Unchained - FTX's Ryan Salame Is Going to Prison. Here’s What He Has to Say - Ep. 718

Episode Date: October 11, 2024

Ryan Salame, the former CEO of FTX Digital Markets, is headed to prison, but not before sharing his side of the story. Ryan talks candidly about the decisions he made at FTX, why he withdrew millions of dollars worth of assets in the days leading up to its bankruptcy, and the backstory behind the Thai prostitute trading scheme to unfreeze Alameda’s funds in China. He also disputes the claims about his campaign finance violations, while explaining why he thinks Caroline Ellison is “at least as guilty as SBF” and that Nishad Singh lied. Show highlights: Ryan’s life pre-FTX and how he got into crypto His three attempts to quit working at FTX How Ryan committed campaign finance violations Why Ryan disputes claims that FTX misled banks and misused customer funds How Ryan was involved in setting up trading accounts with the identities of Thai prostitutes to unfreeze Alameda’s funds Whether Ryan was involved in bribing a Chinese official Why he withdrew millions of dollars worth of assets from his FTX accounts right before its bankruptcy Why Ryan claims he was cooperative with prosecutors, despite common belief How he refuses to comment on his wife Michelle Bond's case, but denies wrongdoing Why Ryan pleaded the Fifth Amendment His allegations that prosecutors lied to his lawyers about whether they would pursue charges against Michelle Why he thinks that SBF could have never coerced Caroline Ellison and whether Ellison is “equally guilty” as SBF Why Ryan believes Nishad Singh lied to save himself and his take on Gary Wang How, if he didn’t know about the fraud, he could be so certain that Caroline or Nishad lied Whether the legal advice from FTX’s and Alameda’s lawyers should have been considered in Bankman-Fried's trial Whether testimony from more employees could have created reasonable doubt in SBF's trial Why Ryan is going to law school His plans post-prison What Ryan learned from the FTX debacle Visit our website for breaking news, analysis, op-eds, articles to learn about crypto, and much more: unchainedcrypto.com Thank you to our sponsors! Polkadot Mantle Guest: Ryan Salame, former CEO of FTX Digital Markets Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey everyone. Today's interview is with Ryan Salem, the second FTCX executive who will be serving time. He was the head of FTCS digital markets, which was the Bahamian entity. His part in the FTCS story had to do with the campaign violations that were initially part of Sam Pinkman-F's trial, but then got severed into their own trial due to technicalities involving the agreement that the U.S. and the Bahamas had over SBF's extradition to the U.S. However, that second trial never happened because the government got. a sweeping conviction on all seven charges in the first trial, and so decided not to go ahead with the second one. While SBF's trial did have bits and pieces of information involving the campaign finance charges, the full extent of the government's allegations never gotten airing at trial. This interview with Ryan helped bring more of those details to life. Also, for those of you on crypto Twitter, I'm sure you couldn't help but notice that Ryan has been tweeting a lot leading up to

his prison sentence. There's been a lot of juicy things that he has said in the those tweets, so I asked him about some of his spicier takes. When we recorded this episode, we didn't know when we would be releasing it. And there was also a question in the era of when he would begin his sentence. But today, the day we are publishing, Friday, October 11th, Ryan is reporting to prison. Just hours after we wrapped our recording, he made a post on LinkedIn that referred to the federal prison that will be his home for the next several years. quote, I'm happy to share that I'm starting a new position as inmate at FCI Cumberland. And now here's my interview with Ryan Salem.

I think the way Caroline portrayed the relationship between her and Sam doesn't do justice to the fact that I think Sam was probably the least emotionally available human being on the planet. And like Caroline, you know, created these fantasy novels and these fantasy games around her desire for love with powerful men. And I don't want to disparage Caroline too much. I know I've done a lot over Twitter. I actually really like her. Yeah, I mean, she's already done into the process. But I really, these are all actually decent human beings. And that's like the challenge.

You know, I met a lot of assholes in this industry. I met a lot of assholes in the world. Like Sam, Caroline, Gary, and Ashad are fundamentally like good people to their core. But Caroline had some bizarre views about like the world and galaxies and AI. And a lot of the weird EA stuff, she had an obsession with like, I mean, she reported this, so I don't feel as bad, saying she had this obsession with, like, pleasing or being in the presence of powerful men and things like that. And she created these fantasy worlds constantly. I mean, I think she even wrote a fantasy book while she's been out. She used to do these, like, games where she'd build in this fantasy world. So for the narrative that, like, Sam could emotionally coerce Caroline to meet, if you know the two of them, it's just not possible. I mean, Sam doesn't have, like, really an emotional fiber to. in the way that most human beings do. Hi, everyone. Welcome to Unchained, your no-hype resource for all things Crypto.

I'm your host, Lauren Shin, author of The Cryptopians. I started covering crypto nine years ago, and as the senior editor at Forrest was the first mainstream reader-porter to cover cryptocurrency full-time. This is the October 11th, the 2024 episode of Unchained. Pocod is the original and leading Layer Zero blockchain with over 2,000-plus developers. and the Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Join the community at Pocodot.network slash ecosystem slash community. FBTC is the fastest growing OmniChane BTC asset this summer.

Join FBTC points-inspired campaign where you can hold FBTC to earn sparks, lucrative yields, and token drops, all on your Bitcoin. Today's guest is Ryan Salem, former CEO of FTCS digital markets. Welcome, Ryan. Thank you. Thanks for having me. We're speaking just a few days before you're likely headed to prison for the next seven and a half years. I know you did request to stay just literally today the day we're recording, so we'll see what happens with that.

But assuming that you do go to prison in a couple days, how are you feeling right now? I mean, that's a big question. I don't know. You know, you come, I've had years now or a year and a half roughly to start to come to terms with it. So, yeah, it's, I don't know how to describe how to feel about it, I suppose. I think mostly I feel worse for my wife, Michelle, and my child and everyone else that sort of has to deal with the cleanup after I leave. I'm obviously not excited to go away. But yeah, I don't.

That's a tough question to start off with. Well, let's actually then go back to your life and interest before FTX. Tell us about what your life was like then. Yeah. So I grew up in Western Massachusetts in a more rural environment. So I grew up fishing, you know, snowableness. wheeling on four-wheelers, things like that. I went to our local elementary school, middle school, high school. I then went to UMass Amherst for college. I got an undergrad in accounting.

I then went to work for Ernst & Young, which is one of the big four accounting firms as a tax accountant. I caught the crypto bug, I would say late in high school, but then really got into it in college. And then, you know, shortly into being a tax accountant, I realized, you know, I'd really like to do something in crypto. I went and I got a job for Circle. I worked for them for two years, roughly. They were one of the larger OTC desks at the time. And then I made my way to working for Sam Begman-Fried. Initially, that was in Hong Kong and then eventually the Bahamas. And here we are. And for listeners who don't know, OTC desks are ones that do large trades for bigger customers, because if you trade on an exchange, your price can get sort of eaten away you could pay potentially a higher

price for an asset. So what was it about crypto that captivated you? I mean, I thought Bitcoin was probably one of the coolest things I'd ever come across. I mean, this idea of a completely decentralized network working that didn't need large institutions or intermediaries. I mean, we're, you know, I'm growing up at a time of the 08 financial crisis. You're seeing that like these large institutions that everyone trusts aren't necessarily doing what they say they're doing, which I suppose is ironic in hindsight now. But at the time, I was very excited about what crypto, specifically Bitcoin, but the whole industry offered. It's just an exciting industry to be a part of.

I mean, you've been around for a long time. As you know, I mean, it's moving constantly. It is, it's global. It's like all inclusive in some capacities. But, you know, the idea that something could just function based solely on math working was very enticing to me. And, you know, a lot of ways I got lucky, but I was also very confident that Bitcoin was going to be successful. and the crypto markets in general were going to be successful. So that was at least a good thought that I had at the time.

And what were your aspirations in life at that time? That's an interesting question. I'm more like, what is the phrase by the seat of my pants or whatever it is? Like I'm kind of not thinking five, ten years ahead. This is what I'm interested in. This is what I'm excited about in a current moment. I like working. You know, a lot of people like work to live.

I definitely live to work. So the crypto industry had 24-7 availability. operated on weekends. I mean, it was exactly like the right environment for me in terms of, you know, who I was and what I wanted to do. And obviously, you know, when you were at FTCX, you got pretty involved in politics. Had you always been interested in politics, like before you started working there? I got interested in politics when I moved back. I got really interested in politics when I moved back from Hong Kong to the Bahamas because I was back on the same time zone as the U.S. I was now visiting the U.S. a bit more.

was post-COVID. I now had sort of a large amount of financial resources. So it really, I guess, began my interest or my involvement in politics was the founding of GMI PAC, which was a precursor to what is now, the Fair Shake Pack. But it was a couple guys that I had either worked with or were friendly with who were starting this pack in the U.S. that was going to specifically focus on crypto and crypto legislation. And they asked if I would come on and help fundraise and be a part of it. And so that was my initial foray into really being involved as a large donor in politics. And then it grew rapidly from there. And so obviously, you know, FTCS now has become very well known for its collapse. But let's just focus on that time before all that. Like, what was your life like at

that time? What was it like working in FTCX? I did see you say that you had tried to quit FTCS three times. So I was also curious to know why that was and then why you ended up staying. Yeah, I mean, tried to quit. I wasn't like enslaved. You know what I mean? So tried to quit is maybe not the exact description of it. But so 2020, you know, working for Sam, working for Caroline Ashad, Gary, working in that environment. They worked and lived 24-7 in the office, basically. You know, they were working for sort of this different purpose than a lot of us were, which is this effective altruism concept, work to make money, make money to give it away. But this different purpose of working allowed them to not get burnt out. So after a year of being sort of in SBF's environment, you know, I went

three months in like early 2020 without seeing daylight or without leaving the office for more than a couple hours at a time. And that's seven days a week, 24-7. I'd amassed a pretty decent nest egg for myself between crypto trading and, you know, just successful ICOs and things like that. So I didn't need to work anymore and I was completely exhausted. So my first quote-unquote attempt to leave was in 2020. I submitted my resignation. Sam wrote me a beautiful letter. A bunch of people talked to me. I was still going to leave. And then it was actually Caroline that convinced me to stay the first time. So she took me into a side room and she just burst into tears crying that I was leaving. I think because she realized that, you know, all the work

that I was doing was now going to end up on her plate if I left. And she was already at her breaking point. But that got me to stay. And, you know, everyone said, look, Ryan, just work less if you need to, you know, get the balance that you need. But I sort of didn't have it in me to work less. So I, you know, continue to just work a crazy amount. And then in August of 21, I finally said, I'm like done. I can't do this anymore. And then, you know, there's going to be this theme of me blaming lawyers, but I'm just telling you what happened. Dan Freedberg said, hey, you know, there's something you could do that would be tremendous for the company and for us. We want to get regulated in the Bahamas. They just rolled out this Dare Act. But under Bahamian law and regulation, the CEO needs to

live in the country. And there is no way we're moving all of Alameda or FTX to the Bahamas. So you could go there, be the CEO, build a small office, establish a present, work with the regulators and the government there, and have this sort of quasi-retired version of living, but still be helping the company. And so in 2021 in August, I moved to do that to be the figurehead CEO of FTX Bahamas. And, you know, I had a tremendous three months there of being basically retired. And then the company event followed me down there, got back into this insane working environment again and then mid-22, I was basically done. So I resigned again. I said, Sam, there's no reason for me to be the CEO if you live here now. That was, you know, the purpose of this in the first place.

So Sam took over the CEO title in the Bahamas. And I left in early 22 or mid-22. Brett Harrison had just left and Sam should be good just left. And so we didn't want the public narrative of all these executives leaving. So I didn't make any announcement or public statements that I had left yet, but just quietly sort of disappeared and moved back to the United States. So that's a bit of a long-winded explanation of those three events. Okay, yeah. And just for people to know, Dan Friedberg was the chief relitur officer and the FTAX digital markets is the Bahamian entity.

So now let's talk about the accounts in which you pleaded guilty. The first was conspiracy to make unlawful political contributions and defraud the FEC, Federal Election Commission. And this refers to how Sam Pinkin-Fried unlawfully made over 300 political donations totaling tens of millions of dollars to Republican political candidates in your name. And dozens of times this allowed him to exceed individual limits on campaign donations. And the funds were described as loans to you, even though you knew you would not have to pay them back. And the prosecutors said, quote, the scope of this campaign finance offense is

overwhelming. The defendant and his co-conspirators deployed over $100 million in the legal donations as part of their effort to influence the 2022 midterm elections. No campaign finance crime of that scale has been attempted in this country's history. So you said in your guilty plea that you knew that these acts you pleaded guilty to were illegal. So why did you do it? Yeah, I mean, there's a ton to unpack there. So why did I agree to the plea agreement? So they had, during negotiations, they had made a strong inducement and statement that if I pled guilty,

they would not look into my wife and the mother of my child for any campaign finance violations. So that immediately prevented me from considering any other options. I was very close to going to trial on the charges. I'm not sure going to trial would have been the correct move for a number of reasons. So first off, Nashad had already pled guilty to campaign finance. And I had seen, you know, the way the way Sam's trial went. I mean, this was after. But, you know, no one was going to stand up and provide any counter evidence or explanation

against what the government was saying. So all of the accountants that deemed these to be loans when I took them out were not going to take the stand and say, yeah, Ryan thought these were loans. You know, we told them these were loans. This is how they were booked at the company. The multiple sets of lawyers that were involved for the loans that I was taking from Alameda, they weren't going to take the stand and say, yes, you know, we advised Ryan to borrow money from the company in this capacity instead of selling off his own assets for what he wanted to do. So wait, now are you disputing what prosecutors say when they said that you knew that you would not have to pay. those quote-unquote loans back, you were saying that you thought you had to pay them back? Well, I didn't even want to take loans in the first place. So I was going to sell off a majority of my assets. So I had kept a significant amount of my wealth on the FTX platform, which like a lot

of people did. And in crypto in general, ever since I started making a lot of money in crypto while I was on the Circle Desk. I was finally at the point, you know, I was done with FTX again. I was finally at the point that I was going to liquidate, you know, a substantial portion of my assets. And, you know, the lawyers advised, first off, other people in the company, had been taking out loan agreements, so I hadn't been aware of that, but this loan agreement structure was common around the company. And they brought in some external lawyers and tax accountants that indicated that, you know, this was a much smarter and more intelligent route to take money out than selling off your assets. And in general, this is like a common theme for

how people who have substantial amount of assets turn it into cash. So, you know, I didn't want to take loans in the first place. So, yeah, once they were deemed loans, I thought they were real loans. I had no reason to think they weren't real loans. Everyone was telling me they were loans. So, yeah. Okay. So you're saying you did think you had to pay them back? Yeah. Yeah. I mean, I thought they were loans. They're booked as loans. The accountants thought they were loans. The lawyers thought they were loans. Everyone, yeah, absolutely. Okay. And then for my original question, you said in your guilty plea that you knew that these acts were illegal. So why did you do them? You know, when you go through this process and decide whether to plead guilty or not,

what really occurred and what you lived and experienced matter a lot less than, am I going to spend the next zero to ten years in prison or am I going to spend the next zero to 50 years in prison? And so the, you know, the prosecution makes it out that, you know, if we don't reach a plea agreement, we're going to send you to jail for the rest of your life for as long as humanly possible. Your lawyers indicate to you the percentage of times that defendants beat the prosecutors when they go to trial, no matter what the facts are. So you were saying that you lied in your guilty plea? I am saying that there are reasons that you go through this process and the way that you go through it and they're not always tethered to actual factual things that occurred in reality.

And do you have minimal avenues to go down other than taking what the government says is true. So we can go back to this. I know you're going to bring us up again, but there's some cold, hard facts that just don't make, you know, a ton of sense for everything that's going on. So crypto wasn't what I was pushing in D.C. I wasn't working with SBF on D.C. policy. I was working with his brother Gabe on pandemic preparation policy. So I can, you know, describe all of that. We can go through that if you want to. Right. But I think I saw the list of, of the different things. you were donating to. And I mean, it was just like straight up political donations, but you were saying that.

No, it's all, it's all political. Sorry, it was all political donation. Well, actually, a portion of the money that I borrowed from Alameda did not go to, to political donations either. But that fact has also been swept under the rug. But no, everything we were doing on the pandemic preparation side was through work in D.C. So after COVID, the government had allocated a couple hundred million dollars. I think it was like three or four hundred million dollars to various states to prepare for for COVID. And a lot of that money had been unspent by the end of COVID. And there is this strong push by a group of people that Gabe was working for that if we pulled back that money and put it towards preparing for a future pandemic by researching and looking into vaccines now and preparing for,

I think there's something like 21 different viral categories that exist. And you could start to create vaccines and preparations for any of those viral categories. So if we took those funds that already been deployed and put them towards preparation, you could stop a global pandemic in the future. Well, I guess, like, to me, this is, like, so I guess whatever conversations you were having around the purpose of the donations or what cause you were, you know, trying to have it to lobby for in Washington, I feel like that's different from what the prosecutors were saying, because they were saying that you allowed your name to be used so that SPF could exceed the individual limits on campaign donations. Well, that's actually not the majority, but there was very little example of that.

I mean, Sam could have given 98% of the money I gave himself. It was all to PACs and various political action committees or super PACs. And so maybe one to two percent of the donations went to individual candidates that overlapped with what SBF was doing. So. Okay. Okay. So, yeah, let's move on to the second charge, which was he pleaded guilty to conspiracy. to operate an unlicensed money transmitting business. So you were in charge of managing the settlements team at Alameda, which track the Fiat deposits and withdrawals to or from the Alameda bank account so that the customer's account on FTEX, which is different company,

could be properly credited or debited. And what that means is the customers were sending their money to the Alameda bank accounts. And so there had to be the system where these two, you know, the Alameda bank accounts would connect to the FTCS one. So people knew how much money you owed the customers. Or, you know, how much they had deposited. So you essentially knew that FTC's customer money was tinkling with Alameda's accounts. And in May of 2020, you also knew that an Alameda employee gave a false answer to signature

bank saying that a transfer from an FTCS customer was actually related to Alameda. So how did you justify, you know, combining Alameda? is money with customer money and also lying to banks about, you know, kind of the source of this money. Okay, well, there's a ton to unpack there as well. First off, there was no lying to any banks. It is the most insane accusation from this entire thing. I mean, you know this industry very well. It is fundamentally impossible that FTX and Alameda were lying to Silvergate or Signature bank about what was happening with accounts. Both Silvergate and Signature Bank were actively looking at helping the industry as best it could. Not just FTCs, Bin Laden,

as well and a lot of other exchanges. So you're saying that prosecutors, what prosecutors said there was false, that you... Oh my God, I could write you, I mean, I have written a book about if you want to go through everything faults that prosecutors accused in this case. Well, do you want to list some of the prime examples? Well, the bet let's, can we finish up on the banking one? Sure. The banking one's actually very important, I think, but then I'm happy to go through more of that.

You're unpacking a lot here at once. So the way the bank accounts works. So we're, I get to Alameda like 20. 19, and Sam's launching FTCS right at this time. And so we go to Silvergate Bank, and I think this email is public and it's in the exhibits, and we say, hey, can we open a customer account for FTX? And Silvergate comes back and says, no, we can't, we don't currently have the capability within Silvergate Bank for FTX to have a customer account. So we worked with, and this included lawyers on our end, this included external lawyers, this included lawyers on their end. And the management

team of Silvergate, we worked through a process to allow. Alameda to function as an OTC desk for customers to convert their dollars to FTX eMoney is what we called it. And so what this is, it essentially worked like how airline points work. It's not a great analogy. So it's not a perfect analogy. But you would trade your dollars with Alameda and Alameda would give you back this FTX stablecoin basket. And everyone was comfortable with this for a number of reasons. So one, the USD line item on FTX was not just USD.

It was a basket of USD, stable coins. That was USD, TUSD, HUSD, BUSD. There may have been one other. And so dollars were never held one to one to one to one in a bank account anywhere. The Alameda approach for the OTC desk was a stopgap approach until Silvergate could get comfortable giving FTX its own bank account based on its own internal procedures, which they eventually did in 21. So the Alameda account was used as an OTC search. to allow customers to trade in and out of their FTX balance with the OTC desk. But were customers aware of that?

It was all over the terms of service. Now, people don't read the terms of service, so I'm aware of that. I have a mountain of chats with individual users where I described this process when they reach out and ask, hey, why is Alameda's wire instructions, you know, what are available for FTX right now. You know, Sam very publicly was at this time the CEO of Alameda and very publicly at this point, the CEO of FTX. And so people did have concerns about that. And we would explain to them, you are trading your dollars into FTX stable coin basket and out of it when you withdraw. That is not

an optimal system. That's not the system we want. That is the system that the bank has worked with us to create until they're able to give us an account, which they eventually did. And then FTX converted or we're supposed to convert over to the FTCS account. So I know that's very long-winded, but I think there there needs to be this whole backstory on how we got to the point of Alameda being the on and off ramp for trading your FTCS stable coin in and out. But there was there wasn't a hiding of this, is my point. But there was because you were also involved in the incorporation of North Dimension, which was this kind of fake electronics company. No, the fake electronics company is not real. So that you can go to North Dimension.org right now. That's the website related to North

Dimension, it publicly shows that it's a cryptocurrency company and that it is trading on markets and basically describes what Alameda did as a crypto company. The electronics website, I have no idea where that came from. My speculation, again, this is complete speculation, is that a Chinese company who was trying to justify wiring North Dimension created a website to show that it was an electronics company, and that's why they were wiring in and out. There's a ton of different theories on why that website exists. But if you go to North Dimension.com, or that was the website that we created for Alameda. Now, the reason for...

But the point is, so, okay, regardless of whether it was billed as an electronic company, the point is that... Well, it's an important point, though. Let's just be honest. Okay, okay. So, you know, maybe, you know, that it's not clear really what happened there, but the reason that was... What's clear from my side, what happened?

I mean, we incorporated a new subsidiary of Alameda along with the bank due to a number of problems with the Alameda account. Right. So, you know, you had tried to go to the thing to get an account for FTCX, but because it was not licensed and registered as a money services business, you were denied. But that's not true either, right? Because FTCS never incorporated as a money service business and then Silvergate gave FTCS an account anyway in 2021. So either they changed their entire policies internally that you no longer needed a money service business or what really happened, which was they needed to build out the internal capability for FTCS and for processing. customer-specific deposits and withdrawals and just hadn't done that yet, and therefore Alameda, and for one month or two months, you used North Dimension. So, yeah. Okay, but so basically,

the creation of North Dimension happened with that name because the name bore no connection to Alameda or FTX. And when you opened the account with Silvergate, you told them that it was an account for trading and market making. Well, that's not quite true either. And did not say that it was going to be used to receive and transmit FTF customer deposit. So you were saying that what prosecutor said there is also not true. I mean, it's verifiably false. So first off, in the wires that came in and out of North Dimension and Alameda before that,

customers put in the description on the memo, FTX and then their account number. So unless the entire bank just ignored all of the memos going back and forth, I mean, And that makes, there's substantial amount of evidence that customers were constantly reaching out to Silvergate to talk about issues they were having with wires to get funds eventually to FTX that were being traded with North Dimension. So that alone, I think, is like evidence that you could just look up and find that never came out. On top of that, we would never, and no crypto company would ever try to hoodwink Silvergate with like a subsidiary for a different purpose. Like we worked in conjunction with Silvergate to incorporate and utilize the North Dimension account because, and there's a few reasons for it, Sam at the time was actually thinking of sun setting at, this is not the primary, but I'm just going to get through a list of a few of them. Sam was thinking about sunseting Alameda at the time. There'd been a number of negative press pieces about it that had come out between their investments or, you know, there was a reef OTC trade around that time that was a big issue. So Sam was already considering sunsetting Alameda and just using North Dimension. But primarily, the number one concern was that intermediary banks all over the world were blocking Alameda wires. And Silvergate didn't have the capacity to keep trying to work with these intermediary banks to get the wires processed.

And so along with Silvergate, the theory was if we incorporate a subsidiary to Alameda for a very temporary time, it was, I think, a month or two, then they won't have to deal with the international or intermediary bank issues that have been causing customers to wait. weeks, even months to get their funds to Alameda or to get their funds returned because of the intermediary banks. But you're, so you're saying that you never told Silvergate that that North Dimension account was an account for trading and market making. What we did. So we had the Alameda account and we had the form that we used to open the Alameda account. We worked with Silvergate to incorporate and get North Dimension onboarded and the team. That's what you told them that was going to use. Hold on. Hold on. Okay, one second. What happened was the paperwork that was used to complete Alameda's account

opening was just copy and pasted to create North Dimensions account opening and submitted. And I was just C-Ced on that email. I don't know if it's in the exhibits or not, but I wasn't even sort of a part of that whole process. Well, I was a part of it. Sorry, but I didn't direct that whole process. But we had worked with Silvergate so closely throughout the entire process. And this is their entire team that when it came time to actually submitting the account opening docs at Silvergate, we just used the Alameda accounts and swapped out the name to get it in and get it all set up quickly. But the premise of this was being hidden from Silvergate, it makes no sense. And you know it makes no sense because you know, you know this industry.

Like FTX is one of the largest exchanges. Binance is one of the large exchanges. Without a Silvergate account, you're toast in crypto at the time. Yeah, I don't think you can tell me what I know or don't. Oh, I'm sorry. I didn't mean that too rude. But I'm just saying a lot of people I talk to don't know, like, the crypto industry, and you know the crypto industry well. And so that's what I meant by that. I

apologize. I mean to be rude. Well, so one other thing about this account is, and this goes back to the political donations, so prosecutors say, quote, in order to conceal the truth source of the funds, the campaign donations, Salem agreed with others that funds for contributions would be transferred from Alameda's bank accounts, which also contained FTA's customer funds, to bank accounts in the name of the political donors, and then transferred from those, you know, who were you, Nisham, etc. And then transferred from those individual bank accounts to political campaigns. So did you know that some of those funds being used were customer funds? Well, they weren't customer funds. Customers didn't have USD on FTX that they had title to until FTX finally got the account. Customers had

title to their crypto, their Bitcoin, their Ethereum, their Solana, everything else, because that was just supposed to be custody to FTX. It turned out not to be, but it was supposed to be, and we all thought it was. So you're saying that if a customer wired dollars to that Silvergate account for the purpose of it then being used for their trading accounts on FTX, that in that kind of transfer period, the money suddenly doesn't belong to them? They traded it in for FTX stable coin. Yes. This is not, yeah, that's 100. It's in the terms of service. It's how I disclosed it every time we talked about it. And it would have been impossible to custody the money one to one because a user could trade in, for USDC and then turn that USDC or trade that USDC in for US dollars in the bank account

and then trade those 50 of those US dollars in for TUSD. So the amount of re, I don't know what you call it on the back end, like swapping between stable coins and dollars on the back end would not have allowed a one-to-one custodying in the bank account anyway. But it wasn't even advertised to be until FTX got its bank account that it wanted with Silvergate for FTCS customers. And then it was literally FTCS customers' trading account. Okay, yeah, but it looks like a bunch of like $34.5 million of campaign donations that you made,

went directly from the North Dimension account at Silvergate to your personal account at signature. And then from there to- Of course it did. We all had accounts on FTCs. Every customer and employee had accounts on FTCX. So anytime I withdrew money from my FTCS account or deposited money in or traded money into my FTCX account, it was going to come from Alameda and North Dimensions accounts, the same way it did for every other user that used the USD stable coin basket. Yeah, I don't know. The co-mingling of all that money is

obviously not how things should be done in is concerning. But let's move on. No, I agree. And that's why we didn't want it. I mean, we were fighting to guess why we tried to get FTCS a bank account from day one and then worked with Silvergate for other solutions until they finally did give FDX a bank account. But yes, I agree the interaction. between banking and crypto exchanges is terrible and not how it should be. All right. So in a moment, we're going to talk about some other allegations against Ryan Salem, but first a quick word from the SponsuC to make this show possible. FBTC is an Omni-Chane BTC asset, contributed by Mantle Network and Antalpha Global.

Launched in early July, FBTC's TVL has already passed $125 million, making the fastest-growing BTC asset this summer. FBTC's points-inspired campaign, Sparkle, has officially started, with lucrative and sustainable yields, plus points and token airdrop from Babylon, Mantle's new token cook, and more. FBTC is the BTC solution you've been waiting for. Visit FBTC.com slash ongoing hyphen campaign today. Back to my conversation with Ryan. In 2021, Alameda's trading accounts on Wobie and OKX were frozen at Sam Bickman-Fried's trial. As Caroline Ellison testified, quote,

on OKX, we made several accounts using the ideas of different people who I believe were Thai prostitutes. And we tried to basically have our main account lose money and have those other accounts make money. And so, you know, basically do very imbalanced trades between the two accounts. So those other accounts would be able to make money and withdraw it. And she said, you were the person who informed her of the identities behind those accounts, that, you know, of the Thai prostitutes.

So who came up with that scheme? Okay, well, there's a lot of inaccuracies with that, and I'll describe it to it. It's not an A plus thing anyway, but let me just describe to you what actually occurred. So OKX and Huobie froze about a billion dollars of what were predominantly funds borrowed from Genesis for Alameda's trading. And at the time, or we realized, or I didn't know at least, that it was mostly under Gary Wong's name that these accounts existed in China, in Huwobie and in OKX. And I think that was probably a legacy issue from when they all started back in like 16 or 17. And the exchange has basically said, Gary Wong needs to show up in person in China to begin the process of getting these funds released. No one was about to send Gary into China to meet one to one. So Sam reached out and said, you know, what are some solutions that are available? Being on the OTC desk or running an OTC desk for as long as I had, there are these groups of people that exist. It's very common in China, but it's in most capital control countries. And it's called KYC farming.

I don't know if you've heard of it before, but what it is is basically, you know, someone who has a ton of money in China and is trying to move it to the United States, they're not able to do to capital controls. So they go to these KYC farmers and those KYC farmers give them, you know, 50 or 100 bank accounts to use of people within China that they can send a little bit of money slowly out and get it out of China. So this is just this is just a backstory of what KYC farming is, but that's sort of very popular in capital control countries. So the solution that I came up with was, hey, we should reach out to one of these KYC farmers and see if sort of getting these other accounts set up on these exchanges is a viable solution for this. The Thai prostitute thing, I don't know. I never met any of these people before. It's a KYC service. I hardly knew the person that even got me the KYC stuff for us to use.

So, yeah, it's just a salacious news piece that got brought up because that's what people like is sort of salacious things. but I don't know what these, I don't know many of these people or know anything about these people. And it failed miserably. And that was the end of my involvement in all of that. Okay. Well, so I don't know if it was. I have to ask you about what happened next. Because that Thai prostitute trading strategy did not work.

Alameda employee David Moss suggested that you guys try what he was calling his way or what they called his way in the trial. And essentially that was to bribe a Chinese government official, $150 million. And Caroline referred to this in her notes as the thing because she knew it was illegal to bribe before a government official did not want to write that down. In the testimony, it was clear that you were at least part of some portion of those discussions, but not exactly which discussions. I mean, you don't have to believe me. I was not a part of those discussions. I was brought in to try to devise a solution. I came up with what I knew best, and that was the end of my involvement and a few other people's involvement. to the extent there was anything like that that occurred, I imagine, say, I wanted to keep it as hush-hush as possible, but I was not involved in any of that. Okay.

So. And I think it's, I think it's, well, anyway, sorry. I think it's a bit clear I wasn't because why would they also not, you know, the government wasn't holding back with me. So, yeah. Okay. And so I then also wanted to ask about kind of like what you knew when, when it comes to the FTA. fraud. You say you weren't part of the inner circle. You say you didn't know about the fraud at the heart of FTX and about how Alameda had spent the FTX customer funds. So when did you come to

know about it? Yeah. Okay. So, I mean, basically the collapse of the six was that November 6th. That was when, you know, there's some messages that have been made public that were very advantageous to me. I messaged Caroline and I was like, it's all the money there or not. And then she testified, she didn't know whether to keep lying to me about whether the money was there or not. I think I was in denial maybe between the sixth until, I don't know, the ninth or tenth, that it was even feasibly possible that customer money was missing, let alone to this degree. But, yeah, I guess the sixth would be the first time I had any inkling of it. You know, I think back to all these memories that now seem crazy, but I remember when the balance sheet leaked.

And my first thought was like, oh, my God, the lenders are in so much trouble here. Like the lenders are talking about Alameda's balance sheet? Yeah, Alameda's balance sheet. Yeah. When that article came out, my initial thought was like, wow, the lenders are in a lot of trouble here. Like, it's clear they've been lending to Alameda against a basket of, you know, questionable assets, a tremendous amount of money. It didn't even occur to me that this had any implications for FTCs or FTCS customers, crypto or assets. Yeah, and just to be clear for people, that was on November 2nd.

So, yeah, I think it was like a Wednesday or something. And then November 6th was the Sunday. day. And that night was the night when, I guess, Sam, think, Van Freed, Caroline, Ellison, Gary Wong, and Ashad Singh, Rom Nicarora. And I guess you were on the phone with them, because as you mentioned, you were no longer in the Bahamas. But they were discussing how to address this crisis. You know, the customers were withdrawing a lot of money. And they were drafting various versions of a tweet to be posted by Sam and debating whether or not to characterize FTCS as solvent or well capitalized. And this was the discussion that led to the tweet, the infamous

tweet by Sam, FTCS is fine, assets are fine. So at that point, during that discussion, did you know that FTX did not have the money? You know, honestly, my memory is just a little blurry around exact times. I don't even 100% remember that phone call. I'm not denying that it happened, but I just remember sort of being in these horrific chats going back and forth all the time about, you know, various people messaging and me sort of sitting back and watching the world unfold. I remember really appreciating how big of a problem it was when Sam finally posted the FTX Ventures book. So there was this Excel spreadsheet that had ventures. Sam eventually posted it in a chat and said, hey, can we get some of these things liquidated to cover the amount of customer funds that are no longer available?

And so I opened that up. I scrolled to the bottom and I saw that there was like $8 billion of ventures investment. And then it sort of occurred to me what had happened to all the money. So, yeah, go ahead. Would you say that that was the moment when you realized that the customer funds had been used and were not available? I think that's, yeah. Yeah, it's not this finite black and white moment, but I think that was like a more earth-shattering realization. I mean, Zane had texted me maybe a little bit before that just saying like Ryan, holy,

can I swear? Yeah, Ryan, holy fuck, like, you're not going to believe this. There's nothing in the cold or hot wallets. And I replied, like, that's impossible. There's got it. You know, the funds have to be somewhere. And he's like, no, like Sam Royley screwed us, yada, yada. So I had some messages like that coming in.

But it was really seeing the Ventures book that I think for me explained at least, at least gave evidence to where money could be or, you know, where ultimately it turned out the money had all gone. And at what day would you say that happened? Oh, God, I don't want it. It's between the sixth and like the 10th, I think. I don't want to give you a day or two off exactly. I mean, this is a blurry time for me. But yeah, it was it was somewhere in that chat. Sam creates the small group chat. He brings in a bunch of people. I was one of the people he brought in.

It starts with, hey, guys, I think like a billion to two billion is missing. Okay, why is a billion to two billion missing? There's something clearly wrong here, but that's a solvable problem. You know, there's, it's like Sam's got assets all over the place. This is a solvable problem. Then we figured out how the heck did that even happen in the first place. Then that number grows to like two to three billion. And then I think it gets to like three to four billion. And then he posts the Ventures book. And then, yeah, I think that if he's, if he's, If I had to pinpoint a moment, that's, I guess, the earth's shattering moment. And was that before you knew that he was trying to sell FTX to CZ at Binance? I think, yes, I think so.

Okay, so before November 8th, I guess, which was the Tuesday morning. Yeah, that sounds right. Okay, because, okay, so that morning, November 8th is when it became public, that SBF had been trying to get CZ of finance to buy FTCX. So here's the thing. Like, you know, at that time, you're saying that it was like slowly dawning on you that the money wasn't there. And then, you know, before the eighth is when you definitively knew. So most likely the seventh, at least from the trial, it seems like the evening of the seventh has been a lot of people figured it out. And so prosecutor said, quote, on November 6th and 7th, Ryan Salem recognized that there was a meaningful chance to FTCS would go bankrupt and even told an associate on November 7th,

FTX needed more than $1 billion to meet ongoing and accelerating customer withdrawals. Despite this knowledge, at about 8.30 p.m. that day, Salem withdrew more than $5 million in cryptocurrency from an account he controlled in FDX.com to a crypto wallet. He tried to withdraw tens of millions more that evening, but the withdrawal's failed. Over the next few days, Salem was a party to additional conversations about FTC's doomed position, some of which raised the implication that Bankman Freed had committed a massive fraud. On the morning of November 9th, Salem learned that FTCS's U.S. FTCS was also affected and had a deficit of $45 million in funds.

Salem nonetheless withdrew nearly $600,000 in cryptocurrency from his FTCS U.S. account on November 11th hours before the bankruptcy. What do you have to say for yourself? Yeah. No, and I mean, not a bright moment. So the FTX U.S. one is silly because that just sat in the account and then I returned it to the DOJ maybe two weeks ago. So that's just publicly available.

I didn't spend the funds that came out of the FTX U.S. one. There was a lot of talk that the U.S. was always solvent. And to this day, I think a very strong case should be made that FTX U.S. was always solvent. That doesn't justify me withdrawing from it. But I didn't use and I recognize that those funds should not have been touched and just left them where they were until now. So, but yes, let's go back to the FTX one. I had the vast majority of my net worth on FTX. I didn't have available liquid funds. I knew I needed a lawyer. I withdrew. I put up multiple withdrawals. So I put up a a five, a six, a seven, and then the five eventually was processed by someone, and so I canceled the six and the seven. Yeah, no, not a bright moment. You know, I, yeah, I, no, I'm not saying I did nothing wrong and have no regrets. I hope that's not why you think I'm here. But, you know, I don't, I still don't think FTC should have ever filed bankruptcy. So the idea that I told someone that I thought FTX was bankrupt is, I think, a little miscommunication, because to this date, I don't ever think FTX should have filed bankruptcy. And then, you know, if we were only a billion in the hole,

when I said that, I thought a billion in the whole was solvable. I mean, it's still a problem, but I did not think that a billion in the whole was not something Sam could resolve. I mean, Sam had basically turned out a billion in investment over the previous year into FTCS. Yeah, Sam, you know, last I knew sat on between five and $10 billion with the Solano. So, yeah. Okay. And so the New York Times reported that you used this money to pay off personal expenses and hire a PR firm, but you were saying you used it to hire lawyers? Sorry, I just moved it to my bank account and then used it. The PR firm is, again, it sounds like I'm trying to justify things here. Mistakes were made. My point is not that I did everything perfectly 100% of the time. So the PR firm actually, though, was hired for FTX, or I went out and found a PR firm for FTX, and then Sam just stopped engaging with me and refused to use it, and then everything went into chaos. And so I used the PR firm for like two months because I'd already paid the retainer and then it had just run out. But yeah, I used the money that I I withdrew to continue living my life as well. And when you said Sam stopped engaging with you when and why do you think he did that? Well, Sam was just in, I mean, his whole world's collapsing. I'm sort of

one of the least interesting people for him to be talking to at that point in time. I was uninvolved for the company for like six months prior to that, really. I had once again sort of left him. You know, he trusted me as a person still, but in this world of trying to resolve what's going on to him in the Bahamas and FTX. My only maybe use case for a little while was do I know anyone that would buy the FTCX Ventures book or put investment into FTCS? And once that was true that I was not helpful there, I served no purpose. Okay. And the prosecutor said in their sentencing memo, quote, this criminal conduct, they're talking about you, was motivated amongst other things by greed. They said you earned millions of dollars at Alameda and FTX and spent that money in luxury items,

including homes, restaurants, and cars. They noted that your FTX holdings, at least on paper were at one point worth hundreds of millions of dollars. And similarly, the New York Times reported, quote, Mr. Salem said at times that he was in crypto because it was a way to get rich, according to a person who knows him. He enjoyed expensive cars, flew in private jets and had a reputation for hard partying. What's your response to all that? Well, wait, there's a few things I want to unpack in there. So first, I find it interesting that even the DOJ notes, I was worth hundreds of millions of dollars, but then I chose to illegally make campaign finance contributions. You know, I took something that could have been perfectly legal and just made it illegal for the heck of it is sort of what that argument is.

But anyway, that's an aside. I did fly private a fair bit. I bought two cars. There's a race called the Gumball 5,000. I don't know if you heard of it, but it's like a luxury car race that happens all over the world every now and then. So I bought a car for that. I mistakenly bought an electric car that I couldn't use in the race. So then I went out and got a non-electric car. So I do, I have two Porsches. I, yeah, I bought, you don't buy restaurants to make money. I bought restaurants because they were going under in my hometown or struggling after COVID. And I had worked in restaurants growing up all the time.

So I had friends that worked there and people that I cared about in the restaurants. And so I bought the ones that people worked at, increased people's wages to a fair wage, cleaned up the place, tried to sustain everything through COVID. Yeah, no, I, yeah. I, sorry, I, yeah, I don't know what to tell you. I made, you know, I was fairly well, before arriving at Alameda and FTX, at least relative to everyone else there. I'd been very successful in crypto just personally. I was very successful at Circles OTC desk. And then, yeah, my investments in FTT were

successful and other I COs and things of that nature. For a long time, I just left all the money, like sort of fake on FtX or I think before that it was on Binance and then eventually FTX, my old boss sort of recommended, you know, you'll go a little crazy unless if you turn this into real money. So just sort of keep this as, you know, play money on the in the crypto ecosystem. And it's a little easier that way. So for a long time, I just did that. But, you know, once I was worn out at a, and it sounds like I'm justifying. I'm just explaining to you what happened. Once I was sort of worn out and done working, I was going to go live, you know, and enjoy a lot of what I built and created and made money from. Like retire early, basically. Yeah, well, I moved to the Bahamas to retire.

I mean, that's why I left in 21 was to get away from everyone and quasi retire while still, you know, supporting a company that I'd help build and turn into this phenomenally successful company. I was to say, interestingly enough, a lot of the political stuff was actually me, you know, beginning to be more altruistic and try to do more with the money. You know, I'd partied, I'd flown private. I'd done, you know, I'd had a nice car and things like that. It didn't provide all that much pleasure past the first experience of doing it. So I sort of, not ironically, but I considered the work I was starting to do in D.C. around this pandemic stuff with Gabe to actually be me being more altruistic and doing something beneficial for the world instead of me just enjoying and having fun with it. So, you know, in hindsight, it doesn't look like that. But that was it at the time. Okay. And so, you know, as you discussed or you mentioned earlier, you decided to plead the fifth. But obviously other people kind of in a slimmer position with the government, Caroline, Ellison, Gary Wong, and Ashad Singh, they all decided to cooperate. So why did you decide not to cooperate? Was it, you know,

because you would have had to tell the truth about all the criminal activity you knew about, which would have then potentially incriminated or even, you know, caused you to have to testify against your, your now wife, then girlfriend, Michelle Bond? No, that's not true. I was cooperative from day one. This whole narrative that I was uncooperative has, is not true at all. So I got lawyers sort of shortly out in November. My lawyer. reached out to DOJ, said Ryan's here and available for anything you need. I sent my laptop and cell phone off, actually for a lot of money, I sent it off to be screened and downloaded and have all the information taken off of it. I didn't have access to a lot at that point because the

bankruptcy estate had shut off all emails, calendar, all that stuff, but I had all the chats and any documents that have been saved on my computer and then all the chats on my phone and everything. We made 100% of those documents immediately available to the DOJ. You know, this narrative that I was not cooperating. Right, no, no, but, but like, cooperate in the, you know, legal sense of the word in terms of... No, I was cooperating in the legal sense. I didn't have as much information for them. You know, I didn't have a whole ton to tell them.

You know, they had stuff around the MTI. You know, I was explicitly told we didn't need money transmitting licenses by lawyers. But the point is there's a distinction between the fact that you pleaded the fifth and that the rest, you know, testified at the trial, et cetera. So I'm not saying that you literally didn't have any communication with. I'm just asking like, why didn't you go the route that Caroline Ellison and Gary Wong and his shot saying did? Well, what would I have gone into the DOJ and said? Well, I mean, so. I wasn't aware of all the funds being misused or it was incomprehensible that FTC's customers' funds were missing.

I don't, I didn't think we had any time were doing anything illegal or improper. I mean, we had, we were hiding anything from anyone. We had. So it didn't at all have to do with what we're, well, let me, so actually, let's just do this. So I'm going to talk about the unlawful political donations that involved your partner, Michelle Bond, or your now wife. So for her congressional campaign, after exceeding the maximum amount allowed to support her candidacy, you continue to wire hundreds of thousands of dollars to an associate who then immediately wired those funds into her congressional campaign account. This included over $200,000 after she had lost in the prime. and that was to assist in her retiring the outstanding debts owed. Prosecutors also alleged that you had hired her to do a consulting job at FTX that, at least technically, they made a full-time job simply because the payroll person suggested that it would be easier for her to get paid that way. And so, you know, when they suggested that, you then asked if she could have a base pay of

100K with a signing bonus of 400K. And after that bonus was paid, she then wired 300,000 of it to her campaign. campaign account, had it marked as a loan from herself to the campaign when actually it was this illegal contribution from the FTCS exchange to the campaign. So I was wondering, like, who decided to do each of those things? Like, which were actions that you decided upon and which were one she decided upon? Oh, my God. I want to answer all of this so badly. The one thing I'm not going to talk with you about is Michelle's case, because it's open and ongoing right now. She's going to litigate that in the courtroom and sort of once the facts of this come out, which I'm very excited.

for, I think a lot of what you just said will be proven, even just factually inaccurate. So I'm unfortunately, I'm not going to answer those questions to you right now. I promise you, I'd love nothing more than to go through this, but she is in the beginning part of this legal process. And, you know, based on what happened to Sam, when he sort of talked about anything with his case, I don't want to jeopardize her in the moment or in the middle of this. But I'm extremely confident when that gets to be, you know, opened up and looked at you're going to find a drastically different set of baseline facts and just actually what occurred. So one thing I can tell you, I opened, I started a super PAC to support her for her congressional

race. So I sent, I think, between one and 1.8 million to a super PAC called Stanford, New York that was spending to support her and her race. Because you are not allowed to, because we were not married, even though we wanted to be and we're working very hard to get married, we were not married. So I could not directly support her. So to do it legally, I created the super PAC, sent off. all the money there and had the Super PAC support her race.

So you disputed earlier when I asked if the reason that you pleaded the fifth was because when you cooperate with the government, it's because you have to tell the truth about all criminal activity you know about. And here, you know, you did not want to discuss Michelle's case to. Oh, no, I've been happy to with the government. I did discuss with the government. She has now been indicted and is in the middle of this legal process. And it would not be fair for me to sort of front run her on.

her story and what actually occurred. So you can use- Then let me just ask it another way. Like, why did you decide to plead the fifth? Why did I say to plead the fifth in Sam's case? Like to go on trial for-s- They never were going to have me as a witness anyway, I don't think. So, you know, I followed lawyers, instructions and recommendations at that point. There was never a direct or open offer for me to be a cooperator and testify against Sam. Okay. But I guess also it's for your case, right? Yeah, I think so the, I guess I don't know exactly what you're asking here. The government indicated that there were areas of exposure that they were concerned about with me. And so at that point,

we know they're investigating me and looking into what's going on there. And I don't remember exactly, but I am very confident my lawyers recommended, you know, if you're not going to be a cooperating witness, you should plead the fifth unless they're going to give you a non-prosecution agreement, like they gave can and son. And if that's sort of not what they're looking for interested in, we advise you to plead the fifth. Okay. Okay. Okay. Okay. Well, I do want to ask something that concerns you, but it's from Michelle's, Michelle Bond's indictment, because at least from this, it appears that you did know what the campaign finance laws were. So the indictment says, quote, honor about June 27th, 2020, the day before, and they call you CC1, but it's you, wired money to the bond personal account. You asked a friend to donate to the bond campaign. And you said to this friend, quote, the whole thing is annoying, because you can only max, donate 5,800 per person. Otherwise, I would just cover the whole thing. And your friend replied, LOL, if you Venmo me, I'll donate it. And you responded, well, don't type that. That's not allowed.

Correct. So why did you do those things if you knew they were illegal? Well, I think you can parse through that I'm telling you that I did not do those things. Like, I think it, yeah, I, so this is me specifically telling someone I'm not going to Venmo the money to then contribute to Michelle's campaign. So I would argue that that explicitly exactly states what I knew and why I didn't commit campaign finance violations. Okay. So you were saying when you wrote, don't type that. You're most people would read that as saying, we know we're doing something illegal.

Let's not put it in writing. Oh, she never, sorry, they would have gotten that transaction never happened. I never Venmoed anyone $50. and I don't even think that person contributed to Michelle's campaign. I don't remember. So when Michelle started running, I messaged everyone I'd ever known for the past, like, 10 years of my life, a link to her Wyn Red account so people could contribute, which is, you know, what you do in politics generally.

And but knowing that, do you still felt the FTX payment to Michelle's camp, or to Michelle's, I guess it went to her personal account, what she then sent to her campaign, you thought that was all kosher? You can't talk about it. I'm not going to go super down and start. SBF worked with Michelle. I met Michelle, but after SBF hired her to do consulting work for FTX, and we met because of that and then fell in love.

I didn't bring her on to the company beforehand. Sort of her and Sam overlapped. Somehow she started being a consultant for FTX, and then we met, fell in love, and got together. So, you know, there's a bit of a timeline problem there, I think. But, you know, she had agreements and consultation work. with SBF long before I even knew who she was. Okay.

So then there was a recent twist in your case where on September 12th, Judge Lewis Kaplan, who's the judge in this SBF case, threatened sanctions against you for lying to him last year in a guilty plea when you told him that prosecutors had not offered you a deal to induce your guilty plea. But of course, then you went back to him this summer saying that they had promised you they would stop their investigation of your partner, wife now, Michelle Bonn, who, you know, That's exactly what you said here in this episode. And what had happened was, you know, on August 22nd, she was indicted for these conspiring

to raise unlawful campaign contributions from FTX. And they ended up, so the prosecutors ended up releasing contemporaneous emails confirming the substance of conversations with you in which they made it clear that the investigations into your conduct and her conduct were separate. And resolving your case would have no bearing on hers. And they also point out that you enter. your guilty plea after that meeting. So, you know, this, they had made that clear and then you entered the guilty plea after that. So, you know, why did you tell Judge Kaplan that when you made the

guilty plea, you were under the impression that this was, you know, a condition that they had agreed to? Oh, because it was 100% percent. A 100 was. I have substantial evidence that they made this inducement. My lawyers told me it was the strongest inducement they'd heard in their 20 plus years as prosecutors or on the defense side. I have memos from them. I have messages from them. But I mean, I've read the prosecutors. The prosecutors say a lot of things. I mean, you were obsessed with the prosecutors. No, but there were emails that are, you know, dated and have dates on them when I was reading the chronology of things.

And it appears what they're saying is correct. What's not? But if you go down to exhibit four, five, and six, I think in that same submission, you will see evidence that they submitted that shows my lawyers talking, mine and Michelle's lawyers talking to the prosecutors saying you let us to believe or indicated there would be no charges against Michelle. why are you emailing us and talking to us? So the government's in their own submission. So you were saying that at that time that you submitted your guilty plea, you knew that this was a point you guys did not agree on and yet you still submitted the guilty plea? No. When I submitted the guilty plea, it was because my lawyer's thought and because the DOJ had made my lawyers feel that way.

Or presumably, I'm not a part of these conversations, remember. I'm getting relayed back from my lawyers what conversations are between the two of the three of. them. I never got to speak to the DOJ once directly. They, and this actually will come out, I believe, in the future. So, you know, the big reason I withdrew my Cormnobus petition is so that it could be litigated if necessary in Michelle's court. So this will be hashed out. I think it's up to her. I don't know what direction she's going to go, but this whole point will be litigated and made far more public as her trial goes underway. But I will tell you that it was advertised to me as the strongest inducement by lawyers that basically ever heard. And these are expensive lawyers. I mean,

these are very expensive lawyers. So these are lawyers that were former prosecutors. And so, yeah. Okay. So Judge Kaplan now is in this position where he has to weigh in on whether or not the prosecutors, you know, actually promised or did not promise to drop their investigation into bond, you know, exchange for your plea. And to decide whether or not you even lied in your initial motion to withdraw your plea, if he decides that you did lie, that could lead you to have new charges brought against you, possibly even a new consecutive prison term. And here are some of the areas of criminal exposure that the prosecutors say could be brought up. First, there's evidence that you were involved in a foreign corrupt practices act scheme in the Bahamas in which you supervised

efforts to pay bribes to immigration authorities to help get FTCS employees and associates into the country. What do you have to say to that? So first off, the first time I've heard about any of those was in that filing. So if they really thought there was strong evidence of any of these things, why did we not proffer on it or discuss it the first time through this whole thing? That one in particular is a bit insane because everything I was doing in the Bahamas was to help the Bahamas and not go around their regulation in place. So we had a huge problem with moving employees from like so many employees internationally down to the Bahamas because there are strict work permitting laws there. And the solution that we implemented to that was putting the various

condos and buildings in the Bahamas in other people's names so that they could get residency permits and get around the work permitting structure. So now, you know, Sam's been criticized for buying his employees, these luxury places and stuff all over when that's not even what happened. The names were just put on these various places to get residency permits for everybody because we weren't able to get work permits quickly enough and fast enough. So that's crazy. And the rest of them are crazy. I knew the ones you're about to list off to the further sort of embarrass me and, you know, make the government's case, they're all, they're all crazy. And if the, if the government actually thought these things were real charges, why are we

waiting till now? Like, this is literally the first time I heard about all of these was that submission. It wasn't a month ago. So I think that says all it needs to say. Yeah, just to be clear, I'm not asking you the questions to embarrass you. I'm asking you the questions to give you the opportunity to respond to them. So I do want to ask about the others. They also say, another criminal area of exposure could be that they have evidence of distribution quantity of narcotics trafficking? What's your response to that? Yeah, I mean, that's crazy. I mean, so have I been to parties before where things were at them? Sure, we didn't have company parties that were anything like that or the way people have been trying to describe these, like,

orgies that went on in Sam's apartment or nasty stuff like that. But it was a group of sort of young kids. And so I wasn't a part of it in that sense. You know, I don't know anyone who's worth hundreds of millions of dollars and is also choosing to do that with their life. But yeah, that's an outrageous charge. Okay. And just to make clear also from the audience, like you, you yourself were in your late 20s at that time. So you were also very young. That's correct. Basically the whole company really was. So yeah. Yes. So another one that they brought up is paying for prostitutes, including for FTCVIP clients. What's your response to that one? Outrageous. There would be no, yeah, I can't even think of what they're talking about there.

Another one they mentioned is failure to pay taxes on your 2021 bonus. I'm working with the IRS right now. There was a timing issue on, I'm in the middle of an IRS. I think I can publicly say it. Well, whatever, screw it at this point. But anyway, I'm in the middle of an IRS audit, and they're looking at all that now. Yeah, there was a timing issue with, I think, more than one. But it wasn't a failure to pay.

It was just which year I paid the taxes in versus a, like be hiding a bonus to not pay. Okay. And the last one is they say they have evidence that you arranged to obtain unauthorized preferential access to tokens on FTX. No, so we fired people for that. So, yeah, you know, they had to just make up these things and put them in this filing here because they're mad that I called them out for the inducement that they know they did. But yeah. Okay. So I want to ask you a few other things about the trial. In August, you tweeted, quote, one of my many regrets is actually letting my lawyers scare me into not testifying on SBF's defense, not because I think he's innocent of everything, but because what we witnessed was one-sided,

coerced legal theater provided by people willing to say anything to stay in a prison. So here's your chance. That's a great tweet. I'm really happy with that tweet. I'm not happy with all of them, but I'm happy with that one. Here's your chance. If you had testified on SBF's behalf, what would you have said? Well, I think we've touched in a number of things here.

The whole bank account structure and the way Caroline described the bank account structure and why things were set up specifically for USDA in the way they were has been completely misdescribed the entire time. I think the way Caroline portrayed the relationship between her and Sam doesn't do justice to the fact that I think Sam was probably the least emotionally available human being on the planet. And like Caroline, you know, created these fantasy novels and these fantasy games around her design. for love with powerful men. And I don't want to disparage Caroline too much. I know I've done a lot over Twitter. I actually really like her. Yeah, I mean, she's already done into the process. But I really these are all actually decent human beings. And that's like the challenge. You know, I met a lot of assholes in this industry. I met a lot of assholes in the world. Like Sam, Caroline, Gary,

and Ashad are fundamentally like good people to their core. But Caroline had some bizarre views about like the world and galaxies and AI and a lot of the weird EA stuff. She had an obsessive. session with like, I mean, she reported this so I don't feel as bad, saying she had this obsession with like pleasing or being in the presence of powerful men and things like that. And she created these fantasy worlds constantly. I mean, I think she even wrote a fantasy book while she's been out. She used to do these like games where she'd build in this fantasy world. So for the narrative that like Sam could emotionally course Caroline to meet, if you know the two of them, it's just not possible. I mean, Sam doesn't have like really an emotional

fiber to him in the way that most human beings do. So there's that. There's a lot of how Nishad described the campaign finance stuff that I just know to be completely factually inaccurate, which raises questions about the way he describes other things. Well, okay. Why don't we break these down one by one? Let's actually start with Caroline. Like, you tweeted that she lied the most at trial.

You tweeted Caroline's more guilty than SBF. Yeah, that's probably a little harsh. I'll be honest with you. That's probably a little hard. I know I tweeted that, but I think she's at least equally guilty. There is a section, well, sorry, go ahead. I cut you off. And I apologize for that. Please. Just, yeah, tell us what you meant by those sweets. I mean, she has a whole section of her diary. It even came out where she admits to lying to Sam or trying to hide her failures and what was going wrong at Alameda. And I find it a little impossible that she was telling Sam that she was like failing to successfully run Alameda. And he was just saying, that's fine. keep failing at running Alameda. So I think it is very likely from even her comments and how things have been portrayed that she was hiding a lot of the big issues that were going on at Alameda from Sam and the rest of the company, even self-admittedly. So I think that that cuts a decent amount into what she claims were conversations that they had and didn't have. Now, I don't know what conversations they had and didn't have. And again, that's why I said I'm not, I didn't want to be in his

defense to get up there and say, I know for a fact, he's innocent. That's not at all what I'm trying to say. I'm just trying to say that, like, for it all, for that, for their relationship to be characterized the way it was, which has been an instrumental part of her, um, her testimony, I think is just factually inaccurate. So. Okay. Yeah. But just to point out, like the performance of Alameda should not have had any bearing on, you know, FTC's customers' assets being there, you know, whether or not she did a good job. Yeah, Alameda is just not relevant even. Well, it's a little relevant. So Alameda had, here's what's always been difficult. And it's difficult for, I think, a lot of people that work there probably still now. You know, when I was at Alameda between 19 and 21, I estimate we made between

four and five billion in profit. Sam made between five and 10 billion. I'd estimate on just his Solana investment alone. Like paper gains. No, real gains. No, no, like cash in the bank. That they cashed out. Correct. So everyone has always, and Michael Lewis alluded to this a little bit, which like, you know, everyone hated how he wrote his book. And I'm sure everyone's going to hate what I'm saying right now. But where did all the money go?

There was just so much of it to go from this like heaping pile of money to now we need to steal or misappropriate $8 billion of customer funds in the matter of a year is like unfathomable. And so that I think is. I mean, I don't think it's unfathomable if you think about what happened in 2022. I mean, that much money gone that quickly? Yeah. No, you're right. It clearly is not.

I'm wrong. Sorry, I'm wrong. But for someone that's like who is there when the money was being made and with a firm that's like, was known to like keep a fairly decent hedge. So the word hedge gets thrown around all the time. Like, no one, you know, it's an easy word to toss out there. But like Alameda, I watched sustain ups and downs before. You know, we traded through Black Thursday and we're successful in trading through that.

So, yeah. Yeah, the impression I've gotten over the years is not necessarily that there was a lot of hedging. And it was more, you know, participation in new coin launches that you guys would then dump on FTCX. But anyway, let's now move on to Nishad. Wait, which coins are you talking about specifically? Oh, this is like very commonly known. There are a bunch, I guess, like, so I don't want to name any because I don't have them off the top of my head. But yeah, during the time this was happening, I remember doing interviews and talking to different projects where they were like, we were so excited to get Alameda listed as one of our venture investors.

and then when they dumped our tokens and crashed our token price, our project just died immediately. Yeah, I think a lot of people are, well, okay, fine. I mean, first off, you could just put a token agreement in and not allow that to happen. So, like, unless you're arguing Alameda was backing out of its agreements, which I don't. Yeah, I mean. Reef was the one I was involved in, and it was like completely made up. Anyway, go ahead. Sorry.

Okay. This doesn't matter. Well, let's, yeah, let's move on. So you also had some choice words for Nishad Singh. also accusing him of lying to save himself? Yeah. I mean, specifically that did the most damage for me. You know, the idea that Nashad, who's worth one to $1.5 billion, thought of himself as a straw donor for Sam, I don't think makes, I know that's not how he thought about it.

I know it's not how any of us thought about it. So, yeah, just him describing in that way didn't come from his lived experiences. It came from him saying that to save himself and probably to say what the, prosecution wanted him to say. And so I actually haven't seen you say much about Gary, but I just have to ask about him because he's another one of the co-conspirators. What's your take on him? I don't know. I don't know much. No one knew Gary. Gary was always elusive. I think the like latter half of the company that started to work there didn't even know whether Gary existed or not. A very quiet guy talked to him maybe five times in my life. He sat on the other side of Sam for a long

time. Yeah, I just don't know. I've, I've just don't know. I've, I've, I've, I've, I've tried to minimize speculation where I can because I've seen how much speculation harms people. And that's why I'm hesitant to say, you know, while we're talking about this, what exactly transpired between Caroline and Sam, because I just don't know exactly what was said or went between them. I just know who they are as people and like what narrative doesn't really make a lot of sense to me or what does. But I don't have any qualms or issues with anything that Gary said because I just don't know. I also don't code or know how to read code. So, And so one thing that's, you know, interesting when you kind of look at the entirety of your statements, you are saying you didn't know about the fraud happening in FTX until shortly before the rest of the world knew. And yet you are also saying that these different executives lied, that, you know, Caroline really has more culpability. So if you were actually in the dark, then how can you know those things?

Well, I think that's why I just said what I said to you. I don't know. And that's the point of I didn't want to testify to say that I know since. Well, you said you didn't know about Gary, but you said about Caroline that you felt. Just specific, just a couple things. I mean, I think I've repeatedly said here, I don't know communications that went between them. But I do know who Caroline was as a person. I do know who Sam was as a person. And so that's what I'm willing to comment on. I do how the banking structure worked, how it was advertised, how it was put in the terms of service, how we talked about it. And so those things that I do factually know about, I'm happy to comment on those and, you know, message those.

Both of those statements that I know Caroline lied and I know Nishad lied are factually true. I mean, even the Thai prostitute thing, which is, like, difficult to even say, that's not rooted. Like, that's not what happened. Okay. I mean, that's a little, that's an irrelevant thing. So basically, but then it's basically that you're saying, I know they lied about other things that are not actually what the fraud was about because you didn't know what the fraud. So that's what you're saying. I guess so.

Yeah. I think I'm saying specifically just what I'm saying. saying. But you, so, but like, you, you know, claim to be in the dark about the fraud. And then yet you're also- Or even Caroline claims I'm in the dark about the fraud. It's not just me claiming that. Right. And then- And Ashad and Gary. But, okay. But the point is you ask, because you, you know, don't know, but you're saying that, you know these other things, that then you're making some other conclusion that they're lying about the fraud too. No, I'm not making a conclusion

that they're lying about the fraud. I'm saying if you're going to have a trial, specifically in a America, the idea of a trial is not to string together the exact narrative that you want to be true, shut out any other narratives, prevent Sam from showcasing any real defense, and just running that through the justices, right? That's theater. That's not an actual trial. Like, you're supposed to get up there and have factually what occurred, be presented, people get up and share what happened, and then a jury of people hears all that and decides whether a crime occurred or not. It would seem impossible to me, though I know Sam still claims, that no crime occurred. How were $8 billion of customers money, not where it was supposed to be when customers went for it?

That, to me, is almost an insurmountable thing to try to argue occurred. But to not even get to get up and present a factual outline of what actually happened is not the point of the justice system in my mind. Wait, so I don't understand why you're saying that because Sam's team definitely did get it. a chance to present their side. Well, barely. No one would get up and say anything that would support him, right? I didn't get up there. Other people didn't get up. There's a number of employees that I know and have talked to the media. Very few have, but I think Natalie did and pointed out just discrepancies that they know to be true, but no one was willing to put themselves out there to get on the stand to support him. He was prevented from bringing up lawyers involvement at all, which is crazy to me.

I mean, the lawyer, the legal fees were some of our largest expenses since I got there in 2019. I never met Sullivan. I never worked with Sullivan and Cromwell at all, but they became a massive legal firm that was overseeing everything. I don't, oh, go ahead. So, I mean, the reason that the lawyers were not allowed is because since the lawyers didn't know about the fraud, anything they rubber stamped was not necessarily like with the knowledge of the fraud. So it was kind of like irrelevant. But you're saying that you think.

Not irrelevant to me. Not irrelevant to all these other churches. You think the lawyers knew about the fraud, the fraud? No, sorry, Sam was not only on trial for the fraud. If Sam was only up there for the fraud, fine. Like my whole life in existence in the next seven and a half years of what's up with me has nothing to do with the fraud or not. And for a number of other people, it has nothing to do with the fraud.

So if they had only charged Sam for the fraud or that's all that was going to come up at trial, then that makes sense. But that's not all he was charged for. But so out of the seven charges, six of them were for various types of fraud, and one was for money laundering. So you're seeing, so what are you saying, that the lawyer should have been brought in for the one charge? Yeah, I'm saying Sam should have gotten the ability to question and analyze lawyers' involvement in all of this. I think it's like an incredibly important piece and certainly for what I was charged with. But even though, so even though they didn't know about the fraud, you think.

How do you know they didn't know? about the fraud because the government told you they didn't know about the fraud. I mean, nobody says that they knew about the fraud. I know, but no, they weren't allowed to be questioned either. You're saying that the lawyers did know about the fraud. I'm not saying that at all. Sorry, I am not arguing anything about what was known and not known about the fraud. I'm saying that this whole, like, case that was put on was not a real representation of what occurred at Alameda and FTX. But how do you know if you were not privy to what was happening. I was, I worked there from 2019 to 2021, and then I worked in FTCS from 21 to early 22.

I'm talking about the fraud, which is what the case was about. The case is about more than the fraud. Like the whole backdrop of what FTX was. When the fraud began was pre, you know, they're arguing that it was a fraud from day one. That's absolutely insane. Or, yeah, a couple months after day one. But yeah, I mean, that's crazy in my mind. colloquially day one. That's crazy. Wait, so you think the fact that Gary coded the backdoor in two months after they launched or three months or whatever the number was, you feel like that's not part of the fraud? So I've never figured out what coding a backdoorment.

The $65 billion credit line, to me, seemed to be the gigantic issue that should have never existed and was hidden from everyone. But Alameda was like overflowing in assets completely unrelated to FTA. and was like at times returning borrow to Genesis and these other lending firms. Like Alibito is not in a capital crunch at any point in time between 2019 and 2021. So the argument is they just like decided to steal customer funds because they didn't care about it. That's like a little weird to me.

And like none of us observed that in the way we thought the system was functioning. But just to make clear, I think they had to borrow customer funds in 2021 to buy their state back from finance. Okay, yeah, sorry, that might be. I'm just trying to highlight that this early trading time of 19 and 20, there was a surplus of capital. Okay. Well, yeah, but, okay. You don't just commit crimes to commit crimes, I guess. You know, this has been like, there has to be a why. Why did Sam take customer funds in 2022? It's because Alameda had run out of capital, spending it all on ventures. He needed to repay lenders. 21 and 2022 is when he took the funds.

Yeah, okay. But there has to be a reason why. There was no reason to take customer funds in 2019 and 2020. Okay. Like, why would you do that? Like, you just commit crime to commit crime. Like, Bernie Madoff committed crime because the trade, like, the company wasn't working and he needed to cover it up.

Elizabeth Holmes was covering up the fact that her product wasn't working and didn't want to tell investors. Sam was, like, sitting on gold mines everywhere he looked. You know, the first death threats I got was when, we wouldn't sell someone more Maps token. Someone threatened to come kill me and my family because they wanted another $10 million of MAPS token and we shut off raising.

Now, like that's crazy, right? Like everything Sam was touching was just turning to gold left and right. So, yeah, like, that's the thing that I struggle with. I'm not here to tell you no fraud occur and I hope that's not what sounds like the message I'm trying to give. I mean, millions of people all over the world had their lives destroyed for no good reason.

and like that's horrific. But I'm telling you that the whole representation that's come out about who Sam and Caroline were or who Nishad was or how the company's functioned or why things occurred the way they did or, you know, Sam's been advertised as like actually loving luxury things. I can tell you we hated luxury things and we could do a whole explanation there. It doesn't, all these things are side pieces of it that don't matter against the fraud, except that they do matter for what the narrative is and what actually occurred. Well, so I have another question for you then. Do you think that the judge, Louis Kaplan, was fair?

That's, I have a hard to. There are people out there that think everyone that work for FTCS should spend the rest of their lives in prison, including me. And there's people out there that think, you know, no one should do more than a couple years in prison if they weren't violent. I don't, I'm not here to judge what is a fair system and what is not a fair system. Yeah, I mean. Okay. I mean, well, you seem to be quite opinionated on what, you know, what a trial really should be as opposed to what happened in the SPF trial. Well, that's just the point of like the justice system in America. That's not really my opinion. I don't, I mean, I guess it is, sorry, I guess it is my opinion. But yeah, I think a lot of people would agree that the justice system in America should allow for a fair representation of all the facts related to a case. I don't think that that's super controversial, but I could be wrong.

Right. I'm just saying that I do think SPF's team did have a chance to present their side, but, you know, I was sitting in the courtroom day after day. And unfortunately, the consensus among us who, you know, sat there and listened to their presentation, there was no through line in their defense. So, you know, that's irrespective of whether there were other people that corroborated. It's like even from Sam himself, there was nothing that like really hung together as a really strong storyline that we could, you know, say like, oh, wait, like there's something there. So, you know, I'm just telling you about my personal experience and, you know, how the rest of us who also listened to had experienced it. But now, would someone who'd been on the stand noting discrepancies in what Caroline and

Ashad said have been at all interesting or not really? I mean, I wasn't in the courtroom. So I've read the transcripts or as much of them as I can read, but would people that were providing a counter-narrative around, you know, lawyers' advice on structuring things and how the company looked in that way, or how lawyers and all of Silvergate's team thought about the bank accounts and why they were set up in that way, or how the campaign finance was structured or a lot of, you know, we all thought the campaign finance was structured. Would any of that provided at least some areas that would cause you to question things as described the way they were?

Yeah, but that's what I was saying is because everybody got cross-examined, there was no, it never felt like there was some like gotcha moment with any of the witnesses where the defense really scored some points that, you know, caused there to be that reasonable doubt, you know, hurdle that the jury has to get over to convict. So I think if you'd gotten five or ten employees up there to talk about some different aspects, you might feel a little differently. But I don't know. Okay. Well, you know, we didn't have that. So let's change tax for a moment just because I have to ask you. I was just so interested. There's obviously this election year that we're in and crypto has become the biggest source of donation money this election season.

And I just was wondering what it's been like for you to watch these groups, you know, stand with crypto, fair shake, et cetera, be open about their donations, about supporting both Democrats or Republicans, you know, whereas in contrast, the way that, you know, the different executives at FDX, including you, had done it, was to be secretive. Well, first of all, I'm very excited about what's going on with the crypto donations in politics in the U.S. I wasn't focused on crypto and politics in the U.S. I was focused on pandemic work. I don't think we are being secretive about anything. I mean, I filed with the FEC everything.

We had loan agreements. I don't think I was being secretive about a single thing. So, yeah. So even though the money was not your money, it was being passed through you, you thought that that was a legitimate way to participate. It was loans. I used the loans for multiple things. I used the loans for political stuff.

I used the loans to live my life. I use the loans to make a couple purchases. You know, when lawyers tell you this is the proper way to take money out instead of just selling off your assets, you listen to. to them. It wasn't just internal, it was external lawyers, too. So, yeah. Interesting. You also tweeted, quote, you aren't aware how corrupt the legislative process is. Can you elaborate on that? You know, I think we've done a good job sharing the different pieces that I think are a problem throughout this whole thing. Well, the legislative process, which is different. It's like Congress and,

you know, lawmaking. Yeah, then that's just me being illiterate. I meant the sort of legal process. Oh, judicial. Not the legislative. Judicial. Sorry, that's just me. Got it. You know, my punctuation is terrible. My grammar's horrific, and I type stuff off and fire it off fairly regularly. Well, I saw that you're planning to attend law school, and I was curious why and, you know, what you plan to do with that after you were released from prison.

I mean, I think the world's telling me I have to be my own lawyer. So, yeah, I don't know. If I can't rely on lawyers to give me legal advice that is sound, then I just have to do it myself, and that's fine. Yes. It was nothing I ever wanted to do, but I think the universe is sending a very clear message to me that I need to be my own lawyer. And so you're, so you're not going to practice law. It's literally just in case you get into legal trouble again. No, so I understand law. I mean, I didn't know anything about money transmitting licensed law in the U.S. I didn't know about

that sort of the way I was borrowing money was illegal. Yeah. I mean, yeah. I don't know what specifically I'll do in law school. I just have an interest, I guess, in understanding and better appreciating the law now. Okay. And do you have any particular plans for after prison? I don't. I had started a company in 22 that I was going to leave FTX to do anyway. So I'm cautiously optimistic that that is still something that I'll be able to pursue. And is that in crypto or what type of thing? I can't go back into crypto. I mean, I love the crypto industry more than anything else on the planet, but I've just done too much. I'm a part of something that did too much damage now. And so it, yeah, it's not, I mean, I'll probably trade crypto again. I was very good at it.

I'll do it again if I'm given the opportunity to. But, you know, I did what I could in the industry and things that I thought were helping the industry move forward. And it turned out to just be a colossal problem. So, you know, I don't think it's, I unfortunately, I don't think it's where I should go back to. You know, we'll see how I'm feeling in X amount of years. But, you know, when you, whether you believe me or not, when you think you're a part of a solution and helping people and you turn out to be one of the largest problems, you know, that hits you fairly hard. So yeah, my company is actually, believe, or not in politics. So I think that that is that is somewhere I'll continue to focus on, I believe. Not me running, but just politics in general. Like what kind of company in politics? Yeah, well, I don't want to get it. It's so good. I don't want to give it. No, there's a lot of the political process that is very archaic. A lot of stuff till it goes through the mail. I find it very sure. shocking that polling is not any better and still comes. I don't know if you get those horrific polling texts five times a day, but a lot of people do. Politics, whether you like it or not,

it's not my fault. Citizens United exists, but it does. Politics is a massive industry, and a lot of it still operates in a way that, like, you'd feel like this industry is still in the 90s, paper mailers, things like that, that just the whole political landscape needs to be updated. And I think once it is updated, it'll create a much better political system. It'll engage younger people a lot more. It'll give more insight into what's actually going on, what your politicians are voting for, how they're justifying, why they voted yes or no on a certain bill. So I think that there are, well, I know there is. I don't know if I'll get to do it, but there is absolutely room to bring politics into the 21st century.

All right. And last question, you just said that, you know, you thought you were part of one of the best parts of crypto. And then you realize that you were part of the one of the biggest problems. and, you know, that didn't feel good. Are there any other reflections that you have on this whole FTCS debacle in your life? Oh, my God. Yeah, of course. You know, I stayed a part of something. I kept my name and reputation attached to something that I really didn't have a lot of insight into what was going into or going on on the inside. And, you know, I was making public statements about things that I actually turned out knew nothing about based on this sort of old archaic information that I had.

I was making statements that I thought were current and up to date. So, you know, don't, don't do that. That's a terrible idea. You know, I say came to the trappings of wealth more than I'm proud of. And, you know, that I think even if I'm wealthy again, that won't happen again. I think part of that's being young and all of a sudden, you know, innocent yada yada. But I regret that wholly. I, you know, I brought a lot of my friends and stuff along with things. I invested in friends' businesses and things like that that now have collapsed and have harmed their lives immeasurably in some sense. So, you know, being more careful with that. You know, we were moving so fast forward that like eyes weren't perfectly dotted and T's weren't perfectly crossed. And like when you're managing other people's money, that can't be the case. You know, I think we were operating like we were a young tech company while also holding billions and billions of people's assets from all over the world. And so there are reasons that there are strong safeguards and protections around companies that choose to do that.

And we, you know, yeah, the company as a whole was somehow okay with ignoring those for a majority of the time. So, I mean, I can keep going with you. I think I've thought about these and written them out a lot. My argument is not I was perfect and everything I did was A-plus. But, yeah. All right. Well, thank you so much for giving us your time today.

Yeah, thank you. Appreciate it. Thanks so much for joining us today. to learn more about Ryan and FTX. Check out the show notes for this episode. Don't forget, next step is the weekly news recap, today presented by Wondercraft AI. Stick around for this week in crypto after this short break. Pocodot is the original and largest layer zero blockchain with over 2,000 plus developers. The anticipated Pocodot 2.0 upgrade will be a massive accelerator for the ecosystem. Upgrading the infrastructure with eight times higher transaction throughput and

twice as fast block times, tailored core time for the needs of every protocol, trustless bridges to multiple chains and revise tokenomics with a token burn to reduce inflation. Perfect for GameFi and Defi to build, grow, and scale. Get your Web3 ideas to market fast. Think big, build bigger with Pocod. Join the community at pocadot.network slash ecosystem slash community. Welcome to this week's Crypto Roundup.

In today's recap, we dive into the HBO documentary claiming Peter Todd is Satoshi Nakamoto. the latest on FTX creditors receiving up to $16.5 billion, and Caroline Ellison settling with the FTX estate. We'll also cover the FBI's crypto-sting operation, crypto.com's lawsuit against the SEC, and Uniswap Labs launching its own Layer 2 solution, Unichain. Plus, we'll explore Ethereum's potential throughput boost,

a $5.5 million hack at EigenLayer and Scroll's controversial token distribution. And don't miss our fun bid on the FBI's own smart contract slip up. Thanks for tuning in to the weekly news recap. Let's begin. HBO documentary identifies Peter Todd as Satoshi Nakamoto. The new HBO documentary, Money Electric, the Bitcoin history, claims Peter Todd, a former Bitcoin core developer, is the elusive creator of Bitcoin, Satoshi. Directed by Colin Hoback, the film points to chat logs and forum posts where Todd allegedly hinted at his connection to Satoshi. One message in particular described Todd as the world's leading expert on how to sacrifice your Bitcoin. which Hoback interprets as a confession that Todd destroyed access to Nakamoto's 1.1 million bitcoins. However, Todd vehemently denied the claims, calling them ludicrous and telling Coin Desk flatly, I'm not Satoshi. The documentary has fueled widespread criticism in the crypto

community, with many dismissing Hoback's theory as baseless. Notably, past speculation about Nakamoto's true identity has named crypto figures such as Nick Sabo, Hal Finney, and Adam Back, all of whom have also denied the claims. SEC sues Cumberland DRW for unregistered crypto trading. The U.S. Securities and Exchange Commission, SEC, has charged Chicago-based trading firm Cumberland DRW LLC with acting as an unregistered dealer in cryptocurrency transactions. According to the SEC, Cumberland bought and sold over $2 billion worth of crypto assets, including tokens such as Saul, Algo, and FIL, without registering as a securities dealer, violating

federal law. The SEC is seeking disgorgement of profits and civil penalties. Cumberland responded by defending its compliance framework, accusing the SEC of using an enforcement-first approach, despite years of discussion between Cumberland and the agency. The firm vowed to continue its operations and maintain liquidity for the assets in question. FTX creditors to receive up to $16.50 billion in payouts. A U.S. bankruptcy court has approved FTX's reorganization plan, setting the stage for creditors of the now defunct crypto exchange to receive up to $16.5 billion in recovered assets. While this payout is significant, experts caution that its impact on the broader crypto market may be limited. The repayment process will unfold in phases. Smaller creditors with claims under $50,000 will be paid first,

likely within 60 days after the plan's effective date, which is currently estimated to be in late October. Larger creditors who are collectively owed around $9 billion may have to wait until early next year for their compensation. Despite speculation that these distributions could inject liquidity into the crypto market, Kyle, a key advocate for FTX creditors, also known as Mr. Purple on social media, believes this is unlikely. Almost none of the claims buyers will redeploy into crypto, he said, citing restrictions on many of the investment funds with claims in the case. Caroline Ellison settles with FTCS estate. Following the the approval of FTX's reorganization plan, former Alameda Research CEO, Caroline Ellison,

has agreed to transfer most of her assets to the FDX bankruptcy estate. This settlement aims to help recover funds for creditors affected by FTC's collapse. The amount of assets Ellison will be transferring was unclear, but the settlement filing noted that FTC's bankruptcy estate sued Ellison in 2023, seeking to recover $22.5 million in bonus payments given to her 2022 and $6.3 million in bonuses from 2021. Ellison will forfeit assets not already claimed by the government or used for legal expenses and has pledged cooperation with ongoing investigations into the FTX case. The agreement follows Ellison's recent two-year sentence for her role in the exchange's downfall, which caused billions in losses. FBI launches Cryptotoken, Next Fund AI,

to expose crypto scammers. In an unprecedented sting operation, the FBI created its own cryptocurrency, Next Fund AI, to entrap market manipulators in the crypto space. An unsealed indictment reveals charges against 18 individuals and four crypto firms, Gottbit, CLS Global, My Trade, and ZM Quant, for engaging in wash trading, artificially inflating token prices for profit. Jody Cohen, special agent in charge of the FBI's Boston Field Office, called the case a landmark event in fighting crypto fraud. The investigation uncovered widespread manipulation, and the U.S. Attorney's Office highlighted the fact that fraudulent practices such as wash trading, which are banned in traditional markets, are also illegal in cryptocurrency.

BitFinex named sole victim in 2016 hack. The U.S. government has stated that BitFinex may be the sole victim of the 2016 hack involving Ilya Liechtenstein and Heather Morgan. Lichtenstein and Morgan, who pleaded guilty to laundering 119,754 Bitcoin, were. worth around $70 million at the time of the hack, have asserted that the crypto exchange is the only entity entitled to restitution. Despite this, the government has requested the court to allow BitFinex customers to present claims, should any emerge, before the sentencing of Lichtenstein and Morgan in November. This cautious approach aims to ensure that all potential victims have a chance to be heard. Bitfinex had previously redeemed all BFX tokens issued to affected customers by

2017. Crypto.com sues SEC over regulatory overreach. Cryptoexchange Crypto.com has filed a lawsuit against the SEC, accusing the agency of exceeding its regulatory authority over the cryptocurrency industry. The lawsuit comes after crypto.com said it had received a well's notice, indicating that the SEC might take enforcement action, claiming that tokens traded on its platform are securities. The crypto exchange argues that the SEC's approach is arbitrary and that it has imposed rules without proper legislative procedures. In a separate filing, Crypto.com also petitioned the SEC and the Commodity Futures Trading Commission to clarify which agency has jurisdiction over cryptocurrency derivative products. Speaking of the SEC, Politico reported

that Robin Hood's chief legal officer, Dan Gallagher, could potentially lead the agency, currently led by Gary Gensler, if Donald Trump wins the presidency. Gallagher's nomination could mark a significant shift given his past criticism of the agency's approach to regulating digital assets. Uniswap Labs launches Unichain Layer 2 to improve Defi. Uniswap Labs has introduced Unicane, a layer two solution built on optimism superchain to address defy's fragmented user experience. The platform, developed in partnership with FlashBots, aims to provide faster, cheaper transactions with block times of 200, 250 milliseconds. Unichain focuses on improving cross-chain liquidity, allowing users to easily access funds across

multiple networks. It also introduces a validation network involving U and I stakers, offering more decentralization compared to other layer 2S with centralized sequencers. Uniswap Lab CEO Hayden Adams emphasized the goal of unifying defy liquidity and creating interoperability across chains, starting with the superchain ecosystem. Unichane structure also distributes transaction fees among sequencers, validators, and stakers, making it more decentralized and secure than traditional systems. Crypto Sleuth exposes meme coin analyst's wallets. Blockchain investigators Zachxbt stirred the meme coin community by revealing the wallets of Murad Mahmoudov, a prominent meme coin promoter with over 200,000 followers on X, formerly Twitter. Zachxbt disclosed 11 wallets, claiming they hold around $24 million

in meme coins, allowing the community to track Mahmoodov's future activity. He accused Murad of making bold predictions while controlling the supply, saying, people deserve to make more informed decisions. The reveal sparked backlash, with some accusing Zach XBT of endangering Marad, while others defended the move, noting that blockchain data is publicly accessible. Ethereum proposal wants to increase network throughput by 50%. A new Ethereum improvement proposal, EIP 7,781, introduced by Nethermind contributor Ben Adams, aims to significantly enhance Ethereum's performance by reducing slot times from 12 seconds to 8. This adjustment could increase the network's transaction throughput by up to 50%,

according to Ethereum Foundation researcher Justin Drake, who supports the proposal. By shortening slot times, Ethereum would be able to produce blocks more frequently, improving transaction efficiency. Drake highlighted that this change could save decentralized exchanges like Uniswap up to $100 million annually in arbitrage. However, the proposal raises concerns about increased bandwidth requirements for validators potentially impacting less resource solo stakers and decentralization. Eigenlayer faces backlash after $5.5 million token hack. Eganlayer, the largest Ethereum restaking protocol, is under fire after a malicious actor

exploited an email thread between an investor and the platform's custodial service, resulting in theft of over 1.6 million Agen tokens, valued at $5.5 million. The attacker swiftly sold the stolen tokens raising concerns about the protocol's security measures and manual handling of token transfers. Despite Eigenlayers' claims that this was an isolated incident and not a vulnerability within its protocol, some community members are questioning the platform's internal processes. Critics argue that the lack of a vesting contract enabled the unauthorized transfer, sparking concerns about oversight and control. We trust Web 3 to eliminate human error with smart contracts, but many projects still rely on manual handling of token investing. This needs to stop, said Andreas Penciled,

CEO of Pandora. The incident has fueled skepticism within the crypto community, with many questioning the protocol's handling of sensitive investor transactions. Scroll faces criticism over token launch. Ethereum-based Layer 2 Protocol Scroll is facing significant backlash for allocating 5.5. 5% of its SCR token supply to Binance's launch pool, sparking accusations that the distribution favors large investors on the exchange. Critics claim that giving Binance whales an early opportunity to farm tokens for just two days undermines smaller investors who have supported Scroll's development for over a year. Defy researcher DeFi Igness expressed frustration, calling it crazy that such a large percentage was allocated to Binance users for short-term farming.

Scroll defended its decision. explaining that partnering with Binance helps reach underserved markets, particularly in developing countries. Binance CEO Richard Tang responded to the criticism, stating that launch pool allocations are capped and strictly for users, with strong monitoring controls in place to ensure fair access to tokens. FundBits is the FBI breaking the law? You know how we previously told you about the FBI creating their own crypto token, Next Fund AI, to catch market manipulators? Well, it turns out the FBI might be breaking the law. Their own smart contract law, that is. X user zero X-cigar called them out on the social network, pointing out that the FBI's smart contracts copied code from Open Zeppelin's

libraries without including the required MIT license. The MIT license clearly states this permission notice shall be included in all copies, but it seems the FBI skipped that part. Guess even the feds aren't above forgetting to read the fine print. And that's all. Thanks so much for joining us today. If you enjoyed this recap, go to Unchained Crypto.substack.com that is Unchained Crypto.com and sign up for our free newsletter so that you can stay up to date with the latest in crypto. Unchained is produced by Laura Shin with help from Matt Pilchard, Juan Aronovich, Megan Gavis, Pam Majumdar, and Margaret Korea. The weekly recap was written by Juan Aronovich and edited by Nelson Wang. Thanks for listening. Unchained is now a part of the Coin Desk Podcast Network. For the latest in digital assets, check out markets daily five days a week with host

Noel Atchison. Follow the Coin Desk podcast network for some of the best shows in crypto.