The Binance & FTX Collapse | Crypto Bankruptcy & Crash.

this video is not brought to you by FTX

who's a Founder just lost a 94 of his

net worth in the crazy crypto Wipeout

happening today it's maddening instead

this video is brought to you by the

brand new course that I am releasing on

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other programs on building your wealth

the crypto Market is in utter collapse

mode with big

time this recording down over 10 10

percent revisiting briefly the lows we

have not seen in Bitcoin since a June

20th and 19th so where Bitcoin traded

around 17

596 dollars today thanks to liquidations

a falling to 17

147

rebounding to about

18.3 thousand dollars folks all of this

because of the collapse the unexpected

collapse of FTX and now folks are

wondering if there's only one Jerome

Powell style figure left in crypto how

is something that's supposed to be

decentralized going to survive if that

one person turns out to be Shady a scam

or also bankrupt well in this video I'm

going to catch you up with absolutely

everything that happened today in the

crypto market then we'll also look at

coinbase CEOs response wants to what's

going on in the market and we'll analyze

who's this remaining person whom without

crypto might collapse now don't get me

wrong I want to be crystal clear I'm a

big fan of blockchain technology I think

the underlying technology will at some

point in the future be as common in our

daily lives as water and electricity in

other words I think blockchain will

become a utility a standardized utility

of which there will be a value and that

value could be denoted in the value of

Bitcoin or ethereum depending on which

blockchain ultimately ends up being used

if it ends up being one of those at all

we'll see who knows maybe every

corporation themselves will have their

own blockchain and they'll intermingle

with others that's all speculation the

point is there's unfortunately a

difference between blockchain's

fundamental value and markets and

markets react to liquidity problems and

when greedy institutional investors try

to create leveraged products and then

some kind kind of underlying Panic

happens you get liquidations and

liquidations lead to force selling of

cryptocurrencies that are unfortunately

caught in the mix

so what happened today well the first

thing that happened is we found out that

FTX is basically going

basically going bankrupt and their FTX

token is now down over 70 percent on the

day the FTX token is a ticker symbol ftt

when you go to coin at market cap you

can see it's down

75.3 at the time of this recording down

to five dollars and 46 cents the plummet

took it from about 22 this morning uh

all the way down to 5.46 do also keep in

mind though this trend or the trend for

ftt hasn't been great at the beginning

of the year we were sitting around 45

ran up to about 50 bucks by March and

trended down throughout the summer when

Bitcoin hit its lows ftt was trading for

about twenty three dollars actually

slightly more more than where it was

trading this morning when we were at

about twenty two dollars and that's

because there were a lot of rumors

circulating that some pain was coming to

FTX and even though Sam bankman freed

said the rumors about problems at FTX

are fake news

unfortunately FTX needed a bailout and

that's where this person CZ comes in

that's to catch you up to speed where CZ

comes out and says this afternoon FTX

asked for our help there is a

significant liquidity crunch to protect

users we signed a non-buying letter of

intent intending to fully acquire

ftx.com and helping cover the liquidity

crunch we will be conducting a full due

diligence in the coming days things to

know about that first FTX is the

international branch however that

International fear that's happening at

FTX which is going to lead more

International FTX users to demand

withdrawals could end up spreading to

the FTX us version even though

technically they're separate I think a

lot of customers at the FTX us version

are going to think oh I better get my

money out and unfortunately when a lot

of people get fearful and take their

money out what ends up happening well

you end up creating exactly what

companies try to avoid a bank run

essentially but because there's no audit

of these companies there's no federal

reserve FDIC SEC uh you know

um finra none of that actually auditing

these companies we don't know if they

have sufficient liquidity to actually

cover the withdrawals that are being

demanded of them some rumors suggest

that FTX is seeing withdrawal requests

of anywhere between one to three billion

dollars in just the last week and unless

they have all that cash available

unfortunately they've got to go figure

out where to get cash from somewhere

else all of this stress is starting to

impact other companies as well coinbase

was reporting outages this morning and

now the CEO of coinbase has the

following to say first off I have a lot

of sympathy for everyone involved in the

current situation with FTX it's

stressful anytime there is a potential

for customer loss yeah customer loss is

the most important thing you want to

avoid because that's what leads to

bankruptcy remember when Voyager digital

started having liquidity issues and they

started limiting withdrawals that was a

big red flag to get your money out of

Voyager because it ended up leading to

their complete collapse and bankruptcy

the only thing people were able to even

have a claim of or on in the bankruptcy

proceedings for Voyager digital was cash

and I'm not talking about stable coins

uh like a usdc I'm talking about

straight up US dollars so if you didn't

move your coins to cash at these

centralized exchanges your claims in

bankruptcy court were basically

eradicated that's because there is no

lender of Last Resort to bail out these

sort of companies like the Federal

Reserve in fact here's an interview of

me talking about this and telling my

audience about it because I posted this

video obviously on my channel when I

spoke with the founder and CEO of block

fi a company that was also nearly

destroyed by the three arrows Capital

collapse which led to the collapse of

Voyager and subsequently nearly blocked

Phi and what's crazy about all this is

block 5 was almost bailed out by FTX

but now FTX is going bankrupt anyway

look at this throwback clip so you know

I think our our scale and capitalization

and experience and risk management is

something that really uh stands apart

from other uh folks uh that operate in

this market

nice so yeah I mean that's interesting

because uh when the market crashed there

and in March there's no fed coming in to

bail out the crypto market right there's

no lender of Last Resort and it sounds

like that was almost you guys so you

guys were like go ahead

yeah I mean look we're the we're the

largest

um and and we you know we think of

ourselves as uh certainly a company

that's interested in growing more client

relationships and offering more products

to our clients and being successful from

a uh from a capitalistic perspective

just absolutely crazy looking back to

this but what else did the CEO of

coinbase have to tell us let's take a

look at this I do know that link down

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linked down below so what else did the

CEO of coinbase have to say well Brian

Armstrong says coinbase has no material

exposure to FTX or ftt and no exposure

to Alameda so FTX is obviously the

company FDT is the FTX token and Alameda

is the sort of holding company that Mr

Sam bankman freed owns uh which is this

guy who is basically mission

accomplished achieved giving away all of

his a fortune and is now leading to

memes circulating that look like this

Alameda research

CZ walking in to bail out FTX and the

Elon Musk sink so you could let that

sink in oh punny so

Mr Brian Armstrong goes on to say that I

think it's important to reinforce what

differentiates coinbase in A Moment Like

This this event appears to be the result

of risky business practices including

conflicts of interest between deeply

intertwined entities and misuse of

customer funds lending user Assets Now

this is really interesting this is a CEO

who suggests it is a misuse of customer

funds to potentially be lending user

assets but wait a minute coinbase

applied to allow lending but they got

shut down by the SEC so I feel like this

is kind of kicking somebody for

something you would have been doing

anyway

and now you're alluding to this being

risky I mean obviously risk management

was an issue otherwise they wouldn't be

potentially going bankrupt here but uh

kind of kind of interesting do keep in

mind this sort of lending issue all

having to do with stable coins or a lot

of it having to do with stable coins

it's an issue that we've talked about in

this channel as well in fact back in

March of 2021 I explained how this whole

lending stuff just collapses in fact

here's the clip we think hey it's pegged

to the dollar it's pegged to the dollar

one uh one to one and if it's back to

the dollar one to one it's kind of like

having cash except it's kind of like a

high yield savings account but that's

the problem it's not it's a loan if they

made you sign a document saying you

agree to lend this and you could lose

all of it people probably would be less

inclined to do this but that's all in

the fine print they just say hey sign up

and earn interest on your cryptocurrency

it sounds so wonderful they don't make

it clear that this is actually a loan

now that doesn't become a problem

because right now your gusd doesn't

fluctuate in value because it's packed

to the dollar and the markets are

working normally prices are going up

you've got nothing to worry about

because as prices go up there there

usually isn't stress in the markets

right so when does this become a problem

well let's say Sally says you know what

I'm going to get some margin I'm going

to buy Bitcoin for a hundred dollars I'm

gonna get 25 of margin from Voyager here

and I'm gonna have 125 dollars invested

in Bitcoin now let's say Bitcoin goes

from 55k to 5K that's a big drop it's

about 91 right well this is going to go

down 90 to about 12.50 what happens now

well now Sally gets wiped out Sally got

destroyed and this could be a flash

crash this could be a day Sally

instantly gets destroyed because you

have Smart contracts that instantly take

your money away give it to Voyager the

problem is Voyager is left with an asset

that's worth a whole lot less than what

they thought it would ever be worth so

now they only have 12.50 they just lost

money when a company or an Institutional

Investor loses money and this happens at

scale amongst hundreds or thousands of

different client accounts because we

have no idea how many people are on

margin we don't get that kind of

transparency from the system we don't

know we don't know how often this gusd

is Lent out over and over again we have

no idea let's say boyager goes bankrupt

okay Voyager goes bankrupt because

they're like wow we just had all these

margin losses well cryptify is probably

going to have some issues as well but

I'll tell you the first thing that's

going to happen Kevin and Michael are

going to be like oh crap please let me

have my gusd back and all of a sudden

we're going to see a lot of people

instantly demand redemptions they're

gonna want yo give me turn my gusd into

dollars right now the Market's crashing

I'm freaking out

okay now and I know some of you are

gonna think Kevin come on the same stuff

happens in fractional Reserve banking

hold that thought okay I'm gonna put a

little note down here fractional Reserve

banking we're going to talk about

fractional Reserve banking hold that

thought because there's a massive

difference quite a few actual massive

differences here so what happens now now

you've got two people who think they

have a hundred dollars of gusd in the

bank they're like I want to redeem okay

well what happens Gemini and crypto if I

say hey look we're in a crisis right now

no redemptions literally no redemptions

they could do that it's happened before

look at bitfinex bitfinex a Chinese

company uses tether as their stable coin

and in October of 2018 they stopped

allowing deposits and so nobody was able

to convert uh US dollars or Chinese

dollars or whatever euros into tether

and the one-to-one peg of the tether

collapsed it went down as low as 85

cents to one dollar and there was no

market crash Bitcoin was stable around

six thousand dollars when that happened

no no crash no collapse and tether loses

15

boom like that but wait a minute it's

pegged to the dollar okay you think

Kevin and Michael are going to be able

to go to the fed and go yo I demand my

USD no fed's gonna laugh you they're

gonna laugh you out of the bank get out

of here we we did not bestow our trust

on the gusd you tried to inherit Trust

of the USD you tried to inherit the

Sovereign banking the uh the backing of

the Full Faith and Credit of the United

States via a stable coin but it doesn't

work that way quick example I have let's

say a thousand of these erasers and I

say hey I will always pay you one dollar

for this eraser right here because the

value of this eraser is pegged to the

dollar cool who are you trusting the US

government or me trusting me if I go

bankrupt worthless

same could happen here you'll get

institutional bankruptcies the value of

those underlying coins which are

corporate controlled these this is not

government control they're corporate

controlled usdc is a Consortium they're

private companies that control usdc

Gemini private company that controls the

Gemini coin so back to the CEO of

coinbase again coinbase has always

strived to be the most trusted player in

the space and we don't engage in this

type of risky activity yeah again

because you can't you wanted to but you

can't we don't do anything with our

customers funds unless directed to do so

by the customer we hold all assets

dollar for dollar and users can withdraw

their money at any time and that's fine

that may be true but that doesn't mean

that disruptions and dislocations in

other parts of the crypto Market

couldn't destroy the valuation of

certain currencies that you may be

having at coinbase right we are

Incorporated in the US this is true

they're publicly listed in the US and

they say that's because as we believe

transparency and Trust are important so

every investor and customer can see our

publicly or public audited financials

which show how we hold customer funds we

never issued an exchange token I think

it's worth just intercepting here and

saying you know just because you're

public doesn't mean you're not shady

you're going to go bankrupt in fact um

here's me with the CEO of Voyager

digital which was a publicly listed

company and is now bankrupt here's the

clip listen to what they say compared to

what coinbase just said the risk

parameters we've set as a public company

and why it's easy to see it in our

disclosures and our financials you know

we just put out our December financials

got posted on Canadian Cedar uh the

other day on Monday as did on the OTC

market so people can see all the data

what happens when the last man standing

of the crypto World goes bankrupt

because remember

Jerome Powell of the Federal Reserve can

print as much money as he needs to to

support functioning markets and

liquidity for users but when Sam bankman

freed runs out of money there aren't a

lot of Jay Pals left and Sam bankman

freed was deemed to be a lender of Last

Resort but he just ran out of money

today it's a historic moment in fact I

want you to see this clip

from months ago where I made a similar

analogy saying one day Sam bankman freed

could run out of money here it is and

then we'll talk about this other guy

until then bailouts from companies like

FTX is founder Sam banquin freed or

binance can keep crypto afloat they're

basically acting like the Federal

Reserve which remember when I said

you're going to wish you had a j-pal

who's referred to as the lender of Last

Resort well guess what CNBC is now

calling the founder of FTX

yup the lender of Last Resort just like

j-pow but even Sam bankman free doesn't

have a money printer like j-pal so that

means his support is more limited than

what j-pal can do Sam bankman freed

might be able to help prop the crypto

economy up around 19 000 Bitcoin as a

strong support but what happens when his

support stops what happens when true

Panic spreads because there's no Sam

bankman freed to make sure Voyager

digital can allow people to at least

remove some of their money from the

platform

TBD so what do we know about binance and

CZ and is it possible that CZ is a shady

character well

take a look at this piece and boy it is

a piece can crypto's richest man stand

the cold

what I've done is I've gone through this

piece I went through this when it was

first published and I've just recently

gone through it again this was published

just a couple days after crypto well

Bitcoin last hit its bottom cz's full

name is right here Chiang Peng Zao and

what I'd like to show you are some of

the highlights from this take a look at

this first they suggest that binance

remains the biggest company in crypto by

a mile processing more transactions than

all of the next four exchanges combined

that's not necessarily a good thing

though because binance is a company

that's the target of Investigations by

almost every Financial regulator that

exists the Department of Justice

commodity future and trading commission

the IRS the SEC you name it they're all

looking in to binance and there's a

reason for that because see binance is

technically owned by binance Holdings

which is a Cayman Islands firm which is

usually where companies go to kind of

skirt disclosure and lawsuits in fact we

technically don't really know who owns

binance Holdings or what their

motivations are now we know that CZ is

the owner of binance Capital Management

which is registered in the British

Virgin Islands now the problem with that

is it makes suing these companies really

hard when people sign up for an account

and then run into problems for example

binance at one point Shield tarot Luna

without giving warnings around their

promotion of Terra Luna this led to a

lot of lawsuits but not just this other

things have led to lawsuits as well

unfortunately a lot of people as we see

here just give up suing them because

they can't figure out which entity to

Sue or it's just so confusing to

navigate how to actually pin down which

person to serve because the ownership is

so Arcane in these either either the

Cayman Islands or the British Virgin

Islands that people are just straight up

confused like the lawyers are even

confused and it's their job to figure

out who owns these companies but you

literally have Bloomberg telling you

finance.com which is based in who knows

where and owned by God knows whom

they also say that when Traders sign up

for a binance account they agree to do

business with quote parties that run

binance which is basically a fancy way

of saying we don't really know who

you're doing business with

uh so some people say CZ just has all

the control that he's the one guy in

charge which is really interesting

because he refuses to show up in the

United States because he's fearful of

getting arrested in the U.S even though

he says he doesn't think he's gonna get

arrested there has been an

acknowledgment that he might get

arrested if he comes to the U.S and so

when he speaks at conferences in the

United States he does so via Zoom CZ

himself is based out of Dubai which

Dubai is one of those places that people

tend to go when they're trying to stay

away from regulation in other countries

and potentially avoid paying taxes on

the money they're making now we know

that binance got kicked town of the

United Kingdom on top of that binance

sued Forbes when Forbes did this hole

expose on how binance was setting up

bait and switch strategies for their

customers and then binance eventually

dropped that lawsuit you would think if

you know Forbes messed up here they

wouldn't drop the lawsuit just listened

to some of the shadiness there were

other signs that zaos pivot to

conventionality it might not be entirely

urgent the day of the interview Zao said

a reporter could visit the new Dubai

office but after a flurry of emails

calls and texts during which assistance

and PR Consultants made an array of

excuses a binance representative said

that in fact the office was closed

because of a surge in covid-19 cases

that was odd Zao hadn't made no

reference to the disease during the

interview nor had anyone else at the

company the previous day binance had

arranged a separate interview with the

company's head of Middle Eastern

operations who showed up unmasked at a

crowded hotel lobby where he appeared to

be conducting in-person meetings really

so the head of the Middle Eastern

operations is showing up in a Lobby to

do interviews in a Lobby and then 10

days later the head of publicity offered

businessweek a virtual tour a virtual

tour led by a head of the HR team but

before the tour binance explained that

the offices weren't exactly bustling but

gave the impression that there was at

least some activity in them saying quote

so we have offices but people only go to

the offices a couple days a week

okay this is literally like the last

company standing uh of of like huge uh

means in the crypto space because we

know obviously coinbase still exists and

like crypto.com and stuff but this is

the big boy and they're like the last

j-pow remember FTX was the first shape

out this is like the next in line and

after that

that's it J like the real jpow ain't

coming in to bail out crypto uh then of

course uh you know this this particular

article here ends with this uh reference

to binance tweeting saying they had 2

000 open positions and they were hiring

that they said ended up being just a

joke and they didn't actually mean they

were hiring you've got your scene over

from Ark whom I've had on the channel as

well and people are taking massive risks

saying it's been a crazy day at the

office FTX is basically insolvement

insolvent BTC testing new lows uh Sam

bankman Freed's Investment Company toast

binance planning to acquire FTX uh the

FTX token down 80 potentially headed to

zero CZ announcing this proof of Reserve

model this by the way I think is just a

kind of a a little weird Okay so look at

this CZ this is the guy who we just got

a profile on from Bloomberg is now

saying that all crypto exchanges should

do basically a proof of Reserve System a

merkel's tree is just the way blockchain

and hashing works you don't really have

to know what that means but what's

really wild about this is he's making

this argument that oh crypto exchanges

should not operate like Banks and run on

fractional reserves that way you have

all the money in case anybody wants to

withdraw it but the problem with this is

he's just suggesting this as an idea and

it's happening at a time of a massive

liquid did he crunch so sure this is a

great idea and it makes him seem like a

genius because it's like yeah that's

right screw the banks what he's really

doing is manipulating the world and

thinking yeah we're all still United FDX

screwed up okay they suck no problem but

the mission of crypto lives on yeah

let's do this

but they're not doing that and not only

are they not doing that they're probably

unlikely to ever do that because

transparency is the last thing we get

from CZ if anything everything is pretty

arcane and murky with CZ on top of that

he tweeted this stay seifu hashtag which

is a reference to their secure asset

fund for users and on their binance

website they say that the secure asset

fund was valued at one billion dollars

based on pricing in January on January

29th 2022 so they're trying to say like

hey we have this emergency Insurance

Fund set up that was established in 2018

to protect users funds and look we've

got a billion dollars over here well no

you don't because unfortunately you park

this stuff into things like the binance

token and the binance token that's down

like seven percent today uh yeah seven

point three percent today the binance

tokens falling so basically the more

that falls the less money you actually

have in the Insurance Fund so this is

kind of like saying hey we have an

insurance fund so that basically if

crypto tanks you could get your money

out but wait a minute that Insurance

Fund is funded by binance coin and if

binance coin tanks then there's less

insurance to protect people in case the

binance coin tanks there's a complete

disaster look it's like investing it's

almost like a tether on steroids over

here uh like whatever I think you get

the point these are the actual wallets

which don't actually show a billion

dollars anymore what they show now is

about 331 million dollars plus the

second account shows let's see here I

want to say it was about 150 million

dollars yeah here it is this is the

second account this shows about 144

million uh dollars available so really

you've got maybe 480 million dollars in

this Insurance Fund that's less than

half of what you said it was in January

and what you're kind of advertising it

as so even seifu isn't even really safe

so long and short of it bottom line Naya

keys not your crypto number one number

two when these big companies go bust not

only does it increase volatility but it

kills a lot of trust in the entire

system blockchain technology Will

Survive but the valuation of crypto

assets with all this insane speculation

and nonsense will come into a heavy

question especially if binance pulls the

plug and doesn't buy FTX if they don't

buy FTX FTX could end up going bankrupt

if FTX goes bankrupt we could see Mass

Liquidations in crypto as people well

basically as FTX goes through bankruptcy

and then what that could actually hurt

finance and if binance goes down

GG game over good game well played wish

you all the best check out the programs

on building your wealth link down below

and we'll see in the next one