Many still remember the crypto boom of 2021. It seemed like the way to do business would be revolutionized. Companies such as Bored Ape Yacht Club were pioneers in the NFT market, Bitcoin was becoming mainstream, and FTX, a cryptocurrency marketplace, was booming. It felt like the blockchain was going to be engine of progress for the following decades. And like most dreams of complete and radical revolution, the reality was starkly different.
Sam Bankman-Fried, once CEO of FTX, the currently bankrupted cryptocurrency company, is now on trial. The crimes: wire fraud, securities fraud, commodities fraud and money laundering. Bankman had taken money from customer accounts to use in personal investments and political contributions. There is even the possibility of another trial to address the political nature of the indictment. How this worked is through Alameda Research, a hedge fund that was owned by Bankman. The fund was allowed to borrow an uncapped amount of funds from FTX. Bankman has claimed innocence and has blamed this on the incompetence of the people around him for being careless with their security. His close associates have already confessed to their involvement in the scheme.
More than others, the crypto industry has been associated with a flagrant disregard for the law or regulation. This trial is seen by many as a way to set a precedent in the industry. Two things should be noted on this view: that Friedman's con cost the industry $8 billion, causing a domino effect that obliterated the livelihoods of people who either invested in or owned cryptocurrency firms; and that Friedman had previously bailed out many people in the industry before when the market crashed in 2022 by driving up cryptocurrency evaluations.
I am bringing this story up today because this is an aspect of investment a lot of people don't think about. When it comes to new technologies, due to a lack of either STEM literacy or financial experience, people are quick to believe in the CEO's promising how they will change the world. In addition, in this modern age, we have come to associate progress with technological advancement for economic purposes. They are synonyms by this point. As such, it is easy to buy into the hype of such figures and organizations, as a way to have some of the glory they have garnered for themselves. However, it is so very important to always try to see things, not as what you wish you would be seeing, but instead for what they are. People had been saying that the crypto market was a corrupt and cutthroat place for years, and yet people still bought in. Now many normal people, even before this incident, have lost everything because they believe a lie peddled by these people. We must not be blinded by the shining lights of such things or otherwise we might find that what we thought was a guiding light was an angler's lure.
So what do you think of the Sam Bankman-Fried case? We would love to hear your comments below. As per always you may contact 200GFS if you wish to make a consult, and we wish you the best.
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Works Cited
Griffith, E. (2023, October 2). Who’s rooting hardest for a Sam Bankman-fried conviction? the crypto industry. The New York Times. https://www.nytimes.com/2023/10/02/technology/crypto-insiders-sam-bankman-fried-conviction.html
Yaffe-bellany, D. (2023, October 3). What to know about Sam Bankman-fried’s fraud trial. The New York Times. https://www.nytimes.com/2023/10/03/business/sam-bankman-fried-trial-ftx.html
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