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FTX and Alameda Research Go Down in Flames -- a special episode
Episode 8110th November 2022 • Generational Wealth with Cryptocurrency • McIntosh
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A lot has transpired since Sunday night's recording. I thought it would be best to do a shorter special episode to discuss this and the ramifications on the market moving forward.

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I can be reached by email at mcintosh@genwealthcrypto.com and on twitter at @McIntoshFinTech. My mastodon handle is @mcintosh@podcastindex.social. Looking forward to hearing from you!

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https://genwealthcrypto.com

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Transcripts

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Hey, SatStackers, it's November the 9th.

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This is Episode 81 of Generational Wealth of Cryptocurrency.

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I'm your host, McIntosh.

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Today's episode is a special news update in regards to the collapse of FTX.

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Of course, no one on this podcast is a financial advisor, and all information presented on

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this podcast is for informational purposes only.

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Now that we have the legal stuff out of the way, let's jump on in.

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All right, so this is definitely going to be a different episode.

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I'm going to do a very brief market update, and we are going to jump into the news, which

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will be about FTX, Binance, all this hoopla.

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We'll not be doing supporters tonight, I've had some support come in the last few days

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which I certainly really appreciate, but I want to give them the time that they deserve,

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frankly, and this is a case where there might be people who skip this episode simply because

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it's not at the normal time and so on.

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So I wanted to make sure that that goes to our regular podcast market update for the

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week or for the day.

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We did close at $15,877.06 for Bitcoin, Ethereum at $1098.85, so $1,098.85, and then Ethereum

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at $31.68, obviously those are all down.

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Bitcoin is down roughly $5,000, Ethereum is down roughly $500, and ADA is down nine cents

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or so.

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Most of this certainly could be pinned to the news that we'll be discussing tonight

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with FTX and Binance.

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This episode I'm going to do very little editing on by the way, I'm just going to apologize,

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I'm going to get it out as quickly as I can, but I just felt it was too important.

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Alright, so I've already talked about this a little bit, Sunday's episode was called

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is Alameda going to be Celsius 2.0, we talked on the 31st about regulation, and of course

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back on the 24th we talked about SBF Sam Bankman Fried's regulatory proposals that generated

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quite a stir.

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So we've been kind of discussing in some ways FTX and Sam Bankman Fried for the last few

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episodes, I knew that something was going on, of course, just a couple days ago.

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And then unfortunately yesterday morning very early, the news started breaking really fast.

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And the prices of crypto of course started dropping.

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This is across the board.

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So actually, in addition to the prices that I wanted to give, I wanted to go ahead and

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point out two other tokens, Solana has taken a deep dive, it is currently at 1520, it was

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down I think down into the 12s.

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And then the other is actually the token that FTX created, it's kind of their little utility

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token, and it was the core of all this.

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If you remember, Sunday, Monday morning when I was talking about they created this token,

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and then it turns out it's a very large part of their balance sheets, because frankly,

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I tweeted out earlier today, if I'm not mistaken, at this point, I don't well, one of the news

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items is Sam Bankman Fried has already declared bankruptcy.

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So he went from being a multi-billionaire to declaring bankruptcy in the course of a

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few days.

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And I don't wish ill will on anyone, I want to be very clear about that.

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But at the same time, to me, it's becoming very obvious that either FTX and Alameda Research

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were doing clown world handling of the client's money, or it was outright fraud.

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Now, in this country, we believe in guilty and excuse me, innocent until proven guilty.

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And I don't want to, the jury's out on that, so to speak, but it's a huge mess.

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It's very clear.

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I think they're saying $6 billion there in the hole.

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They're desperately casting about looking for someone to bail them out.

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Let's go back in time, just a little bit.

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Tuesday morning, 10.03 central time, SBF tweeted, I've got a few announcements to make.

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And basically, it's that they've come to an agreement with Binance pending due diligence

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and things like that.

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But Binance would be buying FTX.com.

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And that's actually important because there's an FTX.com, which is offshore, essentially.

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And then there's an FTX US site.

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And then of course, Alameda.

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All right.

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So that being said, and like eight minutes later or something, maybe five minutes later,

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five or six minutes later, CZ, the guy who started Binance, the CEO, I don't know what

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his title is, but anyways, he tweeted that they've made this agreement.

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Now he actually tweeted in that tweet, he said, it's a non-binding agreement.

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And I actually pointed that out when I tweeted about that.

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By the way, you can follow me on Twitter at McIntosh Fintech.

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And if you want to get this stuff more in real time, you might want to, because I try

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and post about this stuff, I can't always, but I do try.

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You might want to follow me on Twitter.

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And I'll have my Mastodon handle as well in the show notes.

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I don't know what it is, the full name offhand, it's McIntosh at something.

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I don't know the rest of it.

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Anyways, he said, this is not binding.

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And I thought that was very important.

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So clearly, Binance had not looked at their books yet.

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And then before the end of the day, they backed out of it.

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I don't have the tweet here that says exactly when, oh, I never even finished up, sorry,

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the FFT token.

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I apologize, I've got notes that I'm working off of, but honestly, this is not going to

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be as organized as normal.

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Okay, well, of course I'm having issues with Chrome.

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My keyboard doesn't work with Chrome.

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So I will have to improvise.

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All right, the token is the FTT token.

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And it's sitting at 228 in value and up until, let's see.

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It was at $25 or so up until, it looks like the 8th, no, the 7th, the 7th of November

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at 20, so late in the afternoon, late at night, sorry, 8 o'clock or so, and I'm not sure what

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time zone, to be honest.

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But it started dropping and then of course when this news broke, it dropped significantly.

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And now it's sitting at roughly $2.50.

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It's been a little lower than that.

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I think it brushed $2 or so at one point.

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I see a 214 here on this chart, but I'm not sure what the granularity really is.

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Regardless, obviously the token itself has taken a deep dive and that's simply because

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people started bailing out when they realized that FTX was the primary holder of this token.

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FTX looked like they were insolvent.

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FTX has big problems.

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So that was a big part of it.

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Solana is involved because apparently FTX actually, that was one of their bigger holdings.

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Interestingly, when the report came out, apparently they didn't really have any Bitcoin holdings,

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which I thought was interesting.

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So later in the day, as I said, Binance came out.

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They've now said they're not doing this deal, blah, blah, blah.

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I'm not going to speculate on motives.

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Some people think that this was done as a complete setup to expose FTX and SBF, Sandbagged

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McFreed.

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I'm just going to start calling him SBF just to make it short.

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That's certainly possible.

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I would say, to be honest, I would call CZ, and I don't necessarily mean this as a, it's

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not derogatory.

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Maybe it's taken that way, but he's cold blooded.

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He's a cold blooded businessman.

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So it wouldn't surprise me if that was the case, but there's certainly no data to suggest

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that.

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What it looks like happened is they made this agreement in theory.

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They opened up the books.

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He looked at the books of both Alameda and FTX and said, there's no way I'm touching

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this because they owed $6 billion.

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Everything's insolvent.

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Their token is going to zero, as far as I can tell, and Solana may go with it, to be

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honest, although Solana may recover, I don't know.

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But regardless, that's where we're at.

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Now, the market has recovered.

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Right now, in fact, Bitcoin is at 16,700, Ethereum is approaching 1,200 ADAs at 35 cents.

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So things have rebounded.

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We will see where this goes.

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We've certainly got a low.

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We got it below that June low that everybody kept saying we're not going to get below.

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So we've already done that.

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I am of the opinion this is not over.

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I think tomorrow morning, the CPI data will come out, and I will have published this already.

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I think they're estimating 8.1.

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If it comes in a tenth of a percent above that, the stock market is going to start going

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down again, and so will crypto, and it will press, I think we will see, 14,000.

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I've been saying this for a while.

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I still stand by it.

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I don't see any reason at this point to change.

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I may be incorrect, but if you recall, I keep promoting a strategy, you should be DCAing.

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I did some extra buying today, just in case.

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This is the bottom.

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You might be wise to do that as well.

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It's not financial advice, and it's certainly your choice.

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Bitcoin's not going away.

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I see no reason at this point that Ethereum is going away, nor ADA.

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But this activity will set back the crypto market for a long time.

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When I say crypto, I mean all of the assets.

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Now a lot of the Bitcoin maximalists are making hay out of this, and maybe they should be.

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They're talking about not your keys, not your crypto.

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That's something that I've said too.

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We've talked extensively about not keeping the majority, at least, of your assets on

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a centralized platform, whether that's FTX, Kraken, Coinbase, Binance.

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I don't care.

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You shouldn't have all your assets on that exchange.

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I would love to say this is going to flush out all the bad actors, but the reality is

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I don't think it will, and this behavior will continue.

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Now one of the other news items is that the SEC and, I believe, the Justice Department

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of the United States have announced that they're going to investigate FTX.

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Now the SEC in particular, I would say, huh, how?

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Because FTX.com is not a US-based platform, from what I understand.

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That's why they have a separate FTX.us or whatever.

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I'm going to look that up right now, actually, and of course the site may not even be down.

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So FTX.us is, earlier today, both Alameda and, so FTX.com simply redirects you to FTX.us.

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And research brings you to a screen that says, private site.

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This site is currently private.

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If you're the owner or contributor, log in.

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I wonder what that site is.

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Private WordPress.

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No, it's Squarespace.

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Well played, multi-billion dollar company.

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Oh man.

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Wow.

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Like I said, clown world.

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All right, so they have a Squarespace site up.

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I don't know if that was their old site and they've changed the front.

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They probably was Squarespace.

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Okay, point is, what's my point?

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Again, we're learning our lesson.

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We don't put large amounts of money in sites like this.

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We don't.

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Public storage, your wallet, hardware wallet, even your software wallet is better than keeping

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the majority of your assets on one of these sites.

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And I do not care which site it was, all right?

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So learn that lesson.

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As far, you know, I don't know if any of my listeners had any money on FTX.

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Obviously, FTX did a big marketing promotion here in the United States over the last year.

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Super Bowl ad.

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Oh, and one of the casualties of this is going to be apparently Tom Brady and his wife, who

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I don't know her name, but they're getting divorced, which of course is big news in some

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circles around here.

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But they did an ad for FTX and actually the majority of their fortune was in FTX and now

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it's gone.

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This was the kind of promotion they were getting, FTX, Rena or whatever.

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Maybe down in Miami, I think FTX is, you know, they spent hundreds of millions of dollars

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on all this stuff and they should have been safeguarding their clients' assets.

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But like I said, there's only two ways to look at this.

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Either it was a complete clown world of a business or it was fraud.

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And either way, I do believe, to be honest, I believe people are going to go to jail.

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If they prove fraud, there will be people in jail if they're U.S. citizens.

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I actually don't know where SBF is from.

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I assume, I believe he's a U.S. citizen.

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The legal team quit, compliance and legal, now those people actually would be criminally

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negligent or at least civilly, what's criminal and civil, civilly, civilly negligent, I'm

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not sure, depending on whether it was fraud or just stupidity.

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So they could be looking at severe issues and I don't think they're going to get out

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of it just because they quit.

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Oh, and by the way, the CEO of Alameda Research conveniently resigned a few weeks or months

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ago and then the new one came on who was there in the company, Caroline, she's not been there

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very long.

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So I could see a lot of people getting in a lot of trouble for this.

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Now that doesn't help all of the clients whose assets are either frozen or more than likely

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they will, if they recover anything, just like Celsius, it will be pennies on the dollar.

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So what we should learn from this is primarily hold your assets again and I will continue

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to emphasize this, we will forget this, we will move on, things will happen and I will

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continue to remind you to do that because it's super important.

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Now there may be, if you're trading or whatever, you may need to keep stuff online but do not

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keep the majority of your assets online, do not do that and don't keep it, maybe you have

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a lot in crypto and maybe you're trading with a significant amount, $10,000, I might not

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even keep all that on one platform, I might split that up, because you just don't know

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these are not transparent organizations, the blockchain is transparent and it's very interesting

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because the blockchain explorer type people, analytics, that's the word, the blockchain

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analytics people, they are finding out some very interesting things but the companies

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are not transparent, they're opaque and people don't know until sometimes it's too late.

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So just don't put yourself in, it's called risk management, okay, you have risk management

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in trading, you should have risk management in this because it's just not transparent.

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All right, that's really it, I want to wrap up, it's going to be a short episode of course

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but I just wanted to get this out there just to let everybody know what was going on and

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so we don't spend all Sunday talking about this.

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The Generation Wealth Cryptocurrency Podcast is a podcasting 2.0 podcast, it's actually

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a value for value podcast with no sponsors and no advertising and I want to emphasize

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this, literally today I had something happen and if they were sponsoring my show and forking

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over lots of money to me, I would not be telling you about this, so listen up.

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I have talked in the past a lot about the Strike app, it is one of the easiest apps

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out there to use and I was using it today to buy some Bitcoin, of course, just like

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I said and I was buying some smaller amounts as it went down, I was trying to catch the

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bottom basically because that's just, I can't help it.

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Anyways, I noticed on the third buy that, like I'll do it right now, I'm sure it's

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still going up, so I had the app up, Bitcoin right now is showing at 16, 629.99, the price

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up on my other monitor, which I don't know where that comes from, is 16, 679, so it's

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close, okay, buy, 25 bucks, next, $25, price, 17, 176, huh?

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And I poked around and I couldn't find anything, I actually submitted a support ticket and

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then I saw later, they posted something on Twitter saying, right, there's a basically,

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what did they call it?

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Let me try and find the ticket, the Twitter real quick, I'm almost sure it was on Twitter.

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And while I'm looking for this, of course, U.S. elections were today, a lot of people

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I think, maybe myself included, to be honest, thought that the Republicans, for better or

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for worse, it doesn't even matter, it's not a political discussion, but we thought that

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they were going to take over more of the House and Senate because of the last several years

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the things have been going on.

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That really didn't happen, it's looking like things are exactly the same.

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Here's the message that they put out six hours ago, we're aware that our BTC provider for

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the Bitcoin tab is experiencing high volumes and as a result, users are seeing higher spread,

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so the spread is between the price that's listed and the price you're buying.

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Now I'm buying immediately, at least according to what they're showing me, I'm not having

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to wait to have my order filled and yet it's filling at a higher price.

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So we apologize, we're actively working with them to rectify the situation, blah blah blah.

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So to me, this is a flaw in their program and if they were paying me a thousand bucks

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an episode, whatever, it could be a lot higher frankly for a large audience, I wouldn't be

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talking to you about that.

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Now I'm not saying you shouldn't use strike, but it is certainly something you should be

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aware of and to be honest, unless I'm out and I have money on strike now, so I'm going

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to have to use that, but until they get this fixed, I'll be using something else to do

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any major purchases of my Bitcoin.

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So keep aware, that's what I'm here for and that's one of the reasons why I do value for

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value and I don't have sponsors or advertisers, because that means I get to tell you all the

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truth as best I see it, okay?

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All right, so back to the script, I actually have a script for this, of course.

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You can support the podcast in three ways, time, talent, and treasure.

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If you want to support the podcast and has some time or talent, I am working on chapters,

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I actually ran into a roadblock with that to be honest, not to get off on this.

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I'll talk about that more Sunday, but maybe transcripts would be nice, I could use some

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help there, things like that.

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Treasure is just what it sounds like.

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If you find the content valuable, you can support the podcast by streaming Sats from

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a Podcasting 2.0 app.

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Like I said, I won't be going over support tonight.

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We've had some support this week and I do appreciate it and I want to honor those people

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next Sunday.

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If you like the content, I would love it if you would tell your friends about the GWC

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podcast.

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Thanks for being here.

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I do hope this has been helpful and it's given you something to think about.

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I would love to hear from you.

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I'm on Twitter at McIntosh Fintech.

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You can reach me by email at mcintosh@genwealthcrypto.com.

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Of course, the generational wealth website is at genwealthcrypto.com.

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And on Mastodon, I have it right here, I just opened up the client.

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It's McIntosh, at Macintosh, is I guess what I should say, at podcastindex.social.

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So it's the podcastindex.social Mastodon instance, which is the Podcasting 2.0 Mastodon instance.

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And then of course, I'm McIntosh on there.

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So even if you're on another instance, you can still plug that in and use that to follow

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me or send me messages or whatever.

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So there you go.

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Stay humble.

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Be safe.

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And I will talk to you all on on Sunday, okay?

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