Part Two | The Collapse: Seven Balance Sheets

0:00 It's a night in September of 2022. A penthouse balcony high above Nassau in the Bahamas. Below the balcony is paradise. The water, the lights, the kind of view that money buys when money is no object at all. But the young man sitting on the balcony, he ain't looking at the view. He's looking at a number. A number he has just worked out for himself. The way an engineer does. Slowly, carefully, and then all at once. The young man's name is Nashad Singh. He is the head of engineering at FTX, one of the most trusted companies in the world. And the number he has just put together, the number that nobody is supposed to say out loud, is roughly $ 8 billion.

0:46 $ 8 billion missing. Per a sworn testimony given later in federal courtrooms, Singh did the math that fall. And the math told him the money Almeida Research owed to FTX. Money that belonged to FTX customers had grown into a hole about $ 8 billion deep. $ 8 billion of other people's money spent. And so on that balcony, in that warm Bahamian night, Nasheed Singh confronted the most trusted man in crypto, he confronted Sam Bankman Freed. What could Sam say? What would you say? And here's the question that ought to keep you up at night. If the hole was $ 8 billion deep in September, how long have they been digging? Well, to answer that question, we have to go back to a number, not $ 8 billion, a much bigger one, a number that was put into a computer intentionally to in the very first year of the company, by a man who built the machine at the direction of the man who owned it. Last episode, I told you that Gary Wang told us Almeida got special privileges. In this episode, y'all, I'm going to tell you exactly how special. Welcome to Exposed Scandalous Files of the Elite, the Bankman Freed Series, Episode 2, 7 Balance Sheets. Hey everyone, welcome back to Exposed,

2:37 Scandalous Files of the Elite. I'm your host, Jim Chapman, and thank you for coming back for this second episode in this multi-part series on Sam Bankman Freed. Now, if you'll remember where we left off last time, and if you haven't heard... Part one yet. Go back and start there because this thing builds. We traced Sam Bankman Freed from Stanford childhoods to MIT to philosophy called effective altruism to Jane Street to founding Almeda Research and then to FTX himself. We watched him become the boy king of crypto, $ 32 billion valuation, Tom Brady's Super Bowl ad, Congress hanging on his every word and underneath all of it in the code red. of his own exchange, set a little setting called, quote, allow negative. A backdoor that let his trading firm, Almeida, spend money it didn't have. We ended last time with Gary Wang, Sam's roommate and his co-founder, and the man who wrote that code on a witness stand in Manhattan under oath saying the quiet part out loud, quote, we gave Almeida special privileges on the platform, unquote. Well, today we're going to open up the books. Today we're going to follow the money, your money, customer money, through the back door. And we're going to watch where it went.

3:59 The lenders, the real estate, the politicians, and we're going to spend some time with seven balance sheets, seven versions of the truth cooked up in the summer of 2022. And as always on this show, we build it out of the documents, the trial testimony, the indictment, the court records. That's the ground we always stand on here at Exposed. Quick thank you before we dive in. I want to thank the Patreons. Y'all support this show. If you can't be a Patreon, I get it. Please share it to anyone that you feel would enjoy it. listening to the content that we put out. All right. Last time I promised you a number. It's time I paid up. So let's get into it. And we're going to go back to 2019. And let's do it the way we know it.

4:46 through the sworn testimony of Gary Wang given in the trial in the United States versus Sam Bankman Freed in a federal courtroom in Manhattan. And if you will remember from part one, Wang testified that at Sam's direction, he built two things into FTX code. for Almeda's account. First, a flag that kept Almeda from ever being automatically liquidated. Every other trader on earth could get closed out when their bets went bad, but Almeda could slide below zero and keep trading. And second, a feature with a harmless little name called Allow Negative. Now, last time I described Allow Negative for you this way. Your bank account has, say, $ 1, 000, but a setting the bank's owner quietly gives you lets you walk up to the window and take out $ 10, 000, $ 100, 000, a million dollars, whatever, and the window never says no. Today, y'all, we put a number on it because Gary Wang, under oath, told the jury exactly how big that secret line of credit got. And I've been waiting a whole episode to say this out loud. $ 65 billion. Say it slow. $ 65 billion.

6:02 That's the figure Wayne testified to, Almeida's hidden line of credit on FTX. The amount Almeida was ultimately permitted to owe was set at $ 65 billion, not million, billion with a B, a line of credit bigger than the entire value of FTX itself at its peak. Remember, the whole company was valued at $ 32 billion at its peak. The secret permission slip written into the code in the dark was for two times the company's best ever valuation. Now, I want you to understand what that means practically, because the practical part, that's the scandal. A line of credit like that doesn't come from a bank. Nobody underwrote it.

6:48 Nobody approved it. No board voted on it. No regulator did their due diligence and reviewed it, and no customer ever consented to it. It existed because two young men, the owner of the exchange and the man who coded it, decided it would exist and told essentially nobody. And whose money stood behind it? Because it was real money. Think about that. Amanda wasn't borrowing from some vault labeled, I made his money. When Almeida drew on that line, when it withdrew beyond its balance and went deep into the negative, that money that filled the hole was the money sitting in the exchange. It was actually there and it was customers' money. The deposits of teachers, truck drivers, kids with the first paychecks that we talked about last time, their balances still showed up on the screens. Nice and reassuring when they looked at them. The numbers were there, but the money It was somewhere else. Wayne testified to something else in that stretch of testimony, and it tells you everything about the culture inside that place. FTX showed its customers an insurance fraud, a number on the website meant to reassure everyone that, hey, if something goes wrong, there's a cushion of money standing by to make it right.

8:10 Wayne walked the jury through how that number was falsely inflated. The cushion the public was shown was not the cushion that existed. Even the safety mat was a story. Now, I want to be fair and careful here, the way we always try to be on this show. A line of credit is a permission. It's not a theft all by itself. In theory, a market maker with deep access can steady a young market. Keep trading smooth. All the things Sam's defenders would later point to. And if Almeida's bets had all paid off, if the music never stopped, that $ 65 billion permission slip might have sat in that code forever. Unknown and not used. And Sam Bankman free might still be on the magazine covers today. But a permission slip like that, at that size, in secret? It's not a tool. It's a loaded gun in a drawer in a house full of people who don't know it's there.

9:09 And the thing about loaded guns and drawers, y'all, sooner or later, somebody's reaching in that drawer. In this story, the reaching started early and it never really stopped because once you can spend money that isn't yours quietly, instantly, without the window ever saying no, every problem in your life looks like it has the same solutions. Lenders need paying? Reach in. A bet needs making? Reach in. Politician needs funding. A penthouse needs buying. A rival needs buying out? Reach in. So where did it all go? That's the next question, and it's the right question. Let's follow the money, because the money is the story. Per the trial testimony and later the government's sentencing filings, more than $ 8 billion of FTX customer money ultimately flowed out the back door of Almeida.

10:02 $ 8 billion. And a forensic accountant who testified at trial traced it where it went. To real estate, to investments, and to donations. Let me take you through the buckets because each one of them tells you something about the man who spent it. Bucket number one, the lenders. Almeda was a trading firm, and a trading firm borrows. That's normal. That's the business. Almeda had borrowed billions of dollars from outside lenders, but borrowed money has a string attached. And the string is this. The lender can ask for it back. In the spring and summer of 2022, when the crypto market cracked, and we'll live in that summer for the next few minutes, those lenders came calling all at once.

10:47 And per Caroline Ellison's sworn testimony, Sam directed her to pay those lenders back with FTX customer deposits. Not with Almeida's money. With yours. Keep the lenders happy. Keep the whole machine looking alive. And the appearance of life was the one thing Sam could not afford to lose. And understand this, this is how debt works. In crypto or really anywhere else, when a lender hands a trading firm billions of dollars, that loan isn't a gift and it isn't forever. It can be recalled. The lender can pick up the phone and say, we're done, send it back. In good times, no one really makes that call because everybody's making money and the loans roll over like they were never even real. But the minute the market turns, the phones start ringing. And it doesn't stop ringing until the money comes home. Almeida's lenders made those calls in 2022, and the money that came home to them, per Ellison's testimony, was the money that never had been Almeida's to send.

11:51 It was the customers. The customers just didn't know they had been volunteered. Bucket number two, the bets. Almeida didn't just repay debts with customer money. It went shopping with it. Venture investments, stakes in other companies, other people's startups. The empire building kind of bets a man makes when he believes his own bullshit. Money that customers believed was sitting safely on an exchange was out in the world locked up in illiquid investments that couldn't be sold on a Tuesday if the customers came asking on a Tuesday and customers eventually always come asking. Bucket number three, the real estate, Bahamas real estate, property in paradise, bought up in and around that penthouse world in Nassau. And I want you to hold on to the real estate in your mind because it's going to matter again when we get to mom and dad later in this episode. The paperwork on some of that property leads straight back to the Bankman-Fried family.

12:54 and the FTX estate. The people who cleaned up the wreck would later have a great deal to say about it in the courtroom, a great deal. And bucket number four, the politics. If you'll remember from part one, Sam publicly disclosed political giving in the 2022 cycle was roughly $ 40 million. One of the biggest donors in the Democratic Party, his Protect Our Future PAC, was spending more than $ 27 million all by itself. But according to the federal indictment, the true number was more than $ 100 million in campaign contributions. And prosecutors allege the money came from misappropriated and embezzled FTX customer deposits. Rided through other executives as straw donors.

13:47 Men who had put their name on donations that weren't really theirs. One of those executives we will meet up close in this very episode. Nasheed Singh, the engineer on the balcony. Now step back and look at the picture all the way around. The whole picture. Because this is the part that makes regular people like you and me pissed off. And it should. The customers thought their money was in a vault. The whole pitch, built by traders for traders, the safe grown-up exchange, the Super Bowl ad, the senators nodding along, the whole pitch was that FTX was where responsible people would keep their money. And in reality, per the testimony, is that that money wasn't in a vault.

14:31 That money was paying off trading debt. That money was buying venture stakes at beachfront properties, and that money was buying influence in Washington, D.C. The customer's reward for trusting the most trusted man in crypto was to become a secret bank without ever being asked, without ever being told, and without ever seeing a dime of interest. That's not a business model, y'all. That's a man treating other people's deposits like a personal freaking line of credit. One of the prosecutors later, nah, I'll save that. We'll get into the courtroom in part three. For now, just understand the machine. The deposits came in the front door, the back door stood open, and Almeda reached through it again and again and again. But a machine like that has a tell, even a secret one. Because the money going out has to be explained to somebody. Most of all, to the lenders, the professionals, the ones with the power to pull the plug.

15:31 And in June of 2022, The plug pullers came in asking the one question that Sam could not honestly answer. They simply said, show us the books. So June 2022, this is the month and the place where we started part one of this series. Remember with the screens all red. Now we're going to live in Because this month, it is the absolute spine of this episode. And it's where the lie becomes a document. Seven documents, actually. So set the scene in your mind again with what we already know. The crypto market has broken. Luna, the coin, is worthless.

16:11 Three Arrows Capital, the giant fund it's going under, and Almeda Research, which is Sam's trading firm, has been, per the testimony... quietly standing on customers' money for a long time. Its own balance sheet is full of holes. Its lenders, including a firm called Genesis, are calling in their loans, billions of dollars of loans. And this time, before they roll anything over or show any more patience, they want proof. They want to see Almeida's balance sheet. Now, you and I know what the true balance sheet would have shown. It would have shown a trading firm propped up, by a secret $ 65 billion line of credit. It would have shown customer deposits flowing through the back door. It would have shown, though nobody outside of the courtroom could have read it yet, the beginnings of an $ 8 billion hole.

17:01 Show Genesis that document? The true one? And the game would end that day. Genesis calls everything. The lenders run. The exchange that Almeida feeds on panics greatly. And Sam Bankman Freed's empire dies in June instead of November. And maybe, maybe the customers get more of their money back. But the true document is not the document Genesis got. Per Caroline Ellison's sworn testimony at trial, here's what happened instead. Ellison, running Almeida under Sam, prepared seven alternative versions of Almeida's balance sheet for Genesis. Seven. Not one careless draft and a correction. Seven deliberate versions of the same company's finances.

17:46 Each one of these telling a different story. Each one engineered to hide... what the true one would have revealed. And Ellison testified, Sam reviewed those versions and Sam chose, Sam picked which fiction Genesis would receive. And I said in part one, and I'll say it again because it bears repeating, not whether to send a fiction, which fiction to send. That is a man comparison shopping for a lie. And I want you to sit with Ellison in that moment for a second, because she's not a cardboard cutout in this story. She's a central figure. to it. And the courtroom understood that. Here's a woman running Almeida, sitting with real numbers and fake numbers side by side, building version after version of the balance sheet for the biggest lender in the room, knowing, she would later admit in her own guilty plea and on that witness stand, knowing that the business it described was being kept alive with customer deposits. Quote, he directed me. to commit these crimes, unquote.

18:54 That's what she told the jury a year and a half later about Sam. Directed, not suggested, not hinted, directed. And all through that summer, while she built the versions and the lenders were fed this chosen fiction, Ellison kept a running memo in her computer, a list in her own words. And the title, as I told you in the last episode, was Things Sam is Freaking Out About. Y'all, think about that document. The public Sam in the summer of 2022 is serene. He's the adult in the room. He is giving interviews, playing a rescuer, if you will, of a shaken industry. And he's letting the world believe that while everybody else is drowning, FTX is on a life raft. In the private Sam, the Sam his own CEO is documenting in real time is freaking the fuck out because the man knew. Whenever Sam Bankren-Fried would later claim about what he knew and when he knew it, and we'll put his own words on trial in part three, the woman closest to the numbers kept a list, the list had a title, and that title tells you the truth.

20:06 about that summer. So let's lock in what June of 2022 really was. It wasn't a stumble. It wasn't a rough quarter. June of 2022 was the month the most trusted man in crypto looked at the true state of his empire, understood that the truth would end him, and chose, chose professionally, from a menu of seven, the lie that would keep him alive a little longer. And guess what? The lie worked. Genesis stayed in line. The summer went on. And inside that penthouse in Nassau, the hole kept digging itself deeper, ever so slowly toward that September night and that balcony in that $ 8 billion number. But before we climb up to that balcony, there's a departure I need to tell you about. Because in August of 2022, at the height of the lie, one of the most important men in Sam's empire quietly stood up, walked to the door, and left. On that day, a guy named Sam Tribeco resigns. Now, who is Sam Tribeco? If Sam Bankman Freed had a right hand at Almeida, it was Tribeco. He was the co-CEO of Almeida. Alameda Research. Carolyn Ellison's the other CEO.

21:29 One of the very few people on earth positioned to see the trading firm from the inside, at the top, the bets, the borrowing, the back door. If you want to know what Alameda really was in the summer of 2022, the list of living people who knew starts with Sam Bankman Freed, runs through Gary Wang and Carolyn Ellison, and Sam Trabucco is right there in the front row. And in August, with the lenders circling and the hole deepening and the fictions flying, Sam Trabucco stands up and walks right out the front door. Allison becomes the sole CEO of Almeida, and Trabucco, he never comes back. Now, I want to be careful here. the way we are careful on every episode of this show, Tribeco was never charged with a crime in this case. He never testified at Sam's trial. Matter of fact, never raised his right hand in the courtroom at all. Whatever he knew, whenever he knew it, those are questions that the public record doesn't fully answer. And I'm not going to pretend otherwise. What Sam Trabucco later had to get back and what it cost him to have been in that front row, that's a story for later in this series. And believe me, we're going to tell it. And it involves a yacht, y'all.

22:47 I mean, it involves a yacht. But here is what I can tell you. And I want you to feel the weight of it as a listener, because the timing of this testimony, August the 24th, the seven balance sheets went to Genesis in June. The lenders were circling in the summer. And the co-CEO of the trading firm, the man who more than anyone else could read those balance sheets without the decoder ring, if you will, he decides that August is when he gets out. Three months. That's what was left. Three months between Sam Tribeca walking out that door and the whole empire lying in bankruptcy. Draw your own conclusions. On this show, I trust y'all to do exactly that. But file that date away. August the 24th, 2022.

23:36 The first man off the ship was one of the men who helped build that freaking ship. Says a lot. And notice who that leaves standing at Almeida. Carolyn Ellison. Alone now. Sole CEO. Keeper of the seven versions. Author of the memo about everything Sam is freaking out about. Think about her position for a second. The lenders aren't going away. Matter of fact, they're getting louder. The hole isn't shrinking, it's growing. And the one other person at the top of the firm who truly understood the trading, the bets, the machinery is gone by his own choice on his own schedule. Whatever weight was on that operation from August the 24th forward, it sits on the shoulders of the woman who had already built seven versions of the truth. The inner circle's getting smaller, y'all. And smaller circles keep bigger secrets right up until the moment they can't anymore. Because by September, there was one more man doing the math in that penthouse, and his math would not let him sleep. And that man was Nishad Singh. Now, you've heard his name as one of the straw diners, and we'll get to that. But first, you need to know who he was inside the company, because he was not some hanger-on, if you will. Singh was the head of the engineering at FTX, one of the builder's of the machine itself, a man deep inside that inner circle, a man who had hitched his whole life to Sam Bankman Freed's rocket ship. And in September of 2022, per

25:07 a sworn testimony at a trial, Singh did something nobody else in that penthouse seemed willing to do. He added it all up. He worked out for himself the size of what Almeida owed, the customer money that had flowed through the back door and had been spent And the number he arrived at was approximately $ 8 billion. $ 8 billion. Say it the other way. $ 8, 000 million. That's the scale of the shortfall Singh says he discovered in September while Sam Bankman Freed was still, to the outside world, the most trusted man in the industry. Still the boy king.

25:48 Still the rescuer. Still the future. And so Singh confronted him out on that balcony at that penthouse in the Bahamas. The engineer told the boy king what the numbers said per Singh's testimony. He confronted Sam Bankman Freed about that shortfall, about the hole, about whose money filled it, and about what it all meant. So what did Sam say back to him? Well, I'm not going to put words in the man's mouth because the documents are what they are. And part three of this series is going to be Sam's own words. In his own defense, at his own trial, and y'all can judge every syllable of that when we get there, what the record in front of us shows is simpler. And to me, sadder. It shows what Sing did next, which is nothing. Nothing stopped. The machine kept running.

26:38 The hole stayed a hole. And Sing stayed. And Singh testified that in that particular period, he felt suicidal. And I want to handle that the way it deserves to be handled, plainly and without decoration. A young man helped build this thing, worked out that it was a fraud in process, $ 8 billion deep of other people's money. And the weight of that actually pushed him to the edge of his own life. And still, he stayed. He kept working. He kept his place in the circle. And when the United States government later laid out its case, Singh's name was in it in another way entirely. Because Singh would admit in his own guilty plea that he had served as a straw donor in the political money operation. Donations made in his name per the indictment account sourced from the same customer's deposits that filled the hole that he had discovered. Now sit with the tragedy and the culpability of that, both at once, because this show doesn't flatten...

27:41 people into one thing. Singh is a man who saw the truth on a balcony in September and, according to him, was very despaired over that. But he's also a man who pled guilty to his part in the machine and stood in the courtroom and told it. Both of those things are in the documents and both of those things are true. And here's a pretty cool fact right here. After the balcony, after the confrontation, After feeling horrible about this, the lie did not wobble in public. Not one inch. Sam Bankman Freed went on being serene. The empire went on looking like an empire. September closed. October came. The customer's money stayed spent. And the hole stayed at $ 8 billion deep. And the only thing standing between Sam Bankman Freed and the abyss were people who'd agreed for money, for loyalty, for fear, for whatever reasons that live in those people's chest, not to say what they knew. The customers didn't know. The investors, they didn't know. Congress certainly didn't know. But Sam's own family? Now that's an interesting question.

28:53 Because the deeper this hole gets, the closer we need to look at the two people who raised him. Those two Stanford law professors from part one. And at the money and the property and the late night messages that connect them to the heart of this thing. Mom and dad have entered the story, y'all. And this is where it gets a little bit uncomfortable. So if you remember from part one, I told you to remember the house Sam Bankman Freed grew up in. Remember, he had a tax law professor for a father, a legal ethics professor for a mother. He was raised on the Stanford campus at the very top of a pyramid. Well, it's time to ask the question this show always asks when the money gets this big and the rules bend this far, and that is, where are the freaking grown-ups? Because Joseph Bankman and Barbara Freed were not distant figures in this story.

29:45 Off in California, reading about their sons in the newspaper per court records. And I want to be precise about which records and whose claims these are. They were close to the center of it. Start with Joseph Bankman, the father. Now, per the FTX Estates Court filing, Joe Bankman wasn't just dad. He was also an advisor to FTX. He advised on the company's tax structure. He advised on those Bahamas real estate purchases that we talked about. The property... being snapped up around that penthouse. And when the trial came, the jurors saw evidence of the collapse via a signal group. As a matter of fact, it was a chat called, quote, small group chat, where the end of the empire was being managed message by message. And Joseph Bankman was in that group chat. the tax professor, in the chat. And then there is the money. In September of 2023, after the fall, when the cleanup crew, the FTX estate, had been through the wreckage, the estate files a lawsuit against Joseph Bankman and Barbara Freed. And I'm going to give you its allegations exactly as that, allegations, because that's what they are, claims in a civil complaint. which the Bankman-Frieds had flatly denied. Now, the estate alleged the parents were unjustly enriched by roughly $ 30 million. It alleged $ 10 million cash gift to the parents paid, per the complaint, out

31:17 of Almeida funds. It alleged a $ 16. 4 million Bahamas villa. a place called Blue Water that ended up in the parents' hands. It alleged roughly $ 5. 5 million steered to Stanford University, which is the family's own institution, the place that raised Sam and employed both of them. And it alleged on the order of $ 10 million directed towards Barbara Freed's political operation. Because the ethics professor was not only a scholar of how power should behave, she was a player in it. a co-founder of a super PAC called Mind the Gap, an outfit built to move serious money into American elections.

32:00 And the estate alleged that Joseph Bankman pushed to raise his own compensation to a million dollars a year. The complaint's phrase for the whole arrangement, the estate's phrase, not mine, was that FTX was a, quote, family business. A family business, y'all. To the most credentialed legal minds in America, a son running a $ 32 billion empire on a secret back door, and the people cleaning up the wreckage described the thing as a family business. Now, fairness, because the show deals and documents, and documents have two sides. The parents, through their family, called the estate's claims completely false. Completely false.

32:40 Full stop. And here's a fact that is not an allegation at all. Neither Joseph Bankman nor Barbara Freed had ever been criminally charged in this case. Not then, not since. Whatever the civil lawyers argued about villas and gifts, no prosecutor ever stood up in a criminal court and put mom and dad in the docket. And you deserve to know that as clearly as you know the allegations. But I want you to get the whole picture because the picture is the point of this show. The legal ethics professor's son built a fraud. That much a jury has decided. And around that fraud, per the estate's complaint, sat a $ 10 million gift and a $ 16 million villa and a father in the war room chat advising on taxes and the real estate. Elite protection doesn't always look like a phone call to a judge. Y'all, sometimes it looks like a family closing ranks in a very nice house in the Bahamas bought, the estate says, with other people's money.

33:42 What did mom and dad know? When did they know it? The documents give us allegations and denials in a villa, in a chat log, but they don't give us the inside story Of anybody's heart. And I'm not going to pretend that they do. But I will tell you this. By the fall of 2022, the secret of FTX was no longer Sam's alone. It also belonged to Ellison, who wrote the memo, to Wang, who wrote the code, to Singh, who did the math on the balcony, and to Trabuco, who had already left. And in some measure, the documents are still arguing about if it belonged to the family too. Secrets of that size exist. They don't stay kept, y'all.

34:25 They never do. They leak. In November of 2022, that's exactly what happened. So let's bring this one home, y'all, to the first days of November 2022 and the beginning of the end. Through September, through October, the surface of Sam Bankman Freed's world never cracked. The hole was eight billion deep. The CEO of his trading firm was keeping a list of everything he was freaking out about. His co-CEO had quit his engineering, confronted him on a balcony into the outside world. Sam was still Sam, the most trusted man in crypto. Then came November the 2nd, 2022. On that day, a crypto news outlet called Coindesk, they publish a story built on a document and it was a leaked document. It was Almeida Research's balance sheet dated June the 13th of that year. Remember June? Remember Genesis?

35:23 Remember seven versions? Because now a version of Almeida's real finances were out in the open. And anybody who could read a balance sheet could see the things Sam had spent all summer hiding. Here's what it showed. I made it claimed roughly $ 14. 6 billion in assets. And the largest single chunk of those assets, the biggest thing the trading firm owned was FTT. It's a token. And it's also the coin that FTX itself had invented. Printed out of thin fucking air. And can print more whenever it liked. Plus a pile of related coins. And the market called them, quote, Sam's coins. Y'all, even if you don't know anything about finance, you can smell that. The trading firm's fortune was made of the exchange's own homemade money. If everybody ever decided at one time that FTT wasn't worth what Sam said it was worth... And then that meant Almeida wasn't rich.

36:25 It was a hole. The circle only worked while nobody looked at it. And now, thanks to a leaked document, everybody was looking a little bit harder. Four days later, November the 6th, the biggest man in the room looked at it and pushed. Remember Changping Zhao, CZ, the head of Binance, the giant rival exchange, the man who had sold his stake in FTX back to Sam in 2021 and taken the $ 2. 3 billion largely in FTT? On November the 6th, CZ announced to the world that Binance would liquidate It's FTT Holdings. What does that mean? He's going to sell it. More than $ 500 million worth of that token. Well, when this gets out, the price of FTT falls off a cliff. And then the thing Sam Bankman Freed had feared in every entry of Carolyn Ellison's memo happened all at once. The customer's all came for their money. An absolute bank run. The old-fashioned, it's a wonderful life kind of bank run, except at internet speed and crypto scale.

37:33 And I want you to understand why a run is the one thing that no story and no fraud can survive. A run is not an argument. You can't out-debate it. You can't charm it. You can't tweet your way past it. A run is simply every customer at the same time asking for the money that is supposed to be sitting there. And the money is either there or it's not. By Sam's own count, roughly $ 6 billion in withdrawals in 72 hours, y'all. $ 6 billion walked out the front door, straight into the empty vault where that back door had been. On November the 7th, with the run at full roar, Sam Bankman-Freud went on Twitter and told the world, quote, FTX is fine, assets are fine, unquote. Six words, well, five in a fragment.

38:24 From the most trusted man in crypto, while his exchange was bleeding out and his trading firm was $ 8 billion in the hole, that tweet would later be deleted. Prosecutors would later hold it up in a courtroom for exactly what it was, the boy who would give it all away, looking the world in the eye, and in the very end, telling it the money was there when the money was gone. And then November the 8th, 2022, one of the strangest days in the history of American finance, Sam Bankman Freed and CZ announced that Binance had signed a letter of intent, a non-binding agreement to acquire FTX, to buy the whole thing to rescue it. And for one night, y'all, one single night, it looked like salvation. The biggest man in crypto would swallow the second biggest. The customers would be covered.

39:17 The boy king would survive. Diminished, humbled, maybe, but alive. Somewhere in Nassau, in a penthouse full of people who knew exactly how deep that hole was, there must have been one night of something resembling hope. But a rescue like that has a condition. Before Binance writes the check, Binance gets to check the books. Real books this time. All of them. Not one of seven versions. The actual numbers. The ones Sing had done. on the balcony. The ones Ellison had buried under those fictions. November the 9th, CZ's team opens those books and Sam Bankman Freed's deleted tweet hangs over all of it. Five words in a fragment.

40:07 Already a lie looking for a place to land. FTX is fine. Assets are fine. Was it? Were they? Y'all know where this is going. And tomorrow in part three, We live through all nine days of it. The walk away, the bankruptcy, the arrest in the Bahamas, the moment the inner circle, Ellison Wang saying they stopped protecting Sam Bankman Freed and start testifying against him. That's part three. And I promise you, you're not going to want to miss that. a minute of it. So that's going to do it for episode two of this series. Thank you so much for listening. Again, check us out on Patreon, commercial-free early releases.

40:48 I know there's a lot of commercials right now. It's going to be that way till the end of the year. So you can join us on Patreon, patreon.com slash exposed podcast files. And for $ 2. 50 a week, commercial-free early release episodes, so much more. with some other tiers on our Patreon page, so please check that out. Please tell people about the show, send it to them, and please leave a review if you've not yet done so. And until next time, for Exposed Scandalous Files of the Elite, I am your host, Jim Chapman. Much love.