FTX/SBF: A $32B Tale of Grift and Political Collusion Dirtying Crypto’s Image
It’s hard to know even where to begin unraveling the $32 billion collapse and subsequent reveal of FTX and Sam Bankman-Fried as a dirty money Ponzi scheme with ties to the Ukraine, the Democrat Party and even SEC Chair Gary Gensler. It’s just a rotten onion with as many layers as lies. New allegations are coming out daily, if not hourly.
But let’s start with the most troubling issues. There will always be the grifters who give crypto – or any industry – a bad name. SBF and FTX were apparently among the worst we’ve seen. They are the latest in a line of bad actors who create distrust and fear in the market and draw unfair regulatory attention. But with FTX/SBF it goes beyond financial fraud and money laundering.
If you have even a slightly suspicious mind, you’re going to see so much worse than an e-Madoff/Do Kwon-tier scheme at play here. The allegations around FTX/SBF out there are mind-boggling, and they keep coming. Here’s a taste of what is being alleged.
For starters, FTX was established just weeks after Joe Biden announced his presidential campaign, and rose quickly to become one of the biggest contributors to Democrat causes and campaigns. It became the darling of the political and financial media, with SBF taking the cover of Forbes Magazine‘s 2021 Forbes 400 issue. (This is the same special Forbes 400 issue that had disgraced former Theranos CEO Elizabeth Holmes as the cover in 2014 .)
Over the next years, hundreds of millions poured through FTX and into Democrat PACs and campaigns, much of it investor money and exchange deposits, it appears. FTX threw a lot of support into Biden’s 2020 campaign.
That was bad enough. But earlier this year FTX partnered with Ukraine to establish a crypto donation exchange that now is being accused of being a money-laundering racket. Basically, a good portion of that $60+ billion that Biden’s State Department has given to Ukraine for their war with Russia was pushed through FTX, which in turn donated it to Vote Blue and other Democrat PACS.
Then on top of all that, FTX itself has a curious and uncomfortably close relationship with SEC Chair Gensler, the very man most in the industry see as an authoritarian opponent of crypto. Gensler’s shady relations to FTX range into inappropriate professional and familial relations with key FTX players such as Alameda CEO Caroline Ellison. And this was apparent even as Gensler was shepherding FTX through the SEC’s minefields and providing a golden road that crypto advocate US Rep. Tom Emmer says he is going to investigate.
U.S. Congressman Tom Emmer said in a tweet that he had received reports that the SEC chairman Gary Gensler was allegedly helping Sam Bankman-Fried and FTX “work on legal loopholes to obtain a regulatory monopoly.”
Interesting. @GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We're looking into this. https://t.co/SznowgcP6V
— Tom Emmer (@RepTomEmmer) November 10, 2022
The crypto community has questioned the relationship between Gensler and the FTX founder, with many labeling it shady.
Speculation within the community alleged that SBF’s regulation drive was fueled by attempts to control the crypto space. Some also speculated that the SEC chairman was influenced by relationships from his time at the Massachusetts Institute of Technology (MIT).
A tweet from RH Cult stated that Gensler’s boss at MIT was Alameda CEO Caroline Ellison’s father. SBF’s Wikipedia page shows he graduated from the school in 2014.
Gary Gensler's boss at MIT Glenn Ellison is the father of the Co-CEO Caroline Ellison of #Alameda Research. @SBF_FTX also went to MIT and helped to create #AlamedaResearch . This is looking like a setup to crack down on #crypto and control the system. — RH CULT (@HEXCULT1) November 10, 2022
It is worth noting, the ties between FTX and the SEC go beyond in-person meetings.
The general counsel of FTX US had served as lead counsel to Chairman Gensler at the CFTC.
By all accounts, he is a standup and excellent attorney.
The point is that the SEC was pretty close. https://t.co/ohez0oXSjo
— Dane Lund (@lund_dane) November 11, 2022
Additionally, SBF met with Gensler earlier this year, which caused the community to scrutinize his donations to politicians.
This whole house of cards has already fallen but the story is still unfolding. Until the definitive investigative story is written, a great place to keep up with each day’s increasingly damning revelations is @autismcapital on Twitter.
What really grinds our gears is that if all or even a portion of these allegations are true, FTX was operating a full-on Ponzi scheme and parlaying that into money laundering, political corruption and regulatory incitement. What it has done to the reputation of the industry and the distrust it breeds in users and investors is damage you can’t put a price tag on.
This is the kind of thing that could provide support for shackling DeFi in favor of a state-controlled CBDC system which brings the worst of both the fiat and digital currency space together. If we were conspiracy minded, we might even think this was the intent.
We at Silvermint have a commitment to radical transparency. We believe that most of our competitors and peers also have a commitment to integrity and act in good faith. We believe that one of the greatest strengths of crypto is its decentralized insurance of fact and reality, where on the blockchain it is either 1 or 0, no shading, and everyone can verify anything on the chain for themselves. This is what is supposed to guide our ethical outlook.
To have this tribe of cheats and swindlers operating in our space like this right under the noses of those tasked with protecting the markets turning a blind eye, or worse, in on the scheme – it’s outrageous.