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SDNY unseals the indictment: Sam Bankman-Fried and FTX is a "classic fraud" [1]

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Date: 2022-12-13

The latest news of the FTX affair is revealed in the Southern District of NY unsealing the indictment of Sam Bankman-Fried as a classic fraud. The Indictment alleges that he “knowingly co-mingled” funds in the FTX/Alameda Research fraud case because it’s not really about crypto but about fictitious capital manipulated in the old fashioned way: “they earned it”. Digital bread now becomes analog toast.

Misappropriation of customer funds occurred with funds from one walnut shell swapped into another hedge fund exchange shell and the float spent on luxury goods and even political contributions. Institutional investors got rooked. Politicians who received donations are returning funds so as not to be caught by the SEC and FEC.

It’s a Madoff-like classic Ponzi scheme: a million clients representing $50 billion in assets, managed in Quickbooks software? The relative isolation of crypto contained a slightly indirect relation to the financial system. Sam Bankman-Fried’s lack of risk-management is only one bit of negligence as a subsequent run on assets revealed the lack of funds supporting investments. It sounds more complex because of the use of crypto and crypto-coinage in one aspect, but it’s still about money laundering, fraud, and theft.

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[1] Url: https://www.dailykos.com/stories/2022/12/13/2141686/-SDNY-unseals-the-indictment-Sam-Bankman-Fried-and-FTX-is-a-classic-fraud

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