitcoin is a static line of 0:11:15.360 --> 0:11:17.240 code that's the store value. The other one is frantically 0:11:17.600 --> 0:11:20.080 trying to create money out of thin air. Okay, So 0:11:20.120 --> 0:11:22.319 now let's talk about this interview, and I'm gonna read 0:11:22.320 --> 0:11:25.079 directly quote and stand bankman freed. So here's how it works. 0:11:25.559 --> 0:11:28.600 You start with a company that builds a box and 0:11:28.640 --> 0:11:32.200 then practice this box. They probably dress it up to 0:11:32.280 --> 0:11:35.840 look like it's a life changing, you know, world altering protocol. 0:11:35.960 --> 0:11:37.720 So what he's saying is you start with a box. 0:11:37.720 --> 0:11:41.280 So a company that's a key piece a company. Remember 0:11:41.320 --> 0:11:44.679 that a company builds a box and they dress it 0:11:44.760 --> 0:11:47.120 up to look like it's a life changing, world altering 0:11:47.160 --> 0:11:51.280 protocol to all these cryptocurrencies, their protocols, right, their software, 0:11:51.480 --> 0:11:54.160 They're gonna change the world, which is exactly what he's saying. 0:11:54.240 --> 0:11:57.440 So they a company builds a box and they dress 0:11:57.440 --> 0:11:58.960 it up to look like it's a life changing, world 0:11:59.000 --> 0:12:03.440 altering protocol. Then it says what it does, or it 0:12:03.520 --> 0:12:07.160 pretend it does literally nothing. It's just a box. I'm 0:12:07.200 --> 0:12:10.160 reading directly from him. So they create a company. Uh, 0:12:10.200 --> 0:12:12.640 they create a box. They say it's a world changing protocol. 0:12:12.800 --> 0:12:15.520 But the box does nothing. It's just a box. So 0:12:15.559 --> 0:12:18.640 what this protocol is, It's called protocol X. It's a box. 0:12:19.080 --> 0:12:22.480 Now you take a token, all right, and you can 0:12:22.520 --> 0:12:24.800 take ethereum. You can put it in the box and 0:12:24.800 --> 0:12:26.680 then you take it back out of the box. So 0:12:26.760 --> 0:12:29.440 you put money in and you take money out. You 0:12:30.080 --> 0:12:33.080 start doing this to create activity. That's me ad living 0:12:33.160 --> 0:12:35.480 here um. Now I'm gonna go back to quoteing him 0:12:35.559 --> 0:12:38.280 quote It doesn't do anything but let you put things 0:12:38.360 --> 0:12:41.680 in it if you so choose. Then this protocol issues 0:12:41.720 --> 0:12:45.200 a token. We call it whatever, call it X token, 0:12:45.559 --> 0:12:48.480 and X token promises that anything cool that happens because 0:12:48.480 --> 0:12:51.160 of this box is going to ultimately be usable. So 0:12:51.840 --> 0:12:54.240 now on the ad lib again here. So you created, 0:12:54.360 --> 0:12:56.680 you create a box. A company creates a box and 0:12:56.679 --> 0:12:58.719 they say it's going to change the world. Then they 0:12:58.720 --> 0:13:00.760 start putting tokens in and out of the box, like 0:13:00.760 --> 0:13:03.120 a theory. In and out the box. There's like some activity. 0:13:03.200 --> 0:13:06.000 And then they create a token for this box, and 0:13:06.040 --> 0:13:09.640 this token promises that anything that happens that's cool with 0:13:09.679 --> 0:13:11.800 the box is gonna be usable. Now we don't know 0:13:11.840 --> 0:13:14.000 what that is. It's gonna have utility, though, we promise. 0:13:14.040 --> 0:13:15.559 We don't know what utility is, but don't worry, it's 0:13:15.559 --> 0:13:18.640 gonna have utility. Okay, this is how it works. Quote. 0:13:18.760 --> 0:13:21.280 And of course so far we haven't exactly given a 0:13:21.280 --> 0:13:24.840 compelling reason for why there would ever be any proceeds 0:13:24.840 --> 0:13:28.280 from this box, but I don't know, you know, maybe 0:13:28.440 --> 0:13:32.840 there will be end quote. Okay quote. And then you say, 0:13:32.880 --> 0:13:35.440 all right, well you've got this box and you've got 0:13:35.480 --> 0:13:39.120 ex token. They're going to give them away for free 0:13:39.360 --> 0:13:43.480 to whoever uses the box. End quote. So basically, you've 0:13:43.480 --> 0:13:46.400 created this token. You create a company, you create a box, 0:13:46.440 --> 0:13:48.679 create a token, you pretend that there's some stuff going 0:13:48.760 --> 0:13:50.080 in and out of the box. You're putting money in 0:13:50.080 --> 0:13:51.760 and out of the box to pretend there's something there. 0:13:52.120 --> 0:13:53.720 And then you create this token and you say, hey, 0:13:53.720 --> 0:13:56.200 anybody else that puts money in this box will give 0:13:56.240 --> 0:13:58.719 you this token that we created out of thin air, 0:13:59.080 --> 0:14:02.520 and we're gonna give it to you. All right, Um, 0:14:02.559 --> 0:14:05.040 if you use the box, quote X token has some 0:14:05.120 --> 0:14:09.880 market cap, right, it's probably not zero. Let's say you 0:14:09.920 --> 0:14:14.280 know it's twenty million market At this point, the interviewer 0:14:14.360 --> 0:14:17.440 Matt says, wait, wait, wait, wait, wait, from like first principles, 0:14:17.520 --> 0:14:21.360 it should be zero. Sam Bankman Freed says, uh, sure, okay, 0:14:21.440 --> 0:14:25.760 completely reasonable comments. The interviewer Matt says, when you describe it, 0:14:25.760 --> 0:14:30.000 it sounds like it should be zero. Sam Bankman Freed says, quote, 0:14:30.200 --> 0:14:33.000 you might think that in like five minutes, with the 0:14:33.080 --> 0:14:35.760 Internet connection, you could create such a box and such 0:14:35.760 --> 0:14:38.680 a token. So Sam Bankman Freed says, yeah, you might 0:14:38.680 --> 0:14:40.800 think it should be zero, and actually it probably should 0:14:40.800 --> 0:14:42.520 be because I could create this in five minutes. If 0:14:42.520 --> 0:14:45.320 I had an Internet connection, within five minutes, I could 0:14:45.440 --> 0:14:49.720 quote create such a box and such a token. It 0:14:49.840 --> 0:14:54.440 should be worth like one hundred and eighty dollars. You 0:14:54.480 --> 0:14:56.960 know that effort that you put into it. In the 0:14:57.040 --> 0:14:59.560 world that we're in, if you do this, everyone's going 0:14:59.600 --> 0:15:03.040 to be like, oh, box token, maybe it's cool. If 0:15:03.040 --> 0:15:05.920 you buy in box token, you know that's gonna appear 0:15:05.960 --> 0:15:08.400 on Twitter and it will have a twenty million market cap. 0:15:09.120 --> 0:15:10.680 One thing that you could do is you could like 0:15:11.120 --> 0:15:15.400 make the float very low. There haven't been twenty million 0:15:15.400 --> 0:15:17.760 dollars that have flowed into it yet end quote. So 0:15:18.800 --> 0:15:21.000 he's saying, yeah, it should be worth nothing because all 0:15:21.000 --> 0:15:22.560 you need is an Internet connection and I could make 0:15:22.560 --> 0:15:26.680 this in five minutes, That's what he said. But because 0:15:26.880 --> 0:15:29.600 you tell the world, oh, if you buy this box token, 0:15:29.640 --> 0:15:32.680 it's gonna be worth so much money. And then he says, uh, 0:15:32.720 --> 0:15:34.760 there would be a very low float. So what does 0:15:34.760 --> 0:15:37.080 that mean. So a low float meaning you create, let's 0:15:37.080 --> 0:15:40.440 say a hundred million tokens and of the hundred million, 0:15:40.920 --> 0:15:44.440 only a very small percentage you're actually available to trade. 0:15:44.480 --> 0:15:46.520 So out of a hundred million tokens, you take I 0:15:46.520 --> 0:15:49.960 don't know, five thousand of them, like almost nothing. The 0:15:50.000 --> 0:15:52.440 rest get locked up. Of the five thousand, you start 0:15:52.480 --> 0:15:55.920 trading and through wash trading that means I trade in 0:15:56.000 --> 0:15:58.840 and out by myself. So I sell it to my buddy, 0:15:58.880 --> 0:16:00.360 and they sell it to their buddy and Eyboddy and 0:16:00.400 --> 0:16:01.960 I buy it back and then it goes round and 0:16:02.040 --> 0:16:04.760 round and round. And because it's such a very thin amount, 0:16:05.040 --> 0:16:07.120 it's very easy for me to push the market cap 0:16:07.200 --> 0:16:11.400 or the valuation of a token that's very thinly traded up. Now, 0:16:11.440 --> 0:16:14.680 the interviewer says, quote, it shouldn't have any market cap 0:16:14.720 --> 0:16:18.360 in theory, and Sam Bankman Freed says, quote, that's right. 0:16:20.960 --> 0:16:22.440 So it shouldn't have any value because they just made 0:16:22.480 --> 0:16:23.680 it up and it didn't cost any money, and all 0:16:23.680 --> 0:16:25.240 that was a computer and internet and they did it 0:16:25.720 --> 0:16:27.800 and we've artificially created and it it shouldn't have any value. 0:16:27.800 --> 0:16:33.080 And Sam Bankman Freeze says, quote that's right, continuing quote. 0:16:33.120 --> 0:16:36.840 Obviously already we're sort of hiding some of the magic impact, right, 0:16:37.440 --> 0:16:39.640 some of the magic is in like how do you 0:16:39.680 --> 0:16:42.320 get that market cap to start with? But you know whatever, 0:16:42.400 --> 0:16:45.720 we're gonna move on from that. Ex tokens are being 0:16:45.720 --> 0:16:48.160 of it out each day. All these like sophisticated firms 0:16:48.200 --> 0:16:51.480 are like, huh, that's interesting, Like if the total amount 0:16:51.520 --> 0:16:53.720 of money in the box is a hundred million dollars. 0:16:54.000 --> 0:16:56.480 Then it's going to yield sixteen million this year and 0:16:56.600 --> 0:17:00.560 ex tokens being given out for UH sixty percent return. 0:17:00.720 --> 0:17:03.120 So what he's saying there end quote. So what Sam 0:17:03.120 --> 0:17:05.760 Bankman Free is saying is you're right, it shouldn't have 0:17:05.760 --> 0:17:08.720 any market cap, but we're hiding some of the magic. 0:17:09.160 --> 0:17:11.560 And he says, um X tokens are being get out 0:17:11.680 --> 0:17:14.840 every day and these sophisticated firms are like, that's interesting. 0:17:15.080 --> 0:17:18.760 These sophisticated firms are the venture capitalist firms. And this 0:17:18.840 --> 0:17:23.399 is a key piece. So venture capitalists loves cryptocurrency because 0:17:23.440 --> 0:17:28.240 they can buy these fake imaginary tokens and instantly make 0:17:28.480 --> 0:17:31.199 In this example, Sam Bankman Freed quoted him says they 0:17:31.240 --> 0:17:35.119 could make sixteen million this year. So typically venture capital 0:17:35.160 --> 0:17:37.320 has to lock up money for seven to ten years 0:17:37.760 --> 0:17:40.360 and hopefully if this company really changes the world, will 0:17:40.400 --> 0:17:43.280 make that money back. But with crypto they can put 0:17:43.280 --> 0:17:48.080 it in and instantly make five, ten, twenty thirty times 0:17:48.160 --> 0:17:51.159 on their money. They loved it. If you're just tune in, 0:17:51.160 --> 0:17:53.040 you're listening to the Mark Moa show. We are talking 0:17:53.080 --> 0:17:55.560 about the ft X fiasco, how it's melted down the 0:17:55.600 --> 0:17:58.600 cryptocurrency space, and I'm explained how it works. I gotta 0:17:58.640 --> 0:18:00.800 break all this down for you. Have a very ambitious show. 0:18:00.800 --> 0:18:02.600 I'm gonna try and get through really quickly. Don't go away, 0:18:02.800 --> 0:18:05.760 I'm gonna be right back. All right, welcome back. If 0:18:05.800 --> 0:18:08.040 you're just tuning in, we're talking about the ft X fiasco. 0:18:08.240 --> 0:18:12.119 I'm explaining to you how it worked. It's the key piece. 0:18:12.200 --> 0:18:15.000 You have to understand how it worked to understand where 0:18:15.119 --> 0:18:17.680 this goes. And this is what most people misunderstand. I've 0:18:17.680 --> 0:18:19.520 been putting it out on Twitter, and people don't understand 0:18:19.520 --> 0:18:22.639 because you're going to get you know whatever, whatever tun characters. 0:18:22.680 --> 0:18:24.359 I think it is. Um. If you're not following me 0:18:24.359 --> 0:18:26.080 on Twitter and you want to play by play, you should. 0:18:26.119 --> 0:18:28.600 You can find me on social media, Twitter, Instagram, whatever, 0:18:28.800 --> 0:18:33.640 at one, the number one at number one, Mark Moss. Anyway, So, uh, 0:18:33.680 --> 0:18:36.119 Sam Bankman Fried, I'm reading a quote directly from an 0:18:36.119 --> 0:18:39.480 interview here. He says that, uh, you know, these sophisticated firms, 0:18:39.520 --> 0:18:41.960 these venture capitalists are like, wait, so I can make 0:18:42.000 --> 0:18:44.080 all this money. And so that's the point that I 0:18:44.119 --> 0:18:46.840 want to make. This is how it works. You have 0:18:46.880 --> 0:18:49.640 a company, they artificially create a token. They say it's 0:18:49.640 --> 0:18:51.960 going to change the world, but really it does nothing. 0:18:52.359 --> 0:18:55.040 They start wash trading, they start moving money in and 0:18:55.040 --> 0:18:57.880 out of it to look like it has some activity. 0:18:57.680 --> 0:19:00.159 They thinly trade and they take a small percentage and 0:19:00.160 --> 0:19:04.240 they artificially push the price up. Then when they artificially 0:19:04.280 --> 0:19:07.720 pushed the price up and people artificially think there's actually 0:19:07.720 --> 0:19:10.639 some value there, then those people will want to buy it. 0:19:10.920 --> 0:19:13.600 So then they do that with Alameda, and then they 0:19:13.720 --> 0:19:16.560 list the token on the exchange on ft X, and 0:19:16.560 --> 0:19:19.760 then everybody wants to trade that token because they think 0:19:20.000 --> 0:19:24.720 that token has some value because Alameda faked it. And 0:19:24.760 --> 0:19:26.680 then f t X makes all the money because you're 0:19:26.680 --> 0:19:28.640 buying and selling it, so as you trade it, they 0:19:28.680 --> 0:19:31.879 make money. So everybody's making money and they dump it 0:19:32.040 --> 0:19:35.920 on you. And it's important to understand this key piece here. 0:19:36.000 --> 0:19:38.600 All Right, we're gonna come back to this um towards 0:19:38.640 --> 0:19:40.720 the end when we start talking about the regulations and 0:19:40.720 --> 0:19:42.639 where I think the places of the space is going 0:19:42.680 --> 0:19:45.199 to go and how it's going to affect things. So 0:19:45.240 --> 0:19:47.520 that's kind of how it worked. Alameda would create these 0:19:47.520 --> 0:19:50.320 tokens out of thin air, or they would actually help 0:19:50.640 --> 0:19:52.440 create these tokens out of thin air. They would bring 0:19:52.480 --> 0:19:56.160 on companies, thousands of companies to create these box tokens. 0:19:56.160 --> 0:19:59.560 As Sam n Freed says, Alameda would then artificially create 0:19:59.600 --> 0:20:01.600 a market around it, and then ft X would list 0:20:01.640 --> 0:20:02.879 it so then you could buy and sell it and 0:20:02.920 --> 0:20:05.919 they could all make money off of you. All right, 0:20:05.960 --> 0:20:08.600 So that's how all of this worked, and that's how 0:20:08.640 --> 0:20:14.200 cryptocurrency works overall. Now we can see that it wasn't 0:20:14.280 --> 0:20:17.760 just the venture capitalists that love this. Of course, as 0:20:17.800 --> 0:20:21.400 I said, the venture capitalists do absolutely love it because 0:20:21.520 --> 0:20:25.440