Last updated on May 31, 2023
Brady Dale joins the podcast to discuss his book, ‘SBF: How the FTX bankruptcy unwound crypto’s very bad good guy’ and offer his thoughts on the present and future of cryptocurrencies.
Content Highlights
- Who is Sam Bankman-Fried exactly? Is he a crook? (Yeah, probably) Misunderstood? The author has known SBF for awhile and states that his subject was initially motivated by effective altruism, or EA … (1:27);
- FTX was undone by its special treatment of Alameda. If it wasn’t for that, “Sam would still be on the news all the time” today (10:54);
- Bankman-Fried’s apparent misreading of crypto cycles led to ill-timed bets after Bitcoin hit an all-time high in November 2021 (14:26);
- In one of SBF’s last conversations with the author, SBF claims he is unlikely to get a fair trial due to being proverbially hung already in the courts of opinion (17:59);
- Where does SBF rank among other financial market fraudsters? Perhaps Long Term Capital Management is the closest comparison… (23:52);
- Background on the guest, including what got him to write the book on SBF (34:03);
- Cryptos should eventually become a normal part of the economy. In many ways the story of SBF vindicates this (38:26);
- The world only really needs three blockchains: Bitcoin, Ethereum, and Dogecoin (44:28);
- Crypto regulation was supposed to have happened already, but it all seems to be talk (49:58).
More From Brady Dale
- Purchase the book from Wiley or Amazon;
- Twitter: @BradyDale;
- Subscribe to his Axios newsletter.
Quick Video Highlights From our YouTube Channel
Transcript
Nathaniel E. Baker 0:35
I’m here with Brady Dale, the author of a book called simply SBF. Sam Bankman-Fried, of course, is the topic of the book. And that’s the cover. But it says underneath that, ‘how the FTX bankruptcy, unwound cryptos very bad, good guy’. So a lot of ambiguity there in the title. Which begs the question, which is what a lot of us want to know, is just exactly who is this guy? What makes him tick? Is he a crook? Or is he misunderstood? Curious what your view is on this question. And on SBF in general.
Brady Dale 1:37
I’ve known Sam, we’ve never been in the same room together. But I’ve known him since 2020. That was the first time I ever talked one on one. We’ve had several phone conversations over the years. And we used to email or text pretty often about sort of the news of the day. As many reporters will tell you, Sam made himself very available. And in a very kind of un-, you know, a lot of people who are as prominent as he became, have a lot of PR people in between them and the press in or, you know, it’s very filtered. He was very easy to get a hold up and was good at you know, giving pithy comments on things. So, you know, you’d like to hit him up. And so a lot of us did. So I think the important thing, and I really try to deal with this in my book and explain it to people is that Sam was driven by a set of ideas that are known as Effective Altruism, and he had this goal of building up a huge pile of money in EA, you know, there are people who are trying to do good for the world. And they’re trying to do good for the world. In a data informed way, they’re trying to they’re trying to do stuff that like has been investigated as actually being helpful and doing the most helpful things they can. And Sam was very bought into that. And there’s sort of two ways in which EA people are recommended to try to do good in the world, a small number of them are it’s encouraged them to just go out and actually do good like work for nonprofits, you know, work for good causes, and try to do good. But then for a larger number of them, you know, more often than not people in that world, go out and get high paying jobs, hopefully ones that don’t do harm, and make a lot of money and then give it to things to do good. And so Sam wanted to do that. And he wanted to like make just unbelievable piles of money. And I think the other argument that I make in the book is above and beyond a lot. There’s a lot of other folks in EA and you can see this in the way Sam talks about things. Sam also believed he was the smartest about how to do good. So it wasn’t just that he wanted to like trust the EA institutions on what he should, you know, give money to support, he was going to be actively involved in all of that. And so I think a lot of I think that informs a larger understanding of how Sam did a lot of things, and probably how he justified some of his behavior. Because my guess is, once you start to believe that you’re kind of saving the world, it becomes easier in a short term way to justify taking certain shortcuts so that you can build up the giant world war chest that you need to save the world. So that’s sort of my view of where Sam’s coming from to the question of Is he a crook or not? As you said, the courts will decide, but so far, there’s several billion dollars missing, that shouldn’t be missing. You know, that’s not good, you know. And, you know, it seems like that money is missing because his firm Alameda research wanted to make some really big swings, as the crypto market was coming down so they could so they could cement their place as the top dog as the Alpha predator and credit crypto going into crypto winter, which wasn’t mistaken is it was a kind of a crazy thing to do. But so So yeah, you know, innocent until proven guilty, but with billions of dollars, you know, on the winds. It’s tough to see and other interpretation.
Nathaniel E. Baker 4:56
Okay. I want to get get back to that and what ended up unwinding FTX. But first to go back to SBF here, if you can track all these, all these acronyms
Brady Dale 5:09
They’re deeply wired for me
Nathaniel E. Baker 5:11
Me too, I mean at least the SBF versus FTX one.
Brady Dale 5:15
Yeah. Right.
Nathaniel E. Baker 5:16
So what you just said and some other things here about Sam, which immediately brings up some contradictions about this person because you say ‘personally, I have no doubt that SBF had every intention to give piles and piles of money away.’ And also that he would, in fact micromanage that process.
Brady Dale 5:40
and indeed not to cut you off. I already had I mean, he had in many ways. I mean, it wasn’t like he was just like, letting it say he was giving a lot of way and kind of always had anyway
Nathaniel E. Baker 5:49
Okay, so there’s that on the one hand, but on the on the other hand, ‘he talked a lot about them how much money he had more than anyone in crypto full stop.’ That’s another quote from the book. And maybe he wasn’t flashy with like, personal things. But he talked about that a lot. He was certainly out there. He was certainly a self promoter. So how do you, you know, kind of, I guess, reconcile those two kind of extremes, if you will?
Brady Dale 6:15
Well, I don’t think those two things are, you know, someone said something to me about that that made it I can’t they they justified it? Well, I mean, it was it was helping to, I mean, I think on some level him talking about how much money he made, helped to sort of convince people that they should work with his products and tools, because you know, and so it was like it was kind of good advertising for him. I also don’t think there’s a big contradiction there in terms of sort of bragging about how well you’re doing and giving a lot of a lot away. I mean, you know, one could argue that all through history, super wealthy people have flexed on their super wealth by giving tons of money away. You know, I think, I think philanthropy and ego often go hand in hand. So I think those two things are pretty consistent.
Nathaniel E. Baker 6:55
Okay. Okay. Fair enough. But at the same time, you have what looks like fraud. You know, I mean, couldn’t have done this lawfully. Why did he need to go to these lengths? To Do you know, assuming these allegations are true, if they’re even partly true?
Brady Dale 7:11
Well, that’s the thing. I mean, like, you know, oh, what’s his name? There’s, there’s one of his staffers who I interviewed in the book, who, who worked with his big gun clients was sort of the service guy for the really the really big clients. It’s one of the points he made? I don’t know. Well, I think the reason the money disappeared at the end is because they were they were trying to make some big swings. They’re trying to make some really big investments there at the end. And they went awry. Some of them were bets on the, on the exchange, and some of them I think we’re probably that’s off. We don’t we won’t really know until the trial. But this is a point that lots of people make is, why did he need more money? Because there’s no question that FTX was making a lot of money on its own. Alameda might have been screwing up and no longer, you know, the golden child that had once been, but there was no reason not to just hit that point with FTX doing as well as it was because people really liked using FTX people like they said it had, you know, good good user experience, you know, good functionality. It was an exchange people enjoyed using they were happy using, you know, it was probably making an easy seven figures a month or something like that, you know, is making a lot of money, maybe more like six figures, but still plenty of money. It’s like, why did he need to make more and so he I mean, the short answer is he didn’t, you know, it was, but I think the thinking was, I think, I think what he thought was one he wanted to overtake by Nance I think he saw by Nance is vulnerable, because there’s always all these questions about finance from a regulatory standpoint and sort of their you know, whether or not they’ll be taken down by governments, the world at some point, I think he thought he was good enough at Bill. You know, I said early on that sort of the main security model for his platform was a meme. And that was like he had built this idea around his company that it was very trustful, trustworthy. And I think he thought he could ride through that. And then if finance did go down, FTX would be in a place to take that, but they could only really have it cemented if they got to scale. And you talked to Sam, he was always always always talking about scale, he was always talking to get into getting to millions of people using crypto, really big apps, like he wanted everything to go really big. And obviously, the bigger it went, if FTX was the biggest exchange out there. And of course, he had this other idea of building the Super App, you know, that he wanted the whole world to use that like all money would go through. That would mean lots and lots of money going into his conference, which all of that money would be more influence, he could have more impact he could have on the world so I don’t think they needed to do it. In less. Sam believed that the only real successful outcome for them to collapse over time was to be number one, which might be true, you know. So that’s what I think is thinking why is it still you know, led to a bad place but that’s what I think is thinking was
Nathaniel E. Baker 9:57
Okay, interesting. So it sounds they’re not too much unlike I hate to bring it up, but Bernie Madoff had a legitimate business as the broker dealer if we go back here to previous generations of financial crisis, and but he just had this whole scam, literal Ponzi scheme, but it doesn’t sound like like SBF was not that brazen, like, you’re saying like, this is a this is there was a legitimate business business underneath here and he wasn’t purely operating a Ponzi, like made off? Where did it all go wrong? Do you think and and Could there have been? Could there be an alternate universe where like, they kind of went through here where their risk control is just too poor? And they’re, I guess, operations and other things just to? Oh, right now,
Brady Dale 10:41
it looks like the whole problem was special allowances for Alameda Research. And that really seems like that that’s the entire problem. So could it have been okay, absolutely. I mean, like 100% it, like, if they just had done what they said and treated Alameda like any other customer, and, you know, led me to, like, take some losses led me to fall apart completely, you know, FTX would be here today, keep Sam would still be on the news all the time, you know, like, all that you would be able to say against him is Oh, the hedge fund he started at all with his tanked are isn’t what it once was, which would, you know, be a blow to his ego, I guess. But FTX is doing so well. He kind of like who cares, you know, and even then with the kind of money they were making, even if they just let Alameda bleed out to a certain point, they probably wouldn’t have even died is proud to had a crappy year, and then they you know, they plowed some more money back into it, it goes back. But as far as we can tell, the problem with SBA with with FTX was that Alameda just had a different set of rules. And everybody else, you know, like, for example, on the exchange, you know, his his, his risk engine was people our view was pretty well wired for if you were if you were taking a margin trade, you know, if things got too edgy, you got liquidated, which is what should happen. And you got liquidated fast like it was, you know, it was brutal about it. But that wasn’t true for Alameda, Alameda, you know, doesn’t look like it got as many checks as other people did. So it allowed it to trade a little bit faster, which was its own little advantage. And then it was able to get carry negative balances is what you know, subsequent reports have shown like it could go negative and what it appears and again, we won’t really know until the courts get to look into this. But it does appear that it wasn’t just that they were doing negative margin trades, but actually, they were just taking money directly out of FTX. And covering costs for Alameda, you know, one of the most damning things that was in I think it was the CFTC complaint, or maybe was the SEC complaint, or maybe was both is like they point out that famous moment When Caroline Ellison says to CZ, that she’ll buy all the FTT that he wants to sell at a fixed price. You know, the regulator’s looking at the books, you know, after the bankruptcy, you know, say that she must have known that Alameda didn’t have the money to make that purchase. And she must have assumed she would take it out of FTX as they had for you know, they as they had in the past. So, yeah, there’s definitely a world in which it could have survived. They just needed to, you know, treat Alameda research the way that they said they were treating it as just another customer on the platform.
Nathaniel E. Baker 13:10
So why did they give them this preferential treatment? Was it due to the relationship between Sam and Caroline? Or was it was it?
Brady Dale 13:16
Well, they’re all the same? I mean, they were all the same, you know, this. I mean, that’s, it’s all the same. You know, like, they’re technically separate companies, but it was all the same thing. I mean, you know, then yeah, I think I think they wanted Alameda to be a big success and have, you know, lots and lots of money that they could use to further research or further invest into things that would further the goals of FTX. And the whole, I call it the SAM glommer in the book, you know, it’s all it was all just one thing. I mean, it’s a million different entities all over the place, but like, Yes, this is true, like all companies, they have a million identities and they’re all just like one thing, really, it’s another, more one thing that they’re ones, but I think with it, you know, I think more and more evidence shows that like, you know, yes, Sam technically wasn’t CEO anymore at Alameda research, but it seems pretty clear that he was still pretty heavily involved. And so yeah, I think they just wanted to keep being successful. The thing that I find the most mystifying about all this to me though, is you know, in my opinion, if someone has been around here for a while, there is a real difference between people who’ve been in crypto through a prior bull and bear cycle and the ones who came in and a more recent one. The ones who came in more recently have a harder time knowing when to get out like when the party’s over, right? Those of us who’ve been around for prior cycles sort of know that like when Bitcoin hits a really big crazy high and then it starts to go down it usually is gonna keep going down like never, that’s that’s far every time it’s kept going down until it goes around around 80% And then it like rides for a while and there’s another crazy run a little while later when something else exciting happens. What’s surprising about Sam and the SAM llama it is he was he started in crypto full time in 2017 just like I did, so he should have understood like others that Did you know around November of last year was the time that the party was over. But when you when you look at the story from 2023, it really does seem like Alameda research was taking big swings through the first half of 2023, which is crazy. Like you shouldn’t, you know, that’s newbie behavior, like you should know that, like, the big wins are over. And the people who want to look smart later on, are starting to move out into like, safer things, you know, even if that’s just putting it all into Bitcoin or whatever, which is still risky, but like it’s not, you know, that’s going to that’s going to be safer over time than trying to make more big bets. And it looks like they were trying to make more big bets. They’re trying to get you
Nathaniel E. Baker 15:35
Yeah, you said 23. It was 22. Because they they’re no longer
Brady Dale 15:38
Yeah. In early 2022.
Nathaniel E. Baker 15:42
Yeah.
Brady Dale 15:43
Yes. So the time was 2021. Yeah, it’s all becoming a blur. Yeah,
Nathaniel E. Baker 15:46
yeah. It’s okay. Okay, fair enough. But I mean, even though I mean, there were there are blips here along the way up or down. So maybe they can be forgiven. Or maybe the it had already gone that far off the moving average.
Brady Dale 15:59
Why am I screwing these years up so badly? After November 21, when Bitcoin hit all time highs? I think everyone you know, and it was decisively it wasn’t you know, it was like at the start of the next year was like at $40,000, which is still a good bitcoin price, but it’s way down from the high. Anyone who is still if you’re like a January 1 After that November and you’re still like, I think we can make a few more big bets. Like that’s just craziness like that. That the air was coming out of it. You know, that was just that was just obvious. There. It could work. I think it will work differently at some point in the future, but we’re it’s definitely the market is not there yet.
Nathaniel E. Baker 16:46
So Alameda Research. So Alameda is was a hedge fund.
Brady Dale 16:50
Yeah, that’s how it all started. Going back. Yeah, that’s what Sam started. First, he started Alameda Research that runs for a couple years, then he decides that they’d be better off if they had an exchange, and then they started FTX. But they were all part of the same thing. And Sam was the CEO, both for a long time. And then And then, you know, he stepped down and Caroline and Carolina and the other guy took over. I don’t write about Carolina, the other co founders much in the book, because I just don’t really think that they’re actually that important, I think for the things are important. But they were all doing what Sam wanted is my take, as far as I can tell. I and I think we’ll see more of that later on. But yes, that’s far three of the top executives have Gary Caroline, in this shot, have all pled guilty, and our you know, our on the, on the Department of Justice. And that’s, you know, and all those complaints,
Nathaniel E. Baker 17:42
I say, right, and so but but they are all free. I mean sandbank when fried is out on bail, a massive bail. But it’s interesting here when your believe one of your last conversations with him. And you quoted in the book. And he says that he’s concerned about getting being able to get a fair trial, in light of all the news that’s come out of him. Do you think that is a realistic concern on his part? Or is he just trying to defend himself?
Brady Dale 18:08
I think he’s trying to defend it. I do think at that point, look, the the big, outstanding question. And to me, and I write about this in the book. And I think the thing we’ll find out at trial. And this is like this gets to be really nebulous. And the truth is, it doesn’t really matter in the end, but it to me, it does matter. So the big outstanding question is, was the loss from Alameda? Was Was that was that that’s that went wrong on the FTX platform was that, you know, long or short positions they had taken on margin that went south? Or did they actually take money out of FTX and move it over for Alameda to us sort of directly, they both get you to the same place, right? Like if you allow the firm to have a zero balance, and it takes really big margin swings. And then then those things go wrong. And they’re liquidated. And but you didn’t have proper blocks on so it goes negative. But to me, it is kind of from a moral stance, and I have a feeling that jurors might see it this way too. I don’t really know. But like, it is a different thing to like, let a sort of peer company make bets on your platform. And it is to it shows a higher level of intentionality than it is to like, take $10 million with a Bitcoin pull it out and dump it into another, you know, entities while and that’s, to me that’s sort of the big outstanding question, which we’ll see from all this. I think one of the points that Sam was trying to make when we talked and some of the arguments he was trying to use to defend himself is that like, some of that sort of the the negative realization was, was more he was more risks which are real costs, but they still were like unrealized risks, and they sort of did get realized towards the end. And so I think that’s kind of his argument for why he believes from some perspective, he could be innocent, or at least, not as guilty as people think so which is it was just a really abstract point, I don’t know, if you’re, if your listeners will follow it, or even if I entirely follow it, but that’s sort of that I think that’s kind of where he was coming from when we talked at the end of last year. But, you know, since then, some darker allegations have come out, for example, this allegation that they, they bribed the Chinese official to get, you know, some of their accounts unlocked. I mean, if, if that turns out to be true, if you evidence of that turns out to be credible, you know, that’s pretty, that’s pretty heavy stuff. And I also just don’t know how, at the end of the day, you get around the fact that like, several billion dollars are just missing. I mean, this might, you know, you don’t talk about if you don’t deal with crypto very much, it might just help to unpack one thing here. A lot of people have talked about what happened with FTX, as a bank run. And it was sort of it sort of was, but the really crucial thing for folks to get about crypto exchanges, is that they’re not banks. So like, all banks, and I’m not being a conspiracy theorist, when I say this is just how banks work. All banks are vulnerable to bank runs, right? Because the whole well, and the whole way banks were I mean, this is not this is no secret, the way banks work is people put in deposits, and they lend most of that money out to, you know, work in the economy, that’s how it works, they only ever have a portion of the money there. That is the design of banks, this is economics one on one. However, crypto exchanges should not be at all like that, they should have 100% of all deposits at all time. Because the point of the crypto exchanges, you know, you put in your ninja coin, and I put in my alien coin, and we trade them back and forth between each other. But 100% Of that total amount is there the whole time. And the exchange is making money on our trades, they’re taking a little bit off of each of our trades. And maybe you’re smarter than me and you and the dollar value of you know, alien coin goes up. And you made that bet, right. So like when you cash out, you’ve got more money, but the net total value in there is always the same. That’s the way it should work and exchanges, because they the money making model of exchanges is just allowing traders to me and for them to make a little bit of money on the trades. And in the meantime, all the money should just sit there. And that’s why it’s so disconcerting, that like FTX had a bunch of money missing, because that shouldn’t happen with Exchange, it should all just be there. In fact, with every trade that happens, it should get a little bit easier for exchanges, because every time someone trades a little bit money becomes the exchanges, you know, so they have some cushion, you know, but that doesn’t seem to be worse happens. That’s why this story is really dark.
Nathaniel E. Baker 22:47
Yeah. And there’s exchanges are regularly have their own regulators and stuff and, you know, just regular stock exchanges. So which doesn’t seem like FTX was and this is maybe part of the problem with these things that even though behaved like an exchange, it wasn’t regulated like one, because I guess it didn’t do stocks. It just did cryptos
Brady Dale 23:08
crypto, yeah, though they did. They did some they did. I don’t think regulators love this, but they would they did some synthetic stock trading anything. Anyway, that but that was all just that just that just is how their margin trading mechanism works out. It was still ultimately all crypto exchanges.
Nathaniel E. Baker 23:27
I’m curious, have you studied other, you know, fraudsters in the world of finance or elsewhere? And do you have any thoughts on where SBF ranks or for you if there’s any similarities between other ones? The ties them all together? Maybe? I mean, I think, you know,
Brady Dale 23:52
this was I guess, I don’t have a great example to compare them to. But I think FTX was sort of the classic story of a company that had made a lot of bets that had gone really well for it, double down on those bets, at some point, made some losses and then tried to make it back, you know. And I think that’s probably why they kept doing crazier and crazier things is because they they had made a lot of successes in the past, and they thought they could make it back. And you know, I think bull markets have a lot of way have a way of making smart people into idiots because they convinced smart people that they’re geniuses without noting the fact that like, kind of everybody’s winning, like if you’re convinced in a bull market that you’re like, especially smart, you’re only fooling yourself because everyone’s doing well and then if you let that convince you as things start to turn that you can do that you can win all you know you’ve made some losses, you made some big bets, you can win it all back then you’re then you’re just going to be in
Nathaniel E. Baker 24:57
more trouble. Interesting, actually, what But you what came to mind when you were describing that was LTCM Long Term Capital Management? Isn’t anything about that? Because they did this. They had? Well, the difference was they had so they actually had some literal Nobel Prize winners on their staff. Yeah. But they developed this model that that worked until it didn’t run out when it didn’t. They had to cover it up and did a bunch of other things. And it almost took down the hole. Depending on who you ask may or may not have almost take down the whole financial system.
Brady Dale 25:25
Others. I know that the classic book about that, that I need to read, but I haven’t I can.
Nathaniel E. Baker 25:29
Yeah, when genius failed. Yeah, yeah. Yeah. Roger Lowenstein. Yeah, actually, I would make all the hedge fund reporters that I knew hedge fund reporters read that as their introduction. Yeah. Just because he does a really good job explaining some of the trades and things. And yeah, a little bit of a culture. All right, we’ll really interesting stuff here. Do you think that um, what do you think creates this is getting a little bit off base here? But what do you think creates an individual like SBF? Is it? Is he just a product at a times? Is there something unique about it? In this era, perhaps during the crypto era? You see the poster child now of cryptos gone bad? Will there be another one? I want to talk more in the second half of the show, by the way about cryptos? In general? So leave that out there. But yeah.
Brady Dale 26:12
What made SBF? I mean, you know, I think SBF was unique in a couple ways. One, I do think Sam is unusually smart. I mean, though he did some really stupid things. I do think he’s unusually smart. Think what confused everyone about Sam is, and I said this long before any of this happens. Most people in the crypto world fall into one of two camps, either. They’re just greedy and see a great place to make money because it’s a new market. And that’s always a good spot to make a lot of money fast if you don’t screw up. Or they’re believers, like they think crypto is changing the world. And they’re on this mission. And most of those folks would like to get rich to a month away, but like, but they still are believers, right? Sam was confusing, because he he was something else. He was mainly there to make money. That’s what he wanted. But he was also a believer. He just wasn’t a believer in cryptocurrency. He was a believer in this other set of ideas. So he also unlike the other people who wanted to make lots of money, we weren’t really missionaries, he was a missionary. And so I think he confuse people because people sent this certain amount of like, missionary quality to him. And they’re used to when they see a crypto person as a missionary quality. They’re like, Oh, he’s one of these, you know, crypto believers. But that wasn’t the kind of missionary that he was. And that’s why a lot of times, he was willing to like screw over crypto people not really play nice, whatever, because he was there just to make a lot of money so that he could, you know, save the world later or kind of now to, you know, kind of keep that mission going. But he just was a different sort of category. You know, one of my sources I spoke to who knew Sam pretty well also argued, and I can’t really speak to this, but they argued he also because he grew up in the valley, you know, and they argue that he is also a product of that culture. You know, he grew up around people who ended up being, you know, multimillionaires and billionaires and just had grown up steeped in that culture of like, to be a success means being a major success. And so he chose a different rubric by which to judge major success. It wasn’t just about money, it was about being a mega philanthropist. But you know, there could be something to that to that as well. To me, what’s most important about Sam is that he had a philosophical worldview that he committed to, at an extreme level, which is always dangerous. And he was so smart and so talented, that he was able to do more damage than most people who get kind of, I mean, I would say router. I mean, he really even he was radicalized. I don’t think EA is a worldview that tends to lead towards radicalism. I don’t argue that in the book, but I do think he kind of became radicalized on it. And that is a part of his. That’s the part of what made him dangerous. That’s what I think that’s how I would explain Sam.
Nathaniel E. Baker 29:10
Very interesting. Can we talk about AAA real quick and describe what that is? Sure. Yeah.
Brady Dale 29:15
Yeah, it’s effective altruism. So that was the ideology that Sam adhere to, as I say in the book, I hung out with yeas for a little bit. Here in New York City in 2019. I was kind of hanging out with some yesterday actually sort of a little gathering that was kind of adjacent to that world. And they’re just people who believe in devoting their life to doing as much good as they possibly can with whatever amount of time that they have on earth. And for some people that’s doing good for some people that’s making a lot of money and giving it to good things. And the other core thing about yay is is doing good. They try to define rigorously. So they really support causes that have good data backing, you know, whatever it is they believe in. You know, they’re very into mosquito nets. For example. Um, one of the things I liked about them is they’re very into having big philosophical conversations about, like, what the most important issues are and bringing a lot of information to the table about that, you know, either Those were fun conversations. So that’s the crux of who they are. I mean, I think on some level there, it’s also I think, so that’s the ideas if you actually spend some time around them, and I have, it’s very much a social cultural movement, too. So unlike a lot of other kind of groups exist out there. They there’s a very strong kind of community component component to it. They’re really you know, I grew up in the Protestant church, you know, very mellow Protestant church in the Midwest. And to me, EA looks a lot like kind of a godless sort of church replacement. It’s like a way of having some community around a set of ideas. So it’s a pretty it’s, I would argue, it’s pretty nice thing overall. It’s just like, like any ideology. Some people can go crazy with it. And I sort of think,
Nathaniel E. Baker 30:53
and Sam was an adherence to EA before he was a crypto person. Oh, yeah. Or even a finance person from the sound of it.
Brady Dale 31:00
Yeah, I mean, I think he he’s talked about this before. I think he kind of committed to EA sometime in college.
Nathaniel E. Baker 31:07
Okay. Yeah. Interesting. All right. Wow, this is fascinating. All right. Brady, Dale, I want to come back and ask you some more about yourself about your book, about cryptos in general, and about some other stuff that we are first going to take a short break. If you’re a premium subscriber, you will not get the break. Don’t go anywhere. Don’t touch the dial. We’ll be right back. In fact, we already are. I welcome back, everybody. Brady Dale, the author of SBF you are also is it a reporter editor and Axios reporter Yeah. Reporter Axios. So this is the segment of the show, where we ask our guests to tell us a little bit more about him or herself. How he or she arrived at his station life. Usually most people on the podcast are professional investors, or economists, or academics. We do get the occasional reporter like me and you. But so yeah. So tell us how you how you how you came to this whole thing he came to invest in cover crypto, and how you came to write the book. Yeah. So
Brady Dale 32:10
I started as a journalist in like 2013. I was a freelancer for several years, working for various people. But I was most of what I did was about tech. I had I had been in the nonprofit life for a long time and had kind of wanted to get out of at a certain point, and sort of go into a lot of tech meetups in Philadelphia and kind of liked that world or like their attitude, their their viewpoint. So it’s kind of all before the tech lash began. And kind of starting to speak the language and stuff. And I knew I wanted to leave nonprofit life. And I didn’t really think I would manage to be able to become a reporter I sort of thought I’d end up like writing tweets for Starbucks or something. But some opportunities arose. And people I knew were editors in places they gave me a shot, and it kind of kept going. So then, you know, I became a tech reporter, my first full time I was kind of sort of full time at this place called technically, Brooklyn, I cover tech in Brooklyn, was really more of a part time job but and then I became full time at the former New York Observer, it was there for a couple of years. And I’ve always gravitated towards writing about weird stuff, like whatever the edgier stuff, is the newer stuff. And so I was doing that. And I discovered crypto kinda because I was interested in blockchains it first as a way to do IP management. So that was kind of how I discovered him. It was really nascent at that time, and it still is, but but that’s kind of how I got interested in them and sort of learn to think about them. And so then as the initial coin offering, boom, started to happen. I wrote around, wrote about a few ICOs that was a pretty weird thing. And at that time, coin desk, which is sort of the big crypto publication out there in the world, and was then to, was just starting to expand its editorial team, it was really tiny at that point, I think, in late 2017, it was like six reporters or something like that. And so they had seen my Ico coverage, hit me up and asked me if I wanted to come on, I wasn’t really specifically trying to be a crypto reporter, but I really wanted to work someplace else. At that point, I was ready to I was ready to move on. And so I went to coin desk and kind of the rest is history, you know, I had a good time there seem to you know, have a pretty good response from the audience. I think the next big phase for me the sort of the, after Ico is you know, sort of a general quarter and then the next time I really kind of found a rhythm for myself in the market was in 2020 when the when the decentralized finance boom happened. And that’s actually when I met Sam for the first time met him I talked to him in the middle of the defy boom, which is called the fi summer now, and, and that’s led to other opportunities, like working for the defy, and then ultimately Axios. And the story of the book is, well, it’s sort of, I guess, two parts. I had already been interested in SAM as a subject. I wanted to write a book about defy summer. And specifically if for folks who read the book, there’s a part in the middle about this create You know, this thing called sushi swap, and it’s battle with the big decentralized finance exchange uniswap. And Sam appears in that story, and I thought that would make for a good book. And so I had done a bunch of work on that story at a book proposal together, it hadn’t gone anywhere yet. But then when FTX blew up, Wiley found me and asked if I’d be interested in you know, putting together a book really fast on Sam and the story of leading to FTX. And that was an opportunity because that uniswap Sushi swap story did kind of bring Sam on to the public stage. That was an opportunity to tell that piece of the story in there, but also all the other things around it. And so, so yeah, I agree to it. I wrote the book. And I mean, I mean, so
Nathaniel E. Baker 35:39
they’re great. This is Well, time then as we record this on May 1. Right. That’s really interesting. So you actually had a your background was first tech, and then into finance, backdoor through through the crypto world. Very interesting. So where do you see the crypto world? Now? Where do you see in general? You do talk about this a little bit in the book? Yeah,
Brady Dale 36:01
I don’t think crypto is going anywhere. I think I think it will i It’s my opinion, and always has been that it will eventually become just a normal part of the economy. That has always been my stance. You know, as I always tell people, you know, I graduated high school without an email address. Hardly anyone had them when I graduated from high school. Yeah, and I, and I saw email come along. And so the web come along, as a social come along to the cloud comes along. And I saw people dismiss and make fun of those things every time and just the whole classic, like, why do we need this new whatever dumb thing. And, you know, just sort of go through the classic Gartner hype cycle every time. And what I came away with was, if a lot of smart people are excited about a new weird thing, usually it’ll get somewhere though it might take a while. And I think crypto is another example of that. I think it’s taking longer because it’s disrupting considerably more entrenched powers, you know, but, but I, Sam, ultimately, the story and I say this, I say this pretty clearly in the book, Sam, story is a proof of the the fundamental points that crypto made, I mean, Satoshi created Bitcoin, so that you could control your wealth on your own. So you could manage your wealth in a wallet that you completely had serenity over. And yet people keep using exchanges where they turn their assets over to somebody else because it you know, aids with speed and aids with convenience and sort of take some cognitive load off of them. But the probably the biggest problems that arise in crypto are when people trust somebody else, like they did FTX. And the whole point of this technology is to make things trustless. Right, so so people who don’t get it sort of look at FTX is like proof that crypto is all garbage. And it’s like, no FTX is proof of like, the core point from the start is like, don’t trust verify.
Nathaniel E. Baker 37:58
Yeah, and you talked about that in the book. But wouldn’t you at some point need to use this, you know, currency that you’re holding in cold storage? I mean, anything is safe, if you keep it in under a mattress, right?
Brady Dale 38:10
Well, I mean, the crypto mattress is better than then. Yeah, exactly. Yeah, you’ve got to use it. But even then you can, you know, like, for example, so you want to, you know, I talked about uniswap and Su SWAT before, right? Those were both exchanges. Those are both decentralized exchanges. They’re noncustodial exchanges. So if you want to trade for, you know, I’ve got alien coin, you’ve got ninja coin, we want to trade. You know, we don’t trade directly on those exchanges, we trade with the exchange. And so I don’t, I don’t release my alien coin until the exchanges head this is I’m gonna send you ninja coin. And you know, it’s a decentralized app, you know, you can see how it works on there, and no one can change it. And so you know that that trade is going to happen. And you don’t, you don’t release custody until the moment of trade where as opposed to on a centralized exchange, you release custody, and then you do all kinds of trades, like whatever, and then eventually, maybe you decide to take it back up there. But but you don’t with a decentralized exchange, you don’t have to do that you it’s a noncustodial to noncustodial exchange. So it’s different in that way. So there and crypto continues to work to solve those problems sorted to make more and more ways that economic transaction trustless. But the economy is big and complicated, and it’s gonna take a long time, you know, but, but they’re, they’re, you know, they’ve come in some way on some of those things. And there’s a lot more to do.
Nathaniel E. Baker 39:28
Yeah, and when it comes to the use case for crypto, and you say this in the book that the main use case right now at least is gambling on other cryptos.
Brady Dale 39:37
Right.
Nathaniel E. Baker 39:38
So do you see that changing and how?
Brady Dale 39:41
sure, I mean, you know, for example, we are already seeing now, I mean, it’s not very visible to you and I it’s not very legible, do you and I because we’re here in the developed world. But, you know, more and more evidence is coming out that in parts of the world where the economy is not worth what more important that the current the local current It is not good. More and more people are discovering cryptocurrencies, you know, not as much Bitcoin there is some of that, that people do like Bitcoin, but more and more they’re discovering, for example, stable coins, you know, coins that, you know, reflect dollars elsewhere, but you’re, they’re able to manage in a trustless way. And so we’re seeing lots and lots more of those kinds of technologies get picked up in those places. And, you know, you and I don’t need that we’re here in America where most things work, well, the dollar is fine and stuff. So it’s just like, Oh, what do we care, but like, more and more of that kind of stuff is happening? You know, there’s these cases, like, for example, I, you know, I don’t know what your listeners think about Canadian truckers, like, I don’t really have a stance on them. But, you know, they were doing a protest that made the Canadian government bad and mad, and they shut down their bank accounts, you know, and one of the points of cryptocurrency is to be able to be what’s called censorship, resistance to be like to be able to transact value, and not have anyone stop it. And a bunch of those folks discovered cryptocurrency at that time, too, it’s just like, well, they can shut down the banks, but they can’t shut down crypto wallets. So you know, those kinds of things happen, they get to be, you know, useful in certain edge cases in the global economy. But then one of these days, you know, people may, and it sort of seems there’s more and more evidence of this, like, they may get hip to the fact that cryptocurrency is also a cheaper way just to move large amounts of money around the world, you know, like, we’re all paying a decent amount of money for the price of using Swift globally. I mean, it’s not much in a given transaction, but it adds up to a ton over time, the price of moving piles of money around in crypto, and it a it has fewer people in the middle sort of taking cards that hasn’t, you know, none really just that just the networks themselves and be it can do it cheaply and more fast, you know. So there’s other advantages, I think, will should kick in eventually, you know, we’ll see, but who knows, or it could just be an edge thing forever. And this could be as big as never gets, you know, I could be wrong about all of it. I just don’t, that would be my guess.
Nathaniel E. Baker 41:50
Hmm. Interesting. Wow. Okay. Yeah, those are some there’s some good points here about about that. And as far as the proliferation of coins and Bitcoin versus ether versus dodgy coin versus whatever, do we have too many coins? Now? Do you think there’s going to be a bleeding out process of that? Or has that been already done?
Brady Dale 42:10
Was Evan already done? I mean, it’s weird when you look at these cryptocurrencies, like the amount of value they still have, you’re just like, what, you know, I say in the book, I think that I think there’s only really three blockchains that the world has shown that they really are, you know, they really want and that’s Bitcoin, etherium. And I would say Dogecoin is one of those. I think Dogecoin is I think the world has decided that Dogecoin is, you know, canonical chain, everything else is trying to prove that it has some unique value, and we’ll see and probably some more of them will, but are there too many? blockchains? I think almost certainly, you know, one of the things that really bothers me is how new layer ones sort of like alternatives to Bitcoin keep getting launched even now. And I could be wrong, but but those look to me like cynical plays by investors, just like, they know, you can get people excited about these things you get, they buy a bunch of them cheap, the thing goes live, people get excited, they buy like crazy, it drives the price up early on, they sell during that they make a bunch of easy money, you know, rinse and repeat. That’s as far as like, you know, these things like Sui and Aptos. And all that that have come along. I mean, that is the reasonable person’s read on most of those things right now. You know, they’ve got some nice technology, we’ll see. But even then, almost all the cryptocurrencies that have come out for a while now, basically, I mean, I can’t think of one that doesn’t fit this. They’re all just a theory of knock offs, in you know, with different packaging, and, and, sure, their shortcomings to how etherium started in the first place. I mean, it was the first to do that. But, you know, it does continue to keep solving problems, it has far more developers than any other blockchain like it’s not even close. So I don’t really see any of them circumventing them. And so you’re not really seeing any of these blockchains do anything that is dramatically different than what etherium is already doing. You know, it’s just, it’s just Bitcoin, etherium and 1000 etherium clones so far, you know,
Nathaniel E. Baker 44:07
so, yeah. Okay. Interesting. You know, what do you think of the crypto industry in general, like it seems to be it’s massive, and even now, you look at like some of this conference covers. There’s one last week. And these things are huge. Like, it’s bigger than any financial conference I can think of, at least in recent memory.
Brady Dale 44:30
I wouldn’t know financial conferences. I only got a crypto.
Nathaniel E. Baker 44:33
they’re big. I’m telling you. And there’s just all this stuff. And is that what do you make of all that? Is that Is that too big?
Brady Dale 44:42
Is it well, it people are, look when when chunks of the economy are new and different and disruptive. There is an outsize chance to make a lot more money, you know, to also lose a lot more money but it’s just like, you know, new growing sector ORS grow way faster, you know, some day, crypto will be boring. And those big gains will be over and crypto conferences will probably look a lot like contemporary finance conferences, or they’ll just be the same conference, it’ll be the same thing. You know, finance conferences will be crypto conferences, you know, like when that happens, and then it’ll just be like, we’re excited about 4% returns, you know, like folks are everywhere, where else and that will just be the way it is. And that’ll be what it looks like when crypto succeeds. But, you know, people who who buy the argument for crypto are excited to be here now because they see a chance for outsized gains. And I think that’s why more people show up at those things. They have more energy, you know, I mean, it’s it’s a bad it’s a gamble, but they could some of some of them have been right already. Some of them are doing great already. So you know.
Nathaniel E. Baker 45:46
Do you see more crypto regulation coming down the pike. I mean, we hear about it a lot every day now.
Brady Dale 47:21
I’ve been hearing about it since 2017. I’m always really, I get I get I get pitches every week about this expert knows what’s going to happen with crypto regulation. Let me tell you what’s happened the entire time I’ve been in this business is like basically nothing, you know. But like, I mean, last week representing McHenry said, he’s gonna roll out the consensus conference when they were talking about a minute ago, that they’re gonna roll out big crypto legislation in the next few months. I mean, you know, new legislation in three bucks via coffee at Starbucks, I mean, you know, like, it’s more than three bucks. Because I’ve been to Starbucks for a while, but, but my point is just that, like, you know, anyone can write it, you and I could write some legislation and submit it doesn’t mean it’s gonna get passed. But, um, but yeah, so who knows? I don’t I don’t think here’s what I will say. I don’t think the Biden administration is going to do anything new. I think the only way anything is going to change is out of Congress. And Congress has a hard time passing anything. But if that were to happen, then yeah, things would change. I don’t think don’t look for Gary guns or the SEC, or I think any sec, under the Biden administration to do anything. And I’m not saying that as a partisan. I’m not a partisan. It’s just the administration has been pretty clear. You know, like, it’s just it seems, you know, last year, they put out this executive order asking their various agencies to study cryptocurrency and, you know, and to tell that to tell them if there should be concerns, and you don’t, you’re never going to if you’re, if you’re a president, and you ask your agencies, should I be concerned about anything? The answer is always going to be yes. You know, like, the only way you’re gonna get your only way you’re gonna get government agencies to say like, let’s move forward to be innovative is if is if a president says, I want this make this happen, you know, but if he says, like, should I be nervous? The answer is always gonna be like, yes, you should be nervous. You know, should I be nervous about peanut butter? Yes, these are these are problems with peanut butter. It’s very dangerous. We should regulate it more like that a lot. They’re always, you know, cover their own backsides and that way, and I think that’s I think, so I think the fact that the executive order was phrased that way sort of shows that they always intended to be non enthusiastic. That’s
Nathaniel E. Baker 49:28
interesting. All right. Well, there’s some interesting stuff here on the long term, prospects of crypto as well as this book SBF available by the time you hear this podcast for sure. And on that, will you tell us our listeners how they can find out more about you? I see you on Twitter. And yeah,
Brady Dale 49:48
I mean, you know, obviously, we’d love for folks to buy the book sort of get, you know, absorbed my voice for 300 pages. But the thing would really be great as if folks are interested in this stuff. My co writer and I crystal Kim, put out a newsletter. Better every weekday from Axios called Axios. crypto. If you Google Axios crypto, you’ll find it. We try to be real, you know, newbie to intermediate level friendly, and they’re just covering the important crypto news every single day doing some explainers, that kind of stuff. And yeah, I’m at Brady Dale on Twitter. So you know, follow that if you’re into Twitter, understand if people are not these days, but really the best. The best thing is that Axios crypto newsletter, check that out.
Nathaniel E. Baker 50:22
Cool. I’ll link to the Axios crypto newsletter, and also to the book where people can pick that up. And that’s all we got for today. Thank you all for listening. Thank you very much to Brady for coming on. Check out the book. We’ll see you here next week. Speak then. Bye.