Late last week, campaign finance charges against Sam Bankman-Fried were dropped.
WILLIAM BLACK, snldebacle@gmail.com
Author of The Best Way to Rob a Bank is to Own One, Black was the deputy staff director of the national commission that investigated the cause of the savings and loan debacle.
He said today: “The New York Times journalist team consistently fails its readers. It created a precis (“What to Know About the Collapse of FTX”) that the online version routinely tacks on to any story about the SBF prosecution. It includes these gems (and excludes all candor). I provide a candid correction (in italics).
What is FTX? The now bankrupt company was one of the world’s largest cryptocurrency exchanges. It enabled customers to trade digital currencies for other digital currencies or traditional money; it also had a native cryptocurrency known as FTT. The company, based in the Bahamas, built its business on risky trading options that are not legal in the United States.
FTX was a large financial fraud using fake accounting to inflate asset values so the elite insiders could loot it. The “exchange” was a front that hid the real operation (Alameda) that lost vast amounts and enriched the elite insiders.
Who is Sam Bankman-Fried? He is the 30-year-old founder of FTX and the former chief executive of FTX. Once a golden boy of the crypto industry, he was a major donor to the Democratic Party and known for his commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways.
SBF is a fraudster. While he donated to Democrats, his top confederates donated heavily to Republicans to ensure bipartisan political support for the looting scheme. The elite insider looting funded the political and charitable contributions that made SBF and FTX appear to be honest and saintly.
How did FTX’s troubles begin? Last year, Changpeng Zhao, the chief executive of Binance, the world’s largest crypto exchange, sold the stake he held in FTX back to Bankman-Fried, receiving a number of FTT tokens in exchange. In November, Zhao said he would sell the tokens and expressed concerns about FTX’s financial stability.
They began when SBF and his top confederates used fraudulent accounting and looting to make FTX appear to be highly profitable, and to enrich the elite looters.
What led to FTX’s collapse? Zhao’s announcement drove down the price of FTT and spooked investors. Traders rushed to withdraw from FTX, causing the company to have a $8 billion shortfall. Binance offered a loan to save the company but later pulled out, forcing FTX to file for bankruptcy on Nov. 11.
SBF and his co-conspirators’ looting and fraudulent accounting combined with their public financial illiteracy led SBF to rely on Binance for liquidity – which put an unscrupulous competitive rival with the ability to expose FTX’s massive insolvency by selling FTT’s token which Binance received for bailing out FTX. Binance used its leverage.
Also see: “Why Did FTX Spend So Much on Politicians?”
