Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,
Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for
Speaker 1: Bloomberg News. It's Wednesday, January eighteen. Western Massachusetts is a
Speaker 1: very different place from the Bahamas, where the FTX crypto
Speaker 1: Exchange had its headquarters, but the small town of Lenox
Speaker 1: there is feeling the effects of the ft X bankruptcy. Nonetheless,
Speaker 1: the reason why is a gentleman named Ryan Salem, the
Speaker 1: former co CEO of FTX Digital Markets, who was also
Speaker 1: it turns out, a major player in the economy of Lenox.
Speaker 1: Salem grew up in Berkshire County, of which Lenox is apart.
Speaker 1: The town has fewer than ten thousand residents, actually closer
Speaker 1: to five thousand, according to the most recent sense us.
Speaker 1: In March, the county's local newspaper, The Bookshire Eagle, reported
Speaker 1: that Salem owned multiple restaurants and other properties in the town.
Speaker 1: What's going to happen to those restaurants now that ft
Speaker 1: X has filed for bankruptcy and Salem is out of
Speaker 1: a job. Bloomberg reporter Carl I Wanna has the latest.
Speaker 1: There are questions of, yeah, what happens to the restaurants,
Speaker 1: to the food truck when their owner is somebody who,
Speaker 1: like we said, has up in charge. But it's obviously
Speaker 1: somehow embroiled in this scandal. Carly, welcome back to the show.
Speaker 1: Thank you for having me. How did you end up
Speaker 1: reporting on Ryan Salem? Was because I told you too.
Speaker 1: You said it would be interesting to know more about
Speaker 1: Ryan Salem, and I said, okay, and what did you
Speaker 1: find out about this dude? Who was the former co
Speaker 1: CEO of FTX Digital Markets. Right, So a shout out
Speaker 1: to local journalism on a quick google, Ryan Salem's name
Speaker 1: came up. This was a month or two ar ago
Speaker 1: with the Berkshire Eagle, which is a local paper out
Speaker 1: of western Massachusetts, and they had done an extensive amount
Speaker 1: of reporting on him, not only since the collapse of
Speaker 1: f t X, but also in the years leading up
Speaker 1: to it. Because Ryan Salem, as it turns out, is
Speaker 1: actually from Western Massachusetts. So I quickly learned by reading
Speaker 1: their excellent reporting both before the collapse of fd X
Speaker 1: and after that, he had been heavily invested in the
Speaker 1: local restaurant scene in Lennox, Massachusetts. He had bought up
Speaker 1: a lot of real estate and restaurants and ice cream
Speaker 1: store as well. It's a really interesting trajectory and so
Speaker 1: that kind of spurred an interest in what is that.
Speaker 1: So I then went through local property records and confirmed
Speaker 1: that it was in fact over six million dollars that
Speaker 1: was invested into the restaurant scene of I mean, this
Speaker 1: town is small and Atlantic Passachusetts. It is like five
Speaker 1: thousand plus people according to the census data, and he
Speaker 1: was a heavyweight in their restaurants scene. He also just
Speaker 1: owned random plots of land as well. So if I
Speaker 1: remember correctly, and I'm going to quote some of your story,
Speaker 1: he owns five dining enterprises, including two restaurants, a dessert shop,
Speaker 1: a catering company, and a food truck called the lunch Pail. Yes,
Speaker 1: the lunch Pail. Incredible. One of the things that struck
Speaker 1: me about this reporting is it was so unexpected, right,
Speaker 1: so as we start reporting on this, it was before
Speaker 1: everything came out about the ft X bankruptcy. It was
Speaker 1: before Sam Bankman Freed showed up in a court in
Speaker 1: New York to plead not guilty. And this dude, Ryan Salem,
Speaker 1: while he was an important player in the ft X ecosystem,
Speaker 1: in the Bahamas, he wasn't necessarily super well known outside
Speaker 1: of Western Massachusetts. He's still not been charged with any
Speaker 1: crimes at all. It turned out, according to court filings
Speaker 1: in the f t X case, that even prior to
Speaker 1: FTX filing from bankruptcy, he went to local Bohemian regulations
Speaker 1: and said, I have concerns about what's going on here.
Speaker 1: Several days prior to the collapse of f t X,
Speaker 1: one of the most senior people at f t X
Speaker 1: was already tipping off authorities in the Bahamas about possible
Speaker 1: misuse of funds. So this executive is someone called Ryan
Speaker 1: Salam and essentially he was the former co CEO at
Speaker 1: FTX Digital Markets and basically he told regulators in the Bahamas.
Speaker 1: So we know more about him from the perspective of,
Speaker 1: you know, this was a high ranking executive in this
Speaker 1: crypto empire that has disintegrated. What did you learn about
Speaker 1: him as a person from Western mass locals understandably, so
Speaker 1: we're not super keen on talking that much about the situation.
Speaker 1: That said, though, people who would speak with me said
Speaker 1: that he was a hometown guy, that he had vested
Speaker 1: interest in the community, and you know, he grew up
Speaker 1: in the area. His investments in the community. One person
Speaker 1: told me he seemed genuine. He really seemed like he
Speaker 1: did and does have an interest in that community itself.
Speaker 1: You know, he even went to college around the area.
Speaker 1: He went to the University of Massachusetts Amherst. So there
Speaker 1: is this kind of sense of this was a young guy,
Speaker 1: he was from the area, and you know, he thought
Speaker 1: it would be i don't know, fun or cool or
Speaker 1: maybe even a good investment to go into these local properties.
Speaker 1: It should be noted too, that he did a lot
Speaker 1: of these investments in restaurants during the COVID nineteen pandemic,
Speaker 1: So there were questions even at the time of why restaurants.
Speaker 1: Right now when there's staffing shortages and labor issues, there's
Speaker 1: a lot of questions about why he did it. But
Speaker 1: at the end of the day, it did kind of
Speaker 1: seem like he had this this interest and I don't know,
Speaker 1: giving back to the community, helping out being a part
Speaker 1: of the community that he kind of grew up around,
Speaker 1: and in again shout out to local journalism. One of
Speaker 1: the articles in The Berkshire Eagle was noting that, you know,
Speaker 1: his parents still live within commuting distance of Lennox, and
Speaker 1: he had said to the reporters at the time that
Speaker 1: he wanted these investments and restaurants to be like real
Speaker 1: going concerns. Right. It didn't sound like it was just
Speaker 1: a hobbies, Like I want these things to make money.
Speaker 1: So what's going to happen to them now? Again, while
Speaker 1: he hasn't been charged with a crime in the US,
Speaker 1: you know, no US prosecutor has come out and said
Speaker 1: anything about his involvement in the collapse of f t X.
Speaker 1: He doesn't have a job, right. A lot of the
Speaker 1: money that he had had is tied up in ft
Speaker 1: X and ft X accounts. There are court filings that
Speaker 1: suggest he borrowed significant amounts of money from Alameda Research,
Speaker 1: which is one of the bankrupt entities at the center
Speaker 1: of the ft X empire, in the amount of I
Speaker 1: think fifty five million dollars. So there are questions over
Speaker 1: you know, where the money came from, or or he's
Speaker 1: going to continue to go. What are the folks who
Speaker 1: own and work in these restaurants saying in this aftermath
Speaker 1: of everything that happened, People there say that the restaurants
Speaker 1: are still operating as normal. In the month of December.
Speaker 1: I called number of people who said they were, you know,
Speaker 1: the restaurants were packed, Firefly and you know, all Heritage tavern.
Speaker 1: We're still doing business as normal. The lunch pale was,
Speaker 1: you know, food trucking around. As it may, Ryan's land
Speaker 1: wasn't really involved in the day to day operations of
Speaker 1: these businesses. Instead, he kind of funneled that to somebody
Speaker 1: also local manager. Her name was Jane Blanchard. She declined
Speaker 1: to comment. All she had to say was that she was,
Speaker 1: in fact a big Ryan fan. The reality is, though
Speaker 1: he was not involved in really keeping them afloat day
Speaker 1: to day managing their operations. That said, though, you know,
Speaker 1: he is their owners. So there are questions of, yeah,
Speaker 1: what happens to the restaurants, to the food truck when
Speaker 1: their owner is somebody who, like said, was up in charge,
Speaker 1: but as obviously somehow embroiled in this scandal and talking
Speaker 1: to people to again, really really small town, it's probably
Speaker 1: pretty wild that your small town is now the center
Speaker 1: of this thing that is huge and pertains to and
Speaker 1: relates to fraud. So I do wonder if there are
Speaker 1: questions about maybe the ownership is something dicey for the
Speaker 1: restaurants themselves. But I think I want to go back
Speaker 1: to this idea of the the outsized effects of this
Speaker 1: FTX collapse, because you know, one of the things about crypto,
Speaker 1: and there's a lot of focus on crypto as technology, right,
Speaker 1: Like we we laugh at the phrase the underlying technology,
Speaker 1: but we do. We do a lot of reporting on
Speaker 1: the technology of the thing, on the markets, on the prisis,
Speaker 1: on what's going on up down sideways. But crypto is also,
Speaker 1: much like any other industry, something that's filled with people
Speaker 1: and often very colorful characters and very colorful people. And
Speaker 1: you've been involved in other stories that we've done, not
Speaker 1: only about Ryan Salem, but about other execs at ft
Speaker 1: X and in crypto. What are some of the key
Speaker 1: things that you have observed in terms of the personalities
Speaker 1: in this space that seemed to make it perhaps uniquely
Speaker 1: prone to these sorts of scandals. M That's a really
Speaker 1: interesting question. I think the thing that stuck out to
Speaker 1: me the most is that these people were young, and
Speaker 1: there are questions after ft X collapsed of what were
Speaker 1: they doing with their money and potentially even I mean
Speaker 1: f t X is money, there was a lot of
Speaker 1: loans given out and it's hard to establish wonder on
Speaker 1: relationships of what loans went exactly where. But the reality
Speaker 1: is there was exorbitant spending in a number of things.
Speaker 1: Six million dollars is a lot of money to invest
Speaker 1: in the local restaurants scene, in the real estate of
Speaker 1: a small town in western Massachusetts. But that's also penny
Speaker 1: is compared to the real estate that was in the Bahamas,
Speaker 1: or the massive, massive political contributions that were given to
Speaker 1: various campaigns. Ryan Salem himself was a large Republican donor,
Speaker 1: but others at f t X were large generals themselves,
Speaker 1: many of them to Democrats. So I think there's a
Speaker 1: lot of I don't want to use the word effective
Speaker 1: altruism because that is a very specific thing, but right right,
Speaker 1: we do, and I think that it it just becomes
Speaker 1: a you know, it becomes an all encompassing thing. But
Speaker 1: there was this idea of these young people who are
Speaker 1: I mean flooded with money, and what do you do
Speaker 1: with it? What can you do with it? And the
Speaker 1: reality is some of it went to charitable endeavors, some
Speaker 1: of it went to random stuff like I mean, restaurants
Speaker 1: in Lenox, Massachusetts. But there's questions of where should it
Speaker 1: have gone and whose money was it up. Next, you'll
Speaker 1: hear more from Bloomberg report to Coli Wanna on the
Speaker 1: long tentacles of the fd X fallout. You mentioned the
Speaker 1: political contributions, and those are one of the things that
Speaker 1: did come up in the criminal allegations against Sam Bankman Freed,
Speaker 1: which he's denied, was that, you know, the way that
Speaker 1: they made those donations was not in compliance with relevant laws.
Speaker 1: And I think that at the center of a lot
Speaker 1: of this is what what you've identified. It's it's not
Speaker 1: only what did they spend the money on, but it's
Speaker 1: also where did the money come from? Right, Because a
Speaker 1: key claim here is that FTX used customer funds inappropriately,
Speaker 1: and that is that the heart of the bankruptcy filing.
Speaker 1: It's at the heart of what is going to be
Speaker 1: a very long and complex set of criminal cases. And
Speaker 1: if it is found by judges lawyers restructure as all
Speaker 1: of these folks that customer funds were used here, then
Speaker 1: one of the things that folks are staring down is
Speaker 1: what's called clobax, right, this idea that you're a politician,
Speaker 1: you're gonna have to figure out how to give back
Speaker 1: those campaign donations, or you're a nonprofit you have to
Speaker 1: give out give those donations, or potentially you're charming little
Speaker 1: restaurants and now you're going to be caught up in
Speaker 1: bankruptcy filings, which is not a not a fun thing
Speaker 1: for folks to be considering. Right, Yeah, and it should
Speaker 1: be said to that he purchased these properties through individual
Speaker 1: companies that he had registered. So we found, I mean
Speaker 1: a lot several companies that he had Ryan Salem formed
Speaker 1: and purchased properties Slash real Estate through, so those were
Speaker 1: not tied up and necessarily the the on entities that FTX,
Speaker 1: you know, entered into Chapter eleven bankruptcy proceedings in November. However,
Speaker 1: there are questions of what happens those entities if their
Speaker 1: founder is embroiled in those bankruptcy proceedings, even though no
Speaker 1: charges haven't breast Gainst him obviously got it. And I
Speaker 1: think just as a as another kind of consideration, you know,
Speaker 1: sometimes what happens is when you have a person who
Speaker 1: is very famous and their name, even if it's not
Speaker 1: in the building, is like strongly associated with the brand
Speaker 1: I'm thinking of, like Mario Vitalian easily or Donald Trump
Speaker 1: and hotels and soho that what happens next is kind
Speaker 1: of a pr campaign of like, um, we're moving on
Speaker 1: from that part of our history. The picture has come down.
Speaker 1: You know, there's a new coat of pains. There's like
Speaker 1: new owners, same restaurant. Everything's great. Did you get any
Speaker 1: sense from the folks who were willing to speak to
Speaker 1: you that this controversy is something that they're just trying
Speaker 1: to be like, we're going to move forward, we don't
Speaker 1: want to talk about it anymore. Absolutely. I think that's
Speaker 1: also why people probably in some ways didn't want to
Speaker 1: speak to me too about it, is because this is
Speaker 1: something that this is not the town's fault. The town
Speaker 1: did not do this, this is not their responsibility. But
Speaker 1: now they are caught up in this because their owner,
Speaker 1: Ryan Salem, is a name that is associated with ft X. Right,
Speaker 1: So even them saying like oh it is business as normal,
Speaker 1: people not wanting to really comment on it. They're only
Speaker 1: comments being you know, fairly positive things to say about
Speaker 1: Ryan Salem. I mean, the reality is that fd X
Speaker 1: is being accused of doing some pretty bad things. In
Speaker 1: regard us of what his role and it is, it
Speaker 1: probably doesn't make a lot of sense for people in
Speaker 1: the town to start helving off against Ryan Salem, like
Speaker 1: it really does probably make the most sense to just
Speaker 1: move forward and continue your business as normal. And again,
Speaker 1: this is a really small down so I have to
Speaker 1: kind of hope that the restaurants and the ice cream
Speaker 1: store in the catering company and food truck will we
Speaker 1: find because it's a small downtown. There's doesn't seem like
Speaker 1: they are that many options where you eat. It seems
Speaker 1: like the people like the food, So I hope that
Speaker 1: there is a you know, local sentiment that drives it
Speaker 1: forward past Ryan Salem, if that is what it comes to, right.
Speaker 1: This is very different from reporting that you've also done
Speaker 1: about say like Margharitaville, which is going to continue to
Speaker 1: be fine and attract an international clientele who's going to
Speaker 1: spend you know, large amounts of money on big checks
Speaker 1: in in the Bahamas. So a completely different vibe. But
Speaker 1: Crypto intains multitudes clearly, yes, And Onion, Carlie, thank you
Speaker 1: for being on the show. Thank you for having me.
Speaker 1: That was Bloomberg Report, carl Juanna. You can find more
Speaker 1: of her reporting on the Bloomberg Terminal and on Bloomberg
Speaker 1: dot com and be sure to check out our twice
Speaker 1: weekly newsletter, Bloomberg Crypto. This is Bloomberg Crypto, a daily
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