This Week in Startups: The Trial of SBF: A deep dive with Inner City Press's Matthew Russell Lee | E1833

there's a, an intersection between sort of VC thinking and philanthropy of like,

let's find cutting edge nonprofits that can go to scale. I know,

I've, I know those people,

but effective algorithm goes one step further and says we're going to go out

and make all kinds of money. And then we're going to save the world.

I guess you could say it's kind of like, it's not like, you know,

Andrew Carnegie, Carnegie made the money and then did libraries. This,

they're convincing themselves that the reason that they're doing these things is

they ended up never doing it. Like with Sam Bankman Fried,

there was a big moment where they said, the shod singed said,

I went to meet with, with anthropic because I was,

I was going to make a donation because I love that technology so much.

And then the process, then the question was, well,

did you ever make a donation? Well, no.

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Okay, today on the podcast, we have maybe the world's number one

source on the SBF trial, the explosive trial taking place in

Manhattan for the founder of FTX, who allegedly stole billions and

billions of dollars. Matthew Russell Lee runs an account on

Twitter slash X called inner city press, INNER city press.

I found out about this account when he was covering the Nikola

trial. We'll get into that in a minute, but his account has

absolutely blown up over the past couple of weeks because of

his extraordinary in-depth threads on the SBF trial.

He's one of the old school journalists out there who goes to

the courts and does real reporting.

And so a little history for Matthew and I, who we've never

met, but back in September of 2022, Matthew was covering the

fraud case of former Nikola CEO Trevor Milton. You remember that

I had Trevor Milton on this podcast episode 1090 back in

July of 2020. And during the case, prosecutors actually

played a clip of Milton or that infamous interview that I did

with him. And that specific clip that was played in court is at

the 46 minute mark in that episode. It's when Milton

talks about being inspired by Apple to launch the Nikola

Badger. It was a pickup truck that never launched because it

inspired more consumers to buy the stock. Here's a clip.

So now you've got all this cash on the balance sheet. And you've

got all this runway. But you, this building a network of

hydrogen chargers and coordinating the building of

hydrogen trucks and satisfying a bunch of customers seems like an

awful lot of work. And then I'm not sure exactly the date you

announced it. What date did you announce that you're going to

take on Ford's F-150 pickup truck and Elon's Cybertruck and the

Riven? Riven is the other Rivian, sorry, Rivian. So now you

decide, eff it, I'm going to create an F-150, the best selling

car in the United States, I think, and obviously the best

selling truck. Why would you take on more work?

That's a good question. Yeah. So here's the reason why our

trucks are gravy trained with money. That's where all the

money comes from is our is our is our big semi trucks, right? The

problem is, is 90% of Americans will never own a semi truck. And

so your investment, your investment, your portfolio of

investors can be very limited. And we wanted to go and build a

company that's gonna be worth $500 billion, trillion dollars

over, say, 10 or 15 years. And if you're limiting yourself to

10% of the market, you'll never do it. No matter how good your

numbers are. The reason why people love Apple, that everyone

touches their product. Why do they love Google? Everyone touches

their product. So your what I did is I knew day one, you know,

once once we started coming out, we had all this gravy train

coming in from the semi truck program. My question was, okay,

that's great, but I'll never touch the average consumer. So

therefore 90% of investors will probably never invest in me. So

I needed to touch the consumer. And so the truck is for the

profit, the semi truck, the pickup trucks for the consumer,

and the consumer is the one who is part of the Robin Hood

portfolio is part of the, you know, the family office or

whatever. And that's where all the valuation of the company

comes from.

Alright, a crazy, crazy clip. That episode recorded in July of

2020. The Badger project was canceled four months later in

November 2020. And obviously, trying to bait retail investors

to buy your company on the way to a trillion dollars, quite a

claim in 10 years is a large part of a bigger story. Milton

wound up being found guilty of three of four counts of fraud

in October of last year. And he's getting sentenced in a few

weeks, faces a max of more than a decade in jail. Anyway, my

Matthew Russell Lee, welcome to the show.

Great. I'm glad to be on I do I do I very much remember that and

was that was a big part of the the jurors had also seen the

infamous ad for the semi truck where they had still had no

motor and they put it on on a 3% incline to make it look like it

was that it was running. So it was a huge contrast to see what I

agree, the idea of sort of of basically coming up with a

product in order to make to make the stock sexy during COVID

where people are like, Whoa, I've got this government check. What

a great company is for climate change. It was it was a it was

smart while it lasted but he the thing is normal a normal

defendant would already have been sentenced after this long

after the conviction, but he's managed to like he had a lot of

post trial motions. He one juror contacted Intercity Press

because once once the jury is released, they they go online

and they look at, you know, things about the trial and

contacted me and I interviewed them. They basically they said a

lot of kind of anti corporate things and they describe the

deliberations and how people ended up thinking he was really

like a smart punk. And so that's been one of the basis of his

of his appeal. So we'll have to see what happens ultimately

with Trevor Milton, but he was convicted.

Yeah, and it really is particularly sinister, you

know, when you are incompetent, you know, you're not going to be

able to build the product. And I think that is the part about

this where, you know, in our industry, the technology industry,

we have a long history, Matthew, of fake it till you make it or,

you know, set audacious goals. In fact, it was a big, hairy

goal. Big, hairy, audacious goal at BHAG is a term they use at

Google. And that's fine. But something along the way to a big

audacious goal can throw it off the rails. What is that? When

does it become a legal issue? You know, since we have a lot of

founders listening in your mind between, Hey, this is an audacious

goal. And maybe you're committing a crime.

I mean, I think it's it's I'll say it is as although to the

prosecutors defrauding investors is as much of a of a of a of a

crime, you know, securities fraud, wire fraud crime as as

defrauding, let's say a depositor or somebody that I'm going to

turn it to FDX, somebody that put money and thought they were

trading crypto when in fact, Sam was just moving the money

elsewhere. I think that the it becomes there there's you have

to show it's like see enter you have to show that they knew that

the statement was false that it wasn't just that they were sort

of puffing puffery. The same thing is actually coming up in

this truck. There's a Trump trial right now in New York about

his real estate and the idea that he somehow misled Deutsche

Bank about the value of Mar-a-Lago and his various

properties. Personally, when I look at it, it's hard for me to

see Deutsche Bank as a big victim in the sense that it's

their job to do due diligence. There's another case. It's

Charlie Javice. I don't know if you've heard about that one.

She had a she had a trying to think what it was called. She

had a platform that was supposed to help people fill it out

FAFSA Frank. Exactly. And so yeah, total fraud. We did cover

Frank. Yeah, she she she sold she sold it to JP Morgan Chase

and claimed to have hundreds of thousands of customers. She

didn't. She actually went out and just bought an email list. But

so that's fraud. That's fraud. At the same time. What are the

prosecutors? This to me sounds more like a civil case in the

sense that like JP Morgan Chase dropped the ball. They didn't

do any due diligence. And now, alongside their civil case, they

have the prosecutors conveniently. I'm not a fan of

Javice. I'm just saying and then the other option, obviously,

you I'm sure you guys have talked about Theranos and

Elizabeth Holmes. That's where it gets terrible. That's where

fake it when you're actually faking like cancer test results

is pretty yeah, worse than a real world harm. Yeah, worse than

a pickup drop worse than crypto. So there's a there's a whole

continuum here. I will say just in FDX, it's beyond. I mean, in

Trevor Milton, they did show sort of, you know, extravagance

spending by Milton and the Caribbean. But I think that

the the the prosecutors in the FDX case have really managed to

show the specifics, not just a sort of, you know, do you

resent this type of this type of excess and the $35 million

condo over the Bahamas. But this the taking of customers

money to make political contributions, to give it to

your brother's foundation to buy real estate for the parents

who say they're such ethical, you know, pro-poor people. I

think that's ultimately if I were a juror, that's the that's

the real that's the that's what sort of gets their ire up. And

I don't know how Bank of Madrid is going to rebut that

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Yeah. And so let's get to this. The case has been going on for

a couple of weeks now. And it's gotten really interesting,

because I think this is the key to it. You know, he's had like

four of his top lieutenants plead guilty. And I think three of

them are cooperating with authorities in order to get

reduced sentences. I'm not sure if they've already negotiated

those sentences or not.

I'll tell you, yeah, they can't actually just just to explain

that they don't know yet what their sentence is going to be.

They basically they plead guilty to a slew of charges, all of

which some of which have mandatory minimums. And the

government commits as long as they tell the truth, whatever

the outcome of the trial is, commits to write with something

called the 5k one letter to the judge when they come up from

sentencing saying how useful their cooperation was. And then

it's totally in the judge's hands. Like, honestly, they're

well, they're totally it's total. There's no guarantees here

at all. And honestly, if if a judge himself concludes, in this

case, it's Judge Louis Kaplan concludes that one of the

witnesses might have been lying or trying to make themselves

look better, that's going to hurt them at sentencing. So it's

it's an interesting, I think they had almost no choice,

they're going to get much less that if he's convicted, then

then San Bank Madrid is, but they definitely don't have any

assurance of what that will be.

Yeah. And so they might get, I mean, if we're going to take

a percentage of it, yeah, like half of it, a third of it,

whatever it is, sometimes they get time served. It's really,

it's really an interesting, and I'm sure that they're all of

them have like, super high, high power white shoe law firms

representing them. So I'm sure all of them shown them like

charts of like, not just here's generally what cooperators might

get. I covered another crypto fraud case, one coin, which

didn't even have a blockchain. It's called the Crypto Queen, a

woman from Romania. Yeah, I remember. Yeah, called Rujignitova.

Anyway, a cooperator against her who helped her launder money

and then and then provided a lot of information to the

government, got five years. So you can get. Oh, wow. Yeah, he

got his name is Gilbert. He also violated his cooperation

agreement by like, selling his jet without telling the

government stuff like that. But so it's a there's no assurance

they don't have any assurance, but they definitely have an

assurance that they'll do better than than the defendant if

he's convicted. If he gets off, they're screwed because they're

going to go to jail and bankment freak won't but I feel

really wow. Yeah. Yeah. I mean, because they played guilty,

right? They played guilty to they can no longer say I didn't

do it. They confessed to all those things. So so tell me you've

been in the actual courtroom. Sure. And you are an expert at

getting into the courtroom. I'm just curious from a mechanic

standpoint. How does one get access to the court? Is it easy?

Is it difficult? You have to show up at 4am? Do you know

people there? And yeah, how does it work? It's not I will

explain this. I've been covering the court very like on a

daily basis. I used to do the same thing at the United Nations

until I my reporting there got me into some trouble there. So I

came down to the court and I was like, here I am. I was

covering a UN corruption trial, Chinese bribery of UN

officials. And every day I have to I have to leave my my

laptop and my phone downstairs. I go upstairs and I

notice there were other reporters covering the trial that

were not leaving the building to do broadcasts, you know,

during the break, but had their electronics with them. So they

haven't there's an in house court system. There's an in there's

an in house press corps and a non in house press corps. And the

way it was explained to me and I give them credit for this, it's

not just based on like, Oh, you're a big journalist in from

London. Here, take a press pass. Basically, they said to me,

it's not enough to just be covering one case, no matter how

much you are, you have to cover, you know, a lot. So now I mean,

I'm covering actually a lot. I write 10 stories a day about

the courthouse. Not all of them are financial fraud. A lot of

them. I like criminal law, but a lot of them. I, you know, I

there's some really long sentences being given out. There

wasn't in any event. So I'm an in house reporter there so I can

bring the electronics in and I don't ask you a simple question

there. So you're in house lawyer. How do you sustain

yourself? This is a hobby or you seem to be doing this full

time. So no, no, I mean, a citizen journalist, how do you

make money? Yeah, I was gonna I was gonna break in when you

said you may know it through the Twitter, with through the

Twitter feed, which is or X feed, which is free, but I have a

Patreon, I have a sub staff, I have a you, you know, you so

and there's a there's a variety of ways. I would say it's

actually, I think this is a I don't want to say it's a new

model of journalism. All obviously corporate corporate

media is going through various trying to decide whether you

should what the way I do is I I if I had my druthers, I would

put everything up for free. I want people to know the

information as it is. I'll put almost every I'll put almost

everything up for free. But I'll also put put, you know, if I

get documents, I do a lot of FOIA requests, I do a lot, you

know, the, the people send me, you know, documents. And so I

put, I put, you could call it bonus material on Patreon. And

I do living. Do you make six figures doing this? Can you can

you survive? I'm surviving. Here I am. Here I am. And that's

what I do. And it's, it's kind of I kind of learned during in the

UN as well. I had the same. There were people that want to

it's an interesting, I think as a kind of I don't want to say a

lone journalist, I like I like beats where you can really

everything is within walking distance, for example, I mean,

I'm covering a lot of cases. And it's because all of these

cases are in two buildings in Lower Manhattan, that I have a

pass, I can go back and forth between men and I can really

cover, I can cover a lot of things. And so and, and it's

the same the UN for all of its failures, I enjoyed covering it

because it's just 42nd to 46th Street, First Avenue to the

River. And yet you can cover a lot of things and you can build up

a readership. And there are people that are willing to pay

for it.

Amazing. So I'm really happy for that. Everybody go to Patreon

right now. And please subscribe to inner city press. And we're

going to do the same here from our program as a thank you for

you doing this. So tell me about the general vibes in the

courtroom, because these people work together. But they and they

work together for years. They're all very smart. They're all

very young. They were all hopped up apparently on Adderall

speed, all kinds of amphetamines, which is a really

interesting side discussion. We'll put that on the side down,

put a pin in it. But it doesn't seem like they had a massive

amount of deep loyalty for SPF. And they have flipped on him.

But what is that like? Because they're all in the courtroom

looking at each other. But these all seem like really weird

aspergery kind of ADHD kids, I think they've all used that in

their defense. So what's the vibe and compared to other

trials? And have you ever seen anything like this? Yeah, no,

it is extraordinary. The first thing I'd say is that they're

not all there at once. Like, because they're witnesses, you

can't be in the courtroom. For example, when Carol, Carolyn

Ellison was the first of these these three cooperators to

testify, Gary Wang and Nishad Singh were not even in or

there, they had to basically vowed and not even follow the

could follow the testimony, because you don't want witnesses,

you know, sort of putting their testimony together like as she

said, I'll say this. So but so it's been one by one. And the

highest profile one was was Carolyn Ellison because beyond

being Alameda's at one time co CEO, and there's another guy

called Sam Trebuco that I'll put a pin in that and get back to

it. It's an interesting he hasn't shown up in the trial. He

hasn't been charged. People are writing to me saying why not

like when Carolyn was there, very good. Look at each other. Did

they say hello to each other? Did they greet each other? No,

they did not. And in fact, there was a lot was made of this.

But when it is kind of like a Perry Mason, like, like, it's

like your idea of what a court would be. They say, do you see

the defendant in the courtroom? And she initially couldn't see

him, because he looks quite different than he did back in

his back in his days of podcasts from that from from the

Bahamas, with with big hair and in cargo shorts, he's now the

hair has been cut. He's a lot thinner, which I don't know if

he's trying, he's either gonna in closing, try to say he's been

mistreated in jail or something. His suit is too big. So there

was definitely, I think Ellison was was a very strong witness

because it combined both her describing, you know, how it

worked. And she was definitely poor. She's glad guilty. She

she acknowledges that she knew that Alameda that Alameda had

this incredible $65 billion line of credit with fdx, that when

people thought they were sending in money to do to trade on the

fdx platform, it was being diverted to Alameda. But she

said very much Sam told me to do this. And she also has the added

element of they were had a relationship, they broke up. And

and, you know, it's sort of I think that the quotes have come

into evidence of things like he wasn't paying enough attention

to me, he he ordered me around. And I think as much as saying

that these four were like Gary Wang was a co founder of both of

both Alameda and then fdx. The shot saying was the engineer.

But this was not a an equal four person relationship. Sam was

clearly Sam was the boss. The other ones have even though they've

played guilty, they've tried to kind of say, I went along. And

some of them even said, both Ellison and when we're said the

on cross, they were asked, Well, why didn't you leave? You

know, if you if it was so bad, if you if you knew it was fraud,

why didn't you leave? And basically, the answer was we

thought it would all fall apart even faster if we left or Sam

sort of like demanded loyalty, like stick with me to the end of

the three of the three, the most sort of sort of poignant was

Nishad Singh. It seems like he really believed in this ethic. I

don't know how since they were throwing money around like crazy.

Yes, he seemed to believe that the purpose of fdx was to help

poor people. And somehow in November 2022, he was

abused. I don't know if the jury's going to believe that

sorry to

No, no, no, I mean, it's fascinating what you're

describing, because that's the dynamic I'm trying to get my

head around is the interpersonal dynamic between them. And then,

of course, on a trial basis here, how they're sort of framing

their involvement, because they knew that they had built this

backdoor, they knew they were taking this money, they knew

that these were client deposits, they're not they're

admitting to all of that. And they knew that they were doing

they were bribing Chinese exchanges, correct? Correct. No,

that there was a there was a time where fdx's money got

frozen on two Chinese platforms. And so they wanted to get it

out. First, they tried, I guess, legitimately, with a Chinese

lawyer, that's not really how China works. And they had a guy

they had a staffer inside fdx, an engineer who said, I'll tell

you how China works. And they ultimately you first using the

accounts of Thai prostitutes. Yes, this went into evidence that

they they stole the identity or bought the identity of Thai

prostitutes to set up trading accounts to which they could lose

in trading as a way to shift money. There doesn't seem to be any

dispute that they paid a bribe to an unnamed yet unnamed Chinese

official, and their money was unfrozen in the middle of

business. They did it in the form of losing a trade in these

accounts that were owned by prostitutes. So that somebody

who was a regulator, if they didn't have any controls in

place, but if a regulator did see it, it would just look like

they made a bad trade. This person went long, you know, some

crypto, they went shorted and they won the trade. Yeah,

yeah, they were exactly that was their way. And the sort of to

me, the one of the interesting things about it was, there was

another fdx employee called Heidi Yang anyway, her she's

Chinese and her her father is a Chinese government official, and

they were apparently talking like, you know, China, all the

officials are corrupt, we'll just pay a bribe through the

prostitutes. And Heidi was like, no. And so there's a there's a

signal chat between between Sam and this guy called Sam

Trebuko, saying Heidi's a real like, you know, she's a she's

she turned us in, you know, we need to take her off all the

communications channels. And she very, very quickly left. I

think she would have been a great, a great witness in this

trial. Because that's again, again, in terms of the jury,

it's not just showing there's the kind of bloodless, there's a

lot of balance sheets, there's a lot of spreadsheets. And then

there's like, this guy was just a he was like, screaming at his

employees, he was a he's now trying to blame Carolyn Ellison

when basically, I don't want to say she was a puppet of his.

But what he told her to do at Alameda, she did it wasn't she

even if you look at her resume, she didn't, it wasn't like he

hired some like, huge hedge fund person. I'm not saying, you

know, again, I know it's not to be

these words, super experienced people and he didn't surround

himself with adults who would have kept him in check. He hired a

bunch of kids, peers. And he is apparently, you know, directed

them to do this stuff. Now they also participated. So that's

gonna come in. What what what has the jury responded most to

because you must as a reporter there. Sure. Yeah, and they're

taking notes or they did was there a moment where they gasped

or they rolled their eyes? What have you seen? I think

absolutely. Yeah, I think because there have been other

witnesses that have haven't been as kind of Shakespearean.

There's an there's been there was an expert witness. There were

a couple of investors. There was a guy who's a cocoa trader cocoa

like chocolate. He's a truck commodity trader in London that

said he lost $100,000. I have to say the jurors didn't seem

that excited about that. They very much focused on the three

these three cooperating witnesses. And there's also a kind

of a hype celebrity aspect to this to this whole trial, where

they got into evidence, not just that that that FTX paid more

than $100 million to rename the Miami heat arena. And and and

for the Larry Davis, David add and Tom Brady, but also like

there's a there's a particular message where after the 2002

Super Bowl, Sam wrote to all three of his his his

collaborates and said, I'm just back from LA. I went to this

Super Bowl party. It was fabulous. You know, all these

Hillary Clinton was there. There's like, then the jurors are

like looking at this list of like, and he's got you know,

gushing about the people that he was hobnobbing with. This was

all through this thing called K five of Michael Keeves. And he

was he was ready to do a huge investment with them saying

like, this is that this is a mixture. It's an investment, but

really is it's really an investment to sort of get

FaceTime with these big names and take ourselves to the next

level, which by the way, is a thing in business, you know,

like, people will make investments. They will hire

endorsers, but they'll make investment in companies that give

them access to a certain class of people or and so

um, Keeves, uh, you know, got a $700 million investment. There

was some purchasing of shares, I guess, you know, I think from

the co founders of the firm. But FTX, as Sam Bankman free was

doing this in your mind, and this is what they kind of

portrayed to the jury, to try to put a patina of celebrity and

excitement around the company, correct?

No, no, absolutely. And kind of legitimacy to make it like

people have heard, for example, Binance and see his big

pitch because at the same time that he was doing that, he was

also there's the jury has been shown footage of his testimony

to the House Financial Services Committee and his tweets praising

Maxine Waters and stuff like this. He was trying to take and

that was I think very it was again that that that's not

fraud. That's sort of that's how it works. He was trying to take

FTX out of the the the morass of crypto platforms, even Binance

is it's a big platform and CZ but it has a kind of like he made

a big point of saying, with its Chinese founder, they're never

going to get anywhere in Washington, right? I'm the you

know, I'm an American, I'm, you know, hobnobbing with Shaq. So

it was I don't I don't think it would be unfair if the jurors

were just like this guy was a social climber. But I think

what's amazing about this is that there wasn't there must like

you're saying it's a bit it's a known business thing to make

investments to get there. They were just from as best I can make

out and this is not from reading or coming into the trial

literally from the exhibits. It was just a piggyback. There it

literally was and the amounts are huge. They're they were lending

each other like $300 million. Now in some cases, this was so

they could make an investment for FTX they claim but the

amounts there and there was no there's no paperwork. They're

literally like, you know, snap signal chatting each other and

saying, Okay, 300 for there. And then you have this something

that I'm very interested in. His mother Barbara Fried is a law

professor at Stanford, very progressive. She has a nonprofit

called Mind the Gap. It was in turn giving money to many

progressive candidates. She said things like, Okay, I want a

million dollars, but do it through Nishad Singh. So it

doesn't look like this is just a family affair. And that's in

writing. The jury has seen Wow. Yeah. So it's pretty. And

Barbara Fried is in court every day. So some people are joking

like, is she gonna at the end of this trial, are they gonna pull

the handcuffs out on and the father as well. Joe Bankman is a

tax lawyer. Also, I believe he's a psychotherapist. Anyway, he's

a very put together guy. And he's he's known for like helping

with like, you know, easy tax filing for low income people,

like he's a he's a self described, progressive. And yet,

he was in the signal chats to the last day of how they could

like defraud potential investors about the financial

condition.

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has come across there? Because there has always been this

question. He's got these parents who are Stanford law

professors who have written papers, I believe on ethics and

morality. And these are seeming to be, you know, the elites of

our society. Now, elite people know right from wrong, they know

the law, they're literally lawyers and professors. So if

they were involved in this, that certainly means they know

right from wrong. So they must not only know right from

wrong, they must have known that this fraud was going on and

they must be copable, right? I mean,

I think so. I hate to, to exactly, I mean, I think that

there must have been a point in time. And there's probably

is still some percentage of their selves that are actually

idealistic. But they, they lost their way. I think there's a

kind of arrogance. I mean, I don't know if there was a big

there was the New Yorker did a piece that I don't know how to

take it, but sort of explicating their point of view,

the writer went out and walked around with them.

It was very criticized that piece because it was very soft.

Yeah. Oh, very soft. And in fact, without any rebuttal, I

think Barbara Fried said, those who question us are like

McCarthyites, like they can their mind. No, sir, in their

mind, it's kind of arranged. That's a direct quote. Like the

idea is that it's so unfair. Like their son was a genius. And

he was there's what we haven't used these two words yet, but

effective altruism that he's

explained what that is to the audience and how this became a

rallying cry for them. I really, I mean, I wanted, I want to

say like, I, I've been contacted by adherence of it. And I

still, I, it's a weird, I guess it's the, it's a kind of

elitist fan, elitist or quantitative philanthropy. The

idea, and I've heard it, there was a slow, there's a lot of

there's a, there's a, there's a, there's a, there's a, an

intersection between sort of VC thinking and philanthropy of

like, let's find cutting edge nonprofits that can go to scale.

I know I've, I know those people, but effective altruism goes

one step further and says, we're going to go out and make all

kinds of money. And then we're going to save the world. I

guess you could say it's sort of kind of like, it's not like,

you know, Andrew Carnegie, Carnegie made the money and then

did libraries. This, they're convincing themselves that the

reason that they're doing these things is they ended up never

doing it. Like with Sam Beckman Fried, there was a big

moment where they said, the Shad Singh said, I went to meet

with, with anthropic, because I was, I was going to make a

donation, because I love that technology so much. And then the

process, then the question was, well, did you ever make a

donation? Well, no, you know, they made an investment that

in a way, this is the manifestation of what happened

with Bill Gates, you know, he made this extraordinary

fortune, and then they signed this giving pledge. And so this is

like an extension, I think it goes back to that giving pledge

that Warren Buffett and Bill Gates came up with, I think,

where they were involved in. And Bill Gates, you know,

basically, after decades of being an extraordinary

entrepreneur, just decided, I'm going to put all of this money

to work in a very intelligent fashion. This is like the next

generation saying, Hey, that's why we're doing it. So don't

hate us as entrepreneurs. We get a pass. And so is part of the

prosecutions or the defenses, you know, theories here, and

their angle in terms of either getting off or getting

convicted, this effective altruism, how is that playing

into the legality of this or the argument?

That's that it's in, in, in pre trial, there's obviously a lot

of skirmishes before the trial began. And it's called motions

and limine and they sort of decide in advance what can come in

and what can't come in. We have not heard the word the phrase

effective altruism from either side, because the judge said,

it's going to confuse the jury. But we've seen the we've seen him

funneling Alameda money to his brother, Gabe bankman freed has

a has something called a guarding against pandemics where he

was like, you know, and this is a big issue for the idea,

they're saying like, I think I want to go back to just say the

sort of catchphrase of effective altruism is you could, you

know, become a doctor and then go and say and work in Gaza or in

Africa and try to sew limbs on, or you could just go and like

start a crypto platform, steal everybody's money and fund 4,000

doctors in Africa. And isn't that more effective? Now, he never

did find doctors in Africa. And also, no matter what you're

doing with it, you shouldn't steal other people's money. It

wasn't like they were using their personal money. And they had

quite a bit of it. Yeah, they were literally just like

scooping into Alameda and giving it to the brother. And

nobody knows where did the money go?

Yeah. And so that see, this is where I think their argument

breaks down. It's probably why the judge said, Hey, listen, you

want to bring this Robin Hood stuff in? No, no bueno. Let's just

talk about the actual actions that happened here. And let's just

judge this case based on that because I could see it being

appealing to I'm trying to I want to I want to steal man for a

second. Sure. The the the the SPF side. If they were allowed

to talk about this, he says, Listen, I this is what I think

the defense is going to be. And I want to hear what you think

there's been. Hey, listen, I was hopped up on speed. I have a

DHT. I got into this. I really had great intent. And I didn't

know what I was doing. I didn't have the controls in place. I

was trying to make as much money as I could. And look, I made a

bunch of bets. I thought that was the job. I made the best.

Hey, these bets worked out. I think I'm with the Santhropic

investment. Everybody will be whole. So yes, I should have had

controls in place. I didn't know what I was doing. I should

have had governance. I had all these investors, they didn't

force me to have governance. But at the end of the day, I was

just trying to make sure that, you know, the children were saved

and I had this great money to do that. And I you know, I beg

your forgiveness. Is that what they're going to go for?

I it definitely remains to be seen because so far, always

seen from them are these not not visibly very effective cross

examinations of the cooperators. Now, last night, they put in a

filing, they have one expert witness, a guy called Joe Pimbley,

who's going to dispute the size of the line of credit between

FTX and Alameda. I don't think that's going to go very far.

The many people are saying, criminal defendants in federal

trials rarely testify, because you you open yourself up to like

three days of cross examination. And that's when things like

prior statements on it, all and he has many of them will all

come in and they'll ask him about it. But I it does seem like

he might testify because it doesn't. The feeling is it

doesn't it's not a it's not a coin flip. It seems guilty.

Yeah, it's not going dead to rights. It's not going well. He's

going to have to convince and he's also he's got to throw a hell

of Mary. Yeah, I guess. So then yeah, once he is talking, Mary,

what will be the defense? What do you think? I think it's just

that I think he's just he's almost and I what they've

tried to show is it's not just bad investments like it would be

one thing if the company failed, because let's say they were a

hedge fund and they made some bad investments and they and

it flamed out. That's not illegal. That's just bad

investments. It's the misuse. It's the you know, the the

clearest one is the people that put their money in and they said,

I never authorized them to take my money and give it to gay

bankman freeds, guarding against pandemics or to give it as a

political contribution. We stolen literally stole it. They

literally stole it. And then they and then they scammed

people. The whole group to the size of like $8 billion. And

they misled. They also had very third point various investors in

the company say, if I'd known that there was this backdoor, I

would never have invested. I see that paradigm. Did paradigm

come in? Yes. Absolutely. Yeah. The the and there was this

guy the last witness of last week was a guy from third point. I

forget his name. Yeah. Brewer journey. And he was describing

these meetings in Hudson Yards and like they the thing is, you

know, I don't know, from my point of view, I feel like they

needed to have better due diligence to like it wasn't rocket

science. I think that this is a key point. Right. You know, I

know a lot of people I know Matt from from paradigm and I know

some of the people who invested. And what happened was just to

explain to you in the industry. People had come before and

invested and there was a very hot market. This company was

growing very quickly. So people were like, Oh, the other

people must have done diligence. And they kind of suspended

disbelief didn't do due diligence. And then there was no

board of directors and there was no CFO that these are

extraordinary red flags for a company that had 100 million in

revenue, you had 100 million in revenue and you had, you know,

I don't know, $50 million invested in your company or 100

million, you would certainly want board oversight. But I think

because this had gotten so big, they basically gave him a pass

because this was such an extraordinary success. So it's

very bizarre. Now those people, you know, in my mind, if you

didn't do the diligence, you deserve to lose your money. But

of course, the people who thought they were buying crypto,

they don't deserve to lose their money. When we look at the

defense, do you think there's a chance he will say I was drugged

out, and I'm mentally ill and I was in a manic state because he

has been very public about his use of these patches and these

weird, you think he goes for the I'm, I don't want to say

insanity, but insanity defense.

I mean, they would have had to kind of give notice of that. But

I think, again, once you get in front of the jury, you know,

there are no these fine legal distinctions between did you

give notice of this defense or not? They so far, the jury

hasn't heard it out. Whenever the jury is out, there's been a

lot of discussion of Adderall. Could he get, you know, he's

there are many people in the MDC jail in Brooklyn that I'm

sure could use it and they're not getting it. But you know, he

has a doctor that they've tried to say the doctor maybe writes

too many scripts. But they've gotten to the point where

initially he was getting Adderall in the morning and at

night, they're saying in the middle of the day, he's not

able to focus and participate in his defense. So he's he's

getting sort of longer, slow release Adderall. Now the jury

hasn't heard it yet. He hasn't heard it yet. But you're

right that I don't know if it's going to be as as as as clear

as saying I was crazy, but it I think he thinks he's charismatic.

I think he's gonna he's gonna try to create this this this kind

of kind of dust storm of good, good intentions. I was doing

the best. It's an unregulated field.

Pixie dust. Yeah, exactly. It's crypto, you know, people some

some planes crash and now it might go up again. And I'm a

victim, you know, I'm just a sort of an innovator. And again,

I get the the the the the prosecutors are just gonna try to

like, let's go back to basics. I think that their approach to

the case is that this is not really about crypto. This is not

about this is just fraud. It's just just fraud. It's just

fraud. You say to somebody, put your money with me and I'm not

gonna take it out. And then you give it to your brother. I

think that's also their most that's definitely their most

effective thing because that it's just it's it doesn't pass the

smell test when you're funding your family's foundations with

somebody else's money.

All right, we're back with another Pitch It to Jake House

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Let's go back to that jury. This to me seems like it's a very

interesting, you know, did they respond strongly? I'd asked

before, just did they respond strongly to any moments in the

trial? And then do you know through the selection process

who the jury is in terms of it's a firefighter? It's a

secretary? What's the composure of this group? Because I think

that will, in some ways, determine, you know, how they

take some charismatic or, I don't know, nerdy looking kid and

deliver their verdict. Yeah. It's always, I mean, because

this is the jury pool is drawn from the Southern District

voter rolls. So it's like the five, it's not even the five

boroughs, it's Manhattan, the Bronx, and then six counties

above. There were a lot of professional people. There were

a lot of people that were like lawyers. Somebody had, yeah, I

mean, and some of them got knocked off and some of them

didn't. And then you had a very young woman that works as a

checkout in a supermarket. She's on the jury. So it's a pretty

well, there was one guy that, you know, I feel bad for him. He's

an alternate, but he got through the process and was selected.

And the next morning he said, by the way, I'm a night watchman

and they're not letting me out of my job. And the judge said,

you should have told us that earlier because we've let the

whole pool go. And so this is the one if you've seen some of the

coverage is talked about a person sleeping on the jury. He's an

alternate. So it possibly it's it's not necessarily going to

give rise to it to an appellate issue. There's one I want to

jump back to because there's something there's the as people

may know he was in the Bahamas when it when it all fell apart

and he stayed there. His his you know, these three all left the

country and went back to their parents' homes and began very

quickly to get cooperation agreements. But he stayed there

kind of kind of it's a kind of Shakespearean thing walking

around in cargo shorts in the in the condo in the condo doing

doing doing doing zooms with all in sundry. But then he was

arrested by the Bahamian authorities. They taken into

custody and it became I remember this because it was a big we

were in the courthouse wondering when is he going to come? Is

he going to fight extradition? He ended up not he ended up

consenting to extradition. But this is now being used to

actually get him out of several of the charges. The Bahamian

authorities are saying now that he's been extradited, he can

only be tried in the United States on the charges that were on

the table when he was extradited. So there's been as

they've gone through the electronics and the various

files. Yeah, they were file a superseding indictment. Yeah,

they did. They filed one including the Chinese bribery

charge, including the including the campaign finance charges.

And basically, he may be convicted in his first trial on

securities fraud, wire fraud, money laundering and never faced

the other charges. But right now it looks like he and this is

where it gets me may sound like kind of conspiratorial, but

the the political side doesn't it's not just that he looks bad.

The politicians that took the money don't look very good,

right? Because they were being proponents of using the FTC,

the CFTC, they were basically doing Sam's bidding for the

money, which I guess no one is surprised by that. That's

Washington. But we have a political system. Yeah. Yeah. Many

of them didn't want to didn't. Yeah. And there was dark money

to like these guys were not they were not just doing that's the

$2,500 to candidates, they were funding like the Republican

governor. They and there was it was mostly Democrat, but they

have this other guy called Ryan Salam, who he's played guilty,

but without a cooperation agreement. So that's going to

be, to me, it's interesting, like they he may provide them with

information, but he hasn't testified. This is the name

that I put a pin in. I'm remitting to go back to it. There's

a guy called Sam Turbuko. He was a co CEO of Alameda with

Carolyn Ellison. And in the evidence at trial, he left before

the fall, he left seven months before the fall. But he's never

been charged. And he's not a cooperator. But in the Chinese

bribery thing, he was absolutely central to it. Like him and Sam

were saying, like, let's do it. So he's, he's not subject to

this Bahamian Hail Mary of knocking out charges. He's an

American citizen that on evidence violated the campaign

finance laws and the Foreign Corrupt Practices Act. So it's a

mystery. There's a lot of sort of rumors floating around like

where's Sam Turbuko or that maybe DOJ is deferring. It's not

clear to me that the Justice Department has to defer to

Bahamas on this. This is not, they've admitted it's not

really a legal requirement. They're saying it's nice to be

nice. For for future extraditions from the Bahamas,

we wanted them to feel comfortable. But right. And so

some people say to me, it doesn't really matter if he's

convicted of the wire fraud, he's going to do a lot of time

in jail. It doesn't matter. But to me, it does matter. Like it

does the specifics of the campaign finance charges and the

Chinese bribery, these are issues that go well beyond Sam

Bakeman Fried. They're like, how does it work? How does it work?

And it's, it's too convenient. I personally, I go to press

conferences with the US Attorney and I've asked him, but you

can't get an answer to this question. Who decided that that

to that that these really explosive charges that go

beyond just financial chicanery would somehow get swept under

the carpet. And I don't, that's something that I'm going to

continue to pursue wherever the trial ends.

Have they gotten the money back? Is that part of this trial?

Have they talked about recouping the money and getting it back

from different places? Or those who I know those would be

separate actions in some cases.

Yeah, there's a big, there's a big bankruptcy case in Delaware.

And in fact, a lot of the evidence in the case, they sort

of the FTX debtors or there's a there's a snapshot that was

taken of their, their Amazon Web Services, full cloud account

of everything about FTX on November 6, 2022, which seems

to be like the day that it all fell apart that the FTT token

collapsed and people flew out of the country. And, and down

there, those, those are the guys that are the parents have

actually been sued civilly for the money they took. Like this

guy, John Ray, who's the the bankruptcy sort of trustee, he

did the same thing in Enron is a fame, kind of like, try to get

all the money back that you can. Yeah, he's filing all kinds

of lawsuits against against people trying to claw back. I

mean, I wonder, there's other people that got investments, like

you were saying, I don't want to say Michael Kivis, but you

know, Scarimucci, they're all these names floating around that

took that got money. And, and it seems pretty methodically,

they're trying to get to get all the money back.

It's ill gotten gains. And you spent it at a restaurant or a

Nix tickets. I don't think the Nix have to give that back if

you consume something, right? If you invested, and you have it

sitting in your bank account or some amount of it, and you

traded for shares, then the shares are what should be given

back. But I think they could put pressure on somebody, let's say

you raised 10 million, like there is a blog, like a news blog,

semaphore. Yeah, I think that took 10 million. And they

committed to giving it back. And they found new investors. So I

guess they just don't want to be involved in this. So just give

the 10 million back. But let's say they had spent it. Well,

then you owned equity. And so the people who are sold, they

would get the equity. Yeah. So there were other names in

negotiation. Yeah,

yeah, it is. And it's I think a lot of like the committee to

protect journalists, a very high minded group, they got $4,000,

$410,000 in crypto from from FTX or Bankman's Free. No one's

quite clear. And so some months after the flame out, they

quietly gave the money back. And which is good, because

other ones, John Ray is coming knocking at the door. And I

think the parents, the parents are real, they're trying to say

that they never knew the house was in their name. And it just

it doesn't it doesn't pass the smell.

We're using signal and other services to try to cover their

trails. But they seem to have gotten some of these signals. So

does that mean somebody was taking screenshots or recording

it? What would you do for that? And they've tried that the

prosecutors, I don't know if it's if it's fair or not, because a

lot of these, they focused a lot on on Sam Bankman, free

telling, you know, Gary Wang, the shot saying Ellison, to all

set self erase, you know, for four weeks, or then that's it

got things got harder, it seemed to have shrunken down to one

week. Clearly, some of them stopped doing that because the

messengers are there. But they've tried to sort of show like

this. And I think they do have a direct quote from Sam, they

have a witness saying, Sam told them, let's not do this stuff

in writing, it's it's better regulators are going to come

looking for this. And I but I mean, that's all that that that

doesn't necessarily mean you broke the law.

That's standard business advice, too, which is talking about a

legal issue. Let's not totally play pretend we're lawyers and

talk about it on Slack or iMessage, because then an

attorney is going to try to spin that in a case. So that that's

kind of like general health practices. But I was just kind

of interested in that. You know, when you set it on signal, I

believe it's mutual. So if I set it to one week, you're

automatically set to one week, it's kind of like we've agreed on

one week. So I was wondering if people did take screen shots

because I sound away. Yeah, these are that's they may not have

been very experienced in business, but they definitely knew

they definitely knew technology.

And somebody was probably new to cover their tracks to

to what's left in the trial here. We've been at this for some

number of weeks. Sure. When they do a trial like this, they

set a number of weeks, right? They have a certain time.

Yeah, they asked, they said they thought it would be four to six

weeks. Okay. And they tell us that too. We're past three weeks.

And there's been a kind of a hiatus here that Judge Kaplan had

to go to some conference. So there was no squirt last Friday,

and it's going to restart on Thursday. On Thursday, the

government is closing its case. They've basically they yeah,

they're there. That's why we now know that Trebukko is not

being called as a witness. They're you know, they're there.

There was also the general counsel, a guy called can son, he

was given, he wasn't charged, but he was given a non prosecution

agreement. He testified and it can't be used against him. And

his his testimony was basically that he had no idea. But that

event where he's in the final days, Bankman Fried asked him to

come up with a justification for the missing $8 million. And he

he told them there really is none. But here's some here's some

plausible explanations, but they're not plausible. So his and

Sam's reaction was like, Oh, I get it, which is sort of an

admission. Yeah, that I think that was the purpose of that

testimony. So basically, before lunch on Thursday, which is

when the of this week, on Tuesday, they're going to rest

their case. The defense has tried to say give us another break

they've already had this three day break. But they don't that

if they want another break and Judge Kaplan said no, Thursday,

after lunch, you got to start. They might have three weeks to do

their side. Yeah, I don't think they'll take even if they it

seems they don't have an extensive witness list. They

wanted six experts. They're now down to one expert. He probably

will go on Thursday. And then there'll be this magical moment

where the judge says Mr. Bankman Fried, you have an absolute

right to testify. You know, they'll do outside the presence of

the jury. You have a right to tell you don't have to testify.

It's your decision. It's not your lawyer's decision. And when

people are, I mean, these are people that are like deep inside

it. They're thinking like, probably the lawyers almost

always lawyers say don't testify because it doesn't end well,

but this is not ending well either. But it's totally his

decision. He could tell them I'm not going to. And in that

moment moment, you could say, I'm ready. Yeah, I'm taking the

stand. So there's going to be that's like the moment and I'll

get if he definitely if he says no, I choose not I exercise my

fifth amendment, right? I'm not testifying. There's going to be

a lot of disappointed journalists, certainly. And I

think they've disappointed investors, because people I

think they do want to know they don't just want to see him

flame out. But they wanted there. There's been a there's been a

pretty, you know, a pretty workman like presentation. But

there's still something missing. Just like you said, how I

mean, I myself said, when did even in that family, when did it

go from kind of arrogant, pretentious, but ultimately

idealistic, you know, to want to help the poor to like screw the

world, we're better than everybody. And anyone that

criticizes, it's like McCarthyism. When did that happen?

But at what's your right meal? There was a break. And I think

like, this might come out if you start, I think you're going to

get, you're going to get closer, not to the truth, but to the

psychological truth of how it happened. So I'm hoping that he

testifies. What do you think the actual truth is? If you had

to speculate, you know, you're a student of this, you see this

every day, you study criminals, the criminal mind. It's

entitlement, it's how they were raised. In this case, what makes

this guy tick based on everything you see?

I think I think that I mean, I think he's a very strange

character. It's not just that he was, he was not just homeschooled,

he was kind of always off on his own. He definitely does have

some kind of attention deficit. He's a very smart guy. But he's

not, he's not the world's most social person. He's not a, and I

think I think, I mean, I think his initial, you know, he got out

of MIT, he went to work at Jane Street, then he had this, this

alimony, basically, he had this idea of like buying, you know,

buying Bitcoin in the US and sell arbitrage and selling it in

Japan. And I think, I guess, I mean, I don't want to say that

this type, this type of like, you know, it's a funny way to

invest, it's it to me, it's one step away from saying like,

wait a second, if I can like, find a weakness in the market

and exploit it. Yes. Let me find a week. Let me find a week.

Exactly. But it's hard to then remind yourself, you can find

it, you can find an edge in just what we were talking about

Trevor Milton, like the week, there's people are going to feel

better investing in Nicola, if they can think there's a pickup

truck, than if it's just some abstract stock. And I think it's

the same.

Right.

If you look for an edge, you might wind up with edges that are

illegal, unethical, immoral, all of those things. And then some

individuals, maybe they doesn't matter to them, they see

through it, like, I guess, maybe he's on the spectrum in some

way, he doesn't feel empathy for people, the way other people

might.

Right. Yeah. And I think, in a way, it goes this family

background, they think they're better than everybody. And it

really deep, despite the idealism, there's this idea that

like, hey, you know, it's okay to do this, because we have an

also our goal is good, nobody, the laws are for other people,

you know, and I think, I think even even if someone was brought

up, let's say, in a family of people that are like, even like

a parent had, you know, served some time for stock fraud, you

know, there's this legal system, and that like, you go up to the

line and not over it, or you know, this was just outright,

like, whoa, we can do it for the law.

We might as right, we are elitists, we were Stanford,

we're lawyers. Yeah, we, we, we transcend the law. It's

absolutely disgusting. And, you know, when you look at this

case, eight billion dollars stolen, is that the number they're

claiming here? That's that's the dollars. You know, if you took

every low level criminal who robbed a, you know, a grocery

store in Bodega, New York, you know, every dime bag sold in

Washington Square Park, and you added it together over the last

50 years, it wouldn't equal eight billion.

I'm going to give you two, two, I'll give two, two examples.

Last Christmas, when Bankman freed, he was initially allowed

to be out on bail at his parents house in Palo Alto, which was

amazing. It was amazing to me, like, because often they'll say

risk of flight, and also just the loss amount, but he was

released. And I was covering in the courthouse the case of a

guy called, his name, Edwin Pozo, 19 year old Bronx resident

that was along with his friends, you know, fell in and they

did it. Somebody else had the gun, an armed robbery of a

smoke shop. No one was shot, but it's a, it's a federal crime

because, yeah, it's a federal crime. So he's been in prison

since then. He was, he spent Christmas in prison. I did it

like, like, and now he was just sentenced to three years. And

yesterday, here's, even on the financial fraud side, this, this

blew my mind. There's a guy called Adeo Ilocke. He's a man

from Nigeria, real shyster. He did PPP fraud, paycheck,

you know, protection program loan, but it wasn't, it wasn't

that he said that he had a business that he didn't, which

many people have been caught and served time and returned the

money. He stole people's identity and set up fake

businesses. And he stole all told about a million dollars. He

went to trial. He was convicted. Yesterday, he got 25

years in prison. So $1 million or a million dollars. Yes, 25

years. Now he's 8000 times that. Yeah, I don't expect. Yeah, I

wouldn't, I wouldn't be surprised if convicted if he got 15

years. I wouldn't, I wouldn't be that's sort of like the way

most white collar crime works. And it's, it's weird. Like what

makes this guy a Loki different? I guess it's the, the, it's

the, he's sort of at the cusp of white collar and blue collar

crime. It's like, you know, it's, there's a lot of identity

theft that's like people, you know, look, there's a, there's a

spate right now in New York of people stealing checks out of

mailboxes. It's an amazing, they're all of these, and it's a

federal case because the Postal Service is a federal agency.

These guys are coming down from the Bronx with a fishing, a

fishing line with, with duct tape around it with a sticky side

out and taking, taking envelopes out. And then the cops find

them and they open them up. People are still mailing checks.

And there's a whole system of like using chemicals to change

the name on the check. Or in some cases, they're getting the

postal key from God. It's an incredible, it's absolutely

amazing. And, and these guys are getting a low sentence, but

it's, it's, yeah, there, there, there's, I don't know, I don't

know what to say, except that it's the, the, the

number is profoundly unfair. Yeah. The number is huge. And

this is the, what do you think he gets?

If you think 99% and what percent is he guilty? What do you

think he gets? I usually don't. But for you, I'll, I usually

say like, I can't know. But yeah, no, I mean, I think, I think

that he, I, unless he pulls around, yeah, yeah, I mean,

the finding, I think he is guilty. But I think there's 95%

chance he'd be found guilty. That's, that's actually in

keeping with, with 95% of federal indictees end up either

pleading guilty or being found guilty. So they have a very

high batting average. But I think in terms of sentencing,

people are, you know, talking about 110 years, I doubt it

very much. I think he will get out, he will get out, he would,

if convicted, he would get out of jail in his, I don't know,

50s, 60s, 20 years. Yeah. We're, we're, you know, AI and

whatnot will have taken the world by then. I don't know

what, what fraud you'll find waiting for him. But, you know,

or whether that, yeah, there's a guy called Martin Screlly, you

know, the famous. I know Martin Screlly. Yeah. He's been

coming to the trial. He's been coming to the trial. I've

talked to him online. He follows inner city press and sort

of throws comments, and like,

he, I guess he got convicted of fraud for the people who are

investing in his investment vehicle to make drugs. I think

that was the, the charge he got. But I think he's made

himself years. Yeah, he's made himself, he's made himself into

sort of a white collar crime pundit. He's kind of, it's, it's

sort of funny. I mean, I'm, I'm, he's clever. Yeah. It's

clever. It's like a Wolf of Wall Street guy, right? Like he

kind of like, he, if you own it, and then you have something to

say, because he did some kind of like a zoom call with Sam

Bankman Frieden was giving him advice, I don't even saw that

trending on Twitter. It was actually fake. It was with

Doquan and people cropped in and a fake video of Sam Bankman

Frieden. Oh, it was fake. He was actually talking to Doquan and he

was like, jail's not that bad.

He was talking to Doquan about crime. Yeah. And then they just

went to Sam Bankman. Listen,

there are a lot of crypto. I just want to say one, there, beyond

this one, there's like, there, there's a, you know, tornado

cash. There are all kinds of crypto, crypto cases. It's

turning out to be a big, a big, a big beat. And I initially, you

know, it's, it's, it's just amazing. You never know who's

coming in next. And I think there's the guy of Moshinsky

from Celsius. He's, he's been indicted here. He's out on bond

and his co-

Are these all the Southern District of New York?

They're all the Southern District of New York. And it's

Tell me just briefly, because I listened to Pete Barara's

podcast. He seems like a serious, like I've met him. Sure.

These are seriously principal people. Supposed to the show

Billions, the character Paul Giamatti plays is based on him

in some way, like a composite. So it's just as we wrap here,

what, what is the nature of the SDNY? They're pretty hardcore.

Yeah.

They're very, again, they also feel that they're like the best

and the brightest. There's a, there's a lot of, what's

interesting is that there's a lot of competition between them and

the Eastern District, where, which is in Brooklyn and covers,

they have some great cases over there. They're the ones who did

El Chapo. They actually, there's a case that's, that's right

near the courthouse in Manhattan, the, the, the illegal

Chinese police station, the Chinese government opened up a

police, quote unquote, police station to go after its own

dissidents in Chinatown, but it was brought by the Eastern

District. So it turns out, this is something I want to, I

cover this one district very closely, but it turns out that

there's some kind of committee in D.C. that gives the green

light for like, who gets the big cases, right? Because there's

like, everyone wants a piece of it, or a Russian oligarch, you

could do it anywhere, right? But the Southern District

definitely like throws its weight around and has become, and I

think that they, they go out of their way to issue press

releases about, they did, they did a case against a guy from

OpenSea, NFT, an NFT fraud.

Yeah, the guy with fraud around the market.

Yeah, Chastain, Nat Chat, no, yeah, $50,000 loss amount. And

they, they issued press releases, they, because they were like,

this is a cutting edge case, we're not going to rest on these

crypto fraudsters. So I think they've made themselves.

If they see there's a bunch of cases going on, they see

themselves as like, hey, if we come down hard on somebody,

it's going to protect the, you know, the, the public from

future harm. So they kind of have this idea that they need to

set examples of people. Yeah.

And exactly. And I think then I'm interested, I don't want, I

don't want to cast dispersions in the sort of personal

motivations of the people that go to work at SDNY. No one stays

there forever, very few. They might put in eight years and

move up from doing crack cases to securities fraud to, you

know,

Julianne famously ran the SDNY.

And then they cash out to a white shoe law firm, usually doing

white, white collar criminal defense, or there's at least

five of, of, you know, alumni of SDNY commenting on this

commenting on this case and prognosticating one of them,

interestingly, a recent SDNY guy called Emile Beauvais or

Beauve, he represented a Haitian Haitian pastor slash

crypto fraudster named Eddie Alexandre. But he's now

representing not only Miles Guo, Guo Wengui, the sort of very

Chinese dissident slash fraudster, but also Trump, he's

put in a notice of a notice of appearance for Trump down in

DC. So this is this is kind of like, like, show me what you

got for six years at SDNY, and then your career is set. You

know, and I think that love it. Damien Williams managing it

keeps probably like throwing the bone, like I'll let you do this

case. And like, I want to keep this guy on for two more years.

So I'll give him this profile case. I mean, they're all I

actually, I like the what's interesting about that office is

that they all began with the smoke shop, the smoke shop on

robbery. And federal judges, despite their Lewis Kaplan is

dealing with guys that like, you know, robbed mail, and then,

you know, pass a failure analysis while they're on

probation, like 50% of these federal judges time is spent on

very concrete things. And a lot of them show compassion. It's

not they're not like, this is beneath me, get me back into

into the high polluting world. It's it's very knowing what you

know. Do you have faith in our justice system, doing what you

do every day? Do you feel good that justice in my hometown,

New York? Do you feel like it's in good hands? Because we have

this like, sort of anti deep state kind of, you know, hey,

it's all rigged that Trump's kind of putting out there. You

trust the justice system, you feel like

I actually do a much more as a good job.

You know, it's sort of having covered the UN and found a lot

of corruption. And basically, my day to day reporting job was

like debunking things. When I came to the courthouse, I sort of

had the same like, I'd find little, you know, I would be

through, you know, put they'd say, we're sealing the courtroom,

and I'd write a story saying, this is outrageous, we've got to

get I think that's part of journalism is to like, push the

envelope. But I well, it's not just that I sort of I it's the

and it's it's the cases that are not the high profile cases,

it's that it's a judge spending the time to actually like, get

to know how this defendant has been on probation and neither

like, letting them all I have a lot more confidence than I had

when I went in, I think, and it always kills me. People people

love to say like, as soon as the case is wheeled out, oh, that's

a Clinton appointee, or this one's a Trump appointee. And I found

out honestly, that's there's something to be said for this

is lifetime tenure, because the people really, they're they're

almost they're in their own world, the judges don't even talk

that much to each other, each of them has a staff and has a

docket. And they're just in most cases, here's the main thing.

Most cases in federal court don't have anyone covering them at

all. Like, I can't tell you, I've become well known in the

courthouse, because not just for Sam Beckman, Frieder, Trevor

Milton, but your average case, I'm covering a DEA case, there's

nobody covering a DA bribery case, because everyone's focused on

the big cases. And so like, you know, the people somebody was

killed by fentanyl and a daycare. And it's, it's just, and the

judges take the take it seriously. That's my my impression of

them here. It's a deeply kind of moral. They're kind of like, it's

like being a I don't want to say they're like, they're like

monks, but they literally are in their own world like Jedi

knights, you know, they really get mentioned in the newspaper,

they're like samurai, they have a bit of a go nuts and no one

would know. I mean, the problem is they have they have almost

unlimited discretion. It's very hard to win an appeal. So if if

they start going off the rails, it's difficult because you can

start they could start personally, I think the 25 years for

the million dollars this bit, it's too harsh. I don't think I

don't think it'll be reversed on appeal, though, because the

sentencing guidelines allow for that. But I think but I so I

don't who knows, maybe maybe that judge had a particular

insight to this guy, you know, commit very violent crimes. And

you know, they don't get 25 years. So it's it's sometimes as

hard as an outsider to process the sentencing part, but we'll

save that for another week or two or three from now. And Matthew,

it's been awesome. You're my kind of guy. I don't know, did you

grow up in New York? You seem like a New York guy to me.

I'm a Bronx site, but let's put it that way. Okay, I'm a

district. No, Bronx, I probably Bronx, I'm from Brooklyn. So

all right. Yeah, let's go get a slice. All right. Incredible.

They have a folks Matthew Russell Lee from inner city press. I

want you to follow it on X from formerly known as Twitter

inner city press. It's one of the greatest Twitter handles

X handles you could follow. But more importantly, I want

everybody to go to Patreon right now. And if you enjoy his

work, and you want to see him do more of it, you know, toss him

a couple of bucks, and then let's, you know, buy him a slice,

you know, get him a diet coke, whatever he's into. All right,

keep it up. I love the work. And we'll see you on the next

time in between startups.

Machine-generated transcript that may contain inaccuracies.