“Everyone got duped by Sam Bankman-Fried’s big gamble,” the BBC said after the conclusion of the FTX founder’s financial fraud trial last week.
The verdict was in: The former crypto king, also known as SBF, was guilty on 7 counts. He could face more than 100 years in prison.
The trial lasted little less than a month and the jury came to its conclusion in just a few hours. Some were surprised by how quickly it went. Again, if you read “‘How Sam Bankman-Fried’s Cult Of Genius Fooled Everyone” in Forbes or “How SBF fooled everyone—including me” in Fortune last year, perhaps you were under the impression that SBF was some sort of mastermind.
But, he wasn’t. Many critics of SBF and crypto as a whole had called out the industry and, yes, specifically SBF well before the FTX con unraveled last November.
We saw it comin’
James Block, who runs a newsletter under the name Dirty Bubble Media, had been tracking FTX and its sister company, Alameda Research, and found that the latter was likely insolvent before the FTX bankruptcy news broke last year. FTX funneled customer funds to Alameda Research, which engaged in risky bets and investments.
Marc Cohodes, a well-known Wall Street short seller put it out there quite simply in a short tweet just a month before FTX’s collapse: “Over the past month, people have reached out with some great stuff on @sbf_ftx and FTX.. Its just a question of when this Charrade blows up not if.. I suggest SBF come clean and come clean fast.”
So, besides the obvious victims – the FTX customers that SBF took from – who, exactly, is the “everyone” that got duped by SBF? The very smart tech evangelists and venture capitalists, of course.
1. Sequoia Capital
Perhaps the best example of the dupes being largely the tech elite is Sequoia Capital, one of the biggest venture capital firms in Silicon Valley. In 2021, FTX was raising money amid the booming cryptocurrency wave. Sequoia Capital listened to SBF’s pitch and were immediately swayed
“I LOVE THIS FOUNDER,” wrote one partner during the pitch. “I am a 10 out of 10,” said another. And the adulation for SBF during the meeting from these VCs continued to the point where the firm invested $213.5 million into FTX.
What did SBF say that was so enticing?
“I want FTX to be a place where you can do anything you want with your next dollar,” pitched Bankman-Fried. “You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”
You can buy a banana.
That was part of the pitch, which SBF delivered while playing video games, that won Sequoia over. And, how do we know? Just before FTX collapsed, Sequoia shared the story in a blog post on its own website.
2. Anthony Scaramucci
Remember The Mooch?
Anthony Scaramucci was the White House Press Secretary for roughly 10 days in 2017 before being unceremoniously fired by then-President Donald Trump. Scaramucci runs an investment firm, SkyBridge Capital, which became a big proponent of crypto in recent years. Among those crypto investments was $10 million that SkyBridge Capital invested in FTX after the exchange bought a 30 percent stake in the financial firm.
According to Scaramucci, they lost $9.6 million of that money when FTX went under.
Scaramucci had been one of SBF’s biggest fans for years, promoting FTX on social media and appearing alongside Bankman-Fried at numerous events.
“FTX is much more than a crypto exchange,” posted Scaramucci in May of last year. “I believe they will become the Amazon of financial services.”
As we all know, SBF’s scheme eventually fell apart and FTX went bankrupt less than 6 months later.
3. Bill Ackman
Let’s now take billionaire hedge fund manager Bill Ackman who defended SBF — even after he was arrested for fraud in December of last year. Ackman repeatedly went to bat for Bankman-Fried after FTX collapsed. Ackman claimed to believe SBF’s tale of how everything was on the up and up, but the company just failed to assess certain risks.
“Call me crazy, but I think @sbf is telling the truth,” read one Ackman tweet in November of last year. Months later, Ackman still jumped to SBF’s defense, this time penning a long tweet thread comparing his own legal troubles to SBF’s issues. By that time, however, it had been well-established that SBF clearly took part in fraudulent activity and co-mingled customer funds.
4. Kevin O’Leary
Another one of Sam Bankman-Fried’s biggest cheerleaders was Kevin O’Leary. That’s right, the Shark Tank guy who originally made his fortune from selling his edutainment software company.
When FTX collapsed, O’Leary was one of SBF’s staunchest…
Read More: Sam Bankman-Fried didn’t fool everyone – mostly just the tech elite