As the impact of the FTX collapse continues to unfold, there are several aspects of the event that reach well beyond the cryptocurrency world. And as more information comes out, the more important the situation appears.
A Few Facts and Curious Coincidences
First of all, the massive financial scandal has left investors with billions of dollars in losses. That in itself makes the debacle one of the costliest on record. The speed at which FTX both attracted investors and lost all of its money is also unprecedented. Its CEO, Samuel Bankman-Fried (also known by his initials SBF), went from a net worth of up to $26 billion to essentially broke in a matter of days.
It’s also amazing how Bankman-Fried was able to acquire such a large amount of investor cash so quickly and publicly.
Why didn’t that attract some sort of regulatory inquiry despite warnings from market experts in congressional testimony?
The Madoff of Cryptos
This is a very good question since the dynamics of the collapse involved evident malfeasance on the part of Bankman-Fried. Not only were basic capital protections ignored, but FTX investors’ cash was diverted into Alameda Research, an investment firm owned by SBF. That’s an illegal and unethical conflict of interest that should have already drawn criminal charges against him, especially in light of the scope of the financial losses. He has rightly been described as the Bernie Madoff of cryptocurrency.
Yet somehow, amazingly, SBF has yet to be arrested. What’s more, regulators missed these obvious red flags. Or did they simply ignore them?
And if regulators ignored the FTX transgressions, why would that be?
The simple answer, though certainly not the only or complete one, is that Bankman-Fried and FTX were and remain politically connected to very powerful people. That’s a well-established fact.
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Son of Stanford Professors
Another well-established fact is that Bankman-Fried’s parents are both Stanford professors. His mother, Barbara Fried, teaches courses in federal income taxation, legal theory, tax policy, distributive justice, and moral psychology. His father is an expert in taxation policy and has testified before Congress. Both are deeply connected to the Democratic Party establishment, and both profited handsomely from FTX to the tune of some $300 million in properties.
Turning a Blind Eye
But did politicians help protect FTX along the way?
That, too, has yet to be established. It is a fact, however, that the political elite in Washington, our elected representatives, benefitted greatly from FTX. Since 2019, Bankman-Fried has been the second largest donor to the Democratic Party, contributing $38 million of essentially stolen investor funds from FTX to the party.
But it wasn’t just the Democrats that were funded by FTX. In that same period, Bankman-Fried’s co-CEO, Ryan Salame, who ran various parts of FTX, donated about $20 million to the Republican Party. So both parties gained from large financial contributions by FTX.
One can’t help but wonder how many blind eyes and legal protection such contributions may have bought Mr. Bankman-Fried. That is speculative but not unreasonably so.
Tainting the Bitcoin Well
Furthermore, hundreds of millions of dollars have been stolen from the exchange and funneled into bitcoin. That dynamic is turning the world’s top cryptocurrency into a haven of thieves and tarnishing its already damaged reputation. Bitcoin is already under duress as energy costs associated with mining have risen while bitcoin’s price and credit sources have contracted.
The timing of the FTX collapse is another coincidence. It certainly helps the anti-cryptocurrency crowd. Critics warn that money, especially cryptocurrency, is just too important to leave to the market and private issuers.
That argument sounds reasonable, but it’s also highly coincidental with the FTX crash occurring in the same period as the Federal Reserve’s public announcement and initial testing of its Central Bank Digital Currency, known as the digital dollar.
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Why’s that important? There are at least a few reasons.
A Perfect Crisis for the Digital Dollar
One is that the FTX crash is the perfect crisis to help “demonstrate” to the public that unregulated, decentralized, and anonymous exchanges, and trades and holdings of cryptocurrencies that are beyond the purview of the federal government pose a threat to investors.
That’s true, but the same could be said about unregulated real estate transactions or the buying and selling of used cars. Nonetheless, the cryptocurrency chaos can be used to justify a federal crackdown on the industry.
Another reason is that the American public will not be easily convinced of the need or desirability of the digital dollar. The FTX collapse may be one way to help shatter public confidence in all cryptocurrencies as safe and viable alternative investments in order to persuade the public to accept the issuance of the digital dollar.
The digital dollar will be transparent and programmable to provide the Fed with new levels of control over our spending habits, strip away privacy, and greatly restrict personal autonomy. In short, digital currency is a formula for tyranny that will be presented as needed for currency security.
Who Are the Shadow Players?
There are other curiosities about FTX and its sudden downfall, such as the identity and influence of FTX and Alameda Research co-founder and CTO Garry Wang. He has been silent so far, and not much is known about him.
Finally, it’s certainly coincidental that Bankman-Fried sought a bailout from his industry rival Changpeng “CZ” Zhao, owner of Binance, the world’s largest cryptocurrency exchange. Some believe that China-born Zhao’s loyalties still lie with Beijing. That is not known at this time.
But as enigmatic as the people surrounding the fall of FTX appear to be is how it was allowed to happen in the first place, which leads to at least one more question …
Was FTX designed to fail?
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of our premium news partners at The Epoch Times.
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
JD Rucker