I hope everyone’s had a good week, and thanks to those who left reviews which can now be seen on the website, there were definitely some interesting ones.
Today we’re beating a dead horse and talking about fraud. Of course, we’ll talk about the FTX implosion and SBF, but we’ll also summarize and compare how this fraud case compares some of the biggest fraud cases in history.
SBF = Some Background First
Sam Bankman-Fried (SBF), once the savior of crypto, was just arrested in the Bahamas for fraud. His company, FTX, once worth $32 billion, declared for bankruptcy after not having enough money in the reserves to cover the withdrawal demand.
This is a big deal, and could potentially land him 115 years in prison if he’s convicted of all the charges against him.
Ok, but what happened?
- Commingled funds: You deposit money in FTX, FTX sent that money to Alameda Research who invested it. And they weren’t good investors.
- Wire fraud: You deposit money in FTX, he uses that money to buy real estate and other personal assets.
- Conspiracy to defraud the United States: You deposit money in FTX, he uses that money to donate millions to political campaigns.
- Pretty much no bookkeeping at all: That one speaks for itself.
- Loved stimulants: Apparently, he and his team loved to use stimulants for productivity.
All of this has him looking like Marty from Home Alone.
And all of this, illegal.
The new CEO, John Ray, who has handled some of the biggest bankruptcy cases in the world, says this is the worst.
And there’s a lot of collateral damage. Since so many celebrities (Tom Brady, Giselle, Steph Curry, etc.) all promoted it, they’re also getting sued.
Anyways, you can go read about it pretty much anywhere and I’m too lazy and stupid to spell it all out for you.
But I did want to bring up some other frauds that can serve as comparisons, and because they’re cool.
SBF = Some Better Fraudsters
Here are the top frauds and fraudsters I could find. I also included their jail time, so at the end of it all we can see where SBF lands.
The Fraud: Started a Ponzi scheme in which early investors were paid off with money from later investors. His firm became very popular on Wall Street due to the huge investor payouts. Ultimately, he was able to do this for over a decade before he was caught.
The Sentence: 150 years for theft of $68 dollars.
The Fraud: Ponzi promised investors a 50 percent profit from an arbitrage scheme to buy US postage stamps at a discount in one market and sell them at full price in another market. His arbitrage scheme worked to some extent, but it produced nowhere near the 50 percent profit promised. Ponzi covered the difference with money from new investors, paying off early investors until the entire scheme collapsed when too many investors demanded their money all at once.
Ah yes, the big industry of postage by the man himself.
The Sentence: ~14 years for mail fraud.
The Fraud: ZZZZ Best was a fictitious rug cleaning company concocted Barry Minkow as a front for criminal enterprise of money laundering, racketeering and credit card theft. ZZZZ Best was valued at over $200 million at its height.
The Sentence: A whopping 5 years for securities fraud.
And last but not least, my personal favorite:
The Fraud: This guy, Jho Low, was nuts. Straight up coocoo for Cocoa Puffs. He personally got to know the prime minister of Malaysia and convinced him to let himself manage their country’s sovereign wealth fund of over $4.5 billion dollars. He pretty much used all this money for personal pleasure, buying a $250 million dollar yacht, buying his way into friendships with celebrities, and even financing the Wolf of Wall Street movie. How ironic, using fraudulent money to make a movie about fraud.
The Sentence: Jho Low is still at large, so zero years I guess…? He’s suspected to be living lavishly in China somewhere.
There’s a whole book on this called Billion Dollar Whale, and it details the whole thing. It’s one of my favorite reads, so go check it out!
SBF = Some Brewery Facts
Here are some facts: Seventh Son Brewing Co has the best beer in Ohio, you can buy their beer outside of Ohio, and they’re not a fraud. Seventh Son rocks, I’ve been there for work, and I’ve been there for play, and they’ve got an awesome setup for both. So go check em’ out! #ad
SBF = Going to Jail?
Sorry, I couldn’t think of another SBF acronym that made sense here.
It’s been mindboggling reading up on how this happened. The more details that leak, the less and less I’m surprised.
Both his parents are lawyers, and on an ethics council.
There was no board for his company.
Him and his staff all dated at one point.
Were his donations bribes to the government?
Like at this point, nothing surprises me. I just feel bad for the people who lost their money, and can’t wait for the movie to come out.
Cheers to us not having money in FTX, unless you did!
Let’s have ourselves a weekend.