Is Sam Bankman-Fried; Bernie Madoff of the Crypto Industry

Sam Bankman-Fried’s FTX froze withdrawals due to a lack of collateral in processing transactions on the Exchange in November. What was one of the titans of the Cryptocurrency Industry less than a month before the fall, seemingly overnight turned into a headline for one of the largest cases of fraud and financial mismanagement in over a decade.

Sam Bankman-Fried will go down in Crypto history as a fraud larger than Bernie Madoff. How do we explain FTX’s over $10B in losses, Where did the $2B in venture funds go?

SBF, donating $40m to not go to jail for stealing $10b+ is one of the highest ROI trades of all time, Elon Musk stated on Twitter that the donations could be over $1B distributed among the Dems. The money went somewhere, so where did it go.

Interestingly, Beto O’Rourke has returned Funds Sam Bankman-Fried “donated” to him. Time for all the other politicians who received FTX customer money to do the same thing.

O'Rourke returns $1 million to SBF-FTX
O’Rourke returns $1 million to SBF-FTX

FTX, is a gift for Alameda Research. FTX is gathering and attracting tons of uninformed retail order flow for Alameda to monetize by trading against, similar to PFOF. In retrospect, Alameda Research is a gift for FTX. Alameda offers valuable liquidity to customers. Otherwise, the exchange would have no volume.

Alameda Research could make a market with limited competition against uninformed retail order flow. Alameda would simply take the other side of random buy-and-sell orders and make money.

Imagine, Alameda Research is the House. The house has a slight ‘edge’ – a slight positive expectancy. Over time, skillful poker players start to show up. Jump, Wintermute, and smaller shops.

Will Clemente tweeted, SBF is already on record admitting to mistakes and negligence that were his own fault. He’s not walking away as a free man. Sam Bankman-Fried masterminded how the mainstream media and politicians are enabling the strategic behavior we are witnessing.

On Coffeezilla’s Podcast;

The entirety of SBF’s defense is built around avoiding his own terms of service which says FTX can’t loan out funds of ordinary users. (margin trading is different!) SBF claims here they treated these accounts differently (not true). I asked Sam if they treated client assets responsibly, where is the money?

SBF, said he thought some of it was lost in the Alameda Research wire transfers before they had a bank. I told him to ignore that. What about everyone else. He said some of the assets might still be at FTX.

Read Coffeebreak’s Twitter Thread on The EXACT moment SBF admitted to fraud.

No serious CEO in their right mind would allow a token like SRM, which had a market capitalization value of $200MM based on the marked-to-market value of the circulating supply of the tokens, would have allowed that same token to be used as nearly $5B of collateral on the exchange.

Serum to USD Chart
Serum to USD Chart

This implies that a large portion of that “less liquid” collateral that Alameda was using was locked. SRM also only had an average daily volume of <$20M. FTT wasn’t much better – though it was propped up by the weekly “buy and burns” funded from a % of exchange fees.

SBF has agreed to appear before the US House Committee on Financial Services on the 13th of December, 2022 to narrate everything which went south on FTX International, Alameda Research, FTX-US, and 150 other subsidiary entities.

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