when you look at the classic Bernie Madoff story there was no real business
there the whole thing as I understand it I think was was just one one big Ponzi scheme right fgx
that was a real business Sam bankman freed the CEO of the now bankrupt FTX crypto exchange has
been repeating for weeks that he was unaware that FTX was co-mingling user funds Carolyn
Ellison says you knew that FTX funds were being funneled to Alameda did you know that
I knew that there is an open margin position there and that involved no but that's all that
I'm asking if she's in court and you're in court and she's under oath and you're under arrest and
you're asked did you know that these funds were being funneled to Alameda what is your answer
foreign
use of customer funds He was unaware that FTX customer funds were being stolen despite ftx's
own terms of service all of that user money is now gone to be clear okay next please go on Stanley I
got a hundred dollar check from my grandma well that's fantastic a really smart decision young
man stand it's gone what's up gun the money in your account it didn't do too well it's gone
what do you mean I have a hundred dollars not anymore you don't poof
FTX users have a little hope of ever getting their crypto back yet the CEO of the company
SPF has seemingly been on a press tour making sure that you know the just like FTX users
he's also looking for the one responsible for the FTX fraud and the FTX collapse to refresh
your memory provide you with the full story and give you context for the clips I'm about to show
you this is SPF at the New York Times deal book Summit with CNBC host Andrew Sorkin Sam is asked
the direct question and he answers at the end it appears FTX was co-mingling user funds were you
aware of that the terms of service for FTX it says None of the digital assets in your account
are the property of or shell or maybe loan two FTX trading FTX trading does not represent or treat
digital assets and users accounts as belonging to FTX Trading so how is it possible that Alameda
had this loan of such a large size so there's that piece from the terms of service
um but there were a number of other parts of the terms as there's a number of other
parts of the platform on top of that there is the borrow lending facility where users were lending
billions of dollars of assets to each other um you know collateralized by assets on the exchange
um you had uh and you got obviously Futures contracts where there are leveraged positions
on now of course all of this um it's meant to be the case that these are positions where FTX could
if it needed to Margin Call those positions and close them down in times such that it would cover
all of those uh you know all those shorts all those liabilities obviously that wasn't the case
here and that's a massive failure of oversight of risk management um and of uh you know diffusion
of responsibility from from myself running FTX but just make this very straight was there commingling
of funds that's what it appears like it appears like there's a bit a genuine commingling of the
funds that are of FTX customers that were not supposed to be commingled with your separate firm
I ain't knowingly commingle funds well it appears Sam bankman freed has been doing so
many interviews lately in so many spaces and putting himself on record to free questions
so much just yesterday he might have finally admitted to co-mingling funds and user fraud
by the way it seems Caroline Ellison the CEO of Alameda ftx's sister company she's been talking
as well I think like every week or so uh something like weirder than the previous week would happen
for me A lot of it was just about sort of uh yeah readjusting my expectations and uh
being open to whatever happened please watch this video if you haven't already I'll link this below
it seems like Carolyn Ellison has been talking to the FBI and telling her story anyways SBF finally
admitting to fraud let me show you and you tell me great journalism by coffeezilla Sam bankman freed
just yesterday was asked by coffeezilla in spaces if it's true that you didn't invest FTX user
assets not even in the treasuries why do those FTX user assets no longer exist if it's true that you
didn't invest client assets not even in treasuries as you said via a now deleted tweet why do those
client assets no longer exist I'm just taking a stab at this because I don't have the data but
my my best guess is the following is that there were a lot of those assets remaining we processed
something like you know five or six billion dollars I think of withdrawals over the over
the few days prior to our or I guess the few days you know during the crash and there are still a
few billion dollars of those remaining I think in the estate and so you put those together you have
many billions of dollars of those assets but I think and and so that's part of the answer is that
um there were a large number of actual assets there um I I think there's one follow-up question
you probably still have there which is well how about people who didn't withdraw and were also
in that bucket and part of the answer is well there still do exist some number of billions of
dollars of assets so Sam bankman freed claims many FTX users were able to withdraw their assets and
those who didn't withdraw still have their assets as part of FTX this is where it gets interesting
again good job to coffeezilla I've been following this guy for a long time this is one of the ways
I stay up to date on everything crypto anyways coffee Zilla then asks Sam if Sam can guarantee
that FTX user assets are backed one to one Sam hesitates and then starts to talk about a news
story listen to the end of this clip Sam bankman freed admits FTX user money was fungible they paid
out everybody from seemingly the same fungible wallet I can't believe he admitted to co-mingling
like this no is there one-to-one assets because that's the whole thing we're talking about a
separation of fun funds so those funds should be a completely different in a different place in a
different wallet than everybody else what you talked about servicing billions of dollars of
withdrawals has nothing to do with those specific digital assets because that's just first come
first serve whoever pulled out first we're talking about people who never agreed to have their funds
loaned out who never agreed to have their funds put on margin they should have according to your
terms of service one-to-one backing it should all still be in some bucket somewhere and are
you confident today as the CEO of FTX this has nothing to do with Alameda are you confident today
to say that you those are absolutely real and they exist and they're present people are backed one to
one on client digital assets so I think and again this is I'm just taking a stab here but I think
what happened is that if you look at especially a lot of the withdrawals that happened those
withdrawals were not necessarily only coming from people who never used margin trading or futures
or staking or anything else those weren't just withdrawals from people who were um uh who were
keeping one-to-one backed or or or were you know were sort of you know just keeping them as pure
spot balances and it was Omnibus wallets you know between the various categories and so I
think that the answer to your question is that a number of those assets were withdrawn by people
who had balances on the exchange potentially in the few days prior to the collapse um and uh and
you know if you wanted to think about it this way it could be that you know that happened and then
um you know when when the collapse sort of completed I the um that that effectively meant
that there was you know if you wanted to put it this way like uh fungibility created during those
withdrawals between assets uh for people who had and had not uh been using so did you hear what
SPF just admitted FTX user money was fungible that means that there was not a separation of funds if
there is fungibility between two different FTX buckets of money that means that there are no
separate buckets there's just one bucket meaning FTX users who didn't agree to lend their money
to Alameda or lend their money to margin Traders were forced to take on that risk anyways doesn't
SBF see that as defrauding FTX customers listen to what he says I can take the money
that someone who didn't sign up to those same risky terms didn't agree to isn't that fraud so
I'm specifically talking about what happened in the days immediately um during and following
the crash in that you know three or say so day period um and during that period
um I think we may have allowed uh you know just generalized withdrawals I think that was
um you know if you're saying that we should have held up withdrawals for everyone who had an open
Futures position um you know for clawback potential or something like that uh I don't
know maybe that would have been the right thing to do I hear where you're coming from on that
um I felt you know at the time um that you know we wanted to treat customers equally it was an
incredible but they had agreed to different things so you can't treat them equally and now that Sam
admitted that they were co-mingling funds for the withdrawals he starts getting a little bit
defensive SBF accuses coffeezilla of grandstanding monopolizing the time just listen to the clip why
do you think he acts like this I mean it's like this is the whole problem of the story of FTX and
Alameda is all the funds were being co-mingled isn't this just another story of co-mingling
funds except this is now FTX which you can't pass the blame to Alameda anymore this is your company
your funds that you are treating all the clients the same when they clearly signed up to different
terms of service so I just want to respond to that and please I completely respect your question but
you have monopolized all of these discussions coffee Zilla you need to let others speak and
you need to respond to what I'm saying and not grandstand as much here I completely understand
where you're coming from but the to answer your question I didn't make a decision there I just
we process withdrawals as we normally do until it became clear we couldn't anymore at which
point we shut them off and it was the case that like at that point um there was a big
liquidity hole that's what happened if you want to judge that process and think that like we should
have been spending those days frantically trying to code up a new withdrawal process
um I disagree with you but I understand where you're coming from okay but it's not about
coding up a new withdrawal process Sam it's about treating FTX clients the way you told them they'd
be treated so that's even worse if this is how FTX always processed withdrawals then the FTX
terms of service have been a lie from the very beginning the withdrawals weren't segregated
as promised they literally were in a huge pot of money first come first serve SBF cond everyone in
addition SBF just can't keep his story straight it seems because in another spaces last night
SBF admitted that when customers were buying and selling and trading Bitcoin on FTX they weren't
actually buying or trading real Bitcoin it was just a fake entry into their account at FTX any
media besides altcoin daily want to cover this because that makes sense as to why there were no
more Bitcoin to withdraw where customers like like that I know had Bitcoin balances because
those Bitcoin actually didn't exist because it was just notional you were just letting us buy
notional tokens that didn't actually really exist uh yeah or another way of phrasing that because
otherwise you would have had to have the usdc somewhere right yeah I yeah I I believe that what
you're saying is in fact part of what happened by the way if you're planning to attend Bitcoin
conference 2023 let's hang out it's going to be epic use code altcoin daily 10 off this is the
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