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 young genius in the Investing was that they should turn over a lot of money for him to play with.
That is, until I witnessed what happened on Wednesday after the fallen cryptostar attempted to explain his side of the FTX disaster to reporter Andrew Ross Sorkin. The missing billions in customer funds, shattered lives, etc. weren’t illegal, just a big, innocent mistake, or in his words “screwed up,” the result of a “bad month.”
Sounds absurd, doesn’t it? Believe it or not, many veteran financial pundits say they still believe SBF’s latest selling point, further proof that suckers are being born every minute, and many of them are occupying Wall Street’s C-suites.
Of course, not everyone in high finance bought SBF’s shtick, even if they drove high. Veteran trader Marc Cohodes and Chicago Mercantile Exchange CEO Terry Duffy were early skeptical of his business skills and, as Bankman-Fried claimed, he dedicated his entire life outside of crypto to a bright fad known as “effective altruism.” is – what he earned money for Give it all away.
Sam Bankman-Fried’s henchmen gambled away client funds at the global crypto casino.Tom Williams/CQ-Roll Call/Sipa USA
But they were among the lonely few who saw signs that something was wrong. Most of the media and way too many big finance guys didn’t seem to care about his messy looks and odd behavior. They found it adorable. They didn’t think twice about the fact that he had become a billionaire and Democrat mega-donor relatively overnight, giving big bucks to Pols overseeing crypto.
Buying influence is fine, I think – as long as it affects Democrats.
Conflict business
They certainly ignored its conflicted business model: risk-taking prop-trading fund Alameda Research – known for taking too much risk – was affiliated with its crypto exchange FTX, designed to keep client deposits safe. This was something almost doomed to fail, and that’s exactly what happened when SBF’s minions gambled away customer funds at the global crypto casino.
Sam Bankman-Fried claimed he “misbooked” $8 billion in FTX funds (via Portal).
Worse, some members of the so-called “smart money” group still gorge on his flimsy explanation of one of the biggest scandals in recent market history without a shred of indigestion or outrage.
Bill Ackman is one of the pre-eminent hedge fund managers. Known for “shorting” or betting against stocks he believes to be scams, he once launched a year-long campaign to prove (albeit unsuccessfully) that the dietary supplement company Herbalife was one grand pyramid scheme.
But Ackman was so smitten with SBF’s apology – that the crypto bro “never attempted to commit fraud” by assembling a house of cards that failed to meet minimum risk compliance standards – that Ackman tweeted, “Calls driving me crazy but i think @sbf is telling the truth.”
I don’t know if Ackman is actually crazy, but if he believes SBF’s explanations of how he started a financial firm without even doing basic risk management setups, he could be a real jerk.
Kevin O’Leary reportedly lost millions to FTX meltdown, Portal
Tom Brady was a “brand ambassador” for FTX.AP
Also think of Kevin O’Leary from Shark Tank. This is a guy who describes himself as someone who’s driven around the block enough times that he can tell good business ideas from dogs. A real shark.
O’Leary is said to have lost millions of dollars in the FTX collapse. He was, along with NFL legend Tom Brady and other celebs, so-called “brand ambassadors,” part of the crew that starred in those slick commercials that SBF put out to sell the investing public that FTX was a safe place to trade your is crypto.
Doesn’t look good, but what’s worse is that O’Leary is still not suspicious of SBF’s motives.
After watching SBF’s performance with Sorkin on Wednesday, O’Leary, known as “Mr. Wonderful,” tweeted, “I’ve lost millions as an investor in @FTX and got sandblasted as a paid spokesperson for the company, but after listening to this interview I’m in @BillAckman’s camp about the boy!”
Who was responsible?
First of all, the “child” is 30 years old. This is a grown man who conceded to Sorkin, “there was no person primarily responsible for client position risk at FTX,” which is the functional equivalent of a doctor performing surgeries without attending medical school.
SBF also told Sorkin that he is speaking publicly about what happened against his attorney’s advice because he wants to do the right thing and help bring everyone who’s lost money back to health. Maybe that’s what sold Ackman and O’Leary.
I bet the Manhattan US Attorney’s Office investigating this sordid mess won’t be such an easy target for SBF’s excuses.