Speaker 1: Hello, and welcome to another episode of The Mark Moss Show,
Speaker 1: where of course we talk about the decentralized revolution each
Speaker 1: and every week, the way the world is changing, and
Speaker 1: it's changing rapidly right before our very eyes. We look
Speaker 1: at through the lens of politics, finance, and technology, and
Speaker 1: of course that technology is bitcoin. It's the decentralized revolution
Speaker 1: that is changing the world. Now, who we got a
Speaker 1: big show to cover today because there are big things
Speaker 1: happening in the cryptocurrency market. Well, this big thing happening
Speaker 1: in the world, a big thing happening in the markets, um,
Speaker 1: and there is big things happening in the cryptocurrency space,
Speaker 1: and it's important to understand what's actually happening because it's
Speaker 1: like a microcosm. It's like, uh, it's like a little
Speaker 1: model that we can see and we can understand easier,
Speaker 1: and we can see it happen in much shorter time frames.
Speaker 1: But it's exactly, uh, it's exactly what's happening in the
Speaker 1: bigger financial system, and it's exactly what's happening in the
Speaker 1: bigger global landscape. What's happened to other countries and will
Speaker 1: eventually happen to the United States as well. And so
Speaker 1: if you can understand what's happening here in the crypto space,
Speaker 1: which you should, um, then you can understand everything else.
Speaker 1: So we've got lots of cover today. I'm excited to
Speaker 1: get into this. UM. I am wearing my hottle shirt today.
Speaker 1: I have changed. I've broken from my normal uniform of
Speaker 1: a black shirt to represent my hottle shirt because that's
Speaker 1: what we need to do today. We have to hoddle.
Speaker 1: The price of bitcoin is plunging, the cryptocurrency market is
Speaker 1: plunging based off of the news that I am going
Speaker 1: to unpack for you, So let's jump into it. What
Speaker 1: am I talking about? Well, another one bites the dust?
Speaker 1: How about that? How's that for a title? Another one
Speaker 1: bites the dust, and I am talking about another pillar,
Speaker 1: a giant in the cryptocurrency space is done for game
Speaker 1: over Now, We've been talking about this for a while. UM,
Speaker 1: this kind of domino effect that happened, and really we
Speaker 1: saw the cryptocurrency markets plunge, Bitcoin plunge, cryptocurrency markets plunged
Speaker 1: when Tara Luna the stable coin broke And I'm not
Speaker 1: going to go through all that again. Hopefully remember that.
Speaker 1: If not, don't worry you can go back and check
Speaker 1: it out on the podcast. Just check out your favorite
Speaker 1: podcast player for the Markmas Show and you'll find those episodes.
Speaker 1: But we saw Tera Luna, which was this algorithmically programmed
Speaker 1: stable coin was a horrible idea, UM, and they were
Speaker 1: trying to keep this pigs. They created their own token
Speaker 1: from thin air, and they were trying to keep it
Speaker 1: algorithm algorithmically pegged at dollar parody. And then they took
Speaker 1: a bunch of the money that they had made from
Speaker 1: selling this made up token out of thin air and
Speaker 1: put into bitcoin. When it all started to come apart,
Speaker 1: when the peg was being broken and they're made up
Speaker 1: token started losing value, they were forced to dump all
Speaker 1: their bitcoin into the market, and it brought the price
Speaker 1: of bitcoin down. When the price of bitcoin came down,
Speaker 1: then it's created this domino effect where then we saw
Speaker 1: Celsius go down, we saw three Arrows Capital go down,
Speaker 1: we saw Voyager go down, we saw block Fire go down,
Speaker 1: and it was like this domino effect. Um. It was
Speaker 1: pretty interesting. Now. I said at the time, and I'm
Speaker 1: gonna unpack for you again that pegs are always meant
Speaker 1: to be broken because somebody is trying to artificially engineer value,
Speaker 1: trying to artificially engineer the way the markets work by
Speaker 1: creating this arbitrary value pegging it. But that's not how
Speaker 1: markets work. Value is always subjective. People say, well, there's
Speaker 1: no intrinsic value. You've got the Peter Shifts of the
Speaker 1: world saying that bitcoin isn't like gold. Gold has intrinsic value.
Speaker 1: Bitcoin doesn't know. That's false. There is no such thing
Speaker 1: as intrinsic value. Period All value is always subjective. It's
Speaker 1: always subjective of giving you examples of that over and
Speaker 1: over and so the problem is when you try to
Speaker 1: engineer value, when you try to gamify it, when you
Speaker 1: try to force it like fiat. Current. See, a lot
Speaker 1: of people don't really understand what that word fiat means.
Speaker 1: It's a new word. As a matter of fact, I
Speaker 1: would like credit bitcoin for bringing that word fiat back
Speaker 1: to kind of main um the mainstream. Fiat means by decree,
Speaker 1: so all things have value because we believe they have value. Collectively,
Speaker 1: the market agrees that certain things have certain values. But
Speaker 1: fiat means that it's not up to the market. We decree,
Speaker 1: by decree, we give it value. So that's exactly what
Speaker 1: happened with these pegs is they try to buy, decree
Speaker 1: give something value, and sometimes the market goes along with
Speaker 1: it for a while, and then the market says, we
Speaker 1: don't value it anymore. And now we see this happen
Speaker 1: all over the place. UH is typically known as bubbles.
Speaker 1: So the famous one that people want to point Bitcoin
Speaker 1: too is the tulip bubble. And they'd say, they point
Speaker 1: to Bitcoin is no different than to the bubble. So
Speaker 1: back in Holland, I think it was the sixteen hundreds.
Speaker 1: Um in Holland, they have tulips to the flowers, and
Speaker 1: all of a sudden, for some reason, they started becoming
Speaker 1: more and more valuable, and certain tulips were worth more
Speaker 1: than others, and then it turned into a mania where
Speaker 1: collectively the market started paying more. Well, then tulips went
Speaker 1: from this price to this price, so then people were like, okay,
Speaker 1: we'll pay more, and I'll pay more, and the price
Speaker 1: of tulips went straight up like a skyrocket. And then
Speaker 1: all of a sudden people figured out that they were
Speaker 1: just flowers and that they were great valued way too high,
Speaker 1: and nobody wanted them anymore, and then the price came
Speaker 1: straight back down. Now, one thing I'll point out is
Speaker 1: that very simply, Look, I'll make the financial markets super
Speaker 1: simple for you. That's my goal. Take these financial subjects,
Speaker 1: these complex financial subjects, and make them very easy to understand.
Speaker 1: And so look, I'm gonna make it super simple. It's
Speaker 1: not oversimplifying this outworks. Markets stopped going up when there's
Speaker 1: no more buyers. Also, markets stopped going down when there's
Speaker 1: no more sellers. So in this example of the tulip mania,
Speaker 1: which by the way I should I didn't prepare this
Speaker 1: part to the mania, six thirty six is when it happened,
Speaker 1: and it happened over just a very short period of time. Uh,
Speaker 1: sixteen thirty six. Sixteen thirty seven speculations drove the value
Speaker 1: of tulip bulbs to extremes. At the market's peak, the
Speaker 1: rarest tulip bulbs traded for as much as six times
Speaker 1: the average person's annual salary. Wow, think about that, six
Speaker 1: times the average annual wage, which is in the United States,
Speaker 1: the average annual wages fifty three thousand dollars a year,
Speaker 1: fifty three grand a year. So time six, that's how
Speaker 1: much the two loops were going for. So anyway, um,
Speaker 1: as it started going higher, higher, higher, higher, higher, and
Speaker 1: then all of a sudden there was no more buyers
Speaker 1: and they said, uh, you know what, we don't we
Speaker 1: don't think it's worth that, we're not gonna buy anymore.
Speaker 1: And then the whole thing crashing and it never came back.
Speaker 1: So trying to compare bitcoined two is ridiculous. But the
Speaker 1: point is is that the mark get collectively agreed that
Speaker 1: they would give it value and they did. All right,
Speaker 1: now let's jump into what happened here. Another one bites
Speaker 1: the death. So when you're trying to peg things, you're
Speaker 1: trying to create this artificial value, it always is meant
Speaker 1: to be broken. Now, the most famous example of this, well,
Speaker 1: real quickly, we're talking about, just so that you know,
Speaker 1: we're talking about the ft X cryptocurrency exchange is the
Speaker 1: second largest cryptocurrency exchange. I'll call it a cryptocurrency casino.
Speaker 1: That's what it is. It's gambling, and I'm gonna explain
Speaker 1: to you why it's gambling. Um, I know a lot
Speaker 1: of you guys think that crypto is this innovation and
Speaker 1: it's the hottest thing ever, and it's gonna be worth
Speaker 1: all this money. It's really a casino. And when I
Speaker 1: unpack and uncover all this for you, you're going to
Speaker 1: see exactly why. And Japan Bank of England UH and
Speaker 1: the e c B and yes, even the United States
Speaker 1: is also a casino as well. Once I unpack all this,
Speaker 1: it's gonna be super easy to understand. Before we get
Speaker 1: into the f t X, what happened to Sam bankman
Speaker 1: Free how they how he lost the second the second
Speaker 1: largest exchange. I want to rewind the clock just to
Speaker 1: give you a little bit of a better example. We're
Speaker 1: gonna go through history. I know you love it when
Speaker 1: I give you a history lesson, and I want to
Speaker 1: go back to the story of George Soros. Everybody's favorite villains,
Speaker 1: certainly not my favorite guy, but it's an important story
Speaker 1: to understand. How did George Soros get so rich? Well,
Speaker 1: he was, he was a trader, one of the most
Speaker 1: successful investors and traders in history, by the way. But
Speaker 1: he got famously rich by making a billion dollars in
Speaker 1: a single day, um back in the nineties. Now a
Speaker 1: billion dollars was a lot more money back in the
Speaker 1: nineties and is today. And so we made that in
Speaker 1: a single day, And how did he do that, well,
Speaker 1: I'm gonna break that down for you. I want to
Speaker 1: explain to you what he did and how this translates
Speaker 1: into what's happening with f t X, how finance just
Speaker 1: to took out fd X, what this means for you
Speaker 1: if you're in the cryptocurrency market, and how it's just
Speaker 1: a smaller um microcosm of actually what's happening with the
Speaker 1: central banks around the world, including the United States dollar
Speaker 1: in the federal reserves. I'm gonna explain all of that.
Speaker 1: You do not want to miss this. It's gonna be
Speaker 1: expensive lesson if you missed this, because this is going
Speaker 1: to happen to you no matter whe're a in the world.
Speaker 1: If you're just tuning in, you're listening to the Mark
Speaker 1: Moss Show breaking down the decentralized Revolution, and I'm gonna
Speaker 1: explain to you what happened in the cryptocurrency space this
Speaker 1: week and how it's coming for the rest of financial markets.
Speaker 1: Don't miss this. I'll be right back with more in
Speaker 1: a minute. Don't go away, right back, all right, welcome back.
Speaker 1: If you're just tuning in, you're listening to the Mark
Speaker 1: Moss Show, I'm breaking down what happened this week in
Speaker 1: the cryptocurrency markets. How the second largest exchange I'm talking about,
Speaker 1: f t X, was just taken out by the number
Speaker 1: one exchange, their competitor, Buyinance. Before we get into that,
Speaker 1: I wanna, I wanna, I wanna. I'm gonna break down
Speaker 1: this whole thing for you so you can understand what
Speaker 1: happened here. How it was just a small example of
Speaker 1: what's happening in the greater financial system. But I'm gonna
Speaker 1: give you this story real quick about George Soros and
Speaker 1: how he broke the British pound. And so what happened is, again,
Speaker 1: all value is subject, all values created by the market.
Speaker 1: Whenever you try to force it, that's when you create
Speaker 1: the problem. So the British pound, so you know, all
Speaker 1: these countries in Europe had their own currencies. So the
Speaker 1: in in Britain they had the pound. In German Germany
Speaker 1: they had the mark. And what happened is the British
Speaker 1: pound was shadowing the German mark in in thees. Even
Speaker 1: though the two countries were completely different countries, they had
Speaker 1: different economical basis, imports, exports, all of that. At the time,
Speaker 1: Germany was a much stronger um country, at the time
Speaker 1: and they still are today. But the UK they wanted
Speaker 1: to keep the value of their pound at two point
Speaker 1: seven marks, so you could always exchange one pound for
Speaker 1: two point seven marks. They picked that number. That's an
Speaker 1: arbitrary number. They decreed Fiat by decree, we say that
Speaker 1: one pound is worth two point seven, but the market
Speaker 1: doesn't always agree. The problem is that in Britain they
Speaker 1: had very high interest rates um and they had equally
Speaker 1: high inflation, so the value value of their dollar was
Speaker 1: going down. Their dollars the pounds were buying less and
Speaker 1: less goods right when inflation. When you hear about inflation,
Speaker 1: the FED is trying to fight inflation. That that means
Speaker 1: they're trying to fight prices going up, the cost of gas,
Speaker 1: the price of homes, the price of food is going
Speaker 1: too high. It's not that the prices are going higher,
Speaker 1: is that the value of the dollar was going down,
Speaker 1: so it takes more of those dollars to buy those things,
Speaker 1: so that those work in opposite. So what happened is
Speaker 1: in Britain they had high interest rates and they had
Speaker 1: it high inflation, but they also demanded that remember that
Speaker 1: the pound exchange two point seven for one mark. They
Speaker 1: had to do that in order to enter into something
Speaker 1: called the e r M, and it's exchange rate mechanisms.
Speaker 1: So European Union, the EU was forming, and they're trying
Speaker 1: to figure out how all these countries could work and
Speaker 1: how these different currencies could be exchanged for each other.
Speaker 1: So Britain want to enter to the e r M.
Speaker 1: Now many speculators, gamblers, traders, whatever you want to call them,
Speaker 1: George Soros being one of them. He wondered how long
Speaker 1: could these fixed exchange rates really work? How long could
Speaker 1: they fight against market forces? And so speculators like George
Speaker 1: Soros began to take up short positions against the pound.
Speaker 1: They were basically saying, look, we don't believe that it's
Speaker 1: worth two point seven marks. We don't believe that um,
Speaker 1: and we can see that you have high inflation, high
Speaker 1: interest rates, and and we know that it's not worth that,
Speaker 1: and we know that it's going to drop in value,
Speaker 1: that the pound will lose value, so we're gonna bet
Speaker 1: that it's going to go down. Now what happened is
Speaker 1: so they're selling it short, they're put they're trying to
Speaker 1: push the value of the pound down, and the UK
Speaker 1: didn't want that to happen. So what do they do?
Speaker 1: They try to defend it. How do they defend it?
Speaker 1: Will they start buying it? So Soros and the speculators
Speaker 1: are selling it down, shorten it and the UK is
Speaker 1: forced to buy it to try to prop it back up.
Speaker 1: And what they did is they raised interest rates um
Speaker 1: to double digits to try to attract more investors to
Speaker 1: buy the pound. So, um, hey, right now if you
Speaker 1: put your you know, if you buy dollars from the U. S. Treasury,
Speaker 1: they'll pay you about almost five percent right now, and
Speaker 1: so that's attracting more investment capital. People are like, we'll
Speaker 1: shoot um, losing money sitting in the Argentina paso or
Speaker 1: the Turkish lira or the pace or whatever it is.
Speaker 1: So we'll put our money into the dollar at the
Speaker 1: treasury will make four or um and if they continue
Speaker 1: to raise rates, more and more money will come into
Speaker 1: the dollars. That's exactly what the Bank of England did
Speaker 1: or the UK did. They raised interest rates to double
Speaker 1: digits to try to attract more investors to help buy
Speaker 1: up the pound to fend off the attack of George
Speaker 1: Soros and the speculators. Now what happened though, is now
Speaker 1: that now they had to pay out all this interest expense. Right,
Speaker 1: they raised rates to attract investors. The investors came, but
Speaker 1: now they had to pay out the money. But the
Speaker 1: British government realized that it was going to lose billions
Speaker 1: of dollars trying to artificy sually prop up the pound.
Speaker 1: So after trying and spending billions of dollars, they gave up. Basically,
Speaker 1: they had to withdraw from this e r M that
Speaker 1: they are in the exchange rate mechanism. And when that happened,
Speaker 1: it plunged. They gave up the peg. They said forget it,
Speaker 1: We're gonna withdraw out of the RM, and the pound
Speaker 1: crashed in value, and Stros and the other speculators that
Speaker 1: had all these short bets piled up. They made a
Speaker 1: billion dollars off of this one trade. Now, why do
Speaker 1: I break that story down for you, because that's exactly
Speaker 1: what happened with Harry Luna. I'm sorry with Terry Luna.
Speaker 1: It's exactly what happened now with f t X, and
Speaker 1: it's exactly what's happening in Japan, Bank of England and
Speaker 1: will happen in the United States as well, so let's
Speaker 1: break this down a little bit. So, um, you might
Speaker 1: know who Sam Bankman Freed is UM from f t X.
Speaker 1: F t X, as I said, is the second largest
Speaker 1: cryptocurrency casino are they call him exchanged? Now, like I said,
Speaker 1: when this whole thing broke down where Tara Luna crashed
Speaker 1: and then Celsius crashed in three AARs capital crash and
Speaker 1: Voyager and blocked by the whole thing, Sam Bankman Freed,
Speaker 1: the founder of f t X, came out as the savior.
Speaker 1: Everybody applauded him. Hey, he came out. He saved everybody. Congratulations.
Speaker 1: He was featured on like Time magazines and the Financial
Speaker 1: Times and all these articles that he was the savior.
Speaker 1: He was going to backstop everything. He was the smartest guy.
Speaker 1: He's like under thirty years old. He's worth billions of dollars.
Speaker 1: He's the smartest guy that we leave all his money
Speaker 1: to charity. Now he's meeting with presidents and political leaders
Speaker 1: and his influencing regulations and all these things. So let's
Speaker 1: talk about this. So he started building out all these
Speaker 1: UM companies and he committed millions of hundreds of millions
Speaker 1: of dollars to that in May of two ft X
Speaker 1: CEO Sam Bankman Fried has warned that more crypto exchanges
Speaker 1: are headed towards insolvency, but there yet to be exposed.
Speaker 1: So he's saying, hey, look, there's way more crypto exchanges
Speaker 1: that are going to be insolvent or bankrupt, right, but
Speaker 1: we just haven't found that yet. Um crypto billionaire has
Speaker 1: recently provided some hefty loans to bell at a number
Speaker 1: of struggling crypto firm so he, like I said, he
Speaker 1: was bailing him out. He was titled cryptos bailout King.
Speaker 1: People are starting to think like the Federal Reserve is
Speaker 1: meant to backstop the banks, and maybe f t X
Speaker 1: and Sam Bankman freed, which will call SPF moving forward,
Speaker 1: SPF and f t X will be like the Federal Reserve,
Speaker 1: They're going to bail out the crypto exchanges. It's kind
Speaker 1: of the same thing, right, Not really, um, he said,
Speaker 1: quote there are companies that are basically too far gone
Speaker 1: and it's not practical to back stop them for reasons
Speaker 1: like a substantial hole in the balance sheet. So he's like, look, um,
Speaker 1: we're we we bailed out a few of these companies,
Speaker 1: but there's way more that are way worse and we're
Speaker 1: just not gonna do him. He bailed out f t
Speaker 1: X and f SPF bailed out UM Block five million
Speaker 1: dollar revolving line of credit. Uh, the quantitative trading firm Alameda,
Speaker 1: remember that name, We're gonna come back to it, committed
Speaker 1: five million of financing Voider Digital UM In May, Bankman
Speaker 1: Freed purchased a stake in robin Hood, and they also
Speaker 1: acquired Canadian crypto trading platform bit Vote, as well as
Speaker 1: in Bed Financial Technologies. They're buying all these things up
Speaker 1: left and right. Okay, But then in July, SPF says
Speaker 1: that f t X has up to two billion dollars
Speaker 1: for further billouts. He says that f t X has
Speaker 1: a few billion on hand to continue assisting in struggling firms.
Speaker 1: According to a Reuter's article, um but he said that
Speaker 1: he felt the worst liquidity crisis were now in the past.
Speaker 1: So hey, I think we're past the worst of it.
Speaker 1: We did our best, We bailed out these companies, and
Speaker 1: you know, by the way, we got an extra two
Speaker 1: billion dollars laying around if you want us to use anymore.
Speaker 1: But this is only the beginning, and it gets so
Speaker 1: much better. And like I said, you need to understand
Speaker 1: what's happening here, because it really is what's happening in
Speaker 1: the United States and Japan and every everywhere for that matter.
Speaker 1: You're listening, if you're just tuning and you're listening to
Speaker 1: the Mark Moas Show breaking down the Decentralized Revolution, and
Speaker 1: I'm explaining how f t X just fell from grace
Speaker 1: it crashed hopefully didn't losing money on the way, and
Speaker 1: how it's coming for the rest of the world. Like
Speaker 1: I'm gonna break this whole thing down. You don't want
Speaker 1: to miss it. Super interesting. I gotta go through it fast.
Speaker 1: I'll be right back. Don't go away, all right, Welcome back.
Speaker 1: If you're just tuning in, you're listening to the Mark
Speaker 1: Moss Show, I'm in the middle of breaking down how
Speaker 1: the second largest cryptocurrency exchange just blew up. Sam Bankman
Speaker 1: freed we call him SPF and his exchange f t X,
Speaker 1: and they absolutely crashed. So he was the savior. He
Speaker 1: bailled everybody out, um and uh he said, hey, we
Speaker 1: have a few billion dollars two billion dollars on hand,
Speaker 1: just in case anyone else wants to get billed out.
Speaker 1: But we think the worst is behind us. All right.
Speaker 1: That was July. Now in this is important. So October,
Speaker 1: just a couple of weeks ago, SPF Sam Bankman Freed,
Speaker 1: the founder of crypto exchange f t X, said, quote
Speaker 1: no more bailouts. Interesting, So um, the SPF and f
Speaker 1: t X are looking to raise fresh funding. He clarified
Speaker 1: that the company f t X will no longer pursue
Speaker 1: bailout acquisitions. They're not gonna do that anymore. On twenty
Speaker 1: sam Bankman Freed said f t X is planning a
Speaker 1: new funding round to raise capital. They wanted to raise
Speaker 1: a billion dollars of capital at a thirty two billion
Speaker 1: dollar valuation. So October twenty five, a few weeks ago,
Speaker 1: they were raising a billion dollars at a thirty two
Speaker 1: billion dollar valuation. Well then November two, a couple of
Speaker 1: weeks later, coin base breaks an article and says, divisions
Speaker 1: in Sam Bankman Freed's crypto empire, which is Alameda and
Speaker 1: ft X blur on his trading titan Alameda's balance sheet.
Speaker 1: So um, what happens is he owned two companies and
Speaker 1: let me let me break down how this works, how insidious?
Speaker 1: This is? All right, I'm gonna try to be a
Speaker 1: little bit vague, but i'm gonna give you some examples.
Speaker 1: So f t X is an exchange where you can
Speaker 1: go exchange one crypto token for another. You can exchange
Speaker 1: your bitcoin for a theory m or for Cardana or
Speaker 1: Salona or whatever any of the other twenty tokens they
Speaker 1: have on their all. Right, then he created another company
Speaker 1: called Alameda, and Alameda is what's known as a market maker.
Speaker 1: Remember that markets are supposed to be free. Remember that
Speaker 1: values are supposed to be set by the free market.
Speaker 1: But what market makers do is they get into the
Speaker 1: market and they buy and sell to push a certain valuation.
Speaker 1: So here's how it works. Um a market cap of
Speaker 1: Tesla stock or Amazon stock, or bitcoin or f t
Speaker 1: t token, it's all the same. You have the price
Speaker 1: of the stock or the price of the token times
Speaker 1: the total amount of stock or tokens that are available
Speaker 1: gives you a market cap. So if I created marks
Speaker 1: token out of thin air, I created ten of them,
Speaker 1: and one person buys one of those tokens for a dollar,
Speaker 1: then I would say the market cap of Marks tokens
Speaker 1: is now ten dollars. Someone bought one for a dollar,
Speaker 1: and there's ten of them in existence as ten dollars.
Speaker 1: Now what happens is who bought that one token for
Speaker 1: a dollar? Well? What if it was my buddy over
Speaker 1: here known as a market maker. So there's ten tokens,
Speaker 1: and they're going to buy and sell these tokens to
Speaker 1: each other. They're gonna buy it for a dollar, sell
Speaker 1: it to the other guy for a dollar, fifty, the
Speaker 1: next guy for two dollars, up to this guy for
Speaker 1: three dollars to five dollars, ten dollars. Now the next
Speaker 1: thing you know, they're buying them for buying and sell
Speaker 1: them for a million dollars per token. Now I have
Speaker 1: ten tokens times a million dollars each, and now my
Speaker 1: market cap is worth ten million dollars. But it wasn't
Speaker 1: done by the free market. It was done by the
Speaker 1: market makers. Now, the market makers, of course, get the
Speaker 1: free market to move right, So the market makers start
Speaker 1: trading it. But when it goes on to an exchange,
Speaker 1: the other people on the exchange are watching this token
Speaker 1: go higher, higher, or higher or higher higher, So then
Speaker 1: the free market jumps in. Right Now, where is this
Speaker 1: free market of buyers? Oh, that's right, it's on his
Speaker 1: other exchange. It's on FTX. So let me give you
Speaker 1: an exam ample. Um, I know two people. I'm not
Speaker 1: going to say who they are. Um, and they basically
Speaker 1: last year went to f t X, went to SPF
Speaker 1: and said, hey, uh, we want to build our own token.
Speaker 1: What token do you think we need for the Salona blockchain?
Speaker 1: And SPF said, uh, you know what would be really
Speaker 1: good is if we had this type of a token.
Speaker 1: I'm not going to out these people because I know them. Uh.
Speaker 1: He said, if we had this type of token to
Speaker 1: this kind of thing, that would be worth pretty good.
Speaker 1: And they said great, Um, if we build that, well
Speaker 1: you listed on f t X. He said, well, if
Speaker 1: if Alameda, the market maker, my other company, if they'll
Speaker 1: take that project on, then yes, f t X will
Speaker 1: list the token. Okay, great, would you set up as
Speaker 1: a meeting? Oh? Sure, So I set up a meeting
Speaker 1: with Alameda. They said, hey, Alameda, we talked to SPF.
Speaker 1: He said, if we build this project, you're listed, and
Speaker 1: Alameda says, sure, we'll take it. So these guys, this
Speaker 1: guy I know, went and hired a couple of developers
Speaker 1: on up work or whatever and built out this whatever
Speaker 1: protocol Salona Token, and within a couple of months and
Speaker 1: went back to Alameda and said, hey, okay, we built
Speaker 1: this project and we have it and do you want
Speaker 1: to take it? And they said sure. So, Um, I
Speaker 1: forget the exact details, and I don't want to give
Speaker 1: you the exact specifics either, but basically they said, we
Speaker 1: want thirty percent of the tokens you created. There was
Speaker 1: like a hundred million tokens that they created out of
Speaker 1: thin air. So he created this project to be this
Speaker 1: token on Salona created out of thin air. Um, we
Speaker 1: have a hundred million tokens and we're gonna give Alameda
Speaker 1: thirty million of those dirty percent of them in exchange
Speaker 1: for twelve million dollars cash upfront. Plus we're gonna get
Speaker 1: other tokens are gonna give us, and we're still going
Speaker 1: to keep seventy of the tokens. So then Alameda and
Speaker 1: venture capitalists love this because they just got thirty million
Speaker 1: tokens up front. They automatically turn around and sell them
Speaker 1: for three times, five times, ten times higher than they
Speaker 1: just paid for it, so they instually make money. They
Speaker 1: say it to venture capitalists and then they set the
Speaker 1: market and it gets listed on f t X, their
Speaker 1: other company, so alamedas that's the price of this in
Speaker 1: the market by buying and selling it, and then on
Speaker 1: ft X they release it to the public with this
Speaker 1: new found price. The public thinks that this is the
Speaker 1: market valuation because the market maker has artificially gotten the
Speaker 1: price there. And then f t X makes all the
Speaker 1: money from you, the public buying and selling these tokens. Now,
Speaker 1: these two projects both built on Salana. Two different people
Speaker 1: I know UM launched these tokens and then they walk away.
Speaker 1: They hired some developers on Upward, they built the token,
Speaker 1: they deliver it over to Alameda and f t X,
Speaker 1: and then dust their hands off and walk away. Because
Speaker 1: it's a decentralized protocol. It's not a company, it's not
Speaker 1: a service. They don't need employees, there's nothing to do.
Speaker 1: They're not managing that, they're not growing it. It's just
Speaker 1: a protocol. We just built this thing, and here you go,
Speaker 1: and we walk away. And they got millions of dollars,
Speaker 1: tens of millions dollars in their pocket. Up front. Alameda,
Speaker 1: the market maker sold those of the tokens, thirty million
Speaker 1: tokens at three, five, ten times what they paid and
Speaker 1: then f t X makes all the money from you,
Speaker 1: the public buying and selling these tokens, which is a
Speaker 1: bunch of worthless garbage. Now you think that it's life changing,
Speaker 1: it's world changing. This company built this page, this web
Speaker 1: this white paper, and they built this website and this
Speaker 1: new protocol they built is going to change the way
Speaker 1: that we interact with each other. And it's gonna become
Speaker 1: so valuable. And look how much money I'm gonna make.
Speaker 1: Little do you know that it's vapor where it's literally nothing.
Speaker 1: Literally somebody made this in six months with a bunch
Speaker 1: of remote people from overseas that just built it, and
Speaker 1: they sold it to you and they pocket a bunch
Speaker 1: of money. And now fts is making much of money
Speaker 1: for your buying and selling it. But there's nothing there.
Speaker 1: It never will be anything there. There's no team there,
Speaker 1: there's no there's no no development going on there. This
Speaker 1: is what as as Sam Bankman freed f t X
Speaker 1: and what Alameda are doing. This is the model. Now
Speaker 1: where did they get all the money to do this?
Speaker 1: That's the other part. So f t X, the cryptocurrency
Speaker 1: casino the exchange created their own token called f t
Speaker 1: t now if I buy this f t T token
Speaker 1: that allows me to have a discount on my trading fees.
Speaker 1: It's sort of like a like a club, right, like
Speaker 1: a rewards, Like when you go to the grocery store
Speaker 1: and you sign up the grocery store and they give
Speaker 1: you a discount when you put your phone number in.
Speaker 1: It's like that. So if I buy the token, then
Speaker 1: they give me this kind of my trading fees. But
Speaker 1: most people bought this token because they thought it would
Speaker 1: go up in value. So they create a bunch of
Speaker 1: these tokens out of thin air. They use their market
Speaker 1: maker company to set a price of those tokens, create
Speaker 1: a valuation, and then they start selling them in the market. Now,
Speaker 1: in March of this year, when Sam Bankman Freed was
Speaker 1: belling out the entire industry, that f t T token,
Speaker 1: how to valuation a market cap of over seven billion dollars.
Speaker 1: Today it's worth almost nothing. I'm gonna finish breaking this
Speaker 1: thing down for you. Show you what happened, how this
Speaker 1: actually happened within a matter of like less than forty
Speaker 1: eight hours, it went down to nothing. What's going to
Speaker 1: happen next? And how this is a microcosm of what's
Speaker 1: happening in the greater financial system. You're listening to the
Speaker 1: Marks Show if you're just tuning in, trying to take
Speaker 1: these complex subjects, make them easy to understand and extrapolate
Speaker 1: so you can understand what's going on in the financial system.
Speaker 1: Don't go away, you don't want to miss what's coming
Speaker 1: up next. I'll be right back, all right, welcome back.
Speaker 1: If you're just tune in, you are listening to the
Speaker 1: Mark Moss Show. We're talking about the blow up in
Speaker 1: the cryptocurrency market. The second largest cryptocurrency exchange f t X,
Speaker 1: was just taken out by their number one competitor, Finance,
Speaker 1: And it's really just a microcosm of what's going on
Speaker 1: in the greater financial system and what's happening in Japan
Speaker 1: and Europe and even here in the United States. So
Speaker 1: I broke it all down. If you miss that, don't worry,
Speaker 1: as I got your back. You can check me out
Speaker 1: on YouTube. Just search Market Disruptors. These go on on
Speaker 1: that channel. You can watch it there or on your
Speaker 1: favorite podcast player. Just search Mark Moss Show. You'll find that.
Speaker 1: If you want to catch up to where rat so anyway,
Speaker 1: the f t X token or the f t T token,
Speaker 1: which was again created out of thin air, had a
Speaker 1: seven billion dollar valuation in March of this year. But
Speaker 1: what happened is is uh just a few days ago. Uh, well,
Speaker 1: the story broke on coin desk in November. I got
Speaker 1: I got side checked here. So in November, this story
Speaker 1: broke on on on coin desk and they said that
Speaker 1: these two companies f t X the exchange and Alameter
Speaker 1: Research the market maker. Um, they're both giants in the space. Uh,
Speaker 1: there's supposedly two separate businesses, but they actually have the
Speaker 1: same asset on their books. The balance sheet of Alameda
Speaker 1: where they got all the money to go fund all
Speaker 1: these projects. Like I was just breaking down to you
Speaker 1: and now bill out all these other products. The balance
Speaker 1: sheet shows that it's full of the f t X token,
Speaker 1: the f t T token that was created at a
Speaker 1: thin air and given evaluation by the market maker. Mm hmm.
Speaker 1: It's kind of dirty. And what what what it shows
Speaker 1: when you dig in is that they have more assets
Speaker 1: on their books of this token f t T token,
Speaker 1: then the token is even worth. So they were claiming
Speaker 1: about eight billion, eight billion dollars, but the valuation of
Speaker 1: the token was less than that. The net equity in
Speaker 1: the alimated business is actually fox f t X is own,
Speaker 1: centrally controlled and printed out of thin air token. Wow.
Speaker 1: Now they had other assets on their balance sheet, including
Speaker 1: three point three seven billion of quote unquote crypto like
Speaker 1: these other projects I told you about where they take
Speaker 1: all these tokens, but it's basically vaporware. Large amounts of
Speaker 1: the Salona block chains, they token two or nine two
Speaker 1: million dollars of unlocked Salana, uh three million of locked Salana,
Speaker 1: forty one million of Salona collateral, other tokens mentioned by name.
Speaker 1: So basically just a bunch of garbage, that's what they had.
Speaker 1: So all of a sudden, very quickly, everyone's like, whoa
Speaker 1: wait a minute, Uh, I hold this token. They don't
Speaker 1: have any money, the bank doesn't have my money. It's
Speaker 1: called a bankrupt And so what happened is that that
Speaker 1: that came out and binance, which is the largest crypto exchange,
Speaker 1: said wait a minute, we're holding two billion dollars of
Speaker 1: this token and it's not worth that. And so c
Speaker 1: Z he's the owner of binance um he said that
Speaker 1: quote as part of finances exit from FTX Equity last
Speaker 1: year Binance received roughly two point one billion US dollar
Speaker 1: equivalent in uh in in Binance USD stable point and
Speaker 1: f t T the token. But due to recent revelations
Speaker 1: that have come to light, we have decided decided to
Speaker 1: liquidate any remaining f t T on our books. So
Speaker 1: he's like, look, hey, we see what you did. You're
Speaker 1: a giant Ponzi scheme scheme. You have no liquidity. We're
Speaker 1: not going to hold us on our books. We're going
Speaker 1: to get rid of it now. It's interesting about this
Speaker 1: is that when you want to move that much more,
Speaker 1: he says, we will try to do so in a
Speaker 1: way that minimizes market impact. Due to market conditions and
Speaker 1: limited liability, we expect this to take a few months
Speaker 1: to complete. Well, when you're trying to liquidate a large position,
Speaker 1: you're trying to do it privately. Typically you do it
Speaker 1: what's called O T C over the counter because you
Speaker 1: don't want to move the market so big buys or
Speaker 1: big cells you do it over the counter. Otherwise what's
Speaker 1: what's known as slippage happens and the price goes down
Speaker 1: in value and so um. But he didn't do that.
Speaker 1: He didn't do it quietly. Didn't do privately, he is marrect.
Speaker 1: He announced it to the whole world what he was
Speaker 1: gonna do, and very quickly everybody else realized, oh shoot,
Speaker 1: if he's going to do, it's going to christ the
Speaker 1: crash the price. How much am I holding and how
Speaker 1: am I going to get my money out? And so
Speaker 1: everybody ran for the fire exits at the exact same times. Now,
Speaker 1: Alameda and ft X tried to stem that, and they
Speaker 1: publicly they went back and forth. The two CEOs went
Speaker 1: back and forth, and they said, Hey, if you're looking
Speaker 1: to minimize the market impact on your token sales ft
Speaker 1: T cells, let us buy it from you. We'll buy
Speaker 1: it all from you today at twenty two bucks. No.
Speaker 1: It's interesting is when they gave out that number twenty two,
Speaker 1: they basically told the market where um where the where
Speaker 1: the support line was, where their liquidation price was cz from.
Speaker 1: Binns had no response, he didn't say anything. But by
Speaker 1: telling everyone he was going to start dumping the token
Speaker 1: on the open market, it started crashing it. So it
Speaker 1: showed that he wasn't really trying to get his money
Speaker 1: out so much as he was really trying to attack
Speaker 1: the company, which of course is his number one competitor.
Speaker 1: And I'll also say that Sam Bankman freedom f t
Speaker 1: X is hostile towards the crypto ncy market. And I
Speaker 1: say hostile because Sam Bankman for d SPF is is
Speaker 1: vocal about trying to impose regulations, honors regulations, in my opinion,
Speaker 1: horrible regulations. Pretty much all regulations are horrible, but impose
Speaker 1: these on the cryptocurrency space. So CZ probably not only
Speaker 1: is he my competition, but he's also harmful for the
Speaker 1: space overall. So how about all this take him out.
Speaker 1: This is known as a speculative attack. It's exactly what
Speaker 1: George Soros did to the Bank of England, which is
Speaker 1: why I started with that. UM. Now since that's happened,
Speaker 1: we can see that the price of f f t
Speaker 1: T token has completely plunged. Like I said, UM, he
Speaker 1: offered to buy it at the twenty or they they said, hey,
Speaker 1: we'll sell you the price cap, which is where they
Speaker 1: were trying to defend, and he said, no, no way,
Speaker 1: it's not gonna happen. And within literally days since yes
Speaker 1: on on eleven seven, on the seventh it was a
Speaker 1: three billion dollar valuation, and on eleven eight it's a
Speaker 1: five hundred million dollar valuation just completely demolished. Now I said,
Speaker 1: this is also happening in the rest of the world,
Speaker 1: all right, So this is a small example. It's like
Speaker 1: a toy example of what's happening in the rest of
Speaker 1: the world. So let's look at the Bank of Japan.
Speaker 1: The Bank of Japan is doing the same thing. They
Speaker 1: have printed money. They've made the en out of thin air.
Speaker 1: Now the market collectively values the en, and the country
Speaker 1: of Japan uses the en. That's their currency, and they've
Speaker 1: assigned value to that. But the problem is that they're
Speaker 1: printing so much of it. It's pushing the valuation of
Speaker 1: the end further and further down, which means prices are
Speaker 1: getting higher and higher. Now what's happening is that their
Speaker 1: their currency is crashing so fast, it's losing value so
Speaker 1: fast that Japan is doing the same thing that FTX did.
Speaker 1: They're buying their own currency to keep it propped up,
Speaker 1: just like the Bank of England to hold off George Soros.
Speaker 1: So the speculators are selling it short, they're trying to
Speaker 1: buy it to prop it back up. So the Bank
Speaker 1: of Japan is actively doing the right Now. The problem
Speaker 1: is is that at some point they're going to run
Speaker 1: out of assets to continue to buy it up, and
Speaker 1: at some point the people are going to go, look this,
Speaker 1: we don't want to hold this token. We don't want
Speaker 1: to hold this yen anymore. We're going to sell it
Speaker 1: for something else, dollars or bitcoin or house or stock
Speaker 1: or anything. But we're not going to hold this yen anymore,
Speaker 1: just like nobody wants to hold the f t T
Speaker 1: token today. Now. Um, the Japan is just kind of
Speaker 1: like in the same situation as f t X, where
Speaker 1: they can't print dollars. They can only print their own currency.
Speaker 1: So ft X couldn make more ft T tokens, but
Speaker 1: nobody wants them, just like Japan can make more yen,
Speaker 1: but if nobody wants them, it doesn't matter. They're not dollars. Well,
Speaker 1: the FED is also in the same situation in the
Speaker 1: United States. The FED is also seeing the value of
Speaker 1: the dollar going down. It's buying you less goods and
Speaker 1: services than it did before. Remember, we don't want money.
Speaker 1: What we want is goods and services. I want energy,
Speaker 1: I want heat for my house, I want asked for
Speaker 1: my car, and I want food for my family. I
Speaker 1: want that. Money is only the proxy. Now, if the
Speaker 1: value of the dollar continues to fall, the government can
Speaker 1: print more of those dollars to try to keep it
Speaker 1: propped up. But what they can't do is print more
Speaker 1: energy or food. And at some point, just like what
Speaker 1: happened to f t T, the valuation of the dollar
Speaker 1: will plummet so fast that everybody will rush out and
Speaker 1: buy anything they can, any house, any stock, anything they
Speaker 1: can to get out of the dollar. That's what Mesas
Speaker 1: framed up as the crack up boom. Now, it happened
Speaker 1: within days, two days to f t X, and it's
Speaker 1: going to happen over decades to the country. But we're
Speaker 1: witnessing it, we're living through it, we're seeing it happen
Speaker 1: right now. My guess is, just like with f t T,
Speaker 1: you want to get out before everybody else, before the
Speaker 1: fire exits gets jammed. And so this is your warning. Anyway,
Speaker 1: you're listening to the Markmas show, breaking down the decentralized revolution,
Speaker 1: breaking down the way the financial system is changing right
Speaker 1: before our very eyes. How the stocurrency spaces of microcosm.
Speaker 1: That's what I got. Thanks for listening.