“Smart” crypto money? Great traders fell in love with Sam Bankman-Fried

I was shocked when I first learned how a hot mess like Sam Bankman-Fried got away with convincing so many seemingly smart people – big money managers, venture capitalists and all those celebrity ambassadors – that he was such a little investment genius, they should hand over a lot of money for him to play with.

That is, until I witnessed what happened on Wednesday after the fallen crypto star tried to explain his version of the FTX disaster to journalist Andrew Ross Sorkin. The missing billions in client funds, ruined lives, etc., weren’t illegal, just a big innocent mistake, or in his words, he “screwed up”, the result of a “bad month”.

Sounds absurd, right? Believe it or not, many sophisticated financial types say they still believe in SBF’s latest sales pitch, further proof that suckers are born every minute, and many of them occupy Wall’s C suites. Street.

Of course, not everyone in high finance bought SBF’s shtick even when it was high. Veteran trader Marc Cohodes and Chicago Mercantile Exchange CEO Terry Duffy were early skeptics of his trading prowess and how Bankman-Fried claimed he had devoted his entire life outside of crypto to a waking fashion known as “effective altruism” – where he earned money in order to give his all.

But they were among the few who saw signs that something was wrong. Most of the media, and way too many Big Finance guys, didn’t seem to reflect on his chaotic appearance and odd behavior. They thought it was endearing. They didn’t think twice that relatively overnight he had become a billionaire, Democrat megadonor, giving big money to the pols with crypto oversight.

Buying influence is OK, I guess – as long as it involves Democrats.

Conflicting cases

They certainly didn’t pay attention to its conflicting business model: the risky prop trading fund Alameda Research – notorious for taking too much risk – attached to its FTX crypto exchange which was supposed to protect customer deposits. It’s something that was almost designed to fail, and that’s exactly what happened when the minions of SBF gambled customer funds into the global crypto-casino.

Worse still, some members of the so-called “smart money” ensemble are still eating his shitty explanation of one of the biggest scandals in recent market history without the slightest indigestion or outrage.

Bill Ackman is one of the leading hedge fund managers. He is known for “shorting” or betting against stocks he thinks are frauds, and once led a year-long campaign to prove (but unsuccessfully) that the nutritional supplement company Herbalife was a big pyramid system.

But Ackman was so sold on the SBF excuse — that the crypto brother “never tried to commit fraud” by assembling a house of cards that failed to meet minimum risk compliance standards — that Ackman tweeted. , “Call me crazy, but I think @sbf is telling the truth.

I don’t know if Ackman is really crazy, but if he believes SBF’s explanations of how he started a financial company without even the basic knowledge of risk management, he might be a real jerk .

Also consider Kevin O’Leary of “Shark Tank” fame. He’s a guy who comes across as someone who’s been around the neighborhood so many times that he can tell good business ideas from dogs. A real shark.

O’Leary would have lost millions of dollars in the collapse of FTX. He, along with NFL legend Tom Brady and other celebrities, were so-called “brand ambassadors,” part of the crew who appeared in those slick ads aired by SBF to sell to the investing public. that FTX was a safe place to trade your crypto.

Not very handsome, but even worse, O’Leary is still unsuspecting of SBF’s motives.

After watching SBF’s Wednesday performance with Sorkin, O’Leary, known as “Mr. Wonderful,” tweeted, “I’ve lost millions as an investor in @FTX & been blasted as the company’s paid spokesperson, but after listening to this interview I’m in the @BillAckman camp about the kid!

Who was responsible?

For starters, the “kid” is 30 years old. It was a grown man who conceded to Sorkin “there was no one who was primarily responsible for the positional risk of clients on FTX”, which is the functional equivalent of a doctor performing surgeries without going to the hospital. ‘medicine School.

SBF also told Sorkin that he was speaking publicly about what happened against the advice of his attorney because he wanted to do the right thing and help save everyone who lost money. Maybe that’s what sold Ackman and O’Leary.

I bet the US Attorney’s Office in Manhattan, which is investigating this sordid mess, won’t be such an easy target for SBF’s apology.