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0:15

This

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is a CBC podcast.

0:24

Hi there. I'm Jacob Silverman,

0:27

journalist and host of the brand new

0:29

four part podcast series, The

0:31

Naked Emperor. About the stratospheric

0:34

rise and spectacular fall

0:36

of Sam Bankman Freight. Sam

0:39

Bankman Freight was at the top of the game,

0:41

he was a billionaire by the time he turned

0:43

thirty, and the trusted face

0:45

of crypto with his trading platform,

0:48

FTX. The

0:50

FTX logo was on the Miami HEETS

0:52

Arena and the uniforms of Major

0:54

League Baseball Umpires. Despite

0:57

his dorm room lifestyle, he

0:59

charms celebrities politicians and

1:01

Silicon Valley. That

1:03

is until it all came crashing

1:06

down. Today, Sam

1:09

faces charges that could send

1:11

him to prison for the rest of his

1:13

life. Join me

1:15

on a wild ride in search of an answer

1:17

to the question How did Sam

1:19

Bank been freed to happen? Familiarity

1:22

with crypto not required. Now,

1:26

here's the first episode of The Naked

1:28

Emperor The Heights. Have

1:30

a listen.

1:35

There's gonna be time and place for me to

1:38

sort of think about myself

1:41

and my own future, but I don't think

1:44

this is it. Like, right

1:46

now I mean, look, I I've had

1:49

a bad month. This is not

1:51

the name of the

1:52

country, but that's not what matters

1:54

here. In

1:56

late November of last year, a

1:59

thirty year old man made his first public appearance

2:01

since the collapse of his business

2:03

empire. His arm

2:06

visibly shakes as he addresses via

2:08

video, the elite crowd

2:10

at the New York Times hosted event.

2:13

And if I had to guess

2:15

what they find so funny here,

2:18

it's just the understatement of

2:20

calling it a bad month.

2:24

It was unprecedented. Weeks

2:26

earlier, Sam Bankman frees companies

2:29

worth billions had gone bankrupt.

2:32

His personal fortune was wiped

2:34

out. Basically overnight in

2:37

what Bloomberg called one of history's

2:39

greatest ever destructions of

2:41

wealth. And the worst

2:43

was still to come for Sam. This

2:47

morning, we unsealed an eight count indictment,

2:50

charging Samuel Bankman Fried.

2:52

FTX's founder, with

2:54

a series of interrelated fraud schemes

2:56

that contributed to FTX's collapse.

3:00

By mid December, he would be arrested

3:02

in the Bahamas and charged by

3:04

the US attorney for the southern district

3:06

of New

3:07

York. It's so hard to compare these

3:09

things, but I I think it's fair to say that by any

3:11

anyone's life, this is one of the biggest financial

3:13

frauds in American history.

3:16

The next day, the guy who had come in

3:19

to take over the wreckage of the company,

3:21

a guy best known for taking over

3:23

after the bankruptcies of Enron and

3:25

Nortel would go before the

3:27

US Congress and call it

3:29

a blatant rip

3:30

off. It's just taking money

3:32

from customers and

3:35

using it for your own purpose. But

3:37

this isn't

3:38

sophisticated whatsoever. This is just plain

3:41

old embezzlement. Old school.

3:44

There you go. A

3:46

court will have to decide that because

3:49

Sam is denying it. Either

3:52

way, there were millions of these customers

3:54

who held funds on FTX. Now,

3:57

they don't know where their money is.

4:01

Investigators are left combing through

4:03

a company that had been one of the biggest

4:05

cryptocurrency exchanges in the world.

4:08

Sold as safe and legit by

4:10

NBA star Steph Curry and

4:12

Shark Tank Salib, Kevin O'Leary, invested

4:15

in by giants like BlackRock and

4:18

the Ontario teacher's pension

4:20

plan, leaving many to wonder

4:22

How could this happen? She

4:26

says that it's not fraud, that it was just an honest

4:29

mistake, but it's fraud. To me, it's

4:31

fraud. And how did no

4:33

one see it? I understand

4:35

why I didn't see it or

4:38

why didn't the people that we trust

4:40

see it.

4:49

I'm Jacob Silverman. And this is

4:51

the naked emperor. Episode

4:53

one, the hype. Most

5:07

of my encounters with Sam Bankman Freed

5:09

or SBS have taken

5:11

place on Twitter. In

5:14

the spring of twenty twenty two,

5:16

he started responding to some of my

5:18

tweets. First publicly, then

5:21

in private, It

5:23

was a bit unusual to hear from

5:25

a billionaire CEO in Twitter

5:27

DMs, especially when I was

5:29

open about my skepticism of the

5:31

crypto industry. SPF

5:34

was far more casual and solicitous

5:36

with journalists than most executives. Even

5:39

by his industry's freewheeling standards.

5:42

He gave out his personal phone number

5:44

and tweeted as much as any influencer.

5:49

One day SBFDME,

5:51

essentially offering to be my guide

5:53

to crypto. The message read,

5:56

always happy to chat about stuff.

5:59

Smiley face. Could be

6:01

helpful for porting you to places that

6:03

will in the end, vindicate

6:05

what you say. Slash help you

6:07

avoid things that won't age as well.

6:11

I was dubious. There

6:13

seemed to be a warning there. Some

6:15

of my criticisms were valid, but

6:18

others were in ages well,

6:20

at least he was implying if

6:23

I didn't listen to him. I

6:27

kept my guard up even as I continued

6:29

to occasionally exchange brief messages

6:31

with SDF. We met in

6:33

person when my colleague, Ben McKenzie,

6:36

interviewed him for forthcoming book

6:38

about Crypto and Fraud. My

6:40

producer says I'm obligated to tell

6:42

you that, yes, that's the same, Ben

6:44

McKenzie, who played Ryan on the

6:46

o c. SBS seemed

6:49

awkward but not introverted. He

6:51

was prone to long, wonkish stem

6:54

whiners that didn't answer the

6:56

question in front of him. An industry

6:58

hype man who sold himself as the one

7:01

to make cryptos safe for the masses,

7:03

he was clearly cunning. He

7:06

had to be in order to become so

7:08

wealthy and politically influential

7:11

so quickly. By messaging

7:13

with me, SPF was either

7:15

being very savvy, keeping

7:17

an eye on a journalist who might report

7:19

on him, or he was being

7:21

very stupid. By risking

7:24

saying something revealing. Maybe

7:26

it didn't matter. I was one of

7:28

many people in SBS Rolodex.

7:31

And just because I didn't buy the myth

7:33

built up around him, didn't mean

7:36

that it wasn't very real.

7:41

In

7:41

just the past five years, him, Hank Minfred went

7:44

from buying his first Bitcoin to

7:46

becoming a multi billionaire The FTX

7:48

founder is now worth an estimated eleven

7:50

billion dollars

7:51

is a change. I think a lot of people probably

7:53

only heard of Sam Bankman free

7:55

for the first time. When everything

7:57

was falling apart. And to get just

7:59

how stunning a downfall it

8:01

was, you have to understand the

8:03

truly spectacular heights from

8:06

which he plummeted. FTX

8:11

has seen explosive growth since twenty

8:13

nineteen company was founded, thirty two

8:15

billion dollar valuation your company is now

8:17

worth more than Twitter and some of the biggest

8:19

banks in the world.

8:21

For a while, there in the pandemic in

8:23

twenty twenty one, early twenty

8:25

twenty two, the hype around crypto

8:28

was just crazy. The price of a

8:30

token based on a dog meme went

8:32

up by thirty six thousand percent.

8:34

On late night TV, Paris

8:36

Elden and Jimmy Fallon, lazily

8:39

touted Monkey JPEG's as somehow

8:41

cool and

8:42

desirable. Why?

8:43

How

8:43

do you pick because because you can pick

8:45

your your your aid. Yes. I was going

8:47

through a lot of them, and I was like, I want something

8:49

that, like, kinda reminds me of me, but

8:52

I

8:53

this one, it's it does.

8:55

I think we we we

8:56

Every new bitcoin or NFT

8:58

collection or celebrity endorsement seemed

9:01

more ridiculous than the

9:02

last. None of it seemed very

9:04

useful, and yet the value of this

9:06

stuff just kept going

9:08

up. I went to the

9:10

world's biggest Bitcoin conference in

9:12

Miami, where tech billionaire

9:14

intelligence contractor

9:16

and leading Republican donor Peter

9:18

Teal held up hundred dollar bills.

9:21

Really weird. What is What is this? I mean,

9:23

it's it's probably not very good as toilet

9:25

paper. It's not good as

9:26

wallpaper. It's it's sort

9:28

of this crappy fiat money

9:30

crumble them up and clumsily through

9:32

them away. Throw it out of people.

9:37

So much money was pouring in

9:39

that the industry reached a valuation of

9:42

around three trillion dollars. And

9:44

Sam Bankman freed rode that

9:47

hype to the very top. You

9:50

were at a billion dollars little more

9:53

than a year ago, and as

9:55

a result of this raise today your valuation

9:57

is? It's thirty

10:00

two billion internationally and in

10:02

the US. How old is your company? About

10:06

two and a half years. He

10:08

became filthy rich. His

10:10

popular crypto exchange CX

10:12

was valued at thirty two billion dollars.

10:15

His personal wealth was valued at sixteen

10:18

billion. Forbes magazine,

10:20

put them on their cover and called him

10:22

the richest twenty something in the world.

10:25

And with the money, came credibility.

10:29

Rather than attend that crypto conference

10:31

I was at in Miami, he put on

10:33

his own in the Bahamas. It

10:36

was much more exclusive, invite

10:38

only. But I found this sizzle

10:40

reel from the event on YouTube with

10:42

a lot of techno, strobe

10:44

lights, and Footage of Steve Aoki

10:46

DJ. Welcome to

10:48

the Bahamas.

10:51

Where you can see just a glimpse of former

10:53

British prime minister Tony Blair speaking.

10:56

Understand this technology revolution and

10:59

harness it for the public good. Along

11:01

with former US

11:02

president, Bill Clinton. I'm convinced

11:04

that we've got a lot of money, energy, and talent

11:07

behind crypto. And when you

11:09

have something that's obviously

11:10

serious, you wanna do right by

11:12

it in the regulatory space. On

11:17

stage with these pseudo elder statesman,

11:19

was Sam Bankman Free wearing

11:22

a rump old FTX T shirt, shorts,

11:25

and new balances.

11:28

This was part of his schtick. He

11:30

dressed like a college student who just rolled out

11:32

a bed for breakfast. He slept on

11:34

a beanbag chair and lived with his buddies

11:36

Hi. So we live in nine

11:40

nine colleagues and I bought a large apartment

11:42

together near office that we live

11:44

in.

11:44

He played video games while talk into

11:46

investors and journalists.

11:48

It has playing Game of Storybook for all.

11:51

I took second place out of eight, could

11:53

have been worse.

11:54

And they ate it up.

11:58

In a glowing profile since removed

12:00

from Sequoia Capital's website, Sam

12:03

is described as playing of legends

12:05

throughout a meeting with the famous venture

12:07

capital firm's partners. Their

12:09

reaction, quote, we were

12:11

incredibly impressed. Sequoia

12:15

would go on to invest one hundred

12:17

and fifty million dollars in

12:19

FDX. And they warrant

12:22

SBS only prestigious backers.

12:25

There was Temasek, Tiger

12:27

Global, SoftBank. Some

12:30

of the world's biggest venture capital

12:32

and sovereign wealth funds invested

12:34

in FTX. Like I

12:36

mentioned earlier, even the Ontario

12:39

teacher's pension plan invested

12:41

ninety five million dollars. These

12:44

names might not much to people outside

12:46

the financial world. But these

12:48

are what are called blue chip investors. They're

12:52

recognized. They're respected. Deep

12:55

pockets. Even

13:01

as SBF was getting rich off the

13:04

crypto boom, the big part of

13:06

his success was how he set himself apart

13:08

from that often volatile

13:09

world. He cultivated a public

13:11

image that was different from the CryptoBros

13:14

stereotype. Okay.

13:16

The guy you see next to me is the most

13:18

generous billionaire in the world,

13:21

and I found him. Hi.

13:23

My name is Sam, and this is my story.

13:25

Sam has crazy hair. Sam

13:28

is

13:28

vegan. Sam sleeps five

13:31

hours a night. Sam Beyond

13:33

the shabby outfits and unkempt hair,

13:36

he was portrayed as living a relatively modest

13:38

lifestyle for a billionaire.

13:41

Hold on. Wait. Where's your

13:42

car? It's a that

13:44

one there. That's like quite a Yoda.

13:47

Yeah. And the Corolla. Once you

13:49

buy a Lamborghini

13:50

man, it didn't have any particular

13:52

need for one. He talked

13:54

a lot about his charitable giving.

13:57

He identified as an effective

13:59

altruist, which basically

14:01

means Well, here's how

14:03

Sam explained it on CNBC in September.

14:06

Which is basically movement looking at.

14:09

If you wanna have positive impact on the world,

14:11

how do you maximize that? Or at

14:13

least do the best that you can. Like,

14:15

think about it now in terms of like, do at least one

14:18

unit of good. But instead of like how

14:20

many units of good ten you do, given

14:22

what resources you have at your disposal,

14:24

for me in particular what it has meant is

14:26

making as much as I can so I can donate as much

14:28

as I can to what hopefully are some

14:30

of the world's most efficient effective charities.

14:34

Effective altruism had become the

14:36

ethos of choice for philanthropy

14:38

minded Silicon Valley Mogels. It

14:41

suggested you could optimize charitable

14:43

giving and that making money could be

14:45

a good thing unto itself. The

14:48

effective altruism thing was part of

14:50

Sam's whole billionaire origin

14:52

story. He

14:55

told it many times. It goes like

14:57

this. Back when he was just an undergrad

14:59

at MIT studying

15:00

physics, he met with prominent

15:02

effective altruists who made him think.

15:05

Maybe he could make a lot of money in order

15:07

to give it away. For sort of the

15:09

first time in my life had, you know, real discussions

15:12

about know, of all the things I could do with

15:14

my career, what's the best. And

15:17

I think there are a lot of great things that that you can

15:19

do, and I don't know the answer, but I'd certainly put

15:21

on the road map, like, Well, you know, one

15:23

thing that you can always try and do is is try and

15:25

make and give away money. And, you

15:27

know, anything else has to sort of beat that and

15:29

you have to think. A young billionaire

15:32

making money for the sole purpose

15:34

of donating it to good causes and

15:37

made for a great yarn. One

15:39

that he was happy to tell to anyone

15:41

who would

15:42

listen. He would float

15:44

the idea of giving away truly

15:46

astronomical sums. The

15:49

hope is to scale into the, like, hundreds

15:51

of millions to billions over the next couple

15:53

of years. And certainly, to the billions per year, over

15:56

the next five to ten years, And

15:58

obviously, like, a lot of this depends on exactly how

16:00

all the company goes, but I think, like, I'd be previous

16:02

point if it never got to to, you know, if it

16:04

never reached the point of a billion a year.

16:07

Sam's money went not just to charity,

16:10

but to politicians too. He

16:12

told podcaster Jacob Goldstein,

16:15

that he planned to donate north of

16:17

one hundred million dollars in

16:19

the twenty twenty four election

16:21

cycle. So

16:22

if that's a floor, What's

16:24

the ceiling? Like a billion? Why

16:26

don't you give a billion? Yeah.

16:29

I think that's a decent light. Thing

16:31

to look at as a as

16:33

a sort of like I mean, I I would I would

16:36

hate to say, like, hard ceiling consumer knows what's

16:38

gonna happen between now and then. But as,

16:40

like, at least sort of a soft ceiling,

16:42

I I would say. Yeah. That

16:46

is an absurd number. He

16:48

soon walked it back saying to political,

16:51

that was a dumb quote. But

16:54

he did give about forty million dollars

16:56

in political donations in the twenty

16:58

twenty two election cycle, making

17:01

him one of the biggest donors in last year's

17:03

US midterms. It

17:05

was covered at the time like he was mostly

17:07

giving to Democrats. But

17:10

I noticed that his co CEO at an

17:12

FDX subsidiary was giving

17:14

plenty to Republicans too. SBS

17:17

insisted this was primarily about

17:19

pandemic

17:20

prevention. As he told Chuck

17:22

Todd on meet

17:23

the press. It's weird. We did not,

17:25

as a country or as a world frankly, have

17:27

a coherent response to COVID

17:30

and we missed in both directions. Mhmm.

17:32

It was careening wildly around, and

17:34

we still haven't learned the lesson. And this has

17:36

gotta be a thing that government is involved

17:38

in. That government's working proactively on.

17:41

He claimed that he wasn't just buying influence

17:43

on crypto regulation. Despite what

17:46

skeptics like me, I think.

17:48

People aren't taking out my word and I understand

17:50

that. I think what it says, and do the research, you know.

17:52

Look at the the policies that I'm supporting, the candidates

17:55

that I'm supporting, you know, and

17:57

many of these people, I have no idea

17:59

what their position on is on.

18:00

Okay. But But

18:02

regulation was a big interest of

18:04

his. This made SDF

18:06

unusual in crypto, where

18:08

companies reveled inside stepping

18:10

the rules and scrapping with the

18:12

government agencies trying to rein them

18:14

in. Crypto's libertarian

18:17

underpinnings meant that government

18:19

was the enemy, not a potential

18:21

collaborator, but not

18:23

for SBS. Here

18:25

he is actually wearing a suit

18:27

for once. Testifying before

18:29

the House Agriculture Committee in

18:32

May twenty twenty two asking

18:34

for regulation.

18:36

Digital asset market places need federal

18:38

oversight. They need that oversight to

18:40

protect consumers, to protect against systemic

18:42

risk, to bring liquidity back onshore

18:45

to ensure US competitiveness globally.

18:48

In that Chuck Todd interview, he

18:50

described it as almost a selfless

18:53

act. I think it'd be irresponsible of me

18:55

not to to engage, you

18:57

know, with capital health with regulators. And

19:00

the things that I've been arguing for are more

19:02

regulations. For the industry. I think that's what's

19:04

right for the country. I don't know if that's what's right for

19:06

a company, but it's what needs to happen.

19:09

That's a rosy view of it. Sam

19:12

was trying to boost the role of more friendly

19:14

regulators. That's how

19:16

he ended up talking crypto in

19:18

front of an agriculture committee. It's

19:21

in charge of the commodities Future Trading

19:24

Commission or the CFTC because

19:27

futures trading used to be about commodities

19:30

like grain or corn, hedging

19:32

against a possible bad harvest for example.

19:35

Now, Sam wanted the CFDC

19:38

to regulate the trading of dogecoin.

19:41

One proposed piece of legislation, circulating

19:44

through congress, was commonly referred

19:46

to as the SBS bill.

19:53

Worried about increasing interest

19:55

rates? Lock in a low rate on

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your next auto or personal loan Find

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out more at pathway c u dot com.

20:02

Pathways Financial Credit Union, your

20:04

true financial partner, member NCUA,

20:07

equal housing lender.

20:09

Sherry Warren was a young mother looking for

20:11

a fresh start. In the process of a divorce,

20:13

she had moved out, found a great new job, and

20:15

even found a new boyfriend. But on an October

20:18

evening, Sherry said goodbye to her coworkers,

20:20

left the office and was never heard

20:22

from again. Two men immediately

20:25

raised suspicion her estranged husband

20:27

and her new boyfriend. One's where he loved

20:29

her the other didn't seem to care, but

20:31

did one of them murder her Listen

20:34

to Cole, the search for Sherry, on

20:36

Amazon Music, or wherever you get your

20:38

podcasts.

20:47

I wanna talk about one more way

20:50

Sam Bankman Fried stood apart from his

20:52

crypto peers. And that's the way

20:54

that he advertised. SPF

20:58

went big. Buying the naming right to

21:00

where the Miami heat play.

21:02

Bankman Reid tells me he hopes the

21:04

soon to be FDX arena encourages

21:06

people to try crypto out.

21:08

One piece of this is that we're really trying to,

21:10

you know, get our name out there.

21:13

When he made a deal with Major League Baseball,

21:15

he put the FTX logo not on player's

21:17

uniforms, but on the sleeve of every

21:20

umpire, linking FTX with

21:22

the people who ensure fairness in the game.

21:25

Baseball's regulators. The

21:28

message being sent with the enormous advertising

21:30

budget was that FTX is safe

21:33

and easy. And they got big celebrities

21:35

to deliver it. Seven times

21:37

Super Bowl champion quarterback Tom Brady.

21:40

FTX is the safest and easiest way to buy and

21:43

sell crypto the best way to get in the game.

21:45

NBA

21:45

superstar, Steph Curry. No.

21:48

I'm not an expert and I don't need to be.

21:50

With FTX, I everything I need

21:52

to

21:52

buy, sell and trade crypto safely.

21:55

Canadian Larry David was paid to

21:57

endorse the company too. Well

21:59

kind of.

22:00

One of the worst ideas I've ever heard. This

22:03

commercial's premise was that Larry David

22:05

didn't recognize the brilliance of various

22:07

technological inventions throughout

22:09

history, like dishwashers.

22:13

You might

22:13

as well

22:13

put the dishes in the shower and

22:15

toilets. You expect this cord

22:18

to do its business inside? We

22:20

like animals. We don't

22:22

outside like humans.

22:25

So of course, he didn't get the brilliance of FTX

22:28

either.

22:28

And like I was saying, it's FTX. It's

22:30

a safe and easy way to get in the crypto.

22:35

I don't think so. And I'm never

22:37

wrong about this stuff. Never.

22:40

That one actually didn't age too badly.

22:47

A key brand ambassador for FTX

22:50

was current day shark tank shark,

22:52

former Dragon

22:54

Dragon, Kevin O'Leary.

22:56

I don't endorse products or services that

22:58

I don't actually use. I eat my

23:00

own cooking. I think that's important. O'Leary

23:04

became an investor and spokesperson in

23:06

summer twenty twenty one. He's

23:08

saying Sam's praises. He was

23:10

even impressed by Sam's Stanford Law

23:12

Professor parents.

23:14

And big advocate for Sam because he

23:17

has two parents that are compliance

23:19

lawyers. If there's ever a place I could

23:21

be that I'm not gonna get in trouble, it's

23:23

gonna be an FTX. They're they're great

23:25

people, but he gets the job. It was quite the

23:28

change of heart considering just two

23:30

years earlier. O'Leary was totally

23:32

dismissive of

23:33

crypto. You love it. You haven't changed my mind

23:35

at all. It's still garbage. And

23:37

I'm not gonna take real money and put it into

23:39

this thing. Never gonna happen. I mean,

23:41

real money, taking real dollars, and I'm making

23:44

in cash two point one percent on putting it into

23:46

crypto crap.

23:49

This thing was huge. Like,

23:52

we're talking billions of dollars, ambassadors

23:54

left right and center from actors

23:57

to sports people to

23:59

creators on YouTube. I was still

24:01

appearing on CNBC, and interviews

24:03

talking about how how he's investing this

24:06

and what the FDX is doing in Congress

24:08

and, like, all

24:10

this weighs on your mind red and you're, like,

24:12

Oh, okay. That's Chris Kocharian in

24:14

Quebec. He says that he'd been interested

24:17

in crypto for almost ten

24:18

years. He works in tech.

24:21

It was a little fun project and IT

24:23

type of thing. It wasn't any anything serious

24:25

where money was the

24:27

goal. It wasn't like, oh, this is gonna

24:30

changed my life type of thing. He

24:32

started taking a closer look in twenty seventeen,

24:34

twenty eighteen when the first boom happened.

24:37

Still one of the problems with crypto

24:39

as a

24:40

whole. And in Canada, since

24:42

I am in Canada, was accessibility.

24:45

And how do you get these things? The on

24:47

route wasn't there, wasn't simple.

24:50

I knew people that were buying crypto,

24:52

like like pulling out cash, going

24:55

to meet a guy in a in an alley, giving

24:57

them five hundred dollars to buy them one Bitcoin

24:59

type of thing. I didn't go that route.

25:02

I'd never I don't trust other people in that

25:04

sense, but I have a friend who still

25:06

owns one whole Bitcoin. Then

25:09

he never sold Stellies holding onto it, but

25:11

that's how he got it. He paid five hundred dollars cash

25:13

in the valley

25:13

somewhere. That's what the bestest way he told me

25:15

anyway. But

25:18

by the time the next boom came around

25:20

in the pandemic,

25:21

They were easy to use exchanges, mainstream

25:24

endorsements, and there

25:26

was FOMO, a fear of missing

25:29

out. So obviously, there's a FOMO

25:31

aspect where I

25:34

saw some people that just

25:36

randomly threw five hundred bucks or

25:38

a thousand dollars and then suddenly had two

25:40

hundred fifty thousand dollars. And

25:42

that kind of f alone was I

25:45

resisted it a long time. I

25:47

only saw a committee when it looked

25:49

like there was people that I look up doing

25:51

the sense of investments. Kevin

25:54

O'Leary, I can tell you that name came

25:56

up I remember originally

25:59

had said it's old garbage. And then

26:01

now he's he's one of the backers of the

26:03

FDX you know, not everybody

26:05

can just stare at

26:08

the the pot of gold in front of you and

26:11

see people putting their hands in it and

26:13

then Just keep staring at it and say,

26:15

nope, not for me. Chris

26:18

starts putting more serious money

26:20

into crypto. I started investing

26:22

a hell of a lot more. Sorry for the language.

26:25

I put rules in where I it would automatically

26:27

buy fifty dollars every week regardless

26:30

both in these series I'm at Bitcoin. When

26:32

they would drop, I would go nuts and buy a

26:34

a chunk more, like, two hundred bucks at a

26:36

shot. And then, obviously, that over

26:38

a year or two years, became thousands

26:40

of dollars. And because he keeps

26:42

hearing about FTX,

26:44

FTX seems so global. It seems

26:47

so huge. And all these people are putting their

26:49

name and money behind it and

26:52

he checks it out, finds he likes

26:54

the interface, the low fees.

26:56

So I moved My money too

26:59

left yet, then I started buying

27:01

on FTX with a credit card.

27:04

And Chris becomes one of the millions

27:06

of FTX users worldwide.

27:15

I tried to warn you guys, I tried to tell

27:18

you in my last video crypto is going to blow

27:20

up it happened. Welcome to the

27:22

crypto crash of two thousand twenty two,

27:24

we are living through history epic times.

27:31

The mania that brought SBS to

27:34

the top couldn't last forever. It

27:37

was a bubble driven by low interest

27:39

rates, tons of cheap venture

27:41

capital, and a lot of

27:43

hype and irrational enthusiasm. On

27:46

some exchanges, seventy percent

27:48

or more of trading activity was

27:51

what's known as wash trading. Fake

27:53

trades between accounts controlled by a

27:56

single entity. Done

27:58

in order to drive volume and

28:00

move prices. By

28:03

the time the twenty twenty two Super

28:05

Bowl aired was six crypto ads,

28:07

including Larry Davids for FTX.

28:10

The cracks were already starting to form.

28:13

Prices had peaked months earlier,

28:16

Many who bought in were too late. They'd

28:18

end up losing money to either plummeting

28:21

prices or abrupt bankruptcies.

28:24

This has been a tough, tough market

28:26

for a lot of people, particularly last week.

28:28

Last week was a very painful week

28:31

for

28:32

many small investors, retail investors

28:34

as well as institutional. The

28:37

truth was that by mid twenty

28:39

twenty two, Consumer Crypto

28:41

was dying, or at least the

28:43

version we knew anyway.

28:52

As crypto crashes around him,

28:55

Sam seems to be thriving. Sam

28:57

Bankman Fridaida is really becoming the

28:59

industry's lifeline during a crisis

29:02

lately. The CEO of FTX is

29:04

behind hundreds of millions of dollars

29:06

in emergency loans in the past few

29:08

years.

29:08

He tells Bloomberg's David Rubin Stein

29:11

that the crash doesn't make him super

29:13

nervous.

29:14

long term problem. So

29:15

it

29:15

didn't give you any gray hair I can see. So

29:18

I'll I'll a little bit. But, you know, I I

29:20

plucked those out to keep up appearances. And

29:22

he begins bailing out various crypto

29:25

businesses on the verge of collapse,

29:27

earning himself some flattering

29:29

comparisons. They call him the JPMorgan

29:33

of crypto. Right?

29:35

Yeah. The Michael Jordan of crypto,

29:38

if you will. See, The

29:40

JPMorgan of crypto, the

29:43

next Warren Buffett, Crypto's

29:45

white knight, He extends

29:48

lines of credit worth hundreds of millions

29:50

to peers and insists

29:52

he has more to deploy if

29:54

need be. He tells CNBC

29:57

he's doing it for the good of the industry.

30:00

It's not gonna be good for anyone long term.

30:03

If we have real pain, if

30:05

we have, like, real blowouts.

30:07

And it's not fair to customers. And

30:10

it's not gonna be good for regulation.

30:12

Like, it's not gonna be good for anything. And

30:14

so from a longer term

30:16

perspective, it's just that was what was important.

30:18

For for the ecosystem is what was

30:21

important for customers and was what was

30:23

important for people to be able to operate in the

30:25

ecosystem

30:26

without being terrified that unknown

30:29

unknowns were gonna blow them up somehow. But

30:32

the ecosystem was already compromised.

30:36

All these actors are so tied

30:38

up in each other's business. It

30:40

makes sense, of course, that he would try

30:42

to provide some stability. If

30:44

people see crypto companies tanking all

30:47

over the place, why would they feel

30:49

safe putting their money into this world?

30:52

But he's also picking survivors. For

30:55

every company, he chooses to save.

30:58

Others are left to die. And

31:00

Sam comes out on top,

31:02

or that was the plan.

31:09

Seeing all these people talk about him, seeing media

31:11

platform, putting him on, seeing him in

31:13

front of the US Congress, you'll

31:15

get the sense of, like, this this is a go

31:17

back. This guy is doing good things.

31:19

He seems like he he's

31:21

clearly successful. I mean,

31:23

he's a multibillionaire. All

31:26

these people trust them. The Bailey

31:29

entire companies out left Fred and center,

31:31

like, they almost like, well, okay. Well,

31:34

clearly, they can't fail.

31:37

Those are very bad last words of mine.

31:41

At the height of the mania, I remember

31:44

telling people that not just FTX,

31:47

but this entire industry seemed

31:49

unsustainable. They

31:51

said I was just salty about missing

31:53

out or that three trillion dollars

31:55

in market cap couldn't be wrong. This

31:58

was the next internet. I

32:00

took a lot of heat online. And

32:03

sometimes I did feel like I was crazy.

32:06

A guy with a cardboard sign warning

32:08

about the apocalypse on a street corner.

32:11

Maybe there was some fundamental thing

32:13

I didn't get. But there

32:15

was so much I was seeing that just didn't

32:17

make sense. Even

32:21

as the industry began to crack, SBF

32:24

was still standing and somehow

32:27

able to bail out troubled companies. Where

32:31

was the money coming from? Why

32:33

was FTX doing so well when

32:35

most of its peers weren't? It

32:37

seemed like everyone was indebted to

32:39

everyone. But Sam wasn't

32:42

just immune to what people in the industry

32:44

called Contagion. He

32:46

was stopping it. When

32:49

SDF DM me back in the spring,

32:52

he said that some of my critiques of Crypto

32:54

were correct, not all, but

32:56

some and that he would tell me when he

32:59

thought I was wrong. He told

33:01

me that one potentially sketchy crypto

33:03

company with which he did a

33:05

lot of business was poorly

33:07

run, a mess, but

33:10

not a scan. The

33:12

difference between what's just a mess

33:14

and what's a scam turns

33:16

out to be at the heart of this story. What's

33:19

the product of negligence of

33:22

being reckless and bad at your job?

33:25

And what's a crime? Because

33:27

if you want to convict someone of fraud,

33:30

you have to prove intent.

33:46

Coming up on the naked emperor.

33:49

Hey, guys. As good news. Bunch of twenty

33:51

five year olds. We don't really know what a big one

33:54

is, but we're trading it. You're just like, well,

33:56

I'm in the Ponzi business and it's

33:58

pretty good. There was never

34:00

the smart people and the quote unquote

34:03

dumb

34:03

people, the smart money and the dumb money,

34:05

you know, everyone has collapsed like their thinking

34:08

of your fans here, did Everett

34:10

give you pause that a crypto market

34:12

that you said yourself is very

34:14

volatile, was being sold as safe by

34:16

some of these big industry players like FTX?

34:18

I mean, should people

34:19

Yeah. I'm not I'm not

34:21

sure if it was sold as safe. I don't think anybody

34:23

can say that.

34:28

You've been listening to the Naked Emperor,

34:31

a frontburn mini series from CBC

34:33

Podcasts and CBC News.

34:36

The show was written by Me, Jacob

34:38

Silverman, with producer image in Bertchard.

34:41

Associate producer, Yvette Syn.

34:44

Sound designed by Julia Whitman and

34:46

Yvette Syn. Sarah

34:48

Clayton is our digital coordinating producer.

34:51

Executive producers are Cecil

34:54

Fernandez, Chris Oak.

34:56

And Nick McCabe Locust. In

35:00

order of appearance, Audio From,

35:02

The New York Times YouTube channel the

35:05

US attorney's office for the southern district

35:07

of New York's Facebook page. Andrew

35:09

Sorkin and Kate Rooney on CNBC's

35:12

YouTube channel. The YouTube

35:14

channels of the Tonight Show on NBC,

35:17

Bitcoin Magazine, Salt,

35:19

the David Rubin Stein Show on Bloomberg,

35:22

The pushkin podcast, what's your

35:24

problem? The YouTube channels

35:26

of NaaS daily, the FTX

35:28

podcast, and the eighty thousand hours

35:30

podcast. The YouTube channels

35:33

of NBC News, NBC six

35:35

South Florida, Yahoo! Finance,

35:37

Kevin O'Leary, Tech Lead,

35:40

coin desk, and Matt Levine on

35:42

the Bloomberg podcast, OddLux. That

35:51

was the first episode of the brand

35:53

new podcast, The Naked Emperor.

35:56

You can listen to episode two right now

35:58

on the CBC Listen

35:59

app, and everywhere you get your

36:01

podcasts. For more

36:04

CBC podcasts, go to cbc

36:06

dot c a slash podcasts.