Stablecoin collapse, major hacks frozen funds, defaulted, loans. Its been a weird month and in our darkest hour, a hero, rises. Kind of., Two struggling crypto firms, Voyager Digital and BlockFi, received massive loans., See the crypto Industry is kind of on its last leg and these loans are meant to help prevent total collapse and possibly some personal gain as well, that were going to discuss in a minute.. The loans were supplied by companies owned by Sam Bankman, Fried FDX and Alameda Research. Whats. Interesting about this is a lot of people are saying. This story sounds awfully similar to a fellow named J. P. Morgan.. I dont know about you, but its been a while, since I read my high school history textbook., So I dont remember much about another guy who single handedly attempted to save an industry., But before we dive into this fascinating comparison, let me tell you about todays, sponsor Myself, my company Finova. Markets are extremely shaky right now and its great to have a friend in the finance business. On Finova. We have a massive community of investors chatting about the latest tactics and strategies and making a lot of money doing it. We have live coaching calls every single day, trade signals, research reports and so much more for as little as 10, a month. Theres really nothing else. Quite like it. Also, we are now running a seven day, free trial., So check it out for yourself see if you like, it.

, That is linked down below. Now before we start looking into whether this comparison between Sam Bankman Fried lets just call him SBF and J. P. Morgan is accurate, lets review some highlights or lowlights is that a thing of whats happening in this horror show lately. A few crypto VC firms like Three Arrows Capital found themselves unable to pay back loans that they had taken out, usually unleveraged positions., Its almost always Leveraged positions., Crypto exchanges like Celsius, ran into liquidity issues, so they prevented customers from removing funds from the platform. Its a bit like watching dominoes fall. Each time a new exchange, crypto project or VC firm, ran into a problem. The more panic ensued and the worse. This tailspin gets for the entire crypto market.. Oh my God., Okay, its happening. Everybody stay calm. Whats. The procedure Stay, the fk calm. This is whats called Only so many bad things can happen in an industry before everyones like Aight, Im out and the whole industry. Just collapses., Or sometimes even the whole economy, collapses for a while., Clearly Celsius and Three Arrows Capital arent. The only crypto companies in trouble. The whole space is in rough shape., BlockFi, everyones favorite way to pay with a credit card and get Bitcoin as reward was also running into liquidity. Issues.. To help solve this problem, BlockFi announced that they had received a 250 million loan from FTX Sams Crypto Exchange.. Just three days before that Alameda Research, Sams Crypto Trading firm, had agreed to loan Voyager Digital, nearly half a billion dollars in crypto assets.

. So you might be asking yourself: Well, he actually had a really good reason.. In a recent interview, SPF said I do feel we have a responsibility to seriously consider stepping in, even if its at a loss to ourselves to stem contagion. Here is where the comparison to J. P. Morgan comes. In. SBF appears to be bailing out the crypto industry by keeping major players in business, because if they failed, it would lead to a mass sell off of assets, further depressing prices and making things worse and worse Contagion.. So it turns out J. P. Morgan did something pretty similar back in his day. See this company called United Copper went bankrupt in 1907 because of a failed attempt by these two Wall Street bankers trying to corner the copper market. When their attempt failed people began to Withdraw funds from any banks or trusts associated with those two copper fanatics., Then, in the same weekend, two brokerages and a bank imploded on themselves.. This was extremely bad back then, because no bank account had FDIC insurance like we have now., So news spread and there was complete panic. People yanked their money out of the stock market and banks in fear of losing it all. And because banks dont keep 100 of Deposits on hand they can completely run out of cash and collapse.. This is whats called a bank run. And heres a fun fact. I just learned. Banks actually used to use this sneaky tactic to slow the draining of money out of the bank, where tellers would intentionally give customers back their money as slowly as possible.

. The whole thing got so bad that President Roosevelt became involved in trying to find a solution., So he phoned up the richest guy. He knew J. P. Morgan.. He was like Yo Pierpont. Can you fix this? I dont know how Roosevelt sounded. And Morgan was like Sure. I guess I got nothing else to do., So J. P. Morgan pledged his own capital and called together the most influential banks and trusts to all meet at his private library to work together and solve this issue. Think Tony Stark, calling together the Avengers or Captain America. Maybe or Samuel L. Jackson. Anyway, the dude had some sway.. He suggested that the largest banks invest in their smaller competitors, decide which banks would have to be sacrificed and work together to make concessions for the good of the country and probably make money while theyre at it.. So he locked them inside the library until they could come up with a plan to reestablish faith in the banking system. While he played solitaire in another room by himself.. In the end, crisis was averted and people began putting money back in their bank accounts., And the thing is this was the second time J. P. Morgan helped to avert a total economic collapse.. The first time was during the Panic of 1893.. This time around, the US. Treasury was running out of its gold reserves, which backed the US Dollar. At the time, gold could be exchanged for dollars at any bank, and many foreign investors were doing just that.

. This spooked, the American citizens and things were falling apart. And mind you. The unified US Dollar, was only around for like 30 years at that point, so it was kind of new.. So, with the permission of President Cleveland and a loophole created by the Civil War J., P. Morgan gathered this team of international investors, who agreed to buy US gold bonds in exchange for gold, and this reestablished trust for the dollar and avoided economic collapse.. I dont know about you, but after looking at how much J. P. Morgan actually did and the amount of influence he was able to wield, it kind of seems like this comparison is falling apart. A little bit. Yeah. SPF loaned some money to a few competitors to slow bleeding, but J. P. Morgan saved the freaking economy twice.. However, as I dug deeper into the bailouts, I began to see more and more similarities.. They both used chaotic circumstances to build their own empires. Throughout both the Panic of 1893 and 1907 J. P. Morgan gave out loans to banking competition rival railroads. The man was super into railroads and even industrial competitors. Through this process of swooping in when others were struggling. He established Americas, first billion dollar company US steel., And the plan was simple, offer a loan to struggling competitors but include some stipulations like. If you go bankrupt, I get full control of your company.. The consolidation became so popular that the process became known as Morganization.

SPF seems to be doing something similar just in a more narrow space.. In addition to extending loans to Voyager Digital and BlockFi, FTX also acquired the Japanese crypto exchange Liquid Global., And it turns out in August FTX, had loaned Liquid Global 120 million following a hack where Liquid lost 90 million., Then in August 2021 FTX US acquired LedgerX.. In May 2020, they acquired Blockfolio.. Then Sam acquired a 7.6 stake in Robinhood.. This acquisition, boosted Robinhood stock by 36., Bloomberg actually reported that FTX was on the verge of buying RobinHood, but they since responded that there are no active MA conversations with Robin Hood. Note. The word active. Now, while writing this video news was released that Morgan Creek Digital is raising money to counter FTXs offer to BlockFi.. It turns out that FTX would be able to acquire BlockFi for next to nothing if they were to go bankrupt. Sound, familiar And Morgan. Creek as an early investor in BlockFi would get the short end of the stick. If that were to happen.. Also interesting is that BlockFi chose to work with FTX, as they were, the only offer that protected clients, funds, which is totally nice to hear. Update. While this video was being edited, some news came out that FTX could soon purchase BlockFi exactly what we expected. Now. This could be closed by the time you see this. The purchase price would be up to 240 million depending on performance., And this is down from their previous valuation of 3 billion.

Just a year, earlier. Update on the update The deal went through. Now the similarities between how both of these guys got even richer. In the middle of chaos seems pretty clear. And you find this all over. Rich people tend to set up their base to make money in bad times when the opportunities are there., But the most compelling similarities. I found between these two required, an understanding of their character and goals.. This helps highlight their real intentions. J.. P. Morgan was born into the business world.. His dad was this prominent banker.. However, he was really sickly, as a child and couldnt go outside and play with the other kids.. So we just stay indoors playing solitaire, studying and reading financial statements.. He was either going to be a mogul or a supervillain, and one of those two happened., But as a titan of banking and railroads and steel industries. J. P. Morgan believed that consolidation of these industries, under the guidance of an honest and capable person, would improve efficiency. To the benefit of everyone. Morgan, even to his detractors and competitors, was widely known as being pretty honest and direct.. While SBFs parents were not banking masters, they are both law professors and they did instill in him. Some of his core business values., Barbara, Fried SPFs mother, describes her husband and two sons as take no prisoners utilitarians.. She says the ethical goal of utilitarians is to maximize the total well being of the worlds people and for some animals as well .

.. That the goal leaves utilitarians to focus their efforts on helping people in the direst straits and on policy interventions that will lower the Risk of existential threats to present and future generations. Sounds pretty good.. Spf has adopted an ethos of that urges people to use their time and resources to bring the greatest good to the greatest number they can.. He believes that by creating the most wealth possible he can help the most people possible.. So not only do SBFs goals seem to reflect J. P. Morgans belief that consolidation and expansion of ones business empire can be moral good, but like Morgan, he is also known for being pretty earnest and truthful.. Spfs college friend, Adam Yedidia, said that SPF is charismatic and that people knew he meant what he said.. It seems like a pretty chill billionaire.. However, even though FTX has sponsored my videos, I cant quite let them off that easy.. I buy it that wealth in the right hands can promote ultimate good. And I totally believe SPF will do good things with his money., But we cant ignore personal desires as well. Bailing out crypto companies is in Sams own interest.. If the crypto market totally collapses, hes going to lose far more than the billion that he loans, out. Plus, if those companies go under, he gets assets for pennies on a dollar. And of course he just wants to win as well. When youre a billionaire having money. Isnt even remotely a problem, but you can still win new battles and win new business.

Thats, what hes, doing. And its not necessarily bad its just human.. If I were SPF Id, say yes, Im helping to save this industry.. Yes, its probably good for all of us, but Im also protecting myself., I dont want to lose either. And people would be like Yeah bro. I get it.. I like money too and theyd move on with their day.. So, overall, I think that these loans to crypto companies are a net win for the average investor. Im glad that FTX and Sam did this.