Sam Bankman-Fried didn’t fool everyone — just the tech elite: 5 high-profile figures that believed him
“Everyone got duped by Sam Bankman-Fried’s big gamble,” the BBC said after the conclusion of the FTX founder’s financial fraud trial last week.
The verdict was in: The former crypto king, also known as SBF, was guilty on 7 counts. He could face more than 100 years in prison.
The trial lasted little less than a month and the jury came to its conclusion in just a few hours. Some were surprised by how quickly it went. Again, if you read “‘How Sam Bankman-Fried’s Cult Of Genius Fooled Everyone” in Forbes or “How SBF fooled everyone—including me” in Fortune last year, perhaps you were under the impression that SBF was some sort of mastermind.
But, he wasn’t. Many critics of SBF and crypto as a whole had called out the industry and, yes, specifically SBF well before the FTX con unraveled last November.
We saw it comin’
James Block, who runs a newsletter under the name Dirty Bubble Media, had been tracking FTX and its sister company, Alameda Research, and found that the latter was likely insolvent before the FTX bankruptcy news broke last year. FTX funneled customer funds to Alameda Research, which engaged in risky bets and investments.
Marc Cohodes, a well-known Wall Street short seller put it out there quite simply in a short tweet just a month before FTX’s collapse: “Over the past month, people have reached out with some great stuff on @sbf_ftx and FTX.. Its just a question of when this Charrade blows up not if.. I suggest SBF come clean and come clean fast.”
So, besides the obvious victims – the FTX customers that SBF took from – who, exactly, is the “everyone” that got duped by SBF? The very smart tech evangelists and venture capitalists, of course.
1. Sequoia Capital
Perhaps the best example of the dupes being largely the tech elite is Sequoia Capital, one of the biggest venture capital firms in Silicon Valley. In 2021, FTX was raising money amid the booming cryptocurrency wave. Sequoia Capital listened to SBF’s pitch and were immediately swayed
“I LOVE THIS FOUNDER,” wrote one partner during the pitch. “I am a 10 out of 10,” said another. And the adulation for SBF during the meeting from these VCs continued to the point where the firm invested $ 213.5 million into FTX.
What did SBF say that was so enticing?
“I want FTX to be a place where you can do anything you want with your next dollar,” pitched Bankman-Fried. “You can buy bitcoin. You can send money in whatever currency to any friend anywhere in the world. You can buy a banana. You can do anything you want with your money from inside FTX.”
You can buy a banana.
That was part of the pitch, which SBF delivered while playing video games, that won Sequoia over. And, how do we know? Just before FTX collapsed, Sequoia shared the story in a blog post on its own website.
2. Anthony Scaramucci
Remember The Mooch?
Anthony Scaramucci was the White House Press Secretary for roughly 10 days in 2017 before being unceremoniously fired by then-President Donald Trump. Scaramucci runs an investment firm, SkyBridge Capital, which became a big proponent of crypto in recent years. Among those crypto investments was $ 10 million that SkyBridge Capital invested in FTX after the exchange bought a 30 percent stake in the financial firm.
According to Scaramucci, they lost $ 9.6 million of that money when FTX went under.
Scaramucci had been one of SBF’s biggest fans for years, promoting FTX on social media and appearing alongside Bankman-Fried at numerous events.
“FTX is much more than a crypto exchange,” posted Scaramucci in May of last year. “I believe they will become the Amazon of financial services.”
As we all know, SBF’s scheme eventually fell apart and FTX went bankrupt less than 6 months later.
3. Bill Ackman
Let’s now take billionaire hedge fund manager Bill Ackman who defended SBF — even after he was arrested for fraud in December of last year. Ackman repeatedly went to bat for Bankman-Fried after FTX collapsed. Ackman claimed to believe SBF’s tale of how everything was on the up and up, but the company just failed to assess certain risks.
“Call me crazy, but I think @sbf is telling the truth,” read one Ackman tweet in November of last year. Months later, Ackman still jumped to SBF’s defense, this time penning a long tweet thread comparing his own legal troubles to SBF’s issues. By that time, however, it had been well-established that SBF clearly took part in fraudulent activity and co-mingled customer funds.
4. Kevin O’Leary
Another one of Sam Bankman-Fried’s biggest cheerleaders was Kevin O’Leary. That’s right, the Shark Tank guy who originally made his fortune from selling his edutainment software company.
When FTX collapsed, O’Leary was one of SBF’s staunchest defenders in the media, claiming SBF just made mistakes that any investor could make.
“I’m a bit of an advocate for Sam,” O’Leary said shortly after FTX filed for bankruptcy.
Part of O’Leary’s advocacy may stem from his work with FTX. The Shark Tank judge received $ 15 million from SBF as payment for promoting the crypto exchange. O’Leary claims that he lost his earnings by holding on FTX’s exchange when the company went bankrupt. However, that’s not entirely true; O’Leary still made millions after his FTX losses were calculated.
As more about SBF’s fraudulent activity came out, O’Leary continued to back SBF, taking up Bill Ackman’s position.
“I lost millions as an investor in @FTX and got sandblasted as a paid spokesperson for the firm but after listening to that interview I’m in the @billAckman camp about the kid!” O’Leary said in late November 2022.
5. Elon Musk
As far as we know, Elon Musk wasn’t fooled directly by Sam Bankman-Fried like the aforementioned individuals and firms. While Musk is a fan of cryptocurrency and his companies have invested in Bitcoin and Dogecoin, there’s no evidence he had any involvement in FTX.
In fact, Musk previously claimed that he always thought something was off about SBF.
But, that’s not entirely true. Musk makes it on this list because he was duped into believing a myth SBF perpetuated about himself — that he’s an untouchable, well-connected crypto kingpin.
When FTX failed in November and SBF’s fraud came to light, many conspiracy theorists truly believed that Bankman-Fried was going to get away with his crimes. There were incredibly concocted conspiracies at the time that alleged SBF was in cahoots with the Democratic Party and funneled money to Democratic candidates through Ukraine. Mashable even debunked this conspiracy at the time.
But, because SBF wasn’t immediately arrested as the DOJ built its legal case and prepared to extradite the FTX founder from his residence in the Bahamas, this flourished among conspiracy theorists.
Of course, Elon Musk was one of those people.
“SBF was a major Dem donor, so no investigation,” Musk posted days after FTX’s collapse.
Obviously, there was an investigation into SBF, and now, he’s been found guilty after going through a months-long trial less than one year after FTX’s collapse.
As for the “major Dem donor” charge, it is true. SBF donated tens of millions of dollars to Democratic candidates. But he also donated roughly the same amount to Republicans. However, as previously mentioned, SBF was very careful in how he shaped his image, so he donated to Republicans via dark money groups in order to help obscure those donations.
And Elon Musk fell for it.
