December 14, 2022 • 19 mins
Sam Bankman-Fried, the disgraced founder and former CEO of crypto company FTX, has been arrested in the Bahamas and charged by federal officials with eight counts of fraud, conspiracy, campaign finance law violations and money laundering. He is being accused of funneling customer money into his hedge fund to make investments and loans to himself. About $8 billion in client funds have gone missing with only $1 billion being recovered. The difficulty there is that there was no adequate record-keeping as it was found out the multibillion-dollar company was using QuickBooks. Dan Primack, business editor at Axios, joins us for what to know.
Next, a significant breakthrough when it comes to fusion energy, something that could one-day provide us with unlimited clean power. Researchers at the National Ignition Facility were able to achieve what is called ignition, getting more energy out of a reaction than what they put in. The team fired 192 laser beams at a small fuel pellet and produced a small amount of net gain energy. While this is an important step in proof-of-concept of the science, it is still a long time away from being a commercially viable energy source. The lasers and equipment used would have to be drastically upgraded to produce more energy. Umair Irfan, senior correspondent at Vox, joins us for this fusion energy breakthrough.
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Episode Transcript
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Speaker 1 (00:00):
It's Wednesday, December fourteen. I'm Oscar Ramirez in Los Angeles
and this is the daily Dive. Sam Bankman Free, the
disgrace founder and former CEO of crypto company ft X,
has been arrested in the Bahamas and charged by federal
officials with eight counts of fraud, conspiracy, campaign finance law violations,
(00:23):
and money launders. He's being accused of funneling customer money
into his hedge fund to make investments and loans to himself.
About eight billion dollars in client funds have gone missing,
with only one billion dollars being recovered. The difficulty here
is there was no adequate record keeping. Dan Primac, business
editor at Axios, joins us for what to know next
(00:45):
a significant breakthrough when it comes to fusion energy, something
that could one day provide us with unlimited clean power.
Researchers at the National Ignition Facility were able to achieve
what is called ignition, creating more energy out of a
reaction than what they put in. The team fired one
two laser beams that a small fuel pellet and produce
a small amount of net gain energy. Well. This is
(01:06):
an important step in proof of concept of the science
it is still a long time away from being a
commercially viable energy stores. The lasers and equipment used would
have to be drastically upgraded to produce more energy. Who
mayor or Faun, senior correspondent at Box joins us for
this fusion energy breakthrough. It's snooze without the noise. Let's
dive in. I am hopeful that the arrest of Mr
(01:32):
Bankman Freed, the founder and pharmacy CEO of f t X,
means he will be held accountable where the fraud he
has committed and the harm he has called. Joining us
now is Dan Primac, business editor at Axios. Thanks for
joining us, Dan, thanks for having me. Well, what a
spectacular fall for the CEO and founder of ft X
(01:55):
former CEO Sam Bankman Freed. He is uh, he's in big,
big troubles now. I mean, prosecutors have alleged that he
oversaw a massive corporate fraud there at f t X
that he cost customers and investors billions of dollars and losses.
He's been charged now with eight counts of fraud, conspiracy,
campaign finance law violations, and money laundering. Damn, there's a
(02:19):
lot going on here, so help us walk through some
of it. Yeah, so you know f t X was
in exchange. There's kind of two ft X is. There
was FTX Global, which was this company that was based
originally in Hong Kong and then in the Bahamas, which
is kind of what everyone in the world could use
the trade crypto and then a lot of crypto derivatives
and these other kind of more exotic instruments. And then
there was called f t X u S which was
specific for US investors and they were at least presented
(02:42):
as separate companies. And then there was a third company
called Alameda Trading, which was basically a crypto hedge fund.
Now Sam Bankman Freed owned all three of these. Two
of them had some outside investors, but he owned all
three of these. And the basic argument is that he
kept putting his finger in different pots to help out
other parts of this business. And and most specifically, when
(03:02):
the hedge fund was starting to have problems and was
starting to face a hole, he took customer funds from
FTX Global, which he was not supposed to do, was
against in terms of service, it was also something he
told his investors he didn't do, and he took those
customer funds, and he used it to help build the
whole kind of like what Bernie made Off did back
years ago. He assumed that the crypto hedge fund would
(03:23):
start doing better, it would start making profits, and so
he could take that money and put it back in
and no one would notice that the crypto hedge fund
kept losing money and Sam couldn't keep digging, and eventually
the whole thing collapsed on So now some of the
latest things that had happened. Obviously, federal prosecutors charged him
with this stuff, but he was just arrested in the Bahamas,
as you mentioned, to the companies based out of there,
so they arrested him out there. He was also just
(03:46):
going to testify on Capitol Hill, although not in person
but remotely. So this is kind of a curious timing
of this arrest and all that, when lawmakers were eagerly
getting ready to start grilling him on a lot of stuff.
It is what we've learned today from the US Attorney
for the District of New York, who's the ones who
filed the criminal charges. They're also are civil charges from
the CFTC and from the SEC. What we learned from
(04:09):
him was that they authorized the charges last Wednesday, the
indictment was returned from the grand jury last Friday, and
then it was a matter of time kind of waiting
for the Bahamas police to arrest. So, yeah, the timing
does look weird. It's you know, he gets arrested the
night before he's supposed to testify. However, he could have
been arrested on Saturday or Sunday or even on Friday night,
So there were several days, you know, as for why
(04:30):
they wouldn't want him to testifire, why they would arrest
them ahead of time that there's several reasons they that
are potential reasons they didn't enumerate. They could have thought
there was an exigent issue. For example, maybe he's going
to leave the Bahamas, where we have an extradition treaty.
Maybe they thought money was being moved. It's also possible
they didn't want to testify in front of Congress, that
they want to be able to ask their questions without having,
you know, the jury pool maybe further deluded by all
(04:52):
the media coverage that there would have been with his
presence today. What do we make about the role that
the SEC plays in all of this and their chair
Gary Gensler. There's been a lot of buzz about him too,
you know, I know for a time said he you you know,
he had the tools to regulate cryptocurrency and some of
these companies and everything. But then this happens with f
t X. What do we make of his role in this? Yeah,
(05:14):
it's been a bad day for Gary Gensler. Again, the
SEC does file charges, so you have this twenty eight
page civil complaints against Sam Bankman freed from the SEC.
But you know, Gary Gensler was not a witness at
this hearing today that Bankman freak was supposed to be at,
but he might as well have been. It was almost
like he was being kind of question in absentia because
a lot of folks on both sides of the Aisle,
(05:35):
Democrats and Republicans, say, the SEC and Gary Gensler keep
telling us they have all the tools they need to
regulate cryptocurrencies. So either they're wrong because FTX collapsed or
they fell asleep on the job. One of those two
things must be correct. And the argument here is often well,
FTX Global, which is the company that really collapsed here,
was based on the Bahamas. That's outside the jurisdiction of
(05:57):
U S regulators, but then the responses, But you didn't
notice that the US entity, which was based in the US,
was essentially part of the same organization. You guys didn't
notice it. And when the company goes bankrupt and they
bring in this restructuring expert, somebody named John Ray, who
worked on en Ron years ago, it took John Ray
just a couple of days to figure out what was
happening here. Dear SEC, where were you for the last
(06:18):
several years? And more on John Ray because he was
testifying on all this. You know, so there's billions of
dollars and client funds that went missing. I think they've
been able to track down. I think maybe they said
a billion of that, but there's still so much more
going on there. And you know John Ray saying, as
you mentioned, it took him, it was very quick that
he was able to identify how unprepared these people were
(06:40):
that were running FTX. And he's even said that they
were using quick books, you know, something that they used
for small businesses to manage that stuff, that they were
using this to run a multibillion dollar company. And he says,
you just can't do that, No, you don't do that,
And look, this is an unususual company. This is a
company that raised were two billion dollars in venture capital
(07:02):
from some of the top venture capital firms in the world,
including Sequoia Capital, who is best known for, you know,
back years ago backing Apple and what recently companies like Google.
They raised all this money, but they never had an
independent board of directors or a board of directors. Really,
they didn't have a CFO. This was really a company
that was run by a few dozen people, and lots
of people fell down on the job and and and
(07:24):
there was not really an organization. No. I met with
Sam Bankman Freed in October two thowy one, shortly after
the company relocated to the Bahamas, and admittedly he was
trying to move the company there, and not everyone was
there physically, but it was basically a room with maybe
seven or eight desks, a bunch of monitors Bloomberg terminals
or whatever sitting there. But it was very small. And
when you speak to investors in f t X, one
(07:46):
of the things they will say to you is one
of the appealing parts was how much it seemed they
were able to do with so little. Dan Primac, business
editor at Axios Thank you very much for joining us.
Thanks for having me. Milestone moves us one significant step
(08:12):
closer to the possibility of zero carbon, abundant fusion energy
powering our society. Joining us now is m or Faun,
Senior correspondent at Vox. Thanks for joining, my pleasure, Thanks
for having me. Well, let's talk about some exciting news
in energy. We just had a fusion energy breakthrough. This
(08:36):
is coming from researchers at the National Ignition Facility. This
is at the Lawrence Livermore National Laboratory. They've been working
at Ignition for fusion for some time now. This is
one of those things fusion that you might have heard
in uh, you know, science fiction movies. We've been working
towards this since like the fifties. It's been something that
has been on the radar for scientists for a long time.
(08:57):
Creating limitless source is of clean energy is the ultimate goal.
And we just had a big breakthrough where we got
more energy out of this experiment than the energy we
put into it. So we'll mar tell us a little
bit about this and and what this all means. Right
this goal post here, it's called Ignition, and as you described,
it's basically where the amount of energy that they impart
(09:19):
to start the reaction is less than the energy that
they actually get out, and that means that now the
reaction is actually worthwhile, that you can get a net
energy gain an increase here, and then from there you
could use that access energy potentially to boil water to
make steam to run a turbine and thereby generate electricity.
This is something, as you noted, that scientists have been
(09:40):
at for decades, since at least the nineteen fifties, and
they've been making incremental progress over at this over time,
but it's been frustrating. It's been slow, and for fusion
science in particular, it's been hard for them to get
consistent budgets to do this, and so they've seen funding
cuts in the past and that's also slowed the research.
But now finally they've gotten to this point where after
this incremental progress, they've been able to cross this specific
(10:02):
finish line, which is an important step forward because it's
a proof of concept. It shows that it is in
fact possible to get more energy out then in and
that if we were to keep out this even further,
eventually at some point in the future you could build
a power plant around us. Let's talk about the specific
experiment where we did get that net energy gain, and
then we'll talk about a lot of the stuff behind it,
(10:23):
because it's also very important. So what they did there
was fire a hundred and ninety two laser beams at
this tiny fuel pellet and they produced They put in
about two mega jewels of energy in, they got about
three mega jewels out. I think overall. They said it's
about one point five net gain that they got. Described
that to me, tell us what it means. So gain
is the factor of how much more out than in
(10:45):
you get. A gain of one is is would be
a break even. Basically you you have a net zero
impact and then anything more than one is a net increase.
And so with this particular experiment, as you noted, it
reached a gain of one point five. You know, this
is an important proof of concept. It has never done
anywhere before in a laboratory, and you know, this is
a huge step forward that you know previously the last
(11:05):
big enounce that they had out of myth they were
about seventy of the way there, so they had a
gain of zero point seven roughly, and so being able
to go at to reach one and go beyond one.
That's a huge step forward. However, in order to make
this practical and useful, you need to get a lot
more energy out of the fusion reaction, because you know,
you have to actually run the generators and you also
have to overcome the amount of energy you need from
(11:27):
the power grid to run all these lasers. The specific
way that they measured this, remember, is the amount of
laser energy hitting the fuel pellet. There's a lot of
energy that's lost in the process after the lasers are
actually first built up, charged up, and then fired at
this it's a very inefficient process right now, and so
you would need to generate drastically more energy out of
this process, maybe a gain of a lot of hundred
(11:49):
in order to break even in terms of the energy
that we use overall. And so there's a much further
goal post in order to make this much more practical.
Where only a tiny fraction of the way there on
that front. But from a technical perspective, you know, this
is still qualitatively a huge step forward. Yeah, and and
that's important to know, right as you mentioned, it's kind
of a proof of concept and we know now that
(12:10):
it can be done. But yeah, so much more needs
to be done to actually really clear the energy that
we're actually using for all of this tell me a
little bit about nuclear fusion in general, because we've been
able to do this. Uh, there's other terms that have
been thrown out there too, like nuclear fission, which is
another thing that we do that we already do. There's
a difference between them. The nuclear fusion, which is what
(12:32):
we're talking about right now, This is where there's not
as much nuclear waste attached to it. That's why they
say this is a potential for a big clean energy source.
Right The nuclear energy that most people are familiar with
that's more commonly used is nuclear fission. That's where you
take big atoms like uranium and split them apart. The
downside of that, of course, is that those atoms, when
they're split apart, become nuclear waste and that can stay
(12:55):
hazardous for thousands of years, and so you need a
place to put them and also requires a lot of
spensive fuel to begin with. You need to generate and
produce in mind and extract all those heavy isotopes. Vision
is sort of the opposite approach. Rather than taking big
atoms and splitting them apart, you're taking tiny atoms and
smashing them together. The outside of fusion is that the
fuel is derived from hydrogen. You can get this hydrogen
(13:15):
these isodoses and hydrogen from water from seawater, and so
our planet is covered with water. There's potentially a lot
of fuel that we could potentially very easily extract in
order to do these fusion reactions. And then after you
run the reaction, the net product is helium and gas
that you know is useful for a lot of other
things as well, and so there's very minimal waste in
terms of nuclear hazardous material that you would have to
(13:36):
worry about for thousands of years. And there's no greenhouse
gases either. And if you were to get this working,
you know, on paper, you know, you could get potentially
gobs of baseload energy basically energy that you can have
on demand constantly, twenty four hours a day without producing
any of the hazardous stuff that we're all worried about.
And so there's two ways, two main approaches to doing
this nuclear fusion. The one that we're talking about right
(13:58):
now through the n i F obviously is compressing this
tiny pellet of fuel with these powerful lasers. The other
one is to heat up temperatures too hotter than the
Sun and use magnets to contain some of that energy.
This is also being worked on in in another location
with another organization. Right, So there's groups all over the
world working on these two main approaches and they're using
(14:20):
flight variations on them. So yeah, what NIF is doing
is what's called in inertial confinement fusion. Basically, you take
a point and you try to smush it down into
an even smaller point and contain all those high energy
atoms and molecule, you know, protons in a very small space.
With what the other approaches, magnetic fusion, you basically use
a giant metal donut and you heat up the fuel
(14:43):
so hot that it becomes this new state of matter
called plasma and it gets too extremely hot, temperatures hotter
than the Sun. When they operate, there's the hottest objects
of the Solar system. And in order to contain then
object that hot, you know, you can't even use a material,
you can't use the substance. You have to use powerful
magnetic speel and so there are some experiments now underway.
There are tacomaxs this, so that's what these devices are
called here in the United States, like at Princeton Laboratory,
(15:05):
at M I T and a few other places. And
then there's a big experiment that's being built right now
in France which is going to be the largest tacomac
built and the most powerful one. And so it uses
magnets that are powerful enough to lift aircraft carriers out
of the water in order to contain these kinds of forces.
But it's still under construction and it will be a
few years before it gets operational. This announcement was done
(15:26):
with the n i F obviously and the U. S.
Department of Energy at this point, since you know, we've
kind of done this breakthrough, Does this mean that we're
the leader in this nuclear fission right now in terms
of meeting this particular milestone. Yeah, the United States has
something to be proud of here. This is the first
country to actually reach that energy positive with a fusion reaction,
at least in the laboratory. And this is something that
(15:47):
a lot of countries around the world are working on
independently and working together as well. But the fact that
this happened in the U. S. Department of Energy laboratory,
you know, and in a at a National Nuclear Security
Administration Facility. You know, this is something that is funded
by the US government. The facility is mainly meant for
stewardship for nuclear weapons, but they were also able to
use that technology to do advanced energy research. And so,
(16:08):
you know, Department of Energy officials during the announcement, you know,
they were very proud of this fact. They were shouting
the fact that the US as a global leader in this,
and you know, they're saying that, you know, the next
generation of energy ideally would be developed here in the
United States. That's amazing news. Now, before I mean this
is exciting stuff, it is a breakthrough, I did want
to talk about the limitations and the next steps for
the future, right, because there's a lot that has to
(16:30):
be done to really make this viable for commercial use
and really start powering stuff life and the country and
in the world. So there's a lot of limitations. So
one with the system itself, right, the lasers are based
off of older technology. Those can be upgraded. That's one
of the main things that really needs to be done.
It seems like overall what they have now proves that
(16:51):
it works, we have to kind of go back to
scratch and rebuild the whole thing to make this work
for the future. That's right, you know, Miss is the
National Emission of the stility. It's a it's a research laboratory.
It's not a power plant. It's not meant to produce energy.
It's a mainly meant to produce just to test this concept.
And so there's a lot of inefficiencies here that could
be corrected over time with you know, iterating and like
(17:13):
developed and engineering, but you know that have to be
done now at this point. We need more efficient lasers,
as you highlighted. You know, the lasers that this lab
are built on nineties level technology. We have much more
efficient and more powerful lasers that we could be using now.
The design of the fuel pellet, for instance, needs to
be optimized further. You know, they did receive reach net
energy positive, but they didn't burn anywhere close to all
(17:33):
the fuel that was available, so there was a lot
that actually went to waste, and so we need to
better optimize the way that we use fuel. And this facility,
you know, is only able to produce a handful of
these laser shots in a given week. We need to
be able to produce something like ten to thirty per
second in order to generate a viable nuclear reactor around this.
And so certainly the stuff that they're doing now is new,
it's experimental, but it needs to be done at a
(17:54):
much larger, much faster scale. And that's the next challenge
going forward, right to the point we were talking about earlier,
the engineering net energy that we need to get going.
There's so much electricity point at you know, used with
these lasers that oftentimes, uh, it causes blackouts there at
the facility, is what was happening, So that the lasers
need to be upgraded as well. Well. The laser is
(18:16):
a facility, just like designing an entire infrastructure to do this,
Like um we've been getting at, you know, you need
power to generate power, and so you still need to
take a lot of power in from the power grid
in order to actually start this reaction and then eventually
put more power back out onto the grid. And so
designing a system that can actually operate on these massive
scales to be able to draw in a lot of
(18:36):
power but then also distribute a lot more power, that's
going to require engineering, not just at the plant itself,
but on the entire power grid. How do we integrate
this in a world where we're going to have large
baseball power plants like this, but also renewable energy that's often,
you know, wavering with the wind and the sun, fluctuating
throughout the day. That's going to also be a big
challenge going forward. How do we integrate all these variable
(18:57):
clean energy sources with what could potentially be a massive
base load source. And then how do you come up
with a business model that can fund us? This is
an extremely expensive project. The US government has been spending
taxing billions of taxpayer dollars on this. How are you
going to convince a private company to place a multibillion
dollar bet that may not pay off for fifty years
or so. That's also going to be a big challenge.
How do you make a business case for developing this
(19:19):
your fun Senior correspondent at Vox, thank you very much
for joining us, my pleasure, Thanks for having me. That's
it for today. Join us on social media at Daily
Dive Pod on both Twitter and Instagram. Leave us a comment,
give us a rating, and tell us the stories that
(19:41):
you're interested in. Follow us an heart radio, or subscribe
wherever you get your podcast. This episode of the Daily
Dives produced by Victor Wright, engineered by Tony Sarrantina. I'm
Oscar Ramirez and this was your daily dive.
It's Wednesday, December fourteen. I'm Oscar Ramirez in Los Angeles
and this is the daily Dive. Sam Bankman Free, the
disgrace founder and former CEO of crypto company ft X,
has been arrested in the Bahamas and charged by federal
officials with eight counts of fraud, conspiracy, campaign finance law violations,
(00:23):
and money launders. He's being accused of funneling customer money
into his hedge fund to make investments and loans to himself.
About eight billion dollars in client funds have gone missing,
with only one billion dollars being recovered. The difficulty here
is there was no adequate record keeping. Dan Primac, business
editor at Axios, joins us for what to know next
(00:45):
a significant breakthrough when it comes to fusion energy, something
that could one day provide us with unlimited clean power.
Researchers at the National Ignition Facility were able to achieve
what is called ignition, creating more energy out of a
reaction than what they put in. The team fired one
two laser beams that a small fuel pellet and produce
a small amount of net gain energy. Well. This is
(01:06):
an important step in proof of concept of the science
it is still a long time away from being a
commercially viable energy stores. The lasers and equipment used would
have to be drastically upgraded to produce more energy. Who
mayor or Faun, senior correspondent at Box joins us for
this fusion energy breakthrough. It's snooze without the noise. Let's
dive in. I am hopeful that the arrest of Mr
(01:32):
Bankman Freed, the founder and pharmacy CEO of f t X,
means he will be held accountable where the fraud he
has committed and the harm he has called. Joining us
now is Dan Primac, business editor at Axios. Thanks for
joining us, Dan, thanks for having me. Well, what a
spectacular fall for the CEO and founder of ft X
(01:55):
former CEO Sam Bankman Freed. He is uh, he's in big,
big troubles now. I mean, prosecutors have alleged that he
oversaw a massive corporate fraud there at f t X
that he cost customers and investors billions of dollars and losses.
He's been charged now with eight counts of fraud, conspiracy,
campaign finance law violations, and money laundering. Damn, there's a
(02:19):
lot going on here, so help us walk through some
of it. Yeah, so you know f t X was
in exchange. There's kind of two ft X is. There
was FTX Global, which was this company that was based
originally in Hong Kong and then in the Bahamas, which
is kind of what everyone in the world could use
the trade crypto and then a lot of crypto derivatives
and these other kind of more exotic instruments. And then
there was called f t X u S which was
specific for US investors and they were at least presented
(02:42):
as separate companies. And then there was a third company
called Alameda Trading, which was basically a crypto hedge fund.
Now Sam Bankman Freed owned all three of these. Two
of them had some outside investors, but he owned all
three of these. And the basic argument is that he
kept putting his finger in different pots to help out
other parts of this business. And and most specifically, when
(03:02):
the hedge fund was starting to have problems and was
starting to face a hole, he took customer funds from
FTX Global, which he was not supposed to do, was
against in terms of service, it was also something he
told his investors he didn't do, and he took those
customer funds, and he used it to help build the
whole kind of like what Bernie made Off did back
years ago. He assumed that the crypto hedge fund would
(03:23):
start doing better, it would start making profits, and so
he could take that money and put it back in
and no one would notice that the crypto hedge fund
kept losing money and Sam couldn't keep digging, and eventually
the whole thing collapsed on So now some of the
latest things that had happened. Obviously, federal prosecutors charged him
with this stuff, but he was just arrested in the Bahamas,
as you mentioned, to the companies based out of there,
so they arrested him out there. He was also just
(03:46):
going to testify on Capitol Hill, although not in person
but remotely. So this is kind of a curious timing
of this arrest and all that, when lawmakers were eagerly
getting ready to start grilling him on a lot of stuff.
It is what we've learned today from the US Attorney
for the District of New York, who's the ones who
filed the criminal charges. They're also are civil charges from
the CFTC and from the SEC. What we learned from
(04:09):
him was that they authorized the charges last Wednesday, the
indictment was returned from the grand jury last Friday, and
then it was a matter of time kind of waiting
for the Bahamas police to arrest. So, yeah, the timing
does look weird. It's you know, he gets arrested the
night before he's supposed to testify. However, he could have
been arrested on Saturday or Sunday or even on Friday night,
So there were several days, you know, as for why
(04:30):
they wouldn't want him to testifire, why they would arrest
them ahead of time that there's several reasons they that
are potential reasons they didn't enumerate. They could have thought
there was an exigent issue. For example, maybe he's going
to leave the Bahamas, where we have an extradition treaty.
Maybe they thought money was being moved. It's also possible
they didn't want to testify in front of Congress, that
they want to be able to ask their questions without having,
you know, the jury pool maybe further deluded by all
(04:52):
the media coverage that there would have been with his
presence today. What do we make about the role that
the SEC plays in all of this and their chair
Gary Gensler. There's been a lot of buzz about him too,
you know, I know for a time said he you you know,
he had the tools to regulate cryptocurrency and some of
these companies and everything. But then this happens with f
t X. What do we make of his role in this? Yeah,
(05:14):
it's been a bad day for Gary Gensler. Again, the
SEC does file charges, so you have this twenty eight
page civil complaints against Sam Bankman freed from the SEC.
But you know, Gary Gensler was not a witness at
this hearing today that Bankman freak was supposed to be at,
but he might as well have been. It was almost
like he was being kind of question in absentia because
a lot of folks on both sides of the Aisle,
(05:35):
Democrats and Republicans, say, the SEC and Gary Gensler keep
telling us they have all the tools they need to
regulate cryptocurrencies. So either they're wrong because FTX collapsed or
they fell asleep on the job. One of those two
things must be correct. And the argument here is often well,
FTX Global, which is the company that really collapsed here,
was based on the Bahamas. That's outside the jurisdiction of
(05:57):
U S regulators, but then the responses, But you didn't
notice that the US entity, which was based in the US,
was essentially part of the same organization. You guys didn't
notice it. And when the company goes bankrupt and they
bring in this restructuring expert, somebody named John Ray, who
worked on en Ron years ago, it took John Ray
just a couple of days to figure out what was
happening here. Dear SEC, where were you for the last
(06:18):
several years? And more on John Ray because he was
testifying on all this. You know, so there's billions of
dollars and client funds that went missing. I think they've
been able to track down. I think maybe they said
a billion of that, but there's still so much more
going on there. And you know John Ray saying, as
you mentioned, it took him, it was very quick that
he was able to identify how unprepared these people were
(06:40):
that were running FTX. And he's even said that they
were using quick books, you know, something that they used
for small businesses to manage that stuff, that they were
using this to run a multibillion dollar company. And he says,
you just can't do that, No, you don't do that,
And look, this is an unususual company. This is a
company that raised were two billion dollars in venture capital
(07:02):
from some of the top venture capital firms in the world,
including Sequoia Capital, who is best known for, you know,
back years ago backing Apple and what recently companies like Google.
They raised all this money, but they never had an
independent board of directors or a board of directors. Really,
they didn't have a CFO. This was really a company
that was run by a few dozen people, and lots
of people fell down on the job and and and
(07:24):
there was not really an organization. No. I met with
Sam Bankman Freed in October two thowy one, shortly after
the company relocated to the Bahamas, and admittedly he was
trying to move the company there, and not everyone was
there physically, but it was basically a room with maybe
seven or eight desks, a bunch of monitors Bloomberg terminals
or whatever sitting there. But it was very small. And
when you speak to investors in f t X, one
(07:46):
of the things they will say to you is one
of the appealing parts was how much it seemed they
were able to do with so little. Dan Primac, business
editor at Axios Thank you very much for joining us.
Thanks for having me. Milestone moves us one significant step
(08:12):
closer to the possibility of zero carbon, abundant fusion energy
powering our society. Joining us now is m or Faun,
Senior correspondent at Vox. Thanks for joining, my pleasure, Thanks
for having me. Well, let's talk about some exciting news
in energy. We just had a fusion energy breakthrough. This
(08:36):
is coming from researchers at the National Ignition Facility. This
is at the Lawrence Livermore National Laboratory. They've been working
at Ignition for fusion for some time now. This is
one of those things fusion that you might have heard
in uh, you know, science fiction movies. We've been working
towards this since like the fifties. It's been something that
has been on the radar for scientists for a long time.
(08:57):
Creating limitless source is of clean energy is the ultimate goal.
And we just had a big breakthrough where we got
more energy out of this experiment than the energy we
put into it. So we'll mar tell us a little
bit about this and and what this all means. Right
this goal post here, it's called Ignition, and as you described,
it's basically where the amount of energy that they impart
(09:19):
to start the reaction is less than the energy that
they actually get out, and that means that now the
reaction is actually worthwhile, that you can get a net
energy gain an increase here, and then from there you
could use that access energy potentially to boil water to
make steam to run a turbine and thereby generate electricity.
This is something, as you noted, that scientists have been
(09:40):
at for decades, since at least the nineteen fifties, and
they've been making incremental progress over at this over time,
but it's been frustrating. It's been slow, and for fusion
science in particular, it's been hard for them to get
consistent budgets to do this, and so they've seen funding
cuts in the past and that's also slowed the research.
But now finally they've gotten to this point where after
this incremental progress, they've been able to cross this specific
(10:02):
finish line, which is an important step forward because it's
a proof of concept. It shows that it is in
fact possible to get more energy out then in and
that if we were to keep out this even further,
eventually at some point in the future you could build
a power plant around us. Let's talk about the specific
experiment where we did get that net energy gain, and
then we'll talk about a lot of the stuff behind it,
(10:23):
because it's also very important. So what they did there
was fire a hundred and ninety two laser beams at
this tiny fuel pellet and they produced They put in
about two mega jewels of energy in, they got about
three mega jewels out. I think overall. They said it's
about one point five net gain that they got. Described
that to me, tell us what it means. So gain
is the factor of how much more out than in
(10:45):
you get. A gain of one is is would be
a break even. Basically you you have a net zero
impact and then anything more than one is a net increase.
And so with this particular experiment, as you noted, it
reached a gain of one point five. You know, this
is an important proof of concept. It has never done
anywhere before in a laboratory, and you know, this is
a huge step forward that you know previously the last
(11:05):
big enounce that they had out of myth they were
about seventy of the way there, so they had a
gain of zero point seven roughly, and so being able
to go at to reach one and go beyond one.
That's a huge step forward. However, in order to make
this practical and useful, you need to get a lot
more energy out of the fusion reaction, because you know,
you have to actually run the generators and you also
have to overcome the amount of energy you need from
(11:27):
the power grid to run all these lasers. The specific
way that they measured this, remember, is the amount of
laser energy hitting the fuel pellet. There's a lot of
energy that's lost in the process after the lasers are
actually first built up, charged up, and then fired at
this it's a very inefficient process right now, and so
you would need to generate drastically more energy out of
this process, maybe a gain of a lot of hundred
(11:49):
in order to break even in terms of the energy
that we use overall. And so there's a much further
goal post in order to make this much more practical.
Where only a tiny fraction of the way there on
that front. But from a technical perspective, you know, this
is still qualitatively a huge step forward. Yeah, and and
that's important to know, right as you mentioned, it's kind
of a proof of concept and we know now that
(12:10):
it can be done. But yeah, so much more needs
to be done to actually really clear the energy that
we're actually using for all of this tell me a
little bit about nuclear fusion in general, because we've been
able to do this. Uh, there's other terms that have
been thrown out there too, like nuclear fission, which is
another thing that we do that we already do. There's
a difference between them. The nuclear fusion, which is what
(12:32):
we're talking about right now, This is where there's not
as much nuclear waste attached to it. That's why they
say this is a potential for a big clean energy source.
Right The nuclear energy that most people are familiar with
that's more commonly used is nuclear fission. That's where you
take big atoms like uranium and split them apart. The
downside of that, of course, is that those atoms, when
they're split apart, become nuclear waste and that can stay
(12:55):
hazardous for thousands of years, and so you need a
place to put them and also requires a lot of
spensive fuel to begin with. You need to generate and
produce in mind and extract all those heavy isotopes. Vision
is sort of the opposite approach. Rather than taking big
atoms and splitting them apart, you're taking tiny atoms and
smashing them together. The outside of fusion is that the
fuel is derived from hydrogen. You can get this hydrogen
(13:15):
these isodoses and hydrogen from water from seawater, and so
our planet is covered with water. There's potentially a lot
of fuel that we could potentially very easily extract in
order to do these fusion reactions. And then after you
run the reaction, the net product is helium and gas
that you know is useful for a lot of other
things as well, and so there's very minimal waste in
terms of nuclear hazardous material that you would have to
(13:36):
worry about for thousands of years. And there's no greenhouse
gases either. And if you were to get this working,
you know, on paper, you know, you could get potentially
gobs of baseload energy basically energy that you can have
on demand constantly, twenty four hours a day without producing
any of the hazardous stuff that we're all worried about.
And so there's two ways, two main approaches to doing
this nuclear fusion. The one that we're talking about right
(13:58):
now through the n i F obviously is compressing this
tiny pellet of fuel with these powerful lasers. The other
one is to heat up temperatures too hotter than the
Sun and use magnets to contain some of that energy.
This is also being worked on in in another location
with another organization. Right, So there's groups all over the
world working on these two main approaches and they're using
(14:20):
flight variations on them. So yeah, what NIF is doing
is what's called in inertial confinement fusion. Basically, you take
a point and you try to smush it down into
an even smaller point and contain all those high energy
atoms and molecule, you know, protons in a very small space.
With what the other approaches, magnetic fusion, you basically use
a giant metal donut and you heat up the fuel
(14:43):
so hot that it becomes this new state of matter
called plasma and it gets too extremely hot, temperatures hotter
than the Sun. When they operate, there's the hottest objects
of the Solar system. And in order to contain then
object that hot, you know, you can't even use a material,
you can't use the substance. You have to use powerful
magnetic speel and so there are some experiments now underway.
There are tacomaxs this, so that's what these devices are
called here in the United States, like at Princeton Laboratory,
(15:05):
at M I T and a few other places. And
then there's a big experiment that's being built right now
in France which is going to be the largest tacomac
built and the most powerful one. And so it uses
magnets that are powerful enough to lift aircraft carriers out
of the water in order to contain these kinds of forces.
But it's still under construction and it will be a
few years before it gets operational. This announcement was done
(15:26):
with the n i F obviously and the U. S.
Department of Energy at this point, since you know, we've
kind of done this breakthrough, Does this mean that we're
the leader in this nuclear fission right now in terms
of meeting this particular milestone. Yeah, the United States has
something to be proud of here. This is the first
country to actually reach that energy positive with a fusion reaction,
at least in the laboratory. And this is something that
(15:47):
a lot of countries around the world are working on
independently and working together as well. But the fact that
this happened in the U. S. Department of Energy laboratory,
you know, and in a at a National Nuclear Security
Administration Facility. You know, this is something that is funded
by the US government. The facility is mainly meant for
stewardship for nuclear weapons, but they were also able to
use that technology to do advanced energy research. And so,
(16:08):
you know, Department of Energy officials during the announcement, you know,
they were very proud of this fact. They were shouting
the fact that the US as a global leader in this,
and you know, they're saying that, you know, the next
generation of energy ideally would be developed here in the
United States. That's amazing news. Now, before I mean this
is exciting stuff, it is a breakthrough, I did want
to talk about the limitations and the next steps for
the future, right, because there's a lot that has to
(16:30):
be done to really make this viable for commercial use
and really start powering stuff life and the country and
in the world. So there's a lot of limitations. So
one with the system itself, right, the lasers are based
off of older technology. Those can be upgraded. That's one
of the main things that really needs to be done.
It seems like overall what they have now proves that
(16:51):
it works, we have to kind of go back to
scratch and rebuild the whole thing to make this work
for the future. That's right, you know, Miss is the
National Emission of the stility. It's a it's a research laboratory.
It's not a power plant. It's not meant to produce energy.
It's a mainly meant to produce just to test this concept.
And so there's a lot of inefficiencies here that could
be corrected over time with you know, iterating and like
(17:13):
developed and engineering, but you know that have to be
done now at this point. We need more efficient lasers,
as you highlighted. You know, the lasers that this lab
are built on nineties level technology. We have much more
efficient and more powerful lasers that we could be using now.
The design of the fuel pellet, for instance, needs to
be optimized further. You know, they did receive reach net
energy positive, but they didn't burn anywhere close to all
(17:33):
the fuel that was available, so there was a lot
that actually went to waste, and so we need to
better optimize the way that we use fuel. And this facility,
you know, is only able to produce a handful of
these laser shots in a given week. We need to
be able to produce something like ten to thirty per
second in order to generate a viable nuclear reactor around this.
And so certainly the stuff that they're doing now is new,
it's experimental, but it needs to be done at a
(17:54):
much larger, much faster scale. And that's the next challenge
going forward, right to the point we were talking about earlier,
the engineering net energy that we need to get going.
There's so much electricity point at you know, used with
these lasers that oftentimes, uh, it causes blackouts there at
the facility, is what was happening, So that the lasers
need to be upgraded as well. Well. The laser is
(18:16):
a facility, just like designing an entire infrastructure to do this,
Like um we've been getting at, you know, you need
power to generate power, and so you still need to
take a lot of power in from the power grid
in order to actually start this reaction and then eventually
put more power back out onto the grid. And so
designing a system that can actually operate on these massive
scales to be able to draw in a lot of
(18:36):
power but then also distribute a lot more power, that's
going to require engineering, not just at the plant itself,
but on the entire power grid. How do we integrate
this in a world where we're going to have large
baseball power plants like this, but also renewable energy that's often,
you know, wavering with the wind and the sun, fluctuating
throughout the day. That's going to also be a big
challenge going forward. How do we integrate all these variable
(18:57):
clean energy sources with what could potentially be a massive
base load source. And then how do you come up
with a business model that can fund us? This is
an extremely expensive project. The US government has been spending
taxing billions of taxpayer dollars on this. How are you
going to convince a private company to place a multibillion
dollar bet that may not pay off for fifty years
or so. That's also going to be a big challenge.
How do you make a business case for developing this
(19:19):
your fun Senior correspondent at Vox, thank you very much
for joining us, my pleasure, Thanks for having me. That's
it for today. Join us on social media at Daily
Dive Pod on both Twitter and Instagram. Leave us a comment,
give us a rating, and tell us the stories that
(19:41):
you're interested in. Follow us an heart radio, or subscribe
wherever you get your podcast. This episode of the Daily
Dives produced by Victor Wright, engineered by Tony Sarrantina. I'm
Oscar Ramirez and this was your daily dive.
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