Will former FTX CEO Sam Bankman-Fried be held accountable for his mismanagement of investor funds?
After most of the entities tied to his cryptocurrency exchange became insolvent last week, blockchain analysts concluded the insolvencies came as a partial result of the exchange’s trading house, Alameda Research, burning through nearly $10 billion in cash that technically belonged to FTX customers. To date, the company has declined to elaborate on the contractual details that made the arrangement possible — or legal.
In the aftermath of FTX’s collapse, skeptics have questioned whether the elite — in Washington or elsewhere — will be motivated to investigate the situation with any rigor. Tesla, SpaceX and Twitter CEO Elon Musk suggested in a Nov. 13 tweet that he was among those critics, sharing an image that ties Bankman-Fried — also known as “SBF” — to Securities and Exchange Commission Chair Gary Gensler. Bankman-Fried is a graduate of the Massachusetts Institute of Technology, the image notes, where Gensler served as a professor. And he’s been romantically linked to Alameda Research CEO Caroline Ellison, a Stanford graduate whose father, Glenn Ellison, also teaches at MIT.
— Elon Musk (@elonmusk) November 13, 2022
There are also more serious reasons to wonder who might be interested in holding SBF accountable — like a glowing Nov. 14 interview with SBF published by New York Times writer David Yaffe-Bellany. Noting that SBF had been “compared to titans of finance like John Pierpont Morgan and Warren Buffett,” Yaffe-Bellany says that SBF “did, however, agree with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry.”
OK, but what about the allegation that Alameda used more than half of FTX’s $16 billion in customer deposits to make failed trades? “He said the size of the position was in the billions of dollars but declined to provide further details,” the Times noted before moving on.
What about new blockchain evidence that indicates Alameda used advanced knowledge of which assets FTX would list in order to inform its purchases? Such “front-running” is a form of insider trading — one that an attorney might argue is illegal. The Times failed to even broach the issue.
Disgraceful reporting by the @nytimes on FTX. It portrays SBF as a…