Were SBF's parents in on it? Follow the Money – Crypto Critics' Corner

Today Bennett and Cas talk about Sam Bankman-Fried's parents, Joseph Bankman and Barbara Fried, who are alleged to be holding onto property and money that the FTX and Alameda Research estates are looking to claw back. Read more about it here. This episode was recorded on September 20th, 2023.

Cas Piancey and Bennett Tomlin discuss the alleged role of Barbara Fried and Joseph Bankman in FTX and Alameda Research. We discuss the millions of dollars in donations to Stanford, the $16 million mansion they were gifted, and the $10 million gift they received.

This episode was recorded on September 20th, 2023.

Where to find the podcast:

• Spotify
• Apple
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• RSS Feed

Other episodes mentioned in this episode:

• YouTube playlist of episodes about FTX, Alameda Research, and Sam Bankman-Fried
• Episode 1 – Tether: A Stable Discussion
• Episode 2 – Tether: A Stable Discussion Continued
• Episode 117 – Crypto Critics’ Corner Copes at CoinDesk Consensus Crypto Conference

Other resources mentioned in this episode:

• Protos coverage of lawsuit
• Lawsuit
• Statement from lawyers for Joseph Bankman and Barbara Fried
• Protos coverage of relationship between Joseph Bankman and Anthony Scaramucci

Where to find Crypto Critics’ Corner:

• BlueSky
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• Cas’ Blog
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• Bennett’s Mastodon

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English Transcript:

00:00:05:01 - 00:00:12:07
Cas Piancey
Welcome back, everyone. I am Cas Piancey and I'm joined, as usual, by my partner in crime, not of the criminal sort.

00:00:12:07 - 00:00:13:19
Cas Piancey
Bennett Tomlin. How are you today?

00:00:13:19 - 00:00:15:13
Bennett Tomlin
I'm doing well. How are you Cas?

00:00:15:13 - 00:00:18:17
Cas Piancey
I’m doing good. It's been busy. It's been a very busy week for both of us.

00:00:18:18 - 00:00:20:05
Cas Piancey
But today's episode is going to be about

00:00:20:05 - 00:00:21:15
Cas Piancey
SBF’s parents,

00:00:21:15 - 00:00:22:27
Cas Piancey
the Bankman's and the Fried’s

00:00:22:27 - 00:00:23:29
Cas Piancey
and their

00:00:23:29 - 00:00:33:07
Cas Piancey
what appears to be increasingly important role that they each played in the criminal elements of FTX and Alameda Research.

00:00:33:12 - 00:00:35:06
Cas Piancey
They called it a family business.

00:00:35:06 - 00:00:36:00
Cas Piancey
They

00:00:36:00 - 00:00:41:10
Cas Piancey
accepted incredibly large salaries. His father was getting $1,000,000 after requesting it

00:00:41:10 - 00:00:44:13
Cas Piancey
because he was only getting 250,000 before

00:00:44:13 - 00:00:45:02
Cas Piancey
Mom

00:00:45:02 - 00:00:48:11
Cas Piancey
pushed and tried to ensure that any money

00:00:48:11 - 00:00:49:23
Cas Piancey
getting sent to

00:00:49:23 - 00:00:53:00
Cas Piancey
the charity arm of the of the company

00:00:53:00 - 00:01:00:24
Cas Piancey
had, you know, two steps of separation, two degrees of separation, just really shady, weird stuff going on over there with the Bankman's and the Fried's.

00:01:00:24 - 00:01:03:21
Cas Piancey
But those are kind of vague descriptions of what's going on.

00:01:03:21 - 00:01:09:17
Cas Piancey
Bennett Why don't you walk us through some of the seriously criminal elements and what what is happening?

00:01:09:17 - 00:01:28:00
Bennett Tomlin
There's a decent amount of allegations contained in this lawsuit from the FTX Debtors in possession against Joseph Bankman and Barbara Fried. That at a high level alleges that they were involved in specific aspects of the business and were closely connected to various alleged criminal acts and

00:01:28:00 - 00:01:34:12
Bennett Tomlin
criminal acts people have pled guilty to. Starting with Joseph Bankman, he was involved with Alameda Research

00:01:34:12 - 00:01:40:11
Bennett Tomlin
as early as 2018, which is when it was founded and stayed involved throughout the entire time.

00:01:40:14 - 00:01:59:20
Bennett Tomlin
The first several years, this appears to have been relatively informal. He, directed FTX towards their first law firm, suggested their first accounting firm, was involved in consultations for hiring of certain executives and things like that. But none of this was documented in any kind of formal way.

00:01:59:20 - 00:02:07:17
Bennett Tomlin
Eventually, in January 2021, he decides that there should be some kind of piece of paper that describes his relationship with these entities.

00:02:07:19 - 00:02:20:01
Bennett Tomlin
And so he creates a document that describes his work for Alameda Research and FTX and FTX U.S. saying he's doing a variety of pro-bono legal work and consulting work

00:02:20:01 - 00:02:21:28
Bennett Tomlin
for these entities.

00:02:21:28 - 00:02:23:10
Bennett Tomlin
What's interesting,

00:02:23:10 - 00:02:37:22
Bennett Tomlin
of course, is that he was the signatory for the FTX's entities and for himself, and this entity really has kind of vibes of that loan agreement between Bitfinex and Tether years ago, where J.L. VDV

00:02:37:22 - 00:02:40:14
Bennett Tomlin
and Giancarlo were signing for both entities.

00:02:40:16 - 00:02:47:15
Bennett Tomlin
And so that was one moment that really struck me as I was going through that, is that he felt the need to after

00:02:47:15 - 00:02:56:27
Bennett Tomlin
providing advice for several years, finally in 2021 documents it and says he's providing this pro-bono legal advice.

00:02:56:27 - 00:02:57:24
Bennett Tomlin
This

00:02:57:24 - 00:03:00:14
Bennett Tomlin
did not stay pro-bono for very long.

00:03:00:14 - 00:03:19:13
Bennett Tomlin
Later, in 2021, he would take a leave of absence from Stanford University, and after he took this leave of absence, he allegedly told an FTX US employee, I'm no longer getting paid by Stanford cuz I'm on leave, so you should have me on salary starting December 1st. In December 2021,

00:03:19:18 - 00:03:39:25
Bennett Tomlin
this is when he finally entered into a formal employment agreement with FTX US, where his nominal title was senior advisor to the FTX's foundation. You said it was 250,000. It was actually $200,000 a year plus bonuses. He was supposed to be getting paid. And this is where we get to the fun part that you made an allusion to before he

00:03:39:25 - 00:03:52:16
Bennett Tomlin
went to FTX’s head of administration after signing this employment agreement that clearly said 200 K told this person that he was supposed to be getting $1 million a year starting in December.

00:03:52:18 - 00:04:20:12
Bennett Tomlin
And then he sends an email over to Sam Bankman-Fried, his son, that says and I quote, Gee, Sam, I don't know what to say here. This is the first I've heard of the $200,000 a year salary, putting Barbara on this, meaning he CCed in Sam Bankman-Fried’s mother and his domestic partner to help him deal with this contract negotiations that happened after he signed that contract.

00:04:20:14 - 00:04:21:14
Bennett Tomlin
And it worked.

00:04:21:14 - 00:04:29:20
Bennett Tomlin
It worked. Within two weeks, Bankman-Fried were gifted $10 million in funds originating from Alameda. Within three months,

00:04:29:20 - 00:04:46:26
Bennett Tomlin
they ended up getting their $16 million mansion in the Bahamas, funded entirely by FTX. And over the period after they got that mansion, they were able to expense something like $90,000 in various other expenses. And before

00:04:46:26 - 00:05:02:23
Bennett Tomlin
he signed that contract agreement in December 2021, I do want to make clear he was also provided with an option to purchase shares of FTX US and FTX trading in November 2021 and went in before he was even employed with FTX.

00:05:02:23 - 00:05:18:16
Bennett Tomlin
He was getting large options of shares. So yeah, I think that kind of is a good initial overview and we can get into some of the details he was also involved in, but they were receiving a lot of this type of monetary compensation.

00:05:18:21 - 00:05:21:20
Cas Piancey
Yeah, well, I want to specifically bring up here

00:05:21:20 - 00:05:23:07
Cas Piancey
some things that really

00:05:23:07 - 00:05:25:16
Cas Piancey
made a red flag go off for me

00:05:25:16 - 00:05:26:21
Cas Piancey
were, for instance,

00:05:26:21 - 00:05:28:15
Cas Piancey
how they were keen

00:05:28:15 - 00:05:29:12
Cas Piancey
to

00:05:29:12 - 00:05:38:12
Cas Piancey
keep the residences, the properties that they were acquiring with these gifted funds and all of this money that they were essentially taking from customers.

00:05:38:12 - 00:05:39:15
Cas Piancey
Let's be clear on that,

00:05:39:15 - 00:05:42:21
Cas Piancey
that they wanted to ensure that that money and those properties

00:05:42:21 - 00:05:45:26
Cas Piancey
would be shielded from a bankruptcy. And I'm just wondering

00:05:45:26 - 00:05:52:10
Cas Piancey
like why if they're so confident in this business, if they're so confident in their son, if they're so sure this is the

00:05:52:10 - 00:05:53:16
Cas Piancey
future of finance

00:05:53:16 - 00:05:54:04
Cas Piancey
and I get it

00:05:54:04 - 00:05:56:04
Cas Piancey
you want to shield your personal property

00:05:56:04 - 00:05:57:00
Cas Piancey
from a bankruptcy,

00:05:57:00 - 00:05:59:22
Cas Piancey
but you just got gifted $10 million

00:05:59:22 - 00:06:03:05
Cas Piancey
you have to know this isn't this isn't exactly personal property, right?

00:06:03:05 - 00:06:14:23
Cas Piancey
Like, you have to know your son is giving this to you. Your son is making money from the company. How is he making all this money? You haven't really nailed that down yet. And you still are just letting this all transpire.

00:06:14:23 - 00:06:23:19
Cas Piancey
Nobody was asking any questions is kind of what I'm getting to. But the questions they were asking were about like ensuring that they were shielded from any problems in the future.

00:06:23:19 - 00:06:29:27
Bennett Tomlin
Yeah, and we should clarify the timeline a little bit here. There's a 2021 email exchange

00:06:29:27 - 00:06:37:25
Bennett Tomlin
where FTX’s general counsel wants to set up a meeting with their law firm to discuss how assets, including primary residence, can be structured to be bankruptcy remote.

00:06:37:27 - 00:06:53:16
Bennett Tomlin
And Bankman quickly kind of responds in this email chain the next day and says, it would be great, all else equal, if we could have the founders put money into property in the Bahamas and sent them a link to a description of an offshore trust structure in the Bahamas. He then discusses this with

00:06:53:16 - 00:06:55:02
Bennett Tomlin
a lawyer in the Bahamas,

00:06:55:02 - 00:07:01:24
Bennett Tomlin
another Stanford law professor and his brother in law, and then ends up saying something we might use when we buy property in the Bahamas.

00:07:02:01 - 00:07:04:14
Bennett Tomlin
And the reason I'm belaboring this point is because it happens,

00:07:04:14 - 00:07:07:16
Bennett Tomlin
I think about a year before they actually end up getting the house

00:07:07:16 - 00:07:22:27
Bennett Tomlin
and then five months before they get the house, there's another thing that happens, and that's that they apply for residency in the Bahamas, permanent residency in the Bahamas. In order for them to get that, there's a $15,000 fee that's also paid by FTX.

00:07:23:00 - 00:07:36:20
Bennett Tomlin
And so I think what that kind of shows is this kind of series of planning that went into them eventually getting this mansion, they started discussing how to structure this about a year before, and I don't think they ended up using those trusts, at least not at the time of bankruptcy.

00:07:36:20 - 00:07:42:09
Bennett Tomlin
They had already gotten their residency months before they got the property and then they got the property.

00:07:42:09 - 00:07:44:09
Bennett Tomlin
They wanted to benefit from this.

00:07:44:09 - 00:07:49:26
Cas Piancey
There's no doubt about that. I mean, there is no doubt. I just want to be clear, and we're going to link to the

00:07:49:26 - 00:07:52:23
Cas Piancey
very thorough Protos article that goes over all of this.

00:07:52:23 - 00:07:53:16
Cas Piancey
But it is

00:07:53:16 - 00:07:54:29
Cas Piancey
very obvious, I think,

00:07:54:29 - 00:07:56:03
Cas Piancey
before we get to

00:07:56:03 - 00:07:56:27
Cas Piancey
crux of this,

00:07:56:27 - 00:08:08:11
Cas Piancey
I first want to delve into this a little bit more. So Stanford yesterday decided that they were going to return all of the donated funds from this family, which amounted to $5.5 million, which is a lot.

00:08:08:11 - 00:08:08:14
Cas Piancey
me.

00:08:08:14 - 00:08:09:00
Cas Piancey
I know

00:08:09:00 - 00:08:10:00
Cas Piancey
that they get

00:08:10:00 - 00:08:12:09
Cas Piancey
a shit in metric shit ton of cash

00:08:12:09 - 00:08:14:03
Cas Piancey
every year, but

00:08:14:03 - 00:08:21:26
Cas Piancey
the idea that they're getting $5.5 million in a single year from one family, one company, you know, essentially one family,

00:08:21:26 - 00:08:25:07
Cas Piancey
that's how you get your name on a building and stuff like that. So

00:08:25:07 - 00:08:27:16
Cas Piancey
they were donating a ton of money

00:08:27:16 - 00:08:29:07
Cas Piancey
to this educational institution.

00:08:29:07 - 00:08:36:21
Cas Piancey
All I want to say is that I think Stanford is disgusting. I think we see this in a bunch of these higher education, these private institutions.

00:08:36:21 - 00:08:38:21
Cas Piancey
probably equally common in

00:08:38:21 - 00:08:40:18
Cas Piancey
great college university or great public

00:08:40:18 - 00:08:41:27
Cas Piancey
universities as well.

00:08:41:27 - 00:08:50:04
Cas Piancey
But the ones that we hear about are like MIT or Harvard or Stanford accepting money from Jeffrey Epstein or accepting money from these guys.

00:08:50:04 - 00:08:55:21
Cas Piancey
And and then, okay, you're returning it. Great. Well, you know why you're returning it? Because you got caught.

00:08:55:21 - 00:09:01:06
Cas Piancey
That's why you're returning it. You're not returning it because you thought it was the right thing to do. Now that it's all coming out in these court documents,

00:09:01:06 - 00:09:05:14
Cas Piancey
Stanford's giving the money back. They didn't do it one minute before that happened, though.

00:09:05:14 - 00:09:06:27
Cas Piancey
Isn't that interesting? And I

00:09:06:27 - 00:09:09:10
Cas Piancey
you know, I think you should get into kind of the details of

00:09:09:10 - 00:09:11:25
Cas Piancey
those donations which there were there were many

00:09:11:25 - 00:09:13:03
Cas Piancey
over this period. But like,

00:09:13:03 - 00:09:17:15
Cas Piancey
oh, what a nasty, nasty way for a university to operate.

00:09:17:15 - 00:09:21:12
Bennett Tomlin
I think the elite private colleges are at a special risk

00:09:21:12 - 00:09:29:21
Bennett Tomlin
for kind of this because so much of their, like existing structure is based around taking in cash and converting it to

00:09:29:21 - 00:09:31:28
Bennett Tomlin
some vague elite authority.

00:09:32:00 - 00:09:42:01
Bennett Tomlin
Speaking specifically about the donations from FTX to Stanford that appear to have been directed by Joseph Bankman, there was one that came from

00:09:42:01 - 00:10:11:03
Bennett Tomlin
PaperBbird directly to Stanford University. And this one was interesting because there was a lot of discussion about which entity to use. And what Brinkman ends up saying is that he thought it should come from Paper Bird, which was one of the entities that Sam Bankman-Fried owned that held most of the stock for FTX that investors were buying into the struck the corporate structure of FTX is a mindfuck, but this shows Bankman was aware of parts of the mindfuck, he says paper bird can use the deduction and

00:10:11:07 - 00:10:17:03
Bennett Tomlin
when he discusses alternatives he says we can have another entity loan Paper Bird money, but that requires some paperwork.

00:10:17:03 - 00:10:33:29
Bennett Tomlin
Eventually they get it all sorted out. FTX transfers money to paper Bird into a newly set up bank account, which immediately sends that money on to Stanford there was another $4 million donation to a Stanford Fund for Pandemic Preparedness that he described as pretty much a no brainer.

00:10:34:05 - 00:10:38:07
Bennett Tomlin
Bitcoin was transferred from Alameda Research's FTX account, eventually.

00:10:38:07 - 00:11:00:06
Bennett Tomlin
There was another series of donations where it was proposed that they give 1.5 million from the FTX Foundation to Stanford College. However, the initial 500,000 for this came from an Alameda Research Bank account, and the second 500,000 came from an FTX US bank account. There was another donation they did for a Stanford blockchain conference so they could sponsor it.

00:11:00:14 - 00:11:24:26
Bennett Tomlin
That one was only 10K, but again, it kind of points towards how Bankman saw these entities as interchangeable. He said. Ten K is so little it doesn't really matter. So if we think that having FTX US is easier or safer for some reason we should just do that. And what's most interesting is you talked about your name on a building and there was a Stanford University employee who provided comment as part of this lawsuit.

00:11:25:02 - 00:11:43:25
Bennett Tomlin
And this Stanford University employee apparently says that internally in Stanford, these donations were categorized as directed by the Bankman-Fried. And when they specifically got the big $4 million pandemic preparedness donation from Alameda, this person even reached out. Should this one be categorized like the rest

00:11:43:25 - 00:11:46:25
Bennett Tomlin
as from you all? Or is this one somehow different?

00:11:46:25 - 00:11:59:14
Bennett Tomlin
And so, yeah, I think that those donations kind of point towards how they were specifically using these co-mingled customer and client funds from across all these different entities in this self-promotion activity of giving these donations.

00:11:59:14 - 00:11:59:27
Cas Piancey
Yep.

00:11:59:27 - 00:12:01:00
Cas Piancey
there's more to

00:12:01:00 - 00:12:04:29
Cas Piancey
where this money went, how much was spent, Why they were in control of this.

00:12:04:29 - 00:12:08:10
Cas Piancey
But I think the question that everybody wants to ask and is wondering about

00:12:08:10 - 00:12:09:04
Cas Piancey
is

00:12:09:04 - 00:12:11:27
Cas Piancey
how were they not being criminally charged with anything yet?

00:12:11:27 - 00:12:12:22
Cas Piancey
And will they

00:12:12:22 - 00:12:15:01
Bennett Tomlin
I think we should hold off on that question for

00:12:15:01 - 00:12:16:29
Bennett Tomlin
just a moment, because I want to talk about

00:12:16:29 - 00:12:25:06
Bennett Tomlin
how Joseph Bank Mahan also made sure other people he was related to and friends with got paid while he was in this position, because I think that's kind of fun.

00:12:25:13 - 00:12:45:22
Bennett Tomlin
They talk about one example where he got a Stanford Law student, a free trip to the French Grand Prix tickets to the race so they could go and visit that. But I think the more interesting one was a hackathon that they had planned that was run by his sister, Bankman-Fried, Sam's aunt.

00:12:45:22 - 00:12:49:19
Bennett Tomlin
They hired her at a rate of $14,000 a month

00:12:49:19 - 00:12:56:25
Bennett Tomlin
to prepare the FTX $1 million hackathon and crypto summit held at the Miami Heat Arena,

00:12:56:25 - 00:12:59:07
Bennett Tomlin
which was the one they put their name on briefly.

00:12:59:07 - 00:13:03:19
Bennett Tomlin
They spent a total of $2.3 million on this event,

00:13:03:19 - 00:13:04:22
Bennett Tomlin
which was attended

00:13:04:22 - 00:13:05:22
Bennett Tomlin
by 1,200

00:13:05:22 - 00:13:20:25
Bennett Tomlin
people. They were spending crazy amounts. They said she was authorized to spend like without a budget, whatever it was needed to get this event done. There was so much of this kind of like self-enrichment here that

00:13:20:25 - 00:13:23:29
Bennett Tomlin
get to your question as to how are they not being criminally charged.

00:13:23:29 - 00:13:26:03
Bennett Tomlin
That's just grift.

00:13:26:03 - 00:13:27:06
Cas Piancey
Yeah obviously.

00:13:27:06 - 00:14:01:28
Bennett Tomlin
The other person we need to talk about, of course, is Barbara. Barbara Fried. Sam Bankman-Fried mother and her specific role. She, as you alluded to at the very beginning of this episode, described herself as her son's partner in crime of the noncriminal sort, and Sam made sure to sing her praises to his team, making known to her that he intended to rely on her direction regarding who to give to, how much to give to, and how it should be disclosed, and told them that it would be good for them to follow her advice as well.

00:14:02:00 - 00:14:23:15
Bennett Tomlin
And what seems really interesting is she seemed to have a great deal of control. The lawsuit even alleges she was able to unilaterally commit funds of Sam Bankman-Fried’s to her political action committee Mind the Gap, meaning without Sam's authorization, she was able to take Sam's money, donate in Sam's name to her political action committee,

00:14:23:15 - 00:14:25:24
Bennett Tomlin
which is a great deal of trust.

00:14:25:24 - 00:14:35:02
Bennett Tomlin
And even inside her own committee, when she had to talk about some of these donations, she would say things like, I don't know exactly what interconnected entity he sent the money from,

00:14:35:02 - 00:14:42:29
Bennett Tomlin
but the business is real and revenue generating, which again, I think points towards kind of the interchangeability of these entities for these folks.

00:14:42:29 - 00:14:43:29
Bennett Tomlin
What I think

00:14:43:29 - 00:14:46:26
Bennett Tomlin
really gets interesting is Nishad Singh,

00:14:46:26 - 00:14:54:13
Bennett Tomlin
who's already pled guilty for conspiracy to defraud the Federal Election Committee, as well as a variety of other conspiracy charges.

00:14:54:13 - 00:15:01:15
Bennett Tomlin
He was one of the people who appears to have served as effectively a straw man donor for Sam Bankman-Fried

00:15:01:15 - 00:15:07:04
Bennett Tomlin
and was advised in this process by Barbara Fried, Sam's mother.

00:15:07:04 - 00:15:14:01
Bennett Tomlin
At one point when they were discussing donations to her organization, Mind the Gap, And she suggested

00:15:14:01 - 00:15:26:27
Bennett Tomlin
that now that my connection to Sam is publicly known because we don't want to create the impression that funding MTG is a family affair as opposed to a collective effort by many people, including some mystery guy Nishad Singh.

00:15:27:03 - 00:15:28:22
Bennett Tomlin
Just when she was suggesting that

00:15:28:22 - 00:15:38:21
Bennett Tomlin
on their end they would prefer his name was the one that was donated to mine The Gap and to the Sam Bankman-Fried. And similarly she was worried about a lot of their political donations.

00:15:38:21 - 00:15:40:12
Bennett Tomlin
there's a really telling one

00:15:40:12 - 00:15:42:24
Bennett Tomlin
where she's warning him an email

00:15:42:24 - 00:16:00:23
Bennett Tomlin
one of these days. Soon some reporter is going to think to look more closely at FEC reports, do a search for donations by company and just reframe this as the FTX's juggernaut rather than the SBF juggernaut or even worse, suggests you were using Nishad slash Carolyn as fronts.

00:16:00:23 - 00:16:05:21
Bennett Tomlin
And again, later, just the last one to really put kind of a cherry on top of her

00:16:05:21 - 00:16:11:01
Bennett Tomlin
seeming knowledge of some of the criminal acts that Naushad Singh has pled guilty to,

00:16:11:01 - 00:16:11:19
Bennett Tomlin
she said,

00:16:11:19 - 00:16:16:10
Bennett Tomlin
I would counsel strongly against giving an undisclosed form under your own name

00:16:16:10 - 00:16:17:29
Bennett Tomlin
and continued further in that email.

00:16:18:02 - 00:16:24:01
Bennett Tomlin
You could get Nishad or Caroline to contribute to the PAC some of the total amount you

00:16:24:01 - 00:16:25:07
Bennett Tomlin
are willing to give,

00:16:25:07 - 00:16:27:23
Bennett Tomlin
but that has its own costs and risks.

00:16:27:23 - 00:16:36:00
Bennett Tomlin
And I think this as well as some of like the more specific tax advice that Bankman was giving FTX on

00:16:36:00 - 00:16:39:24
Bennett Tomlin
their specific finances and stuff like that point towards

00:16:39:24 - 00:16:43:06
Bennett Tomlin
potential knowledge of criminal acts.

00:16:43:06 - 00:16:56:26
Bennett Tomlin
I tweeted out shortly after I read through this lawsuit or as I was about halfway through reading this lawsuit, if I'm being honest, Stanford Law professors desperately Googling what to do if I'm an unindicted coconspirator.

00:16:56:26 - 00:17:04:29
Bennett Tomlin
And as you alluded to previously, that is kind of what this feels like. It feels like these two law professors who should have known better had

00:17:04:29 - 00:17:11:19
Bennett Tomlin
high level knowledge of things that people have already pled guilty to and were deeply involved in the business.

00:17:11:27 - 00:17:27:01
Bennett Tomlin
Bankman's specifically was even mentioned on an internal document as a member of the management of FTX US, along with only a few other names, They had knowledge they were inside the organization and they had some amount of presence.

00:17:27:01 - 00:17:30:19
Bennett Tomlin
One last thing that I think really hammers that home.

00:17:30:19 - 00:17:35:07
Bennett Tomlin
When we went to consensus and we talked about this in our episode that we did after that,

00:17:35:07 - 00:17:39:07
Bennett Tomlin
Anthony Scaramucci was talking about his experiences

00:17:39:07 - 00:17:43:15
Bennett Tomlin
in the lead up to and aftermath of the FTX's collapse.

00:17:43:18 - 00:17:48:27
Bennett Tomlin
And one thing he said that seemed to be corroborated in the lawsuit is that

00:17:48:27 - 00:17:53:15
Bennett Tomlin
Mahan was involved in them attempting to get the emergency funding.

00:17:53:15 - 00:18:06:21
Bennett Tomlin
And as we said and we shared the audio clip of Scaramucci saying it, Bankman apparently told Anthony Scaramucci or intimated to him that there was an asset liability mismatch at FTX

00:18:06:21 - 00:18:40:01
Speaker 1
What happened to me is I was actually speaking in Sarasota, Florida. There was rumblings that day, I think it was November the sixth or something like that or seventh. The Monday was the seventh. And then I got back to New York and I spoke to Sam's dad about the problem, and it was intimated to me that it was a an asset liability mismatch, that they were leading redemptions and there were assets available, but they weren't necessarily liquid and they needed time to get the liquidity and they were looking for some rescue.

00:18:40:04 - 00:18:55:19
Speaker 1
And so at that time, I was, you know, a good citizen and I'm a partner in the business. Effectively, they want a piece of my business. I was certainly trying to help them on their fundraising round. And then I talked to his dad later in the day. How much money were they? Well, they were trying to talking about it.

00:18:55:25 - 00:19:18:22
Speaker 1
And I said, we're talking about $1,000,000,000, which seem. Yeah, a lot of money. That certainly would be manageable in the context of the size of the business. But later in the evening, that number went from 1000000000 to 4 to apply it. And then I said, okay, there's obviously a problem and it's a bigger problem than they want to admit to.

00:19:18:25 - 00:19:38:08
Speaker 1
And so I made the decision that evening. I got on my phone, I got myself a JetBlue flight down to the Bahamas, and I wanted to see for myself what was going on. You know, listen, I put my name and reputation at stake. I introduced him to a lot of people, Brad and I, one short year ago, and I believe you were there with us.

00:19:38:10 - 00:20:01:28
Speaker 1
We had Crypto Bahamas at the bottom of Del Bretton. I organized a dinner for the likes of Tony Blair and Bill Clinton and a whole host of luminaries. One short year ago, Invest were sort of still hard to believe that we're where we are right now. And so I needed to see it for myself. So I went down there and I would say that the war room was despondent

00:20:01:28 - 00:20:06:01
Bennett Tomlin
and this was an exchange that should have no duration issues.

00:20:06:03 - 00:20:20:00
Bennett Tomlin
That means for at least several days before FTX declared bankruptcy, at least according to Scaramucci’s version of the story and the lawsuit also alleges he was down there. And part of those talks to get emergency fund raising, he knew

00:20:20:00 - 00:20:22:12
Bennett Tomlin
FTX was insolvent.

00:20:22:12 - 00:20:23:00
Cas Piancey
Yep.

00:20:23:00 - 00:20:24:15
Cas Piancey
I don't know what's going to happen. Right.

00:20:24:15 - 00:20:27:21
Cas Piancey
I want to clarify as usual that we're not lawyers.

00:20:27:21 - 00:20:32:17
Cas Piancey
We don't pretend to be we aren't going to suggest

00:20:32:17 - 00:20:36:20
Cas Piancey
that we would have any better idea of what's going to happen

00:20:36:20 - 00:20:38:20
Cas Piancey
with any of this than anyone else.

00:20:38:24 - 00:20:40:05
Cas Piancey
What's being described

00:20:40:05 - 00:20:41:02
Cas Piancey
sounds like fraud.

00:20:41:02 - 00:20:44:13
Cas Piancey
It sounds like a breach of fiduciary duties. It sounds like fraud.

00:20:44:13 - 00:20:45:08
Cas Piancey
sounds like

00:20:45:08 - 00:20:45:25
Cas Piancey
criminal.

00:20:45:25 - 00:20:48:16
Cas Piancey
And I don't know how that plays out.

00:20:48:16 - 00:20:51:11
Cas Piancey
we're going to get an idea based on how

00:20:51:11 - 00:20:54:05
Cas Piancey
the co-defendants in the FTX/Alameda stuff

00:20:54:05 - 00:20:55:16
Cas Piancey
who have already pled

00:20:55:16 - 00:20:56:14
Cas Piancey
what happens to them?

00:20:56:14 - 00:20:57:26
Cas Piancey
I don't know yet. Nobody knows.

00:20:57:26 - 00:20:58:28
Cas Piancey
I can presume

00:20:58:28 - 00:21:03:22
Cas Piancey
they're going to get a lot less time than SBF. I really believe that. I don't know if it'll be true.

00:21:03:22 - 00:21:04:23
Cas Piancey
We're going to find out.

00:21:04:23 - 00:21:05:29
Cas Piancey
My belief is

00:21:05:29 - 00:21:06:29
Cas Piancey
strongly

00:21:06:29 - 00:21:07:26
Cas Piancey
that they will see

00:21:07:26 - 00:21:12:23
Cas Piancey
a significantly less amount of time in prison if they get prison time at all.

00:21:12:23 - 00:21:16:26
Cas Piancey
Outside of Sam Trabuco, who we still haven't heard from, I think he

00:21:16:26 - 00:21:19:29
Cas Piancey
when he does decide to appear, will be doing a lot of time in prison.

00:21:19:29 - 00:21:22:05
Bennett Tomlin
We should add in the interest of

00:21:22:05 - 00:21:32:06
Bennett Tomlin
journalistic fairness that lawyers for Joseph Bank men and Barbara Fried issued a statement to several outlets where they say these allegations are nonsense.

00:21:32:11 - 00:21:37:29
Bennett Tomlin
That house we lived in and referred to our as our house and that was paid by FTX funds was in no way

00:21:37:29 - 00:21:49:24
Bennett Tomlin
criminal or fraudulent, yadda, yadda, yadda. And then they throw in some stuff about how John Ray is wasting all this money. And this is a distraction. This is meant to inflame people right before our son goes on trial.

00:21:49:29 - 00:21:54:08
Bennett Tomlin
And so some version of that is their statement. And that's that's the liberty I'll give it.

00:21:54:08 - 00:21:55:28
Cas Piancey
We've talked about this before as well,

00:21:55:28 - 00:21:57:15
Cas Piancey
they already put it down in writing.

00:21:57:15 - 00:22:01:13
Cas Piancey
They can say whatever they want now. I don't really fucking care if they deny it. You sent the emails.

00:22:01:13 - 00:22:03:12
Cas Piancey
Out of context, my fat ass. And like in it, We've said it before. I don't know if you're going to do crime like this on this level, if you're going to be doing, you know,

00:22:06:13 - 00:22:08:22
Bennett Tomlin
They're out of context, Cas.

00:22:10:21 - 00:22:14:24
Cas Piancey
We've said it before. I don't know if you're going to do crime like this on this level,

00:22:14:24 - 00:22:16:02
Cas Piancey
if you're going to be doing, you know,

00:22:16:02 - 00:22:19:14
Cas Piancey
moving tens of millions, hundreds of millions of dollars at a time

00:22:19:14 - 00:22:20:01
Cas Piancey
the name of,

00:22:20:01 - 00:22:21:19
Cas Piancey
you know, crime, I mean, sorry,

00:22:22:07 - 00:22:24:08
Cas Piancey
not of the not of the criminal sort.

00:22:24:14 - 00:22:25:25
Cas Piancey
But if you're going to be doing this,

00:22:25:25 - 00:22:31:04
Cas Piancey
I don't know, man. These guys are law professors. It's hard to believe, but it makes you question everything.

00:22:31:10 - 00:22:35:00
Cas Piancey
And this is this is the last point I want to make. It makes you question everything. These guys had crazy reputations in Silicon Valley and the education world, right? Upper education world. They were well known for their for their essays

00:22:34:06 - 00:22:36:07
Bennett Tomlin
What if the lines are tapped?

00:22:45:12 - 00:22:54:12
Cas Piancey
had crazy reputations in Silicon Valley and the education world, right? Upper education world. They were well known for their

00:22:54:12 - 00:22:56:24
Cas Piancey
for their essays and their their statements about

00:22:56:24 - 00:22:59:24
Cas Piancey
tax law and and Fried particularly about

00:22:59:24 - 00:23:03:12
Cas Piancey
criminals. And, you know, treating them correctly and all this stuff.

00:23:03:12 - 00:23:07:27
Cas Piancey
It didn't take that much money for them to completely give up their reputation

00:23:07:27 - 00:23:09:27
Cas Piancey
and do the exact opposite

00:23:09:27 - 00:23:12:09
Cas Piancey
of what they'd been teaching for decades.

00:23:12:09 - 00:23:13:14
Cas Piancey
That's crazy.

00:23:13:14 - 00:23:14:17
Cas Piancey
That's crazy.

00:23:14:17 - 00:23:18:11
Cas Piancey
And it's not just them. And I hope people realize that. Like,

00:23:18:11 - 00:23:23:05
Cas Piancey
it just makes you question everything so much more because who who are you going to rely on now?

00:23:23:05 - 00:23:26:14
Cas Piancey
people are going to throw away their decadeslong reputations

00:23:26:14 - 00:23:27:17
Cas Piancey
in academia

00:23:27:17 - 00:23:28:08
Cas Piancey
and

00:23:28:08 - 00:23:30:17
Cas Piancey
everything that they once stood for,

00:23:30:17 - 00:23:32:29
Cas Piancey
for some millions of dollars in some property,

00:23:32:29 - 00:23:33:26
Cas Piancey
I mean, that is

00:23:33:26 - 00:23:39:17
Cas Piancey
that says something. And I don't know if that's an American societal issue. That's a global issue. I don't know, man.

00:23:39:17 - 00:23:41:01
Cas Piancey
But it's troubling to me.

00:23:41:02 - 00:23:43:15
Bennett Tomlin
there's certainly issues with many of the elites in America.

00:23:43:15 - 00:23:49:17
Bennett Tomlin
I think both Joseph Bankman and Barbara Fried spent a lot of time around people who were richer than them,

00:23:49:17 - 00:23:54:20
Bennett Tomlin
who they thought they were smarter than and had at some level a belief

00:23:54:20 - 00:23:58:17
Bennett Tomlin
that this was finally their chance to be both smart and rich.

00:23:58:17 - 00:24:01:06
Cas Piancey
Warped, warped and sad and

00:24:01:06 - 00:24:03:06
Cas Piancey
certainly a statement on the the way

00:24:03:06 - 00:24:05:25
Cas Piancey
academia, higher education in America works,

00:24:05:25 - 00:24:08:27
Cas Piancey
especially at these private institutions. It's super sad and super corrupt.

00:24:08:27 - 00:24:14:16
Cas Piancey
And if you want to stop that, if you want to do something about you know, if you want to do something to stop this kind of

00:24:14:16 - 00:24:15:01
Cas Piancey
gross

00:24:15:01 - 00:24:18:18
Cas Piancey
academia stuff, this fraud, donate to CasCoin guys.

00:24:18:18 - 00:24:19:22
Cas Piancey
It's super simple.

00:24:19:22 - 00:24:22:10
Cas Piancey
Anyway, I think that's going to do it for this episode.

00:24:22:10 - 00:24:27:10
Cas Piancey
Remember, hit the Like and subscribe button and all that stuff. I hate it when people say it, but I know I have to.

00:24:27:10 - 00:24:28:08
Cas Piancey
Thanks for listening.