Sam Bankman-Fried's Sentencing and Amazon's AI Investment | Bloomberg Technology
>> FROM THE HEART OVER INNOVATION, MONEY, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS "BLOOMBERG TECHNOLOGY" WITH CAROLINE HYDE AND ED LUDLOW. ♪ ED: I AM ED LUDLOW IN SAN FRANCISCO. CAROLINE HYDE IS OFF. THIS IS BLOOMBERG TECHNOLOGY. FULL COVERAGE OF THE SENTENCING
OF SAM BANKMAN-FRIED AS THE FTX FOUNDER FACES UP TO HALF A CENTURY IN PRISON. AMAZON BOOSTS ITS INVESTMENT ANTHROPIC WITH $3 BILLION OF CASH INFUSION. WE SIT DOWN WITH AWS TO DISCUSS. WE SIT DOWN WITH THE CEO OF WALGREENS AS THE COMPANY ENTERS ITS REINVENTION ERA. WHAT IS THAT MEAN FOR AI, DIGITAL OFFERINGS, AND COMPETITION WITH AMAZON? WELCOME TO YOUR FINAL TRADING DAY OF THE FIRST QUARTER OF 2024. NASDAQ 100 IS MY GO TO. A TECH HEAVY INDEX. A HIGH CONCENTRATION OF MEGA CAPS.
WE ARE HEADING FOR BACK-TO-BACK QUARTERLY GAINS. THE FIRST TIME SINCE JUNE OF LAST YEAR. YOU KNOW THE BIG STORY. NVIDIA IS THE BEST PERFORMER, MORE THAN 80% GAIN YEAR-TO-DATE. OTHER CHIP NAMES LIKE MICRON WHERE WE ARE TALKING ABOUT THE INFRASTRUCTURE BUILDOUT THAT IS SUPPORTING AI DEVELOPMENT. WE ARE SEEING MORE
BENEFICIARIES PARTICIPATE IN THE TECHNOLOGY STOCK RALLY. THERE ARE OTHER NAMES AS WELL. DOORDASH, META, ASML ARE SOME OF THE BIGGEST YEAR-TO-DATE ON THE NASDAQ 100. IN THE SESSION THE NASDAQ 100 IS BASICALLY FLAT THIS THURSDAY IN A SHORTENED TRADING WEEK IN THE U.S. LET'S GET TO OUR TOP STORY. THE JUDGE PRESIDING OVER SAM BANKMAN-FRIED'S SENTENCING WILL DECIDE THE FUTURE OF THE FALLEN CRYPTO MOGUL.
PROSECUTORS ARE SEEKING A SENTENCE OF 40 TO 50 YEARS FOR WHAT THEY HAVE CALLED, "LIKELY THE LARGEST FRAUD OF THE LAST DECADE." DAVID GURA IS ON THE GROUND OUTSIDE OF THE COURTHOUSE IN NEW YORK CITY. WHAT IS HAPPENING RIGHT NOW AS WE SPEAK? DAVID: THIS IS A PIVOTAL MOMENT. SAM BANKMAN-FRIED IS ON THE STAND ADDRESSING THE COURT. WE HAVE A VARIETY OF LITIGATION ABOUT SENTENCING GUIDELINES , WITH THE JUDGE MIGHT OR MIGHT NOT DO. HE HAS TAKEN THE OPPORTUNITY AND HE'S NOT SPEAKING FROM NOTES.
HE'S GIVING AN OFF-THE-CUFF ADDRESS TO THE COURT. AN OPEN QUESTION GOING INTO THE PROCEEDINGS WAS HOW MUCH REMORSE IS SAM BANKMAN-FRIED GOING TO SHOW? HE SAID A LOT OF PEOPLE FEEL REALLY LET DOWN. I'M SORRY ABOUT THAT. I'M SORRY ABOUT WHAT HAPPENED AT EVERY STAGE. FROM THERE WE RETURNED TO THE
SAM BANKMAN-FRIED A LOT OF US ARE FAMILIAR WITH. SOMEBODY WHO HAS BEEN GROUSING ABOUT THE WAY THE COMPANY FELL APART AND WHAT HAPPENED IN THE WEEKS THAT FOLLOWED. THE ROLE BANKRUPTCY LAWYERS HAVE BEEN PLAYING AND FAMILIAR ARGUMENTS HOW ABOUT HOW THEY'VE MISHANDLED THE WAY THE COMPANY WAS STRUCTURED, MISHANDLED THE RECOVERY OF ASSETS, AND HELPING WITH THE RESTRUCTURING PROCESS. WHAT BEGAN AS A GLIMPSE OF SOME REMORSE TURNED INTO THAT. IT WAS SANDWICHED AT THE END BUT HIM SAYING I WAS RESPONSIBLE BUT POURING OVER THE SENTENCING MEMOS. WHAT WAS SO GLARINGLY MISSING FROM THE SUBMISSION WAS AND I'M SORRY.
AN ADMISSION OF THE FACT THAT HE ORCHESTRATED THIS MASSIVE FRAUD. IT'S CONTINUING BEHIND ME IN THE COURTROOM. WE MIGHT HEAR FROM THE PROSECUTION ON THE HEELS OF THIS. WE HAVE HEARD FROM THE DEFENSE. IT IS UP TO THE JUDGE THE SENTENCE HIM BASED ON THE TWO SUBMISSIONS FROM THE SIDES AND THE GUIDELINES HE HAS. ED: GUIDELINES. THE DEFENSE WAS PUSHING FOR A SENTENCE OF SIX AND A HALF YEARS. THE PROSECUTION WANTED A SENTENCE OF BETWEEN 40 AND 50
YEARS. WHAT ARE THE FACTORS THE JUDGE HAS TO CONSIDER? I HAVE SOME EXPERIENCE IN THE OUTCOME OF WHITE COLLAR CRIME OR FRAUD TRIALS WHERE THERE ARE GUIDELINES IN PLACE. THE JUDGES AT THE CENTER OF THIS AND HAS SOME DISCRETION SO TO SPEAK. DAVID: LET ME CATCH YOU UP IN WHAT HE HAD TO SAY ABOUT SOMETHING THAT'S AT THE CRUX OF THE DEFENSE'S ARGUMENT.
THERE ARE EFFECTIVELY NO LOSSES. THE BANKRUPTCY HAS GONE SO WELL THAT THE FRAUD HAS BEEN MINIMIZED. HE REJECTED THAT OUT OF HAND, REJECTED THAT ARGUMENT FROM THE DEFENSE. WE HEARD COMPELLING TESTIMONY
FROM SAM BANKMAN-FRIED'S NEW LAWYER ABOUT SAM BANKMAN-FRIED. WHO HE IS, WHO HE WAS, WHAT HAS ANIMATED HIM. REALLY HE'S AN AWKWARD MATH NERD.
THIS IS A PHRASE WE HEARD FROM TIME MEMORIAL GOING BACK TO WHEN HE WAS RUNNING FTX. HE HAS A SOCIAL AWKWARDNESS. HE SAID SAM HAS LOST EVERYTHING. BEING SHAMED BY THE GLOBE SEEMS TO BE ENOUGH SPECIFIC DETERRENCE. THEY ARE LOOKING AT HIM AND CONSUMMATE WITH OTHER FRAUDSTERS THROUGHOUT TIME. BERNIE MADE OFF OF COURSE. ELIZABETH HOLMES. HE'S A YOUNG MAN WITH NO
CRIMINAL DIFFICULTIES OR ISSUES BEFORE THIS. THERE IS NO NEED TO BE EXCESSIVELY PUNITIVE TOWARDS HIM. THAT IS THE ARGUMENT THEY ARE MAKING IN THE SENTENCING FILING. IT IS UNCLEAR HOW A RESIDENT THAT'S GOING TO BE WITH THE JUDGE. HE HAS BEEN PALPABLY IRRITATED BY SAM BATEMAN FREE THROUGHOUT THE COURSE OF THIS PROCESS, GOING TO THE BEGINNING BEFORE THE TRIAL, THE PRETRIAL HEARINGS WHEN WE SAW HIM FLOUTING THE RULES PUT IN PLACE ON HIS HOUSE ARREST. ED: DAVID GURA, STAY CLOSE. WE WILL BRING REAL-TIME UPDATES
AS WE GET THEM FROM INSIDE THE COURTHOUSE. LET'S KEEP THE CONVERSATION GOING. JOINING US NOW IS CHRISTINE ADAMS, PARTNER AT ADAMS, DOUG, KIM AND STEEN. A PROSECUTOR WORKING ACROSS SEC
INVESTIGATIONS, WHITE-COLLAR CRIME. YOU HEARD THE LATEST FROM DAVID WHO IS OUTSIDE OF THE COURTHOUSE. BASED ON WHAT WE KNOW, THE BACK STORY THAT DAVID OUTLINED, WHAT IS YOUR EXPECTATION FOR THE SENTENCING IN THIS CASE? CHRISTINE: IT IS HARD TO SAY BECAUSE I THINK THE CHALLENGE HERE IS MR.
BANKMAN-FRIED IS SUCH A YOUNG MAN. HE'S ONLY 32 YEARS OLD. WHEN YOU LOOK AT THE COMPARABLE TYPES OF CASES, INCLUDING ELIZABETH HOLMES AND BERNIE MADE OFF, SHE'S 40 NOW. SHE WAS SENTENCED TO 11 YEARS. BERNIE MADOFF WAS SENTENCED TO 150 YEARS BUT HE WAS 71 YEARS OLD AT THE TIME AND ONLY SERVED 10 YEARS BEFORE HE PASSED AWAY.
THE THING I DO KNOW IS THAT MR. BANKMAN-FRIED IS NOT HELPING HIMSELF. THE COURT HAS ALREADY DETERMINED THE LOSS OF $550 MILLION. THERE IS A LACK OF REMORSE ON
MR. BANKMAN-FRIED'S PART. THAT DOES NOT HELP THE BANKRUPTCY THAT THEY WERE ABLE TO RECOVER. THEY CAN'T ARGUE I TOLD YOU THE CUSTOMER FUNDS WOULD BE SAFE AND I STOLE THEM AND I INVESTED THEM REALLY WELL AND MAIL THIS MONEY. THAT DOES NOT WORK UNDER THE LAW. THE COURT WILL TAKE INTO ACCOUNT HIS LACK OF REMORSE. THEY HAVE ALREADY TAKEN INTO
ACCOUNT THE BELIEF HE COMMITTED PERJURY AND OBSTRUCTION OF JUSTICE IN CONNECTION WITH THIS TRIAL. WHATEVER THE COURT DOES DECIDE TO SENTENCED MR. BANKMAN-FRIED, IT WILL NOT BE BECAUSE OF MR. BANKMAN-FRIED. ED: HAVING GONE THROUGH LAW SCHOOL MYSELF AND COVERED IN MY CAREER AT BLOOMBERG OTHER FRAUD AND WHITE-COLLAR CRIME CASES THERE ARE GUIDELINES AND THEN THERE IS THE HUMAN ELEMENT OF THE JUDGE. YOU MENTIONED BERNIE MADE OFF AND THE PROSECUTORS IN THIS CASE FOR SAM BANKMAN-FRIED PUSHED FOR 40 TO 50 YEARS BECAUSE OF THE FINANCIAL LOSS THEY ARGUED WAS SUFFERED BY FTX CUSTOMERS AND INVESTORS. THEY QUOTED THAT THE FIGURE WAS JUST BELOW MADE OFF -- BERNIE MADE OFF.
DOES THE JUDGE TAKE THAT STORY INTO ACCOUNT WHEN FORMING THE SENTENCING? CHRISTINE: THE JUDGE WILL TAKE INTO ACCOUNT WHAT THE FACTS WERE WITH MR. MADOFF'S FRAUD. THE CHALLENGE IS THIS LACK OF REMORSE. EVEN AT THE HEARING NOW SAYING HE MADE BAD DECISIONS, WHICH IS THE EQUIVALENT TO THAT MISTAKES WERE MADE. ED: THAT IS ON THE FINAL DAY OF THE STORY, IS IT TOO LITTLE TOO LATE IN THAT SENSE? CHRISTINE: IT IS TOO LITTLE TOO LATE.
HE'S NOT EVEN GIVING ANY TODAY. IT WOULD BE DIFFERENT IF HE WERE TO COME AND SAY I'M VERY SORRY, I LIED. I TOLD MY CUSTOMERS ONE THING AND DID ANOTHER. I TOLD MY INVESTORS ONE THING IT DID ANOTHER, BUT HE'S NOT DOING THAT. WE ARE NOT PEOPLE TO ANALYZE WHETHER IT IS TOO LITTLE TOO LATE BECAUSE THERE IS NOTHING HE IS OFFERING. ED: CHRISTINE, WE ARE SPEAKING WITH YOU BECAUSE OF THE 11 YEARS HE DID AT THE U.S.
ATTORNEY'S OFFICE IN LOS ANGELES. YOU ARE AN EXPERIENCED FORMER FEDERAL PROSECUTOR. HOW MUCH OF THIS IS ABOUT DETERRENCE? SENDING A MESSAGE THAT THE SENTENCE IS PUT IN PLACE TO DISSUADE OTHERS FROM ANY FUTURE ACTIONS SIMILAR TO THOSE THAT SAM BANKMAN-FRIED CARRIED OUT? CHRISTINE: DETERRENCE IS ESPECIALLY IMPORTANT IN THIS CASE BECAUSE OF THE NEWNESS OF THE CRYPTOCURRENCY MYSTERY AND THE FACT IT'S ONLY JUST NOW BEING REGULATED. THERE ARE A LOT OF COMPANIES IN THIS SPACE. THERE IS AN ARGUMENT TO BE MADE THAT WITH THE ELIMINATION OF FTX AND BINANCE AND THE OTHER CRYPTOCURRENCY EXCHANGES IN THE SPACE HAVE LEARNED THEIR LESSON AND ARE OPERATING ON A MORE ONBOARD BASIS THEN THESE PREVIOUS COMPANIES. IT'S IMPORTANT FOR THE
GOVERNMENT TO SHOW THE NOVEL INDUSTRIES -- TECHNOLOGICALLY COMPLEX INDUSTRIES THAT THEY CAN BRING CHARGES AND EFFECTIVELY PROSECUTE THESE CASES BY BREAKING IT DOWN INTO VERY SIMPLE FACTS THAT JURIES CAN UNDERSTAND, WHICH IS THESE COMPANIES TURNED OUT TO BE A LIE. PEOPLE WERE VICTIMIZED BY LOST MONEY AS A RESULT. ED: WHERE WILL SAM BANKMAN-FRIED'S TRIAL AND THIS STORY RANK IN THE HISTORY OR MYTHOLOGY OF U.S. WHITE-COLLAR CRIME AND FRAUD
CASES? CHRISTINE: I THINK YOU WILL BE WAY UP THERE. WE STILL TALK ABOUT BERNIE MADOFF AND THAT WAS DECADES AGO. I THINK THE BANKMAN-FRIED CASE WILL BE JUST LIKE THAT. ED: CHRISTINE ADAMS, INEXPERIENCED FEDERAL PROSECUTOR ON SAM BANKMAN-FRIED'S TRIAL AND SENTENCING. THANK YOU VERY MUCH FOR YOUR TIME. THIS IS "BLOOMBERG TECHNOLOGY." AMAZON INVESTS MORE MONEY IN AI
STARTUP ANTHROPIC. WE HAVE ALL THE DETAILS WITH AWS VICE PRESIDENT MATT WOULD. INTERESTING CONVERSATION. A LOT OF EMPHASIS ON THE SEMICONDUCTOR SIDE OF THE STORY, AS WELL AS AWS AND GENERATIVE AI. THIS IS BLOOMBERG TECHNOLOGY.
ED: AMAZON IS INVESTING AN ADDITIONAL $2.75 BILLION INTO ANTHROPIC, COMPLETING A DEAL HE MADE LAST YEAR TO BACK THE AI STARTUP. EXPAND THE PARTNERSHIP WITHIN THE COMPANIES. IT BRINGS AMAZON'S TOTAL INVESTMENT TO $4 BILLION. JOINING US NOW IS MATT WOOD, VICE PRESIDENT OF AI PRODUCT THAT AMAZON WEB SERVICES. AWS AND ANTHROPIC ARE BECOMING INCREASINGLY CLOSE AND ALIGNED FINANCIALLY BUT ALSO OPERATIONALLY.
I WANT TO EXPLAIN TO THE AUDIENCE THAT IN SEPTEMBER THE INITIAL INVESTMENT WAS $1.25 BILLION. THERE WAS A MARCH DEADLINE TO INVEST THE REST OF IT, BECAUSE YOU HAD PLEDGED AS MUCH AS $4 BILLION. YOU FOLLOWED THROUGH ON THAT. WHAT IS IT THAT AMAZON AND AWS SAW AND ANTHROPIC THAT PUSHED YOU TO COMMIT? MATT: THANKS, ED.
IT IS GREAT TO BE HERE. ANTHROPIC ARE A PROVIDER OF WHAT WE CALL FOUNDATION MODELS. THEY ARE THE VERY CENTER OF THE GENERATIVE AI REVOLUTION. THIS ABILITY FOR THE FIRST TIME
TO BE ABLE TO REASON AND INTEGRATE ACROSS VERY LARGE AMOUNTS OF INFORMATION, TO BUILD SYSTEMS AND CHATBOTS BUT ALSO COMPLETELY REIMAGINE EVERY ASPECT OF THE CUSTOMER EXPERIENCE. ANTHROPIC HAVE SOME OF THE BEST FOUNDATION MODELS AVAILABLE ANYWHERE TO DATE. IT'S BEEN A DELIGHT TO GET TO KNOW THAT TEAM MORE CLOSELY. OUR INVESTMENT REALLY REFLECTS THE WAY WE ARE PARTNERING EXPANSIVELY WITH ANTHROPIC TO BRING THESE REMARKABLE FOUNDATION MODELS THAT ANTHROPIC -- ACROSS EVERY INDUSTRY AND EVERY SINGLE USE CASE. IT'S BEEN REMARKABLE OVER THE PAST YEAR TO WATCH SO MANY CUSTOMERS FROM FINANCIAL SERVICES LIKE ADP AND INTUIT, MANUFACTURING WITH SIEMENS, TRANSPORTATION WITH HEALTH AIRLINES, PFIZER IN LIFE SCIENCES, TELECOM, EVERY INDUSTRY YOU CAN IMAGINE STARTING TO USE THESE FOUNDATION MODELS TO BE ABLE TO REIMAGINE THE EXPERIENCE.
ANTHROPIC MAKES AVAILABLE ALL THREE, WHICH IS CURRENTLY THE BEST PERFORMING SET OF FOUNDATION MODELS AVAILABLE ANYWHERE. WE HAVE BEEN ABLE TO PARTNER WITH THEM TO BRING THIS MODELS TO CUSTOMERS THROUGH AWS, THROUGH A SERVICE CALLED BEDROCK. WE ARE PARTNERING TO ALLOW ANTHROPIC, WHO SELECTED AW SS THEIR PRIMARY PROVIDER FOR THEIR MISSION-CRITICAL TRAINING WORKLOADS GOING FORWARDS, TO OPTIMIZE THEIR WORKLOADS FOR OUR OWN CUSTOM SILICON THAT WE USE FOR MACHINE LEARNING WHICH WE CALL TRAINIUM, A CHIP DESIGNED TO ACCELERATE MACHINE LEARNING AND ARTIFICIAL INTELLIGENCE MODEL TRAINING AND A SPECIFIC CHIP DESIGNED TO EXHILARATE THE PREDICTION OF USE CASES OF FOUNDATION MODELS. ED: WHEN THE NEWS BROKE YESTERDAY I POSTED IT ON SOCIAL MEDIA THAT THE STORY. SOME PEOPLE REPLIED SAYING THIS LOOKS LIKE A QUID PRO QUO WHERE AMAZON OR ABS INVESTS IN ANTHROPIC BUT ANTHROPIC IS REQUIRED TO USE AWS COMPUTE.
CAN YOU GIVE ME SOME NUMBERS BEHIND ANTHROPIC'S USE OF BOTH OF THE PROPRIETARY CHIPS FROM A WS? HAVE THEY STARTED USING THIS? HOW WAS THE ONBOARDING OF ANTHROPIC OPERATIONALLY INTO A WS GOING? MATT: ANTHROPIC HAS SELECTED AWS. WE ARE COLLABORATING ON MODEL TRAINING AND THE WORK IS HELPFUL IN HOW WE DEVELOP THE NEXT GENERATION OF THESE PRETTY REMARKABLE CHIPS WHICH PROVIDE BETTER EFFICIENCY AND BETTER PROFILES FOR TRAINING THESE LARGE FOUNDATION MODELS. THE INVESTMENT IN ANTHROPIC IS AN EQUITY INVESTMENT. IT IS A CONVERTIBLE NOTE. WE DON'T HAVE A SEAT ON THE BOARD.
WE HAVE NO SAY IN HOW THE MONEY IS SPENT. THEY CAN USE THE INVESTMENT AS THEY SEE FIT. ED: WHAT'S INTERESTING, AND ANTHROPIC HAS TOLD THIS IS RECENTLY IS THAT THEY ARE GETTING A LOT OF SUCCESS BEDROCK IN GETTING THEIR MODELS OUT ENTERPRISE. COMMERCIAL CUSTOMERS.
WHAT IS AMAZON AND AWS GETTING FROM ANTHROPIC FROM A BUSINESS VOLUME PERSPECTIVE? WHAT IS THE BENEFIT OR THE SALES BOOST TO AWS? MATT: PRESSURE. -- FOR SURE. BEDROCK IS OUR CAPABILITY FOR MAKING THE MODELS AVAILABLE. WE MAKE AVAILABLE MODELS FROM ANTHROPIC. WE ALSO MAKE AVAILABLE MODELS FROM OTHER PROVIDERS, INCLUDING AMAZON AND OTHER PROVIDERS LIKE STABILITY FOR IMAGE GENERATION. WE HAVE PUBLICLY AVAILABLE
MODELS FROM META AND MISTRIAL, A I21 LABS AND SOMEONE. CUSTOMERS WANT TO BE ABLE TO ACCESS THE BEST-PERFORMING, MOST REMARKABLE MODELS IN AN ENVIRONMENT WHICH IS PRIVATE AND SECURE, WHERE THE DATA IS NOT REVIEWED BY HUMANS, DOES NOT GO INTO TRAINING THE UNDERLYING MODELS, DOES NOT TRAVEL OVER THE PUBLIC INTERNET, AND HAVE THE ADDITIONAL CAPABILITIES WHICH MAKE YOU SUCCESSFUL WITH GENERATIVE AI SUCH AS GROUNDING THE MODELS IN YOUR OWN BUSINESS DATA SO THEY CAN ANSWER QUESTIONS ON INFORMATION THEY HAVE NOT BEEN TRAINED ON YET. THAT IS WHAT BEDROCK ALLOWS CUSTOMERS TO DO. ED: LET'S TALK ABOUT CHIPS. YOU WERE AT GTC, FOR WHAT WAS ANNOUNCED WHICH IS BLACKWELL. THEY'RE USING TRAINIUM AN INFERENCIA.
GIVING YOUR EXPERT REACTION TO BLACKWELL AND WHAT YOU THINK YOU ARE UP AGAINST THEIR. -- THERE. MATT: BLACKWELL IS A REMARKABLE PLATFORM THAT COMBINES GPU'S AND CPUS. IT IS LIKELY TO BE THE ABSOLUTE BEST BEAST PROVIDING MACHINE LEARNING TRAINING. WHAT IS REALLY IMPORTANT IN OUR APPROACH IS THAT OPTIONALITY OF COMPUTE AND MODELS REALLY MATTERS WITH GENERATIVE AI. WE MAKE AVAILABLE NVIDIA GPU'S. WE WERE THE FIRST TO BRING THIS JEEP USED TO CUSTOMERS THROUGH -- THOSE GPU'S TO CUSTOMERS THROUGH AWS.
WE HAVE A PARTNERSHIP GOING BACK 13 YEARS. I HAVE BEEN ON STAGE WITH JENSEN. WE HAVE WORKED CLOSELY TOGETHER FOR OVER A DECADE NOW. NVIDIA ALSO RUN THEIR OWN AI SUPERCOMPUTER ON AWS THAT WE ARE PARTNERING TO BUILD TOGETHER WHICH WILL HAVE TENS OF THOUSANDS OF BLACKWELL PLATFORMS CONNECTED TOGETHER WITH VERY FAST INTERCONNECTS. IT WILL DELIVER OVER 400 FLOP'S OF COMPUTE POWER SO E -- EXO FLOPS OF COMPUTER POWER.
WE WILL BUILD THEIR OWN CHIPS AND CONTINUE TO BRING CHIPS FROM OTHER PROVIDERS. WE WILL CONTINUE TO INVEST AND PARTNER WITH NVIDIA. ED: MATT WOOD, VICE PRESIDENT OF AI PRODUCT THAT AMAZON WEB SERVICES. I LOVE TALKING ABOUT AI ACCELERATORS AND CHIPS. THIS IS "BLOOMBERG TECHNOLOGY." ED: ELON MUSK'S X IS LETTING USERS JOIN COMMUNITIES THAT ARE FOCUSED ON ADULT CONTENT, OR OTHER NOT SAFE FOR WORK MATERIALS. JOINING US FOR MORE IS CAROL WEGNER.
WE TALKED ABOUT X WANTING TO BE THE EVERYTHING APP. THIS IS A NEW AREA FOR THEM. WHAT HAVE YOU LEARNED? >> THIS SORT OF ALIGNED TO THE IDEA THAT WE HAVE HEARD FROM ELON. NOTHING IS OFF LIMITS WHEN IT COMES TO X UNLESS IT IS ILLEGAL. IT'S A WAY I SEE TO DIFFERENTIATE EXTRA MOTHER PLATFORMS. X HAS HAD NOT SAFE
OR WERE CONTENT, USUALLY PORNOGRAPHY, SEXUAL CONTENT. IT'S HAD THIS FOR YEARS. IT HAS BEFORE YVONNE SHOWED UP. -- ELON SHOWED UP. I SEE THIS AS A WAY FOR HIM TO DIFFERENTIATE X AND HOLD THE FLAG HIGH THAT ANYTHING GOES HERE.
THAT'S WHEN I MANTRA THIS WHOLE TIME. ED: WALK ME THROUGH THE METHODOLOGY OF HOW WE LEARNED ABOUT THIS TESTING AND FEATURE. THIS IS NOT SOMETHING X HAS ANNOUNCED. BRING ME YOUR REPORTING. KURT: WE GOT A TIP FROM A RESEARCHER AT WATCHFUL. HE IS BASICALLY -- HE FINDS UNRELEASED FEATURES WITHIN THESE APPS. HE REACHED OUT WITH SOME
SCREENSHOTS AND SHOWED US THEY ARE TESTING THIS. THE WAY IT WORKS IS IF YOU ARE A USER THAT IS CREATING A COMMUNITY ON X, ESSENTIALLY JUST A GROUP, YOU CAN GO INTO SETTINGS AND HIT A BUTTON THAT SAYS THIS GROUP IS GOING TO CONTAIN ADULT CONTENT OR NOT SAFE OR WERE CONTENT. THE GROUP GETS A LABEL TO SPECIFY. WE DON'T KNOW IF THEY WILL AGE GATE THESE GROUPS. X HAS RULES IF YOU'RE UNDER 18 YOU ARE NOT SUPPOSED TO HAVE ACCESS TO ADULT CONTENT, PRESUMABLY THAT WILL APPLY TO GROUPS AS WELL. WHEN HE REACHED OUT TO THE COMPANY THEY DECLINED TO COMMENT AND SHARE SPECIFICS WITH US. ED: WE JUST HAVE 15 SECONDS.
REMIND ME ABOUT YOUR BOOK. KURT: THANK YOU, ED. "BATTLE FOR THE BIRD." IT'S THE STORY OF TWITTER AND ELON MUSK. IT EXPLAINS WHY WE ARE TALKING ABOUT THIS. I HOPE PEOPLE WILL TAKE IT UP.
ED: KURT WAGNER. WANTED TO MAKE SURE YOU GOT THE OPPORTUNITY TO TELL US. THANK YOU FOR YOUR TIME. COMING UP ON "BLOOMBERG TECHNOLOGY," BITWISE'S CEO WILL JOIN US. SAM BECKMAN FREED STOOD IN FRONT OF THE JUDGE -- SAM BANKMAN-FRIED SHOWING SOME REMORSE. WE CAN MOVE TO WHAT HAPPENS NEXT. FOR MANY THIS IS A BOOK AND FOR THE CRYPTO INDUSTRY. WILL IT BE THAT?
AN IMPORTANT CONVERSATION IN THE NEXT BLOCK. WE WILL BE BACK. ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." AS WE SAID EARLIER, THE FINAL TRADING DAY OF THE FIRST QUARTER OF 2024. IN THE MOMENT THIS IS WHAT IT LOOKS LIKE. IT IS A SHORT WEEK IN THE U.S. GOOD FRIDAY IS A MARKETS HOLIDAY. NASDAQ 100 IS COMPLETELY FLAT. A SLIGHTLY BETTER PERFORMANCE,
UP THREE TENS OF A PERCENT IN THE PHILADELPHIA SEMICONDUCTOR. AMD AND INTEL PUSHING HIGHER. NVIDIA IS THE BEST PERFORMER YEAR-TO-DATE BOTH ON THE NASDAQ 100 INDEX AND THE PHILADELPHIA SEMICONDUCTOR INDEX. THERE ARE NEWS ITEMS GOING ON. WALGREENS UP .1%. HAD A STRONG QUARTER IN THE QUARTER GONE BUT TRIMMED ITS OUTLOOK FOR THE FISCAL YEAR.
THE CEO OF WALGREENS WILL BE JOINING US IN JUST A FEW MINUTES TIME. WHAT YOU GUYS THINK ABOUT WALGREENS? MESSAGE ME ON SOCIAL MEDIA. I WOULD LOVE TO FIELD YOUR QUESTIONS TO THE CEO. WE'RE LOOKING AT U.S. LISTED SHARES OF CHINESE TECHNOLOGY COMPANY SHALL ME. IT JUST UNVEILED A $29,000
ELECTRIC VEHICLE. THAT ENTERS AN ALREADY COMPETITIVE MARKET IN CHINA'S DOMESTIC MARKET WHERE THERE ARE MORE EEEV PLAYERS AND MODELS. INVESTORS LIKE WHAT THEY HAVE SEEN. WE WILL TALK MORE ABOUT THE STORY. BITCOIN'S WINDOW WATCH. WE ARE ABOVE -- BITCOIN IS ONE TO WATCH.
THERE'S A LOT IN THE NEW CYCLE ABOUT THE CONTINUED MOMENTUM OF SPOT BITCOIN ETF'S. THE NET INFLOWS OF MONEY INTO THOSE ETF'S. MIKE NOVA GRATZ WAS ON THE SHOW YESTERDAY MAKING THE CASE FOR BITCOIN. IN THE BACKGROUND SAM BANKMAN-FRIED IS AWAITING SENTENCING IN NEW YORK CITY. HE IS FACING THE PROSPECT OF BETWEEN 40 AND 50 YEARS OF PRISON TIME. LET'S GET THE LATEST WITH DAVID GURA WHO JOINS US LIVE FROM OUTSIDE THE COURTHOUSE.
WHAT IS HAPPENING? DAVID: THINGS ARE WRAPPING UP HERE. THE JUDGE'S SPEAKING. WE HEARD FROM SAM BANKMAN-FRIED. HE DID NOT ESPECIALLY APOLOGIZE BUT HE ACKNOWLEDGED PEOPLE WERE UPSET AND HAD BEEN HURT I THINK HE DID IN HIS PAST. WE HEARD FROM THE PROSECUTION WHO REJECTED ALL THE ARGUMENTS THAT BOTH SAM BANKMAN-FRIED AND HIS ATTORNEYS MADE. NICK ROSE SANKEY LIED TO BANKS, BLUFF -- UNLAWFULLY TRANSFERRED MONEY, INTERFERED WITH THE ASSET PROTECTION PROCESS, OBSTRUCTION OF JUSTICE AND COMMITTED PERJURY. JUDGE KAPLAN SUMMARIZING WHAT TRANSPIRED DURING THE COURSE OF THE TRIAL BUT THE CONCLUSIONS OF THE JURY.
THEY REACHED THEIR VERDICT A FEW MONTH BACK. SPF IS A HIGH ACHIEVING AUTISTIC PERSON, SOMETHING THAT CAME UP DURING THE SENTENCING MEMORANDA. IT HAD TO DO WITH THE WAY SAM BANKMAN-FRIED ACTS.
THEY TALKED ABOUT HIS INABILITY TO FEEL HAPPINESS. HE SAID THE GOAL FOR SAM BANKMAN-FRIED WAS ALWAYS POWER AND INFLUENCE. HE GOT INTO THE ARGUMENT THAT THE PROSECUTION TRIED TO MAKE ABOUT STRAW DONATIONS IN THE CAMPAIGN MEDDLING SAM BANKMAN-FRIED TRIED TO DO WITH CUSTOMER MONEY. THIS'LL BE PART OF A SECOND TRIAL IF THE PROSECUTION CHOSE TO HAVE ONE. THEY ELECTED NOT TO DO THAT. JUDGE KAPLAN SEIZING ON THE FACT THAT IN HIS VIEW SAM BANKMAN-FRIED WAS NOT BUBBLING INTO THIS. HE HAD A CLEAR OBJECTIVE OF
GETTING A LITTLE POWER ACROSS THE WORLD. ED: DAVID GURA OUTSIDE THE COURTHOUSE. THE MOMENT THERE IS A DEVELOPMENT WE WILL BRING IT TO YOU LIVE HERE ON BLOOMBERG TELEVISION AND BLOOMBERG TECHNOLOGY. THERE IS MUCH MORE TO DISCUSS ABOUT WHAT HAPPENS NEXT AND WHETHER THERE IS A LASTING IMPACT ON THIS INDUSTRY. BITWISE CIO MATT HOUGAN JOINS
ME FOR HIS THOUGHTS ON WHAT IS NEXT FOR YOUR INDUSTRY. I HAD MIKE ON THE SHOW YESTERDAY. HE GAVE SOME VERY INTERESTING THOUGHTS ABOUT THE LEGAL SYSTEM IN THE COUNTRY BUT ESSENTIALLY DESCRIBED AS A BOOKEND, THE SENTENCING. HOW ARE YOU APPROACHING THIS?
MATT: I THINK THAT'S EXACTLY RIGHT. THE CRYPTO INDUSTRY IS PAST FTX AND ONTO ETF'S, PAST BANKMAN-FRIED, ONTO LARRY FINK AND OTHERS. IT'S A NEW INSTITUTIONAL MOMENT FOR THE INDUSTRY. THAT IS FOR THE BETTER, FOR THE VASTLY BETTER.
I LIKE THE IDEA THIS IS A BOOKEND. WE NEED TO DEAL WITH THE ISSUES WE ENCOUNTERED WITH THE LAST CYCLE AND PUT THEM ASIDE. HOPEFULLY THIS IS THE LAST TIME WE ARE TALKING ABOUT SAM BANKMAN-FRIED ON NATIONAL TV.
THAT WOULD BE THE BEST THING FOR CRYPTO AND THE RIGHT THING FOR CRYPTO. I'M OPTIMISTIC ABOUT CLOSING THIS CHAPTER AND MOVING ON. ED: OUR GUEST EARLY IN CHRISTINE ADAMS CHRISTINE ADAMS THE PROGRAM WAS.
SHE SPENT --GUEST EARLIER WAS CHRISTINE ADAMS. AN EXPERIENCED FEDERAL PROSECUTOR. SHE EXPLAINED TO THE AUDIENCE WHATEVER HAPPENS WITH SENTENCING ONE OF THE BIGGEST POINTS OF IT IS DETERRENCE TO DISSUADE OTHERS FROM ACTING IN THE SAME WAY AS SAM BANKMAN-FRIED IN THE FUTURE.
THE REASON I OUTLINED THAT TO YOU IS THIS IS STILL AN INDUSTRY WHERE WE ARE TRYING TO ASSESS THE INVESTMENT IN STARTUPS WORKING AT THE TECHNOLOGY LEVEL. BLOCKCHAIN FOR A GENERAL DESCRIPTION. HOW MUCH STRESS AND ANXIETY DO YOU THINK LEADERS AND ENTREPRENEURS ARE UNDER TO GET IT RIGHT? TO NOT TAKE RISKS? MATT: ABSOLUTELY. IF YOU OPERATE IN CRYPTO YOU ARE OPERATING IN AN EMERGING REGULATORY ENVIRONMENT. IT CAN BE CHALLENGING. I DO HOPE THE SENTENCE IS HARSH
ENOUGH THAT IT PROVIDES A DETERRENT TO OTHER FRAUDSTERS. THIS WAS CLASSIC FINANCIAL FRAUD. THERE WAS NOTHING CRYPTO SPECIFIC ABOUT THIS. IT WAS CLASSIC FINANCIAL FRAUD.
THE BIG THING THAT IT POINTS OUT IS WE NEED MORE REGULATORY CLARITY HERE IN THE U.S. A LOT OF THE WORST THINGS THAT HAVE HAPPENED IN CRYPTO'S PAST, THE GHOSTS OF CRYPTO'S PAST HAPPENED BECAUSE OF A LACK OF REGULATORY CLARITY, BECAUSE OF EFFORTS TO MAKE IT DIFFICULT FOR CRYPTO TO INTEROPERATE WITH THE TRADITIONAL FINANCIAL SYSTEM, TO GET EXPOSURE TO BANKS, TO BENEFIT FROM REGULATION. I'M HOPEFUL AS WE BOOKEND THIS PAST CHAPTER AND TURNED TO THE NEW CHAPTER IT IS NOT JUST RELYING ON CRYPTO TO BE GOOD, WHICH OF COURSE IT SHOULD BE. WE GET MORE REGULATORY CLARITY
THAT PROVIDES THE BENEFITS OF REGULATION. I THINK FOR WHAT IT'S WORTH THE ETF IS A GREAT EXAMPLE OF THAT. ETF SCHEME TO MARKET, LOWERED COST BY 90%, INCREASED INVESTOR CONFIDENCE, AND EVERYONE IS IN A BETTER PLACE. HOPEFULLY THAT IS THE PLAYBOOK WE GET MOVING FORWARD. MORE REGULATORY CLARITY, MORE INVESTOR PROTECTIONS, AND A BIGGER BETTER CRYPTO INDUSTRY. ED: HAS YOUR INDUSTRY FULLY REGAINED THE TRUST OF INVESTORS? MATT: I THINK WE ARE WORKING THROUGH THAT. I DO THINK PRO REGULATORY
ENVIRONMENTS LIKE THE ETF ARE PART AND PARCEL OF BUILDING THAT TRUST. IT IS ABSOLUTELY TRUE INVESTORS SHOULD NOT TRUST OFFSHORE EXCHANGES THAT THEY DON'T KNOW. A LOT OF INVESTORS WANT THE BENEFITS OF REGULATION. IT HAS BEEN DIFFICULT TO GET THOSE IN CRYPTO BUT WE ARE MAKING GREAT PROGRESS. I THINK THERE IS A CRYPTO OF TODAY AND A CRYPTO OF THE PAST. WE ARE IN A NEW INSTITUTIONAL
ERA OF CRYPTO. I THINK THE TRUST IS BUILDING SIGNIFICANTLY. YOU CAN SEE THAT IN PRICES AND THE TYPE OF INVESTORS WHO ARE MOVING INTO CRYPTO FOR THE FIRST TIME.
I THINK THAT MOMENTUM IS GOING TO BUILD FOR THE FORESEEABLE FUTURE. ED: BITWISE ASSET CEO MATT HOUGAN, THANK YOU FOR YOUR TIME AND WHAT IS HAPPENING WITH SAM BANKMAN-FRIED'S SENTENCING. WE WILL SIT DOWN WITH THE CEO OF WALGREENS TO DISCUSS THE COMPANY'S FUTURE. WALGREENS AND THE REINVENTION ERA RIGHT NOW. THAT CONVERSATION IS COMING UP
NEXT. THIS IS BLOOMBERG TECHNOLOGY. A LOWER OF BLOOMBERG CRYPTO FOCUSED ON THE SENTENCING OF SAM BANKMAN-FRIED. THAT IS COMING UP. ♪ WALGREENS SHARES A TOUCH HIGHER ON THE DAY AFTER THE COMPANY REPORTED EARNINGS WITH PROFIT AND SALES TOPPING ESTIMATES IN THE QUARTER GONE. THE COMPANY NARROWED ITS FISCAL 2024 GUIDANCE AND CITED A CHALLENGING RETAIL ENVIRONMENT.
JOINING US NOW IS WALGREENS ALLIANCE CEO TIM WENTWORTH. LET'S GET TO THE CONSUMER POINT. YOU OUTLINED A PICTURE WHERE THERE IS SOME HESITANCE FROM THE CONSUMER. RETAIL SPENDING PERHAPS NOT A STRONG. THAT WAS BASED PRINCIPALLY AT THE CORE OF YOUR OUTLOOK.
WHAT IS HAPPENING? TIM: I THINK WHAT YOU SEE IS THAT THE CONSUMER CONTINUES TO BEHAVE IN WAYS THAT SHOW THEY ARE CHALLENGED. THEY ARE SEEKING VALUE. THEY ARE WILLING TO PURCHASE AND DO OTHER THINGS. WHEN YOU LOOK ACROSS THE RETAIL SPECTRUM YOU WILL SEE SOME FOLKS DOING BETTER THAN OTHERS IF THEY ARE IN THE SUPERHIGH VALUE PART OF THE ECOSYSTEM. IN OUR CASE WE COUNT ON FOLKS
TO COME IN AND NOT ONLY VISIT OUR PHARMACIES BUT ALSO COME IN, BUY IMPULSE ATOMS, LAST-MINUTE ITEMS, SEASONAL ITEMS. A LOT OF THOSE THINGS ARE PURCHASES YOU HAVE GOT TO GET THE VALUE EQUATION RIGHT ON OR THEY FEEL DISCRETIONARY TO FOLKS. WE HAVE BEEN REENGINEERING OUR SPIRITS, OUR SKUS AND PRODUCT LINE, AND OUR PRICING STRATEGY AND PROMOTIONS STRATEGY TO BRING BACK THOSE THAT WE LOST AND TO KEEP THE ONES WE HAVE GOT. WHAT YOU SEE IS WE ARE ANTICIPATING THE SECOND HALF THAT IS NOT GOING TO MEANINGFULLY DISSIPATE, ALTHOUGH I DON'T THINK IT'S GOING TO GET WORSE. WE HAVE OURSELVES POSITIONED TO
BUILD FROM THE SECOND HALF OF THIS YEAR BACK TO A PLACE WHERE CONSUMERS WILL BEGIN AGAIN TO PREFER WALGREENS MORE OFTEN THAN THEY DO TODAY. ED: DOES THAT CONSUMER BEHAVIOR EXTENDED TO BOTH YOUR STORED FOOTPRINTS AND YOUR DIGITAL OFFERINGS OR ARE YOU SEEING ANY DISCREPANCY IN THOSE TWO MARKETPLACES? TIM: IT'S INTERESTING. OUR DIGITAL OFFERINGS HAVE PROVEN TO BE NOT ONLY ROBUST BUT IMPORTANT PARTS OF HOLDING UP OUR UNDERLYING VALUE, BOTH VALUE TO SHAREHOLDERS BUT ALSO VALUE TO THE CONSUMER. WE SEE MEANINGFUL INCREASES OF SAME-DAY DELIVERY.
80% OF OUR DELIVERIES ARE DONE WITHIN AN HOUR, NOT A DAY, NOT TWO HOURS. SLIGHTLY OVER 80%. WE HAVE SEEN THE INVESTMENTS IN BOTH THE UNDERLYING TECHNOLOGY TO ENABLE THE CONSUMER TO INTERFACE WITH US THAT WAY AND THE UNDERLYING ECOSYSTEM TO GET IT RELIABLY TO THEM HAS MEANINGFULLY BROUGHT CONSUMERS BACK INTO THE FOLD. ED: A BIG PART OF THAT TECHNOLOGY IS BUILT AND EXECUTED ON BY DOORDASH. YOU ARE ONLY A LITTLE PERIOD INTO YOUR TENURE BUT WOULD HAVE YOU MADE OF DOORDASH AND THE RELATIONSHIP THERE? TIM: WE ARE REALLY PLEASED. I WILL CONFESS COMING AND I WAS NOT CERTAIN HOW TO THINK ABOUT THAT. WE ARE NOT IN A POSITION TO BUILD A DISTRIBUTION SYSTEM, STORE TO DOOR TO PEOPLE HOUSES WHETHER ON VEHICLES.
IT IS NOT NECESSARY. DOORDASH HAS BEEN A GREAT PARTNER. THEY COMMUNICATE PHENOMENALLY. IF YOU HAVE NOT USED THE EXPERIENCE I RECOMMEND EVERYONE GIVE IT A TRY. THE COMMUNICATIONS FROM
WALGREENS AND FROM DOORDASH THROUGHOUT THE JOURNEY OF THE PRODUCT THEY HAVE ORDERED IS PHENOMENAL. THEY HAVE BEEN GREAT. I'M SUPER HAPPY WITH THE RESULTS WE ARE GETTING WITH THEM. ED:
I SCANNED THE TRANSCRIPT OF YOURS A FEW TIMES. I WAS LOOKING FOR ARTIFICIAL INTELLIGENCE. I SAW THE WORD AUTOMATION. HOW BIG WAS THE TIM TATIAN TO TRY AND -- TIM TATIAN TO TRY TO TELL A WALGREENS AI STORY? -- TTEMPTATION TO TRY TO TELL THE WALGREENS AI STORY? TIM: I WILL NOT USE BUZZWORDS IF I CAN AVOID IT.
AS RELATES TO AI THERE ARE SOME VERY INTERESTING THINGS WE ARE DOING IN OUR BUSINESS BOTH WITHIN OUR OWN FOUR WALLS AND WITH OTHERS THAT WE ARE SUPER EXCITED ABOUT IN TERMS OF EVERYTHING FROM LOAD-BALANCING TO INVENTORY MANAGEMENT. ULTIMATELY I THINK SOME OF THE WORK PEOPLE ARE DOING IN STORES. THERE IS A FAIRLY WIDE LANDSCAPE OF THINGS WE ARE USING AI AS A TOOL FOR. BUT IT'S A TOOL.
IT NEEDS USE CASES -- BY THE WAY, WE HAVE YEARS OF MACHINE LEARNING OF LIKABILITY TO CERTAIN THINGS. AS WE LOOK AT PREDICTING CONSUMER BEHAVIOR AND CONSUMERS AND WHERE THEY WANT TO BE BEFORE THEY KNOW WE WILL BE THERE, THOSE SORTS OF THINGS, AND IN TERMS OF A VERY COMPLEX OPERATING MODEL OR WE CAN IMPROVE SERVICE, IMPROVE WORKING CAPITAL, INTEGRATE OUR STORES WITH THE MICRO FULFILLMENT CENTERS, WE THINK THERE IS SOME INTERESTING THINGS WE CAN DO THERE. I SPOKE WITH ALEX KARP THIS WEEK FROM PALANTIR WHO CLEARLY IS DOING SOME INTERESTING THINGS THERE. THAT IS ONE OF A NUMBER OF FOLKS WE ARE WORKING WITH TO ACTUALLY REALLY GET AT MEANINGFUL THINGS WE CAN DO WITH THE BUSINESS LEVERAGING AI. ED: PLEASE KEEP US POSTED ON "BLOOMBERG TECHNOLOGY" ABOUT THE RELATIONSHIP WITH PALANTIR IN THE FUTURE. I RECENTLY SPOKE WITH DR. KARP AS WELL.
THIS IS THE EARLY INNINGS OF WHAT PEOPLE ARE CALLING THE REINVENTION ERA OF WALGREENS. YOU HAVE YOUR STRATEGIC BUSINESS REVIEW NEXT MONTH. PHARMACY DOES SEEM TO BE A CORE PILLAR OF THAT. IN OUR WORLD IT'S A WORLD THAT AMAZON IS INCREASINGLY MOVING INTO.
EXPLAIN THE STRATEGY, THE EARLY STAGES OF IT FOR PHARMACY FOR THE AUDIENCE. TIM: WHAT YOU HAVE TO LOOK AT TO UNDERSTAND THE PHARMACY STRATEGY IS, WHAT ARE THE POSSIBILITIES AND THE THINGS TODAY WE ARE DOING IN THE BACK OF OUR STORES? IT IS MORE THAN JUST DELIVERING MEDS TO FOLKS WHEN THEY NEED THEM BECAUSE THEY HAVE A SHORT-TERM PROBLEM. IT IS MORE THAN JUST FILLING LONG-TERM MAINTENANCE MEDICATIONS AND EITHER MAILING IT TO THE PATIENT OR HAVING THEM PICK IT UP.
IT IS MORE THAN VACCINES EVEN. NOW WE ARE DOING TEST AND TREAT. NOT TO MENTION SOME WORKFLOW CHANGES THAT FREE UP PHARMACISTS TIME SO THEY CAN CONSULT WITH PATIENTS. THAT'S THE BIG DIFFERENCE. ED: TIM, I'M SORRY TO INTERRUPT YOU. WE HAVE SOME BREAKING NEWS. SAM BANKMAN-FRIED, FTX FOUNDER HAS BEEN SENTENCED TO 25 YEARS IN PRISON BY THE JUDGE IN HIS FRAUD AND WHITE-COLLAR CRIME CASE. SAM BANKMAN-FRIED HAS BEEN
SENTENCED TO 25 YEARS IN PRISON. HE WAS CONVICTED OF FRAUD AS A REMINDER OVER THE COLLAPSE OF FTX. THE PROSECUTION HAD BEEN PUSHING FOR ASCENDANCE BETWEEN 40 TO 50 YEARS. THE DEFENSE HAVE BEEN PUSHING FOR 6.5. THE RESULT IS THAT SAM BANKMAN-FRIED HAS BEEN SENTENCED TO 25 YEARS.
LET'S BRING IN MAX CHAFKIN WHO JOINS ME AND HAS DONE DEEP REPORTING ON THIS. MAX, YOUR REACTION? MAX: I THINK THIS WAS OF AN -- WITHIN WHAT PEOPLE WERE EXPECTING. THE PROSECUTION WAS ASKING FOR 40 TO 50. THE DEFENSE WAS ASKING FOR FIVE. BUT WE HAVE SEEN FROM JUDGE KAPLAN BASED ON THE REPORTS FROM BLOOMBERG REPORTERS IN THE COURTROOM HE EXCORIATED BANKMAN-FRIED. HE SAID HE LIED REPEATEDLY, CAUSING A HUGE AMOUNT OF HARM. THEN HE SAID HE DID NOT THINK THE 40 TO 50 YEARS WAS -- HE THOUGHT THAT WAS TOO SEVERE.
WE ARE SEEING A BIT OF A COMPROMISE. 25 YEARS IS A VERY LONG TIME. SAM BANKMAN-FRIED IS IN HIS EARLY 30'S NOW. HE'LL BE IN HIS LATE 50'S WHEN
HE COMES OUT OF FEDERAL PRISON. ESSENTIALLY THIS WILL PUT AN END TO THE CASE, BARRING THE INEVITABLE APPEAL BY HIS LAWYERS WHICH WILL COME WHEN THIS IS ALL CONCLUDED. ED: MAX, STAY WITH US. A HEADLINE THAT SAM BANKMAN-FRIED HAS BEEN AWARDED TO FORFEIT MORE THAN $11 BILLION. LET'S GET TO THE COURTHOUSE IN NEW YORK CITY AND BLOOMBERG'S DAVID GURA. THE LATEST PLEASE?
DAVID: 25 YEARS. I WILL SUMMARIZE WHAT WE HEARD FROM JUDGE LEWIS KAPLAN AHEAD OF THAT SENTENCING. HE SAID HE THOUGHT WHAT THE PROSECUTION WAS ASKING FOR WAS TOO HIGH. THEY WERE ASKING FOR 40 TO 50 YEARS. HE EMPHASIZED IT WAS NOT FOR THE PURPOSE OF DIMINISHING THE SERIOUSNESS OF THOSE CRIMES AND EMPHASIZED SEVERAL TIMES IN HIS STATEMENT THAT HE WAS QUITE CRITICAL OF WHAT SAM BANKMAN-FRIED HAD DONE AND THEY NEEDED SOMETHING -- THEY NEEDED SOMETHING TO DETER THOSE KIND OF CRIMES. THERE IS NO DOUBT THAT SAM
BANKMAN-FRIED'S NAME IS PRETTY MUCH MUD BUT HE SAID THERE IS A RISK THE MEN WILL BE IN A POSITION TO DO SOMETHING VERY BAD IN THE FUTURE. THERE WAS A FEAR OF RECIDIVISM HERE, SOMETHING THE PROSECUTION BROUGHT UP SEVERAL TIMES IN THE SENTENCING MEMO. VERY COMPELLING TO JUDGE LEWIS KAPLAN. HE LINGERED ON THE WORDS THIS WAS A VERY SERIOUS CRIME. HE SAID THAT SLOWLY ACCORDING
TO COLLEAGUES WHO ARE WATCHING THIS UNFOLD. I'M NOT DIMINISHING THE ENORMOUS CRIMES HE DID, HIS EXCEPTIONAL FLEX ABILITY WITH THE TRUTH, HIS LACK OF REAL REMORSE. I THINK WITH SOME ANY PEOPLE WERE LOOKING FOR HERE, THE PROSECUTION, CERTAINLY THE VICTIMS OF THE CRIMES COMMITTED BY SAM BANKMAN-FRIED WAS A CONCRETE APOLOGY. THAT IS SOMETHING WE DID NOT
GET FROM SAM BANKMAN-FRIED WHEN HE SPOKE TO THE COURT THIS MORNING AND THE JUDGE VERY AWARE OF THAT FACT. 25 YEARS IN PRISON FOR SAM BANKMAN-FRIED. ED: I WILL RECAP THE HEADLINE. SAM BANKMAN-FRIED SENTENCED TO 25 YEARS IN PRISON. HE'S BEEN ORDERED TO FORFEIT MORE THAN $11 BILLION. WE WILL DIG INTO THE MECHANICS
OF HOW THAT WILL WORK EVENTUALLY. I'M SURE WE NEED MORE DETAIL. BLOOMBERG'S MAX CHAFKIN IS WITH ME OUT OF NEW YORK CITY.
THE STORY THAT BUSINESSWEEK TOLD, THAT WE TOLD THROUGH OUR PODCAST WAS COMPLEX. LET'S GO TO THE BASICS OF WHAT HAPPENED TO FTX AND WHY SAM BANKMAN-FRIED HAS ACTUALLY BEEN SENTENCED TO 25 YEARS IN PRISON. MAX: THE BASICS ARE THAT SAM BANKMAN-FRIED STARTED WHATEVER RETROSPECT WAS A FRAUDULENT CRYPTOCURRENCY EXCHANGE. AN EXCHANGE THAT POSES AS A PLACE WHERE YOU SEND MONEY AND BUY CRYPTO ASSETS. WHAT HAPPENED IS YOUR MONEY WENT INTO SAM BANKMAN-FRIED'S POCKETS AND THE POCKETS OF PEOPLE CLOSE TO HIM AND THEY SPENT IT ALL ON A NUMBER OF THINGS, INCLUDING SOME SORT OF VERY INTERESTING AND RETROSPECT INVESTMENTS, INVESTMENTS IN STRANGE TOKENS AND INVESTMENTS IN REAL ESTATE IN THE BAHAMAS, PAYMENTS TO HIS PARENTS. A REALLY WIDE AND BROAD PORTFOLIO.
OF COURSE, HUGE AMOUNT SPENT ON MARKETING. ONE OF THE MOST DIFFICULT PARTS OF THE STORY AND THE THING YOU SEE IN THESE VICTIM STATEMENTS IS THAT THE MARKETING SAID THIS WAS SAFE. I KEY POINT TO SAM BANKMAN-FRIED 'S -- THE WAY HE PRESENTED AND MARKETED HIMSELF WAS THAT HE WAS MORE RESPONSIBLE. HE WAS THE KINDER, GENTLER
VERSION OF CRYPTO. HE WAS THE VERSION THAT HUNG OUT WITH GISELLE AND TOM BRADY, COMFORTABLE AROUND DEMOCRATIC POLITICIANS. HE BOUGHT THAT WITH CUSTOMER FUNDS. MUCH OF THAT MONEY WAS GONE AT THE TIME FTX COLLAPSED. SINCE THE COLLAPSE THE BANKRUPTCY ATTORNEYS LED BY JOHN RAY HAVE MANAGED TO RECOVER A SIGNIFICANT PART OF THE MONEY THAT WAS LOST. THAT
IS SUMMER LEE FOR THE VICTIMS. AS WE SAW TODAY AND AS WE HAVE SEEN FROM VICTIM STATEMENTS IN THE PAST IT IS KIND OF SMALL COMFORT. PEOPLE, EVEN IF THEY HAVE THEIR INITIAL INVESTMENT BACK AND EXPECT TO GET THEIR INITIAL INVESTMENT BACK ONE DAY, MANY LIVES WERE RUINED BY THIS EPISODE AND THEY WILL NEVER BE THE SAME. ED: LET'S GO BACK OUT TO THE COURTHOUSE ON THE GROUND WITH BLOOMBERG'S DAVID GURA. THE NUMBERS HERE ARE STAGGERING. YOU LOOK AT THE CHARGES, THE TOTALITY WAS 110 YEARS.
THE PROSECUTORS, 40 TO 50 YEARS. WE END UP WITH 25 YEARS. WE ARE GETTING MORE INFORMATION. WHAT IS TOP OF MIND FOR YOU, DAVID? DAVID: WE'RE AT THE POINT IN THE HEARING WHERE THE JUDGE IS INDICATING WHERE HE THINKS SAM BANKMAN-FRIED MIGHT BE REMANDED TO PRISON. HE WILL RECOMMEND A SAN FRANCISCO BAY AREA PRISON. HE GREW UP CLOSE TO THE STANFORD UNIVERSITY CAMPUS.
BOTH HIS PARENTS ARE MEMBERS OF THE STANFORD LAW SCHOOL FACULTY. BY VIRTUE OF THAT GEOGRAPHIC PROXIMITY IT SEEMS LOGICAL HE MIGHT END UP THERE. THE JUDGE SAID HE DOES NOT THINK THERE IS THE NEED FOR A SUPER MAX SITUATION WHEN HE GOES TO PRISON. WE WILL WAIT TO SEE IF WE HEAR ANYTHING FROM PROSECUTORS AFTER THE HEARING CONCLUDES.
WE HEARD FROM U.S. ATTORNEY DEBBIE WILLIAMS. THE VERDICT HAS SENT A MESSAGE. THE SPEED HAS SENT A MESSAGE. SOMETHING WE HAVE BEEN TALKING ABOUT IS THE RESIDENCE OF THAT MESSAGE AND THE STRENGTH OF THE SENTENCE, THE LENGTH OF THE SENTENCE WILL MAKE THE MESSAGE MORE FORCEFUL. WE WILL SEE IF WE HEAR FROM THEM. IT WILL BE A MATTER OF WEEKS IF NOT MONTHS BEFORE SAM BANKMAN-FRIED IS MOVED FROM THE JAIL IN BROOKLYN TO PRISON, WHEREVER THAT MAY BE. ED: OUR TEAM COVERAGE WITH
BLOOMBERG'S MAX CHAFKIN AND DAVID GURA. MAX, AS WE COME TOWARDS THE END OF "BLOOMBERG TECHNOLOGY" IT'S A HISTORIC MOMENT IN THE WHITE-COLLAR CRIME, FRAUD, AND THE CRYPTO INDUSTRY. YOUR CLOSING THOUGHTS? MAX: WE HAVE SEEN WHITE-COLLAR CRIMINALS GET BIG SENTENCES. A LOT OF PEOPLE COMPARED THIS EPISODE TO BERNIE MADOFF, WHICH WAS A FAIR COMPARISON. AS BOTH THE DEFENSE AND PROSECUTION AND JUDGE ACKNOWLEDGED, HE WAS ELDERLY WHEN HE GOT THIS INSANELY HIGH 100 YEAR PLUS SENTENCE. I DO THINK ANYBODY SPEC TO HIM TO SERVE IT IN ITS TOTALITY.
I DO THINK IT IS STAGGERING. JUST A COUPLE OF YEARS AGO SAM BANKMAN-FRIED WAS SEEN AS ONE OF THE WEALTHIEST, MOST RESPECTED, ONE OF THE PILLARS OF THE BUSINESS WORLD. IN A VERY SHORT AMOUNT OF TIME HE HAS NOT ONLY LOST ALL THAT MONEY, NOT ONLY BECOME MUD BECAUSE OF THE ANGER PEOPLE FEEL BUT HE'S GOING TO PRISON. THE SPEED WITH WHICH THAT HAS
HAPPENED IS REMARKABLE. IT WAS AN INCREDIBLY RAPID RISE AND AN EVEN QUICKER FALL. ED: MAX CHAFKIN OF BUSINESSWEEK, DAVID GURA IN NEW YORK CITY, THANK YOU. COMING UP, A FULL HOUR OF "BLOOMBERG CRYPTO," ESPECIAL FOCUSED ON THE SENTENCING OF SAM BANKMAN-FRIED WHO HAS BEEN SENTENCED TO 25 YEARS IN PRISON WITH THE JUDGE RECOMMENDING PRISON IN THE SAN FRANCISCO BAY AREA.
PLEASE TUNE IN FOR THAT SPECIAL AND BLOOMBERG'S TEAM COVERAGE. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." IT'S BEEN AN INCREDIBLE SHOW. A RECAP ON THE PODCAST. A SHORT U.S. WEEK.
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