Sam Bankman-Fried made a fool of me, too

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There is no shortage of people duped by disgraced FTX founder Sam Bankman-Fried. According to bankruptcy filings, FTX has over one million creditors, a staggering number but perhaps unsurprising given that the swiped sum is north of $8 billion.

While I held no assets on FTX, I was also one of those duped by FTX. I wrote this article titled “How American customers were saved from the FTX mess”. I was very wrong.

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The article was published on November 10^th, the same day that Bankman-Fried published a 21-tweet thread beginning with his new favourite words, “I’m sorry”. The key tweet is the one below:

19) A few other assorted comments:

This was about FTX International. FTX US, the US based exchange that accepts Americans, was not financially impacted by this shitshow.

It’s 100% liquid. Every user could fully withdraw (modulo gas fees etc).

Updates on its future coming.

— SBF (@SBF_FTX) November 10, 2022

FTX US was saved from US regulation, I wrote, believing Bankman-Fried that it was separate and would be OK. At this time, it was still processing withdrawals and nothing seemed amiss. FTX, remember, was headquartered in the Bahamas and, much like Binance (deep dive on recent events on that exchange here), set up a separate subsidiary in the US to deal with the harsher regulatory climate.

I concluded that this had saved FTX, after Bankman-Fried’s tweets. It seems naïve now to put any sort of weight into a word coming out of his mouth, but that is exactly what I did. Again, FTX US was processing withdrawals just fine at this point and seemed to be distanced from the whole debacle. The below tweet was also posted that same day.

3) So here’s an update on where things are.

[THIS IS ALL ABOUT FTX INTERNATIONAL, THE NON-US EXCHANGE. FTX US USERS ARE FINE!]

[TREAT ALL OF THESE NUMBERS AS ROUGH. THERE ARE APPROXIMATIONS HERE.]

— SBF (@SBF_FTX) November 10, 2022

The following day, Bankman-Fried then tweeted the below:

1) Hi all:

Today, I filed FTX, FTX US, and Alameda for voluntary Chapter 11 proceedings in the US.

— SBF (@SBF_FTX) November 11, 2022

It was a stunning twist in an already incredible story of deception, and it has still not been cleared up as to why Bankman-Fried insists that FTX US is solvent. He interviewed with Andrew Sorkin of CNBC on November 30^th as part of the New York Times DealBook summit and said the below:

“The U.S. platform is fully solvent and funded. I believe withdrawals could be opened up today and be made whole.”

But zero evidence has been given to support his. And all the while, withdrawals are frozen with FTX US customers part of the bankruptcy process along with all other customers.

Then again, given Bankman-Fired tweeted “FTX is fine. Assets are fine” on November 7^th, before deleting the tweet and filing for bankruptcy, perhaps it isn’t all that surprising that the FTX US line is false, too.

Either way, Bankman-Fried has now been arrested as is being extradited back to the US. Lawmakers have moved impressively quickly o the case, with concerns from the crypto community that he would get preferential treatment given all his political donations proving nothing but a misplaced conspiracy.

Let’s hope there comes a time soon when we can all stop talking about him, because I really am tired of it. But either way, if anyone read my piece praising US regulation saving American customers, I apologise.

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