Crypto Revisited (Part Three)

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Previously on RedPilledAmerica. By late 2018, Alameda Research was already in trouble. I mean, the company didn't have any lawyers, so I think my utility there was pretty obvious. Hundreds of unscrupulous characters began creating their own cryptocurrencies. And the currency that you would use would be these munchies.

You know, it's so outlandish that I'm tempted to accuse you of just making that up. We also recently launched a derivatives exchange called FTX. Sam called his new cryptocurrency FTT. By the end of 2019, CZ became one of the first major investors in FTX. They were treating this guy like he was a guru.

How did you do this so quickly? FTX raked in an industry record $900 million.

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We're at the third and final part of our series of episodes entitled Crypto Revisited. If you haven't heard the previous episodes, you should go back and listen from the beginning. We're looking for the answer to the question, where is cryptocurrency going? By telling the story of the astonishing rise and spectacular fall of crypto entrepreneur Sam Bankman Freed. So, to pick up where we left off, at the close of 2021, Sam Bankman Freed was in the midst of a power move.

The young crypto entrepreneur had some leverage. He'd just come off an industry record $900 million fundraising tour for his cryptocurrency exchange FTX. And as Bitcoin was peaking at nearly $70,000 per coin, the price of Sam's FTT token rose along with it. Sam was climbing to the top of the crypto world, and his political donations were beginning to pay off as well. Thank you, Chair Waters, Ranking Member McHenry, and all the members of the committee for having me here today to testify.

It's an honor to be here. He spoke at a congressional hearing on the need for crypto regulations. I think it is important, and I think it is healthy that the industry will be regulated.

Sam appeared to have something up his sleeve, and he had a trusted sidekick to help him all along the way. I think we've always enjoyed working together and thinking together. At least I like to think so. That's Sam's father, Joe Bankman, talking about working with his son. Joe, a Stanford Law professor, began helping his son early in his crypto ventures.

Joe would eventually focus on two specific areas. The first was FTX's charity endeavors. That's about half of what I do. And the other half of what I do is regulation, broadly speaking. So it's the bills moving through Congress.

It's whether we'll get approval from a regulatory agency, things like that. Joe Bankman was a lawyer, so the formulation of regulations aligned well with his expertise. In fact, all regulatory changes, anytime you work through the government, that's really legally intensive. Regulations also played a pivotal role in the world of finance. In effect, they act as the gatekeeper of who does and does not get to enter the playing field.

So how regulations are crafted can mean life or death for a company.

By the close of 2021, it appeared that Sam and his father had a plan in motion. It looked as if they were trying to set up a regulatory framework that would benefit Sam's array of crypto companies while hurting his competition. They wanted to create a monopoly, there's no question about it, to match finance. That's Ben Armstrong, crypto enthusiast and creator of BitBoyCrypto.com. So here was the plan.

We'll bring in all of these other companies to cover lending, to cover DeFi, to cover exchanges, to cover derivatives trading, margin trading. They wanted to bring kind of one company in that did everything from every niche in the crypto world, bring them up under FTX. Then they were going to create the federal BitLicense. Basically a proposed federal license to operate in the U.S. crypto industry.

And they were going to be the only show in town that had the license. All their companies would get the license due to being under their umbrella. They'd have such a head start on anybody else trying to apply to get the license that they would just be able to win from the ground up. So that was kind of the plan.

But in order to have real influence over the parameters of that license, Sam would need to position himself as the authoritative voice of the crypto world. So he launched one of the most audacious branding campaigns that the world of finance had ever seen.

Sam had already signed Tom Brady and Gisele as FTX spokespersons. He then expanded into the NBA. Crypto exchange, FTX, spending $135 million to rename the home of the Miami Heat. This is the first time a crypto firm has won naming rights to a major U.S. sports venue.

FTX would eventually sign a deal with Steph Curry and Shaquille O'Neal. He infiltrated Super Bowl 56 with an ad featuring comedian Larry David. Like I was saying, it's FTX. It's a safe and easy way to get into crypto. I don't think so.

Sam carpet bombed young entrepreneurs with YouTube influencer endorsements. Now, before we get to part two, I have to give a quick shout out for today's sponsor. It's FTX US. You've probably heard of them before. One of the largest U.S.

regulated cryptocurrency exchanges in the world, trusted by millions of users to buy, sell, track and trade both crypto and NFTs. They've been the ones that are going out, investing in and buying other crypto exchanges that are struggling. I'll explain in just a moment. Right after I mentioned that, if you want to take advantage of buying the crypto dip, check out our sponsor today, FTX. Sam also wanted to win over traditional finance, who'd been a bit skeptical about crypto.

Investor Kevin O'Leary initially had a negative impression of the crypto industry. But along came Sam Bankman-Fried, who lathered the Shark Tank star with greenbacks. And Kevin, remarkably, did a 180 on the subject for the entire finance community to see. I don't know where you are in crypto. You were so negative for a while.

Then you got totally positive. Do you own Bitcoin now? Kevin, what's your position in crypto right now? Yes, I do. You do?

I have millions of dollars. 20 percent of my portfolio is now in cryptocurrencies and blockchain. Well, you have to be diversified. I own 32 different positions, including equity and FTX. And I have to disclose I'm a paid spokesperson for that company.

And Sam pulled in his new spokesmodel, Giselle, to reach into the world of luxury. Today, we're going to be discussing Giselle and Sam's shared mission of philanthropy, which is the theme of our spring-summer 2022 luxury campaign.

The FTX founder joined Giselle in a print ad that was published in America's most prestigious magazines, including Vogue, Vanity Fair, GQ and The New Yorker. The two took the stage at the Bahamas Crypto Conference to announce the campaign. And I think it's really important to think about what are we leaving behind? Because either we're going to be part of the solution or we're going to be part of the problem. I think when you start thinking about the trillions of people who haven't been born yet who are going to inherit this earth from us, the things that we do that sort of impact, what it is exactly that we're passing down to them are just incredibly important and magnified, way beyond the scope of almost anything else that we do.

Sam was attracting some of the most gifted virtue signalers on the planet. Former President Clinton, pop star Katy Perry and former Prime Minister Tony Blair all attended his event. He amped up his effective altruism message and the media sopped it up. Crypto billionaire Sam Bankman Freed is doubling down on his embrace of effective altruism. This is something that he's talked about so much that he's really in crypto so that he can give the money away, essentially finding an avenue where you can make the most money to give away the most.

He's fully committed to giving millions and now billions of dollars to charities. Again, Ben Armstrong of BitBoyCrypto.com. Alameda has the greatest propaganda arm we've seen since the USSR. They use a combination of paid engagement, bots, paid influencers, paid spokespeople, paid media in order to control a narrative. The FTX branding effort may have looked as if it was intended for the general public, but that was a peripheral benefit.

Its ultimate target was really a very small audience in Washington, D.

C. that included the SEC Chairman, Gary Gensler. In March 2022, Sam reportedly met with Gensler to discuss regulations on crypto exchanges like FTX, and Sam had an inside track with Gensler. The CEO of Alameda Research, Caroline Ellison, was the daughter of Gensler's old boss when he worked at MIT. Sam's plan appeared to be falling into place, but the problem was that a crypto winter was brewing, and Sam appeared completely oblivious to the coming storm.

When you become successful and you buy your own media, and you surround yourself with people who only tell you that what you're reading on the cover of Forbes is actually reality, you begin to believe it. That's a representative from Doomberg, one of the most widely read finance newsletters on subscription-based platform Substack. Sam Bankman-Fried spent a lot of money to buy great press. When you read it, it's easy to forget that you paid for it, and it's not real. And then anybody who, like, points out to you that, hey, maybe we have these real issues here, and yes, I understand, this is part of your PR strategy, but we should consider A, B, and C, gets eliminated from your inner circle.

And the only people who remain in your inner circle are people who are willing to lie to you about how great you are. So then you become very insulated. This was undoubtedly Sam's situation, and because of it, he thought he'd built a rock of Gibraltar. But he was about to figure out if he'd really erected a house of cards.

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Welcome back to Red Pilled America. So as Sam Bankman-Fried was soaking in the adoration of his charm offensive, a crypto storm was brewing. The early signs began to surface right around the time Sam testified before Congress in December 2021. The signal was, of course, the original cryptocurrency. Bitcoin, is having a December to forget, along with the other major cryptos.

Bitcoin is hovering just below the $50,000 level heading into the new year. That's after hitting $70,000 just last month. As the new year got underway, the decline continued. Bitcoin now trading below that $37,000 handle, hitting a one-month low. At first, people chalked up the dip to just the volatility of the crypto market.

But by early May 2022, the cracks in the dam burst open, and many of the companies propped up by the crypto bubble began to pop. Crypto, obviously right now getting crushed. Tonight, a massive sell-off of cryptocurrency, erasing more than $200 billion from the entire market in a single day. The price of Bitcoin plunging to its lowest level in 16 months. It's gone down to its lowest point for quite a while, and that's something that it doesn't usually do, actually.

Going down to a low past the year before has only ever happened once before, so this is quite a big deal. More than $300 billion was wiped out just in the last week. What has happened? What's gone wrong? This is the definition of a black swan event.

This is the Lehman Brothers collapse of crypto. The numbers sending some investors spiraling, fearing they could lose it all. One minute, it looks like the market's going to rip. The next minute, it looks like the market's going to dip. And I don't know what in the world's going on, so I'm out.

no mas. In total, it seems crazy to say, but I'm down around $35,000.. I actually lost over half my portfolio. I lost $1.6 billion on Luna, and then I put in another $200 billion. Trading platform, Coinbase now warning that if they go belly up, customers could lose all their crypto investments, which aren't technically subject to bankruptcy protections.

And if you're a retail investor, you're not protected, right? Or does it depend on the jurisdiction? You're not protected pretty much anywhere. There's no protections at all, just like with the rest of crypto. Any money you put in is entirely at your risk.

The problem with Bitcoin, there's nothing underpinning it. There is no government, there is no company, there is no rent. There's nothing to actually kind of prop up the value of cryptocurrencies. Stories out of New York of people losing half-million dollar fortunes, cars, homes, literally the whole lot because they punted on this stuff. That's it.

When everyone's making money, everyone's happy. As soon as that turns around, it can really hurt. You're making it sound like a Ponzi scheme. What we have seen is nothing short of carnage. It's quite horrible to watch.

This event is probably the most destructive wealth event in the history of crypto. By the summer of 2022, company after company that either created their own cryptocurrency or had most of their holdings in some new crypto token came crashing down. How could this have happened? How could an industry that had been heralded by financial media, been celebrated as the next big thing, come crashing down in a matter of days?

Well, a lot of it had to do with those new types of cryptocurrency tokens entering the market. Remember when Sam's father, Joe Bankman, learned about Initial Coin Offerings, or ICOs? Now, in my own personal opinion, the large majority of these ICOs are frauds or they're going to fail. I totally agree with that, by the way. Well, it turns out that by 2022, the industry had become littered with these fraud coins.

As the crypto winter was slowly building, Sam went on a Bloomberg podcast and used an analogy to explain how many of these crypto tokens come into existence. Where do you start? You start with a company that builds a box. And in practice, this box, they probably dress it up to look like a life-changing, world-altering protocol that's going to replace all the big banks in 38 days or whatever. Maybe for now, actually, pretend it does literally nothing.

It's just a box. Sam went on with this box analogy. He suggested that the primary function of this imaginary box was for users to put their currency in it, for which they'd receive an IOU. And then later they could use that IOU to pull their cryptocurrency out of the box. As Sam told it, the controllers of this box then produce a crypto token.

We'll call it whatever, X token. And they're going to give them away for free to everyone who uses the box. So anyone who goes, takes some money, puts it in the box, each day, they're going to airdrop 1% of the X tokens pro rata amongst everyone who's put money in the box. That's, for now, what X token does. It gets given away to the box people.

And now what happens? Well, X token has some market cap. Let's say it's $20 million market cap. In the world that we're in, if you do this, everyone's going to be like, ooh, box token. Maybe it's cool.

If you buy a box token, that's going to appear on Twitter and I'll have a $20 million market cap. It shouldn't have any market cap in theory, but in practice, they always do. That's right. So X token is being given out each day. All these sophisticated firms are like, huh, that's interesting.

If the total amount of money in the box is $100 million, then it's going to yield $16 million this year in X tokens being given out for it. That's a 16% return. That's pretty good. We'll put a little bit more in. And maybe that happens until there are $200 million in the box.

So sophisticated traders and or people on crypto Twitter go and put $200 million in the box collectively. And they start getting these X tokens for it. And now all of a sudden, everyone's like, wow, people just decided to put $200 million in the box. This is a pretty cool box. This is a valuable box, as demonstrated by all the money that people have apparently decided should be in the box.

And who are we to say that they're wrong about that? Boxes can be great. Look, I love boxes as much as an X guy. And so then X token price goes way up. And now it's at $130 million market cap token because of the bullishness of people's usage of the box.

And now, all of a sudden, of course, the smart money, it's like, oh, wow, this thing's now yielding like 60% a year in X tokens. Right. They pour another $300 million in the box and you get a site and then it goes to infinity and never makes money.

The two journalists were a bit stunned by his explanation. I think of myself as like a fairly cynical person. And that was so much more cynical than I would have described. farming. Like you're just like, well, I'm in the Ponzi business and it's pretty good.

At no point did any of this require any sort of like economic case. It's just like other people put money in the box. And so I'm going to do too. And then it's more valuable. So I'm going to put more money in.

And at no point in the cycle did it seem to describe any sort of like economic purpose. Can you comment on the sustainability of that? Yeah. Because on the one hand, you're like, well, a trillion dollars of institutional money is going to come into Bitcoin. On the other hand, you're like, basically, there are a lot of Ponzi's that have done really well.

OK, cool. I'll stay on the cynical route. Think about, like cynically, what could happen here. Well, OK, so you've got these boxes kind of dumb. But like, what's the end game?

Right. This box is worth zero, obviously.

Sam Bankman-Fried inadvertently described the nature of much of these crypto tokens.

They're built out of nothing. Many of the boxes or companies were worth zero. Again, Doomberg. I firmly believe these are all totally unregistered wildcat banking, Ponzi schemes with nothing but thin air backing them. By mid-summer 2022, Sam Bankman-Fried was bailing out cryptocurrency firms left and right.

The media dubbed him the crypto world's lender of last resort. But his actions were not benevolent. Many believed he was bailing out companies because of fear the insolvency contagion could spread to his firm. Sam even began hinting that there were more collapses to come. In an interview with Forbes, Sam stated, quote, there are some third tier exchanges that are already secretly insolvent, end quote.

Little did anyone know that it was Sam that was the one that was in trouble.

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I'm Ben Adafafri, host of the history podcast The Last Archive, and I want to tell you about a new series running in our feed. It's called The Deadline, and it features six essays written and read by Jill Lepore, the New Yorker writer, American historian, and founding host of our show. These are incredible essays on everything from the history of cryogenics to the Silicon Valley gospel of disruption. And at the end of each essay, I interviewed Jill about her craft as a writer and how she's thinking about the themes of these essays. now.

We talk Frankenstein. We talk writing leads. We talk Barbie. We talk Doctor Who. This is a crazy origin story.

I don't think I've ever told this before. I really loved having these conversations with Jill, and it was a rare chance to talk to her about how she goes about reading, writing, and the work of history. You can listen to The Deadline on The Last Archive feed, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

My name is Michael Wolff, and I'm the host of Fire and Fury, the podcast. Not too long ago, I saw Donald Trump, and he shouted, Hey, Michael, I made you rich. And the truth is, my three books about Trump, they have sold a lot of copies. It all started eight years ago. I found myself in Donald Trump's Beverly Hills home, sharing Häagen-Dazs ice cream with him.

I asked him, why was he running for president? And he answered, without missing a beat, because I want to be the most famous man in the world. Since then, I've become a go-to person when Trump and those around him want to talk. And now, every week, I'm going to share those insider stories with you. Listen to Fire and Fury, the podcast, on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

Welcome back to Red Pilled America. So, just as Sam Bankman-Fried looked like the bailout savior during the crypto winter, what no one yet knew was Sam's companies were teetering on the edge as well. His crypto trading firm, Alameda Research, was nearing insolvency. He was no longer friends with CZ, a rival crypto exchange, Binance. Sam had nowhere to turn but the mirror.

But then something happened. In late September 2022, 173 million FTT crypto tokens materialized. And then they were miraculously given to Alameda Research. At the time, the trading price for FTT tokens was roughly $24 each. This fresh minting of FTT tokens put $4 billion on Alameda Research's balance sheet.

In one fell swoop, the supply of FTT tokens in existence increased by a reported 124%. Just like the Federal Reserve's dollar printing press, these FTT tokens were just created out of thin air.

As anyone with an elementary understanding of economics would know, the act of just printing a currency from nothing could not immediately add value to a company. The only institution that can get away with that is the Federal Reserve. Where did this value come from? How was it that these FTT tokens were valued at $24 each? Again, Ben Armstrong.

FTT was one of the ways that SBF would pump up the net value of Alameda and FTX. They basically wash trade FTT back and forth between the two companies. In other words, they gamed the system. On Wall Street, wash trading is an illegal way for traders to manipulate the market. A buyer and seller, or sometimes one investor, acting as both the buyer and seller, illegally collude to sell a particular stock between each other, to mislead other traders into believing that the trading volumes for the stock are higher than they actually are.

Their goal through this wash trading is to trick others into trading the same stock, and, in the process, illegitimately increasing its price. To wash trade in the crypto world, you just swap out stocks for crypto tokens, like FTT. The process that Sam allegedly used to prop up the value of his companies was not a new process. in finance. The scheme looks something like this.

First, you create a stock, in this case, a crypto token, and you retain the majority of those tokens in your possession. Then, you pump up the price of those tokens through wash trading, or buying them with customer assets, or through creating propaganda campaigns. Whatever you need to do to drive up the price of the token, and in a largely unregulated industry like crypto, it wouldn't be that hard. Now, since you've retained the majority of the tokens, someone with a huge batch of said tokens can't lower the price of them by selling them on the market at a rock-bottom price.

Now, with this artificially high-value token on your balance sheet, your company looks like it's worth a ton of money. So, you can go to the banks asking for loans with the tokens as collateral, or you can go to investors asking for investments, because hey, look at my balance sheet, I've got millions upon millions of dollars. The banks and investors want in, because they don't want to miss out on the chance to make easy money. They give you real dollars, not crypto tokens, and now you can use that money to go on a wild spending spree, like buying the naming rights to stadiums or locking arms with the biggest supermodel in the world. The only thing you have to do is keep your token price high, so the banks keep lending you money, and investors keep buying into your business.

But the problem now is, the people that hold your token in the public want to take advantage of the high prices, and they sell your token in the market. If enough people do that, flooding the market with supply when there was no real increase in demand, then the token price drops, as does the value of your company, making it harder for you to get loans or attract investors. So now you have to continue the process all over again, pump up the price of the token through watch trading, or using customer assets to buy the tokens at a higher price, or any other scheme, whatever it takes to raise the token price. Eventually, you run out of money. That's when you come up with an idea.

If you control the token, you can just print up more of them and place them in your account to make your company look more valuable. on paper. You basically create crypto tokens out of thin air. It appears that that is what Sam Bankman Freed did in this moment of crisis at the end of September 2022..

Again, Ben Armstrong. So you just have a long history of Sam creating money out of nothing, and even there's a video where he explains how he does it. And when they needed more money, they would just print more FTT, and then they would be able to immediately add value to their balance sheets.

By late October 2022, Sam must have felt like he'd stabilized the businesses because he became a little bit cocky. At the time, Binance, FTX's primary competitor, was apparently in some legal trouble.

So Sam decided to sucker punch Binance's owner, CZ. He jumped online and tagged his old frenemy in a tweet, suggesting that CZ wasn't even allowed to go to Washington DC because of his legal issues. The public pot shop must have burned CZ up. The stage was set for an epic chess move. In a stunning coincidence, just a few days after Sam sucker punched CZ, Alameda Research's balance sheet leaked to the press.

Cryptonews outfit, Coindesk, was the first to publish a report on it, claiming that Alameda Research had $14.

6 billion in assets. But here's the kicker. That value was almost entirely derived from FTT tokens. In other words, it was Sam Bankman Freed's own token that was propping up his company. Not real U.S.

dollars, gold, or some other universally recognized asset. Not even Bitcoin. The Coindesk report got the ball rolling. But it was someone else that dug deeper. An investigative journalist that goes by the moniker.

Dirty Bubble Media also received the leaked Alameda balance sheet. And he expanded on the Coindesk original report. Two days later, I published an article. That's Dirty Bubble Media. That basically took that information, plus the information I saw in their balance sheet, the actual copy of it.

And basically broke it down in a way that people could understand it, to explain why it was as bad as it was. Essentially, they were using worthless assets as collateral for loans and that they were insolvent in very real terms.

The news of his article spread quickly within the crypto communities on Twitter and YouTube. News just came out that FTX is actually insolvent. And Dirty Bubble Media actually went ahead and did a lot of digging. All the reporting sparked an idea in CZ's mind. Again, Ben Armstrong.

So Binance and FTX obviously had beef with one another at that point. But it goes back much further when you really look at CZ versus Sam. For about six months, there was a deterioration of that relationship. And I believe CZ found out more and more about what Sam was doing. CZ caught wind that Sam was trying to monopolize the crypto industry by influencing federal regulations.

This didn't sit well with CZ. He no doubt felt that it was a direct attack on his company, Binance. And then at some point he found something out that was like, OK, now I can't look back. I can't turn away at this point. I got to, you know, slam down on this and do something.

That's what he did. He announced he was doing it and he did it. And CZ had just the right thing to take out. Sam. Remember those FTT tokens that Sam gave CZ when he bought out CZ's share in FTX?

Well, CZ held on to those FTT tokens. And a little over a year later, those tokens transformed into digital scud missiles on Sam's business.

If CZ decided to flood the market with them, the price of FTT tokens would plummet, bringing Sam Bankman Freed's entire scheme to an end. You see, Sam's companies were holding the majority of FTT tokens. The company's enormous value was derived from them. So, Sam needed the FTT token price to stay high so that he could continue to raise money based on their high value. If the price fell, so would Sam's house of cards.

CZ must have seen the opening and he decided to take the shot. Again, dirty bubble media. The head of the finance exchange, which is the largest exchange in the world, and previously an investor in FTX, announced that they were going to be selling some $600 million worth of this token that FTX had created out of thin air and was using as collateral. Basically put them between a rock and a hard place. So that, combined with the resulting panic sparked by my reporting, other reporting, kind of led to a withdrawal cascade.

In other words, there was a run on Sam's bank. Fearing that FTX and Alameda Research were both insolvent, people began withdrawing their funds from FTX. Unfortunately, I have some bad news to report. Currently, a bank run is happening on FTX. Its reserves, specifically Ethereum, is being drained off by the hundreds of millions right now.

Sam took to Twitter to try and calm the market. Over the weekend, speculation rose about the solvency of FTX. This came after a CoinDesk report revealed Alameda Research's balance sheet is full of FTX's native token, FTT. So FTX CEO Sam Bankman-Free took to Twitter this morning to clear something up. He said that a competitor is trying to attack the company with rumors.

He then says in the same tweet, FTX is fine. Assets are fine. Alameda Research's CEO, Caroline Ellison, tried to calm the storm as well, tweeting that Alameda had assets not included in the leaked balance sheet. To keep the FTT token price from falling, she publicly offered to buy CZ's tokens at the then-market rate of $22 each. to keep him from putting it up for sale on the open market.

CZ turned her down. He must have smelled blood.

CZ then proceeded to flood the market with the FTT tokens he possessed. And the price of FTX's crypto coin plummeted. In just two days, FTT went from $22 a token to just $5.50 a token. A day later, it dropped another 60%. Sam desperately tried to raise over a billion dollars from Silicon Valley, but no one bit.

So Sam took drastic action. Breaking news, it appears that FTX has stopped withdrawals for the past, basically, four hours. The jig was up. And some people are saying that if they log into FTX, they have a balance of zero. now.

FTX, the big exchange, has filed for Chapter 11 bankruptcy. Trying to understand exactly how a company, the second largest crypto exchange in the world, has become insolvent and filed for bankruptcy in the space of a week. The company's controversial chief executive, Sam Bankman-Fried, resigning as CEO and will remain to assist in an orderly transition. Sam Bankman-Fried was eventually arrested. In addition to the federal indictments of wire fraud and a list of other charges, news began to surface that Sam was not necessarily the effective altruist that he claimed to be.

The company FTX, Sam Bankman-Fried, himself and his parents all owned around $300 million worth of luxury real estate out in the Bahamas. Well, here's the thing. If you're running any kind of currency operation and you're involved in a polyamorous relationship with seven other people, I got to think you're wacky. Ten other people. Ten total.

What do they do? They just wear polyamorous, live in a house together? They all live together in the same place, the Bahamas. And they all just bang each other?

SBF, just 32 years old, was sentenced to 25 years in prison and ordered to pay $11 billion for his fraudulent schemes. Sam Bankman-Fried was the darling of the crypto industry, considered the man with the master plan for crypto. Yet his company joined the graveyard of crypto companies that fell during the crypto winter. The turn of events started to make people wonder, where does crypto go from here? The dilemma for the cryptocurrency industry is that after more than a decade, no one has derived a commercial use for crypto.

It hasn't become a form of digital cash to make purchases, and it's too volatile to be a digital asset like gold and silver. Cryptotechnology, especially Bitcoin and the blockchain, was touted as being the technology that would allow people to bypass the central bank. It was initially promoted as internet cash, used to buy and sell products.

But when experts in the field are asked, when will that happen, the answer has stubbornly remained the same. Are we going to actually see more payment services carried out, more customers, consumers using things like, for example, Bitcoin or even Dogecoin, if you're Tesla, to actually make purchases? Is this the year where that actually happens? Well, I think that we're going to have to just see about. And the reason I'd say that is I think people want dollars.

I think they want to make payments in dollars. Well, Bitcoin's been around 10 years, 12 years. That's Peter Schiff, famed CEO and chief global strategist of Euro-Pacific Capital Incorporated. Peter is perhaps the world's leading critic of Bitcoin and thinks the cryptocurrency industry is the biggest Ponzi scheme of his life. He argues that Bitcoin is no longer in its infancy and yet still hasn't found a use case.

It's never evolved beyond a speculative token in the first 12 years, so why should the next be any different? Dirty Bubble Media is skeptical as well. Is there any use case for it? I don't know. I haven't yet come across a project that seems to actually be generating positive cash flow and generating something of economic value.

I haven't encountered that yet. So, you know, and the thing is, if this technology was so useful, why isn't Google using it? Right. Why isn't Amazon using it? Why isn't Facebook using it?

There's a real split amongst cryptocurrency enthusiasts. Many believe the other new tokens are just fraudulent get-rich-quick schemes, while Bitcoin is the real deal. The one digital currency that can free citizens of the world from the disastrous policies of central banks. And there is an argument that Bitcoin is different than these other tokens. It does appear that it launched organically.

The public couldn't game that system. It's also decentralized. No one controls it. And Bitcoin is by far the most adopted cryptocurrency of them all. Does the fact that so many people believe in it give it some kind of network effect, or people use it because so many people use it?

I asked Doomberg if there was any legitimate quality to Bitcoin, or was it just a massive Ponzi scheme? I would say both. So. to the first part of your comment, there is undoubtedly a network effect for the creation of value. And the quintessential example of that is gold.

I mean, gold is an inert metal that has some interesting chemical properties. But collectively, over 5,000 years, people have decided that gold is a valuable asset worth owning. And since enough people have decided that, and enough examples in history of hyperinflating fiat currencies have proven that those who, at the early stages of a hyperinflationary environment, were shrewd enough to get their hands on as much gold as they could, did very well.

But in Doomberg's assessment, the jury was still out on Bitcoin reaching the status of a digital precious metal. The Bitcoin network, the people who believe in it, is not nearly as big as gold. And it has not had enough validation events as a sort of store of value, as an emergent phenomenon, as gold has had. But it's possible. I could say, like, if you asked me which of the cryptos I had to put a certain amount of money in, I would select Bitcoin.

And again, mostly because of the regulatory clarity with which a U.

S. citizen who wishes to remain within the bounds of the laws can own, transact and participate in the Bitcoin world. There is no central party that controls it. That would be the one exception to sort of the whole crypto universe. Doomberg believes that if any cryptocurrency survives the crypto crash of 2022, it will likely be Bitcoin and the technology built around it.

Much like when we had the dotcom boom, where basically all manner of startups rushed to put dotcom in their name and most of them were BS. And then, when the dotcom bubble burst, I mean, people forget how violent that was and how many people lost all of their life savings and their investments. And yet from that rubble came Microsoft and Amazon, Apple, the survivors of the catastrophe of the dotcom bubble, bursting. It's seductive to imagine that we're about to see the same thing, like there's very interesting things going on in the crypto universe. Not everybody tried to create a Ponzi.

token out of it. There will be technologies that survive this crash. There will be entities that survive this crash, Bitcoin among them. I mean, a Bitcoin network is going to keep running. Whether a Bitcoin costs you, quote, 17,000 U.S.

dollars today or 400 dollars a year from now, the Bitcoin network is going to keep running. But Doomberg has a rather dark view of what will happen with the blockchain technologies that survived this crash. The technologies that survived this flash and are ultimately taken over by the government to impose central bank digital currencies on the world, which we think is a great plague on personal freedom. But the owners of that technology will be handsomely compensated. Central bank digital currency are basically the government's version of Bitcoin.

Think of it as a federal digital coin issued by the Federal Reserve. Central bank digital currencies, for those that aren't familiar, it's essentially the elimination of physical cash and the elimination of the Fourth Amendment. And the government can basically see and control how you spend your money. And so they could just decide that the only legally accepted currency in the United States is Fed coin. And you're not allowed to buy guns with a Fed coin, for example.

Or you're only allowed to buy so many gallons of gasoline in a week because your carbon footprint has been exceeded. Or you can only buy so many bags of chips and sodas with sugar in them because, by and large, healthcare has become nationalized and you're being an undue burden to society by living in the way that you do. And so it's a very, very small step from a central bank digital currency to what we have called, in a piece we wrote last year, called dystopia coin, where you cannot hide from the eye of Sorin. And the government shall see everything that you do. There's no tipping with cash.

There's no giving a few hundred dollars to a friend that you don't report to the IRS. All the way in which most Americans express their freedom will be removed in such regard. And our fear, in our base case, and ultimately our objectives to try to analyze the situation unemotionally, is that the technologies that prove to be useful in the crypto cycle that we've just gone through will be hijacked and leveraged by central bankers around the world. And they're never ending thirst for more control over the populace. And that's coming.

But the technologies developed in the cycle of greed that we've gone through will undoubtedly be sifted through and hijacked by the world's central bankers and their desire to eliminate cash and, by extension, to eliminate privacy and, by extension, to eliminate private property ownership, which is, by extension, the elimination of freedom. And of that we are significantly concerned. Ben Armstrong agrees that central banking, digital currencies, or CBDCs, are coming. Yeah, it's inevitable. There's no doubt about it.

It's inevitable. It can't be stopped.

Digital dollar is already out, guys. It's called USDC. Circle is behind it. Coinbase is behind it. Jerome Powell, the chairman of the Federal Reserve, back in 2020, said, we're open to the private sector helping us to create the digital dollar.

It's already been created. They're already working as well with the European Union on creating the digital euro. I believe we're three to four years away from digital dollar coming out. And I think there's no way to fight it, to be honest with you. One thing we want to turn our attention to very soon is we want to outlaw the use of a social credit score in combination with your money, in combination with a digital dollar.

So what we really need to do is figure out ways to make that digital dollar safer and to protect ourselves in the future from Great Reset, from the elites, from whatever you want to call them, the overlords, whatever you want to call them. You know, we want to do our best to protect those through legislation, and just accept the fact that it's coming. Doomberg agrees that the American public needs to protect itself from the inevitable adoption of a digital dollar. We in the West, who grew up with and cherish our privacy and our freedom, desperately need a modernized version of the Bill of Rights and, I would say, a digital Bill of Rights. I think that there still exists within the Western world a thread of freedom loving.

citizens who have an appropriate lack of trust in centralized authority and pushed hard enough will demand a new digital Bill of Rights. Donald Trump can't freeze my bank accounts without some due process, or Joe Biden can't freeze my bank accounts without due process, and for a politician to be able to inspect my transactions without any suspicion of wrongdoing should be illegal, and we should codify this. And perhaps the fear of totally losing your rights and freedoms might provoke an appropriate political response that leads us to a place where we can incorporate the benefits of these technologies.

Which leads us back to the question, where is crypto going?

It appears that the crypto world is developing technologies that could one day lead to the end of the paper dollar and the establishment of a central banking digital currency. And this could be an extraordinary challenge to American freedom. When we started our inquiry into the world of crypto in 2019, we asked the question, is Bitcoin dangerous to America? What sparked our interest in that subject was a statement earlier that year. by then President Trump.

Crypto is being talked about. The president actually weighed in and tweeted about cryptocurrencies last night. He wrote in part this, I'm not a fan of Bitcoin and other cryptocurrencies which are not money and whose value is highly volatile, based on thin air, he writes. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activity, writes the president. To make this argument, the Trump administration and other politicians claimed that cryptocurrencies were completely anonymous and therefore would facilitate massive illegal activity.

But when we dug into this claim, we found the argument was flawed. It was actually the technology underpinning Bitcoin, the blockchain, that allowed criminals to be tracked down. So, we concluded that Bitcoin was not necessarily something Americans should fear. But did we get it wrong? Well, I think it's fair to say that Donald Trump thinks he got it wrong.

Trump used a cryptocurrency to launch a digital trading card. Ultimately, technology like Bitcoin is just a tool, like Twitter or Facebook, or a gun. What makes any tool dangerous is the user operating it. Paper cash is used by lemonade stand operators and the Mexican cartel. If the experts are right and a central bank digital currency is inevitable, then Americans need to demand a digital bill of rights.

One that prohibits a tyrannical government from using a cryptocurrency to dictate our behavior. And for those of you that think, a federal crypto dollar is a thing in the far off future, perhaps you should reconsider your timeline. So, you might have missed what happened Wednesday afternoon at the Fed. They started their central bank digital currency. So, they rolled it out and it's in its beta test now.

Red Pilled America is an iHeartRadio original podcast. It's owned and produced by Patrick Karelchi and me, Adriana Cortez, of Informed Ventures. Now you can get ad-free access to our entire archive of episodes by becoming a backstage subscriber. To subscribe, visit redpilledamerica.com and click join in the top menu. That's redpilledamerica.com and click join in the top menu.

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