Introducing: Scams, Money, & Murder

30:49And so I tried my best to try and go find resources. There are some people also that have been interviewed over the course of all of this that I had reached out to and gotten their two cents on and that kind of thing. But there were a lot of people that were left on their own without questions, without any resources. And maybe the few people that they did know that had used the platform didn't have any other information either. They had the same questions with the same lack of answers. And so you could have had 10 ,000 people texting in one group and it would have all been the same. It would have been a lot of frustration more than it would have been proactive.

31:26Because not only were the interviews coming out, you mentioned NPR, but the tweet, the story played out on Twitter, basically. I mean, I don't know if you were a big Twitter guy before this, but did you see all of it come out? Like you mentioned that you were a fan of Binance. That was SBF's competitor, CZ. I won't say his full name. I will for sure butcher it. But he tweeted, you know, as part of Binance's exit from FTX equity last year, Binance received roughly 2.1 billion USD equivalent in cash B, USD and FTT, which is FTX token. Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books.

32:12End quote. Did you see this? I saw that. Come out real time? I didn't see it come out in real time. I saw a post about it. I think it was on Reddit, actually. Somebody had posted it there because I don't have Twitter. And so I wasn't trolling the Twitter feeds or anything like that. But I did see that. That was my biggest red flag that things were wrong. Because again, Binance was someone that knew what they were doing, how to do it, regardless of any nefarious activities that they were involved in or not. They had been around. They had played the game. They knew how to manage upturns, downturns in the market, so on and so forth.

32:52And so I respected that. It was a huge sign that if they are not confident in an investment of that size and magnitude, there's something very wrong. because, again, they had been talking for some time and SBF had hinted at partnership or some sort of investment from Binance, which would have raised their profile significantly. There was the tweet also that SBF put out about everything's fine, liquidity's fine. I didn't see that until maybe a few days after it came out because I didn't have Twitter. Then it came when the implosion happened. People obviously came back to that saying like, well, why did he say this?

33:39And so on and so forth. So I didn't see that in real time. Even if I had the question of why did Binance all of a sudden just shake it and say, hey, without rhyme or reason, we are simply just liquidating everything. Not like, hey, we're going to pause. We're maybe going to do this in phases. It was, we're out. We're not saying anything. Good luck. That was a big message in the marketplace. Yeah. I mean, for you, did you think this could spread to more of the financial system? I mean, it sounds like you lived through 2008. Did you have a moment where you thought the whole system could implode?

34:22Of course. Yeah. My first thought was, how does this affect the market? How does this affect the legitimacy of all the other platforms? and are they doing the exact same thing? And do they equally have cash on hand to make good on all of their users or creditors? I immediately thought that. And I immediately stopped trading, pulled out any of the remaining assets that I had or as much as I could at the time. Because again, there were some restrictions because the run on the bank was definitely a real concern, I think, amongst the other platforms. And it took a few months, But finally, I had divested everything I had in crypto, which at that point was not a lot and had got it back into a traditional bank account.

35:09And after that, I haven't jumped back in. And clearly, things are operating fine for the most part. The market has had that recovery, has been had a fabulous year this year for the most part. And maybe I missed out. But at the time, I was not in a position to even consider that. It was ships on fire, everyone for themselves kind of a thing. When do you think it really sunk in that the money was gone? Because I'm sure at that point there was a ton of adrenaline. Get the money out, get it into a traditional bank, move as quickly as possible, try to salvage anything you possibly can. So when was it that it finally hit you?

35:51It was probably a couple of weeks. I can't remember the exact date. It was the first week in December. I had given the first NPR interview and it made me think, you know, I really should go check. I should go back through and I should be seeing if I can get on the platform, seeing what's really there versus not there. Because they were transfers on the end of Bitcoin and finance that said pending. That there had been something that had triggered a notification that said there's a transfer pending. And I figured because of that, eventually the system would get sorted out. Because at this point, there's still a huge doubt in everyone's mind that the money is completely gone.

36:39That it's just drained. And that it's a system issue. And that they need to reconcile this versus this. And there's just a lot of moving pieces. And it's taking time. Bankruptcy had been filed. So obviously the legal entities need to get involved and verify things. So it was definitely that first week in December when I sent a message to, I think it was Coinbase support and said, are these going to go through? And they said, no. As far as we know, these are just system triggers when an event happens. There hasn't been any other data sent through or any other meta tags suggest that these are legit.

37:20And if you want, we can cancel them out. But the likelihood of them coming through is nil at this point. And so on and so forth. So I was like, okay, it's really just gone. And that realization was very stark. Because at that point, it wasn't, I've lost some money. I'm going to have some. It was zero. I don't know how many people have had that happen before. But I had never had that happen in any other investments that I had. whether it was a bet, whether it was something from my youth or anything like that. Never from a fairly decent amount to zero in less than three weeks. And with almost no recourse of recovery.

38:07It was mind-boggling, but it was also terrifying at the same time. I can only imagine. So just to sort of zoom out, at this point, you had a bunch of other losses. and other investments. FTX had gone under. You basically had nothing. There was no hidden bank account or brokerage or something for you to live on. What was, I mean, you're going into the holidays too at this point to December. What was that like for you? I guess not just financially, emotionally and physically. Yeah. I immediately got in touch with a debt restructuring company because I had essentially told my debtors or creditors that I was planning to pay back what I had leveraged at the end of the fiscal year.

39:00That was kind of an expectation. And they had brokered a deal with me understanding that it was a short-term loan, essentially, that was going to be paid back in quick succession. And so they were fine with allowing me to go on. Not related to FTX. You just had a loan, right? Well, I used that money to invest more heavily in crypto in general, not necessarily FTX. So I immediately knew I was going to have to work with them and I was going to need professional help that I wouldn't be able to do that on my own. So I met with the debt collection company. We worked out a plan and their job is to work with people that you have debt with, your creditors and so on and so forth to come up with reasonable repayment structuring plans and so on and so forth.

39:51And I had my job. I worked at a company called Loom at the time and was doing fairly well from a career standpoint. And it was going to be extremely tight, but it was going to be manageable. I would be able to do it if nothing else happened. And, well, it wasn't until February when the tech layoffs happened and I got laid off from my job that things really got serious. And at that point, debt collection wasn't an option. And I thought, OK, where are the real options here? Bankruptcy was one of the first things that somebody recommended. it's not something that I had ever considered myself having to do, needing to do, or having to consider it all in the course of my life.

40:41I had liked to think that I was pretty financially prudent and that something like that was not in my future, but it was. And I had opted to do chapter seven, personal bankruptcy, but that is a qualification process that takes quite some time. Because they look back at your history and they say, okay, if you were here at this point and you're now here, why can't you do this or why couldn't you do this or what happened? And so my bankruptcy lawyer essentially said, you can't file right away. We can get everything ready, but we have to wait at least eight to 12 months because you won't qualify. There's a very specific bar that has to be met.

41:27And unfortunately, if they wouldn't look back right now, you have had some tough times, but you still wouldn't qualify. And so that started this essentially two year journey of not getting any income, not having full time work and having to scrape by in order to meet the qualifications to file. and then some events that happened after filing that truck things out in February, March, got out of it. And when I say got out of it, got out of the bankruptcy, got out of the foreclosure, any of the financial obligations and responsibilities I had prior to FTX. It's been that long. I told the crew on Thursday that my mother was nice enough to buy me some groceries at a fancy store that we have here called New Seasons.

42:24I don't ever shop there anymore because a piece of food costs$50. It's a very privileged thing to be able to go there. I just remember thinking, eating almond, realizing this is the first time my refrigerator has been full of locally sourced whole foods like vegetables and fruits and that kind of thing. It was two and a half years. That was a sad and also humbling realization to just kind of put together in that time. But it sums it up quite aptly in the sense of the catalyst of FTX, the job markets being laid off, going through all the proceedings to situate myself in a place where I can even begin to start to rebuild.

43:10And that's essentially where I am right now. And it's taken not as long. Wow. So it's safe to say that you went through a hard mental health time. Were you depressed? I don't think I was. In fact, I got the comment a lot that how are you handling this so well? And I don't have a straight answer for that. I didn't really think about it that much or try to pin it down. I just kind of said, let's keep going. Let's keep going. I just slide it into the tunnel, like don't give up. And that's really what kind of drove me. In fact, this place that I'm in right now is not my condo that I had owned. I recently moved in the last two months.

43:50I'm essentially living here for free. and the person that owns this is actually in Europe for the next few months and was nice enough to let me squat here while he's off doing fun things, I guess. But it was extremely challenging, but the challenge also brought a lot of opportunity for me to discover and question. I'm kind of an analytical person, And I can now understand and appreciate the kind of institutional process in which once people find themselves in a position of bankruptcy or insolvency, that the mechanisms and agencies in place to help lift people up or to support also are as detrimental as anything else.

44:44And it's this cycle that is very difficult to get out of if you don't have the resolve or even the sliver of resources to be able to do it. And I felt compelled to try and understand that, fight that in some instance, many times failure. And so it wasn't just, you know, the FTX and losing my job. It was fighting some of the bankruptcy trustees. It was fighting some of the court proceedings when it came to the foreclosure and how that all played out. and spending money that I didn't have, other people's money, to go to court and try and fight some of these things and just get laughed out of the courtroom, essentially.

45:23So it was a humbling experience, to say the least. Not that I didn't invite some of it myself, but I don't wish it upon anyone. And regardless of the trigger, whether it's FTX or not, there is a systemic issue in the country that allows you to be able to file for bankruptcy, but then does not allow you to necessarily come out of that or essentially benefit from the opportunity to do that in a way that moves things forward, in my opinion. In all honesty, the reason why I said I didn't think bankruptcy was for me is because I thought these people were lazy. I thought they were irresponsible. I thought there was a whole stereotype of things that I had thought people with bankruptcy in that realm of losing things or having to be in that situation, the kind of character they were, just to find myself in there and to be extremely humbled and humanized to realize that it's going to happen to anyone.

46:27I shouldn't say it probably can't happen to the PayPal mafia crew, but it could happen to normal people in the blink of an eye. And I wish that there were a better solution. And it's frustrating. That's probably the thing that drove me the most is why is it like this? Why are there no resources? Why can't I get questions answered? I'm being told what to do, but I'm not being told why. I don't have an advocate outside of paying someone to help me get through the process to try and solution something different or understand like, hey, is my situation worthy of this versus that. That's probably what drove me at the end of the day.

47:05So in other words, you're saying that the system around bankruptcy that's in theory put in place to help people out of a bad situation makes it harder to get credit or to get a new place, which is why it sounds like you're staying with a friend or to rebuild financially, which is where you were stuck. And while you were going through this. FTX was also going through bankruptcy. Were you able to get any of the funds through their bankruptcy process? Were you part of any of the class action lawsuits? I didn't partake in any of the class action lawsuits simply because I had enough going on in my personal life that it wasn't something that I had the headspace for.

47:51In fact, I needed to be away from that and not be involved. I did file a claim. However, that was very early days before things changed, before the new name came along. I'm still a little unclear about some of the FTX subsidiaries and now new holdings and that kind of thing. And they're obviously still experiencing major issues because payments have not been going out as they promised. At least I I haven't seen them anyway. I did file a claim. I did not want to not try to recoup some of the funds that I had lost. For their bankruptcy. For their bankruptcy, right? So you could get your authentication and verification done, which has been an issue.

48:37I have not done that yet. Again, extended the deadline to June 1, so I'm probably going to do that here the next month or two just to play the game. But initially I did mine and then I kind of washed my hands of it and I didn't want to partake in it. I watched a little bit of the trial and obviously heard the verdict and was like, that's great. Fantastic. Like justice is served, I guess. But it didn't have an effect on me. It didn't have an effect on what I was dealing with and what I was going to have to deal with and the challenges that I was facing, you know, in the months that I knew were coming up.

49:14And so, in all honesty, I don't know if people are going to see all their money again. They say they are. But if you go and look on the website, the amount of claims that they have, the amount of motions that have been filed just within the past couple of months is insanity. It's going to take years. I mean, they have the money. Great. That's one thing. Getting it to the entities that are needing it, sorting out all of those claims, because there's hundreds of thousands of them. I think it's just going to take forever. You've spent a lot of time thinking about all of this, I'm sure, living through it.

49:53What are your thoughts now on Sam Bingman-Fried? My thoughts now are almost worse than they were before in the sense of everyone painted him as this mastermind villain. I don't see that now. I see it as a spoiled kid who had parents that were able to guide him. He went to prestigious institutions that enabled him access to the likes of Peter Thiel and other investors that would fund him. For all intents and purposes, he had no interest in crypto before starting FTX. If you go back and look at his tenure at MIT, he didn't ever prophesy, I'm going to build the next crypto exchange. Now, he prophesied some of his other philosophical ambitions and that kind of thing, but it wasn't necessarily crypto platform.

50:49It was some iteration of freeness and community, but it wasn't necessarily that. So I see him as a privileged white male like myself, able to build and get incredible access to initial funds to scale and perpetrate something that he personally wanted to do. Whatever that is, and I kind of alluded to what my theory is, that's the big unknown. But he didn't start this for the betterment of mankind or people kind. He was selfish. He had an agenda. What that agenda is, hard to say. I mean, obviously, there was some legitimacy at the beginning. There was an intention to do this. It wasn't a Ponzi scheme.

51:38It wasn't a scam. It wasn't, you know, I'm going to pull the rug out from you at the very last moment. And there was the intent to provide for the most part. But I think that he deserves every minute in jail sitting in his cell with P. Diddy and the likes. They're good riddance. They deserve each other. If he was sitting here now and you had a chance to speak to him, what would you say? I probably wouldn't say much. I have not a lot of words for someone like that. But I would say that regardless of whatever restitution he has to pay back, whatever time he has to do to make good on his crime and that kind of thing, I hope he's haunted by the fact of the detriment to people.

52:30The hundreds of thousands, 400 plus thousand users on the platform that were affected by this. Not the big investors. I'm talking about people that had their life savings of$50 ,000K or less or complete and utter enveloped into the platform. Just destroyed, right? Lives completely destroyed. I mean, my situation is not perfect. But some people literally, they either retired or were planning to retire. Now they can't retire and has messed up their life, has messed up their family's lives, has messed up their children's lives. Like generational impact. I hope that that haunts him because it's the only restitution really that the victims will get if they get any money back anytime soon or if they get the full value.

53:24It's a little too late, right? The damage has been done.

53:30He was, of course, sentenced to 25 years. in prison. Do you think that was justice? And if not, what does justice look like to you? Well, I think it's justice in the fact that regardless of the amount of time, which clearly was done as a precedence for nefarious characters that may have plans of doing something like this in the future or are currently in the marketplace and doing things that could be considered fraudulence or affecting the market and consumers of crypto and the currencies and the tokens and the innocent that just want to partake in a proactive and positive way. I don't think justice was served in the sense that time in prison with these types of crimes doesn't create a state of what I would call civic restitution for the people that were impacted.

54:28Sure, then they could file bankruptcy and they could find the money and maybe get it back to people. But as I said, there is a precipice of time that is really essential for that to really matter, for people's lives to be not irrevocably changed. There's been a lot of great coverage about the case and about him and about the situation, but not about the systems and the institutions that manage this and manage the blowback of it and are supposed to be in charge of rectifying and resolving these types of things. I think that's where the justice fails. And that's not necessarily something you can pin on him, but I would rather see him spend less time in prison and have to help with this in some shape or form, right?

55:18Be on the hook for making this work and happen. And Even if it's going around door to door to the victims and apologizing or something along those lines, then hiding away in a cell and that kind of thing. And who knows? Maybe he will get pardoned by Trump and that will be just icing on the cake if that happens. But I think the system did what the system was designed to do. I don't think the system is designed in a way that really is an advocate for the victims in these types of scenarios. So because the system hasn't changed much, do you think this can happen again? In some respects, yeah. I don't know if this miraculous collection of scenarios that just collate into one massive kind of fallout.

56:08I don't know if that could happen again because there's probably triggers and flags in place on all primary changes now that would prevent that from happening or they're very cautious about that happening. Their attention is so focused on this now, that they're not focused on the next thing that could happen. And of course, it's just a matter of time. Yeah. It's like when you go to the airport and you now take off your shoes. I don't think we're going to have any shoe bombs anytime soon, but that doesn't prohibit something else potentially from happening. Same in the financial world. So not another FTX, but something else could potentially happen with people listening and getting into different kinds of investments, especially now when the market is low.

56:55Some say that it's a good time to get in instead of get out. Do you have any advice for somebody who's thinking about investing in crypto today? I'm not an investor and I'm not a financial advisor, but I have heard plenty of people say and give me advice of an investment is never secure. It is never realized until it's realized. And all you can do is ensure that you're comfortable with what you are investing in and that you have done enough of the research and vetting that you can minimize as much risk as possible that is known because what's unknown is unknown. And at the end of the day, it's a personal choice.

57:40And I would never tell somebody not to do it because of my experience, because it was a time place. And it could be years before something like that happens again, if it could. But at the same time, it could be beneficial. They could profit from it. It's really their own personal approach to that risk assessment. And I would say, for me, have the caution as much that threshold is much higher than it would be two, three years ago. But that doesn't preclude it from being like any other investment. There aren't the benefits to be realized. There are definitely the pitfalls, but that's the same with property these days.

58:22That's the same with the traditional stock parking. So nothing is safe. It's just how comfortable you are and how willing you are to potentially go down that journey and see what happens. To be fair, some investments are safe and principle protected and bonds and things like that. So if you want lower risk, there are some options, but you're saying, you know, be vigilant. Don't mourn paper losses, which is easy to do. The two days that are most important are the days you buy and the days you sell and everything else is kind of noise. Everything else is death and taxes, right? Death and taxes. Would you get into this space?

58:59Would you invest again or have you completely stepped away? I actually was just looking at it the other day. Obviously, I haven't done an interview in a while and was poking around and hold up the old Bitsgap community and said hey to everyone and that kind of thing. And they were like, Jake, where have you been? I was like doing some stuff, you know. So I myself, you know, can't be too much of an alarmist because at some point or another, I probably will. I certainly will probably consider myself to be, From an investor standpoint, a few here, a few there. Again, I enjoyed the challenge of it and the strategy and analysis.

59:45That's still something I think is tangible and can happen without having the world fall out from under you and that kind of thing. So yeah, at some point, I could see myself right this second. No, I have other things to focus on. But, you know, if I get back to a place where I have some stability and some walking around money, then yeah, absolutely. And finally, is there anything else you'd want other victims to know, especially someone who might feel alone or frustrated by the system and the bureaucracy and all the hoops you have to go through to even try to get anything back? I would say try.

1:00:24Definitely try. I'm a bad example in the sense that I should have done more for my own cause, for my own case. But because I was dealing with other things, I was kind of too upset and too disgruntled to really be an advocate for myself. But if you find yourself in a situation like this, there are more people now, I would say, readily available and willing to jump in and assist, whether it be lawyers, whether it be advocacy groups, whether it be communities, whatever the case may be, than there have been in the past. And so there are more resources available now for victims of such types of crimes, especially, I would say, crypto markets.

1:01:08And that if you feel like that has happened or you've definitely have been impacted by it, then don't just write off your losses, like fight for it, because there is the potential to get your some portion of your pie back for sure. If those organizations haven't been cut by Doge. Right. Right. That's a fair point. Touche to that. Jake, well, thank you so much for sharing your story with us. It takes a lot to speak about this openly and honestly. It is something so personal and painful. And I know your honesty will definitely resonate with a lot of people. So thank you. Yeah, absolutely. Thanks for having me.

1:01:45Appreciate what you guys are doing. Bye.

1:01:52Thank you so much for listening. I'm your host, Nicole Leppin. Scams, Money, and Murder is a Crime House original. Join me every Thursday for a brand new episode. Here at Crime House, we want to thank each and every one of you for your support. If you like what you heard here today, reach out on social media at Crime House. Don't forget to rate, review, and follow Scams, Money, and Murder wherever you get your podcasts. Your feedback truly makes a difference. And for ad-free listening plus early access and bonus content, subscribe to Crime House Plus on Apple Podcasts. Scams, Money, and Murder is hosted by me, Nicole Lapin, and is a Crime House original powered by PAVE Studios.

1:02:29This episode was brought to life by the Scams, Money, and Murder team. Max Cutler, Ron Shapiro, Alex Benidon, Stacey Warnker, Sarah Kamm, Paul Liebeskin, and Victoria Asher. Thank you so much for listening. you