Reason, Nov. 21, 2022
“The New York Times’ report on this disaster uses soft, passive language to disguise blame at every turn. This is the outlet that treats nearly every development in the tech sector as an existential threat to democracy, yet its summation lets SBF write his own verdict”
The public is only beginning to understand the full extent of alleged crimes committed by Sam Bankman-Fried (better known as SBF), a cryptocurrency entrepreneur who lost billions of dollars after his exchange, FTX, was revealed to be little better than a Ponzi scheme. SBF’s net worth plunged from $10 billion to effectively nothing in the course of a few days. He has declared bankruptcy and was recently questioned by the police of the Bahamas, where he resides.
John Ray III, who was brought in to manage Enron following that company’s self-destruction in 2001, is now the CEO of FTX. In a court filing last week, he said he has never seen such “a complete failure of corporate control,” including at Enron.
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he said in a court filing.
SBF engaged in extreme levels of deception to trick people into thinking FTX was worth more than it was. He effectively paid investors, employees, and vendors shares of the company—his token, FTT—and loaned out money to his quantitative investment firm, Alameda Research. It was an elaborate house of cards that apparently fooled investors, celebrity sponsors, and politicians: SBF interviewed former President Bill Clinton and and former Prime Minister Tony Blair at a crypto conference he hosted back in April.
SBF was heavily involved in Democratic Party politics: In the 2022 election cycle, he was the second most prolific funder of Democratic candidates after George Soros. But he wasn’t just a funder of electoral efforts. He funded both progressive and mainstream media organizations.
I wrote earlier today that there’s a huge question over whether SBF will be able to continue funding media going forward.
Grants have gone to: ...SOURCE