The collapse of FTX last year in the recent criminal conviction of its founder should have served as a wakeup call for anybody investing or thinking of investing in cryptocurrencies on this channel. We've always been skeptical that cryptocurrencies have any value at all. but in the beginning there is at least an understandable rationale for Bitcoin People were distrustful of governments and centralized financial institutions. The promise of Bitcoin was a way to store and transact your wealth that could not be interfered with or exploited by anyone else.

As time went on, people got lazy and started trusting their crypto to centralized offshore exchanges with zero transparency or oversight. This allowed criminals like SPF to lure hundreds of thousands of people to deposit tens of billions of dollars, which he proceeded to steal to get a sense of just how Despicable SPF was as he was looting. The Exchange He encouraged his own employees to deposit their life savings, even going so far as to set up direct debits for their paychecks to be deposited into FTX accounts. This is eerily similar to Enron Senior Management who told their employees to invest their 401ks in to Enron stock.

The more things changed, the more they stay the same. After FDX collapsed, it quickly became obvious that it was a massive fraud, but beforehand, very few people had any suspicions. Almost everyone in the mainstream Financial press and social media alike viewed S SPF as a benevolent genius, but in hindsight, there were numerous red flags including the fact that they had no board of directors no CFO conflicts of interest with a related party hedge fund and nobody could explain how they generated the 8% yield they offered on stable coins at this point. Further, exposing the extent of the criminality at FTX is like beating a dead horse.

The victims have already lost their money and there's not much they can do. What's more important is to look at the crypto companies that are still operating today and customer funds that are still at risk. Currently, the largest crypto Exchange in the world is Binance, with 90 million customers with $72 billion of assets as of October of 2023, 51% of all crypto transactions globally run through Binance. If you look at Binance and it: CEO CZ there are some shocking similarities between it and FTX.

In fact, the number of red flags around Binance today are far greater and more concerning that the red flags are on FDX Before its collapse, yet millions of people around the world still deposit what in many cases is their life savings. in this video, We'll take a deep dive into all the red flags surrounding the world's largest crypto exchange: FTX Raised billions of dollars from what at the time were considered to be some of the most prestigious Venture Capital firms and hedge funds in the world. These included Seoa Capital SoftBank Coinbase, Ventures Toma Bravo Third, Point Capital Tiger Global retired hedge fund manager Paul Tutor Jones and Kevin O Kevin O was also a paid spokesman for FTX and only invested his sponsorship fee. This is just a select list.

There were over 100 supposedly sophisticated institutions who collectively forked over billions of dollars to SPF they invested despite knowing that FTX had no board of directors no Chief Financial Officer no Chief Risk RIS officer and no independent compensation committee. These are all things that any large company should have. They also knew that SPF set up the exchange in Hong Kong not because he liked Chinese food, but because he wanted to skirt Us regulations. He then moved the headquarters to the Bahamas not for the beaches, but for the relaxed regulatory regime which allowed him to act with relative impunity.

They also knew that SPF owned a multi-billion doll hedge fund which was run by his 28-year-old girlfriend and this hedge fund was also the single largest account trading on FTX Ellison was a self-proclaimed Harry Potter fan and lared as a wood NPH in her spare time. We know that the Venture capitalists knew this because Aoya Capital discussed Ellison's laring activities in the SPF profile that they proudly posted on their website to see just how ridiculous this is. Imagine Hypothetically, if the CEO of Goldman Sachs also owned a hedge fund and appointed his girlfriend to run it and that hedge fund was also the largest customer of Goldman Sachs that would clearly be outrageous and the CEO would be immediately fired. If any company did this, its stock would be uninvestable even if you didn't know SPF was stealing billions of dollars of customer funds.

Any one of the red flags we just went over would make the company uninvestable. but the Venture capitalists were so drunk on the crypto Mania that they actually thought these were good things. The reason we just spent so much time going over the FTX red flags is that we will see shockingly similar things with Binance. And if anything, it's even worse.

the public face of Binance is Chong Pong Zalo, who goes by CZ it was is actually co-founded by two people CZ and a woman named Hui In 2013, Hui co-founded a company called Okcoin, which was one of the first crypto exchanges in China. In 2014, she hired CZ to be the chief technology officer of Okcoin. CZ had previously worked as a software engineer at the Tokyo Stock Exchange in Bloomberg In 2015, CZ left Okcoin to start his own company called Bia Technology based in Shanghai China which was a technology provider for various online exchanges by appears to be not operating anymore, but I was able to locate an archived version of their website If you want to create an online Marketplace for cultural property Commodities intellectual property or digital assets Bia could help you execute transactions on the back end In 2017 CZ decided that he wanted to create his own crypto exchange called Binance and convinced Hui to join him as a co-founder instead of seeking startup capital from Venture Capitalists. CZ Instead decided to raise money by creating a new cryptocurrency called BNB and selling the newly minted tokens in an Ico.

Many years later, in an interview with Bloomberg, Huy claims that she helped write the B&B white paper. At the time, CZ was relatively new to the crypto scene. In order to convince people to buy his new BNB coin, he needed to convince prospective investors that he's legit. so he wrote a glowing profile of himself which looks like it could have been found in a spa presentation.

He says that he founded Bia technology which Powers over 30 exchanges in Asia in its first 12 months. It generated more than5 million of Revenue and that number will double in second year. Sounds pretty good. He promised that after the launch of Binance, he would step down from B and devote all of his efforts to Binance.

This applies to all other B employees who also worked on the BNB Ico. In fact, all of the Binance co-founders listed on the white paper were previously employed at Bia, so this Bia company is quite important. Binance was basically spun out of Bya. Interestingly, Hui is not listed as a co-founder in the white paper.

She's instead listed as an investor or adviser. Yet, in future press releases, Binance refers to Hui as a co-founder so why not call her a co-founder in the white paper, especially since she claims to have helped write it? This is the first weird thing about the Binance story. As a story goes on, it only gets weirder and weirder in the white paper. CZ Claimed that Bia powered more than 30 exchanges across Asia an impressive feat for a company less than 2 years old.

On their archived website, they list nine of their customers. Baia claimed that this first customer had over 400,000 active users with 1.4 billion R&B of daily trading volume, which is pretty massive I Couldn't find any information about this company online. A reverse image search for the logo only found it on one website from 2016 and this website no longer exists for most of the other customers. Their logos return zero results on a reverse image search.

It's hard to believe that this Spia company was really doing $5 million of Revenue in 2016 and on track to double that in 2017. When now appears to be defunct and it's hard to find any evidence of their customers online. none of these are yet smoking guns. It's possible there's some reasonable explanation as to why Bia shut down, but none of it inspires confidence in CZ Now let's look at the Binance.

Co-founders listened on the white paper. In addition to CZ, there are five additional co-founders who previously held senior positions at V. According to the white paper, they transitioned to working for Binance full-time Let's start with Roger Wang who the white paper claimed was the chief Tech technology officer of Bia technology His LinkedIn has no mention of Bia or Binance. It instead says that since 2015 he was a CTO of a company called Roger Co presumably named after himself.

He describes Roger CO as a company that provides cloud-based exchange and clearing systems to exchange operators. It started from September of 2015 and now Powers 30 plus exchanges in Asia. In the first 12 months since founding, the company closed $5.3 million in revenue and will multiply that by two in year two. This is the exact same description that CZ gave for Baia.

Almost word for word. maybe Baia changed his name to Roger Co. It's conceivable, but CZ said that all by employees mentioned in the white paper would move to Binance. So why did Roger Wiang not move to Binance? And if you look at the LinkedIn profiles of all the other supposed co-founders not a single one of them makes any mention of Binance on their LinkedIn profiles.

So in the early days, it's hard to know who was even running Binance. In 2017, Binance raised 15 million with the Ico of their native BNB token. This was enough money to get them off the ground so they didn't need to raise any money from Venture capitalists. Interestingly, the Binance BNB token is almost identical to Ftxs Ftt token in its functionality.

Holders of the BNB token receive discounted commission fees when they trade on Binance, and Binance uses 20% of its profits to buy back B&B tokens and burn them, kind of like a stock repurchase program. The Ftt token also allowed users to get discounted fees on FTX and FTX use 33% of its fee Revenue to buy back and burn Ftt tokens. The more profits The Exchange generates, the more tokens they can buy back. Thus, the value of the coin is related to the profits of the exchange.

It's economically similar to owning an equity interest in the exchange. The main difference between these native exchange tokens in a stock is that there was no regulation, no standardized disclosures, and the white papers were not audited. The BNB token is clearly an unregistered security. When Binance was first founded in 2017, it was headquartered in mainland China.

Shortly thereafter, the Chinese authorities started cracking down on crypto, so Binance moved its servers to new offices in Japan and Hong Kong where there was almost no crypto regulation at the time. Over the following years, Binance set up a complex array of offices all over the world with servers to host their website. In many countries, Binance is not approved to operate, but customers anywhere in the world can easily access Binance with Vpns and transfer crypto directly into the platform. Binance has no set head quarters, and CZ moves around from place to place at any given time.

Nobody knows where he is in most of his media appearances, especially over the past year. He only gives interviews via Zoom and does not disclose his location. The nebulous corporate structure of Binance as well as their intentionally relaxed know your customer protocols have made it extremely popular with criminals who want to launder ill-gotten gains. In June of this year, the SEC filed a complaint against CZ Binance and multiple of its subsidiaries accusing them of Securities fraud.

By looking at this lawsuit, we can start to understand why Binance created such an opaque corporate structure with no defined headquarters and why CZ never wants people to know where he is. The US has relatively strict know your customer and securities regulations. Because of this, both Binance.com and Fx.com were banned from doing business in the Us. Both companies created Us specific platforms Binance Us and FTX Us which had stricter know your customer requirements and didn't offer as many coins.

With that being said, a US President can easily trade on Binance.com by using a VPN or creating a foreign shell company. Binance actively encouraged its Us-based customers to use these methods to trade on Binance.com Binance Us was basically a front to create the perception that they were going to follow Us regulations. In reality, they had every intention of helping their customers to flout them. CZ owned two trading firms called Sigma Chain and Merit Peak which served as market makers on both Binance and Binance.

US Billions of dollars of customer funds from both Binance .c and Binance Us are both commingled in accounts controlled by Merit Peak This setup is eerily similar to FTX and Alama Research: Merit Peak and Sigma Chain engaged in so-called wash trading. This means that they would execute sham trades, buying and selling various cryptocurrencies between their accounts to give the false appearance that the coins have greater trading volume than they actually do. So why do this? Let's say you're a Binance customer and you see some new scoin is listed on the platform. If there's almost zero trading volume, you'll assume the coin is a flop as it failed to generate interest from other crypto.

Traders seeing that you're more likely to pass on buying the coin yourself. Conversely, if you see a new coin that has huge volume, you'll be much more likely to think it's legit and buy it yourself. Binance has listed hundreds of S coins in recent years. In some cases, as much as 99% of the trading volume in the first few hours is fake trades from Merit Peak and Sigma Chain.

This fake trading lures unsuspecting customers into the S coins pumping up the price and who decides which coins get listed on Binance. Hui The mysterious co-founder who makes very few media appearances In addition to deciding which coins get listed, Hui also runs Binance Labs The Venture Capital Arm of Binance, which manages $7.5 billion and invests in cryptocurrencies. So, the same person who's deciding which coins get listed and thus receive the Binance pump is also in charge of investing in new crypto projects. in addition to being co-founders CZ and Hui have a romantic relationship and have had multiple children together out of wedlock.

Again, flashbacks to S SPF and Caroline Ellison In addition to investing billions in early stage crypto projects, CZ has made a number of headline grabbing Investments unrelated to crypto. Most notably his $500 million investment into Elon Musk's Twitter buyout. This is eerily similar to Spf's $500 million investment into Robin Hood SPF Claimed the funds came from Alam's Trading profits. In reality it was from FTX customer deposits CZ Claims that Binance is highly profitable.

That's how he was able to afford making billions of dollars of Investments Binance also spends hundreds of millions of dollars on Celebrity endorsements, including the Portuguese Soccer Star Cristiano Ronaldo Binance doesn't publish his financial statements so we have no way of knowing for sure where that money comes from. But what little information that we do have already raises red flags. Binance has an earn feature where customers can earn yield on their crypto Holdings their simple Earn feature which they Market as low risk offers a 133% yield on stable coins. Simple earn is extremely opaque.

They released a promotional video on their website which just tells you how to start using earn on the app. It gives no information on how the yield is generated, but they do have a section on their website titled how is Binance able to pay users daily Rewards The daily Rewards are distributed from Binance's own funds. The assets deposited into Simple Earn are used for a variety of purposes, including by other business units within Binance. This may include assets that are loaned out to Binance users and other operational demands.

Basically, the funds are comingled customer assets are put in a big pot of money, which Binance can use for whatever it wants. So how does Binance determine how much yield to pay? The APR is discretionary and doesn't reflect any indication of profitability. Within Binance's various operations, Binance may have regard to its competitor's offerings and deciding on appropriate levels of APR. What this means is that the yields do not necessarily reflect how much Binance can make.

By lending out these funds. They look at how much Shield their competitors are offering and try to match that in an effort to attract more users. This is eerily similar to Celsius. They set their yields based on marketing concerns.

they wanted to one up their competitors and attract more users. But the high yields were unsustainable and the whole thing was basically a Ponzi scheme Is something similar happening at Binance. It's impossible to know for sure because they tell us almost nothing about how they generate. the yield.

is some of that money being used to make illiquid? Venture Capital Investments At Binance Labs, they admit that that customer funds can be transferred and used throughout Binance's various operations. Why not transfer it to Binance? Labs I Don't have a Smoking Gun showing that Binance will collapse in the same way FTX did Likewise, almost nobody knew that FTX would collapse until it was too late. It wasn't until after the collapse that the smoking guns were exposed in Spf's criminal trial, but long before the collapse. There were so many red flags around the company that should have given pause to customers and investors alike.

If you deposit funds into an exchange and it doesn't collapse, the upside is minimal. If it does collapse, the downside is catastrophic. Today, there are so many red flags around Binance. All the co-founders listed on the white paper have disappeared without explanation.

CZ appoints his girlfriend to run Binance Labs His trading firms do wash trading to manipulate Es coin prices. they don't have a corporate headquarters CZ moves around from place to place and avoids making public appearances in person. And worst of all, they admit that the assets in simple Earn are put into a slush fund with substantially zero disclosure as to how they are used. All things considered, the red flags around Binance are far worse than anything we could have known about FTX before its collapse, yet inexplicably tens of millions of people around the world still have $71 billion deposited on the exchange.

Nothing on this channel is financial advice, but if I had one penny on Binance, I would drop everything to take it out while I still could. All right guys, that wraps it up for this video. What do you think about Binance? 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.