The FTX fraud is way worse and deeper than people realize. It's one of the greatest scandals of our time, with more than $10 billion stolen.
We know all too well what happens when the public doesn't quite grasp the depths of a fraud because it's all a bit too murky and convoluted. For years, there were only a few of us who saw the 1MDB scandal for the epic crime that it eventually was understood to be – one that drew in Goldman Sachs bankers, lawyers from Shearman & Sterling, the auction house Christie's and a never-ending parade of accountants, financial experts, party-planners and private investigators.
What made 1MDB so pernicious was that the money stolen was debt, so the average Malaysian didn't feel the theft in real-time. If someone steals your credit card debt, it feels very different than if they steal from your savings account even though the debt is worse – it could affect your credit score, you owe interest, your assets could be at risk!
With FTX, something similar is going on. Yes, many thousands of account holders had money from their savings accounts stolen, but they are a demographic that is hard to picture or understand for the average reader or viewer. This wasn't money people were paying their rent with (for the most part, I'm sure). It was mostly speculative betting. After all the scandals in the crypto world in recent years, it almost feels like it comes with the territory to get hacked or robbed.
Making matters worse is the very real possibility that just about .0000001% of earth actually has a comprehensive understanding of what cryptocurrency is or could be used for in everyday life. There I said it: it might as well be Monopoly money.
But all of that obscures just how bad this scandal is – and how so few people understand it.
It's still early days, but all evidence is pointing so far that Sam Bankman-Fried – the same one donating bundles to Democratic candidates, investing in media start-ups, practicing "effective altruism" – presided over one of the greatest heists of our time.
This is about $10 billion of other people's money that was STOLEN and will not be recovered in any serious way.
What's even more remarkable is SBF started acting according to the fraudster's playbook. It seems that no matter your background (and his certainly didn't scream future tycoon), you'll sing the same tune once you have your billions.
Deflect attention onto your rivals.
Build a fake charitable reputation.
Buy media influence.
Fill political coffers with money.
High-minded, yet empty, promises and words.
In other words, this story is a Whale Hunter's delight. Whale Hunters chase the big story and they never hold their best stuff.
On that note ...
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