Sam Bankman-Fried aka SBF, the co-founder of the once mighty cryptocurrency exchange – FTX, has been one of the most established leaders in the crypto space in recent years. A well-connected MIT graduate who regularly met up with regulators, who wouldn’t bet on him.
But history has proved looking “credible” doesn’t always mean they are. Remember Bernie Madoff? Yea, the fraudster who ran the largest Ponzi scheme in history, worth $65B.
Reminder: Bernie Madoff ran a $64 billion Ponzi scheme & was the largest fraudster in US history.
Madoff was also simultaneously Chairman of the largest securities regulator in the US, the NASDR (now known as FINRA). Madoff also sat on advisory committees at the SEC.
— Bruce Fenton 🇺🇸 (@brucefenton) November 12, 2022
Madoff was the Chairman of the largest securities regulator in the US, the NASDR (now FINRA), and was on the advisory committees at the SEC. Harry Markopolos, a forensic accountant and securities expert, sent a 17-page whistleblower report detailing Madoff’s fraud and alerted the SEC in 2000, 2001, and 2005. It was ignored by the SEC.
Well, surprise, surprise! Madoff’s son-in-law worked at the SEC and his brother was his compliance officer.
Is History repeating itself?
The crypto community is now questioning and speculating about the relationship between SBF and SEC Chairman Gary Gensler, a former professor at MIT.
Well, guess what? Gary Gensler’s old boss at MIT is the father of Alameda’s CEO, Caroline Ellison.
Alameda Research, if you didn’t know, is a crypto hedge fund controlled by SBF. Caroline is also reportedly, an on-and-off lover of SBF.
Who’s behind the FTX hack?
FTX has been reportedly hacked and $9B has been drained from FTX-linked customer wallets following a week when SBF filed for bankruptcy and resigned as CEO. There are claims that SBF himself is the one who carried out the hacking of the remaining assets at FTX. (tt: @Bitboy_crypto)
SBF literally just hacked the remaining assets at FTX. Guarantee it’s him. He’s done this before (see my previous tweet).
The fact he has not been arrested already shows negligence of @DOJPH & @SECGov. Do your FREAKING job.
— Ben Armstrong (@Bitboy_Crypto) November 12, 2022
What you don’t know that I do:
Sam is known by people in his innermost circle to be one of the best hackers in the world. He was the hacker who stole $100M from his own coin before. Cover Protocol aka Safe Token.
He took $ and fled US for Hong Kong in 2020 bc of FTX lawsuit. https://t.co/jqlKXXGz1v
— Ben Armstrong (@Bitboy_Crypto) November 12, 2022
If this turns out to be true, he’ll be making history by beating Madoff and Theranos at the Scam Game, becoming the world’s biggest Ponzi Scheme or more precisely “collapsed Ponzi Scheme”.
Mishandling of User Funds
There are speculations as to what will happen to him: will he be arrested and punished or will he get away with a slap on the wrist, considering he has been lobbying by donating $40M to political campaigns and had previously pledged to donate $1B to political parties?
FTX has reportedly violated its own terms of service and misused user funds. Where did the money go, you might ask. SBF misappropriated $4B trying to save his failing hedge fund, $21M on Superbowl commercials, $5M on Joe Biden, and of course the $40M on campaign donations.
A Premonish Podcast with Bloomberg
In the now infamous podcast from April with Matt Levine and the OddLots podcast, SBF accidentally describes a Ponzi Scheme while trying to explain “yield farming”, which raised quite some eyebrows.
In the podcast with Bloomberg, he talks about putting a value on something that doesn’t have any value and mentions and I quote
“…If the world never decides that we were wrong about this, like, in a coordinated way”,
the system will keep working. Except that’s exactly what happened.
FTX suffered a “liquidity crunch” after Changpeng Zhao aka CZ, founder-CEO of rival crypto exchange Binance and richest crypto Billionaire, questioned its liquidity through a series of tweets last week. According to Reuters, the former co-founder of FTX said on Saturday that he is still in the Bahamas, denying rumors that he had fled to Argentina.
