#1951 - Coffeezilla

Joe Rogan (0:14)

I appreciate what you do Thank you. What you do is a very valuable service. Because you go so deep on some of these scammers, it's like, it's so important.

Because there's so many people that just, they don't really understand what's going, like the FTX thing, for example, the best one. Because I was so in the dark about this thing. I was like, what is happening? Like, what are they doing?

Try to break it down for us. Like, first of all, what is a, it's a crypto exchange, right? So how does that work?

Stephen Findeisen (0:43)

So the first question is when you get in, when you learn about crypto, you're like, it's this magic internet money.

Joe Rogan (0:48)

Magic.

Stephen Findeisen (0:49)

How do you get some of that? How do you get some of that magic internet money?

Well, you have to go somewhere to buy it.

And so it's a crypto exchange is where you kind of go. You put your fiat on your dollars or whatever, euros or whatever, and you put it into this crypto exchange. They have a bank and they work with that bank. Then they exchange that money for some type of crypto token. There's a lot of different tokens out there and-

Joe Rogan (1:14)

Explain tokens, because I don't understand tokens. I know there's crypto and there's tokens. Like what is the difference between the two?

Stephen Findeisen (1:20)

Yeah, tokens like is the individual, you can think of currency, right? So it's like the individual. So Bitcoin is, you have Bitcoin, then you have, it's one of the cryptocurrencies. You have Ethereum, you have Dogecoin, you have SafeMoon, you have FTT, which is what FTX was using as their native token. So a lot of these guys, you'll start a crypto exchange, and then you'll launch your own token that people can invest in, sort of like they're investing almost in your crypto exchange.

And so that was actually one of the ways that FTX really perpetuated their fraud. I can break it down. How much do you know about the FTX situation?

Joe Rogan (1:58)

Let's break it down for people that don't know about it.

Stephen Findeisen (2:01)

Let's do it. So FTX was this crypto exchange located out in the Bahamas, which is a great place to put your-

Joe Rogan (2:08)

Why do they do it in the Bahamas?

Stephen Findeisen (2:09)

Because it's unregulated. So the problem with doing stuff in the United States or something like Europe or something like that is you are subject to all these regulations which require you to be a little more careful.

Joe Rogan (2:24)

Oh, those are pesky.

Stephen Findeisen (2:25)

Yeah, they're annoying. So like the famous example is like Coinbase is in America and they have to file all these forms. They have to be, they're a regulated entity. They're a publicly traded company. So they have to report everything. So if you're offshore, you can kind of not do any of that. You can play fast and loose.

And for some people, they think that's better. They can offer, let's say like a hundred X leverage. Like you have a dollar, I'll let you trade with a hundred dollars.

And that's going to be like one reason you come to my offshore exchange. I can offer you more leverage than the guys who are like Coinbase or something like that. So FTX launches, let's start with who Sam Bankman Fried is. He's kind of at the center of all of this. Sam Bankman Fried is this guy who comes, he's the son of two Harvard lawyers. Then he comes up, prep school. He's kind of like built for success, right? He goes to MIT, goes to Jane Strait as this quantitative trader.

And then he goes into the crypto space and he launches FTX.

Joe Rogan (3:24)

He's very young, right? How old is he?

Stephen Findeisen (3:27)

I think he was, he is young. I'm not, maybe you can look that up, Jamie.

31

He launches Alameda Research First, which is just like this trading firm, which basically the idea here is, we have some ideas, we're gonna raise a little bit of money and we're gonna do these trades that are profitable in crypto. So the way he first made his money was he did something where he bought Bitcoin in the US and he sold it on these Japanese exchanges where it was worth more. So he was arbitraging this difference in prices. And then after he made his money that way, he launches FTX in 2019 And that's a crypto platform where honestly you can make a lot more money than just with a trading firm. So FTX quickly skyrockets in popularity. They bring on people like Tom Brady to promote it. Larry David in the Super Bowl. They kind of get buy-in from all these big sort of names and also reputable people like BlackRock, Sequoia Capital. They all invest in this guy. Kevin O'Leary famously promoted it for like $18 million.