The Daily Signal - INTERVIEW | Jake Denton Explains What You Need to Know About Trump, Twitter, and FTX

Episode Date: November 22, 2022

Donald Trump’s Twitter account has been restored to him. The former president's Twitter account is one of several high-profile ones to be resurrected following entrepreneur Elon Musk's takeover of the social media platform. "I think [with] Musk getting in and seeing what was happening behind the scenes, he realized pretty quickly that the content moderation rules that had been put in place by the previous regimes were actually completely arbitrary," Jake Denton, research associate in The Heritage Foundation's Tech Policy Center, says. (The Daily Signal is Heritage's multimedia news organization.) Denton joins "The Daily Signal Podcast" to discuss what Musk has changed at Twitter as well as the bankruptcy filing of the cryptocurrency exchange FTX.  Enjoy the show! Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

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We'd love to talk, business. This is the Daily Settle podcast for Tuesday, November 22nd. I'm Virginia Allen. Former President Trump's Twitter account has been restored. That's just one of the big changes Elon Musk has made since taking the helm of Twitter. Heritage Foundation's research associate in the Center for Tech Policy, Jake Denton, joins the show today to talk about what we are seeing at Twitter under must leadership. Plus, Jake also breaks down what you need to know about the bankruptcy of the cryptocurrency exchange FTX. Some of the details of how the company was run are pretty shocking. Stay tuned for my conversation with Jake after this. The Heritage Foundation

takes the field on offense with their young leaders program. I'm Evelyn Homily from Hillsdale College. I'm Harrison Stewart from the University of Virginia. I'm a journalism intern with the Daily Signal. I'm a digital productions intern in communications. For spring, summer, and fall semesters, the Heritage Foundation hosts undergraduate and postgraduate interns right here in the nation's capital to train our country's future conservative leaders. As a daily signal intern, I've had the opportunity to cover exciting events here in D.C. and work in a fast-paced environment with some of the conservative movement's best journalists. In YLP, interns are on the cutting edge of the conservative movement,

attending exclusive briefings from heritage experts, members of Congress, and movement leaders fighting for the fate of our country. It's been exciting connecting with big names in the political. world and better understanding our nation's greatest threats. If you want to go on offense with other passionate, dedicated conservatives, go to heritage.org slash intern to learn more about the young leaders program. We are joined today by Heritage Foundation Research Associate in Tech Policy. Jake Denton, Jake, welcome back to the show. Thanks for having me back. So Jake, we had you on a few weeks ago to talk about Elon Musk buying Twitter, big news after so long. And since Musk,

purchased Twitter. He's made some pretty big changes to the platform so far. Some people love the changes. Other people are not so happy. Some of the folks who work at Twitter are not so happy. Some folks on the political left are pretty angry about these changes. And some of the biggest news, recent news, is that Musk has restored former President Donald Trump's Twitter account. Why is Musk allowing Trump back on Twitter? Well, I think Musk, you know, getting in and seeing what was happening behind the scenes, he realized pretty quickly that the content moderation rules that had been put in place by the previous regimes were actually completely arbitrary. You know, there are forms out there where you can see what Trump was banned for, and it's incoherent. It makes no sense. And I think Musk sees that the rules of the past regime will always hold back Twitter. You know, he wants to move. He's saying the previous, you know, Parag and Jack, was Twitter 1.0. We're heading to Twitter 2.0. That's where kind of these expectations for the new employees come from. And if you carry over the baggage of Twitter 1.0, you're bound to recreate

the same mistakes. So I think Trump was the most obvious. You know, it's the elephant in the room. Is he ever going to come back? If you had said he is, you know, a year ago, I don't think anyone would have believed you, but things are changing very quickly. And I think this perfectly positions Twitter to move into Twitter 2.0. Well, and I had to laugh a little bit at the way that must did it, because He actually put a poll up on Twitter and he let Twitter users vote and say, yes, we want the former president back on the platformer. No, of course, we can't say definitively whether, you know, that alone was how Muth made his decision.

You feel like he probably already had determined what he wanted to do. But one way or another, the poll saying, yes, bring Trump back, one out, which is pretty fascinating to see. And yet Trump isn't tweeting. Why? Yeah, so quickly, the poll was actually a totally new direction for the platform because initially the Trump ban was going to wait until the oversight board had been formed. Okay. And Musk had kind of, you know, said no big changes of the platform will occur until this like panel of academics assembles and we can review them, you know, with every perspective at the table.

And I think in the midst of the chaos of the employees revolting against him, he just kind of went rogue and did it himself. And I think we've gotten, you know, beyond even Musk, Project Veritas, several other accounts that I don't think would have made it through the oversight board. So very substantial that he's kind of diverted course from that initial plan, probably the bad advice of an employee who's no longer there. So that was a great development. Classic Musk. Yes, yeah. And then in regards to former President Trump, it's fascinating because his account has been restored, but he's not actually tweeting. Yes. So truth social, actually, it's contractually obligated that Trump remains on the platform exclusively, so to speak. So there is a clause within the contract that allows for him after posting exclusively on truth six hours-ish later, he can then post on an adjacent platform. And so I think it's kind of, you know, boxing him in a bit. He's saying-

But this is Trump's platform. So did he he allowed those rules to be written in for his own platform for himself? Correct. Yeah, this was trying to create like shareholder value, right? You know, why would, because, you know, they go public. Why would I invest in this? And so Trump gave them that reason. You're going to have the Trump bombshells exclusive on truth. And so I believe this contract expires almost like a year out from now. So he can either, you know, lose that exclusivity deal, you know, cross post on both. Quite a few paths. I think the most likely kind of outcome to this is heading into, you know, the third. thick of election cycle, we'll see Trump post exclusively on truth, and then it's mirrored on Twitter and, you know, any other profile. But I don't really see him coming back. And I think he'll play kind of this, you know, you could have had me and I left type of angle, but it really is a contractual issue. That's fascinating. Well, Musk, when he bought Twitter, he promised to really model it after a town square, saying anything that you say in a town square, you should, should be able to say on Twitter because Twitter is now essentially the world's town square.

But I want to ask you to weigh in on something that was written in the New York Times by the former head of trust and safety at Twitter, Yoel Roth. So he had a piece in the New York Times on Friday and he writes, advertisers have played the most direct role thus far in moderating Mr. Must's free speech ambitions, as long as 90% of the company's revenue. comes from ads, as was the case when Mr. Must bought the company, Twitter has a little choice but to operate in a way that won't imperil the revenue streams that keep the lights on. So the implication here is that advertisers are not going to put up with language on Twitter, with claims on Twitter that are false or that they deem its hateful conduct or whatnot.

What are your thoughts here? Can you have the free speech aspect on Twitter and also keep advertisers happy? Yeah, it's very interesting to kind of watch this unfold because it's almost like selective outrage from the corporate interest bubble for years, essentially since the origins of Twitter, child pornography has been a rampant issue on the platform. And what we're seeing from Elon Musk is that there was almost like a deliberate, you know, just don't address it, allowed to exist type of mentality from, you know, Will Roth's trust and safety group. And now Elon's saying, you know, it's a top priority. They've already gotten rid of tons of the hashtags that were used to kind of like traffic child pornographic images.

But then, you know, if President Trump's on the platform, advertisers won't be on the platform. So these are the same people, you know, that are objecting to content on the platform that were totally fine with the previous Twitter that had all these explicit images and terrible things on it. And so I think it really just comes back to, you know, the corporate interest. that are aligned with the left that intend to use their power to drive the direction of the country. Twitter's critical infrastructure at this point, and they don't want to have someone like

President Trump on the platform. So it really is a political move here. I don't think it has anything to do with their true moral objections to, you know, the rhetoric that could come out. Okay. That's fascinating. Thanks for explaining that. Now, when it comes to Twitter's future and looking forward, of course, you know, whether

Whether you're on Twitter or not, Pew Research estimates that about one in five adults in America use Twitter, but a lot of Americans also have stock in the platform, how well or poorly Twitter does affects global markets. So far, for those who use Twitter or have stock in Twitter, they want to know, is the company going to make it under Musk? Your thoughts. I think, you know, these speculative kind of articles from, you know, CBS to any other given publication saying that Twitter's going to go under and they're unstable are really just trying

to prop up this almost bulk kind of Silicon Valley model where you overstaff, you know, those TikToks where the IT girl is, you know, posting a day of my life in tech and they don't do anything. That is kind of the complex that the media apparatus wants to prop up and Elon is, you know, bashing it down with a hammery showing that I believe from their 7,500 employees at their all-time high, Twitter is operating almost the exact same structure, same style, with almost just around 1,000. So such a substantial reduction in staff size, yet, you know, the thing isn't burning down. And you're seeing that model and that kind of perspective spill over across the tech sector. You have Amazon, Google, all these other companies beginning to lay off

these extra staff. And frankly, I don't know how the past kind of leadership structure found things for 7,500 people to do at Twitter. You know, they have that little roundtable the other day of the engineers coming together and helping sort through the code. And, you know, they're making changes with just around 30 to 40 top-level coders that we couldn't get with, you know, 7,000 staff. So I think we're seeing that the model is completely flawed for these tech companies. You know, they've had so much extra money that, you know, the way they decided to spend it was

on staff when that really wasn't what they needed. Well, Jake, I want to take a minute to talk about a tech company that has gone under. A cryptocurrency empire has gone bankrupt just recently. So last week, news broke about the bankruptcy of FTX exchange. FTC, they were a leading centralized cryptocurrency exchange. Walk us through this. What exactly did FTX do as a company and how? How did they go bankrupt? Yeah. So in order to kind of really understand this, we have to kind of jump in the time machine and go back to 2017, where the founder of FTX, Sam Bankman-Fried, founds his first company,

Alamator Research, which is a quantitative trading company, focusing on cryptocurrency. And so he kind of develops this lore behind him as he amasses a great deal of wealth kind of using legitimate, you know, quantitative methods to trade cryptocurrency at high volumes, all this money spins up FTX, which is essentially a normal person's crypto exchange, right? Forever, crypto is impossible to invest in because it required a sophisticated knowledge of, you know, basically this Korean apparatus that had, you know, crypto exchanges that weren't necessarily legal in the United States. So Sam brings this kind of layman's, you know, normal person, crypto exchange of the states,

and overnight it's a success. It becomes a monopoly. Regulators are, you know, cozy. up to Sam, there's no shortage of photos with him and Maxine Waters to Gary Gensler, the SEC Commissioner. And then overnight, essentially, just similar to its rise, it collapses. And, you know, there's no sign as to initially why it could have happened. And then we begin to sort through the rubble and see that users' funds that were going

onto FTX were being transferred to Alameda Capital, the original company that essentially spun up FTX, to make really risky trades. that were kind of baseless. They were investing in obscure alt coins, which are essentially, you know, different from your bitcoins and Ethereums. They fulfill very niche purposes. And then the other funds that were still in Alameda were being loaned to Sam Bankman-Fried. And what Sam was doing with his money, I don't think at this point it's any secret, was donating to political causes predominantly of the far-left variety, anywhere from his own family's PACs to, you know, political candidates that were primary and kind of, you know, institutional folk. And then they were also just purchasing, you know, houses and luxury cars for executives. So, I mean, you really pull back the curtain here, and it appears the entire thing was just a pass-through entity for basically purchases that had nothing to do with cryptocurrency, everything to do with kind of the hedonistic pleasures of the, you know, the leadership apparatus to the political causes that he believed in. Yeah. Now, we know that companies, large companies,

do go bankrupt and companies in general, they go bankrupt all the time. But why is FTCS specifically taking the news by storm? Why is everyone so blown away that this company specifically went bankrupt? And what does this mean for global markets? Yeah, well, I think there's a handful of reasons why you could say this took such a strong foothold in the news cycle. I think the first has to be with the kind of speculation over the ties with the Democratic Party and all these other institutional forces that allowed for them to kind of manipulate this regulatory environment and develop a pseudo-monopoly over crypto exchanges domestically. But I think the more interesting thread, and it's a little less politically valuable,

is kind of the complicit behavior with Silicon Valley and the venture capital kind of apparatus. You have groups like Sequoia Capital, which are known to be very good at due diligence. They don't invest in, you know, obscure companies like this, give Sam $400 million without, you know, a corporate structure existing. There was no board of directors. The day one affidavit of their Chapter 11 filing found that they couldn't even produce the bank accounts that the company had. There's no bookkeeping at all of where the money was going. They couldn't even provide a list of names of individuals who worked at the company. There was no HR apparatus. People were essentially being paid over a Venmo equivalent.

the supervisors approving the process of payments, whether that be reimbursements or just, you know, your normal salary, were approving the process through the use of emojis. So you get like a thumbs up or a thumbs down on if you were getting your disbursement. So Sequoia Capital and, you know, a whole host of other institutional investors, here's this pitch from 20-something who's on loads of amphetamines, right? He's taking everything from Adderall to Parkinson's medication, overly stimulated, shaking in every video you can find of him. And they ask him, you know, for details of FTX. And he presents to them, you know, this company that has literally no corporate structure. And yet they still give him all this money.

And the question is, what motivated these really legitimate enterprises, these operations with, you know, no shortage of Harvard business grads and veterans of the space, to reject every principle they've ever had and invest in Sam. And I mean, someone with a more pessimistic mind would probably say it's the political connections. Others could, you know, point at the nature of crypto, this fog around the space of whether or not, you know, it's a legitimate enterprise. There's really not a great understanding of, you know, the older crowds of what crypto even means. But there really hasn't been an answer for that yet. And groups like Sequoia have slid under the radar, you know, the media isn't talking about them at all. but they were essentially the pitch deck.

You know, you go to Tom Brady, you go to any of these individuals who put money in, and Sam's telling them, oh, Sequoia invested. So they kind of need to answer for what they saw in the process beyond, you know, an eccentric 20-something loaded on amphetamines that motivated them to give them all this money. Yeah, it's wild because you think about all of the hoops that just a small company in the United States has to jump through, you know, with all of the red tape and the things that they have to have to show the IRS. And it's almost mind-blowing to think that that FTC didn't have some sort of structure set up. So what happens now? Well, it's very interesting because now, I mean, every

regulator in Washington, you know, has essentially met with Sam. There's been no shortage of cocktail receptions to, you know, on the hill meetings. You know, he visits with Gary Gell. of the SEC. So all these people are, there's two classes, right, the folks who are deceived and the people who knew. And I think both are probably equally angry. The folks who were deceived believe, you know, a fast one was pulled on him. And the ones who are angry are just mad that this blew up and they're now implicated. And so we're essentially on this collision course with reality where these regulators have to react in some form. Inaction basically shows that they're complicit. So I believe that the hammer is just going to drop.

I mean, it's going to supercharge the anti-crypto rhetoric that's already existed here in D.C. And, you know, the golden boy is gone. So everything that was holding them back from, you know, already dropping the hammer, it's going to be open season. I don't think there's going to be really another crypto bull run until this is all sorted out with the regulatory environment. But this is not going away anytime soon. You're going to keep a close eye on it. Jake Denton of the Heritage Foundation. Jake, thank you so much your time today.

We really appreciate you joining. Thanks for having me. And that'll do it for today's episode. Thanks so much for listening to The Daily Signal podcast. If you've not had the chance already, be sure to check out our evening show right here in your podcast feed where we bring you the top news of the day. Also, make sure to take a moment to subscribe to the Daily Signal

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