The continuous downfall of FTX may be one of the longest cons perpetrated on crypto investors. The reality was and still is staring FTX investors in the face, but no one can seem to accept it. In reality, a number of red flags have existed for some time, but investors have been too focused on profiting during the crypto winter and recession to notice.
As the autopsy of Sam Bankman-crypto Fried’s empire commences, it is important to note that red flags were everywhere. We missed them. It was a success tale that was nearly impossible to resist. FTX would grow from nothing to a $32 billion enterprise in slightly more than three years. Now there is nothing left.
FTX’s Sam Bankman-Fried pulled a long con on crypto investors
FTX has filed for Chapter 11 bankruptcy in the United States, and its CEO, Sam Bankman-Fried, has resigned. The filing pertains to Alameda Research and 130 affiliated companies. Do Kwon performed a poorer job than SBF and his team in fooling investors. What Do Kwon did to Terra Luna investors appears to be a joke compared to a man, SBF, who was the backbone of the crypto community and crypto regulations in Washington, D.C.
This level of betrayal cannot be undone despite the fallen behemoth’s elaborate ruses. Sam Bankman-Fried, often known as SBF, is 21 tweets into an apologetic thread that begins with “I fucked up” but only partially clarifies what has gone wrong. SBF’s attempt at damage control is commensurate with the absurdity of their story.
The mechanisms underlying FTX’s demise are fairly convoluted. Simply, FTX threw itself into a death spiral. This spiral involves tedious, complex processes to produce. Investors, legislators, regulators, and journalists all dropped the ball along the road.
There were hints frequently provided by SBF himself. According to SBF, FTX was created out of dissatisfaction with his crypto-focused proprietary trading firm, Alameda Research.
As FTX increased in prominence, a few issues were raised regarding its rapid expansion. However, Bankman-Fried did more than shape his image through the media. He planned to join it. The intimate relationship that Bankman-Fried and FTX built with journalists may have prevented further investigation.
Government authorities were as captivated by the FTX geniuses. Whether it was because of his generosity — SBF donated over $40 million to candidates during the most recent midterm election cycle — or because FTX had a revolving door for regulators wishing to move into the business, the crypto tycoon had the ear of Washington.
He testified many times before Congress in the past year on topics such as crypto market regulation, and records indicate he spoke with SEC Chairman Gary Gensler. SBF also played the government.
Nevertheless, not everyone believed FTX’s success story. Marc Cohodes, a veteran short-seller with a working bullshit detector, has been sounding the alarm for months.
In my view, nothing ever added up. I think SBF will make Bernie Madoff look like Jesus Christ.Marc Cohodes
Kraken’s Jesse Powel comes at SBF
As a result of FTX’s insolvency, some of the industry’s largest and oldest participants have begun to voice disappointment in SBF. Jesse Powell, co-founder and former CEO of the cryptocurrency exchange Kraken, has resorted to Twitter to criticize SBF, outlining some of his actions and labeling them red flags.
Powell vented his ire at the outcome of the FTX debacle and its impact on the broader cryptocurrency market in a 14-tweet thread. The co-founder of Kraken argues that the good and trustworthy nature of the cryptocurrency community has made it an ideal target for fraud artists.
According to him, these fraudsters expressly claim that they have come for profits and not the asset class. However, rather than being rejected by investors, they are praised for their integrity.
Powell highlighted further that the FTX issue is not a matter of striving high and falling short but rather of greed, self-interest, and sociopathic behavior that threatens the industry’s “hard-won gains” over time.
He asserted that SBF entered the cryptocurrency market eight years after its inception and posed as if he knew everything while “becoming a media darling’ and seeking puff pieces.” He listed Bankman-most Fried’s popular deeds, including nine-figure sports deals, and referred to them as “big ego purchases.”
Potentially billions of dollars worth of customer assets are primarily stuck in the exchange and may be entangled in bankruptcy procedures for an extended period. One remark regarding the FTX saga stands out. FTX’s lack of ‘financial’ personnel.
There are six senior team members listed on the about FTX page: the CEO, the COO, two tech leaders, and two compliance and legal leaders. Something is missing. Is it not weird that a corporation managing billions of dollars in customer funds lacks a Chief Financial Officer (CFO)?
Is it surprising that Sam Bankman-Fried (SBF) obtained erroneous leverage data? The demise of FTX has the potential to harm the crypto sector in numerous ways. How can investors protect themselves further? Will crypto regulations help? Is it time for centralized financial watchdogs to step in into the market? Is SBF who he said he was? Was this a long con all along, or has a deal gone wrong?