The Wolf Of All Streets - $250 Million Bail | FTX Co-Founders Plead Guilty | Crypto Week In Review

Episode Date: December 23, 2022

The review of the most important news of the crypto week! ►► Sponsored by PRIME XBT! Sign up for a new trading account using the link below & receive up to a $7,000 deposit bonus with “wolfofallstreets” promo code.  https://u.primexbt.com/WolfOfAllStreets ►► JOIN THE FREE WOLF DEN NEWSLETTER https://www.getrevue.co/profile/TheWolfDen  Follow Scott Melker: Twitter: https://twitter.com/scottmelker  Facebook: https://www.facebook.com/wolfofallstreets   Web: https://www.thewolfofallstreets.io  Spotify: https://spoti.fi/30N5FDe  Apple podcast: https://apple.co/3FASB2c  #Bitcoin #Crypto #Trading The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. This video was created for entertainment. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this video constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.

Sam Bankman Freed is sitting in a Bahamian prison, checks notes. Sam Bankman Freed has been extradited to the United States and is sitting in a prison in the United States, checks notes. Sam Bankman Freed is out on $250 million bail and is playing League of Legends in his parents' basement. How did this guy go from sitting in one of the worst rat-infested maggot infested, rape infested jails in the world to back to his parents' basement where all crypto people eventually end. We're going to talk about that and all of the news in review today. You guys don't want to miss it. Let's go. nap on that like button. If you're wondering why I look like I just rolled out of bed and why my voice sounds like I swallowed some sort of wild animal, it's because holiday travel. I got home, pulled into the house with my seven-year-old like this and my three-year-old like this at around

2.30 in the morning last night. That's about seven hours ago. By the time we got everyone settled, everything, it was after three. I woke up at 8.45 this morning in a complete daze and confusion. Newsletter not yet written, but ready to show up here and talk to you guys about the Week in Review. And this isn't just a Week in Review for you guys. It's a Week in Review for me. I literally have not turned on a computer, opened a computer, looked at a computer in a week. Didn't write any newsletters, didn't do any streams, didn't even barely check the news. Wasn't even sure of the price of Bitcoin, to be quite honest, because I went skiing with my family.

Am I good at skiing? No. No. I skied once in 2019 for about four days, and this was the second time that I ever went skiing. But I will tell you, it's pretty much the most fun thing in the world. It's amazing. And I'll tell you what's really frustrating. I kind of tweeted about this, but yet once again, I was outclassed, outathleticized, out, just out everything by my wife. She was the same, went in 2019 for the first time

ever we're out in snowmass so we decided hey we'll do two days of private lessons this time right the kids will go do their thing two days of private private lessons we do the first day the private lessons we're also there with friends who can really ski they're out doing their thing on the second day we all of a sudden emmy is like a oian, like Alpine downhill skier, like perfect parallel skis and stuff. We go to lunch and on the way to lunch, she's like, I'm going to ski with the other people. No more lesson. I go back to the instructor and he goes, I've been, I've been doing this for 40 years. Scott actually called me Steve doing this for 40 years. Steve, your wife is a once in a generational talent at skiing.

She's like, you're never going to keep up with her. She's always going to be faster down the mountain. She's always going to be better. I'm sorry. I'm sorry, but this is not a sport that you guys are going to play together. Pretty crazy. Pretty crazy. But I kept up anyways.

But yeah, so it was really, really and uh pretty pretty pretty awesome kids loved it took my took them down like a big part of the mountain my seven-year-old pretty awesome pretty awesome anyways that's so that's what i've been doing if you're wondering where i've been and why i haven't been here for the holidays and you may have noticed also while i was gone got a got a new sponsor which is awesome because obviously uh that's something that we're excited about to keep everything going, to keep you guys informed, to keep momentum flying. And that is PrimeXBT. And you've probably seen them on a million YouTubers' streams.

We're going to be telling you a hell of a lot more about them over the next few months. But as you can see, we got the banner thing. You can read about that. You can check them down in the description. You can get like 7,000 bucks depending on how much you deposit. There's a lot going on there and we're going to be keeping you updated with everything that they're building over the coming months. Joe Bob here says ski resort sponsor. Yes, I'm sponsored by Snowmass, As aspen snowmass that would be awesome though wouldn't it that'd be awesome yeah josephine says scotty can i sponsor your stream too got a

little crypto apparel shop i started yeah for free man i'll let you come on one day and tell us about it tell us about it i'll put it up there anyways, you didn't come to hear about my ski trips or the nightmare that is holiday travel. It took us 26 hours to get there on the first day. We ended up having to sleep in Dallas, get up in the morning, fly to a different city, drive to Aspen. It was a whole thing, but we did get home yesterday. Our friends that we were with, we had a 3 p.m. flight, they had an 8 a.m. flight, and last I checked at 9 p.m., they were still in Colorado in a different airport, right? And they had left seven hours before us. Nightmare. Anyways, Izzy says, Scott got awesome voice, to be honest. Yeah, and it's even better when I'm tired. As my mom always said, you know, you've got a face made for radio let's dive into the news

right now because yeah as i said in the beginning obviously the story right now the story right now is sam bankman freed and how everyone in crypto comes full circle and eventually ends up living in their mom's basement spf's 250 million dollar bail is one of the largest in US history. It doesn't mean he has that much. Guys, okay, so like, you know, I'm sitting down at the airport trying to catch up and I start seeing all these tweets. SPF only had $100,000. How did he pay $250 million in bail? Right? Where did they get the $250 million? Did Joe Biden post the bail? I don't know, man, but wild conspiracy theories. And it took me all of like 30 seconds Googling what this means to know that he didn't have $250 million. You don't even need to put down anything. It's a

personal recognizance bond, which means that as long as you show up in court and do the predetermined things that the court says, you don't have to put down anything. Right. So $250 million is a big number, but it's a penalty on the people who signed for him if he leaves and nobody's ever going to pay $250 million if Sam Bateman Freed disappears. It's an incredible, incredible clickbait, nonsensical story. Right. And everybody, as usual, fell for it. But yeah, I, you know, I did a Google search. I probably didn't put anything down. They have like a few million dollar house. Right. They had apparently his parents signed and two other unknown, very wealthy people signed the guarantee. So he gets moved to his parents' house, gets to chill there for a while with the ankle bracelet on and stuff

and probably didn't actually have to pay anything. But as I tweeted this morning, what could be more fitting than his parents effectively using 10x leverage and a meaningless signature on a piece of paper to get this loan? Could have been 10 25 million that they guaranteed pretty fitting that the ftx uh ceo who went down for offering offering these kind of products that's how his parents rolled that's how his parents roll but either way he's ended up back probably having a tough time catching up on league of legends. I'm going to be honest. I feel for the guy. Right.

But basically the story would go that he was opposing extradition, spend a few nights in Bahamian prison with Jimbo and friends and was like, nah, bro, I would literally rather do 400 years in the United States than sit in this prison. And then got home and was like, Oh,

I guess I'm going to chill on my, on my on my couch pretty wild it's a pretty wild story but you guys have seen the pictures right i mean first of all like i don't know what weight loss plan he's on i guess like uh starving and um dropping the soap but the guy looks like he lost half his half half his body weight right he also looks uh like he's going to have a sword duel with a musketeer or maybe that he's going to search for buried treasure i don't really know but to be honest this is pretty much the best that he's ever looked at some like strong el chapo vibes i mean it's it's pretty incredible just looking at the picture. I think this is the first time in history that I've ever seen handcuffs used as cufflinks on a French cuff shirt. It's brilliant. I mean, look at that.

He's got the open cufflinks but wearing handcuffs. That has to be a first in history. It would have been cool if they had looped them through the thingies. Yeah. Anyways, but I would say that Sam is looking svelte, hardened. He probably has a huge full back tattoo at this point that was done in prison.

He's a hardened criminal now. Look at him. Look at him. But yeah, guys, please don't be fooled by the Sam Bateman Freed paid $250 million to get out of jail. This is a symbolic gesture jail this is a symbolic gesture this is a job gesture luke here says straight out of princess bride yeah he's not left-handed

no more rhyming and i mean it anybody want to be in it princess bride is a great movie man that's a really great movie it's a good one man anyways so moving on And how did we get here, right? I mean, it's got to be that SPF, you know, had these loyal, like, consularies, like second in command, these people that would die for him or do anything. Either that or Gary Wang and Carolyn Ellison, the two people closest to him, quickly ratted him out immediately and went for deals themselves. And we had already seen that Ryan Salameh from Salameh, Salameh, Salameh, that Ryan from FTX US, he already, we know, flipped on SBF before the bankruptcy and told the Bahamian authorities that SBF was transferring money basically from FDX to Alameda and it was

all a huge Ponzi scheme. But now we have finally the reemergence of Carolyn who people thought was fleeing all over the world, was doing like the face-off thing and getting plastic surgery. Nah, she was just cooperating, guys. All she was doing was going ahead and cooperating, which is a thing. And this is not like a joke. So I'm sure that she will get pleaded down massively. Maybe won't even do jail time. I have no idea. But she is facing up to 110 years

on seven charges, including wire fraud and conspiracy to commit both commodities and securities fraud. 110 years. And Gary's Wang, he's at four charges, I think. Conspiracy to commit wire fraud

and securities fraud, and he faces up to 50 years in prison. And they've both been released on $250,000 bond, not to be confused with $250 million bond. So they're both also chilling at home awaiting trial. But let's be honest here, guys. Let's be honest, because we did a lot of criticizing. We did a lot of criticizing. Oh my God. Myself included. I

literally like went on TV myself. I was like, nobody's going to jail, bro. Right. You've heard me say like Suzu and Kyle there. I'm not saying that they committed the same kind of fraud as SBF, but those dudes are like on a beach and painting and Doquan. I don't even know where he is, but nobody ever gets in trouble for financial crime until this time, right? You have to give credit. This was a massive effort by the United States, the SEC, CFTC, Justice Department. They turned this around fast, and they are definitely punishing the people responsible. So we had a lot of unfound criticism for the United States government, I would say. Man, Johnny Rico said that he goes by Little Wang now.

That's one of the funniest comments I've ever read. Johnny, you're welcome anytime. That's really funny. So, yeah, I mean, you have to give credit where credit's due. They have actually done their job this time, it would seem. So I'm assuming it's going to take quite a long while for all of this to uh play out honestly it's a week in review there's not much else to talk about in crypto but hopefully we can get past uh obsessing over spf and friends

you know what i mean jeff biaco says in prison the bf in spf does not stand for being freed he means boyfriend he means it's boyfriend luke says gary wang's new name is wary gang he's in the wary gang if he wants to survive wants to survive you have to join the wary gang and meanwhile this is the this is the dumbest story of the entire thing right the sec calls SEC calls FTT exchange token a security. Thank you for the protection, right? We have FTX, a pyramid and Ponzi scheme of epic proportions, all perpetuated on top of the free money printer that was FTT security token, because basically they just pumped the price of the token, which then they were able to use as collateral, which then allowed them to continue printing money. And it was this evil, evil, evil circular scheme that eventually died.

And luckily, we had the amazing consumer protection of the SEC led by legend Gary Gensler to help protect us from this in advance. No, they didn't. No, they didn't. Now that it's gone to zero in the complaints against Wang and Ellison, they're deeming FTX, FTT, a security. Their job is literally to protect consumers, consumer protection. That's what Gary Gensler is supposed to do. And now what they're doing is using the token that they didn't protect anyone from, the exchange that they protected nobody from. In fact, you could say that they were complicit, but hey, you can just watch me on Yahoo Finance if you want to see why I said that.

But now they're deeming it security, which protects literally nobody. In fact, it will hurt the remaining holders, whatever FTT might be worse, and it will probably hurt a lot of consumers who hold other tokens that could now theoretically be deemed securities as they build this precedent for calling things securities. So notice the library credits case, this, there was other cases in the past where they've just randomly, like in one sentence, included seven or eight random tokens as things that are securities we still have zero clarity as to what is a security in crypto and we only find out after the fact when things go bad and people get hurt and it makes absolutely no sense

absolutely no sense yeah joe would like you to everybody wang chung with me we're gonna make gary wang jokes all day everybody have fun tonight everybody wang chung tonight yeah that's it but yeah so now ftc exchange token has been deemed a security but not officially only in a complaint against them and still nobody knows what that means but here's what they said. In the complaint, it highlighted that FTX would use proceeds from the token sale to fund the development, marketing, business operations, and growth of FTX while using language to emphasize that FTT is an investment with profit potential. The FTT materials made clear that FTX core management team's efforts would drive the growth and ultimate success of FTX. You know what? In this case, who can argue?

It's probably security. But maybe you should have let everybody know that before they got absolutely completely wrecked. Maybe you guys should have been investigating Sam Bankman-Fried instead of deeming him the golden boy and the man that we needed to represent us on Capitol Hill and the guy who was meeting directly with Gary Gensler in an effort to get a wall put around FTX when regulation dropped. My God, man. My God. Joe Bob wants me to talk about the XRP versus SEC case.

To be honest, I'm not exactly sure where it stands today. I can just say that we should all be cheering for XRP to win that case because that would be a pretty epic blow to the space if Ripple XRP is deemed a security. Jeff says he missed me so damn much. I missed you too, buddy. Yeah. So let's continue on with the news and not much of it's good not much of it's good inside core scientifics pre-arranged bankruptcy the world's biggest publicly traded bitcoin miner filed for chapter 11 protection wednesday here's more details on what that means well first of all their chief mining officer, Russell Kahn,

he said the situation is much closer to Hertz and Ford and Delta than FTX. Everybody got to be throwing that FTX out there. But basically, this should be a true restructuring chapter 11. I had Mike Alfred on, I believe it was last week, and he was saying how insanely cheap the stock was. It was down 99%, And assuming they did not declare bankruptcy, that it would do very well. But listen, we saw Hertz go up five times because of Wall Street bets when it declared bankruptcy. This does not mean the stock is dead, but it does look like this is more of a restructuring than a liquidation. But yeah, pretty crazy. I mean, these guys, Core Scientific, they account for 10%

of the entire hash rate of the Bitcoin network. We're talking about 50 Bitcoin a day. They mine 1,295 Bitcoin mined in October. It's a lot of Bitcoin, man. A lot of Bitcoin. So this is one of those things that would probably be solved by a massive pump in the price of Bitcoin. But we've been talking about this for a while. We've had this rare situation here where we have hash rate at extreme highs, at all-time highs, while profitability in machines are at an all-time low. There's inflation. There's extreme electricity costs.

This is a horrible, horrible, horrible time to be a Bitcoin miner. So we will see what happens here, but hopefully we will be able to see them turn this around. Cause you know, we don't really want to see more liquidations of assets. The thing is though, if you guys have paid attention, you'll see a lot of fun about these miners. They've pretty much sold. They've pretty much sold their, they've pretty much sold their assets already. They don't really have that much Bitcoin that they're sitting on. Apparently, they can put a massive selling pressure onto the

market. Crypto Golfer says chapter 11 million investors are last in line and get screwed. That certainly seems to be the case with every single proceeding I've seen thus far. I mean, while I was gone, you guys probably saw that Voyager is now being sold apparently to Binance.us rather than FTX US. And if you start to do the math on how much the lawyers are paid and how much it costs to do this chapter 11 over and over and over again, probably the first day, if they had just liquidated the assets and everybody had just taken their piece of that $700 million hole, we would have gotten a hell of a lot more money. Now it's probably going to be 50 to 60 cents on the dollar at best, maybe even lower. It's crap.

It's crap. None of this helps anyone. Anyway. So let's hope that we stop seeing this contagion. We stop seeing these failures. We stop being embarrassed on the world stage and things better. And speaking of uh you know fud and bad things going down with binance everything is not fine says jean vieve

rock dexter now you guys i had her on and you guys kept screaming her name's kennedy no jean vieve I don't know how to pronounce my guest name. Anyways. Yeah, she's been going hard, going hard on the crypto side at trying to do some investigative journalism and dig deep into what's happening here. This, of course, is from a few days ago. But honestly, man, you know, I can't embrace yet the Binance fund. Just being honest.

There are a lot of similar red flags, but this is not FTX. There's no hedge fund that they're funneling all their money to. Your customer funds are probably actually, you know, getting deposited onto Binance. So this is not the same situation as FTX. Doesn't mean that something can't go wrong,

but this is not the same situation. She went through a whole lot of different reasons. Like for one, when looking at Binance, we know that they received a huge amount, maybe billions of dollars, hundreds of millions, certainly in FTT in the deal. When Binance was bought out of FTT by FTX, well, we know that those coins are now worth nothing. Is anyone accounting for the fact that those hundreds of million dollars now are a big fat zero? Also, there's a lot of people who are claiming that Binance could have a clawback on the $2.1 billion that they received. That was years ago, maybe, but that seems extremely unlikely from everything that I've read considering it was a buyout. It's not like a payment. Anyways, there's the fear that they could have $2.1 billion clawed back. That would be a very, very hard pill to

swallow for any exchange. See, file under not. Fine. And his answer when asked about it on CNBC, CZ said, we're financially strong, right? But listen, this is not a company that is required to share its balance sheet. Private company, they should. Private company. But then, this is not a company that is required to share its balance sheet. Private company, if they should. Private company. But then, of course, we saw Mazers, Mazers, Mazars. We talked about it last week that they've stopped doing crypto audits and basically just removed the Binance audit from their website, even though they said not an audit. Okay. And then of course, the fact that they have a huge part of their reserves in BNB, in BNB, which could be a similar situation to FTT or so they say, but it's actually a pretty

small percentage of what they hold. More than 70% of finance reserves are in BNB, BUSD and Tether, but mostly in BUSD and Tether. Either way, guys, listen, let's just do this again. Crypto exchanges are awesome. Everyone's hating on them. There's tons of FUD. I'm not saying the businesses, but I'm saying if we want to get money in and out of crypto, and if we want to trade, we need exchanges. So that does not mean that you leave your assets there. Don't. I hope nobody just cuts that beginning clip and acts like I didn't say the rest of it. Use an exchange for what its purpose is. If you're going to trade, that's it. And use it for that few minutes when you're getting your money in and out and sending it off to cold storage. But if you're

going to trade and you're going to use leverage, that can be a great risk management and counterparty risk management tool. It's fine, but only use it for trading. That's it. And then you won't have to worry about what Binance does. If at this point, listen, first of all, if Binance goes over, it would be horrible. But at this point, all the net outflows, people are clearly listening. But at this point, if another exchange goes under and you are still custodying all of your assets there and not just the part you're trading with it's going to be like a you know fool me once shame on you fool me twice shame on me right like voyager celsius block five ftx bald a whole list of other i mean guys, it's time to protect your own ass. Time to protect your own ass. I'm not saying that means you should go bank run on any of

these exchanges and take everything off, but use them for what they're for. This is not your bank. It's not your custodian. It's an amazing place to go trade a whole lot of assets. That's what we got there. What do we got next now? So I don't know. I can't pander in the FUD necessarily, but it's a very good time to be careful and take care of yourself. I love this story. Next financial crisis will be from crypto if it's not banned. Indian central bank governor. So basically what we have here is a central banker saying that the single thing that is a threat to his central bank is bad. Central banker says that crypto, which could directly impact the success of central bank is bad, but this guy is really flooding it hard, right? And

if you're not getting conflicting adoption versus ban information out of India, it wouldn't be Friday, right? Every single time we get some China or India FUD somewhere in every single cycle. That's just the way it is. But yeah, this is their central bank governor saying that crypto is a massive threat, that private cryptocurrencies will be the end end and that everything should be outright banned yeah i think the term private cryptocurrency is a fashionable way of describing what is otherwise a 100 speculative activity and there is talk that it should be regulated and what you might not notice in this story is that the central bank of india is pushing extremely hard for central bank digital currency of of which Bitcoin and

obviously stable coins and all cryptocurrency would be a massive competitor. And we all know that they're better than central bank digital currencies. So maybe this guy should STF you because we see what you're doing, man. Here's what he said. Our view is that it should be prohibited because if you try to regulate it and allow it to grow, please mark my words, the next financial crisis will come from private cryptocurrencies. They have no underlying value. They have huge inherent risk for our macroeconomic and financial stability. I am yet to hear any credible argument about what public good or what public purpose it serves. Okay. Okay. Let's move on to the final story of the day. Speaking of countries doing things with cryptocurrency, and this one is not bad news, except for maybe the Bolsonaro part. I don't know

if you guys like him or not. I'm not Brazilian, but Brazil gets crypto trading ground rules as Bolsonaro signs law. We saw that this went through. It came short, obviously, of deeming Bitcoin legal tender, which a lot of people wanted, and we've seen in El Salvador. But this did put a robust regulatory framework and very clear guidance as to what people can do in Brazil. Here's what they said. The law published Thursday in the official Federal Gazette defines crypto as the digital representation of an asset that can be traded, transferred, and used for payments or investments. Crypto providers are subject to laws preventing money laundering and concealment of assets, as well as against financing of terrorism,

criminal organizations, and the proliferation of weapons of mass destruction. Authorities can impose jail time for those who fail to comply. You know, like that's a very simple paragraph, but very powerful because they said, Hey, it's still illegal to do crime and fraud

using crypto. But otherwise, let's let the people do what they want with this asset class, make some money, invest in it, and we will put a framework. Everybody's doing it, Gary Gensler. Come on, man. Time for the United States government to come figure this out because this is a joke. Every country in the world will eventually get some crypto regulation and most of it will probably be sensible. But yeah, I mean, do we really have to say that crypto providers are subject to money laundering laws and concealment of assets and terrorism and criminal organizations? Yeah, because those things are crimes and it doesn't matter whether you're using crypto or whether you're using dollars or whether you're using

postage stamps. I don't care. I don't care. It makes literally no sense to have to reiterate that it's illegal to use crypto for crimes, right? We have Gary Gensler, of course, saying, well, we have every law that we need to prosecute these people. Yeah, man, what we need is some regulatory clarity, whether good or bad, as to how we can proceed in this industry. That's all the news I have in review for this week. Maybe you guys have a whole bunch of news. Yeah, Luke says major banks get fined every year. Wells Fargo again recently. Dude, these guys, it's all fraud. JP Morgan's got in trouble. Wells Fargo has been getting absolutely crushed year after year after year with billions and billions in fines. But when you make tens and tens of billions of dollars, it's worth probably taking those fines and moving on.

That's what they do. It's crazy. It's wild guys. I, now I'm going to go, I'm going to go write a newsletter for you guys. And I got to go deal with my children. You know, it's the holidays, it's the holidays, but I'm going to be here now. We will be here on Monday, December 26th, and we will be here on January 2nd. So I know you guys will be home and bored and looking for any excuse to do anything. So that's what I go. Drucified says, Scotty, can I show my shop? Go ahead.

Go ahead. I trust you. Go ahead. Throw up a link or something. This better not be to like some really dirty, weird stuff or some kind of scam. But I'm going to let you do it, Drew. You've been here a long time. I'm just going to wait here until I see a link.

I'm going to do it doing yeah what we got what do we got what do we got drew we want to see your store now he's like oh shit i gotta get this together really fast i'm literally just gonna sit here um should we do the Jeopardy music? What do we got? Come on. I don't know. Drew, I guess we'll have to do it next time, man. Unless you got 10 seconds. Drew will continue to be here.

Give me the link, man. Give me the link. What are you selling? Can't get it. Drew, come on, man. It's your moment. This is your moment. Tonight is the night.

Link not working. He sent it. All right. Message me and we'll figure it out. Guys, I do have to go, though. Of course, check out the thing scrolling at the bottom. Like I said, you're going to be hearing a whole lot about PrimeXBT in the future. Guys, that's all I got for you today.

Thank you for tuning in. It is great to be back and I will have my SHIT much more together on Monday when I'm not the most tired person in the world. Peace, guys.