Lex Fridman Podcast
#345 – Coffeezilla: SBF, FTX, Fraud, Scams, Fake Gurus, Money, Fame, and Power
09 Dec 2022
Coffeezilla is a journalist and investigator on YouTube who exposes financial frauds, scams, and fake gurus. Please support this podcast by checking out our sponsors: - Rocket Money: https://rocketmoney.com/lex - Eight Sleep: https://www.eightsleep.com/lex to get special savings - BetterHelp: https://betterhelp.com/lex to get 10% off - MasterClass: https://masterclass.com/lex to get 15% off EPISODE LINKS: Coffeezilla's YouTube: https://www.youtube.com/Coffeezilla Coffeezilla's Twitter: https://twitter.com/coffeebreak_YT Coffeezilla's Instagram: https://www.instagram.com/coffeebreak_yt PODCAST INFO: Podcast website: https://lexfridman.com/podcast Apple Podcasts: https://apple.co/2lwqZIr Spotify: https://spoti.fi/2nEwCF8 RSS: https://lexfridman.com/feed/podcast/ YouTube Full Episodes: https://youtube.com/lexfridman YouTube Clips: https://youtube.com/lexclips SUPPORT & CONNECT: - Check out the sponsors above, it's the best way to support this podcast - Support on Patreon: https://www.patreon.com/lexfridman - Twitter: https://twitter.com/lexfridman - Instagram: https://www.instagram.com/lexfridman - LinkedIn: https://www.linkedin.com/in/lexfridman - Facebook: https://www.facebook.com/lexfridman - Medium: https://medium.com/@lexfridman OUTLINE: Here's the timestamps for the episode. On some podcast players you should be able to click the timestamp to jump to that time. (00:00) - Introduction (06:04) - Coffee (08:13) - SBF and FTX (22:54) - $8 billion (32:01) - Evil vs incompetence (41:57) - Key lessons from FTX collapse (55:15) - Should SBF go to jail? (1:03:02) - Role of influencers and celebrities (1:07:30) - How FTX covered up fraud (1:11:26) - Interview with SBF (1:26:29) - SafeMoon fraud (1:32:41) - Bitcoin (1:43:20) - Psychology of investigating fraud (1:52:26) - Investigating politics and corruption (1:59:39) - Coffeezilla origin story (2:04:19) - MLM marketing scams (2:11:58) - Andrew Tate and Hustlers University (2:29:40) - Save the Kids crypto scandal (2:36:59) - Money and fame (2:44:03) - MrBeast (2:50:26) - Fake gurus and Get-Rich-Quick schemes (3:09:45) - Process of investigation (3:22:31) - Twitter Files release (3:31:36) - Time management and productivity (3:43:36) - Advice for young people
Chapter 1: What is discussed at the start of this section?
The following is a conversation with CoffeeZilla, an investigator and journalist exposing frauds, scams, and fake gurus. He's one of the most important journalistic voices we have working today, both in terms of his integrity and fearlessness in the pursuit of truth. Please follow, watch, and support his work at youtube.com slash CoffeeZilla. And now a quick few second mention of each sponsor.
Check them out in the description. It's the best way to support this podcast. We got Rocket Money for savings and subscriptions, Eight Sleep for naps, BetterHelp for mental health, and Masterclass for online learning. Choose wisely, my friends. And now onto the full ad reads. As always, no ads in the middle. I try to make this interesting. I swear I do.
But if you skip them, please still check out the sponsors. I enjoy their stuff. Maybe you will too. This show is brought to you by Rocket Money, an app that helps you identify and stop paying for subscriptions you don't need, want, or simply forgot about. On average, people save up to $700 a year with Rocket Money. You know how there's garbage out in space?
And space is really big, but it starts getting cluttered up. Same with there's garbage out in the ocean. And it's funny how this garbage just starts accumulating in different places. And that's why I think of subscriptions and these little things that sneak in that you're not paying attention to.
that you signed up for with the best intentions but don't use anymore, and you forgot you subscribed to it. It's just really nice to get rid of that because it really does add up. It's a great, great way to save money. And also to have an easy heart that you can feel safe signing up for stuff if you're legitimately curious, knowing that it'll be caught and eventually removed.
uh, with rocket money. So anyway, start canceling subscriptions today at rocket money.com slash Lex. You could save hundreds a year at rocket money.com slash Lex. This episode is also brought to you by eight sleep and it's new pot three mattress. It's a place of happiness for me. A great nap on a cold bed with a warm blanket away from the world. I'm thinking focused on reading and drifting, uh,
Slowly into sleep, as you probably are to the sound of my voice. Oh, man. Maybe I should collaborate with Eight Sleep, where they have a little audio device in the mattress, and I speak sweet nothings into your ears as you fall asleep.
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Chapter 2: How does Coffeezilla describe his coffee preferences?
I think nobody will want that, but I'm just brainstorming ideas here. Anyway, yeah, I'm a big, big, big, big believer of power naps. It's a really powerful way for me to refresh my mind. And it's just honestly really something I look forward to is doing that on an eight-sleep bed versus like on the floor or on a hotel mattress.
It's one of the things I look forward to actually to get back home to. Anyway, check it out and get special savings when you go to eightsleep.com slash Lex. This episode is sponsored by BetterHelp, spelled H-E-L-P, help. They figure out what you need and match you with a licensed professional therapist in under 48 hours.
I've been speaking with a bunch of folks recently about the value of therapy. It's kind of surprising to me how many people from all kinds of walks of life at some point in their life, if not continuously throughout their life, got a lot of value from therapy. I didn't realize this, I think, earlier in my life. Yeah, there's a huge amount of value to it.
And I think the nice thing about BetterHelp is it's just really accessible and easy to get started. So if it's something you haven't tried before, it's definitely worth trying. You should try as many things as possible. So this has helped a lot of people so much. Why don't you give it a try? Check them out at betterhelp.com and save on your first month.
This show is also brought to you by Masterclass. $180 a year gets you an all-access pass to watch courses from the best people in the world in their respective disciplines. We got Chris Hatfield, we got Will Wright, Carlos Santana, Gary Kasparov, Daniel Negreanu, Neil Gaiman, Martin Scorsese... What would I not give to talk to Morris Scorsese? But until then, you can listen to the Masterclass.
Actually, I mean, there's a really fundamental difference between Masterclass and podcast. I think long-form podcasts are good at sort of having the fun, relaxed exploration of ideas. And Masterclass is, no pun intended, masterful at... doing structured communication of those ideas from the best people in the world.
It really, it's just a really crisp lecture on what those folks know best and are best at. So it's just infinite value, honestly. especially if there's people on there that you really want to learn from, and I bet there is if you look at the list. Yeah, definitely worth trying. Go to masterclass.com slash Lex to give the gift of an annual membership when you buy one of your own.
That's masterclass.com slash Lex. Terms apply. This is the Lex Friedman Podcast. To support it, please check out our sponsors in the description. And now, dear friends, here's coffee, Zillow. How do you like your coffee? Dark and soul crushing. That was the number one question on the internet. Do you like your coffee to reverberate deeply through the worst of human nature?
Is that how you drink your coffee?
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Chapter 3: What are the key points about Sam Bankman-Fried's background?
I mean, I don't know.
I think- My relationship with shark has like finding Nemo. There's a shark in that. I don't know.
I think like Jeff Bezos is a shark. So whether people have loaded connotations of like how they feel about Jeff Bezos. I mean, I would say like, I think CZ is a ruthless businessman. I think he's cold. He's calculated. He's very- deliberate and
I think what he should do in this position is forfeit the funds that he profited from that investment because largely I think it was, it's owed to the customers. There's so much hurting out there. So I think they could do a lot of good around that. I don't know if they will because I don't know if he sees it in his best interest. I think that's probably how he's thinking.
But yeah, I think they could have helped or they could still help there.
Who do you think suffered the most from this so far?
The little account holders, this is always true. So one of the big temptations with fraud, I've covered a lot of scams, frauds, is everyone looks at the big number. Everyone, that's the headline, billions of dollars, the top 50 creditors, what everyone thinks at first. Uh, but quickly when you dig down, you realize that most people who lost $10 million, I mean, I'm sure that's terrible for them.
I wish them to get their money back, but, uh, it's usually the people with like 50,000 or less that are most impacted. Usually they do not have the money to spare. Usually they're not diversified in a sophisticated way. Um, so I think it's those people I think is the small account holders that I feel the worst for. And unfortunately they often get the least press time or airtime.
That's the really difficult truth of this is that, especially in the culture of cryptocurrency, there's a lot of young people who are not diversified. They're basically all in on a particular crypto. And it just breaks my heart to think that there's somebody with $50,000 or $30,000 or $20,000. But the point is that money is everything they own. Right.
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Chapter 4: What are the main lessons learned from the FTX collapse?
Yes. So funny enough, like one of my videos from six months ago or so blew up because SBF I got to give a lot of credit to Matt Levine of Bloomberg, great journalist, great finance journalist. And I want to say, when I talk about media elite, there are people doing great work in these mainstream institutions. It's not a monolith.
Just like independent media isn't all doing great work and all the corporate media is bad or whatever. There's these overarching narratives that I don't subscribe to. So Matt Levine's a great journalist. He did an interview with SBF where... He got Sam to basically describe a lot of what was going on in DeFi, but it kind of a larger philosophy around crypto.
And he described a Ponzi scheme where he just described this black box. It does nothing. But if we ascribe it value, then we can create more value and more value and more value. And it kind of was this ridiculous description of a Ponzi scheme. But there was no moral judgment on it. It was like, oh, yeah, this is great. We can make a lot of money from this.
Right.
And Matt is like, well, it sounds like you're in the Ponzi business and business is good. I made a video about that. I said, this is ridiculous. This is absurd, whatever. It's obscene. But I didn't explicitly call SBF a fraud there. And I think if I'm being, I think I saw some of it, but like many people, I think a lot of us were kind of like,
I think a lot of us missed how wrong everyone could be at the same time. I did notice leading up to the crash, what was happening. And I, and I called it out a day, a day or a day and a half before it happened. Cause I saw my friends post a dirty bubble media. And this was the first real look into the heart of their finances. Cause they're this black box.
So you just kind of had to evaluate them without knowing much. And once we got a peek under the hood of what their finances were, I realized, oh my gosh, these guys might be completely insolvent. So I made a tweet about it. I hope some people saw it and got their money out. But pretty quickly after that, I caught the narrative of what was really going on at Alameda.
that it was basically this Ponzi scheme that they had built.
Do you ever sit like Batman in the dark since he fight crime and wonder, like sad, just staring into the darkness and thinking I should have caught this earlier? Yeah, I think... In your $10 billion studio. $10 million studio. $10 million studio.
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Chapter 5: What are the challenges of local vs. foreign journalism?
Or you did this for X, Y, Z or whatever. Like I really find that deeply problematic about our current, uh, like, journalism in the political sphere. As far as government stuff, I think it's easy to do... Not easy, but it's much more enticing to do foreign journalism than to do local journalism on positions of power. Because if you question...
It's so easy to just get, the bigger cases you expose locally, you get in danger. Like it's just like very clear cut. The bigger the case, the more your financial wellbeing, your access, your entire life is like sort of in jeopardy. Whereas if you do foreign journalism, you can do great work and largely you're protected by your own government.
So it's kind of this weird thing where if you want great journalism on America, sometimes going abroad might be... Might be the way to go.
But the politician thing that's interesting, you mentioned that and going abroad. I think the way you think about your current work, I think applies in great journalism, in politics as well. So what happens, I have that sense, because I aspire to be like you in the conversation space with politicians.
I try to talk to people on the left and the right and do so in a non-partisan way and criticize, but also steel man their cases. What happens, I've learned, is when you talk to somebody on the right, The right kind of brings you in. It's like, yes, we'll keep you comfortable. Come with us. And then the left attacks you.
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Chapter 6: How does Coffeezilla approach interviews with controversial figures?
And the same happens on the left. You talk on the left, the right attacks you. And the left is like, come with us. So there's a temptation, a momentum to staying to that one side, whatever that side is. The same with foreign journalism. You can cover Putin critically.
There's a strong pull to being pro-Ukraine, pro-Zelensky, pro-basically really covering in a favorable way to the point of propaganda, to the point of PR, the Zelensky regime. If you criticize the Zelensky regime, there's a strong pull towards then being supportive of, not necessarily the Putin regime, but a very different perspective on it, which is like NATO is the one that created that war.
There's narratives that pull you. And what I think a great journalist does is make enemies on both sides and walk through that fire and not get pulled in to the protection of anyone's side because they get so harshly attacked anytime they deviate from the center.
Well, and I think also like, There's a criticism of all centrists, which I think in some way is fair. And I say that as someone largely who's a centrist, which is that this what about the left or what about the right can skew when it's not a both sides issue. So in the case of Russia, Ukraine, I think I'm strongly in favor of Ukraine, even though I tend to go on both sides.
And that might be partly because one of my employees is Ukrainian. And I think... What a great journalist does, especially like in politics, is I think they criticize the regime that's most in power, most that controls the keys and is the most corrupt at that time. And they might appear to be like, let's say during the realm of Trump.
A great journalist would criticize Trump, but that same journalist who held Trump's feet to the fire should be capable of holding Biden's feet to the fire four years later, if that kind of makes sense.
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Chapter 7: What insights does Coffeezilla share about the psychology of fraud investigations?
That's exactly right. Yeah. Yeah. So any revealing any attacking any power center for the corruption, for the flaws they have.
Irrespective of like your political agenda or your political ideas.
And that's what I mean about sort of the war in Ukraine. There's several key players, NATO, Russia, Ukraine, China, India. I mean, there's several less important players, maybe some of the like Iran and like Israel and maybe Africa. And what great journalism requires is basically revealing the flaws of each one of those players. irrespective of the attacks you get.
And you're right that throughout any particular situation, there is some parties that are worse than others and you have to weigh your perspective accordingly. But also it requires you to be fearless in certain things. Like for example, I don't even know what it's like to be a journalist covering China now.
Oh, that's an exact case of like China has made it so difficult to be a good journalist that they've effectively squashed criticism because to be a journalist in China means constantly risking your life every single day to criticize that government. And so the best journalists are a lot of times outside the country or they have sources inside the country who are like there's like this, you know.
different there's layers to the journalism where there's insiders who are leaking information but they themselves cannot publish because it's like it's you know it's it's extremely risky so yeah i think i think as a society one measure of how healthy the political structure is is how well you can criticize it without fearing for your safety
In that sense, the chaos and the bickering going on in the United States politics is a good thing that people can criticize very harshly.
Very harsh.
And be in terms of safety are pretty safe.
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Chapter 8: What advice does Coffeezilla give to young people starting their careers?
I think our only challenge is like where it gets dangerous is around like top secret information. The government comes down so hard that. The danger in covering politics here is you can expose something that's top secret that should be exposed, and they'll ruin you.
So that's where you, again, give props to Snowden for stepping up. 100%.
100%.
What's the origin of the suspender-wearing Batman? How did you come to do what you do? We talked about where you are and how your mind works, but how did it start?
I've kind of always been interested in fraud or at least I saw fraud early on and I was just like curious about what is this? I didn't know what I was really looking at. So basically my mom got cancer when I was in high school and it was pretty traumatic. I mean, she's fine. She had thyroid cancer, which is, we didn't know it at the time.
It's like cancer is cancer, but it's fairly easily treatable with surgery. It's one of the better, you know, survivable ones. And I just watched her get like bombarded with all these like phony health scams of, you know, just like colloidal silver, you know, all these different like remedies. And she was very into, you know, all the different ways that she might treat her cancer.
And obviously surgery is very daunting. And, you know, I was just confused. I was like, why are we doing so many different remedies that all seem a very dubious health value? Right. Later, I'd find out that these are all grifters. I mean, they take advantage of free speech in America to advertise their products as life-saving miracles, whatever, when they're, of course, not.
Eventually, she got the surgery, thank God. But I know people in my life who their parents passed away because they didn't have the surgery. They instead... took the alternative option.
I know like, I don't want to go into specifics because I don't want to mention their specific like case, but their family member went to Mexico for some alternate treatment, health treatment, instead of getting an easy surgery and they died. And so it's like, I realized, you know, where is the outrage about this? Where's the, who covers this stuff? And I realized, well, not many people do.
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