Yesterday Sam Bankman-Fried was found guilty of fraud in a New York Federal court over the collapse of FTX. This was the second largest crypto-currency exchange before it ceased trading with a shortfall as much as $10 billion in its accounts. Billions of client money had been lent to Alameda Research a proprietary crypto trading firm, also controlled by Bankman-Fried who could not repay it.
Bankman-Fried tried to talk his way out by giving evidence in his defence that he had consulted lawyers and they said it was OK to use client funds, allegedly.
This verdict is hardly surprising. I have been reading the book “Going Infinite”, subtitled “The rise and fall of a new tycoon”, by Michael Lewis. Clearly there were few controls in the business of FTX and people were hired with no experience – lack of financial knowledge or experience was seen as an asset!
The gullibility of the public to new get rich quick schemes is well demonstrated in the history of FTX. The UK Government has recently announced plans to regulate crypto markets which should surely be done as soon as possible.
The book mentioned is essential reading for anyone who wants to dabble in cryptocurrency and highlights some of the stupidities associated with Bankman-Fried.
Roger Lawson (Twitter https://twitter.com/RogerWLawson )
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