FTX Fraud – Lies and Obfuscations
In his media campaign, Sam Bankman-Fried has been trying hard to hammer in an image of a well-meaning but inexperienced CEO, who simply made a mistake. To be honest, there is a huge list of companies that made unwise investments that put them in the red. This is why doing profitable business requires knowledge, skill, and expertise. The level of foresight to deposit funds prudently can make or break a company. Experienced investors understand this, and no investment is without its risks
However, there is a huge difference between putting your money into a risky investment, and when a company embezzles your funds. The FTX crypto scam did just that. SBF is trying his best to spin the story of FTX in the direction of oblivious mismanagement, rather than fraud and deliberate extortion of crypto investors’ funds.
As more and more evidence emerges it becomes clear that the FTX group was deliberately deceiving people and they knowingly committed financial crimes. In this article, we will cover dubious tactics that FTX fraud had used to cover their schemes, for additional content on FTX be sure to check our blog page.
Damage control – Playing Dumb
Several days prior to declaring bankruptcy FTX founder Sam Bankman Fried made sure that his post circulated on Twitter in which he claims he “f*cked up”, pardon his French. The entire ordeal was presented as a highly unfortunate faux pas and a lapse of judgment. A lauded genius decided to go for the defense of miscalculation, stupidity, and lack of experience rather than fraud. Naturally, people were outraged and furious.
SBF is trying his best to frame having lost billions in customers’ money as an honest mistake with an oops-a-daisy on top. Similarly, various media outlets highlight sensationalist details of the SBF’s clique who was managing the whole company. They present them as a polyamorous drug-abusing team of inexperienced semi-adults. As much as that makes a provocative read, it supports the narrative of FTX fraud just being them crazy kids getting in over their heads.
It’s certainly true that the FTX team wasn’t aware of how brittle their multi-billion house of cards was. Nevertheless, it would be incorrect to assume they weren’t conducting fraud knowingly and deliberately.
Alameda and FTX – Illegal Bedfellows
In 2017 SBF founded Alameda Research and quickly enough in 2018 he made a fortune trading on the discrepancy in price between Japan’s Bitcoin price and the rest of the world. This gave Sam a reputation as an expert in cryptocurrency exchange. So when in 2019 he Founded FTX, the world gobbled up the advertising behind it – a revolutionary company led by a quirky genius billionaire with altruistic ideals. FTX quickly became one of the largest crypto exchange companies, holding the place of the third biggest crypto exchange platform in volume.
Right from the beginning, many expressed their concerns about the striking conflict of interest. Two large crypto service providers were run by the same man. However, Sam quickly assuaged all the concerns, leaving the position of Alameda’s CEO and concentrating solely on FTX. He stressed that the two companies are completely separate and independent. What’s more, his team has ensured this is the case, enforcing stringent measures and putting up ‘walls’ between companies. This all turned out to be a gross lie.
During the controversy surrounding the FTX group, it was discovered that, though certain systemic roadblocks were in place, Gary Wang, one of the leading members of the FTX clique, installed a special code secretly. It worked as a back door of sorts, enabling the two companies to exchange funds freely and without a visible trail.
This enabled FTX group to secretly transfer customer funds to Alameda, where they were invested in risky trades. As of December 2022, it is still unclear what happened to this money. Unfortunately, this was the worst offense, but it wasn’t the only one.
