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Sam Bankman-Fried isn’t the only guilty party in crypto’s big con

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Shapshak is editor-in-chief of Stuff.co.za and executive director of Scrolla.Africa

FTX Exchange founder Sam Bankman-Fried wasn’t a genius — he was just a conman who didn’t brush his hair.

Sam Bankman-Fried (aka SBK) is not the only guilty person involved in crypto’s fall from grace. Many others have made small fortunes off of the rapid rise and just as rapid fall of this new form of money and people’s lust for lucre.

For some, it might just have been a hope for a better return on investment, for others a weird middle finger to the establishment. Investors in the FTX Exchange that Bankman-Fried built and ran were assured of many things when placing their bets — er, investing their bitcoin — but not that a backdoor to these funds was programmed in to let Alameda Research syphon off $8bn.

The world is full of quick-talking hustlers who helped themselves to their investors’ funds — as happens in all sectors of the financial services industry — but none as brazen as SBK and pals.

They took these billions and lived large — all while SBK was proclaiming some higher purpose by being part of the jargonistic “effective altruism” movement.

But he was just a conman. His closest allies testified it was Bankman-Fried who was at the heart of the whole charade and instructed them to steal the money. 

His sometimes girlfriend Caroline Ellison, the former CEO of Alameda, and former FTX executives Gary Wang and Nishad Singh admitted guilt, took plea deals and dished the dirt.

Just a grifter

Bankman-Fried funded political parties, gave money to social causes and presented himself as a fluffy-haired boy genius who was trying to change the world and make crypto more mainstream. In the end, he was just a grifter. Now 31, he is likely to spend the rest of his life in jail.

“The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time and we have no patience for it,” said Damian Williams, the lead federal prosecutor in Manhattan, after the guilty verdict.

What’s particularly galling is that Bankman-Fried’s parents are both Harvard law professors. He has come from unbelievable privilege and seemingly professors who lecture in the law must have imbued him with some ethics, at the very least a sense of right and wrong.

He reportedly bought his parents a house, which they put up as collateral for his bail. I wonder if they will sell the house and give the proceeds back to those people whose $8bn their son blew? Don’t hold your breath.

The astounding thing is how Bankman-Fried was allowed — and enabled — to get away with it for so long. There were a lot of warning signs and reports about FTX and SBK. There is never smoke without fire in Ponzi schemes — and there have been a disproportionate amount in the crypto industry.

Because it is complex and complicated, as much investing is, too many people let their guards down. There was a gold rush mentality as Bitcoin kept breaking records and rising — and an equally destructive lemming-like response when its price plummeted. Many people lost their life savings in an unregulated industry that prided itself on being so brazen. Turns out those financial regulations that protect consumers’ investments are there for a good reason, not that it is much comfort to all those people who now have worthless crypto, or those who SBK stole from. 

Sam Bankman-Fried wasn’t a genius — he was just a conman who didn’t brush his hair. DM

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  • Peter Atkins says:

    Yes, Sam is a crook, yes FTX was/is fraudulent and yes greed will find a way to steal other people’s money. Remember all the other Ponzi schemes and reckless derivatives trading – regulation didn’t stop them. So it’s wrong to blame the FTX fraud on crypto and Bitcoin – that wasn’t where the weakness was, that was in the exchange software and hopeless auditors, and greedy and gullible investors. And no, Mr Shapshak, all crypto is not worthless, Bitcoin is currently trading at about ZAR 650k, but crypto is highly volatile and unpredictable.

  • Paul Mitchell says:

    Come on DM, you can do better than this, and you do – when you have Steven Boykey Sidley writing on this topic. This is the “crypto is all a scam” nonsense that wasn’t very helpful in 2018, let alone 5 years later. SBF (not SBK) is undoubtedly a crook, and there are many crooks in crypto, as there are in any other field you care to name. The fact that crypto is focused on the sweet spot of money & technology means that it attracts more than its fair share; the fact that regulators are slow off the mark, especially in the US doesn’t help. But to publish this kind of lazy pander to the crowd should be beneath DM. “SBF isn’t the only guilty party” – who else is guilty? A lot of those also involved in FTX / Alameda, for sure, but they have plea bargains in place. Culpable parties? Many regulators, but you’ll never see them admit that. It’s a nuanced topic that will change the way financial services operates, but there is no nuance here unfortunately. Give the pen back to SBS (not SBF) and not to Toby Shapshak, who has added nothing new to the debate here. Opinion? Maybe, but it’s not new, distinctive, thought provoking or interesting. Everybody’s got one.

    • William Stucke says:

      Not only does everyone have an opinion, but most of us can write in proper English.

      “Many others have made small fortunes OFF OF the …”

      That isn’t English, although it may be USian.

      Come on DM. Better editing, please.

  • Sue Magoo says:

    The problem with SBK is not Bitcoin or blockchain or alternative currencies. The problem is with badly run crypto exchanges, and smart asses like SBK creating their own versions of crypto/stable coins/derivatives/investment schemes. Let us separate dodgy dealers in this space from the great potential that Bitcoin and Ethereum have in providing an alternative to the traditional money industry that has the world by the balls. It is their agenda which is served by non nuanced opinion pieces like this one!

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