Open Book with Anthony Scaramucci - Sam Bankman-Fried & the Unravelling of FTX with Brady Dale

Episode Date: July 12, 2023

This week, Anthony talks with veteran crypto reporter Brady Dale. Brady’s brand-new book SBF: How the FTX Bankruptcy Unwound Crypto’s Very Good Bad Guy, is the first book detailing the collapse of Sam Bankman-Fried and FTX. With Anthony’s personal ties to Sam and Brady’s vast knowledge of the space, the two get personal on what really happened, who was responsible, and where crypto is heading from here.  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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free of charge. BetMGM operates pursuant to an operating agreement with Eye Gaming Ontario. Hello, I'm Anthony Scaramucci and this is Open book where I talk with some of the brightest minds out there about everything surrounding the written word from authors and historians to figures and entertainment, neuroscientists, political activists, and of course, Wall Street. Sorry, I can't resist. Before we get into today's episode, if you haven't already, please hit follow or subscribe, wherever you get your podcast, and leave us a review. We all love a review, even the bad ones. I want to hear the

parts you're enjoying or how we can do better. You know, I can roll with the punch. You know, I can roll with the punches, so let me know. Anyways, let's get to it. Sam Bankman-Fries, someone people have asked me a lot of questions about in recent months. I, for one, was fooled by Sam, along with many others. My guest today, Brady Dale, has written the first book on Sam NFTX. The subject is still painful for me, but it's important we talk about what happened, the personalities involved, and why blockchain and cryptocurrencies are still going strong. So joining us now a veteran crypto reporter Brady Dale, who's out with a new book, SBF, How the FTX Bankruptcy, Unwound Crypto's very bad, good guy. Brady, I have to tell you, I'm still suffering from post-traumatic stress syndrome

from the whole situation. And so I pride myself in reading everybody's books here on Open Book before I start these interviews. But in a moment of honesty, I had a tough time reading your book because it was so raw and visceral for me and so painful. But listen, you wrote a great book. And the book wasn't painful, right? It was the experience that you're remembering, right? Yeah, exactly. I was reliving how, and I was also while I was reading your book, and I read most of it to be totally gander. But what I was reading was making me relive, and it was also making me question my judgment. And we're going to go into that as well, because I saw something in Sam that I frankly liked. I saw something in Sam that I thought was different. I thought he was the, I've said it before,

I'll say it here on this podcast. I thought he was the Mark Zuckerberg or the potentially Elon Musk of crypto. I did not see him as the Bernie made off of crypto or the Charles Ponzi of crypto. And so I got that wrong. And so one of the calculations going on on my head is how did I get that so wrong? And obviously many people got that wrong alongside of me. But let's go to your book. It's an amazing year. I'm going to set the scene for you. It's in your book. The view of Sam, Bankman-Fried May of 2022. What was that view of Sam Bankman-Fried May, 2002, one short year ago? Well, so that would have been, you know, if we go to mid-May, that's right after the Terra collapse. So just in case folks don't know, there was this

stable coin called Terra. Them thought it was this really daring approach to creating a unit of value on the internet. Others thought it was a crazy kind of Ponzi scheme. And it had unwound in a way that everybody had always said it would unwound just a couple of weeks prior. And it turns out that a lot of big players were exposed to Terra. And so a lot of the cryptocurrency market was unwinding. And then as that happened, it seemed like FTX was very nearly the last big man standing. And at least, I mean, you know, Coinbase was still standing, that Gemini would still have standing at that point. You know, they were okay.

There were other big people standing. But it was the only one that started to step up and sort of save the entities that it thought in its wisdom at the time was worth saving. And so the crazy thing about Sam at that point is it looked like somehow, because by that point, you're six months into the peak of the crypto market coming off. You know, Bitcoin had peaked November six months before that. And everyone who knows crypto knows that after Bitcoin peaks, it's probably just going to go down for a while. It can all come back, but probably go down for a while. And so it had been six months of the market going down. And somehow it seemed like Sam was the guy.

He still had a giant pool of money, which suggested that he was the smartest guy in the room, that he had planned everything out, made a ton of money, got out at the right time, and, you know, had money to spare. So, again, I'm not going to put words in your mouth, but a media darling at the time, a good Samaritan, you know, a quote unquote, J.P. Morgan stepping in to save the cryptocurrency market. It's a man wanted in Washington to regal them with his rationality and his common senseness and his sort of unaffected folksiness. Did I get all that right? Yeah. Okay.

So what do you think started the sea change in opinion? It was it just the explosion that took place in November? Was there anything lurking under the surface or was this just, okay, this is just, you know, again, Bernard Madoff, there were some people that were accusing of charlatanism, but most people were not the mainstream people thought he was a decent guy until December of 2008 when he was exposed and arrested. Was that the same with Sam? How would you, how would you view that? Well, you have to look at Sam two different ways. So you and I come at this thing kind of in opposite perspectives, I think, on some level, because, you know, I've been a crypto reporter. I report from

within the industry. And I've always kind of reported from the perspective of the industry, right, a little bit different than other crypto reporters. I sort of like take its viewpoint as granted as I report on it. Whereas, you know, I think Ucom as like a more traditional guy who sort of like vibe with Sam because it looked like he sort of spoke your language a little bit. So I think on the outside, people like Sam because he sort of spoke the traditional finance language. He was skeptical of crypto.

Within the crypto world, you know, it's not a monolith, but folks had always been somewhat skeptical of Sam. And as you're getting later in 2020, 2020, that was all growing. I mean, people's two big problems with Sam, of those who had them, there were people who still thought he was a hero all along, even within the history. But of those who had them, there's two big problems. One, he's running a centralized exchange, which everyone uses them. But the idea is they're kind of a necessary evil. They're a stepping stone to the bright crypto, the centralized future.

It's not an end point. And two, he had kind of acted in a fairly predatory fashion within the, you know, the, defy world sort of like plowing millions or billions of through there to sort of hover up as hover up as much value as he could. And so those things were causing people to not really love him because he wasn't really seen as like a good neighbor within crypto. And then just before FtX blew up, people got pretty mad at him because he seemed to be hogging all of the space in terms of deciding what the future of crypto would be in a legislative fashion. And a lot of folks didn't really like the vision he was articulating. Folks got pretty mad at him in October when he put out

this big vision statement of what the law should be. And everyone assumed he had like the year of all these members of Congress and he was going to define like what the next law was going to be. I think that was a little bit overblown. But there were a group of people who weren't crazy about him even before it all blew up. And then of course, everything blew up and no one was crazy about him. So I find the whole whole thing fascinating. Of course he had that debate with the Bitcoin Maximilist. You'll know the guy's name. I can't. Eric Forgeys. And that didn't seem to go well. That was right after I had gotten back from the Middle East trip with him. Let's go to you for a second, Brady, if you don't mind.

How did you come to cover crypto? Sure. So I was a general technology reporter, and the way I always described this to people is, you know, I was writing about technology for a former New York Observer. And I just always like to write about anything that was weird. So robots, exoskeletons, you know, machines that talk and cryptocurrency. And my origin story for getting interested in crypto is a little, is pretty, is kind of funny. I got interested in crypto.

I was interested in its potential as a way to manage intellectual property right because I liked to write about e-books. That was one of my favorite things to write about like Kindles and things like that. And I realized that a Kindle could easily be a hardware wallet. And that was, you know, it could be like a wallet for verifying ownership of a digital book or whatever. That was an interesting use case to me. So I dug into it. And then that kind of opened the door to me writing about all kinds of stuff.

And then, you know, CoinDesk recruited me because they liked some of the stuff that I was doing. And then once that happened in late 2017, you know, I've been full-time crypto ever since then. So, again, I ask if you don't mind, but you are a journalist, you don't have to, you don't have to answer. You have a license here, Brady. You don't have to answer. But are you a disciple?

Are you a crypto-sceptic? Are you a crypto-agnostic? Or are you a crypto-believer? How would you describe yourself? I guess I would put myself somewhere on the agnostic to-believer end. I mean, I've always been pretty open about this. I'm in my 40s. I've always been interested in technology.

I graduated high school without an email address. I remember people making fun of email. I remember people making fun of the internet. I remember people making fun of social media. And again and again and again, these new things came along. And they all end up being hugely important. So long before I ever got interested in crypto, I just sort of made the decision that when lots of smart techie types get excited about something, it may take a while, but it's probably

going to work out. So that's just kind of been my viewpoint for a long time. And that's sort of how I look at cryptocurrency. That said, I'm happy to, people get mad at me like they do any journalists for sort of reporting on the wards of the industry because I'm happy to do that. Like, I'm not trying to like, you know, they call it FUD and crypto if you do anything negative. I'm happy to sling FUD.

I think it's important for industries to be held accountable. But I don't look at it from the perspective of this stuff is all nonsense. It's going to go to zero eventually. That's not my approach. I don't know what's going to be important or how, but I do sort of think it's with us for the foreseeable. I think as well described what you're saying, I was a crypto skeptic. I was a traditional finance person. I became a little bit less skeptical after my very short stay in the White House when I learned that the Fed was talking about digitizing the dollar. I didn't make my first Bitcoin

investment until November, October, November 2020. I think I bought one in October and several more in November and then started scaling. But I had no idea who Sam Bankman Fried was. I didn't meet Sam Bankman-Fried until June of 2021. When did Sam Bankman-Fried come across Brady-Dale's radar screen? When did you first realize who he was and what he was doing and what his master plan was, which you very well articulate in your book? Thank you. So Sam, I didn't really, he didn't come on to my radar until 2020 during D-Fi summer. However, FTX had been on my radar before that. It was, you know, as a journalist, you see things all the time that you're like, I should write about that at some point. The thing that I liked that FTX had is I worked with another

reporter at Coinette's the time who would talk about FTX some time and I would go look at the website and they had a, I hope this isn't inappropriate me to say on your show, but they had a shit coin index, you know, they had a, you could invest in a bunch of, you know, crappy cryptocurrencies and I thought that was a funny concept. And so it was one of those things that I kept meaning to to write about, but never really got around to writing about it. And then in DFI summer, which was this moment in which, you know, sort of decentralized finance was getting very big on Ethereum. And I talk about this in the book. The first one of those products to really pop was Compound, which is basically a money market, a lender's market on Ethereum. And they did this

comp token. And Robert Leshner, the founder of Compound, introduced me to Sam because FTX was the first to list a futures market for the Comp token, like, you know, right after it came out. And I was doing any story that I could about Comp because it was such a crazy time when it first came out in June of 2020. Did you get any vibe, let's say pre-November, any vibe of the Sam nefariousness? Well, is it nefariousness? So, okay, you know, as you know from having at least read part of the book, you know that I sort of characterized myself, much like you characterize yourself and sort of generally being pro-sam or sort of a Sam believer.

And I think that is the most fair way to describe myself, but where everything blew up, which is not to say I didn't have any notes of skepticism about him. I think there were two things, but neither of these get you to the massive debacle that ultimately happened. But the two things that bothered me about Sam is, one, I didn't love the way he was sort of plowing through. A little background for folks, which could be a little bit hard to follow. But during DFI summer, this thing happened where people would spend up these new tokens, and they would give them to people who try out their different stuff. It was the easiest way to describe it.

It was called liquidity mining or yield farming, whatever you want to call it. But basically the idea is they'd make these new tokens, which would theoretically have some. value and if you use their stuff and you had to put some money at risk to use it, you could get some of them. And it was, it was a growth hack, you know, it was a classic growth hack, right? But the idea was they were trying to do it. These tokens had a limited supply. They wanted people to be long time. Shareholders is what they were going for. But deep pocketed investors like Alameda Research would just plow a ton of money in, hoover up as much of those coins as they could and then just dump them, which could completely wrecked the whole process

of trying to build a basis of users, right? And Alameda would do this just, really aggressively, right? And I understood why, because it was very clear to me at that point that Alameda didn't really care about the industry that they were in. They wanted to make as much money as they could so they could do their EA thing and save the world. You know, like, that's why they were doing it. It kind of bugged me because it didn't seem to be like in the best interest of the industry that they were in, but I also was just like, well, I don't know, it's capitalism, people to do things wherever that for whatever reason they want. But that's sort of put me off. And then the other thing that also made me nervous about Sam, and this might be a point where

you and I don't see things quite the same way, but he just clearly did not understand or buy into what I understand to be the value proposition of crypto. So, like, he would talk a lot about how it was problematic that blockades were too slow and you couldn't rapidly get to millions and millions of users, right? And I got where he was coming from, but, like, I was just like the tradeoffs that you want to make. If you make them, you might as well just not do blockchain. And so it just seemed to me like he was sort of fundamentally out of sync with the whole space. And I sort of wondered about his long-term viability based on that. But I still, you know, on the day that FCX blew up, I was in somewhat of denial that day, not because I was so invested in Sam, but just because he just seems smarter

than that thing. You know, it was just like, I just didn't think, I just didn't do something that dumb, you know? Well, it's interesting. I mean, he did say, I mean, I have a hindsight test, obviously, where I see the world 2020 or sometimes tell people hindsight is not 2020, Brady, it's, it's 2010. We see better reflecting backwards than we do forward, you know, and I have a And he said something to me, you know, now upon reflection, he said something to me that should have been more troublesome. And this is, I guess, one of my shortcomings. He said, well, I don't really care about crypto.

This is a money-making arbitrage opportunity. So there was no, and I'm not saying he needed to be a Michael Seller-like evangelist, but it just felt like it was probably higher level opportunism than really what I'm hoping long term will be the use cases for crypto, which is a de-layering. of transactions and making transactions more efficient, more time efficient, but also more accurate, more secure. Those are the real hopes of the blockchain. Well, and right. And to your point, how are you going to be the Mark Zuckerberg or whatever of crypto? If you don't buy in, you know, like Mark Zuckerberg was never going to be Mark Zuckerberg if you didn't think social media was a good

idea. You know, because he thought social media was awful. Right. He wasn't going to be the guy who made it huge. It's a really interesting point. It's the reason why I'm bringing it up. It doesn't reflect well on me because I'm now using a hindsight test to see that, but I think you bring it up in your book, and I think it's really worthwhile. I think it's worth sharing with your readers and my listeners. You say a couple things about Sam, which made me laugh. I'm going to read them to you, if you don't mind. One is your subtitle, Crypto's Very Bad Good Guy. You also call them a geek with swagger, which is a little like jumbo shrimp, right? There's a little bit of oxymor going there. And then he said something about him, which turned out to be very true, actually, that there was

some fame addiction there where he was addicted to the attention. So handle all three of those. Let's start with crypto's very bad good guy. What do you mean there? Yeah, well, so it's, it's kind of meant to be a double entendre. You know, Sam's whole thing was he was going to save the world. He was the smartest guy in the room. He was going to make a pile of money. He was going to deploy that money to do, he's going to do more good per dollar than anyone had ever done before. That was his big vision. So he was meant to be this good guy. It turns out, though, he ended up not, he did some good. I mean, definitely, you know, spread some money around, but, uh, he ended up losing people a lot more money than that in the end. So he was very bad at being a good guy or the other way, the other side of the

entendre is he was a very bad guy pretending to be a good guy. So like he ultimately had, you know, very poor ethics, um, but was presenting himself as a good guy. So I sort of, it's kind of like which way, and I, it's open to the reader to interpret it, like, which way do you think he was? Was he just bad at being good or was he actually bad in pretending to be good, you know? And I don't to really have a super clear answer on that myself. I sort of what I want people to think through as they read the book. I think the one big thing I will say about it is I have never been a huge fan of self-righteousness, even though where I was a journalist, I was a professional activist, but still, you know, it's just super intense. Like, I know what's right for the world. You're not derogatory

to other people that have a different opinion than you. You're just evangelizing your opinion. No, I do, I do know that we have a lot of self-righteous and we have a lot of scolds in our population now. If you're not admitting the same level of carbon that they're admitting, you're a bad guy, they're a good guy. P.S. We're both admitting carbon. So I don't understand all the hypocrisy. But by my point there on Sam is, is I feel like the fact, I feel like he was able to do more harm because he convinced himself it was okay because he was ultimately going to do so much good. That's the danger of the self-righteousness there. And that's what I think is it particularly alarming. You help me see a lot of things. And so I just want to address them with you. People often ask me, did I think that this was a nefarious plan from the start? Meaning, did he have a piggy bank known as Alameda? He was perhaps processing trades and taking advantage of volatility and arbitrage in the situation. And then he said, hey, maybe I need more rocket fuel. Let me set up this FTC thing.

I'll make it my own personal piggy bank. You got me across that finish line, by the way. I think it was Malfizans from the start. What say you? I'll tell you why you got me over the finish line a second, but I want to hear your thoughts. Well, I mean, I think it was always meant to be a way to make as much money as possible. That said, I still think he wanted to make the money to like cure malaria and whatever.

I mean, that's always, you know, I always think curing malaria. I don't know if that was his top goal. And I think, I think he thought he could actually do it in a way where his customers would also make money. I don't think he ever thought a hole would be discovered. Yeah, I think it's pretty clear that he was willing to like take that big risk, outsized risks to like do this massive amount of good all along. Yeah. So that, that's my theory, right?

He had a little bit of a God complex. He said, no problem. I'm going to borrow Brady and Anthony's money. I'm going to take it out of their accounts, put it in my accounts. Of course, it's temporary. I'm such a genius and I have a little bit of a God complex. I'm going to get everything right with my trading. I'm going to make myself tens of billions of dollars, which is going to be used as fuel

to save the world. And then at the appropriate time, very ethically with no. criminal intent. I'm going to take Brady's money and Anthony's money and put it back in their accounts. And it will have always been safekeeping. But since I can't do it technically because of the way the terms of service are, I'm going to break these rules. But it's okay. It's not a big deal because it's me. I'm a God. And I'm a God complex person. I'll get my three or four cohorts that will be able to backdoor software program. I'm going to break these rules. Entrepreneurs have to break rules. But I'm a great guy. Money's going for a good cause. I drive in a Corolla. I don't

really care about my hair or makeup or hair products, and I'm going to get Brady and Anthony's money back. Is that it? Yeah. My take, yeah, completely squares with yours is I think it becomes easier for you to justify to yourself taking those kinds of risks if you're not buying yourself gold-plated airplanes, but, you know, you're creating opportunities for people in developing world. That's your long-term vision, right? So it becomes easier to justify that. Is he going to win that argument in court? I don't think so. I don't think they care why you, you know, stole money. Yeah, right. There's a strict liability. Remember, there's criminal intent. There's something called mens rea.

It's criminal intent. I have the intent to defraud or steal from you. But there's also a strict liability test, meaning if I cross the threshold, if I reach into your bank account and take your money and put it in my bank account, even if I was, in my own mind, going to return it to you someday, it doesn't matter. That's a criminal act. And that's quite punishable. He has used the effed up term a lot.

You write about it. It's fun. fun part of your writing. Bond of saying that I effed up. What do you make of that? What do you make of that sort of like, I'm not going to say it's adolescent, but I'm going to say it's gamification.

It's almost like dispassionate, objectification of human beings. You know, I blew through $8 or $9 billion of your money, and so, you know, I misplayed the game Dungeons and Dragons. I don't know. Do I have that wrong?

Or what does that say about it? What does that say about his personality when he's writing that? Yeah, To me, one of the strongest images of the Sam story, and I encourage people who find this moment interesting to go back and look at it. It's easy to do is to go look at his interview that he did with the New York Times with Aaron Ross Sorkin and kind of his body language and his affat in that interview. I got irritated to some level during discussion of Sam's blow up with how much focus there was on him being a son and a young man and things like that because he's a 30-year-old guy and like whatever. But if you look at that with Aaron Ross Sorgan, he's acting like a kid who got in trouble in the principal's office. You know, like the good kid who everyone knows is always good and then made, you know, one mistake and can't believe he was ever in the principal's office. And I think that was sort of

the vibe he was trying to get off. And I think that's sort of the same thing he was doing with that whole effed up language. And keep in mind, that was all, you know, when he was doing that the most was was before he had gotten arrested. I think he still thought there was some chance that in the court of the public opinion he could, he could win this argument and convince him. It was everyone. It was just, it was just a big mistake and he could get past it. But yeah, I do. think it was strategic. He was trying to appeal to people's thinking that, you know, mistakes, mistakes happen and he had, he had just made one. Okay. I think it's so, it's so well said. You also dedicate the book to Michael Lewis. And so I want to give you my quick Michael Lewis story.

You know, I did the Crypto Bahamas event with Sam. I had Michael Lewis at our table. We had President Bill Clinton, Prime Minister Tony Blair there. We also had Governor Terry McCullough from Virginia, Orlando Bloom, it was a coup of people, prime minister of the Bahamas. I think Michael was smitten with Sam. And I saw Michael at the Bitcoin conference and had an opportunity to hear his presentation. I think Michael bought hook line and sinker into Sam. And by the way, I'm not judging that because guess who also did that? I did that as well. So again, no, I'm not throwing any rocks and I'm in a glass house. But he did say something to me that I think he changed his mind on. He said that if he bought Sam was nefaris, he wasn't going to write a book. And when it came out that Sam is nefarish,

he decided to write the book anyway. And I don't blame her for that because it's such an interesting human story. You know, your book, his book. These books are very readable and they're very Shakespearean. But I guess why did you dedicate the book to Michael? How do you think your book is going to differentiate from the eventual Michael Lewis book? Yeah, it'll be wildly different. So I dedicated to him for a couple reasons. I mean, one, this is my first book and I'm going up against the greatest writer of our generation, you know? Yeah. And I do that going into it.

So it was just like, I wanted to acknowledge it. And obviously, I've admired the guy for years. I've read most of his books. You know, he's great. I also, you know, as you know, having read the book, it at least tries to be a fairly funny book. And I wanted to do that, you know, going into it. I mean, it isn't like a Dave Sedaris book or anything.

But I'm pretty light in a variety of times throughout it. I thought that was kind of a funny way to open. It's just sort of open up with that unusual move like that to people who got to know what they were getting into. But I do genuinely admire the guy. He's so great at setting a scene and, like, taking you through history and sort of bringing people alive. And I think that's what his book is going to do, you know, he's going to introduce a bunch of characters. You're going to see them. You're going to, breathe the air that they were in in the Bahamas as he was talking to them. You know, that's the kind of thing he is going to be able to do. I wasn't able to do any of that. I wrote the book in way less time

during a period in which nobody wanted to talk about FTCX. Nobody wanted to be associated with it. you know, it was very hard to get sources to speak with me. But I think what I'm able to deliver hopefully better than I'm guessing Michael Lewis will be able to is the larger story that Sam found himself in and that sort of the mechanics of this very weird world and how he was able to take advantage of it and why he saw an unusual arbitrage opportunity in this space. And I also think I probably, I have a feeling that even for all of Michael, we'll see. I mean, I'm sure they'll write a great book or as a really great book. But I think I do get the sort of effective altruism viewpoint better than most people do.

And so that's a big undercurrent. What do you? What do you? Your viewpoint on effective altruism. You like it. You think it's BS and virtue signaling. What's your view? Oh, I like.

I think, I think, yeah, people are great. A big theme of this book is the philosophical element of cryptocurrency and the importance of that element. And a part of what makes this story interesting to me is most cryptocurrency philosophical battles are just coins versus coins. Sam brings in this whole separate. philosophy that never had, usually doesn't have much to do with it, of EA and it's sort of that stew created chaos. My thinking on almost any philosophical viewpoint is they're all useful tools

and they're all terrible if you take them all the way. Like, you know, they, they are all horrible at an extreme. And I think Sam was an extreme with EA. And so I know more think that Sam's extremity on EA should reflect on EA than the fact that most hardcore Bitcoiners that you meet, Meep aren't very fun to hang out with it parties. You know, that's just a reality of intense Bitcoin people. That doesn't mean that Bitcoin is bad. I think Bitcoin's great. You know, I also find a lot of Bitcoin people super annoying to talk to.

So I just, I think it's similarly, you know, when I was hanging out with EA people, which I did for a while in 2019, but before I even knew who Sam was, they made me feel like I should be a better person that I should be doing more in the world, that I should be better as it is than, you know. I think Sam has jaded me a little bit on it. Maybe I need to get myself up to speed on it. I'm glad I asked the question. So I'm at the part of our podcast where I come up with five words.

I don't have got a chance to listen to any of our podcast. I'm going to read you five words, Brady, and then I need you to react to them. You could be a one sentence, 10 sentence, a one word. Just sort of, I'm going to say it. You react. Caroline Ellison. Overindexed. What does that mean exactly?

Help me. I think Caroline and all the other people, I think they're all good, interesting, useful people in the world. But I think really this is ultimately a story of Sam. And I think a little bit too fixated on the fact that he was a co-worker with his girlfriend. That might be kind of weird. But I don't think it really explains much of the many billions of dollars that were lost. You know, I think this is really a Sam story, not a Sam and Caroline story.

Okay. Gary Wang. Basically the same answer. I would like to know, I guess, but he's just a little more mysterious. I would like to know more about Gary. I don't understand if Gary was a crazy technical genius or was just simply a genius for getting Sam. what he wanted built, which I think it might have been more of the latter, but I don't know. But Gary's a mystery.

Nobody knows too much about Gary, you know, including me. So maybe, maybe let me phrase it this way. Gary, guilty. Caroline Ellison, guilty. Nasad, the tech guy, guilty. So we have three of Sam's closest cohorts have all committed guilty. Are they guilty and over-indexed? Are they guilty and have smoking guns in their hands?

Or do they have the... evidence and resources to put Sam away for a long time. Oh, I mean, I mean, you know, if that's the question, sure, I mean, if Sam did a bunch of wrong things, they did too. I mean, this is why I described Sam was a geek with swagger. We were talking about that before. You know, I mean, this guy had enough charisma to persuade Gary Wang to leave his high-paying deck job and just come work with him to start up this hedge fund in the Bay Area, you know, like they did things at his behalf that they shouldn't have done. So if the question is, do I think that a court will probably condemn them as well, Sure, of course. The members of Billy the kids gang were still guilty, even though Billy was the leader.

But it's still like, you know, it is still fundamentally a Billy the Kid story, just like this is fundamentally a Sam Bankman-Fried story. I don't tend to think about things in legal fashions too much. I think about them in terms of big narratives. And so in terms of the big narrative, this isn't a story of a bunch of geniuses coming up with some conspiracy together that ultimately led lots of people losing billions of dollars. This is a story of one big personality who persuaded a number of other smart people to do. his bidding. All right, I'm going to keep going. We went to Caroline Ellison, Gary Wang. CZ, founder of Binets. Oh, man, Kingpin. And father figure, you know, I think in so many ways, Sam was emulating CZ. And, you know, like, I think, I don't know what people called him SBF before he got into

crypto, but I don't think it's any accident that Sam really liked being known by a series of initials, just like CZ was known by a series of initials. You know, FtX launches a token, just as Binance launched a token. FtX was sort of like wandering around the world, sort of know exactly home location, you know, much like Binance did. And I think Sam was 100% targeting. I think the reason they took the big swings that they took in 2020 or in 2022 really is because he thought he had a chance that they made a lot of money that they could overtake finance eventually was what they thought he had to do. I mean, I think maybe arch enemy is sort of the best, is the best. Yeah, There was a rivalry there. There was a fraternal rivalry. Obviously, CZ helped him get the business started.

I was at the inception point of the last transactions, meaning the Sam was speaking about CZ in a way that I never would have in Dubai and Abu Dhabi, which led to CZ unwinding his FTT token. But make no mistake, CZ did not put Sam out of business. If Sam was running a legitimate business and he had the capital that he was telling you. people he had, he would have been able to have met that sale easily and things would have progressed. And he would have been well served back in May of 2022 to have said, hey, lost the money at Alameda. I'm shutting Alameda down and just focus on FTCS. He still would have been fine, but he couldn't do those things. There was too much wrapped in there. You wrote this beautiful book, SBF, how the FTX bankruptcy unwound crypto's very bad good guy. And you wrote a book that helped me learn a lot more about the situation away from own facts, but the facts that I had on the ground, it was clear to me that Sam had something

out for CZ. And he was, you know, not just the nastiness on Twitter, but he was telling regulators in, you know, Abu Dhabi and Dubai that, you know, CZ was not to be trusted. And so the weird thing happened is he ended up being the one that got knocked out of the game. The other thing, Sam did another weird thing. He said, well played. I don't remember that on Twitter, but it's not a game. You know, you've got real people's lives and money at stake. You can't say well played. It's just too disassociative. But I ran into CZ in Sam Maritz in January. So January 23, I went to the CFC Sam Maritz Conference. We had a chance to break some bread together at dinner. And I actually thanked him. I thanked him for the exposure because I was in the process of

introducing Sam to some of the biggest investors in the world, which included the crown prince of Saudi Arabia, the president of the UAE. And who knows? Maybe they would have invested their money. And that would have been very damaging for me and my business. Not that Sam didn't already hurt me. He certainly did. But it's less damaging when some of your closest friends don't put any money in or its exposure happens before the money goes in. I've got two last words for you, if you don't mind, DFI, the concept of DFI.

And let me ask a little bit of an addendum. Is DFI one or are we going to be in a trade five world with a tiny bit of DFI? I think we're going to be in a trade five world and a DFI world. I think the way that technology usually worked out is it finds new corners and new interesting things for itself to do. So I think both will exist. I think we'll be surprised in 10 years how we're using defy. You know, just like when the internet started, I remember the first time I heard about Twitter. Like, why would you write only 140 characters when you can do a block that gives you as much space as you want?

That sounds dumb. You know, but like that worked out. You know, technology is surprising. So I think defy will win. I think one of the most important things for people to understand, I think coming out of this whole story is people see Sam as a condemnation of crypto. But the truth is, the truly decentralized things, you know, the truly decentralized entities through the Sam story did pretty well. So, for example, there were a bunch of lenders who were entirely defy lenders. We know that all the

centralized lenders like BlockFi and Celsius and all of them went under. The defy lenders were fine. They had, you know, there were some liquidations of people, you know, they were never insolvent, And so I think Defi will be fine. I think it will have a, I think it has a bright future. Do I think that means they'll barrel over Goldman Sachs? I would make that call. But I think it'll be with us for the foreseeable. It's really well said.

Last word of my five words, Brady, Sam Bankman-F, SBCF. The big thought for me on Sam, I guess the big red flag of Sam is just really, honestly, beware the good guy, beware self-righteousness, because it has many time. You know, I made a comment about Fidel Castro in the book, you know? I mean, I think Fidel started with some real idealism, but like, believing you're more right than everyone else can lead to really dark places eventually. So I guess that's my big thought. And there's also a cautionary tale in your book, this can and likely will happen again. It's not just Charles Ponzi and it's not just Bernie Madoff and Sam Bankman-Fried and the woman Elizabeth Holmes that ran it.

And Theranos, unfortunately, this is something that we will live with. And it will, you know, in Madov's case, he was one of the most regulated people on the planet, still was able to commit a three decade plus fraud. So we're going to be living with this. What's next for you? I mean, you know, I'll be at Axios. You know, I write this Axios crypto newsletter every day. I would love for folks to check that out. I read it with my co-writer, Crystal Kim. You know, hopefully I'll end up doing some more books on some more topics. We may do a paperback with some more about the trial if people like this one. So, you know, we'll see. All right. Well, listen, And congratulations to you.

I loved reading what I read, but I had one eye closed in certain sections. I was wincing, and it was quite traumatic. Read the conclusion if you haven't yet. The conclusion closes with some big thoughts, which you may find. Oh, yeah, no. I read that. Yeah, so I'm talking about your book is not only just about Sam in my mind. The reason why I wanted to bring you on, your book is about human nature.

And your book is about certain types of people. it's almost like a cautionary handbook with a real-life example that it's quite contemporary for all of us. And that's what I think makes your book so interesting. Yeah. And I don't want to give away the end of your book, but that's more or less the gist of what you're saying to people. Well, God bless you. Great book. I look forward to reading your blog on Axios.

And thank you so much for joining us today on Open Book. As I said in the interview, I thought Sam was the Mark Zuckerberg crypto. I didn't think he was the Bernie Madoff. Terrible story. Obviously, many of us got caught off guard by him. Lots of cautionary lessons there. Sometimes we look at peculiarity and eccentricity and say, well, that's okay. The person is a genius and very rich. Other times we should probably be looking at that and saying, well, wait a minute, there might be something more to this and perhaps something weird or nefarious or maybe this is a red light as opposed to a green light. One of the things that I learned from what happened is small groups of people can commit very large financial crimes. And so if it was Bernie Madoff as an example, he had himself, his brother, his assistant and an accountant across the Dabancy Bridge in Rockland County. In Sam Bankman-Fried's case, it was himself, his head of technical operations, Caroline Ellison, who was running his personal trading account, and his partner and founder at FTX. Those three people alongside of Sam committed

that crime. And of course, three of them have already pled out. If you put a lot of people in soup and you make a lot of people accountable, there's always a person of conscience that steps up and says, hey, this doesn't work for me. But in a small group, that doesn't happen. Some people say to me, well, will history ever repeat itself? I have really bad news about that. The answer is yes. Bernie Madoff, he was one of the most regulated people on Wall Street. He was the most looked over. The SEC probably examined his books and records three or four times, didn't see any problem. Even Madoff himself admitted that in 2005, three years prior to the to his demise, he thought they had him cooked. They thought that they were going to come to him and say,

hey, you're committing fraud. And so, of course, that did not happen. Three long years later, he had that fraudulent explosion. And so we got Sam thereafter. There are many smaller ones that people are not even aware of that don't even hit the news. But yes, history will repeat itself. I guess the thing we have to be super concerned about and super worried about is not letting it happen to us. And so it requires more in-depth investigation. It inquires really tracking the money and who are the actual trigger pullers on the money. If you do those things, we can prevent it from happening. But, man, it's always going to happen.

Hello? All right, Ma, you're ready to come back on the show? Yeah, go ahead. I had another guy on by the name of Brady Dale. Okay, he has written a book about Sam Bankman Freed. Okay, and you know who Sam Bankman Fried is, Ma, right? That's the guy I went into business with. It looks like Anthony DeFiel.

You know who I'm talking about. Oh, oh, yes. Okay, sorry. Well, I'll make her back. Okay, so what do you think of Sam, Ma? And tell me what you thought of Sam in the beginning, and tell me what you think of Sam now. Well, in the beginning, I thought he looked like my nephew,

that he was a clone. And my nephew, fortunately, or unfortunately, it's a very innocent human being, and I looked at him as being very innocent. What do I think of us now? So you liked him, right? You liked him. Yeah.

You liked him. Okay. So tell me why you liked it, because I liked him. I'm not going to be as well. I don't BS people. You know that. I liked him. Why did you like him, Ma?

Because he looked like my nephew, and my nephew is innocent, and he would never screw you. Okay. All right. But what do you think of him now? I think he's a loser. Okay. And so what do you think happened there, Ma? He got arrogant.

He got too big for his britches. He was amoral, all of the above. What do you think happened there, Ma? I think that he was losing. He got too big for his britches. and the age made a difference because he really got a lot of experience and he really didn't. Okay, but you, we sometimes get people wrong, though, right? Didn't you and I both get him wrong?

Yes, absolutely. Okay, all right, but I mean, that happens in life. What the hell are you going to do? Should I tell my viewers and listeners that you call Bitcoin Bitcoin? Should I tell them that? Do you think it's Bitcoin, Ma? I think it's funny that you call it that. Well, I've been corrected, so now I know it is it.

All right, so what do you call it now? Bitcoin. Okay. All right, and you watch it pretty regularly, right? Yes, right, too. You call me the other. 30,000. Yeah, see that?

You called me right away when it got through 30,000, right? You like the action, right, Ma? Well, I think that you know how to make money. And when you call something, it might take a little while to get perfect, but it won't be perfect. I believe that it's going to even go higher like it wasn't at one time. All right. Let's see what happens. It may be right.

All right. I love you, Ma. All right. I'll talk to you later. All right. I'll talk to you later. All right. Bye.

Bye. I am Anthony Scaramucci and that was open book. Thank you for listening. If you like what you hear, tell your friends and make sure you hit follow or subscribe wherever you listen to your podcast. While you're there, please leave us a rating or review. If you want to connect with me or chat more about the. discussions, it's at Scaramucci on Twitter or Instagram. You can also text me at plus 1, 917, 909-29-296. I'd love to hear from you. I'll see you back here next week.