WEBVTT - This Week in Crypto: SBF Arrested

0:00:02.680 --> 0:00:06.000
<v Speaker 1>This is Bloomberg Crypto, a daily Bloomberg IHOD podcast, and

0:00:06.040 --> 0:00:09.480
<v Speaker 1>I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.

0:00:09.880 --> 0:00:30.440
<v Speaker 1>It's Friday, December sixte what's a week it's been breaking

0:00:30.440 --> 0:00:33.120
<v Speaker 1>news overnight? Fd X founder sand Bankman free to rest

0:00:33.120 --> 0:00:34.720
<v Speaker 1>it in the Bahamas, set to face the judge this

0:00:34.760 --> 0:00:38.159
<v Speaker 1>morning after US prosecures found criminal charges in connection with

0:00:38.200 --> 0:00:41.479
<v Speaker 1>a multibillion dollar collapse of his crypto company, Sam Bankman.

0:00:41.560 --> 0:00:44.080
<v Speaker 1>Freed is now in a correctional facility in the Bahamas

0:00:44.120 --> 0:00:47.400
<v Speaker 1>after his request for bail was denied by a judge.

0:00:47.600 --> 0:00:49.960
<v Speaker 1>We said in that episode just a few days ago

0:00:50.080 --> 0:00:52.800
<v Speaker 1>that the last couple of weeks have felt like thirty years.

0:00:53.479 --> 0:00:57.520
<v Speaker 1>This one week has felt like a hundred. Here to

0:00:57.560 --> 0:01:00.560
<v Speaker 1>recap some of the major events, including and most of portently,

0:01:00.600 --> 0:01:03.120
<v Speaker 1>of course, what happened when Sam bang when Freed was

0:01:03.280 --> 0:01:07.319
<v Speaker 1>arrested in the Bahamas. Are my colleagues, Anna arera Less

0:01:07.319 --> 0:01:09.640
<v Speaker 1>than two months ago, SPF was hailed as the next

0:01:09.720 --> 0:01:12.039
<v Speaker 1>JP Morgan and you wouldn't think anything would go wrong

0:01:12.440 --> 0:01:14.960
<v Speaker 1>and Miss re Lenna a gulf of polo. Part of

0:01:15.000 --> 0:01:17.800
<v Speaker 1>the reason why he was denied bail was because people

0:01:17.880 --> 0:01:27.480
<v Speaker 1>were scared that he would flee Anna. Mr re Lena,

0:01:27.720 --> 0:01:29.720
<v Speaker 1>thank you for joining me on what has been a

0:01:29.760 --> 0:01:33.440
<v Speaker 1>week of no sleep for me at least for me

0:01:33.480 --> 0:01:36.280
<v Speaker 1>at least, Mr Lenna, I'm gonna start with you. Tell

0:01:36.360 --> 0:01:38.200
<v Speaker 1>our folks who you are, what you're up to, and

0:01:38.200 --> 0:01:40.520
<v Speaker 1>why you haven't been sleeping this week. My name is

0:01:40.600 --> 0:01:43.399
<v Speaker 1>Mr Lena and gulf of Ulu. I am the team

0:01:43.480 --> 0:01:46.679
<v Speaker 1>leader for the legal news team at Bloomberg. I have

0:01:46.760 --> 0:01:52.400
<v Speaker 1>been covering crypto for a while now, and this week

0:01:52.440 --> 0:01:56.840
<v Speaker 1>I have not been sleeping because it appears to be

0:01:57.240 --> 0:02:00.320
<v Speaker 1>the week where we essentially god perhaps when like the

0:02:00.360 --> 0:02:05.840
<v Speaker 1>most important arrests in like crypto history play out after

0:02:06.160 --> 0:02:09.320
<v Speaker 1>experiencing the most dramatic collapse of one of the biggest

0:02:09.320 --> 0:02:13.440
<v Speaker 1>crypto companies over the past months. So this week really

0:02:13.440 --> 0:02:16.000
<v Speaker 1>sort of brought everything we've been seeing the past month

0:02:16.240 --> 0:02:21.120
<v Speaker 1>like front and center. You. I'm tired just listening to

0:02:21.120 --> 0:02:26.200
<v Speaker 1>you say that Sam bankmun Freed went from appearing on

0:02:26.320 --> 0:02:30.440
<v Speaker 1>stages at conferences including the Bloomberg Crypto Summit, and you know,

0:02:30.520 --> 0:02:33.679
<v Speaker 1>being fetted by various lawmakers in the US and in

0:02:33.720 --> 0:02:38.840
<v Speaker 1>the Bahamas to being literally under arrest Mr Lena, How

0:02:38.880 --> 0:02:43.760
<v Speaker 1>did we get here? I mean, the bankruptcy of f

0:02:43.880 --> 0:02:48.920
<v Speaker 1>TX occur exactly a month ago before this week, And

0:02:48.960 --> 0:02:52.799
<v Speaker 1>I want to start by what we were experiencing last week,

0:02:52.840 --> 0:02:54.919
<v Speaker 1>which I think is very indicative of how we got

0:02:54.960 --> 0:02:59.240
<v Speaker 1>to where we are today. Last week we saw several

0:02:59.280 --> 0:03:04.600
<v Speaker 1>meetings play out in the Manhattan Prosecutor's office where people

0:03:04.720 --> 0:03:10.560
<v Speaker 1>from FTX bankruptcy teams, including the newly appointed CEO, lawyers

0:03:10.680 --> 0:03:15.200
<v Speaker 1>for the company, as well as Manhattan prosecutors, were meeting

0:03:15.919 --> 0:03:19.000
<v Speaker 1>inside the court. We didn't know why, but we knew

0:03:19.080 --> 0:03:22.840
<v Speaker 1>they were meeting. Later, we found out around Friday that

0:03:22.880 --> 0:03:27.120
<v Speaker 1>those meetings were really to discuss possible charges and look

0:03:27.200 --> 0:03:30.760
<v Speaker 1>into what the possible charges they could bring against same

0:03:31.040 --> 0:03:34.440
<v Speaker 1>bankman freed for the collapse might be. We thought this

0:03:34.520 --> 0:03:39.320
<v Speaker 1>was going to take a while to figure out, years, years.

0:03:39.440 --> 0:03:44.000
<v Speaker 1>I mean really, the Monday's arrest and the following indictment

0:03:44.040 --> 0:03:48.600
<v Speaker 1>on Tuesday was just brought in spectacular speed for the

0:03:48.680 --> 0:03:51.400
<v Speaker 1>d o J. I mean, I have some examples of

0:03:51.560 --> 0:03:54.680
<v Speaker 1>how long it took to prosecute older cases. Let's talk

0:03:54.720 --> 0:03:57.520
<v Speaker 1>about Enron, which happened back in two thousand one. It

0:03:57.560 --> 0:04:00.120
<v Speaker 1>took two years for the prosecutors to build a is

0:04:00.160 --> 0:04:04.080
<v Speaker 1>against the CEO, even most recently our cages Bill Hoong,

0:04:04.320 --> 0:04:06.960
<v Speaker 1>that took over a year to build a case. Again,

0:04:07.080 --> 0:04:08.880
<v Speaker 1>so when you think about the fact that it took

0:04:08.880 --> 0:04:12.280
<v Speaker 1>a month for these prosecutors to pull a case together

0:04:12.640 --> 0:04:15.840
<v Speaker 1>against Sa Makman Freed and indict him on eight charges,

0:04:16.320 --> 0:04:21.160
<v Speaker 1>I mean that was out of nowhere. But like at

0:04:21.160 --> 0:04:23.839
<v Speaker 1>the same time, the speed at which these happened kind

0:04:23.880 --> 0:04:25.920
<v Speaker 1>of makes sense if you think about the fact that

0:04:26.080 --> 0:04:28.920
<v Speaker 1>same bankman Free is currently in another country that has

0:04:29.120 --> 0:04:32.440
<v Speaker 1>an extradition treaty with the United States, the Bahamas, in

0:04:32.560 --> 0:04:34.400
<v Speaker 1>order to get him to the United States. It's a

0:04:34.440 --> 0:04:37.359
<v Speaker 1>complicated process, and the first step to that process is

0:04:38.040 --> 0:04:43.360
<v Speaker 1>US officials need to present an official indictment to behaving authorities.

0:04:43.400 --> 0:04:46.360
<v Speaker 1>That is what gets the extradition process started, which could

0:04:46.360 --> 0:04:50.080
<v Speaker 1>take up to years to complete. And so really here

0:04:50.560 --> 0:04:53.400
<v Speaker 1>I think the speed was partially done so that they

0:04:53.400 --> 0:04:57.279
<v Speaker 1>can start that process immediately, really just bring charges against

0:04:57.320 --> 0:05:01.080
<v Speaker 1>him that we're basic in their nature. The sdn Y

0:05:01.360 --> 0:05:04.800
<v Speaker 1>press conference that we saw happened this week was clear

0:05:04.839 --> 0:05:07.760
<v Speaker 1>and that the investigation is still ongoing. So if we

0:05:07.760 --> 0:05:11.919
<v Speaker 1>were to expect more charges against Bankman Freed, that wouldn't

0:05:11.960 --> 0:05:14.320
<v Speaker 1>be out of the question, and so really speed here

0:05:14.400 --> 0:05:17.680
<v Speaker 1>was to get extradition process started. We expect more charges

0:05:17.720 --> 0:05:21.680
<v Speaker 1>to potentially come about later as prosecutors dig deeper. They

0:05:21.760 --> 0:05:23.960
<v Speaker 1>really truly were very clear about the fact that they

0:05:24.000 --> 0:05:26.560
<v Speaker 1>are not done. I mean, there's two things that are

0:05:26.560 --> 0:05:29.880
<v Speaker 1>playing out here. First of all, Damon Williams, who is

0:05:30.160 --> 0:05:33.760
<v Speaker 1>essentially the new U S District Attorney in New York City,

0:05:33.880 --> 0:05:37.200
<v Speaker 1>has clearly said since he started that crypto is a

0:05:37.320 --> 0:05:40.800
<v Speaker 1>priority for him in his office, and so of course

0:05:40.839 --> 0:05:43.760
<v Speaker 1>it makes sense for them to basically jump in and

0:05:43.839 --> 0:05:48.799
<v Speaker 1>capitalize on a case that's created so much online cry.

0:05:49.080 --> 0:05:51.760
<v Speaker 1>I mean, the fact that so many people were questioning

0:05:52.080 --> 0:05:56.240
<v Speaker 1>how Sam Bankman Freed was still free after this collapse

0:05:56.360 --> 0:05:59.360
<v Speaker 1>and so many allegations that came against him. Really, I

0:05:59.400 --> 0:06:02.520
<v Speaker 1>think most prosecutors to speed up the process so that

0:06:02.600 --> 0:06:06.600
<v Speaker 1>online cry sort of capitalizing on that sentiment, I mean,

0:06:07.400 --> 0:06:11.920
<v Speaker 1>I think helps the st N wise message be louder,

0:06:11.960 --> 0:06:15.280
<v Speaker 1>and I think they want that right now. I know

0:06:15.880 --> 0:06:18.000
<v Speaker 1>one of the things that we've both had to cover

0:06:18.279 --> 0:06:22.000
<v Speaker 1>over the past month or so, is bank when Freed's

0:06:23.160 --> 0:06:27.360
<v Speaker 1>media tour, is it the done thing? For someone whose

0:06:27.400 --> 0:06:31.240
<v Speaker 1>company has just you know, filed for bankruptcy to be

0:06:31.480 --> 0:06:35.200
<v Speaker 1>on a like a self flagellation slash apology slash. I

0:06:35.279 --> 0:06:40.320
<v Speaker 1>don't have any recollection tour, No, absolutely not. It's not common.

0:06:40.600 --> 0:06:43.599
<v Speaker 1>It is common for crypto to have very senior people

0:06:44.200 --> 0:06:47.400
<v Speaker 1>just lead their own comms on Twitter essentially, but it

0:06:47.480 --> 0:06:49.479
<v Speaker 1>is not common for someone who's been accused of so

0:06:49.480 --> 0:06:53.239
<v Speaker 1>many different things to go and say sorry, right yeah, um,

0:06:53.279 --> 0:06:56.120
<v Speaker 1>I mean, I'm deeply sorry about what happened. Part of

0:06:56.160 --> 0:06:58.360
<v Speaker 1>it is if you say sorry, then someone could ask

0:06:58.360 --> 0:07:00.320
<v Speaker 1>you what are you saying sorry for if you didn't

0:07:00.360 --> 0:07:02.520
<v Speaker 1>do anything wrong, right, Like, if you have to defend yourself,

0:07:02.960 --> 0:07:06.440
<v Speaker 1>then it doesn't excuse Saying sorry doesn't doesn't really help.

0:07:06.480 --> 0:07:08.520
<v Speaker 1>And when with any kind of scandal that has a

0:07:08.600 --> 0:07:12.119
<v Speaker 1>legal component, you don't really see the main person going

0:07:12.320 --> 0:07:16.720
<v Speaker 1>on the TV and doing interviews right right straight after,

0:07:16.840 --> 0:07:19.320
<v Speaker 1>like even before they even appear in any court. Right.

0:07:19.680 --> 0:07:22.040
<v Speaker 1>It was a sort of unusual tactic, and he admitted

0:07:22.120 --> 0:07:24.920
<v Speaker 1>himself at several points that his lawyers would have advised

0:07:24.960 --> 0:07:27.600
<v Speaker 1>against it, so it was quite surprising. And then after

0:07:27.640 --> 0:07:29.240
<v Speaker 1>a while, I guess it became a bit tired to

0:07:29.440 --> 0:07:32.800
<v Speaker 1>like because he was just saying sorry many times. Whatever happened,

0:07:32.800 --> 0:07:35.800
<v Speaker 1>why ever happened. I had a duty, clearly I do

0:07:35.800 --> 0:07:38.120
<v Speaker 1>a good job of that. Really I made a lot

0:07:38.160 --> 0:07:41.480
<v Speaker 1>of mistakes. Are things I would give anything to be

0:07:41.520 --> 0:07:44.760
<v Speaker 1>able to do over again. Um I didn't. And you know,

0:07:45.600 --> 0:07:48.160
<v Speaker 1>it's it was hard to see what the point was.

0:07:48.360 --> 0:07:50.440
<v Speaker 1>I don't know whether you know it was kind of

0:07:50.440 --> 0:07:53.400
<v Speaker 1>to portray himself in a certain way like I obviously

0:07:53.440 --> 0:07:55.360
<v Speaker 1>I don't want to expect it because who knows. But

0:07:55.520 --> 0:07:57.760
<v Speaker 1>it's definitely not not common for someone if you think

0:07:57.760 --> 0:07:59.800
<v Speaker 1>of all the biggest financial scandals you know, think of

0:07:59.840 --> 0:08:03.840
<v Speaker 1>like Librar recently. He didn't see the people there, the

0:08:03.840 --> 0:08:05.880
<v Speaker 1>CEOs of the companies, or even if a company a

0:08:05.880 --> 0:08:08.480
<v Speaker 1>big bank gets you know, a big fine for money laundering,

0:08:08.480 --> 0:08:10.760
<v Speaker 1>you don't have the ceo go and do an interview thing.

0:08:11.160 --> 0:08:13.200
<v Speaker 1>You know, this is what we did. I'm really sorry

0:08:13.280 --> 0:08:16.960
<v Speaker 1>we we left up. That was kind of surprising for sure,

0:08:17.680 --> 0:08:20.360
<v Speaker 1>And just to not coin a phrase, but to quote

0:08:20.360 --> 0:08:23.640
<v Speaker 1>one I censored. Left up was going to be the

0:08:23.640 --> 0:08:28.240
<v Speaker 1>first line of the testimony that bank when Freed was

0:08:28.280 --> 0:08:32.199
<v Speaker 1>due to deliver on Tuesday before he was arrested Monday, nights.

0:08:32.240 --> 0:08:34.120
<v Speaker 1>But Mr Lena, I want to go back to something

0:08:34.120 --> 0:08:35.920
<v Speaker 1>that you said about like the speed of this and

0:08:35.960 --> 0:08:38.880
<v Speaker 1>that it feels like it's happening in Internet time, which

0:08:38.920 --> 0:08:41.440
<v Speaker 1>is you know, accelerated in ways that are probably bad

0:08:41.480 --> 0:08:44.840
<v Speaker 1>for all of us. The whole thing about not just crypto,

0:08:44.920 --> 0:08:49.000
<v Speaker 1>but the ascent of FTX has really felt incredibly fast.

0:08:49.280 --> 0:08:52.079
<v Speaker 1>Right that they go from here's a bunch of folks

0:08:52.080 --> 0:08:55.199
<v Speaker 1>who left Jane Streets and are taking interesting risks and

0:08:55.240 --> 0:08:59.720
<v Speaker 1>doing stuff with you know, japan based arbitrage to this

0:09:00.200 --> 0:09:02.840
<v Speaker 1>is showing up on Capitol Hill trying to inform the

0:09:02.920 --> 0:09:09.040
<v Speaker 1>future direction of massive markets. Two, there's a bankruptcy. To

0:09:10.200 --> 0:09:13.600
<v Speaker 1>the rate at which that bankruptcy is filed has you

0:09:13.600 --> 0:09:18.000
<v Speaker 1>know John J Ray the third who Enron connection was

0:09:18.040 --> 0:09:21.000
<v Speaker 1>the liquidator for Enron, saying things like he's never seen

0:09:21.040 --> 0:09:24.240
<v Speaker 1>something more disorganized in his entire life. Like there's something

0:09:24.280 --> 0:09:27.760
<v Speaker 1>about this that just feels like we've speed run through

0:09:27.800 --> 0:09:31.480
<v Speaker 1>a crisis that would ordinarily take years. If this we're

0:09:31.480 --> 0:09:33.439
<v Speaker 1>playing out at a slightly slower pace or in a

0:09:33.520 --> 0:09:37.600
<v Speaker 1>slightly more like normal fashion, what would have been the

0:09:37.640 --> 0:09:40.280
<v Speaker 1>next things to happen? Right, So, we've now had all

0:09:40.320 --> 0:09:42.080
<v Speaker 1>of these indictments. We've had all of these charges in

0:09:42.120 --> 0:09:47.240
<v Speaker 1>record time. What would normally happen next, What prosecutors need

0:09:47.400 --> 0:09:50.280
<v Speaker 1>right now is to get san Baateman freed back into

0:09:50.320 --> 0:09:54.640
<v Speaker 1>the United States. Um, there's a hearing scheduled on his

0:09:54.679 --> 0:09:59.480
<v Speaker 1>extradition in February. That is the priority. Ordinarily that would

0:09:59.480 --> 0:10:02.760
<v Speaker 1>take a very long time. There is an extradition treaty

0:10:02.800 --> 0:10:05.000
<v Speaker 1>between the US and the Bahamas, as I mentioned. But

0:10:05.640 --> 0:10:08.120
<v Speaker 1>you know, anyone in that position has rights, and they

0:10:08.160 --> 0:10:11.720
<v Speaker 1>have the right to essentially reject extradition. And we have

0:10:11.840 --> 0:10:14.880
<v Speaker 1>examples in the past of people who have been able

0:10:14.920 --> 0:10:18.640
<v Speaker 1>to successfully fight for that right and have stayed in

0:10:18.640 --> 0:10:20.480
<v Speaker 1>the Bahamas. Like this is something the US has had

0:10:20.480 --> 0:10:23.440
<v Speaker 1>to deal with before. In this case, though, you know,

0:10:23.600 --> 0:10:25.920
<v Speaker 1>there's just several factors that are in play. I mean,

0:10:25.960 --> 0:10:30.120
<v Speaker 1>one big factor is, like SBF was denied bail. He's

0:10:30.120 --> 0:10:32.240
<v Speaker 1>going to have to go to prison in the Bahamas.

0:10:32.280 --> 0:10:35.720
<v Speaker 1>Their reports out that explained that the conditions in the

0:10:35.760 --> 0:10:40.320
<v Speaker 1>Bahamas are not ideal. I mean, how long can SBF potentially,

0:10:40.360 --> 0:10:43.640
<v Speaker 1>you know, put up with those conditions. And part of

0:10:43.679 --> 0:10:46.520
<v Speaker 1>the reason why he was denied bail was because people

0:10:46.559 --> 0:10:48.720
<v Speaker 1>were scared that he would flee if he were to

0:10:48.720 --> 0:10:51.320
<v Speaker 1>be in the United States, you know, bail could come

0:10:51.320 --> 0:10:54.120
<v Speaker 1>back on the table because maybe you know, authorities and

0:10:54.160 --> 0:10:56.880
<v Speaker 1>prosecutors in the US wouldn't be as scared that he

0:10:56.960 --> 0:10:59.199
<v Speaker 1>was going to flee the country as they are with

0:10:59.280 --> 0:11:01.800
<v Speaker 1>him being in the Amas. So I guess the question

0:11:01.840 --> 0:11:05.400
<v Speaker 1>now is, you know, do the circumstances and conditions that

0:11:05.480 --> 0:11:12.359
<v Speaker 1>surround same bankman freed in the Bahamas discourage him from

0:11:12.559 --> 0:11:15.920
<v Speaker 1>fighting extradition. And you know, there's still a question here,

0:11:16.040 --> 0:11:19.000
<v Speaker 1>I think, on the table on whether he will cooperate

0:11:19.280 --> 0:11:23.920
<v Speaker 1>with the government and whether that's going to offer something

0:11:24.000 --> 0:11:25.839
<v Speaker 1>for him, because I think, you know, when you talk

0:11:25.880 --> 0:11:29.720
<v Speaker 1>about the fact that so many charges could still possibly come,

0:11:29.840 --> 0:11:34.160
<v Speaker 1>we're still very early in this story. If you were

0:11:34.200 --> 0:11:36.280
<v Speaker 1>to cooperate, is that even an option on the table

0:11:36.440 --> 0:11:39.679
<v Speaker 1>for for authorities and and what would that mean, like

0:11:40.040 --> 0:11:42.839
<v Speaker 1>we could see that play out now. To your point

0:11:42.880 --> 0:11:45.560
<v Speaker 1>about cooperation, one of the things that folks have been

0:11:45.600 --> 0:11:49.600
<v Speaker 1>speculating on is, you know, of the charges that he's facing,

0:11:49.640 --> 0:11:51.480
<v Speaker 1>and we haven't specified what they were, but they're largely

0:11:51.520 --> 0:11:56.280
<v Speaker 1>in the area of like fraud, misappropriation of customer funds, misrepresentation,

0:11:56.360 --> 0:11:57.760
<v Speaker 1>of like what it is that you are up to

0:11:57.920 --> 0:11:59.640
<v Speaker 1>and why you wanted money and what you're going to

0:11:59.720 --> 0:12:02.600
<v Speaker 1>do with up money. But if you were to kind

0:12:02.640 --> 0:12:05.760
<v Speaker 1>of do some very like legal arithmetic and just like

0:12:05.800 --> 0:12:08.360
<v Speaker 1>add up the maximum potential sentences for each of these,

0:12:08.960 --> 0:12:11.920
<v Speaker 1>he if found guilty on any or all of these,

0:12:11.920 --> 0:12:15.400
<v Speaker 1>could be facing a significant amount of time in prison.

0:12:16.640 --> 0:12:19.480
<v Speaker 1>Is it normal in cases of financial crime for people

0:12:19.520 --> 0:12:22.960
<v Speaker 1>to actually go to jail? I would compare this more

0:12:23.080 --> 0:12:27.960
<v Speaker 1>to like a thora nos kind of collapse. I think

0:12:28.000 --> 0:12:29.719
<v Speaker 1>that's what we would be seeing here. I mean, the

0:12:29.800 --> 0:12:34.400
<v Speaker 1>charges are not identical, they're similar, the effects are not identical,

0:12:34.440 --> 0:12:37.719
<v Speaker 1>but they're similar. Lenders teated out and customers teated out.

0:12:37.760 --> 0:12:40.000
<v Speaker 1>I mean that is what we're talking about here. Elizabeth

0:12:40.000 --> 0:12:43.040
<v Speaker 1>Holmes got sentenced to prison time last months. I mean,

0:12:43.440 --> 0:12:46.640
<v Speaker 1>this is how I see this playing out for for

0:12:46.720 --> 0:12:49.520
<v Speaker 1>same bankman freed if he's found guilty. If he's found guilty,

0:12:49.559 --> 0:12:52.120
<v Speaker 1>And I think another thing about cooperation is also you know,

0:12:52.800 --> 0:12:55.080
<v Speaker 1>and these charges that were brought against him is in

0:12:55.120 --> 0:12:56.920
<v Speaker 1>all of the suits that we saw, whether it was

0:12:57.000 --> 0:13:00.760
<v Speaker 1>from the d O J SEC or CFTC, he was

0:13:01.200 --> 0:13:05.600
<v Speaker 1>the only defendant mentioned in those suits and we know

0:13:05.840 --> 0:13:09.560
<v Speaker 1>that he definitely didn't run FTX alone. There are other

0:13:09.600 --> 0:13:14.280
<v Speaker 1>individuals that are involved, including Caroline Ellison, Gary Wang or

0:13:14.320 --> 0:13:20.800
<v Speaker 1>the director of engineering saying who are still m I

0:13:20.880 --> 0:13:23.120
<v Speaker 1>A and and we don't know whether this means that

0:13:23.160 --> 0:13:25.920
<v Speaker 1>they're cooperating with the government on their end, and what

0:13:25.960 --> 0:13:29.400
<v Speaker 1>it means about how guilty or not guilty they will

0:13:29.440 --> 0:13:31.880
<v Speaker 1>be found. These are all things that we are looking

0:13:31.920 --> 0:13:34.480
<v Speaker 1>at moving forward, right, And you know, to your point,

0:13:34.480 --> 0:13:36.480
<v Speaker 1>it's not clear if or when they will even be

0:13:36.600 --> 0:13:40.000
<v Speaker 1>charged with anything, especially because of the rates of which

0:13:40.040 --> 0:13:42.680
<v Speaker 1>this is unfolding. Right. It's not that folks have taken

0:13:42.679 --> 0:13:45.000
<v Speaker 1>two years to build a case and say these are

0:13:45.000 --> 0:13:47.480
<v Speaker 1>the charges against the whole bunch of people. They've taken

0:13:47.720 --> 0:13:50.000
<v Speaker 1>like a month and built a case against one person

0:13:50.040 --> 0:13:52.000
<v Speaker 1>so far, exactly. And I think that if you go

0:13:52.120 --> 0:13:55.000
<v Speaker 1>through these suits, you'll realize that a lot of like

0:13:55.480 --> 0:13:59.400
<v Speaker 1>perhaps like the mislabeling of where money was going in

0:13:59.480 --> 0:14:03.840
<v Speaker 1>the balance sheet within f t X, wasn't just Sam

0:14:03.920 --> 0:14:08.320
<v Speaker 1>BigMan free. There were other individuals that were perpetrating that mislabeling.

0:14:09.440 --> 0:14:13.240
<v Speaker 1>That hasn't been a reason for prosecutors so far to

0:14:13.280 --> 0:14:15.640
<v Speaker 1>bring any charges against them. And so that to me

0:14:15.920 --> 0:14:18.520
<v Speaker 1>raises a question of what's going on right. So to

0:14:18.559 --> 0:14:20.560
<v Speaker 1>your point, the big thing that's going to continue to

0:14:20.600 --> 0:14:22.840
<v Speaker 1>keep us awak for the foreseeable future is just that

0:14:23.240 --> 0:14:27.800
<v Speaker 1>it seems like there's more to come here reassuring. So

0:14:27.880 --> 0:14:31.840
<v Speaker 1>but but please don't call me at like six am again,

0:14:31.960 --> 0:14:34.680
<v Speaker 1>say may because I I had like a panic attack

0:14:34.760 --> 0:14:37.000
<v Speaker 1>when I woke up and I saw three miscalls from you.

0:14:37.040 --> 0:14:39.360
<v Speaker 1>I was like, oh my god, this is what happened.

0:14:39.920 --> 0:14:42.920
<v Speaker 1>I did. I did call Mr Leam and be like, hey,

0:14:43.000 --> 0:14:47.160
<v Speaker 1>news such as the life of a crypto editor. We'll

0:14:47.200 --> 0:14:49.600
<v Speaker 1>be right back with more of the week's top crypto stories,

0:14:49.920 --> 0:14:53.200
<v Speaker 1>featuring Anna Errera, senior editor at Bloomberg and Misfilena, a

0:14:53.240 --> 0:15:05.640
<v Speaker 1>Gulf FA polo. We spent a lot of time talking

0:15:05.640 --> 0:15:07.640
<v Speaker 1>about SPF and f t X, as we should, but

0:15:07.680 --> 0:15:10.800
<v Speaker 1>there's been another pretty big crypto story this week. Can

0:15:10.840 --> 0:15:13.560
<v Speaker 1>you just give us in, you know, like as non

0:15:13.600 --> 0:15:17.880
<v Speaker 1>technically as possible, what's been happening with finance. So finance

0:15:17.960 --> 0:15:23.160
<v Speaker 1>has been facing massive amounts of withdrawals essentially, so people

0:15:23.240 --> 0:15:26.640
<v Speaker 1>who are worried, are you know, you understandably if you

0:15:26.760 --> 0:15:29.120
<v Speaker 1>had money on ft X and as you said before.

0:15:29.280 --> 0:15:31.520
<v Speaker 1>You know, it's like a less than two months ago,

0:15:31.720 --> 0:15:34.040
<v Speaker 1>SPF was hailed as the next JP Morgan, and you

0:15:34.040 --> 0:15:36.120
<v Speaker 1>wouldn't think anything would go wrong. Then in a week

0:15:36.200 --> 0:15:38.360
<v Speaker 1>you've lost all your money on the platform. Then you

0:15:38.440 --> 0:15:40.720
<v Speaker 1>might start getting a bit wary about having money on

0:15:40.760 --> 0:15:44.320
<v Speaker 1>any centralized crypto exchange, and Finance is now by far

0:15:44.440 --> 0:15:48.400
<v Speaker 1>the biggest. It's like a gigantic compared to anyone else.

0:15:48.720 --> 0:15:51.400
<v Speaker 1>And so you know, people are getting worried and they're

0:15:51.400 --> 0:15:54.240
<v Speaker 1>pulling out their money from from Finance. So the situation

0:15:54.240 --> 0:15:56.640
<v Speaker 1>has stabilized a bit from earlier in the week, but

0:15:56.840 --> 0:15:58.560
<v Speaker 1>that in a Nutchell is what is going on. And

0:15:58.560 --> 0:16:01.000
<v Speaker 1>obviously I guess it's kind of like a vicious cycle.

0:16:01.080 --> 0:16:03.600
<v Speaker 1>If people get worried, then they keep withdrawing more and

0:16:03.640 --> 0:16:07.360
<v Speaker 1>then it keeps spreading. It's the next one to watch.

0:16:07.440 --> 0:16:10.600
<v Speaker 1>And you know they've they've tried to reassure customers before

0:16:10.680 --> 0:16:12.600
<v Speaker 1>that they had all the money and that they're they're

0:16:12.600 --> 0:16:14.840
<v Speaker 1>obviously not f t X, and they have if you

0:16:14.840 --> 0:16:16.840
<v Speaker 1>want to withdraw your funds, your funds will be there.

0:16:17.480 --> 0:16:19.800
<v Speaker 1>But you know they've they've fallen short of I guess

0:16:19.880 --> 0:16:22.160
<v Speaker 1>what people would want, which is a full audit. They've

0:16:22.200 --> 0:16:26.200
<v Speaker 1>not given that, and so people are still worried, basically,

0:16:26.240 --> 0:16:28.280
<v Speaker 1>and it's one to watch because they're so big. It's

0:16:28.320 --> 0:16:31.120
<v Speaker 1>one watch because they're the biggest, right like they they

0:16:31.160 --> 0:16:36.360
<v Speaker 1>are by far the largest crypto exchange by pick a metric,

0:16:36.840 --> 0:16:41.080
<v Speaker 1>and increasingly, in with the decline of FTX, they're absorbing

0:16:41.560 --> 0:16:44.680
<v Speaker 1>in theory at least even more customers who are looking

0:16:44.720 --> 0:16:46.720
<v Speaker 1>for a new place to put their money. But as

0:16:46.760 --> 0:16:49.360
<v Speaker 1>you say, you know, the folks of Bindance, including the CEO,

0:16:49.520 --> 0:16:54.640
<v Speaker 1>have tried repeatedly to reassure folks that anything that they

0:16:54.720 --> 0:16:56.880
<v Speaker 1>might be hearing out there is you know, to use

0:16:56.920 --> 0:17:01.320
<v Speaker 1>crypto's favorite word, fud, the unhelped full spreading of fair

0:17:01.400 --> 0:17:05.240
<v Speaker 1>uncertainty and debt. And just as a closing question for you,

0:17:06.000 --> 0:17:09.520
<v Speaker 1>what exactly do you think the prospects are for crypto

0:17:09.560 --> 0:17:14.400
<v Speaker 1>companies like finance and others to really embrace audited financials.

0:17:14.480 --> 0:17:17.040
<v Speaker 1>Not in the here's a quick snap shals in time

0:17:17.080 --> 0:17:19.720
<v Speaker 1>of what's going on, but here's an actual audit of

0:17:19.760 --> 0:17:23.879
<v Speaker 1>everything that's happening. I mean, you know, crypto hasn't been

0:17:23.880 --> 0:17:27.080
<v Speaker 1>regulated as much as other sectors, so it's hard to

0:17:27.320 --> 0:17:29.560
<v Speaker 1>have to do something that's tough as a firm if

0:17:29.560 --> 0:17:32.200
<v Speaker 1>you're not forced to write. Lots of companies preferre prefer

0:17:32.320 --> 0:17:35.159
<v Speaker 1>to stay private for longer because being a public company

0:17:35.200 --> 0:17:37.760
<v Speaker 1>comes with, you know, disclosures that you don't really want

0:17:37.760 --> 0:17:40.920
<v Speaker 1>to make, and so that's obviously for crypto. You could

0:17:41.000 --> 0:17:43.040
<v Speaker 1>argue that, you know, some would prefer not to get

0:17:43.040 --> 0:17:46.280
<v Speaker 1>audited because that requires a different level of disclosure and

0:17:46.280 --> 0:17:47.840
<v Speaker 1>you need to have your house in order, and maybe

0:17:47.840 --> 0:17:49.760
<v Speaker 1>you have not running your company as you should have

0:17:49.920 --> 0:17:51.840
<v Speaker 1>in any like it might not be anything massive like

0:17:51.840 --> 0:17:54.399
<v Speaker 1>obviously now we have the FDx example, which is I

0:17:54.400 --> 0:17:57.439
<v Speaker 1>would hope pretty extreme. But you know, if you've not

0:17:57.520 --> 0:17:59.720
<v Speaker 1>had any rules, then what rules where you're gould have

0:17:59.720 --> 0:18:03.240
<v Speaker 1>fall other than I guess ethics. But if more institutions

0:18:03.280 --> 0:18:05.920
<v Speaker 1>come in and more mainstream firms come in, and even

0:18:05.960 --> 0:18:09.439
<v Speaker 1>also now just regular customers, if you've been burned by FTX,

0:18:09.480 --> 0:18:11.760
<v Speaker 1>you might want to say and tell you the exchange

0:18:11.760 --> 0:18:13.560
<v Speaker 1>you're going to, Yes, I will put my money on

0:18:13.560 --> 0:18:16.600
<v Speaker 1>your platform. Yes I will trade there if you do

0:18:16.680 --> 0:18:19.600
<v Speaker 1>an audit, and maybe they will be pushed by customers

0:18:19.680 --> 0:18:22.000
<v Speaker 1>rather than regulation. But tends to be the case that

0:18:22.080 --> 0:18:25.520
<v Speaker 1>regulators and you know, not men with guns, but sort

0:18:25.560 --> 0:18:28.600
<v Speaker 1>of have more sway than just like I'm doing it

0:18:28.600 --> 0:18:30.639
<v Speaker 1>because I love the world and I want to you know,

0:18:31.040 --> 0:18:33.720
<v Speaker 1>behave well, you know, a soup. It's just cryptos. I

0:18:33.760 --> 0:18:36.760
<v Speaker 1>guess the way the world is unless you have repercussions

0:18:36.800 --> 0:18:39.440
<v Speaker 1>for doing things well. This has certainly been a week

0:18:39.480 --> 0:18:42.520
<v Speaker 1>of consequences. Um, Mr Lenna, Anna, thank you both for

0:18:42.600 --> 0:18:46.160
<v Speaker 1>joining me. Thank you. You can find more of Anna

0:18:46.200 --> 0:18:48.520
<v Speaker 1>and Mr Willias reporting on the Bloomberg Terminal and on

0:18:48.520 --> 0:18:50.800
<v Speaker 1>Bloomberg dot com, and be sure to check out our

0:18:50.840 --> 0:18:58.879
<v Speaker 1>twice weekly newsletter, Bloomberg Crypto. This is Bloomberg Crypto, a

0:18:58.960 --> 0:19:02.360
<v Speaker 1>daily podcast from Bomberg and I Heart Radio. For more

0:19:02.359 --> 0:19:05.040
<v Speaker 1>shows from I Heart Radio, visit the I Heart Radio app,

0:19:05.280 --> 0:19:09.399
<v Speaker 1>Apple Podcasts, or wherever you get your podcasts. Send us

0:19:09.400 --> 0:19:12.280
<v Speaker 1>your comments, questions or suggestions for the show to Crypto

0:19:12.359 --> 0:19:18.760
<v Speaker 1>at Bloomberg dot net. The supervising producer of Bloomberg Crypto

0:19:18.880 --> 0:19:22.840
<v Speaker 1>is Vicky Verglina. Our senior producer is Janet Babin. Our

0:19:22.880 --> 0:19:26.840
<v Speaker 1>producers are Mohammed Farouk and Sharon Barriro. Our associate producers

0:19:26.840 --> 0:19:30.400
<v Speaker 1>are Ty Butler and Moses on Them. Desta wonder At

0:19:30.520 --> 0:19:36.159
<v Speaker 1>is our engineer, original music by Leo Sidron. I'm Stacy,

0:19:36.240 --> 0:19:37.959
<v Speaker 1>Marie Ishmael. Have a great weekend.