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SBF clown show trial unmasks the crypto casino and the robustness of Bitcoin
A billionaire autist on trial reveals a lot about why Bitcoin stands above it all
If you’re not following the trial of failed FTX CEO Sam Bankman-Fried, it’s a doozy.
Billions of dollars gone poof, crypto tokens artificially propped up, paper Bitcoin trading hands like fidget spinners, and a vast donation network that looks more like an evil Soviet spymaster plot than any legitimate trading platform. And I didn’t even mention the strange nerd orgies in the Bahamas headquarters.
What do you need to know? FTX, a crypto exchange operating in the Bahamas, was a premiere online platform for many crypto traders that gained significant influence among politicians, celebrities, and private investors. While it gained ground publicly, it all turned out to be a ponzi scam. It’s estimated that over $230 million were doled out to friends of favor and even more was gambled away directly from customer funds.
The money seemed virtually printed, as billions of dollars poured into the platform while investors, customers, and regulators were oblivious to the massive margin shell game being played within.
It became a piggy bank for sponsorship deals, millions in left-wing political spending, and a wet bag of a slush fund for the parents, family, and friends of its founder Sam Bankman-Fried.
I’ve been quite clear on this topic from early on. I wrote my first piece criticizing SBF and FTX’s business model back in August of 2022. It was clear they were basing themselves in the Bahamas while pumping a scam across international borders that were lining their pockets and screwing depositors. The truth became more clear in September even though SBF was the talk of the town on crypto twitter, in the halls of Washington, D.C., and making fake celebrity friends all along the way.
By Thanksgiving of 2022, the scam had been revealed.
Much more than just a crypto exchange gone broke because of a bank run, FTX’s debts had been subsumed thanks to its relationship with Alameda Research, the hedge fund founded by SBF and his Stanford buddies, which had an unlimited credit limit on the platform that eventually gambled, lent, and donated away billions of dollars of custodied cryptocurrency.
As the ongoing criminal trial of SBF is revealing, this was not only a long-term plan of FTX since its inception, but it was literally baked into the code of the FTT token that underpinned all FTX trades.
At the same time, the court testimonies revealed that as FTX and Alameda’s debts climbed higher, there was an active campaign to wager against the rise of the Bitcoin price in order to keep those debts in check. There may have been some downward pressure, and we’re still down in fiat terms since then, but we learned very early on that Bitcoin is bigger than all this bullshit from an Adderall-fueled Caribbean utopia that created a fake crypto token empire.
While SBF played the role of an effective altruist who gave political money to the right people and causes, he was setting fire to the reputation of cryptocurrency and providing us with the starkest example of why a decentralized protocol like Bitcoin stands apart.
While the gains in SBF’s FTT token, his favored VC-backed coin Solana, and other crypto projects were mostly vaporware, he was always held in check by the underlying tech and market of Bitcoin. That’s why he and his operatives were so intent on bringing the price down, conspiring to keep the price below $20K.
I will keep paying attention to the trial because it does provide us with a night and day division of why Bitcoin stands leagues above the crypto casino game. For one, there’s an actual use case for Bitcoin. This entire website is filled with examples.
Another, because of its anonymous founding, proof-of-work algorithm, and ability to validate transactions independently, there is no way to fake Bitcoin or fool the markets, like SBF attempted to do with his own tokens and exchange.
There may be some sour news coverage around Bitcoin when it comes to this trial and until SBF makes his prison cell a permanent home for the billions he stole, but the protocol will eventually rise above it all.
In the end, I’m happy to be on the side of Bitcoin and away from the crypto circus. Aren’t you?
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