Speaker 1: This is Bloomberg Crypto and 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, February fifty. The best known figure
Speaker 1: of the ft X bankruptcy is co founder and former
Speaker 1: CEO Sam Bankman Freed. This isn't surprising given his public
Speaker 1: profile and frequent media appearances alongside politicians and celebrities. But SPF,
Speaker 1: as he's commonly known, isn't the only f t X
Speaker 1: affiliated player who has attracted the attention of regulators and
Speaker 1: prosecutors since the crypto Exchange collapsed in November, along of course,
Speaker 1: with Alameda Research. So who are some of those folks
Speaker 1: and what's next for them? Bloomberg reporter Hannah Miller joins me. Now, Hannah,
Speaker 1: welcome back to the show. Thank you for having me.
Speaker 1: You've been busy as usual, and one of the things
Speaker 1: that seems to have been keeping you busy is reporting
Speaker 1: on various of the folks associated with different parts of
Speaker 1: f t X who are not Sam bank maun Freed.
Speaker 1: Tell me about your recent interview with Brett Harrison. Yeah,
Speaker 1: so I had the opportunity to talk with Brett Harrison,
Speaker 1: who's the former president of f t X U S,
Speaker 1: which is the US exchange that's part of the very
Speaker 1: complicated and confusing f t X family. So Brett is
Speaker 1: working on a new venture. It's a startup called Architect,
Speaker 1: and he recently raised five million dollars for this new
Speaker 1: startup and Architect is building crypto trading software that will
Speaker 1: make it easier for institutional investors to access crypto markets,
Speaker 1: both centralized and decentralized. Now, when I first heard that
Speaker 1: he was raising money, I had like an immediate follow
Speaker 1: up question, which was like who is he raising money from?
Speaker 1: And you know, similarly, has he found it difficult in
Speaker 1: this environment where there's such a huge cloud over everyone
Speaker 1: who was associated with f t X or f t
Speaker 1: x US or Alameda to be raising money in that environment. Yeah.
Speaker 1: So it was pretty interesting because we reported in the
Speaker 1: fall that Harrison was trying to raise and that he
Speaker 1: was aiming for this target of ten million dollars in
Speaker 1: a round that would value the company at a hundred
Speaker 1: billion dollars. So the fact that he raised five million
Speaker 1: dollars shows that he had to kind of have an
Speaker 1: expectation reset. You know, this is a really market right now,
Speaker 1: and we usually, I think, don't report on rounds that
Speaker 1: are the small, but because it was Harrison behind it,
Speaker 1: this was noteworthy. You know, Harrison left f t x
Speaker 1: US before all of this happened, and he stepped down
Speaker 1: in September. But there's still this question of what he
Speaker 1: knew and didn't know in his role and in the
Speaker 1: interview because in addition to you interviewing him for your story,
Speaker 1: Brett Harrison also spoke to our colleague Sonali for Bloomberg
Speaker 1: TV and he did an interview with her. It's so
Speaker 1: clear that there were deliberate steps taken to mislead investors,
Speaker 1: to mislead internal employees like myself, to hide what was
Speaker 1: happening from the general public. And that that has been
Speaker 1: sort of the most shocking part of all of this,
Speaker 1: that there was that this was not something that we
Speaker 1: could have ever really known, given what steps were taken
Speaker 1: to to hide this from from everyone. But you've no
Speaker 1: Sambang been freed for about a decade. From what I understand,
Speaker 1: you worked with him back at Jane Street. You were
Speaker 1: his boss. I wasn't his boss, but we were in
Speaker 1: different departments and I was in the technology side. He
Speaker 1: was in the trading side, and some of my earliest
Speaker 1: years at the company, I helped develop a program at
Speaker 1: James Street to help teach new traders how to program
Speaker 1: in our internal programming languages, and he was one of
Speaker 1: my earliest students. So I met him back in So
Speaker 1: would you have any indication from then to now that
Speaker 1: he that he would have been able to lead the
Speaker 1: ft X empower and that this would have gone this
Speaker 1: way Even between the relationship between the two of you,
Speaker 1: it was really early days then, you know, I never
Speaker 1: could have fathoms that you know, he would go on
Speaker 1: to build this gigantic company and then of course everything
Speaker 1: that's happened afterwards, or that you know, one day I
Speaker 1: would go work for him. Now. One of the things
Speaker 1: we've just heard Red Harrison saying in the context of
Speaker 1: that interview is that he didn't know what was happening
Speaker 1: at you know, fd X Means or f t X International,
Speaker 1: and that he feels deliberately misled by some. But one
Speaker 1: of the other things that also has come across in
Speaker 1: that interview and others is that the relationship between he
Speaker 1: and some seemed to be tense at best. Yeah, I
Speaker 1: mean he published this very long tweet threat in January
Speaker 1: where he really referred to Sam Pigman Freed as an
Speaker 1: insecure and prideful manager and that he raised red flags
Speaker 1: about serious organizational problems within FTX. So I talked to
Speaker 1: him a little bit about that, and he said, you
Speaker 1: know that he felt like these were growing pains for
Speaker 1: a startup in terms of these these organizational issues. You know,
Speaker 1: that it was not at the level that it turned
Speaker 1: out to be in terms of, you know, the alleged
Speaker 1: fraud that happened. But he said that he really was
Speaker 1: met with like a brick wall, you know, in terms
Speaker 1: of trying to get these things addressed, and that really
Speaker 1: contributed to him leaving. But the fact of the matter
Speaker 1: is that Harrison was an extremely powerful figure within the
Speaker 1: ft X empire. He was pretty much the second most
Speaker 1: visible face of f t X after Sam Bateman Freed.
Speaker 1: You know, Harrison did tons of interviews, He appeared at conferences.
Speaker 1: He would not play League of Legends during media interviews.
Speaker 1: He was always very focused. He is a compelling public speaker.
Speaker 1: So I think for some people it is difficult to reconcile,
Speaker 1: you know, the amount of influence he had within within
Speaker 1: ft X with this idea that he really had no
Speaker 1: idea what was happening here, that he was not involved
Speaker 1: in any way with wrongdoing. I spoke to a lot
Speaker 1: of venture capital investors for this story, and pretty much
Speaker 1: none of them would go on record with me. They
Speaker 1: would they would be like, oh, you know, he's a
Speaker 1: really nice guy, but I still have questions about what
Speaker 1: he did and didn't know. So, you know, even some
Speaker 1: of them who had personal interactions with him and you know,
Speaker 1: spoke about him positively, were like, I still passed, you know,
Speaker 1: on on investing in his startup because of this connection
Speaker 1: to f t X. So I do think it's going
Speaker 1: to be a difficult road ahead for him. And you know,
Speaker 1: but the fact of the matter is there are still
Speaker 1: people who believe in him. I mean, his investors included
Speaker 1: Coin based Ventures, Circle Ventures, and Anthony Scaramucci. And Scaramucci
Speaker 1: had actually been someone who was burned in the ft
Speaker 1: X collapse to a pretty significant degree. He sold a
Speaker 1: thirty percent steak in his Skybridge Capital firm to f
Speaker 1: t X, you know, weeks before the company collapse into bankruptcy. Now,
Speaker 1: it's interesting that you mentioned Anthony Scaramucci because he has
Speaker 1: also tool you know me for instance, that he thinks
Speaker 1: that Brett Harrison is, you know, to quote him, like
Speaker 1: a good guy and someone that he despite everything with
Speaker 1: as you say, you know, like the f t X
Speaker 1: International investment and feeling burned by his relationship with Sam
Speaker 1: Bankman Fried, he thinks that Brett is someone that he
Speaker 1: is willing to put not just trust in, but like
Speaker 1: invest in as a as a person and as a founder. Yeah.
Speaker 1: I mean, with Brett, it's pretty interesting. I I had
Speaker 1: asked him about this. He's like a few years older
Speaker 1: than Sam Bankman Freed. He's he's thirty four, and I
Speaker 1: was like, oh, you know, what was it like coming
Speaker 1: to this company with young people? And he did feel
Speaker 1: like kind of like the older experienced hand, you know,
Speaker 1: even though I would consider him, you know, still early
Speaker 1: in his career. But yeah, I mean he he did
Speaker 1: have a really impressive resume. Prior to joining f t
Speaker 1: X US, he had worked at James Street. You know
Speaker 1: we've talked about is this very elite quantitative trading firm,
Speaker 1: and that's where he met Sam Bankman Freed. He had
Speaker 1: actually trained Sam Bankman Freed in a programming course for traders.
Speaker 1: You know, he was above him when they were at
Speaker 1: Chains Street, and he also was at Citadel. You know,
Speaker 1: this is a guy who had an incredible pedigree. I
Speaker 1: mean he has two degrees from Harvard. In talking to
Speaker 1: him about this, he was like, Yeah, it's the weight
Speaker 1: of my past accomplishments, the you know success I've had
Speaker 1: at other places that has helped me get to where
Speaker 1: I am today. So he he really wants people to
Speaker 1: look at the whole picture and not just focus on
Speaker 1: his time at f t X US. You know, among
Speaker 1: the inner circle as it were at ft accident, you know,
Speaker 1: the people who really lived in the Bahamas, you had
Speaker 1: someone named Gary Wang who has kind of come up
Speaker 1: a lot, especially recently. What do folks need to understand
Speaker 1: about Wang? What was his rule and how did he
Speaker 1: come to know Bankman Freed in the first place. Gary
Speaker 1: Wang is this powerful but very elusive figure within the
Speaker 1: ft X empire. He and Sam Bankman Freed met at
Speaker 1: math camp and then later attended m I T together,
Speaker 1: so just you know, in general, doing smart person stuff together.
Speaker 1: And Wang, yes, had an extremely powerful position within f
Speaker 1: t X. He was not only a co founder, but
Speaker 1: he was also the chief technology officer, and yeah, very
Speaker 1: quiet dude from what we know. You know, he he
Speaker 1: really I don't think he ever gave any sort of
Speaker 1: media interview and he wasn't like the most involved manager
Speaker 1: from what we know, and that kind of left space
Speaker 1: for other executives to step in and one of those
Speaker 1: was Nishad Singh. And Nashad Singh was also on the
Speaker 1: engineering team. Yeah, so he was head of engineering for
Speaker 1: fts and he had gone to high school with Sam
Speaker 1: BigMan Free's little brother, Cabe. You know, that's how Sam
Speaker 1: knew him. He had gone on to Berkeley. Both he
Speaker 1: and Gary considered to be very gifted coders. And Nashad
Speaker 1: has been credited with, you know, allowing Alameda to essentially
Speaker 1: have an advantage on FTX of trading advantage using code
Speaker 1: in the sense that he was the person who allegedly
Speaker 1: enabled Alameda to be exempt from the risk position controls
Speaker 1: that everyone else trading on FTX was subject to. Yeah,
Speaker 1: that's right. It was a get hub account. You know
Speaker 1: that you could trace the code to get hub account
Speaker 1: under his name, and get Hub is where folks, especially
Speaker 1: you know, engineering teams, they use it to like collaborates
Speaker 1: on code it's almost like Google Docs butt for software. Yeah. Now,
Speaker 1: so that's that was the engineering team. There are a
Speaker 1: couple of other important execs, and you know, I and
Speaker 1: particularly fascinated with Sam Tribuco. Now, the reason that I'm
Speaker 1: fascinated with Sam Trabuco is because he, like Bret Harrison,
Speaker 1: seemed to have extricated himself from you know, the FTX
Speaker 1: Alameda orbit before there were any real signs of trouble.
Speaker 1: He was the co CEO of Alameda Research. Is that correct? Yeah,
Speaker 1: that's correct. Both he and Harrison were part of this
Speaker 1: mass exodus of CEOs that happened in early fall two,
Speaker 1: you know where really the market downturn in crypto was
Speaker 1: helping to clean out c suites at various various crypto companies.
Speaker 1: So yeah, I mean there is this question about Tribuco.
Speaker 1: You know, he seems to be keeping a low profile.
Speaker 1: There is a big question of whether he is collaborating
Speaker 1: with authorities, you know, the way uh Gary Wang and
Speaker 1: you know his former co CEO, Caroline Ellison, the way
Speaker 1: they have and they've both taken guilty please is at
Speaker 1: this point? So yeah, I mean Tribuco in theory would
Speaker 1: seem to know a lot. But yeah, there is this question.
Speaker 1: I think a lot of the people who are you know,
Speaker 1: still out there who haven't publicly struck deals yet. Their argument,
Speaker 1: at least this is the case with Brett Harrison, is
Speaker 1: that there was this wall up around the inner circle.
Speaker 1: I Mean, one of the most shocking things to me
Speaker 1: that came out of my interview with Harrison was that
Speaker 1: he didn't know about major deals involving his own company.
Speaker 1: That he found out about f t x US is
Speaker 1: failout agreement with block By from the news. So to
Speaker 1: me that was shockgaming. You're you're the president of the
Speaker 1: exact company. Yeah, they're ostensibly in charge. Yeah. And he
Speaker 1: said he hadn't talked to Sam in months before he
Speaker 1: stepped down, you know that there was just this communication breakdown.
Speaker 1: So yeah, I mean the argument here is like, all right, well,
Speaker 1: you know, I was not part of the inner circle.
Speaker 1: Therefore I did not know about any sort of alleged
Speaker 1: wrongdoing happening here. Up next, more from Bloomberg Report to
Speaker 1: Hanna Milla on the very many FTX power players and
Speaker 1: what they're up to now. How did Caroline Ellison, who
Speaker 1: became the co CEO of Alameda Research fit into all
Speaker 1: of this, where what was the nexus with her and
Speaker 1: the rest of the folks you've just described. So Caroline
Speaker 1: met Sam at Jane Street. You know, she's a few
Speaker 1: years younger than him. They connected there and they ended
Speaker 1: up meeting up in Berkeley around the time, you know,
Speaker 1: Sam had had started building Alameda. Alameda was in its
Speaker 1: very early stages and you know, basically, and he invited
Speaker 1: her to join, and she took him up on it,
Speaker 1: and you know, she rose the ranks to become co
Speaker 1: CEO alongside Trabuco, and then when Trabuco stepped down, she
Speaker 1: became the soul CEO. And you know, that's obviously put
Speaker 1: her in a very bad position right now, and she's
Speaker 1: admitted to committing fraud. She's taken that guilty plea. But
Speaker 1: it's really important to remember that not only did she
Speaker 1: have this professional connection and with Sam Pigman Freed, but
Speaker 1: they did date. They were in a romantic relationship. That's
Speaker 1: just an illustration here of how this was a very
Speaker 1: young culture of freewheeling culture. I've heard other people say
Speaker 1: that the FTX culture was not as crazy as it's
Speaker 1: been depicted. You know that people were working too hard
Speaker 1: to really engage in all this you know, polyamory and
Speaker 1: drug usage. But I do think it was undoubtedly complicated that,
Speaker 1: you know, and you had all these people living together too,
Speaker 1: so you know, everyone was in this like luxury apartment together.
Speaker 1: So again there there was just these these many layered
Speaker 1: relationships that has really set up a lot of drama
Speaker 1: in the townfall of f t X. Now, just as
Speaker 1: a kind of a closing thought, there were two people
Speaker 1: who were very close to all of these folks, and
Speaker 1: they were black Man Freed's parents. Yeah, so anything I've
Speaker 1: heard about Joe Bankman and Barbara Freed has been positive
Speaker 1: at least among their their colleagues, people who knew them.
Speaker 1: But their connections to f t X and whether they
Speaker 1: helped in any way with concealing the fraud or promoting
Speaker 1: the fraud, you know, that idea is still very much
Speaker 1: up for debate. So it's it's interesting and it also
Speaker 1: comes down to I think a very primal question is
Speaker 1: you know, what are you willing to do for your child?
Speaker 1: And I don't know, I mean, it's it's hard to
Speaker 1: say what the connection is here. I mean, we know
Speaker 1: that they were you know, living or you know, spending
Speaker 1: time in properties that were owned by f t X
Speaker 1: that they you know, would go down to the Bahamas.
Speaker 1: That Joe Bankman was extremely involved, um in ft X
Speaker 1: charity efforts, and you know, there's also this idea that
Speaker 1: Barber's nonprofit received money from ft X and ft X employees.
Speaker 1: So it's unclear right now. I mean, we're still learning more. UM.
Speaker 1: What I know at this point is that they were
Speaker 1: very respected within the Stanford law community and that you know,
Speaker 1: Sam Bankman Freed grew up with these incredible parents who
Speaker 1: were very focused on law and ethics and you know,
Speaker 1: would debate these things at the dinner table. And it's
Speaker 1: it's a very interesting contrast with what Sam Bankman Freed
Speaker 1: has allegedly done during his time at f t X.
Speaker 1: We're still learning more things every day. This is a
Speaker 1: really complex situation that isn't going to be resolved anytime soon.
Speaker 1: You know, there's still a lot we don't know about
Speaker 1: who was involved and who wasn't um. So you know,
Speaker 1: we're just trying to do the best we can to
Speaker 1: to talk to people about this and figure out what
Speaker 1: exactly happened here, what led up to this this massive
Speaker 1: financial mishaf That is something that is clearly going to
Speaker 1: go down in history as a major major scandal, not
Speaker 1: only within the world of crypto, but within finance more broadly.
Speaker 1: Absolutely well, how to thank you as always for being
Speaker 1: on the show. Thanks that was Bloomberg Report to Hannah Miller.
Speaker 1: You can find more of her reporting on the Bloomberg
Speaker 1: Terminal and on Bloomberg dot com, and she also contributes
Speaker 1: to our twice weekly crypto newsletter, which is also called
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