October 17, 2023

🥛 Week 3: The U.S. vs. Sam Bankman-Fried ⚖️

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GM. This is Milk Road, the crypto newsletter that gives you the same feeling as finding $50 in your old pair of jeans.

It’s Tuesday. Let’s boogie:

  • Week 3 highlights: The U.S. vs. Sam Bankman-Fried ⚖️

  • A big change is coming to Uniswap 👀

  • Weekly crypto funds flow report 📊

  • Crypto is going to college 🍪


It’s week 3 of crypto’s trial of the century…The United States vs Sam Bankman-Fried.

Uncle Sam vs. Banned-From-Family-BBQs-Sam.

Side note: A few people have been asking why we call him “fkSBF”. So let me clarify…

On November 9, 2022, we officially stripped “SBF” of his letters. (nicknames are only for the solvent)

So over the last 342 days, we’ve referred to him by his government name “Samuel” or “he-who-was-formerly-known-as-SBF”. Or fkSBF for short.

Ok. Now that we got that out of the way, back to yesterday’s trial highlights.

The main witness of the day: Nishad Singh. He…

  • Was the former director of engineering at FTX

  • Went to high school with fkSBF

  • Was part of fkSBF’s “inner circle”

Nishad and fkSBF went from MySpace-Top-8-Friends —> Courtroom-Foes.

Here are the top 4 things Nishad said during his testimony:

1/ fkSBF was the ultimate decision maker.

Marketing. Investment decisions. Endorsement deals. High-level business decisions.

You name it, fkSBF was the one making the decisions on it.

This is big because fkSBF has repeated countless times he wasn’t touching the big decisions with a 10-foot pole.

2/ fkSBF balled out on “lavish expenditures”.

Here’s a short list of fkSBF’s purchases/investments…

  • $200M on a stadium (formerly FTX Arena)

  • $50M to Tom Brady and Giselle Bundchen

  • $30M+ on a penthouse in the Bahamas

  • $28.5M to Stephen Curry (NBA legend)

  • $10M to Larry David to appear in a Super Bowl commercial

In total, over $1.1B was spent on these types of deals. (!!)

3/ fkSBF made Nishad process political donations in his name.

Apparently, there was a Signal chat (with disappearing messages) called “Donations Processing”.

The people in the chat: fkSBF, Gabe Bankman-Fried (fkSBF’s brother), Nishad, and Ryan Salame (the co-CEO of FTX).

The goal: funnel funds to political candidates.

  • Ryan Salame would pick the candidates.

  • The funds would be routed out of Nishad’s bank account to → the candidates.

  • Nishad would also sign blank checks in his name to give to Gabe Bankman-Fried for other political donations.

fkSBF wanted to make Nishad the face of these donations for “advantageous optics”.

Milk Road Translation (BS-free): “I don’t want to get screwed, so put it under your name”.

4/ fkSBF had Nishad create code to give Alameda Research “special privileges”.

Some of these privileges included:

  • Letting Alameda’s account go into negative balances

  • Letting Alameda trade, borrow, and even withdraw funds in excess of its balance amount

  • Making it so Alameda would never be liquidated

In other words, Alameda was in God-Mode.

Milk Road Take: In our non-expert legal opinion, Nishad’s testimony was a big win for the prosecutor's side.

It showed that:

  • fkSBF was behind the decisions, and he didn’t care whether people agreed with him or not.

  • Alameda did indeed have special privileges (because Nishad was the one that built the damn thing).

  • fkSBF was continuously misusing customer funds to fund his lifestyle. (i.e. million-dollar mansions, signing celebrities to sponsorships, political donations, etc)

Nishad will finish up his testimony and get cross-examined today. So, we’ll see if there are any other milky details that get exposed.

P.S. – fkSBF’s defense ended the day by asking the judge to delay the trial until Thursday.

The reason? fkSBF needs more Adderall.

The defense argued that fkSBF's “lack of access to prescribed medicine” is hurting his ability to stay focused. And without it, he may not be able to testify.

You can’t make this sh*t up.

fkSBF is showing everyone his BCE – Big Crackhead Energy. And I haven’t seen BCE levels this high since Tyrone Biggums…

The judge’s response: "I can't have lawyers giving drugs to people on trial.”


*mic drop*


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Uniswap Labs just dropped some big news…

What happened: It will start charging a 0.15% swap fee.

  • The fee will only be charged on swaps done through Uniswap Labs’ front end. (i.e. website and app)

  • The fee will only be on certain tokens like ETH, USDC, USDT, EUROC, and DAI.

  • Stablecoin swaps will not be taxed.

  • The fee is being introduced to “sustainably fund” operations.

Why this matters: Uniswap Labs created Uniswap – one of the most popular decentralized exchanges in crypto.

It’s done $4.6B in volume over the last week and has $3B+ in total value locked (TVL) – which is 2x the next closest DEX.

Uniswap is putting up Wilt Chamberlain numbers.

Well, its recent move to implement a swap fee doesn’t come without some controversy…

  • Many people were anticipating that Uniswap would turn on a fee switch to reward UNI token holders, but this fee is to fund internal operations.

  • Other DEXs without swap fees are using this announcement to try to gain market share.

  • The list of tokens that incur a fee includes many of the most popular trading pairs.

Uniswaps token (UNI) is down 3% on the news. Tough crowd.


CoinShare’s latest weekly Digital Asset Fund Flows Report just dropped…

The results? $15M in inflows.

Here’s everything else you need to know:

  • Bitcoin led the way, again. The OG cryptocurrency saw $16.4M in total inflows last week, bringing its yearly total to $260M.

  • European funds are loving crypto. Sweden was the only European country that saw outflows last week.

  • SOL and XRP have been investors’ favorite altcoins. SOL saw the most inflows amongst altcoins, while XRP saw its 25th straight week of inflows. Impressive.

The best part? It was the 3rd straight week of inflows.

We’ll see if it turns into a 4Peat next week.


Coinbase Ventures and Haun Ventures are teaming up to back a crypto accelerator program at the University of Arkansas. That’s right, crypto is going to college!

Tether has frozen wallets linked to terrorist groups in Israel and Ukraine. In total, 32 wallets were frozen holding a total of ~$875K in crypto.

Binance announced it has stopped accepting new sign-ups from customers in the U.K. The top crypto exchange said it was "looking for a new FCA authorized approver" so it could comply and continue to onboard customers.

FTX bankruptcy estate has introduced a new plan to disperse creditor funds. The plan aims to return more than 90% of creditor holdings prior to the collapse. (worth ~$8.9B)

Australia has outlined a licensing program for crypto exchanges. Crypto exchanges will be required to adhere to obligations including minimum standards for token holding, custody software protocols, and transactional integrity.

Lido announced it will discontinue its staking operations on Solana. Staking has been discontinued and no new stake will be accepted. R.I.P.



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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.