Empty Promises, Shady Intentions, A lack of ever intending to hold true to their word, you name it.
Is this really News to any of those whom aren't fresh in the lands of Crypto and NFTs?
The Short Answer: No.
What IS new is that the swindling has now shifted into a wider scope. One that pertains to an audience larger than the "NFT Bros falling for the Ol' 10k Generative Pump & Dump again".
We now are having concerning trends of Crypto Exchange CEOs, Founders, and the like siphoning, laundering, leveraging customer funds, and at times somehow "misplacing" funds of hundred of thousands, if not millions of users.
TL;DR: Sam Bankman-Fried, a now constantly trending name in the Crypto Space, reported to be Gambling millions of Customer/Investor funding through FTX and sister-company Alameda Research using FTX created Alt-Coin FTT. (With recent reports of SOL being in the laundering mix via forced transactions.)
Sam Bankman-Fried of FTX photographed in March 2021 by Virgile Simon Bertrand for Forbes.
For Example: Sam Bankman-Fried -- Founder of Alameda Research, Co-Founder of FTX, was found to be leveraging FTT Token, FTX's in house Alt-Coin, as an asset in Alameda Research.
Not long ago, September 27, 2022 to be exact, Forbes.com was proclaiming this man to be the "Savior of the Crypto World", comparing him to the likes of "...J.P. Morgan during the crisis of 1907."
An Extensive mapping of Alameda Research & FTX Ventures' Portfolio
*For those not fully up to speed, Alameda is a Trading/Investment Firm run by Bankman-Fried associate CEO Caroline Ellison. Alameda is known for their investing in roughly 150 Crypto Currency Based Companies, some of which are now notably bankrupt or were already going under upon acquisition.
In order to fund these investments, or more so Gambles, they took out various loans which ultimately defaulted as the Crypto Market dwindled its' way downward. As the Market crashed, Alameda's lenders wanted to see a return on their loans, which the executives of Alameda and FTX responded with questionably by using FTX Customer Funds to pay back their Loans.
(Reported by the Wall Street Journal on November 19, 2022.)
*This is when FTX, a Crypto Currency Exchange and close competitor of Binance, specializing in "derivatives and leveraged products." becomes a major key in the story.
Big Reminder: Sam Bankman-Fried is the Founder of FTX as well.
They offered Futures, leveraged tokens, options, MOVE contracts, and spot markets.
( Information pulled from Investopedia.com Entry on What is FTX? )
The reports of FTX's initial scandal broke on November 2nd, 2022 via an Article on Coindesk.com after Alameda had disclosed financial documents for review.
Upon inspection, Alameda's balance sheets were "full of FTX – specifically, the FTT token issued by the exchange that grants holders a discount on trading fees on its marketplace."
How much FTT are we talking exactly?
Alameda's financial reports in June of 2022 showed $14.6 Billion of Company Assets. Their largest single asset happens to be $3.66 billion of "unlocked FTT", a $2.16 billion sum of "FTT collateral", and $292 million of "locked FTT." as reported by CoinDesk.com.
(Locked FTT represented a slow-release system implemented by FTX for their Token to ensure "...the exchange, to succeed long term -- much more than short-term profit." The FTX team goes on in the same Official Help Article on their Company Website to state "We will not be taking actions that we think will damage the long term growth of FTT.")
Amongst the list of Assets you will find roughly $1.12 Billion of Solana Blockchain's token: SOL, with Bankman-Fried being an early on investor into the Blockchain.
Traveling further down the Alameda rabbit hole leaves lawyers and financial investigators with more questions than they have answers. According to a Chapter 11 Bankruptcy filing in Delaware, Alameda carries a whopping amount of "...outstanding liabilities of $5.1 billion...", reported by Forbes.com.
Reported in these filings, roughly $4.1 Billion of Loans went to propel Bankman-Fried's personal ventures.
He was accredited with being the "...second-largest individual donor to Joe Biden in the 2020 Presidential Election, personally donating $5.2 million", then going on to donate "$40 million, mostly to Democratic candidates, during the 2022 U.S. Midterm Elections." per Sam Bankman-Fried's Wikipedia Page.
In an Interview Bankman-Fried indicated "...he'd prefer to see the CFTC take on a bigger role." The Commodity Futures Trading Commission holds a more lax approach to the ways Crypto Currency platforms are allowed to operate compared to the SEC, a secondary Crypto Market overseeing Commission.
Given their stance on the matter, it is understandable when FTX themselves called for a "...system in which a trading platform would be able to pick one agency as its primary regulator."
What does this all mean?
In a nutshell, the head of Alameda and FTX collaborated with Executives to gamble on various Crypto ventures, using various acquired funds to try and sway Crypto Legislature in their favor, and sustain various Crypto Companies across the ecosystem. The narrative up until this past month was that this man was our Crypto Savior, a false pretense designed by Bankman-Fried to disarm and confuse as he and his partners swindled millions in their Bahamas Penthouse.
Anonymous sources cited by the Wall Street Journal confirm that Bankman-Fried was "aware that FTX had lent its customers' money to Alameda to help it meet its liabilities."
Reflecting on how situations like these have been handled in the past on Non-Crypto related ventures, this man would be in Jail, or facing Criminal Charges at this current state, right?
Nope. He currently resides a Free Man in the Bahamas.
Leaked Chat Photos involving Sam Bankman-Fried provided by "Internet Detective" CoffeeZilla on Twitter
My journey into Crypto hasn't been weathered and Multi-Bear Market tested like the true Crypto Currency OGs of Old; I have been around long enough to see a piece of what truly bars us from true Mass Adoption of Crypto Currencies, Blockchain Technologies, and NFT Collectibles.
To put it in a simple generalization: Scams.
Scams of all nature and creed plague our Communities. There is so much good to come of it all, yet for every individual preaching the Blockchain Gospel in the purest of senses, there are two looking to make a quick bag and then chuck the deuces!
We were led to Crypto Currencies for one reason or another, but a common thread shared by many is a want for an alternative to the "Norm". What we are left with is something closer to the Centralized Mess we sought a solution to.
With that I now pose a Question to you:
What does the General Public see more scrolling Social Sites like Twitter, the Good or the Bad?
Twitter Profile of Ben Armstrong
Granted in recent times with the Scandals of FTX, Alameda, LUNA, and endless Social Media Influencer S*%$-Coin Rugs, it is easy to see how some have truly have become desensitized to these atrocious happenings.
Shave that Jaded mentality away, and I personally find myself concerned with the state of it all.
As much as it is to be understood that the Internet is not the entire views of the General Public, nor the supporters of all the Communities involved; There is a tangible troubling overtone when having to sift through a seemingly endless number of issues.
Nancy Pelosi's Twitter Thread regarding FTX
What happens when the Rug Pulls are being facilitated through the Exchanges and Trading Hubs we are trusting with our Funds and Investments?
One could argue the "Bad Apple in the Bunch" argument when a Project Founder is found to be funneling Community Funds, but how do we brush ourselves off after a hit so crucial, whether or not we had stake on the FTX platform?
Not so long ago back in May of this year, we were dealing with the de-pegging of TerraUSD and the resulting collapse of LUNA along with roughly $2 Billion.
Amidst the carnage, we thankfully have individuals daring to use their platform to share about the blatant perpetuating of the same toxic core values causing a general animosity for AltCoins and NFTs the like.
In Part 2, I will dive deeper into recent NFT Influencer scandals and rugs, Starting with the Art Gobblers specifically.
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Until next time!
