Why Isn't Sam Bankman-Fried in Jail?

It's day 20 and SBF still isn't in jail. What gives? Ryan and David give their thoughts on why that may be and how this all might play out. Also, stay tuned toward the end of the show for a special guest appearance from our boots-on-the-ground Bahamas correspondent to give their take from the belly of the beast. ------ Infura | Join the New Decentralized Infrastructure Network www.bankless.cc/infura http://www.bankless.cc/infura ------ SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/?utm_source=banklessshowsyt ️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ️ ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum DESO | DECENTRALIZED SOCIAL BLOCKCHAIN https://bankless.cc/Deso BRAVE | THE BROWSER NATIVE WALLET https://bankless.cc/Brave TRUEFI | CRYPTO FINANCIAL HUB https://bankless.cc/TrueFi SEQUENCE | ALL-IN-ONE PLATFORM https://bankless.cc/Sequence ️FUEL | THE MODULAR EXECUTION LAYER https://bankless.cc/fuel ------ Timestamps: 0:00 Intro 5:44 SBF to Prison? https://fortune.com/crypto/2022/11/13/could-sam-bankman-fried-go-to-prison-for-the-ftx-disaster/ 9:00 Criminal Misconduct https://twitter.com/RBPFPolice/status/1591864528291221504 10:25 1M Creditors https://www.cnbc.com/2022/11/15/ftx-says-could-have-over-1-million-creditors-in-new-bankruptcy-filing.html 14:21 Alameda Backend https://www.cnbc.com/2022/11/13/sam-bankman-frieds-alameda-quietly-used-ftx-customer-funds-without-raising-alarm-bells-say-sources.html 16:30 SBF Backdoor https://www.reuters.com/markets/currencies/exclusive-least-1-billion-client-funds-missing-failed-crypto-firm-ftx-sources-2022-11-12/ 17:28 Buying Properties https://www.reuters.com/technology/exclusive-bankman-frieds-ftx-parents-bought-bahamas-property-worth-121-mln-2022-11-22/ 18:35 $1B Personal Loan https://www.bloomberg.com/news/articles/2022-11-17/ftx-s-bankman-fried-received-1-billion-loan-from-alameda 19:08 Cashing Out $300M https://www.coindesk.com/business/2022/11/18/sam-bankman-fried-cashed-out-300m-in-previous-funding-round-wsj/ 21:40 NYT Puff Piece https://twitter.com/nytimes/status/1592296341346320384 https://twitter.com/TrungTPhan/status/1592349684471037955 24:15 Liz Hoffman of WSJ https://twitter.com/lizrhoffman/status/1595184595409969153 25:30 Alameda CEO https://twitter.com/Forbes/status/1593615727512227840 26:14 Pandemic Prevention https://www.washingtonpost.com/health/2022/11/16/sam-bankman-fried-ftx-pandemic-prevention/ 27:42 NYT Conference https://www.news.com.au/finance/money/investing/sam-bankmanfried-to-appear-at-new-york-times-conference-despite-ftx-bankruptcy/news-story/2e02d2fd6e584cc5b3148d0f6ba14a2f https://twitter.com/andrewrsorkin/status/1595517635441090565 https://twitter.com/WSBChairman/status/1595512773177446412 https://twitter.com/MattWalshInBos/status/1596130827733188608 https://twitter.com/elonmusk/status/1595591868275826688 33:50 Grants to Media https://twitter.com/teddyschleifer/status/1591191408589017088 https://www.coinage.media/ https://www.youtube.com/watch?v=5g9ycHS0xtU https://techcrunch.com/2022/07/27/ftx-ceo-leads-trustless-medias-seed-round-to-help-build-community-owned-web3-shows/ 41:00 Balaji Thread https://twitter.com/balajis/status/1592661466012061696 50:45 Political Donations https://freebeacon.com/biden-administration/beleaguered-crypto-billionaire-was-hobnobbing-at-white-house-just-six-months-ago/ https://www.livemint.com/market/cryptocurrency/sam-bankman-fried-ftx-team-among-top-political-donors-before-bankruptcy-11669031663161.html https://twitter.com/dankeeler/status/1519780887893790724 https://www.bloomberg.com/news/articles/2022-11-25/ftx-mcconnell-bankman-fried-super-pac-donation https://www.nytimes.com/2022/11/22/business/ftx-sam-bankman-fried-influence.html 51:47 Returning Money https://www.texastribune.org/2022/11/29/beto-orourke-sam-bankman-fried-ftx/ 52:40 ON THE GROUND BAHAMAS CORRESPONDENT 55:25 Psychology Autopsy https://www.nytimes.com/2022/11/15/technology/ftx-sam-bankman-fried-psychiatrist.html 1:05:45 Why Isn't Sam Bankman-Fried in Jail? 1:14:30 Closing & Disclaimers ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Ryan Sean Adams?

  Why isn't SBF in jail already?

• 0:06David Hoffman?

  Right, what the hell's going on?

• 0:08Ryan Sean Adams?

  What's happening? Is anything happening? Is anyone doing anything about this? And I think this is a topical issue, of course, because crypto is really having sort of some introspection in itself and asking itself, like, why do scammers keep invading this space? And why do we keep falling for it? How does this keep happening every time? David, I've been kind of a little bit relaxing over Thanksgiving, so not quite as tuned in. But I know you've been hard at work preparing this agenda. So it's kind of like, I want to throw it over to you, man, and just get me up to speed. But the basic question is the same question, I think, in a lot of Bankless listeners' minds is like, what is SBF still doing?

• 0:50Ryan Sean Adams?

  Is anyone going to bring some accountability to this situation? What does this look like?

• 0:55David Hoffman?

  Yeah, it was really the video that surfaced that somebody took of SBF in the Bahamas, like, running around in his backpack in cargo shorts. And like, it was something like 12, 13, 14 days.

• 1:07Ryan Sean Adams?

  BitBoy went to the Bahamas, right? I think I saw this.

• 1:09David Hoffman?

  That wasn't BitBoy that recorded that video, but BitBoy is now in the Bahamas.

• 1:13Ryan Sean Adams?

  Oh, God.

• 1:14David Hoffman?

  But like, we saw this video of SBF just like running around in the Bahamas. Like, all right, like, why? And why is he not in jail? Why? So like, we know he did a bunch of illegal things. We're going to go through all of the illegal things that he did. But there's this big question is like, why isn't anyone outside of crypto taking this seriously?

• 1:34Ryan Sean Adams?

  Well, people in the chat, David, right now are saying jail isn't for rich people. Right? This is common sentiment. Is this part of the story here? It's just like, have we grown that cynical? Rich people just don't go to jail and he's rich, so he's not going to jail?

• 1:46David Hoffman?

  Uh, I think that definitely plays a very significant role in this. But it's not just like, oh, if rich, then no jail. There's more to that story, which is a part of the story that we're going to tell here today.

• 1:57Ryan Sean Adams?

  Are you going to talk a little bit about mainstream media's coverage about this too? Because that's been a piece on my mind. Like, why mainstream media is giving him so much positive coverage? Not all mainstream media, but like some outlets certainly are, and I don't understand this.

• 2:11David Hoffman?

  Yeah, and there are some outlets that are giving Sam Bankman-Fried the time of day. And also, those same outlets also are running like pretty good reports, pretty good accounts. So it's very mixed. Like, the New York Times and the Wall Street Journal are definitely the big like culprits here. Like, these articles that ran pieces as to like, oh, like, Sam Bankman-Fried says he's sorry. And like, forgets about the whole theft of customer deposits. And then that same outlet will actually run a decently well, like, research report on the whole thing. And so like, what the hell is going on with that? And so there's a lot to unpack there. Part of this answer, of course, goes into the hundreds and hundreds of millions of dollars

• 2:52David Hoffman?

  that Sam Bankman-Fried has donated, not just to the Democrats or even the Republicans, or to political organizations, but nonprofits as well. And so there's just going to be this massive, like, audit of the state of money that Sam Bankman-Fried and FTX like sloshed around everywhere. And like, what do we do about that fact? Because that's a very relevant part of the story, too.

• 3:13Ryan Sean Adams?

  Well, we're going to talk about all that. And I know toward the end of this episode, you're going to put on your therapist hat a little bit as well. And because I think there's some psychology here, that's maybe persistent psychology that we've seen a pattern emerge across many of these folks that have scammed the industry, really. So I want to get to that, too. Guys, before we get in, I want to tell you about our friends and sponsors. This is Infura. They are calling all Web3 infrastructure providers to get early access to their decentralized infrastructure network. I think Infura's been criticized as being a centralization vector of Ethereum in the past. And of course, they don't run your individual Ethereum node, but they run a lot of the archival nodes.

• 3:55Ryan Sean Adams?

  So they would be, like, Infura would be maybe behind a Metamask transaction or something like this. Well, they are taking steps to decentralize the Infura network, which is pretty key. If we're going to build a decentralized future on top of this crypto money system that we have, rather than rely on SBFs of the world, we need to decentralize our data providers, infrastructure providers. I think there's some early access people can get here. David, what are we looking at on the link?

• 4:24David Hoffman?

  Yeah, there is the early access program to the decentralized version of Infura, which exists in the future if we help it come about. There's been a bunch of controversy in Infura in the news lately about just like reporting IP addresses and mapping Ethereum addresses. There was a bunch of nuanced threads that came out of Dan Finley and Joseph Lubin. But this is actually not about that. This is about taking the Infura stack, the very important role of RPC endpoints in the way that we broadcast transactions to Ethereum, and doing the thing that we love to do in this space, which is decentralizing it. So if you have skills that Infura might want or need to help decentralize their own stack, there is a link in the show notes where you can sign up to help that effort proceed into the frontier.

• 5:09Ryan Sean Adams?

  David, as you were talking about that, I was reading the chat window. Someone said, "David looking jacked." Man, you've been working out over the holidays? That turkey treating you well?

• 5:18David Hoffman?

  I have set a goal to climb a mountain in 2023. And so, yeah, I've been going to the gym.

• 5:23Ryan Sean Adams?

  There you go. Climb a mountain, not metaphorically. You're talking about an actual real mountain.

• 5:26David Hoffman?

  No, I'm talking a literal mountain, yeah.

• 5:29Ryan Sean Adams?

  That's cool. David, in his spare time, went away from crypto, goes and, you know, does ice climbing up glacial sheets.

• 5:36David Hoffman?

  All the risks I don't take in crypto, I take in my outside adventures.

• 5:39Ryan Sean Adams?

  Oh, that's great. Stay healthy, my friend. That's all I gotta say. This show would be pretty boring if it was just me. No one would tune in. All right, so let's start at the high level of this story. And here's kind of the question. Maybe we need a reminder of like, obviously, people have bandied about the word fraud and talked about scammer. There are some legal definitions for what SBF actually did. Maybe you can get into the story, but I want you to kind of remind us, because this is the topic of why isn't SBF arrested? And the question of, okay, some people are saying because rich people don't go to jail. Others are saying because he didn't do anything illegal. Can you just remind us of what SBF actually did? And we'll talk about whether it's legal or whether it's not and the nuance there.

• 6:24David Hoffman?

  Yeah, yeah, we got the receipts, of course. And as if anyone listening to this episode like needs to be reminded. But we're going to go through all of the illegal things that SBF did. Some things aren't technically illegal, but they are downstream of illegal things. And so we'll get into all those as well. But I want to start, before we get to all of that, with this article out of Fortune, Fortune magazine, which the title of this is just like, "Could SBF Go to Prison for the FTX Disaster?" Which like...

• 6:52Ryan Sean Adams?

  The answer is yes. You don't even have to ask the question. Yes, he could. But, yes. Well, to be fair, this is November 13th. This was a while ago.

• 7:00David Hoffman?

  Sure. And also, the audience to this article are like not bankless listeners. They aren't on crypto Twitter. They aren't familiar with FTX. So like, this is still coming from like, going out to people that are still trying to get up to speed with the article or with the events. And so this article gives out two reasons about like, perhaps what like, what it would take to get SBF arrested. And two complications, if you will. First, there's jurisdiction. So since FTX is an offshore business with headquarters in the Bahamas and did not cater to Americans, defense lawyers could argue that the actions of FTX executives are beyond the reach of US law enforcement. I'm sure people listening to that are like, mm, that doesn't sound like that'll hold up.

• 7:38Ryan Sean Adams?

  But the Bahamas has jail.

• 7:40David Hoffman?

  Yeah, the Bahamas also has a jail, yeah.

• 7:43Ryan Sean Adams?

  Okay.

• 7:43David Hoffman?

  And then the second would be intent. Where so like, you know, mismanaging your company and losing a bunch of other people's money is technically not criminal. Mismanagement happens all the time. For a criminal case, there has to be like deception, right? And so these are the two things that we would need to get over in order to prove that SBF needs to go to jail.

• 8:01Ryan Sean Adams?

  You have to prove these in court, you know, all of these things, of course.

• 8:04David Hoffman?

  I feel like, Ryan, that these are easy things to prove.

• 8:07Ryan Sean Adams?

  Surmountable obstacles.

• 8:08David Hoffman?

  Very surmountable obstacles. Because like, reminder, SBF isn't American. FTX totally serviced American customers. It marketed to Americans. Remember the Super Bowl ad? Remember FTX Arena?

• 8:23Ryan Sean Adams?

  Oh, yeah. I remember that. They had the best Super Bowl ad.

• 8:27David Hoffman?

  So it's like, no question.

• 8:29Ryan Sean Adams?

  Actually, coming out of that, it was our favorite, um, Super Bowl ad.

• 8:32David Hoffman?

  It was, yeah. It was, it was our favorite.

• 8:34Ryan Sean Adams?

  Larry David.

• 8:34David Hoffman?

  Yeah, it was hilarious. Yeah, Larry David, who is now being sued for, for doing that, which is ridiculous. But like, okay, so like jurisdiction and intent, like. Jurisdiction, I just covered that. We don't need to go over like how many Americans lost money in FTX.

• 8:50Ryan Sean Adams?

  Some intent there. I mean, the stories of him like cooking the books behind the scenes, having backdoor access from like one set of books to the other. And by the way, if he did that, I think that's maybe legally, technically like fraud, the bar of fraud. But what are we looking at here? Is this a...

• 9:03David Hoffman?

  Yeah, you've got a statement.

• 9:04Ryan Sean Adams?

  Police arrest?

• 9:04David Hoffman?

  Yeah, you've got a statement from the police Public Affairs and Communications Department of the Bahamian Police saying, "In light of the collapse of FTX globally and the provisional liquidation of FTX, a team of financial investigators from the, again, Bahamian Financial Crimes Investigation Branch are working closely with the Bahamian Securities Commission to investigate if any criminal misconduct occurred." November 13th, 2022. Reminder, criminal misconduct definitely occurred. So, I mean, we're about to get into all of the people that SBF paid money to, and I would just like to raise the possibility that if SBF donated to both

• 9:45David Hoffman?

  political parties, a bunch of nonprofits, The New York Times, a bunch of media institutions, who are, again, we're gonna go through all of these, is it also possible that FTX also paid off Bahamian regulators? I don't have the answer to that question. I'm just posing that question.

• 10:02Ryan Sean Adams?

  I don't know what the police are like in the Bahamas, but I don't know why I have this stereotype of them being like super chill. I don't know. I don't know that that's the case, though. But what are we looking at here? 1 million creditors in their bankruptcy filing. So, you know, when this Public Affairs communication from Bahamian Police was released, two days later, we got the actual bankruptcy filing, which indicated how many creditors were out of money here. Why are we pulling this up?

• 10:32David Hoffman?

  Well, because it would imply that if there are over 1 million people or entities who are owed money by FTX, that it's like, you know... What's the word? Smoking gun, that criminal activity definitely occurred? Yes. If you owe 1 million people money, like, people can find- What did you do? People can find something- We can find something illegal that you probably did. So the likelihood is very, very strong. The vast majority of these 1 million creditors are, again, customers- Retail. Who did not consent to their money being sent to Alameda Research, which is like the main bit of fraud that happened here. And so there's a bunch of other things that were about to go down.

• 11:15David Hoffman?

  SBF used Alameda Research for trading of customer funds, the illegal backdoor in a bespoke bookkeeping system, FTX buying 19 million dollars- 19 properties in the Bahamas worth $121 million. That's not illegal.

• 11:32David Hoffman?

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• 14:23David Hoffman?

  All right, Ryan, we've got a long list of criminal activity to go through. You ready? Yeah, let's see other options. And so, the CNBC article headline, of course, says, "Sam Bankman-Fried's Alameda Quietly Used FTX Customer Funds For Trading Says Sources." And of course, this is the big one. This is the big thing. The umbilical cord between FTX and Alameda is the illegal thing. There's a bunch of other things as well, but this is a matter of setting up an exchange. And then, when you have an exchange, if you are ever interested in starting an exchange, Ryan, here's how you would do it. You would take in one customer's Bitcoin, and then you would have a one Bitcoin liability to that customer.

• 15:07David Hoffman?

  You would also have one Bitcoin. And so that matches. And so you should never, ever not have the funds that customers deposit. You are meant to be a full reserve institution. These are the words that I remember coming out of Nick Carter's mouth when I was listening to his podcast. You are meant to be a full reserve institution. And so the fact that Alameda had this like pipeline of money to trade customers' funds is the first, obviously, very illegal thing to do, according to US Securities Laws, right? In this same article, Sam Bankman-Fried told CNBC, "Our margin position took a huge hit,"

• 15:45David Hoffman?

  implying that FTX sent money to Alameda, who then used it on leverage to gamble on the market.

• 15:53Ryan Sean Adams?

  Right.

• 15:53David Hoffman?

  Perhaps, perhaps there might be some laws inside the United States that say that that might be illegal. And then in the same article, Alameda was allowed to post the FTT tokens it held as collateral and barred. And so this is the insane thing. Alameda Research had FTT tokens, which it sent to FTX to post as collateral when it was borrowing the funds. And so I was like, okay, like, we have this collateral, which FTX totally has the money printer for, but we'll use this collateral to as like legitimate justification to buying, to borrowing customer funds. That's insane.

• 16:30Ryan Sean Adams?

  It's pretty fresh.

• 16:31David Hoffman?

  So, so that's the big one. There's also the backdoor bespoke bookkeeping system that FTX made themselves. And so there was a backdoor in their own accounting system that allowed Sam to execute commands that could alter the company's financial records without alerting anyone else in the company, including external auditors. And this was what allowed for the movement of $10 billion in funds to Alameda that didn't trigger any internal or compliance red flags at FTX. I bet you they didn't even have any internal like compliance teams. But, okay, so that, that is, what is that? That is like, there, there's intent there.

• 17:10David Hoffman?

  If you create a backdoor in a bespoke bookkeeping system, I feel like that is evidence of intent, right? Am I crazy?

• 17:20Ryan Sean Adams?

  It seems like it. I mean, that's pretty intentful. I mean, you're, that's called cooking the books, right? It's, uh, this is Enron level fraud.

• 17:28David Hoffman?

  Then there's the article about how FTX bought 19 properties for a total of $121 million. And then inside this article, it says separately attorneys for FTX said that one of the company's units, remember how like there's this massive org chart of FTX, spent $300 million in the Bahamas buying homes and vacation properties for its senior staff. And that FTX was of course run as the personal fiefdom of Sam Bankman Fried. Most of these were luxury beachfront homes. That this is insane. $72 million of like the most expensive property in the Bahamas. And the deeds of these properties, which were again bought by a unit of FTX,

• 18:11David Hoffman?

  were said that these were used as residences for key personnel of FTX. Like, I don't think, like, it's just dubious that an exchange or any company would buy this much real estate and for their own like C-levels execs. But then when you combine that, of course, with like the fact that they were just using customer deposits to do this, is like, it's not only dubious, like, it's illegal to begin with. There's also, there's also the fact that SBF took out a $1 billion loan from Alameda Research, a personal loan from Alameda Research. But where did Alameda Research get that money? Well, they got it from FTX. So Sam Bankman Fried's exchange sent it to his prop trading desk.

• 18:53Ryan Sean Adams?

  Look, man, it's not too much to say he was basically using depositors' money as a personal piggy bank. Exactly what he's doing. His personal piggy, buying property in the Bahamas for his parents and himself. Beautiful property.

• 19:09David Hoffman?

  Here's my favorite one. This is the CoinDesk article. And so, do you remember, do you remember when FTX raised $420 million? It's 420 million, $69,000 for the meme raise, remember that?

• 19:24Ryan Sean Adams?

  It's real funny now, isn't it?

• 19:25David Hoffman?

  Super funny. You know what else is super funny? In that same raise, SBF sold $3 million of his own equity into that funding account.

• 19:34Ryan Sean Adams?

  No, not 3 million.

• 19:35David Hoffman?

  Oh, excuse me, 300, 300 million.

• 19:38Ryan Sean Adams?

  300. Those are rookie numbers, okay? This is SBF world. You gotta 100x those numbers.

• 19:45David Hoffman?

  Three, so, so while FTX raised 420 million, $69,000, Sam Bankman-Fried personally sold $300 million of his own stake in FTX.

• 19:59Ryan Sean Adams?

  Somebody in chat, by the way, saying his parents are lawyers. Isn't that crazy? The guy, the guy knows better than this, raised by lawyers. And this is what's happening, this is what's going on.

• 20:11David Hoffman?

  Yeah, apparently at the time when SBF did this, he told previous investors that this was partially to reimburse him for money he spent to buy out Binance's stake in FTX a few months earlier.

• 20:22Ryan Sean Adams?

  Dude, like, if you're a VC, though, and you, like, just put 420 million and the founder takes out 300 million.

• 20:29David Hoffman?

  300 million out of that raise?

• 20:31Ryan Sean Adams?

  Three quarters of that.

• 20:33Ryan Sean Adams?

  Do you think something is happening?

• 20:35David Hoffman?

  That is the biggest red flag of all time.

• 20:36Ryan Sean Adams?

  Do you think alarms are going off in your head and you're being like, huh? This, so we got 120 million of this raise to continue, like, building the company, but founder's just taking out 300 million?

• 20:46David Hoffman?

  Why did this story not come out until now? Because investors at the time knew this. He told investors of FTX during this raise that he did this, because that's, that's... Why didn't, why didn't they bring this up at the time?

• 21:00Ryan Sean Adams?

  Look, we'll have to wait for the movie to get all the kind of dramatization details. By the way, did you know that Netflix has signed for the rights to this? Among, like, Apple's fighting for it, like, there's gonna be so much material.

• 21:11David Hoffman?

  Good.

• 21:12Ryan Sean Adams?

  What, you want this story to be told?

• 21:15David Hoffman?

  Yeah, yeah, because if they tell the story right.

• 21:18Ryan Sean Adams?

  Dramatized?

• 21:18David Hoffman?

  Yes, if they tell the story right, hopefully, maybe I'm, like, have too much faith in humanity.

• 21:23Ryan Sean Adams?

  I don't know that they're going to tell the story right.

• 21:25David Hoffman?

  They're going to tell the difference between DeFi and FTX, do you think? Am I naive?

• 21:29Ryan Sean Adams?

  I expect you to be very pissed off at the outcome of the stories that are told. We will see, but like, let's take our clue from mainstream media coverage right now.

• 21:39David Hoffman?

  Do it.

• 21:39Ryan Sean Adams?

  Because that has been very much mixed to terrible coverage.

• 21:43David Hoffman?

  Yeah.

• 21:43Ryan Sean Adams?

  Maybe emphasis more on the terrible side of things, that's the other part of this story. Should we pull up? I actually don't have a subscription to New York Times, David. I forgot to get that prior to the show. But what is this New York Times article?

• 21:54David Hoffman?

  So this is the puff piece that everyone got really, really mad about. So there's this New York Times puff piece that talked about how Sam Bankman-Fried's empire collapsed. And even though you didn't subscribe to New York Times, I still pulled out a couple of lines. One of the reasons why, according to the New York Times, that FTX's empire collapsed was that it expanded too fast and that they failed to see warning signs. How does that land with you, Ryan?

• 22:22Ryan Sean Adams?

  How does that land with me? It does not want me to make me want to subscribe to the New York Times.

• 22:28David Hoffman?

  And the comment on the article that was from another article was that this whole article just uses soft, passive language to disguise blame at every single turn. And so there's a tweet that I thought was pretty useful from Trung Phan that said that it looks like did the command F on the words fraud and wrong, crime, illiquid, stolen, hidden, criminal, or backdoor to see if any of these words showed up in the New York Times article. And none of them did. For some reason, they talked about him getting sleep. Now, I personally read this article, Ryan, of course. And like, while that point definitely stands that there's no word fraud or theft in this article, it actually wasn't as puff piece-y as I kind of thought it was.

• 23:11David Hoffman?

  I don't know if you've read this article or got your take on it, but like it was an acceptable account of things that happened in FTX that could have been more scathing, but was a little bit rounded edges. But I still thought it was an acceptable like account of what happened. Anyway, that's my take.

• 23:31Ryan Sean Adams?

  Okay, so you don't think this was as much of a puff piece?

• 23:33David Hoffman?

  It's not super puffy. It's just not as deadly as it should have been.

• 23:37Ryan Sean Adams?

  It's kind of funny because I do feel like... Many of the biases out of the New York Times, Wall Street Journal, these other sources are very crypto unfriendly.

• 23:48David Hoffman?

  Yes.

• 23:48Ryan Sean Adams?

  And have been for crypto's entire lifecycle. You would have expected, now that they actually have a smoking gun, gun, ah, we found the scammer, the biggest scammer in like, maybe modern banking history, they would have gone hardcore after not only crypto, but also the scammer.

• 24:07David Hoffman?

  Right.

• 24:07Ryan Sean Adams?

  Themselves.

• 24:08David Hoffman?

  And a question.

• 24:08Ryan Sean Adams?

  That kind of begs the question of why we got a different outcome here?

• 24:12David Hoffman?

  Mm hmm.

• 24:12Ryan Sean Adams?

  Um, I don't know, are there more examples of this?

• 24:14David Hoffman?

  Yeah, so this is, remember when Sam Bankman-Fried turned, what do I call him, Sam? SBF wrote that apology to his employees and like, it got sent out in a bunch of screenshots.

• 24:25Ryan Sean Adams?

  Yes.

• 24:26David Hoffman?

  So Liz Hoffman of the Wall Street Journal tweets out these screenshots, she wasn't the source, but she tweets out the screenshots to make some commentary. And she follows up and says, well, this mostly makes sense to me, after Sam gave the account for how FTX ran out of funds and like, he's like, yeah, we had a leveraged position, the market's turned against us, our assets became less than our liabilities. And then he does, he does his napkin math accounting, which is embarrassing because he doesn't even know how much FTX has in his books. And then Liz Hoffman of the Wall Street Journal responds, this mostly makes sense to me. FTX had a lot of collateral, 60 billion, against not that many liabilities. The problem that the collateral was monopoly money and the liabilities were real money. That's real basic bankless stuff. Excuse me.

• 25:10Ryan Sean Adams?

  Banking stuff.

• 25:10David Hoffman?

  Banking stuff. Uh, that's not what happened, Liz. That's not what happened at all.

• 25:16Ryan Sean Adams?

  Number one is, you never trust a Hoffman, so I think that's a.

• 25:19David Hoffman?

  She needs to change her name.

• 25:20Ryan Sean Adams?

  Part of the problem.

• 25:21David Hoffman?

  I'm not changing my name.

• 25:23Ryan Sean Adams?

  Wow, that's, that's an interesting take. Um, okay, but you get a lot of bad takes on, on crypto, I guess. Not every mainstream media journalist publication is going to have, I guess, great takes on this. Um, what is this from Forbes that we're looking at?

• 25:36David Hoffman?

  Forbes, Alameda CEO Caroline Ellison is a math whiz who loves Harry Potter and Risk.

• 25:42Ryan Sean Adams?

  Wait, when did this, when was this published? November 18?

• 25:45David Hoffman?

  Oh my God, dude.

• 25:47Ryan Sean Adams?

  Wow, among other things, and scamming customers and using depositors' funds and wow, also a math whiz and loves Harry Potter.

• 25:55David Hoffman?

  Again, if you actually read this full length of the article, you actually do, you actually do get this image of like, oh Caroline totally like effed up and this is totally her fault. But the headline is that she is a math whiz who loves Harry Potter and risk is absurd.

• 26:13Ryan Sean Adams?

  Wow, that is silly. Um, okay.

• 26:15David Hoffman?

  Okay, this is, this is.

• 26:16Ryan Sean Adams?

  Taken down.

• 26:17David Hoffman?

  The tweet was not taken down, no. Uh, but okay, so here's my favorite one. Uh, this, which is, which is, it's the Washington Post. Before FTX collapsed, founder poured millions into pandemic prevention. And so.

• 26:28Ryan Sean Adams?

  Most of these initiatives have come to a sudden halt.

• 26:31David Hoffman?

  Yes, yeah, uh huh.

• 26:32Ryan Sean Adams?

  They have.

• 26:33David Hoffman?

  Uh, so, so I'm gonna, I'm gonna read an excerpt from this. Uh, when the coronavirus pandemic hit and the world shut down in the spring of 2020, many mourned the loss of life, jobs and normalcy. Sam Bankman-Fried, then a 28-year-old cryptocurrency entrepreneur and his brother Gabe, a 25-year-old congressional staffer, said the pandemic provided them with something else, an opportunity to make a difference. Harnessing the enormous wealth created by FTX, the cryptocurrency exchange that SBF had founded, they undertook a project to spend potentially billions of dollars on pandemic prevention, a long neglected priority on Capitol Hill even amidst the coronavirus crisis. What is this reporting, dude?

• 27:10Ryan Sean Adams?

  I don't know. I don't know. That, I mean, this is either very lazy, like, reporting or just, um, completely out of touch with what's actually happening. But did this just say that Sam had a brother who is a 25-year-old congressional staffer?

• 27:24David Hoffman?

  Yeah, that's actually news to me.

• 27:25Ryan Sean Adams?

  I didn't know that.

• 27:26David Hoffman?

  I did not know that.

• 27:27Ryan Sean Adams?

  His brother Gabe is a congressional staffer.

• 27:29David Hoffman?

  Yeah, and this family's all over the place, man.

• 27:31Ryan Sean Adams?

  Like, all over the place, like, embedded in some of the largest institutions that run the United States, is what you mean by all over the place.

• 27:39David Hoffman?

  Yes, that is what I, uh, okay. And so, uh, Ryan, did you know tomorrow, SBF is meant to appear at a New York Times conference?

• 27:48Ryan Sean Adams?

  I did know this.

• 27:49David Hoffman?

  Yeah. Uh, so that is, that's happening tomorrow.

• 27:51Ryan Sean Adams?

  It's happening virtually, I believe.

• 27:53David Hoffman?

  Is it? Okay, well, that, that makes sense.

• 27:55Ryan Sean Adams?

  I believe that's the case.

• 27:56David Hoffman?

  Remember Sam Bankman-Fried's tweet to C, about CZ is like, is that guy even allowed it in the United States? Uh, well, pretty sure Sam Bankman-Fried is not supposed to go to the United States anymore.

• 28:06Ryan Sean Adams?

  Did you see the speaker list for this? By the way, this looks like a total pose. I don't know if he's like. Are you seeing any amphetamines on the desk?

• 28:13David Hoffman?

  There is a picture of amphetamines on the desk that we'll come to later. They'll be at the end of the day.

• 28:17Ryan Sean Adams?

  Oh, thanks. You really delivered on this agenda. Did you see who else was with him?

• 28:23David Hoffman?

  No.

• 28:24Ryan Sean Adams?

  Okay, so I think I tweeted out kind of a list of the other people who are attending this conference at the same time. Because it's kind of like a who's who's list. Here we go. Look at this.

• 28:34David Hoffman?

  Okay, Mayor of New York City.

• 28:36Ryan Sean Adams?

  Eric Adams, the mayor.

• 28:36David Hoffman?

  All right.

• 28:37Ryan Sean Adams?

  Larry Fink, CEO of BlackRock, Reed Hastings.

• 28:41David Hoffman?

  Oh, Janet Yellen, I'm suing her.

• 28:43Ryan Sean Adams?

  Janet Yellen, Mike Pence.

• 28:48Ryan Sean Adams?

  Zuck, Zelensky.

• 28:50David Hoffman?

  Wow.

• 28:50Ryan Sean Adams?

  And also SBF. And I'm just surprised he hasn't been uninvited, honestly. I don't know, like, what do you think about this? Like, you're in kind of the content game. SBF has been on the Bankless Podcast before. Before all of this came to light. I'm not convinced that we wouldn't have him on again. I think he deserves an accounting to the crypto industry. To just like, somebody to just be like, what did you do and why did you do this?

• 29:16David Hoffman?

  So I did DM Sam when he was talking to, who was he talking to? Dave Portnoy. Dave Portnoy, I was like, I'm gonna do, I'm gonna do an interview with Sam Bankman-Fried. And I sent Sam in Twitter DMs that tweet. And I was like, if you go on any media, like, thing that's not a crypto media thing, crypto media platform to talk to and about crypto. Like, no one's ever, like, I mean, he was beyond the point of repair at that point. But it was basically like, you have to come talk to the crypto industry and apologize to us. And he, of course, didn't answer that. So yes.

• 29:46Ryan Sean Adams?

  Give it accounting for your actions.

• 29:47David Hoffman?

  Right. So would I, would we have SBF on? I think so, because also, we're not the New York Times, who is apparently conflicted and not sober about what happened. And we would actually ask the right questions.

• 29:59Ryan Sean Adams?

  But why? I just still don't understand. Why would New York Times, Washington Post, why would they be giving him the softball treatment? Is there an answer to that question?

• 30:08David Hoffman?

  There is not a concrete answer, but there is a bunch of data that points to a very plausible answer. And the answer is money. Surprise, surprise. But before, before we get to that point, there's like a few more tweets that I want to get to. Did you see the Matt Walsh tweet that just went absolutely viral?

• 30:25Ryan Sean Adams?

  I did. This is Matt Walsh correcting the Wall Street Journal. By the way, so for people can't see on the podcast, this is the Wall Street Journal, front page of the Wall Street Journal. And the, the title, the headline on the front page is FTX collapse wiped out founders philanthropic aims. Okay. And this was published November 25th. So Black Friday, the day after you're having your Thanksgiving meal.

• 30:53David Hoffman?

  25th or the 23rd?

• 30:54Ryan Sean Adams?

  Uh, this is on the top here, November 25th.

• 30:57David Hoffman?

  Okay.

• 30:57Ryan Sean Adams?

  I got the glasses, David, not you, man. I got that seat. This is clearer than 2020 to me. All right. These glasses really help. Um, FTX, FTX's collapse wiped out founders philanthropic aims. And Matt Walsh revises this headline with something else. What did he, what did he say?

• 31:15David Hoffman?

  Yeah. So in big, bold, sharpie, he writes FTX's fraud wiped out customer money. Again, this is the thing that mainstream media can't figure out. It's not, it's not that complicated. What happened? Fraud?

• 31:29Ryan Sean Adams?

  On the 20, on the 25th too, of November, like this is very clear what SBF's been up to. Like evidence has mounted. Like, I can't, I can't, how did this make it off of the press floor?

• 31:38David Hoffman?

  This is after the Vox article where SBF said, yeah, the whole like woke liberal, like effective altruism donation things was just a front. That's after he told us this.

• 31:52Ryan Sean Adams?

  Is this, okay, I'm still not convinced that this isn't just lazy laziness.

• 31:57David Hoffman?

  It could be just be laziness.

• 31:58Ryan Sean Adams?

  Do you think it is?

• 31:59David Hoffman?

  It's pretty damn, I mean, if, if it is laziness, then what is the state of modern day journalism, Ryan?

• 32:05Ryan Sean Adams?

  I don't know.

• 32:07David Hoffman?

  What are they doing?

• 32:08Ryan Sean Adams?

  So here's the thing, I've, I've always rejected when people have referred to bankless as journalists. I've always rejected that.

• 32:16David Hoffman?

  We are not journalists.

• 32:17Ryan Sean Adams?

  I feel like journalists should be at a much higher, held to a much higher standard than bankless. All right, we are investors trying to figure this out on the journey, right?

• 32:26David Hoffman?

  Thesis driven media company.

• 32:28Ryan Sean Adams?

  Yeah, so sometimes we're trying to interpret events as they come in, but like, we are not doing in-depth investigative reporting. That's for these guys to do.

• 32:37David Hoffman?

  Right.

• 32:37Ryan Sean Adams?

  I thought that's what these institutions were set up to do. The Wall Street Journal, New York Times, Washington Post. Aren't they supposed to like, get to the meat of the story and uncover the facts? And give us some distillation of this?

• 32:50Ryan Sean Adams?

  This is not the headline that's doing that, David.

• 32:52David Hoffman?

  Yeah, I would say to put it into a single sentence. Bankless is, would write an article that says ether is ultrasound money. And an investigative journalist would write an article that says, is ether ultrasound money? Those are two different things.

• 33:08Ryan Sean Adams?

  After we meme it.

• 33:11Ryan Sean Adams?

  Okay, so that begs the question then, we're getting back to, which is like, why is the media like this?

• 33:16David Hoffman?

  Right.

• 33:16Ryan Sean Adams?

  What hap- why are they doing this? What's the reason for this kind of reporting? And you said, you whispered into Mike just now, money.

• 33:22David Hoffman?

  Money.

• 33:23Ryan Sean Adams?

  What are we looking at from Elon Musk?

• 33:25David Hoffman?

  So here's Elon Musk saying, if SBF was as good at running a crypto exchange as he was at bribing media, FTX would still be solvent, which has almost 30,000 likes. Good, good tweet, good tweet.

• 33:36Ryan Sean Adams?

  That is an explanation. It's bribing media. What does that mean? What does it take to bribe media?

• 33:42David Hoffman?

  Well, I'd love to ask SBF this. He did this in a variety of different capacities. And so there's this Intercept journalist journalism thing, which this subtitle for the Intercept is, fearless adversarial journalism that holds the powerful accountable. SBF donated $3.25 million to the Intercept. There's this-

• 34:05Ryan Sean Adams?

  Wait, is this like a nonprofit? The Intercept nonprofit?

• 34:08David Hoffman?

  No, it's, oh, maybe it's a nonprofit. I actually don't know. It's definitely a media, an investigative media institution. Whether it's a nonprofit or not, I don't know.

• 34:15Ryan Sean Adams?

  Okay.

• 34:16David Hoffman?

  I don't know.

• 34:18David Hoffman?

  Oh, it's a nonprofit news organization founded by Glenn Greenwald. Cool. Yep. Okay. So there's that. The next in the list, Semaphore, a new journalism project created by Ben Smith, formerly the media columnist at The New York Times, and before that, the editor in chief of BuzzFeed. SBF gave a grant to Semaphore.

• 34:39Ryan Sean Adams?

  A grant?

• 34:40David Hoffman?

  Yeah. Remember, and then Ryan, remember Trustless Media? We covered this very briefly on a weekly rollup a long time ago. It was a, it raised money to start a media company in crypto called Trustless Media, which I took offense to because my Twitter name is Trustless State. But we talked about them anyways because it was a good raise, high production, and they were actually the first-

• 35:04Ryan Sean Adams?

  The Bankless Killer.

• 35:05David Hoffman?

  Yeah, the Bankless Killer. Yeah, that was like kind of the wink wink. They were also the first organization that did the first big piece on DoKwon after the Terra collapse. They, that was their episode zero. They like, and were somehow got DoKwon to do an interview after, after, God, look at that photo, man. What the hell? After Terra collapsed, they got the first scoop with DoKwon. You remember this?

• 35:27Ryan Sean Adams?

  Yes, I totally do.

• 35:28David Hoffman?

  Well, guess who led the round of Trustless Media?

• 35:32Ryan Sean Adams?

  You're gonna tell me what I already know, but why don't you tell everyone else?

• 35:35David Hoffman?

  It was Sam Bankman-Fried. Sam Bankman-Fried, FTX CEO, leads Trustless Media's seed round to help build community-owned Web3 shows. Can we, does that, can you go back to the old website? Does that look community-owned to you?

• 35:49Ryan Sean Adams?

  Well, this is what Bankless could look like if we actually had some fantastic production value data.

• 35:53David Hoffman?

  Raised money, yeah.

• 35:54Ryan Sean Adams?

  Yeah, raised money. I, you know, look, he's going for something here, right? Like, I guess I get it, but is this, is this effectively what it means to buy media? Is you kind of write checks, grants through sponsorship, and when you can't get any forays into crypto, you kind of found and create your own crypto-native Web3 media companies? Is this effectively what it means?

• 36:23David Hoffman?

  I guess so, yeah. I mean, I would imagine there's a bunch of sponsors out there who are like, we'll totally sponsor your like media org and like run commercials, but you have to do this, this, and this.

• 36:33Ryan Sean Adams?

  Can you talk, can you talk about that? So I feel like we have- We have an idea of what this looks like because we are actually running a media company.

• 36:43David Hoffman?

  Right.

• 36:43Ryan Sean Adams?

  And so like we have sponsors that pay for our show. I guess I will talk about that for a minute. Our, our policy and our approach to sponsorship is always, has always been like, you have to be willing to fire your sponsors at any time. You can't let them own you. That, that's policy number one. And so we've always had-

• 37:06David Hoffman?

  You are never beholden to sponsors.

• 37:07Ryan Sean Adams?

  Never be beholden to, to sponsors, right? Don't be, ever put yourself in a place where you require a check from a set of sponsors in order to exist and push your message forward, right? Rather be in a place where you can select and pick your sponsors as you go and drop those that don't align with your values and retain those that, that do. So that's something that I, I feel like we've worked hard at Bankless to do. And in order to do that, you have to like, keep small, stay scrappy, maintain profitable over, be, be profitable over time and kind of establish a, a reputation. Cause I think you can very easily be put in a place where you're owned by sponsors.

• 37:48Ryan Sean Adams?

  You can also be put in a place where you're owned by your investors as well. And so I think this is a challenge if you are funded by like a billionaire Jeff Bezos or somebody in the crypto, like this example of Trustless Media was funded by SBF. Really hard to write a, a piece on SBF or comment and talk about SBF if you're actually funded by the guy, Alameda, right? So that's another thing that we've avoided, avoided doing. And I guess, you know, our policy towards sponsors has always been just like, fire any of them if we have to, right? And so we have let sponsors go in the past.

• 38:33Ryan Sean Adams?

  Don't sell to the highest bidder. Never, never receive sponsorship for like-

• 38:40Ryan Sean Adams?

  Content.

• 38:41David Hoffman?

  Paid content.

• 38:41Ryan Sean Adams?

  So paid content is an absolute no-no, like always has been for Bankless.

• 38:46David Hoffman?

  Can we, can you define paid content? Because when we were talking, when we had our BitBoy show, people were like, Bankless receives money for their sponsors. What the hell's, what the hell's the difference between what we were talking with BitBoy? What is, Ryan, what is paid content?

• 38:58Ryan Sean Adams?

  Yeah, paid content means like it looks like it's organic content, right? So let's say we wrote an article on Bankless and it looked like it was organic content, but it was really funded by some sponsor, FTX or something like this. And so it was, it was actually a puff piece, right?

• 39:16Ryan Sean Adams?

  Or, or a podcast, a show, let's say. The reason we're having so-and-so on a show is because they have paid to be on the show, something like that. And so.

• 39:28David Hoffman?

  Disclosed or undisclosed?

• 39:29Ryan Sean Adams?

  And then. Disclosed or undisclosed?

• 39:31David Hoffman?

  If it is disclosed, like that's one business model, as long as you're extremely explicit about it.

• 39:36Ryan Sean Adams?

  I agree, but even then it can become kind of a slippery slope, right? Of like, you're just, you're disclosing it, but like, so we have never done paid content pieces. We always segment our sponsors as like, hey, this is a sponsor. Like it's very clear when Bankless runs an ad, like these are, these are advertisers. Anyway, it's not perfect, right? But it is a way to put some firewalls in our media entity so that we can't be purchased by a Sam Bankman-Fried or an FTX, right? And I think that becomes hard over time if, you know, maybe you're an established institution, your, your revenue's down, your subscribers are down, all of these things, there's mounting pressure.

• 40:19Ryan Sean Adams?

  And so there can be external pressures that, that cause you to take sponsor funds that you wouldn't ordinarily take.

• 40:25David Hoffman?

  Right.

• 40:27Ryan Sean Adams?

  We've been, we've always tried to be very diligent on that and like make sure that, that we're firewalled off from that and we don't have that, that kind of risk. And I think other crypto media entities do that fairly well. So I guess that is how you buy, buy media though, right? You could like pay for content, pay, pay for a puff piece. You could donate to the right, right people. You can spend on sponsorship money with kind of the wink, wink, nudge, nudge. Oh, you're going to cover us favorably if we spend on you, that sort of thing.

• 40:59David Hoffman?

  Oh, I have a, I have plenty to talk about there. And actually Bellaji has plenty to talk about there because this Bellaji, I think, did a pretty good like autopsy of. The whole like confusion is like, is the media mainstream media paid off? Is it not what the hell is going on? Uh, so he put a thread together, which, which I want to read. Uh, and then he also gets into some, uh, some technical, some like legal terms, which, uh, he says like, if you lost money in FTX, you should be familiar with these, which I will go through. Uh, Ryan, you want to share Balaji's thread while I go through this?

• 41:31Ryan Sean Adams?

  Oh yeah, I was just looking at it here. Let me share my screen. This is Balaji now.

• 41:34David Hoffman?

  Yeah. Okay. So Balaji says, "The net result of FTX is that billions of dollars were stolen from crypto investors to give Democrat-aligned politicians, nonprofits, and journalists. This is why there may be no prosecution." So this brings us to kind of the punchline of the whole episode. Why isn't SBF in jail? Well, because he spent hundreds of millions of dollars on political organizations, PACs, nonprofits, and journalists.

• 41:58Ryan Sean Adams?

  Can I, can I just pause? This is a stronger articulation of what you just said, because part of the answer of why isn't SBF in jail, um, is just because it's too soon. Like, we have to prove this case, he has to be arrested, like, we have to have some probable cause before arresting him, all of these things. But Balaji's making the case that he may never go to jail.

• 42:17David Hoffman?

  Right.

• 42:18Ryan Sean Adams?

  In fact, there might never be prosecution here. So let's segment that out. It's not that SBF isn't in jail now, it's that he might never face accountability for his actions.

• 42:30David Hoffman?

  Right.

• 42:30Ryan Sean Adams?

  So, yeah, go on. What does Balaji say?

• 42:32David Hoffman?

  Yeah. So Balaji, of course, asked the question, "So why is SBF so protected?" Uh, and answers, "He was basically Soros Jr., dressed with stolen customer money and evidently bought off entire media, nonprofit, political, and regulatory establishments." Uh, the author of this article that, uh, Balaji's linking, uh, is, he says, "A born-rich journalist." So he knows, uh, Sam Bankman-Fried's milieu, his like, you know, uh, comrades, if you will.

• 42:57Ryan Sean Adams?

  The author of what?

• 42:58David Hoffman?

  Uh, the article that he is, uh, he is citing in this tweet right here.

• 43:02Ryan Sean Adams?

  Okay.

• 43:04David Hoffman?

  And so the article says, "The optics would look awful if SPF is giving away money to Wizkid political projects, just as millions of FTX customers lose their deposits." And then Balaji says, "The overall picture you get is of rats scurrying around now that SPF's money has been cut off and very much not wanting to defraud crypto investors to claw back those stolen funds." We'll get into what a clawback is in a second. And so Balaji continues and says, "The stage is set for an absolutely insane zero-sum match. On one side, 1 million crypto investors robbed of $10 million by SPF. On the other side, a network of dark money Democrats who will fight to keep as much of those stolen funds as possible."

• 43:46David Hoffman?

  So this tension is one of the big answers to the question as to why SPF isn't arrested yet. And this is the juxtaposition, if you believe Balaji, if you believe this angle of things, is that we have a bunch of people who would like their money back because it was stolen from them by SPF and crew. And then there's a bunch of political organizations who now have a bunch of money and would like to stay in power and not give that money back because we need money to stay in power. And so Balaji continues and says, "The bankruptcy case may play out on social media. Crypto investors to get FTX funds back may hire lawyers like Irving Picard, who clawed back 75 cents on the dollar for Madoff's victims, Bernie Madoff's victims."

• 44:29David Hoffman?

  And so who would they claw the money back from? Of course, it's the groups that SPF funded. And so just continue a few more tweets here. The fundamental question is, when did SPF start stealing from customers and how much did he steal? And Ryan, like throughout the reporting, there's pretty strong indications that the fraud of FTX actually started all the way back in 2021. Because if you remember, Alameda Research posted a net loss of $3 billion on their tax returns on 2021.

• 44:59Ryan Sean Adams?

  An historic bull year for crypto, having to even lose money.

• 45:02David Hoffman?

  Right. And SPF started shooting from the hip with political donations before 2022, back in 2021. And so SPF was sending, while his big hedge fund, Alameda, was taking the fat L, he was still spending a ton of money on political donations, on nonprofits, on media entities. And so this fraud may go as far back as money being spent in 2021.

• 45:28David Hoffman?

  So that's crazy. And so Blaji says, "This can only be answered by forensic accounting." So hopefully that is, you know, some forensic analysis that's going on right now. And so on his, one more tweet, yeah, one more tweet, he goes, "The list of all the donations..."

• 45:43Ryan Sean Adams?

  Wait, before this, David, it says, "The headline amount given to Democrat politicians is 37 million, but understates it. FTX Foundation alone was 190 million." Oh my God. That is getting to Soros-level donations here.

• 45:59David Hoffman?

  Right? Yeah. And so the next tweet, "69 million dollars in political donations, mostly to Democrats, but also to some Republicans. 109 million dollars to a foundation, that's the FTX. 128 million dollars to a political action committee." You know that political action committee? You know which one that is, Ryan?

• 46:15Ryan Sean Adams?

  I'm sure it was protecting DeFi freedoms.

• 46:17David Hoffman?

  It was, it was, what was it? Uh, shit, where's my notes? Uh, it's, I can't remember the title. It's like Fight for Freedom. It's something with, it's two Fs.

• 46:26Ryan Sean Adams?

  Fight for Freed?

• 46:29David Hoffman?

  It's, uh, it's his mom's super PAC, or...

• 46:31Ryan Sean Adams?

  Oh, cool.

• 46:31David Hoffman?

  Yeah, so he sent 120...

• 46:33Ryan Sean Adams?

  Throw a little nepotism in there.

• 46:34David Hoffman?

  Exactly. He sent 128 million dollars to his mom's political action committee.

• 46:38Ryan Sean Adams?

  Well, he's buying his parents' houses in the Bahamas. They're in on this too, right?

• 46:42David Hoffman?

  Yeah, uh-huh, uh-huh.

• 46:43Ryan Sean Adams?

  Wow.

• 46:44David Hoffman?

  Right.

• 46:45Ryan Sean Adams?

  Okay, but like, okay, but one, one piece for this, David. What I wasn't aware of in going through Blaji's tweet is the clawback potential here.

• 46:56David Hoffman?

  Yeah, mine, mine, mine, sorry, "Mind the Gap" was the PAC that was started by Sam Bankman-Fried's money, which received 128 million dollars.

• 47:05Ryan Sean Adams?

  What do, what does "Mind the Gaps" do?

• 47:07David Hoffman?

  "Mind the Gap," uh, let me quickly Google.

• 47:10Ryan Sean Adams?

  Protect people from like metros, subways? Don't step out too far.

• 47:15David Hoffman?

  "Left-wing super PAC dedicated to helping Democratic political candidates win elections."

• 47:20Ryan Sean Adams?

  Okay, so it's also a political donation here.

• 47:23David Hoffman?

  Yes.

• 47:23Ryan Sean Adams?

  Okay, the clawback piece is the part that's new to me. I didn't realize that that could be... This money could be clawed back, which maybe lends some credence because I've always wondered, like, why is mainstream media now, once this guy's ship has sunk, why are, rather than distancing themselves and condemning him and pretending like they are part of the group that's always hated SPF or always thought he was suspect? I would, I would anticipate that's the default reaction mainstream media, but Blaji is saying it's maybe it's because they don't want their money to be clawed back.

• 47:51David Hoffman?

  Exactly. Yeah. So if you actually scroll down a few more tweets, Blaji titles this tweet, "The crypto clawback. Anyone with money on FTX may want to learn the following terms: clawback, look back, fraudulent conveyance, unjust enrichment, voidable preference." Now, right, I went again ahead and did some Googling, so I've got some of these terms to find here. So if anyone listening has lost money in FTX and is curious as to what these means, here we go.

• 48:16Ryan Sean Adams?

  Are you a lawyer now, David?

• 48:17David Hoffman?

  I'm so, such a lawyer, armchair lawyer.

• 48:19Ryan Sean Adams?

  Bankless is not legal advice, I didn't remind you.

• 48:21David Hoffman?

  I'm just reading definitions here. Clawback. The term clawback refers to any money or benefits that have been given out but are required to be returned due to special circumstances or events, such as the monies having been received as a result of a financial crime. Wow, that seems relevant.

• 48:37Ryan Sean Adams?

  Ha.

• 48:39David Hoffman?

  Fraudulent conveyance, the transfer of property for the express purpose of putting it beyond the reach of creditors, making creditors have to bring a lawsuit to, to the courts in order to void the transfer.

• 48:52Ryan Sean Adams?

  So making it hard to get your clawback?

• 48:54David Hoffman?

  Yes, exactly. Unjustly enrichment, when party A confers a benefit to party B without party B providing proper restitution, AKA an unequal exchange of value, for example, the recipients of political donations from FTX who did not provide an equal and opposite return of value for those donations, therefore implying that the actual compensation was political protection.

• 49:15Ryan Sean Adams?

  Wait, wait, wait, wait. Isn't that all political donations? Isn't that what lobbyists do legally?

• 49:22David Hoffman?

  Well, you know, it depends on definitions.

• 49:24Ryan Sean Adams?

  All right.

• 49:25David Hoffman?

  And then voidable preference, when there is a transfer of assets to a creditor shortly before a debtor files for bankruptcy protection, recipient of these assets must return them to the bankruptcy estate.

• 49:35Ryan Sean Adams?

  Basically, if you kind of withdrew from FTX and you were able to get your funds out, or something like this, that would be voidable preference.

• 49:44David Hoffman?

  Yep.

• 49:45Ryan Sean Adams?

  So, all of these things seem kind of bad if you got money from FTX.

• 49:49David Hoffman?

  Yeah. Yeah. So, if anyone is listening, who got money from FTX, you have to give it back. You, that's.

• 49:57Ryan Sean Adams?

  Probably, right? And they have to prove this in court, and I guess you're trying to disprove it in court?

• 50:02David Hoffman?

  Yeah.

• 50:03Ryan Sean Adams?

  How does that?

• 50:03David Hoffman?

  Yeah, but if you're trying to disprove it that you have to give it back, who are you? Because that is credit, like, that's customers' money.

• 50:13Ryan Sean Adams?

  You kind of suck, right?

• 50:14David Hoffman?

  Yeah, you kind of suck.

• 50:15Ryan Sean Adams?

  You're on the bad guy's side.

• 50:15David Hoffman?

  Yeah.

• 50:16Ryan Sean Adams?

  Well, somebody's got to take the L.

• 50:18David Hoffman?

  Mm-hmm. Somebody does have to take the L.

• 50:21Ryan Sean Adams?

  So, maybe it should be depositors, then? That's what some, these donation recipients are probably going to argue in court.

• 50:27David Hoffman?

  Yeah. Yeah. Okay, so I want to speedrun through the rest of this show, Ryan. Okay, so, $5 million donated to Joe Biden for the 2021 presidential campaign.

• 50:39Ryan Sean Adams?

  Yes.

• 50:39David Hoffman?

  2022 midterm election cycle, $40 million donated to mostly Democratic politicians, making him the second-largest financial backer after George Soros.

• 50:51Ryan Sean Adams?

  Go on.

• 50:52David Hoffman?

  He's also paid for a speaking opportunity to sit onstage with none other than Bill Clinton.

• 50:59Ryan Sean Adams?

  Oh, Bill!

• 51:00David Hoffman?

  But FTX US.

• 51:01Ryan Sean Adams?

  Hey, this is Tony Blair, too!

• 51:02David Hoffman?

  Oh, Tony Blair, look at that, yeah. FTX US also donated 3/4 of $1 million to Congressional Leadership Fund and $150,000 to the American Patriots PAC. These are Republican entities, right? According to a Bloomberg report, FTX donated $1 million to the Senate Leadership Fund, a super PAC associated with Senate Minority Leader Mitch McConnell. And it just goes on and on and on. I do want to shout out. To Beto O'Rourke, who returned $1 million that was donated by SBF. The money that on October 11th, SBF sent to Beto O'Rourke, $1 million.

• 51:41David Hoffman?

  But that $1 million was returned, not after FTX imploded, but before, because the contribution was unsolicited and the campaign's upcoming report would show that this $1 million donation was returned on November 4th. So I just want to do a tip of the hat to Beto O'Rourke for returning O'Rourke, yeah. O'Rourke, thank you. For returning $1 million, because it didn't pass the sniff test. Well done. Wait, you could do that? If you're a politician? Yes. You can return money that you receive that looks shady? Yes, you can give money back. That seems counterproductive. I don't know about this, David.

• 52:20David Hoffman?

  Sequence is the all-in-one developer platform you need to build web3 games and applications. For your users, Sequence is a smart wallet, and it's the easiest, most intuitive onboarding your users will ever experience, and comes with all the features users need to feel empowered in the web3 world. Multi-chain support, NFT display, and users can buy SFTs, NFTs, and crypto directly with a credit or debit card. For developers, Sequence is the plug-and-play platform for web3 games and apps. Their APIs let you bring NFTs, SFTs, and tokens into your game or application. And a Sequence relayer enables Gasas transactions for your users. Sequence already powers some of the best web3 games, like Skyweaver, NFT projects like Cool Cats, and marketplaces like NiftySwap.

• 53:02David Hoffman?

  And Sequence is compatible with all the EVM chains, including Ethereum, Polygon, Binance Smart Chain, Arbitrum, Optimism, and Avalanche. So go to sequence.xyz to get started unlocking the full potential of your application today. The reality today is that five corporations control the entire world of social media. They own our names, they restrict our content, they monitor our every move. And their time is up, thanks to our sponsor, DSO. DSO is a Layer 1 blockchain, built from the ground up to decentralize and scale social networks. With DSO, you can own your own identity, content, and social graph, and take it with you across hundreds of applications already built on the censorship Deso blockchain. Deso's storage advantages make it finally possible to build infinite state applications

• 53:46David Hoffman?

  that can efficiently store and index large amounts of content and data fully on-chain. Deso also offers multiple crypto-native monetization primitives for developers and creators, including social NFTs, social DAOs, social tokens, and social tipping. So in order to experience the social layer of Web3, go to deso.com and claim your username. That's D E S O dot com.

• 54:09David Hoffman?

  TrueFi is DeFi's largest credit protocol, connecting global lenders with institutional-grade lending opportunities. TrueFi has completed over $1.7 billion in originations and paid out nearly $35 million to lenders, proving that DeFi is ready to take its next big leap into the $8 trillion credit market. TrueFi gives lenders like you access to sustainable, high-yield opportunities backed by real-world investments, usually reserved for high-net-worth individuals. At the same time, fund managers use TrueFi's financial infrastructure to bring their portfolios on-chain, benefiting from the global liquidity, cost savings, and transparency of DeFi. TrueFi is a decentralized financial utility. The protocol is owned and governed by the TrueFi DAO, and TrueFi is here to bring DeFi into the golden age, bridging the power and access of crypto

• 54:52David Hoffman?

  with institutional-grade lending opportunities and portfolio tooling. Explore the diverse financial opportunities available on TrueFi or launch your own portfolio at truefi.io.

• 55:01Ryan Sean Adams?

  Okay, so what do you think the psychology of all of this is? I know you wanted to talk about this, and I've seen a lot of, you know, armchair psychological profiles. I'm talking about like amphetamines playing a role, talking about the psyche of a sandbag retreat. I think, look, I guess the goal here in like, people are like, why do you even care about the psychology of this person? For me, it's just about, it's also about kind of looking for the early warning signs, seeing sort of the patterns so the crypto industry doesn't get duped again, because this keeps happening. And I feel like it's even now, it's still happening, people in crypto.

• 55:44Ryan Sean Adams?

  Like, there are other megalomaniac scammers that the crypto industry is still propping up, like even now. And so, yeah, what are your thoughts on the kind of the psychology of this situation? What was SBF thinking? What's his profile?

• 55:58David Hoffman?

  Yeah, so I remember that crypto grifters video that I made on that that short video. And I talked about like the common denominators behind all of the grifters of crypto. Like, what draws them all together? And there are some elements of Sam Bankman-Fried's story that is very, very much the same as all of them. But there's also some unique ones, right? So like, let's see, did I put that tweet in there? No, I don't think I did. So like, Do Kwon, massively bombastic individual, clearly was like really stroking his ego while like the Luna price was going up through the roof. And he also had this like massive army of lunatics, self-described lunatics, that just like enabled the hell out of him.

• 56:43David Hoffman?

  As in like, he couldn't do anything wrong because any tweet that he would tweet would immediately get like 10,000 likes and a bunch of people just like piling on on whatever like thing that Do Kwon would produce, right? Like, this is the story of Daniel Sesta, this is like the story of Three Ours Capital. There's like these people in crypto that their ego is too like, it's too like, when it gets big and inflated, they love it and they want more. And we saw this same sort of behavior with SBF, even though like it kind of threw us all for a loop because like, here's this modest guy in like a sweaty t-shirt and New Balances and cargo shorts and he's plastering his image about effective altruism all over the world. And it was like, it was different from Three Ours Capital, it was different from Do Kwon,

• 57:28David Hoffman?

  it was different from Daniel Sesta, but it was still like, SBF, the character. SBF, the ego was large. And some people definitely called SBF out, but not as, you know, it wasn't as obvious as Do Kwon, for example, right?

• 57:42Ryan Sean Adams?

  Do you know, by the way, where I first saw this massive contrast between SBF and? And some of the others is like when we had that conversation after all of this unfolded with Jesse Powell from Kraken.

• 57:53David Hoffman?

  Yeah.

• 57:54Ryan Sean Adams?

  Another exchange founder, but incredibly understated.

• 57:57David Hoffman?

  Yes.

• 57:58Ryan Sean Adams?

  Like he is not like trader god, savior of crypto persona is he's almost like kind of in the background. And there's such a contrast there between Jesse Powell and an SPF. But yeah, go on.

• 58:14David Hoffman?

  So there's an article I found that I actually did not see circulate on crypto Twitter while I was making this agenda. Ryan, did you know that FTX employed a therapist on staff for 32 hours a week just for coaching services to FTX employees?

• 58:29Ryan Sean Adams?

  I didn't. I had heard this. Was it, could this therapist prescribe medication as well? I believe they could, or if this is someone else.

• 58:37David Hoffman?

  So if you're a therapist, you can prescribe very limited medication. It's a psychiatrist that can prescribe medication.

• 58:45Ryan Sean Adams?

  And this person is not a psychiatrist.

• 58:46David Hoffman?

  This person is not a psychiatrist. They were just a therapist.

• 58:49Ryan Sean Adams?

  Okay.

• 58:51David Hoffman?

  And so there's this quote from the article that I'll read. And if you think you're screen sharing, Ryan, you're not.

• 58:57Ryan Sean Adams?

  I can't open it. I don't have the New York Times.

• 58:59David Hoffman?

  Oh, that's right. Okay.

• 59:00Ryan Sean Adams?

  Sad.

• 59:01David Hoffman?

  And so in this article, so the therapist was first off, very surprised as to the events that took place. When, when people said that like, oh yeah, SPF is like this sociopath who has zero empathy for anyone. That was a surprise to him. And so like, while it would be like super easy to be like,

• 59:22David Hoffman?

  SPF is this like insane character and like, we all saw it coming and like, he was just like, it was blah, blah, blah. It's actually not, it's much more nuanced. The therapist was, he had a, when asking about the, the culture at FTX, Dr. Lennar is his name. Let's see, what's the full name? I can't remember. Dr. Lennar says, "It was a very tame place." The higher ups, this was also asking about like, the perhaps like orgies that were going on, if you've heard those rumors. Dr. Lender said, "It was a very tame place, FTX was. The higher ups, they mostly played chess and board games. There was no partying. They were under sexed, if anything." That's a direct quote. You know, those people really felt like it was a family, said the doctor.

• 1:00:05David Hoffman?

  I think that's why this is so devastating for all of us for this to be over. Citing about the kind of the culture at FTX, that it was like very much a family thing. But also, if you cross-reference that with a few other things. FTX employees lived in a, it lived in a palatial, how do you, what is that word?

• 1:00:22Ryan Sean Adams?

  Palatial.

• 1:00:23David Hoffman?

  Palatial.

• 1:00:23Ryan Sean Adams?

  It's just palatial group house, like, uh, yeah.

• 1:00:25David Hoffman?

  A palatial group house. Several, several of them used to be in romantic relationships with one another. And of course, this is where SBF had rumored to be dating Caroline Ellison, the CEO. Right, okay, so, group housing, they all, they all dated each other. And then also, of course, there is just the rampant use of amphetamines, which has come out post FTX collapse, that the leadership totally encouraged employees to take, like, any sort of like amphetamine. They had like, like intimate knowledge of, well, this amphetamine does this to you if you want to do this, this amphetamine does that to you if you want to do that. Okay, so we have, we have, we have SBF and Caroline, and they're, they're living together. There's like group dating going on. They are spending all of their time together.

• 1:01:10David Hoffman?

  It's starting to sound kind of like a cult. And so this is when group think takes over. And this is when like, the same, what I was talking to with like the Frog Army that was enabling Do Kwon, well, this group of people just enabled themselves. And they were on like, you saw Sam Bankman-Fried when we had him on with Eric Voorhees, and then there was like 17 other interviews where the guy is literally vibrating.

• 1:01:30Ryan Sean Adams?

  Yeah.

• 1:01:30David Hoffman?

  And so if you're taking too much amphetamines, like, you cannot actually come to terms with what reality is. And so this is probably part of one of the big reasons why FTX got as crazy as it was, is drug use, dude. Like, it's insane. And so, like, the, there was this picture, I think it was like Autism Capital on Twitter, which I know is an interesting Twitter handle name, that found this one drug called Esram, Esram or something?

• 1:01:59Ryan Sean Adams?

  M-Sam.

• 1:02:00David Hoffman?

  M-Sam. M-Sam. How do you spell that?

• 1:02:02Ryan Sean Adams?

  M-Sam. Yeah, it's a combination of M and Sam is kind of the name. It's because the, the creator of this named it after his children.

• 1:02:12David Hoffman?

  Wow, well, the fact, the fact that it's Sam is in there is pretty interesting. So the, the, the, like, listed, what do you call it, the side effects of this thing is like... Risk-taking and gambling behavior and like basically everything that you'd like, like you would put into like a fraudulent company that is like a gigantic casino.

• 1:02:34Ryan Sean Adams?

  It probably exacerbated all of this. I think what's interesting about what you just said, though, is there is kind of this caricature afterwards of a clear sociopath, clear psychopath. It's interesting if this, if you could believe what this therapist is saying and he's not in himself being kind of, I guess, delusional about it. His therapist didn't think so.

• 1:02:56David Hoffman?

  Yeah, therapist.

• 1:02:57Ryan Sean Adams?

  It's very interesting, right? Like, so either he's very good at fooling a large number of people, or maybe the portrait of him being sort of pure sociopath psychopath is not accurate. I'm not sure. I know which, which would be more interesting for Hollywood to cover is definitely the like drug orgy kind of line of thought. So maybe that's what we'll see coming out of there.

• 1:03:24David Hoffman?

  Yeah.

• 1:03:25Ryan Sean Adams?

  You wanted me to share this tweet?

• 1:03:26David Hoffman?

  Yeah. So here, here's the Autism Capital tweet that identified the M-Sym like wrapper on Sam's desk. A drug normally used to treat depression or Parkinson's off-label for its alertness and focus benefits. So I can actually tap into some of my psychology background. So Parkinson's and depression is like a lack of dopamine. And so dopamine is highly associated with like attention and focus and also reward-seeking behavior. Parkinson's just happens to be a lack of dopamine. So if you increase your dopamine, like your Parkinson's go away. And so this is why when some of the, the things that are likely to happen, side effects, thank

• 1:04:08David Hoffman?

  you, is the word I'm going for, side effects is like impulse control. Because if you have this system that is tinkering with your reward pathways, you are, you can't control your impulses. And so literally on this side, on the side, like the warnings of this drug are the, the side effects of uncontrolled spending of money, binge eating, remember how SPF got, gained a ton of weight in the last like year, and other intense urges, right? And so all of these things are like adjacent to so many of the conversations that have been going on. And so like, this is a story of Like a kid without any oversight, no parents in the room, enabled a bunch of his friends,

• 1:04:47David Hoffman?

  didn't really think to have any sort of like controls over the funds of FTX, put a bunch of like-minded friends in the same room, they all live together, they all started using amphetamines to be high performers, and eventually it just got too much. It was just like one gigantic crescendo, and eventually it blew up.

• 1:05:06Ryan Sean Adams?

  What's interesting about all of this is that's probably the legal defense I would use, if I'm

• 1:05:10David Hoffman?

  Oh, I do not think that is a legal defense.

• 1:05:13Ryan Sean Adams?

  I don't know, man. It was the drugs, they made me crazy, it's a side effect, look at all of this. I don't know. I mean, which brings us to, I guess, kind of the final thought for this episode, and the question we started with, is SBF going to jail? Why is he not already in jail? So, what do you think about this? All like fact patterns considered, so we've got somebody who's clearly doing, it's clearly illegal activity, certainly unethical activity, ripping off millions of people, billions of dollars, you know, give a huge black eye to the industry, they caused, I don't know how many crypto banks to enter Chapter 11, BlockFi just earlier this week entered Chapter 11, going bankrupt from this,

• 1:05:57Ryan Sean Adams?

  destroyed lives, I wouldn't be surprised if there is like personal injury in some destroyed lives as a result of this, like caused a lot of harm and pain to a lot of people. Not in jail, maybe getting softball treatment from some in mainstream media, as a result of what? What are the motivations here? Political donations? You know, something else? Like wanting to prevent clawbacks? That's Blaschi's theory anyway. And then we've got like kind of a psychological, I guess, profile starting to emerge here. How do you think this ends? Does SBF actually go to jail?

• 1:06:32David Hoffman?

  I mean, I don't, I'm not an expert in this particular matter on like the odds of whether he ends in jail or not. I think the thought that I do have is I know you and I are both big fans of Ray Dalio's book about the changing world orders. And what did, what did Ray Dalio do to write this book? He went back in time to look at when empires rise and fall and why do they rise and fall? And there was a part, I think even in his earlier book, which talked about the fall of the Roman Empire. And he said that people were aware of the decline of the Roman Empire before it collapsed. Like, people saw the writing on the walls, right? And one of those, one of the big writings on the walls were like, people just started to become blatantly corrupt, and they stopped caring about public opinion. Instead of doing

• 1:07:14David Hoffman?

  things, you know, behind closed doors, they just did it out in the open. And that was like, it's one of the last symptoms of like a falling empire is like-

• 1:07:22Ryan Sean Adams?

  Total corruption.

• 1:07:23David Hoffman?

  Total, total blatant corruption and no one cares. And that's like the last thing that happens before everything breaks down. And like, every time I see like Nancy Pelosi making public trades about laws that she's about to enact, that's what I think of. And now when I see SBF sending out hundreds of millions of dollars to political organizations, and the political organizations are like, well, we don't want to give it back because we want to stay in power, which is basically just like giving a thumbs up to fraud, saying, hey, thanks for the fraud, because you gave us $100 million. I'm thinking the same thing, man.

• 1:07:56Ryan Sean Adams?

  Just the end stage.

• 1:07:58David Hoffman?

  Late, late-stage empire.

• 1:08:00Ryan Sean Adams?

  Death cycle, late-stage empire problem of we've got corruption in the system.

• 1:08:05David Hoffman?

  Yeah.

• 1:08:05Ryan Sean Adams?

  So I think you'd say that if SBF is not held to account, not prosecuted for this.

• 1:08:11David Hoffman?

  Right.

• 1:08:11Ryan Sean Adams?

  I mean, on the flip side of this, all right, Elizabeth Holmes, there and as founder, just went to jail for 11 years.

• 1:08:19David Hoffman?

  Did she donate any money to political organizations?

• 1:08:22Ryan Sean Adams?

  I don't know. I guess it's probably too early to call at some level. But if this turns out to be a case where we get no prosecution, and we have people like Alex Pertsef, who, let me just remind everyone listening right now, is a developer of open source privacy tools in crypto for Ethereum, developed a smart contract called Tornado Cash, is now in jail, has been in jail for three months, is going to be in jail for at least another three months. Was brought to jail without charges, actually confiscated his material possessions. They went and they repo'd his car, David. Took his personal property. Okay, what's his crime? Open source privacy tools for the world.

• 1:09:05David Hoffman?

  They repo'd his car, and SBF has 19 properties in the Bahamas.

• 1:09:11Ryan Sean Adams?

  Let's see where it all falls out. I, you know, I'm a little hesitant right now because we don't know what's going to happen yet. The legal system does take time. Let's put that out there. But if, in six months' time, a year's time, two years' time, we have someone who has, is so wealthy, is so well-connected, has given to the right politicians, and let's call it what it is, bribed the right people, such that this individual faces no consequences for their actions? This is late-stage empire. This is blatant corruption. And I think we've already seen a number of those cases. It goes back to kind of a Epstein, didn't kill himself.

• 1:09:55David Hoffman?

  Right.

• 1:09:55Ryan Sean Adams?

  Type stuff. Like, it's another tremor, I guess. Here's the thing, though, David. The extra insidious part about this is the industry he did this in is crypto, right? And now, so we get to the end of this, and it feels...

• 1:10:15Ryan Sean Adams?

  How in the world are we supposed to say, you and I, a technology that we believe in, right? Protocols, not people. Code, not kings, right? How are we supposed to now defend crypto and say, oh, actually crypto is the way out of this? If you're taking a surface level, you're telling me crypto is the way out of this?

• 1:10:33David Hoffman?

  Right, no, crypto enabled this.

• 1:10:36Ryan Sean Adams?

  Yeah, crypto is the way SBF stole all of that money. And you're telling me crypto is the way out? You're telling me protocols can solve this? We have to say, no, look, it's nuanced. This was another banker that was like entering crypto and he had custody of your keys. Like if you don't give up your private keys, you know, then you become the bank. You don't have to trust this other individual. And so, yeah, actually crypto is the way out. That falls on deaf ears right now, which is why I'm so infuriated in this particular case. Because, um, man, how many years of, like, how many years have we been doing this podcast? Bankless, how to take their private keys, go bankless, decentralized finance is the way out. We don't have to trust third parties like Sam Bankman-Fried. And now here we are in crypto in the same.

• 1:11:20Ryan Sean Adams?

  So I don't even feel like we're in a position to say, oh, and all those problems that you just described, or some of those problems, a subset of those problems with late-stage empire, late-stage capitalism, all these things, and crypto is the way out. You have the corruption problems you have. Well, like, we need to create code that is not corruptible. It's uncorruptible, like decentralization, what is it? It's corruption resistance technology. That's what it is, the bottom line. It's really hard to make the case for crypto at this point.

• 1:11:46David Hoffman?

  Yeah.

• 1:11:47Ryan Sean Adams?

  So what do we do with that?

• 1:11:49David Hoffman?

  People just like conflate these things. But I will take another leaf out of the pocket of the On The Brink podcast, where Matt Walsh was talking about this exact point where people would report, New York Times, mainstream media would report on the collapse of FTX. And they would be like, their reaction would be like, oh, it's so confusing. There's like these crypto things and like there's these tokens and like, I'm just really confused about it. And Matt responded like, It's not that confusing. He stole $10 billion. Like, it wasn't crypto. It was what caused the collapse of FTX? A lack of regulation, a lack of oversight, and the fact that, again, the SEC pushed all of this stuff offshore

• 1:12:32David Hoffman?

  because the Gary Genslers of the world are like effing up their jobs. And so, like, yes, it's, it's, say, "Oh, DeFi fixes this" is like such an old thing to say. But at the end of the day, it's just like, that is the truth. I'm a fundamental believer that the truth always comes out because hiding the truth is always harder than fabricating the truth.

• 1:12:54Ryan Sean Adams?

  Owning your own private keys would have fixed this.

• 1:12:57David Hoffman?

  Yeah.

• 1:12:58Ryan Sean Adams?

  You can't steal your money if you don't have your crypto, right? So, this is a harsh way to learn it, but, um, that's why maybe he's not in jail. We'll have to see where this goes from here. Anything else you want to say, David?

• 1:13:10David Hoffman?

  Yeah, I had fun putting this agenda together.

• 1:13:13Ryan Sean Adams?

  Thanks for doing this, man.

• 1:13:13David Hoffman?

  Yeah, I mean, is this what? I'd love to hear from the chat. We usually reserve this show slot for guests, but lately, we felt that actually it's just better to just talk about the updated news over the last seven days. So I'd love to hear from the chat, what kind of content? Because like, at some point, we're not going to want to talk about FTX. At some point, we're going to want to go back to regular scheduled programming of bankless stuff. I would love to hear from the chat, what you guys want us to talk about.

• 1:13:40Ryan Sean Adams?

  I think we're getting close to that, David. I feel like, um, this may take a little bit longer to heal, but I can't wait to go back to talking about like, projects that are building in this space, again, uh, and get back to, uh,

• 1:13:54David Hoffman?

  projects that are helping us go bankless.

• 1:13:56Ryan Sean Adams?

  Yeah, dude, I can't wait to honestly, 2023 starts. I can't wait, in crypto anyway, to leave 2022 behind us. And like, let's start rebuilding this thing, right?

• 1:14:05David Hoffman?

  Yeah.

• 1:14:06Ryan Sean Adams?

  Uh, all right, guys, we appreciate you tuning in. As always, I gotta say, none of this has been financial advice, nor legal advice, nor journalist advice. I don't know.

• 1:14:16David Hoffman?

  And I'm also not a psychologist.

• 1:14:18Ryan Sean Adams?

  Yeah, David's also a nice psychologist. No medical advice here either. Uh, as you know, we say this at the end of every show, ETH is risky, crypto is risky, so is Bitcoin, so is DeFi. So are centralized exchanges, for sure. You could lose what you put in, but we're headed west. This is the frontier. It's not for everyone. But thanks for joining us on the Bankless Journey.

• 1:14:57Ryan Sean Adams?

  Thank you.