The FTX Racket Unraveled in Real Time

CommentaryOne has to appreciate Sam Bankman-Fried’s honesty of late. After running a presumed $32 billion company to zero in a matter of days, he took to Twitter to reveal what many of us already knew. He said that woke is a racket. “In the future, I’m going to care less about the dumb, contentless, ‘good actor’ framework,” he said. “What matters is what you do—is *actually* doing good or bad, not just *talking* about doing good or *using ESG language*.” True enough but perhaps a bit late since woke ideology was the main product that his short-lived company was selling. He says it was never his intention to rob anyone. And he does feel “bad for those who get” harmed by “this dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us.” What the company’s ideological strutting did provide was access to power. SBF made frequent trips to Washington to court regulators he now criticizes as mostly useless, while holding events in his fancy Bahamas home that attracted the likes of Bill Clinton and Tony Blair. When the Ukrainian government was looking for a crypto exchange to store and convert its own crypto holdings (where did they get those?), it chose FTX. What’s more, FTX was the only crypto exchange in the world that came recommended by the World Economic Forum, which has since taken the company down from its website. The unraveling of the company reads like the most implausible fiction story you have ever encountered. The Wall Street Journal has discovered billions in payments to undisclosed parties the names of which were not disclosed in the books. It could take years to sort out the whole sordid tale. In a too-bizarre-to-be-true twist, the company was heavily involved in the COVID lockdown response, including funding studies conducted by scientists connected with vaccine companies to debunk repurposed drugs, studies that received loving media attention even though their flaws were obvious to anyone in the industry. And that was just the beginning. Sam’s brother Gabe founded a lobbying group called Guarding Against Pandemics that shilled for Democrat candidates who favored lockdowns and vaccine mandates, even as their mother had founded a Democrat Political Action Committee called Mind the Gap that was dedicated to funding Democrats too. Pandemic planning was on the list of causes that FTX considered socially responsible, along with the predictable list: climate change, social justice, animal rights and veganism, and socially conscious investing that sails under the flags of ESG and DEI today. How deep were the company’s COVID connections and how much funding are we talking about here? The Washington Post offers this tantalizing hint: “The shock waves from FTX’s free fall have rippled across the public health world, where numerous leaders in pandemic-preparedness had received funds from FTX funders or were seeking donations.” Shock waves? The “public health world?” What are we talking about here? How many scientists and institutions were involved? How many in this realm had come to depend on this magic bean factor in the Bahamas to make their dreams come true? We can only hope someone cares enough to find out. It’s a pretty good guess that many top dogs in this realm are busy cleaning up their emails and text messages today. Much of the scam depended on a high valuation for a token called FTT but once suspicions about the company’s insolvency were rumored on Twitter, depositors engaged in the old-fashioned test: they demanded their money back. It turns out that the company’s high valuation depended heavily on a forever higher price of FTT but that turned south very rapidly. At that point, the future looked very obviously bleak. The company declared bankruptcy, which the delusional Sam now says was his greatest mistake since he could have easily parlayed all his connections to have raised the $8 billion necessary to make good on frozen depositors’ funds that did not really exist. The Washington Post offers further intriguing details that could ultimately discredit high-prestige institutions that played a huge role in pushing lockdowns, including famous scientists that once wrote articles opposing such a brutal pandemic response. “The FTX Future Fund’s commitments included $10 million to HelixNano, a biotech start-up seeking to develop a next-generation coronavirus vaccine; $250,000 to a University of Ottawa scientist researching how to eradicate viruses from plastic surfaces; and $175,000 to support a recent law school graduate’s job at the Johns Hopkins Center for Health Security. ‘Overall, the Future Fund was a force for good,’ said Tom Inglesby, who leads the Johns Hopkins center, lamenting the fund’s collapse. ‘The work they were doing was really trying to get people to think long-term … to build pandemic preparedness, to diminish the risks of biological threats.’” The Gates Foundation is also a huge funding source for the Johns Hopkins Center

The FTX Racket Unraveled in Real Time

Commentary

One has to appreciate Sam Bankman-Fried’s honesty of late. After running a presumed $32 billion company to zero in a matter of days, he took to Twitter to reveal what many of us already knew. He said that woke is a racket. “In the future, I’m going to care less about the dumb, contentless, ‘good actor’ framework,” he said. “What matters is what you do—is *actually* doing good or bad, not just *talking* about doing good or *using ESG language*.”

True enough but perhaps a bit late since woke ideology was the main product that his short-lived company was selling. He says it was never his intention to rob anyone. And he does feel “bad for those who get” harmed by “this dumb game we woke westerners play where we say all the right shiboleths [sic] and so everyone likes us.”

What the company’s ideological strutting did provide was access to power. SBF made frequent trips to Washington to court regulators he now criticizes as mostly useless, while holding events in his fancy Bahamas home that attracted the likes of Bill Clinton and Tony Blair.

When the Ukrainian government was looking for a crypto exchange to store and convert its own crypto holdings (where did they get those?), it chose FTX. What’s more, FTX was the only crypto exchange in the world that came recommended by the World Economic Forum, which has since taken the company down from its website.

Epoch Times Photo

The unraveling of the company reads like the most implausible fiction story you have ever encountered. The Wall Street Journal has discovered billions in payments to undisclosed parties the names of which were not disclosed in the books. It could take years to sort out the whole sordid tale.

In a too-bizarre-to-be-true twist, the company was heavily involved in the COVID lockdown response, including funding studies conducted by scientists connected with vaccine companies to debunk repurposed drugs, studies that received loving media attention even though their flaws were obvious to anyone in the industry.

And that was just the beginning. Sam’s brother Gabe founded a lobbying group called Guarding Against Pandemics that shilled for Democrat candidates who favored lockdowns and vaccine mandates, even as their mother had founded a Democrat Political Action Committee called Mind the Gap that was dedicated to funding Democrats too.

Pandemic planning was on the list of causes that FTX considered socially responsible, along with the predictable list: climate change, social justice, animal rights and veganism, and socially conscious investing that sails under the flags of ESG and DEI today. How deep were the company’s COVID connections and how much funding are we talking about here?

The Washington Post offers this tantalizing hint: “The shock waves from FTX’s free fall have rippled across the public health world, where numerous leaders in pandemic-preparedness had received funds from FTX funders or were seeking donations.”

Shock waves? The “public health world?” What are we talking about here? How many scientists and institutions were involved? How many in this realm had come to depend on this magic bean factor in the Bahamas to make their dreams come true? We can only hope someone cares enough to find out. It’s a pretty good guess that many top dogs in this realm are busy cleaning up their emails and text messages today.

Much of the scam depended on a high valuation for a token called FTT but once suspicions about the company’s insolvency were rumored on Twitter, depositors engaged in the old-fashioned test: they demanded their money back. It turns out that the company’s high valuation depended heavily on a forever higher price of FTT but that turned south very rapidly.

Epoch Times Photo

At that point, the future looked very obviously bleak. The company declared bankruptcy, which the delusional Sam now says was his greatest mistake since he could have easily parlayed all his connections to have raised the $8 billion necessary to make good on frozen depositors’ funds that did not really exist.

The Washington Post offers further intriguing details that could ultimately discredit high-prestige institutions that played a huge role in pushing lockdowns, including famous scientists that once wrote articles opposing such a brutal pandemic response.

“The FTX Future Fund’s commitments included $10 million to HelixNano, a biotech start-up seeking to develop a next-generation coronavirus vaccine; $250,000 to a University of Ottawa scientist researching how to eradicate viruses from plastic surfaces; and $175,000 to support a recent law school graduate’s job at the Johns Hopkins Center for Health Security. ‘Overall, the Future Fund was a force for good,’ said Tom Inglesby, who leads the Johns Hopkins center, lamenting the fund’s collapse. ‘The work they were doing was really trying to get people to think long-term … to build pandemic preparedness, to diminish the risks of biological threats.’”

The Gates Foundation is also a huge funding source for the Johns Hopkins Center for Health Security. What kind of relationship did the Gates Foundation have with FTX? They certainly partnered to fund the TOGETHER trial that was widely touted to have debunked Ivermectin. One wonders just how deep this relationship was.

The mystery is going to be a bear to unravel simply because the books at FTX were so poor. The first auditor to see them wrote: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

Let’s try to think of the bigger picture here. The unraveling of FTX might serve as a metaphor for a larger issue. Over the last decade and a half, beginning with the Fed’s Zero Interest Rate Policy, the whole world seems to have gone insane. Loose money was on the hunt for return from anywhere but where it could traditionally be found in the normal process of saving.

As a result, capital flowed to the wackiest-possible sectors. Over the course of these years, cranks and crazies of all sorts have been unleashed on the world, including people who believe that the purpose of business is not to make profits but rather to fund social revolution, oddballs who have convinced the world that fossil fuels need to be eliminated by force, nutty cultural theories that there really is no biological distinction between men and women, and once-thoughtful scientists who imagined that shutting down the world economy was the right way to control a virus.

It’s all been so strange, and it really has culminated in the idea that some 30-year-old kids on the spectrum could load themselves up with amphetamines in the Bahamas and become a major funding spigot for institutions, politicians, and academicians to push for the dystopian worldview of the World Economic Forum.

These days, and with the help of Jerome Powell at the Fed who has reversed the main Fed policy of the last decade and a half, it all seems to be coming apart, piece by piece. If we really are entering into a new age of tight credit and more honest money, FTX could be just the beginning of the companies that will take a deep fall.

We are already seeing tech companies cut down to size but the data I’m looking at suggests that the Fed has a very long way to go before it can control inflation, which means we are going to see far more of this in the near future and following.

Despite the pain, this is all to the good. We’ve all known in our hearts that something has gone very wrong with the world in recent years. The forces of economics and the reality of the balance sheet are revealing it all right now. The lies have gone on far too long. It’s not the regulators who have exposed it all but rather the forces of the market itself, along with the newly freed Twitter.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.


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Jeffrey A. Tucker is the founder and president of the Brownstone Institute, and the author of many thousands of articles in the scholarly and popular press, as well as 10 books in five languages, most recently “Liberty or Lockdown.” He is also the editor of The Best of Mises. He writes a daily column on economics for The Epoch Times and speaks widely on the topics of economics, technology, social philosophy, and culture.