The Renegade Billionaire Vlog: My Journey In Marketing, Music, And The Game Of Bidness
How Sam Bankman Fried And Other Frauds Manipulated The Crypto Markets
Below I'm going to show you behind the scenes of one of the biggest frauds of our time. I'm also going to show you why crypto is a very flawed side hustle, and 2 side hustles that are much safer and where you don't lose all your money unless you do something totally bananas. #businessnews #crypto #bitcoin
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- Duration:
- 17m
- Broadcast on:
- 24 Jul 2024
- Audio Format:
- mp3
In this video, I'm going to check you behind the scenes of one of the biggest investing scams in history and show you just why investing in crypto, why it sounds like a good idea and for a lot of people it might have worked out but why it's much more dangerous than it appears on the surface and why you could lose literally everything that you invest in crypto and you know I'm talking about the same bankman freed crypto scam right same bankman freed I mean this is a serious topic and the reason why and the reason why it's so stunning is literally because just looking at the numbers involved in terms of losses just how much money investors lost you're talking about billions and billions of money that it's just so stunning man I'm telling you like investors lost their shits and this all right so let's get into the story so you can understand exactly how same bankman freed and other fraud steps like that in the crypto markets really put off one of the biggest scams investing scams in history that's now you know ended up with some of them being sentenced to like decades and decades of prison time right this this was a big scam this was not a small theft this was a massive massive like gigantic scam so same bankman freed was the founder of two businesses all right he was the founder of FTX a cryptocurrency exchange so this is where you would go to buy and sell tokens but as far as I understand he was focused more on the on the institutional so like if you were like an investing company or if you were you know some kind of a pension fund although I guess you really wouldn't be able to invest in crypto not in that case but let's say you run some kind of crowd fund that's invested in crypto or some kind of you know market-making company and you want to hold some crypto or to make your operations you know you're involved in crypto in some way if you were you know some kind so catering to those kinds of institutional funds right so and this is where those guys would be able to go in and buy and sell whether it's Bitcoin or Ethereum or some other crypto chalking so that's kind of what FTX was and he was also the founder of a second business known as Alameda now what Alameda was was a hedge fund that was focused on crypto which is interesting like you know so so he's doing two things two different businesses but we're a big danger and a big red flag that opened the door to this whole fraud comes in is that same big man freed his two businesses were kind of symbiotic in the sense that a rise in one of them could make the other a little bit more potentially powerful but that's also where the danger was that he would be tempted to use one of these two businesses to prop up the other so let's say for instance his his crypto exchange was failing he might be tempted to you know to bring in his hedge fund to support his exchange or if his hedge fund was failing then he might be tempted to bring in his exchange to support the hedge fund and while that might seem like those are good things if one business is failing you should bring in another that might be okay like if you're running like a publishing company and then your other business is like a restaurant right like if you need to support the restaurant we can get we can advertise in the publishing company if we need to support the publishing company we can have the restaurant by we can have the restaurant by advertising in the publishing company so that improves the income for the publishing company so you it's okay sometimes you can pull it off where two businesses that are symbiotic can actually support each other in a good way but in this case it wasn't it was a risky it was a bad setup simply because the assets that he would be using in either case were not his like in a hedge fund these are not your assets that you actually own the assets that a hedge fund manages belong to investors in the hedge fund so this is why this was ethically a bad setup to even begin with because it opens the doors to misappropriating and misusing customer funds same thing with the exchange the assets on the exchange don't actually belong to the exchange they belong to the depositors that have deposited them on the exchange for safekeeping and transacting and you know so the the exchange is not supposed to ever use those assets cannot use them to prop up the hedge fund by the same talking the hedge funds assets can never be used to prop up the the exchange but uh same bankman freed uh would end up doing exactly that you would end up crossing that red line uh due to to cover up his fraud and in in particular the failures of these businesses so okay let's look at why um the exchange actually failed the reason why the exchange eventually failed was um they were actually misappropriating a lot of the assets that customers might have deposited on the exchange they they had a deal with the hedge fund where the hedge fund was uh acting as a as a participant on the exchange to provide liquidity but one thing they did was that if the hedge fund ran a loss and it was supposed to put up additional capital uh because they didn't have the money to do it they would let the hedge fund keep trading on the exchange even if it had run a loss and needed put up additional capital they secretly didn't uh have that requirement for the hedge fund the the requirement was in place for every other uh party transacting on the exchange but with the hedge with their own hedge fund they kind of did it in secret where they allowed this um uh illegal uh move to actually uh happen which meant that you know they're kind of wait and and let the the hedge fund keep transacting and then they would cover that loss like later on when the hedge fund like maybe made a good trade on a different talking or some other thing so what this did is that um it opened the can of worms to where the exchange was literally losing money because it was you know it was uh uh maybe giving that money to the hedge fund to cover some possible losses that the hedge fund had and kind of keeping that secret so if you put in let's say you're putting a hundred million on the exchange and then the exchange you're a customer right and then the exchange takes you a hundred million and it sends 20 million to alameda the hedge fund to cover some positions that alameda has that have run a loss and so they keep it secret from you they say hey we got you a hundred mil it's okay there's nothing to fear we got you but all they got left is 80 mil and they move 20 million to to alameda and alameda is like don't worry guys i'm gonna cover uh i'm gonna retain the money in alameda i guess at first they did retain the money like when they covered their positions um but this is where it gets interesting because same bankman freed and this is where a lot of manipulation happened same bankman freed happened to own positions in a lot of crypto uh tokens including FTT and Solana and some other ones so what this does is that because these assets were on the balance sheet of uh both the hedge fund and also his crypto exchange uh he started manipulating like when he is running a loss on any of his other trading positions in the hedge fund he started he started manipulating the tokens that he was holding to try to prop them up like he would manipulate so this is why if you are literally trading in the crypto markets why it's so dangerous and at this kind of stuff i'm pretty sure still happens to this day uh same bankman freed just happens to be one of the ones that went bust doing this but if you end the crypto markets you're literally trading alongside guys like same bankman freed that are dropping up coins that are not worth however much they say they're worth so they can make like if they need to make a a bunch of money and try to make a lot of money quickly maybe to cover a loss that they had elsewhere then they could actually pump up the price by reducing the supply or whatever talking uh so this is where you see a lot of pump pump and damp schemes where they pump up a talk and maybe it's a new token that's coming to the market they scoop up a lot of market share and then they put up a lot of positive information on Twitter and other social media and everybody is hyped up about the talking and starts buying and you see something go from like you know maybe like a hundred bucks to like 500 bucks in a couple of weeks and everybody starts jumping in and saying the crypto good days are here again everybody we need to buy this token and then what these uh manipulators do is now they're not like oh we got all these thousands of people in now into the deal they bought it and these guys are selling the token to all these guys and and then what they do is they come to the point where now it's time for them to get out and a lot of people are still trying to get in and then these insiders they sell off all that talking that they were holding because they know like the the stories they've been telling in the media to pump up the talk and the assets are completely fake and and so they sell out ahead of time two weeks later the promises that were promised are reviewed to not nothing is happening and then people start getting caught feet because they are holding this token that they thought was gonna go up forever and then you know a story leaks in the news that maybe some investigative reporter discovers oh this claim is completely bogus nothing nothing of the kind is ever gonna happen and then everybody kind of slowly realizes they've been duped so of course they rush for the exits everybody starts selling up the worthless token and the price immediately crashes and if you are one of the ones that got in at like 200 bucks and then the price crashes to like three dollars like you you can literally lose all your money right so these were some of the schemes that these masterminds were using to try to make grab some money to prop up some of their failing trends and and and that's a general look at the kinds of things that were happening like Sembingman Fried wasn't the only one right like he was here the pretty huge network he was well connected to other crypto investors politicians he was well connected to academics all kinds of people like he he's a guy that had a huge network so in the markets in the crypto markets whatever market whatever talking that might be there are still people like that that would be manipulating these tokens so it's really the Wild West if you are investing in crypto this is something I don't see getting chucked about enough there are still a lot of manipulators it's still the Wild West so that's my you know my take on all this thing if you are investing in crypto you better be aware that they are all these manipulators and that it's probably gonna be a long time before crypto becomes like a safe investment asset class if you look at like you know the S&P 500 stocks right now it's a much much safer kind of asset in terms like it doesn't have this crazy up and down swings because it's not nearly as easy to manipulate as the crypto markets in the crypto markets is the Wild West so there are a lot more manipulators now I'm not saying the S&P 500 is safe just that there probably it's it's probably harder to manipulate than the crypto markets where you can have a single individual running these super big scams where if you look at it FTX ended up losing customers like eight billion dollars and then the iH fund he had taken in I think some like was managing some like 3.8 billion or over three billion dollars and you look at the billions and billions of losses involved it's really mind-blowing so when I look at this whole situation you know that's all I can say is like you you want to watch out for these manipulations and there are safer things to invest in right like if you want to you know make some extra money for yourself and that's why I recommend like doing like a side hustle if you do like a side hustle in e-commerce you don't even actually need to put any of your money on the line you can set up a store on the chip you know using like a free open source platform that lets you build up an online store and you can get into e-commerce so that's those are much much safer ways to like do a side hustle than going into crypto trading or investing in crypto you can do info products you can sell your knowledge online you know those are the kinds of side hustles that I personally recommend and going into crypto trading while some people have been able to make it work I think it's very risky very dangerous for the reasons I listed and you know if you if you are one of those with expertise to do it and you're doing it and it's working for you you know more power to you like that's great but for the ordinary individual who is not a master of these markets you really need to be aware of some of these dangers involved in you know so that's what I had for you guys today and if you need some resources to help you with your products getting your side hustle of the ground you can grab some of my free downloads the links will be in the description