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They Burned Down Crypto. Now They Want a Comeback

On Wednesday, Vox published a bombshell interview with former crypto exchange FTX CEO Sam Bankman-Fried, where the 30-year-old crypto trader all but revealed he had, in fact, co-mingled customer funds with those of his hedge fund, Alameda Research. This would be a problem on its own, as it violated FTX’s terms-of-service as well as likely falls afoul of wires or securities laws.

Bankman-Fried’s crime, which “wasn’t quite lending [customer deposits] out” but something “messier,” “more organic” and “reasonable” than that, was compounded after a run on his exchange left up to one million FTX users without access to their funds. Billions of dollars worth of crypto are missing –  and the “messy accounting” at FTX and Alameda are still being sorted.

This article is excerpted from The Node, CoinDesk’s daily roundup of the most pivotal stories in blockchain and crypto news. You can subscribe to get the full newsletter here.

He’s now attempting to raise $8 billion in financing to make customers whole. What that will look like is anybody’s guess, (Bankman-Fried did not respond to a request for comment). But the sum is far greater than the company, once valued at $32 billion and now going through Chapter 11 bankruptcy, ever raised. SBF has also resigned as CEO.

That Bankman-Fried thinks he can mount a reversal of fortune shows a deep disconnect with reality. He’s lied repeatedly in public, to customers and to investors – his trust is burned, and he’s likely facing criminal charges. And while he thinks he was once “one of the world’s greatest fundraisers,” his success was built on a charm offensive and misdirection.

See also: How Sam Bankman-Fried’s ‘Effective’ Altruism Blew Up FTX | Opinion

FTX counted a number of white glove funds as investors, including Sequoia Capital, Lightspeed Ventures and Coinbase’s angle fund. Apparently no one did any due diligence – Sequoia even committed after finding out SBF was playing League of Legends during the meeting. That level of lax scrutiny won’t happen again.

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