1 00:00:01,600 --> 00:00:05,240 Speaker 1: Welcome to Crash Course, a podcast about business, political, and 2 00:00:05,320 --> 00:00:08,760 Speaker 1: social disruption and what we can learn from it. I'm 3 00:00:08,800 --> 00:00:14,560 Speaker 1: Tim O'Brien. Today's Crash Course, Sam Bankman Freed versus the 4 00:00:14,600 --> 00:00:20,400 Speaker 1: Crypto Grift. Every generation produces a financier or business person 5 00:00:20,760 --> 00:00:24,479 Speaker 1: who personifies how easy it can be to part fools 6 00:00:24,480 --> 00:00:28,000 Speaker 1: from their money, part smart people from their senses, and 7 00:00:28,080 --> 00:00:31,800 Speaker 1: part the media from skepticism. There's a long list of 8 00:00:31,840 --> 00:00:35,920 Speaker 1: exhibits in that genre, from Charles Ponzi to Bernie Madoff. 9 00:00:37,040 --> 00:00:40,440 Speaker 1: Does Sam Bankment Freed belong in that pantheon. Well, there's 10 00:00:40,479 --> 00:00:44,600 Speaker 1: lots of evidence suggesting he does. He and the cryptocurrency 11 00:00:44,640 --> 00:00:47,960 Speaker 1: empire he built are the subjects of sprawling fraud and 12 00:00:48,040 --> 00:00:53,240 Speaker 1: money laundering probes. His company FTX is bankrupt, and federal 13 00:00:53,280 --> 00:00:56,319 Speaker 1: prosecutors in New York have indicted the thirty one year 14 00:00:56,320 --> 00:01:00,080 Speaker 1: old former multi billionaire for a range of financial crime. 15 00:01:01,080 --> 00:01:04,520 Speaker 1: SBF as he's known, maintains that he is innocent of 16 00:01:04,600 --> 00:01:07,600 Speaker 1: any wrongdoing, and of course he still gets to have 17 00:01:07,680 --> 00:01:10,360 Speaker 1: his day in court. But today we get to have 18 00:01:10,400 --> 00:01:13,880 Speaker 1: my Bloomberg News colleague, Hannah Miller join us to discuss 19 00:01:13,920 --> 00:01:17,679 Speaker 1: this epic mess. Hannah covers crypto and as the host 20 00:01:17,760 --> 00:01:21,720 Speaker 1: of a new podcast, Spellcaster, about the life and times 21 00:01:22,160 --> 00:01:26,800 Speaker 1: of Sam Bankman Freed. Hey, Hannah, thank you for having me. 22 00:01:27,240 --> 00:01:29,880 Speaker 1: Great to have you on. Why don't we just start 23 00:01:30,400 --> 00:01:32,800 Speaker 1: a little bit with your own journey. Since we're talking 24 00:01:32,880 --> 00:01:37,479 Speaker 1: about SBF's journey, When did he first appear on your 25 00:01:37,600 --> 00:01:40,959 Speaker 1: radar as a crypto reporter? I'm assuming very early on, 26 00:01:41,160 --> 00:01:43,520 Speaker 1: but tell me when he first sort of flashed into 27 00:01:43,600 --> 00:01:44,479 Speaker 1: your awareness. 28 00:01:44,840 --> 00:01:47,480 Speaker 2: Yeah, So I started covering crypto in twenty twenty one, 29 00:01:47,680 --> 00:01:49,760 Speaker 2: and I remember one of the first things I did 30 00:01:50,480 --> 00:01:53,080 Speaker 2: was really start researching the industry and making a list 31 00:01:53,120 --> 00:01:56,160 Speaker 2: of dream interviews. So I had all these names on it, 32 00:01:56,480 --> 00:01:58,440 Speaker 2: and he was at the top of the list. You know. 33 00:01:58,640 --> 00:02:03,680 Speaker 2: I really quickly learned about FTX. I was very nervous 34 00:02:03,720 --> 00:02:06,200 Speaker 2: when I sent in my interview request to his PR team. 35 00:02:06,720 --> 00:02:08,760 Speaker 2: They said I could actually speak with him, and I 36 00:02:08,800 --> 00:02:13,079 Speaker 2: remember I was so nervous during the interview and was 37 00:02:13,120 --> 00:02:15,880 Speaker 2: definitely still finding my way as a reporter, and he 38 00:02:16,000 --> 00:02:19,400 Speaker 2: was actually very patient during the conversation. So that was 39 00:02:19,440 --> 00:02:21,480 Speaker 2: sort of the first time I was really interacting with him. 40 00:02:22,120 --> 00:02:25,920 Speaker 1: And you were nervous because you felt starstruck. You were 41 00:02:25,919 --> 00:02:29,760 Speaker 1: nervous because he was of heavyweight in the industry, you 42 00:02:29,800 --> 00:02:31,799 Speaker 1: were nervous because it was a new beat for you, 43 00:02:31,919 --> 00:02:33,080 Speaker 1: All of the above. 44 00:02:32,960 --> 00:02:36,080 Speaker 2: All of the above, and you know, I remember this 45 00:02:36,200 --> 00:02:37,880 Speaker 2: was during the pandemic, so I was just in my 46 00:02:38,360 --> 00:02:42,000 Speaker 2: little studio apartment with no air conditioning, just sweating and 47 00:02:43,480 --> 00:02:46,840 Speaker 2: talking with him. You know. He did walk me through 48 00:02:46,919 --> 00:02:49,239 Speaker 2: everything like pretty carefully, like it was, like I said, 49 00:02:49,320 --> 00:02:52,440 Speaker 2: very patient, calm. I didn't always have that experience with 50 00:02:52,760 --> 00:02:55,960 Speaker 2: talking to founders. You know, sometimes people make you feel stupid, 51 00:02:56,440 --> 00:03:01,359 Speaker 2: but he wasn't like that. And I remember walking away 52 00:03:01,360 --> 00:03:03,640 Speaker 2: from the interview just like so relieved. I was like, 53 00:03:03,639 --> 00:03:05,440 Speaker 2: oh my gosh, Okay, I didn't screw up. 54 00:03:05,560 --> 00:03:07,440 Speaker 1: What did you want out of the interview when you 55 00:03:07,480 --> 00:03:09,920 Speaker 1: approached him? Was it on the record or were you 56 00:03:10,000 --> 00:03:12,120 Speaker 1: looking for just sort of a like a background or 57 00:03:12,120 --> 00:03:13,880 Speaker 1: and a primer on how the industry works. 58 00:03:14,160 --> 00:03:16,880 Speaker 2: It was totally on the record. And this was around 59 00:03:16,919 --> 00:03:19,560 Speaker 2: the time that he had talked about wanting to buy 60 00:03:19,560 --> 00:03:23,000 Speaker 2: Goldman Sacks, which I was like. 61 00:03:23,639 --> 00:03:26,640 Speaker 1: What, you know, I want to buy Goldman Sacks. 62 00:03:26,919 --> 00:03:30,000 Speaker 2: Yeah, so you know, I remember I brought that up. 63 00:03:30,040 --> 00:03:31,799 Speaker 2: And the other thing too, was. 64 00:03:31,880 --> 00:03:34,519 Speaker 1: Wait, wait, give us, give us a year on this. 65 00:03:34,520 --> 00:03:35,920 Speaker 2: This was twenty twenty one. 66 00:03:36,120 --> 00:03:39,720 Speaker 1: So it's a year before the stuff starts hitting the fans. 67 00:03:39,800 --> 00:03:42,560 Speaker 2: Yeah. And then the other thing too, was he talked 68 00:03:42,560 --> 00:03:46,400 Speaker 2: about wanting to take you know, ftx US public eventually, 69 00:03:46,680 --> 00:03:49,840 Speaker 2: you know, and Coinbase had just gone through its direct listing. 70 00:03:50,320 --> 00:03:52,560 Speaker 2: I'd brought that up, you know, and he was like, 71 00:03:52,680 --> 00:03:54,600 Speaker 2: I think we'd do it a little differently than Coinbase. 72 00:03:54,720 --> 00:03:58,120 Speaker 2: And you know, now look where we're at very differently. 73 00:03:58,600 --> 00:04:02,760 Speaker 1: What was your mind for coming into it just pure curiosity? 74 00:04:03,160 --> 00:04:06,920 Speaker 1: Did you have a perspective on where you thought it 75 00:04:07,000 --> 00:04:09,320 Speaker 1: might be going and how you wanted your reporting to 76 00:04:09,400 --> 00:04:10,480 Speaker 1: shape that narrative? 77 00:04:11,320 --> 00:04:14,080 Speaker 2: Yeah. No, I had known about blockchain since college, you know, 78 00:04:14,160 --> 00:04:16,440 Speaker 2: I would have friends send me white papers. I wasn't 79 00:04:16,480 --> 00:04:21,520 Speaker 2: personally invested. My aunt also lost a ton of bitcoin 80 00:04:21,640 --> 00:04:25,000 Speaker 2: in a scam, like it was a ransomware scam and 81 00:04:25,080 --> 00:04:27,240 Speaker 2: she had to pay in bitcoin and use a bitcoin 82 00:04:27,320 --> 00:04:30,159 Speaker 2: atm in the West Village in New York City. So 83 00:04:30,800 --> 00:04:32,480 Speaker 2: going to reporting, I knew I had to go in, 84 00:04:32,600 --> 00:04:36,360 Speaker 2: you know, with healthy skepticism, as any reporter should, and 85 00:04:36,960 --> 00:04:39,560 Speaker 2: you know, I really doubled down on learning about the 86 00:04:39,600 --> 00:04:42,760 Speaker 2: technology behind Bitcoin behind other cryptocurrencies. And I remember I 87 00:04:42,760 --> 00:04:48,480 Speaker 2: actually read like a whole college course textbook on crypto 88 00:04:48,520 --> 00:04:51,920 Speaker 2: and blockchain and was like highlighting, taking notes. I read 89 00:04:52,000 --> 00:04:54,120 Speaker 2: all these books, all these stories, you know, trying to 90 00:04:54,160 --> 00:04:55,560 Speaker 2: just beef up before I went in. 91 00:04:56,160 --> 00:04:59,320 Speaker 1: Well, and just for our listener's sake, the blockchain is 92 00:04:59,440 --> 00:05:04,919 Speaker 1: essentially the architecture upon which these transactions reside. It exists 93 00:05:04,920 --> 00:05:07,480 Speaker 1: in the cloud, for lack of a better description, and 94 00:05:07,520 --> 00:05:11,880 Speaker 1: it's a community organized transaction universe, and it can be 95 00:05:11,960 --> 00:05:15,120 Speaker 1: used for accounting, it can be used for ledgers for 96 00:05:15,160 --> 00:05:18,599 Speaker 1: different kinds of transactions. And then along the road, people said, 97 00:05:18,640 --> 00:05:22,000 Speaker 1: you know, we could also create a currency that can 98 00:05:22,040 --> 00:05:25,040 Speaker 1: be used in this universe to help move transactions along, 99 00:05:25,080 --> 00:05:26,919 Speaker 1: and it will be a digital currency that exists in 100 00:05:26,920 --> 00:05:29,840 Speaker 1: the cloud, and that's called crypto. Is that a good 101 00:05:29,880 --> 00:05:32,520 Speaker 1: working kind of description of that world. 102 00:05:32,839 --> 00:05:34,799 Speaker 2: Yeah, I think that's a good breakdown. It's always helpful 103 00:05:34,800 --> 00:05:35,680 Speaker 2: to translate. 104 00:05:35,839 --> 00:05:39,159 Speaker 1: Yeah, I think so. And so Sam and his cohorts 105 00:05:39,200 --> 00:05:44,440 Speaker 1: come in with evangelical zeal and real innovative ideas about 106 00:05:44,520 --> 00:05:48,160 Speaker 1: how crypto could change how we buy and spend and 107 00:05:48,160 --> 00:05:52,080 Speaker 1: how we transact. And he's an eccentric dude to say 108 00:05:52,080 --> 00:05:53,960 Speaker 1: the least, right he is. 109 00:05:54,240 --> 00:05:56,440 Speaker 2: Yeah, I feel like the same descriptions of him come 110 00:05:56,520 --> 00:05:58,560 Speaker 2: up all the time. You know, this cloud of black 111 00:05:58,640 --> 00:06:01,680 Speaker 2: curly hair, you know, the shorts and the T shirt. 112 00:06:02,160 --> 00:06:04,400 Speaker 2: And really with this podcast, we wanted to get behind 113 00:06:04,440 --> 00:06:06,800 Speaker 2: that image, like what made this guy tick? And it 114 00:06:06,839 --> 00:06:09,200 Speaker 2: was really helpful to talk to people who knew him 115 00:06:09,200 --> 00:06:11,120 Speaker 2: early on in life, Like, there's a lot of stuff 116 00:06:11,160 --> 00:06:12,680 Speaker 2: that didn't make it in there. I was researching his 117 00:06:12,800 --> 00:06:15,760 Speaker 2: high school, you know, talking to people who attended his school. 118 00:06:16,080 --> 00:06:18,279 Speaker 2: We had an amazing interview with one of his college 119 00:06:18,279 --> 00:06:20,560 Speaker 2: friends that did make it into the podcast. So that 120 00:06:20,680 --> 00:06:23,400 Speaker 2: was like really fascinating to sort of uncover the myth 121 00:06:23,680 --> 00:06:24,720 Speaker 2: of Sam Bankman Freed. 122 00:06:25,440 --> 00:06:28,240 Speaker 1: You know, the very first episode of Spellcaster opens at 123 00:06:28,240 --> 00:06:32,280 Speaker 1: a cryptoconference in the Bahamas that has a Vegas Disney 124 00:06:32,400 --> 00:06:36,040 Speaker 1: vibe according to the descriptions of it in the show itself. 125 00:06:36,880 --> 00:06:40,640 Speaker 1: And during that episode you offer up the great Michael Lewis, 126 00:06:40,720 --> 00:06:43,000 Speaker 1: who is a casual acquaintance of mine, in a Bloomberg 127 00:06:43,000 --> 00:06:49,000 Speaker 1: Opinion contributor Waxy evangelical about a youngster he's interviewing on 128 00:06:49,040 --> 00:06:53,360 Speaker 1: the stage, Sam Bankman Free, and he says this to SBF. 129 00:06:53,640 --> 00:06:57,040 Speaker 3: You're breaking land speed records, and I don't think people 130 00:06:57,040 --> 00:07:01,359 Speaker 3: are really noticing what's happened, just how from the revolution 131 00:07:01,440 --> 00:07:04,000 Speaker 3: has become there's a status of people that's going on 132 00:07:04,040 --> 00:07:06,400 Speaker 3: in the financial world, and you're sitting right in the 133 00:07:06,440 --> 00:07:06,960 Speaker 3: middle of it. 134 00:07:07,600 --> 00:07:10,040 Speaker 1: So you have even Michael Lewis, you know, a veteran 135 00:07:10,240 --> 00:07:15,920 Speaker 1: savvy financial writer, who is both enamored of this spell 136 00:07:16,040 --> 00:07:19,400 Speaker 1: that SBF is weaving and to a certain extent, very 137 00:07:19,400 --> 00:07:22,920 Speaker 1: credulous about what it all amounts to. Do you think 138 00:07:22,960 --> 00:07:26,320 Speaker 1: that was just common across the board. Was that sort 139 00:07:26,360 --> 00:07:30,960 Speaker 1: of emblematic of the media rah rah that surrounded Sam Bankminfree? 140 00:07:31,240 --> 00:07:35,160 Speaker 2: Yeah, I mean I think part of what the media 141 00:07:35,280 --> 00:07:39,400 Speaker 2: loved about SBF was that he was available, you know 142 00:07:39,440 --> 00:07:41,160 Speaker 2: when I like, for example, when I first spoke to him, 143 00:07:41,160 --> 00:07:43,840 Speaker 2: I was really new to covering the crypto industry. I 144 00:07:43,880 --> 00:07:46,080 Speaker 2: was shocked he even wanted to speak with me. But 145 00:07:46,160 --> 00:07:48,240 Speaker 2: he would do that across the board, and you know 146 00:07:48,320 --> 00:07:51,160 Speaker 2: that's as a journalist, you know, if someone's willing to 147 00:07:51,160 --> 00:07:53,000 Speaker 2: get on the phone with you, do it quickly like 148 00:07:53,440 --> 00:07:56,360 Speaker 2: that's super helpful. But you know, I think there were 149 00:07:56,400 --> 00:07:59,080 Speaker 2: people who tried to question his Aura. I mean, yeah, 150 00:07:59,080 --> 00:08:01,840 Speaker 2: I did that first story with him, But last summer 151 00:08:01,960 --> 00:08:05,240 Speaker 2: I did a story that really questioned whether he was 152 00:08:05,400 --> 00:08:07,440 Speaker 2: you know, the JP Morgan of crypto, that was the 153 00:08:07,560 --> 00:08:10,800 Speaker 2: nickname that everyone was calling him. And I wrote this 154 00:08:10,840 --> 00:08:13,240 Speaker 2: whole story, you know, saying like, he's not doing all 155 00:08:13,240 --> 00:08:15,920 Speaker 2: these bailouts out of the goodness of his own heart. 156 00:08:16,360 --> 00:08:18,480 Speaker 2: You know, he's doing this to advance his own power, 157 00:08:18,600 --> 00:08:21,800 Speaker 2: his own clout, his own control over the crypto industry. 158 00:08:21,880 --> 00:08:24,200 Speaker 2: So I think there should have been more people questioning. 159 00:08:24,840 --> 00:08:27,080 Speaker 1: Why do you think there wasn't. Why do you think 160 00:08:27,080 --> 00:08:30,960 Speaker 1: he had this sort of halo of boy wonder and 161 00:08:31,520 --> 00:08:36,559 Speaker 1: indefatigable innovator around him that kept the narrative going. 162 00:08:37,400 --> 00:08:41,640 Speaker 2: Yeah, well, crypto is no stranger to scams and scandals 163 00:08:41,679 --> 00:08:43,600 Speaker 2: and things like that. There are a lot of big 164 00:08:43,640 --> 00:08:49,360 Speaker 2: personalities who are bad actors within the space, and I 165 00:08:49,400 --> 00:08:52,000 Speaker 2: think Sam really tried to set himself up as an 166 00:08:52,000 --> 00:08:56,800 Speaker 2: alternative to those people. He was talking with lawmakers, he 167 00:08:56,920 --> 00:08:58,920 Speaker 2: was going to DC all the time, he was making 168 00:08:58,920 --> 00:09:02,679 Speaker 2: big political donateations. You know, he helped set himself up 169 00:09:02,720 --> 00:09:06,440 Speaker 2: as the good guy of crypto, And you know, I 170 00:09:06,480 --> 00:09:09,240 Speaker 2: think people in the industry a lot of them wanted 171 00:09:09,400 --> 00:09:12,559 Speaker 2: someone who could give, like a I guess, a clean 172 00:09:12,640 --> 00:09:15,920 Speaker 2: face to the industry and were willing to support him. 173 00:09:16,720 --> 00:09:19,800 Speaker 1: You know, his openness and his willingness to court people 174 00:09:20,040 --> 00:09:24,680 Speaker 1: and to present himself as the ambassador for the whole 175 00:09:24,720 --> 00:09:28,440 Speaker 1: industry and the one who was transparent and trustworthy in 176 00:09:28,480 --> 00:09:31,240 Speaker 1: and of itself could be a kind of grift, right. 177 00:09:31,400 --> 00:09:33,679 Speaker 1: It preys upon a certain kind of trust, doesn't it. 178 00:09:34,160 --> 00:09:36,880 Speaker 2: Yeah, it does. And you know, I think it was 179 00:09:36,880 --> 00:09:39,000 Speaker 2: really a perfect storm. I mean, there was so much 180 00:09:39,440 --> 00:09:43,280 Speaker 2: happening within the space. The pandemic obviously had created a 181 00:09:43,320 --> 00:09:46,840 Speaker 2: lot of interest in crypto as people looked for safe 182 00:09:46,880 --> 00:09:49,920 Speaker 2: harbor assets like bitcoin or you know, supposedly safe harbor 183 00:09:50,000 --> 00:09:54,400 Speaker 2: assets to put their money. And you know, he really 184 00:09:54,800 --> 00:09:57,600 Speaker 2: like it was a lot of different factors that help 185 00:09:57,640 --> 00:09:59,480 Speaker 2: propel him. But you can't deny at the end of 186 00:09:59,480 --> 00:10:02,880 Speaker 2: the day that they were major venture investors who put 187 00:10:02,920 --> 00:10:07,120 Speaker 2: money into Sam who you know, maybe didn't push further 188 00:10:07,160 --> 00:10:11,120 Speaker 2: in their due diligence. That there were celebrities willing to 189 00:10:11,160 --> 00:10:14,319 Speaker 2: take his money and help promote his company and his products. 190 00:10:14,800 --> 00:10:17,960 Speaker 2: I think the Super Bowl commercial happened last year that 191 00:10:18,080 --> 00:10:21,640 Speaker 2: was like the pinnacle where you have Larry David doing 192 00:10:21,640 --> 00:10:24,320 Speaker 2: a commercial for you during the Super Bowl. 193 00:10:24,600 --> 00:10:26,920 Speaker 1: Like I was saying, it's FTX, it's a safe and 194 00:10:26,920 --> 00:10:30,280 Speaker 1: easy way to get into crypto. I don't think so. 195 00:10:31,080 --> 00:10:35,360 Speaker 1: And I'm never wrong about this stuff. Never it's crazy. 196 00:10:35,760 --> 00:10:37,600 Speaker 1: And Tom Brady did some too, right. 197 00:10:37,679 --> 00:10:42,000 Speaker 2: Yes, yeah, yeah, so Tom Brady and Gazelle were also, 198 00:10:42,240 --> 00:10:44,520 Speaker 2: you know, teaming up with Sam. What's up, I'm getting 199 00:10:44,520 --> 00:10:45,800 Speaker 2: into crypto with FTX. 200 00:10:46,120 --> 00:10:48,880 Speaker 1: I believe I'm in but still hate you understood? Is 201 00:10:48,920 --> 00:10:49,400 Speaker 1: he in? Y? 202 00:10:49,679 --> 00:10:50,480 Speaker 2: Did he say he hates? 203 00:10:51,080 --> 00:10:55,560 Speaker 1: He noted financial experts Tom Brady and Gazelle. Yeah, so 204 00:10:55,640 --> 00:10:58,719 Speaker 1: let's cut to the chase. One of my favorite parts 205 00:10:59,520 --> 00:11:02,040 Speaker 1: in spell Caster is the first episode when you go 206 00:11:02,080 --> 00:11:05,400 Speaker 1: to a bachelorette party and then a wedding ceremony. You're 207 00:11:05,440 --> 00:11:08,000 Speaker 1: in the midst of getting you know, crypto, getting to 208 00:11:08,040 --> 00:11:10,560 Speaker 1: know Sam Bank and Freed, learning more about the industry, 209 00:11:11,040 --> 00:11:13,720 Speaker 1: and you wind up at both a bachelorette party and 210 00:11:13,720 --> 00:11:17,800 Speaker 1: then a wedding ceremony with a woman named Caroline Ellison 211 00:11:18,000 --> 00:11:19,960 Speaker 1: and tell us a little bit about her and why 212 00:11:20,040 --> 00:11:22,880 Speaker 1: it's so wild that you ended up in such close 213 00:11:22,920 --> 00:11:23,880 Speaker 1: proximity to her. 214 00:11:24,480 --> 00:11:28,120 Speaker 2: Yeah, so, I had known about Caroline Ellison for a 215 00:11:28,120 --> 00:11:32,720 Speaker 2: few years. She is a childhood friend of one of 216 00:11:32,760 --> 00:11:36,320 Speaker 2: my best friends from college. So it's a small world, 217 00:11:36,520 --> 00:11:39,280 Speaker 2: and I'd heard about her for a while, like my 218 00:11:39,320 --> 00:11:41,600 Speaker 2: friend would talk about, you know, her friends from growing up, 219 00:11:41,600 --> 00:11:44,160 Speaker 2: and she would always describe Caroline as the smartest person 220 00:11:44,240 --> 00:11:47,120 Speaker 2: she knew. So I was very intrigued by who Caroline was. 221 00:11:47,720 --> 00:11:49,800 Speaker 2: And then you know, I started covering crypto and then 222 00:11:49,800 --> 00:11:54,240 Speaker 2: I realize, oh my god, this girl's a huge, huge 223 00:11:54,280 --> 00:11:58,400 Speaker 2: deal in this space. This is crazy and she's a 224 00:11:58,480 --> 00:12:02,280 Speaker 2: huge deal in this space. Why So, she was at 225 00:12:02,320 --> 00:12:06,720 Speaker 2: Alameter Research, which is the trading firm that Sam Bankman 226 00:12:06,760 --> 00:12:11,280 Speaker 2: Freed founded prior to starting FTX, and she eventually rose 227 00:12:11,320 --> 00:12:14,000 Speaker 2: the ranks there. She went from co CEO to just 228 00:12:14,080 --> 00:12:17,920 Speaker 2: soul CEO. And you know, this is a trading firm 229 00:12:18,040 --> 00:12:21,360 Speaker 2: handling billions of dollars through major market maker within the 230 00:12:21,360 --> 00:12:26,080 Speaker 2: crypto space. So when I realized her importance and the 231 00:12:26,120 --> 00:12:27,839 Speaker 2: fact that I was going to be going on a 232 00:12:27,880 --> 00:12:32,680 Speaker 2: bachelorette weekend trip with her in Memorial to weekend twenty 233 00:12:32,720 --> 00:12:37,280 Speaker 2: twenty two, I was like nervous, excited. I also wanted 234 00:12:37,320 --> 00:12:40,440 Speaker 2: to keep things very professional this was about my friend 235 00:12:40,440 --> 00:12:42,840 Speaker 2: the bride. This wasn't about me trying to get a scoop, 236 00:12:43,320 --> 00:12:45,560 Speaker 2: and I go into this in the podcast, but like, 237 00:12:45,720 --> 00:12:49,480 Speaker 2: you know, we did some pretty funny, maybe a little 238 00:12:49,480 --> 00:12:52,760 Speaker 2: bit embarrassing bachelorette stuff like learning a dance routine to 239 00:12:52,800 --> 00:12:57,120 Speaker 2: a Britney Spears song, or you know, just drinking cocktails 240 00:12:57,200 --> 00:12:59,000 Speaker 2: and having fun, so. 241 00:12:59,320 --> 00:13:01,400 Speaker 1: Standard pre wedding partying things. 242 00:13:01,640 --> 00:13:04,439 Speaker 2: Yeah, and then you know, we did attend the wedding together, 243 00:13:05,480 --> 00:13:08,960 Speaker 2: and about a month after the wedding, I ended up 244 00:13:09,000 --> 00:13:13,040 Speaker 2: reaching out through her PR team wanting to see actually 245 00:13:13,080 --> 00:13:15,280 Speaker 2: if I could go down to the Bahamas to do 246 00:13:15,320 --> 00:13:17,240 Speaker 2: a story on Alameda, because there was all this stuff 247 00:13:17,240 --> 00:13:19,760 Speaker 2: about FTX, but Alameda was way more under the radar, 248 00:13:20,320 --> 00:13:22,800 Speaker 2: and that request got denied, but they said I could 249 00:13:22,840 --> 00:13:25,480 Speaker 2: do an interview with Caroline, so I ended up interviewing 250 00:13:25,520 --> 00:13:28,839 Speaker 2: both Caroline and Sam. Looking back on it, there was 251 00:13:28,880 --> 00:13:31,079 Speaker 2: probably a lot of turmoil in the company at that time. 252 00:13:31,240 --> 00:13:35,360 Speaker 2: Caroline's co CEO stepped down like a few weeks after 253 00:13:35,400 --> 00:13:38,440 Speaker 2: I'd made that request and had it denied, so I 254 00:13:38,440 --> 00:13:40,840 Speaker 2: think probably the cracks were already starting to show for 255 00:13:40,880 --> 00:13:42,080 Speaker 2: sure during that time. 256 00:13:42,280 --> 00:13:44,080 Speaker 1: Let's pause for a minute and talk about what you 257 00:13:44,120 --> 00:13:46,760 Speaker 1: were sort of on the precipice of learning yes, and 258 00:13:46,800 --> 00:13:49,640 Speaker 1: what you were seeing, which was, you know, in most 259 00:13:49,720 --> 00:13:54,480 Speaker 1: companies that involved both brokerage operations and market making, you 260 00:13:54,559 --> 00:13:59,480 Speaker 1: separate the exchange in this case FTX from the market 261 00:13:59,480 --> 00:14:02,640 Speaker 1: maker in this case Alameda, which has been described in 262 00:14:02,679 --> 00:14:04,480 Speaker 1: lots of different ways. People have called it a crypto 263 00:14:04,480 --> 00:14:07,600 Speaker 1: hedge fund, they've called it a research firm. Essentially, it 264 00:14:07,640 --> 00:14:10,640 Speaker 1: was pulling in lots of money that was meant to 265 00:14:10,840 --> 00:14:16,080 Speaker 1: make trades in bitcoin and other cryptocurrencies more liquid, and 266 00:14:16,120 --> 00:14:19,480 Speaker 1: those trades would take place on a platform like FTX. 267 00:14:20,040 --> 00:14:22,920 Speaker 1: But you want a separation of church and state so 268 00:14:22,960 --> 00:14:27,000 Speaker 1: that the exchange is pricing things fairly and the market 269 00:14:27,040 --> 00:14:31,120 Speaker 1: maker isn't taking advantage of insider knowledge. That can be 270 00:14:31,160 --> 00:14:35,840 Speaker 1: a fraud relationship across the financial world, even when people 271 00:14:35,880 --> 00:14:39,360 Speaker 1: observe these Chinese walls, there's always problems around it. Sometimes 272 00:14:39,360 --> 00:14:44,360 Speaker 1: there's fraud. In the Sam Bankman Freed Carolyn Ellison world, 273 00:14:45,040 --> 00:14:49,360 Speaker 1: there was very little practical separation of anything, which you 274 00:14:49,440 --> 00:14:52,400 Speaker 1: didn't really realize till you started talking a little bit 275 00:14:52,400 --> 00:14:55,760 Speaker 1: further about them. And you have another moment in the 276 00:14:55,800 --> 00:15:00,120 Speaker 1: podcast where you hear about Carolyn thinking about breaking up 277 00:15:00,160 --> 00:15:02,720 Speaker 1: with her boyfriend Sam Bankinfree. So not only are the 278 00:15:02,760 --> 00:15:07,160 Speaker 1: businesses very cozy with one another, the people running the 279 00:15:07,160 --> 00:15:10,440 Speaker 1: two businesses are literally cozy with one another. And a 280 00:15:10,560 --> 00:15:12,600 Speaker 1: light bulb goes off in your head when you hear 281 00:15:12,640 --> 00:15:13,680 Speaker 1: about this, doesn't it. 282 00:15:14,240 --> 00:15:17,600 Speaker 2: Yeah. So these were two companies run by a bunch 283 00:15:17,640 --> 00:15:21,880 Speaker 2: of people in their twenties and early thirties, and they 284 00:15:22,200 --> 00:15:26,560 Speaker 2: lived together, they socialize together, they're in the Bahamas together. 285 00:15:27,240 --> 00:15:28,720 Speaker 2: And I was just like, how do they keep these 286 00:15:28,720 --> 00:15:31,760 Speaker 2: two companies separate? You know when they have to? I mean, 287 00:15:32,120 --> 00:15:35,160 Speaker 2: you know, you wouldn't want customers to be disadvantaged. You 288 00:15:35,160 --> 00:15:38,560 Speaker 2: wouldn't want Alameda to have sensitive knowledge of how FTX 289 00:15:38,560 --> 00:15:40,560 Speaker 2: traders work, you know. I was like, how do they 290 00:15:40,560 --> 00:15:43,280 Speaker 2: put these barriers in place when you're together twenty four 291 00:15:43,320 --> 00:15:47,400 Speaker 2: to seven, when you have the same corporate campus. So, 292 00:15:48,080 --> 00:15:50,200 Speaker 2: with these interviews I did with Caroline and Sam, you know, 293 00:15:50,320 --> 00:15:53,080 Speaker 2: the number one question I had was like, how separate 294 00:15:53,600 --> 00:15:58,120 Speaker 2: are FTX and Alameda? And how do you make sure 295 00:15:58,360 --> 00:16:03,000 Speaker 2: they stay separate? And I will say, you know, Caroline 296 00:16:03,040 --> 00:16:06,200 Speaker 2: was very confident, calm in the interview. You know, she 297 00:16:06,640 --> 00:16:10,120 Speaker 2: said we're totally separate, that they have, you know, barriers 298 00:16:10,160 --> 00:16:13,040 Speaker 2: in place, that the only thing they really share are 299 00:16:13,800 --> 00:16:17,840 Speaker 2: the staff who put in their food delivery orders. And 300 00:16:17,880 --> 00:16:19,880 Speaker 2: then when we did the interview with Sam, it was 301 00:16:20,120 --> 00:16:22,200 Speaker 2: so tense. He was nervous. 302 00:16:22,320 --> 00:16:24,480 Speaker 1: And this is August of twenty twenty two. 303 00:16:25,120 --> 00:16:27,800 Speaker 2: Yeah, and comparing you know, the first interview I ever 304 00:16:27,840 --> 00:16:30,240 Speaker 2: did with him to this last interview. It was night 305 00:16:30,280 --> 00:16:32,840 Speaker 2: and day, and I remember I asked him about his 306 00:16:32,880 --> 00:16:35,200 Speaker 2: living situation, like I knew he and Caroline lived together. 307 00:16:35,760 --> 00:16:38,840 Speaker 2: I knew that they had broken up in the late 308 00:16:38,880 --> 00:16:43,560 Speaker 2: spring of twenty twenty two, and he couldn't answer the question. 309 00:16:43,600 --> 00:16:45,160 Speaker 2: I mean he said he slept on a bean bag. 310 00:16:45,520 --> 00:16:48,000 Speaker 1: I mean he ultimately exploded during the interview, didn't He 311 00:16:48,160 --> 00:16:50,720 Speaker 1: ultimately got upset with you, right, Yeah? It was more 312 00:16:50,760 --> 00:16:52,360 Speaker 1: than just not answering questions. 313 00:16:52,520 --> 00:16:54,200 Speaker 2: Yeah, I mean I really thought he was going to 314 00:16:54,280 --> 00:16:56,560 Speaker 2: pull out. I thought the zoom call was going to end. 315 00:16:57,280 --> 00:16:59,720 Speaker 2: I think, you know, we might have even offered him 316 00:17:00,000 --> 00:17:02,640 Speaker 2: the opportunity to just take like a breather, but I 317 00:17:02,640 --> 00:17:05,720 Speaker 2: had never seen him act that way. And it got tense, 318 00:17:06,200 --> 00:17:09,840 Speaker 2: and later on both his answers and Caroline's answers were 319 00:17:09,960 --> 00:17:13,359 Speaker 2: used in the SEC and CFTC complaints. 320 00:17:13,040 --> 00:17:14,800 Speaker 1: Their answers to your interview questions. 321 00:17:15,000 --> 00:17:17,840 Speaker 2: Yes, so you know, I saw the words staring back 322 00:17:17,840 --> 00:17:19,520 Speaker 2: at me from these complaints. I was like, oh my god, 323 00:17:19,520 --> 00:17:23,040 Speaker 2: that those are the interviews I did where they said 324 00:17:23,040 --> 00:17:26,720 Speaker 2: that these two companies were separate, when in reality they weren't. 325 00:17:27,119 --> 00:17:31,440 Speaker 1: They were lying. They were lying. Things are seemingly now 326 00:17:31,440 --> 00:17:34,080 Speaker 1: a little bit smelly. You had come into this to 327 00:17:34,119 --> 00:17:38,160 Speaker 1: a certain extent starstruck, or at least in awe of 328 00:17:38,320 --> 00:17:40,479 Speaker 1: sort of this mover and shaker in the industry spending 329 00:17:40,480 --> 00:17:43,679 Speaker 1: time with you, did your own thinking at this point 330 00:17:43,760 --> 00:17:46,199 Speaker 1: begin to tilt in a different direction in terms of 331 00:17:46,680 --> 00:17:48,159 Speaker 1: thinking about what you were looking at. 332 00:17:48,480 --> 00:17:49,920 Speaker 2: I think it would have been hard for anyone in 333 00:17:49,960 --> 00:17:54,040 Speaker 2: the industry to imagine the scale that this was at. 334 00:17:54,880 --> 00:17:58,200 Speaker 2: And you know, I definitely had my suspicions, of course, 335 00:17:58,240 --> 00:18:01,000 Speaker 2: following that interview, and we publish a great story, that's 336 00:18:01,040 --> 00:18:03,760 Speaker 2: one of the stories I'm most proud of. But taking 337 00:18:03,800 --> 00:18:06,159 Speaker 2: it to that next level was very challenging. And I 338 00:18:06,160 --> 00:18:08,400 Speaker 2: will say, during my reporting process. 339 00:18:08,119 --> 00:18:10,640 Speaker 1: And even the next level, saying that there's a fraud here, 340 00:18:10,680 --> 00:18:14,560 Speaker 1: as opposed to just it's a messy operation. Some things up, 341 00:18:14,600 --> 00:18:17,359 Speaker 1: but not yet saying the whole thing is a sham. 342 00:18:17,520 --> 00:18:22,000 Speaker 2: Yeah, no, I that's exactly it. And I will say 343 00:18:22,040 --> 00:18:26,520 Speaker 2: like people were hesitant to, you know, speak out against Sam. 344 00:18:26,760 --> 00:18:29,720 Speaker 2: You know, it wasn't until after ftx's implosion that I 345 00:18:29,720 --> 00:18:32,399 Speaker 2: had people come to me and were like, he was 346 00:18:32,440 --> 00:18:35,439 Speaker 2: super vindictive in the past, he did this to me 347 00:18:35,720 --> 00:18:37,399 Speaker 2: or I never wanted him to be the face of 348 00:18:37,480 --> 00:18:39,800 Speaker 2: the industry. But I think at that time, you know, 349 00:18:39,800 --> 00:18:42,560 Speaker 2: where Crypto was already struggling, and we're FTX, you know, 350 00:18:42,680 --> 00:18:45,760 Speaker 2: with these crazy bailouts and having raised so much money 351 00:18:46,160 --> 00:18:48,800 Speaker 2: was sort of a beacon of hope for people. There 352 00:18:48,920 --> 00:18:51,760 Speaker 2: was maybe some shyness around criticizing them. 353 00:18:52,320 --> 00:18:53,800 Speaker 1: We're going to take a little bit of a break, 354 00:18:53,840 --> 00:18:55,800 Speaker 1: and when we come back, we'll talk some about the 355 00:18:55,840 --> 00:18:59,239 Speaker 1: making of SBF, how this little boy Wonder became a 356 00:18:59,320 --> 00:19:07,840 Speaker 1: man wonder. In just a second, we're back with Hannah Miller, 357 00:19:07,840 --> 00:19:12,440 Speaker 1: Bloomberg reporter extraordinaire and the host of a new podcast, Spellcaster, 358 00:19:13,080 --> 00:19:16,040 Speaker 1: The Fall of Sam bankman Freed, and we're talking about 359 00:19:16,040 --> 00:19:19,080 Speaker 1: Sam bankman Fried's journey and the ins and outs of 360 00:19:19,119 --> 00:19:22,760 Speaker 1: trying to understand who he was and why it took 361 00:19:23,040 --> 00:19:25,560 Speaker 1: so long for people to come around to the idea 362 00:19:25,720 --> 00:19:28,800 Speaker 1: that he might just be a scamster. So, Hannah, you 363 00:19:28,880 --> 00:19:32,200 Speaker 1: were just talking about how you sorted through the fact 364 00:19:32,240 --> 00:19:35,159 Speaker 1: that there wasn't a Chinese wall between FTX and Alameda, 365 00:19:35,720 --> 00:19:38,439 Speaker 1: and you began to get more suspicious about what the 366 00:19:38,480 --> 00:19:42,960 Speaker 1: operation entailed, and so you began digging more, and as 367 00:19:43,000 --> 00:19:46,439 Speaker 1: part of that digging, you end up exploring the world 368 00:19:46,440 --> 00:19:49,840 Speaker 1: that SBF emerged from. Talk to me a little bit 369 00:19:49,840 --> 00:19:52,280 Speaker 1: about that, particularly his college career. 370 00:19:53,320 --> 00:19:57,919 Speaker 2: Yeah, So I was definitely just trying to learn what 371 00:19:57,960 --> 00:20:01,000 Speaker 2: I could about Sam, and it really helped that I 372 00:20:01,080 --> 00:20:03,800 Speaker 2: live in the Bay Area. I had actually lived in 373 00:20:03,880 --> 00:20:08,320 Speaker 2: Palo Alto in Stanford housing, super close to where Sam 374 00:20:08,320 --> 00:20:10,080 Speaker 2: had grown up and where he's now, you know, under 375 00:20:10,119 --> 00:20:12,600 Speaker 2: house arrest, so I could picture the world that he 376 00:20:12,640 --> 00:20:16,119 Speaker 2: lived in. You know, I knew people who he went 377 00:20:16,160 --> 00:20:17,640 Speaker 2: to high school with, things like that. 378 00:20:17,880 --> 00:20:19,800 Speaker 1: It all felt very familiar. Yeah. 379 00:20:19,920 --> 00:20:23,080 Speaker 2: Yeah, And I think having this idea, like knowing what 380 00:20:23,119 --> 00:20:25,480 Speaker 2: Palo Alto is, like knowing what Silicon Valley is like, 381 00:20:25,560 --> 00:20:28,840 Speaker 2: and how people really saw him as one of their own. 382 00:20:29,160 --> 00:20:33,600 Speaker 2: And I think that also helped fuel venture investments in FTX. 383 00:20:34,000 --> 00:20:37,520 Speaker 2: That sort of context was just invaluable to my reporting. 384 00:20:38,240 --> 00:20:41,880 Speaker 2: So yeah, I ended up talking a lot to his parents' 385 00:20:41,880 --> 00:20:43,359 Speaker 2: colleagues at Stanford. 386 00:20:43,560 --> 00:20:45,600 Speaker 1: His parents were both at Stanford themselves. 387 00:20:45,840 --> 00:20:50,600 Speaker 2: Yes, yeah, they were both law professors and just beloved 388 00:20:50,600 --> 00:20:51,320 Speaker 2: by students. 389 00:20:51,560 --> 00:20:51,760 Speaker 1: You know. 390 00:20:51,800 --> 00:20:54,560 Speaker 2: I talked to people who'd had them, who just said, 391 00:20:54,600 --> 00:20:57,600 Speaker 2: Barbara and Joe are amazing, Like they had me over 392 00:20:57,640 --> 00:20:59,440 Speaker 2: to their house for dinner. They're incredible. 393 00:20:59,560 --> 00:21:01,480 Speaker 1: They did so such a good job of inculcating and 394 00:21:01,520 --> 00:21:02,800 Speaker 1: respect for the law and their son. 395 00:21:03,080 --> 00:21:05,320 Speaker 2: I know, Well that's the huge ironic thing. It's just 396 00:21:05,440 --> 00:21:09,440 Speaker 2: his mom specializes in ethics, and you know, they had 397 00:21:09,480 --> 00:21:12,800 Speaker 2: these dinner table conversations with him growing up, teaching him 398 00:21:12,800 --> 00:21:15,359 Speaker 2: how to debate, teaching him about what's morally right versus 399 00:21:15,359 --> 00:21:19,440 Speaker 2: morally wrong. And it's just crazy to think that this 400 00:21:19,520 --> 00:21:21,960 Speaker 2: person who if you had to do a lab experiment 401 00:21:22,080 --> 00:21:25,320 Speaker 2: to make the perfect founder, it would be SBF. Like 402 00:21:25,520 --> 00:21:29,160 Speaker 2: just his background, his education, you know, where he grew up. 403 00:21:30,119 --> 00:21:32,800 Speaker 2: All those things I think added to the myth around 404 00:21:32,880 --> 00:21:36,240 Speaker 2: him and drew people to him, including venture capital investors. 405 00:21:36,800 --> 00:21:38,080 Speaker 2: And I also did a lot of research into his 406 00:21:38,119 --> 00:21:38,960 Speaker 2: high school. 407 00:21:39,280 --> 00:21:42,880 Speaker 1: What stands out to you about his high school years. 408 00:21:42,920 --> 00:21:45,320 Speaker 1: Is there like a signal moment in high school for 409 00:21:45,440 --> 00:21:48,800 Speaker 1: him that's emblematic to you of the person he would become. 410 00:21:49,280 --> 00:21:52,760 Speaker 2: So I love this anecdote they had. I think it 411 00:21:52,800 --> 00:21:55,120 Speaker 2: was like a spirit week thing for his senior year, 412 00:21:55,960 --> 00:21:59,919 Speaker 2: and they did like bankman Bucks. It was fake money, 413 00:22:00,160 --> 00:22:03,679 Speaker 2: his face printed on it, as like a prank, and 414 00:22:03,760 --> 00:22:05,679 Speaker 2: someone offered to like sell it to me. It was 415 00:22:05,760 --> 00:22:08,800 Speaker 2: one of his classmates. I was like, I'm not doing that. 416 00:22:08,880 --> 00:22:12,439 Speaker 2: I like, no, you know, but he went to this 417 00:22:12,560 --> 00:22:15,920 Speaker 2: incredibly competitive high school. You know, all the kids who 418 00:22:15,960 --> 00:22:20,120 Speaker 2: were going here, like their parents were tech founders, professors, engineers, 419 00:22:20,840 --> 00:22:23,879 Speaker 2: and it was like super nerdy as a school, and 420 00:22:23,920 --> 00:22:26,479 Speaker 2: it was like the smartest kids were the coolest kids usually, 421 00:22:27,359 --> 00:22:32,120 Speaker 2: And I think that helped fuel maybe his competitive streak 422 00:22:32,280 --> 00:22:36,120 Speaker 2: going forward. A lot of what Spellcaster focuses on is 423 00:22:36,200 --> 00:22:40,320 Speaker 2: his love of gameplay, including video games strategy games. That 424 00:22:40,440 --> 00:22:42,560 Speaker 2: develops even further when he goes to MIT, and we 425 00:22:42,640 --> 00:22:45,240 Speaker 2: have a great anecdote in there about how he would 426 00:22:45,280 --> 00:22:49,879 Speaker 2: love to create these strategy games with members of his fraternity. 427 00:22:50,080 --> 00:22:52,159 Speaker 1: Well specifically, I mean the one that stuck out for 428 00:22:52,280 --> 00:22:55,040 Speaker 1: me was how he played diplomacy, yes, and you get 429 00:22:55,040 --> 00:22:57,960 Speaker 1: into that, and I think the people who play against 430 00:22:58,040 --> 00:23:00,200 Speaker 1: him end up feeling like he's devious. 431 00:23:00,240 --> 00:23:02,640 Speaker 2: Talk a little bit about that, yeah, I mean, deception 432 00:23:02,880 --> 00:23:05,760 Speaker 2: was part of his strategy. He would win your trust, 433 00:23:06,119 --> 00:23:08,480 Speaker 2: get you over to his side, and then stab you 434 00:23:08,480 --> 00:23:10,880 Speaker 2: in the back when it was convenient for him. And 435 00:23:11,640 --> 00:23:12,480 Speaker 2: it was bloodthirsty. 436 00:23:12,800 --> 00:23:14,800 Speaker 1: I mean, it's easy to look back and say, wow, 437 00:23:15,080 --> 00:23:16,960 Speaker 1: there it was, but boy, there it was right. 438 00:23:17,200 --> 00:23:20,040 Speaker 2: Yeah, and you know again. Mit is also the place 439 00:23:20,080 --> 00:23:24,679 Speaker 2: where he really started first diving into effective altruism, which 440 00:23:24,880 --> 00:23:28,560 Speaker 2: was a philosophy that he claimed motivated him in terms 441 00:23:28,600 --> 00:23:30,960 Speaker 2: of gaining more success in business. It was why he 442 00:23:31,040 --> 00:23:33,639 Speaker 2: wanted to make money so he could eventually give it 443 00:23:34,400 --> 00:23:35,359 Speaker 2: all of it away. 444 00:23:35,800 --> 00:23:39,040 Speaker 1: I have to say the effect of altruism stuff. I 445 00:23:39,280 --> 00:23:41,679 Speaker 1: kind of believe that I was in an audience with 446 00:23:41,720 --> 00:23:47,359 Speaker 1: Will mccaskell, who was SPFS sort of I guess mentor 447 00:23:47,600 --> 00:23:51,280 Speaker 1: and philosophical guide in the world of effect of altruism. 448 00:23:51,760 --> 00:23:53,880 Speaker 1: It would be hard for me to describe that as 449 00:23:53,880 --> 00:23:56,800 Speaker 1: a philosophy. It sort of feels to me like it's 450 00:23:56,840 --> 00:23:59,600 Speaker 1: a get out of jail free card more than a philosophy. 451 00:24:00,000 --> 00:24:03,840 Speaker 1: I think mccaskal says during one of his speeches that 452 00:24:03,920 --> 00:24:05,800 Speaker 1: you should just go out there and make a crapload 453 00:24:05,800 --> 00:24:08,960 Speaker 1: of money quote unquote more or less, and then do 454 00:24:09,040 --> 00:24:11,520 Speaker 1: good things with the money you make. But it sort 455 00:24:11,520 --> 00:24:13,679 Speaker 1: of implies that you can just make a crapload of 456 00:24:13,760 --> 00:24:19,440 Speaker 1: money very quickly without cutting corners, or that you can 457 00:24:19,520 --> 00:24:22,200 Speaker 1: just make a crapload of money and the act itself 458 00:24:22,280 --> 00:24:26,480 Speaker 1: doesn't involve any kind of ethical considerations or possible compromises, 459 00:24:26,880 --> 00:24:29,880 Speaker 1: and then you wash it all away by donating it 460 00:24:30,040 --> 00:24:32,200 Speaker 1: to a variety of good causes, and then you get 461 00:24:32,200 --> 00:24:34,679 Speaker 1: to go to your beach house. Isn't it sort of 462 00:24:34,760 --> 00:24:37,560 Speaker 1: emblematic of the era we're in at a quote unquote 463 00:24:37,560 --> 00:24:42,960 Speaker 1: philosophy like that took root around Sam Bankmin Freed and 464 00:24:42,960 --> 00:24:45,479 Speaker 1: his cohorts. You know, And there are many ways in 465 00:24:45,520 --> 00:24:49,359 Speaker 1: which using investments in capital wisely is liberating for people. 466 00:24:49,359 --> 00:24:51,800 Speaker 1: It creates jobs, it creates businesses. There's also lots of 467 00:24:51,840 --> 00:24:55,240 Speaker 1: ways in which you do it in a predatory fashion 468 00:24:55,359 --> 00:24:57,560 Speaker 1: to feather your own nests, and it can be destructive 469 00:24:58,119 --> 00:25:01,880 Speaker 1: and simply sort of telling people just make that nut. 470 00:25:01,920 --> 00:25:03,840 Speaker 1: However you can make it, and then you can wash 471 00:25:03,880 --> 00:25:07,600 Speaker 1: yourself clean by donating it. It's just too cute by half, 472 00:25:07,680 --> 00:25:08,280 Speaker 1: I think. 473 00:25:08,760 --> 00:25:11,120 Speaker 2: Yeah, like what you said about it growing up around 474 00:25:11,320 --> 00:25:13,840 Speaker 2: you know, SBF, it made a lot of sense to me, Like, 475 00:25:14,080 --> 00:25:15,879 Speaker 2: I think a lot of Sam and how he presented 476 00:25:15,960 --> 00:25:18,800 Speaker 2: himself was showing that he was atypical, that there was 477 00:25:18,840 --> 00:25:21,520 Speaker 2: something different about him. It was also an angle that 478 00:25:22,280 --> 00:25:25,399 Speaker 2: you know, the media really liked to play up. I mean, 479 00:25:25,440 --> 00:25:28,639 Speaker 2: he was the second biggest donor to Joe Biden in 480 00:25:28,680 --> 00:25:31,920 Speaker 2: the twenty twenty election, after Mike Bloomberg. So I think 481 00:25:31,960 --> 00:25:35,520 Speaker 2: it really helped him just build up this image of 482 00:25:35,880 --> 00:25:36,160 Speaker 2: you know. 483 00:25:36,160 --> 00:25:38,760 Speaker 1: He got interviewed by Bill Clinton at cryptoconferences. 484 00:25:38,920 --> 00:25:40,000 Speaker 2: Yeah, I mean it's crazy. 485 00:25:40,400 --> 00:25:43,200 Speaker 1: So he leaves college and he begins working at Jane 486 00:25:43,240 --> 00:25:46,560 Speaker 1: Street Capital in New York, and he begins dating during 487 00:25:46,560 --> 00:25:48,520 Speaker 1: that same period of time. Tell me a little bit 488 00:25:48,520 --> 00:25:51,040 Speaker 1: about that era in his life. What did he learn 489 00:25:51,080 --> 00:25:52,119 Speaker 1: at Jane Street Capital? 490 00:25:52,760 --> 00:25:54,440 Speaker 2: Yeah, So, I mean Jane Street, first of all, it's 491 00:25:54,440 --> 00:25:57,199 Speaker 2: really prestigious. It's also a very secretive firm. And the 492 00:25:57,200 --> 00:25:59,520 Speaker 2: podcasts were actually able to give an inside look at 493 00:25:59,560 --> 00:26:01,920 Speaker 2: like what a trading floor looks like at Jane Street, 494 00:26:01,920 --> 00:26:04,360 Speaker 2: which was really cool to get. But yeah, I mean 495 00:26:04,440 --> 00:26:10,159 Speaker 2: it's very competitive. You are dealing with very incremental differences 496 00:26:10,160 --> 00:26:14,440 Speaker 2: in price, whether you're looking at equities, ETFs, whatever. And 497 00:26:14,880 --> 00:26:17,320 Speaker 2: I think it was a good fit for him initially 498 00:26:17,359 --> 00:26:20,639 Speaker 2: in the sense, you know that he found other people 499 00:26:20,760 --> 00:26:24,520 Speaker 2: who shared his interests. Jane Street has actually been associated 500 00:26:24,520 --> 00:26:28,080 Speaker 2: a bit with EA. We do know that he dated 501 00:26:28,240 --> 00:26:31,639 Speaker 2: a colleague there who he later gave a lot of 502 00:26:31,720 --> 00:26:36,040 Speaker 2: money to her crypto firm. So, you know, I think 503 00:26:36,040 --> 00:26:39,560 Speaker 2: it's sort of set the precedent for this mix between 504 00:26:39,800 --> 00:26:42,480 Speaker 2: personal and professional when it came to business. 505 00:26:42,720 --> 00:26:45,400 Speaker 1: Mingling love and money. Yeah, in a very random way. 506 00:26:46,400 --> 00:26:48,920 Speaker 1: He decides then to head out of Jane Street Capital 507 00:26:49,080 --> 00:26:53,520 Speaker 1: and venture off on his own and become a crypto entrepreneur. Yeah. 508 00:26:53,560 --> 00:26:57,400 Speaker 2: So in twenty eighteen was when he first really started 509 00:26:57,440 --> 00:27:01,560 Speaker 2: building Alameda. And again, you know, he brought in people 510 00:27:01,600 --> 00:27:04,040 Speaker 2: who he knew early on. He also brought in people 511 00:27:04,040 --> 00:27:07,080 Speaker 2: from the EA movement. Some of Alameda's earliest backers are 512 00:27:07,400 --> 00:27:11,359 Speaker 2: effective ultruists. You know, they were out in Berkeley, like 513 00:27:11,600 --> 00:27:16,320 Speaker 2: hanging out, building stuff, working NonStop. We have this great 514 00:27:16,359 --> 00:27:20,760 Speaker 2: scene where like they've lost power, they're trying to get 515 00:27:20,760 --> 00:27:22,240 Speaker 2: it back. They're trying to call the landlord. They're trying 516 00:27:22,280 --> 00:27:24,720 Speaker 2: to like, you know, get back to work, and it's 517 00:27:24,760 --> 00:27:28,840 Speaker 2: like Christmas time. So these were people who wanted to 518 00:27:28,880 --> 00:27:32,000 Speaker 2: work hard, and their social circles and their professional circles 519 00:27:32,040 --> 00:27:35,240 Speaker 2: were very blended as well. Like your friends were your coworkers. 520 00:27:35,280 --> 00:27:38,040 Speaker 2: You spent all your time with them, basically, and. 521 00:27:37,960 --> 00:27:41,480 Speaker 1: In pretty short order, they began minting extraordinary amounts of money, 522 00:27:41,800 --> 00:27:44,479 Speaker 1: in part because this was a new industry and they 523 00:27:44,480 --> 00:27:47,640 Speaker 1: were on the ground floor and they had both visibility 524 00:27:47,880 --> 00:27:51,159 Speaker 1: and market moving power that gave them a lot of 525 00:27:51,160 --> 00:27:55,440 Speaker 1: control over both trading patterns and pricing. Do you think 526 00:27:55,520 --> 00:27:58,320 Speaker 1: they as a group felt that they were changing the 527 00:27:58,320 --> 00:28:00,720 Speaker 1: world with crypto or were they in on the joke. 528 00:28:01,480 --> 00:28:04,600 Speaker 2: So we did an incredible interview for the podcast with 529 00:28:04,680 --> 00:28:10,720 Speaker 2: an early Alameda employee who was very much excited about 530 00:28:10,720 --> 00:28:14,000 Speaker 2: giving the money away, you know, had some interest in crypto, 531 00:28:14,080 --> 00:28:17,280 Speaker 2: but was really all about EA and you know, started 532 00:28:17,320 --> 00:28:19,160 Speaker 2: to have doubts over the course of her time there. 533 00:28:19,840 --> 00:28:22,720 Speaker 2: So you know, yeah, I do think there were you know, 534 00:28:22,800 --> 00:28:26,960 Speaker 2: true believers initially coming in, but at the end of 535 00:28:27,000 --> 00:28:28,960 Speaker 2: the day, this was a very competitive thing. It was 536 00:28:28,960 --> 00:28:32,399 Speaker 2: about making as much money as possible. It was about 537 00:28:33,119 --> 00:28:37,240 Speaker 2: making sure that you had the right timing in place, 538 00:28:37,400 --> 00:28:39,320 Speaker 2: the right people in place, because they were doing all 539 00:28:39,320 --> 00:28:42,800 Speaker 2: these arbitrage trades in Japan, so it was it was 540 00:28:42,800 --> 00:28:45,400 Speaker 2: a pretty complex operation. And I will say, yes, they 541 00:28:45,400 --> 00:28:48,040 Speaker 2: were able to make tons of money very quickly, but 542 00:28:48,080 --> 00:28:51,640 Speaker 2: these were also people with incredible pedigrees connections. They were 543 00:28:51,640 --> 00:28:54,960 Speaker 2: able to get a lot of money early on from friends, family, 544 00:28:54,960 --> 00:28:55,760 Speaker 2: people who knew them. 545 00:28:56,120 --> 00:28:57,160 Speaker 1: The stars lined up. 546 00:28:57,360 --> 00:29:00,600 Speaker 2: Yeah, yeah, It's like you know, starting base. 547 00:29:00,440 --> 00:29:03,320 Speaker 1: Or whatever and saying you hit a triple yes. 548 00:29:03,520 --> 00:29:05,840 Speaker 2: Yeah. And then when Alameda was trying to raise money, 549 00:29:05,840 --> 00:29:08,080 Speaker 2: you know, we talked to an investor who considered backing them, 550 00:29:08,880 --> 00:29:12,360 Speaker 2: and he noticed that they were making really big mistakes 551 00:29:12,520 --> 00:29:16,920 Speaker 2: at times, sometimes costing for millions of dollars. That was 552 00:29:16,960 --> 00:29:19,880 Speaker 2: just one of the red flags about Alameda that convinced 553 00:29:19,960 --> 00:29:21,760 Speaker 2: him not to ultimately invest in them. 554 00:29:22,200 --> 00:29:24,840 Speaker 1: Did they all believe in Sam Bankman Freed and did 555 00:29:24,920 --> 00:29:27,360 Speaker 1: he tell them he had a vision? It sort of 556 00:29:27,440 --> 00:29:30,440 Speaker 1: almost felt to me at times cultish. You know, they're 557 00:29:30,480 --> 00:29:33,400 Speaker 1: living in the same place in the Bahamas, they share 558 00:29:33,440 --> 00:29:36,640 Speaker 1: the same work, they are saying the same kind of 559 00:29:36,760 --> 00:29:40,160 Speaker 1: chance about their mission in life and the outside worlds 560 00:29:40,200 --> 00:29:42,680 Speaker 1: believing them. Did a lot of people at the company 561 00:29:43,080 --> 00:29:46,480 Speaker 1: believe Sam Bankman reads lines about where things were headed? 562 00:29:46,800 --> 00:29:50,920 Speaker 2: Yeah, I think so definitely. The cult thing that thought 563 00:29:50,960 --> 00:29:53,480 Speaker 2: crossed my mind a lot during my reporting on this, 564 00:29:54,240 --> 00:29:56,720 Speaker 2: you know, and just the fact that you know, there 565 00:29:56,720 --> 00:29:59,280 Speaker 2: were different tiers within the company, like Sam had this 566 00:29:59,360 --> 00:30:03,840 Speaker 2: inner circle of executives who were also I mean most 567 00:30:03,880 --> 00:30:06,240 Speaker 2: of them were from personal parts of his life, whether 568 00:30:06,280 --> 00:30:08,959 Speaker 2: they had gone to college together, or you know, were 569 00:30:09,000 --> 00:30:14,000 Speaker 2: friends of his brother or someone he was romantically involved with. 570 00:30:14,240 --> 00:30:16,520 Speaker 2: You know, these were people who had no separation between 571 00:30:16,560 --> 00:30:20,040 Speaker 2: their personal and professional lives, like FTX was their life. 572 00:30:20,480 --> 00:30:23,360 Speaker 2: And I know from talking from employees you know there 573 00:30:23,360 --> 00:30:25,560 Speaker 2: who were lower on the food chain, maybe not part 574 00:30:25,560 --> 00:30:27,880 Speaker 2: of that inner circle, that it could be very isolating 575 00:30:28,280 --> 00:30:30,560 Speaker 2: to work there at times that you're in the Bahamas, 576 00:30:30,600 --> 00:30:33,480 Speaker 2: You're in a completely different country, the only people you 577 00:30:33,520 --> 00:30:36,480 Speaker 2: know are your coworkers, and you're expected to work until 578 00:30:36,600 --> 00:30:39,240 Speaker 2: three in the morning every day, and that for some 579 00:30:39,280 --> 00:30:41,760 Speaker 2: people it was extremely difficult living there and being a 580 00:30:41,760 --> 00:30:42,720 Speaker 2: part of that organization. 581 00:30:43,520 --> 00:30:46,360 Speaker 1: I remember being struck by sort of the cultish kind 582 00:30:46,360 --> 00:30:49,240 Speaker 1: of elements of it. I was at a Bloomberg conference 583 00:30:49,280 --> 00:30:52,240 Speaker 1: in San Francisco, I think in twenty eighteen on crypto, 584 00:30:52,360 --> 00:30:54,200 Speaker 1: and I was part of the discussion about it, and 585 00:30:54,240 --> 00:30:56,320 Speaker 1: I just raised the question that if it actually was 586 00:30:56,360 --> 00:30:59,880 Speaker 1: going to replace old fashioned money fiat currency, that they 587 00:30:59,920 --> 00:31:03,480 Speaker 1: were was no central bank yet in the crypto universe, 588 00:31:03,520 --> 00:31:06,040 Speaker 1: and if a crisis were to arrive arise, there was 589 00:31:06,080 --> 00:31:09,160 Speaker 1: no lender of last resort, you know, and that economies 590 00:31:09,160 --> 00:31:11,960 Speaker 1: had spent thousands of years realizing that, oh you needed 591 00:31:12,560 --> 00:31:15,200 Speaker 1: some sort of an agent like this in the economy 592 00:31:15,240 --> 00:31:17,880 Speaker 1: to deal with crises. Who would be there to sort 593 00:31:17,920 --> 00:31:21,080 Speaker 1: of catch the knives when the music stopped. We have 594 00:31:21,160 --> 00:31:23,680 Speaker 1: the Federal Reserve for that out in the real world, 595 00:31:23,920 --> 00:31:27,080 Speaker 1: but in the digital paradise of crypto, there is no 596 00:31:27,160 --> 00:31:29,720 Speaker 1: one doing that. It's everyone trusting one another to sort 597 00:31:29,720 --> 00:31:32,960 Speaker 1: of stand by their bets. And the woman at the conference, 598 00:31:32,960 --> 00:31:34,480 Speaker 1: and I can't remember what firm she was with, but 599 00:31:34,880 --> 00:31:36,680 Speaker 1: she got very offended and she said, you know, well, 600 00:31:36,680 --> 00:31:39,000 Speaker 1: if anyone has to start talking to us about the 601 00:31:39,040 --> 00:31:42,000 Speaker 1: need for central banking or more regulation, we're just going 602 00:31:42,080 --> 00:31:44,320 Speaker 1: to up and move and go to the Caribbean. And 603 00:31:44,400 --> 00:31:46,880 Speaker 1: I thought, well, in fact, that's what they ended up doing. 604 00:31:47,200 --> 00:31:50,240 Speaker 1: It was either the Caribbean or Hong Kong. That also 605 00:31:50,320 --> 00:31:52,680 Speaker 1: seemed to me to be like a red flag, yet 606 00:31:52,720 --> 00:31:54,959 Speaker 1: another one of the red flags. You know, why are 607 00:31:55,000 --> 00:31:58,160 Speaker 1: they setting up shop in the Bahamas at the end 608 00:31:58,160 --> 00:32:00,160 Speaker 1: of the day, how do you answer that question? Why 609 00:32:00,200 --> 00:32:01,680 Speaker 1: did they choose to be in the Bahamas? 610 00:32:02,040 --> 00:32:05,040 Speaker 2: Yeah, I mean it was friendler regulation. Almida and FTX 611 00:32:05,040 --> 00:32:07,160 Speaker 2: had been based in Hong Kong, which up to a 612 00:32:07,200 --> 00:32:10,959 Speaker 2: certain point had been friendly towards crypto but then really 613 00:32:11,080 --> 00:32:14,800 Speaker 2: you know, started cracking down, especially after China did so. 614 00:32:14,880 --> 00:32:18,400 Speaker 2: I mean, China has an outright ban on cryptocurrencies. So 615 00:32:18,880 --> 00:32:20,680 Speaker 2: going to the Bahamas, which was you know, trying to 616 00:32:20,720 --> 00:32:23,600 Speaker 2: position itself as a new crypto hub, that was really 617 00:32:23,640 --> 00:32:26,880 Speaker 2: advantageous to FTX and Alameda, and you know, they were 618 00:32:26,880 --> 00:32:30,120 Speaker 2: an important part of the Bahamas while they were down there. 619 00:32:30,320 --> 00:32:35,040 Speaker 2: I mean just that conference alone, I mean drew so 620 00:32:35,160 --> 00:32:38,640 Speaker 2: many people there, and we have some incredible reporting in 621 00:32:38,680 --> 00:32:40,760 Speaker 2: the podcast on what it was like to be down 622 00:32:40,800 --> 00:32:44,640 Speaker 2: in the Bahamas. When Sam was first arrested and brought 623 00:32:44,720 --> 00:32:47,000 Speaker 2: in and put before a judge. You know, people were 624 00:32:47,080 --> 00:32:50,880 Speaker 2: showing up and watching this event like as if it 625 00:32:51,040 --> 00:32:52,560 Speaker 2: was some professional sports game. 626 00:32:55,120 --> 00:32:56,960 Speaker 1: On that note, Hannah I want to take one more 627 00:32:57,040 --> 00:32:59,719 Speaker 1: break and then we'll come back and wrap things up. 628 00:33:05,560 --> 00:33:07,520 Speaker 1: We're back with Hannah Miller, the host of a gripping 629 00:33:07,560 --> 00:33:12,600 Speaker 1: new podcast, Spellcaster. The Fall of Sam Bankman freed, and 630 00:33:12,760 --> 00:33:16,360 Speaker 1: we've been talking about that moment on the Precipice when 631 00:33:16,840 --> 00:33:19,680 Speaker 1: people started asking hard questions about how he was running 632 00:33:19,720 --> 00:33:24,880 Speaker 1: his business and where the truth resided, and he was 633 00:33:25,040 --> 00:33:28,680 Speaker 1: ensconced in a luxury penthouse apartment in the Bahamas, as 634 00:33:28,760 --> 00:33:32,800 Speaker 1: some of this starts to come undone. You know, Hannah, 635 00:33:32,880 --> 00:33:34,920 Speaker 1: you mentioned that earlier, and I think in your own 636 00:33:34,960 --> 00:33:36,920 Speaker 1: reporting he said it was hard to imagine the full 637 00:33:37,040 --> 00:33:41,000 Speaker 1: scale of what was wrong inside the empire. This was 638 00:33:41,040 --> 00:33:43,680 Speaker 1: somebody who had been compared in the media favorably to 639 00:33:43,760 --> 00:33:48,160 Speaker 1: Warren Buffett and to JP Morgan. When did you start 640 00:33:48,280 --> 00:33:51,840 Speaker 1: to think it was even worse than you suspected? Was 641 00:33:51,880 --> 00:33:53,960 Speaker 1: there a moment when you thought, oh my god, this 642 00:33:54,120 --> 00:33:57,680 Speaker 1: is actually an outsized fraud and a lot of us 643 00:33:57,720 --> 00:33:59,800 Speaker 1: might have been built on Sandy. 644 00:34:00,240 --> 00:34:04,440 Speaker 2: I mean, the image of him and handcuffs just made 645 00:34:04,680 --> 00:34:06,720 Speaker 2: this feel real. I mean, obviously I knew the situation 646 00:34:06,960 --> 00:34:11,520 Speaker 2: was dire before that, but seeing him being arrested in 647 00:34:11,560 --> 00:34:13,719 Speaker 2: the Bahamas and brought out. I mean, he was just 648 00:34:13,840 --> 00:34:16,600 Speaker 2: so disheveled. You know, I was like, oh my god, 649 00:34:16,680 --> 00:34:20,680 Speaker 2: this is happening. And it was crazy to think about. 650 00:34:20,719 --> 00:34:22,600 Speaker 2: I mean, like, like I said, crypto has had a 651 00:34:22,719 --> 00:34:25,640 Speaker 2: lot of crazy stuff happen. I mean, this was just 652 00:34:26,160 --> 00:34:30,320 Speaker 2: scandal after scandal, you know, collapse, bankruptcies all in the 653 00:34:30,400 --> 00:34:34,440 Speaker 2: months leading up to FTX, But this topped everything. 654 00:34:34,719 --> 00:34:36,919 Speaker 1: The arrest because it was so tangible and real. 655 00:34:37,200 --> 00:34:39,920 Speaker 2: Yeah, and just the fact that this empire that he 656 00:34:40,040 --> 00:34:43,120 Speaker 2: had built, that so much of crypto was connected to. 657 00:34:43,239 --> 00:34:46,960 Speaker 2: I mean, the web of influence that FTX had was 658 00:34:47,120 --> 00:34:51,560 Speaker 2: so expansive. You saw, like other companies crumble in the 659 00:34:51,600 --> 00:34:53,120 Speaker 2: face of this sort, you know, have to file for 660 00:34:53,200 --> 00:34:57,840 Speaker 2: bankruptcy or fledgling startups lose money that they had custdied 661 00:34:57,920 --> 00:35:01,560 Speaker 2: with FTX. So it was just the industry was just 662 00:35:01,680 --> 00:35:06,120 Speaker 2: totally reeling. And it's hard to say whether crypto will 663 00:35:06,320 --> 00:35:09,080 Speaker 2: hit the level it was at when FTX was at 664 00:35:09,080 --> 00:35:12,480 Speaker 2: its peak. But you know, there's still obviously people who 665 00:35:12,760 --> 00:35:15,520 Speaker 2: are convinced of the power of crypto, that there are 666 00:35:15,520 --> 00:35:17,640 Speaker 2: still people investing in this industry, there are still people 667 00:35:17,680 --> 00:35:20,000 Speaker 2: building in this industry. There's people looking to combine crypto 668 00:35:20,080 --> 00:35:22,200 Speaker 2: with AI. You know, I don't think this is something 669 00:35:22,280 --> 00:35:23,560 Speaker 2: that's going to go away. 670 00:35:24,320 --> 00:35:28,080 Speaker 1: FTX also went bankrupt after Sam bangun Freed was arrested, 671 00:35:28,480 --> 00:35:32,080 Speaker 1: and one of your Bloomberg stories around the time memorably 672 00:35:32,239 --> 00:35:37,920 Speaker 1: described what that bankruptcy revealed, and you wrote documents filed 673 00:35:37,960 --> 00:35:41,800 Speaker 1: and ftx's bankruptcy depict a free wheeling enterprise rife with 674 00:35:41,920 --> 00:35:46,160 Speaker 1: conflicts of interest, self dealing, and very little controls over 675 00:35:46,239 --> 00:35:50,440 Speaker 1: what happened to customers. Money funds were poorly tracked, Leadership 676 00:35:50,560 --> 00:35:56,720 Speaker 1: was haphazard and meaningful. Oversight appears virtually nil. Has anything 677 00:35:56,960 --> 00:35:59,239 Speaker 1: changed your mind that that won't just be a very 678 00:35:59,360 --> 00:36:03,000 Speaker 1: damning heart of the case against him if and when 679 00:36:03,040 --> 00:36:03,800 Speaker 1: he goes to trial. 680 00:36:04,880 --> 00:36:08,800 Speaker 2: There's an incredibly strong case against SBF and part of that, 681 00:36:09,200 --> 00:36:11,080 Speaker 2: you know, they have all these documents, they have this 682 00:36:11,200 --> 00:36:13,360 Speaker 2: evidence that this is what was happening at the company, 683 00:36:13,920 --> 00:36:16,880 Speaker 2: like all the things you listed, But they also have 684 00:36:17,640 --> 00:36:21,120 Speaker 2: guilty please from Caroline Ellison and from Gary. 685 00:36:20,960 --> 00:36:22,640 Speaker 1: Wong, and they're cooperating. 686 00:36:22,800 --> 00:36:25,880 Speaker 2: They are cooperating. Yeah, So Gary Wong, he was Sam's 687 00:36:25,920 --> 00:36:29,719 Speaker 2: friend from both math camp and college. He helped found 688 00:36:29,800 --> 00:36:35,080 Speaker 2: FTX with Sam, who's chief technology officer, and they've given 689 00:36:35,120 --> 00:36:39,279 Speaker 2: what they can to this to prosecutors, They're working with authorities. 690 00:36:39,880 --> 00:36:41,560 Speaker 2: I think it's going to be a real upheld battle 691 00:36:42,200 --> 00:36:44,960 Speaker 2: for Sam at this point. I mean, these are very 692 00:36:45,080 --> 00:36:47,920 Speaker 2: serious allegations against him. And the other thing to remember 693 00:36:48,080 --> 00:36:50,560 Speaker 2: is that I say this all the time, there are 694 00:36:50,560 --> 00:36:52,360 Speaker 2: still people who haven't gotten their money back. There are 695 00:36:52,400 --> 00:36:54,520 Speaker 2: still people with so many questions of whether they're going 696 00:36:54,560 --> 00:36:55,800 Speaker 2: to recover their life savings. 697 00:36:56,480 --> 00:36:58,520 Speaker 1: I mean, the nut of what he's been charged with 698 00:36:58,719 --> 00:37:01,240 Speaker 1: is a year long fraud. She used billions of dollars 699 00:37:01,320 --> 00:37:05,920 Speaker 1: of FTX customer funds for personal expenses and high risk 700 00:37:06,000 --> 00:37:10,759 Speaker 1: gambles through Alameda, and yet he's repeatedly said he didn't 701 00:37:10,840 --> 00:37:13,600 Speaker 1: know what went on there. Do you find that credible 702 00:37:13,800 --> 00:37:15,840 Speaker 1: that he didn't know what went on? No? 703 00:37:16,200 --> 00:37:18,560 Speaker 2: I mean I in that last interview I did with him, 704 00:37:19,080 --> 00:37:20,960 Speaker 2: the whole time he was talking about not having anything 705 00:37:21,000 --> 00:37:24,480 Speaker 2: to do with Alameda, but I knew he had orchestrated 706 00:37:24,719 --> 00:37:27,279 Speaker 2: the company's bailout deals and called him out on that. 707 00:37:27,960 --> 00:37:33,200 Speaker 2: I think he's someone who manipulates the narrative when he 708 00:37:33,960 --> 00:37:37,239 Speaker 2: wants to, and uses it to his advantage. I think 709 00:37:37,320 --> 00:37:40,319 Speaker 2: He's also someone who really likes to talk himself through 710 00:37:40,360 --> 00:37:44,759 Speaker 2: things and give these very convoluted answers. I think it's 711 00:37:44,800 --> 00:37:47,000 Speaker 2: going to be very hard for him to use those 712 00:37:47,080 --> 00:37:50,440 Speaker 2: tactics to defend against these allegations. 713 00:37:51,400 --> 00:37:53,719 Speaker 1: You know, Hannah, we always like to ask people on 714 00:37:53,840 --> 00:37:57,680 Speaker 1: the show what they've learned over time? What do you 715 00:37:57,880 --> 00:38:02,720 Speaker 1: know now about the crypto world? And Sam Bankman freed 716 00:38:02,840 --> 00:38:05,400 Speaker 1: that you didn't know when you embarked on this journey 717 00:38:05,440 --> 00:38:07,040 Speaker 1: as a new reporter a few years ago. 718 00:38:07,880 --> 00:38:10,719 Speaker 2: I think the top thing I've learned is that be 719 00:38:10,880 --> 00:38:13,760 Speaker 2: suspicious of anyone who claims to be a hero, especially 720 00:38:14,280 --> 00:38:18,400 Speaker 2: in this industry, and really question their motivations, look at 721 00:38:18,480 --> 00:38:22,640 Speaker 2: how it benefits them personally, and then I don't know. 722 00:38:22,719 --> 00:38:25,760 Speaker 2: I still think Crypto has to figure out what exactly 723 00:38:26,080 --> 00:38:28,800 Speaker 2: it wants to use boxing technology for. You know, this 724 00:38:28,960 --> 00:38:33,560 Speaker 2: is an industry still finding its legs, and these bad 725 00:38:33,680 --> 00:38:36,920 Speaker 2: actors are just hobbling things like. 726 00:38:36,960 --> 00:38:38,600 Speaker 1: The rest of us. Crypto will have to figure out 727 00:38:38,640 --> 00:38:41,239 Speaker 1: what it wants to be when it grows up exactly. Yeah, 728 00:38:41,880 --> 00:38:44,520 Speaker 1: thanks for joining us today, Hannah, No, thank you for 729 00:38:44,600 --> 00:38:48,000 Speaker 1: having me. You can find Spelcaster The Fall of Sam 730 00:38:48,120 --> 00:38:52,200 Speaker 1: Bankman Freed. Wherever you listen to podcasts, you can find 731 00:38:52,239 --> 00:38:56,160 Speaker 1: Hannah Miller on Bloomberg's website, the Bloomberg Terminal, and on 732 00:38:56,320 --> 00:39:02,160 Speaker 1: Twitter at HG. Miller twenty nine. Here at Crash Course, 733 00:39:02,320 --> 00:39:06,080 Speaker 1: we believe the collisions can be messy, impressive, challenging, surprising, 734 00:39:06,280 --> 00:39:10,160 Speaker 1: and always instructive. In today's Crash Course, I learned that 735 00:39:10,239 --> 00:39:15,160 Speaker 1: skepticism is always a healthy thing, even if you're confronted 736 00:39:15,520 --> 00:39:19,040 Speaker 1: with the bold, lee, new and innovated traveling under the 737 00:39:19,080 --> 00:39:23,040 Speaker 1: guise of a mop of black hair and big Bermuda Schwortz. 738 00:39:24,120 --> 00:39:26,440 Speaker 1: What did you learn? We'd love to hear from you. 739 00:39:27,120 --> 00:39:29,960 Speaker 1: You can tweet at the Bloomberg Opinion handle at Opinion 740 00:39:30,400 --> 00:39:34,800 Speaker 1: or me at Tim O'Brien using the hashtag Bloomberg Crash Course. 741 00:39:35,360 --> 00:39:38,000 Speaker 1: You can also subscribe to our show wherever you're listening 742 00:39:38,120 --> 00:39:40,560 Speaker 1: right now and leave us a review. It helps more 743 00:39:40,600 --> 00:39:44,200 Speaker 1: people find the show. This episode was produced by the 744 00:39:44,239 --> 00:39:49,400 Speaker 1: indispensable Anna Masarakis, moses On Dam and Me. Our supervising 745 00:39:49,480 --> 00:39:52,680 Speaker 1: producer is Magnus Hendrickson, and we had editing help from 746 00:39:52,719 --> 00:39:57,480 Speaker 1: Sage Bauman, Katie Boyce, Jeff Grocott, Mike Nitze and Christine 747 00:39:57,560 --> 00:40:01,719 Speaker 1: Vanden Bilart. Blake Maples does our sound engineering and our 748 00:40:01,760 --> 00:40:06,000 Speaker 1: original theme song was composed by Luis Gara. I'm Tim O'Brien. 749 00:40:06,640 --> 00:40:09,000 Speaker 1: We'll be back next week with another crash course.