Unchained - Erik Voorhees and Cobie on Why FTX Loaned Out Customers’ Assets - Ep. 419

Episode Date: November 11, 2022

 Erik Voorhees, founder of ShapeShift, and Jordan Fish, aka Cobie, crypto investor and host of UpOnly, talk about the collapse of FTX.  Show highlights: the links between FTX and Alameda what kickstarted the blowup of FTX why Erik and Cobie think that Bankman-Fried's behavior was “sociopathic” why the $10 billion hole is so shocking to Cobie considering the advantages that FTX had as a company whether this would have ever happened if the prices hadn’t plummeted in the bear market the tension between advocates of privacy and those who want to limit criminal activity why Erik believes that SBF’s donations to both political parties are bribery whether regulators can prevent an exchange from collapsing whether Changpeng Zhao did a better job at investigating FTX than anyone at the SEC the likelihood that this will result in criminal charges how blockchain technology is the solution to the problem of centralized exchanges doing things in the dark Tether’s decision to freeze USDT owned by FTX Erik’s response to Bitcoin maximalists who say FTX was caused by altcoins whether it is a mistake for exchanges to issue their own tokens how big the contagion could be in the industry why nobody should leave a significant amount of their net worth in a centralized exchange Erik’s message to regulators whether SBF was aligned with the values and the ethos of crypto Thank you to our sponsors! Crypto.com Ava Labs DeFi Saver Erik: Twitter ShapeShift Previous Unchained episodes: Why ShapeShift’s Erik Voorhees Thinks Toxic Bitcoin Maximalism Is Bullshit Shapeshift’s Erik Voorhees on How Crypto Will Separate Money and State Cobie: Twitter Substack UpOnly Previous Unchained episodes: Cobie and Chris Burniske on How to Navigate a Crypto Bear Market Episode Links Previous coverage of Unchained: Sam Bankman-Fried on How to Prevent the Next Terra and 3AC The Chopping Block: FTX: The Biggest Collapse in the History of Crypto? FTX Collapse: FTX Tapped Into Customer Accounts to Fund Risky Bets, Setting Up Its Downfall SBF’s video talking to regulators Unchained coverage: FTX May File for Bankruptcy After Binance Walks Off the Deal FTX Needs $8B to Meet Investor Withdrawals: Report Tron Founder Justin Sun Says He Is Working With FTX on a Solution US DOJ Joins SEC and CFTC Probe of FTX FTX-Issued Wrapped Solana Tokens Could Add to DeFi Contagion: wBTC Creator Sequoia Capital Writes Off $214M FTX Investment to Zero Binance’s dropped deal with FTX CZ’s announcement SBF’s announcement Binance’s merkle-tree proof-of-reserves Unchained coverage: Binance Set to Buy FTX Amid Liquidity Crisis SBF’s Net Worth Plummets 94% In One Day: Report There are Rumors that Alameda Went Down With 3AC in Q2 Alameda Owes More Than $30M in DeFi Debt Coinbase and Genesis Declare No Exposure to Collapsing FTX  Binance Might Have Triggered a Liquidity Crisis as FTX’s Main Wallet Lost 290K ETH in Two Days Binance to Liquidate Millions Worth of its FTX’s Token Holdings FTX’s Stablecoin Reserves Hit One-Year Low Alameda’s Balance Sheet Sparks Controversy Crypto regulation Industry Leaders Debate How to Regulate DeFi Bankless debate between SBF and Erik Voorhees  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey everyone. This has been the biggest newsweek in crypto quite possibly for all of crypto history. Sympathies to everyone who has lost money or has had their fund stuck or who simply feels betrayed. I hope that all of this gets resolved for all of you very quickly. The Friday show on Unchained is typically a short interview followed by a recap of other news, but this week we have an hour-long discussion between Jordan Fish, aka Kobe, of Up Only TV, and Eric Vorhees, founder of ShapeShift. It's a fantastic discussion unpacking the FTX fiasco, how this could have happened, and what it all means.

One note that there were some technical difficulties, so Kobe's portion cut out a bit, and we didn't know until after we rapped. He was gracious enough to re-record those answers, and we did our best to edit it all to be as seamless as possible. After the interview, we have a briefer than normal news recap, and then a truly special fun bits, a stand-up comedy special with comedian and author Ginny Hogan,

all about the FTX Binance drama. Be sure to listen to the end for that. Just a quick note before we begin, Unchained is doing its annual survey. Head to SurveyMonkey.com slash R slash Unchained 2020 to tell us how you think we're doing and how we could improve, whether it's on the podcast in the newsletter

or in our premium offering. Looking forward to hearing your thoughts. Again, the link is SurveyMonkey.com slash R slash Unchained 2020. And you can also check the show notes for the link. And now onto my conversation with Kobe and Eric. Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto seven years ago, and as a senior editor at Forbes was the first Main Tree Media Reporter to cover cryptocurrency full-time. This is the November 11th, 2022 episode of Unchained. DefySaver is an all-in-one management app,

with unique automation options for top lending protocols such as AVE, Maker, Liquity, and Compound. Check them out on Ethereum Mainnet, Arbitrum, and Optimism. Avalanche was built to provide a robust Web3 infrastructure with flexible tools, so you can build anything you want, any way you want. Visit avox.network to discover how you can. With the Crypto.com app, you can buy, earn, and spend crypto in one place. Download and get $25 with the code, Laura. Link in the description.

Today's topic is the collapse of FTX. Here to discuss are Eric Vorky's, founder of ShapeShift, and Jordan Fish, aka Kobe, crypto investor and host of Up Only TV. Welcome, Eric and Kobe. How's it going? Hello. So let's just start by processing the recent news, meaning like what broke in the last several hours, to give readers some context, since events are essentially changing by the

minute. We are recording at about 11 a.m. on Thursday. And to give a really brief recap of events this week for listeners who may have missed the blow by blow, which was happening kind of in real time, mostly on Twitter. This week, there was a bank run on FTX. SPF himself, Sam Bingman-Freve, the founder and CEO, said that they saw about $5 billion in withdrawals on Sunday. Sunday alone. At a certain point, it became clear they could not process all the withdrawals, which just should not happen in an exchange. That just should not be possible.

an exchange should put your coins in cold storage, keep some of them in the hot wallet, maybe for day-to-day operations, but otherwise, their job is to keep that shit secure. So apparently this is not what happened because Tuesday morning, FTX revealed that they did need to ask Binance to try to acquire them. Wednesday, we found out that the size of the whole in FTX's balance sheet was $8 billion. So Binance ended up pulling out. They said, you know, the financials and obviously all this regulatory. risk was not something, you know, that was suitable for them to acquire the company. And it kind of

looked like FTX was headed toward bankruptcy. Maybe still looks that way. Late Wednesday night, Justin's son tweeted further to my announcement to stand behind all Tron token holders and he listed to them. We were putting together a solution together with FTX to initiate a pathway forward. Sam actually did reference that negotiation as well, both in a internal Slack message, which Kobe post on Twitter, but also in some tweets that he posted. So who knows what will happen, but you know, bankruptcy probably is maybe the direction this will go. And then like I said, we're recording Thursday morning. But when I woke up at least, I found out that Reuters reported that Alameda got loaned some unidentified amount of money from FTX after it lost $500 million

due to the Voyager bankruptcy, which you might recall was triggered by the implosion of three Aeros Capital. So Eric and Kobe, let's just start with all that. I'm curious, you know, with this Reuters piece actually, I'm curious, do you think that the Voyager bit and this loan that happened after that was the start of any kind of commingling? Or do you think that FTCS and Alameda had been commingling funds previously? I don't have any specific knowledge on this. Co-mingling is an interesting word. I'm very curious, like, what was specifically happening. The most likely seems to be that a loan was made from FTX to Alameda collateralized with FTT. And on the surface, that looked sound until you realize that FTT is a relatively small cap token that can go up and down drastically, whereas the debt was probably denominated in dollars.

And that's a really good recipe for a disaster. So that's, I guess, what unfolded this week. But I think a lot of the specifics are still to come out. we don't we don't really know yeah i mean i would have been surprised if they were combing glim previously but i was surprised that they wouldn't solvent at all like i thought there was a sub one percent chance that that this would be like the outcome when the rumors began so maybe my opinion doesn't have that much weight but alimader and sam used to be the CEO of alameda right like he alameda and s bf were kind of the same entity and i'm

like SBF and FTX are also the same entity. So I imagine at some point they were, they were extremely close. And then maybe for regulatory reasons, they tried to distance them a little bit. Sam stepped down from a CEO of Alameda and was FTX only. And I guess how distant did they ever really get is the question's answer. I would not have thought in a million years that they would be like just slushing the bucks around together. And I think that is likely in the lunar to Celsius to 3AC meltdown, Alameda got really hurt. And they patched it up then. It aligns with like Brett leaving FTXUS and Sam Trabs leaving Alameda around a similar time to that FTT transfer that Eric mentioned.

But, you know, like sometimes people have the confidence to do this because they've successfully done it a few times before. So they don't think about it. They just go, oh, we'll just do that thing again. That worked for us last time and get out of the hole. So who knows? Yeah, one thing, you know, without going into names, I would just say let's not speculate on why people left. Let's wait for them to make those. But I think some of them have publicly said, like, you know, I didn't leave for anything related to this.

I think some of the people that you mentioned maybe truly had no idea, actually. But anyway, one other thing, though, is just what you were saying about how you just never would have expected that FTCS would even be in this kind of position. I am curious about that. Like, there's a few different kind of versions of SBF out there, right? It's like the one who, you know, is constantly testifying in Capitol Hill and, you know, just is sort of chummy with the regulators and, you know, just like. you would imagine someone like that.

Let's put it this way. If you're actually doing something shady, you're probably not going to want to get too close to people like that is maybe a way to put it. That's an interesting assumption. Yeah, actually, right when I said it, I just realized because, of course, people have been tweeting at me that he was like trying to buy himself protection. But then, you know, there's this other side of SBF that everybody has been pointing out in recent weeks, which is this is just a real conflict of interest.

There were a number of situations where FTCS or Alameda participated in deals with projects that were launching and got coins on the cheap. And then the exchange might open, you know, I guess it was perpetuals or something on these like, you know, coins that really had no volume. And then people suspected that Alameda was trading on that and making money on these coins that they got cheaply. Basically dumping on retail is essentially what a lot of people implied. I looked at a number of these things. It's one of those things where like it's hard to prove, right? But there were a lot of insinuations, a lot of. Yeah, I think that also distracts a little bit from like the really egregious behavior here. So private parties trying to get good deals and make a profit on the deals with

their own property is, is one thing. And I'm not so concerned about like a conflict of interest between those two firms. There clearly was because they were owned by the same people to a large degree. The problem here is lending out customer money without telling the customers and then going a step further and acting as though you're not and dismissing others in the industry for doing the same thing that was being done at that moment. That's the egregious behavior here. It is appalling that Sam would be speaking to regulators about like, counter-party risk and the safety of customer deposits while at the same time being insolvent with his own customers. That's like sociopathic behavior and is just downright fraud.

Yeah. Yeah, I 100% agree with Eric. The other stuff you mentioned, you know, like opening markets so that Alameda or other entities close to FDX like friends can head. these bags that they've got cheaply, they can effectively proxy sell on perps, coins that they have locked and not supposed to sell for four years, to take advantage of, you know,

this high, FDV type low float setup, is maybe anti-customer or the markets are much more useful to insiders than they are to retail traders. But it's just a totally different

degree of thing than just stealing customer deposit and lying about stealing customer deposits. And part of the reason I would say this, I would have never guessed they were insolvent is they sort of had the game rigged in their favor, right? So, like, they were able to do these things with these markets that allow them an advantage over any other market participants such that they should just be printing so much money all of the time.

Like, they had the exchange, they owned the venue, they had all the data for people's positions, on the venue. They had markets that they wanted to hedge their own positions like off venue, and somehow they still managed to lose $10 billion? Like, it doesn't make sense. They must have been the worst traders of all time. So that's why I was so shocked. If you have an exchange that prints eight to nine figures of fees per day, you raise $2 billion. Like, there's a $10 dollar hole, but it means they must have lost like 14 billion or something in the last year. So that's why I would never have expected it, I think, a mixture of, it is just a different degree

or a different magnitude of fraud to the behavior that could have been seen as like, you know, a bit sharky and maybe not ethical, but, you know, welcome to crypto. And then literally just like lying and being so incompetent that despite all your advantages, is you still manage to, like, lose 10 yards. It makes no sense. Yeah, and let's talk about that first bit where when I said that he was kind of the face of crypto regulators and people, like, I tweeted that it's like the person that you thought was Hermione ended up being Voldemort.

And to my mind, Hermione is like the goody-two shoes, you know, kind of like kissing up to the teachers and whatever. And so, and that's why I said, SBF appeared like that. But I was curious, you know, what your take was on what he was doing with regulators if he was actually, you know, doing what it looks like he was doing. It's clear that he doesn't come from the same ethos as many in the crypto world who believe that what we're doing is antithetical to, you know, federal regulations. And they have all sorts of philosophical, economic, moral reasons for that. He was not of that cloth. He was, and he didn't, you know, lie about that.

He was very pro-regulation, or as people like to euphemistically say, pro-regulatory clarity. And he was willing to sit in Washington and invite down these regulations, you know, with a smile on his face and putting forward that the industry supports it because he has this huge exchange. He's very well-known, millions of customers. And so he can say, like, yes, the industry will support this. the regulators want that because then to them it feels like they're doing good and they get a bunch of his donation money and in return he gets to help craft that legislation and what was really worrying a couple weeks ago when I had that debate with him was how how readily he was going to sacrifice defy essentially sacrifice decentralized finance such that the centralized finance such that the

financial regulations would be more in his favor. That was super concerning. And I think that's why the community was so outraged with what he was saying there. But no one at that point thought he was also committing like a multi-billion dollar fraud. So that's, that's new and surprising. Yeah. It's just, it's just such an order of magnitude different. Like I can even understand someone being like having different regulatory opinions and like fighting for the things that they believe are best. But I just end up speculating and going to conspiracy theory when I think about these things now. Like, you know, his parents are from like a deeply political elite background. They're both like lawyers. Apparently he's my mom's friends with Elizabeth Warren

and stuff. And I wonder how much of this egregious fraud that was happening influences what you do in those in those venues. Like, do you fight for what you really believe? You know, even if you know you have this hole and you have this thing coming up or do you cozy up to regulators a little bit more. There's this video of him in Congress testifying about the financial crisis and how there was this opaque debt that was being, you know, borrowed against and repackaged and borrowed against and all these, you know, this daisy chain of debt and how that cannot happen on, on FDX that like, you know, it's impossible, it's like transparent and crypto, blah, blah, blah, blah, And at the same time, he's doing the exact same thing that he described in Congress as like being bad and not possible with crypto.

And ironically, is possible with FDX, a centralized exchange that acts somewhat like a bank, but is not possible with defy, this thing that I guess allegedly, I still don't know the details, but allegedly he was arguing to regulate more strictly and stuff. rumor and conjecture. So yeah, I I don't know, man. I just wonder how much the fraud influences what you do in those venues and how you behave with regulators and stuff.

I don't know. I mean, if crypto prices had rallied over the last six months, this wouldn't have happened. Right? Like, this would have been covered up and the solvency would have regained itself and it could have been working. out. But of course, to run a company of that size and to be holding billions of dollars

of customer money, that can never be your assumption. You have to assume quite the opposite. And if you wanted to be loaning out customer funds, like just tell the customers you're doing it, you know, and give them some of the yield. Tell them what you're doing. That's all it requires. The fraud is in doing it without telling them. And then the double fraud is in doing it and then saying you're doing the exact opposite. Yeah. Some of the, um, the stuff he was saying, you know, in his now deleted tweets were FTCS is fine. Assets are fine. FTCS has enough to cover all client holdings. And, you know, it's so interesting

to me, like, if you ever deal with little kids, like trying to explain to them how important it is to not lie. And then, like, as adults, like, all you guys are saying is like, if he had been transparent, you know, if he hadn't lied, it's really the lie that is actually what is the crime here, which, you know, is, it's interesting. And I actually, this goes back to the Theranos comment, because I also followed that very closely. And just in all the stuff that I learned about what she was doing, it's interesting. I know this can maybe sound crazy, but I don't know if you guys remember her, her voice is fake. Like, it's a normal, like she is a normal voice, but she, like, fake made it deeper. And, you know, people who knew her before said, like, yeah, it didn't used to be

like that. And some employees were like, oh, like at the company party, she sort of fell out of her voice and we heard a real voice and stuff like that. And for some, it's like for such a little lie. Like, like, that's when you cross the line is just like at any moment that you're going to like when you're willing to lie, then it's like, you know, then the lies like you can't ever just do one lie because you essentially have to keep creating stories around the lie and just keep going. And it almost feels like maybe, you know, obviously we don't know all the facts here. but it seems like maybe something like that happened. But even when Eric was like, oh, they could have potentially traded out of this or whatever

if the price of the coins had gone up, you know, it's like just what you were saying. Like, no, when you have that moment where you're like, okay, one of my entities is in trouble, you know, you know that you are not supposed to touch the funds of your customers in the other entity. But he crossed that line. And it's like from that moment forward, like, you know, it. Then all the other lies just go from that one. And yeah, like, Kobe, I feel like you mentioned this earlier. Like he could have very well been like one company maybe won't be successful.

The other one is going to be a great company. I can make money off the trades, whatever. And, you know, who knows? Maybe he was like, if they're both successful, I can give away more to all the, you know, people that deserve my effective altruism. Yeah. What I just don't understand is how you can have this exchange, which is worth $40-odd billion, and prints eight figures, nine figures in fees per day, and yet risk all of that in order to bail out the failing hedge fund, right?

Like, you have a hedge fund that you're also co-founder of and maybe contributes more to your net worth than the exchange does even. but it's failing, it's not doing well, whereas FTCS is doing well, FTCS is succeeding, but you risk the thing that's winning in order to prop up the thing that is clearly not able to perform in the market if it needs, you know, this bailout. I just don't, I can't see a world where a person decides to do that and says, well, in order to save half of my net worth, I guess, I will risk everything. I'll risk customer funds. I'll risk this successful business, investor relationship, everything in order to prop

up a failing hedge fund, I can't imagine. I just can't imagine how you end up in that place. Yeah, Eric, since you have experience with exchanges, I was kind of curious for your take on all this. I don't know if you saw Jesse Powell tweeted. He was such a great thread, but I'm just going to quote one of them. He said, red flags, acting like you know everything after showing up to the battle eight years late, nine figures buying political favor, being over-eager to please DC, huge ego purchases like nine-figure sports deals, being a media darling, seeking out puff pieces, which by the way, I don't know if you guys saw the Sequoia thing. I mean, I know they invested in him, but it was just, I was like, oh boy, this is embarrassing. EA virtue signaling. And then the. The last one was, of course, FTT.

Yeah, I was curious for your thoughts as an exchange owner or previous. I mean, it's hard to not be super pissed. And what I'm pissed about is so like with ShapeShift, when we created it, it was in the wake of Mount Cox collapsing, which like almost took down the industry. They were 80 or 90% of the entire exchange market. And we were so dismayed because like it had been years of work trying to get Bitcoin credible, trying to get people to take it seriously. And then the most important exchange,

through some combination of incompetence or actually insiders stealing money, $500 million is lost. And that was so much money back then. And we built ShapeShift to not ever hold customer funds. We weren't like, oh, you know what the problem is? Mark Carpellis isn't trustworthy. We are.

So we will take all the deposits of customers. That's a recipe for just repeating the same mistakes. And so we built ShapeShift to protect customers by not holding the money at all. And this is like the magic of crypto that you can do that. You can never have a non-custodial exchange system in the Fiat world. They can't exist. And crypto blockchains come along. Suddenly you can build these amazing tools that systematically remove risk from finance.

Systematically. And then we as Shapeshift get nothing but hell from regulate. get nothing but hell from the Wall Street Journal, get nothing but hell from like the financial establishment that doesn't like us because we actually provided privacy to users and we actually protected them systematically. And then FTX comes along, donates millions of dollars to the politicians

and is like this darling in D.C. Where he then goes and is invited to like speak and craft regulation. And the corruption of all of that is so so blatant. And my hope for this for this example and tragedy, as bad as it is, is like, wake up to what crypto can actually do. Wake up to how defy works where you simply remove the need for trust. We don't need a licensing regime because that's just meant to improve trust. We've removed the need for trust.

This is a huge breakthrough for humanity. And the politicians, the regulators do not appreciate this at all. And they continue to vilify it wherever they can. it was disgusting to see Sam inviting that down on Defi and then to see to see what he did with this customer money is so ironic and tragic and I hope it wakes some people up. Yeah, I actually want to ask you two follow-up questions in that. The first one is about, I mean, you kind of reference the Wall Street Journal piece that ran that implied that, you know, I don't remember all the details. It was like maybe like terrorists are using ShapeShift or people

were like money laundering using Shameshift. I am really curious about this. because I just feel like we see this tension so much in crypto in general where, you know, obviously, like, I think it's a good thing if criminals don't use crypto to launder their money and whatever. And yet at the same time, I totally agree with you about like customer privacy and, you know, protecting their funds and not creating a honeypot and all that. So I was just curious to hear kind of like what you think is the best way to resolve the tension between those two. I think the way you resolve it is to recognize like a first,

principle, which is the presumption of innocence, customers are not criminals. Therefore, if they're not even accused of a crime, they should be permitted the decency of privacy. I don't know why this makes me like some radical. This should be a fundamental part of American culture that if you haven't been accused of a crime, you have the right to privacy. I mean, I thought there was like an amendment, you know, like the Fourth Amendment. It guaranteed that, that enshrined it. And it's violated every single time someone goes to an exchange and has to surrender their personal identifying information just because some regulator wanted to capture it. The regulators want to make their job easier.

And in so doing, they are happy to violate fundamental rights of an entire population. Yeah, I think it's, you know, what is the default? Because like at the beginning of your state, he said customers are not criminals, but sometimes they are. But absolutely. And so allege a crime and go after the criminal. If there is a suspicion of wrongdoing, allege it. Like, this is how the court system works, right?

You get some evidence and you allege that a crime happened. And then when people are accused of crimes, there's a reasonable argument that some of their freedoms start getting stripped away while you figure that out. That's like a case-by-case basis. You find a criminal. You go after them. You accuse them. And if you have done a good job as the authority, you bring convincing evidence and you

convict them. And we have such a backward system now where the government believes that exchanges, that all financial intermediaries, for example, should be spying on everyone, everyone and reporting all that information back to the government when none of those people are even being accused of a crime. That's so different. And for all the people to care about law and order, like, where is the law and order in that? That's not law and order. That is tyranny.

And it's just sad that it's such like an extreme position these days. And then the other thing I wanted to ask you about is when you were talking about, how Sam, you know, was going to D.C. and being all buddy, buddy with the regulators and lawmakers. I was curious, you know, you only mentioned it in the context of the DC CPA and how that obviously was going to make defy not really defy. And I was wondering, did you have any inkling that he was a bad actor for crypto when it came to regulation before that time or, you know, either of you or in general did the crypto community feel that way? I didn't, I didn't really know. I only got aware of his position when he posted his blog about, you know, his suggestions for regulations

in the industry. And there were some big red flags in that. And so that's what I, that's what I was calling out. I mean, I, let's just say I was a little suspicious of him when I learned that he's like the second largest donor to one of the political parties. That's not good. You know, like, so something was already amiss there. But, um, the degree to which he was causing bad. And then, you know, had things to happen was not apparent until, until that discussion. Yeah, I mean, I don't know. I don't know, I don't know, like I, I didn't think Sam seemed very well in the debate with you, Eric.

Like, it was so one-sided and kind of awkward to watch after a while. He seemed like, you know, he seemed like a little bit sick or something. Cludey, a lot of stuff going on. So I don't really, I don't really know. And I'm certainly not an expert on the reg stuff. And I think it's extremely complicated. So I don't really know what to say. Have the regulators ever actually prevented an exchange from collapsing?

Like, is there a single example where they came in and were like, hey, we discovered the fraud and we're shutting these guys down because we are the government and we're here to help? Does that ever happened? There was no, there was no insolvency there. No, they shut down BTCE because they didn't like where it was coming from. They called it money laundering. No, but actually the stolen funds from Mount Cox were laundered through BTCE. So I think that's why I got shut down. Yeah, allegedly.

Allegedly. But I mean, it's, I think. But that wasn't the case where they were stealing customer money and there was an insolvency. So the question is like, have the regulators ever prevented a collapse of an exchange on insolvency grounds? I don't think there's a single example. No, but theoretically they should be able to do that because, you know, like for instance, so I did get chain analysis to send me

the balance sheets of ETH on FTCX.com and FTX US and you can see that FTX was in the red on ETH. Actually, interestingly, it showed that they were in the red on ETH back in January for a short period. And then, of course, again, just in the last few days. but when you look at the balance, there's a big drawdown in June. Where were the regulators then? Too busy taking photo ops, I guess. I think, you know, look, I mean, the charts I have, they're not interactive, so I couldn't look too closely, but it looked like around the time that Voyager announced that they had the exposure to 3AC.

and I saw another chart showing that around the same time, FTX and FTCUS received a huge influx of FTT. So just everything that Reuters mentioned checks out when you look in that regard. But you guys, so we're going to take a quick break to hear from the sponsors to make this show possible. DefySaver is an all-in-one management app for the top lending protocols on Ethereum, including AVE, Maker, Liquity, and Compound. They have dedicated protocol dashboards with, the options for quick leverage adjustment and self-liquidation, as well as automated liquidation

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So some other bits of news that broke this week are that the SEC, CFTC, and now DOJ are all investigating. Based on what we're talking about, you know, the deleted tweets, the actual facts that are coming out versus what he was saying. you know, am I wrong in thinking this is likely to end in criminal charges? I don't know, but it seems like CZ did a better job investigating than any of the regulators did. Although, of course, C.C. Crypto Twitter was aware of the problem based on like service level blockchain forensics. Yeah, all this. And the regulators come in after the collapse.

Where is the accountability here? I know, but did you read CZ's tweets? Because he was just as shocked as everybody else. At least the way he told it in his tweets was that. that it literally was just like, oh, Alameda's balance sheet looks a little bit risky. Like, we should, you know, get this FTT off of our balance sheet to cover our risk. And then he had no idea that all of this would end up in Sam calling him Monday night or Tuesday being like, hey. The SEC, CFTC, and now DOJ are all investigating.

And as we were talking about, he has these deleted tweets in which what he was saying doesn't comport. with the facts that have emerged since. So I was curious, do you guys think this will end up in criminal charges? I mean, I hope so, right? It's like an egregious fraud. If it doesn't, what is the point of the system at all? At least with Mount Gox, it feel like, at least what I understand of Mount Gox, it was like a technical mistake which Mark then tried to cover up to make users whole.

right? So like a hack or like some like bad code somewhere, which then Mark was not honest about, whereas this just seems to be like we store customer deposits and then we just continually lied about it because stealing customer deposits is not good and people would not use our exchange anymore. So I mean, I hope so. Eric, before you even answer that, I was just wondering, like, what do you guys think of? The fact that, you know, blockchains and transparency show a lot of this stuff and actually could be used to prevent these kinds of situations. And yet most likely at the moment, just based on everything that's happened, my sense is that regulators are going to want to do the traditional type of regulation and not go with this more technological solution. And I was curious what you thought of that, too.

Yeah. it's really frustrating when the technology for complete transparency, real-time auditability is here, and the regulators not even like won't adopt it, but they actively vilify it and then aren't themselves solving any of these fraud issues. Like what probably happens here is years of court cases and depositors getting some tiny fraction of their money back,

many years from now. And like whether, whether Sam goes to jail or not, I don't really care. Like, what I care is people learning the lesson to stop using custodians, stop using like centralized financial services where this kind of thing can happen

and has happened over and over and over again. The solution is like right in front of us, these decentralized protocols, solve these very problems. We don't have to care about people's intentions. We don't have to care about human mistakes in the moment. Like, we have to care about code mistakes, but that can be viewed and audited and fixed. And there's just such hesitancy for people to, like, step into the actual promise of crypto

because they're comfortable in these little walled gardens, especially when they say that they're, you know, the safe regulated way to buy and sell Bitcoin, which was, which I think was literally FTX's slogan for all of their advertising. It reminds me like that underwater fish with the little light, like the light of the light of regulation, the deep sea fish, and then everyone's like, ooh, they're safe and regulated and they go toward it. And it's just kind of tragic. Hopefully people learn. What do you think of the fact that the FTX U.S. and in general, you know, like any of these U.S. entities don't have these problems because there are such strict regulations in the U.S.? They also don't have the customers.

It doesn't vindicate anything. I mean, the reason that 9 out of 10 FTCS customers are in the offshore one is because the U.S. regulatory burden is so high that no one actually wants to use the U.S. version, right? Is that true? And when you say... I don't know. I made that number up, but I know that the international one, I'll disclaim that.

I made that stat up. The number of international customers and the volume of FTX international was dwarfing U.S., right? So same thing with Binance, right? there's a Binance US. How does that compare in terms of volumes to the real finance? It's almost insignificant. The reason customers go elsewhere is because they prefer those services because they're not burdened with all the garbage that the US regulatory system puts down. Where's the accountability for that damage done by the regulators? And then how do you account for the success of Coinbase, which obviously is mainly US and has more than 100 million customers or something?

Coinbase is the exception that proves the rule. And they've done a very very, good job over a very long period of time. And they've, you know, they've worked tooth and nail over a decade to gain that customer base. And I know it's frustrating to them that so many customers leave to other jurisdictions. I remember back when like all the ICOs were going on and Coinbase felt they needed to be too conservative to list a lot of the assets. And so Binance would list everything and the customers all went out there because people wanted to trade these things. So Coinbase has done an amazing job, given the constraints of the regulatory system in the U.S. But they're at a constant disadvantage.

Let's also now talk about this little news bit, which broke shortly before we started recording, which is that Tether has frozen $46 million of USDT held by FTX following a request from law enforcement. What did you guys make of that? And people were saying that it looked like FTX might have been doing something with the curve pull to try to break the USDT peg or something, I'm not sure. Yeah, my hope is that like circular or tether would freeze these accounts based on their own judgment. They see these flows better than anyone.

And if they see a big blowup, they have at their discretion the ability to freeze these things. I hope they're not waiting around for some law enforcement to suggest it because that could come way too late. But again, it's a good reminder that these centralized stable coins are not permissionless. So everyone that uses them needs to know that. One other thing that we have referenced a few times is the existence of FDT itself. And I was curious what you thought of exchange coins.

You might have seen there was like a little dust up with Alex Gladstein saying that this sort of proves like Bitcoin versus all the other coins, blah, blah, blah. And then other people are fighting back saying like, no, it's just about you shouldn't kind of have these exchange coins. Yeah. Do you feel that this vindicates that Bitcoiner notion that when people kind of create this funny money and it's like a little bit more centralized that it leads to these shenanigans and really it just shows the power of Bitcoin or what's your take on that? The Maxi is trying to make this into like a Bitcoin versus crypto thing is kind of gross. This isn't a Bitcoin versus crypto thing. This is a custodian versus non-custodian thing. This is a trust versus trustless system thing. This is a centralized versus decentralized thing.

There's nothing wrong with an exchange making its own token. Absolutely nothing wrong with it. As long as they're being honest about what it is, how it works, all that kind of thing, there's nothing wrong with it. And even though FTT now has a huge black mark on it, BidFinex created their Leo token years ago and actually solved their own exchange hack through some very clever financial engineering with their token. That whole project doesn't get enough attention, but like they basically solved a hack that was existential to them. It wasn't the government that did it. It wasn't a regulator that came in and made those people whole. They did it and they did it using their own token and they've been, you know, very successful through that.

creating a token is fine. Let the markets be free. Anyone should make whatever tokens they want and they can market them as long as they're being honest. There's nothing wrong with that. What was wrong here was giving away customer money to another party and then lying about doing that. Yeah, the focus, though, just needs to remain on the real crime here, which was giving

away of user assets and saying that they weren't doing that. Yeah. Everything else is somewhat important details, but like that is the real. real fundamental breach of trust here. Yeah. And actually, while we were talking, my assistant put in the document that the Wall Street Journal reported that SBF told an investor this week that Alameda owes FTX about $10 billion. And that all in all, FTCS had $16 billion in customer assets.

So that means that FTX lent more than half of its customer funds to Alameda, which That doesn't necessarily mean that. No. For example, if FTCS had a bunch of its own cash, the loan could have been part customer funds and part its own cash, but point still stands. It's a huge amount. Yeah. Yeah.

So where do you think this kind of ends up in terms of contagion issues? Are there any other entities that you think might get hit? Like, are there any other? Yeah, because obviously this all got kicked off way earlier from other entities. and we saw that, you know, all of these have knock on effects. So it's curious to hear what you thought about that. Yeah, the answer is like, certainly there will be effects. The question is just how big and how bad, who's affected.

Lots of people in the industry, I'm sure, are like trying to figure out counterparty risk right now. And the echoes of how this kind of thing works and how like the financial crisis happened in 2008 are pretty, pretty loud. Again, I've sound like a broken record, but like in Defi, don't worry about this stuff because everyone understands where all assets are at all times and contracts execute as the code is written. In fiat systems, in custodial systems, there's just this opacity that you can't get around. But do you want to name who people seem to be kind of worrying? I don't know. Yeah. I really don't know. Yeah. So if you have a financial relationship with Alameda in any way such that Alameda owes you money, I mean, those are the

obvious ones, right? So who are the lenders that have lent money to Alameda? I read somewhere that, like, obviously Alameda does a lot of market making for projects. So projects will give a supply of tokens to Alameda, and Alameda will use that to create market depth, but they're supposed to give those tokens back at some point. Whether or not they'll give those tokens back, I guess, is on the on the cards now um a lot of projects seem to loan money to alameda as well so like project treasury is similar to the three ac thing where if you got a if you were invested in by three ac or alameda they would also say to you um we'll come we'll take a 50 million dollar loan and you will give you this 10% annually or something on that so like

There's maybe some contagion beyond just lenders. There may be some projects who lose their treasuries and need to raise in a very bad raise environment. Obviously, everyone that has money on FTCs, I saw multi-coin has like 20% of assets under management or something on... Yeah, I think it was 10%. 10% on FDX. So there's a lot of balances there, probably industry balances. And again, like crypto company balances. So I think those are the main things.

a few lenders might go bust, people that had a relationship with Alameda, like how many of the other big exchanges or user-facing crypto companies were lending to Alameda? Obviously, FDX were because they're really close, but Alameda had a reputation as being like money printers, right? Like a similar to 3A where they were like, oh, these guys are extremely profitable. So was exchange B, C, and D also saying they're a safe place to put some, some of our money, whether that's just money that the exchange owns or maybe someone else is also learning out customer deposits. Those are things I think are worth watching. And in these times

when something starts blowing up and you don't know what the daisy chain of who's relying on who to pay back money is, I think the best thing to do is just to withdraw anything that you have on any custodial exchange to like something where you own the keys. So, you know, no matter where you have money really. Maybe Coinbase is the only exception because they're like a public company and you can go read their book, like financial bucks and stuff like that. But yeah, I think those would be the main places. I also saw something that's solid. The Solana, like, wrapped Bitcoin and Solana wrapped assets are issued by FTX or Alameda. So there may be even some contagion in Solana defy too. Yeah, great point. Yeah. Yeah.

We wrote an article about that on Unchained that came out Thursday, so people can check that out. Kobe, you can tell me, do you have sort of an inside line into what things look like inside FTCS? Because you were the one who posted, you know, the Slack message from Sam and stuff. Yeah, no, no, no. I mean, I mean, Sam was effectively lying to my face right up until the day before this broke. because someone was talking to him about this and said, will you go on my podcast? Will you go on Op. Only TVs?

The podcast to talk about this, and he said, yeah, I'll go on it. And this was maybe the seventh or the eighth. So we started a group chat with some, and we were arranging a time. And it's like, cool, right, I'll have a nap. And then when I get up, we'll do it. And then when I woke up, it's like, oh, we're going to delay it now. We'll definitely do it this week, but we're delaying it. So, like, right up until this whole thing blew.

who RP was pretending things were fine and was, I guess, going to come use our podcast to, like, tell some more, tell some more lies about how things were fine, perhaps. But I, yeah, I, like, for some reason everyone knows my telegram handle and I tweet information. So people just keep sending me snippets. And then occasionally a couple of cryptojournalists when they don't feel like they can publish the information, perhaps for political reasons, just say, we verified this, what do you think? And then normally I just leak those things, which is what happened with the Slack thing, a cryptojournalist sent me it, and I verified it was someone. But you said that you had verified that it did actually come from Sam. Anon was a cryptojournalist, and I verified it with

someone that works at FTX. Well, is this Slack message real, basically. But beyond that, like, no, not really. Like, as in the dark as everyone else is, apart from reading the rumor mill. Typically, when a lot of this stuff happens, there's a bunch of telegram chats of, like, deeply crypto-native people. Right. But your sense is what's mostly being reported, which is like even that all of this was kept to a small number of people at an extremely high level to the point where a lot of high. other high level people just didn't even know. Is that what your senses? I'm dismayed to hear that someone like Zane would have 50% of his net worth on any custodian. Why do people leave so much money

with custodians? I mean, he's worked at so many exchanges. He's worked at OKX and finance and or are all the more reason. Maybe not at finance. It's depressing how much risk people expose themselves to. And the nub I get, right? The nubes used to their bank account. They'll leave all their money on FTCS. I'll get it. But like, come on, people, we got to, we got to do better than this. Do not leave half of your net worth among any set of custodians. It's just foolish. And it's not at all what the whole point of crypto is. If you're doing that, you are, you're doing it wrong. So that's a good message for everyday listeners. I was curious, you know, we kind of kind of have been addressing what takeaways regulators should have, but I know a bunch of regulators

listen to my show. So if you want a platform to send them a message, what would you guys say to them? Yeah. Okay. Thanks for the platform. I'm sure all the regulators are going to be salivating over this because they see crypto company loses billions of dollars and they want to solve that by making a bunch of laws. To any regulators out there who can think about what they're doing before they regulate, consider that this is an issue of custodianship, that this only happened because a custodian run by people could make subjective judgments about the assets within it. This happens in the banking system. This happens in the custodial crypto system, just the same. And if you want to put regulations on those people, I get that. Do not put regulations down on

Defi, assuming it is the same model. Defi solves these very problems. It solves them at a code level that can be audited by anyone in the world in real time. And we have that technology now. So if you care about the billions of dollars that was lost from this and you don't want that to keep happening, and you're not familiar with the magic of defy, you owe it to every to go learn about that and understand that stuff. And please do not assign a bunch of regulations that just pull DFI back closer to the Fiat financial system that we already have. It was hard for me because I had to like focus the whole time on what he's saying because

I have to be ready to address anything. And he just went off on these crazy tirades. And to me, to me it came across as someone who like actually has not considered the first principles of what crypto is all about, which isn't surprising for someone who only arrived like three years ago and is in Washington, D.C. trying to get everything regulated. But with all this now coming to light, I think there was some other stressful things going on

under the surface that are kind of obvious when looking at it now. Yeah. And I know you have to go, Eric, in a minute, but it's just the last point was I actually asked him this when I last interviewed him because when I was doing research on him and I realized he was making all these political donations, I asked him, oh, so when you make your donations,

is your purpose more of your, like, effective altruism philosophy? Or is it more to further the interests of crypto? And, you know, it was interesting when I was like listening to your conversation with him. I'm not a video person. I actually like listen to things mostly. And even though, yes, I had seen the screenshots, but, you know, I could hear in his voice that he, yeah, sounded kind of agitated. And it really felt like, you're right, that he hadn't kind of like thought of a grand vision and already got like two worked up in the details. I was trying to figure out.

So if we use this language and are you okay with this or that? like not just taking a step back and thinking about like, okay, when I go into this, what am I going to stand for? What am I not going to stand for? But already just like trying to like just, you know, mark up the paper without like thinking, you know, beforehand what he was willing to do. So his positions were not based on any consistent set of moral principles. And when you get into a debate about ideology and you don't have a consistent set of moral principles, you're screwed. And he walked right into that one. Yeah, yeah. You could hear it. Like I said, just in his voice, he was too caught up in all the details and not thinking big picture. All right. Well, I know you have to go. You guys, this has been amazing. Thank you both so much. Is there any last thing you want to say about where can people find you or what you want them to know or think about this?

This was one of those moments where Kobe's video and audio did not work, but you can find him on Twitter at Kobe, C-O-B-I-E, and at Up Only TV. on YouTube and Twitch, and he also, by the way, told people to follow Eric. I'm on Twitter sometimes at Eric Voorhees. And yeah, just for everyone who's suffering out there from losses or risks or worries, just move through it step by step. It's never as bad as you think it is. You'll get through it. Many of us who are OGs in the space have suffered immense losses as well and just be strong

and use it as a learning opportunity and move forward. Nothing's more important than your own life and well-being. Don't forget, next up is a brief weekly news recap, plus the most fun, fun bits we've ever released. Stick around for the rest of This Week in crypto after this short break. Join over 10 million people using crypto.com, the easiest place to buy, earn, and spend over 150 cryptocurrencies. Spend your crypto anywhere using the crypto.com visa card. Get up to 8% cash back instantly, plus 100% rebates for your Netflix, Spotify, and Amazon Prime subscriptions. Download the Crypto.com app now and get $25 with the code Laura.

Link in the description. Thanks for tuning in to this week's news recap. The Department of Justice seizes $3.36 billion in Bitcoin. The U.S. Department of Justice seized 50,000 bitcoins from James Zhang, the hacker who stole from Silk Road, a dark web marketplace. The raid happened in November 2021 when the seized Bitcoin was worth $3.36 billion. which represents the second largest seizure in the history of the U.S. government. Additionally, Zhang pleaded guilty to wire fraud and could face up to 20 years in prison. OFAC updates its tornado cash sanctions. The U.S. Treasury's Office of Foreign Assets Control modified its sanctions against Cryptomixer

tornado cash, revoking the initial designation and redesignating to clarify what person tornado cash is. According to the redesignation, the entity known as tornado cash is the unincorporated association of tornado caches, founders, associated developers, and the tornado cash Dow. OFAC has not, however, designated any of those individuals at this time. Coin Center's Peter Van Valkenberg tweeted that these changes do not alter the advocacy group's strategy in its lawsuit. The SEC wins its case against library credit. The Securities and Exchange Commission won its case against library, a decentralized content hosting platform. A judge

ruled that library violated securities laws by selling its native LBC tokens as unregistered securities. Gabriel Shapiro, General Counsel at Delphi Digital, tweeted, The Library Judge reasons that even if a team is completely silent about efforts, no promises, no contracts, but pre-mines tokens, that alone creates a sufficient expectation of profits from their efforts in Common Enterprise to pass the Howey test. Very bad result. Miles Jennings of A16-Z had a very different take. Results of the library case should be the final nail in the coffin of the utility token approach

for most projects. An ICO and no credible claims of decentralization doesn't work. USDT trades at a discount. Amidst the FTX crisis, Tether's stable coin USDT slightly lost its peg to the US dollar. USDT traded at a 3% discount and it dropped to 93 cents for a few seconds on Cracken. The Trondow announced a purchase of over $1 billion of USDT to safeguard the overall blockchain industry and crypto market. OpenC respects creator royalties. OpenC, the largest NFT marketplace by trading volume, announced it will continue to enforce creator royalties on its platform. The announcement comes after many marketplaces decided to move to an optional royalties business model and may represent a relief for many creators.

Miners are still in trouble. This week, Bitcoin miner, Iris Energy, defaulted on a $103 million equipment loan. After the company disclosed, it was in financial trouble. Moreover, riot blockchain, Marathon Digital, and Stronghold Digital Mining posted their third quarter results. All of them missed analyst estimates and their shares decreased in value. Machigian's death, no evidence of foul play. Police in Puerto Rico have found no evidence. evidence of foul play in the death of Maker co-founder Nikolai Michigian. Days before his death,

Michigan had tweeted that the CIA and Mossad will torture me to death. Inflation pushed crypto prices. During a negative week for the crypto markets, which lost over $200 billion in total market capitalization, the Consumer Price Index report was presented on Thursday. October's inflation came in lower than expected by analysts and crypto prices rocketed, but not enough to make up for this week's losses. All right, time for fun bits. This week, some of you may have noticed that I tweeted that I thought it would be great to have a comedian give their take on the FTX debacle this week. I ended up commissioning Jenny Hogan, a stand-up comedian and author of I'm more datable than a plate of reframing piece to write and perform some jokes on what has been

an absolute humdinger of a week. Please enjoy. So I didn't follow crypto all that closely until I wound up in a relationship with a crypto engineer. He worked in an Ethereum startup. Well, I say it was a relationship. We were never official and he wanted us to be. He would always ask me if I was dating other people and I was always like, Josh, you of all people should understand the concept of an asset only having value because of how much other people want it. Okay, I saw what happened to Luna. I'm not going to let that be me. Yes, I'm dating other people. Okay, so because of him, unfortunately, I do still pay attention to the crypto markets.

Crypto Winter, where we've been for the last 11 months, started to heat up the other night. Whenever I hear about the crypto world fighting, I feel like it's that scene in Mean Girls in the gymnasium where Lindsay Lohan realizes that every subgroup has its own drama. even the huge, huge, huge losers. I'll say it up top. I think it's really fun when the crypto markets act like the regular financial markets. I don't like change. And it's kind of homey and comforting to know that a rerun of 2008 is coming up. It's nostalgic.

Like, let's put on the Friends finale. So here's to FDX, the Lehman of Crypto. Okay, let's get into it. What we have is a war between two men who both go by their initials, Z and SBF, both celebrities in the crypto world and the guy you just swipe left on on Hinge in the real world. ZZ is basically the bad boy of crypto. He runs finance, which is not, as the name suggests, finance for bisexuals. And he would never talk to DC regulators.

He's super anti-regulation. He's in his mid-40s and left a traditional finance career to work in crypto, which I believe is what they call a lateral move. Think of him like James Dean without the cool jacket or cool personality or cool anything. He's also, fun fact, partially responsible for funding Elon Musk's acquisition of Twitter, which I have mixed feelings about.

I'm mad that he helped Elon buy Twitter, but I'm grateful that he's helping Elon go broke. SBF, the founder of FDX, was the good guy, which of course is how women describe men who can't get laid. He's super young and was sometimes called a crypto savior. That's right, like the crypto version of an essential worker. He promised to give away his billions of dollars, which, well, he just might have done. We'll get to it.

So a week ago, he had $16 billion, which is insane because I saw a photo of him and I had no idea that getting a haircut costs $16 billion and $1. He's done a lot to raise his public profile, including a vogue spread with Giselle, who, he was told five minutes before the shoot began, is a very famous model. All of that is to say, no one suspected SBF was doing anything shady with money. Giselle has never made a bad choice in her entire life. It started on Sunday. CZ tweeted that Binance was liquidating any remaining FTT, the coin issued by rival exchange FTX. Finance was once part of FTX, but it spun off like a malignant tumor.

ZZ claimed he had to dump the FTT. And listen, I think it's nice. Would crypto guys get to experience dumping things? Due to revelations about FTT, which we soon learned was that SBF was getting high on his own supply. And by that I'm referring to crypto, not weed. They're very different. Weed is mostly legal. Someone discovered that Alameda, SBS's other first.

sometimes called it sister firm, making it one of very few women in crypto, held a huge amount of FTT, its own coin. And it turns out FTT was pretty illiquid. Zizi said he needed to drop the FTT because he was learning from Luna, which is insane. I did not realize crypto people learned from their mistakes. Anyway, after Binance dumped all this FTT, 23 million coins, the price of FTT went crazy. Well, it went from $24 to $2450 to 2228 in just one day, which is, to be fair, not all that unusual for a crypto coin. Alameda then offered to buy FTT for $22 each, which seems weird. Like, if you're getting in trouble for holding too much of your own currency, don't buy another $23 million of that currency. That's like when I told my ex, he was sleeping with too many

women and then he slept with 23 million other women. Just kidding. I've never had an ex who was successful at getting women to sleep with him. Did you miss the part about dating a crypto guy? Anyway, then on Tuesday, finance agreed to buy FTX. Yeah, it turned out FTX was totally insolvent and people couldn't get their coins out. I've dated a crypto guy, so I know what it's like when they just can't perform. It's not a good situation. CZ offered to save crypto for now, and SBF got humbled. SBF, who once made his reputation bailing out troubled crypto firms, is now on the receiving end of the bailout.

He lost 94% of his net worth. How's he going to keep himself afloat with a mere $994 million? A lot of people who will never have as much money as him are dunking on him for being poor, and honestly, I'm here for it. But even just in the last couple days, it turns out that CZ scrapped the whole deal. I guess his offer hinged on Binance first performing due diligence, which, of course, being a crypto exchange, meant they had to first learn what due diligence was.

He said their problems were beyond his ability to fix, and then he tweeted out a list of advice for crypto users, one of which was to ignore the prices, which seems much easier to say when you have a billion dollars on hand. FDX is now on the brink of collapse and SBF said he needs $8 billion in emergency financing. I don't understand. Can he just like mine for that? Anyway, recently Justin and son announced he's going to find a way to return FTX and Tron users to normalcy. But I've met a lot of crypto guys and I find that highly unlikely.

A lot of people are concerned that this means that the crypto markets will have to follow the same rules as the traditional financial markets. But I assure you, it's not that many rules. Don't worry. You can still be SEC regulated and melt the entire economy, boys. The big banks do it all the time. Thanks so much for joining us today. To learn more about the collapse of FTX, Eric and Kobe, check out the show notes for this episode.

Unchained is produced by me, Laura Shin, with help from Anthony Youen, Mark Murdoch, Matt Pilchard, Juan Arvanovich, Sam Shre Rum, Pamajumdar, Shishonk, and CLK transcription. Thanks for listening. Thank you.