After elections, it is always interesting to see the uncovering of events that could, and should, have been made prior to the election. That leaves this question: Who benefited by delaying until post-election?
Consider that just three days after the Nov. 8 election, there was the bankruptcy filing of the cryptocurrency companies of FTX, Alameda and 100 affiliates. Cryptocurrency is a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. FTX owes customers 50 creditors more than $3 billion and perhaps up to $8 billion.
In 2017, Sam Bankman-Fried and Zixiao Gary Wang started the trading firm Alameda Research in Berkeley. That was two years before they founded the crypto exchange, crypto exchange, FTX, in Antigua and Barbuda with a headquarters in The Bahamas. Alameda traded crypto using FTX, an abbreviation of “Futures Exchange,” as its exchange despite the lack of independence of the two entities.
Mr. Bankman-Fried named his 28-year-old girlfriend Caroline Ellison, whom he met at the Jane Street Hedge Fund, as a leader and subsequently CEO at Alameda despite her only having 1½ years’ experience after earning a math degree from Stanford. Ms. Ellison, perhaps influenced by her tweet of “nothing like regular amphetamines use to make you appreciate how dumb a lot of normal, non-medicated human experiences is,’’ talked about how she, and her nine friends that were running Alameda, were skilled in trading: not currencies but partners.
They literally “knew nothing,” to quote Sgt. Schultz from the 1960s CBS sitcom “Hogan’s Heroes,” about financial controls.
Mr. Bankman-Fried donated $10 million to Joe Biden and, in Sept. 2021, moved the headquarters of FTX and Alameda from Hong Kong to The Bahamas, where Ms. Ellison and her nine friends moved into Mr. Bankman-Fried’s $40 million Orchard Penthouse in Albany.
Albany, a gated community with guards in The Bahamas, is owned by Tiger Woods, Justin Timberlake and Ernie Els, who designed the champion golf course located in the compound whose amenities include a Rolex Store, an equestrian center and hotel rooms that begin at $5,100 a night. Mr. Bankman-Fried spent another $32 million for units bringing his total to $300 million for real estate in The Bahamas. His extravagant spending, including $10,000 a day for lunch for his group, attracted celebrity endorsements from Tom Brady, Gisele Bundchen, Steph Curry, Shaquille O’Neal, Larry David, and others.
In 2022, Mr. Bankman-Fried spent $30 million featuring Larry David, a celebrity and a Democrat, in a Super Bowl ad.
On Sept. 26 of this year, the Federal Deposit Insurance Corp., under Trump appointee Martin J Gruenberg, issued a cease-and-desist from misleading representations about FDIC insurance.
In October, the Republicans in Texas started investigating the FTX group.
Meanwhile as Mr. Bankman-Fried “donated” $40 million to the Democrats, second only to George Soros, neither the SEC nor the DOJ did anything. While MSNBC et al say he also donated to the Republicans, be aware that it was only $260,000.
Three days after the midterms, Mr. Bankman-Fried resigned as $473 million was “removed” from FTX by “unauthorized transactions” and FTX, Alameda and 100 affiliates filed for bankruptcy in Delaware.
John Ray III, appointed CEO by the bankruptcy judge based on his experiences with Enron’s collapse, said in court filings that “FTX and its sister companies lacked functional accounting or human resources and SBF (Mr. Bankman-Fried) had received $1 billion loan from one of his own firms, and a complete absence of any trustworthy financial information compromised systems integrity and faulty regulatory oversight abroad, to the concentration of controls in the hands of a small group of inexperienced, unsophisticated and potential compromised individuals.” As of Nov. 12, billions of dollars in customers funds “could not be accounted for.”
Who will be held responsible for not preventing the fraud, permitting it to continue, and not warning the investing public?
Mr. Bankman-Fried? Will he be able to avoid extradition, only available for the DOJ, for fraud and theft charges by “hiding” in his $40 million Penthouse in The Bahamas while following his father’s counsel to remotely try to influence regulators? Housing and assets in The Bahamas may be exempt from bankruptcy.
Ms. Ellison, who with her nine “friends” is in Mr. Bankman-Fried’s Penthouse, for permitting FTX to “borrow” money from customers’ accounts she maintained as CEO of Alameda, for lending Mr. Bankman-Fried $1 million of customers’ funds from Alameda, and for not maintaining financial records? After the bankruptcy filings, she said “Crypto is mostly scams and memes.”
Mr. Bankman-Fried’s parents? They are Sam Bankman and his wife Barbara Fried, both Stanford law professors and heavy contributors to the Democrats, who stated that they want “to return the deed “(clever approach) to a property purchased by FTX in the Old Fort Bay gated community in The Bahamas. That’s where they were listed as “signatures,” and may have counseled Mr. Bankman-Fried to locate in The Bahamas and donate to Democrats.
Gary Gensler? The Democrat is the head of the Securities and Exchange Commission, and he died not issue regulations protecting investors, and/or prohibiting FTX from trading in the US and/or bringing an action to prevent the sale of unregistered securities. The SEC defines a security as a capital investment by one party to be managed by another party,which includes crypto. Mr. Gensler repeatedly talked negatively about cryptocurrency while doing nothing, except in October calling the son of former colleague Sam Bankman: SBF.
The celebrities may be included in a class action civil suit allegedly filed against Mr. Bankman-Fried’s group for misleading the public.
Who will be held responsible? The U.S. Department of Justice, headed by Attorney General Merrick Garland through fellow Democrat Damien Williams, the U.S. attorney for the Southern District of New York if their investigation continues to join the Hunter and Joe Biden one in their “dead’ pile?
Who will go on trial? Mr. Bankman-Fried and his family, friends and colleagues? The SEC and DOJ? To determine if politics were involved, ask yourself how the SEC, media and DOJ would have acted if the $40 million had been “donated” by Republicans, or by parents dissatisfied with their school boards, or by participants in the Jan. 6 events, or, heaven forbid, by a Trump?
Aren’t post-elections interesting?
Brent E. Zepke is an attorney, arbitrator and author who lives in Santa Barbara. His website is OneheartTwoLivescom.wordpress.com. Formerly, he taught law and business at six universities and numerous professional conferences. He is the author of six books: “One Heart-Two Lives,” “Legal Guide to Human Resources,” “Business Statistics,” “Labor Law,” “Products and the Consumer” and “Law for Non-Lawyers.”
