Saturday, December 24, 2022

SBF's Greed: Now Freed on Bail

FTX's Sam Bankman-Fried is out of a Bahamas jail and back home with his Stanford professor parents.  Bankman-Fried has been "charged with orchestrating a years-long fraud in which he used billions of dollars of FTX customer funds for personal expenses and high-risk bets."  He is out on a $250 million bond.

Several of SBF's partners in crime have been charged as well.

“From 2019 through 2022, I was aware that Alameda was provided access to a borrowing facility on, the cryptocurrency exchange run by Mr. Bankman-Fried,” Alameda CEO Caroline Ellison said. “In practical terms, this arrangement permitted Alameda access to an unlimited line of credit without being required to post collateral, without having negative balances and without being subject to margin calls on’s liquidation protocols.”

SBF testified before a Congressional committee in May 2022 about FTX's strong customer protections and conservative risk model.  That was clearly perjury.  

The fallen peer of Carlyle Group co-founder David Rubenstein invested alongside Rubenstein's Declaration Partners in Paxos.  

Rubenstein and Paxos board member Sheila Bair need federal regulation to save their wish of equity stake profits.  Ferreting out SBF's lies and misrepresentations will be important as regulation strategies move forward.  

CPA and former Texas Congressman Mike Conaway might provide insight.  He recently served as D.C. lobbyist for FTX.  Conaway sniffed out fraud at the National Republican Congressional Committee but missed FTX's accounting nightmare in his FTX lobbying engagement due diligence.

There is much at stake going forward.  Truth and honesty are needed to design systems that corral those spinning untruths and harming others with their greed, arrogance, and hubris.  I'm not sure a time-out in SBF's parent's basement will do the trick.

Update:  Bankman-Fried freed in time for the holidays.  Warms the heart he can spend it with family while the people he ripped off face their diminished present. 

Update 12-25-22:  Former Labor Secretary Robert Reich noted how SBF and other tantrum tossing billionaires were not reigned in by regulatory bodies.

Update 1-5-23:  SBF's General Counsel at FTX "told prosecutors what he knew of Bankman-Fried's use of customer funds to finance his business empire."  He had over a year to learn how SBF did business.

8-3-2021:  Cryptocurrency exchange FTX.US named a former Sullivan & Cromwell LLP and U.S. Commodity Futures Trading Commission attorney as general counsel.

Meanwhile Sullivan and Cromwell remains the law firm for FTX, before, during and after the revelations of gross mismanagement and fraud. 

Update 9-19-23:  FTX's insider money funnel included SBF's parents.