SBF’s in hall of ‘shame’ Crypto ‘fraud’ joins list

It may be a bit too early to lump Sam Bankman-Fried into the same bucket as the infamous fraudster Bernie Madoff — or maybe not. 

The full post-mortem of his epic collapse from crypto wunderkind and billionaire to broke crypto villain extraordinaire won’t be ready for some time. Prosecutors in the US attorney for the Southern District are eyeing possible charges before the end of the year, I am told, so barring exculpatory evidence we can’t label him a criminal yet. 

The bankruptcy trustee is just starting to get into the mess. He calls what went down — the disappearance of billions, massive losses in allegedly segregated accounts in Bankman-Fried’s FTX crypto exchange — “unprecedented.” But he has stopped short of calling it a fraud. 

Quicksand fortune 

At the very least, the 30-year-old man-child known by his initials as “SBF” can be best described as a world-class schemer. Armed with the benefit of hindsight, you can see how cultivating his image of nonconformity with his unkempt hair, and coupling it with the halo of woke politics, SBF built his one-time crypto empire on a pile of quicksand. 

Of course, all scammers have their shtick. In Madoff, those who fell for his hustle wanted to believe that a fatherly figure from Queens, savvy in the markets and looking out for their interests, would help them retire in style. If you convinced him to let you in the door, the “Madoff Bond” took care of you and your kids in perpetuity. The promised guaranteed returns turned out to be a mirage because nothing in finance can ever be guaranteed. 


Bernie Madoff.
Bernie Madoff was an infamous fraudster who is in the same category as “SBF.”
Dennis Van Tine/MediaPunch

More recently, Elizabeth Holmes’ hustle was a well-cultivated image of tech-geek cool. She faked her Steve Jobs act right down to the black turtleneck and husky voice as she pushed what now seems to be a life-altering, and improbable, innovation: a do-it-yourself blood-testing product that would have revolutionized health care. 

SBF’s hustle was the diversionary technique of virtue signaling his way into the hearts and minds of the media and financial elite so they didn’t bother to examine the logical holes in his business model. 

Signs of those holes were certainly there. He amassed his paper fortune, around $16 billion, on the back of a dubious crypto, FTT. There were untoward links between his FTX crypto exchange and a prop-trading fund he ran on the side. 

He made a lot of money — for a time. SBF was compared to Warren Buffett by the geniuses at Fortune Magazine. But Buffett made his fortune over a long career. SBF earned nearly all his “money” in about three short years. 

How did he pull it off? SBF went to MIT so that gave him the imprimatur of smartness and marketable to investors. He wore a hoodie, so that may have made him hip to the fawning tech media always on the lookout for the next nonconformist to change the world. During our Fed-induced financial bubble and irrational exuberance in crypto, he was able to ride the wave of easy money and crypto-trading opacity. 

He may have been smart but real skillful traders avoid life-altering losses by seeing markets turning against them and moving on. When crypto began to correct and crash, SBF famously doubled down investing in distressed crypto outfits. That should have been a sign of his deception. 

Dem ‘altruism’ 

Yet no one asked where he got the money to do it because he built up such a rep as a do-gooder who was on the right side of investing. He gave to progressive pols in the Democratic Party and $10 million to President Biden in 2020, which bought him cover. He spoke incessantly about the need for the super wealthy like himself to embrace something known as “effective altruism” — you make money for the purpose of giving it back to make the world a better place. 

You can see it in the deference people like Tony Blair or Bill Clinton gave him at conferences just before his collapse. Or how congressional committees sought his advice, nearly to the minute he imploded, on all matters crypto. 


A general view of an FTX logo as seen in Hawthorne, NJ on November 17, 2022.
Sam Bankman-Fried built a broken empire off cryptocurrency through FTX.
Christopher Sadowski

The chattering classes, the Blairs, the Clintons, the financial press, ate it up. 

The absurdity of it all didn’t stop Sequoia Capital, the VC heavyweight, from giving him money, or news anchors from begging him for fawning interviews or Congress from getting his two-cents on regulatory matters. SBF was being introduced to Middle East investors for even more cash just weeks before his fall. Hell, he recruited Tom Brady and Larry David as FTX brand ambassadors. 

SBF cozied up to crypto regulators at the Commodity Futures Trading Commission, the Securities and Exchange Commission. He met with chairman Gary Gensler to pitch an idea for a new crypto exchange despite Gensler’s skepticism about the industry, without anyone thinking, “is this guy too good to be true?” — except a lonely handful, including possibly SBF himself. He recently remarked in a moment of candor that his virtue signaling was “a dumb game.” 

Now ya tell us.