The Chopping Block: Nic Carter on Hamas’ Crypto Funding, SBF’s Courtroom Collapse, and Dramas Involving Lido and dYdX - Ep. 564

11/02/23 • 59 min

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Welcome to The Chopping Block – where crypto insiders Haseeb Qureshi, Tom Schmidt, Robert Leshner chop it up about the latest news. This week, the gang sits down with guest Nic Carter of Castle Island Ventures, whose tweet thread pushed the Wall Street Journal to correct its story that Hamas had raised tens of millions in crypto. Carter discusses the challenges in tracking how much crypto Hamas has actually received, the declining prospects for Sam Bankman-Fried’s acquittal, and ongoing dramas surrounding staking protocol Lido and decentralized exchange dYdX.

Show highlights:

Why the cross-examination has not gone well for Sam Bankman-Fried
how the Wall Street Journal misinterpreted data and may have overstated the amount of crypto donations flowing to Hamas for terrorist activities
why it’s difficult to pinpoint how much funding Hamas has raised in crypto donations
how extensive crypto funding for terrorists is believable to many outside observers of the industry, even recently some of its supporters in Congress, but does not reflect reality
Why Hamas has decided on its own to stop trying to raise funds in crypto
how Lido is upset at the way Layer Zero has pre-marketed its bridge
why dYdX’s pivot to decentralization with fees going into its token is a positive development but does not give the protocol the moral high ground to attack erstwhile competitors such as UniSwap.

Hosts

Haseeb Qureshi, managing partner at Dragonfly
Robert Leshner, founder of Compound
Tom Schmidt, general partner at Dragonfly

Guest

Nic Carter, general partner at Castle Island Ventures

Disclosures Links

Previous coverage by Unchained on the trial of Sam Bankman-Fried:

Show highlights:

Why the cross-examination has not gone well for Sam Bankman-Fried
how the Wall Street Journal misinterpreted data and may have overstated the amount of crypto donations flowing to Hamas for terrorist activities
why it’s difficult to pinpoint how much funding Hamas has raised in crypto donations
how extensive crypto funding for terrorists is believable to many outside observers of the industry, even recently some of its supporters in Congress, but does not reflect reality
Why Hamas has decided on its own to stop trying to raise funds in crypto
how Lido is upset at the way Layer Zero has pre-marketed its bridge
why dYdX’s pivot to decentralization with fees going into its token is a positive development but does not give the protocol the moral high ground to attack erstwhile competitors such as UniSwap.

Hosts

Haseeb Qureshi, managing partner at Dragonfly
Robert Leshner, founder of Compound
Tom Schmidt, general partner at Dragonfly

Guest

Nic Carter, general partner at Castle Island Ventures

Disclosures Links

Previous coverage by Unchained on the trial of Sam Bankman-Fried:

Previous Episode

SBF Trial, Day 16: In Final Cross Examination, SBF Gets Caught Again by His Own Words

For a second, consecutive day, prosecutors pounded away at Sam Bankman-Fried’s credibility, asking the former FTX CEO to explain his obliviousness about how Alameda had spent $8 billion of FTX customer funds.

Prosecutors and the defense both rested their cases on Day 16 of the high-profile trial. Both sides will make their closing arguments on Wednesday and jurors could begin deliberating the following day.

While Bankman-Fried claimed that he thought “it was permissible” for Alameda to use FTX customers’ fiat deposits, he also admitted that he didn’t tell his employees not to spend that money or create measures to segregate FTX customer funds from Alameda’s.

Prosecutor Danielle Sassoon also grilled him on why he didn’t look into who had spent the FTX customer money. “So it’s your testimony that while you were CEO of Alameda some unknown people spent $8 billion without your knowledge?” prosecutor Danielle Sassoon asked Bankman-Fried, who replied that he didn’t agree that was his testimony.

Bankman-Fried later said that he had asked former Alameda CEO Caroline Ellison to explain the $8 billion in spending but did not fire anyone. Under subsequent defense questioning, Bankman-Fried said that he had wanted to look ahead.

Earlier in the day, Sassoon had honed in on Bankman-Fried’s allegedly close relationship with government officials in the Bahamas, and presented an email in which he said that the company had “segregated funds for all Bahamian customers on FTX and that it would be “more than happy to open up withdrawals for all Bahamian customers on FTX.” The communication came Nov. 9, 2022, a few days after FTX had halted customer withdrawals as awareness of its financial problems grew.

Catch up on Unchained’s previous coverage:

Next Episode

SBF Trial, Day 17: Closing Arguments Ask: ‘Villain or Good-Faith Actor?’

Prosecutors and defense attorneys in the trial of former FTX CEO Sam Bankman-Fried closed their arguments with similar stories to their opening statements more than three weeks ago: a tale of two Sams.

On Wednesday morning, day 17 of the trial, the government took jurors on a final grand tour of Bankman-Fried’s alleged lies, evasions and misdirections that they said aimed to hide the ugly truth of a gaping $8 billion hole in the crypto exchange’s balance sheet from investors and regulators, and that reflected his indifference to spending customer assets.

Assistant U.S. Attorney Nicholas Roos said that as the person overseeing FTX and the separate trading entity, Alameda Research, to which FTX funneled customer deposits, Bankman-Fried was the only person who could have been responsible for decisions that led to the deficit – criminally so.

“He told a story and he lied to you,” said Roos, who punctuated his more than two-hour presentation with metadata readings and time tables that seemed to devastatingly illustrate SBF’s ongoing awareness of his company’s financial debacle.

But in the afternoon, Bankman-Fried’s defense team portrayed him in softer tones, as a math nerd with no ill-intent and guilty only of bad management, particularly his failure to install adequate risk management protections. Attorney Mark Cohen said that the government had failed to prove its case as it sought to create a Hollywood villain responsible for the disappearance of the funds, cartooning his dress and personal habits to make their case. At one point, he seemed to appeal to jurors’ emotions, reminding them that Bankman-Fried had lived a big life and now faces prison.

Bankman-Fried faces potentially decades in prison on a total of seven counts of wire fraud and conspiracy. The prosecution will have an opportunity for rebuttal on Thursday, and jurors could begin deliberating his fate before the end of the day..

Often raising his voice for dramatic effect, Roos highlighted earlier testimony from Bankman-Fried’s inner circle and Google metadata indicating his awareness of the balance sheet woes to show his involvement in the company’s oversight. Bankman-Fried testified on Monday that he was unaware of the problems, suggesting others were to blame.

And Roos used the time tables to demonstrate separately that Bankman-Fried had lied to Congress about protecting customer assets even as he paid off loans using them, and that he had spent heavily on investments, political contributions and personal items, even after he knew of the massive balance sheet hole.

“This was a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money, and eventually it collapsed, leaving countless victims in its wake,” Roos thundered.