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 Biggest Bitcoin conference in the world use code
altcoin daily 10 off see there post this video on Social media get this story out to as many people
as possible subscribe to altcoin daily for daily Crypto coverage watch this video of Caroline
Ellison if you haven't and I'll see you tomorrow