SkyBridge Capital founder and managing partner Anthony Scaramucci discusses his take on FTX founder Sam Bankman-Fried's latest legal developments.
The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency. Joining us now with more insights on the SPF trial is Skybridge Capital, founder and managing partner, Anthony Scaramucci. Welcome Anthony Michael. Good morning. Good morning. How, how's everybody? We gotta, they gotta give Sam's a DH D medications to the jury, right? We gotta keep him awake to pay attention to the trial. I think, I think our, our reporters could do with some of that as well. It's, uh, it's an exhausting process. It, uh, obviously paying attention, which is, this is what we're hit. Why we've got you here. No one from the FT A is watching. Uh, you knew Sam personally, right? And, and you were a business partner, right? The investment arm of FDX had previously purchased 30% of Skybridge Capital and you hosted the Crypto Bahamas together. So what has all this meant for you watching this thing unfold this past week? Well, I mean, listen, it's been absolutely heartbreaking, you know, I, uh, you know, II I, I'll, I'll take you back, I'll take you back to November the eighth, which was, uh, Tuesday and I arrived in the Bahamas, uh, to learn firsthand what was actually going on and how the funds were used and how they got wired around. And, uh, you know, I mean, I was shocked then saddened, uh, angered all that sort of stuff. I'm now way past all of that and I'm now in the, uh, the zone that this was fraud and it was done by people who are fraudulent. Ok. And so what bothers me about the whole thing is that it's getting blamed on crypto and it hurts the reputation of crypto investing web three, excuse me, the whole uh thought of where we could go from a technical innovation point of view. Um And so, you know, this will go on now probably until Christmas. Um You know, Sam is obviously playing the probability that if there's just one out of those 12 jurors that doesn't understand the case or can somehow sympathize with him. Uh He's hoping to get off, I don't think that will happen. Uh But things happen, what we learn about jury cases is none of us know it's a little bit of a, of a coin toss in terms of what happens. Uh Despite what the facts might be guys. So yeah, but I'm saddened by the whole thing. It's not, it's not, you know, I'm not looking for anything other than getting this behind us so that we can focus on all the great things that are happening in the industry. So last year, uh Anthony we had these crypto kings, you know, Sam Bank and, and others. Um, you know, and it looks like Sam's not gonna possibly spend his life behind bars. We've got, uh, you know, if he's convicted, of course, we've got CZ also being sued by the SEC, we got, you know, Kevin o'leary saying that these cowboy crypto cowboys are all on their way out. Um This is now time for the sort of the grownups to come in. I mean, how do you see all of this flushing out? Is, are we moving to a more institutionalized grown up if you like crypto world or do we continue in this sort of more, uh, you know, freewheeling style? Well, you know, I mean, listen, I have a great relationship with Kevin and I have a lot of respect for Kevin and we worked on some FTX things together. Um, I do, I do think we disagree a little bit on CZ. I think he, he feels strongly that CZ brought FTX down. I don't think, um, if FDX was handling things prof properly and if they had 1 to 1, uh, locked on their customer assets as what was put in the terms of service, uh, no matter what CZ said end or did, it would not have hurt FTX. So, you know, I don't agree with that. I think it's Sam and the three or four people that have already pled guilty that brought down FDX. I think the, the other thing about CZ, which I think is important is that he is being sued by the SEC, but he is not being, uh, um, sued criminally yet there's no department of justice indictment, uh, related to CZ. Now that could happen, I'm not close enough to the situation, but I think people deserve their day in court and I think they deserve the opinion and the presumption of innocence. And I think as I've said, continually, Sam certainly deserves his day in court. Um But you know, you're asking about if we're gonna end up into the grown up world in crypto. And I don't think that happens Michael until we get the Bitcoin ETF until we get a cash, Bitcoin ETF in the United States. I don't think we enter the grown up world. I think we're gonna be in this sort of native position, this still early stage position and, uh you know, with continued volatility and uncertainty but still adoption. I think the adoption has been exponential. I think people have to focus on that, but you get a crypto ef you're gonna break the uh the wall down and you'll have a full, fully institutionalized process. Well, II, I, I'm gonna ask you, I, I do want to ask you about the crypto ETF s that, that are in applications right now. But uh you know, you're a Harvard trained lawyer. Um Are, have you been asked to testify in this trial. I have not been asked to testify. So I, I said that on C NBC last week, I think they, I think they presented my name, uh, last week to potential jurors. Um, you know, I have attorneys obviously that I'm, I'm close to that said to me, perhaps they did that because I'm a public figure. I'm more or less outspoken, I've been outspoken about the case. Um, and so they just wanted to make sure that there was nobody on the jury that knew me personally where they felt that my opinion of what went on could be something that would unduly influence a juror. But I have not been asked to testify and I appreciate you asking me that question because it allows me to clear it up because there's been suggestions that, uh I'm gonna be on the stand during this case and I've frankly been told specifically that I will not be. Do you want them? No, I don't, I don't want to. No, I would, you, would you want to, I mean, you know, Iii, I say Center Street is a nice place. I, you know, sometimes it's, it's better to be a witness than, than to be on the wrong side of that, certainly better to be with. But listen, I, I wasn't close enough to the blast zone frankly. So I don't think there's any relevancy. I mean, I can take you through a tiktok of what happened on November 8th, which I've already stated publicly. It's already out there in the public, but I wasn't close enough to the blast zone. I think what's the most interesting thing about the case? And if I were Sam's defense attorneys, you have to come up with an explanation why four of his senior executives have already pled guilty to the case. And so, you know, there's an expression that you learn in trial advocacy. If the, if the windows open and you hear clip clop outside, it's a horse guys, it's not a zebra. So, you know, you, you have to explain to me while four of your cohorts which were in your inner circle have already explained to the US government and the Department of Justice what you guys perpetrated. And so then please explain to us why you think you're the only one of the cohorts that should be considered innocent. I think that's something that hopefully they'll get to and hopefully the jury will be awake for that one because I'm, I'm interested in that one myself. So, so um you probably saw Michael Lewis, the, the business journalist, the uh famous author, his book Going Infinite. He came out in 60 minutes and said that he thought FDX had a great real business as if no one and no one had cast dispersions on it. It'd be running, you know, just fine with customer deposits and making a ton of money. Uh Obviously got a bit of a, a big backlash response to the crypto community. What are your thoughts on that? Well, OK. So I know, I mean, he said that I watched his interview, I also read the book this past weekend. I think the book is very well written and just to be fair to Michael, I think he brings up a lot of the things that he think we went wrong to FDX. People said, oh, this is an apology letter on behalf of Sam. That's not the book. If you actually read the book, you'll see in the book, he is fairly objective about everything that went on. I think what Michael is saying is something that I think I felt and perhaps some of the venture capitalists felt, um you know, had he run it straight up, it would have been a smaller business perhaps. Uh it would have been a gentleman at the age of 30 worth three or $400 million not 16 billion as he was uh portrayed to be. And I think what Michael is basically saying is that there were accounts up and running if you sat on the trading desk and we did that as part of our, our due diligence, you know, he had 12.5% of the market share. So, um but I think what Michael should have said in the 60 minutes interview and these are, you know, I mean, they tape them and cut them the way they see fit. So sometimes it's not reflecting perfectly what people are thinking. But what Michael should have said is, you know, had he run the thing pursuant to the terms of service that he put out there, uh He had market share, he had garnered enough business where he would have been a successful exchange. Would he have been the second largest exchange? Perhaps not? Uh but he was an early mover. And I think Michael's point is that uh if it was run properly, it could have been a quite, quite profitable business. And so, I mean, people could be upset about that it wasn't run properly. So, um you know, II I and, and I think Michael leaves that for the reader to decide uh the situation in my own dealings with Michael. He did say something to me which I'll share with you guys. Uh that he wasn't, he wasn't gonna write the book if he felt that Sam was completely and full on guilty. And so he wrote the book. And so I think that he doesn't believe that he's completely full on guilty. I think that he thinks that some of these indiscretions didn't have criminal intent and some of these indiscretions were based on disorganization. But if you read the transcripts from last week, and Gary is testifying under oath, um that uh they had a plan in place dating way back to 2020. Now, the more cynical part of my personality would then ask. Well, uh, 2021 was arguably the best bull market or the best bull cycle in crypto. And if you were going to quote unquote, clean it up the way Sam professes to Michael Lewis, wouldn't that have been a great time to have cleaned up the problems that you had? And so, so, and of course, the answer was, well, if you are never thinking you're gonna get caught or never thinking that you need to clean something up, you run it until it crashes into the wall. And we've seen that happen with Theranos, saw that happen with Bernie Madoff and we witnessed that last year in terms of what happened to FTX. So, so to me, I think it's prima facie and I think the Department of Justice will have to prove that to those 12 people that are listening carefully that is pretty upset with the defense. I mean, I think that's pretty obvious Lawrence, right? I mean, we Michael, I mean, you could see that the judge is not happy with the way these guys are proceeding. Well, I, I, so to sum it up, it, it, it, you know, how would you describe, would you ultimately you've dealt with Sam? Is he a, is he a crook or a fool? Ok. Again, I'm only giving my opinion and everybody has a different opinion and he's titled to, you know, him, he, he, he, he sat in rooms with them entitled to his day in court. And, you know, the jurors have been instructed not to listen to us here at coin desk or to look, look at the media. Uh, but I think he's guilty and I think he committed fraud and I think he, he committed it intentionally and I think he had this little bit of a Messianic view of himself the way guys like him and Bernie Madoff do that. You know, this is uh excusable fraud because I'm gonna save the world. And I'm such a genius that I'll be able to put the money that I'm taking uh against my terms of service and this violation, it's no problem because I'm a genius and I'm a Messianic savior of the world and I'll be able to put the money back in the location where I took it from and there'll be, nobody works for wear. And so, uh that's criminality. You can't do that in our society. You can't do that in money and investments. And, uh, you know, listen, I mean, remember his general counsel, uh his directors of compliance. Uh, none of them have been implicated because they were frankly shielded from it. And I have said this repeatedly if you want to commit a financial fraud, uh, what we learn from FDX and what we learned from Bernie Madoff, you have to have a very close group of people uh to commit that fraud because if you have 50 or 60 people looking at something, but that level of checks and balances. There's always a person of conscience that comes up and says, hey, sorry, that doesn't work for me. Uh I'm not going to jail uh for you guys to uh do Super Bowl ads. It's just not gonna work for me. And uh and they didn't have that because it was so intentional. They had a close group of guys, close group of men and women who knew exactly what they were doing and they made the decision to do it because they thought they were never gonna get caught. Alrighty. Well, thank you, Anthony. Uh, insights as always, uh that was Skybridge Capital founder and managing partner, Anthony Scaramucci.