The insane story of Sam Bankman-Fried and his gigantic money-laundering cryptocurrency scam is not nearly making enough headlines, but even when it does there is just a huge mystery surrounding.
First of all, what exactly is blockchain technology? What actually is a cryptocurrency? For many people, these questions alone receive answers that go above their heads. Then there’s the question of how massive amounts of money moved to foreign countries, seemingly got invested into crypto, and made its way back to Democrat politicians. There’s a lot to unpack here.
Fortunately, one internet guru does exactly that. In this minute-and-a-half clip, watch as the entire episode gets distilled into digestible, understandable language. He introduces the main characters, the plot, and the mechanisms for how it all came together – and subsequently crashed.
I could talk about the FTX collapse for hours on end. But there's no time! Here's the whole awful glorious mess crammed into 99 seconds. #FTX #FTXCRASH #MelonHead pic.twitter.com/2lqq4rASu1
— Nobody Special (@JG_Nuke) November 11, 2022
The video introduces us to Sam Bankman-Fried, colloquially known as SBF. Who is SBF?
He’s the founder of FTX. He also controls the crypto hedge fund called Alameda research but that’s all gone. Now, he wants you to think he’s a sweet guy. He even brought in a famous YouTuber who called him the most generous man in the world.
After founding FTX, SBF then spent way more money than he had – thus, it was the classic Ponzi scheme – and SBF needed a way out. For a while, he covered his tracks by basically inventing new money. It had no worth, no value, but since the crypto space is so new, he got away with it for a bit.
FTX token was basically a Ponzi scheme hidden below layers of moonbow jargon even when on Bloomberg podcast and bragged about it. Yep, that happened. To use his Ponzi token as collateral to borrow billions of real dollars that he couldn’t pay back. He then used those real dollars to build an empire out of dining companies like Voyager and block five. This led Jim Cramer to call him the new JP Morgan. That’s weird. It’s not like Jim Cramer to promote a billionaire con artist.
If you didn’t watch the video, the Cramer reference is to his past promotion of the wildly scam-tastic Theranos. The video continued:
SBF sold people crytpos like Bitcoin, or so they thought. What they really bought from SBF was an IOU but as long as everyone didn’t cash in their IOU at the same time this scheme worked. Until it didn’t.
Then we learn how the whole scheme crashed and burned, as all Ponzis eventually do.
This other a-hole who hates SBF came along and engineered a bank run with some passive aggressive tweets. It worked, SBF didn’t have enough money to pay everyone at once. And now his customers have lost everything.
Then the video details the criminal nature of SBF’s venture:
He’ll be happy to know that this is exactly how every bank in the world operates. So where did all the money go? He misappropriated $4 billion, trying to save his failing hedge fund. Oops, that’s a felony. He spent $21 million on Super Bowl commercials, $5 million for the big guy, $40 million in campaign donations. I wonder what he wanted in return.
Finally, there is a warning about regulating the crypto space. The idea behind crypto is unregulated, truly free market exchanges. Regulation inhibits that, and more to the point, it provides safeguards and loopholes for crooked people to take advantage. Regulation of this space has the opposite effect.
And everyone who’s pointing at this story and saying this is exactly why we need to regulate crypto. Remember that SBF stole billions that’s already a crime. And he spent a lot of it on bribing politicians, also a crime, in order to create a crypto monopoly for himself. Government regulations don’t protect the customers. They protect the crooks that’s exactly what SBF was trying to do.
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