Until a couple of weeks ago, Sam Bankman-Fried was hailed as the next Warren Buffet. But then, it all utterly collapsed, wiping out billions of dollars of investor funds as the FTX/Alameda saga unfolded like the plot of a Tom Clancy novel.
SBF, as he was colloquially known in crypto circles, it appears was less Buffet and more Bernie Madoff, and he’s probably the most hated individual amongst crypto enthusiasts right about now.
As each new day passes, and just when you think the whole FTX saga couldn’t get any worse, well, it gets worse.
Now, the investigative super-sleuths of the internet have been poring through his past, and uncovering some interesting connections which seem to paint SBF as less a nerd whose risk appetite got “a bit out of hand” and more as a highly–connected and shrewd operator.
Whether or not the powers-that-be decide to take such an in-depth look at Bankman-Fried and his merry band of crooks remains to be seen, as some of them, at the very highest levels, were if not completely in his pocket, at least certainly a little close for comfort.
So let’s take a look into some of the connections which may have allowed SBF to get away with his colossal crypto fraud with impunity for as long as he did.
Bankman-Fried and his friends don’t appear to have been too careful about actually explaining how to exploit the crypto world to make ridiculous amounts of money, and in many ways, they were pretty much emulating that biggest-of-all economic frauds, the one imposed upon the world by private and Central Banks for decades (maybe even centuries).
On a chat on Bloomberg’s Odd Lots podcast in April 2022, SBF was asked about yield farming and provided a great insight into what DeFi has become as he literally describes how a theoretical product can be tokenised and turned into a pump opportunity.
Essentially, he confirmed that much of the industry was simply smoke and mirrors, as Market Makers (like his company Alameda) effectively manipulated price to entice new money into the ecosystem. He even described, using a theoretical “box” company analogy, how leveraged collateralisation of such vapourware tokens as FTT can be used to rinse investors of money.
Of course, until recently, SBF was the God Emperor, and as such, could do no wrong, even despite his characterisation of the industry he was up to his eyeballs in, and in terms that would have made Charles Ponzi look like Mother Theresa, almost everyone missed it and just happily went on with their day.
The fact is that SBF, FTX and Alameda Research have some extensive ties to a number of powerful government players, and as the dust starts to settle on the collapse of FTX, these connections are coming to light and starting to point fingers at some of the world’s most powerful globalist players:
Sam Bankman-Fried has been lauded by Bond-like villain Klaus Schwab’s sinister World Economic Forum (those of “you will own nothing and be happy” fame), and both he and Alameda CEO (and on-off polyamorous former girlfriend) Caroline Ellison had their own bio on the WEF’s website.
However, on the day of writing this article, even The WEF was quietly washing its hands of FTX, removing partner links, and deleting all previous references to SBF, and also family members including SBF’s aunt, Linda Fried, an epidemiologist connected to the WEF through the Global Agenda Council of Aging.
It’s tough when your former friends and most powerful allies suddenly shun you because you’re suddenly so toxic, isn’t it Sam?
Caroline Ellison is the daughter of Glenn Ellison, the former boss of the current SEC chair Gary Gensler whilst he was tenured as a professor of economics at MIT (interestingly, the same university where SBF and Ellison also both attended).
Furthermore, it transpires that the general counsel of FTX’s US arm was also the lead counsel for Gensler at the CFTC, where Gensler allegedly assisted FTX with navigating a number of legal loopholes and working towards a regulator's monopoly for the exchange, according to Minnesota Congressman Tom Emmer.
Despite the connections, Gensler has been noticeably silent on the FTX scandal, surprisingly. He did put out a mostly vanilla-flavoured video on Twitter where he just talked about how bad it was that retail investors were getting hurt.
Whilst Gensler did reference “interconnectedness” between certain people, he failed to mention his own connections to FTX - or even FTX by name, which strikes you as slightly odd that the man who is the head of the agency which can decide policy around crypto didn’t even really want to talk about arguably the most significant bit of crypto news since the Mt Goxx hack.
It appears that Sam Bankman-Fried is no stranger to hob-nobbing in various political circles with the elites, and neither is his family.
SBF was a huge political donor - in the most recent Midterm cycle, he was the second largest PAC donor after George Soros, giving a total of almost $40M, and a further $28M was also donated by two deputies at FTX.
Although SBF has made a small number of donations to Republicans over the last few years (most notably those who had connections and influence over crypto policy), the vast majority of his campaign donations tend to end up in Democrat coffers.
And, had it not gone pear-shaped already, in a podcast with Jacob Goldstein in May 2022, SBF said he expected to spend “north of $100 million”, and potentially up to a $1 billion soft ceiling on political donations in the current cycle.
That’s a lot of influence. But of course, no self-respecting and highly principled politician would ever engage in such a gross example of influence-peddling with corporate lobbyists who would directly benefit from certain policies which they would be involved in crafting.
In return, WallStreetParade reported that he wanted permission for FTX to offer highly leveraged crypto derivatives contracts. Had he got his way, who knows how much worse the fallout could have been?
SBF's mother, Barbara Fried, was also a Standford Law Professor, and head of the Mind the Gap, a left-wing super PAC which raises millions of dollars for Democrat political causes, mostly from Silicon Valley executives, and it’s claimed that Barbara Fried has also previously represented Hillary Clinton.
SBF’s brother Gabriel is a founder of “Guarding against Pandemics”, a group formed during the Covid pandemic which seems to have a rather strong interest in Biometric and Genetic security (in other words, they’re very big on surveillance). He is, of course, also a former Legislative Correspondent for the US House of Representatives, who advised large Democrat political donors, and a consultant for backstage political data firm Civis Analytics.
And it doesn’t stop there, there are many connections with titans of the Democrat party inside the FTX family.
For example, Amy Wu, FTX’s Head of Ventures & Commercial, started her career with, yes, you got it… the Clinton Foundation!
The Commodity Futures Trading Commissioner (CFTC) under Obama, Mark Wetjen, became the head of FTX Policy & Regulation, and Nishad Singh, FTX’s Director of Engineering has personally spent over 8 million for Democrat candidates.
SBF himself appeared on stage with Bill Clinton at the Crypto Bahama’s conference, organised by FTX, in April 2022, with Sam getting the famous “death touch” from the former president and close travelling companion of Jeffrey Epstein. Also ran’s at this conference were former British PM Tony Blair, well-known as a proponent of total centralisation and Digital ID’s, quite apart from being the world’s biggest seller of whoppers about Weapons of Mass Destruction.
The self-proclaimed Scourge of Wall-Street Mark Cohodes called out Sam Bankman-Fried, and associates Gary Wang and Dan Friedberg back in October, saying “nothing of this story fits… everything reads like this thing is a complete scam… it’s dirty and rotten to the core”.
Cohodes, it seems, could see straight through SBF, and was more than happy to go on the record, but it’s interesting to note that since the collapse, establishment Mainstream media outlets have mostly been running benign fluff-stories on FTX, with outlets like CNBC even arguing that it’s definitely not SBF’s fault, but that he should have had a good board around him to ask tough questions. Righto!
One would think that Bankman-Fried was well connected with the very people who have a vested interest in the decline of Bitcoin, to be replaced with one of those nice programmatic CBDC’s.
In fact, it seems that FTX and SBF, through both his personal, and family connections, have nothing short of a veritable rolodex of connections in Government, Media, NGO’s and various lobbyists. So much so that FTX even joked that it didn’t have any connections with the South Pole back in July of this year.
As the contagion from the Terra-Luna meltdown in May of this year raged, Bankman-Fried became the hero of the cryptosphere as he went around bailing out crypto firms , including BlockFi and Voyager.
Only, now it seems that SBF’s saviour status served to make him an even more Faucian figure (I am trademarking this term).
SBF’s actions look less like “effective altruism” and more like a Machiavellian play to get both FTX and Alameda out of trouble - much needed because at the time, FTX had hundreds of millions of dollars in loans outstanding on Voyager alone.
The bailout had the effect of positioning FTX as the new parent company, thus preventing the forced selling of both FTT and SOL tokens, which would almost certainly have made the Alameda balance sheet implode sooner.
At the same time, FTX was coercing Portfolio companies to custody with the platform, enabling them to gain access to customer funds, which assumably they could then use as a source of funding their own liabilities.
This hypothesis is supported by the fact that FTX sought to nullify the creditor claim Voyager held over them during the acquisition, a position originally rejected by Voyager as a “low-ball bid dressed up as a white knight rescue”.
In many ways, what we are witnessing now is nothing short of a speeded-up version of what global currency collapse will look like. If you’re not already aware of when it’s coming, then you’ve probably missed the fact that we’re already in it.
The result of the mighty fall-from-grace of the once revered crypto leviathan has been catastrophic, and how far down the market will continue to plummet is anyones guess at this point.
As the 10th century historian Baron John Dalberg-Acton wrote, power and influence does have a tendency to corrupt and sometimes those “great visionaries” often turn out to be the baddies, and SBF will almost certainly go down in history as one of the great bad guys of our time.
What can we conclude from all this? Well, firstly, in order to recover, there needs to be trust in the system, and if ever there was a time that trust in a system was at its lowest, it’s right about now.
Of course, some will say that the sudden collapse of FTX just couldn’t have been predicted, but it’s probably worth pointing out that it was exactly for this reason - centralisation - that Satoshi created Bitcoin in the first place.
It’s within this framework, in the very idea of sound money which has no CEO, no central governing authority and no government regulation (because, ultimately it can’t) that crypto provides the unrivalled opportunity for all to participate in finance on a level playing field.
However, many of us were so enthralled by the magic money machine that our common sense took a backseat whilst our wallets were bulging with freshly farmed yield.
It’s time for us all to remember the whole point of crypto - to eradicate institutional hegemony of fiat money, created out of thin air and governed by the nameless and faceless captains of finance and industry, and enacted by a spineless political class, all bought and paid for by interest groups and lobbyists.
The question now, as the crypto and DeFi industry tries to put itself back together, is whether we are going to shun the old centralised model for a future that’s properly decentralised, even at the risk of making it a bit less easy to deal with.
The good news, if there is any, is that this whole sorry story may well lead to the creation of a number of new and novel solutions more in line with the original vision of open finance which isn’t dominated by the utterly corrupt.
It’s one reason we’re developing Bumper, a wholly new DeFi risk management tool which aims to solve the issue of volatility spoiling your day. Yes, really!
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