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Dear Fellow Traveler: When Sam Bankman-Fried went down three years ago… everyone acted surprised. They shouldn’t have been. The disheveled genius in cargo shorts… The guy who spent an hour staring at the floor while interviewing Bill Clinton and Tony Blair… one of the strangest things I’ve ever witnessed, and not just because of SBF… The “effective altruist” who wasn’t in it for the money… The guy who testified before Congress while senators nodded along like he was explaining the future of finance to their grandchildren… The one building “institutional infrastructure” while Bitcoin maxis screamed into the void about Ponzi schemes… What made him so dangerous? The illusion of it all. He wasn’t promising you’d 10x your money overnight. He was promising legitimacy. People cheered him because he took a complex corner of crypto and presented himself as the competent adult in a brave new world. He was, absolutely, a bridge between the old JPMorgan world of finance and the new one he expected to dominate. And what was FTX’s business structure? I would ask hedge fund managers about it, and they couldn’t explain it… only that “it worked.” Some would call that… “Red flag No. 1 to 47.” It was never complex enough that you couldn’t fake a few things… or that people could nod along and repeat the buzz words to make them sound like an expert, too. What they could ALWAYS explain was the money… and THAT it was rolling in. Now meet Josh Wander. Last month, federal prosecutors in the Southern District of New York unsealed an indictment alleging that Wander, co-founder of investment firm 777 Partners, defrauded lenders and investors out of more than $500 million. His former CFO has already pleaded guilty and is cooperating. The charges are allegations, not convictions. But if true, Wander’s story is just another in a long line of people who built credibility around boring, complex ideas… only to reveal an illusion at the end. The SetupWander’s company was based in Miami… the same city where FTX slapped its name on the NBA arena, only for those letters to be pried off after SBF’s arrest. So what did 777 Partners actually do? Structured settlements. If your eyes just glazed over, that’s the point. The more boring it sounds, the safer it feels. Structured settlements are compensation streams paid out over time… think the old JG Wentworth jingle.
777 Partners bought these payment streams, aggregated them, and securitized them. It was boring. It was predictable. And the investments were cash-flow positive. That’s not the pitch of a con artist. It’s the fiduciary’s pitch. According to prosecutors, 777 became one of the largest buyers of structured settlements in the secondary market. They built credibility. They banked trust. And then… The PivotStarting in 2018, prosecutors allege, Wander began diverting capital from the structured settlement business into “new sectors with less certain cash-flow profiles.” This included streaming platforms, airlines, and professional sports teams across Europe and Latin America. (Because apparently everyone buys soccer clubs now… thanks, Ryan Reynolds.) Let me check my math… Carry the 4… deduct the carrots from your pay…
Yep. None of these things has anything to do with structured settlements. According to the indictment, Wander allegedly used restricted funds to cover the acquisitions… despite internal warnings, including from his CFO. When the money ran short, prosecutors claim he pledged more than $350 million in assets as collateral… assets the firm either didn’t own or had already pledged elsewhere. His reputation REALLY became the collateral. Not… you know… the assets. Prosecutors say this spiraled into double-pledged collateral, doctored bank statements, and an “antiquated computer system” blamed for the discrepancies. If this FBI briefing sounds familiar, it should. The allegations have pieces of SBF… Madoff… and Enron all in one soup... The RhymeWe’ve seen this before… repeatedly… Enron’s Jeff Skilling… the smartest guy in the room, with accounting no one understood. Bernie Madoff… not promising 50% returns, just a steady, boring 12%. SBF… a guy who could probably raise money just by walking into a room and falling asleep at the table because he was an “altruist.” But in every case, there’s a moment where someone asks a simple question… and the answer doesn’t add up. For FTX, it was a balance sheet showing $16 billion in customer deposits backed by… considerably less. For 777 Partners, according to the lawsuit filed by Leadenhall Capital, it was a tip: the collateral backing their $600 million loan either didn’t exist, wasn’t owned, or had been pledged twice. Leadenhall investigated. The tip was right. By October 2024, London’s High Court issued a winding-up order. 777 Partners was bankrupt. Lenders were left holding paper backed by nothing. Unless you count reputation points as a currency. I don’t… The Great EqualizerSo what actually separates a “visionary” from a “fraud” in a leveraged environment? Liquidity. When money is cheap and flowing, complexity looks like innovation. “Proprietary whatever”… looks like sophistication. Nobody checks the math. Nobody pulls collateral. Nobody asks for the bank statements. But when liquidity tightens… when rates rise… when credit contracts… and lenders start asking uncomfortable questions… the facade cracks. FTX collapsed when withdrawals spiked. Enron collapsed when analysts demanded real cash-flow statements. Madoff collapsed when clients called for their money… The trigger is always the same… Someone asks to see the money. What to Watch ForThere are dozens of shiny “innovations” that Wall Street can’t wait to bring to market right now. And I’ll tell you this: There is a fraud out there. When the ocean of liquidity drains from the United States… and it will… someone revered will be revealed… The pattern is always the same:
The tide pulls back… The interesting thing about all this? Most of the people in these stories don’t start out as frauds. This is the part that matters most right now. We’re sitting on the edge of a liquidity cliff… and everyone’s pretending we’re on a plateau. Cross-border flows are already shifting in ways policymakers can’t follow in real time. Liquidity is the real oxygen of the system. It’s thinning out… And that’s always when the issues start to surface. This isn’t about SBF or Wander. It’s about someone operating today, right now, inside a fund or strategy you’ve been told is “safe.” The conditions that reveal fraud are forming again. The person who causes real systemic damage won’t be a YouTuber promising 200% returns. It will be a boring name… someone on TV, on panels, on magazine covers. They’ll cut a corner. Then another. The shortcut becomes the business. Then it collapses. History doesn’t repeat… It rhymes like Busta…
And this pattern… the competent operator, the complex structure, the boring pitch, the liquidity crisis that reveals the truth… didn’t start with Enron, Madoff, or FTX. It goes back further than the Great Depression. Further than America itself. As long as there’s been money and trust, there have been people who understood how to exploit both. And every time the tide goes out, we discover the same thing… The smartest guy in the room was just another man hiding an empty vault. Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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