Personal Finance YouTubers Have Bigger Problems Than Just FTX #Finance

welcome back we continue to follow the collapse of FTX we have some breaking news on the FDX Crypto story just crossing that FTX Founders Sam bankman freed has been hit with a class

action lawsuit what it means for Market Liquidity Sam bankman Freed’s Alameda research is closing as we know FTX filed through bankruptcy and the Alameda was one of the biggest market makers in this guy John Ray who did the Enron stuff never in my career have I ever seen such

a complete failure of corporate controls in such a complete absence of trustworthy financial information has occurred here what happened at FTX I think is is again just a harbinger of things to come um John Carney SBF is this guy going to jail what’s going to happen to him because a couple

weeks ago now the world’s largest Crypto exchange FTX collapsed due to Borderland fraudulent management and investment practices the collapse was the largest example of such collapse

albeit just one of many instances of fraud in the Crypto Community The Fallout from FTX will take months if not years to resolve lawyers have to decide whether the exchange can operate and

then there’s the issue of all the customers who just want their money back I think it is very important that everybody with Investments even non-Crypto

Investments understands what happened to this company and I will do my best to give you everything that you need to know about this collapse so far because it is rapidly evolving and circumstances may have changed significantly when you watch this CashNews.co investors will lose

billions in this collapse and that by itself is terrible but I think it highlights a much larger issue which is the personal Finance influencers that are directly responsible

for directing hundreds of thousands of their viewers to make Investments that will harm their long term Financial well-being there’s me Kevin Graham Stefan Andre Jacob Jeremy from Financial education all these guys got paid Millions by FTA I am not just talking about FTX

either yeah sure this is one incident and maybe nobody could have seen it coming but it’s just the tip of the iceberg and people are going to keep losing their money because of bad advice they received on the internet so it’s time that people like Graham Stefan Andre dick meet Kevin and

the dozens of other influencers in the personal Finance space recognize the harm that they could be doing to Their audience I don’t want to start YouTube b for anything

here I think these guys could do a lot of good for Their audience if they reverse some of the really bad practices they have started making in recent months bad practices that are probably going to blow up in their face in more ways than just this FTX disaster their reputations have just been going

down the toilet people who promoted absolute garbage companies like FTX us and block 5 for millions of dollars today we’re finally seeing the results as both of those companies are basically bankrupt so it’s time to learn how money Works to understand what went wrong with FTX and

understand how you can personally tell when someone you think you can trust on the Internet is telling you to do something that is not in your best interest a big part of understanding the difference between a scam and a legit product is being able to think critically and today’s sponsor

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many works or click the link in the description and the first 200 of you will get 20 off Brilliance annual premium subscription FTX was a Crypto exchange platform that also released and

promoted its own Cryptocurrency ftt both the ftt token and the FTX platform itself were heavily marketed through big budget campaigns involving sports stadiums traditional celebrities and

Finance influencers a lot of focus was put on the founder and CEO of the company Sam bankman freed or SBF he had marketed himself as a generous billionaire that drove a

regular old car and War dagged clothes and apparently people thought that was unusual enough to make a big deal about it forgetting that most billionaires in the world were dagged clothes and make a big deal about driving an old car it really isn’t that remarkable anyway behind FTX and the

ftt token was Alameda research a supposedly quantitative-based hedge fund that would trade Cryptocurrencies as far as analysts can tell now their quantitative trading strategy was to buy up a

bunch of different Cryptocurrencies and hope they would shoot up in price so bold strategy cotton let’s see if it pays off for them the person put in charge of managing this hedge fund

was a 20 28 year old Caroline Ellison who had just two years industry experience working at Jane Street Ellison famously said in an interview that her trading strategy didn’t require much math very little math a quantitative hedge fund without math is like McDonald’s without the burgers

it just doesn’t really make sense due to the crash in the prices of most Cryptocurrencies in 2022 Alameda research began losing large amounts of cash which was replaced with large

Loans given by FTX using their own tokens as collateral this is roughly the same as a company using its own stock as collateral for a margin Loan and there is a good reason why businesses are not normally allowed to do this its share price will naturally decrease

which undermines the value of the collateral the Loan was secured against in the first place but if you are Sam bankman freed and you control both the lender and the borrower you don’t need to care about business conventions eventually this house of cards came crashing down

as ftx’s primary competitor binance raised down some of the platform’s ability to honor withdrawals a doubt that was very well founded because most of their custom summer deposits were being used to save the sinking Alameda hedge fund as of today FTX is still close to withdrawals and is

starting the process of chapter 11 bankruptcy which is a reorganization of the business to try and get Creditors their money back in this case some of those Creditors are people who have deposited money on FTX to trade and are now unable to withdraw that’s

the best two-minute summary I can give and if you want a more technical explanation I highly recommend Patrick Boyle’s 26 minute analysis he is Real World Experience running an actual hedge fund that hasn’t lost billions of dollars so its insights are truly Second To None one of the

biggest issues this collapse highlighted is personal Finance influencers and the role they played in promoting FTX to Their audience that watch them because they valued their

advice for those who haven’t been following the stories too closely the space is basically divided into two camps with the influencers who took the sponsorship on one side claiming that if BlackRock and Stephen Curry could fall for FTX then they should be allowed to as well on the other side

there are people like coffeezilla calling them out for costing their audiences billions of dollars while personally Profiting millions of dollars from advertising Revenue I have made it pretty clear in the past that I am not a fan of traditional

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance influencers because it is impossible to give appropriate Financial advice to such a broad audience especially when most of the bigger names in the space have no background in

href="https://cashnews.co/finance" style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance Graham and meet Kevin are ex Real Estate agents Andre dick was a magician and none of this is to get keeping talking about

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Finance on the internet everybody should have the right to share their opinions but if you pay close attention you will notice that more qualified creators Like Richard at the plain bagel who is an investment analyst and has a

CFA and Ben Felix who is a Portfolio manager avoid making Financial recommendations because they know they can’t do it to an audience of that size without doing more harm than good this means that their content is less exciting than hearing about how to use the 2023 recession

to get rich or how to safely invest ten thousand dollars and I think the choice to not give Wild speculative advice is why their audience is significantly smaller than these more exciting characters even incredibly generic advice like investing in a broad Market stock Portfolio is

a terrible move for someone who is close to retirement or living paycheck to paycheck if you ever consult with a real financial planner you will see that they spend 90 percent of their time listening to you about your Current financial situation and objectives and 10 of their time making

recommendations Financial influencers have no way of listening to their millions of subscribers individual needs so they spend a hundred percent of their time making recommendations this whole problem gets so much worse though when these guys start taking paid sponsorships For Better or Worse

people look to these influencers because they think they can help them improve their financial situation so when they start recommending investment products that they were paid to promote it causes two major problems the first is that it undermines their credibility you wouldn’t listen to a

food critic sponsored by McDonald’s and you shouldn’t listen to a Finance influencer sponsored by a color: #1a73e8; text-decoration: none;">Crypto exchange it would be very very hard for these influencers to say anything bad about Crypto in general because they would risk losing

sponsorship deals which by most reports were running half a million dollars a year that I’m genuinely asking you to forgive me because I [ __ ] up I am not even going to say that I am personally above this temptation I’ve been approached by many

style="font-weight: bold; color: #1a73e8; text-decoration: none;">Crypto exchanges offering me way more money than my other sponsors do for an ad spot and I do need sponsors to keep even this modest Channel going which is why this next point is so important people like Tom Brady Steph Curry and

Matt Damon have more leeway to lend their name to Finance companies because nobody is paying attention to Tom Brady for his financial advice that means it’s a lot

easier to tell when he is being paid money to appear in an ad the same goes for sports stadiums and ironically even the largest financial firm in the world BlackRock so far the biggest defense that Financial influencers have presented is that the world’s largest asset manager was also an

investor in FTX so if they didn’t know how would anybody know BlackRock did invest in FTX and in fact so did a lot of big names such as Sequoia tiger Global and Toma Bravo I am not going to say too much about the quality of due diligence that these investors conducted but typically speaking

due diligence for these minority Equity positions tends to be far less involved than when you’re seeking majority Equity furthermore blackrock’s Venture arm invests into many companies like this knowing very well that many of these companies fail

venture Capital is a risky business and it’s why VC funds tend to have much larger Portfolios than buyout funds they make many gambles with the hope that a couple do incredibly well a few more do okay and the remainder fail so investing in FTX was by no means

an endorsement of its success but rather a gamble on its future the personal Finance influencers who were stung by this really do deserve the backlash they are receiving and

I hope that it will make them seriously reconsider what advice they give in the future and who they work with as sponsors I know none of them have offered to compensate any of their viewers out of the piles of money they have made from sponsorship deals but maybe that’s asking too much so

here’s something much more reasonable to ask something that will make sure they are never in a situation like this ever again I want to know tell me don’t accept sponsorships from any company that offers investing products or Services now I’m not saying you shouldn’t partner

with anything money such as a company that offers your viewers way to save money with coupons or even an app that helps your users put together a budget what I am saying is no stock Brokerages no text-decoration: none;">Crypto platforms no trading Bots and nothing where there’s an implied assumption that investing your money in X investment can generate y return I know sponsors are crucial to running a channel but there are plenty of great sponsors to work with that have a simple

product that doesn’t have to sell people on the chance of turning their money into more money they do offer less lucrative deals because people are more willing to spend money on things that they think will make them money but come on guys you are rich enough and this would be a great way to

show your audience that you have their best interest in mind I don’t think anybody should reasonably advocate for these guys to be completely canceled over this one incident but if this becomes a pattern then it’s going to do more damage to Their audience and their reputation now if you

haven’t already seen it you should probably go and watch the CashNews.co I did over a year ago on all the other problems with these personal Finance personalities a

special thanks again to brilliant for making it possible for everybody to keep on learning how money Works what does Matt Damon say on that Bitcoin commercial fortune favors the brave my dad said he listened to Matt Damon and lost all his body yeah yes everyone did but they were Brave in doing

so