The Debrief With MyronGainesX - Former Fed Explains FTX Collapse! It's WORSE Than You Thought...

00:00:00.940 And we are live. What's up, guys? Welcome to the Fresh Fit. No, just kidding.

00:00:04.340 Welcome to FEDA 1811, guys. Today, we're going to talk about the Sam Bankman Freed FTX Collapse.

00:00:09.520 Guys, we've got a lot to go through, and it's a lot worse than you think. Holy. Let's get into it.

00:00:16.900 I was a special agent with Homeland Security Investigations, okay, guys? HSI.

00:00:20.200 The cases that I did mostly were human smuggling and drug trafficking.

00:00:25.240 No one else has these documents, by the way.

00:00:27.540 Here's what FEDA covers.

00:00:28.740 Dr. Lafredo confirmed lacerations due to stepping on glass.

00:00:35.560 Murder Investigations.

00:00:36.560 You see him reaching in his jacket. You don't know.

00:00:38.820 And he's positioning.

00:00:39.460 Been on February 13, 2019.

00:00:41.180 You are facing two pounds of two meditative murder.

00:00:44.300 Racketeering and Rico conspiracy.

00:00:46.080 Young Slime Life here and after referred to as YSL.

00:00:48.720 This is 6ix9ine, and then this is Billy Seiko right here.

00:00:52.160 Now, when they first started, guys, 6ix9ine ran with me.

00:00:54.800 I'm a FED. I'm watching this music video.

00:00:56.280 You know, I'm bobbing my head like, hey, this shit lit.

00:00:59.140 But at the same time, I'm pausing.

00:01:00.620 Oh, wait, who this?

00:01:01.860 Right?

00:01:02.280 Oh, who's that in the back?

00:01:04.480 Firearms and violent crime.

00:01:05.800 A.K.A.

00:01:06.380 Bush Icy violated.

00:01:07.660 In order to stay away from the victim.

00:01:09.360 Trapper Bush Icy arrested after shooting at King of Diamonds.

00:01:11.720 Miami strip club injured one person.

00:01:13.380 This is the one that's going to fuck him up because this gun is not tracing.

00:01:16.400 Well, it happened at the gun range.

00:01:18.120 Here's your boy, 42 Doug, right here on the left.

00:01:20.380 Okay.

00:01:20.720 Sex trafficking and sex crime.

00:01:22.260 They can effectively link him to paying an underage girl.

00:01:25.360 I'm going to lock my 50-year-old right.

00:01:26.860 Right.

00:01:27.120 And the first bomb went off right here.

00:01:29.860 Suspect to shut down a backpap on the site of the second explosion inspired by Al-Qaeda.

00:01:34.520 Two terrorists, brothers, the Zokar Sarnev and Tamerlan Sarnev.

00:01:39.520 When the cartels shipped drugs into the country.

00:01:41.560 This guy got arrested for espionage, okay?

00:01:44.260 Trading secrets with the Russians for monetary compensation.

00:01:48.260 The largest corrupt police bust in New Orleans history.

00:01:52.520 The days of the police are gone.

00:01:54.300 So he was in this bad boy.

00:01:55.680 We're going to go over his past, the gang tie, so that this all makes sense.

00:02:04.520 All right.

00:02:06.540 We are back.

00:02:07.120 What's up, guys?

00:02:07.580 Welcome to Fed It, man.

00:02:08.800 Today's going to be a very important episode.

00:02:10.340 We're going to take a break from the serial killers and the terrorists and the bank robberies.

00:02:14.020 We're going to actually talk about a financial case.

00:02:15.960 We're going to talk about fraud, guys.

00:02:17.080 And this probably, for me doing the research and everything, probably one of the biggest fraud cases in recent history, man.

00:02:22.380 This is really big.

00:02:23.340 And your boy SBF is dealing with a lot more than just criminal charges.

00:02:27.780 He's dealing with some other stuff as well, which we're going to go into detail.

00:02:29.820 But before I get into it, I got a special guest with me.

00:02:31.880 I mean, she's not really that special.

00:02:32.960 Y'all know her already.

00:02:33.660 You want to say anything to the people?

00:02:35.620 Introduce yourself real fast.

00:02:36.640 Hi.

00:02:37.220 So if you guys want us to do any cases, contact Fed It 1811 on IG.

00:02:41.460 That's it.

00:02:42.380 Bam.

00:02:42.880 Nice and brief.

00:02:45.220 And just so you guys know, we're waiting on some documents to come back in the Young Dolph case.

00:02:48.980 As you guys know, we had went and got some documents over in Memphis.

00:02:51.900 We did not forget about that case.

00:02:54.020 It's just that there's some court proceedings that's happening this month that we want to go ahead and get the documents on.

00:02:59.360 That way we can give you guys the full picture of what's going on.

00:03:01.740 But we do got some information that no one else knows, which I don't want to disclose yet for y'all.

00:03:05.620 But all I'm going to say is that case is a lot bigger than we thought it was.

00:03:09.460 OK, so, yeah.

00:03:11.260 Anyway, so today, guys, we're going to go ahead and cover the FTX collapse.

00:03:16.180 All right.

00:03:16.460 And without further ado, as you guys know, SPF got arrested a couple of weeks ago.

00:03:20.320 I'm going to go through systematically what he's looking at, what the charges are and how we got here.

00:03:25.740 All right.

00:03:26.300 And I got a couple of videos to play for y'all.

00:03:28.080 Right.

00:03:28.280 So that I don't make it boring and just talk the whole time.

00:03:30.440 This was one of the press releases that came out right after he got arrested in mid-December.

00:03:34.860 FTX founder Sam Bankman-Fried is under house arrest in California after being released on $250 million bail.

00:03:44.740 Prosecutors allege the 30-year-old defrauded investors out of billions in his cryptocurrency exchange.

00:03:51.140 Lilia Luciano has more.

00:03:52.540 In a span of 24 hours, Sam Bankman-Fried was whisked by federal agents in the Bahamas to New York City, where he faced a judge and walked out of a federal courthouse after posting bail on a $250 million bond, which prosecuted.

00:04:08.620 Oh, that's a lot of money.

00:04:10.020 Oh, shit.

00:04:10.720 Oh, shit.

00:04:11.340 Which means he had to come up with at least 10 percent, a.k.a. 25 million.

00:04:15.580 And yeah, guys, I mean, it's your mainstream media.

00:04:17.100 You know, they're going to be on some BS.

00:04:18.140 I don't really watch the news anyway, but this is just to give you all a glimpse of what the hell is going on.

00:04:20.920 And we're going to get into more detail.

00:04:22.540 The prosecutors believe is one of the largest in U.S. history.

00:04:27.060 That bond will be secured in part by the equity in Bankman-Fried's parents' California home, where he will remain under house arrest.

00:04:34.840 We continue to work.

00:04:35.660 And we're going to talk about his parents here in a little bit.

00:04:37.300 I'll give you all a little bit of background in how we got here.

00:04:39.700 Work around the clock.

00:04:41.260 And we are far from done.

00:04:42.760 Prosecutors say Bankman-Fried swindled FTX customers out of billions in deposits in order to enrich his hedge fund, Alameda Research,

00:04:51.500 and himself.

00:04:53.300 Mike Parker is a former federal prosecutor.

00:04:55.580 It was a bit of a classic fraud case where cryptocurrency on deposit with an exchange was being used, as alleged once again, to fund essentially this hedge fund.

00:05:08.520 On Wednesday, is Bankman-Fried a weighted...

00:05:11.120 So, yeah.

00:05:11.680 So, he was in the Bahamas, guys.

00:05:12.780 They went over there.

00:05:13.320 They extradited him.

00:05:13.920 So, we're going to talk a little bit more as far as what went down, you know, how they were able to identify him, how they were able to identify the scheme that he had running,

00:05:23.900 which, if you look at it, it's somewhat complex, but it isn't something that hasn't been done before.

00:05:29.640 So, I'm going to go ahead and play for y'all this video from Moon, who I thought did a really good job.

00:05:36.480 Shout out to him.

00:05:36.880 I'm going to subscribe and like his video, which you guys also need to go ahead and do to this channel and this channel as well,

00:05:42.520 because when people make great content, you got to go ahead and give them that love.

00:05:45.880 His video is linked below, but this does a really fantastic job of summarizing the entire situation with FTX.

00:05:51.980 I'm going to stop it and, you know, add some context and or give you guys some sauce on what the hell is really going on if something comes off confusing,

00:05:57.860 but we're going to run through this video and then we got some other stuff that we're going to cover as well.

00:06:01.940 And I got all the legal documents with his indictment so we can really bring this thing to light.

00:06:08.020 All right, so let's go on.

00:06:09.040 In January of 2022, FTX was worth $32 billion.

00:06:13.180 Its founder and CEO, Sam Bamu-Fried, was regarded as one of the most charitable billionaires out there.

00:06:17.960 The guy you see next to me is the most generous billionaire in the world.

00:06:22.680 He was seen as a genius, revolutionizing the crypto industry.

00:06:26.040 But not even a year later, there's nothing left, with most of the major figures in the company having now been arrested on charges of major fraud,

00:06:32.540 after FTX was found to have lost billions of its customers' money.

00:06:35.820 So what happened here?

00:06:36.680 Well, there's so much out there on this topic.

00:06:38.720 And so in this video, we're going to be going over the full story of what really happened here and what the future for Sam is.

00:06:44.020 You see, Sam came from an incredibly privileged background.

00:06:46.540 Both of his parents are Stanford law professors and they gave him...

00:06:49.120 Now, guys, Stanford, just so y'all know, one of the best schools in the United States, for all my international people out there, okay?

00:06:55.240 Stanford University, they consider it the West Coast Ivy League, all right?

00:06:58.500 Stanford University, officially Leland Stanford Junior University, is a private research university in Stanford, California.

00:07:03.320 The campus occupies 8,180 acres, huge, among the largest in the United States, and enrolls over 17,000 students.

00:07:09.940 Stanford's considered amongst the most prestigious universities in the world.

00:07:14.300 And both of his parents, guys, are professors there, okay?

00:07:17.500 And not only are they professors, but they're also...

00:07:20.260 They practice law as well, okay?

00:07:22.520 This is going to come in handy later on.

00:07:25.980 Everything he needed to build a successful career.

00:07:28.400 But instead of going into academia like his family, Sam was much more interested in finance.

00:07:32.440 He graduated from MIT with a degree in physics in 2014.

00:07:35.920 But even before...

00:07:36.340 All right, that's an understatement.

00:07:37.620 Guys, MIT, also want to let y'all know, very good school, Massachusetts Institute of Technology, is a private land-grant research university in Cambridge, Massachusetts, established in 1861.

00:07:47.120 MIT has played a key role in the development of modern technology and science, and is one of the most prestigious and highly ranked academic institutions in the world.

00:07:54.080 Now, why do I go ahead and let y'all know this?

00:07:56.300 The reason why, guys, is because I want you guys to understand that this guy is not stupid.

00:08:01.400 And you're going to see, when they run the scheme and how they did this, that even though he made some really stupid mistakes, but the guy is definitely book smart, very bright, and he wasn't able to make this money by accident, okay?

00:08:13.840 He's not one of these, like, typical crypto guys that just pumped up Doge and made a bunch of money.

00:08:17.780 Like, oh, yeah, woo!

00:08:18.960 I just, you know, bought and sold at the right time.

00:08:21.500 Like, no, this guy actually is very bright.

00:08:24.280 You can't go to MIT and be a moron, all right?

00:08:27.800 And I know this because I went to Northeastern.

00:08:29.280 And a lot of the guys that went to, because MIT was right over the bridge in Boston.

00:08:33.160 Remember when I used to do my run route, I'd run over the Mass Ave Bridge.

00:08:36.380 And then MIT's right there, and then I'd go ahead and loop around back onto the red line over the bridge the other way around.

00:08:42.460 And it was like a six-mile loop that I would take.

00:08:44.860 But, yeah, I spent quite a bit of time at MIT.

00:08:47.200 And even though a lot of them are strange and awkward sometimes, they're very bright, okay?

00:08:51.460 You can't be a moron to go to that school.

00:08:53.240 You have some, Christina?

00:08:54.000 No, they're, like, really, like.

00:08:55.440 You got to talk in the mic.

00:08:56.480 Sorry.

00:08:56.760 No, they're, like, really, um, because my brother went to Wentworth.

00:09:00.640 Oh, Wentworth is where the retards go.

00:09:02.020 Oh, yeah?

00:09:02.800 I'm sorry.

00:09:03.740 That explains a lot.

00:09:04.600 MIT is, like, really, like, just really, like, shook on everything.

00:09:07.180 Yeah, it's not easy to get into that school.

00:09:08.940 All right, cool.

00:09:09.680 So, now y'all kind of know that the guy is a moron, all right?

00:09:13.820 Let's keep going.

00:09:14.760 Uh, you know, we don't need this tab open no more.

00:09:16.660 Before this, Sam was interning at a trading firm.

00:09:19.720 Soon after, he would join the James Street Capital, learning the ropes and getting to

00:09:22.960 grips with the financial world.

00:09:24.380 James Street specialised in international money exchange and figuring out how to profit

00:09:28.000 from these transfers.

00:09:29.120 And these skills would become incredibly useful later on.

00:09:31.720 But after a few years, Sam was just tired of organised finance.

00:09:34.420 It was boring.

00:09:35.100 It was corporate.

00:09:35.880 There was no room for progression.

00:09:37.340 Instead, his attention had now been captured by the exploding world of crypto, a completely

00:09:41.440 new financial world, where the frontiers were endless.

00:09:44.020 The price of Bitcoin went through $10,000 US for the very first time 24 hours ago.

00:09:49.440 But sorry, that's old news.

00:09:50.780 Because overnight, the price of Bitcoin went through $11,000 for the very first time.

00:09:55.800 Yep, $1,000 it made overnight.

00:09:58.040 Which is why just three years after starting his career, Sam quit James Street and founded

00:10:01.680 his own trading firm, Alameda Research.

00:10:03.780 Okay, guys, this is very important.

00:10:06.160 Alameda is going to be a critical component to this entire investigation, all right?

00:10:10.660 Sam owned 90% of this new company and used it to facilitate million-dollar crypto trades.

00:10:17.660 One of the key ways he found major success was by exploiting differences in value between

00:10:21.580 international markets, where Sam could make millions in profits, with one of his first

00:10:25.480 schemes to buy Bitcoin from vendors in the US at lower prices, then sell it onto Japanese

00:10:29.800 exchanges for much more.

00:10:31.140 To do this, Sam had to jump through lots of hoops to make these trades happen.

00:10:34.220 Because at first, he even needed people with dual Japanese-American dual nationality to

00:10:37.800 queue up in person and send money between countries.

00:10:39.900 Although Sam's experience in James Street had given him the tools to deal with these

00:10:53.580 complexities, and this puts him in a great position to take advantage of the new international

00:10:57.960 crypto market.

00:10:59.000 But Sam was also prepared to take a few shortcuts and bend the rules to get what he wanted.

00:11:02.600 And that's where it begins, guys.

00:11:04.740 That greed always kicks in at some point.

00:11:09.100 That's why he chose the name Alameda Research to hide the company's true intentions.

00:11:12.800 The fact that he would be forced to admit in an interview last year.

00:11:15.860 Especially in 2017, if you named your company, like, we do cryptocurrency, Bitcoin, arbitrage,

00:11:21.060 multinational stuff.

00:11:22.400 No one's going to give you a bank attack.

00:11:23.880 That's your company name.

00:11:24.880 But everyone wants to.

00:11:25.960 Why is that?

00:11:26.620 Well, because that's extremely risky.

00:11:28.160 Guys, banks typically don't like cryptocurrency because it's a volatile market.

00:11:31.340 Hell, let me tell you something about the banks, okay?

00:11:34.640 If I went to Bank of America tomorrow and I said, yo, guys, listen, I want $10,000 so

00:11:39.420 that I can buy stock in Bank of America.

00:11:41.100 You know what they'll tell me?

00:11:41.920 They'll look at me like, nope, get the fuck out of here.

00:11:44.160 We're not giving you no money to buy stock in our own bank.

00:11:46.780 However, if I went to that bank and said, hey, guys, can I have $100,000 to buy a house?

00:11:51.640 They're going to be like, sure, we'll go ahead and give you a loan for real estate, but

00:11:55.280 we will not give you a loan for a stock.

00:11:57.280 So, guys, stocks are risky to the banks, let alone cryptocurrency.

00:12:01.520 So, you guys can see here from his mindset, I can't even open a bank account with that

00:12:05.560 name because cryptocurrency has that negative connotation of being extremely volatile, which

00:12:09.880 it is.

00:12:10.720 But you got to understand that banks are in the game of making money, not losing money.

00:12:15.020 So, that is why he structured, and it's going to make sense why he made it called Alameda

00:12:19.900 Research, okay?

00:12:21.020 Which was the first of his fuck-ups.

00:12:24.580 Server Research Institute.

00:12:26.160 Using his willingness to play dirty and his knowledge of the crypto loopholes, Sam was

00:12:29.760 able to give his new trading firm a head start, and it wouldn't take long for him to be making

00:12:33.600 millions of dollars every single day.

00:12:35.820 But instead of publicly indulging in luxury yachts and cars like other crypto millionaires,

00:12:39.460 Sam put his money into a carefully designed PR campaign.

00:12:42.240 In a series of publicized donations, Sam painted himself as the white knight of crypto, using

00:12:46.760 his immense wealth to help others.

00:12:48.260 Despite owning a fleet of luxury cars and living in the Bahamas, Sam would drive around in

00:12:52.240 a Toyota Corolla.

00:12:53.060 And you guys are going to see that this image wasn't necessarily true, if you know what

00:12:58.380 I'm saying.

00:13:00.160 Okay, but he's putting himself out there as kind of like the Robin Hood.

00:13:02.860 Hey, I'm a good guy.

00:13:03.820 I'm a hardcore minimalist.

00:13:05.000 I don't really, you know, I'm not all about spending money and being a certain way.

00:13:08.300 But he did this strategically to get investors on board.

00:13:11.920 And you guys are going to see about that here in a second.

00:13:14.360 It was a facade, my friends.

00:13:15.400 The company's crazy profits impressed investors.

00:13:18.740 And soon, everyone wanted a piece of Alameda.

00:13:20.880 But Sam was dreaming even bigger.

00:13:22.420 He wanted to make international trades and deals that weren't supported by the platforms

00:13:25.920 at the time.

00:13:26.700 So in 2019, Sam founded FTX, a cryptocurrency trading platform that offered features and

00:13:31.560 more complicated products.

00:13:33.040 His history...

00:13:33.500 Okay, so guys, some of you guys that are just joining us, we got 1,000 of y'all watching

00:13:37.240 right now.

00:13:37.620 Please like the video, subscribe to the channel.

00:13:38.980 And also shout out to Moon, who I linked below.

00:13:40.680 We're watching this video right now.

00:13:41.760 And he did a fantastic job of summarizing this entire situation.

00:13:44.240 Guys, so he started with Alameda Research, right?

00:13:49.880 Has 90% ownership of that.

00:13:51.440 Then he creates FTX in 2019.

00:13:54.040 So these are the two big companies you need to understand, guys, for this entire scheme

00:13:57.840 to make sense.

00:13:59.920 The change was vital in setting up the sophisticated modern platform.

00:14:03.580 It looked just like a conventional exchange platform, which attracted investors that were

00:14:06.920 usually too risk-averse to get involved in the chaos of early crypto.

00:14:10.160 And this approach fooled investors around the world.

00:14:12.220 And soon, they were all pouring money into FTX.

00:14:14.560 Companies like SoftBank, BlackRock, and Secure Capital were among the investors.

00:14:18.180 But even pension funds were getting involved.

00:14:20.060 So everyone is, hey, they're just going to SPF.

00:14:22.360 Yo, take my money.

00:14:23.580 Take my money.

00:14:24.520 You know what I mean?

00:14:25.040 So this is a big W right now for FTX and for Alameda.

00:14:29.380 A large part of this money went towards the image of the company in an effort to attract

00:14:33.000 new users and new investments.

00:14:34.520 Adverts in the Super Bowl.

00:14:35.840 It's FTX.

00:14:36.640 Pictures on the covers of Fortune and Vogue.

00:14:38.260 Some even bore the name of an NBA stadium in Miami.

00:14:40.900 With Sam Bangman-Fried becoming the second biggest donator to the Democrats.

00:14:44.480 And with all of this, FTX growth snows.

00:14:46.180 Hold on.

00:14:46.940 Whoa.

00:14:47.340 Biggest donator to the Democrats.

00:14:51.000 Yes, guys.

00:14:51.480 He donated quite a bit of money.

00:14:52.760 I think somewhere between $50 to $100 million he donated to the Biden administration.

00:14:57.280 So that, my friends, is a big.

00:14:59.040 Which might explain why he was able to operate the way he did for as long as he did doing

00:15:07.180 a lot of the mistakes that he did.

00:15:10.560 More publicity stunts.

00:15:11.860 More cash injections.

00:15:13.060 The crypto markets were booming.

00:15:14.520 Allowing FTX to become one of the largest cryptocurrency trading platforms almost overnight.

00:15:18.820 And at the top of this pyramid sat Sam Bangman-Fried.

00:15:21.360 Skimming the profits of the top of his companies and making billions in the process.

00:15:25.180 Although there were some people that were starting to get nervous about FTX.

00:15:27.840 And what was really going on behind the scenes.

00:15:30.100 Sam had appeared on countless podcasts professing his altruistic ideology.

00:15:33.940 And how he'd give 99% of his wealth away.

00:15:36.400 Everyone was so enamored by his image.

00:15:38.260 That they failed to see past all of the glaring red flags.

00:15:40.800 With one of these being the unusually close relationship between Sam and an employee at

00:15:44.880 Alamanda Research.

00:15:46.000 Caroline Nelson had met Sam when they were both.

00:15:48.040 This girl is going to be a part of the end, my friends.

00:15:53.040 Okay?

00:15:55.220 Caroline Nelson.

00:15:56.200 This is her right here.

00:15:56.960 Yeah, I know.

00:15:57.500 Not the most attractive.

00:15:58.360 But here she is, guys.

00:15:59.560 She is born in 1994.

00:16:00.980 An American former business executive and quantitative trader.

00:16:03.640 She is the former CEO of Alamanda Research, the trading firm affiliated with the cryptocurrency

00:16:07.160 exchange FTX.

00:16:08.380 In December 2022, Ellis implated guilty to two counts of wire fraud, two counts of conspiracy

00:16:13.020 to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit

00:16:16.880 money laundering.

00:16:18.200 Okay?

00:16:19.060 According to an anonymous source cited by the Wall Street Journal in November 2022, Alameda Research

00:16:22.960 owed $10 billion to FTX.

00:16:24.680 The source said FTX had lent the trading firm money from customer funds at FTX.

00:16:29.700 Ellison was terminated from her position after FTX in Alameda filed for bankruptcy.

00:16:34.700 Holy!

00:16:35.020 All right.

00:16:38.200 So, um, she is going to definitely be a part of your boy SBF's demise coming very shortly.

00:16:45.280 But here she is.

00:16:45.980 Okay?

00:16:46.520 Let's keep going.

00:16:47.740 ...worked at Jane Street Capital.

00:16:49.440 At some point, the two sparked up a romance and went into business together.

00:16:52.600 Their chaotic, on-again, off-again relationship was an unusual FTX in Alameda.

00:16:56.980 As sources say, this was just part of the company's culture.

00:16:59.760 But what was even more concerning were Caroline's lead tweets professing her love for amphetamine

00:17:03.880 is what the boom-bucka nothing like regular amphetamine used to make you appreciate how

00:17:09.160 dumb a lot of normal non-medicated human experience is.

00:17:11.920 So, hold on.

00:17:12.900 You got the president of your, your firm, your research company using meth, using speed,

00:17:20.060 using Molly, like what the hell is going on here?

00:17:25.020 And putting this on Twitter?

00:17:27.480 Oh, man.

00:17:28.720 Stupid.

00:17:30.660 Let's keep going.

00:17:31.480 Adding in things like Sam's habit of playing League of Legends during meetings,

00:17:35.420 and you get a picture of the disorganized and childish company that they were running.

00:17:38.740 Like, what the fuck is going on over here?

00:17:40.740 As y'all can see, they're not the most, uh, well-run company going on here.

00:17:43.900 It's like, yo, uh, playing League of Legends, doing speed and meth.

00:17:47.800 It's like, bro, what the fuck?

00:17:49.740 You stupid.

00:17:51.600 So it shouldn't be any surprise that Ellison was eventually made CEO of Alameda Research

00:17:55.500 in April of 2022.

00:17:57.100 But they were also-

00:17:57.640 Oh, so you're using meth.

00:17:58.800 Remember, guys, that tweet was from April 2021.

00:18:00.560 A year later, she gets promoted to president.

00:18:03.940 Oh, man.

00:18:09.500 That is the beginning of the end.

00:18:11.120 Signs that something much more dangerous than criminals playing out.

00:18:14.140 In a now infamous interview, Sang-Pagman Free describes his business plan

00:18:17.660 in a way that sounded suspiciously similar to a Ponzi scheme.

00:18:20.620 Now, a Ponzi scheme isn't anything new.

00:18:22.540 It's one of the-

00:18:22.860 All right, guys, they're going to explain how a Ponzi scheme works.

00:18:25.700 So pay attention to this because this is going to be the foundation

00:18:28.980 from which these criminal charges are going to stem.

00:18:31.320 The oldest tricks in the book.

00:18:33.520 The first step is to make up an investment opportunity that promises wild returns with

00:18:37.480 little risk.

00:18:38.360 It doesn't have to be real.

00:18:39.300 It just needs to sound enticing.

00:18:41.100 Then you create hype around the opportunity, putting in some money to start it off and get

00:18:44.440 the ball rolling.

00:18:45.220 And then once enough people fall for the scam, use their investments to pay the first investors.

00:18:49.400 This process keeps going and going with the owners of the scam constantly skimming profits

00:18:53.180 off the top by misusing the investors' money.

00:18:55.360 And Sam gave his business a very similar description.

00:18:57.860 First, he made up a product.

00:18:59.580 Sam says that it has no value, but he gives it a $20 million valuation out of thin air to

00:19:04.140 entice investments.

00:19:05.760 X token has some market cap, right?

00:19:08.240 It's probably not zero, but let's say it's, you know, $20 million market cap.

00:19:13.340 Then he markets the boxes.

00:19:14.620 So he just said, hey, randomly, it's $20 million.

00:19:16.520 So you guys got to remember.

00:19:17.280 So it's basically like a money leapfrog.

00:19:19.720 It's like, okay, I take money from investors, right?

00:19:22.780 Into my company or whatever it may be.

00:19:24.160 And then I'm paying back the investors that came first.

00:19:26.220 And I just keep doing that over and over and over again.

00:19:28.960 Okay.

00:19:29.200 But at some point you can only maintain this facade for so long.

00:19:32.540 Correct.

00:19:33.360 So this is where things start to get crazy.

00:19:35.800 An investment opportunity, trying to entice people into putting money into the box, using

00:19:39.980 his reputation in companies, the value of the box rises and rises based on his interest

00:19:43.920 and this interest alone.

00:19:45.240 Right.

00:19:45.540 So they go, they pour another $300 million in the box and you get a cycle and then it

00:19:49.820 goes to infinity and then it makes money.

00:19:51.800 So Sam had literally described how he was scamming people in front of the world.

00:19:55.540 And soon people were calling him.

00:19:56.700 And him doing those interviews, guys, I ain't gonna lie.

00:19:59.000 You stupid.

00:20:00.060 Describing all these things on public, you know, forums with people.

00:20:04.560 Um, yeah, not the, not the most intelligent way to run things.

00:20:10.540 Coffee Zeta in particular noticed this and made a video about it, which now has over 2 million

00:20:14.640 views.

00:20:15.180 Yeah.

00:20:15.340 That really definitely hurt him as well, man.

00:20:18.180 Fatality.

00:20:18.540 But these dive warnings were jammed out by FTX's hype machine because despite the trouble

00:20:23.260 brewing, Sam's Kota empire had grown into a massive billion dollar enterprise.

00:20:27.760 FTX was attracting new users every day and was turning into one of the largest exchanges

00:20:31.460 in crypto and public opinion of the company.

00:20:33.540 Just so you guys know, cause I know some of you guys might not be into crypto, whatever.

00:20:36.900 We talked about this when we had, um, Miguel from dollar cost crypto and Charlie from cultivate

00:20:41.300 crypto.

00:20:41.860 Basically guys, an exchange is a medium that you use to purchase the cryptocurrency.

00:20:45.840 So for example, me, I'm on Coinbase, right?

00:20:47.820 When you got Binance, you got FTX.

00:20:49.460 And what these guys basically do is they're a portal to allow you to purchase cryptocurrency

00:20:53.800 or, you know, whatever type of a coin you want to get.

00:20:58.060 All right.

00:20:58.220 So FTX was in there with the top three Coinbase, Binance, and FTX, right?

00:21:02.840 Well, FTX has fallen now, but that's what it essentially allowed you to do.

00:21:08.320 In layman's terms, keeping it simple for y'all.

00:21:10.020 I mean, it's way more complex than that, but for all my guys out there that, you know,

00:21:13.560 just want a basic overview of what a cryptocurrency exchange is.

00:21:16.240 That's what it is.

00:21:17.020 Company was at an all time high.

00:21:19.320 Everyone in the crypto world saw FTX as strong and stable.

00:21:22.400 This reputation came in handy when the value of the cryptocurrency market started to take

00:21:26.220 a turn for the worst.

00:21:27.340 The great crash of 2022 saw multiple crypto companies and firms plunge into bankruptcy.

00:21:32.560 Crypto, obviously right now getting crushed.

00:21:35.060 Investors getting jolted by volatility rippling through the crypto world.

00:21:39.540 Tonight, a massive sell-off of cryptocurrency, erasing more than $200 billion from the entire

00:21:45.920 market in a single day.

00:21:47.940 However, Sam, being the kind, generous, charitable billionaire that he is, stepped in to save

00:21:52.340 the day, promising to bail out crypto failures like Voyager by contributing hundreds of millions

00:21:56.880 to buy out their digital assets.

00:21:58.820 Well, that sounds noble on paper, but let's see if he's able to actually do it.

00:22:01.980 We're going to see that in a second.

00:22:03.260 This was a genius move in lots of ways, because by taking care of struggling competitors,

00:22:07.360 Sam was making his company seem...

00:22:08.700 Oh yeah, by the way, FTX's arena is literally right down the street from you guys.

00:22:11.620 It's in Miami.

00:22:12.240 It's the former airline's arena, if I'm not mistaken, was what it used to be called

00:22:16.440 where the Miami Heat play.

00:22:17.980 ...stronger than it really was.

00:22:19.320 On top of this, he helped prevent crypto prices plunging even further, which would have

00:22:22.640 sunk him as well.

00:22:23.560 Not to mention this all added to Sam's charitable billionaire status.

00:22:26.960 However, during these hard times, FTX didn't really have enough capital to complete

00:22:30.540 these deals.

00:22:31.320 Recklessly splashing the cash to become crypto's savior wasn't really a good long-term strategy

00:22:35.420 for FTX.

00:22:36.420 And these risky investments would soon turn sour.

00:22:38.840 And on top of these sour investments, Sam might be making tons of enemies along the

00:22:42.220 way to his billions.

00:22:43.200 The most dangerous and important of these, Changpeng Zhao, the founder of...

00:22:46.660 Oh man, this is a bitter rivalry that's going to be explained here in a little bit, guys.

00:22:50.120 So pay attention to this Binance and FTX beef, because it's going to be very critical towards

00:22:56.380 the end here.

00:22:58.260 Now, Binance is the largest crypto exchange in the world and was in fact a very early

00:23:02.660 investor in FTX.

00:23:03.960 But as the business took off, the relationship between the two men very much soured, leaving

00:23:08.020 them as bitter rivals.

00:23:09.620 And it was this feud that would ultimately become a key part of FTX's collapse.

00:23:13.820 However, for a while, all was quiet for FTX.

00:23:15.960 It seemed like they had weathered the cryptid crash and were looking towards consolidating

00:23:19.100 their position in the market.

00:23:20.460 But in November, everything started to come crashing down.

00:23:23.700 And when we'd come out of the next month, we'd see Sam and his cronies in jail and billions

00:23:27.380 of dollars vanishing into thin air.

00:23:30.380 But before we continue, I want to tell you about our video sponsor, Masterworks.

00:23:33.820 Hey, fuck you, Masterworks.

00:23:34.800 We don't care what y'all think.

00:23:35.980 All right, we gonna keep going.

00:23:41.180 But hey, you gotta do what you gotta do with the sponsors, right?

00:23:44.300 I get it.

00:23:45.960 Oh, I'm fast forwarding it.

00:23:48.080 Okay.

00:23:48.420 Gonna lighten the closure.

00:23:49.420 So documents end up leaking, right?

00:23:51.320 That Sam Bankman-Fried used to fundraise in 2021 and 2022 show why venture capitalists

00:23:57.100 may have ignored due diligence and scrambled to invest nearly $2 billion.

00:24:02.540 And this comes out, guys, what?

00:24:03.900 November 15, 2022.

00:24:05.260 So right around early to mid-November is when things start to get crazy.

00:24:10.660 All right, as far as FTX.

00:24:13.020 So yeah, I'll see, right?

00:24:14.040 The volatility in the crypto market leads SBF to say, okay, well, you know what?

00:24:18.140 I'm gonna make sure that investors get paid back.

00:24:19.800 I'm gonna prop them back up.

00:24:21.160 Even though the crypto market is volatile right now, people are losing money because you guys

00:24:24.980 know crypto basically crashed a large portion of 2022.

00:24:28.520 In contrast to last year when I remember Bitcoin, right, was $60,000.

00:24:33.280 You know, I'm in crypto myself.

00:24:35.180 And, you know, my Ethereum, my Bitcoin, it was high up.

00:24:38.260 And then this year it went down.

00:24:39.680 And I was like, oh, God damn it.

00:24:41.020 So SBF was like, all right, let me pay back some of these investors.

00:24:46.320 Let's, you know, keep the money flowing so that it doesn't crash all the way.

00:24:50.000 And, you know, noble move, but he didn't necessarily have the funds to do it.

00:24:54.540 And you guys are going to see that here in a second.

00:24:57.920 Relationship between Alameda Research and FTX.

00:25:00.740 Everyone knew the company's works in tandem, but nobody suspected how interlinked the two

00:25:04.500 really were.

00:25:05.260 Yeah.

00:25:05.980 See, remember we've talked about Alameda before.

00:25:07.980 I told you guys to memorize that.

00:25:09.800 So people don't really know what the hell's going on behind the scenes, but this is about

00:25:12.900 to come to light right now as far as how tight they really were.

00:25:15.880 And my friends, that is not legal.

00:25:18.380 Okay.

00:25:18.700 And it turned out that lots of Alameda's assets were held in FTT, a crypto token created

00:25:26.120 for and used on FTX.

00:25:27.840 Now, this was incredibly dubious, as whilst FTT was worth around $25 at the time, it had

00:25:32.360 still been created by FTX, and its value was completely tied to FTX's worth as a company.

00:25:37.460 So wait, they made their own token?

00:25:40.360 That they held money in?

00:25:41.900 What?

00:25:43.780 Whilst this technically counted as an asset for the company, it was impossible to turn into

00:25:47.980 real money in a very short time.

00:25:49.660 If Alameda tried to liquidate their assets, the sheer amount of FTT released would lead

00:25:53.500 to a plunge in demand and price, making the billions worthless.

00:25:56.820 FTX and Alameda were meant to be separate companies, so people didn't have enough time

00:26:00.380 to figure out how illegal this truly was.

00:26:02.620 However, the floodgates had now been opened, and soon it was going to be all over for Bangman

00:26:06.420 Free's crypto empire.

00:26:07.500 As in the few days after this news came out, FTT dropped by over 10%, and Sam's long-time

00:26:12.460 rival, Changpeng Zhao, saw his moment to strike, announcing on Twitter that he would be selling

00:26:16.900 off billions.

00:26:17.640 Oh, here we go.

00:26:18.760 As part of Binance's exit from FTX equity last year, Binance received roughly $2.1 billion

00:26:22.780 USD equivalent in cash, right?

00:26:25.340 Due to recent revelations that have come to light, that came to light, we have decided to

00:26:30.420 liquidate any remaining FTT on our books, 1-4.

00:26:33.800 Guys, that right there, holy, that's going to further destroy the value of FTX, right?

00:26:42.300 So you've got your enemy, your op, basically literally has you buy the balls.

00:26:48.300 $100 worth of FTT.

00:26:50.020 Ellison, having only been CEO for a few months, panics an offer to buy.

00:26:53.620 Now, here's the girl, right, that we talked about before, goes, CZ Binance, if you're looking

00:26:58.580 to minimize the market impact on your FTT sales, Alameda will happily buy it all from you

00:27:02.540 today at $22, okay?

00:27:05.020 So the Miss Methamphetamine, Amphetamine, Miss Speed over here, is saying, yo, we'll buy

00:27:11.740 it, don't worry about it.

00:27:13.160 This is what happens when you put women that like to use speed as the leaders of your company,

00:27:19.240 guys.

00:27:19.480 That is a big...

00:27:21.540 I mean, anybody for that matter that likes to use that, you know, bullshit drugs.

00:27:26.580 ...buy it off of them to keep FTT stable.

00:27:29.720 But it was too late.

00:27:31.300 FTT's price plummeted upon the announcement, dropping 80%.

00:27:34.880 And so just in a few short days, Sam, FTX, and Alameda had lost billions.

00:27:39.820 Their make-believe empire had gone up in smoke.

00:27:42.060 And so immediately, everyone rushed to withdraw whatever assets they had on the platform.

00:27:45.300 But the thing is, FTX didn't have this money available, and so they would freeze withdrawals.

00:27:49.640 And this is what's known as a liquidity crunch.

00:27:51.900 FTX needed to find a way to pay...

00:27:53.620 Holy, so their investors needed their money back when they couldn't get it.

00:27:57.240 EA!

00:27:57.880 Because everyone tried to get their money out at the same exact time,

00:28:00.860 thanks to Binance making that announcement.

00:28:03.120 ...these people with their money and fast.

00:28:04.960 Changpeng even sneakily offered to buy out the company after selling off all of his FTT coin.

00:28:09.200 But he knew what he was doing.

00:28:10.500 Sam was his longtime rival.

00:28:12.020 He hated Sam.

00:28:13.020 This was his way of destroying the empire that tried to destroy Binance.

00:28:16.620 So he literally sold it, destroyed the value of the token slash coin or whatever the hell it is.

00:28:21.700 And then when the value of it went down, he said, you know what?

00:28:24.580 Maybe I'll just buy my competitor out.

00:28:26.580 The company got worse.

00:28:28.620 Because the very next day, federal agents in the U.S. announced that they had been investigating FTX for some time.

00:28:34.120 They've been mishandled...

00:28:34.820 Oh, shit, the boys are here!

00:28:37.220 FBI, open up!

00:28:38.320 Everything is crashing!

00:28:40.420 ...funds and massive fraud.

00:28:41.880 So Changpeng and Binance pulled out of the deal, and FTT's value fell even further.

00:28:45.860 And over the next...

00:28:46.700 So he sees that the FBI, SEC, and we're going to talk about that investigation, guys, because it's not just a criminal case, by the way.

00:28:52.460 So he sees that the government is now involved, and they want to go after this guy.

00:28:55.600 So he pulls out the deal.

00:28:56.880 That takes him down even further.

00:28:58.500 So think about this.

00:28:59.240 They lost 80% of their value, right?

00:29:01.540 Then the CEO of Binance is like, you know what?

00:29:03.980 Maybe we'll buy y'all.

00:29:05.100 Then he finds out that the government is involved.

00:29:07.100 And he's like, yeah, no thanks.

00:29:08.900 Nope.

00:29:09.480 And it drops it down even further, guys.

00:29:11.780 So we're talking about going up in fucking flames right now.

00:29:15.860 In a few weeks, things just got even worse and worse with Benjamin Freed when the scale and depth of his crimes came to light.

00:29:21.800 In one of the largest cases of fraud ever recorded, Sang Benjamin Freed and his accomplices had created possibly the largest Ponzi scheme of all time.

00:29:29.020 And here's why.

00:29:29.820 You see, first, FTX would print a new FTT token.

00:29:32.320 Okay, guys.

00:29:32.880 So this is how the scheme works.

00:29:34.560 So please pay attention to this because what's going to happen is we're going to go over the actual charges, okay?

00:29:40.040 So you've got to understand this concept for the charges to make sense.

00:29:44.320 Because not only does he have a criminal case against him, he also has civil cases against him as well, man.

00:29:48.760 Three different agencies are going after this guy.

00:29:50.460 And I'm going to explain that in detail very soon.

00:29:53.140 But before we get into how this scheme worked, guys, do me a quick favor and like the goddamn video.

00:29:57.720 We got 1,600 of y'all watching right now.

00:30:01.220 Like the video.

00:30:02.300 Subscribe to the channel.

00:30:03.440 Okay?

00:30:03.680 Check me out on FEDA1811 on Anchor.

00:30:06.440 Anchor.fm slash FEDA1811.

00:30:08.280 I do my podcast on there as well.

00:30:09.920 So you guys can listen to it on audio.

00:30:12.040 And damn it.

00:30:13.660 What else?

00:30:13.980 Oh, and then FEDA1811 on Instagram.

00:30:16.000 If you guys got a case that you guys want us to go ahead and cover and a lot of people ask for it, we always take a poll.

00:30:21.640 We'll cover it next.

00:30:23.100 And Christina runs that.

00:30:24.120 So she'll go ahead and, you know, she's been keeping track of what you guys have been requesting.

00:30:27.700 So do me a favor.

00:30:29.180 Please like the video, guys.

00:30:30.560 Subscribe to the channel.

00:30:31.700 And let's get it up to 1,000 likes, right?

00:30:34.580 So that this video can get pushed in the algo.

00:30:36.880 And, yeah, more people can figure out what the hell is really going on here.

00:30:39.840 Because I see so many videos on this FTX stuff and no one really clearly and concisely points out what's going on here.

00:30:45.120 And don't worry.

00:30:45.860 After this is done, I'm going to make sure I put extremely detailed timestamps in here for y'all.

00:30:49.160 So this will be our one-stop shop to figure out what the hell is actually going on.

00:30:53.000 From a former Fed that did financial investigations.

00:30:55.220 Anyway, without further ado, let's get into how the FTX scheme worked.

00:30:58.900 Like the video, guys, please.

00:31:00.400 And to lend them to Alameda Research.

00:31:02.340 Alameda would then borrow money against these tokens as if they weren't just created out of thin air, giving the company more free money.

00:31:08.020 And they repeated the same process over and over again.

00:31:10.660 But it still wasn't enough.

00:31:12.060 The money that they had borrowed before was a constant and growing expense that Sam just couldn't keep up with.

00:31:16.740 And so in a move that would bring down his empire, FTX would take money from his own customers' pockets.

00:31:20.980 And to be precise, around $10 billion was reportedly stolen from the public.

00:31:25.260 Oh, Lee!

00:31:26.400 Oh, shit!

00:31:27.120 Oh, shit!

00:31:27.820 And moved straight into Alameda's control.

00:31:30.020 Something that's completely against the law and FTX's policies.

00:31:33.340 It was at this moment that Sam's rivalry with Changpeng Zhao came to a head.

00:31:36.960 And in an incredibly stupid move, Bangun Fried had let Changpeng own billions in FTX tokens as a result of their messy falling out.

00:31:44.060 This essentially meant that their top competitor had a button that he could press at any time and cause a liquidity crunch at FTX.

00:31:50.480 Changpeng had full control over FTX.

00:31:52.820 Oh, man.

00:31:53.460 You know what Shane Pitt is.

00:31:54.560 You know what he's thinking.

00:31:57.720 He was waiting for the kill shot.

00:31:59.920 Yeah, Changpeng Winfried was testifying against him.

00:32:02.480 He was doing everything he could to sabotage Binance.

00:32:04.880 And so when Changpeng found the perfect time, he pressed the button and FTX exploded.

00:32:09.840 Oh, shit!

00:32:11.260 Fatality!

00:32:12.500 In the wake of the crash, FTT fell to under a dollar, and both Alameda and FTX filed for bankruptcy.

00:32:17.680 But this was under a dollar!

00:32:20.000 ...protect them from the feds, who cracked down hard on Bangun Fried's cartel.

00:32:23.460 And as they prepared their arrest warrants, it somehow got even worse for FTX.

00:32:27.080 In what appears to have been an inside job, hundreds of millions in crypto assets vanished from FTX's wallets.

00:32:32.180 By now, FTX were $9 billion in the hole, with less than $1 billion that they could actually sell quickly.

00:32:37.320 But it only got worse.

00:32:38.540 Sam just couldn't stop making stupid mistakes, as lead messages between him and a news reporter laid out all of his...

00:32:43.760 Oh, this is even more shit coming to the light, man.

00:32:47.160 That is not good.

00:32:48.460 You stupid!

00:32:49.440 So the ethics stuff, mostly a front.

00:32:51.140 People will like you if you win and hate you if you lose.

00:32:54.040 That's how it all really works?

00:32:55.880 Yeah, I mean, that's not all of it.

00:32:58.180 ...as Callis Motives.

00:32:59.320 He admitted that his charitable persona was fake.

00:33:01.380 So the ethics stuff, mostly a front.

00:33:03.300 And he says, yeah.

00:33:04.960 Yo!

00:33:06.280 What the hell is going on, bro?

00:33:10.200 Woo!

00:33:14.520 So remember how I told you guys that he ran that, you know, that minimalist, you know,

00:33:18.440 I care about, you know, everybody else, and I'm going to donate and all this other stuff.

00:33:22.780 I'm going to give to the Democratic political party so they can go ahead and give y'all more stimmy checks and all this other crap.

00:33:28.200 But it was all capped to create a certain image, man.

00:33:31.840 You know, I mean, marketing.

00:33:33.220 It is what it is.

00:33:34.280 It's marketing.

00:33:35.740 So, yeah.

00:33:37.880 Oh, my God.

00:33:38.820 I was trying to figure out, like, if it was kind of the PR off-the-cuff answer.

00:33:47.880 Man, all the dumb shit I said, it's not true.

00:33:50.180 Not really.

00:33:51.020 Yeah, I thought it might not be.

00:33:52.820 God damn!

00:33:57.300 Everyone goes around pretending that perception reflects reality.

00:34:00.040 It doesn't.

00:34:01.280 Oh, man.

00:34:01.940 And then it says here, some of this decade's greatest heroes will never be known, and some of its most beloved people are basically shams.

00:34:09.000 Man.

00:34:10.660 His perception in the media, he would then leap onto a wild ramble on the horrors of regulation.

00:34:16.540 There's no one really out there making sure good things happen and bad things don't.

00:34:20.560 Usually there's only one toggle, do more or do less.

00:34:23.520 Yeah, just PR.

00:34:24.380 Fuck regulators.

00:34:25.460 They make everything worse.

00:34:26.520 They don't protect customers at all.

00:34:28.100 Oh, like you do, my friend?

00:34:29.400 Take it there, buddy.

00:34:30.120 A month ago, CZ, the owner of Binance, was a walking example of, don't do ethical shit or your money is worthless.

00:34:40.900 Now he's a hero.

00:34:41.860 Is it because he's virtuous or because he had the bigger balance sheet?

00:34:45.040 And so he won.

00:34:46.860 And then by early December, Sam was in cuffs along with his co-conspirators, Caroline Ellison and Gary Wang.

00:34:52.820 Okay, guys, this is very important.

00:34:54.500 Memorize those two songs.

00:34:56.380 Those two people, right?

00:34:57.400 We got Caroline Ellison, this chick that we talked about before, a.k.a. Miss Speed.

00:35:02.780 And then we got Gary Wang, who is the co-owner of FTX.

00:35:05.340 Gary Wang is an American executive before co-founding cryptocurrency exchange FTX.

00:35:09.140 He worked at Google.

00:35:10.320 Prior to FTX's collapse, he was ranked the 227th richest American in the Forbes 400 and the 431st richest person in the world today by the world's billionaires.

00:35:18.800 And he grew up in New Jersey, attended USA Canada math camp, where he met his future classmate and co-founder, Sam Bankman-Fried.

00:35:24.540 After high school, he attended the Massachusetts Institute of Technology, MIT, which we talked about before, guys.

00:35:28.760 It's where they went to school together, right?

00:35:30.360 And where he studied mathematics and computer science, MIT.

00:35:35.740 He was a member of Epsilon Theta, a co-ed fraternity.

00:35:40.380 All right?

00:35:40.660 So those are his two co-defendants slash business partners.

00:35:44.000 Caroline owned Alameda on paper, of course, right?

00:35:46.960 She owned Alameda on paper when he really was running it because he had access to the balance sheet and everything else like that, which is illegal, by the way.

00:35:52.980 And his boy, Gary Wang, was the co-owner of FTX.

00:35:56.940 And they also got indicted in the situation.

00:35:59.220 I'm going to show you guys something in the court paperwork that is pretty damning to SBF, which I don't think anybody else has covered.

00:36:07.620 I'm going to explain that here in a second.

00:36:08.820 But let's go back to the video so you guys understand what the hell is really going on here.

00:36:13.780 It's been integral parts of the scam.

00:36:15.260 Oh, and then also, guys, do me a favor and like the goddamn video.

00:36:17.960 I hate to ask you all for likes, but you guys never like the goddamn video, man.

00:36:20.720 We're up to 1,700 of y'all watching right now, so like the video.

00:36:25.040 All right, let's get to at least 1,000 likes.

00:36:27.520 But when police came, they both immediately pleaded guilty to try and save their own skins.

00:36:31.280 They pleaded guilty.

00:36:32.400 Them boys came in and they immediately.

00:36:34.840 FBI, open up!

00:36:36.020 Mind you guys, they haven't even been in jail that long.

00:36:38.260 And they just immediately like, all right, we'll cooperate and plead guilty.

00:36:41.660 They all turned their backs on Sam.

00:36:43.600 Everyone was out for themselves, leaving Sam high and dry as the charges piled up against him.

00:36:48.300 Fraud, money laundering.

00:36:49.320 In total, Sam now faces over 100 years in jail, whilst Ellison escaped major charges through a plea deal.

00:36:55.280 And despite claiming to only have 100K in his bank account, Bankman Freed still managed to pay his $250 million.

00:37:00.920 So he claimed he had $100,000, but again, he got a $250 million bail, right?

00:37:07.060 But he was able to get out because he put up 10%.

00:37:08.820 So he had to put up at least $25 million.

00:37:10.920 And you guys are going to see here in a second how he came up with that money.

00:37:12.920 He defrauded people out of literal billions and now gets to sit comfortably home with his lawyer family while his trial drags on for what could be years.

00:37:21.260 The reason he was able to come up with that money, guys, is his family put up the money and they put up quite a bit of equity in their home.

00:37:27.360 They put up some cash and it was a bunch of different other assets that his family had.

00:37:31.960 He comes from a well-off family.

00:37:33.860 So that's how he was able to get out, even though he only had $100,000 in his bank account, which is probably more than likely capped.

00:37:40.640 He just doesn't want to declare how much money he really has.

00:37:43.540 He probably has some kind of account that no one has access to because he knows that it will be taken away by the government.

00:37:49.560 Bankman Freed and his cartel aren't the only people to blame.

00:37:52.400 Despite the warning signs, celebrities like Kevin O'Leary, Tom Brady and Stephen Curry were all willing to take fat paychecks without asking any questions.

00:38:00.560 The media was also all too willing to buy into the hype as well.

00:38:03.260 We shouldn't be surprised considering Sankt Bankman Freed was one of the second largest donators to the Democrats.

00:38:08.580 All during.

00:38:09.180 Oh, donated second largest amount to Joe Biden's campaign.

00:38:13.440 If I'm not mistaken, guys, he donated somewhere around 50 to 100 million dollars.

00:38:17.600 If you guys know in the chat, correct me if I'm wrong, if it's more, I know it's at least that much.

00:38:23.260 It might even be more than 100 million, but he donated quite a bit to that party.

00:38:27.980 And you guys know Sleepy Joe has a bunch of strange connections between the FTX founder, Ukraine, his son.

00:38:37.940 Yeah, there's some questions there, man.

00:38:39.320 So L Biden, or I would say in this case, Leiden.

00:38:42.600 Biden's presidential campaign, which is why politicians were very happy to turn a blind eye as well.

00:38:51.560 And who knows how much leniency this will buy him in the future.

00:38:54.300 In a world that lets his empty scam balloon to such a size, it's doubtful that we'll ever see any real justice for the billions that he stole.

00:39:00.580 All right. So, guys, shout out to, once again, the person that made that video.

00:39:06.440 His name is Moon, man.

00:39:07.540 This was an excellent summary of what went down, because as I was studying the case, I was like, man, this is kind of dry.

00:39:12.640 Because financial cases aren't that sexy, guys.

00:39:14.360 I'll just keep it a thousand with y'all.

00:39:15.280 People don't really give a shit.

00:39:16.420 So I was like, let me find a way to try to make it more engaging and more interesting so that you guys can understand the scheme.

00:39:21.760 But basically, you guys can see it.

00:39:23.240 He's taking money from investors.

00:39:25.320 He's using FTX and Alameda and Tandem together, claiming that he doesn't own Alameda, but in reality, he does.

00:39:30.840 He puts some crazy speed, some amphetamine head, okay, Caroline, to be the quote-unquote president of it.

00:39:38.980 But the reality is he's really controlling Alameda, which is completely illegal.

00:39:42.720 Now, now that we know how the scheme kind of worked, we know who SBF is, we know who his co-conspirators are,

00:39:49.020 Gary Wang and Caroline Ellison, let's actually look at the legality of what the hell he's facing.

00:39:54.400 And for that, I got a video for y'all that is also fairly entertaining.

00:39:58.520 Shout out to this guy, Legal Eagle.

00:40:00.360 I like his content.

00:40:01.200 He makes some pretty good stuff.

00:40:02.780 And this one, we're only going to use a portion of the video, guys.

00:40:06.260 But he summarizes really well what the hell is going on here.

00:40:09.320 And I'm going to give you guys a little bit more insight.

00:40:12.400 But we're going to go over not only the criminal case that he's looking at, but we're also going to go over the civil cases looking at, too.

00:40:18.220 All right.

00:40:19.440 Now, before we get into all of the alleged crimes, and there are a lot of alleged crimes,

00:40:23.100 let's do a quick factual rundown because now we have the benefit of three detailed proceedings,

00:40:27.980 two civil complaints and one criminal DOJ indictment.

00:40:31.340 So civil, guys, as you guys know, isn't necessarily a criminal, but typically there's going to be money involved and he's being sued.

00:40:36.800 And then he has one criminal case as well.

00:40:38.660 And the reason why this is a problem is all of these cases are being filed against him at the same time.

00:40:44.620 And you guys are going to see here, as far as like testifying, the Fifth Amendment, etc.,

00:40:48.940 this can be extremely murky waters for SBF.

00:40:53.820 The SEC and the CFTC filed separate civil complaints, providing additional facts.

00:40:57.680 Okay, you guys are probably wondering, who the hell are these two agencies?

00:40:59.900 All right.

00:41:00.320 The two agencies that have civil complaints against them, guys, are these dudes.

00:41:03.440 The U.S. Securities and Exchange Commission, okay, a.k.a.

00:41:05.780 The SEC is basically an independent agency of the United States federal government created in the aftermath of the Wall Street crash of 1929.

00:41:13.960 The primary purpose of the SEC is to enforce the law against market manipulation.

00:41:18.080 In addition to the SEC Act of 1934, which it created it,

00:41:22.740 the SEC enforces the Securities Act of 1933, the Trust Interventure Act of 1939, the Investment Company Act of 1940,

00:41:30.060 the Investment Advisors Act of 1940, the Sarbanes-Oxley Act of 2002, and other statutes.

00:41:35.700 The SEC was created by Section 4 of the Securities Exchange Act of 1934, now codified as 15 U.S.C. 78D,

00:41:42.760 and commonly referred to as the Exchange Act or the 1934 Act.

00:41:46.360 All right.

00:41:46.620 You guys are probably wondering.

00:41:47.880 Byron, please say that in English.

00:41:49.200 All right.

00:41:49.760 The SEC is there to make sure that investors don't defraud the government and defraud investors.

00:41:53.960 They're there to protect you and me, allegedly, of course, from people like SPF, Jordan Belfort, et cetera, guys that scam you.

00:42:02.840 All right.

00:42:03.120 That's what they're there for, to regulate the U.S. market.

00:42:06.200 All right.

00:42:06.420 Which, LOL.

00:42:07.700 But that's what they're there for.

00:42:08.840 And he's also being sued by these guys, the Commodity Futures Trading Commission.

00:42:12.500 All right.

00:42:13.080 The CFTC.

00:42:15.120 All right.

00:42:15.360 The CFTC is an independent agency of the U.S. government created in 1974 that regulates the U.S. derivatives markets,

00:42:21.380 which includes futures, swaps, and certain kinds of options.

00:42:23.980 The Commodity Exchange, CEA, 7 U.S.C. 1, which is U.S. law, prohibits fraudulent conduct in the trading of futures, swaps, and other derivatives.

00:42:32.000 The state of mission of the CFTC is to promote the integrity, resilience, and vibrancy of the U.S. derivatives market through sound regulation.

00:42:39.320 After the financial crisis of 2007 to 2008, and since 2010, with the Dodd-Frank Wall Street Reform and Consumer Protection Act,

00:42:47.980 the CFTC has been transitioning to bring more transparency and sound regulation to the multi-trillion dollar swaps market.

00:42:55.000 So, guys, this is not good for your boy, SBF, because he has two different regulatory agencies suing him, okay?

00:43:04.180 And he also has a criminal case against him from these dudes, the United States Department of Justice, okay?

00:43:09.700 I mean, it's pretty self-explanatory, but I'll read it for y'all real quick as well.

00:43:13.160 And namely, the FBI, okay?

00:43:15.040 So, the Department of Justice, guys, conducts, has the U.S. Attorney's Office, the prosecutors, and they also have certain law enforcement agencies, okay?

00:43:24.080 So, you got DOJ.

00:43:25.200 That's the main umbrella.

00:43:26.560 Underneath the Department of Justice, you got the United States Attorney's Office, who prosecute all federal cases in the United States.

00:43:31.220 Then you got different law enforcement agencies.

00:43:32.940 You got the Federal Bureau of Investigation, FBI.

00:43:34.780 You got the ATF, Bureau of Alcohol, Tobacco, and Firearms and Explosives.

00:43:37.520 Then you got DEA, Drug Enforcement Administration.

00:43:39.900 You got the U.S. Marshal Service, okay?

00:43:42.520 And then you got other law enforcement agencies as well.

00:43:44.600 You got Homeland Security Investigations, HSI, who I used to work for, and they're under the Department of Homeland Security.

00:43:49.920 But regardless, every federal law enforcement agency goes to the United States Attorney's Office to pursue federal charges against criminals.

00:43:56.920 In this case, right, DOJ has both the FBI and the U.S. Attorney's Office.

00:44:01.300 Who investigates fraud like this typically?

00:44:03.180 It is the FBI that does the criminal side, and then you got the SEC that does the civil side.

00:44:06.840 So a lot of the time, the FBI and the SEC work together in tandem to go after crooks that commit crimes like what SPF is doing, guys on Wall Street, guys like Jordan Belfort, guys like Bernie Madoff, etc.

00:44:18.700 All right?

00:44:19.020 So he's also looking at criminal charges from the DOJ, okay?

00:44:24.200 And the Department of Justice, the Federal Executive Department of the United States government at task with the enforcement of federal law and administrative justice in the United States is the equivalent to the justice or interior ministries of other countries.

00:44:34.520 The department is headed by the U.S. Attorney General, who reports directly to the President of the United States and is a member of the President's Cabinet.

00:44:39.840 The current Attorney General is Merrick Garland, who was sworn in on March 11, 2021.

00:44:43.760 And just so y'all know, the Attorney General of the United States is the chief law enforcement officer in the United States, okay?

00:44:49.440 He oversees all criminal prosecution in all of the different districts of the U.S., all right?

00:44:55.240 So give me ones in the chat, guys, if that all makes sense to you as far as, like, the three different agencies that are going after SPF.

00:45:01.560 Give me ones in the chat if it makes sense.

00:45:02.960 One, if it makes sense.

00:45:03.800 Two, if you're still confused as hell.

00:45:05.620 Let's see what – I want to make sure that y'all understand this so this all makes sense.

00:45:10.180 Let's see what the chat says.

00:45:13.760 All right.

00:45:15.500 I see a lot of ones.

00:45:16.280 I see a lot of ones.

00:45:16.900 All right.

00:45:17.300 Awesome, awesome, awesome, awesome, awesome, awesome.

00:45:18.900 Perfect, perfect, perfect.

00:45:20.200 Okay.

00:45:20.720 Let's keep going.

00:45:21.660 And I know it's complex, guys, so I really want y'all to understand this stuff because, you know, financial crimes, I ain't going to lie to you, they can get kind of dry.

00:45:27.420 I've done financial cases myself in the past, and I'll give it a thousand with y'all.

00:45:31.400 They're boring as fuck.

00:45:32.060 I don't like them.

00:45:32.580 You know, anytime I had a financial case when I was an agent myself, I would always get the IRS involved or I have another agent do the financial side.

00:45:38.480 I would never do the financial side myself, bro.

00:45:40.980 That shit is boring as hell, okay?

00:45:43.960 But it's a necessary component.

00:45:45.820 Anytime you're going to do a criminal investigation, you know, we have a saying, you follow the money and you'll find the crooks.

00:45:51.920 All right?

00:45:52.240 So it's a necessary component of cases just that it's very dry, very boring, very bland, which is why I'm trying to make sure that I explain things very precisely, show y'all some videos, keep you guys engaged.

00:46:02.120 Because financial cases can be boring as fuck, coming from a guy that used to do them.

00:46:06.180 All right, let's go back to the video here as far as what the hell he's facing.

00:46:10.460 So we know now that he's being charged by three different federal agencies, one criminal, two civil.

00:46:17.160 Hey, guys, like the video, man.

00:46:18.440 Because y'all are not going to get a breakdown like this anywhere else on the internet with this type of level of expertise.

00:46:23.720 Well, context to what is alleged to have gone on here.

00:46:26.040 As you probably know, Bankman Freed was the founder of Alameda Research, which he represented as a separate entity from the FTX entities, especially after Caroline Ellison and Sam Tribucco became co-CEOs of Alameda in 2021.

00:46:36.300 However, the SEC and CFTC say that Bankman Freed did not hand off Alameda Research at all and that he remained the ultimate decision maker at Alameda.

00:46:44.440 And that's a big problem.

00:46:46.320 OK, so he claimed that he wasn't the president of Alameda, but he really did.

00:46:50.840 He just put a dummy in there, a.k.a. Caroline, to run it.

00:46:53.700 But the reality is he was telling her what to do, which is completely illegal.

00:46:58.480 He says that Bankman Freed directed investment and operational decision.

00:47:01.540 Boom. And this is a part of the civil suit.

00:47:03.480 OK, Bankman Freed directed investments and operational decisions, frequently communicated with Alameda employees and had full access to Alameda's records and databases.

00:47:10.500 All right.

00:47:12.140 ...frequently communicated with Alameda employees and had full access to Alameda's records and databases.

00:47:17.880 And the CFTC says that Bankman Freed operated all of these entities as a common enterprise, which is no surprise, given the allegations that we've seen in the news where basically they were commingling all of these funds.

00:47:27.240 So in other words, FTX, Alameda, and many of their related businesses were all run by Bankman Freed and Alameda without any corporate controls or separation that Bankman Freed promised.

00:47:36.460 And that is a big violation, guys, against the SEC and the CFTC because you're not supposed to do that.

00:47:41.700 You're not supposed to have control of all these different companies and move money around them because, I mean, you could you could see how problematic that can be.

00:47:48.440 Taking investor money and putting them into different into different businesses and how that would cause issue because the investor is getting fucked because he doesn't know what's going on with his money.

00:47:57.180 He's supposed to have some level of transparency with where their money is going.

00:48:00.760 And this definitely broke quite a bit of rules, guys like rules on Wall Street that guys typically would go to jail for a significant amount of time for doing.

00:48:07.880 But obviously, since this is a crypto world, it took a little bit more time for the government to figure it out.

00:48:11.960 But they were able to eventually figure it out.

00:48:13.660 The SEC said that all of this was baked into the cake, quote, FTX trading executives also created other exceptions to FTX's standard processes that allowed Alameda to have an unfair advantage when transacting on the platform, including quicker execution times and an exemption from the platform's distinctive auto liquidation risk management process.

00:48:31.600 Now, all of this started coming out in November.

00:48:33.500 You can check out my earlier video on how this came to be.

00:48:37.600 In December, just before Bankman Freed was going to testify in Congress, he was arrested in the Bahamas where he lives.

00:48:43.180 The U.S. Attorney's Office for the Southern District of New York presented evidence to a grand jury, the grand jury.

00:48:47.940 And also, I want to let you guys know when it comes to the Bahamas, because I've done cases, I've arrested many Bahamians myself, OK, when I was an agent here in Miami.

00:48:55.460 And we have a very good relationship with the Bahamian government, man.

00:48:58.020 We work with them very well.

00:48:58.940 Anytime someone is arrested over there and we need them extradited, it's a very simple process to get them back over here in the United States because a lot of crime occurs in the Bahamas.

00:49:07.100 A lot of the drugs that are smuggled into the United States come in through the Bahamas.

00:49:09.760 As you guys know, back in the day when Pablo Escobar was running all the drugs into the United States, he had bought – he had owned some land, if I'm not mistaken, out there in the Bahamas where they're able to land the drugs and then go ahead as kind of like a staging area to go ahead and then fly them into the United States after the fact.

00:49:26.620 So there's been a longstanding agreement and working relationship between the United States and the Bahamas because the Bahamas is a huge transition point for many criminal organizations to smuggle things into the United States, namely typically through South Florida, somewhere between Miami all the way to West Palm Beach.

00:49:41.940 And that's just how it goes.

00:49:43.520 So we've always had a good relationship with the Royal Bahamian Police Force.

00:49:46.300 I've worked with them in the past.

00:49:47.880 So I'm not surprised that as soon as they had the arrest warrant for SBF, they got him over here so quickly.

00:49:52.520 The jury indicted him, and then the U.S. attorney's office made provisional requests for his arrest with the Bahamas.

00:50:01.880 The U.S. has an extradition treaty with the Bahamas, and that extradition treaty will take a while, but eventually he will be –

00:50:07.760 No, he got here in a couple weeks, as y'all know.

00:50:10.360 I mean, he filmed – you know, Legal Eagle filmed this video before he had been brought to the United States, but they got him over here extremely quickly.

00:50:17.400 He's already here in the States.

00:50:18.240 He's been here probably for like two weeks now at this point, and the reason why is because of our fantastic working relationship with the Bahamian government.

00:50:25.020 And I know this from experience because I brought people from the Bahamas into the United States, and it's fairly easy to do compared to other foreign countries whenever you have a fugitive and or some criminal over there.

00:50:32.800 And you guys got to also keep in mind that SBF is an American citizen.

00:50:36.780 Anytime you're an American citizen and you're committing crimes somewhere else, it's going to be a lot easier for the United States to extradite you over.

00:50:42.700 Now, things get tricky when you are not necessarily a citizen of the United States and they're trying to extradite you in and or you might be a citizen of the country from which they're trying to extradite you from.

00:50:50.560 That's when things get a little bit murky because then they're basically giving up their own citizen to the United States to be prosecuted, which can be deemed as unfavorable.

00:50:56.940 But in this case, he's an American citizen.

00:50:58.700 He committed fraud.

00:50:59.620 He's doing a bunch of bullshit over there in the Bahamas.

00:51:01.800 So the Bahamas are like, oh, take him on.

00:51:03.400 We don't care.

00:51:04.040 And next thing you know, he's going to jail.

00:51:06.400 All right.

00:51:06.860 So.

00:51:09.560 That's right.

00:51:10.160 To the custody of the American authorities.

00:51:12.420 That means that Bankman-Fried faces a three-headed monster because the SEC and the CFTC cases will have broad discovery procedures, which will force Bankman-Fried to.

00:51:19.960 Well, I'm going to rewind this real quick because this is actually really important.

00:51:23.440 So as I explained to you guys before, he's not only going, not only is the Department of Justice and FBI going after him, but you got the SEC coming after him and the CFTC coming.

00:51:31.780 OK, now keep in mind, these two agencies right here, guys, is civil, means not criminal.

00:51:37.280 All right.

00:51:37.640 And then this one is criminal.

00:51:39.100 Now, when you go through a civil case, guys, for them to prove you guilty or culpable, all right, or liable, I guess, in this case, all they have to do is prove 51% to 49% that you are culpable.

00:51:52.280 So the threshold of proof is far lower versus on the criminal side, you have to be proven guilty beyond a reasonable doubt.

00:51:59.100 So if let's say the Department of Justice can't do nothing to him, right, and they don't have enough evidence to actually criminally prosecute him, it doesn't matter because these two right here could go ahead and still go after his money and find him civilly liable.

00:52:10.640 And they only got to prove 51% versus 49%.

00:52:12.940 So he's facing two different monsters here.

00:52:16.460 And the thing that's scary is that the information he provides here in the civil case might jam him up over here in the criminal case.

00:52:24.760 All right.

00:52:25.200 We're going to talk about here real quick as far as the Fifth Amendment goes and everything else like that and why he's in a very tricky position.

00:52:32.220 All right.

00:52:32.380 So, guys, pay attention to this part right here.

00:52:34.220 I'm going to I'm going to let it play out fully.

00:52:35.560 And I'm going to explain to you guys the severity of this.

00:52:38.060 All right.

00:52:39.280 This is a three headed monster because the SEC and the CFTC cases will have broad discovery procedures, which will force Bankman Freed to turn over documents.

00:52:47.060 He'll have to give a deposition testimony, which could incriminate him in the criminal case.

00:52:51.440 And his lawyers will probably ask the court to stay the civil cases while he defends the criminal case.

00:52:55.400 The judge has the discretion to decide whether to grant that motion.

00:52:58.140 Though don't be surprised if Bankman Freed ends up taking the fifth on a lot of the stuff.

00:53:00.820 Though in the civil proceedings, taking the fifth can be used against you and adverse inferences can be drawn by your assertion of the Fifth Amendment.

00:53:08.540 So, yes.

00:53:09.060 Boom.

00:53:09.460 OK, I don't want to say I told you so.

00:53:12.540 But did you know the Fifth Amendment to the U.S. Constitution guarantees that a person cannot be compelled by the government to provide incriminating information about himself?

00:53:21.140 OK, yes, this is true, but that does not save you, right, from potentially being charged with in contempt of court, obstruction of justice, et cetera, especially if you don't have if you don't if it's not reasonably foreseeable that you could be prosecuted.

00:53:36.480 Now, this is why Hassan, quite frankly, is very stupid.

00:53:39.460 He doesn't know what he's talking about because he said anybody could take the fifth.

00:53:42.180 Yeah, that's true.

00:53:42.940 Anybody could take the fifth.

00:53:43.740 But if you don't actually have some reasonable expectation that you're going to provide statements that's going to go ahead and get you incriminated and get you in jail, the Fifth Amendment doesn't apply to you and you can be held in contempt of court.

00:53:52.840 You can be charged for obstruction of justice, et cetera.

00:53:55.240 That does not mean that you are not free from consequence from asserting the fifth, especially when it doesn't apply to you.

00:53:59.780 Now, let's go back to SPF besides Hassan being an idiot.

00:54:01.980 The reason why this is a problem, guys, is because while he's trying to defend himself in the civil case, they're going to do something called depositions.

00:54:09.620 And a deposition, guys, is when you come in, they sit you down and they swear you in.

00:54:13.920 Hey, do you swear everything you say is about to be the truth and nothing but the truth, blah, blah, blah?

00:54:17.640 Yeah.

00:54:17.920 So he takes an oath and he sits down.

00:54:19.260 Now he's under oath.

00:54:20.680 When you're under oath, you cannot lie.

00:54:22.760 All right.

00:54:23.340 So they're going to ask him questions, right, about FTX, Alameda, his partners, et cetera, in the civil case.

00:54:31.300 OK, now here's the problem.

00:54:34.940 When he testifies in the civil case, he's going to have to watch what he says, because what he says can absolutely be used against him in the criminal case.

00:54:43.900 So more than likely, what's going to have to happen is he's in there under oath in the deposition for the civil case.

00:54:49.100 They're going to ask him questions.

00:54:50.480 He's like, well, if I answer that question, that's going to incriminate me in the federal case.

00:54:53.400 So I'm just going to take the fifth, which you can actually do.

00:54:55.660 He could take the Fifth Amendment in that situation because he is not compelled to incriminate himself because he is the target of active criminal investigation.

00:55:01.840 As well.

00:55:02.900 Here's the problem with that.

00:55:04.800 The civil case doesn't have to prove him guilty beyond a reasonable doubt.

00:55:07.200 They just need preponderance of the evidence, which is a way lower threshold.

00:55:10.160 Fifty one percent over forty nine percent, like I told you guys before.

00:55:12.740 So by him taking the fifth and saying, I don't want to talk.

00:55:15.840 They're going to be like, oh, you don't want to talk.

00:55:18.160 Cool.

00:55:19.120 Stupid.

00:55:19.680 We're just going to find you civilly liable.

00:55:21.160 We're going to take the money that we're trying to get from you in the first place.

00:55:23.800 All right.

00:55:24.740 But let's say he does talk and he proves, OK, I'm not liable for this.

00:55:28.820 It was Caroline.

00:55:29.440 It was it was Gary, et cetera.

00:55:31.920 Well, that's going to incriminate him in the criminal case.

00:55:34.860 So do you guys see here how he is royally fucked?

00:55:38.160 He's in a very, very bad spot.

00:55:44.660 And then on top of that, like legal described, the discovery procedures, OK, between in the civil case are far broader than the criminal case.

00:55:53.220 What the hell does he mean by that in English?

00:55:54.740 Guys, the discovery process is nothing more than the two different legal entities sharing information with each other.

00:55:59.980 So the government requests discovery.

00:56:03.520 Hey, we need all the documents.

00:56:04.720 Right. Or or in this case, the civil the civil side, they're going to say, yo, we need all of SBF's documents, his financial documents so that we can see what the hell we got going on here.

00:56:14.180 And then also the government in turn also has to give SBF everything that they have as well on him.

00:56:19.040 So the civil case can get more documents from him that are that he's compelled to give.

00:56:23.760 The criminal case has to go through subpoenas, grand jury subpoena, admin subpoenas, grand jury subpoenas and search warrants.

00:56:31.040 OK, but that does not necessarily mean that the criminal case, a.k.a.

00:56:35.960 the FBI can't get information from the SEC and the CFTC that they gained during the course of their civil case that they can use in their criminal case against Bankman Freed because they have way broader terms under which the civil case can gather those documents.

00:56:50.040 You see what I'm saying here? So basically.

00:56:55.340 The FBI could just let the SEC and the CFTC gather the documents that they need from Sam Bankman Freed because their burn report proof is far less and then use that against Sam Bankman Freed in the fucking criminal case.

00:57:05.560 Give me one in the chat if that makes sense as to why SBF is in such deep trouble.

00:57:14.480 Give me one's in the chat. I hope I explain that well.

00:57:18.580 Well, I get a sip of water here. I've been talking a lot and we got almost 2000 y'all watching right now.

00:57:22.600 Please like the video, guys. Awesome. Awesome. Awesome. Awesome.

00:57:25.440 I love that you guys understand it.

00:57:27.780 Boom. Yeah. So the government basically is with a one to punch where if we can't get you criminally, we're definitely going to get you civilly and they can use the civil stuff in the criminal case.

00:57:39.120 And SBF is in a bad spot because if you answer stuff in a civil case to kind of limit his his culpability, so to speak, that can absolutely and more than likely will be used against him in a criminal case.

00:57:49.820 And if he takes the Fifth Amendment, he's going to get found liable in the civil case because they can use the fact that you take the Fifth Amendment against you in a civil case.

00:57:57.500 One more time. I need you to understand when you take the Fifth Amendment in a civil case, they can absolutely use it against you to make you to prove their standard of preponderance of the evidence.

00:58:11.460 You don't get the same protections in a civil case that you do in a criminal case.

00:58:15.380 An example of this, O.J. Simpson, as y'all know, he walked.

00:58:18.720 If the glove doesn't fit, you must acquit criminally.

00:58:21.040 He walked and he didn't get charged with murder, even though we all know that he was involved in decapitating his ex-wife and Ron Goldman.

00:58:26.360 However, the civil case came in and they're like, no, we know that you're guilty.

00:58:30.420 And they were able to actually find him culpable for the crime, the murder in the civil case.

00:58:35.880 And now he owes something like 30 million or something like that to them because the threshold of proof was far less in the civil case.

00:58:42.480 And that is why he got found. He got found. I don't want to say guilty, but he was found culpable in the civil case, whereas in the criminal case where the threshold was way higher, they couldn't find him guilty.

00:58:52.980 All right. Beyond a reasonable doubt. So there you guys go. That is the explanation.

00:58:59.500 As to why your boy SPF is in so much goddamn trouble, because he has two different entities going after him and they can attack him from two different angles.

00:59:07.020 And he can't necessarily protect himself from one without hurting himself in the other.

00:59:10.880 All right. Like the goddamn video. Y'all ain't getting sauce like this anywhere else. Let's keep going.

00:59:14.840 Adverse inferences can be drawn by your assertion of the Fifth Amendment, though the SEC has more power than the criminal court to immediately freeze actions by the entities that are under the Alameda FTX banner and the plea agreements from Sam Bankman Freed's compatriots paint a damning picture.

00:59:29.220 OK, so Carolina Ellison and your boy, Gary Wang, I think it was Wang.

00:59:35.640 They both pled guilty and are cooperating with the government, guys.

00:59:40.080 All right. So if we didn't think that it was bad already between the fact that a criminal agency, the criminal investigative agency, the FBI, and that two civil investigating agencies, the SEC and the CFTC working together wasn't bad enough.

00:59:50.940 He also has two people that work closely with him, testifying against him.

00:59:56.520 El for real.

01:00:01.920 Former Alameda Research CEO, Caroline Ellison and FTX co-founder Gary Wang have now pleaded guilty to federal fraud charges and are cooperating with the Justice Department's investigation.

01:00:10.620 I want to make two announcements.

01:00:11.440 First, I'm announcing that the Southern District of New York has filed charges against Caroline Ellison, the former CEO of Alameda Research, and Gary Wang, a co-founder of FTX.

01:00:22.820 And I just want to let you all know real fast.

01:00:24.780 I've described this before.

01:00:25.580 I'm going to describe it again, though, because a lot of you guys are new to Fed it.

01:00:28.420 The Southern District of New York, guys, is probably one of the most aggressive, best and most winning prosecutorial offices for the U.S.

01:00:38.180 for the United States Attorney's Office in the United States.

01:00:41.420 They're responsible for indicting and charging the La Cosa Nostra.

01:00:45.140 They're responsible for indicting the most popular terrorists.

01:00:49.280 They have prosecuted some of the United States' worst criminals in federal court and almost always win.

01:00:55.920 So if you get indicted by the SDNY, a.k.a. the Southern District of New York, it is going to more than likely be an L for you.

01:01:02.640 That is one of the best U.S.

01:01:04.440 attorney's offices in the fucking country.

01:01:06.720 They're extremely aggressive.

01:01:08.660 So this is just bad all around for SBF, man.

01:01:14.040 In connection with their roles and the frauds that contributed to FTX's collapse, both Ms. Ellison and Mr. Wong have pled guilty to those charges.

01:01:22.740 The Justice Department made the announcement on December 22nd, the same day that Bankman Freed waived extradition to the U.S.

01:01:28.960 Bankman Freed is now out of jail and back in his mom's basement as a result.

01:01:32.820 The federal court set bail at $250 million and Bankman Freed was bonded out.

01:01:38.560 Now, a bail bond is usually about 10% of the total bail amount.

01:01:41.140 So we probably had to come up with around $25 million in assets.

01:01:44.320 The court record shows that his parents will need to post equity interest in their home by January 12th, 2023.

01:01:48.780 And this comes just weeks after Bankman Freed told George Stephanopoulos that he only had about $100,000 left in his bank account.

01:01:56.720 Now, the bail disposition said that two non-parent sureties would also sign bonds for lesser amounts.

01:02:01.140 The terms of the release require Bankman Freed to surrender his passport and he'll be confined to detention at his parents' home in Palo.

01:02:06.680 Oh, man, that's...

01:02:08.680 Gotcha, bitch!

01:02:09.740 ...wild to California, where he will have to wear an ankle monitor.

01:02:13.020 Bankman Freed's parents co-sign the bond and Bankman Freed is barred from starting a business or operating new lines of credit more than $1,000.

01:02:19.640 Oh, yeah, well, of course. I mean, that's a fucking given.

01:02:22.160 They're not going to let him do nothing.

01:02:23.940 That has to do with money.

01:02:25.840 Unless approved by the government or the court.

01:02:27.940 The court records show that he'll need to undergo a mental health evaluation and may request to leave the house for exercise.

01:02:33.200 Now, Caroline Ellison's unsigned plea agreement says that she admitted to seven counts, including committing wire fraud on FTX customers and lenders of Alameda Research,

01:02:42.080 conspiracy to commit commodities fraud and securities fraud, and conspiracy to commit money laundering.

01:02:46.920 Now, the maximum sentence of incarceration on those counts is 110 years, but she's not going to face anything like that, especially because...

01:02:51.920 Oh, yeah, she ain't going to face none of that time, guys.

01:02:54.040 She cooperated with the government immediately, so she's not going to face any of that time.

01:02:58.320 Her and Gary Wang, more than likely, in my professional opinion, from doing these types of cases in the past, financial cases,

01:03:03.680 whoever comes to the table first a lot of the times gets the best deal.

01:03:06.620 And the fact that both of them came to the table first and said, yo, we'll get you guys SPF, they're going to barely do any time.

01:03:11.860 Hell, they might do less than five years, more than likely, especially if they're willing to testify against SPF, assuming he goes to trial.

01:03:19.140 But I predict that he's going to plead guilty.

01:03:20.640 He actually has another court hearing, I think, on January 3rd or 4th where he's going to enter in his plea.

01:03:26.480 I think that's his arraignment, okay? And I assume you guys might be wondering, what the fuck is an arraignment?

01:03:29.860 Okay, when you're arrested, guys, break this down.

01:03:32.560 When you're arrested by the police, I'm going to talk about this in the federal system.

01:03:35.860 The state system has this as well, but to keep things simple, I'm going to keep it federal.

01:03:38.900 When you're arrested by the feds, the first thing that has to happen is you've got to go see a magistrate judge

01:03:43.820 within 24 to 72 hours of you being arrested.

01:03:47.940 Most of the time it's within 24 hours, right?

01:03:50.300 Once you are brought in front of that judge, the judge reads you what you're being charged with,

01:03:53.220 whether it's by an indictment or a criminal complaint.

01:03:55.040 They read your charges, and at that point he tells you you have the rights to an attorney, blah, blah, blah.

01:03:58.860 He gives you your Miranda rights, and he assigns you an attorney if you cannot afford one.

01:04:01.980 Then you get remanded to either the marshals or they give you a bond, all right?

01:04:07.040 If they give you a bond, then you go ahead and you can get ready and post that bond.

01:04:10.900 Then somewhere between a week to two weeks later, you get arraigned.

01:04:14.500 And when you get arraigned, right, it's just like an initial appearance.

01:04:17.120 They read the charges against you.

01:04:18.200 Again, if you had maybe a superseding indictment hit you or something else,

01:04:20.860 he gives you the updated charges if the government added any, and once again tells you,

01:04:25.460 hey, you have the rights to an attorney, all that other stuff.

01:04:28.100 The difference is this.

01:04:29.180 You enter a plea.

01:04:30.500 At this point, you more than likely have an attorney,

01:04:32.460 and your attorney will go ahead and either enter in a plea of guilty or not guilty.

01:04:37.000 95% of the time, your defense attorney is going to say not guilty,

01:04:40.580 even if you pretty much damn near are guilty, because it gives them time to prepare.

01:04:45.380 Because at this point, the defense attorney has probably only been your defense attorney for a period of time.

01:04:48.680 He's still getting discovery, which is the process of sharing information

01:04:51.360 between the two different legal entities, and he's trying to build your defense.

01:04:55.380 So he's going to say not guilty up front, typically,

01:04:58.200 so that he can go ahead and look at all the legal documents and posture for you

01:05:02.040 to get a better plea agreement in this situation.

01:05:04.940 Now, the issue with SBF is he's the top guy on the totem pole as far as the government is concerned.

01:05:09.680 His two counterparts have already went to the government and secured deals.

01:05:12.320 So that leaves him with very little to actually get in return for pleaing.

01:05:17.040 So what I foresee is going to happen is the government is going to try to nail him to the fucking cross

01:05:20.940 because they got the other two charged.

01:05:23.920 Now, I want to say this, okay?

01:05:26.020 And this is I'm going to give you all some sauce right now.

01:05:28.160 This is how you can tell if someone is snitching.

01:05:31.720 I'm going to go ahead and share screen with you guys real fast.

01:05:34.060 We're going to actually go through the legal paperwork on these guys, all right?

01:05:39.640 So this right here, guys, is Pacer, okay?

01:05:43.540 Now, as y'all can see, right, these are the different cases that are being filed against your boy,

01:05:48.640 Samuel Bankman-Fried, right?

01:05:50.240 He's a defendant in four different cases, all right?

01:05:53.280 I'm going to do that for y'all.

01:05:55.240 And Pacer, guys, is basically public access, court records, electronic –

01:06:01.520 fuck, whatever, I'm moving a million miles per hour right now.

01:06:05.580 Public access to court electronic records, Pacer, okay, Pacer.gov, all right?

01:06:13.300 So here you guys can see you got USA versus Bankman-Fried, then you got Samuel Bankman-Fried.

01:06:17.440 This is the same exact case, guys.

01:06:18.740 The only difference here is that this Dash won is because he's the first defendant in the case,

01:06:22.960 but because he's the file title, he's the main target.

01:06:26.020 And then you got USA versus Bankman-Fried.

01:06:28.160 This is the entire case.

01:06:29.020 Notice how there's no dashes here, okay?

01:06:31.200 Then you look, and you got 122-CV.

01:06:34.340 This CV, guys, means civil.

01:06:35.880 So you got the SEC case against him, and now you got the CFTC case against him, okay?

01:06:40.240 Commodity Futures Trading Commission et al.

01:06:41.920 versus Bankman-Fried et al.

01:06:43.100 Then you got the Security Exchange Commission versus Bankman-Fried.

01:06:45.500 And then CR, guys, means criminal, okay?

01:06:47.740 So now, whenever you see a federal case, it's going to go the fiscal year and then CR or CV.

01:06:54.380 If you see CR, that means he is being criminally charged by the feds,

01:06:57.800 and then this is the actual case number.

01:06:59.020 And then L.A.K.

01:07:00.020 And then same thing here, CV means civil, right?

01:07:02.980 So those are the cases that are against him at this moment.

01:07:05.740 Now, we're going to go ahead and look at the actual criminal case docket, okay?

01:07:09.500 This is what he's getting charged with.

01:07:10.640 He's known as Defendant 1, all right?

01:07:13.100 And he's being charged with attempted conspiracy to commit wire fraud,

01:07:17.380 fraud by wire, radio, or television on customers,

01:07:19.960 attempted conspiracy to commit wire fraud on lenders,

01:07:22.760 fraud by wire, radio, or television, okay?

01:07:25.680 Conspiracy to commit commodities fraud, conspiracy to commit securities fraud,

01:07:29.280 money laundering fraud, other conspiracy,

01:07:31.460 and then conspiracy to defraud the United States and violate the campaign finance.

01:07:35.420 Now, as you guys can see, here's his co-defendants.

01:07:40.800 You got Garing Wang, right?

01:07:42.400 And he has pretty much similar charges.

01:07:44.180 He's up to conspiracy to commit wire fraud, et cetera.

01:07:47.220 Very similar to your boy, SBF.

01:07:49.220 And then you got Caroline Ellison also being charged with similar charges as well.

01:07:53.640 Now, here's where we see the big difference, though, okay?

01:07:58.580 You can see here that a sealed indictment was filed on December 9, 2022, okay?

01:08:05.000 But notice, this is the indictment right here, guys.

01:08:08.440 United States of America versus Samuel Bankman Freed.

01:08:11.100 But, hmm, hold on one second.

01:08:13.420 You only see him on the indictment.

01:08:16.200 Why aren't his co-defendants on this indictment?

01:08:18.440 Where the hell is Garing Wang and Caroline?

01:08:20.760 Well, I'll tell you where they are.

01:08:22.680 They are right here, my friends.

01:08:24.500 They got charged by something called an information, okay?

01:08:29.600 Right here.

01:08:30.180 You can see here.

01:08:31.040 Information felony filed as a Zhao Gary Wang.

01:08:34.440 And then information felony filed as a Caroline Ellison, all right?

01:08:38.320 Now, you guys are probably wondering, what the fuck is the information?

01:08:40.780 What's the difference?

01:08:41.640 Guys, for me to sum it up for you guys without it being too legal and boring,

01:08:44.380 an information is the federal prosecutor, a.k.a. the AUSA,

01:08:48.400 filing a document that formally charges the defendants.

01:08:52.540 However, when you get hit with the information,

01:08:54.860 that is one of the tell-tale signs that you are snitching

01:08:58.380 and cooperating with the fucking government.

01:09:00.520 One more time for y'all.

01:09:02.500 Any time you see a defendant get hit with an information,

01:09:09.020 there is an extremely high likelihood that they are cooperating with the government, okay?

01:09:14.620 There's three main ways to arrest someone in the federal system.

01:09:18.640 Number one is a criminal complaint, which I've read for you guys before.

01:09:21.060 A criminal complaint is an affidavit written by a federal agent

01:09:23.800 and or task force officer that has federal authority

01:09:25.760 alleging the crimes and giving you the facts and circumstances

01:09:29.080 that led them to develop the probable cause to arrest the individual.

01:09:32.380 That's number one.

01:09:33.240 Number two is an indictment,

01:09:35.060 which is the formal way under which you are charged in the United States, okay?

01:09:39.400 You must be indicted to get a criminal case against you.

01:09:43.200 Yes, someone can file a criminal complaint to arrest you,

01:09:45.840 but they have to follow up with an indictment somewhere between 10 to 14 days

01:09:49.480 after the criminal complaint is filed.

01:09:51.020 So in other words, a criminal complaint is kind of like a placeholder

01:09:54.240 to get the person in prison so that you can go ahead and get an indictment in time.

01:09:59.120 For example, when I was an agent,

01:10:00.740 you'd catch someone smuggling 20 kilos of cocaine coming into the border.

01:10:04.220 Well, it doesn't make sense for me when I have them in custody right there

01:10:06.760 to wait two weeks to indict them.

01:10:08.660 No, I'm going to write a criminal complaint.

01:10:10.020 Hey, you got caught with the drugs, blah, blah, blah.

01:10:11.580 Put them in jail.

01:10:12.160 I'm going to file that criminal complaint.

01:10:14.420 The judge will sign it.

01:10:15.920 I will go ahead and get an arrest warrant to take him, right, to the prison,

01:10:19.620 and then I have 10 to 14 days to get him formally charged by a grand jury, all right?

01:10:24.180 So he has to get indicted.

01:10:25.600 The other route is an information.

01:10:28.740 An information is you being formally charged.

01:10:30.700 It has the same power as an indictment

01:10:33.900 where it gets you into the judicial system officially.

01:10:35.960 However, it's typically reserved for people that are cooperating with the government,

01:10:40.040 which is why the USA can file it directly, the AUSA,

01:10:43.740 the Assistant United States Attorney, the prosecutor,

01:10:45.680 can file it directly with the courts so that the person can be charged formally.

01:10:49.700 But it's typically used for people that are cooperating, all right,

01:10:53.100 or people that aren't the main target of the investigation, all right?

01:10:55.880 So let's go ahead and pull up what an information looks like.

01:10:57.880 We'll look at the one for your girl, Caroline, all right?

01:11:01.420 So I'm clicking on it right now.

01:11:03.220 We're going to view the document.

01:11:05.960 All right, so here, this is what an information looks like, okay?

01:11:12.320 United States District Court, Southern District of New York,

01:11:14.840 United States of America versus Caroline Ellison, right?

01:11:18.160 Here's count one, conspiracy to commit wire fraud on customers, right,

01:11:21.720 where they allege the things, they allege the dates and crimes that were committed.

01:11:26.020 Wire fraud on customers, count two, right?

01:11:28.280 Count three, conspiracy to commit wire fraud on lenders.

01:11:31.380 And then you go into count four, wire fraud on lenders.

01:11:34.660 Count five, conspiracy to commit commodities fraud, right?

01:11:38.840 And count six, conspiracy to commit wire securities fraud.

01:11:42.540 And then you keep on going here.

01:11:45.360 And this, guys, is filed directly with the U.S. Attorney's Office, all right?

01:11:51.980 Right?

01:11:52.300 The Damian Williams is the United States Attorney, the guy that was in a press conference earlier.

01:11:55.500 So the AUSA gets assigned by the U.S. Attorney's Office, the United States Attorney,

01:12:00.420 the guy that runs the Southern District of New York.

01:12:01.960 Now, that is much different than an indictment, which is, this is an indictment against Sam Bankman Freed.

01:12:07.460 As you guys can see here, very similar, right?

01:12:09.960 It has all the counts in it, but here's the big difference.

01:12:12.040 As y'all can see, right, this indictment was filed with a grand jury.

01:12:20.260 Here's the foreperson, a true bill of indictment against, and here's the foreperson's signature, all right?

01:12:25.640 So in one instance, with the information, the U.S. Attorney's Office files it on their own.

01:12:31.700 They don't need anyone else.

01:12:33.060 In the indictment, they convene a grand jury, which is basically a group of your peers.

01:12:37.440 Because they hear the case, the AUSA and the agent goes in, they present their case,

01:12:43.480 and then the agent is asked to leave the grand jury room, because I've testified in grand jury a million times,

01:12:46.840 so I'll tell y'all how the process works.

01:12:48.400 And then the grand jury deliberates if they should return a true bill of indictment,

01:12:53.060 which means we're going to charge them.

01:12:54.380 So most of the time, they return a true bill, bam, you get an arrest warrant, you go pick up your guy, all right?

01:12:59.740 So the difference is this.

01:13:01.240 One is filed by the U.S. Attorney's Office.

01:13:02.920 The other one is done by a grand jury with a true bill of indictment, all right?

01:13:07.780 So I hope you guys...

01:13:10.440 That was a very thorough explanation on the differences between information and indictment.

01:13:15.540 Give me ones in the chat if that makes sense for you guys.

01:13:17.400 I told y'all that this case was going to be a little bit more complex than the others,

01:13:20.900 but I want to make sure that y'all understand how the federal judicial system works when it comes to charging people, all right?

01:13:27.560 But that is a telltale sign on how you know someone is snitching.

01:13:30.780 If they get hit with information, they're definitely given information, if you know what I'm saying, all right?

01:13:35.980 If they get hit with an information, they are more than likely given information, all right?

01:13:41.880 There you go.

01:13:42.620 Just memorize that quote.

01:13:44.700 Let's see here.

01:13:45.580 Let's go back to the video with your boy, Legal Eagle.

01:13:48.260 Let's see if we get ones in the chat, if that makes sense for y'all.

01:13:55.500 All right.

01:13:56.120 I see ones in the chat mostly.

01:13:57.480 Also, guys, do me a favor.

01:13:58.480 We got 2,000 of y'all watching right now.

01:14:00.600 Hope you guys are enjoying this breakdown, giving y'all some entertainment in the process as well,

01:14:04.000 simplifying how the judicial system works federally when it comes to financial cases like this and fraud.

01:14:10.220 So like the video.

01:14:11.420 Give me the 2K likes on this video.

01:14:14.480 Get the engagement up if you guys can.

01:14:15.620 Man, I really appreciate it.

01:14:16.880 Let's keep going.

01:14:18.400 Ellison must continue to cooperate or else she can.

01:14:20.380 And don't worry, guys.

01:14:20.980 I'm going to read Super Chats at the end.

01:14:22.080 I just don't want to disrupt the flow of the show.

01:14:23.760 You can be charged with other crimes.

01:14:25.320 Ellison also agreed to the forfeiture charge, and the government says that it cannot agree

01:14:28.880 not to prosecute her for tax fraud if those charges are appropriate.

01:14:32.240 By pleading guilty, Ellison is not guaranteed a lighter sentence, but typically defendants

01:14:35.860 who cooperate completely do get a lighter sentence.

01:14:38.860 And the plea agreements also require her to make restitution.

01:14:41.960 Ellison was released on bail but cannot leave the country.

01:14:44.500 Wang pleaded guilty to four counts of wire fraud and conspiracy to commit wire fraud, commodities

01:14:48.340 fraud, and securities fraud.

01:14:49.680 The maximum sentence for those crimes is about 50 years in prison.

01:14:52.660 Wang also agreed to restitution to his victims and agreed to the forfeiture.

01:14:56.540 Now, the same cooperation terms apply to Wang.

01:14:58.480 And it's very important that he did this under the information, not an indictment, guys.

01:15:04.400 But he was also released on bail with the condition that he not leave the country.

01:15:08.000 Both plea agreements included sections that are redacted so as not to tip off Bankman Freed.

01:15:12.480 Oh, that's a big red flag. Hold on one second.

01:15:15.760 So that means that they gave a significant amount of information if they're over here

01:15:19.260 redacting what they're saying.

01:15:21.080 It was damning information that they provided.

01:15:24.880 Now, the targets about specific information that Ellison and Wang...

01:15:27.260 And just so y'all know, Sam Bankman Freed's legal team is going to get access to everything

01:15:31.500 that Caroline and Gary said about him.

01:15:34.240 It's just that they're redacting it so that when you go and look at a pacer,

01:15:36.800 you don't know the intricacies of the case.

01:15:38.300 They're mostly doing that for the general public, so they don't know versus Sam Bankman

01:15:42.620 Freed's legal defense knowing because they have to know everything under the discovery

01:15:45.540 process.

01:15:46.240 Anytime you're arrested and charged with a crime in the United States, the defense is

01:15:49.640 1,000% entitled and must receive all information pertaining to their client so they can adequately

01:15:55.920 defend said client against the charges against them.

01:15:58.580 Wang shared with investigators.

01:16:00.720 And in separate actions, the SEC charged Wang and Ellison with securities fraud, and the

01:16:04.520 CFTC also filed fraud charges against Ellison and Wang.

01:16:07.080 The CFTC's amended complaint against Bankman Freed adds charges against Ellison and Wang

01:16:11.720 for fraud and material representations in connection with the sale of digital asset commodities

01:16:15.560 in interstate commerce.

01:16:17.100 And the CFTC...

01:16:17.380 So translation, that means that Caroline and Gary are also facing civil lawsuits from the

01:16:23.360 SEC and the CFTC as well.

01:16:26.900 The SEC hit Wang for creating the code features in the FTX trading platform that allowed Alameda

01:16:31.120 to have an unlimited credit line on FTX without being detected.

01:16:34.220 And the CFTC complaint offers more details.

01:16:36.480 And just to keep in mind, SBF, Caroline, and Gary Wang hid that from investors that they

01:16:44.020 had an unlimited credit line to purchase whatever the hell they wanted.

01:16:47.700 They hid that from investors, which was also a big no-no as well.

01:16:50.900 ...about what happened in November when crypto declined and FTX could not keep up with customer

01:16:56.560 withdrawals.

01:16:57.380 Publicly, Bankman Freed claimed that there was just a liquidity problem, while privately

01:17:00.320 quote, Bankman Freed, Ellison, and other key personnel at FTX and Alameda acknowledged

01:17:04.860 internally that this shortfall was not merely a matter of having sufficient liquid assets

01:17:08.860 on hand to cover customer withdrawals in the short term.

01:17:11.660 Rather, FTX customer assets were irrevocably lost because Alameda had misappropriated them.

01:17:16.840 Guys, I can't even pronounce the goddamn word.

01:17:29.620 I'm so goddamn excited.

01:17:31.440 This is wild that this is all coming out now.

01:17:34.360 Wild.

01:17:34.840 The CFTC says that Bankman Freed's infamous tweet threads of November 6th and 7th, the

01:17:41.020 ones where he apologized for being a screw-up and accused Binance of trying to sabotage FTX,

01:17:45.440 were workshopped ahead of time with Ellison, Wang, and other advisors.

01:17:49.060 The CFTC says, quote, several individuals expressed concerns that Bankman Freed's tweet

01:17:53.240 was inaccurate and or misleading.

01:17:55.400 And on November 9th, after Binance announced that it would acquire FTX in its entirety, Ellison

01:17:59.840 held in all-

01:18:00.720 Irrevocably, guys.

01:18:01.900 My bad.

01:18:02.480 I'm just so-

01:18:02.960 This case is just crazy to me, man.

01:18:05.240 Like, you guys got to understand, from my training experience before, watching this

01:18:09.240 happen to SBF, I'm just like, yo, this guy is done.

01:18:12.240 Because not only does he have the tentacles of the U.S. Department of Justice coming after

01:18:16.080 him, he also has the civil side coming after him, and there's no way that he can beat both.

01:18:21.800 He's going to have to lose emphatically to one to be able to beat another.

01:18:25.700 And to be honest with y'all, he ain't even going to beat the criminal case.

01:18:28.380 So if he can't beat the criminal case, he's 1,000% going to lose to the civil case, because

01:18:33.600 the civil case doesn't need as much proof as the criminal case needs.

01:18:36.880 So this is an L for your boy all the way.

01:18:41.280 I don't think I've used that fail button more in any other investigation that I've done on

01:18:45.680 FedIt.

01:18:45.980 You know what?

01:18:46.300 Maybe the XXTenacion case, I used that L button quite a bit because the criminals were

01:18:51.060 so stupid to wear the same flip-flops that they committed the murder in, as they did on

01:18:54.600 Instagram posts.

01:18:55.460 But this one is pretty bad, too.

01:18:56.720 Oh, my God.

01:18:59.720 ...hands meeting with employees of Alameda Research.

01:19:01.880 During the meeting, she provided detailed information about the years-long fraud.

01:19:05.700 Quote, Ellison stated that starting last year, Alameda was borrowing a bunch of money by...

01:19:10.080 This is Ellison snitching, okay?

01:19:14.380 It's her snitching, by the way.

01:19:15.940 ...term loans and use those assets to make very illiquid investments.

01:19:19.860 Ellison further explained that following the widespread decline of digital asset prices,

01:19:23.140 most of Alameda's loans had been recalled, and in order to meet those recalls, Alameda

01:19:27.580 borrowed a bunch of funds from FTX, which in turn led to FTX having a shortfall in user

01:19:32.380 funds.

01:19:33.180 Ellison informed Alameda staff that FTX had always allowed Alameda to borrow customer

01:19:37.340 assets and did not require collateral for those loans.

01:19:40.600 She also explained that Alameda did not require collateral.

01:19:44.220 What the hell?

01:19:46.380 ...could access user assets without requiring FTX's approval, as the structure allowed Alameda

01:19:51.300 to go negative in coins.

01:19:52.960 In response to an employee question, Ellison also acknowledged that her November 6th tweet

01:19:56.900 to the Binance CEO offering to buy his FTT holdings at $20 per token.

01:20:00.920 And you guys remember that we talked about that in the video prior.

01:20:02.920 She told the guy from Binance, yo, I'll buy it for $22 when he was holding a bunch of it

01:20:08.820 because she was holding a bunch of their FTT coins because she knew that he had them buy

01:20:12.480 the balls.

01:20:13.060 It can literally sell and destroy them.

01:20:15.400 ...was kind of a misleading thing to tweet and express remorse.

01:20:19.400 Kind of a misleading thing to tweet?

01:20:21.260 What?

01:20:22.060 Stupid.

01:20:23.080 Shortly after this meeting, most of Alameda's staff resigned.

01:20:26.300 So basically, Caroline Ellison sort of admitted to, you know, like borrowing a bunch of money

01:20:30.380 from FTX being allowed to have like a negative balance and that FTX and Alameda just kept

01:20:35.720 moving stuff around until the bottom dropped out of the market.

01:20:37.940 And then, you know, what do you know?

01:20:39.880 There's nothing left to borrow and the customers couldn't withdraw their money.

01:20:43.480 Classic Pisces.

01:20:43.800 Oh my God.

01:20:44.780 One day later, FTX and 133 related entities filed for bankruptcy.

01:20:48.520 I declare bankruptcy!

01:20:53.840 It was all, you know, very cool, very progressive, very edgy until, you know, it wasn't.

01:20:58.900 Uh, Ellison and Wang do not contest their liability to these CFTC's claims and their

01:21:02.840 testimony makes it very hard for Bankman Freed to claim that he didn't know what he was

01:21:05.940 doing and...

01:21:06.600 And that is why he is fucked because those two work very closely with him, know the

01:21:11.380 details, have the records to corroborate their testimony.

01:21:15.240 So this is why SBF is in hot water, guys.

01:21:18.000 Aw, shucks.

01:21:18.840 It was just a big old mistake.

01:21:20.600 Wang and Ellison also agreed to the entry of consent orders of judgment as to their liability

01:21:23.920 for engaging in massive fraud.

01:21:26.000 The SEC complaint against Wang and Ellison gives us more clues about how they were cooperating

01:21:30.160 against Bankman Freed.

01:21:32.140 With respect to the fiat at FTX.com account, the SEC said that some of the bank accounts,

01:21:37.960 quote, were not in Alameda's name, but rather the name of North Dimension Inc. in Alameda's

01:21:42.240 subsidiary.

01:21:43.240 North Dimension's website does not disclose any connection to Alameda, but apparently Ellison

01:21:47.400 knew that Bankman Freed had directed FTX to have customers send funds to North Dimension

01:21:51.880 in an effort to hide the fact that the funds were being sent to an account controlled by

01:21:56.200 Alameda.

01:21:57.040 So there you go.

01:21:58.040 More sell companies coming to light that were moving money around to disguise the connection

01:22:02.300 between Alameda, which we discussed before, which is really owned by Bankman Freed, and

01:22:05.960 FTX.

01:22:07.300 Okay.

01:22:07.760 This is all, by the way, guys, extremely illegal.

01:22:11.040 Okay.

01:22:12.020 FBI, open up!

01:22:13.100 And that's why they're in the hot water that they're in right now with the FBI, Department

01:22:16.220 of Justice, SEC, and the CFTC.

01:22:20.660 Apparently, Alameda didn't segregate those customer funds, and the North Dimension account

01:22:24.220 is actually the multi-billion dollar debt referred to as the Fiat at FTX.com account.

01:22:29.100 The Fiat at FTX account was then listed as a loan on the quarterly balance sheets, and

01:22:34.800 Ellison allegedly, at Bankman Freed's direction, combined this liability with loans Alameda had

01:22:39.020 received from third-party lenders to obscure-

01:22:40.880 Big fucking L as well, man.

01:22:43.460 Combining money from lenders-

01:22:46.220 Alameda's intertwined financial relationship with FTX.

01:22:49.220 Now, this information, if true, is fairly damning evidence of the defendant's intent

01:22:52.960 to mislead and conceal information from investors, lenders, and customers.

01:22:56.900 The complaint says in 2022, FTX started trying to separate Alameda's debt in the Fiat at FTX.com

01:23:03.320 account from the portion attributable to FTX, and when Alameda's portion was moved to a

01:23:08.500 different account, it triggered a process that added interest to Alameda's debt.

01:23:12.060 Quote, Bankman Freed directed that the Alameda liability be moved to an account that would

01:23:16.160 not be charged with interest.

01:23:17.400 This account was associated with an individual that had no apparent connection to Alameda.

01:23:21.680 As a result, this change had the effect of further concealing Alameda's liability in FTX's

01:23:26.340 internal systems.

01:23:27.400 And when crypto started crashing-

01:23:28.840 Holy-

01:23:29.160 In May, causing Alameda's lenders to come calling, Bankman Freed told Ellison to hide the unlimited

01:23:34.220 line of credit on the balance sheet so that the lenders didn't know about it.

01:23:37.340 And that's a big fucking L that the government is going to use against Sam Bankman Freed.

01:23:43.080 And also, keep in mind, he told her to hide the balance sheet, right, so that they didn't

01:23:46.820 know that there was an unlimited credit line.

01:23:48.440 So what's she going to do?

01:23:49.540 Oh yeah, by the way, government, he told me to hide it.

01:23:51.800 Here's the proof.

01:23:52.580 Here's the text messages.

01:23:53.680 Here's the balance sheet.

01:23:55.880 Here's the credit line, et cetera.

01:23:57.080 This is why, guys, a lot of the times, when you have co-conspirators, a co-conspirator's

01:24:02.780 testimony is never enough.

01:24:04.180 But if that co-conspirator also has documents, evidence, financial documents, proof that what

01:24:10.760 they're saying is true, that corroborates their testimony, that, my friends, is when it's

01:24:15.500 a big L for you as the defendant.

01:24:18.160 Because you best believe Ellison and Wang are coming with all the paperwork to show that

01:24:23.100 SPF was the one that was directing them, running the businesses, running the operation to the

01:24:28.500 fraud investors, and he is in deep water, man.

01:24:33.800 This is not good whatsoever, because not only they're snitching, they have the documents

01:24:38.320 to back up said snitching, all right?

01:24:42.220 Ellison admitted to making statements that she knew were untrue.

01:24:45.020 For example, in a Bloomberg article from September 2022, Bankman Freed claimed that Alameda is a

01:24:50.200 wholly separate entity than FTX, and in the same article Ellison is quoted as stating about Alameda,

01:24:55.420 quote, we're at arm's length, we don't get any different treatment from other market makers.

01:24:59.580 That was a lie.

01:25:01.160 Stupid.

01:25:01.900 Nope.

01:25:02.700 Stop the cap.

01:25:05.520 And as for the technical issues, Wang designed the so-called risk engine that Bankman Freed touted to

01:25:10.280 investors.

01:25:10.780 The SEC complaint notes that Bankman Freed touted this risk protocol when he testified to Congress,

01:25:15.520 quote, there's a complete transparency about the positions that are held.

01:25:18.640 There's a robust, consistent risk framework applied.

01:25:21.460 Of course, one of the biggest problems is the risk engine didn't apply to FTX's biggest

01:25:24.620 customer, Alameda Research.

01:25:26.640 Wang knew this because he was the person who created the code exempting Alameda Research

01:25:30.080 from the rules, and that Ellison...

01:25:31.980 Bam.

01:25:32.740 So you got the guy who created the coding software for your company, which was defrauding

01:25:40.200 investors, coming in, and he's going to testify and provide the information and the proof

01:25:46.240 that you were defrauding investors because he's the one that created the code that allowed

01:25:49.300 you to do so.

01:25:58.520 ...was aware of and took advantage of this special undisclosed benefit.

01:26:02.480 Of course, this is just scratching the surface.

01:26:04.020 There's additional juicy details about Alameda propping up the price of FTT, FTX using bots

01:26:09.300 to manipulate the entire market, and then the employees and founders issuing giant loans

01:26:13.540 to each other at the company's expense.

01:26:15.600 Now, the SEC complaint alleges that Bankman Freed violated two...

01:26:18.080 All right.

01:26:18.460 So we...

01:26:19.080 So...

01:26:19.640 And I talked to...

01:26:20.640 So now we know what the criminal case is.

01:26:22.260 He's going to go into detail about the SEC and the CFTC complaints.

01:26:25.780 But you guys already pretty much know...

01:26:28.920 I summarized that for y'all as far as what's going on with those.

01:26:32.540 So what we'll do is...

01:26:33.600 Christina, can we pull up some of these chats right now?

01:26:35.300 Yeah, I'll do.

01:26:35.880 We'll go through some of the chats.

01:26:36.860 I appreciate you guys' support.

01:26:38.320 Guys, do me a quick favor.

01:26:39.340 If you guys enjoyed this video, subscribe to the channel, like the video, okay?

01:26:44.600 Give me the 2,000 likes, because like I said before, this was a fairly boring and dry case.

01:26:49.840 So I had to spice it up and make sure that I explain everything to you guys, because there's

01:26:52.880 a lot of moving parts, a lot of legal jargon and financial jargon here that a lot of people

01:26:57.480 might not necessarily understand.

01:26:58.560 So I wanted to make sure that I simplify the best I can so it all makes sense.

01:27:01.580 And don't worry, I'm going to make sure that I put detailed timestamps for y'all in the

01:27:05.220 description below so you guys can go ahead and follow and know what the hell is really

01:27:08.240 going on in this case.

01:27:09.720 Keep chilling.

01:27:10.100 Five bucks goes.

01:27:10.620 Let's go.

01:27:11.620 Who else do we got here?

01:27:14.120 Digital Dankness goes.

01:27:15.120 Five bucks to ties.

01:27:16.020 He shows all the trail to the corruption.

01:27:18.400 Absolutely, man.

01:27:19.080 And it doesn't help that his two counterparts in the investigation are snitching against

01:27:25.640 him that help them with, you know, quite frankly, they have intimate knowledge of the

01:27:30.900 scheme.

01:27:31.800 And anytime you got a conspirator that has intimate knowledge of the scheme and they're

01:27:35.620 testifying against you, it's going to be a bad day for you.

01:27:37.760 So Mr. Shannon goes, happy new year, team fed it.

01:27:40.200 Let's go.

01:27:40.620 Thank you so much, Mr. Shannon.

01:27:41.660 Appreciate that greatly.

01:27:42.600 Band goes.

01:27:43.040 Caroline looks like a substitute ghost on Halloween.

01:27:47.680 Yeah, she's a little weird looking.

01:27:49.540 I ain't going to lie.

01:27:50.420 What else?

01:27:51.180 What do we got here?

01:27:52.860 All right.

01:27:53.100 I got some of these other chats here.

01:27:54.220 I'll pull them up.

01:27:54.800 Okay.

01:27:56.140 Okay.

01:27:56.820 Samantha Laurie goes.

01:27:58.880 Oh, okay.

01:27:59.660 Umbasa, five bucks basically from Great Britain goes.

01:28:02.760 Fun fact, just like FTX, if all customers at any bank tried to withdraw their money at

01:28:07.300 the same time, they wouldn't actually be able to pay out.

01:28:09.320 That's absolutely true because I think it's called fractional reserve banking, which means

01:28:13.800 the bank, guys, only has a small amount of the money that it's supposed to have actually

01:28:18.640 in cash in hand.

01:28:20.640 This is somewhere between, I think, they're mandated to hold somewhere between, I think,

01:28:24.300 five to 10% of all the money that they're supposed to have.

01:28:26.540 So let's say, for example, the bank is supposed to have a million dollars, allegedly.

01:28:29.580 They might only have somewhere between around $100,000 in the actual bank.

01:28:33.800 So if everyone in there at the same time said, yo, give me the money, they'd fucking not be

01:28:37.540 able to give it to you because the banks don't necessarily actually have the money.

01:28:40.620 It's just on paper that they have the money.

01:28:41.920 But the reality is they're lending that money out to investors, right?

01:28:45.240 So they could go ahead and buy assets.

01:28:46.520 They give money to people like me that go buy real estate property, and then they charge

01:28:49.660 me an interest rate to have that loan.

01:28:52.720 I'm an H goes two bucks.

01:28:54.120 Damn, they're tag teaming that boy.

01:28:55.520 Yes, they are, bro.

01:28:56.540 Yes, they are.

01:28:57.340 That's why this is so dangerous for him.

01:28:59.460 Pops Kaya goes, OJ got out because of his, of this used, because of, I think he means

01:29:05.200 they used his deposition from a civil lawsuit against him, but they made a deal saying what

01:29:08.900 was used against him in a criminal.

01:29:10.940 They did.

01:29:11.860 He out.

01:29:13.280 I don't really understand what you're trying to say there, but I think you're trying to

01:29:15.380 say that they used information from the criminal case against him in the civil case because

01:29:18.740 the civil case came after the fact.

01:29:20.860 This guy's free.

01:29:21.740 Andrew Tate is locked up.

01:29:22.900 Yeah, bro.

01:29:24.300 I'm bro.

01:29:25.280 Real talk.

01:29:25.800 This guy took billions of dollars, 10 billion to be exact.

01:29:28.720 And, you know, and they're over here trying to say that Andrew is human trafficking chicks.

01:29:33.180 Fucking cap.

01:29:34.620 Happy New Year.

01:29:35.320 Odds Biden pardons SPF.

01:29:36.900 I don't think Biden would pardon SPF.

01:29:40.080 And the reason why I don't think he would pardon him is because it would look too bad for him

01:29:43.160 politically to do that, even though he, because he, think about it, he received all this money

01:29:46.240 from him.

01:29:46.860 If he pardons him, it's going to look like a grand conspiracy.

01:29:48.980 I mean, not that it isn't bad already that he's received a bunch of money.

01:29:51.500 But a lot of people already think that Biden is up to some, some BS along with his son and all the other

01:29:58.200 nefarious financial and background stuff that they got going on.

01:30:04.060 He don't love you five.

01:30:05.600 All right.

01:30:05.960 What was your final thoughts on 9-11?

01:30:07.800 Go to watch it on the, on the conspiracy show, man.

01:30:10.140 I got a whole part on 9-11.

01:30:12.480 Lemaire, 10 bucks.

01:30:13.380 Sam Trabucco, former Alameda CEO, is still on the run, though he has not been charged.

01:30:17.460 Yeah.

01:30:17.620 He knows the indictment is coming under, coming for him soon.

01:30:20.300 So he got the hell out of here.

01:30:22.260 Who else?

01:30:23.800 That's it.

01:30:24.460 Okay.

01:30:24.680 Here's some other ones I think that we might've missed.

01:30:26.640 Have been, let me see here.

01:30:28.760 I'm going through the chats.

01:30:29.600 I want to make sure that I didn't miss any of y'all.

01:30:34.440 All right.

01:30:35.020 Yeah.

01:30:35.260 I think, I think we got them.

01:30:36.280 All right.

01:30:37.040 Cool.

01:30:38.540 Guys.

01:30:38.820 So that is basically the SBF debacle for y'all.

01:30:43.760 So you guys know exactly what's going down.

01:30:46.440 An overview of the entire case.

01:30:48.280 What do I think is going to happen?

01:30:49.380 Well, guys, personally, my prediction on this is SBF is going to go to jail for a very long time.

01:30:54.200 He's going to have to definitely pay some restitution.

01:30:56.480 And there's no way that he could beat this.

01:30:59.100 I'll be honest with y'all.

01:30:59.680 Because the issue here is that they're hitting him with two different, two different weapons.

01:31:05.480 They're hitting him with a civil case and they're hitting him with a criminal case.

01:31:07.740 And there is, it's basically going to be impossible for him to be both at the same time.

01:31:11.520 If he loses in one, more than likely he's going to lose in the other.

01:31:14.640 And my, my thing is they have more than enough to charge him criminally.

01:31:18.040 And by the fact, and the reason, the fact that they have enough to charge him criminally

01:31:21.160 inevitably means that they already have way more than enough to destroy him civilly.

01:31:25.560 Because the civil burden of proof, guys, remember, is only 51% versus the criminal one is beyond a reasonable doubt.

01:31:32.840 And they've already reached that.

01:31:33.780 So they're going to be able to do this easy mode for the civil case.

01:31:37.220 Fun fact, Citadel is a marketer, is also a hedge fund.

01:31:40.460 Okay, fair enough.

01:31:42.580 No, they just came in.

01:31:43.920 Okay.

01:31:44.280 Anything else come in?

01:31:45.360 Nope, that's it.

01:31:46.080 All right, cool.

01:31:46.920 Hey, guys, hope you guys enjoyed that breakdown, man.

01:31:48.980 I try to make it entertaining for y'all and simplify it.

01:31:51.500 But I'll be back tomorrow for Money Monday with you guys.

01:31:54.480 And we're also going to have an after hours.

01:31:56.000 So make sure to like the video, guys.

01:31:58.320 Subscribe to the channel if you haven't already.

01:31:59.560 Shout out to Legal Eagle and shout out to Moon for making great videos summarizing this stuff.

01:32:04.160 I'll borrow some of their content.

01:32:04.960 I'll put their links below for their videos.

01:32:07.220 And yeah, love you guys.

01:32:08.540 We'll catch you back here for Fresh and Fit tomorrow at 7 p.m. Eastern Standard Time.

01:32:13.000 Peace.

01:32:16.020 I was a special agent with Homeland Security Investigations.

01:32:18.020 Okay, guys.

01:32:18.400 It's HSI.

01:32:19.380 The cases that I did mostly were human smuggling and drug trafficking.

01:32:24.460 No one else has these documents, by the way.

01:32:26.780 Here's what Fedder covers.

01:32:28.540 Dr. Lafredo confirmed lacerations due to stepping on glass.

01:32:34.680 Murder investigations.

01:32:35.720 You see him reaching in his jacket.

01:32:36.820 You don't know.

01:32:38.000 And he's positioning.

01:32:38.640 Been on February 13, 2019.

01:32:40.360 You're facing two pounds of two meditative meals.

01:32:43.500 Bracketeering and Rico conspiracies.

01:32:45.320 Young slime life here and after referred to as YSL.

01:32:47.740 This is 6'9.

01:32:49.500 And then this is Billy Seiko right here.

01:32:51.360 Now, when they first started, guys, 6'9 ran with YouTube.

01:32:53.960 I'm afraid I'm watching this music video.

01:32:56.220 You know, I'm bobbing my head like, hey, this shit lit.

01:32:58.300 But at the same time, I'm pausing.

01:32:59.800 Oh, wait, who this?

01:33:01.040 Right?

01:33:01.480 Oh, who's that in the back?

01:33:03.680 Firearms and violent crime.

01:33:04.760 A.K.A.

01:33:05.560 Bush Icy violated.

01:33:06.880 In order to stay away from the victim.

01:33:08.640 Bush Icy arrested after shooting at King of Diamonds.

01:33:10.900 Miami strip club injured one person.

01:33:12.580 This is the one that's going to fuck him up because this gun is not traceable.

01:33:16.120 Well, it happened at the gun range.

01:33:17.280 Here's your boy, 42 Doug, right here on the left.

01:33:19.560 Okay.

01:33:19.880 Sex trafficking and sex crimes.

01:33:21.520 They can effectively link him to paying an underage girl.

01:33:24.540 I'm going to blow my 50-11 right now.

01:33:26.240 And the first bomb went off right here.

01:33:29.020 Suspect 2 set down a backpack on the site of the second explore.

01:33:32.680 Inspired by Al-Qaeda.

01:33:34.120 Two terrorists, the brothers, the Zocar.

The Debrief With MyronGainesX - January 20, 2023

Former Fed Explains FTX Collapse! It's WORSE Than You Thought...

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