Speaker 1: Let's get now to Laura Davison Bloomberg Wealth Reported joining
Speaker 1: us from Washington, d C. She wrote a pace titled
Speaker 1: Sam bankmun Freed's red Flags were seen in all corners
Speaker 1: of the Empire. Before we get to those, Laura, just
Speaker 1: curious to get your thoughts on what we heard from
Speaker 1: Sam bankmun Freed speaking virtually at the New York Times
Speaker 1: deal book summish because he did admit to many mistakes,
Speaker 1: but he's denied here trying to perpetrate any kind of fraud. Yeah,
Speaker 1: it was a really incredible interview, almost an hour long,
Speaker 1: and really he was quite contrite and and sort of
Speaker 1: had this air that he's had on on Twitter that
Speaker 1: we now saw him you know in uh, you know,
Speaker 1: in the Fleshness video feed UM talk about how sorry
Speaker 1: and how he made mistakes, UM, but also that he
Speaker 1: didn't He said that he didn't know a lot of
Speaker 1: these things that were happening. And so that's really going
Speaker 1: to be the questions that regulators are going to be asking,
Speaker 1: that congressional committees are gonna be asking, and you know,
Speaker 1: potentially the d o J might be asking, um, as
Speaker 1: you know, is he liable and responsible for some of
Speaker 1: these things that happened. So you share a Byeline Laura
Speaker 1: with Sophie Ella Xander on a piece that's being featured
Speaker 1: on the terminal. Sam bankman Fried's red flags were seen
Speaker 1: in all corners of Empire, and you highlight to nonprofits
Speaker 1: in particular. What do you think they picked up on?
Speaker 1: So it's not clear they didn't say exactly why they
Speaker 1: declined to take some of these grants from the f
Speaker 1: t X UH Philanthropy wing, but um, they clearly picked
Speaker 1: up on on something. And uh, this has really been
Speaker 1: really kind of a parallel story to what we saw
Speaker 1: happen at f t X, what we saw having at
Speaker 1: the ft X Future Fund, which was their you know,
Speaker 1: their foundation, and that you know, records were not so clean.
Speaker 1: There were entities who weren't expecting money who got money,
Speaker 1: or entities who were expecting a certain amount and got more.
Speaker 1: But there were also people who were expecting some grants
Speaker 1: that just never got fulfilled about uh, you know, ninety
Speaker 1: million or so that just you know, they had said, hey,
Speaker 1: we're coming through this money never got paid out. Um.
Speaker 1: But really the real thing here that's probably going to
Speaker 1: be the most focused on going forward in the bankruptcy
Speaker 1: case is there were you know, people who received millions
Speaker 1: of dollars. You know, several entities received millions of dollars
Speaker 1: uh from entities that were listed in the bankruptcy and
Speaker 1: that means that some of those funds could be clawed back. Uh.
Speaker 1: And some of these are bigger nonprofits that might be
Speaker 1: able to afford to do so. But a lot of
Speaker 1: these people are you know, individual researchers. You know, PhD students,
Speaker 1: college students that you know, we're given twenty dollars. They
Speaker 1: may not have that money, you know, if creditors come
Speaker 1: to to recoup it. I like a pace that you
Speaker 1: UM quoted a partner with us saying that, you know,
Speaker 1: if some of these big companies like Tiger Global Management,
Speaker 1: Sequoia Capital, we're backing the exchange, why would some of
Speaker 1: these smaller nonprofits and academics do due diligence Because basically
Speaker 1: they can't, but they should have also, I guess had
Speaker 1: faith that that what was happening here was was all
Speaker 1: above board. Yeah, and that's really um, you know sort
Speaker 1: of what is incredible about some of these um, you
Speaker 1: know organizations, they you know, apply for grants or they
Speaker 1: receive grants, and they do. You have teams that you know,
Speaker 1: relatively small compared to you know, what would be a
Speaker 1: due diligence team, um, you know at a hedge fund,
Speaker 1: but you know said, hey, we see some red flags here.
Speaker 1: We're just not going to associate ourselves, um, you know
Speaker 1: with this organization, which is which is really uh, you know,
Speaker 1: not typical in the nonprofit world. If someone comes and say, hey,
Speaker 1: we want to give you, you know, several million dollars,
Speaker 1: most nonprofits you know are not looking for a reason
Speaker 1: to say no. They're looking for reason to say yes.
Speaker 1: So what do we know about the way in which
Speaker 1: regulators are going to step in and kind of prosecute
Speaker 1: this case. So we don't know, uh, for sure, exactly
Speaker 1: how this is going to play out. But there's a
Speaker 1: couple of things in the next couple of weeks that
Speaker 1: are that are gonna be really crucial to watch here. Um.
Speaker 1: One is there's several different congressional committees that want to
Speaker 1: have hearings, uh about the collapse of f t X.
Speaker 1: We've got one scheduled for December thirteenth in the House.
Speaker 1: Um they Sam Bank and free tonight, in his interview
Speaker 1: with The New York Times said he wants to cooperate
Speaker 1: in these We'll see if he actually comes back on
Speaker 1: New y so or on you know, us soil to
Speaker 1: do this. He's still in the Bahamas. Um. You know,
Speaker 1: that does open him up to you know, some potential liability,
Speaker 1: if he has criminal liability, you could see, uh, you know,
Speaker 1: this could have some exposure for him. Uh. There's there's
Speaker 1: a lot happening and a lot that regulators and different
Speaker 1: enforcement agencies are being quiet about right now. But you know,
Speaker 1: as this case builds, and you know, frankly, he's been
Speaker 1: talking a lot, uh, you know, more so than would
Speaker 1: be expected in a situation like he's in. So uh
Speaker 1: more is is likely to come and very quickly. And
Speaker 1: what sort of the crypto contagion are we expecting to
Speaker 1: see here too? I mean, so this is really kind
Speaker 1: of the question we saw, you know, Larry Think and
Speaker 1: others say today that you know, this is really not
Speaker 1: not the end of this. You know, we've seen other
Speaker 1: firms block five example file for bankruptcy. UM. You know,
Speaker 1: just f t X had um tentacles in uh in
Speaker 1: a wide and far in crypto world and just just
Speaker 1: been a real loss and confidence in in crypto as
Speaker 1: well as you know, sort of the loss of evaluations
Speaker 1: across the board. Uh, this is not over yet. What
Speaker 1: about regular Do we have a sense that there's going
Speaker 1: to be much much more strict regulation in this space?
Speaker 1: This has really been UM. A kind of an interesting
Speaker 1: point is you know, you would think kind of the
Speaker 1: natural reactions after sort of there's a big calamitous event
Speaker 1: that you would have people saying, yes, we need to regulate. Um.
Speaker 1: Congress has been slow on this. Part of that is
Speaker 1: the Congress doesn't really understand how crypto works, uh, and
Speaker 1: that they're a little bit slow to react. We're starting
Speaker 1: to see more of that today. The chair of the
Speaker 1: Banking Committee in the Senate, uh, Senate Finance or sorry,
Speaker 1: Senate Banking Committee sent a letter to Yellin's saying, Hey,
Speaker 1: we need to work on this together. We need to
Speaker 1: get to speed on this, but it's gonna take some
Speaker 1: time months, if not years. Yeah. Indeed, great reporting, Thank you, Laura,
Speaker 1: Laura Davis and Bloomberg Wealth reporter joining us from Washington,
Speaker 1: d C. A great pace on the terminal to Sam
Speaker 1: bank Man. Freed's red flags was seen in all corners
Speaker 1: of Empire