Reading of the wreckage created following the collapse of Sam Bankman-Fried’s crypto currency empire, it is difficult to feel sorry for anyone involved in this dismal saga.
It is perhaps salutary that his “empire” was housed in slightly out of the way of jurisdiction, The Bahamas. And that SBF – as he prefers to be known – opted to be tried in New York, rather than continue to endure the reportedly primitive conditions of his Nassau holding cell.
According to news reports, SBF’s main vehicle FTX saw its value soar to US$32 billion on launch in 2019, and then virtually collapse. The company touted itself as “the safest and easiest way to buy and sell crypto.”
Until it wasn’t.
Wild fluctuations
It is worth keeping in mind that, as noted by Investopedia, the price changes in Bitcoin, the “currency” launched by its original anonymous creator have fluctuated wildly. And that situation has not changed.
According to Wikipedia’s online article, Bitcoin reached an all-time high price of US$67,566.83 on November 8, 2021 and was at its cheapest when it began trading in 2010 priced at US$0.09. However, the introduction of a range of additional cryptos has complicated the picture.
There seems little doubt that the collapse of FTX and its related crypto company Alameda Research – which is now accused of participating in SBF’s alleged misdeeds – has dealt a blow to the crypto market. SEC investigators have accused SBF of directing billions in customer assets to Alameda to ensure that company continued its lending relationships.
The FTX founder’s former girlfriend Caroline Ellison, who was made CEO of Alameda, is reportedly prepared to testify against SBF. Ellison, 28, told a New York court recently: “I am truly sorry for what I did. I knew that it was wrong.”
Allegedly not ‘deliberate wrongdoing’
SBF has denied criminal wrongdoing, asserting in public interviews that FTX’s collapse was because of his poor management rather than deliberate wrongdoing. Does that matter?
Finally, and I write as a parent, I can appreciate that SBF’s parents are reportedly standing by him. The accused has been required to stay at his parents’ home while he awaits trial.
The parents, Joseph Bankman and Barbara Fried, live in a multimillion-dollar home in Stanford in the San Francisco Bay Area according to state records and news reports.
Amazingly, given that Bankman reportedly enjoyed a salary from SBF for many months of his involvement with his son’s financial adventures, the father is a professor of law at Stanford University. He is described in his biography on Stanford’s website as a ‘leading scholar in the field of tax law’. He’s also a clinical psychologist, having earned a degree in the field from Palo Alto University.
Bankman personally helped FTX recruit its first lawyers, joined FTX executives in meetings on Capitol Hill, and advised his son as he prepared to testify before the House Financial Services Committee, The New York Times reported. Bankman also regularly flew to the Bahamas, per The Times.
However, a tax-policy class that Bankman was set to teach in the winter quarter was canceled, and The Wall Street Journal reported that he’d postponed the course to the spring. A reading group he was set to lead has also been canceled.
His mother Barbara Fried worked as a professor of law at Stanford until she retired from teaching in September. Her scholarly interests were ‘at the intersection of law, economics, and philosophy,’ according to the university’s website. No doubt.
It can hardly be a surprise that some people are encouraged to participate in these alleged get-rich schemes that ultimately fail. But SBF’s parents are reportedly well-educated and respected academics.
Oh why, oh why?
Related: The deluge may be unstoppable
