How Sam Bankman-Fried Conned the Crypto World

Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
On February nineteen two, there was a mass shooting in Portland, Oregon.
Right wing extremist opened fire at people doing traffic support
for a weekly racial justice march. He killed one person,
he injured several others. One of the people who was injured,
a young woman, is currently paralyzed from the neck down.
Her friends and family are raising money, um, not for

(00:23):
immediate survival, stuff for for quality of life things, for
things to you know, allow her to enjoy herself out
in the world with people, given the fact that she's
dealt with something and is dealing with something, uh, permanently
life changing. So I wanted to highlight that they're already
above their initial goal. But obviously, you know, any anything
we can give will help her and her family have

(00:45):
a higher quality of life, and I think they deserve it.
So go to go fund me Portland mass shooting Paralyzed
Survivor Fund. That's go fund me Portland mass shooting Paralyzed
Survivor fund. If you've got some extra cash, you know,
the season being what it is, I get that everybody's
got a lot of expenses coming up. But if a
few folks have some extra bucks, I know it'll be appreciated.

(01:06):
It will help her have a warmer season this year,
and she certainly deserves it. So again, go fund me
Portland mass shooting paralyzed survivor fund Thank you. Oh God
is dead and you, Jamie Loftus, have killed him. I
did it, I did it, you did it. You did it.
No God was a hymn and Jamie killed him, hammered

(01:29):
at the back of the head. And and people are
going to be critical of that, but you know, you
don't know my story. And in my six part mini
series in which I'm played by Amanda Sea Freed, You're
going to start to see my side of the story.
And she is definitely not going to jail for what
I did. That's good. Unlike Founder of Their Enough Elizabeth Holmes,

(01:51):
who we just found out has been sentenced to eleven
point to five years in in prison. I'm kind of like, yeah,
I have mixed I have mixed feelings because it's like
people don't go First of all, the prison industrial complex
in general, it doesn't make anyone better to the extent

(02:11):
that there's value in the present day, and putting people
in prison, it's people who are like a severe ongoing danger.
And I don't see this making anything better. Like at
the same time, I hate her, so I don't. I'm
not gonna it's not it's not going to be the
top injustice I write route today. I do kind of

(02:31):
like that HERU after being exposed as an unrepentant criminal,
She's like, Oh, I think I'm just going to kind
of be like a norm e girl for a while
and I'm gonna gon gomal kid. And You're like, Liz,
it's too late. It's too late for that. Liz. You
defrauded people with a fake medical device that led folks

(02:52):
to to get treatment for things they didn't have and
ignore all this as they did, which is bad. That
before too many bodies at the floor, but that would
have stopped you, but you didn't really care. You applied
Steve Jobs logic to something that was not just a
silly box to keep in your pocket. Lizzie, you know, Lizzie, uh,

(03:16):
Lizzie again. Also putting her in prison for you know,
probably nine years, when you consider all the other things,
is like not gonna help anything. It'll just mean that
that kid she has grows up without a mom for
nine years, and that's not going to make that It's
like it's a huge moment for many things can be

(03:36):
true at once and having to hold all of those
truths and um, still recording episode of Behind the Bastards,
I can tell you about this. Actually, this actually will
be relevant to the episode. But yes, please please really yes, Okay,
this is definitely not going to be relevant. So let's
let's okay. I was a legal case I was thinking
about today. Um was the beanie baby is billionaire. Um.

(04:01):
When he went was taken the court in for holding
money in a Swiss bank account. Um. He it was
like a tax a tasion, tax evasion charge. Um. So
he was up for as many as five years in
prison for tax evasion, and he got off with I mean,
he's a billionaire, he's never going to suffer a consequence, right,

(04:24):
But like, he ended up getting a two years of
probation on the ground that it had been too publicly
humiliating so he didn't have to get to go to
jail because he was too and so farnest. It was
so embarrassing that he didn't have to go to jail.
What that's absolutely fucking weird. Anyways, I'm gonna I'm gonna

(04:44):
see how far this goes by committing murder and then
having my pants fall down and like, well, Judge, look,
yes I did stab that man seven times underpants. Yeah
pp myself so feel like that. Yeah we can we
just zero this one out. Man. I love the Beanie

(05:08):
Baby's story so much. I'm surrounded by my beans feeling safe. Wow,
that's good. You do literally have one on your shoulder
right now. Yeah, just just like I have this rifle
next to me. I think that we both have our
comfort objects at the ready. Um so, Jamie, speaking of

(05:28):
Elizabeth Holmes, because the person we're talking about today is
going to be the next story like that. By this
time next year, they're probably is going to be an
HBO documentary about this guy. God, maybe Taylor Taylor Kitch
could probably play him. Um, actually, if he wanted to. Really,
Taylor Kitch played hot David Koresh in The Waco Show,

(05:50):
walked into that. Yeah, they'd have to give him like
a belly suit or something. That's not anti fantom, just
being accurate, but he could do it. Maybe that is
I don't want to see this man ever again. No,
I'm mad. You don't want to see Taylor kitchigain you
don't want to see those cum gutters again. Unbelievable, goddamnit.
Plenty in this town, Robert, there's a million cum gutters.

(06:13):
I don't need those. Oh that that is true. But anyway,
so through the street that that that is that is
true of Los Angeles and no other city. Today we
are talking about a guy who absolutely never comes Sam
Bankman Freed. Why do you know this guy? Do you
know this guy? I don't know this guy. You don't

(06:35):
know this guy. You don't know this guy? Have you?
Have you caught any news in the last week about
how like a massive cryptocurrency exchange has collapsed Plummett? This
is that guy. Oh, this is the guy with his
like polyamorous sex ring that was running a big crypto
bank in the Bahamas and it all fell apart. Now
billions of dollars are gone. You've lost me again. Oh great, Okay, well,

(06:59):
well I'll right. This is still breaking. Um we are
because this is a Thanksgiving week episode. We only do
one episode on Thanksgivings. I needed a single one, so
I just want to give everyone background on this guy.
We will we may come back to this story because
there's a lot we don't fully understand about how he
did what he did and the degree to which. But

(07:19):
is that this guy, this guy ran a trading service
called Alameda Research and a crypto exchange, and exchange is
basically like a bank, right, It's a cross between a
bank and like a trading platform called f t X,
which was one of the largest cryptocurrency exchanges in the world,
and was also considered by most people to be the

(07:41):
most stable and like ethical and legitimate, right, people who
are just kind of on the outside looking at when
everything collapsed earlier this year, Right, you remember that we
have that I was engaged in that. It's just that
I get a lot of my news journalists on Twitter
and they've been busy this week. Yes, So when when
the when the when crypto like fell apart? When a

(08:02):
lot of crypto fell apart earlier this year, and like
a bunch of places went under. F t X was
one of the ones that stayed stable. And actually we're
buying up a bunch of like failing crypto companies to
try to like prop up the industry. They just collapsed
and like the value of all everything has been plummeting
for for the last several days. It's a big disaster.

(08:22):
It is very like yeah, in in and as in
words that will annoy me as little as possible. Can
you explain why fts remained solvent and others? It is
not so why did it outlast? Because they lied? Um,
so they were they were operating the short end of

(08:42):
how to describe it, And we may there will be
more details to come, but at present it seems fair
to say that it was a giant Ponzi scheme where
they were they were they were taking in money, promising
unreasonable returns, using other investor money to gamble on stuff
to try to provide anyway. And it was like all
the other guys they were, they were dishonest. Yeah, it is.

(09:05):
It is very likely. What what what differentiates this is
the scale because this is very likely a financial crime
on the level of what Bernie made off did. We
are talking in the ten to twenty billion dollars stolen
a lot of money. This is a serious financial crime.
I'm in on this pretty cold. And so for the

(09:27):
other the other kind of mass of um like touchstone
of this is that it has led to a class
action lawsuit against Larry David, Shaquille O'Neal, Tom Brady and
a number of celebrities who were all in a Super
Bowl ad for f t X. I remember that ad
that was so embarrassing for my man Larry. The lawsuit

(09:51):
is basically advertise. Basic was the high dollar Ponzi scheme,
and you guys were using your name recognition to sell
unregistered securities, which they were, which they were, which they
definitely were. Sorry, I just want to circle back to Shaquille.
Shaquille O'Neil will put his name on anything, to the
point where to the point where I worked at a

(10:13):
Haunted hay Ride this year, which we don't talk about
because it was a bad idea, but the rival what idea?
I guess what. I'm alive, bitch, bitch, I lived, I
lived to tell the tale. It's very unclear who is
right in the side of should I work at a
Haunted hay Ride or not? I still haven't really landed

(10:35):
on a name answer point being. Our closest rival Haunted
Hayride wise was sh Octoberfest. It was Shack themed haunted
attraction in which the only Shack related thing was a
gigantic inflatable Frankenstein that looked like Shack, which did sound awesome.

(10:56):
That sounds actually like the best time anyone's ever had
Shack put his name on an anything, including crypto and Halloween.
What a what a King? Um? Probably not. I'm sure
there's horrible things about Shack that have come out that
seems almost unavoidable. Anyway, Sam Bankman Freed is the guy
behind this gigantic financial crime that is still unraveling as

(11:17):
we do this episode. And I want to talk about
less about what happened on the exchange, because none of
us want to talk about how somebody carries out the
nuts and bolts of a cryptocurrency scam. But I want
to talk about I want to talk about the social
elements of the scam. I want to talk about how
he conned the media, how he conned celebrities, and how
he conned regulators UM. And I just want to talk

(11:38):
about also the way some of these people talked and
wrote about him, because there's a lot about I don't know.
A week or so ago, we did an episode on
The Daily Show we do what could happen here about
ethical altruism, which is in brief theory that like the
instead of trying to help people just because they need help,
you should only help people after you consider the way

(12:01):
to help people that is like the absolute most beneficial
way for like the least amount of you know, effort.
The it's utilitarianism, right, what can I How can I
do the greatest good with the least resources? And yeah,
and it's it's the way a lot of these like
and it's merged with this kind of thinking towards what
billionaire types called long termism. And the gist of this

(12:21):
is like, it's not worthwhile for me to do stuff
like pay taxes to have a society or guarantee like
universal health care. Instead, I should make Instead, the most
ethical thing that I should do is make as much
money as I personally can and then put that money
into things that I believe will save the world, like
research to stop aies from killing everyone and getting to
Mars and ship It's a way for billionaires, trains, It's

(12:45):
a way for billionaires and the other mega rich to
justify like continuing to do exactly what they want and
feel like they're saving in the world anyway, Sam, you
guy from Beanie you know the beanie babies billionaire did
to improve the world may a lot of beanie babies,
and then he bought the four seasons hotel and kept
making beanie babies. He didn't do ship. That's well, you know,

(13:06):
that's I'm fine with that compared to these guys because
they're where they're pretending anyway. Bank Sam Bankman Freed is
one of these guys. We're gonna get into that. But
we did this episode on It could Happen Here where
he was kind of a tangentle character in this very
unsettling and insidious movement that is behind guys like Elon
Musk who are claiming to be saving the world will

(13:28):
just sucking over people. And then like four days after
it came out, his entire life unraveled and his fortune
disappeared overnight because he was a giant con artist. What
a treat. It's very funny. So that's why we're talking
about him right now. He's like thirty years old and
looks like Mark Zuckerberg and David Dobrick's love child. He's
thirty years old, was a Mark Zuckerberg and David dobricks

(13:51):
love child. Look. I shouldn't call anyone a schlub, but
he looks like a schlub. I forget what David Dobrick
looked like because my brain protects myself respectfully. Two villains,
two villains, love child. Yeah. Um anyway, so I uh yeah.
Sam Bankmnfried was born in nineteen ninety two on the

(14:13):
campus of Stanford University, uh, continuing a long and proud
tradition of absolutely nothing good ever coming from that hellhole.
His parents are both extremely prominent Stanford professors. His mother, Barbara,
is a lawyer her clothes who clerked for the Second
Circuit Court and graduated from Harvard. She founded Mind the Gap,
a somewhat shady and mysterious democratic fundraising group. I think

(14:34):
it's shady and that people don't exactly know where all
the money comes from or like what their goals are.
She also yeah yeah. She also pinned an essay in
two thousand thirteen that the right wing is going nuts
about because she was basically arguing that like it's good
and evil are less a factor in in what people
do than environmental factors and and and all that stuff,

(14:57):
Like when people do things that are bad, it's more
and a product of their And it was kind of
am oh god, what's that fucking psychologist. It was like
a Skinner type argument where it's like, well, if people
have bad inputs in their youth and that's going to
determine anyway. Um, I think that's funny given what happens. Um,
I'm gonna guess she sucks at what she's she's she sucks. Uh,

(15:20):
And so does his dad, Joseph Bankman. Joseph is also
a lawyer. He is a graduate from Yale. His big
claim to fame was developing a proposal for an overhaul
of the California tax return system that would have filled
out citizens tax returns in advance. And I don't know,
I just said he sucked, But actually that sounds like
a good thing. Um, I think that that's actually a
cool thing to advocate for. The measure failed by one

(15:41):
vote after heavy lobbying from into It, a tax prep
prep software company. Um yeah, it kind of is. It's
it's total bullshit because stuff, it's the thing everybody agrees
with on paper, but nobody will actually fight the tax
prep companies, which is like, Hey, the I r S
like knows more or less what I'm ache and like
knows more or less what I owe. Why don't I

(16:03):
just get a thing from them? Why do I have
to go through this? Like anyway, there's no need but
it's like that's the other countries do it that way.
We don't, though, because there has to be a convoluted
system that's expensive and where they can charge you if
you make the tiniest mistake because you can't read size
one font well. And more to the point, because I
don't actually think the I R. S. Is advocating to

(16:24):
keep it a pain in the ass. I think it's
these tax prep companies because they have an entire industry
based on charging people to do the thing that they
have to do to avoid going to fucking prison. Um. Anyway,
I said he's an asshole, and I'm sure he is,
but he was right about this, and I don't know
what to say about that. Like all of us. Joseph

(16:44):
is also a podcaster. He is the host of the
co host of the Stanford Legal podcast too, and he's
a nerd. If it wasn't the holiday season and I
wasn't like getting ready for friends and family and all
that that good stuff, I would have listened to his
podcast and we would probably be making fun of him.
But you can do that on your own goodness, I believe,

(17:07):
isn't it doesn't it feel so horrible when you think
of how many people do what we do, but they're
the worst person you've ever heard of. It's so sad,
it's embarrassing. Yeah, it's it's like, I don't know, I
avoid self identifying as a podcaster as it is, it's
still not a stem. But then on top of that,

(17:28):
they're like, oh, like what, like I mean, you know,
you know, the only you know, the only thing that
I can compare it to is like when I started
making a living as a writer fifteen years ago, and
I would say that at like a at like a
party or something, someone asked like, well, what do you
do And I'm like, well, I'm a writer, and like
four other people would say yeah, me too. Uh and

(17:48):
then you wind up listening to everybody's pitches for their
novels that they're never going to finish. Um. So eventually
I just started lying and saying that I still worked
a special at well. I like, I mean, it's the
same thing with like if you say you're a comedian
in a party, you're god no, never never identify as
a comedian And oh me too, do you? And I've

(18:10):
done one whole open mic and Mike was very offensive
and he's had a comedian's job to push boundaries and oh,
tell me your job, you know how Lenny Bruce, Let
read that. Let read that list of curse words. Will
I just do that with slurs here? Let me show you. Yeah,
you're like yeah, like slame. Bruce was not funny in

(18:30):
that period of his career, even a little. Anyways, Anyways,
our job, I mean, are embarrassing what I'm saying. Anyway,
our jobs are indeed embarrassing. So, as you might guess
from all of that, Sam was born into what amounts
to America's like liberal aristocracy. He is a fucking coastal elite, right.
This kid grows up on the Stanford campus to Stanford professors.

(18:54):
One of his aunt's teaches at Columbia University is like
a professor there. So seems like he has close family
connections to employees at Yale and at Harvard UH as
well as Stanford, like his parents both go to Harvard.
I think it is Kennedy. He is a Yeah, he's
he's that. He is as you do not get much
more of a rarefied like intellectual air. He's wearing Linen's around.

(19:18):
This is how I think about this. This is a
child who at age eight, has strong opinions on a
manual kant Um, which will cheer for him at the table. No, No,
we're about to get into that, Jamie loves. I just
had I just had a vision of a child sitting
at like a holiday dinner and saying derivative and then amazing, Wow,

(19:41):
he is really coming along, isn't he. Yeah, this is
a little kid that, when he likes sits down at
the doctor's office, pulls out a fucking I don't know,
doritta or something book just just just so you know,
just so you know, he knows fancy philosophers. God damn
it board book. So his parents and his raised him
in his brother to be utilitarians. Uh one of the

(20:03):
articles about them into SpongeBob. Okay, yeah, yeah, I was.
I was raised to hassle cows in our back forty Um.
His parents nights. So this article notes that nights around
the family dinner table often focused around debates about how
to do the greatest good for the greatest number of people. Um.

(20:23):
In later interviews with I'm gonna get to this guy
in a second, the absolute dick writing this journalist to
ever write, Dick Sam would claim that his most formative
moment came at age twelve, when he was weighing arguments
around the abortion debate. So, first off, because because not

(20:47):
only no, also like in the context of like where
would he have been doing this? I'm guessing at like
around the family table or when they have the all.
You know, everybody's got their brandy and he's drinking in
some sort a fucking t that's insufferable, and they're all
talking about people's rights as if it's like a fun
intellectual problem, like how to fix it for them? It

(21:09):
is because whenever, wherever they land, the rules aren't going
to apply to them anyways. Yes, yes, where does he?
Where does he fall? Where does That's a great question.
So I'm going to quote now from an article previously
published by Sequoia Capital and written by Adam Fisher, who
should never be allowed to lift this article down. When
I say the dick writing ist like fucking pr flak journal,

(21:31):
it's it's it's shameful quote right. A rights based theorist
might argue that there aren't really any discontinuous differences, as
a fetus becomes a child, and thus fetus murder is
essentially child murder. The utilitarian argument compares the consequences of each.
The loss of an actual child's life, a life in
which a great deal of parental and societal resources have

(21:52):
been invested, is much more consequential than the loss of
a potential life in utero, and thus to a utilitarian
abortion looks more like birth control than murder. SPF. That's
what they always call him, the kid Sam spfs application
of utilitarianism helped him resolve some nagging doubts he had
about the ethics of abortion. It made him feel comfortable
being pro choice, as his friends, family, and peers were.

(22:14):
He saw the essential rightness of his philosophical faith. So
that's very fucked up. That is, that is so deep,
Like the term choice is used at the very ind there,
but it's clear that like he's not thinking about this
in terms of like the actual value of human bodily autonomy.
That does not weigh in the utilitarian calculus for him whatsoever. No,

(22:34):
that is, to would argue my friend Robert, no, no, no,
And again, even like, look, I ship reflexively sometimes on utilitarianism,
not because of the inherent value or disvalue of thinking
that way, but about the way it gets talked about
by these people. But like, if you're actually a utilitarian

(22:54):
and you care about the greatest good for the greatest
number of people, then bodily autonomy should factor into at right,
like human bodily autonomy is he should be hugely important
to you. But no, that's not logical. All that matters
is like, well how many If you've if less resources
than this have been invested in the fetus, then it's
not a person. So abortion makes that's fucking bullshit logic.

(23:17):
Fuck you, you're doing too much math. Stop, this isn't
This isn't a math problem, Sam, Like, this is not
a fucking math problem. Not everything is goddamn math problem. Robert,
he won't listen to unless you call him SBF, and
I was like, sunscreen, Yeah, we'll get that. They all
call him fucking SBF, and I hate it. But also

(23:38):
as this went on, I started using it more and
more because it's a pain in the astotype his whole
fucking last name out. Um. I look, I this is
one where I'm not going to give him a pass.
But I get it. If you write about this sucker
a lot, it does make it easier. So anyway, all
of this is very bad. Um, but you know what's
not bad, Jamie, the products and sir this to support

(24:00):
this podcast. That's not true. They are that's well, I've checked.
Hold on, I just ran a quick check on that,
and you can. But but what about the greatest good
for the greatest number of people? And and given that
I'm I'm a people, so it works out pretty well,
it works out very well for me. I think that

(24:20):
if you actually have more advertising revenue, you will actually
built a really fast train like you've been promising me
you would. Yeah, I'm gonna I'm gonna build the hyper loop.
Um yeah, yeah. And I'm gonna promise you one thing.
It's going to kill a hell of a lot more
people than that Simpsons monorail did and that and and
I'm gonna and and look, not everyone is going to

(24:42):
hold you to task for that, but I am thank you, Jamie,
thank you for keeping me honest and ensuring that we
we we really make a memorable disaster. Look, I'm available anytime.
I'm not visiting my friend Liz in jail. M uh

(25:05):
we are back. What a good time. So Sam bankman
Fried is above all else a numbers guy, and I
guess as a kid he was a numbers kid. His
parents sent him to Crystal Springs Uplands, a fancy prep
school in Hillsborough, California. I looked through the website because
I wanted to make fun of it, but it just
kind of seems like a really fancy school. I don't know.

(25:25):
I'm sure it's a great place to get an education.
They make, they put a lot of I will tell this.
They devote a lot of screen resources to letting you
know that they are not racist and that most of
their students aren't white. Um. They also have a friend.
They also have a French cinema class for sixth graders,
which is fine, But the cranky asshole in me that
still has a little piece of my soul raised by

(25:46):
right wing radio wants to say shit about it. I
was raised by by left wing people, and I still
think that that's some loser shit, and I think that
that's fucking dorky and goofy and like should it's like
what you know you meet because you meet people like
that in the wild, and they're sometimes there and maybe

(26:09):
even often very sweet people. But I'm like trying to
be like, oh, you know who Plankton is, and they're
like no, and then but they've been watching French movies
since they were like seven, and I just don't expect
that if I made a sixth if I meet a
sixth grader with strong opinions about French cinema, like I'm
just gonna leave. I'm gonna leave. I'm just gonna walk away, Robert,

(26:32):
that's really brave of you to march out of a
conversation with an eleven year old like I am not.
I'm not putting up with that ship. Absolutely not. I'm
leaving this sixth grade class. My name is Robert Evans,
and out here do fi is? Go watch your Renoir?
Is that one of them? That sounds like one of them?
Cloud Renoir? Is he a painter? Or Renoir is a painter?

(26:54):
I know the one you're looking for it, and I
was looking for it too, but I don't remember. But
guess who do you know who Plankton is? Of I
know who Plankton is, And I also know that at
least one of the directors they study as a pedophile.
Just knowing a little bit about French cinema, that's that's unavoidable.
So he does well. Again, the school is probably fine.

(27:14):
He does well. At the school. UM, he was notably insular.
He avoided most of his classmates to play StarCraft, which
is good, and League of Legends, which objectively sucks. He
also played a lot of magic the Gathering. So I
am confident he did not get late in high school. Um,
this is based on extensive personal experience. Like I just

(27:39):
actually did some field research and about four years of it. Okay. Interesting.
For college, he was accepted to and attended My Tea,
which marked out his family's elite North American University punch guard. Um,
they really hit him all now now that they've got

(27:59):
it in my kid in the family, they get a
free coffee. There used to be an m I T.
So when I was doing comedy in Boston, there was
like m I m I T had like a secret
comedy club that was just for M I T students
And it was awful. That's oh god, Yeah, they paid you, okay,
But it was like they're like, if you like knew

(28:20):
someone who like met someone who went to M I
T and they came to your shows, and they're like,
oh we we've we did the math and you are
allowed to come to our They called it their speak
easy I wonder if it's still around. It was so
it was. I mean it's not fun. Yea not a
fun crowd, I will say. But best of luck to

(28:43):
to whatever was going on there. So he goes to
m He goes to he might have been at one
of those shows where he might have because he joins
a fraternity there. Uh and and M I T. Well, Jamie,
it's a an M I T specific co ed nerd fraternity.
So night it's theta Um. And here's how Adam Fisher,

(29:05):
the guy I hate, described them in his article, which
was bad quote. A co ed fraternity of super geeks
similarly interested in magic and video games. Theten's are fond
of debating math, physics, computer science, linguistics, philosophy, and logic
problems for fun at alcohol free parties. Now I do
know a little bit about M I T. And I
know another thing these nerds often do is kill themselves

(29:27):
using nitrous oxide, because they will try to flood entire
rooms with nitrous to do like nitrous to ratio and
kill themselves. It's a thing that happens. Look it up
in M T. Nitrous des Yeah. I all I did
in college was drink too many blue moons. It's uh,

(29:47):
it's it's quite a thing. Um. So I don't know
doing over there, I don't know, I don't know, I
don't know. I don't know how much I believe that
that they were always alcohol and drug free parties, because
if there's one thing I know from ner, it's that
they do a shipload of drugs. I definitely didn't hear
of this one because I went to a couple of
m I T frat parties and they were, um, not sober.

(30:09):
Fun fact one the one of the m I T
frat parties I went to some for some reason when
I was in college, and I would get really drunk.
I would always I would like, I would I like
to like steal things from wherever I was. And so
I stole two critical pool balls from an m I
T frat house and someone was able to trace it
back to me and they demanded their pool balls back. Um,

(30:30):
and I embarrassingly, I think I capitulated. I think I
did give them back. I shouldn't. Wow. Wow. Actually, so
this one kid I'm finding and died because he put
a bag over his head to in hale Nitris, which
is the funk man. How did you get into in
M I T. I don't know any I was like

(30:50):
this guy, I don't know, don't put bags. Don't put
bags over your head kids. Um, yeah, I learned that
in public school. No less, so many there ways to
do whippets than putting a plastic bag over your head anyway, whatever.
According next, according to the popular Sam Bankman Freed endorsed
version of the story, he pivoted towards an almost obsessive

(31:12):
devotion to ethics. In his freshman year, he went vegan,
he organized a protest against factory farming, and he worried
obsessively over how he could change the world for the better.
And it was at this point that Sam met a
man who was going to change his life forever. William mcgaskell. UM.
If you want to learn more about this guy, I
do recommend the episode of it could happen here on
Effective Altruism. UM. This guy is today the most the

(31:35):
pop philosopher of effective altruism and long term is UM.
He is an elon Musk's text messages that we all
got as a result of the Twitter lawsuit. UM. At
this point he was also at M I T, and
he met with Sam at a cafe in Cambridge, Massachusetts
where mccast which one, which one? Which I don't know.
I'm sure it's out there somewhere, Jamie. Um it's I'm

(31:58):
sure you've gotten a hot dog there. Um, that's that
seems likely now, any place this guy's going it doesn't
have hot talk. They're not ethical. They're famously unethical, So
you're probably right. So mccaskell explained the concept of effective
altruism to him, which is again this idea that like
what matters is you should like think kind of coldly
and robotically about how you do help to make sure

(32:20):
that your charity money does the most that it can do.
But one of the big like arguments about it is
that like, okay, well, what if you, you know, should
you save a drowning child instead of saving like three
kids from a burning building. And it's like, that's a
nonsense choice. Nobody's ever been presented with that choice at
any point in the history of the human race. It
is not a reasonable that is not a there's no

(32:42):
point to that ethical argument. You're not smart, just draft driver. Yeah,
it makes no sense. Yeah, it makes no fucking sense.
There's like bits of it that are reasonable, which is
that like, well, you know, it makes sense to like
look at the best thing you can do financially, you know,
in terms of donating money, is you know, malaria prevention,
because it winds up being the most cost effective thing.

(33:03):
But it's like, okay, does that mean we shouldn't put
money into making the water in Flint, Michigan drinkable? And
a lot of these guys will say no, because that's
not the best use of money. And it's like, well,
we could do many things with money, especially if we
tax billionaires and put it towards rebuilding infrastructure. Um number
a number of things can be done anyway, McCaskill. McCaskill

(33:26):
kind of pills this guy on effective altruism. He frames
it as a strategic investment whose success um was measured
in populations worth of human lives. He estimated, using back
of the envelope math that two thous dollars could save
one life, and so a million dollars could save five
hundred people, a billion could save half a million, and
a trillion dollars could theoretically save half a billion lives.

(33:48):
Based on that totally legitimate math, people are math it
all works out that way based based on that absolutely
real math. The only ethical way for a genius like
Sam to use his time and talents is to become
the world's first trillionaire. And I'm gonna quote again from
that article that I know. SPF listened nodding as MS

(34:11):
Castell made his pitch. The urn to give logic was
air tight. It was SPF realized applied utilitarianism. Knowing what
he had to do, SPF simply said, yep, that makes sense.
But right there, between a bright yellow sunshade and the
crumb strewn red brick floor, SPF's purpose in life was set.
He was going to get filthy rich for charity's sake.

(34:32):
All the rest was merely execution risk. His course established,
McCaskill gave SPF one less navigational nudge to set him
on his way, suggesting that SPF get an internship at
Jane Street that summer, and so for the good of man,
from the good of mankind, get in the finance industry
and gamble like a mother final asshole. I god fucking

(34:55):
hate these people so much. What makes sense? Yeah, you know, look,
I think that I can't debate that lot. There's no
argument to be made about that logic. Jamie. I mean,
I know that this is the wrong person to be
turning on in this moment, but this is the dick
writing is like, this is the Jamie's like, he has

(35:16):
not begun to ride dick. This is this is this
man's got no gag reflection down, Jamie. I'm going to
read you some passages from this that are going to
make you gag. It is unbearable. So and it's like
this article is like ten fucking words. It took me
like an hour to get through this thing. It's massive.

(35:37):
Is He's like, maybe if I do it, he'll give
me a kiss on the mouth. Well, basically this this
was published by Sequoia, which is a massive like investment
fucking fund thing on their website journalistic entity. Yeah, it
looks like that. It looks exactly like an article from
like Wired or something like. They clearly laid it out
like that. But I think it was done because they
put like two hundred million dollars into his company, so

(35:59):
they needed to justify it by making them look like
a genius. So it's like those articles that like are occasionally,
I mean, it's more scary when they're on actual journalistic outlets.
And then there's just a little tag saying like hey,
this is sponsored by RuPaul's fracking farm or whatever the funk,
and it's like why why on mobile um LGBT icons.

(36:22):
So yeah, Sam Bankman freed gets into finance and he's
a very good trader. As I mean, I have no
way to judge this, but Sequoia says he was a
good trader. Um, he was good at making a lot
of money for other people and also a lot of
money for himself. Besides from he gave away fifty percent
of his income to his favorite charities, but those charities

(36:43):
were mostly the Center for Effective Altruism and eighty thousand Hours,
which is also an effective altruism charity. Good money, that's
a great question, Jamie. Um. It allows guys like like
mccaskell to live very well, while also saying they only
take thirty thou dollars in salaries and give away the
rest because their lives are heavily subsidized by these organizations
that allow billionaires to pretend to be heroes. So like,

(37:05):
so like charity, so like charity. Yeah. So he remains
there happily for years until two thousand seventeen, when he
begins to feel as if something is not right. Now
spoilers having crisis, he is having a quarter life crisis.
And this kid absolutely as a con artist. And what
I am giving you was the polished, press friendly version
of the story for a guy whose entire life, as

(37:27):
far as I can tell, was one long set up
for an ambitious con. So when I say stuff like
he gave a lot of money to charity, because there's
like other charities he gives to some which sound reasonable,
but I have actually no evidence that he did like,
I have no evidence that he did, and I haven't
seen it. Um So when I say stuff like he
felt like that, or when they say stuff like he
felt unfulfilled at Jane Street, that doesn't mean he actually did.

(37:50):
Because we are at present reliant on a lot of
reporting from back when this kid was the toast of
Wall Street. Now after his life fell apart and his
company crash and it became clear that he was a
financial criminal, it also came out that the guy who
wrote the big short has been following him for six months.
So I suspect at some point it's got that's gonna
be fun. We're all going to be in for a
real treat when that books. I love. I love when

(38:12):
you're like, and guess who is following him around? You're like, oh,
he's got Michael Lewis on his dail. It's like and also,
if you're an investor, shouldn't like it's somebody involved in
one of these companies. Probably should have been able to
find out, like, oh, hey, the big short guys hanging
out with him, that probably means this is a giant
financial crime. That guy's not gonna just hang out with

(38:33):
a dude who's good at legally making money to write
about how good he is it making money legally, because
that's not Michael Lewis is beat. I'm kind of going
for like a change of paces time, just gonna try
to see a guy who's like doing something right. Yeah, Michael,
aren't you the guy who only writes about financial crimes
on like a gigantic scale. No, No, I think this

(38:55):
is he's just probably just trying to network. Yeah, it's
just just just really like this guy's attitude towards altruism.
So anyway, um, yeah, anyway, here's how that again, very
dick writing pr flack motherfucker wrote about what happens next.
He was he realized too secure. Spfs mind had been

(39:16):
trained almost from birth to calculate as a schoolboy that
hedonic calculus of utilitarianism. And I'm trying to maximize the
utility function measured in Util's of course for abortion. During
his teenage game I know, I know that's a sentence.
Does he say, of course? Uh no, No, I said

(39:37):
that he does say, he does say, he does say,
of course, yes, measured of course, of course. Suck my ass,
you find unbelievable. During his teenage gaming years, his mathematical
abilities allowed him to sharpen his tactics and win. And
of course, every trade spf Ever made at Jane was

(39:58):
the subject of a risk reward calcul lation, all of
it boiled down to expected value. The formula is fairly simple.
If the amount one multiplied by the probability of winning
a bet is greater than the amount loss multiplied by
the probability of losing a bet, then you go for it.
Irrespective of units Util's euros, dollars, We're all subject to
the same reckoning. But at Jane, spf us most another
trading principle. He learned to be risk neutral. In simple terms,

(40:21):
a trader given a choice between a fifty fifty dollars
and a fifty chance at a hundred dollars must be
agnostic if they want to maximize the expected value of
earnings over a lifetime. Those who prefer that sure win
are risk averse and those who would rather gamble our
risk lovers. But both risk lovers and the risk averse
are suckers equally because over the long run they lose
out to the risk neutral who take both deals without prejudice.

(40:43):
That makes no sense. That makes no sense at all,
because like you, you're you're assuming you have to like
choose between one? Can you just take both? Is that
like the is that the offer? Because it seems like
the whole thought experiment is about choosing between one. None
of this makes very much sense. I had a brain
hemorrhage in them it all of that, and then I
was thinking I couldn't stop thinking about do you think

(41:04):
of the utilitarians? How do utilitarians feel about kissing with tongue?
Do you think, um, how many utils does it take
to kiss with tongue? Or or don't waste your fire.
Let me write the equation out, Jamie and try to
try to sketch out the math on I think they
wouldn't be into it. I think they would be like, well,
what's the point. Yeah, that's that seems real. Five utils. Sorry, James, Jamie,

(41:29):
I gotta continue to say, I don't know, but we
have to read another one quote here. SPF realized was
the rub When he applied this principle to his own life,
he came up short. There was little chance he'd get
himself fired from Jane Street. Thus, the decision to stick
with Jane was a risk averse preference. It was the
logical equivalent of being offered a choice between fifty dollars

(41:52):
and fifty of a hundred dollars and saying give me
President Grant. SPF was risk neutral on behalf of Jane Street,
but not He realized for his own life, to be
fully rational about maximizing his income on behalf of the poor,
he should apply his trading principles across the board. He
had to find a risk neutral career path, which, if
we strip away the trader jargon, actually means he needed
to take on a lot more risk. Oh Jamie, you

(42:15):
need to hear this, boy. We're driving it away. I've
been asleep for six minutes. Come on, Which if we
strip away. The trader jargon actually means he felt he
needed to take on a lot more risk in the
hopes of becoming part of the global elite. The math
couldn't be clearer. Very high risk multiplied by dynastic wealth.
Trump's low risk multiplied by mere rich guy wealth. To

(42:37):
do the most good for the world, SPF needed to
find a path on which he'd be a coin toss
away from going totally bust. So has this risk neutral,
But that means taking a lot of risk, because the
most risk is the only way to become the wealthiest
person in the world. And only by becoming the wealthiest
person in the world can you avoid risk. You get it, Jamie. Yeah,

(42:57):
And that's the most ethical thing you can do. That's
the really the most logical ethical way to live. So
do you think that they kissed with done or not?
I mean, I think what he's saying is ordered in
order to avoid the risk of catching an STD you
have to take on a job as the bathroom at
at a brothel. Um Ah, that's the risk a verse

(43:20):
or risk neutral presentation. Frantically rubbing my final grand cells together,
trying to make heads or tails of that, and it is.
It is howling clown shit. It is absolutely sparking nonsense.
Is like of a vortex of bullshit to be like,
so anyways, it's really clear and the math couldn't be

(43:42):
clear that he has to be the most richest guy
or everyone is going to die, like actually really urgent.
You know, it's one of those things because I have
I have known a number of rich guys in my life, um,
and some of them are in late for you, there's
two kinds. There's people. There's people who were poor at

(44:03):
one point, and some of those people are unhinged and
some of them still remember being poor enough to talk
like normal people. And then there's people like this who
Sam was never rich as a kid, but he lived
in this rarefied air where finance and like the concept
of worrying about money or his economic status was not

(44:23):
a thing because everyone around him when he was a
kid was so high status. And he like, he's just
lived in this it's not even a it's not even
a bubble. He grew up on a different planet, Like
the world does not exist to him the same way
it does to everyone else. And so he's like, that's
the only way you can talk about things in this way. Um,
that you're sort of sinister thing where you're talking about

(44:46):
everything like it is very my thinking. It's like it's
so easy for him and people like this to think
of other people as theoreticals because they've never had a
problem before. So it's are a game of chance because
met a person, right, right, he has never known a
human being. Just Stanford professors exactly, just Stanford professors and

(45:08):
problems in his video games. So yeah, and not that
all nerds. I mean, I'm not I'm I'm afraid of nerds,
you know, people who identify as nerds coming into my mansis.
I'm not saying that that's everybody, but I'm saying like
he's not socialized like a person, and that these are
has to do with class. Yeah, God damn it. Um.
So the next thing that SPF did after deciding he

(45:30):
had to quit Jane Street, um is start pondering how
he might change the world in a way that minimized
his risk. By maximizing his risk or some ship anyway,
as he told it, he considered four career fields and
this is These are his notes on the four things
he might do after being a traitor. Number one journalism
low pay, but a massively outsized impact potential. Number two

(45:52):
running for office or maybe just being an advisor. Number
three working for the movement e a effect of altruism
needs people. Number four starting a startup. But what exactly
Number five bumming around the Bay Area for a month
or so just to see what happens. Now again, it
sounds like a bad bumble day, Like it's like, so
what do you do? It's like, oh, well, um, so

(46:15):
start up maybe, but what is a start up? Really?
What is a startup? So again, he spent years working
in finance, He's got plenty of money. He came from
the Bay Area, So five was an option and it's
one he took. Um And by the way, like as
a general rule, if you decide to quit your job
and you have the financial ability to put her amount
around for a month or two and think things through,
not a bad idea, um, But Sam is going to

(46:37):
do this in the worst way possible. He eventually hits
upon his great next idea, which is to make a
shipload of money in crypto now when he quits. Jane
Street is two thousand seventeen, and if you guys can
remember back that far, that's the first big winter when
cryptocurrency boomed like kind of all throughout the last quarter
or so of two thousand seventeen, bitcoin was just say

(47:00):
laying up like massive rises. Ether had a big rice
to just kind of went around early. A lot of
bitcoin nerds who have people have been making fun of
her years became overnight multimillionaires. And this was kind of
the first point at which normal people started to think, ship,
maybe I should get into this, maybe I can make
a lot of money. Right. This is this is the

(47:20):
thing that blew up bitcoin. And there was a crash
after this, but it recovered, YadA, YadA, YadA. Sam was
savvy enough to look at this and know that these
moments where this thing where a lot of funny money
is on the table but there's no regulation um and
regular people who started to get interested because they think
they might get rich. This is the point at which
an unethical person can make the absolute most money in

(47:40):
a financial market. Right, And you can be unethical, to
quote one of the greats, you can be unethical and
still be illegal. That's the way I live my life.
And you know who else lives their life that way?
Jamie loftus you and you're tossing the ads. Yeah, that's right,
I am indeed, baby. Uh here we go, all right

(48:05):
and we're back. So Jay Loft, Yes, it's actually j Low.
It's the first. I'm the first person to use that,
and it's really starting to catch on bowls um afflex
calling me one sect, Jamie, let me take this call.
Oh that's why, boyfriend. Now he's just weeping outside of

(48:26):
a dunkin Donuts and pocket dialed me again, normal normal
Ben stuff? Am I right? Ben? Look sometimes I meet
I meet up with my friend Ben at the Atwater
Dunks and I really, I really said him straight. It's nice. Yeah,
Ben afflick sober for years and looks like he's hungover
in every single photograph. What a king man, I know,

(48:50):
I do, I do. I have a lot of There's
just a something about him that warms my heart. It's
his back tattoo. You love his back tattoos. It's just
that takes courage, you know, oral courage. I think he's
amazed that I think we need to have that back
tattoo and still got to marry Jennifer Lope. I think

(49:11):
I think put his name on the Vietnam Memorial in
honor of the courage that it took to get that
that back tattoo really is braver than the troops. And
he did for a while hold hold the status of
most divorced man in America. Um, but that is now
what he fixed it. But the contest, I was going

(49:32):
to say, they did they did get married at a plantation.
I don't know. Yeah that I mean, that's all. That's
all very fucked up. But I do feel the contest
for most divorced man. Did you ever watch dragon ball
Z as a kid, Jamie, I didn't know. I didn't know. Well,
there's this thing that Dragon ball Z would always do
this thing where like you have this guy and he's
like the most badass person ever that everybody has to

(49:54):
figure out how to fight. And it's this big problem
because this is the most terrifying thing in the universe.
And the next season, like there's something that's like a
thousand times scarier. It's just this like power creep kind
of thing. I feel like we've all been dealing with
that with a divorced guy, because divorced guy Ben affleck
Not doesn't even register on the divorced guy scale. Living
in the Age of Kanye and it's really divorced and

(50:17):
look out because Tom Brady is about to hit the world. Trade.
Tom Brady is gonna go super say and divorce that
is going to a third divorce Man has hit the world.
It's incredible. So back to Sam Bankman freed. He is

(50:38):
just he has just decided to get into crypto now
the first way to make money in crypto. That that
occurred to him because he spends a bunch of time
looking into the market and he finds he sees that
there's this thing called I think it's like the Kimchi
premium or whatever like that. They come up with some weird,
kind of racist name about it, which is basically bitcoin
is worth a lot more in Japan and Korea than

(50:58):
it is in the United States. Right, It's like worth
fifteen grand in Japan and Korea and it's like tin
grand in the United States something like that. Why is
that there's a variety of complicated factors. Basically there's a
bunch of different laws around banking and who can and
cannot hold accounts and execute trades in those areas. That
leads to this premium. Because like normally, if a premium

(51:19):
like that, if the markets were kind of accessible to
each other, and bitcoins worth fifteen grand in Asia and
ten grand in the US. Then you buy bitcoin in
the US and you sell it in Asia and you
get free money, right um. Very obvious, um if you can.
But you can't do that because you can't get access
to as an American, you can't like get a Chinese
account in order to buy bitcoin there, right M or

(51:40):
a Korean account or a Japanese account. There's all these
laws and they can't VPN. No, you can't. You cannot
do that, and no one can figure out how to
do it how as a Westerner to sell bitcoin over
in these parts of Asia and get that premium, right
and like just get a bunch of free cash. Sam
years out a way to do it, um, which is

(52:02):
basically like picking up a pile of free money. Right
if you're buying bitcoin for ten grand and other people
want to pay fifteen grand for it, you're just making cash,
right um. And primarily the way he does that is
through friends in the effective altruism community who are like
placed in banks and stuff over in Asia, who like
help him figure out how to do this. I'm not
going to go into details. They I mean, this fucking

(52:24):
dick writing article spends a long time explaining how he
figures this out, and it might even have been legal.
He may not have broken the law to do this,
although it's kind of hard to know because all of
this is complicated finance gibberish um. By the way, honestly,
I'm not getting a word of this. Finance guys call
this an arbitrage, and it's basically the ideal that if
you can, if there's a resource that's worth a bunch

(52:46):
more money one place than it is the other place,
you buy it where it's cheap, and you sell it
where it's expensive, and you get free money. Right, that
makes sense? Yeah? Yeah, If if my drug dealer sells
me ketamine for like forty bucks a graham, right, and

(53:06):
I don't know, at a house party you're hanging out
at a couple of blocks away, somebody gibb says that
they'd pay seventy dollars a graham for ketamine. You can
make thirty free bucks by taking the ketamine you bought
for forty bucks and selling it at that other house party. Right. Okay,
so that was you speaking to me in terms that
you would understand. But I do think I got it. Yeah, yeah,

(53:28):
ketamine makes everything makes sense. So he just gave it
to me. In Robert's speak, I got it, I got
he makes He makes a shipload of money doing this,
and he decides to roll this money into a company
which will allow him to hire employees to gamble with
cryptocurrency at scale, to try and find different funked up
little areas like this where they can make a bunch
of money by executing trades. He picks members of the

(53:49):
e A community as his first employees, including Carolyn Ellison,
a former coworker co worker at Jane Street who we
will be talking about in a little bit, and Nishad Singh,
a former Facebook employee. Industrial scale dick writer Adam Fisher
lets you know that sing is an incredible, almost impossibly
good human being by describing him this way. He often
wears a T shirt with the words Compassionate to the

(54:12):
core printed in diminutive all lower case font over his heart.
Do you do you think that this guy, this writer
like just it's at this point he's on like a
bucking bronco ASBFS dick, Like it's just absolutely he is
he is, he is fift this guy's dick by weight.
It is unbelievable. What does he think is going to

(54:33):
happen for him? He's got to get paid by Sequoia
to write a ten thousand word article that they then
pull from their website. When it becomes clear this man
is a massive financial crinamental, he's like, no, my greatest work,
it's extremely funny. No, look, I don't know sing. But
based on the description that guy gives, I am convinced
he's murdered a child with his bare hands. And that

(54:55):
is my head cannon for this man. UM. No one
else would wear that shirt. So these these e A
nerds all form a trading firm called Alameda UM, and
in doing so, they came down on one side of
probably the biggest split within the crypto community. See, the
core of the idea that's not bad that exists within
cryptocurrency is that decent is that centralized state controlled money

(55:19):
is like has problems, right, you know that there's things
about that that are bad, um, And it could be
cool and useful to be able to separate the money
from the state if you could do that right, if
you could do that in a way that reduced the
state's power to like you know, just locked down the
bank accounts of dissidence and stuff like that. There's there's
cool benefits to it. And what I just had an idea,

(55:41):
what if we did that, but then we gave all
the money to one guy. Well that's kind of what
keeps happening. Um So. But also like spfs on the
other side of this argument, right, because obviously most of
the actual benefits of a truly decentralized online currency are
just you can buy drugs with it over the internet.
But still that is a real value people do in

(56:03):
fact by drugs using cryptocurrency, and that's fine, um And
the committed ideological crypto people tend to keep their money
offline in a wallet only they can access, right. So
you basically you have like a hard drive that has
all of your crypto on it, and that that only
touches the Internet when you plug that into your computer

(56:23):
and you use it to make a transaction, right and
otherwise it's completely offline, and so people can't just take
it from you, right right, that's the smart people. This
is a pain in the ass though, right, Like keeping
it in this thing, like there's all these security you
can lose your password people actually do lose their money
this way too, But anyway, it's it's there's a measure

(56:44):
to which it it makes sense and is secure, but
most people don't want to go through that pain in
the ass, so they put all of their cryptome currency
and what are effectively crypto banks these exchanges, and these
exchanges are places like Mount Cox which a few years
ago all of the money got stole, and from an
f t X which Sam Bankman freedmakes, which also all
of the money gets stolen from. Right. So the people

(57:06):
who are like, no, you shouldn't do what Sam is doing.
You shouldn't make an exchange because that's not decentralized, and
we like this because it's decentralized, they are the ones
who get robbed less often because because they're a little
smarter um. And that's part of the point these exchanges.
They're meant for people who don't see crypto actually is like, well,
I I want to fight the state by removing my

(57:28):
money from the banking system. There for people who are
like I want to try to get rich quick by gambling, right,
and that's why those people are also the most vulnerable
to scams. UM. However, anytime you explain crypto with me.
To me, even though I know I need to understand
it for the context of the episode, I just feel
like I'm in a corner at a house party and
I'm holding a clammy bud light and it's mostly empty,

(57:51):
and You're like, just one more thing though, because you know,
I mean, the important thing to understand is that what
Sam has done so crypto is like unregular aided right.
It is detached from any state, Okay, which is why
people like it, Which is why people like it. Yes,
Sam has what Sam has done has come in and
he's not the first persons to do this and said,

(58:11):
I have built a place where you can keep all
of your crypto and you can trade it with other
crypto to try to make money the same way people
do with the stock market, right where it is more secure. No,
because here's the thing, Jamie, he says, it's secure. But
here's the thing. So you know how the banking system,
how banks used to just go bust and everyone would
lose their money and it caused a great depression. You

(58:33):
get that part of the history of finance, right. Oh yeah,
one of the characters from Titanic killed themselves over that.
Exactly exactly. So that was a big problem, and we
developed a bunch of regulations so that So what Sam
has done is he's built a bank that has none
of that so that people can gamble on the internet.
So yeah, got exactly. That's all you need to understand

(58:58):
is that Sam has built a big unregular they did
bank for people to gamble with. UM. Yeah, anyway, UM,
and this is this is it is. It could not
have been clearer that this was a Ponzi scheme. And
two eighteen they put out an advertisement to investors and
I'm going to read it right now. I think you'll
be like. We offer one investment product, annualized fixed rate loans.

(59:20):
We can accept both fiat and crypto and can pay
interest denominated in either. UM. These loans have no downside.
We guarantee full payment the principle and interest enforceable under
US law and established by all parties legal counsel. We
are extremely confident we will pay this amount in the
unlikely case where we lose more than two percent. Anyway, Again,
I'm not a finance expert. Neither of you Jamie banks

(59:42):
offer like three percent return on like a fucking uh.
If you're like putting a pile of cash in a
bank and you're getting three percent back, You're doing okay
nonsense that nobody, no one can guarantee that it's not
a real product. I would pretty struck by their use
of the length whiche like we're pretty confident we're gonna

(01:00:05):
be able to play it sounds like it's such just
sounds like someone who is not actually very confident. And
also if this is if you are if you are
investing in a mark in the stock market, right, and
someone says this investment has no downside, it's impossible for
it to fail. That person's lying to you and breaking
the law because it could and often does. Oh right,
because then you're just you're you're making an almost guaranteed

(01:00:27):
false problems. Yes, you cannot do you cannot say this
stock can't go down. Right, If you're a stockbroker, you
cannot tell a client it is impossible for your investment
in this company to fail because that would be a crime. Um.
But with crypto crypt that's unterted territory, territory, you can
do anything. This is also a Ponzi scheme, right, What

(01:00:48):
what what fucking made Off was doing is he had
this investment portfolio that was I forget with the exact
but it was promising an unbelievably high return and guaranteeing
that people would get it right. And what he was
doing is as new people put money into the investment,
he was using their money to pay the old investors
so that nobody noticed that things were sucking up. But

(01:01:08):
eventually new people stopped putting money into the thing, and
it all fell apart and a lot of people lost
billions of dollars, right, Like, yeah, he was also using
a lot of that money to live, you know, an
incredibly lavish rich guy live anyway. Sorry, I only understand
financial concepts when Selena Gomez breaks the fourth wall and
explains it to me. I'm doing my best to be

(01:01:30):
your Selena Gomez. But do you know who Selena Gomez is? Yeah,
she's that chick from the Thing Nailed It. She's she's
kind of in the middle of a fun scandal right
now where she's in a feud with someone who donated
her a kidney what which is a very funny online
feud feud with that person because she Okay, if you

(01:01:54):
asked Robert, this is something I can explain to you.
This so, so what happened was Selena Gomez needed a
kidney donated her close friend who works in the industry.
I don't know who it was, but I guess she's
like sort of famous gave her a kidney a couple
of years ago. Then Selena Gomez turns around a couple
of weeks ago and says, I have no friends in
the industry except Taylor Swift incomes her kidney dontor being like, oh,

(01:02:18):
that's interesting because I'm one kidney light d like I'm
not quoting it, but and then, and then Selena, instead
of apologizing, Selena Gomez is like, oh, sorry, I didn't
thank every person I've ever met in my life. Yeah,
but I mean, Selina, she did give you a kidney. Yeah,
that's a special kind of friend. You guys weren't just

(01:02:39):
like drinking buddies. She literally gave you a kidney. Um,
and that she did. She did the thing that you
would use as like a joking description of someone who've
done a lot for you, to like like hyperbolically say
that you owed them a lot you know who's done
and implying that Taylor Swift has done more for you
than your kidney don't so. I just think it's the

(01:03:02):
funniest feat of all time. Alright, we were talking about
a cryptocurrency. We weren't. Um, we were talking about let's
let's get back to cryptocurrency. So to talk about what
came next after establishing Alameda, UM, I'm going to quote
again from that sequoia right up at this point mid

(01:03:22):
two thousand nineteen, SPF decided to double down again and
scratch his own itch. He would bet Alameda's multimillion dollar
trading profits on a new venture, a trading exchange called
f t X. It would combine coin bases, solid stolen
regulation loving approach with the kinds of derivatives being offered
by by Anance and others. He only gave himself a
twenty chance of success, but in his mind, SPF needed

(01:03:44):
extreme risk to maximize the expected value of his lifetime
earnings and therefore the good his earn to give strategy
could do. The fact that he was, by his own
lights overwhelmingly likely to fail was besides the point. The
point was this, when SPF multiplied out million billions of
dollars a year, a successful cryptocur and the exchange could
throw off by his self assessed chance of successfully building one.

(01:04:04):
The number was still huge. That's the expected value. And
if you live your life according to the same principles
by which you trade an asset, there's only one way forward.
You calculate the expected values, then aim for the largest one,
because in one, but just one alternate future universe, everything
works out fabulously. To maximize your expected value, you must
aim for it and then march blindly forth, acting as
if the fabulously lucky f b SPF of the future

(01:04:26):
can reach into the other parallel universes and compensate the
fail sun spfs for their losses. It sounds crazy, perhaps
even selfish, but it's not. It's math. It follows the
principle of risk neutrality. Yes, it actually is crazy. That's
not math. I'm sorry, that's actually not math, but a
lot of words all at once. That is like, oh

(01:04:49):
my god, the spiraling launch is this? You are using
hundreds of words and high minded bullshit rhetoric to be
like gambling is the best way to make money. He's
fabulously three times in one sentence. Yeah, man, you know who.
I've heard this basic argument from my friends drunk in
Las Vegas, explaining what they're trying to play at the craps.

(01:05:12):
Why they don't want me to leave the little Horsey game?
This is something. Yeah, someone's like, no, don't leave the
Sex in the City slot machine, and you're you want
to You want to hear my mathematical thinking on gambling,
Jamie Loftus, because this will make more sense than anything
that happens in the Sequoia article. Okay, when I go
to Las Vegas, I find me the penny slots where
I can see the most waitresses walking around with those

(01:05:33):
little trays that they have the drinks and stuff on.
Then I sit down at them and I don't start
to play until one gets close to me, and then
I pressed the button as soon as she walks past,
and I like, catch your attention, and then I get
a free drink. And the way that it works out
is that as long as I can get more free
drinks than I'm spending at the penny slots, and mostly

(01:05:53):
I'm just reading a book and hiding it while I'm
at the penny slots and only press it when the
waitress gets near. Like the other Vegas guys, I can
drink effectively for free. Right, it works out to be
like twenty five cents of drink if you're really smart
about it. That is my financial advice to all of you.
I do. I do respect that how you make it
even better. I used to go with a bag because

(01:06:14):
when I was poor. What I would do is I
would go to Vegas once every couple of years, usually
for work, and I would get all the free drinks,
which came in glasses a lot of the time, and
I would keep the glasses, and so I was able
to furnish my apartment with stolen Las Vegas glasses. Love
stealing glasses. I've my fair share of glasses. And I
would get up to the floors where there were the
nicer hotel rooms, and I would find all the people

(01:06:36):
who set out their plates and stuff from like room service,
and I would just take those and take them back
to my house. I respect that. I'm trying to think.
I was like, I don't have a real system for well. Actually,
when I go to Vegas, I always stay at the
hotel with a roller coaster on top. And here's what
I do. I go on the roller coaster once, sometimes twice.
Then I go see one show. Usually it's horrible. The

(01:06:59):
last time to see the Backstreet Boys. And guess what
I found out One of the Backstreet Boys is in
Q and on and then I got bumped up from this.
It was a real The point I want to make, Jamie,
is that what I just described to you, my Vegas
strategy has made me infinite, infinitely more money and net
profit than Samuel Bankman. Freed is actually going to make

(01:07:21):
in crypto Kurts. Oh fun foreshadowing. Um, So never hang
out near waitresses though, because he's probably afraid of women.
He's probably afraid of them. But I am fine with
asking women for a free drink as long as I'm
paying at the penny slots, you know, So it's not weird. Wow.
Feminist icon, robertist icon, Robert Evans, getting those getting those

(01:07:44):
shitty Vegas Irish copies. They come in the glasses. I
want a nasty but I like the glasses they used
to come in. They do have, I know, but then
there's the consequence of having to drink with inside. Well,
you know, Jamie, that's why they call me a hero. Um.
But the Mahatma Gandhi of the West, they call me
the Jesus Christ. And podcasting. These are all things people

(01:08:06):
if you're gonna lie, make it realistic, James, So James soup. Anyway,
let's continue. Um, I'm like, yeah, I think it's hard
to justify being risk averse on your own personal impact
impact SPF told me when I quized him about it,
unless you're doing it for personal reasons. In other words,
it's selfish not to go for broke if you're planning

(01:08:27):
on giving it all away in the end. Anyway, again,
just clown shit. So all of this is a con spoilers,
so you don't have to think that much about it.
In a recent series of text messages with a Vox journalist,
after his entire exchange exploded and everyone found out he
was a financial criminal, Sam Bankman, Freed more or less
admitted that everything he'd had to say about effective altruism

(01:08:50):
was a con meant to get people to trust him
and invest in his company. And I'm gonna read the
text Yeah, I'm gonna read the texts to you between
him and this journalist who, by the way, he put
money in the v so he helped fund this journalist.
So the ethics stuff, this is the journalist. So the
ethics stuff mostly affront people will like you if you
win and hate you with you lose, and that's how
it all really works, Sam, Yeah, I mean that's not

(01:09:13):
all of it, but it's a lot. The worst quadrant
is sketchy and lose. The best is win plus question
mark question mark question mark clean plus loses bad but
not terrible. He also misspells terrible but whatever the journalist
and then replies, you were really good at talking about
ethics for someone who kind of saw it all as
a game with winners and losers. Yeah, he he, I

(01:09:34):
had to be. It's what reputations are made of. To
some extent, I feel bad for those who get sucked
by it. But this dumb game, we woke Westerner's play
where we all say the right shibboleths and so everyone
likes us. And that's the actual truth here, right, That's
the thing that's honest about it is Like, man, it
was all of this talk for everyone. That's the entire
this Miscastell motherfucker. The only reason his effective altruism thing

(01:09:57):
exists as a funded thing is as a fucking shibba
left for billionaires who don't want to pay taxes and
want to let the world crumble around them. Will sucking
as much value out of the working class as they
can and want to pretend like their heroes at the
same time, so that people write their dicks and articles
like that fucking sakoyapies that absolutely fucking ridiculous text. Actually

(01:10:18):
is like a very important document. It's incredibly important. It's
deeply crucial. I hate that there's such a crucial document
that also includes he in it. Yeah, there's nothing to
be done about that one, Jamie, Look, there's it doesn't
feel good, but you know we are previous most important
document to that effect was an I am that said
ha ha, So a text with he he is kind

(01:10:39):
of the logical progression that is fascinated. Do you have
any like insight into like why he would so freely
admit that? Now, I don't. Actually, one of two things
has to be happening, because again the spoilers, this all
falls apart. His exchange goes from worth thirty two billion
dollars to worth basically zero dollars. In the space in
my head anytime you say, like like twenty four hours

(01:11:01):
this happens, his net worth falls in a day, Um,
like it is it all because they realized that all
of the money has gone that he'd been taking money
from one business and using to gamble in another, and
also to pay him and his friends, and all of
the money that the investors had put in when they
tried to withdraw it, like the their money that was
supposed to be in there on paper, none of the
money existed because again he had stolen it um anyway,

(01:11:25):
the context of this article makes it clear that he
felt like, I don't know whatever. This was all the
confidence game, right, that's the key all of this could work,
and the balance because people were looking at their balance. Shee,
I'm making money. I'm making money. The returns are great.
And that money existed on paper until they tried to
take it out because then it actually wasn't there because
he had already frittered it away. It's a confidence game,

(01:11:48):
and we have an you know that's the way it
actually worked. We also know and this is all still
coming out, so I'm not gonna get too much into it,
but we know that he had f t X loan himself.
Sam BigMan freed about a billion dollars, Like his paper
value was like two billion, but he gave himself basically
a billion dollars in other people's money. Um, although he

(01:12:08):
may have gambled that away. It's really unclear how much
money he actually has liquid at the moment um do
we think he has any I have no idea either either.
He was like actually a gambling addict and a narcissist
and he really did lose it all or this was
a con from the beginning, knowing it would all collapse,
and he got as much as he could out of it,
and he's going to wind up someplace without extradition, right like,

(01:12:30):
and that was the goal. If you asked me a
couple of years ago, I would have said it's the latter.
But I feel like the last couple of years have
demonstrated so often that like people are just straight up
not smart and don't have a plan, and it is
all a narcissist shell game. It's very it's it's un
at the moment. I'm going to read you some things
at the end here and you can kind of make
your anyway. Whatever. So after you know, starting FTX, the

(01:12:52):
company moves to Hong Kong and then the Bahamas and
they use they buy these very like a thirty nine
million dollar mansion that he lives in with his friends
using FTX tokens, which is like internal cash that his
company issues based on the perceived value of the company.
They don't know how many rooms is that it's a shipload,
and and they're able to buy it because everything's like

(01:13:13):
their paper on paper. They've gone from nothing to worth
thirty two billion dollars in like a year or two.
And these these idiots, like property owners in the Bahamas,
are like, well, clearly, the best thing we could do
is by this building using the fake money they created
for their own company that they tell us is worth
a lot of money. This is worth it. Um. So

(01:13:35):
since everything collapsed, some people that SPF had like reached
out to as early investors have commented about why they
didn't invest in this company in the early days, and
most of them it's because, like what they could see
of his investments, the tens of millions that he promised
to charities in the long positions in risky cryptocurrent companies
didn't make sense. They would look at like the things
he was buying with the company assets and the things

(01:13:57):
that like he was investing in and be like, well,
there's no way he could have that kind of liquidity
if this is a legitimate exchange right, he can't have
that kind of cash on hand. It doesn't make any sense.
Rich fucking assholes always telling themselves like that, that's funny.
And what's funny is that, like I found one of
these guys who like, yeah, I didn't invest because I
could tell it was a con and then was like,

(01:14:18):
but I didn't tell anybody because I didn't want to
get yelled at. That's unfortunately. I do see myself that
statement a little bit where I was like, oh, someone
might be someone might send me a rude text. I
guess I will this. Yeah, oh my god, it's very fine,

(01:14:41):
goofy bullshit. I don't I'll tell you one thing, Jamie.
He's a spineless guy who still has his fucking money. Wow,
you're in love with him? That's what. Yeah, you know whatever.
It's the finance industry. They're all ghoules from what we
can actually tell now, because again, this fucking Captain Dick writer,

(01:15:05):
the bad writer, Like, I have to read you another
quote that I didn't have in my script to give
you an idea of just how much he fucking how
much he loves SBF. Here's a quote, um from him.
Uh okay, yeah, this is this is actually, Jamie, oh boy,

(01:15:26):
this is when this is when, this is when, this
is when the writer Captain Dick writer is hanging out
with him in the Bahamas at his office quote, and
he's like, what if we kissed? Sensing an opportunity for connection,
I chip in with my own two satoshi, which is
two cents but a bitcoin term. Anyway, I'm going to
walk into the ocean. Wow. Okay. I don't pay any

(01:15:48):
attention to social media. Not because I have any moral
case against it, I say, but because for me, reading
books is the highest band with way I know to
get quality information into my brain, which just craves the
stimulation I'm addicted to reading, which explains how I ended
up being a writer. Oh yeah, said SPS say, SPF,
I would never read a book. I'm not sure what
to say. I've read a book a week from I

(01:16:10):
hate them both because I'm not sure what to say.
I read a book a week for my entire adult life,
and I have written three of my own. I'm very
skeptical of books. I don't want to say no book
is ever worth reading, but I actually do believe something
pretty close to that explains SPF. I think if you
wrote a book you fucked up and it should have
been a six paragraph blog post. Those guys writing word

(01:16:32):
article that he will not read. It's like two guys
whose heads are made out of rocks, just like clunking
against each other repeatedly. Just just wait, Jamie, Jamie. It
has it hasn't gotten as bad as it's going to get.
Whatever the case, I hate books. Whatever the case, I

(01:16:52):
find myself sad for the man, And it occurs to
me that my reaction is exactly what might be expected
from a beta in the brave New world Old Crypto
is creating. Whoa how can you write that and not
leap off the top of the building He literally self
identified as a beta to also, just like what I
love about this is just like what we have to

(01:17:14):
take it. We have to take it as given that
Crypto is creating a brave new world and none of
us has any choice in that. It's inevitable, it's unstoppable.
It's going to dominate everything, which is like capitulate to
our Yeah, so I think again, what I wonder does
he think? I think? Wouldn't someone with i Q points
to spare realized that dismissing books, all books is essentially worthless?

(01:17:34):
Might rile a writer? Was he playing with me? Is
this fun? Is this humor? I'm satisfied with my meta
analysis until I realized that one can always increment the
level of strategic play in this sort of game. It's
like poker. Level one is just thinking about how to
strengthen your own hand. Level two is thinking about what
your opponent's hand is. Level three is thinking about what
your opponent thinks your hand is, and so on. And

(01:17:55):
since SPF is obviously a genius, I should simply assume
that compared with me, SPF will always be playing at
level in plus one, which was making which makes my
analysis of the intent behind SPS books for losers idea
spiral into infinity and crash like a computer like it
was how you write about me and your diary? No, Jamie,
because do you know what the only ethical speaking of ethics,

(01:18:17):
you know what, if you think this way about conversations,
the ethical thing to do is fill your pockets with
rocks and walk into the ocean. Wow, you're wolfing this guy. Yeah,
I absolutely am him and Sam Bankman Free. I could
not hate these people more. I mean, they're both there.

(01:18:38):
There's never been two wronger people having a conversation, and
of course it came out. He's just like, well, obviously
he's a genius. We have to assume that because he
became a billionaire. So and he's like, no, he was
never a billion There his defense, that's math he did
to balance sheet, Like we've now gotten access because he
had to like go to the bankruptcy and step down.
So like there's a caretaker trying to get people's money

(01:19:00):
out of the company, and we know ship like we've
seen the Excel files where they kept their financial records,
and it's him being like, this is basically bullshit, Like,
sorry about this, we funck this up. We weren't actually
keeping records here the company balance sheet. There was no
accounting department. People would file there, like like when they
would spend hundreds tens and hundreds of millions of dollars

(01:19:20):
and things, they would just message each other on signal
about it to get approval and had deleted deleted messages
on so there's actually like no record of a lot
of the accounting they did. At one point hier and
outside accounting firm to handle their accounting of this thirty
two billion dollar company and the firm they hired is
the first builds itself as the only metaverse based accounting firm.

(01:19:41):
Um His the accounting firm for this thirty two billion
dollar company, exists entirely within a crypto themed video game
called decentral Land. Um. It is so futpid with everything
you're saying. Okay, so this is really this is bad
and this field bad to hear Um, I have a question, Yes,

(01:20:04):
Jamie Um, who is I guess because I am I
am kind of back in in Lizzy holmes Land because
that whole last I mean, like departments that should be,
you know, taking care of ship don't even exist, which
is very farops adjacent to me parasian if you will.

(01:20:24):
As with both written books, we can just make up
for Yeah, of course, yeah, that's that's mostly what writing
a book is. For sure. I view myself as the
beta of this conversation, and so I feel comfortable asking
Robert Um who is ultimately affected by this, Like what
is the like trickle down of this what happens? Um?

(01:20:47):
Is it just other rich assholes or it doesn't affect regularly?
Like does it affect Probably there will presumably be some
here's the thing, and here's why there's that lawsuit against
like Larry David and all those other guys who appeared
to the ft X. AD. Yeah, presumably a bunch of
regular people got suckered into putting their money on ft X,

(01:21:09):
and those people have probably lost some money. That said,
for the most part, it's fine because most of the
people who lost money are like gamblers who probably suck
as much as this guy did. Um. And it's one
of those things. There's just an article I think at
Financial Times where someone's like, actually, and I think they
actually had a good point. We shouldn't regulate the crypto

(01:21:31):
industry because if we regulated, it will be brought in
closer to the actual financial industry as it exists, and
banks will put more investments into crypto and it will
get seen as like legitimate and backed by the state.
And so when these conmen destroyed tens of billions of
dollars overnight and cause panic in the industry, it will
affect the real economy. And right now it doesn't seem
to And like, yeah, I guess that is kid, that's

(01:21:52):
not a bad point. Maybe we just let it die
on its own. I don't know. Um, And it seems
so more like, well we'll know more. So, yeah, we
will continue to learn more. One of the things that's
funny is about this is that Sequoia, this investment firm,
put like two hundred million dollars into the company, which
they have all written off. Now they're accepting it as
a total loss. They're going full that girl on this. Okay, Now,

(01:22:15):
when you hear this very serious investment firm put two
hundred million dollars into this business, you probably assume Jamie wow,
I bet he had a good pitch, right, I actually
I don't know if we're talking Sarin knows. I actually
don't think that that is. That's not just qualifying to
have a dogshit pitch. You know. You know who can
make this clear for us is Captain Dick Ryder. Thanks

(01:22:37):
SPF told Sequoia about the so called super app. I
want FTX to be a place where you can do
anything you want with your next dollar. You can buy bitcoin,
you can send money in whatever currency to any friend
anywhere in the world. You can buy a banana. You
can do anything with you you want with your money
from inside f t X. Suddenly the chat Yeah, I

(01:22:58):
don't know, I feel like I can do anything I
want with my debit card, Like I've never run into
a thing I wanted to buy and been like, ah,
I cannot know how do I even buy drugs with it?
By going to an A t M. If I were
to be a person who buys drugs, which I'm not,
I could go to an A t M and take
out cash and purchase support your local drug dealer and

(01:23:22):
banana vendor for crying out so he gives this banana
pitch quote. Suddenly, the chat window on Sequoia's side of
the zoom lights up with partners freaking out. I love this, founder,
typed one partner, I am a tin out of tin
pinned another Yes, exclamation point, exclamation point, exclamation point, exclaimed

(01:23:42):
a third. What Sequoia was reacting to was the scale
of SPFS vision. It wasn't a story about how we
might use fintech in the future, or crypto crypto or
a new kind of bank. It was a vision about
the future of money itself, with a total addressable market
of every person on the entire planet. I sit tin
from him, and I know it's These people are just

(01:24:03):
actually like three executives doing lines of coke and once
swallowing a banana with the peel still on. They're like, yes, yep,
oh my god. Okay, so it's I mean, which does
kind of continue with the trend of like, you know,
as as b F has never had a problem or

(01:24:24):
a like anything to overcome, Like if it's this easy
for him to con people into ship, like, of course
you would have a god complex. You've never you've never
been told no, yep, yep, yep, yep, yep, yep. It's cool.
So what Sequoia was? Yeah, sorry, I have to continue
this this fucking quote. And next he's going to talk

(01:24:45):
about a person who works at Sequoia and is in
the room for this. I sent ten ft from him
and I walked over thinking, oh shit, that was really good.
Remembers Aurora. And it turns out that fucker was playing
League of Legends through the entire meeting. And this is
framed in the article and in all the coverage before
everything fell apart. It's like, so awesome, He's so cool.

(01:25:05):
This writer talks a bunch about how like Sam never
stops playing video games when he's talking to this writer,
when he's having corporate meetings, he's playing video games. Basically,
a hundred percent of the time. Um, and this has
always mentioned like he's always working, He's always in the office,
he sleeps in a beanbag chair at his desk, and
it's like, no, dude, he's not always working. He's conning you.
And he plays video games all the time and pretends

(01:25:28):
that that's a fucking job. Um, which is great, great
con good for you always working in always They're two
very different flavors of things happen exactly. Um, it's all
part of the fucking con So is the fact that
he always he always were like ratty old athletic shorts
and like a wrinkled T shirt. Because like that's if
you are a young man in the tech industry, that

(01:25:50):
makes people think you're a genius, right, because genius is
dressed like shit. Yeah, he's like, now, if I bring
a real stink into their people are gonna like jack
up my already fake i Q score about twenty points. Yeah,
and it's what you know who else dresses like ship
the guy I used to buy weed from. Yeah, yeah,

(01:26:14):
you know who? Also? You know who wears the same
outfit of Sam Bankman Freed, my old buddy who once
at a party got into an argument with the guy
and broke fifteen bones in his face because they were
both drinking. Not a corporate genius. I do like that
shared aesthetic where it's like, really the difference is the
pet snake, that is that's the that's that's how you

(01:26:38):
truly can sniff out the africa he's based. He's the
same kind of person as Elizabeth Holmes and he was
again he's a confidence man, and this gets us into
the Larry David ship because the thing about being a
confidence man is that as long as people are convinced
there's money, their money is safe and most of them

(01:26:59):
don't try to pull it out, then you can keep
the con going, and you can keep the fake numbers increasing,
and you everyone will think you're richer and you can
actually get real money out of this. So one of
the things that he did is he would pour shiploads
of money into sponsorship deals and to other ventures to
make his company seem legit. One way he did this, Yeah,
he spent seventeen and a half million through FTX to

(01:27:21):
sponsor the athletic teams that you see Berkeley. Uh. He
launched a twenty million dollar ad campaign with Tom Brady
and just sell Bunchen. He offered n F T s
at coach uh huh, And he spent a hundred and
thirty five million dollars on the naming rights for the
Miami Heats Home arena. And the purpose this is all
to build confidence, right you see, you see it's the
It's the same thing Crypto dot Com did, by the

(01:27:42):
way with the arena, and I want to say, I
was like, I feel like the Crypto dot Com arena
is not long for this world, and you should I
don't recognize that as an act. Is my money safe
in this thing that's a bank but not a bank?
Well their name is on the arena, so it's probably legit.
Here's the thing, is like, yeah, it's like now walking
into the Crypto dot Com area arena, I couldn't feel

(01:28:04):
less safe. I couldn't feel less secure. Like when it
was the Staple Center. I'm like, oh, you know what's
never going to go out of style? Little notebooks. People
have been using Staples since we were cavemen. I assume. So, yes,
technology just like the worst fucking name on earth. But
it infuriates me these people. So if he has a

(01:28:25):
dog in the fight, I do In his interview with Vox,
Sam basically admits this, albeit in a slightly careful way.
Journalist so, f t X technically wasn't gambling with their money.
F t X had just loaned their money to Alameda,
who hadn't, who had gambled with their money and lost it.
And you didn't realize it was a big deal because
you didn't realize how much money it was. Same response.

(01:28:45):
And also, I thought Alameda had enough collateral to reasonably
cover it. Journalist says, I get how you could have
gotten away with it, but I guess that seems sketchy.
Even if you get away with it, Sam, it was
never the intention. Sometimes life creeps up on you, um
so literally that life comes at you fast. So Sam's
worth taps at around twenty two billion dollars on paper.

(01:29:08):
In reality, neither Alameda nor ft X had ever taken
and even close to that much money. The valuation was
based entirely on nonsense calculations that were themselves based on
lies from ft X. Is extremely cooked books. There's a
lot more about this than we're getting into. People are
still finding this all out. There's one thing I should
probably read, which is, so you know when his company collapsed,

(01:29:29):
he had to step down from running it, right, And
because a lot of money is still in there and
a lot of like investments are still tight up in that,
they put a guy in charge of the company again, right.
And there's like there's specific dudes in the business world,
um whose like job is to come in when a
company fucks up like this and like try and get

(01:29:50):
as much money back out for the shareholders as possible
to minimize the bleeding. So they kind of have like
a like how they had like old Hollywood, they have
like a fixer guy. Yeah, yeah, yeah, they have. And
this is this fixer guy specifically, he is the guy
that they brought in, um when in Ron, he took
over in Ron after it fell apart in order to

(01:30:10):
try and like minimize the damage from it. So he
is the guy who got brought in to deal with
like the fact that this massive fucking crime happened with Enron.
UM one sec. My my favorite, um, my favorite en
Run memory not that you asked, um, was the women
of Enron playboy spread that I got too archived during

(01:30:32):
my time there. Oh god boy, did those en Ron
girl bosses have their there? So the second only two
women of seven eleven, which is my actual favorite spread
continue first option. This company has about a million creditors,
so about a million people possibly lost their entire investment
in this company, which is a stunning amount of people

(01:30:52):
to take money from um. And again, we're probably we
are probably looking at like five or ten billion dollars
stolen something like that. Kind of unclear the exact amount,
but anyway, this is what the guy in the Delaware
bankruptcy court filing. This is what the guy who was
the guy who took over in Ron after it became
clear that the whole company was a criminal enterprise. This

(01:31:12):
is what that guy wrote about Sam's company. Oh no,
never in my career have I seen such a complete
failure of corporate controls and such a complete absence of
trustworthy financial information as occurred here. From compromise systems integrity
and faulty regulatory oversight abroad to the concentration of control
in the hands of a very small group of inexperienced, unsophisticated,

(01:31:34):
and potentially compromised individuals, this situation is unprecedented. Again, that's
the guy who took over in Ron, literally like Bill
Clinton dropping a notes post, being like never have I
seen a more cheated on my wife? And like, well,
I will say it's different. This guy did not commit

(01:31:57):
any of the iron crimes, right, this is the guy
who comes saw them all. This guy is after he's
brought in it becomes clear that none never in my career.
This guy, Yeah, it's probably best to look at this
guy is like an E M. T. When it becomes
clear that a company that has a shipload of money
in it and is central in the economy has collapsed

(01:32:20):
because people broke the law. He comes in to minimize
the damage. But he was not working at in Ron previously, right, Like,
it's not he's not trying to like stop anyone from
getting in trouble. He's trying to minimize how many people
are hurt by this anyway. Yeah, um, I just want
to make clear, like that guy's anyway whatever, he's not.
He's not the end he is not the end runner.
He did not make in roun bad. He's just was

(01:32:42):
there afterwards and was like this company is even worse.
He bought the issue of Playboy and then he pushing
so I should god, there's yeah, we're we're getting close
to done. I should note that before everything collapsed. Sam again,
he's in the effect of altruism. He's he's he promised
to donate like a couple of hundred million dollars to
these e A causes. I'll lot less than that actually
wound got out. Some of them were good, but a

(01:33:04):
lot of it was like So he made a huge
point that he was like his one of his major
priorities was pandemic prevention. Right, we have to stop the
next pandemic. I'm gonna put as much money as i
can to pandemic prevention. That's the best effective altruist thing
that I can do. Um to talk about how well
that actually worked, I want to quote from the Washington
Post here. Ft X backed projects ranged from a twelve

(01:33:27):
million dollars to champion a California ballot initiative to strengthen
public health programs and detect emerging virus threats. Amid lackluster support,
the measure was punted four to investing more than eleven
million on the unsuccessful congressional primary campaign of an Oregon
bio security expert, and even a hundred and fifty thousand
dollar grant to help moncleft Slough, the scientific advisor to

(01:33:47):
the Trump administration's Operation Warp speed vaccine accelerator. Right his memoire.
So that sounds like a giant waste of money. Right,
that sounds like none of it. Even if it was
like good, it sounds like it did in the like,
even if the goals are good, like well, the ballot
measure failed, like it got punted, So it's not like
it worked. Um, and it gets worse because SPFS fund

(01:34:08):
also put a lot of money, like five million dollars
into Pro Publica. And Pro Publica they've done a lot
of cool stuff. They also published an extremely flawed investigation
that backed the lab leak hypothesis. Um, I'm gonna the
l A Times and their analysis of this deeply flawed,
flawed piece of reporting. And also, you know, we've got
some notes for the l A Times as well. Yes,

(01:34:29):
nobody's perfect. The The l A Times called it a
train wreck, noting the article is based heavily on Chinese
language documents that appear to have been mistranslated and misinterpreted,
according to Chinese language experts who have piled on via
social media since its publication. It also takes as gospel
or a report by a rump group of Republican congressional
staff members asserting that the pandemic was more likely than

(01:34:50):
not the result of a research related incident. And this
has been the fact that Pro Publica published this has
like provided a shipload of fuel to the It was
all a fucking lab leak for China. It's China's fault.
Um Republicans. Yeah, Sam Bankman Freed funded that ship. Um
and god yeah, basically none of the ship he was

(01:35:10):
putting in money into that was supposed to be good
really worked, and a lot of it was. So another
thing the right is doing right now is they're talking
about he was like the number one or number two
donor to Democrats during the mid term elections. Seth McFarland. Yeah, yeah,
but none of his donations worked. And also he gave
it was like thirty two million he gave to the DIMS.

(01:35:31):
He gave like twenty four million to the Republicans. And
the reason he was giving this money Number one, there
were some like pro pandemic response candidates he wanted to back,
most of whom didn't you know, do well. But also
like a lot of the money was towards Republican and
Democratic candidates who were going to be part of the
regulation of the crypto industry because he wanted to have

(01:35:52):
a seat at the table and push regulations in a
way that yeah, that would enable that is yeah exact lee. Um.
So anyway, in general, nothing at Alameda or f t
X was as it seemed. And that Dick writing Sequoia
article Carolyn Ellison, the CEO of Alameda is he talks
about her a bit, and like she frames her as

(01:36:14):
like this quintessential innocent nerd girl, plucky and ethical and
optimistic to show like these are the kind of you know,
smart young gen z kids that are you know, building
this this great company. And like she showed up in
Larpe gear to meet with Sam and talk about the
future of their great financial enterprise. And she's an ethical altruist. Um.
Since everything fell apart, it's come out that she and

(01:36:34):
Sam were dating each other and possibly other members of
the company. Um. And also people have found her here
we go. People have found her tumbler um, and boy
is she's sketchy as hell. Um. I'm gonna quote from
a report on her tumbler activity and decrypt dot com. Boy, howdy.

(01:36:55):
When I first started my first foray into POLLI I
thought of it as a radical break from my trad,
pas asked, the account wrote in February, but tbh, I've
come to decide that the only acceptable style of polly
is at best characterizes something like imperial Chinese harem. The
account went on to detail how a polyamorous dynamics should
ideally function as a cutthroat market of sexual competition and subjugation.

(01:37:16):
None of this, none high, non hierarchical bullshit, the account elaborated.
Everyone should have a ranking of their partners, people should
know where they fall in the ranking, and there should
be vicious power struggles for the ranks. God, it gets worse, Jamie.
The Ellison linked account also demonstrated a substantial preoccupation with
hb D or human biodiversity, an online euphemism for the
discredited fields of race science and eugenics popularized right, oh

(01:37:42):
oh boy, give me one more paragraph and then we
can talk about this. Jamie Ellison has for years vocalized
her die Heart obsession with Harry Potter, and one post
her affiliated Tumbler account tied her love of online character
chrizz Is Quizzes to her pinshot for sorting Indians by
their cast, which she presumed to indicate nedic distinction. Oh
my god, it even J. K. Rowling wasn't thinking something

(01:38:06):
that fucked up, and that's really saying something there, someone
is amazing astonishing. Tumbler is exclusively for Sherlock fan fiction
and things that trigger my eating disorder. That's it. I
cannot like. Oh, that's so dark, it's I almost can't
fathom it. Right, And again, there's so much. We probably

(01:38:27):
will do a follow up at some point because like
the fact that the fact that it was this easy
for like some fucking crypto rage are the ones who
reported on it to find her Tumbler where she talks
about race science makes me think these guys were all
probably into a lot more fucked up ship than they
let on. Yeah, so we'll see, we'll see. I just

(01:38:50):
we don't have the hour for me to decompress the
way I need to after hearing that sentence. Specifically, I
need a cigarette. I'm going to start smoke today. And
I hope she's fucking happy. Oh my god, that is
that is brutal place to land. Hopefully they're all all

(01:39:12):
of their money's gone, but they probably squirreled away millions
and stuff for themselves, although at least one of the
articles I've read says that, like, his net worth is
effectively zero now, but I don't think anyone actually knows
what his net worth is right now, like and how
much he got, like his company went from valued at
thirty two billion dollars to most recently there's something like

(01:39:33):
six fifty dollars in actual assets left. Um. But I
also kind of think he and the others probably have
millions or tens of millions that they set aside um
in shady ways for themselves. Yeah, I mean, well that
does sound like what the Beanie Baby's guy would do,

(01:39:53):
and that is my yardstick for morality. That is so
um that that is very very scary to uh to consider.
I feel like guys like that the thing that is,
I mean, I don't know whatever you hear about, Like
it is so karmically satisfying to know that someone like
SBF can can be completely bottomed out and like destroyed

(01:40:16):
by something like this. But the thing is like when
when rich guys like that lose everything, they just come
up with worse, more hateful ideas and then come back.
And that is like always what kind of scares me
about that? It is so funny. Um. I don't know, Jamie,
I don't know what the solution is. That's not like
I want him to have money again. I just you know, what,

(01:40:40):
how can you make someone say less again? I think
the podcasters dilemma. Look, here's here's where I'll land on this.
You know, I don't think I don't think people should
be thrown into cages generally unless there's literally no other
way to stop them from harming folks. So and I
don't think that's the case with these people. So instead,

(01:41:04):
I think the actual solution is to close from the
outside all of the doors to that the fucking rich
person apartment complex they occupy in that Bahamas development, lock
it from the outside, and once a week drop in
food and necessities via a helicopter and never let them

(01:41:26):
leave or use the internet again. Them all just be
with their friends in their in their weird little compound,
going increasingly insane with their Chinese harem ship. I don't know.
I guess that's another kind of prison. But if we
film it, we can make money. But then SBF might
may have to face his worst fear, which is reading
a book. Yeah, I guess, Like, like, my serious answer

(01:41:47):
is what do you do to people like this is
you stop them from ever being able to have access
to money again, or start companies again, and hopefully eventually
they find something to do that actually helps human beings.
And it is like like of any kind of use,
Like we're going to a a grocery store there, that's a
real benefit. People need to get food, and people need

(01:42:10):
like that's a respectable, honest way to make a living. Um.
And if any of these people were to get a
job working in a safe way, they would be providing
an infinitely greater benefit to the human race than they
could ever have performed. Perhaps a bit more of that
that ethical side of the ethical altruism you're looking. I'll
be honest. I did not come to the recording today

(01:42:31):
with a solution for the prison industrial complex. But I don't.
But I still don't like it. Um, I still don't
love it. Um. Yeah, yeah, I have no solution. Um,
But you know what I do have, Jamie, what you're plug?
No you don't. I have those? Well you have them,

(01:42:53):
but I'm letting you have them. Oh my god. I mean,
I mean I could probably do them. If nobody wants
to take this job, I'll do it. I can. I'll
do them, Sophie, do you want to do them? Yeah?
I mean you can pre order Jamie's book. Um, and
that that is linked in her Instagram bio. Um that

(01:43:13):
you can follow her on Instagram at Jamie christ Superstar
and you can follow her on Twitter at Jamie Loftus.
Help if Twitter is still around. Uh. She has a
podcast that she co hosts with Caitlyndt called The backtel Cast.
You should listen to her many limited run series, including
her most recent run, which is Ghost Church and Sophie

(01:43:33):
produced along with The Vital Cast and everything every podcast
on the planet. This has now become a plug for me. Um,
do I get everything, Jamie? Yeah, that's exactly what I
would have said, except worse. Yeah. So pre pre pre
order raw Dog. Yeah, thanks, Sophie. Yeah, preorder raw Dog.
If you listen to the hot Dog episode of Bastards

(01:43:56):
and didn't like it, you did like it now by
the book, Yeah, legally you did like it. And if
you disagree with that statement, we will send the CIA
to kill your family. Yeah. And that, and let's make
sure to attribute that quote to Robert Evans specifically, and
speaking specifically, Robert Evans specifically, Margaret killed Joy specifically, and

(01:44:20):
myself will be doing a Behind the Bastards virtual livestream
show on December eight. You can get tickets at a
moment dot co slash bTB. Yeah. Also, I have a
sub stack now because Twitter's not doing great. So that
makes me so sad. Why I like writing things. I

(01:44:42):
got to write a thing last night. Write more things
better for me than being on Twitter all the goddamn time. Yeah,
you can find it at shatter zone dot sub stack
dot com. Go there and I will be writing. I'll
try to write something every week. Maybe I won't, maybe
all of this will will fall apart, be austin time
like tears in the rain. Or maybe you'll get a

(01:45:04):
new thing for me every week. There's no way to
know every time. Half the time, when I get something
from someone's substack, because I have subscribed to quite a few,
but every time I get a message from someone's substack,
it's always like I'm so sorry and like I didn't notice.
Just give me the content and I'll send to hear
about Yeah, yeah, it's fine, Look we all I don't know.
I'm meaning to write more stuff as opposed to just

(01:45:25):
tweeting ship posts. So maybe it will happen, maybe it won't.
There's no way to know, perfect by Behind the Bastards
is a production of cool zone Media. For more from
cool Zone Media, visit our website cool zone media dot com,
or check us out on the I Heart Radio app,
Apple Podcasts, or wherever you get your podcasts.

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}How Sam Bankman-Fried Conned the Crypto World