Sam Bankman Fried, Television Star

There Is Only One Reason He Is On TV

I watched

ARS

Andrew Ross Sorkin’s interview with Sam Bankman Fried (SBF) Wednesday on CNBC. This morning, he was on Good Morning America with George Stephanopoulos. Maybe the new trend is three letters and I should go by JRC, or just my old trading badge, CR but I digress.

Contrast SBF’s actions with Jon Corzine. Corzine did the exact same thing SBF did at MF Global, take customer money to cover bad trades.

Do not let SBF’s sweet talk and deflection sway your opinion. He is a fraudster. Charles Ponzi would be jealous. He should go to jail.

Maybe FTX didn’t start out that way, but as soon as the business went south, the company and its employees turned to fraud to cover the holes. Not only that, but they took the advice of their parents and immediately started donating to Democratic candidates, along with a tidy $1MM to Mitch McConnell, and at the same time began virtue signaling about how they were going to donate to causes to save the world.

VCs that invested were looking for return but they didn’t have the in-house expertise to understand what they were investing in.

My friend Terry Duffy wasn’t running the CME when Corzine did his thing. One of the reasons he is was because of the CME response at the time. Terry took full control of the helm in the wake of the Corzine fraud. But, he did meet with SBF and the meeting didn’t go well.

Anyone with a modicum of intelligence in how an exchange is supposed to work would have smelled a rat when talking to SBF about how he was structuring his operation. Duffy gets full credit for smelling it and I am sure all the bluster publicly about how CME was going to go down the tubes to the likes of FTX was laughed at in the board room.

If I were on the CME board, at the next meeting I’d set up a special chair with a nametag of “SBF/FTX” on it for the next meeting. I’d do it for two reasons. One to add some levity to a serious meeting. Two, to remind everyone what kind of business we are in. Transparency and the full faith, trust, and credit of people who rely on the business to manage risk, hedge, speculate, and otherwise manage money can’t be done while texting on your phone and at the same time spewing generic platitudes with big words that people like to hear. Exchanges aren’t just in the money management business. They are in the price transparency business. They are in the trust business.

Terry made SBF an offer he shouldn’t have refused and that single offer was where Terry absolutely knew beyond a shadow of a doubt that SBF and his entire operation was a fraud. When I heard about it on television I knew exactly why he did it and it was pretty astounding to me that he did it. It was a pro-move. Who offers to give away a $30MM revenue stream for free in exchange for clearing that may or may not bring you that kind of revenue, especially on a discounted cash flow basis, in the future?

Remember the sort of environment we have been in with regard to building venture-backed businesses. AirBnb ($ABNB) was worth more than all the hotel chains combined. WeWork was worth more than all the office space companies, combined. Tesla ($TSLA) was and is worth more than all the other traditional auto companies, combined. SBF was a wunderkind that was going to take down the exchange industry. He was gonna take down Goldman Sachs too while he was at it.

You don’t go after Dracula, but they come after you when you stub your toe. It was Goldman and Jon Corzine that “helped” Long Term Capital Management after things went south if you recall.

Did Corzine go on television after he committed fraud? As a former Democratic Governor and Senator, along with being the head of Goldman Sachs he certainly had the connections to do it. No, he stayed silent and refused to be interviewed. Not only that, he never even gave a deposition. Koutoulas talks about FTX here. Worth a listen since James got the money back from two consecutive frauds in one year, Corzine and Peregrine Financial Group.

James Koutoulas @jameskoutoulas

@pointsnfigures1 @RLSandack Nope. Judge wouldn’t let us depose

Corzine was protected by the Democratic elite class. He was a top bundler for the Obama campaign. Attorney General Eric Holder ran interference for him.

In Corzine’s case, he ran afoul of US regulations. It’s important to remember that SBF is in the Bahamas so he doesn’t have to deal with US regulations.

But, similarly, SBF is ensconced in the Democratic Party elite bubble. His parents and his girlfriend’s parents are high up in the Democratic Party. They know people that know people. His girlfriend ran Alameda Research so it’s pretty unlikely that he didn’t know what was going on there contrary to his public television statements.

Did SBF launder money for the Democrats? It’s possible. But, it has to be proven and only the Department of Justice can bring that sort of investigation. Watch Merrick Garland. If he sits on his hands, SBF will stay out of jail. If Garland sits on his hands, you know that the Democratic central authorities told him to sit on his hands.

Does SBF have only $100,000 in his bank account? Maybe, but I’d bet dollars to donuts that he has a lot of money tied up in crypto tokens that are hard to trace. He isn’t an above-board player-he is a fraudster. They lie and cheat constantly and use the power of personality to get what they want.

So, why is he on television all the time? No lawyer worth their salt would allow him to tweet let alone speak publicly.

I think it pays to be super cynical, unfortunately. There are two options I see.

1. SBF is going to be protected by the elite Democrat class and this is a roadshow to elicit empathy. Everyone interviewing him is an ardent Democrat. He is “rending his garments”. He is getting somewhat tough questions, but because the interviewers don’t understand the exchange process, the questions are not specific enough. One I would ask is why Alameda or any other trader was allowed to post margin in FTT tokens instead of fiat currency.

2. SBF is in fact going down and the interviewers are doing what they can to expose him to protect the Democratic party.

Watch the news cycle and the spin closely. We know outfits like the NYT and WAPO are liberal left-wing rags and will do anything to protect Democratic Party interests. They are trying to control the narrative. I have seen positive, or neutral stories in the WSJ which is a sign that the GOPe doesn’t know what to do yet either. My guess is they are calculating how many of their core constituents were really damaged by the fraud. Right now it looks to me like the jury is out and no decision has been made. If their spin goes negative on SBF with some sudden revelation, SBF better go to Brazil. If you don’t know what the “Brazillian trade” is, ask a trader.