How did Sam Bankman-Fried get away with his scam for so long?
The more I read about the FTX bankruptcy and its impact on the cryptocurrency market, the better I understand what happens when the controls that society should impose on companies fail miserably.
What did Sam Bankman-Fried do with FTX and how was it possible that no one saw it coming? Leaving aside the question of how somebody with a name like that could inspire confidence in a business related to banking and the economy in general, the problem was, fundamentally, in a narrative of a successful entrepreneur with a supposed fortune of $16 billion, raising funds from hundreds of thousands of people, spending lavishly on PR, media advertising and lobbying politicians, and then covering the hole with a corporate structure in the Bahamas and a cryptocurrency, the FTT, of his own creation.
What was FTT? Basically, a native token created by FTX to try to encourage users of the exchange to leave their money in the company, with promises of additional returns. Similar mechanism exist in the crypto world, but they are supposed to be used responsibly, and not as the foundations for a house of cards. In practice, it should remind us of the cryptocurrency maxim, “not your keys, not your coins”, and how if you leave your coins in a centralized service, you face risk, whether it is hacking, as in the case of Mt. Gox, or…
