While the responsibilities of the now bankrupt derivatives exchange FTX are separate from those of former chief executive Sam Bankman-Fried (SBF), the industry and mainstream media seem to see things differently. Many are calling for justice, citing SBF’s lack of ethics in leading the company to its demise.
The truth is that FTX can be considered one of the best success stories in the entire crypto world, except, of course, its implosion showed that all that glitters is not gold. For a company that was ranked as the second largest in the industry in terms of trading volume and surpassed a $32 billion valuation in its last funding round, its implosion now places it as one of the biggest scams in the digital currency ecosystem.
The facts are in, with evidence indicating that SBF used customer deposits to fund failed investments by its sister company and trading firm Alameda Research. With more than $4 billion illegally siphoned off through a backdoor he allegedly created on the FTX platform, without any other executive knowing what was going on, the crimes committed appear premeditated and deliberate, which explains the anger of investors and stakeholders.
Mainstream media influence sentiment
The media is supposed to be a vehicle for accurate information and awareness, an extremely important medium and resource in the rapidly expanding world of crypto-currencies.
All media must report, this cannot be controlled, however, what they report must at least be within the facts available. Many members of the public disapproved of the latest Wall Street Journal (WSJ) report that attempted to downplay the seriousness of the situation.
The WSJ article portrays SBF as a major philanthropic figure, a positive connotation of his squandering of funds in a fraudulent manner. In a Twitter post to make the news public, the Wall Street Journal said, “When Sam Bankman-Fried’s crypto empire went down in flames, so did his plans to save the world“, a connotation that the industry does not find acceptable.
From Elon Musk to Michael Saylor, the “Bitcoin bull“Whose company, MicroStrategy, owns more than 130,000 units of the first currency, the number of people criticizing the article is growing by the hour.
WSJ giving foot massages to a criminal
– Elon Musk (@elonmusk) November 24, 2022
“Sam counterfeited billions of tokens via stock market fraud, inflated that by billions more via accounting fraud, seized billions of customers via bank fraud, corrupted the establishment with dirty money, then panic sold billions of stolen #bitcoin to crash the market“, tweeted Michael Saylor in response to Elon Musk who said the WSJ “Gives foot massages to a criminal“.
Michael Saylor also noted that Sam Bankman-Fried never had any plans other than to “steal the world“, a designation that does not befit one of those who claimed to be working to build the industry.
Coping with pain
As a former billionaire, Sam Bankman-Fried was entitled to a luxurious lifestyle, and his $30 million mansion in the Bahamas is justified. However, the thought that he had to finance some of his lavish estates with funds from the company and users remained one of the highlights of the wounds that many do not recover from.
FTX is not the only crypto-currency company to go bankrupt this year, as Three Arrows Capital (3AC), Celsius Network and Voyager Digital also went bankrupt earlier this year. The significance of FTX’s bankruptcy lies in the fact that the company presented itself as the lender of last resort sent to rescue other struggling companies.
With the bankruptcy, a handful of prominent investors, including Softbank Group, Temasek Holdings and Multicoin Capital, have announced their intention to write down their investments in the company as a loss, even if there is an iota of hope of recovering some of that money in the bankruptcy proceedings. While these large investment groups have found a solution, the same cannot be said for the smaller investors who have funds on the platform.
The positive sides of the saga
The collapse of FTX has caused a major wake-up call for all industry stakeholders and may prompt a stricter evaluation of which companies to pitch the tent with in the future. The collapse of the FTX exchange has spawned transparency among the surviving exchange platforms, with most of them releasing their proof of reserves to show how liquid and healthy they are.
The collapse of FTX is also seen as beneficial, as Reuters reports, in that it will now force regulators to demand more from crypto providers operating in their jurisdictions. With increased regulation, as many have suggested, user safety and the prevention of similar trends in the near future can be avoided.