 What's up guys today? We have a very exciting podcast with Alex James and myself We talk about the FTX scandal some conspiracies around that and as well we talk about our overall trading and the overall market So stay tuned and this is super super good one and enjoy. Cheers guys What's up guys? We're back with another episode of the after hours podcast Today we have a huge topic to talk about Everyone in like the trading world the crypto world It's kind of been like the main thing going on and it's this whole FTX scandal So Alex wanted to come on and kind of talk about it a little bit. So yeah, so I mean, this is some crazy stuff Man, so I know there's a lot of videos out there I know there's a lot of people talking about it But I kind of want to give you guys what happened from a trader's perspective and what kind of the reality of the situation is So the way you have to think about it is FTX if you want to kind of compare to the real world Is like a bank. So it's like a bank of America So you store your money in Bank of America and they give you a certain interest rate And then what the bank does is they take that money They lend it out in like a mortgage and that's how they make their nut, right? But what FTX was doing is they were taking your money They were lending it out to a hedge fund Run by FTX a CEO called SPF for short run by SPF's girlfriend Okay, and that and what they ended up doing is they ended up leveraging that money. So they borrowed against it So let's say they had ten billion dollars that they lent to the hedge fund The hedge fund borrowed against it 40 billion or whatever the hell the number is we don't know yet And then started gambling on random things and pretty much lost all the money That's it's like they lost all the money There's articles coming out every single day that they use customer funds to buy penthouses in the Bahamas They use customer funds to you know get the naming rights of the FTX stadium in Miami and It was basically a big scheme because sure banks do the same thing. They take your money They lend it out, but they don't lend it out and you know try to Invest in bankrupt companies. They don't do it do all this crazy stuff So the backstory is there was an article that came out. I think it was on coin desk And the article said that FTX and this hedge fund Almeida Alameda Alameda whatever are more related than people think Then what people have to keep in mind is FTX is the number two exchange the number one exchange finance Then came out and said, you know what we have a stake in FTX. We're just going to sell our stake We don't want any part of this the rumor is that FTX was going behind the scenes to the US government And lobbying them which is basically legally bribing them to create laws and rules that would favor FTX and Not favor Binance, right? So They found out that this was also happening and they said, you know, we don't want any part of some guy that's trying to cheat us Or trying to scheme us So whatever stake we have in FTX because Binance is an early investor. We're going to sell it on the open market Now if you bring in so much supply into the market Basic economics says if there's elevated supply and no demand price goes down So Alameda the hedge fund that knew this said, you know, no, no, no, no, don't sell it on the open market We'll privately buy it from you at $22 a coin And Binance like no, I'm going to sell it on the open market, right? I'm going to sell it on the open market It's kind of smart. He knows that if he sells it on the open market, they're screwed Yeah So that day that that happened FTX had six billion dollars in withdrawals, right? Because people are like, wait, what the hell if the number one cryptocurrency Binance is selling Why the hell am I going to keep my money in there? So what ended up happening is the next day Binance comes out and says FTX reached out to us because they have severe liquidity issues, which means that they cannot Fund the deposits So we've decided to send them a non binding letter of intent to purchase the company So all of a sudden in 24 hours, the number one crypto company Was going to buy the number two crypto company for pennies on dollar I think the day after that They came out and said we looked at the numbers and there's no hope for this company We're not going to buy it anymore And then all of a sudden that's when hell broke loose. That's when they halted withdrawals That's when they had a bank run And then you find out that this guy svf that was worth 16 billion dollars yesterday is now worth zero His 30 billion dollar company FTX is now worth fucking zero And all these big investors all these big hedge funds lost all their money and anyone that had money in FTX whether They thought it was safe or not is all gone now The craziest part about this is now it's cascading to other companies and other exchanges other banks that have had a lot of They've had a lot of exposure to FTX and now because of that they're also going bankrupt So as we're recording this now block 5 just went fucking bankrupt. I think I saw something else another company Yeah, Genesis is going bankrupt. So We don't know how crazy the scheme is And what's been going on, but the truth of the matter is there's so many conspiracies behind this I mean, you know because crypto is unregulated they're able to leverage the money like crazy In 2008 when you know that whole thing happened That was because the banks leveraged so much money that you didn't know how much risk was in the system So then they then got regulated So instead of leveraging a dollar to a thousand dollars They're only allowed to leverage a dollar to like ten dollars. They're still crazy about whatever whatever it is so That's number one right number one is all of a sudden this very ethical This guy was on Forbes as the next Warren Buffett. He was at all the jp morgan conferences He was a major political donor to the democrats in the midterms. I think he donated number two Yeah, yeah, and they they said that he was He promised to donate about a billion dollars for the next presidential election So this guy was clean cuts from what it seemed and the reality was they had no money They were taking customer funds and spending it and now the question is What other exchanges next because I mean look a lot of these crypto exchanges. They make money from fees Okay, let's say you make a billion dollars from fees. That's pretty good money But what ends up happening is a billion is not enough You take that money you give it to your sister a hedge fund They start fucking gambling and detrading whatever coins are trading and then all of a sudden you find out that they lost it all They lost it all it's all gone so Now this opens up the big conspiracy theories, which is where was the sec Apparently spf's girlfriend's father was the ex-boss of the chairman of the sec Why isn't this guy arrested in jail yet? Is it because he donated so much money to the democrats? you know, who's next what's going on so I mean in a perspective of Reality in terms of what's going on. I mean, I think this is exactly what the federal reserve wants to do They didn't want to crash ftx But they want to slowly get people to realize that all these because what they would do in the past is interest rates We're at zero and customers want to withdraw funds. They just borrow the fucking money They just borrow it now when interest rates are fucking five six seven eight percent Well, you borrow the money you're fucking you're on the line for you know Tens of millions of dollars a month that they don't have you know So The whole situation is screwed up I mean what I was mentioning to james and harry what I did is I have coins in the exchange. I just bought this It's a ledger. It's basically a cold storage device. So it takes your money out of these exchanges So instead of keeping your money in a bank, which is an exchange and earning interest on it If you keep it on this, you know, a little usb stick Keeps in cold storage and that basically means that You're stuffing your money under the mattress. You're burying it in the backyard So that in case another bank goes under And they were using your money to fund their orgies You'll be protected you'll be protected So what do you guys think about this whole situation like from your perspective? I mean I mean I tried to give a very brief overview so that people don't What do you guys think and I think I just think it's absolutely crazy and the problem is now like from people I've talked to Is people have even less of a confidence in crypto now I think that people are scared because you know, I mean fdx was huge and I think a lot of people Huge and to see someone like that just crater and like the people who have money in there They're stuck. I mean I've met a lot of people already who just they can't get their funds They got nothing So, you know, I think it just scares the shit out of people and I think it makes people wonder like Does crypto need regulation? and the problem is like that was kind of like the opposite intent of crypto and You know, it's just sketchy right because you see all these celebrities endorsing fdx You got tom brady. You got larry david. You got all these guys endorsing it And now it just seems like a big scam. So I don't know man. It's like it's it's just wild I don't even honestly I feel like we're just kind of starting like like you said the cascading effect and we'll see what kind of happens Yeah, to me and and like as far as like trading the last time I heard like a crazy story about like a like brokerage or exchange was like that whole Sure trader thing with like guys, you know, that was the last time I heard something like crazy as far as like conspiracy theory goes and Um Yeah, I just think that it's absolutely wild like number two exchange all of a sudden everything's gone And as far as like the house 10 people living together all involved romantically He's going on podcast saying oh trading's easy. I'm not gonna talk about losses I don't use stop losses like right there is like a complete red flag And she's like, uh, I'm not gonna go over any trades where I lost a ton of money. So I was like, holy shit How's this guy not arrested, bro? I if I go to The Rolex store and I steal Rolex they're putting me in jail. It's goddamn Rolex. This is 10 20 billion dollars And the guy's just chilling. I mean look, I mean I there's definitely a lot of corruption going on in the world But this is just it's so mainstream It's so in everyone's face and the reality is nothing's being done about it, bro. What the hell? Yeah, well, it's the same thing like You know like Epstein they didn't have the the cameras on or whatever Now this dude's just running around in plain sight and also like I also read that like Uh, Ukraine like had money in FTX as well. So like Was the United States government sending money to Ukraine? Ukraine was putting it in FTX After that, it's like wondering it back a conspiracy theory is that Joe Biden is sending billions of dollars a week to Ukraine Ukraine has a little bit of a stake in FTX. So are they clipping off 10 percent sending it FTX FTX is Sending it back to the Democrats exactly I mean, it's crazy, bro It probably it probably goes so deep It probably goes like I I'm still waiting like obviously everybody uses like major exchanges like coinbase and stuff And like so far they've done a good job of like staying out of any issues But like imagine if we see like some major company like that because that's like the average person's like exchange That people use this coinbase, right? And like I don't know. I mean bitcoin's already taken a huge beating every all the all these altcoins and stuff Dude, like these things could tank these things could all just crater and we don't know I mean, we have no idea, you know It's gonna be weird to see but I think it's funny that a lot of these guys now are like begging for a regulation In the government after they've taken like a massive haircut But you know before they were like all these celebrities everybody was super happy about crypto and everything because Don't ask don't tell bro. If someone comes to you and says, hey, we have this company called FTX I'm gonna pay you 10 million dollars a year just to say that we're the best I mean, I don't know about you bro. I'm not gonna watch you do diligence at that point, you know, and that's what happened Yeah, that's what happened. Yeah, exactly And Kevin O'Leary as well All of them bro all them everyone this was Kevin came out though and said he's like, oh, yeah It's still endorsed this guy, you know, if he started another company and it's like, you know Why he probably has money stuck in there and he doesn't he wants to try to save it in whatever way You know, yeah, that's he was he was saying that that was like he's like the number one place I'm not gonna get in trouble is FTX Um, he was a big believer and now he's like before he was like, oh like we don't need regulation We don't need any regulation now. He's like, oh, we need regulation We need regulation and he was also talking about before the um I don't know like he was on cmbc and he's like, you know in order to get out of this recession one company has to go to zero And ironically it ended up being the company that he was marketing the hardest. So Um, it's kind of funny that uh, yeah Maybe somebody too Yeah, dude, the reality is this guy like bamboozled like the world like a alex said he was on Forbes They're calling them Warren Buffett. I mean, bro The only fucking thing that compares is bernie made off the the chairman of the nasdaq the most, uh, recognizable famous guy that made so much returns nonstop and you think to yourself I was actually watching a documentary on it the other day and apparently they were saying oh like Oh, bernie was like the best, you know, he would make 16 percent a year at minimum You know, the returns were crazy and he had one rule If you ever would like, uh, pulled your money out of the fund you would never be able to get back into the You know what i'm saying? So this scam was really deep and the reality is that like Madoff was very famous. He was very prestigious He was the chairman of the nasdaq the chairman of the nasdaq is a scammer the fuck I mean, you got it. It's really crazy. So and I think, um Another example is like enron right enron was a big accounting fraud. I think enron scam was I think like They scanned like 50 to 70 billion dollars And fdx is anywhere between 10 to 50. So this might be the second biggest scam in history Did you guys see they they hired the, um It was like the new ceo was someone who like did the he was the liquidator of enron Yeah, and he said he looked at these books of fdx and was like, holy fuck Like he said he's never seen anything like this and that's enron and that's like one of the biggest Scandals of all time and he said never in my career have I seen such a complete failure of corporate controls And such a complete absence of trustworthy financial information that has occurred here and sam bakeman He got to the top of the top like again. He was political, uh political influence He was then his name was on the fucking stadium for who is the warriors. Miami. Miami. Miami heat Like insane shit and like I mean, that's like, I don't know if you guys saw that netflix show like inventing ana It's like the same idea man like this guy just somehow scammed enough people into giving him enough money And promising returns and promising x y and z and like look what I got and the reality is bro If the fed didn't raise the interest rates if the entire crypto market didn't crash They always kept scamming and scam because that's what happened today. What happened to madeoff is I think it was 2000 2007 2008 when a shit started to hit the fan And clients started to withdraw That's when they started to say, oh wait, there's actually no money in here And I don't know if this is true because like some some shit is real for some shit It's fake apparently apparently what madeoff would do like he was saying, oh you make 16% returns You make 20% return what he was doing But I don't know if it was true or not, but the rumor is that he took all the money that people were giving him He put it into a jp morgan account earning 4% a year interest and that was it Oh my gosh That's all he did That's the problem is when everyone starts to withdraw their money and they were promised 20% returns every year a $5 million account is now $8 million Well in reality, it's only fucking five and a half million and he can't get the entire redemption I wonder though like, you know, like you said with the federal reserve and this is like kind of what they wanted but You know, it's almost like they're sucking like fake money out like there's a lot of money's gone A lot of crypto is gone now that people lost Forget crypto bro money period bro money and I wonder if that was like I mean, it's the goal But think about like the top of the crypto craze, right? Like people were buying board apes for like 10 million dollars Or like crazy shit. So like that was this is almost like a reset. I think I think it's almost like a slap in the face everyone who just made a shit ton of money and now it's a lot of it's just looking It's definitely the great Is what's happening and what I think is gonna happen bro is it may sound conspiracy theory But like I think the fed is trying to crash the market and crash everything so hard that like let's say an example like a company like Randomize that uber goes bankrupt. You find out that uber has too much that there can't make money They go bankrupt all of a sudden the federal reserve is going to say oh, shit like we'll fix it We'll give you guys money and we'll fix it. We'll Break will lower the interest rates We'll do another stimulus and we'll just keep it going because we'll save you this time I know we tried to fix the market. We did as best as we could. We're gonna save you this time Don't worry. We got you. We have the tools to do it. We did it during covid. We'll save you I think they're just gonna keep fucking going until something breaks I think ftx did break harry, but I think that they don't give a shit about ftx Yeah, I think so too us a company to break and when the USA company breaks, they're gonna say We'll save you I think they'll do That's terrible. I was just gonna say that um I I agree with you 100% because it's not really close enough to home if it makes any sense like it is But it's not really because like everyone just looks at crypto like oh, it's gambling Oh, it's this oh, it's that if something like fucking. I don't know wallmark went bankrupt That would be a real fucking problem They want something bro They want something to go bust and then when something goes bust then they have the reason to reverse their course Yeah, exactly It's sure if inflation goes down the way it's going to go down and what people think and You know the next inflation if the next inflation report is low Mark is gonna go fucking go apeshit if it's high we're going right back down So the next this one was important the next one I think is going to be even more important So that's that's going to be key, but it's crazy. Do we rip on 7.7? It's like, yeah, that's good news and all But like still fucking 7.7 inflation normally is supposed to be 3 to 4 percent like that's like normal You know like inflation is not something that's ever going to be zero is impossible So 3 to 4 3 to 4 percent is average. So yeah, we're double the average. It's just horrible but like as long as it starts to trend lower then it's going to bring confidence back and Hey, man, this is it's definitely some crazy times out there Yeah I still think we need like Some major news headline to like actually change the course of everything like like you said either something's gotta break or You know, like the war's gotta end or something But like we're just bouncing around and like dude if you listen to like all these major guys talking like all the The old hedge fund guys and who are now like retired or whatever But they're all saying like We could be in for like five years of just like nothing of just like slow No return kind of marketing also the problem is brought everyone is saying different markets gonna keep crashing and we crash a lot You know certain stocks are down 50 to 70 percent. You got tesla down 50 percent. You got apple down 30 percent You got meta down 70 percent. You got like shit like nvidia down 70 percent So we're down a lot and people are oh, we're gonna keep going lower keep going lower keep going lower I think Usually what happens in the market is everyone says the same thing the opposite is gonna fucking happen You know the opposite is gonna happen So if everyone is saying that you know the market's gonna keep crashing crashing crashing Then the opposite is gonna happen and you know, we're gonna reverse. So I mean, I don't know what the reality is I know that there's gonna be certain companies that make a lot of money during this I mean if you look at like certain charts of oil Energy solar has all been going crazy because there's an energy crisis in europe, but Aside from that. I mean this is gonna really weed out the companies that don't really make money Do you guys imagine if like meadow and bankrupt? Like if that was like the company that just fucking broke like you look at the I just look at the daily chart like Just fucking insane to see like what some of these major companies have become And like obviously like if you guys look at like even netflix, right like How much money are people down on some of these stocks is fucking insane We're both thinking about zoom Fucking all this shit, bro. All this shit So there's a lot of Roku There's a lot of dead money out there, bro And these stocks are never coming back like if Roku ever hits 400 dollars again, I'll fucking marry you james, but Man, do you remember peloton when everyone was talking about that peloton thing? Everyone that wanted a peloton bought it during the fucking pandemic. There's no one that wants it anymore. No I feel like this is one of those like needed things that sounds so fucked But like as bad as things are dude, like I was just having this conversation at dinner the other night like The world got so ahead of itself like like Alex you went down to miami a lot doing like like covid times Like you saw the crazy money people were spending this crazy shit people were buying like dude You'd go to like the louis Vuitton store and people are fucking just buying everything And it's like they're lining up out the door to spend money Yeah, I mean again I always go back to the crypto shit like people were buying nfts with zero value for Millions of dollars if not thousands and look at them now. They're down 90 percent Yeah, you know and it's just like that's how far we got I mean people were doing the dumbest I saw some dude iced out a board a necklace Like at this and it's like he paid like 11 million dollars. I'm stupid like that And it's just again. I think we just everything got too far The reality is brother should need to happen if we want another 10 year bull cycle We're gonna have to have two years of hell cycle, you know, yeah, but you know, it's funny though Like even through all of this stuff though We're all still able to like make money in the market, which is nice. I mean, that's like we're very lucky I'm gonna like knock on wood here But like that's basically it like that's what's crazy like as bad as things are We're also doing pretty all right Yeah, well the pandemic taught me bro Is that when the entire world is shut down when there's no way to make money when everyone is out of business The one business that remained constant is the stock market. Yeah, yeah 100% 100% and I feel like we're starting to finally get some like momentum back into like small and mid cap stocks and stuff like that I don't know what's changed. I honestly I couldn't tell you. I don't know if it's just the end of the year or whatever Um, but I don't know like how are things going for you guys? You can kind of release transition a little quick to that if you want how things been for you the last couple weeks, Harry Uh, to me is still pretty slow to be honest I mean, I know it's picked up for a lot of you guys but for me It's like when you look like at like the stocks that went up like as far as like quality Um, I mean for me, it's been like, you know, still pretty slow Like I've had a couple like nice trades. Like I got dwhack that other one Um, but like I'm also very picky. Um as well like I think alex nailed the only fucking good long trade this week Which was And then that I think that same day Austin nailed dwhack shirt Yeah, I know and I I woke up and I was like, what the fuck is this dude doing in a fucking long position I was like, there's no way I'm fucking logging this stock man Everything fucking goes to the moon. I was like, are you fucking kidding me? Yeah, man, but aside from that if you realize the When the market turned is when cpi went down the market ripped up. So a lot of our Runners are based on the overall market doing well because if the overall market does well people are willing to speculate on these junk stocks It's true. Alex, you've been doing really well. Like these last couple of weeks, like I've been all right, bro Things are going good. Yeah, I could be doing better, bro With a couple first red days in there, but just try to take a slow bro. What can I do? I mean, you know last year we're all making 10 20 30 thousand dollars a day and now we're making fucking 10 dollars a day So what can we do? Yeah, no We're all just gonna say the say the course and that's it's just I find there like as well like really choppy on the way down like dwhack Like that was pretty choppy on the way down that day that are like really tanked. Like that was pretty choppy Yeah, it's not easy, bro. It was not easy. No, like I remember like Like some other first red days where I was like, holy shit. Like that's insane And then dwhack was just like, oh, I'm gonna go like red to green I'm going to like every single trick in the book. I was like, holy shit like Difficult difficult one to to trade for sure Yeah, and they're choppy on the way up too. Like I find a lot of people are really short bias So like every stock now that's at least going up unless it has like a ton of volume like epi Exited but like if it doesn't it feels like the stock is on ssr Where we just get this like burst up and then like right back down and then that burst up and like right back down I think to me it feels like there's just like it's overcrowded with shorts But shorts are so confident that we're not getting these insane squeezes higher It's just like chop chop chop chop. Yeah Where that's open to the end of the year things kind of smooth out and level out and you know, give us some decent range because Man, I miss it. I miss it terribly. Yeah, Rob is making money too But no, that's it. I mean, you know, I think as hopefully the market kind of just like I think like the panic and all that stuff is like slowly kind of like coming out of the large caps Like people are obviously we've had so much worried this whole time So like it's nice to at least see some people coming back to like small caps and stuff like that And I'm starting to get people asking about trading again Which is kind of a signal to me that like people might be kind of slowly coming back into like this this world that we do Yeah, and I think I think crypto is done for a little bit now Like people have really like lost confidence in Bitcoin. Maybe it's a good time to buy now That's exactly when everyone hates it bro, that's when you're supposed to buy it. Yeah. Yeah, maybe it's a good time to buy now But put it in the fucking cold storage, bro. Yeah, put it in the cold store I'm gonna fucking block their name. They're not paying us. Fuck them Have it in cold storage guys. That's the only way that's the only way to store it. Yeah, cool Well, I mean, yeah, I mean, well, I guess obviously like next week We'll see I'm sure but by the next time we do the next episode there'll be Some crazy news. Hopefully some crazy fucking company goes on there some crazy shit. So yeah, we'll see bro In the meantime, thanks guys. It was awesome. Yeah, all right. Perfect better guys Perfect