When Crypto’s golden boy lost his entire empire overnight, instead of running away
from the spotlight, he ran towards it.
Appearing in interview after interview.
I’m deeply sorry about what happened.
I’ve had a bad month.
That is an understatement.
He showed signs of nervousness in this New York Times interview.
Perhaps the gravity of a scandal that could be bigger than Enron hit him.
Many wondered why in the world he wasn’t arrested right away after losing billions
of dollars of customer funds when his cryptocurrency exchange FTX collapsed in November.
It wasn’t until exactly one month, and one day after FTX filed for bankruptcy, that police
in the Bahamas arrested SBF in his luxury home he shared with roommates…at the request
of the U.S.
Hours before, SBF had been playing a video game.
(Storybook brawl)
The Securities and Exchange Commission has charged him with defrauding big investors
who committed nearly $2 billion in recent years.
SEC’s chairman Gary Gensler said in a statement:
“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception
while telling investors that it was one of the safest buildings in crypto.”
Sam Bankman-Fried reportedly used billions in customer funds from FTX to prop up his
other company, Alameda Research, a hedge fund that was in trouble after trying to bail out
other struggling crypto firms.
He reportedly built a “back door” in FTX’s accounting software that let him move billions
of dollars from FTX to Alameda without flagging the transactions to external auditors.
SBF has repeatedly denied that he did anything wrong.
Did you know these funds were being funneled to Alameda, what is your answer?
I did not know there was any improper use of customer funds.
When the crypto website CoinDesk revealed the close ties between SBF’s two companies,
FTX and Alameda, that made Binance nervous.
Binance is the world’s largest cryptocurrency exchange that was an early investor in FTX.
And subsequently sold its stake in FTX, consisting mainly of the FTX token FTT.
($580 million)
That caused the price of the token to plummet and resulted in a domino effect of nervous
customers pulling out…leading to the spectacular fall of FTX, which I covered in more detail
in another video.
Along the way, billions of dollars of customers’ funds also went missing.
Bankman-Fried has said that if he'd spent 'an hour a day' thinking about risk management
FTX might not have collapsed.
His companies thrived on risk.
Risk was baked into his company Alameda, whose CEO was his ex-girlfriend Caroline Ellison,
a 28-year-old Harry Potter-loving math whiz.
This is how she described her business mentality.
I think being comfortable with risk is very important.
We tend not to have things like stop losses.
I think those aren’t necessarily a great risk management tool.
A stop-loss is designed to limit the maximum loss of a trade by automatically selling an
asset once it reaches a certain value.
Not having a stop loss is INCREDIBLY risky.
Yet no one saw the signs of doom.
SBF and his team had everyone fooled.
He was called the next Warren Buffett.
It certainly didn’t help that superstars like Tom Brady and Stephen Curry vouched for
FTX.
With FTX I have everything I need to buy, sell, and trade crypto safely.
The glitz and glamour hid what some FTX users call a Ponzi scheme….in which the first
investors are rewarded with money that’s actually been invested by later investors,
rather than making money from a legitimate product or service.
The mastermind of a massive Ponzi scheme, Bernie Madoff, ripped off tens of thousands
of people of as much as $65 billion.
Madoff was sentenced to 150 years in prison.
Could SBF suffer the same fate?
He is set to be extradited to the U.S., where federal prosecutors are charging him with
wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, money
laundering.
AND, violating campaign finance laws.
He was the darling of the Democrats, donating millions to them…though he now says he secretly
gave roughly the same amount to Republicans.
If convicted, he faces a maximum sentence of 115 years.
The fall of one of the largest cryptocurrency exchanges is another nail in the coffin of
an already fragile crypto market that has yet to recover from the crash in the spring.
Can people trust crypto ever again?
Is Binance safe?
The U.S. Department of Justice has been investigating Binance since 2018, including its founder
Changpeng Zhao.
Reuters reported that it has to do with Binance's compliance with U.S. anti-money laundering
laws and sanctions.
In order to make an informed decision about whether to invest in crypto, it’s important
to understand how it works.
Brilliant is a great way to learn the math and the technology behind cryptocurrencies
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On Brilliant’s website or app, you can learn the mechanics of maintaining and securing
a cryptocurrency, and then, you can decide for yourself if crypto is a fad.
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I personally use Brilliant to improve my critical thinking skills by going through their Logic
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Thanks for watching.
For Newsthink, I’m Cindy Pom.