“The Crypto Charlatan: The Rise and Fall of Sam Bankman-Fried, the Self-Proclaimed Crypto genius”

To fully understand how FTX was running a multi-billion dollar Ponzi scheme under everyone’s noses you have to connect a few puzzles starting with the main piece which is the life and deceptions by Sam Bank Man Fried popularly known as SBF (born March 5, 1992), who was the chief conductor of the FTX orchestra. they managed to orchestrate one of the biggest frauds in history by swindling investors and FTX investors of an estimated $8 to $11 billionAccording to the Securities and Exchange Commission (SEC)Samuel Bankman-Fried, the CEO and co-founder of FTX Trading Ltd. FTX raised more than $1.8 billion from equity investors, including approximately $1.1 billion from approximately 90 U.S.-based investors1.The fraud involved the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, Bankman-Fried’s privately-held crypto hedge fund. Customers suffered significant losses, with estimates ranging from $8 to $11 billion.


The genesis


The first piece of the puzzle is when Sam Bankman Fried decides to join an effective altruism group which was started by  a group of Oxford philosophers, including Toby Ord and William MacAskill, started The Centre For Effective Altruism,  which is an organization/community that believes in the  philosophy and a community focused on answering the question, “How can we best use our resources to help others?”. this defensive strategy enabled SBF create an impression that the enormous risks he took were for the greater good — that, at least, was the impression he tried to give on Nov. 30 in an interview at The New York Times’s Deal Book Summit. And immediately after leaving Jane Street Capital, a proprietary trading firm, is when he joined the CEA

In September 2017, Bankman-Fried left Jane Street and moved to Berkeley, California, where he worked briefly at the Centre for Effective Altruism (CEA) as director of development from October to November 2017, where he met Tara Hedley who was also CEA’s member and together they  cofounded the quantitative trading firm on September 2017  and after following fund injections from billionaire computer programmer Jaan Tallinn and investor Luke Ding he started trying to make the firm profitable by using his Sam Bankman-Fried, the founder of Alameda Research, initially made the firm profitable through a combination of arbitrage techniques and crypto trading strategies. Despite his skills he mostly made the firm profitable by Trading through Japan which played a significant role in propelling Alameda Research’s profitability, especially in the early days of the firm. He could buy Bitcoin in the US and sell it at a higher price in Japan, sometimes at a markup of about 10%. This price difference, often referred to as the “kimchi premium,” was due to high demand for Bitcoin in Japan and regulatory hurdles that made such trades challenging, which he navigated through quite easily especially through his connection to effective altruist members in the country. despite this ingenious strategy the profit margins began to dwindle and eventually dried up, this plus other frustrations caused a power struggle and concerns about risk management, compliance, and accounting practices, which caused Tara Mac Aulay and other early employees left Alameda Research in 2018.


alameda 2.fraud


After the departure of Tara Mac Aulay and other early employees in 2018, SBF assembled a The shadowy team of deceit who would become key figures in both the growth and downfall of his empire. The team comprised of Caroline Ellison who he met at a Wall Street firm while she was finishing her undergraduate degree at Stanford University. Gary Wang who he co-founded FTX with and Nishad Singh who was also closely associated with the operations of FTX and Alameda Research.

They founded FTX in May 2019 from within Alameda Research, in Berkeley, California. FTX is an abbreviation of “Futures Exchange”.Changpeng Zhao of Binance purchased a 20% stake in FTX for approximately $100 million, six months after Bankman-Fried and Wang started the firm.

In August 2020, FTX acquired Blockfolio, a cryptocurrency portfolio tracking app, for $150 million. In July 2021, the venture raised $900 million at an $18 billion valuation from over 60 investors, including SoftbankSequoia Capital, and other firms. Bankman-Fried bought out Zhao’s stake for approximately $2 billion(this might be considered the trigger a cold war with CZ). In September of that year, FTX moved its headquarters from Hong Kong to The Bahamas.

On January 14, 2022, FTX announced a $2 billion venture fund named FTX Ventures, raising $400 million in Series C funding at a $32 billion valuation that month. The FTX Ventures website went offline in November 2022. On February 11, 2022, FTX.US announced that the company would soon begin offering stock trading to its US customers.

These individuals were part of Bankman-Fried’s inner circle and played significant roles in the growth of FTX and Alameda Research. Their testimonies have been crucial in the ongoing legal proceedings surrounding the collapse of FTX and Alameda Research. However, they all later turned against him.


the Deception


People want to make money and they want to make it fast, easy and without no risk. it can be out of greed, desperation…the possibilities are endless. so if you tell someone that their is a magical box that they can deposit all their money and it will multiply up to ten fold, how can one not be tempted? and from 2020-2021 this dream was made a possibility by the crypto boom. this made everyone have the Fear Of Missing Out, since it was evident that any simpleton could do it without even the help of a hedge fund manager, this bandwagon was intensified by the media and multiple celebrities who were preaching the gospel of crypto, in comes the  ‘Michael Jordan’ of  crypto and if the crypto boom was Canaan Sam Bankman Fried was now the Moses chosen to lead them to the promised land. They knew that behind the crypto euphoria was a crusade of people desperate for a way in they just had to convince them, and what is the best way to convince people and augment their decisions against their better judgment, the media and in Jim Morrison’s words “those who control the media control the world”. So the FTX team did just that, they started by placing an very expensive super bowl ad featuring Larry David, to give context a 30 second super bowl ad costs around 7million dollars and FTX’s run for one minute, showing they were willing to pay top dollar to introduce and embed their scheme to around 100million American’s which is the average super bowl viewership. they were know in most if not everyone’s head he used other notable methods such as
Social Media and Public Statements: SBF actively used social media platforms and public statements to promote FTX. However, some of his tweets and claims have been controversial. For instance, he promised that FTX was “fine” despite allegations of fraud and Celebrity Endorsements: FTX ran high-profile ads featuring celebrities like Tom Brady and Larry David. These commercials emphasized FTX as the “safest and easiest way to buy and sell crypto” . all this most likely contributed to FTX’s visibility and consequent success as the third best cryptocurrencies exchange.

he further cemented FTX’S “credibility by projected a carefully crafted persona to the public, emphasizing certain aspects of his character and business endeavors. Some of the elements of this façade included positioning himself as an innovator in the cryptocurrency space. He highlighted FTX’s unique features, such as leveraged tokens and perpetual futures contracts. he alluded confidence and reliability through his public statements which exuded confidence, portraying FTX as a reliable exchange.  He also had a casual wardrobe and a wild black cloud of hair, he didn’t have flashy cars and slept on bean bags at his Bahamas office which established that as an effective altruist all he wanted was to help humanity. All this factors in addition to him being a poster boy for the regulatory board solidified both investors and common users trust in the platform.


shattered illusions.


Just like a house made of cards Sam Bankman Fried’s kingdom made of glass began to shatter, and step by step the truth started unravelling. To  have a vivid understanding  of the chain of events leading to SBF’s downfall one must paint a picture of the butterfly effect that torpedoed his life.

Nov. 2: CoinDesk reports that the balance sheet for FTX’s sister trading firm, Alameda Research, is comprised mostly of FTX’s native exchange token, FTT.

Nov. 6: Rival exchange Binance sells all FTT tokens. Customers begin taking money off FTX in masse.

Nov. 7: FTX announces liquidity crisis and seeks bailout from venture capitalists and Binance.

Nov. 8: Binance says it will buy FTX’s non-U.S. business.

Nov. 9: Binance walks away from FTX acquisition after conducting due diligence. More FTX customers withdraw funds.

Nov. 10: The Bahamas freezes assets of FTX’s local subsidiary. Bankman-Fried admits non-U.S. businesses face liquidity crisis and announces Alameda Research will wind down.

Nov. 11: Bankman-Fried steps down as FTX CEO and is replaced by a court-appointed CEO with restructuring experience. FTX files for Chapter 11 bankruptcy protection.

Nov. 12: FTX reports a hack, suspected to be up to $477 million.

Nov. 18: The Bahamas takes control of FTX’s Bahamian assets.

Dec. 12: Bankman-Fried is arrested by Bahamian authorities.

Dec. 13: The DOJ, SEC, and CFTC announce civil and criminal charges against Bankman-Fried.

Dec. 21: Bankman-Fried is extradited to face criminal charges in the U.S.

Dec. 22: Bankman-Fried is arraigned in Manhattan federal court and released under house arrest at his parents’ home on a $250 million bond.

2023

Jan. 3: Bankman-Fried pleads not guilty to criminal charges.

Feb. 23: Bankman-Fried criminally charged with additional counts.

Mar. 30: Bankman-Fried pleads not guilty to new criminal charges.

July 20: Prosecutors alert federal judge of attempted witness tampering by Bankman-Fried.

July 26: Judge places a gag order on Bankman-Fried. Prosecutors drop campaign finance charge.

Aug. 11: Bankman-Fried’s bail is revoked.

Aug. 14: Bankman-Fried is transferred from house arrest to prison.

Oct. 2: Criminal trial begins for Bankman-Fried’s pre-extradition charges.

Nov. 2: Jury convicts Bankman-Fried on all counts.

Within a year the golden boy of crypto, was unveiled as the greatest scammer of the century worse than the most scandalous scams like Theranos and the Madoff saga, securing him a top spot in the Forbes wall of shame. the new ‘JP Morgan’ the unlikely genius was nothing but a fraud with carefully orchestrated psychopath.

Despite popular venture capitalist loosing their money the true looses were the millions of people who didn’t have millions to lose and entrusted the little they had but little did they know that their Moses chosen to lead them to a land full of hope and brighter days was nothing but a con artist an imposter, who didn’t give them with just a useless twitter thread that fueled their anger and exacerbated their depression.

 

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