Watching the stunning collapse of the cryptocurrency exchange FTX over the last few days has been a powerful reminder of one of the oldest pieces of financial advice around:
Buyer beware.
That’s especially true for crypto, which has the potential to become a useful financial tool…but not yet. And maybe not for a very long time. Part of it is because of the people involved in running the exchanges. FTX’s ex-CEO Sam Bankman-Fried was widely hailed as a stable, reliable actor in the space who could bring it both legitimacy and security.
That didn’t happen. Not even close. And as the FTX story continues to unfold, we’re learning all sorts of…interesting…things about the people Bankman-Fried is said to have put in charge of the day-to-day operations. According to Coindesk:
“Shocking” is a word that aptly describes the rapid fall of Sam Bankman-Fried’s cryptocurrency empire. To a surprising degree, it’s a sentiment that pours out from people who worked for him, people who you’d think would’ve had a clue.
It may have something to do with a luxury penthouse in the Bahamas. That’s where 30-year-old Bankman-Fried is roommates with the inner circle who ran his now-struggling crypto exchange FTX and trading giant Alameda Research.
Many are former co-workers from quantitative trading firm Jane Street, others he met at the Massachusetts Institute of Technology, his alma mater. All 10 are, or used to be, paired up in romantic relationships with each other. That includes Alameda CEO Caroline Ellison, whose firm played a central role in the company’s collapse – and who, at times, has dated Bankman-Fried, according to people familiar with the matter.
CoinDesk spoke to several current and former FTX and Alameda employees who agreed to talk on the condition of anonymity, citing ongoing harassment and death threats due to the exchange’s solvency issues. And they said essentially this: It’s a place full of conflicts of interest, nepotism and lack of oversight.
“The whole operation was run by a gang of kids in the Bahamas,” a person familiar with the matter told CoinDesk on the condition of anonymity.
And the story evolves from there. It’s worth a read if only to remind ourselves that things like corporate culture, governance and fiduciary responsibility really do matter – whether it’s Enron, WorldCom, Lehman Brothers, FTX…take your pick.
And one more time, just in case…buyer beware. And never – ever – take financial advice from Tom Brady.
The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.
READ NEXT: What the FTX Collapse Tells Us About Regulators and ESG >>
it is all a pyramid scheme and no matter what it is measured in dollars, not crypto