OUT ON A LIMB: FTX’s Collapse Was a Crime, Not an Accident. Sam Bankman-Fried is a con man and fraudster of historic proportions. But you might not learn that from the New York Times, CoinDesk’s Chief Insights Columnist David Z. Morris writes.
These are complex and in many cases nuanced forms of fraud – largely echoing, it must be said, well-established models in the traditional finance world. That obscurity is one reason Bankman-Fried was able to masquerade as an honest player, and has likely helped keep coverage softer even after the collapse.
Bankman-Fried had also crafted a scruffy, nerdy image hard to square with malevolent thievery – not unlike other 21st century luminaries like Mark Zuckerberg and Adam Neumann. In interviews, he talked a stream of nonsense tailored to snowjob outsiders about an industry that’s already full of jargon and complicated tech. He cultivated political and social influence through a web of strategic donations and insincere ideological statements.
Since his con collapsed, Bankman-Fried has continued to muddy the waters with carefully disingenuous letters, statements, interviews and tweets. He has attempted to portray himself as a well-intentioned but naïve kid who got in over his head and made a few miscalculations. This is a softer but more pernicious version of the crisis management approach Donald Trump learned from the black-hat mob lawyer Roy Cohn: Instead of “deny, deny, deny,” Bankman-Fried has decided to “confuse, evade, distort.”
And it has, to a significant degree, worked. Mainstream voices still parroting Bankman-Fried’s counterfactual talking points include Kevin O’Leary, who portrays an investor on the reality show “Shark Tank.” In a Nov. 27 interview with Business Insider, O’Leary described Bankman-Fried as a “savant” and “probably one of the most accomplished traders of crypto in the world” – despite recent data implying immense trading losses even when times were good.
O’Leary’s status as an investor in, and formerly paid spokesperson for, FTX (we sure hope those checks clear, Kevin!) explain his continued affection for Bankman-Fried in the face of mounting contradictory evidence. But he is far from alone in burnishing Bankman-Fried’s image. The disgraced failed son of two Stanford University law professors will be handed the opportunity to defend himself onstage at the New York Times’ DealBook Summit Wednesday.
The scale and complexity of Bankman-Fried’s fraud and theft appear to rival those of Ponzi schemer Bernie Madoff and Malaysian embezzler Jho Low. Whether consciously or through malign ineptitude, the fraud also echoes much larger corporate scandals such as Worldcom and, particularly, Enron.
The principals in all of those scandals wound up either sentenced to prison or on the run from the law. Sam Bankman-Fried clearly deserves to share their fate.
Earlier: Sam Bankman-Fried’s media outlets must come clean. “SBF-funded publications have an obligation to their readers to clear up the exact nature of their financial relationship with him, if they ever want their stories on this beat to be trusted again. Questions remain around what kind of influence came with accepting Bankman-Fried’s money — which, as it turns out, wasn’t actually his and is now gone. Otherwise, I foresee a future where reporters at these outlets are left jobless, wishing they’d learned to code.”