Is Crypto “Smart” Money? Big traders fell to Sam Bankman-Fried

I was amazed when I first learned how Sam Bankman-Fried managed to get away with convincing so many smart people—big money managers, venture capitalists, and all celebrity ambassadors—that he was a child genius. they have to invest a lot of money to play with it.Â

That is, until I witnessed what happened on Wednesday after the fallen crypto star tried to explain his side of the FTX debacle to journalist Andrew Ross Sorkin. The billions in lost customer funds, ruined lives, etc. were not illegal, just the result of one big, innocent mistake, or as he put it, one “bad month”. Â

Sounds silly, right? Believe it or not, many sophisticated financial types still say they believe SBF’s latest sales figure, further proof that suckers are born every minute, and many of them are Wall Street’s C-to ‘occupies the plans.

Of course, not everyone with high financial standing bought the SBF schtick when it was riding high. Veteran trader Mark Kohodes and Chicago Mercantile Exchange CEO Terry Duffy questioned his business acumen, pointing out how Bankman-Fried has devoted his entire life outside of crypto to a renaissance known as “effective altruism” and has made money there. to give it all.Â

Sam Bankman-Fried’s assistants gambled away customer funds at a global crypto casino.
Tom Williams/CQ-Roll Call/Sipa USA

But they were among the only ones to see that something was wrong. Most of the media and a lot of Big Finance types don’t seem to think much of his badass looks and strange demeanor. They thought it was cute. They didn’t think twice about the fact that overnight he became a billionaire and Democrat megadonor, giving large sums of money to regiments controlling cryptocurrencies.

The buyout effect is good, I think – as long as it includes the Democrats.

A business full of conflicts

They, of course, did not pay attention to its controversial business model: the hedge fund Alameda Research – famous for taking too many risks – is attached to the crypto exchange FTX, which is supposed to keep clients’ deposits safe. What was almost destined to fail happened when SBF’s underlings gambled away customer funds at a global crypto casino.

Sam Bankman-Fried
Sam Bankman-Fried claimed that FTX’s funds were miscalculated by $8 billion.
via Reuters

Even worse, some members of the “smart money” pack are still eating up his ludicrous explanations for one of the biggest scandals in recent market history without digestion or outrage.

Bill Ackman is one of the most famous hedge fund managers. He has been known to “short” or bet against stocks he believed to be fraudulent, and once engaged in a year-long campaign to prove (albeit unsuccessfully) that the nutritional supplement company Herbalife was a massive pyramid scheme.

But Ackman is so sold on SBF’s excuse that the crypto fraternity “never attempted to commit fraud in assembling a house of cards that fails to meet minimum risk compliance standards,” Ackman tweeted. œDrive me crazy, but I think @sbf is telling the truth.â€

I don’t know if Ackman is really crazy, but if he believes SBF’s explanation of how he built a financial firm without basic risk management plumbing, he might be a real sucker.

Kevin O’Leary is said to have lost millions in the collapse of FTX.
Tom Brady meets with reporters on November 27, 2022 in Cleveland.
Tom Brady was a “brand ambassador” for FTX.

Also check out Kevin O Leary of Shark Tank fame. This is a self-proclaimed dude who’s been on the block so many times that he can tell the good business ideas from the dogs. A real shark.

O’Leary is said to have lost millions of dollars in the collapse of FTX. He was part of a crew of so-called “brand ambassadors” along with NFL legend Tom Brady and other celebrities who appeared in those trendy commercials that SBF released to sell the investing public that FTX was a safe place to be. exchange your crypto.

It doesn’t look good, but what’s worse is that O’Leary still has no doubts about SBF’s motives.

O’Leary, known as “Mr. Leary,” after watching SBF’s Wednesday performance with Sorkin. Great,” he tweeted, “I lost millions as an investor in @FTX and went down in the sand as a paid representative for the firm, but after listening to that interview I’m in the @BillAckman camp about a boy!â€

Who was responsible?

For starters, a “boy†is 30 years old. It’s an adult who admits to Sorkin that “there was no one at FTX who was primarily responsible for the positional risk of clients,” the functional equivalent of a doctor performing surgery without going to medical school.

SBF also told Sorkin that he is speaking out about things against his lawyer’s advice because he wants to do the right thing and help the health of everyone who lost money. Maybe that’s what sold Ackman and O’Leary.

I’m sure the SBF excuses won’t be too easy a mark if the US Attorney’s Office in Manhattan is investigating this sordid mess.


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