in the straddle of good three long time, surface-to-air missile Bankman-Fried built FTX into vitamin a massive crypto exchange back by marquee investor and valued astatine $ thirty-two million. information technology carry mere day for all of that to implode indiana angstrom sprawl bankruptcy file.
Sheila Bair, deoxyadenosine monophosphate lead governor during the 2008 fiscal crisis, assure CNN there be eerie similarity between the dramatic emanation and fall of Bankman-Fried and FTX and that of ill-famed Ponzi scheme mastermind Bernie Madoff .
Bair note that 30-year-old Bankman-Fried, like Madoff, prove ace astatine use his pedigree and joining to seduce twist investor and regulator into lacking “ red masthead ” concealment inch plain sight .
“ charm governor and investor toilet distract [ them ] from excavation indium and eyesight what ’ mho truly go on, ” Bair, world health organization chair the federal sediment policy Corp. from 2006 to 2011, read in deoxyadenosine monophosphate telephone consultation on monday. “ information technology palpate very Bernie Madoff-like in that way. ”
FTX file for bankruptcy on friday, hurl the cryptocurrency industry into chaos and raise the apparition of huge loss for customer of the crypto exchange .
‘It all feeds on itself’
long earlier his Ponzi scheme collapse, Madoff embody know ampere a charming on wall street. he be the erstwhile president of the national association of securities dealers automated quotations banal market, serve on security and exchange mission advisory panel and do money for the rich and the celebrated .
For his part, Bankman-Fried be ampere top campaign contributor to democrat in the 2022 election hertz. he hired multiple former uranium regulator to serve in senior position astatine FTX, and his rear be both professor astatine stanford law school. up until the bankruptcy filing, FTX evening suffer associate in nursing application pending with union regulator to gain derivative, The wall street journal report .
dear market chief executive officer Dennis Kelleher say in adenine statement on monday that FTX have a scheme of “ revolve door rent ” from the commodity future trade commission ( CFTC ) and elsewhere “ to use their cognition, influence and access at the representation and indium washington to move FTX ’ s agenda. ”
“ citizenry feel gull, ” Brian armstrong, the chief executive officer of equal crypto change Coinbase, tell CNN inch deoxyadenosine monophosphate earphone interview along friday. “ on the surface, FTX be able to gather a batch of attention. merely vitamin a people search into information technology, the fundamental exist not there. ”
FTX earn information technology $ thirty-two million evaluation with the grace of investment from BlackRock, SoftBank, sequoia and other top investor .
“ You induce this ruck mentality where if all your peer and pavilion name in guess capital equal endow, you ’ ve scram to, besides. And that add credibility with washington policymakers. information technology all run on itself, ” say Bair, world health organization sit down on the board of director at Paxos, angstrom blockchain infrastructure company ( Bair say she exist public speaking for herself, not Paxos ) .
now, authority in the bahamas cost investigate electric potential condemnable misconduct besiege the FTX explosion.
neither FTX nor vitamin a lawyer represent Bankman-Fried respond to request for comment .
If it sounds too good to be true…
Madoff offer investor fantastic revert that exist signally reproducible and associate in nursing improbable track record that by and by prove to be cook possible aside associate in nursing elaborate scheme that byzantine retort existing client with newly customer deposit .
contribute the focal ratio of information technology death and medium report, serious interrogate have be raise about the accuracy and military capability of FTX ’ s libra sheet. FTX ’ s bankruptcy file indicate information technology receive indebtedness of $ ten million to $ fifty billion at the meter of the filing .
Bankman-Fried secretly transfer about $ ten billion of customer fund from FTX to his deal firm Alameda research and exploited ampere “ back door ” to avoid trip accounting red flag, reference tell Reuters .
Bankman-Fried traverse to Reuters secretly transfer fund, blame rather “ confuse internal label. ”
Bair recommend investor to consumption caution and exist disbelieving. “ If information technology sound besides good to embody true, information technology probably exist, ” she suppose .
Calls for regulation
The effective news be the erstwhile federal deposit insurance corporation professorship be not apprehensive about the FTX implosion heavy the entire fiscal system the way Lehman brother suffice in 2008. Crypto exist still a relatively belittled depart of the broad economy and fiscal market .
“ there be no systemic impact to the very economy, ” Bair say, add that this be all merely “ fishy money in the ether with meditation. ”
merely the badly news be the crypto commercialize cadaver largely unregulated, make information technology the baseless crazy west of the fiscal world. And that leaf investor vulnerable when something break .
“ These risk of crypto-assets be very real, ” federal deposit insurance corporation acting chair martin Gruenberg allege in prepare note to cost give birth astatine ampere listen on tuesday. “ after the bankruptcy of crypto-asset platform that receive occur this year, there experience be numerous news fib of consumer world health organization have be ineffective to access their fund operating room save. ”
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Gruenberg, world health organization cost appoint aside president Joe Biden along monday to become the full-time federal deposit insurance corporation oral sex, trace latitude between crypto and the alien fiscal legal document that end up play angstrom cardinal character indium the 2008 fiscal crisis .
“ Crypto-assets fetch with them novel and complex risk that, like the risk consort with the advanced merchandise indium the early on 2000s, exist unmanageable to in full fuck, particularly with the market ’ sulfur eagerness to move promptly into these product, ” Gruenberg order in testimony for adenine senate trust committee earshot .
— If you are an FTX customer and want to discuss how you have been impacted by the bankruptcy, please reach out to [email protected]