Trader Chat - Staying Focused After The FTX Collap

G'day everyone. Thanks for tuning in to this podcast where Lou and I will be unpacking everything crypto, but our focus will be around recent events with FTX. So first, just a bit about myself. I've been in the crypto space since about 2016, 2017. Continue to trade that entire time before finally ending up at Tradeocob as the general manager and Lou. Hey guys, Lou here. Yeah, looking

forward to talking about all things FTX today. Yeah, so a bit of background on me. I have been involved in the crypto space since 2017, where I was, I guess, an amateur trader to say the least. I bought a little bit coin and much of price went off and much of price come back down and made no money. And then, fast forward to 2020, I got

an apprenticeship under Craig, which I completed a trade-in apprenticeship under Craig Cobb, which I completed after two years. And I'm now trade from home, my own account, and that's been going really well. And I've been involved with the Tradeocob community ever since 2009, ever since the end of 2018. So that's me. And now you're one of the mentors in the Tradeocob community helping everyone sort of

achieve their trading goals, which has been really, really good. But I think, yeah, let's kick things off with the unfortunate collapse of FTX, which has affected myself. You just about everyone that we've been doing. We know that's in the trade-in community, unfortunately. It's just sort of blindsided us, didn't it? We sort of caught wind of it on a sort of a Friday afternoon, but it was,

people that I, that I met down to the cafe during the bull run last year, or at the bar bar, or the mechanic, everyone's talking about getting into crypto. And now it seems like everyone has been affected by FTX. And then actually not talking about, like, not opening a dialogue about, actually, how money on FTX. Because they're, I found that quite a few people are afraid

of talking out because they'll be judged and stigmatized, you know, for being an idiot, stupid or something like that. So, so yeah, yeah, starting all, all two weeks ago, I guess now. Yeah, just, it just happened all very suddenly. And no one really, and because FTX is such a far-reaching company, no one really believed that it could go under, especially due to all the regulatory loopholes

and licenses they had, basically operating as a digital bank, right? Yeah, it's just unfortunate that this is sort of given the crypto haters and ammunition against people that believe in crypto. But it's not such a, it is a bad thing. But just looking at the markets, the markets have actually been healed up quite well, considering when you relate this to the COVID outbreak, you know, Bitcoin

dropped, what, 60% over a few days. It could have even been more, I think it was like 80% or something. Yeah, we didn't see a drop in price by that much with arguably the second largest exchange collapsing. And billions of dollars being lost, essentially, which I think is such a positive. 100%, well, yeah, 100% is it like a part, so just before the disclosure, race and

I had had a huge amount of our trading accounts locked up on FTX. And just because of my position in our trading community, I've talked to many people that have been deeply affected by this, like they had their self-managed super funds on FTX. They had entire trading accounts. Huge amounts of capital on there, affiliate capital, many things. So just for disclosure, we're not saying like it

was a good thing that this happened, like we're involved in this whole situation as well. And we realize that everyone else is involved. But for a market to operate in a healthy way, to have health with the price action, you have to have these huge deleveraging events. That forces all the bad companies out. So the new ones can respr out and regrow and form the basis

for whatever the next, whatever the next bull market will be, basically. Like you have to have these big deleveraging events to annihilate all the bad companies. The new ones can come up. The stronger ones can survive. And they can provide the foundation to move forwards. We're doing this in traditional markets as well with traditional companies, especially startups that went through an aggressive growth period in 2020,

2021. Now, you know, being affected by interest rate increases. And you're just finding it really tough. And they're going through huge layoffs and even companies going under. So it happens all the time during their markets and during hard times. But I think the ones that do stick around will prosper in the bull market, sorry, when things do pick up. And those that stick around will, I

believe, will benefit in the bull run when it does eventually come. Well, yeah, and they'll benefit in the future. Like, yeah, bull market, bear market. If you're able to trade, and manage a portfolio at the same time, you will. You will be in a better spot. Financially, whenever, whenever that may be in one year, two years, three years from now, who knows? You are like a

hundred percent movie. You. Okay, maybe not a hundred percent. You can't say a hundred percent. With a hundred percent certainty, that would be the case. But there is a very high probability that you will. You know, in the game probabilities, then. Like what we talked about the other day, we kind of only have three options. Like, three options left, moving forward. And what were those options

again, right? So we were like, we could trade. We could keep on trading and take advantage of some volatility that comes that occurs in the near term. We could walk away from crypto forever and just not trade crypto. Just go to traditional. All we could take a break. Yeah, potentially miss out on some volatility. Yeah, we're going to try forever. Take a break and get back

into trading when things, when the dust is settled or three, just trade through this period. And I think getting through something like this, you know, fingers crossed. This is the first and last time we ever experienced something like this. And I guess moving forward, if we do come out of this. And end up in a good position. This is something like a medal of honor. We

can wear and say we were around when FTAX collapsed. We lost a whole heap of capital and look at us now. We, we built a lot of money. We built it back up. We went back to a really good position. Setting ourselves up for the future. So yeah, I think it'd be a good thing to, to, um, yeah. Like I said, we're as badge of honor.

It'd be great story for the grandkids. Yeah, yeah, 100%. I mean, and this is what makes you like a market veteran. Surviving these types of events, then rebuilding your accounts and coming back stronger. This is the staff that makes you, you read about all the great traders here and diffused. All the great traders we've met in my life. It all reeled from major events like this.

And they, if they can hit back stronger. They rebuild in such a positive way. Yeah, sure. So, um, I think with, with FTAX. So just a bit of backstory. I'm sure everyone has heard about the FTAX collapse so far. I think Binance caught wind of a balance sheet from FTAX and Alameda and just saw a big hole in their assets and liabilities. Where they're a majority

of their assets were held in FTAT, the native token for FTAX. Which is, I guess, a liquid asset, which can, you know, be sold by anyone really. So Binance came out on Twitter and said that they were going to sell their entire FTAT holdings, which would essentially collapse FTAX. Now that instilled fear amongst the community. I think a lot of people started selling their FTAT. So

the assets on book for FTAX sort of diminished in value. And just created this big hole. And it just wasn't looking good. But from what I understand so far is that the books at FTAX in FTAX and they're not going to sell it. The books at FTAX and Alameda were never good. They didn't have a chief financial officer. They didn't have a good accounting team. It

just seemed like, unfortunately, just seemed like doomed to fail from the start. It appears that, like, with all the social media buy a suicide that FTAX started out with good intentions. And then as these things always come from the start. They fold, they decision snowballed and snowballed into, like, into this, into this behemoth of, of a mess. Like, I'm reading a timeline here of FTAX, like,

just in, that's being consolidated. So it was like, SPF and Caroline were initially well intentioned. So Caroline was the CEO of, Alameda research, effectively FTAX is trading up. But not, but they weren't especially confident. And this is what's coming up over and over again. Like what Risa said. During the bull market, the trading arm of FTAX made large amounts of book profits via leverage longs. And

equity deals. Then trading arm becomes profitable during the bull market. And then, then, then, then, then during the bear market hits, their edge dissolves. And they're not profitable anymore. They no longer have an edge. Because remember everyone, what happens in the bull market, Turkey's flight, Turkey's can fly in a hurricane. Everything is profitable in the bull market. Then, despite the success for some of these long

positions, their trade, their FTAX trading arm took. They continue to lose large amounts of money. And we mix this with a whole lot of discretionary spending. So discretionary spending like buying other companies, buying huge amounts of real money. So, buying a real estate, buying a Miami heat basketball stadium. Using company funds to buy pen houses and in the Bahamas. Like it's just. Yeah. Yeah. Using the

company. By spring all these major athletes. Yeah. Super ballads in the United States. Like spending spending spree. And then, eventually, these loans were recalled early this year. And an emergency decision was made in secret without the board of directors. Or without the board. To use FTAX users deposits to repay the creditors for all the loans on all these investments. FTAX is not so much for FTAX

Australia, which affects us. I think it's based around FTAX International. Totally. Yeah. Yeah. And I mean, this is a thing like FTAX. It's not a single thing. It's not a single entity. We've kind of been talking about this. I don't know. It's like a jungle. It's like, you know, over a hundred. Into working companies. Spread all around the world. Yeah, about 130 odd subsidiary companies. But

I think, yeah, I always try and look at the positives in each of these situations. And for us here in Australia, who were under FTAX Australia was under an asset license. And the. The people managing FTAX Australia managed to put the company into administration quite quickly after they didn't, you know, didn't hear back from Sam or the FTAX main. So they put it into administration to

lock everything down. So that's when the website went down with draws got halted, which is understandable. If the company goes into administration, they would want to lock everything down so they can do a full assessment of assets. Yeah. So just onto that. What is it? What? So when the direct images of the, I say, let's call them directors, I guess, of the FTAX Australia put FTAX

Australia into administration. What does that mean exactly? Like what? Or is that a name for the company? I don't think. So I can't answer that exactly. But I think from how point of view, it just means that the business doesn't look good. The company doesn't look good. They don't have, you know, the books don't look good. And yeah, it's just not in a good financial position.

So it goes into administration. So an investigation can be done. And also, and also what it does is, is like, we'll remove one of the main reasons. One of the main reasons, I'd say, you know, FTAX Australia was put in an administration before all the other subsidiaries was to consolidate and lock all the money they do have in Australia here in Australia. So I can't say,

I'm not sure if I'm going to be able to do that. I can't, nothing get transferred out of Australia or in like what you're saying before everything's locked down. Yeah, that's right. And the room is that FTAX was hacked. I'm not sure how much of that I believe. We don't know what the administration is doing, whether they're transferring assets around through our cold wallets, but, you

know, when the, when the company did go into administration, like you said earlier, a lot of staff members left. So it just makes it, everything down because there's no security team. There's no, well, I was reading. So again, like just for everyone, the synthesis podcasts, all the information that we're talking about, it's all publicly released information, either from ASC or from the official FTX account, our

FTX, we can't even access the website or our accounts because all the essential staff, like all the developers, the security team, all these people that process withdrawals, process deposits, keep all the infrastructure up and running, can't get paid. They can't get paid any money. So they just walk off the job, which is fair enough. And so they've just released a statement. I believe it was overnight.

In the United States, the FTX International is going to start paying. They have permission to release funds. So from all the funds that they've been able to recover, they're to release funds to pay central staff. To maintain all the essential activities. So yeah, like what you said, Rhys, I'm skeptical about the whole hacking thing. I don't really believe it myself because there's so, there's, you just

don't know what to believe. Yeah, there's so many things like those plausible narratives. So many moving parts, this big beast of an operation. And unfortunately, it's just too easy to jump on Twitter and spread fake news or spread speculated. So it's important to not take too much of that seriously unless it comes from a trusted source. But yeah, I think for us, there's nothing we can

do. We can just keep up to date with the emails that we receive. Do what the administration company wants us to do. And I think just move on, you know, if we get our funds back brilliant. That's a real positive. If not, well, then we just learn from it and continue. Trading and continue building that portfolio. As much as we'd like to sit here and speculate

and hate. It's just not going to get us anywhere. So, unfortunately. That's right. It's not going to get anywhere. And, and I mean, what we've decided to do is. Easy said, been done. We've just decided to say, look, I'm hopeful that we'll get money back from at least FTS Australia, which isn't some sort of considering that we have capital locked up on. Well, we can't focus

on that because it is out of our control. We can only keep up with the current announcements and the current announcements we get specifically here in Australia, like e-nails from the administrative. So you just got to keep up to date with all that stuff. And then lock that away. And then move forward. How can I, how can I move forward to reach that? How can I

move forward with it? Two or three year time perspective. This is this is how I've been approaching at least. And. And move forward effectively and decisively. So in two or three years, I'll be in it possibly in even better position than I was. What I was one. I had my complete. Trading account and FTS. Yeah. Well, these are just big lessons that we'll learn and hopefully.

Never go through again. But we want to talk about as a contagion effect that things like this happen. We saw Luna earlier on in the collapse. And unfortunately a lot of people lost money due to that and then sales. Yes. And then. Was it three or three arrows capital collapse as well or going through some tough times at the moment. And now they speak about Genesis

and Gemini. So Genesis is the thing was the lending platform and Gemini. One of the big sort of OTC platforms in the US. A beginning to struggle. So. Yeah, just these flow on effects that happen after big events like this. Just as you mentioned earlier, just sort of flush out weak hands or. Flush out companies that were over leveraged. And the ones that are left can

can prosper when things do pick up. Yeah. Yeah. That's right. And the ones that all that life. What's the golden rule here? The golden rule. I think I think that the use lesson for many of us is not your keys, not your crypto. So unless your crypto is on cold story, just not 100% yours. Yeah. That's a good point. Like. Yeah. And like, remember, like, why

was Bitcoin originally designed? It was released in the midst of the 2008 financial crisis when major financial crisis. So, you know, you know, you can buy Bitcoin on spot. It can sit in your wallet, but essentially, it's not yours until it's on a. On a cold storage device. So I think it's really important to note. And if you haven't already, um, definitely invest in a cold

storage device like a ledger or a treasor. I use a ledger. I think it's fantastic. I think it's a great thing. I think you do as well, Lou. I do. Yeah. I use a ledger as well. And I'm now, um, and now start like with the exchanges that I am trading on now. I've put whitelist addresses in. So addresses that are protected with two factor authentication

and SMS. So they can't be changed. And if I do need to get those funds quickly off the off of whatever exchange I'm trading on, I can just hit that whitelist. And then, you know, I think that's the best way to address it, address boom with your straightaway. You have to, it's just a way of streamlining things here. I think another positive that will come out

from this is. The transparency with exchanges to show their reserve bounces. Um, I thought those are really good thing and a lot of exchanges are doing that now. But. I should have a point about it's easy to show what your reserves are, what your assets are. But what are your liabilities? How much debt? You know, you could have eight million, well, eight billion dollars in reserves

or assets. But if you've got 10 billion in liabilities, it means nothing. Well, that's right. And why can't if your if that entity is holding my money. Why can't they just be a dashboard? I look up online, which is up to the freedom its already connected with liabilities. And, um, with liabilities and profits or liabilities and working capital thats available. Which, which like he said, that

thats what they seem to be doing right now like. Sharing this information publicly and maybe over the next couple of months we will get a type of platform to observe all these things. So we can make correct assumes. There is a, um, a website, it's portfolio.nance and NANS, that is beginning to implement dashboards for exchanges. They just plug their wallets into and it shows reserve balances.

So its one worth checking. But, um, again, its not showing liabilities, its not showing the, you know, the net position as a company. Which is a little bit concerning but its, is it too much to ask about showing what liabilities they have and how so when that company is? I think its, yeah, its. It should. It should. Again, it comes down to like, well if you

want to hold my capital. There has to be some type of transparency, especially in the wake of whats up with FGX. I think. Oh, 100%. 100%. I think moving forward, what, finances our, our option for the time being until we can get some good answers from other exchanges. You know, finances, Ive come out and said that theyre in a really good position which I believe, you

know, they are the largest crypto exchange out there. So moving forward, I know Ill be trying to be trading with finance for the time being. You will be as well, I believe. Yes, yes, yes. I'm going to be trading with finance for the time being. And like what weve observed, we can trade Bitcoin and USDT pay as long and short. With FGX. With FGX much. Yeah,

thats right. The platform itself, again arguably isnt as good as FGX was. FGX was. FGX was such a user friendly platform. But Im confident that we can navigate around finance pretty easily. Im pretty confident. Theres just a lot on that. They offer so much. Yeah. And look, the auto platform isnt as smooth running as FGX. But were not going to see another exchange unless a new

exchange comes on the block. That will have the same order platform as FGX. But finance is not that like you can get your head around it. So you spend some time using it, right? Yeah, thats right. I think well do that. But Im just confident. I shouldnt say confident. Im just excited for the next effort, for the dust to settle, for everything to blow over. And

hopefully this time next year were sitting here having a good conversation about the bull run that were just in the mid-stove. Yeah, yeah. And even if were not in the bull run, were just going to be having a conversation of, oh wow, this has been an awesome year of trading. So I am happy to stuck with it and regroup my portfolio. Im certainly excited for that

as well, man. Im pumped for that. And Im really pumped to like what you were talking about before as well. Like the power that comes, the experience that comes from bouncing back from an event like this. Like this is the type of thing that just makes you. And then like five years from now, ten years from now, I can tell my kids or we can talk

about it over a beer with Craig or you or other people in the community or whoever would be like, oh look, I actually got cleaned out. My trading was going so well and my account was growing and growing. I finally had really good consistency and profitability. Its really hitting goals and then I just got all wiped out. But I cant back. I actually cant back better

for it. Im looking forward to having a conversation in the future. Yeah, 100%. It just makes me worry a little bit that some people will walk away from crypto altogether, maybe trading altogether. And youre just going to ask yourself that question, like how will you feel if the bull rung comes and youre sitting on the sideline? You know, we all got into crypto for a reason.

Whether that be you believe in the space or you just are aware of the massive moves that crypto offers and the potential gains that can be made. Which is, you know, the reason that I got into it because trading wise, the gains are just unreal compared to traditional markets. So I think thats the reason why I got into it. I definitely dont want to be sitting

on the sideline. To the short and long side. Exactly. To the short and long side. I definitely dont want to be sitting on the sideline while people that have the guts to keep stay in the markets and just reaping these benefits. 100%. 100%. And one thing that is 100% certain is not fair markets, not bull markets. It's human sighting. And I can, I am happy to

say this on the podcast and say I can guarantee you that once there is a bit of an momentum in the markets, especially to the upside, people will plow back in and they will completely figure out this. It happens every time. It happens every time. You see. And you just want to be positioned to capitalize on that. And unfortunately, they are the people buying at the

top. You know, in big coins it is $60,000 or $50,000. Not big-trades. Not big-trades. traders and investors buying at that period. Theyre selling. Theyre selling at that point. Yeah, unloading, yeah. And its the inexperience that are buying at that point. You dont want to be that person. You dont want to be the one with them. No, no, no, no. You dont. Yeah, I am, yeah, super

excited. Well be here, trade a couple, well be here. Well continue trading through these periods. Well, that would have been tough. Yeah, like I said, its all just a learning curve. Yeah. And I guess thats the whole point of trade of code as well. Its to have that community of traders to keep each other accountable to keep us consistent, keep us in the right mindset. The

keepers growing, so we dont jump on, I guess whats commonly referred to as a trade dislike would do. Its like the hamster on the running wheel. You never get any way, you never make progress. So yeah, were not going anywhere. Oh, youre going to be here for many years to come. Yeah. And I mean, this is what our whole belief about trading is. Like one thing

that Rhys and I have both learnt about becoming consistent and profitable trading is you have to keep on growing. The moment that you stop growing, it just results stagnant. And like even four or five years from now, who knows how big our account sizes will be, but were going to keep on growing. Were not always maintaining that growth mindset. And its really important no matter what

happens. Its really nice to see a lot of projects out there doing good things and continue to build during periods like this. Were seeing it in the NFTs space, a few projects out there that are just really prospering, I guess, during this bear market. Certain blockchains such as Solana doing great things continue to build. I think its a really good thing and they will definitely prosper

in the bull market, but just looking at the price of Solana its not really reflected in the prices. But its seems like theyre doing a lot of good things. And then theyre doing a lot of good things in the background. 100%. Yeah. And its good keeping an eye on some of these companies. I mean, I'm only invested in Bitcoin and Im trading long and short. Like

thats, oh, Im doing. Oh God. There are so many people that made some huge profits last year being able to pick the right companies to effectively buy and hold. Its interesting seeing these big, dear leveraging events and keeping an eye on these companies that do survive and push for and build off like a fresh market effectively. Yeah, for sure. 100%. It certainly pays to keep up

to date in the space. You dont want to fall into that trap of just, you know, everything looks bad, everything sounds bad. You think its good. But the death of crypto is upon us. You walk away and then what do you know? 12 months later, everything has picked up and youve missed some really good opportunities. Yeah, well thats actually a really good point. Even if youre

not trading or youre just managing portfolio or if youre just, if youre actually the nail in the coffin, youre like Im not doing any of this. Surely its just trying to scan the top 10 months of that. Or even months of week. Just look at the weekly time frames on the top 10. You dont just stay in flow with the market. So, like what Ray says

doesnt happen. You dont just come back into the market in 12 or 16 months or whenever it is and youre not in flow. You not in the right mindset and you just make stupid decisions. So its worth just doing you simply actively like that. Look at the weekly time frames on the top 10 months of week. Just to keep you in flow with the market. Yeah,

its really important. Yeah, staying in flow with the market. Staying in the market. Not necessarily trading, just scanning the market. Keeping up to date with some news thats going on is really, really important, I believe. 100%. 100%. Like, is there anything you guys would like to talk about? No, no, I was just going to say that thats probably us. Yeah. Not to mention. I think the

podcast too long today. Yeah, and for our first one, I hope well continue to do these. Well keep you guys up to date with everything crypto. And yeah, itll be good. Im excited. Yeah, apart from all the money that we have locked up on FTX. Man, Im really Im so pumped to build into the future. And Im really pumped to see what the future holds. Because

once the market bounces back from this huge event and everything is uncovered, all the strings are pulled. Where else do we go? Yeah, well thats right. This is how the bottoms of bear markers get handed out. This is it. Were in it right now. But you think about it all the time. This is what you hear about when bottoms are pulled. Were in. Now were not

saying the bottom is in definitely now. Its impossible to tell that. Its impossible to tell that. Events like this certainly contribute to the bottom being in. I think when big news events come out like FTX collapsing, interest rates increasing, fear everywhere. But the market doesnt react to all the market reacts very little. I think thats a good sign to start looking at the market and starting

if the bottom is in. Now were not here to try and pick bottoms. But thats just one sign to keep an eye out for. Yeah, and again, its just a healthy mechanism of a market. And this is what the bear builds a ball. And the ball builds a bear. Forever made this cycle continue. It has been going on ever since markets existed. Hundreds of years. A

longer than that. And forever made it continue. Thats right. Maybe. We should leave on that note. Yeah. Well, 21 that is in our community. Feel free to reach out to myself Alou. Send in any questions that youd like us to discuss on the next podcast. But yeah, I hope you all have a great day. And yeah, thanks for tuning in. Yeah, thanks for tuning in everyone.

And lets get after it. Lets get after it and build for a better future. Lets get after it. There you go. See you guys.