Foreign What's up guys, and welcome back to Wall Street Millennial On this channel, we cover everything related to socks and investing the single largest story in the crypto space for 2022 so far is the collapse of the massive crypto exchange. FTX As we've detailed in our previous video on the topic which is linked in the description below, FTX was likely running a multi-billion dollar scam. Founder: Sam Bakeman Freed allegedly took billions of dollars from FTX depositors to fund his own trading firm. Alameda Research ultimately leading to the collapse of both companies. The price of Ftx's native Ftt token has declined by more than 90 since the Scandal was exposed with an estimated 8 billion hole in its balance sheet. Hundreds of thousands of people stand to lose billions of dollars in total, with no doubt that this will push many families to financial ruin. One of the most shocking parts of the whole FTX story is how the media lionized Sam Makeman Freed as a genius and FTX as a great company almost up until the day of its collapse a few weeks ago. But there are multiple red flags that should have given all investors pause about the company. years ago in 2020, FTX hired a man by the name of Daniel Friedberg as their general Counsel, eventually promoting him to Chief regulatory officer in 2021. this was a very important role for FDX as they spent millions of dollars lobbying policy makers in an attempt to influence crypto regulations on Ftx's website. They talked about his prior experience working at a law firm as well as his academic degrees. They conveniently left out. perhaps the most significant experience on Friedberg's resume, which was the work that he did in the mid to late 2000s involving an online poker company called Ultimate Bet. In 2009, the website was shut down after it was revealed that somebody had made a cheat software which allowed them to steal millions of dollars from Ultimate bets unsuspecting users The Mastermind was a man by the name of Russ Hamilton a professional poker player who won the poker World Series in 1994. Russ Got involved with Ultimate Bet in the early 2000s. As an Insider He was able to access software which he used to enrich himself to the tune of tens of millions of dollars. Daniel Friedberg Worked as Hamilton's lawyer where he helped cover up his crimes, putting aside any moral concerns. It appears that Friedberg is a very capable lawyer. In 2013, an audiophile was leaked where Hamilton admitted to stealing millions of dollars from Ultimate bet users. Despite his confession, he has never served a single day in jail. Ten Years Later Daniel Friedberg again found himself working for another alleged fraudster, but on a much bigger scale. In this video, we'll look at Daniel Friedberg's involvement in the Ultimate Bet scam and what this can tell us about. FTX Quick pause from our sponsors over at MooMoo Mumu is a commission-free brokerage that provides the most comprehensive set of fundamental and technical analysis tools of any brokerage I've tried so far. For example, if we look at Tesla we can see their short interest data. We can also see their price and earnings ratio, which is extremely high compared to their peer average. If we flip over to the financial tab, we can see a whole host of company data including their vehicle deliveries by model revenue, and EPS numbers compared to consensus expectations and much more. This saves you a ton of time when doing fundamental research on any stock you're considering investing in. While Most data providers would charge you a monthly subscription for this level of data. MooMoo gives all of it to you in-app for free. 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Ultimate Bet hired the Professional Poker Legend in 1994 World Series Champion Russell Hamilton to help run their affiliate program. Rust used his Connections in the professional poker world to sponsor a large number of Poker professionals. With Hamilton's help, Ultimate Bet exploded in popularity, becoming one of the largest online casinos by the mid-2000s For all casinos, cheating is a huge problem. With real money on the line, there is always an incentive for people to gain an unfair Advantage at the expense of the opponents. Cheating is an especially big concern for online gambling platforms, as the people can play anonymously from anywhere in the world. There is always a risk of someone hacking the software to gain an unfair advantage. In poker. Each player's cards are meant to be private. If you can see that your hand is stronger than your opponents, you can go all in because you know with 100 certainty that you will win the hand and vice versa. If your cards are weaker. With such an advantage, you are all but guaranteed to win regardless of your opponent's skill level. Ultimate Bet new cheating could be a big problem. So in the early 2000s they created a software which was later codenamed Audit Monster Audit. Monster had the ability to see the cards of any player on the platform. Its original purpose was to watch the hands of suspicious accounts to make sure they weren't doing anything nefarious. They knew that this software could easily be abused if it got into the wrong hands. To prevent this in the computer code, they added a 30 minute delay as to when the player's cards can be viewed this way. Audit Monster could not be used to cheat in real time. It could only be used to audit suspicious players after the fact as an Insider at Ultimate Bet. Russ Hamilton Knew about Audit Monster and saw its massive potential. He got a hold of the software and hired a computer programmer to remove the 30-minute delay. Starting in the mid-2000s online poker forums started talking about an anonymous account on Ultimate bet called Neo Neo which appeared to have a suspiciously High win rate. In 2008, an Australian mathematician by the name of Michael Joseph reviewed Neo Neo's win rate, comparing it to the win rates of normal accounts. Neo Neo's win rate was anomalously high. In Josum's words, the chance of winning as consistently as Neo Neo was akin to winning a 1 in a Million lottery four days in a row. By this point, the cheating allegations were widely reported in the mainstream media. Russ Hamilton Knew that it was just a matter of time before the cheating software was exposed, so he called an emergency meeting with his lawyer. Daniel Friedberg to come up with the plan for some inexplicable reason Russ recorded the conversation which would be leaked to the media five years later in 2013. while it seems weird to record your own incriminating conversations, it's not unheard of for paranoid people to do this. Richard Nixon Recorded hundreds of hours of audio as White House meetings with many of the conversations being embarrassing and in some cases, incriminating. Regardless, the audio gives us a glimpse into what type of person. both Russ Hamilton and his lawyer Daniel Friedberg are when they think that nobody's listening in all right. So I feel and I and I did take this money and I'm not trying to make it right Dean So we got to get that out of the way right real quick. Okay, right off the bat. Russ Hamilton and Miss they did take the money. He was The Mastermind behind the cheating scandal and he cheated other players on the platform out of an estimated 22 million dollars. He had no intention of coming clean about it. The entire purpose of this meeting with Daniel Friedberg was about how they can try to get away with it. So for us to come out and say the ideal looked at this account, there's no cheating. Let me type this out. On the other hand, I think of what what we can do is to say we've studied it. We know that sometimes it was used, sometimes it was not. These are these limited times in the times it was used, these people are being refunded. Uh, that was Daniel Friedberg talking. He was saying that the ideal situation is if they could just deny that any cheating was going on. but with all the information that the public and The Regulators already had, this would not be credible. So instead they'll admit that the cheating happened, but try to downplay how much it happened by saying that cheating software was only used sometimes, not all the time. This way they can minimize how much compensation they have to pay the victims and even then they had no intention of admitting any wrongdoing on Russ's part. I Think for the public, it just has to be former consultant of the company. take advantage of a server flaw of attacking in the client. Been able to identify exactly when sometimes he played with it, sometimes he played. Without So they'll admit that somebody cheated, but they'll put the blame on a road consultant who is working for the company. This consultant took advantage of some vulnerability in the server to create the cheating software. How do you think this money if you if it suppose it's a five mile which correct makes it could be right around 5 million. If you had to pay the players and give kg we can get it down to five. I'd be happy. Russ is suggesting that they can pay five million dollars in compensation to the victims. Keep in mind that they stole more than 20 million dollars. The plan was to downplay the skill of the cheating as much as possible to minimize the compensation. The Kg he's referring to is Kanawaki Gaming Commission, the regulatory body in charge of the casino license. Friedberg says that if they can get it down to five million dollars, he'd be happy. So he agrees with Russ on the strategy of downplaying the cheating scandal as much as possible. And to make matters even worse, they didn't want Russ to pay back any of his ill-gotten gains. They were going to shift the blame on other people. So Russian keep the entirety of his stolen. Fortune Get paid Uh well. I mean we'll convince the business to pay some. It was right off. The top is because you know that's it's capsa or apologize now. Norton's business. AP Or you'd be I'm confused. Now it's combining. That's right. it's nothing opportunity. The new animals I Don't think they're responsible for anything. they're not. It's nonetheless communication. Yeah, but I don't think they're responsible. I Agree. So I don't think they're responsible for it. Well, I they're not morally responsible. However, they did buy this business when they bought it. They you always take a risk when you buy a business. Russ is asking where the compensation money would come from Friedberg says they can get the company that owns Ultimate Bet to pay. There's a bit of complicated corporate structure where escapesa owned part of it in another company called Absolute Poker owned part of it Friedberg says they can get these companies to pay the compensation Russ makes the point that they shouldn't be responsible Russ was The Mastermind behind the cheating scandal. He did it with neither the consent nor knowledge of Escapesa or Absolute Poker. Friedberg agrees that these companies would not be morally responsible to hold the bag for Russ's cheating, but nevertheless, he was still thinking of a way to get them to pay. But anyway, no, the reason that it's not bad for heroin is because, uh, not. It's not bad for this whole in the big picture. For Carolyn's name to be brought out there because it shows that his gaps is responsible. she was a VP there uh in order to get to excaps his money legally, almost almost half the show thought because they've gone through this clean bar process to Carolyn is an employee of Escapesa the company that owned part of Ultimate that Carolyn was completely innocent in the affair. but Friedberg was suggesting that they implicate Carolyn as a way to put pressure on Xcapesa and get them to pay the compensation. They're fabricating a completely fake story out of thin air to blame everybody. but Russ for a crime that Russ masterminded and was the chief beneficiary of and as if they weren't already Brazen enough. Friedberg also says that Russ should not only deny any responsibility, but should also claim that he is a victim. Uh, I mean that's part of the story is that I think for us, you have to be owed something. here. you played against these high-stakes tables. So I mean this thing has to have ripped you off too hands to it. So, uh, otherwise it's not going to fly. Russ Played at the high stakes tables in Ultimate bet where the cheating was known to be taking place. Of course, Russ was never the victim of the cheating because he was the only one with the audit monster software. He was the one cheating other people, not the other way around. both. They're going to tell the story that Russ was not the cheater. Then logically he would have had to have fallen victim to the cheater as he was playing at the same tables. It shows how morally bankrupt their plan is. They create a story that is the exact opposite of the truth. In the following months, more information was exposed. The Kanawaki Gaming Commission conducted an investigation which found Russ Hamilton was the main person responsible for and benefiting from the cheating scandal. Ultimate Bet was shut down. However, even despite being exposed, Russ still managed to come out on top escapesa agreed to pay 15 million dollars on top of another 6.1 million dollars already paid out by Ultimate Bet to the victims. While Russ Hamilton's reputation within the professional poker Community was completely destroyed, he got to keep his ill-gotten gains and never served a single day in jail. This is partly because online gambling was a legal Gray Zone in the U.S an Ultimate Bet was based in Canada At the end of the day, it looks like Daniel Friedberg's master plan worked 10 years later. Friedberg gets a job as General Counsel of FDX Friedberg's involvement with Russ Hamilton was widely reported in the media, so it's almost inconceivable that Sand Bakeman Freed wouldn't have known about this while being involved in a shady online poker. Scandal might be disqualifying for most jobs for FDX. This might be exactly the kind of experience that they were looking for if Friedberg helped Russ Hamilton Get away with stealing 20 million dollars. Maybe he can help Sam Bakeman free Get away with stealing 8 billion dollars. All right guys, that wraps it up for this video. What do you think about the Ultimate Bet cheating scandal? Should Russ Hamilton have been criminally charged? Let us know in the comments section below. As always, thank you so much for watching and we'll see you in the next one. Wall Street Millennial Signing out.

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