Michael Saylor on how Sam Bankman-Fried lost $10 billion of customer money

Here's the diabolical twist: I [SBF] didn't just generate $10 billion of an unregistered security to dump it on the unsuspecting retail.  That would take me 500 trading days, dumping $20 million a day, right?  He didn't do that.  What he did is he generated $10 billion in unregistered security and then just borrowed $10 billion dollars secretly from his depositors and then went and gambled it, traded it, spent it, lost it.  And that is particularly impressive.

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This is also diabolical: FTX said, "we're built by traders for traders" and Sam bragged that they only charged 3 basis points trading fee and he was 30 times cheaper than CoinBase or much cheaper than Binance.  So he's stealing customers off of the other crypto exchanges by, in essence, offering near-free trading.  He's not trying to make money off the trading.  He's trying to get the assets on his platform because once he had the assets on his platform, he basically used FTX as his personal piggybank.

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So Sam basically scraped billions from unsuspecting investors in Silicon Valley.  They should've know better.  He took billions from crypto hedge funds and crypto banks like BlockFi and Voyager.  They should've known better.  And then he took probably $10 billion or more from depositors on his exchange.  They have the best argument.  It's like they were staring at terms and conditions that said he's not going to rehypothecate or use their assets.  He lured them with the promise of cheap trading, high leverage.

~ Michael Saylor, interview with Valuetainment, 5:30, 11:20 mark, December 5, 2022