58 – FTX Part 2, More Platforms In Trouble & the latest NFT news

Tracey: [00:00:19] Welcome to the Crypto Curious podcast designed to help you navigate the dynamic world of cryptocurrency. We're here for anyone who is interested in crypto at all. Maybe you've already dipped your toe in the water, or maybe you don't know anything about it. And this is the very beginning. But we recommend heading back to the very early episodes to get your footing. However, if you think you're ready to dive in headfirst and let's do it. In this week's episode, we carry on with our updates for FTX and Sam Bankman-Fried because this saga is a pretty big one. We look at who else might be in trouble and we discuss an announcement from the US about a digital dollar. We also look at decentralised exchanges and who might be faring fairly well after the goings on of the last ten days. My name's Tracey and as always, I'm joined by my workmates from the Bamboo App, Blake and Craig. How are you guys going after another pretty wild week in the crypto space? 

Blake: [00:01:12] Pretty well. Lots to talk about today. You know, there's lots of collateral damage in the industry and it's, you know, pretty, pretty horrible to see, but also fascinating to watch play out. 

Tracey: [00:01:23] It's just been a lot to keep up with. How about you, Craig? 

Craig: [00:01:25] Yeah, I've been glued to my Twitter feed recently and all these Twitter spaces, you've been jumping in them as well. It's quite interesting. It was just I mean. 

Tracey: [00:01:35] Everyone was jumping in. 

Craig: [00:01:36] Everyone was jumping. 

Tracey: [00:01:36] There were so many people that were jumping in line. 

Craig: [00:01:39] All the Elon jumped in. 

Tracey: [00:01:40] The one Elon we were in that one that Elon jumped into. There were so many people there and we happened to watch that one live, which is pretty cool. But just watching all the famous people that were there, it was pretty cool. You know, Matthew Dellavedova was in them all the time, was quite cool. But yeah, look, it's been a big week and we try to keep up with what's going on and we do have to start off with the saga. Obviously, we put that bonus episode out last week, which you guys seem to love. We had a lot of feedback on that, so we do need to just carry on because we put that bonus episode out thinking, You know what, we've done a really great job covering off what's happened here, keeping everyone up to date. I think we've covered it off. Boy, he's done a really good job. Wake up the next day and the next story. More of the story has been hacked. So that's where we are going to start off today. Last Saturday, FDX was hacked. So we don't know who has been hacked. Possibly an inside job. Everyone's putting their hand up to say, but we just don't know. It could have been done by another entity, someone you know. These things can be I mean, people are saying could be China, could be Russia, could be anyone. But it's looking more and more likely that it's the inside job. How much was it for Indian boys? 

Craig: [00:02:51] 650 million. And we'll get into it. But Sam reckons it's an inside job, supposedly. But let's go through what actually happened. So the hacks happened on Saturday and then the revelations came out that Sam actually had a back door where he was softening funds from Allah, making it a trade without anyone knowing about it. So clearly, a bit of a red flag there. 

Tracey: [00:03:16] So what do you mean by stifling? What does that mean?

Craig: [00:03:19] So this is so he had a backdoor accounting situation where he could just directly deposit FTX use of funds to his trading firm without anyone knowing about it also. But I know you love your soap operas, Trace. There's love triangles between FTX and Alameda. Apparently, they all live together. There's ten of them in this mansion in the Bahamas, and they're all romantically involved in the main ring regarding this. 

Tracey: [00:03:47] And most of this stuff is unsubstantiated, obviously, but they're talking, yes, love triangles. And apparently they all lived in one big penthouse together. Eight of them. Yeah, all working and living together. So this is all cross-pollination between Alameda and FTX. And again, when you talk about this back door, Alia was between the Alameda and FTX. So it's worth mentioning that this entire time those two companies are meant to be remaining very separate. So when you're talking about this accounting backdoor, this was hidden from the people working within those two businesses. So only Sam had control. So that's what you mean around that. And that's only just come to light now. So what else do we find out? 

Blake: [00:04:32] Yeah. Elon Musk gave his thoughts and said that, you know, when he was speaking with SBF, his bullshit metre was going off the Richter. And this is around the time when Sam Bankman-Fried was offering up $3 billion to help him out with his Twitter acquisition, which is an incredible amount of money. And presumably at this point in time, we could hypothesise that this was client funds. 

Tracey: [00:04:57] Yeah, exactly. It would have been a while ago. So. Like Craig mentioned earlier, we were in one of those Twitter spaces conversations and it was last over the weekend that we were in that listening section. All of a sudden Ellen popped in there and popped up and was chatting, and that's when he actually gave those comments and said a conversation was teed up between the both of them. And yeah, he kind of thought that perhaps he didn't have the cash at the time. So interesting. What else have we got, Craig? What else do we find out during the week? 

Craig: [00:05:24] Another bit of rumour mill. The optics employees are leaking stories that Sam, who apparently isn't a vegan, which, you know, that's the worst thing about them. 

Tracey: [00:05:36] All very upset about this. 

Craig: [00:05:38] But apparently he and his elevator crew, the ten people that were together, all sort of tried out stimulant drugs. They advise employees to give it a try. And, you know, he followed, quote unquote, an optimal dosing schedule. So, you know, he was rumoured to be sleeping in the office on a beanbag. 

Tracey: [00:05:59] We've seen the photos of that one. So that's not such a big stretch. 

Craig: [00:06:02] Okay. So that's true. But all this stuff, obviously rumour mill. But yeah, not ideal for someone that's managing 10 million also more probably.

Tracey: [00:06:10] Well, look, you know, we all know that Microdosing is a big thing in some of the industries. But look, again, that's all hearsay. And, you know, when these kinds of things blow up, a lot of people come out of the woodwork and want to have their 2 seconds and put their bits and pieces up on Twitter. But there are a lot of those things. But then at one point, too, it's worth mentioning that we all thought Sam was on the run. He was on a plane, a private jet somewhere, and people were following that. And that was. 

Craig: [00:06:34] All people were tracking a random plane that people were going crazy on Twitter. Poor guys. This random bloke, he'd just flown his jet and the whole world's watching him. But, yeah, he's still in the Bahamas. 

Tracey: [00:06:46] Yeah, but you know what? That just shows there's a lot of really angry people out there, who have lost a lot of money that they don't think they're getting back and they're out for blood. But again, he's still in the Bahamas. Apparently his dad's by his side. And they are being closely monitored by the authorities. So that's where they are. But then again, this week, he did put a few random tweets out. I think one of them just said, what? And there were a few letters that he put out slowly spelling a few things out. So it was all looking a little bit random until the 17th, which was that time recording. It was yesterday, and then he finally replied. He did reply to a few people saying that he would do a couple of interviews there. I thought I saw a few tweets of DMS with people saying he would do interviews very soon and then out of the blue he did one with someone from Vox. 

Craig: [00:07:33] Yeah. So there's two interviews, actually. The New York Times one, which is the softest piece of journalism I've ever seen. They didn't ask him anything. I will put the link to both in the show notes, but Vox reached out to him and he actually gave Vox a lot. So the article in the show notes, but pretty much this reporter, Kelsey.

Tracey: [00:07:53] Piper, and she'd interviewed him about six months ago as well. So she had a thread of conversation going with him already. 

Craig: [00:07:59] Yeah, exactly right. But she actually posted screenshots of the discussion she had with SBF, some of the little, you know, quotes from there. He said if the regulators, then everything was said, don't protect customers at all, which is quite rich coming from someone who just lost $8 billion of client funds. So this is proper like private message SPF talking here and then he said what FTX are doing he he made an assumption or you know hinted at the fact that every other big exchange is doing the same thing and he name dropped CS from Binance not so you can tell he's still a bit salty with CC and he also said he's sort of implying that this whole thing was a mistake and this whole thing wasn't malicious, which that is it just ridiculous? Like how can $1,000,000,000 go missing as an accounting mistake? That's some of the things that he's hinting at, which, you know, crypto Twitter isn't buying it. 

Tracey: [00:09:01] Oh, yet no one's buying it. No, he's very flippant with it. 

Craig: [00:09:03] But he did say that all of his energy is going to go towards raising the cash to pay people back. 

Tracey: [00:09:09] What were your thoughts on it, Blake? You've had a look. 

Blake: [00:09:11] On the article. It's pretty crazy. It just seems like someone's majorly deluded with reality. 

Tracey: [00:09:17] Yeah, exactly. 

Blake: [00:09:18] And yeah, yeah, yeah. Obviously, you know, potentially drug problems, mental illness, you know, enormous amounts of stress. He's probably broken the law in many different areas. And he's basically acting like a child. 

Tracey: [00:09:32] Yeah, it couldn't, it could not have put that better myself. That's pretty much well done. But look, go back and have a look. Like we said, there's 22 screenshots total from their conversation mixed in around Kelsey's thoughts in this article. So yeah, go and have a look in the show notes below. 

Craig: [00:09:50] Trace the flow on effects. There's still the contagion continuing. Who else has been collateral damage in this?

Tracey: [00:09:58] Well, I think. The big one that we've spoken about in the last couple of days is Gemini. They're not looking good. But even just yesterday, Genesis, which is huge because they're involved like we were just talking about earlier, Craig with Greyscale and Genesis is mixed up in this and then that's huge. 

Blake: [00:10:15] Basically all the trading firms and market makers and OTC desks and aggregator platforms that look for the best price of crypto would have had to have anywhere from, you know, 5 to 30% of their assets on the FTX to manage liquidity. So when a trade comes into their trading desk, they're able to execute on that, you know, in real time on the exchange, for example, FTX. And as a result lots of these big name players have just had a 10 to 20, 25% haircut on their assets under management across that whole sub industry in crypto, which is incredible to see and very unfortunate. 

Craig: [00:10:58] Yeah. And we have to remember FTX was marketed towards these guys to traders like the normal retail user probably wouldn't be on FTX. So Blake's right. There's going to be a lot more that have exposure that comes out in the few in the following weeks, but also locally we've been affected. DG Digital Surge, which is a small Australian exchange, has been affected unfortunately. So we've sort of been a bit unscathed here. But yeah, it's nice to see. 

Tracey: [00:11:23] Hopefully they can pull through. 

Craig: [00:11:25] Yeah, yeah. 

Tracey: [00:11:25] Hopefully we'll see how that goes. But look, let's, let's kind of round that out. There's no doubt we'll probably speak about this again next week. There'll be something else that happens here and we'll see what happens. But as we do, rounded out a little bit more news here. We all have been making jokes about this being a movie, which it will, and we're talking about who's going to play which part where. But it actually is a book and movie deal out there. And if you've seen this during the week, Michael Lewis, who's the author of The Big Short, has other movies like old books, The Moneyball, Flash Boys, and The Blind Side. So he knows how to spin a good yarn. This guy, he's already been following Sam around for the last six months, so apparently, yeah, he already thought that Sam and FDX was going to be a good story regardless. This is such a cool story. 

Craig: [00:12:15] He was probably pleased to be. 

Tracey: [00:12:16] A success story. Yeah. So this is what's happened during the week. An email from his agent to potential buyers of the book got leaked, you know, leaked whatever. It's out there and I'll read this out to you because it's gold. So this is how it reads. For the past six months or so, Michael Lewis has been travelling with and interviewing Sam Bankman-Fried, his childhood and early success on Wall Street, embrace of effective altruism and the creation of crypto empire that catapulted him in record time into the ranks of the richest people in the world seemed more than sufficient for a signature Michael Lewis book. Of course, the events of the past week have proved a dramatic surprise ending to the story. It's also highlighted the rivalry between Sam and Binance Head sees Michael likens them to Luke Skywalker and Darth Vader of crypto. So Michael hasn't written anything yet, but the story has become too big for us to wait. Let me know if I've peaked your interest. So that's the email. But like, oh my God. Yeah. Hey, everybody. Interest. Yes. 

Craig: [00:13:17] Got some serious offers on this. 

Tracey: [00:13:20] So it's pretty cool, especially making that kind of reference to Star Wars. But everyone's like, you know, who's Darth Vader and who's Luke Skywalker? But obviously says he's got to be Skywalker here and Sam's Darth Vader. But yeah, so there you go. The book and the movie are coming. And yeah, we'll see how that one pans out. Let's move on to our next story that came out this week. We've poked a little bit of fun here on the podcast at Crypto.com in the past as an exchange that seems to be really good at flashing cash for no reason. They seem to advertise everywhere, yet I don't actually know anyone that uses them. They kind of exchange, which is the old Aguilar no idea type of exchange. They went big in buying the naming rights of the Lakers arena for 700 million and they are official sponsors for the AFL here in Australia. They had Matt Damon in a multimillion dollar advertising campaign about being brave. Remember last month when they gave away 10 million to a woman in Melbourne who was trying to get a refund of $100? So we should have known there was something a little off in the accounting department after that. A great cock up because there's been a few more issues that have surfaced in this last week. 

Craig: [00:14:32] Yeah. So the fat finger transfers for ten mil. So since the F6 debacle happened, we've had a lot of on chain analysis, people on Twitter like literally gone through every exchange wallet saying what's going on? Are they, are they being safe with client funds? And someone noticed that Crypto.com sent 320,000 Etherium to gate dot io. So what Crypto.com does is when they. By assets like Blake mentioned, they look for the places with the best liquidity where they can fill their orders quickly. So it's not uncommon for someone like crypto dot com to be messing around with other exchanges. So they notice that 80% of their ETHEREUM'S reserve was sent to gate dot IO and pretty much people asked the you know, the CEO, they said, what's going on? How did this even happen? And he said it was an accident, but he accidentally sent 320,000 Etherium to get it. So this causes everyone to go into panic mode because clearly that is irresponsible and clearly that is, you know, a massive mistake.

Blake: [00:15:40] Yeah, this is really interesting because I know that Crypto.com has invested a lot in being certified with something called SOC two and different ISO standards for internal controls, systems and processes, which is specifically designed to ensure that these things don't happen. And many of these certifications came out of, you know, the mismanagement of your banking and finance from the 2008 global financial crisis. And, you know, if they've implemented all of these systems and processes, it's pretty hard to believe that, you know, 320,000, if they accidently left their platform, which is an incredible amount of money. And, you know, who knows if it was an accident or, you know, really trying to cover something, you're more and more concerned. 

Craig: [00:16:28] Well, not even a test transaction like I was. And I remember I sent someone the theory in months and obviously you said 0.1 as a test. These guys just went to roll the 320,008th one transaction like that is just insane to me.

Tracey: [00:16:44] You know, this is the thing with crypto and the blockchain, it's all out there for people to dig and people to find these transactions. I don't think their PR was very good on this the way that they came out and explained it. The explanation on this just didn't just not hit the mark for me. 

Craig: [00:17:03] Yeah, well, he avoided saying the word accident. He said we sent, you know, we sent funds to get IO, but they sent it back immediately. It's like, clearly that's a mistake. 

Blake: [00:17:15] Well, it might not be. I know, you know, many of the exchanges at the moment are doing something called proof of reserves. So it means they're snapshot in their database and the crypto wallets that they have to ensure that the customer liabilities are met by the amount of assets that they have in there, the crypto that they hold. And you know, I might be wrong, but I am doing a proof of asset snapshot around that time. 

Craig: [00:17:40] Yes, they've they have they've got one on there. 

Blake: [00:17:42] Yeah. So this is pretty interesting that, you know, potentially these players are moving assets around to snapshot for their audits and don't actually hold the assets. Mm. 

Craig: [00:17:54] Yeah. Just on that proof of reserve thing that Blake just mentioned, we'll put a link in the show notes, but this blockchain analysis company called Nansen, they pretty much track all the on chain movements from all from all the layer ones. And they've got now every exchange that sort of comes to the party, you can see what they're holding and check it out. It's actually pretty interesting. Binance's 60 billion on the proof of assets and it's pretty staggering to see the amount of money that these exchanges have on their platform. So we'll leave a link and you guys can check it out. 

Tracey: [00:18:24] We might go on a break to stay in. When we're back, we'll talk about the US launching their own digital currency. Welcome back. You're listening to the Crypto Curious podcast. So the US banks are launching their own digital dollar blockchain pilot. A group of US banking institutions has launched a proof of concept digital money platform called Regulated Liability Network. The platform has said it will be using blockchain technology to create opportunities to improve financial settlements. The programme will run for 12 weeks and only operate in US dollars. The project includes a regulatory framework aligned with existing regulations. So I've popped this story in here because this came out yesterday. There was a lot of fanfare in America the way that the press release was sent out. I just thought, this is the banks now pushing their own cbdc coin because of what's happened. This for them, I think, is perfect timing to say, Hey, this crypto industry isn't doing it right. We're going to come out now with our own, you know, digital currency and we're going to do it the right way. I thought we knew this was coming. So I just wanted to get your comments on it, boys, and what you thought. 

Craig: [00:19:38] I mean, it's easy to think it could be a bit sinister, but like, if you think about settlements on the blockchain, it's just so much quicker, more transparent. So it's a natural evolution for space. But it doesn't surprise me that they're sort of. I think the whole regulation conversation is in overdrive right now because of FTX. I think one of the Aussie people said that they've committed to crypto regulation here by next year by the like, which is a lot earlier than what we all thought. Yeah. So I suspect that they will take advantage of the news cycle.

Tracey: [00:20:13] Like, what are your thoughts on this one? 

Blake: [00:20:15] Yeah, no, it's a natural progression. It's great to see that these guys are embracing the technology. Obviously, it's not decentralised, but, you know, they're naturally going to utilise blockchain technology for the day to day operations. So yeah, good on them for pushing the envelope. 

Tracey: [00:20:32] Let's see how that one pans out. I'll keep an eye on it. Let's move now and have a look at our decentralised exchanges. The heroes kind of. I think after what's happened with being a centralised exchange this week, Uniswap overtook Coinbase as the second largest exchange trading Ethereum. Traders are flocking to decentralised exchanges after what happened with the FTC's collapse last few weeks. Dexs allow customers to trade crypto while retaining full control over their funds. Many Dexs have recently posted overnight doubling in trading volumes. Uniswap is now the world's second largest volume for trading. Ethereum Binance continues to lead the category. This was what we knew would happen, though, poised in the way after what happened here. 

Craig: [00:21:18] And what we've seen as well. Like, it's quite interesting, Uniswap has gone to the top, but exchanges like Binance and Bybit, they're actually making their own dex to try to compete. So obviously Binance is involved with Pancakeswap, which is by far the worst branding for a Dex and Bybit are actually that they've actually made their own leveraged trading dex called Apex. So these exchanges sort of see the writing on the wall here. So they've, you know, started building their own dex where it's fully decentralised. All you have to do is connect your wallet. 

Blake: [00:21:52] We've seen this in the past with Bitfinex and Binance building decentralised exchanges in the past, and they've never been able to get traction. I think that they kind of need to be seen to be moving in that direction, building products. But I don't think they at all are going to dominate that space. 

Craig: [00:22:10] Yeah, because people are still a bit sourced and exchanges involved. They want someone completely independent, right?

Tracey: [00:22:16] Yes, that's right. Yeah. Yeah. But it's good to see all of these guys doing so well. Actually, I was going to try and get a list and see who, aside from Uniswap Pancakeswap, you know, kind of who were the other big ones up there? 

Craig: [00:22:28] GMAC's has come out earning $1,000,000 a day in fees. That is a leveraged trading platform. 

Tracey: [00:22:35] We probably want to steer clear from owning that one at this point in time.

Craig: [00:22:38] Yeah. 

Blake: [00:22:39] Probably next one up is Craig's favourite topic. Another NFT marketplace. Nike has launched a marketplace called SWISH. So Craig, Gina, tell us what you like and maybe dislike about this. 

Craig: [00:22:51] May another brand with an NFT marketplace. Actually, Nike makes sense, but like some of the other ones, I'm just like so over them. But I will say it's on a polygon. Huge. This is huge. This is a big deal. This is a big deal. So Polygon are involved and knocking at it does seem to have a bit of competition in the digital asset marketplace as you know. And it has partnered with bought IPO club Nike and now doing the virtual collection of footwear, apparel and accessories at a launch in January 2023. The platform will only use USD and all transactions will be recorded on the polygon chain. But. Be interesting to say they're quite neck and neck at the moment. Not keen ed so be interested to see which one wins the market share trace. 

Tracey: [00:23:38] Yeah, I think that night has gone a bit hard on this with their promotion and what swish looks like and what they are planning to do. This one to me seems a bit bigger and better and their whole plan seems a little bit more grander. So we'll see. Let's move on now then to our short, sharp news bites. I'll let you go first, Craig. 

Craig: [00:23:58] Portuguese rookie. You might have heard of him. Ronaldo. Cristiano Ronaldo. He's launching an NFT collection on Binance. So we now know he's been in the news lately talking shit about Manchester United, which I love. I love hearing that stuff. And now he's in the In the News again with his NFT collection on Binance, which dropped last Friday. So if you've already missed the guys by the time this episode is, but maybe it hasn't been sold out and maybe you can get one, but you've got to sign up with the code. Renaldo And you get a surprise. 

Tracey: [00:24:30] NFT So you have all these is the bottom of the market for the NFT and he's like, now just drop the collection anyway. I'm Renaldo. I'm fine out of the market drop my collection. 

Craig: [00:24:40] I bet you it's been delayed and constantly in this season is just like let's get it out and it's probably the worst time but before the World Cup though. So that's good. 

Tracey: [00:24:49] Yeah. Yeah. Good timing. What else? Blank. 

Blake: [00:24:52] Celebrities like Tom Brady, Shaq and others are all being sued for endorsing FTE ex. The lawsuit being put forward will claim the FTX's fraudulent scheme was designed to take advantage of unsophisticated investors. And I think we're going to see a lot more of this type of stuff come out because there are a lot of people promoting FTX's. 

Tracey: [00:25:15] Yeah. Okay. So like these poor people, these guys are all getting slammed. Don't even have any real hot water yet and these guys are already getting sued. It kind of doesn't make sense. 

Craig: [00:25:22] And how's that, Larry David Super Bowl ad and you pretend that is like shelling FTX and Bitcoin. And now looking back on that ad, you're like, he was actually wrong and so on. So ironic. We'll put the link. 

Tracey: [00:25:35] Okay, so Steve Jobs, raggedy old sandals tied up with an NFT sold this week for $200,000. Yes, that is correct. $200,000. The dilapidated old Birkenstocks were worn by Steve Jobs during the early days of Apple and were initially expected to fetch 60000 to 80000. But one lucky bidder paid 218,000 to get their hands on a pair of these crappy old sandals that Polly smelled horrid that Steve wore. So yeah. And they also came with a 360 degree non fungible token as well. So I don't know what that did, but apparently. Yeah. There you go. 

Craig: [00:26:15] Interesting last story of the day. I've got Binance's NFT users now. So Binance is pretty much integrating Opensea to Binance and has Taylor seem to bring a lot of effort into the NFT space. They got Renaldo, now they've got Opensea listings, so they plan to integrate more marketplaces and chains or to the one place and also have updated metrics, data, visualisations and enhanced price analysis. So Binance is going hard at the moment, but there is another piece of news we haven't gotten here. Trace So Binance now is in talks with Voyager. So Voyager, as we've covered in the past, was going to get bailed out by FTX. 

Tracey: [00:26:56] Called this last week to carry on with your news. 

Craig: [00:26:59] So this is hot off the press but Tracey apparently knew it was going to happen. 

Blake: [00:27:04] Of the. 

Craig: [00:27:04] Oracle yeah. 

Tracey: [00:27:06] But they were in a bidding war. It was obvious they were in a bidding war to see who got them. They were in a bidding war together. 

Craig: [00:27:10] Well, now Bonds have nobody, nobody to beat and they've got Voyager there for the taking. And as a result of the rumours, the Voyager token has been pumping because everyone sort of gave up on it. But yeah, trade with caution. 

Tracey: [00:27:26] Well, that's good for the Voyager users and. 

Craig: [00:27:29] It'd be awesome if Binance can come to an agreement with them and they get paid back. Because right now if you're a Celsius blockfi FTX user, you know the road to getting the assets back seems like a long one, but if you're on Voyager, you could get a resolution soon.

Tracey: [00:27:45] News from Craig hot off the press that I told last week. Excellent. And that's it for this. And that's it for this week. Keep your questions coming in and look. We'll keep you up to date with everything that's going on with FTX and all the other news that filters through as well. So do keep your emails coming to the podcast at podcast@getbamboo.io and social media in the Facebook group. Don't forget to rate and review us whenever you're listening to your podcast right now and we'll see you all next week. Thanks for listening. 

Blake: [00:28:13] Bye for. 

Craig: [00:28:13] Now. See you guys.