Sam Bankman-Fried is different from Bernie Madoff, but still ends up in a Ponzi scheme

Earlier today, SBF announced that it had filed for bankruptcy for FTX and Alameda Research, pushing the price of bitcoin even lower – below $17,000, along with the entire crypto-currency market.

Ripple’s CTO believes that while many people on Twitter are now comparing FTX to Madoff’s Ponzi scheme, there is “huge apparent differences“. Nevertheless, he admits that FTX turned out to be a Ponzi scheme.

Here’s how SBF is different from Madoff, but still ends up a Ponzi scheme, according to Ripple’s CTO.

David Schwartz believes that unlike Bernie Madoff, who created the largest Ponzi scheme in history worth nearly $65 billion, Sam Bankman-Fried seems to have started FTX as a legal crypto business, then it gradually turned into a pyramid, whereas Madoff started with a Ponzi scheme deliberately, perhaps hoping to replace it with a legitimate business later.

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He believes FTX began to turn into a Ponzi scheme when the related Alameda Research trading firm began losing money. Another scenario here is that the founder of FTX wanted it to become more profitable.

Either way, David Schwartz believes that SBF took a huge risk on its crypto-currency exchange – first to increase its profits, then simply to keep it afloat.

Another difference between the two Ponzies that Madoff made people lose money from the start, while Sam Bankman-Fried loaned out customer funds that he was not supposed to use in this way.

Sam Bankman-Fried announced that he had filed for bankruptcy of FTX and Alameda. This event pushed the price of bitcoin below $17,000 and towards pre-2017 ATH levels.

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