Sam Bankman-Fried crypto ‘fraud’ joins Hall of Shame with Madoff, Holmes

It may be too early to put Sam Bankman-Fried in the same group as notorious conman Bernie Madoff – or it may not.

The full posthumous outcome of his epic downfall from cryptocurrency world and billionaire to breakout cryptocurrency supervillain won’t be ready for some time. I’m told that prosecutors at the US Attorney for the Southern District are eyeing possible charges before the end of the year, so with the exception of exculpatory evidence, we can’t classify him as a criminal just yet.

The bankruptcy trustee is just starting to get into this mess. He describes what happened — the disappearance of billions, massive losses in allegedly separate accounts on Bankman Fried’s FTX crypto exchange — as “unprecedented.” But he stopped short of calling it fraud.

Quicksand wealth

At the very least, the 30-year-old known by his initials “SBF” can best be described as a world-class schemer. Armed with the benefit of hindsight, you can see how he polished his image of non-conformity with his tousled hair, and paired it with the aura of wake politics, the SBF built its once crypto empire on a pile of quicksand.

Of course, all scammers have their own scams. In Madoff, those who fell in love with him wanted to believe that a paternal figure from Queens, savvy about markets and looking out for their interests, would help them retire in style. If you convince him to let you in, the Madoff Bond will take care of you and your children forever. The guaranteed returns promised turned out to be a mirage because nothing in financing can ever be guaranteed.

Bernie Madoff.
Bernie Madoff was a notorious fraudster in the same category as “SBF”.
Dennis Van Tyne/Media Punch

Lately, Elizabeth Holmes’ rant has been a well-cultivated image of a tech geek. She forged Steve Jobs’ demeanor down to her black turtleneck and hoarse voice as she pushed what now appears to be a life-changing and improbable innovation: a do-it-yourself blood-testing product that would have revolutionized health care.

SBF’s hustle was the transformational method of Virtue signaling its way into the hearts and minds of the media and financial elite so they wouldn’t bother examining the logical holes in its business model.

There were marks on those holes for sure. He has accumulated his fiat fortune, around $16 billion, on the back of a cryptocurrency, FTT. There have been unwanted links between his cryptocurrency exchange FTX and the prop trading fund he runs on the side.

He made a lot of money – for a while. SBF has been compared to Warren Buffett by geniuses in Fortune magazine. But Buffett made his fortune during a long career. SBF made almost all of its “money” in about three short years.

How did he do that? SBF went to MIT giving him a pass on smarts and marketability to investors. He was wearing a hoodie, maybe that made him fall for the fake tech media that’s always looking for the next misfit to change the world. During the Fed-induced financial bubble and irrational glut of cryptocurrencies, he was able to ride the wave of easy money and cryptocurrency trading ambiguity.

Clever he may have been but real skilled traders avoid life-altering losses by seeing the markets turn against them and moving on. As crypto began to correct and crash, the SBF famously doubled down on investing in struggling crypto outfits. This should have been a sign of his deception.


However, no one asked where he got the money to do that because he built an actor like a philanthropist who was on the right side of the investment. He gave progressive Poles in the Democratic Party and $10 million to President Biden in 2020, providing him with cover. He’s talked constantly about the need for rich people like himself to embrace something known as “effective altruism” — you make money with the purpose of giving it back to make the world a better place.

You can see that in the respect people like Tony Blair or Bill Clinton paid him at the conferences just before his collapse. Or how congressional committees sought his advice, right up until the moment he exploded, on all cryptic matters.

A general view of the FTX logo as seen in Hawthorne, NJ on November 17, 2022.
Sam Bankman-Fried has built a dashing cryptocurrency empire with FTX.
Christopher Sadowsky

The gossip chapters, the Blairs, the Clintons, the financial press, ate it up.

The absurdity of it all didn’t stop Sequoia Capital, the venture capital heavyweight, from giving him money, stopping news anchors from grilling him for fake interviews or preventing Congress from getting his two cents on regulatory matters. The SBF was introduced to Middle Eastern investors for more money just weeks before it fell. Hell, he hired Tom Brady and Larry David as FTX brand ambassadors.

SBF teamed up with crypto regulators at the CFTC, and the Securities and Exchange Commission. He met with Chairman Gary Gensler to pitch an idea for a new cryptocurrency exchange despite Gensler’s skepticism about the industry, without anyone thinking, “Is this guy too good to be true?” – with the exception of a lone handful, it’s probably the same SBF. He had recently remarked in a moment of bluntness that his virtue signal was “stupid game”.

Now tell us.

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