This week we saw the wealth of crypto executive Sam Bankman-Fried drop by 95% from a previous high of nearly $25 billion to less than $1 billion, while it appeared that his trading firm, FTX, turned out to be a Ponzi scheme and customer funds had been raided to fill a huge hole at his trading firm Alameda Research.
It appears that he may have fled the Bahamas for Argentina during the night, after remaining customer funds at the bankrupt exchange had their wallets drained to zero. That seems like an odd final destination, since Argentina has extradition.
Most tracked flight right now – https://t.co/g65UMuTWD8
According to tweets the founder and former CEO of @FTX_Official is en route to Argentina after the FTX collapse earlier this week. pic.twitter.com/e42sI7Huto— Flightradar24 (@flightradar24) November 12, 2022
The situation began to accelerate a week ago when the CEO of the largest exchange, Binance, tweeted that they were going to liquidate their holdings of FTX’s proprietary coin FTT.
- The main asset held by Bankman-Fried’s trading firm turned out to be their own coin
- And they’d pledged that coin as collateral for loans from Bankman-Fried’s exchange
- It had a small float, they owned most of the coins themselves, so they were able to prop up the price. By selling a small number of coins at a high price, it made the rest look valuable
- Once there was suspicion of a solvency problem, customers made a run on the exchange and caused a liquidity problem – quickly revealing what looks like chicanery.
Last night things got even worse. The companies filed for bankruptcy. Customers, for the most part, were unable to access their assets. Then came reports that NFTs and cutouts in the Bahamas were being used to withdraw funds. People were gaining control of user accounts, using the funds to buy NFTs in FTX’s marketplace, and locals in the Bahamas (who could still make withdrawals in person) would access the funds from these sales.
Apparently this is a Bahamas account withdrawing other people's funds for them.
They are likely bypassing the internal balance transfers block by selling NFTs on FTX's NFT marketplace — eg. Bahamas account creates an NFT, the stuck user buys the NFT with their full balance. https://t.co/VphzwQprdQ
— Cobie (@cobie) November 11, 2022
Then things went even more sideways and the money in customer accounts was gone – at scale.
Official: FTX has been hacked.
Source: admin of FTX Community Chat pic.twitter.com/IukG4ekWhO— 0xTre (@0xTre) November 12, 2022
And everyone was gone from the FTX offices, according to the exchange’s charitable foundation:
They’ve been asked to evacuate.
— Future Fund (@FUTURE_FUND_) November 12, 2022
Perhaps the best summary so far:
#Bitcoin pic.twitter.com/6jIfFnwEjd
— naiive (@naiivememe) November 11, 2022
As an aside, Sam Bankman-Fried had sought to invest in the acquisition of Twitter and put the social media company on the blockchain, which sounded dumb to Elon Musk. Musk points out that the meltdown of FTX effectively happened on Twitter, when the Binance CEO first called out the exchange and customers reacted, and when users tracked the hack and pilfering of funds in real time. That couldn’t happen anyway else (Mastodon!) and is why, market value and recent stumbles aside, Twitter remains one of the most important places in the world.
FYI: his net worth is now $1, not $1 billion. All week he lied to try his way out of this mess and cover his own you know what, but he was caught every time
SBF was the second largest donor to democrat campaigns this fall and pledged $1 billion to defeat Trump in 2024. I’m sure Biden and co. have no intent on prosecuting someone who’s been so friendly to the party
For those of you wondering why the story is covered here: he fled using a plane. Or we will read a hotel review from Argentina at a later date.
Why Argentina? It extradites to US …
@305 – we don’t know what his net worth is, but perhaps a billion dollars was drained from customer accounts.
@Ray – “For those of you wondering why the story is covered here: he fled using a plane.” As with all such things, it was covered here because it interests me.
I’m going to guess that Argentina isn’t his final destination although the Nazi’s made it work for them back in the day.
I think the bigger story here is the distrust for all brands of crypto that will come out of this. Might be time to sell my meager holdings I’m thinking.
It’s pertinent because the same people into miles and points also have dipped into crypto even if it’s for like we do with bank deals. It’s also pertinent because as someone has said, this is a Dem propagandist behind the mess. Of course it is. Same with MF Global, same with Voyager crypto, and same with Madoff. Voyager was the warning to get out of all these coins and all these exchanges. Personally, if I still held crypto for investment I would use my brokerage as brokerages would tend to have better controls and aren’t concentrated in this like these exchanges. Kanye will have a field day with this guy and all I mentioned if he still had social media.
The same batch of Dem schemers of course destabilize something which is supposed to be a healthy and helpful thing to society. Part of the birth of all these exchanges is done with aid of investors and banks. I wonder if they deliberately looked the other way with documentation and verification when all these exchanges went up knowing the inevitable problems would maintain the banking system until they have their own digital currencies.
I thought this was still a travel blog
@tim – you’ve been reading this site for many years, you know full well that this has always been a site where i write what interests me, and this post is literally about a flight
Nobody wanted to do any due diligence on this large dem donor, but at least the banks cut off Kanye for saying mean things.
Protect peoples money? Nah
Protect peoples feelings? That’s our real job!
Bottom line? Do not invest in Crypto-Crap because there is no end to the corruption and greed with these companies. Virtual money only has value if you think it has value.
BTW. great article Gary.
The last time I checked this was an airline and travel blog, not a political commentary blog.
Has something changed, Gary Leff?
@Alan any form of money only has value because we believe it to have value
Get to the back of the short bus lol
Thx @Gary for laying it all out like this. There are a lot of things, as I age, that are strange concepts, this is one of them. I’ve always thought that I didn’t understand crypto well enough to be willing to invest in it but I’ve known enough to know I didn’t want any part of it. This guy had now called into question all parts of crypto for the masses, who can you trust and what is reputable.
Remember the Bitcoin mining days? All you needed were computers
Garland is putting together a task force to investigate and prosecute the largest Democratic donor, SBF.
Just kidding. Trump was right…again. DC is a swamp.
@Gary: Who claimed a Ponzi scheme? The WSJ alleges misappropriation of client assets and inadequate operational reserves but has not mentioned a Ponzi scheme.
@William: No. It is the case with fiat money. A commodity currency, for example, has intrinsic value.
And what does this have to do with a travel blog written by none other than the self-aggrandizing self proclaimed “thought leader in TRAVEL”?
Wasn’t SBF a HUGE biden donator?
Looks like this story is not true. The plane is a coincidence.
@Gary, I am an investor hobbyist and have been following this all week, so thanks for the post.
One idea — based on this and related criticism– maybe just start an “And Other Stuff” section on the blog or a separate blog and post accordingly
The twitter screencap from Cobie shows one of the biggest lies of crypto defenders. They claim crypto can’t be used for laundering because its all logged and publicly recorded and besides they have a study to prove it isn’t. The truth is crypto has revolutionized international money laundering and has been a major driver in steady increases in crime globally since its rise to prominence in the mid 2010’s. That is why crime is going up everywhere: blue state, red state, foreign country. Crypto makes it possible to send an untraceable payment for fentanyl or human trafficking from anywhere. The screencap illustrates why thats the case. Yes its all publicly logged but its not transparent because all anyone can see are untraceable account numbers that can move money from place to place irreversibly before it can ever be frozen, a launderers dream. Next these crypto criminals will want to put flight records on the blockchain too so they can make those untraceable to anything but a cryptic account number too.
Fleeing to Argentina when there is an extradition treaty with the US, courtesy of the Clinton Admin? Not likely.
But this mega-donor to Democrats for the 2022 mid-term is in trouble. Seems pretty clear that he tried to co-mingle the exchange and exchange customers’ funds with his trading unit when he was in desperate need of funds to keep his (mega-loss-producing) game going.
No task force is needed to prosecute financial market participants who violate their fiduciary duty under the law when it comes to the financial markets. The Biden Administration will not stand in the way of the enforcement arms of the DOJ, CFTC, SEC and whomever else at the federal level may have jurisdiction over what has transpired with FTX, Alameda and SBF.
In a related vein of rich people who don’t think the rules apply to them and believe they are too smart to end up in trouble for violations, Elon Musk will be in line for a massive penalty for violating Twitter’s deal with the FTC.
Dems love screaming bleep bloop “justice!!l” except when its a donor. Will any of the political recipients of this scumbags donations resign? I bet lots of recipients teceived money from Weinstein and Epstein too. Funny how all this comes out AFTER the election- dems will just scream coincidence. What a clown country
Gary, I realize clicks pay the bills, but how do you reconcile the body copy “it appears that he may have fled” with the headline copy “Sam Bankman-Fried Tracked Fleeing”? One of these things is not like the other:
To the ignorant subnormal that comment that the nazis fled to Argentina, do yourself a favor and investigate who were the USA government’s “Imported talent” that founded NASA. That’s going to make your big ignorant mouth shut.
@Ivan X – quote the whole thing, “Report:…” FlightRadar24 was reporting (i.e. I am not claiming this is correct, but others are) and I said “SBF may have…” Those are consistent, and nothing to do with “clicks” which in fact are not how I ‘pay the bills’.
Gary, fair enough, and I apologize for the snide comment. I still think it’s a misleading headline — if you only read the headline, you’d think he’s fleeing, period. The “report” is little more than a tweet which itself acknowledges its info is based on other (speculative) tweets. I see your point, but I’m on the other side of the hair splitting, because by that standard any tweet with some fanciful spin in the truth could be a “report.”