My Response To FTX

What's up, you guys? So I know this video is longer to do, but I purposely wanted to wait until I had all the facts. It could actually come to you with a concrete solution of what's being done moving forward.

To start, let's talk about FTX US. This is a company that's been a recurring sponsor here on the channel since spring of this year. Prior to then, I was already familiar with the platform. I already had an account; I was already using them alongside several other cryptocurrency exchanges. And even though hindsight is 20/20, back then they were one of the larger platforms and they seemingly dominated everything that they touched.

They told me that while other companies had thousands of employees in high overhead, they operated pretty lean with only a few hundred employees. That allowed them to scale and adapt much faster than their competitors. Now, admittedly, I related to that because throughout my entire career in real estate, I lived below my means and I saved everything possible just so I would be able to invest.

Throughout my beginnings of YouTube, I was a one-man show doing everything, and I thought that gave me a massive advantage because I wasn't this corporation. I was just me, filming videos alone in a converted garage. I was just a guy making the videos that I wished I could have seen back when I was younger. So, on the most basic front, their business model made me feel comfortable because it was something that I was familiar with.

Now somewhat separate from that, but earlier this year, cryptocurrency regulation was also a topic that was gaining a lot of attention. And when it came to that, they assured me that they were at the forefront of compliance and working closely with regulators to ensure that the entire space was a safer place for everybody.

Now in addition to that, during that review process, I also brought up my concern with their earned program, which was offering up to eight percent for certain holdings. They responded by saying that their yield programs were not publicly advertised and it was only used and paid for out of pocket as a marketing expense, much like any sort of bonus or promotional offer.

Now, even though I had a lawyer reviewing everything that they sent, that was not enough. And despite them addressing everything that we asked for, we took them at their word, and that turned out to be a mistake. In fact, just three months into the sponsorship with FTX, both Voyager and Celsius filed for bankruptcy. At the time, I paused the sponsorship deal I had with them just to ensure that the same thing would not be happening to FTX US.

That's when we conducted a 30-minute Zoom call where they assured me and a lawyer that they were properly capitalized, fully backed, and were in the financial position to even buy up the companies that were going bankrupt. They also explained that they had a billion dollars in reserves and were at no risk of defaulting. So I continued my relationship with them under the belief that they were fully compliant and completely backed.

However, a few months after that, everything began to crumble down when leaked documents alleged that Sam Bankman-Fried was using customer funds through parent company Alameda Research, which was over-collateralized by the value of their FTT token. And within days of this coming out, everything fell apart. I was never given any indication that this was ever the case from all of my prior research that I had done with them, and from the very beginning, their team made it clear that FTX US was a completely separate division from the rest of the parent companies and they were not connected whatsoever.

But that does not appear to be the case. From the moment I became aware of this, I posted a video; I cut my ties with them, and I warned people to get their money off the platform while they still could. But in the coming few days, withdrawals were eventually frozen, and they filed for bankruptcy. Since that moment, I felt misled alongside everybody else, and I genuinely had no clue that any of this was going on behind the scenes.

It makes me sick to think that I put my trust in this company whose founder was completely keeping people in the dark. As a result of that, I've not only let down myself, but I've also let down everybody who watches my channel as a reliable source of information. And at the end of the day, that is what matters to me the most.

More than anything, I've dedicated the last six years of my life non-stop to making YouTube videos that help people, that uplift them, and put them in a better place financially. And I'm sad to say that FTX did the exact opposite of what my entire mission was. It's not only a huge setback for the entirety of cryptocurrency but also for all of you watching, and I can't even begin to share how devastated and sorry I am.

Now, after all of this occurred, I've had some time to reflect on how this happened, where I could have done better, and some of the mistakes that were made. And these are a few of the points that really stood out to me. To start, I made the mistake of working with a platform that operates within an industry that does not already have proper consumer protections in place.

Second, on the most basic level, I made the mistake of assuming that Sam Bankman-Fried's image had anything to do with his credibility. This came from a comment that I made where I said that I trusted Sam more because he was worth billions of dollars and yet he drove a Toyota Corolla and lived this minimalistic lifestyle. I fell into his trap of effective altruism.

I suppose that I've seen too many people flash Lamborghinis, designer clothes, and iced-out jewelry, and I guess to me it was refreshing to see someone who I thought was beyond that and just wanted to focus on building something of value. On a slightly different topic from all of this, I also want to address Established Titles. They sponsored one of my videos posted a month ago, and this is actually something that I had received in the past as a fun gift.

So I saw this as a unique way to support an organization that gives back to charity. However, there has been some speculation about their legitimacy. Regardless, I've donated the entire amount that I received to One Tree Planted, so that way regardless of the outcome, at least a greater cause gets to benefit from this. On top of that, if you purchased an Established Title certificate using my link or anybody's link, they have a 60-day money-back guarantee.

So if you're unhappy with your purchase and you signed up using my link, you still have another few weeks to get all of your money back. Just follow the instructions on their website, and if you have any difficulty, just reach out, and I will do my best to help.

As far as how I'm improving my sponsorship process going forward, I'll be ensuring that any companies I work with have the proper consumer protections already in place. That means for stocks, it's SIPC insurance, and for banks, it's FDIC insurance. That way, there's a framework in place to ensure that customers can be made whole in the unlikely event that something were to happen.

The second, you might already be aware of this, but I am a small team. It's just me, it's Alex who edits these videos, Jack on the podcast, and a lawyer who reviews all the contracts. For the most part, I've operated the exact same way since when I first started, when no one was watching me. When I was making videos in my garage, in fact, you know, I still have towels on my lights, and I'm still using the exact same camera that I filmed on.

But as much as I appreciate and love that dynamic, this whole event made me realize that there were blind spots that could have been improved as the channel grew. If you have any other suggestions, I'm also completely open to hearing them out. And if you have any other suggestions for my own vetting process that I could do to improve, I'm all ears.

And finally, let's talk about Millennial Money. Over the last two years, they've sponsored about two dozen of those videos, and I wanted to ensure that no one else fell victim or was redirected back to FTX because even with the link removed, it was still a possibility with the logo being on the screen.

That's why the channel was made completely private, especially since we have not posted on that channel in months. I hope this helps explain everything in my thought process, both in the moment and moving forward. Just like a scar, I understand that this is something that I'm going to carry with me for the rest of my life.

But if there's one thing that I want to make certain, it's that I would never intentionally do anything to hurt anybody watching my videos ever. From the very beginning, I've always believed in the practice of responsible, diversified, long-term investing, dollar-cost averaging through the ups and the downs, never carrying a balance on a credit card, and living below your means.

I have repeated, sometimes to a fault, the exact same thing for years, and it should come as no surprise that this is still my message. Sam's actions have unfortunately gone against everything that I believe in, and I would do anything to be able to go back in time and take everything back. But I can't do that, so I'm sorry.

And the best thing that I could do is to make right by all of you watching and do better in the future, and I am committed to doing exactly that for as long as I could make videos here on YouTube. So I really appreciate you watching. I hope this helps explain everything, and thanks for giving me a chance.