The FTX Finale + A European Spyware Bombshell + Roblox Buys Cheating Company

Speaker 1: A little over a year ago, right as Super Bowl ads were spreading the gospel of a new era of finance akin to the invention of the wheel, we started to see hints, Scott. Hints that a group of nerds in a penthouse in The Bahamas had allegedly set off a financial landmine of their own design that would vaporize billions of dollars, real and imagined, of other people's money. And do you know what today is?

Speaker 2: The reckoning?

Speaker 1: Today is the day we can stop saying allegedly.

Speaker 2: Well, that is true. One of the joys of being any kind of media is that you have to use the

Speaker 1: word allegedly a lot. You say it a lot, but not today. Not us. Last Thursday, Sam Bankman Fried, cofounder of the cryptocurrency exchange FTX, was found guilty on a bunch of charges including fraud, conspiracy, and money laundering. We gotta get into it. It's a big day.

Speaker 2: It is it is a big day. We're gonna do that and a few other stories, some interesting, game cheat story that came to us from our discord. So thank you, Boyd, for that one. I have to cover it. Fascinating fascinating topic.

Speaker 1: Yeah. It's a really interesting one. An unstoppable force and an immovable object in the world of video game shooting cheating. It's a great story. And then I wanna talk about, a little story that came out of Europe's spyware regulation, Amnesty International report into something called the predator files. It is a pretty wild story. FTX, crypto, Europe spyware, Roblox. Let's get into all of it on this chatty episode of Hack. Scribbledy boop bop boom.

Speaker 2: It's it's

Speaker 1: drum and bass now. We're doing drum and

Speaker 2: bass for

Speaker 1: the theme music. It's drum and bass. It's fast.

Speaker 2: It's a 160

Speaker 1: beats per minute strapped in.

Speaker 2: It's strap in. Get ready. Come with us. Come with us. All the time.

Speaker 1: Yeah. How you doing, man?

Speaker 2: We recorded three sixty b p m and then slow it down.

Speaker 1: This is true. You got that woozy yeah. Totally.

Speaker 2: Yeah. I'm good. I'm good.

Speaker 1: How are you doing? I'm doing good. It's been a second since we did one of these. We we had our our great conversation with Jack Reeseider from Darknet Diaries. Check it out if you missed it. And then I went on vacation.

Speaker 2: You did. You did.

Speaker 1: Go on vacation. And

Speaker 2: And now I'm enough, I'm currently on vacation. I am I'm

Speaker 1: I'm so you spent your vacation

Speaker 2: to you have been I've been living your Pacific Northwest rain lifestyle and I gotta say I don't love it. Don't love it. Yeah. Not for me.

Speaker 1: It's it's rainy,

Speaker 2: It's very, very wet and cold. And I I don't I don't dig it. Yeah.

Speaker 1: It it's a lot. You you wanna get the sun lamp. You wanna get that vitamin d. We've talked about this before, but you gotta take steps. You don't have to deal with snow, but you do have to deal with seasonal depression on a scale I've never really experienced before. So, you know, it kind of all comes out in the wash.

Speaker 2: The the thing I've been noticing is, like, where you are in Vancouver, you know, Arc'teryx, Gore Tex jackets. See, I'm even further west, and it's like, you can tell the tourists because we're all in Arc'teryx and Gore Tex jackets, and the locals are literally wearing deep sea fishing, like, outfits. Full rubber rain suits, you know, huge bib pants Yeah. Sure. Massive rain boots. It's like they they pulled no stops out. Only the tourists are the ones who were like, oh, Gore Tex will keep me dry.

Speaker 1: And they're like, no. Idea. Yeah. You need those, yeah, those giant fishing boots that go up to your shins. I know what you're talking about. That makes a lot of sense. Waiters. You need waiters, basically.

Speaker 2: Yes. You need Paddington Bear. You need the whole outfit.

Speaker 1: Hat, coat. The little Bucky hat. So that's a good look. That's a very West Coast look. That's a very far side of the island. Look, I'm glad glad to have you out here even if only for a little while.

Speaker 2: Oh, thanks, buddy. We should thank our patrons. Jordan, what about you? Our lovely

Speaker 1: thank our patrons.

Speaker 2: Lovely patrons. And

Speaker 1: Patrons. We should

Speaker 2: probably talk about the merch store, which has been going great. Store.hackpodcast.com. Love hats. Enjoy your hats.

Speaker 1: You know I love a mug.

Speaker 2: Bunch have we been getting

Speaker 1: People have been buying it. People have been buying hacked merch. Really? It's so sick.

Speaker 2: We get a bunch of orders every day, which is amazing. Love to see it. Amazing. Hope you guys love the merch. Merch is,

Speaker 1: like, one of those things that I know we could have just slapped the logo on something, but we wanted to, like there's some fun designs in there. We wanted to work with our designer to make something cool, and that's part of why it took such a dang long time. So seeing that people were still down, still excited for merch means a lot. Almost as much equal to as much as it means when you support us on Patreon. Hackedpodcast.com redirects to our Patreon. Great way to support the show.

Speaker 2: Mhmm. And

Speaker 1: we got some new patrons

Speaker 2: We do.

Speaker 1: Since we've last done a shout out to thank.

Speaker 2: I would like to thank, Jacob, Jacob, Jacob, Casper, Monson. Jacob. I I Thank you so much. Yeah. Thank you so much.

Speaker 1: And Means a lot. You've left just just thank you, p.

Speaker 2: The letter p. You know?

Speaker 1: Just the letter lowercase two.

Speaker 2: Case letter p, you are

Speaker 1: There's like a swagger of Oh, shit. One letter, lowercase. It's like q one Star Trek, but not in, like, the lowercase. I'm that Puh. That humble.

Speaker 2: Puh. Thank

Speaker 1: you so much, Puh. Puh.

Speaker 2: Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh. Puh.

Speaker 1: Puh. Mika Sanchez. Thank you so much for

Speaker 2: your time. I think. Is that a Micah? I think it's a Micah.

Speaker 1: My apologies, Micah.

Speaker 2: It's okay. Normally, it's me. It's messing up the name. So it's I'm glad this time it might be you.

Speaker 1: You got me. This is we support one another during these trying times. This Micah, thank

Speaker 2: you so much. I I think these next two were pretty good on. Quincy z.

Speaker 1: Love you.

Speaker 2: Quincy z. And Diego Fierro. I I think I think Diego Fierro. It's hard to mess up Quincy and Diego.

Speaker 1: Diego Fierro, congratulations. That's a that's a that's a that's a solid name.

Speaker 2: That's a name.

Speaker 1: I'm a big appreciator of of of a name with flow and Diego Fierro.

Speaker 2: And Quincy. You know, one of my favorite fruits

Speaker 1: is Quincy.

Speaker 2: Yeah. I love a quince. So

Speaker 1: Be Quincy Jones guy. You know how I think about thriller. Thank you all so much. If you wanna support the show, kick kick it on over to Patreon, hackedpodcast.com to find our Patreon.

Speaker 2: And if we stuff. If we miss

Speaker 1: you Or buy a bucket hat.

Speaker 2: Yeah. Or buy a bucket or a visor.

Speaker 1: Or buy a bucket hat

Speaker 2: or a visor.

Speaker 1: It's all good.

Speaker 2: The, if if we did miss you, as a patron, we apologize. Just fire us a note. Yes. DM us on on x or just fire us in on the Discord. But, yeah, if, if we did miss any way, we greatly apologize. But I think

Speaker 1: Just just

Speaker 2: Aside from that, we should maybe plug hotline hacked.

Speaker 1: Oh, yes. So we're sitting on some killer content. We we gotta decide when we wanna drop the first one, but we've gotten enough that I we're gonna at least do a hotline hacked, maybe a couple. And if you wanna get your strange tale of technology, it can be a hack you were a part of. It can be a a funny little little computer whoopsie doodle that you did. If you just got a funny, interesting story about technology that you wanna share with us, hotlinehacked.com. You can see a chat GPT generated website that is in no way, shape, or form optimized for mobile. Very proud of it. It took me minutes to make, and I think I have a future in web dev was all.

Speaker 2: Yeah. Hotlinehack.com. Check it out. And, yeah, let's just let's get on with the show. But, yeah, it was, it seems like it's been a while. Like, we recorded that episode with Jack prior to Halloween. I think that was the last episode that we recorded. So it it feels like it's been a hot minute since we've done one of these. So it's nice to be back behind the mic.

Speaker 1: Yeah. A lot of stuff has happened. We gotta talk about the FTX trial. That one's pretty crazy. There's some stories that have, like, started but haven't quite gotten to a point to talk about it. In the state's executive order, president Joe Biden signed an executive order on October 30 to establish the first substantial US regulation on AI. We're not really talking about that today because it hasn't really fully happened yet. But, I did wanna bring up the fact that the White House revealed that a pretty big influence on this, like, most recent push was the bad guy in the new Mission Impossible movie. I'm not sure if you had followed this story or have seen the new Tom Cruise motion picture Mission Impossible. I

Speaker 2: you know, I haven't. So please enlighten me with how this is more of a joke than it already sounds.

Speaker 1: It's pretty much alright on the surface. In that movie, the bad guy, and spoiler alert if you haven't seen, seen the new Mission Impossible, The the villain is a sentient AI. And apparently, amongst other things, that movie was a was a big part of why there is now a push for substantial US regulation governing artificial intelligence. And that's really fun to me because that's the first part of a two part, a movie. It's it's it's the first of two, and the second one hasn't come out yet, which makes me feel like there's probably an immense amount of pressure on Tom Cruise to get that right given that it seems to be informing domestic policy.

Speaker 2: Well, it's funny that they've completely overlooked the warning signs that were given to us in 1984 in Terminator, and they and they're only paying attention now to Mission Impossible.

Speaker 1: It's got that crew star power. You know what I mean? They saw Top Gun. Yeah.

Speaker 2: Hey. Arnie was, like, a senator, wasn't he? He was a senator.

Speaker 1: Yeah. He was, California.

Speaker 2: Yes. He was. Exactly.

Speaker 1: See, he knew. Our great AI fighting movie stars are really changing the game. We didn't need to bring that up, but I just thought it was fun. That was a good time.

Speaker 2: And that that that is a good one.

Speaker 1: Yeah. So we're gonna we're gonna follow that story, I I think, a little bit more seriously as it starts to develop. But I feel like we're entering into that that first era of of regulations and guidelines governing AI. It's gonna be a whole big mess. We're gonna talk about it as it unfolds.

Speaker 2: A good contrast to the policy and the, you know, the regulations that they're putting on AI. And they're doing it quite quickly when you compare that to something like crypto, which a lot of this episode will be Speaking

Speaker 1: of. Yeah.

Speaker 2: Speaking of the, you know, we're we're decades in at this point or at least, and, still no regulation. Surprising how that works. Maybe Tom Cruise needs to make crypto movie.

Speaker 1: That's a cursed energy you just put out into the world.

Speaker 2: Oh, speed. Oh, wow.

Speaker 1: Can't run from that, Tom. Yeah. It's I'm sure it's bound to happen. And I see you have a story in here that suggests I think that I think far side of the FTX trial, which we're gonna get to, we're gonna start seeing more of it.

Speaker 2: Yeah.

Speaker 1: Increased financialization of crypto by the financial industry that it was trying to get away from seems to be maybe the new actor going into, but we'll we'll get there. We'll get there.

Speaker 2: We'll get there. We'll get there. We'll get there. Get over there. The, what else did I chat about quick? The Humane AI pin. Have you seen this thing?

Speaker 1: I have seen this thing. I followed it. I watched the very, very, very dry announcement video. The, like, anti salesmanship launch video is pretty great. What so, yeah, a company called Humane, helmed by

Speaker 2: ex Apple

Speaker 1: employees. Yeah. Humane, helmed by ex Apple employees, Imran Choudhury and Bethany Bongiorno. Which had been sort of operating a little bit in stealth mode with this product that everyone knew the basic idea behind it. It was a, my phrase not theirs, a screenless smartphone, empowered by, you know, by artificial intelligence. Everyone knew they'd been working on it. Everyone knew that's kinda where it was going. It finally got announced last week. We get the big, kickoff video. And the takes, the hot takes, they are a coming. What do you think of this thing? Honestly? Yeah. You're here for it?

Speaker 2: I think it's yeah. I think it's

Speaker 1: You already have one? You bought it in the midnight black?

Speaker 2: Yeah. I've already bought it. Yeah. Yeah. I'm talking to her right now. It's actually recording my podcast for me. The, I think it's I think it's a neat concept. I just don't know if it's gonna be the smartphone killer. Like, it seems

Speaker 1: Yeah.

Speaker 2: Like, a tenth of the product or a hundredth of the product of a smartphone. Sure. So it's like, you know, obviously, we have Siri. And one of these days, Siri will be, you know, GPT enabled and will be much more functional.

Speaker 1: Yes.

Speaker 2: And it seems like what they've done is create essentially a pin on pseudo Siri. Like, I don't know. The I I see this being a much worse implementation than a smart glasses or a smartphone or a I don't I don't know. It just feels half half cooked. And I just I just don't know how it's gonna compete with some of the larger, more sophisticated solutions.

Speaker 1: Yes. So for anyone that hasn't seen this product, it's a pin with I think they call it a laser ink. It's small projector on it, essentially. The pin sits on your lapel. It listens to you. You talk to it primarily through voice commands. When you do need to see something, it has this little projector that you put your hand in front of. That's that's kind of the whole product here. And I guess if I was trying to think of the most generous thing I could say about it, because I like a big swing. Mhmm. I think this is if if you are a person that struggles with chronic phone addiction and you need to have a small portable computer with you, this is a really interesting way of taking the addicting part, the screen, out of a phone and trying to preserve as much of the utility as humanly possible. They're using so that's that's okay. I can see that being useful for that person. In order to empower that, the big idea idea here is what if we used GPT style AI, natural voice computing, as like a a layer of mediation between you and the device. Instead of having to take the device out and actually use it, you can talk to it using GPT, literally chat GPT, as a service. Mhmm. That's a cool that's a really, really cool idea. There's a a thing in, like, tech product design about don't build features, build products.

Speaker 2: Mhmm.

Speaker 1: And that to me, unfortunately, feels like a feature that in a generation of Android or two, they'll have just woven in all of the Bard style natural, like, language computing into the phone at that level to the point that you could just talk to it like it's a humane pin

Speaker 2: Totally. And

Speaker 1: have it work the same way. The issue for me is that, like, when I do need that really high information bandwidth thing that only a screen can offer, like, if I need a map with five locations pegged on the map that I can see all at once, When I need to be able to see seven products with their prices, and I wanna be able to see them all at the same time, that really high information bandwidth thing, I just want the thing to have a screen on it.

Speaker 2: Totally. Like, could you And so

Speaker 1: I'm not sure how this improves on it.

Speaker 2: Imagine booking an Airbnb with this thing. Hell. Hell. Actual hell. Yeah. Like You're like, hey. I need an Airbnb in Vancouver in the West End. Yeah. And they'd be like Yeah. Found these 76 listings. Yeah. I

Speaker 1: have can you describe them

Speaker 2: to me? Describe them to you. What one of the one of the, like, example cases they give is, like, you know, you can talk to it and have it do things. Like, go through my contacts list and find this person's phone number. Go through my mailbox and find this piece of data. But it's like, what if it doesn't do it well? Like, what if it gives you gives you your confirmation code for your flight from three years ago rather than your confirmation code from the flight from this week? And it's like and there's no all of a sudden, you're, like, having an argument with this four inch piece of glass that's pinned to your coat. I just Yes. I just I don't know.

Speaker 1: 100%. Well and further to that point, why isn't that something that I could say into my AirPod or my Google Bud?

Speaker 2: Totally.

Speaker 1: Like, that way of interacting with the computer is a forward looking, very humane, gets you off your phone

Speaker 2: Uh-huh.

Speaker 1: Feature. It's not I'd it I haven't seen proof that this needs to be its own product. It's a great feature at an OS level for phones. I think that question of, like, well, what is the unique use case that this empowers?

Speaker 2: Uh-huh.

Speaker 1: I was reminded anytime people talk about an iPhone killer, my brain goes back to the famous like, the iPhone launch event where he does the thing where he says, it's a it's an iPod. It's a phone. It's a revolutionary Internet communicator. And he keeps saying those three things, and you realize he's talking about one product, the iPhone. Boom. We have mobile computing. That's how that event starts with these three use cases that are now in one device. This video starts with the colors that it's available in. Like, they're not it's like you haven't you don't know what that that killer app is, that use case, that reason I I have to have this, as opposed to a phone unless I just can't be I can't deal with the responsibility of having a screen in my pocket, which is real. Like, I'm really belittling that for some people. I think this has real utility of just you can't handle owning a phone. Try this out. Fair enough.

Speaker 2: I

Speaker 1: wonder why it's not on your wrist. That seems maybe a little more useful, but that's just a that's a minor detail.

Speaker 2: It does have Yeah. Exactly. It does have a a camera. Like, it does have other little functions. But, yeah, to me, I don't know. Like, I just It feels, like, when I think of Meta Ray Bans, the ultimate output of the meta Ray Bans is, like, essentially this built into a set of glasses, but also with the ability to show you basic pieces of information. Like, have a basic HUD or, like, you know, the ability to to to not project into your hand in single color, some some some form of functionality. It's like I I don't know. I just yeah. I agree with you on the function versus product thing. This does feel like when Siri and, like Google AI get fully integrated that you'll be able to list, hey, Siri on your AirPods, and then boom. I don't know. My iPhone just lit up.

Speaker 1: The A lot of people's iPhones just lit up,

Speaker 2: but I

Speaker 1: don't believe that.

Speaker 2: The but the yeah. I don't know. I just can't see it. I don't know. Totally. Maybe I'm I'm missing some extensible nature. Like, the thing that made the iPhone so successful was the App Store. Right? The ability to take it and use it as a platform. And I I'm seeing lots of those platform ish devices. Those those are the ones that really change the world. I just don't know how you would use this as a platform. I suppose you could ingrain new UIs and GPTs and or sorry, AIs into it. But yeah. I don't know. It's it's interesting. But if I had to bet on it, I'd probably wouldn't.

Speaker 1: Yeah. I imagine that I think you nailed it. Like, I think that GPT as an intermediary layer between you and your computer is a cool idea that will slowly be implemented in devices that will be probably much more successful.

Speaker 2: Uh-huh.

Speaker 1: And as a form factor goes, I would much rather have a pair of glasses I can pop on because the amount of, like, fidelity and information that you're getting out of that laser ink projector feels kind of about as much information as we could probably get into a heads up display on a transparent pair of glasses in the next five years.

Speaker 2: Mhmm.

Speaker 1: And I'd much rather just see it in the corner of my eye. Totally. We'll have to see. You brought up the App Store, and that's maybe worth one last thing we touch on before we dive into

Speaker 2: For sure.

Speaker 1: Dive into some other stories, which is, ChatGPT launched GPTs, their version of essentially an app store. As you can now create these little custom versions of ChatGPT that take prompts, instructions, information you've given it, and save it as its own little agent you can come back to. Pretty cool.

Speaker 2: I you know what? I'm gonna I'm gonna take a victory lap on this one. I feel like I called this. Oh, yeah? I feel like I called this.

Speaker 1: Yeah. I know you kinda do.

Speaker 2: Domain specific GPTs, I'd you just sense it's gonna come. Like, soon there'll be a

Speaker 1: Yeah.

Speaker 2: HR policy GPT that you buy a subscription to that will write all your HR policies and, like, you know, basic legal contract review, stuff like that. Or, you know, I just foresee I you can see this this coming a mile away, and I think it's it's actually brilliant, honestly. Like, to train a a domain specific AI to really know the intricacies of a specific Mhmm. You know, piece of of language. This makes sense.

Speaker 1: Yeah. The second this got rolled out publicly so it's only available for folks that have, I think, GPT plus or pro or whatever they call

Speaker 2: it.

Speaker 1: I have a little folder that has emerged over the last while of of saved prompts, basically. It's very useful to be able to, like, write out a paragraph, slowly finesse it over time, and then just keep coming back to it. Say you wanna, like, make notes about an article or process a large piece of text down into a specific format. Day one, just, like, immediately took all those prompts one by one, created GPTs based on each one of them, save them as little as little agents, and now they're just there. And it it's a small thing, but it really does radically change that, like, user experience of of working with these chatbots because now I suddenly have these little programs, these little apps I can use.

Speaker 2: Sure. That that that have retained the context of the discussions you've had with them. Exactly.

Speaker 1: Yeah. And it refined I noticed it's, when you when you give it your prompts, it's not just doing a copy paste. It actually refines the prompt. It asks you a series of questions that it then uses to refine your original prompt to more accurately give it instructions to itself Smart. For lack of a better way of putting it. Like, it it is refining itself to make sure that you're getting the result. It understands you want, not just doing the letter of the initial prompt, which is, I think, different than when you just feed it the prompt.

Speaker 2: Well, even So far, pretty good. Yeah. Even, like, I think, like, four or five months ago, you started seeing a lot of, like, TikTok videos and things coming up with people who were trying to tell you the best way to use ChatGPT. And a lot of them was starting to interact with it, being like, ask me the questions that you need to know to write me the best cover letter for this job application.

Speaker 1: Yeah. Yeah. Right.

Speaker 2: And then it asks you a prompt of 10 questions, and then you answer those. And then bang, like, knocks you out this perfect cover letter. And it's like, okay. Like, I you could see where we were going for sure.

Speaker 1: Yeah. I'd been off social media, just because I was on vacation. But when I I came back to it, it was right around when those were being announced. And the number of people who at some point had been, like, all about drop shipping and then were all about creating Internet courses.

Speaker 2: And then

Speaker 1: we're all about blah blah blah blah blah blah blah, who had, like, moved on to, this is the new app store. It doesn't require any code, and here's how we're gonna make all the money in the world. And then I went and made one. I was like, nah, dog. This is too easy. The barrier of entry for this is way too low for this to be the new grift. There's zero friction of making this thing. Like, it it it's just too easy to make a GPT for you to be able to do any kind of real hustle. Aside from, like, teach selling courses, teaching people how to make GPTs for money or something, like, there's no actual utility here, I think. Yeah. And as a money making grift, I think it's just a a good useful thing to wire GPT into itself and let you save the results. But I don't think it's gonna be it might be a bit of a gold rush, but it it I don't know.

Speaker 2: I think I think you'll see some really just like everything. Right? Like, there's for every YouTube channel that's successful, there's 10,000,000 of them in

Speaker 1: the art.

Speaker 2: And I think you'll see that here. You'll see a lot of garbage get created quickly, probably around, like, marketing stuff, like writing content for websites that give fake reviews about products so that they get referral commissions. I think you'll see a lot of you'll see a lot of that usage. Yeah. But, also, I think you'll see some people take it and really drive it. You know, like, really train an AI on a specific domain topic that most people spend money on. Like, legal help and HR stuff. And, you know, you you pick one of those relative categories that cost you every time you pick up the phone and call your lawyer, it costs you, you know, $1,100. All of a sudden, if you can replace that in a small sense, like, obviously, not entirely, but just if you need something quick and you can replace it for, like, $30 a month. Like, why not? Yeah. Why not?

Speaker 1: Yeah. There's, I think, a lot

Speaker 2: of

Speaker 1: startups. I think that's true and, like, cataclysmic for a couple of companies

Speaker 2: I don't know.

Speaker 1: Where there were I'd spoken with a couple of people who are doing were doing some kind of an AI based startup that was basically just a chat gbt rapper with a different training set, like, woven into it. Sure. And, like, oh, that's a bad day.

Speaker 2: See going.

Speaker 1: That's a bad day for those companies. Yeah. You just got got. Like, oof, because those just got really easy to make. Like, GPT wrappers are no longer a a thing you can monetize in the same way. There will definitely be a market for it. People some people will get very rich, but they're like, I can go to venture capitalists and raise $50,000,000 for my AI company. It's I I don't think that's gonna work the same way, today that it did yesterday.

Speaker 2: You you are completely out of the Microsoft world. Right? You're entirely Mac?

Speaker 1: I'm I am yes. I am not. I don't currently own any Windows devices.

Speaker 2: Yeah. So I have a few. And, I've gotten the new preview release of Windows 11. I feel like this just touches into this. And it's it's it's got their AI built into it now. So you get this, why can I not remember what it's called? Copilot. So you essentially have ChatGPT woven into Edge and and the OS at a base level. So you can just ask it all kinds of things. So this is gonna be interesting.

Speaker 1: How do you find it? Because I've heard mixed results about the first gen of it. Yeah. Is that like, wow. What a brilliant idea. Executed at about 20% Yeah. Operating, like, potential.

Speaker 2: That's pretty much how I find it. Let's just say that I hit hit it away and put it away pretty quick. But the but the but the idea is is that, you know Yeah. Eventually, it will be very functional. And that's that's it's gonna be interesting. You know? It's gonna be an interesting little revolution we go through here as we figure out the uses for these things as well as figure out how to best implement them into our life and into our existing processes.

Speaker 1: For sure.

Speaker 2: Like, I will say if you do go on social media, the amount of obviously AI generated images I now see is crazy. Like like, you can

Speaker 1: Yeah.

Speaker 2: Miss fingers or, like, the spelling's wrong on a t shirt or something. Like, you can just tell that they're AI generated. But, like, every piece of you know, every garbage marketing post you see or, like, memes, tons of them are AI generated now. So just, like, saving so much time in in generation and art artistic design, I guess. You know? People are not doing them anymore. They're just getting them generated. So

Speaker 1: Yeah. We were, we mentioned earlier that we were on vacation kinda recently. And partway through the trip, a little, like, background game emerged, which is, is the photo in that giant billboard or sign or whatever we're looking at, of real people. I was as we were in, like, Mexico City, big, dense city, tons of outdoor advertising, a lot. Like, a lot, dude. Like, I was I was pretty bold over once I started trying to pay attention to it. I was like, no. That's that doesn't look real.

Speaker 2: That was generated.

Speaker 1: Person's too yeah. Like, that the way that they've all sort of because so many of the images in the training sets are of models Mhmm. Their understanding of what humanity looks like is far too pretty. Like, everyone has that cheekbone structure and the just like that squint, the model squint, it's kind of uncanny. And then you start really paying attention to it. You start to see it everywhere. And it's like, well, it it makes sense, you know, that eyeglass store would have hired models. So the fact that GPT produced humans that look like models is okay. But why does the guy's squinty eyes have so many wrinkles around them that are, like, looping all the way back around the eyeball into the forehead? Weird stuff that doesn't actually happen. I guess that we're probably only a generation of AI away from that not really being I think it's gonna become increasingly less recognizable. Uh-huh. But this is this sweet spot where there's all these, like, cursed computer ghost

Speaker 2: humans,

Speaker 1: peppering our, like, out of home advertising ecosystem. It's great. It was a good time.

Speaker 2: Well, the yeah. I don't even think it's just in advertising. Like, the whole the the the demise of body image is is upon us. But, you know, it started what start what started with Snapchat filters and Instagram filters is now AI makeovers. So you upload your photos to these things, and these AIs Totally. Essentially make you perfect. And then it's like, then you just use that as your profile photo. And it's like, that is not what you look like.

Speaker 1: The new, the new Pixel phone. There's, like, a lot of great discussion about, like, what is a photo. But the new Google Pixel phone really, like, poured a lot of kerosene on that discussion with the inclusion of AI. They're increasingly adding AI photo editing features into the photos app, which is one step away from being added to the shutter button.

Speaker 2: Mhmm.

Speaker 1: Where when you press the button, you are not you're capturing something based on what really happened. But all of that face smoothing and, you know, subtle aesthetic tweaks are moving increasingly like it used to be. You would take a photo, you would export it out of the Photos app into the editing app. Now it's moved out of the editing app into the Photos app. It will inevitably move into the shutter button itself.

Speaker 2: Yeah.

Speaker 1: Where you're never really capturing. You're never opening a sensor, capturing light, and closing it. You're kinda just gathering information with which to synthesize a really nice looking image. And that's like a really big meaningful shift in, like, what it means to take a photo. Because for most people, they just want a good photo of their family. And if everyone's been, like, had Vaseline smeared over the lens by an artificial intelligence to make sure that they're looking at the camera and they're smiling and you can see their teeth and there's the right number of them, For most people, that's a cool thing, but it is it is weird and it is different.

Speaker 2: Just like whitens the teeth, straightens them, replaces the eyes, smooths any of the wrinkles, removes any of the cut it's like it adds makeup, discolor, neutralizes and balances you, takes any sheen away, maybe does your hair for you.

Speaker 1: Yeah. Graham's posture wasn't so good in the one image when everyone was looking at the camera. So let's just straighten her up a little bit. Yeah. Yeah. You want that glint in your eye? You wanna have, like yeah. You wanna look a little mischievous? You just pull that slider up. And, like, who am I to judge? We've been editing in in Photoshop for years. But

Speaker 2: Totally.

Speaker 1: We've been editing photos versus capturing versus creating AI based images based on something that really happened.

Speaker 2: Yeah. On likenesses.

Speaker 1: Exactly. Yeah. It's it like, does it matter? Maybe not. But, also, yeah, it feels like it kinda does. It's a fascinating one.

Speaker 2: Maybe I'm too old, but I like I like humans to be humans.

Speaker 1: Yeah. I I think keep it out of the shutter button, I'd say, is my big red line in the sand. People will be able will want to be able to edit their photos, and they'll wanna be able to use all the AI editing tools. That's fine. But let make it so that when I take a photograph, it opens the sensor, captures captures the image, and then closes the sensor. Whatever happens after that is between you and god. But, like, let that part of it still function that way, hopefully, forever. And I think that that that seems like an okay balance to me.

Speaker 2: Yeah. The thing for me is just like, you know, we social media has already proven to have a pretty negative impact on people's mental health. And as we get What really? Shocker right now.

Speaker 1: I had no idea.

Speaker 2: But as we get further and further away from reality, like our body dysmorphia and like our, like Oh, yeah. Like, we're not just catfishing others. Eventually, we're gonna be catfishing ourselves. People will see themselves and we're gonna need to add AI in the mirrors.

Speaker 1: We're gonna have to add to mirrors. I was like I saw where you're going with that

Speaker 2: so that people can see their perception of themselves, not the reality and it's like at what point are we gonna define that as a mental health problem, You know? Like, it's like we can't convince ourselves. I don't know. Well, maybe we can, but we shouldn't. Maybe maybe we shouldn't convince ourselves that we aren't actually who we really are.

Speaker 1: Yeah. So. That selfie that first time you see the selfie cam not flipped in reverse.

Speaker 2: You know

Speaker 1: what I mean? Where, like, this where Zoom reverses you so that you're it doesn't break your brain, and then you see yourself just filmed and you're the wrong direction Yeah. What you're used to. Yeah. Just the sort of, like, baby version of that. Why don't we move on to something somehow less dystopian than that? Deal. A vast international, spyware network.

Speaker 2: Sure.

Speaker 1: Predator Files. So Amnesty International, a couple weeks ago, we never got a chance to talk about this, published this this really incredible investigation into this series of spyware attacks using a piece of spyware called predator that had targeted, not government people, not just government folks, members of civil society journalists, politicians, and academics, throughout the European Union, The United States, and Asia. There's a couple of really interesting things to this story that are why I wanted to talk about it. So story concerns something called the Intelexa Alliance. All of the names here are ominous. Try and keep track. They're the Europe based developer of predator and a series of other, surveillance based derivatives of this piece of spyware that have, according to I was gonna borrow the quote from Agnes Callamard, secretary general at Amnesty International, have done, quote, nothing to limit who is able to use the spyware and for what purpose. The report published October 9 by Amnesty International Security Lab, outlined how it targeted, though not necessarily infected, members of US Congress. President of the European par parliament, Roberto Metzola, Taiwan president Tsai Ing Wen, and German ambassador to The US, Emily Haber, is a much longer list. Big fancy people all targeted through this. The investigation done in partnership with the European investigate investigative collaborations and backed in-depth by additional reporting by media partner Spiegel Dug into the mechanics of how predator works, it is a zero day based highly invested in, invasive spyware that gives access to the device's microphone, camera, all of its, stored local data, context, messages, photos, videos, and the user will be unaware that it has been infiltrated by this. Perfect. February and June of twenty twenty three. Yeah. It's good stuff. Amnesty International said that social media platforms were being used to publicly target 50 accounts belonging to 27 individuals and 23 institutions. Essentially, this is just a click on a link piece of spyware.

Speaker 2: Sure.

Speaker 1: So these were very public, you know, appeals to people to try and click on a link that would have infected their devices with this predator spyware, as part of a campaign called Reply Spy. Part of the reason I was intrigued by this is that Europe is governed by a series of regulations that are meant to prevent Europe based and regulated companies like the Intellect Cell Alliance, which is this network of companies all based and regulated in Europe, from producing products like this and then selling them to countries that they have good reason to believe will use them to target citizens, journalists, and political dissidents. There is supposed to be a regulatory framework in Europe preventing the use and development of these tools by those types of people. And I think this is a really important story because it reveals that there is a large Europe based international conglomerate that's manufacturing these product products and selling them to, regimes all over the world with seemingly zero friction from that regulatory framework.

Speaker 2: Oh,

Speaker 1: I just found it very interesting. It's a it's a long read. It it it's not a it's not a light one, but it is worth looking at.

Speaker 2: It's it's I don't know. It feels similar to, you know, DDoS as a service and stuff, and this is just spyware as a service, private company that makes these things. There's a lot of companies that make stuff like this and then license it to governments. And whether you like it or not depends on where your political allegiances lie.

Speaker 1: For sure.

Speaker 2: So it's it's just it's it's the world we live in. You know?

Speaker 1: It is. And it I feel like we don't I haven't heard a lot of conversation about you know, this is a it's a product. It's manufactured in one place and it's exported in other places.

Speaker 2: Oh, yeah.

Speaker 1: And yet it's one that, like, has legal implications that are a little bit different than, you know, I make a chair and I sell it overseas. It's like it's a chair that can be used to spy on a, like, a political dissident or a journalist. And, like you said, where your politics fall probably dictates whether or not you think that's a good or bad thing, but but it probably shouldn't. Because as much as you might be okay with a certain group of people being targeted by these things, there's probably some group of people you think shouldn't be targeted by these tools.

Speaker 2: As long

Speaker 1: as they can be sold as liberally as a chair, you're never gonna be able to make sure that that's the case. You know what I mean?

Speaker 2: Yeah. I think that the big I think the big shift is is that I think back in the like, if we if we look at this through the lens of history, you know, when when a a nation state or something, a three letter agency decided that they needed to track and and focus on somebody. There's regulatory involvement, legislative and judicial involvement. Sure. You know, you need a warrant.

Speaker 1: Supposed to be. Yeah.

Speaker 2: All this stuff. And now, this, you know, there was always private investigators, so companies could kind of do something like this.

Speaker 1: Mhmm.

Speaker 2: And now, I feel like in the digital age, it's like Yeah. That's kind of the mirror of this is, like, three letter agencies and nation states are still using software like this. They might not be buying this piece, but they might have other pieces. Yeah. But then but then, at the same time, you've got other bodies that would typically go to like, the entire domain of private investigation needs to be largely digital now. If I had to meet with a PI that didn't know anything about digital stuff, I would be like, absolutely not. You know? No. So it's Yeah.

Speaker 1: What does that guy even do? He's like, I go through garbage. I I just look

Speaker 2: at trash. I follow people around. They're on their phones lots. I don't know what they're doing on them.

Speaker 1: Wonder what they're doing.

Speaker 2: Exactly. So the so, yeah, it's just I don't know. It's just one of those things. Like, obviously, not great. Don't love it. Don't love violations of people's privacy, but it's it it doesn't surprise me. Let's just say that. I I

Speaker 1: It doesn't surprise me. Yeah. I sense that you are yeah. It's like, yeah, bad, but we knew of I feel like we kinda knew about this, and it's not it isn't surprising. Yeah. Which is itself surprising. You know, like, it's is it, though? Yeah. It's it is you bring up a really interesting point that at a certain scale, nation states probably don't need to. The sufficiently large actors don't really need to license these tools because they're developing their own. They don't need to go to someone that found the zero days because they have their own zero days. But there's this sort of, like, middle band of regimes and governments and actors who don't have those things but do have the resources to try and deploy a tool like this. They can't make it, but they can use it. And the market has just sort of, like, yeah, self selected for that. Cool. So we'll make that. You know, you're big enough to buy it, but you're not big enough to manufacture it. We'll manufacture it for you.

Speaker 2: Yeah. Not a

Speaker 1: lot of people can make their own space rockets, but a lot of people wanna go to space. So someone will make it. Exactly. It's, it's like anything. Yeah. I'm reminded of that Crypto AG story, the Swiss company coming out of World War two that was manufacturing, encryption devices for all of these different countries on either side of the iron curtain for decades. And then decades and decades later, it turned out that, the CIA had bought a secretly bought a share in the company and was installing backdoors into the encryption device the entire time. And when I read something like this and this very insidiously named Intellecta Alliance producing this predator spyware, God, the names. Yeah. The names. You do wonder. You're like, in, like, a decade, who are we going to find out owned this? Like, that's that's the question I have. Like, who's really who's really behind this? The, like, tinfoil hat part of me, starts to raise its hand.

Speaker 2: Yeah. I don't I don't know. Doesn't nothing surprises me. Not much surprises me anymore these days, especially when it comes to this stuff. I find, like, the spouse where, you know, I find that that segment more disturbing, maybe because it's more personal than something like this. This just seems like a corporate service offered to large entities and governments to do what they were gonna do anyway. So it's just Yeah. Totally. This is capitalism. You know? Yeah. There's a supply for the demand.

Speaker 1: Well, I mean, that's a good way of putting it. You have it was bound to turn into something like this where if a zero day is as as valuable as we all understand it, a vulnerability that the manufacturer of a device we all carry doesn't even know about is worth that much. It would make sense that an ecosystem of businesses, suppliers, and buyers would naturally, start to grow like moss around that incredibly high value thing.

Speaker 2: Mhmm.

Speaker 1: That's just what happens when those emerge. So I think you're right that it sort of feels inevitable in a way that spouse wear and stalker wear, I guess, are inevitable in a different way that when you zoom in close enough, humans tend to do icky things to one another and find technology to empower them. But that that feels like a difference.

Speaker 2: I feel I feel like you don't even have to zoom in that close. I feel feel like it's a pretty macro thing that we're we're taking part in.

Speaker 1: That's true. That is true. So Well, that's, Amnesty International's Predator Falls. Give it a look look it up. And so it it is a really fascinating read. It's a long PDF they've put out, but it's, I think it's important. It's an interesting one.

Speaker 2: Yeah.

Speaker 1: Okay.

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Speaker 1: And we're back.

Speaker 2: We are back.

Speaker 1: Do we wanna where do we wanna go now? Do we wanna go to the video game cheating quarter, or do we wanna dive into the crypto pit?

Speaker 2: No. What what are we thinking? Let's let's leave the the we've I feel like we had such a heavy intro piece. Like, the pieces, they were pretty socially and and ethically heavy. I think we go

Speaker 1: Some of them. Yep.

Speaker 2: To the video game cheating because it's more insane. And then let's go back to crypto, which is inevitably morally heavy.

Speaker 1: Morally heavy, but honestly, I think it's kind of a good news story today. But we'll get to that. We'll get to that. Yes. This is a fascinating one. You flagged that a member of our Discord found this story. I'm really excited to talk about this. You wanna lay it down for people?

Speaker 2: Yeah. Absolutely. The so void in our Discord, brought the story forward. I dropped a few questions out, and we had a little lengthy chat about it one night. And it was, I'm I'm shocked. Let's just say that. So Roblox, video game, obviously. That can't

Speaker 1: be how we say it this whole time.

Speaker 2: Roblox? Roblox? I don't even know how you say it. Roblox?

Speaker 1: No one's ever heard it said out loud, actually, weirdly enough. I say Roblox as in robot.

Speaker 2: Yeah. I think that's right.

Speaker 1: And I didn't want to just say Roblox later like I was passive aggressively correcting you. So we I had to we had to

Speaker 2: we had to we

Speaker 1: had to get in front of it.

Speaker 2: So so I I I have been saying Roblox forever because I think it sounds funnier, even though I I think are more funny. I think Right. Deep lying that's not it.

Speaker 1: Yeah. Sure.

Speaker 2: I've been saying it for so long that it's now in my lexicon. So for the for the sake of this episode, I will say Roblox. Just just I hope I'm right.

Speaker 1: But yeah. Okay. Roblox. I just I sound like an asshole

Speaker 2: if it's pronounced Roblox. Roblox. Anyway, okay so Roblox has it just signed a partnership to reduce the amount of cheating going on in the Roblox environment.

Speaker 1: Oh thank God

Speaker 2: with the company that makes the cheat the biggest known cheat, Synapse. So they have and I when when void had written initially threw the story out, I was like, where is the proof that this is the company that that makes the cheat? Like, I see them talking, but, no, they never directly mention that Synapse is the cheat maker. To which he replied with a, developer link from the dev forum for Roblox, where they essentially go on to say, we understand how strange this might be, but, you know, this is for the best. So they they have the biggest cheap manufacturer for the for the game has just been hired to prevent cheating in the game. It just feels like a shakedown that I've never seen before.

Speaker 1: Shakedown. Yeah. The the the, the developer post that you you mentioned has some really great stuff in it, and it kinda really does speak. It it reads like that scene in a movie where the person answers the door and there's a cop talking to them. And they have this conversation, and it gets sinister partway through when you realize that the kidnapper is standing just outside of you pointing a gun at the, the person talking's back. A very, like, blink if you're okay type of situation. To read from user bit dancer Roblox staff on this developer forum, as made clear that we said at RDC twenty twenty three, cheating and exploiting are not welcome on our platform, and we are using every measure within our power to combat, at the start of the next paragraph, to take another step towards this goal, we are pleased and excited to share that we have entered into a close partnership with Synapse Softworks LLC. Synapse is well known in the reverse engineering scene, which is a very polite euphemism for they're one of the single largest, cheating actors that, exists on our platform, and we have hired them in order to stop people from cheating on our platform. It's, it's the end of catch me if you can.

Speaker 2: I I have to it's the end of catch me if you can. I have we have to I have to read the beginning of the next paragraph in this post because it's actually my favorite set of sentences.

Speaker 1: Oh, yep. I missed that. Yeah. Yeah.

Speaker 2: Yeah. Yeah. It might seem strange that we're teaming up with Synapse, but we believe it will be the most fruitful option when it comes to reinforcing the platform's security. For the longest time, we've been on opposite sides of the battlefield. But in that time, we've grown to respect their skills, and they've grown to respect our vision. Oh my god. It's like, for the longest

Speaker 1: Our vision of making this end. Please make it end.

Speaker 2: For the longest time, we've been trying to shut them down. Wow. And, we've respect and we have we've grown to respect how good they are at getting around our anti cheat. And so, therefore, they've grown to respect our vision of giving them money to stop creating cheats is what I feel like that says. Allegedly Yeah. What that says.

Speaker 1: I'm so tired of this fly that's been buzzing around my face. I've decided to to offer it equity in my face. I decided to pay off the fly.

Speaker 2: Yeah. I've just given

Speaker 1: Honestly, like, what this I have to think that there was a countdown, like a security update countdown of, like, they did this, so now we're gonna try and do this. And then you release that update, and then they find another way around it. And at a certain point, you would say, if this happens seven more times where we put out a patch and then they get around the patch, we're just buying them. And it went seven six five four three two. Fuck it. We're buying synapse.

Speaker 2: Yeah.

Speaker 1: Exactly. I I feel like this was something that someone knew was coming. And then, October 27, we gotta just drop the update. It's happening.

Speaker 2: It just it but to me, it's just it's it's literally negotiating with terrorists. Like like, the if this becomes, like, Activision like, if you if you parallel this to, like, what's going on with, like, Activision engine owning, big call of duty, chief manufacturer, They're, like, locked up in court. They're suing each other, but the engine owning is still releasing cheats and still kind of causing damage to the call of duty environment. But, like, they're, like, trying to destroy, like or Activision is trying to destroy engine owning, which is, like, you know, what you would kind of expect. Yeah? Where where Roblox has taken the opposite initiative where they're they're saying, you know what? We're just gonna give them a bunch of money. And granted our I'm sure they're gonna deliver some services and be like, hey, you know, this is how we always get around your your anti cheats. And here's, like, here's some things we can do to tighten up where some of the information goes, and how you can secure it against modification, etcetera, etcetera. So I'm sure they'll get value out of it. Oh, yeah. Which is good. But I'm sure most of the engineers that work on Roblox knew a good chunk of it anyway. So the I feel like you're just setting and paving a path for, like like, hey, you wanna get rich, Jordan? It's like it's like, let's just build a cheat for a major free to play video game until the developer comes along with a check and says how much for you guys to piss off. And it's like, I feel like that becomes that becomes their biggest problem is they might have taken out one, you know, one problem, but they might have created hundreds more, especially because the people that play Roblox, the developers and content creators in it are used to creating things for money, and they've all developed significant technical skills. All it's gonna take is, like, 50 of them to be like, you know what's better than making Yeah. A 100 making these things inside of this platform is just hack the platform and wait for the millions to show up.

Speaker 1: Totally.

Speaker 2: And it's like Yeah.

Speaker 1: It feels like you've you've kind of hired a really good blue team at a certain point where it was like, for years, we've waited for you to post an update, and then we reverse engineer it and create exploits for it. Now while you're working on it, we can be doing that process of reverse engineering and figure out how people will crack it

Speaker 2: so

Speaker 1: that you can hopefully ship it without that vulnerability. Like, you almost want to keep these folks in, like, a separate building off to the side and they just get, like, an early alpha of everything. And it's like your job, just keep doing what you were doing. We don't wanna see. We don't wanna hear you. We'll we'll see in the cafeteria and we won't make eye contact. And your whole job is just to fuck up our shit before someone else has the chance

Speaker 2: to. Yeah.

Speaker 1: Yeah. Honestly, pretty good idea.

Speaker 2: Patch patch the code and send the patch over to the to the master branch, please.

Speaker 1: Exactly.

Speaker 2: But even then, I feel I feel like they're just they've created their own they've created a new financially rewarding ecosystem. It's like, why would I build content to the game when I can just try and hack the game and then wait for them to buy me too? And I just I don't know.

Speaker 1: It feels like a more extreme version of a bug bounty almost, where it's just like, yeah. You could crack us and try and sell it. But if you don't wanna break the law, maybe you crack us and then sell it to us. It's, like, kind of that a little, but it is different. It's different.

Speaker 2: It's great.

Speaker 1: I love it.

Speaker 2: I the let's talk about bug bounties quick because I'm always Yeah. This I'm always, a, surprised when companies don't have bug bounties. Mhmm. And, b, I'm generally surprised at how little the rewards are for some of them. Sure. Like, there's some critical systems out there that even if they do have a bug bounty, the bug bounty is, like, $4,000. And it's like, okay. It's like, really? Like, if if I

Speaker 1: don't know. Yeah.

Speaker 2: If I get a zero day into your infrastructure platform or whatever it is, it could cost millions and millions and millions of dollars in losses and lawsuits, and you're gonna give me $4,000. That's, like, I I'm I don't know. This is just a total digression, but I'm always kinda generally surprised at the level that Bug Bounty's rewards are for critical things. Some some have big ones. We're, like, some

Speaker 1: of them are.

Speaker 2: Like, I think Tesla notoriously used to have a pretty massive one. Right. If you could if you could hack the car. Yeah.

Speaker 1: Yeah. Sure.

Speaker 2: So You

Speaker 1: want that. Yeah. You want a big bounty on something on a thing that drives. Yeah. That's true. Every so often you see one and you're like, that doesn't seem worth a, the effort and b, the damage.

Speaker 2: So shall we shall we

Speaker 1: Inevitably, yeah. Let's take it to the crypto corner, the crypto pit. Let's talk about crypto, but it fun one. Maybe not fun. A lot of people lost a lot of money. Yeah. A cathartic moment in the world of cryptocurrency. Sam Bankman Fried, cofounder of the cryptocurrency exchange FDX, found guilty on charges, fraud, conspiracy, and money laundering for following a month long trial in New York where Bankman Fried faced accusations of orchestrating one of the largest financial frauds in history. We've been following the story for a while. A lot of people have been following this story. We've never done the big deep dive episode, the big interview, because it's it's the story is just being so thoroughly told so well by so many different people. And that's kinda one of the important things about it, I think, is that this was one of the first large crypto scam, grift, crime, whatever you wanna call it, that got really, really mainstream attention. And it kinda finally came to a head.

Speaker 2: They paid for mainstream attention, you know, their name on f one cars, their name on stadiums, their Larry David.

Speaker 1: Football ads, man. Yeah.

Speaker 2: Yeah. He

Speaker 1: does the new wheel. Yeah.

Speaker 2: You got the world's best quarterback out there pounding the pavement for you. You've got you know, they they definitely didn't hide away from the limelight. So I think the

Speaker 1: did not.

Speaker 2: All that did was amplify the the collapse.

Speaker 1: Yes. So So little over a year a little less than a year ago, FTX, cryptocurrency exchange, sort of the darling of the crypto world, collapsed. And the the the very broad we can now kind of say this. Users tried to collectively withdraw billions of dollars from FTX, and they were unable to do so. And as it was kind of soon after revealed that the money from FTX had ended up over in the coffers of a supposed to be independent, but unfortunately woven together company called Alameda Research, which was Bankman Fried's training firm that had made these enormous, bets on various parts of the crypto ecosystem, some of which were owned by Bankman Fried and FTX itself. So when the story broke in this, I think it was a CoinDesk report making these early allegations, there was, you know, naturally a run on FTX. The idea that FTX might not have their money made everyone take out their money, which meant suddenly FTX didn't have any money. It was revealed over the course of the trial, primary by this one of the sort of three two to three other major players in this drama, FTX cofounder and executive Gary Wang, testified that from FTX's inception in 2019, customers' funds had pretty much the entire time always been always been flowing between FTX and into the bank accounts owned by Alameda, which was then able to sort of do whatever they wanted to with those, user funds. A really important revelation. And this is really the story of Sam Bankman Fried's, like, kind of main compatriots at Alameda and FTX. People that had been with him since the beginning turning on him over the course of this trial. This was a sort of a a I don't know if I wanted to call it a story of betrayal because I don't have a ton of sympathy for the betrayal, but really it was. It was people turning against one another

Speaker 2: Yeah.

Speaker 1: Under the threat of a massive legal repercussion. But the one of the big really interesting moments that we learned about over the course of this trial was that, Gary Wang had hard coded an exception. This really important exception into FTX that made it so that Alameda Research was the only user on the exchange that was allowed to have a negative balance, which functionally meant they were able to borrow from customer funds. This this sort of negative balance exception turned out to be the thing that the whole collapse turned on. And a major part of this trial was, Wang's allegations that Bankman freed directed him explicitly to create that exception to allow Alameda to borrow basically unlimited money from FTX

Speaker 2: Yeah.

Speaker 1: Which is what resulted in the whole thing collapsing.

Speaker 2: You know, I gotta I just gotta jump in. I gotta take another victory lap because and the lady said this, and we initially talked about this. I said, I bet what they did is they allowed them to never be margin called. They allowed them to bypass the margin called safety limits, and that's exactly

Speaker 1: what they did. Remember you talking about.

Speaker 2: And that's exactly what they did, and that's exactly what they're

Speaker 1: around the track. Who knows? Yeah. No. Yeah. It would seem you called it. One of

Speaker 2: the one of the things that I did find really interesting about this, if you did play close attention to the trial, is they started releasing all of the private, kind of, like, DM groups, like, text message groups

Speaker 1: Some good stuff.

Speaker 2: WhatsApp groups Yeah. That had a bunch of the key players, including SPF's dad, who I think and this is I've seen some coverage of this coming out of it, but I I think he might be he might be in some trouble. At least that's what I've I've read a few things talking about it. Like, they the his his involvement with it was not as, you know, innocent.

Speaker 1: Oh, arms length as originally. Yeah.

Speaker 2: So Expected. So I think there could be there there could be some knock on, at least what I've read a few opinion pieces, there could be some knock on lawsuits and civil suits and things like that coming down the pipe, which I think is to be expected given the size of the fraud. So

Speaker 1: Yeah. Sure. Yeah. There there's inevitably gonna be a round of appeals. I'm sure that this story isn't actually done, and all these people are gonna continue to exist as, we should talk about in a second. But it does feel like a little bit of a chapter closing.

Speaker 2: Totally.

Speaker 1: It felt like there was this group of people who were running this ecosystem of companies, spending lavish sums of other people's money, and it all collapsed. And the result of that was that, they turned on each other. It's an architect of turning on each other. I'm sure it was, again, under the immense weight of, you know, legal fallout. Mhmm. But they all turned on each other, and they all started attacking each other. And the result was that Sam Bankman freed, while he has plans to appeal, has been charged with two counts of wire fraud, four counts of conspiracy to commit fraud, one count of conspiracy to commit money laundering, and is staring down the barrel of a lengthy prison sentence. That sentencing is set to conclude on March 28. So we'll probably do a minor check back on what happened, but, that's not really the interesting part to me.

Speaker 2: A hundred and ten years is what his maximum sentence is or something like that if they read?

Speaker 1: It's pretty gnarly.

Speaker 2: Yeah. I doubt it'll be that, but who knows?

Speaker 1: No. I am not sure that I honestly don't. I'm not even sure that it should be. I think the important part yeah. I'm not sure what the important part is. It's an extreme waste of a bunch of capital and time and human utility.

Speaker 2: It's a big,

Speaker 1: dumb, shitty, bad thing.

Speaker 2: Which I cannot wait to get

Speaker 1: get away with it.

Speaker 2: In Michael Lewis's new book, Going Infinite, which I've just started.

Speaker 1: I am Interesting.

Speaker 2: I am a big Michael Lewis fan as somebody who enjoys economics and finance as well as, good story. Michael Lewis Yeah. Generally delivers on that. If you don't know who he is, wrote, The Big Short The

Speaker 1: Big Short.

Speaker 2: And, like, a bunch of other great books. I've read them all. And this is his newest one. Just came out. It's about Sam Bankman Fried. Can't wait to read it and would love to have him on the podcast. So I just need to find out how to get ahold of him. But he'd I feel like it would be a great great chat.

Speaker 1: I'm curious how I know a lot of that book was written. I I'm not sure when it was, but I think it was it was a while ago. Like, I think it was written maybe prior to the collapse of FTX Mhmm. Or during the early days of it. So I'm really curious to to read. He's both such a, like, hawkish critic of structural abuse, but also loves a good character. Like and I could see it going either way. Like, does he fall in love with the character of SPF, or is he taken aback by the scale of fraud and blah blah blah blah blah, everything we've been talking about? Like, I can imagine a Michael Lewis book that goes one of two directions about Sam Bankman Fried, and I'm really curious which direction it goes.

Speaker 2: I'm

Speaker 1: stoked to hear what you think about it, and I would love to talk I'd love to read it and talk about it with him on the show.

Speaker 2: I think if I'm not mistaken, I think I remember in some of the group text messages that came public through the trial. Yeah. Michael Lewis was, like, in The Bahamas to interview Sam Oh, interesting. Blew up. If I could be making that up, but I feel like I did read that.

Speaker 1: Read this. Yeah. I think I might have to read this.

Speaker 2: So

Speaker 1: Access journalism is so interesting. I Mhmm. The idea of it's something I'd love to get to do, and you just have to find the right subject. But to really just be like, no. I'm gonna spend three weeks with you. Let's spend a month with you. I'm gonna document everything, and we're gonna create something that's really Cool. Like, unique. Not rooted in, like, the hour or two that you sat down for an interview. And you and I have done so many interviews like that. Mhmm. Great. But the idea of just embedding with a person to try and tell their story, so compelling and such a massive threat to your ability to be honest and objective

Speaker 2: and think

Speaker 1: about what's going on. Because you're like, this is my roommate. Like, I hang out with them all day.

Speaker 2: Like Yeah. It's such

Speaker 1: a fascinating thing. I'm excited to read that book, and I'm excited for the end for now of the saga of Sam Bankman Fried FTX and The Bahamas based financial nuclear bomb.

Speaker 2: To speak of how it's not ending, we should chat about how, a few of the former FTX executives fresh off the stands of

Speaker 1: So so

Speaker 2: testifying at the trial are creating their own, crypto exchange.

Speaker 1: What could go wrong?

Speaker 2: What could go wrong? Here's the best part. They are putting it in Dubai, which, as we've covered previously on the show, is the and this is not any indication of whether this is trustworthy or not. I'm just stating it as a fact that Dubai houses most of the scams and multilevel marketing scams that exist in the world. There a lot of them are headquartered out of Dubai. And, this new exchange, which is titled Trek Labs

Speaker 1: Trek Labs.

Speaker 2: Trek Labs is also founded and headquartered out of Dubai. So I think, yeah, not I don't know if it's the greatest look coming

Speaker 1: Correlation, not causation. Yeah. And yet, yeah. Two former colleagues of Sam Bankman Frieder are now starting a crypto exchange days after he was found guilty on seven charges of fraud, which is a wild wait a month.

Speaker 2: Yeah. Like, I'm not saying you're up

Speaker 1: to anything fishy. That's not fair. You're allowed to have another job. You're allowed to start new businesses A 100% with you on that. There there's no indication that any of these people had anything to do with anything. All of the benefits of doubts being given from a purely optics and marketing perspective, Give it a fortnight. Give it a little bit before you send out the press release saying that you are starting this cryptocurrency exchange that had previously received funding, from FTX's venture arm. Like, it's just not a good look.

Speaker 2: Yeah. It, I feel but, yeah, I guess it's to be expected. You know? People people were involved. They saw the success. They saw how to replicate the success. They saw what work. They have that knowledge, that domain knowledge. You have to expect that they're gonna take it and go with it. I assume they probably won't do the whole Alameda, you know, piece of it. But I think the Wait a minute. Being a large crypto exchange is a very viable business, I believe, at this point. So it is as expected. It's just it's a interesting knock on. And, yes, I do agree that maybe waiting until at least the sentencing is over would have been maybe beneficial to the to the look Yeah. To the optics. A

Speaker 1: a generous read of this could be that they know explicitly how not to commit a very specific set of crimes. Totally. They're like and I and I I'm articulating that as a joke, but there's a there's a, like, an actual thing there of, like, we know what it looks like when you have corruption inside one of these organizations. We know what it looks like when one hand is, like, talking to the other behind its back. Like, we we know what that looks like. We're not going to do that. Yep. We've seen the pitfalls. Like, may maybe that's it. Maybe it's this is we all had this experience. We saw the good that can be done, according to them, but we also saw the pitfalls. Now watch us do all of the good and make all the money without stepping in the pitfalls.

Speaker 2: Yeah. They also saw what brought it down and saw what Basically. Used as evidence to ruin them. So

Speaker 1: Yeah. Yeah. Totally. Seeing what not to do and seeing how not to get caught are very distinct things. They're really importantly different than each other.

Speaker 2: The, I think I think just to kinda wrap up, the the Bitcoin stuff. I think we got an NFT thing to chat about. But the there's been a lot of speculation. I don't know if you follow the crypto market, but the crypto market's been very volatile, typically in an up trajectory the last couple months or last month.

Speaker 1: Yep.

Speaker 2: Yep. And a lot of it has to do with the potential approval and launch of a bunch of ETFs, exchange traded funds, that will kind of, spot price crypto into real regulated securities markets,

Speaker 1: which Yeah.

Speaker 2: Which is, to me, I can't fathom how either I know right now it's in front of The UK, Securities and Exchange Commission, their SEC as well as the American one, but I can't fathom how they'll approve these things as it essentially will it's a a tacit acceptance that they are securities and always have been securities, but will not regulate the actual internal security, like the the the Bitcoin itself, but it will allow us to sec create securities around those unregulated securities.

Speaker 1: Yeah.

Speaker 2: So

Speaker 1: It's a it's a it's a weird it would be a strange step towards the legitimization of cryptocurrency. It it's already very legitimate right now. Hundreds of billions of dollars, Super Bowl ads. But from a purely financial perspective, it's a really big step to say that this is just a security now. For anyone that doesn't know an ETF, I think a lot of people listening to this would, but an ETF is just essentially a pooled investment that holds a bunch of other assets instead of just one. So you're not just buying one stock. You're buying a thing that's got a bunch of other stuff inside of it. It doesn't have to be just stocks, but you're buying a basket, I think. Is that a fair way of describing an ETF for a for a person that's unfamiliar?

Speaker 2: Yeah. It holds a bunch of like, tip well, typically, an exchange traded fund will hold, like, an S and P, 500 ETF. Index. Will hold a percentage weighted of all of the things that make up the SPF 500 basket. Crypto, like, if they do a Bitcoin ETF, it will just strictly hold Bitcoin. So we'll only probably own one one asset class inside of it or one asset inside of it. Oh. But the issue For sure. Yeah. Well, there could be a crypto ETF that holds a basket of different cryptos.

Speaker 1: Why wouldn't you just have the full crypto ETF that's like the S and P 500 of crypto? It's It's got Ethereum. It's got Bitcoin. It's got Salon. Like, it's just got all of them in it.

Speaker 2: But but the but the the thing the thing that blows me away is just that it's like, a, you know, the largely the crypto community since I've been witnessing it. So I don't know what that would be. 2009 and onwards? '10 and onwards? Like, I'm making these dates up off the top of my head. But they have not wanted to regulate. You know, they enjoy the fact that they're outside of the regulations. A, from a hyper speculative standpoint where there's no regulations, so they can be crazy and they can do massive leveraged investments and, you know, to the moon.

Speaker 1: To the moon.

Speaker 2: But also on the other side, the they don't really pay

Speaker 1: Philosophical perspective.

Speaker 2: Yeah. Philosophically, they they they're they're kind of anti massive, big, big government finance regulation, etcetera. The regulatory people have let them live and exist in this, like, gray area, I would say. Because it's not like they don't treat it as a security. The more and more, like, the SEC is getting involved in crypto stuff, but they're still unregulated. So they've kind of let them exist in this gray area for so long. Mhmm. And now, letting them create ETFs Mhmm. Full of this asset that they don't regulate just seems I just can't see how they're gonna do it. You know? Like, there's a lot of speculation that they're gonna approve these ETFs, so they just can't, for the life of me, see how they're gonna allow it.

Speaker 1: Yeah. I'm you've been following the regulatory, response to cryptocurrency for a while, and that's been something you've been talking about kind of prior to even me realizing that was an interesting element of the story of cryptocurrency. And that's definitely a huge part of this. Like, will a crypto based ETF ever get approved? And what does it say about institutional finance's relationship with crypto is, like, a big important That's that's kind of what this is really about. The second thing it's about that I find interesting and have wondered about for a long time with crypto is that I was introduced to crypto as a bold, defiant, libertarian, oppositional idea to traditional finance. Yes. Traditional finance is this big corrupt thing and it's dealing in commodities. They're being produced by central banks and blah blah. Like that crypto is supposed to exist across a big raging river from that whole world of traditional finance. And it was supposed to be empowering to people, not your keys, not your crypto. But here's this thing. It's the digital version of a duffel bag full of gold buried

Speaker 2: in the back of the market.

Speaker 1: And to suddenly say, but you know what's even better than a duffel bag full of gold? If we put that duffel bag in a bank and bought stocks in the bank and then come, like, put those bank stocks together and made an ETF out of it. Like so that wasn't about that for some of you. It was about the line going up. It was about a world where the value of a bunch of other things had already gone up before you'd gotten it, but here's a new thing that you can ride to riches. It wasn't about the philosophical stuff. It was just about that line. And an ETF would mean more people could buy that asset, making your line go up further. Like, it to me, this feels like kind of saying the quiet part out loud a little bit. Totally.

Speaker 2: That's exact exactly it. The Yeah. I

Speaker 1: don't know.

Speaker 2: The second it goes ETF, it can attract, you know, institutional great investors. You know Totally. Pensions. Could you imagine a pension fund dipping? It's like it's like something like the s and p five hundred. When when a company gets rolled into the s and p five hundred, usually their stock goes up quite a bit because all of a sudden these ETFs need to acquire, you know, millions of shares in it because they're holding a basket of equities made up of the the members of the S and P five hundred. So same thing will happen here is that if if if these become real ETFs, the more people that buy them, the more Bitcoin will need to be secured and held by the ETF, and it will cause the line to go up. But here's the thing is, like, Bitcoin should I just say has no utility? Is that too far?

Speaker 1: You said it before. I don't know why you would I don't know why you'd waffle suddenly at the finish line.

Speaker 2: So I'd say that it's it's utility versus Yeah. Dubious. Many other ways that we can trade in in in fiat currencies and and and utility in society. It's very offers very low little utility to the world. The fact that it Yes. Needs to be held in an ETF as an unregulated asset, it just blows. I just can't I just can't fathom an SEC that allows this to happen.

Speaker 1: I'll be curious. You'll have to keep us I feel like you're tuned into this regulatory response to crypto stories. You're gonna have to keep us posted on,

Speaker 2: Mhmm.

Speaker 1: On if one of these things exists and whose pension suddenly is going towards

Speaker 2: towards it.

Speaker 1: So bleak. So godly bleak. But you know, it's not bleak, and we should end on.

Speaker 2: Yes.

Speaker 1: I think I think we can put a pin in it with this one. This is just a little one. This is petty. Like, petty alarm bell warning. At a large Bored Ape NFT event in Hong Kong last Saturday, attendees had their eyeballs burned when ultraviolet lights typically used for tanning were used as part of a on screen display. I'm not happy those people got hurt. That part's not funny. No. That part isn't funny. But some part of it's I'm not sure which part of it's funny, but I'm laughing because NFTs gave people snow blindness. Tell me that's not fucking funny. Like, it just is.

Speaker 2: I think I think that the fact that Bored ABL Club managed to still have a conference in today like, I'm not sure what's going on with NFT values. I'm sure it's largely manufactured by by people just refusing to sell. But the yeah. I I just I'm not sure what that conference is. Is it just a party? Like, I've seen people walking around with, like, Bored Ape Yacht Club's hoodies and stuff on. Is it just a brand now? I feel like it is.

Speaker 1: Yeah. I think it was a speculative commodity that's value was based on a story about how valuable the brand is gonna be, and now the value of the commodity crashed, and all that's left is the brand and some people kind of holding on for dear life.

Speaker 2: Yeah. Yeah. Yeah.

Speaker 1: For lack of a better way of putting it. Like, I I I think people still own them, and I think people are still excited about it. And, honestly, like, if its value isn't up and it's just a media IP play of, like, people being like, we like these apes and making cartoons and comic books about them, I don't begrudge that even a little. Did It's the second they all assemble and say this is gonna be worth more than Disney because x y I'm like, this is this is just self delusion. And I'm not happy that you, gave your eyes a sunburn staring at the apes writ large 300 feet tall in front of you. I'm just saying it's quite the fucking picture. It's quite the scene.

Speaker 2: Did you have to did you have to own an ape to go to this conference?

Speaker 1: That's a great question. I wonder. ApeFest, a three day annual meetup of people who own Bored Ape NFTs and which still sell for tens of thousands of dollars. Yeah. Oh, amid the 2021 NFT craze. Got it. Yeah. I don't know. I think you had to own a Bored Ape NFT.

Speaker 2: I feel I feel I feel like I feel like that's just like like, if I was a grifter, I feel like that's the conference I wanna go to. Like, I feel like a room full of people that paid $75,000 for an image that was digitally generated of a monkey.

Speaker 1: Yeah. It would certainly be a Those are

Speaker 2: those are

Speaker 1: What we call that, a high influence group.

Speaker 2: Hot hot leads. Hot leads for for a grifter.

Speaker 1: Hot leads. It's probably a sick event. It's in Hong Kong. Yeah. I'll give him credit. The the graphic design on the website is is pretty it's pretty banging. It looks good.

Speaker 2: Yeah. Totally.

Speaker 1: Yeah. Yeah. It it just it feels like a metaphor.

Speaker 2: And I

Speaker 1: and I haven't taken the time because I just got back from vacation of articulating exactly how that metaphor works, but staring into a glowing symbol that inadvertently hurts you. There's something to that. I don't know what it is, but there's something there. Okay. Okay. FTX, Roblox, European spyware, human AI pin, Mission Impossible is influencing domestic policy.

Speaker 2: Terminator. Terminate.

Speaker 1: We covered

Speaker 2: a lot. Did. We did. We

Speaker 1: covered a couple of Terminator. We got through a lot. And we're happy to be back.

Speaker 2: Hopefully, you guys made it this far. And, if you didn't, totally understand.

Speaker 1: If you didn't, I get it. I get it. Yeah. That's real. That's really valid. I think that's everything. I think that's another one in the bucket. I think we'll catch you in the next one.

Speaker 2: Godspeed. I think I need to make Godspeed my sign off. Godspeed.

Speaker 1: Yes. Godspeed. You said Godspeed. I was like, oh, that's got that's got a nice

Speaker 2: Godspeed.

Speaker 1: Godspeed. Safe travels. I could go with safe travels, and you could do Godspeed. That's so just really intense. Like, is something about to happen? Like, are we good? This podcast left me with an ominous taste in my mouth.

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