Okay I know better now I should already care about these crypto bro bro, it's not. You don't need to get my crypto then these are like these are like in these are the massive events world or at War they're fighting it out and I'm here to tell you who won and what's next now. I'm gonna be honest I Called this yesterday I Warned you guys that FTX second largest exchange might be insolvent and people called me crazy. They said no way. The guy who described all of Defy as a Ponzi scheme could be bad Sam Bankman freed. he's just too smart. wait a minute after all is endorsed by Tom Brady What could go wrong with another celebrity endorsement? How long have you all knew about the FDX problems? Whatever. Because yeah, how long has this been going on for people like Larry David backed FTX Surely your funds are a few months, right? Okay, well turns out they were actually in danger all along and not a week. No shots I heard about I guess I heard about I I know from who I heard I heard about the problems if yes, like like way way back when. Uh, Maybe not maybe like maybe a month and a half ago. a month ago, things are about a month. very bad. So I'm gonna explain to you this entire mess very quick. I'm not married I didn't hear some are changing by as a rumor, but let's get into it. No, I wasn't once there existed two rival crypto exchanges binance and FTX the number one and number two crypto exchanges and their CEOs CZ and SBF or Sam bankman freed hate each other. That's an important part of this story, but things were calm at first for the most part. They played nice for years until recently SBF decided to take a pot shot at his competitor's attempts to work with regulators and said uh, he is allowed to go to DC right implying that CZ was banned Now he didn't know it at the time, but SBF set off World War III in crypto with this tweet that was outdated, but there's two after that. So what we're doing, skip it or what. I'd have signed his own funeral because a few days later, a report came out from Coindesk leaking Ftx's Financial balance sheet and what it showed is that they had a lot of money, but it was sort of locked up in all these token projects they were a part of. most notably in Ftt token Solana other projects that they were oh my. God They couldn't sell the projects anytime they wanted to. In other words, even though they had billions of dollars worth of assets, they weren't very liquid and it was arguable that some of the coins weren't that valuable so they couldn't get access to these funds immediately. Meanwhile, they had huge liabilities of 8 billion dollars 7.4 billion of which were loans now Dirty Bubble Media who was the person who caught out the collapse of Celsius which we've talked about extensively picked this up. In a scathing report. In it, he suggested that FTX and Alameda research might be insolvent because all their money was locked up in these tokens that might be worthless. and if everyone tried to withdraw their money, the company could likely not pay off their reliability. Yeah, because I swear guys, it's been more. It's been about a month. I Was hearing about uh, something with with TSM and FTX and things, but things were going to fall through. whatever right? So if things have been like that now a month back I saw this and decided to take an opera opportunity to strike against his biggest rival. He announced that day that because of recent Revelations which because of that report quote, we have decided to liquidate any remaining Ftt on our books. Well, this was massive given that Ftx's number one holding was Ftt. system is fine though. competitor Binance is saying that they're going to dump up to 2.1 billion dollars worth of it on the open market, causing that price to plummet. Now, all of a sudden, you don't even have E-liquid funds. You just have none of those funds. So even though CZ said that this was not a move against a competitor, it kind of looked like it was right. Of course, he's going to say that in reality he knew what he was doing now. immediately. this stoked all sorts of fears about the solvency of FTX and the fear spread like wildfire is FTX The next Luna is FTX the next Celsius and people started to withdraw funds like crazy. Which honestly, as they said, the logical move yeah, the problem with crypto exchanges right now is that is this equivalent of like a crypto Bank Run Because there's no monetary Insurance on your money. Even if the probability of an exchange going bust is less than one percent, you still have to take all your money out. Because if they do go bust, you lose everything. If it doesn't go bust, you only lose a fractions. You're being cautious, and so there's really nothing to risk by taking your money out. And there's everything to risk by keeping it in. So basically, that means Bank runs are extremely common these days, and a lot of these exchange, they're really not ready for it. Um, Sam Bankman freed himself said that a lot of crypto exchanges are secretly insolvent uh, which was a bit of weird foreshadowing, but at first it looked like FTX wouldn't go and solve and a lot of people said this was very unlikely since in the past they've looked very strong and that's what they basically said. They said, look, it's no big deal, this is all fun, nothing to worry about. Alameda Research who is closely tied to FTX actually responded about these uh leaks in their financial balances and they said quote, they have 10 billion dollars worth of assets that aren't reflected there and that also they have returned most of their loans by now. And most shocking of all was that they offered CZ to buy all of his Ftt off market for 22 each near the current price. Now, the reason for this is obviously to show that. Okay, we're not scared, we've got the money to back this up. and if you really aren't trying to sink us as a competitor, you'll be happy to do this private deal, get a better price, and not impact our price. It would save both parties a lot of headache. But unsurprisingly, because these guys hate each other CZ wasn't having it. He said he was going to stay in the free market, signaling that he fully intended to squash the price of Ftt. And he did. Ftt dropped over the next 24 hours 30 percent and not only that, reports showing that FTX withdrawals were increasing, the bank run really was happening like CZ wanted. and this is where we have to go back to Alameda's CEO What they said said about having 10 billion dollars worth of assets because there's some really key caveats about those claims. What are those 10 billion dollars worth of assets? Are they cash? Because if they are, they're probably fine. But if there's something like more Ftt token or more of Sam's other projects that he can't sell, well, that's going to be a significant problem for them. When everybody's running and asking for their crypto back and they just don't chat guys. guys. All right, HR is a video about this is actually no good about this or not have it. So questions were flying about what exactly FTX was doing with your money when you deposited it. Were they just giving it to Alameda research which is sort of acting like a hedge fund and trading with your crypto trying to make a big return? Or were they keeping your funds safe and just practicing proper risk management? Well, this is where everyone just basically waited with baited breath to see what was going to happen next. Uh oh. this looks pretty bad they first confused. This still happens in a current day and age like you, You would think these exchanges are so big it's like a bank. like some. How much money did they have like in and out like the cash flow. you think you would think it's like an actual bank. those withdrawals and at the same time the teams are bigger. Totally silent and people commented like how bad wait actually bigger than Banks this looks on them. why aren't they speaking and people started to Circle back to old clips of Sam Bankman Free describing Defy and Crypto as basically a Ponzi scheme. Positively, some of them and they wondered how did any of us trust this guy I think of myself as like a fairly cynical person and yep, that was so much more cynical. Yeah. I Would have described farming like you're just like, well I'm in the Ponzi business and it's pretty good point have and did any of this require any sort of like economic case. It's just like other people put money in the box and so I'm going to too and then it's more valuable. So I got to put more money in and at no point in the cycle did it seem to like describe any sort of like economic purpose. So yeah, things are looking really Grim But if you have your money locked up on FTX and you're clinched up right now, take a deep breath. Um, because things look like they might be fine although it's coming from a very unlikely Source CZ Announced only hours after FTX paused withdrawals that they were going to buy them Binance was going to buy FTX the number one crypto exchange buying the number two Out quote this afternoon FTX Asked for our help. There's a significant liquidity crunch to protect users. We signed a non-binding Loi intending to fully acquire Ftx.com and help. Wait a minute crunch. Now this is old news. I Get it, but we're doing it one at a time. Okay I I'm at a loss for words. This is insane If you're not sure what just happened CZ Basically set his competitor on fire by stoking rumors of insolvency and then showed up with water buckets later. you know, Basically acting like the hero saving the day he just bought FTX out for likely Pennies on the dollar in a move that's honestly gonna go down as a bit of business genius I mean Also, cut throat strategy I mean is that really all it takes though for things to like fall out of proportion like that? Just just a couple statements randomly and then everything falls apart. Was a shark. Is that shaky? Now in the next few months you're going to see SBF and CZ try to spin this whole thing as if there's no conflict between them and there was never any problems. That was just a rumor, but don't believe it. they're over leveraged. It was very real only days ago. CZ was saying that we won't pretend to make love after divorce and that quote, we won't support people who Lobby against other industry players behind their backs so very much. These guys did not like each other and one of them just won the war. So the fact SBF let himself get bought out by probably the man he hates most in crypto just shows you how badly they must have been short on cash or the crypto that was being withdrawn. I mean I Promise you they exhausted every other option. In fact, reports are already coming out that FTX was courting basically everyone in Silicon Valley seeking more than a billion dollars but that by mid too Tuesday The hole in their balance sheet looked to be significantly deeper and in the end they had to sell out to their biggest enemy. Now what does all of this mean? Because for one, this represents a huge Central Liquor simulator crypto space. You know everyone wants to be decentralized. Well, the number one buying out the number two is sort of a big problem if that's her goal. There also remains no questions like how they could have been out billions in the first place and how exactly they were safeguarding customer funds if suddenly they find themselves at a multi-billion dollar hole in their balance sheet after people actually look to get their money out. It seems to be yet another lesson that you should not trust these cryptos. No matter what their CEOs say about not having to worry about anything, there could be significant liquidity crisis that they're lying to you about. And on that note, I Want to remind you that this deal is not about blockchain and binance can get out if the due diligence doesn't pan out or if they just don't want to do it. So if you're invested in FTX and didn't get your money out when I and others started telling you guys that, uh, they were likely to be insolvent, it's not time to relax. Finance isn't necessarily going to save you and you should explore all your decisions because your funds might still be in danger if this deal doesn't work out. As for FTX Us: I have no idea what's going on I have nothing on any exchanges or whatever although the deal is still pending. so who knows I don't know anything? Hold your Bitcoin in No Yeah stupid no. no cap. no no, no, no, no I have it on. Um, it's cold. It's cold right? and I hired somebody to like some crazy I I didn't It's like hidden. Okay, it's what it is. It's like some some some cold on a on a physical thing. it's locked away somewhere is some. it's only 9.9 minutes. Okay, the guy you see next to me is the most. General and I found him the most generous billionaire ever where you can get 10 off on your trading fees. These are bad. These are very bad. but FTX there are no fees whatsoever. and if you sign up with our link signing up using my link, there are referral links if you use my link below and the code name Paul Nash Oh, stop it please. you guys are embarrassing yourselves. Listen, what a week it has been for financial influencers. Their reputations have just been going down the toilet. People who promoted absolute garbage companies like FTX Us and Block Five for millions of dollars. Today we're finally seeing the results as both of those companies are basically bankrupt. and so today I'm calling out all the influencers who promoted it. some of whom I know and I'm getting third wave and bear promoted. What embarrassment from it you know I know yo she's Crossing up. It's mind-bendingly stupid to imagine that people actually listen to YouTubers for financial advice, but we all know they do. That's why they get offered these insane Financial deals and these people had a responsibility to their fans and they blew it. So I want to talk about it because it's a pretty big Scandal and uh, it involves a lot of people I know some of them, some of them I've even done collapse with and just honestly it's crazy how many of the biggest Financial channels took deals promoting this garbage and honestly none of y'all are getting off the hook. today. it's chat. Shut the up. Stop it. I'm watching this video. man, slow down shall we? No, we shall not. For all of y'all if you do the crime, you get the screen time I don't care who you are so I kind of showed a bit of it at the beginning of this video but um it was incredible to me as I like looked through the archives just how many people got bought out by. wait this guy I mean I think I chat that he made a video about like being a rich and like I made a reaction and I was trolling him and then he made a video response calling me out for trolling him invite me to his podcast. People got bought out by FTX Us. and uh, let's face facts: the biggest reason for that is money. The sponsorship deals were absurd I know a guy much smaller Channel than me making half a million a year 50k a month just to promote FTX us. So I know the bigger guys were getting much more. Some of them probably deals were in the millions so obviously that's a big reason. A lot of them get it. but I don't think that's the only reason because I think that'd be honestly too easy to say. Oh, they were just greedy. That's why they they did this. I actually think it's worse than that. Well, Michael Reeves clapped them Nah. I mean I'm glad you microwaves he trained and whatnot. Talk to a lot of these guys. That's the scariest part. So many of these experts who are giving you guys advice totally bought into this Sam character as this genius billionaire right? the most generous billionaire in the world who also happened to be paying them handsomely of course. and I just think it shows how bad the discernment is out there making videos on how do invest. It's alarming how many people fell for this guy's ruse and it's alarming how easy it was to convince them like some of the word chat guys. If you're doing an exchange right, how do they make their money in order to um, and how do they make the money in order to pay the advertisement and also, um, how they didn't benefit from that from fees? It's that much. Okay, and and then and then and then. What's their end goal with the marketing? Is it to become number one in the trading business? These guys believed in Sam because he drives a beat-up car Sam doesn't need the money to buy a Lamborghini or to buy a Rolex or to impress his friends. In fact, his car is a Toyota Corolla It's you. Trust the guy more when you see the car he drives. he's worth like 20 billion dollars or something and he drives like this kind. I Don't want to call it beat up. It's like a it's an older Toyota not. He doesn't even have window tints on them completely stocked Toyota What does that have to do with anything? What does window tint have to do with Sam's qualifications as an investor? I Mean, look at, it's now coming out guys that at Alameda research, they were just kind of embarrassingly incompetent and the evidence was always there. but nobody who is selling FTX bothered to take notice. Apparently they were too busy looking at the window tint. Here's the CEO of Alameda for example saying she hardly uses math at her job. Yeah, absolutely could pull it off without my math degree I use very little math. Um, use a lot of like uh Elementary School math. It's just beyond belief like I don't want to pretend like I'm some Nostradamus who saw all this coming and nobody else did right I did call out FTX 24 hours before it shut down I did call FTX us out well before like 72 hours before it shut down. but I wasn't here with my crystal ball forecasting all of this years in advance. But that's the reason I didn't promote this. You know I get the same offers as everyone else, but there's no way I'm going to risk my audience you guys in a game of crypto Among Us Like will this guy turn out to be a psycho in a year or two? Let's find out. Uh no no. I'm not gonna do that. And it's not because I'm better than anyone, it's just because I know that even though I know a little bit about crypto I don't know enough to know for sure whether these companies are going to be around and that's the crazy thing is I think of everyone we're talking about today I probably know the most I probably have the biggest claim to like crypto expert and I would never feel comfortable saying that because there's just no way you know. And so I think it exposes a big gaping flaw in this influencer world where it's not just the greed, it's just this systemic failure of people to recognize their own lack of expertise. And it's so easy for charismatic genius. This is a lot of information, but I'm taking it in convince of these people based on basically no evidence. Take for instance, meet Kevin's seal of approval guys. Brilliant. He talks very fast, but he's brilliant and I trust him. and I like him? Yeah, Really? okay. but once you just are you wearing a fedora, Ironically, he talks very I Don't get it right now. Really, you know I talk really fast. My Brilliance is definitely Up For Debate But do you trust me with all your money? Because you shouldn't. So it's just abysmal. And now that this has all come out, some of these guys are now coming out and apologizing as they should. Uh, but is it enough because people like Graham Stefan now has made a video about it. Uh, basically he said 24 hours before FDX us went bus like hey, maybe you should get your money off. Ftxus has been a sponsor here on the channel for the majority of the Year this one I did not see coming I think it's pretty safe to say as a result of that I'm no longer working with them so if you hold anything on FTX us, you could still take it out and transfer it to an external wallet or wherever else you please. But how many people saw this compared to almost a year of ads or take? Tom Nash someone who's appeared on this channel? okay if he took it I'm confused. Chat: I'm confused. Okay, maybe I'm out of touch. Why would you ever use an exchange service like a bank? shouldn't you use your wallets whether it's cold or whatever as your bank and then get anything out that as fast as possible? A different approach and basically said no one signed up under him The thing that you always ask me to talk about FTX I was working with them. can't you hide to go for crypto somehow? From what, From what, can you just easily hide a lot of money in crypto from taxes? It's complicated so you're gonna get taxed on the way out, but you could still hold it in the meantime? Yeah, that's probably what they're doing. Yeah, of course. again of course during this whole month we were running the campaign. literally nobody signed up for FTX us. They called me and I was insulted in the beginning and they said look, Tom we gotta cut it short because we had like a three-month plan to work together and they said look, we're stopping after one month because nobody said ah, that works I'm not doing anything so you're so dumb yeah I have crypto tax on the way out signing up from your channel yes I don't know if I buy that at minimum. these are bad arguments like no one signed up for me or hey, I gave you 24 hours notice like it's just such an embarrassing standard for this industry If you can even call it that because it's just a bunch of basically random people giving their opinion about finance and truthfully I just think it's a big lesson. Another lesson, The millionth lesson that you shouldn't be actually taking real advice from the people who, who you watch on these screens. They're entertainers and they don't know much more than you about what they're actually selling. Um now I Will say one small thing in their defense: ha at IRS at FBI Usgov Joe Biden look at this man, You don't You don't even saw this guy. a lot of smart people BlackRock was an investor and for you Millennials even Kevin O'leary got caught with his pants down. Number one: I'm an investor in FTX Center oh my God this guy too I'm an investor in FTX U.S Equity Number three I have accounts with FTX I have Capital there inside of my account obviously like everybody else I'm gated currently yikes I Guess it just shows. why would you hold funds in exchange services? The advice out there wasn't how many people. So many of these Financial experts were full and then made fools of themselves by promoting this junk. Now the next thing I want to talk about? it's safe, but you must get something out of it though. bro. Like if you put in a bank, you're getting interest. If you do it right, no interest bro bro. the interest is going. it's going up and down. Uh, based on the value of the value of the crypto, right? Bro. If you have even even a good amount of uh, let me question Mark my brother. if you have one Bitcoin and you store it somewhere right when you go to cash it out, in whatever amount of years you're cashing out one Bitcoin They must have had something different than a cold wallet. They must have had something like your money goes up somehow if it went out to me, it went up, it went down, it went down. You're still catching out a Bitcoin right? that's not interest, but they have interest on the empty. So it's like, uh, going up and amounts like about is a company called Blockfi which paused withdrawals yesterday. It looks like they're also going to be bankrupt. Um, and I Just want to talk about the influencers who promoted him as well. Here's a few clips of what I'm talking about. Well, I Think about people who also money in my opinion, if you have a good one, if you could go on a shadow game, anybody deal with this Bro Bro. You go. You go. You go to the bank, you get a security deposit box. Okay, you put the physical thing and then you open another one and you put the at The Recovery Words and boom. You fight against the hidden forever. Never taken on a paid sponsorship on my Channel Please use my link to sign up to this credit card Actually obligated to speak positively about them. Don't forget to grab up to 250 worth of free Bitcoin Using this block by link right here. It would really help me out a lot. We didn't touch on this at all, but the thing I'm most excited about for this year is uh, the Bitcoin rewards credit card which we're launching in the second. Oh now this is just a lot more of the same junk. and once again I mean I would say this even more so. we have evidence that these people were just bad at predicting this stuff. They just had no idea what was going on because Andre Dick for instance said he keeps all his money on blockfi which just went under I keep most of my money. In fact all of my crypto with block fly off my iPhone and it was the reason why there was invented Bitcoin to hold the rights of your own money another third party exactly. The whole point is to be decentralized and away from One Tap and then Ebony loads their their their their on their own decentralized and they stack that onto one centralized system. What the Ethereum? My Bitcoin everything rip to your portfolio. These guys are just no. I Also want to say meet Kevin I think personally all these guys are just 420 000 into this platform which cool number I guess uh so I think he also lost a ton of money on that. but I just think it's just a big lesson that you cannot take advice from these people. I Know the parasocial relations. Yes, it's like it's like gold. It's not having gold bars and silver bars in your basement literally if you know where you're doing it right. Dude, if you if you have like a wallet right it's physical plus the recovery key or whatever right right? You can have infinite gold bars in a singular small spot. It's that you can treat the same way. like having a gold bars in your basement so much and you start to feel that maybe they know that's how I see it but a lot of them are Googling it like five minutes before they go live. Okay, that's it makes sense. Um and I just think a lot of these influencers themselves should take a hard look at themselves because as much as it's ridiculous that anyone takes their advice, they actually do and it's gonna hurt a lot of people for a long time. So that space, well uh, chat he finishes. Again, this is the finisher and it's gonna. it's trending. it's gonna go on hot. This is going hot mode are now hanging in the balance. It's so big that even the White House Arrested News further underscores. uh these concerns and highlights. Why uh, prudent regulation of cryptocurrencies is indeed needed. Wow! Now I'm gonna try to explain all of what just happened in the last 24 hours. the swirling rumors, the doomers so much for decentralization, the the whole, the only purpose. almost the only point of everything. it seems like it's just gonna wait I'm sorry the Bloomberg allegations and everyone else's allegations too, because when something this big happens, it becomes difficult to sort through what is provably true and what is sort of speculation. So where I can I'll be telling you what I'm sure about and what I'm not and I'm even gonna share some Insider knowledge I Learned from an Alameda research employee who leaked a lot of interesting information to me. So let's get into this but first hello from the future guys. Uh, it's a quick Interruption to this video to say that a lot has happened in the last 24 hours while editing this and a lot of the information has changed the story. like just basically kept going. and so I've made an entire extra video attached to the end of this one covering the latest information. Um, please forgive me I haven't slept a lot. Buckle up though, because they're stolen billions Romantic Affairs flights to Argentina possibly. but for now, just enjoy a much more well-rested coffee. Zilla and I will see you in a bit last time, so this is useless. Spoke FTX One of the biggest crypto exchanges in the world was in deep trouble and their biggest competitor Finance was planning to buy them out for a bailout. Now, initially, this was it. What nothing? If this is for help, um, a non-binding Loi Attending to affiliateware competitor, Binance was planning to buy them out for a bailout. Now, initially, this was believed to be a short-term issue only for FTX CZ their competitor called it a significant liquidity crutch. This basically means FTX had the money just they didn't have it right now. to make an analogy: imagine: I owed you cash but only had gold. Chat: that's a liquidity. Is this a tiny bit similar to the the thing that happened uh with um with Robin Hood or whatever I can't just give you gold I have to go sell it first. But crucially I have the money. It's just locked up. now. depending on how hard it is to immediately sell, this small issue can turn into a very big one. which FTX figured out when five billion dollars in withdrawals came in one day and they just didn't have the money. And so that's what this buyout was all about. Finance Stepped in and said, hey, we'll cover their short-term issue in exchange for buying out their long-term asset. that's for pennies on the dollar. which is a pretty brilliant move. Would you consider that Binance's CEO kind of caused the whole problem in the first place, but you want to know more about that? You can go watch our last video. However, I told you guys in that video that this buyout was kind of shaky at best. Wait, Wait, it was non wait wait. So why don't they have the liquidity binding? Which meant at any point Binance could just walk away if they didn't like what they saw. And that's exactly what happened. Binance recently said they're walking away from the deal and that the reason was based around latest news reports regarding this handled customer funds and alleged U.S agency investigations. and this absolutely ruined Ftx's credibility overnight because all of a sudden the conversation on FTX turned from liquidity crunch. Okay, I get it. Okay, it's a normal thing that everybody understands in in in that realm and I don't It's like them. They have the liquidity that comes in from the users right? and as an exchange they they get the money the juice right instead of just keeping it. Of course they they dip it into other and invest it in things that can make more money right? But basically people say yo all our money back At the same time they don't have the money because it's in other things. So they're leveraged to insolvency and fraud. Because look, there's a big difference between the two Liquidity issues is when I don't have the cash for you right now, but I have the asset somewhere insolvency is when I don't have the cash and I have nothing else either. So if FTX was illiquid, it's a great deal. If FTX is insolvent, it's a nightmare. which is why a lot of people thought Binance backed out of the deal with both Bloomberg and the Wall Street Journal reporting a multi-billion dollars. I Also do that I think banks are like back but like government bullshits scamaz like a rigged like trash shortfall now. Finance Responded to this saying that the issues are beyond our control or ability to help and this is very bad news for FTX It's bad news for if things go bad, they'll really print money or some right and it'll fix the like all of crypto because your average investor is about to get wrecked. Not only that, the CEO Sam Beekman freed may be in a lot of trouble because it turns out when he said that Ft I mean it's a Binance FDX I would assume coinbase I would assume some what is the thing. there's one more now he's fine and that yeah Gemini is a my ass I Don't know what's wrong with that website. it's just hard to log into this. This is it. feels like some I don't know what's wrong with that thing man. Basically, minutes before disaster might be a good idea because they probably are criminals. but we'll get back to that in a second because first, I want to go back to binding earlier statement about mishandled customer funds. What did they mean by that? And how can a crypto exchange as big as FTX become insolvent? It's it's like hearing that a casino went insolven. It's like, how did you guys lose money? You win no matter what. These crypto exchanges make money on the fees. whether you win or not, whether it goes up or down, they're making money. So how could you have lost billions of dollars? As one of the biggest crypto exchanges, that's the question. And this is where Alameda research comes in. So as a quick explanation, Spf's Empire is actually incredibly complicated. Like, way more complicated than even complicated. Firms like this has been compared to the Lehman Brothers. Well, the Lehman Brothers corporate structure is way simpler. Spf's web of companies is really difficult to untangle. But really, there are two companies that matter the most Alameda research and FTX FTX is the crypto exchange we've talked about. and Alameda Research is a small trading firm. Now, these two companies, though they're technically distinct entities, have always been sort of unusually close. Some have speculated unethically close, but their CEO claims that indeed, they are separate entities. But with FTX seemingly becoming insolvent, that relationship is now under scrutiny. and it turns out they may have shared more than an office. They may have shared information and also been sharing client funds. And this is where this whole mishandled client funds allegation comes in. because FTX told users that their digital assets belong to them and wouldn't be traded. It's explicitly laid out in their terms of service quote: you control the digital Assets in your account FTX Trading does not represent or treat digital Assets in user's accounts as belonging to FTX does not represent trading and title digital Assets in users accounts as belonging to FTX trading and title to your digital asset Shell at all times remain with you. But turns out this wasn't the case at all because according to an Alameda research employee who came to me anonymously, apparently they had more access to FTX than previously disclosed. In fact, not only did they have access to Ftx's back end, they managed withdrawals for FTX and had a giant line of credit that they could draw on which seems like partially may have been users funds. something that no separate entity now bear in mind that is coming from one employee, but it's backed up by another source. The Wall Street Journal who reported that FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes which they just said they wouldn't do wait, wait, but wish they could also be doing if they wanted to with the money that they get from the fees which are pretty good, it's probably good money. They're not broke, right? They can still do something like this with the money that they make with I deposited on the exchange for trading purposes which they just said they wouldn't do. Quote: It was a decision that Mr Bankman Freed described as a poor judgment call but I would disagree with Mr champagne I would not describe that as a poor judgment call. A poor judgment call is showing up to a zoo meeting looking like this: when you take clients funds and do exactly what you told them you would not do with them, that's but he does a Toyota though dude, it's on Brands bro did it make sense man and that is fraud now I Know this is already all insane, but we've only explained sort of half the story how clients funds were being used by Alameda but nothing lost because new reports show that Alameda May owe FTX 10 billion dollars. How did they lose that 10 billion because these were supposed to be the crypto Geniuses right? Well, this is unfortunately where we have and speculation. as I said. I'm going to tell you guys what we're sure about what we're not. So losses likely come from four places that I've heard about. Number One is just FTX themselves spending insane amounts on Advertising with stadiums Tom Brady and a crazy number of YouTube influencers who apparently were Shilling FTX The second place they likely lost money was that Alameda invested heavily into Ftt tokens and a lot of their own projects which they give loans to the other to the other company and and collateralize the loans with the tokens on the other company. Ah, when FTX went down, basically went to zero or at minimum couldn't be sold very quickly. The third way they lost money was that Sam Bankman Free tried to bail out all of crypto in the summer. People like Block Five Voyager digital Sky Bridge Capital which led to huge losses. and then when Alameda found itself with big losses around the time of a lot of these companies come lapse number four: Alameda took out a four billion dollar line of credit from FTX a four billion dollar loan essentially. And what did they give FTX in return to back up this money? ftt tokens and Robin Hood shares. Wait. Which the Ftt tokens is? wait. It makes no sense at all. The crazy part because FTX that's their token so it's basically giving nothing. This is all according to Reuters and and it's just insane. Many Financial commentators are calling this dark magic. but I think Matt Levine of Bloomberg put it best. He says it's possibly illegal and it's like a bank. like it's like training yourself money like in it right, lending a lot of money against its own stuff. Like the problem obviously being that if you face a liquidity crunch or people lose confidence in you, then these Ftt tokens go to zero and now your clients aren't backed. So um, it's extremely risky Behavior at the best and like you said, possibly illegal I'd say probably illegal. So it was this incestuous relationship between FTX and Alameda that led to their downfall. Oh wow. Possible illegal activity in the crypto world? No way man, full extent of their losses, just they can't find the liquidity right now. Estimates right now are going from billions to 10 billion dollars at the highest I've seen which is just wild and I feel so bad for the victims here. But I find the collapse unbelievably ironic and all because SPF was lecturing Congress about how crypto exchanges were so much better than the traditional Financial system. In 2008, it was unregulated. It was so risky, but it turns out he was doing all of the same things. Last thing that I'll say is, if you look at what precipitated some of the 2008 financial crisis, you saw a number of bilateral, bespoke, non-reported uh transactions happening between Financial counterparties which then got repackaged and re-leveraged again and again and again such that no one. Okay, so that's what he did is that you learned the strategy. You learned the strategy. That's a class. It's a classic though. This is a massive classic. Knew how much risk was in that system until it all fell apart. If you compare it right, my men went to school that day. Dude, transparency about the full open interest. There's complete transparency about the positions that are held. There is a robust, robust that phase service framework applied. I know I would say to work with this license and regulated venue. Yikes. Does the phrase bespoke non-reported transactions happening between Financial counterparties which then got repackaged and repackaged again and again to such an extent that no one knew how much risk was in the system. Does that sound familiar to anyone? because it sounds exactly like what? SPF Did you know the only difference between SPF and these? Banks Basically, basically it's like it's like a uh I'm I'm I'm buying myself I'm I'm loaning myself money right to give myself, um, a Xqc training card, right? That's that's kind of how it is, so it's like nothing. It's like some which he says we're so bad was the SPF preached us how good he was. He was the generous billionaire. Now you see, next to me is the most generous billionaire in the world I Guess that was a lie, but we still kind of have to answer the final question to all of this. which is that it seems like obviously they're insolvent, but how much of it is insolvency versus liquidity squeeze? We're still figuring that out to be honest. Um, SPF even after making a thread today, admitting that he effed up and he should have done better, Still claims that FTX has assets that are higher than their clients deposits. basically saying they are solving still no way, a little bit but honest sleep I Think this is almost definitely okay. Okay, no that okay. that's isn't that quietly impossible if they paused withdrawals because if they put dude, it's not like everybody will withdraw their money right? Oh, what is zero that? that would never happen. It would be a good. It would be a good amount, right? It wouldn't be zero. So if they have more than that, they shouldn't They shouldn't even be scared of going to zero, right? Well, kind of. But honestly, I think this is almost definitely another lie from Sam Bankman free. Given that a we know that a lot of their assets are in Illinois that real value is probably something. and also B Well, this guy has already proven himself to be a liar and we shouldn't trust him. so I just default to assuming that he's lying. Uh, my guess is they're insolvent by at least a few billion. Maybe the full 10 billion we don't know SPF is now seeking to raise 9.4 billion in an emergency fundraise, which I think speaks volumes to that. I don't think they'll get it Brian Armstrong of Coinbase has said I don't know why investors would put money into this now. Uh, which is a nice way of saying I don't know why anyone put money into this ever. Uh, but not everyone though seems skeptical. Amazingly, there still are some. Believers Bill Ackman For example, believed Sbf's apology in a now deleted tweet. He responds that you have to give SBF credit for his accountability here I have never seen a CEO take responsibility as he does here. It reflects well on him and the possibility it's a two sentence tweet of a more favorable outcome for FTX But what accountability is he talking about I Don't see that at all. Dude actually just don't get it explicitly not a Toyota Corolla about his criminal life about reserves. Remember we talked about how he said you know that assets are fine, we have the full amount to clever cover client deposits. But now look at his new accounting because what he says now is that he messed up and mistakenly thought that they had zero leverage. He messed up and mistakenly thought that they had zero leverage and 24x that needed liquidity. In reality, he says he was wrong and that they were leveraged 1.7 x and didn't have the necessary liquidity. and look at first glance I understand why that would appear like he's taking you know responsibility here until you realize that what he's really telling you is that he sucks at his job Because how can you not know as the CEO as this genius how levered up you are? You know you're this genius traitor. Isn't it awfully convenient that you're suddenly bad at your job when it would be criminal if you actually knew because those are the two options. If he had known he was lying, that's criminal. So he's basically saying well I didn't know I was just wrong I'm just terrible at my job. It's not only his job, he probably has like a lot of people who work for him technically right. It's also their job to monitor this right because it can be. It's kind of hard to have like a one point failure system. It's a multiple point of failure and I'm just not buying everybody. My opinion of it is this: SBF shark who knowingly put his own customers 10 people to save his trading firm Alameda Research. He did this without time while giving them worthless Ftt tokens as collateral. Do they sponsor everything too? He didn't lie about it right up until the last possible moment and when it finally came out that what he did was likely criminal, he goes oh whoops, I didn't know well like this whole thing, this whole audience about like 20 build type of right? total dude, they gonna spend a singular million dollars right and have enough employees that are qualified to help the job right for for civil future and and avoid this then oh totally it was one million dollars. It's ridiculous and anyone who believes this well also I'm just going to say right. billion dollar crypto exchange Anyways, down trading and he also addresses CZ of Binance saying at some point I might have more to say about a particular sparring partner so to speak, but you know glass houses. So for now all I'll say is well played. You won. Which just strikes me as so weird of that statement. He talks about this as if it's a sparring partner, as if all a game. This is not a game to be won and lost. This is billions of dollars of people's real money that you just lost. Correction, he might have stolen it or maybe even executive did. or a hacker did. We don't know for sure. Welcome to the Future It sucks here guys. As I said, a lot has changed and I want to cover it? Uh for one. SBF Declared chapter 11 bankruptcy for all his companies including FTX Us, which he said was fine and many influencers promoted. Uh, see this video for more. Wait a minute. It basically looks like they're all in deep trouble. Even worse news around Alameda has gotten yeah. Anita has all the juice and their bankrupting FTX right? and just using bankrupt? Boom But they got the juice. See Originally we thought this team was a bunch of geniuses in crypto. Now it's coming out. They were more like a gang of kids who all dated each other. This report comes from Coindesk Alameda employees were in romantic relationships with each other and their spec speculation that the CEO of Alameda Caroline Ellison became the CEO Maybe because she dated Sam Bankman freed. Incidentally, she also has been revealed to be a big fan of amphetamines, which is just not great when you're controlling billions of dollars. Yeah, and it gets worse when you realize that extra had secretly added a quote back door into Ftx's bookkeeping system. This came out just recently which allowed SPF to quote execute commands that could alter the company's Financial records without alerting other people. In other words, this is how we believe Sam moved 10 billion dollars in funds from FTX to Alameda without alerting anyone. Later, it was reported that among this 10 billion, some of it also went missing from. even with Reuters reporting that one to two tinted windows gives his girlfriend 10 billion, it's no time with Reuters reporting that one to two billion dollars are unaccounted for even among Alameda's assets. Uh, which again, it just all looks so bad for SBF And from here, things spiral even worse because once the dust started settling, you know we thought, okay, we're gonna get a clearer picture now that they're entering bankruptcy. But then they suddenly got hacked. In addition to everything on telegram, their admin says FTX has been hacked. all funds seem to be gone. Oh God okay. apps are malware. Delete them. How could this happen? Coindesk reported that the hacker got out 600 million dollars and I have dude this is this is this is my dog ate my my homework, my dog at my house to tell you that some numbers are slightly less than that 400 million uh from slow Mist for example. and this hack is being traced so we don't know the full story right right now, but it's a lot of money, so to State The obvious. This is very bad for FTX and it also seems like pretty convenient timing for Sam who has suddenly become unresponsive. So this fueled a lot of speculation now. Elon Musk Decided to join the speculation, seeming to accuse Sam in a meme of being behind it all. he posted this man F's five million people oh, that's what I was on Twitter Uh, which is a pretty good one And basically this set off a frenzy of people frantically trying to unmask the hacker eager to make it Sam or Caroline or even their CTO Gary for example, some people use the GitHub activity of Gary Wang to show that he did an unusual number of commits to his guitar, basically saying he might have set up this sudden hack and he did all this a day before FTX was hacked and this for sure is very suspicious, but we need to be careful about rushing to conclusions. For example, Mario Nafal accused the hacker of being an inexperienced Insider because some of the funds were traced back to Kraken and so people thought the mystery was solved when a krakening bro all this is falling down bro this guy is in a league game Executive said we know the identity of this user. You guys pointed out the problem was is two people, the hacker and then the response team over at FT using Kraken seems to have been the response team and not the hacker themselves so it seems like a false identification there. So I get it. We all want to know who the hacker is, but uh, we can't jump to conclusions here and I'm going to be. Try to be honest with you guys about what we know and what we don't For now, let's just say the leading suspects are anybody at Alameda or FTX and especially Sam himself, but we do not know for sure. Another thing we do not know, but people seem to be happy to claim his fact is that SBF is fleeing the behind. This isn't grind to get on league and flying to Argentina. This could be true, we just do not know. Currently the most tracked flight in the world is the one everyone suspects of being Sam but we do not have concrete evidence and that's going to be the final bit of speculation we entertain here because there's infinite theories about how all this happened. All we know is that FTX is massively in debt and users are unlikely to get their funds back because they sent A lot of it to Alameda and seem to have lost it somehow. The most recent report based on the bankruptcy filing shows FTX held less than a billion dollars in liquid assets against 9 billion in liabilities. So this whole is just so bad at this point. And I think that was actually pre-hack So the real story is likely a lot more grim and this has been a sad case study entrusting slick billionaires too quickly. and I think this story is only just getting started anyways. I hope that the customers get their money back if the if the company goes bankrupt keeps you up to date and hopefully we can edit this thing before all of this information goes out of date in three hours. Thanks for watching and it's time for me. So get some sleep! Jesus To Um Jesus Wow cool, it's you lost 5K What the.