FTX founder Sam Bankman-Fried is poised to die behind bars if convicted on all counts against him. But as the case moves forward, critics and those who abound are wondering how did such a massive scam go unnoticed by international authorities for so long? We explore the case in this extraordinary deep dive and Bankman-Fried ‘s own stunning fall from grace.
Let’s start with the complaint made public this week against Bankman-Fried by a joint operation with the Americans and the Bahamian authorities who arrested the guy. The Americans are calling it ‘fraud from the jump’ but if it was — how did they not notice it this entire time?
It could be sufficiently argued that Bankman-Fried is either the new Elizabeth Holmes or the world’s newest and most prolific liar or perhaps both. His undoing likely began after he claimed he “didn’t know exactly what was going on” at Alameda Research (1 of 2 of his companies) although that actually wasn’t even in the slightest true. Prosecutors claim that he not only was top dog on company bank accounts; he directed operations, had conversations with personnel over mobile communications and other channels, and overall was the leader of the pack despite his claims. It only went downhill after he made these claims and it went downhill fast.
From May 2019 through November 11th, 2022, prosecutors allege that all types of deposits and those held at FTX were actually held by Alameda Research and used for its own purposes rather than holding on to things for its customers. Essentially, prosecutors allege that Alameda Research and its cronies used customer funds to personally enrich themselves; Sam Bankman-Fried, and the massive real estate portfolio that came later on. Bankman-Friend notably racked up a drool-worthy real estate portfolio suitable for any billionaire, except, he wasn’t actually a billionaire and it was all a magnificent lie.
While tapping into what amount to ‘unlimited credit lines’ at best traders at FTX had special processes that they could apparently use to make things go much faster than usual. One could easily argue that this helped along the firm’s collapse, one of which, is shaping up to be one of the greatest corporate collapses ever. Interestingly, prosecutors say that while all of this was going on Bankman-Fried was knowingly deceiving the world about the extent to which the two companies FTX and Alameda Research were actually connected. He made the world or wanted the world to believe they were barely connected at all when in fact they were in bed with each other.
What happened next?
Sometime on or around 8 November FTX executives began to discover massive holes in places there shouldn’t have been. When Bankman-Fried was addressed with these he told the execs “Bankman-Fried directed Alameda traders to prioritize meeting FTX US capital requirements and to send excess capital to FTX US.” Alameda sent more than $185 million to cover the shortfall, the complaint says.
Never fear there’s another potential evil-doer in the mix. According to the complaint, Alameda’s CEO Caroline Ellison allegedly told investigators the same claim that he repeatedly told them that the companies were separate. The complaint, however, has proved that such appears to be a stupendous lie.
Bankman Fried’s last total public appearance was at The New York Times’ DealBook Summit, Bankman-Fried said, “I didn’t knowingly commingle funds” between FTX and Alameda. The government would like the public to know that this too was/is a lie.
And then there’s this. Guys he was dumb enough to use stolen customer funds for a Super Bowl commercial of all things.
Be First to Comment