Crypto “smart” money? Big traders fell in love with Sam Bankman-Fried
I was shocked when I first learned how a hot mess like Sam Bankman-Fried got away with convincing so many seemingly smart people – big money managers, venture capitalists and all those celebrity ambassadors – that he was such a boy genius of investing that should turn a lot of money to play with it.
That is, until I witnessed what happened on Wednesday after the fallen crypto star tried explained his side of the FTX disaster to reporter Andrew Ross Sorkin. The missing billions in client funds, ruined lives, etc. were not illegal, just a big, innocent mistake, or as he put it, he “screwed up”, the result of a “bad month”.
Sounds absurd, doesn’t it? Believe it or not, many sophisticated financial types say they still believe SBF’s latest ad, which is further proof that fools are born every minute, and many of them are in leadership positions on Wall Street.
Of course, not all in high finance I bought the SBF stick even when riding high. Veteran trader Mark Kohodes and CME CEO Terry Duffy were early skeptics about his business prowess and how Bankman-Fried claimed to have devoted his entire life outside of crypto to some vigilante fad known as “effective altruism” — where he make money to give it all away.
But they were among the lonely few who saw signs that something was wrong. Most of the media, as well as too many big financiers, seemed to overlook his shambolic appearance and strange behavior. They thought it was cute. They didn’t consider that relatively overnight he became a billionaire and mega-donor to the Democratic Party, giving big bucks to crypto watchdogs.
Buying influence is fine, I guess – as long as it involves Democrats.
They certainly didn’t pay attention to his conflict-ridden business model: the Alameda Research hedge fund, known for taking too many risks, attached to his crypto exchange FTX, which was supposed to keep client deposits safe. This is something that was almost designed to fail, which is exactly what happened when the SBF minions were betting customer funds in the global crypto casino.
Even worse, some members of the so-called “smart money” group still eat up his stupid explanations for one of the biggest scandals in recent market history without a hint of indigestion or outrage.
Bill Ackman is one of the most famous hedge fund managers. He’s known for “shorting” or betting against stocks he considers to be a scam, and once launched a long-running campaign to prove (albeit unsuccessfully) that the nutritional supplement company Herbalife was one big pyramid scheme.
But Ackman was so sold SBF’s apology — that the crypto bro “never attempted fraud” in assembling a house of cards that didn’t meet minimum risk compliance standards — that Ackman tweeted, “Call me crazy, but I think @sbf is telling the truth. ”
I don’t know if Ackman is really crazy, but if he believes SBF’s explanations of how he built a financial firm without even rudimentary risk management, he might be a real fool.
Also consider Kevin O’Leary of “Shark Tank” fame. This is a dude who presents himself as someone who’s been around the block so many times he can tell good business ideas from dogs. A real shark.
O’Leary allegedly lost millions of dollars in the FTX collapse. He, along with NFL legend Tom Brady and other celebrities, were the so-called “brand ambassadors”, part of the team that appeared in those fancy ads that SBF released to sell the investing public that FTX is a safe place to trade your crypto.
It doesn’t look good, but what’s worse is that O’Leary still isn’t a suspect The motives of the SBF.
After watching SBF’s performance Wednesday with Sorkin, O’Leary, known as “Mr. Wonderful,” tweeted: “I lost millions as an investor in @FTX and was dumped as a paid spokesperson for the firm, but after listening to this interview I’m in @BillAckman’s camp for the kid!”
Who was in charge?
For starters, the “kid” is 30 years old. This elderly man admits to Sorkin that “there is no person primarily responsible for the positional risk of FTX’s clients,” which is the functional equivalent of a doctor performing surgeries without going to medical school.
SBF also told Sorkin that he is speaking publicly about what happened against the advice of his attorney because he wants to do the right thing and help everyone who lost money be sane. Maybe that’s what sold Ackman and O’Leary.
I bet the US Attorney’s Office in Manhattan investigating this dirty mess won’t be such an easy target for SBF’s apologies.
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