Unpacking the FTX Fraud with Lyn Alden - WBD580

Lyn Alden is a macroeconomist and investment strategist. In this
interview we discuss rampant fraud that led to the FTX
bankruptcy, the implications for other businesses and legal
precedent, and Lyn’s current outlook on markets.


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FTX’s empire at the beginning of this year was valued at $32
billion. The whole facade has become a bankrupt mess in a little
over a week. Every hour of the past 7 days has seen a new claim
of malfeasance that exceeds the depravity of the last. This
crescendo has seemingly peaked today as SBF posted cryptic tweets
suggesting he’s struggling to comprehend what has happened.


Sam Bankman-Fried was lauded as a financial genius and social
revolutionary leading the ‘effective altruism’ movement. He was
on the front cover of Forbes in October 2021. A glowing Bloomberg
profile in April this year recounted his interactions with
prominent politicians, investors and celebrities. He openly
discussed having his attention drawn to dealing with existential
issues affecting humanity. SBF had former Presidents and Prime
Ministers in his palm.


However, Bankman-Fried was a Svengali and a fraud. Some Bitcoin
maxi’s tried to sound the alarm, but too many people ignored the
warning signs and believed the hype. In just 3 short years the
30-year-old managed to beguile not just the industry but also
traditional finance. He got a $100 investment from a Canadian
pension fund, which one would assume would lead the world in
discharging fiduciary duties.


In the aftermath, it all seems so obvious. FTX was essentially
run by dysfunctional kids. So, how did this happen? It’s still
very early, and revelations keep dropping as we speak. The truth
behind what occurred will take years to piece together.
Nevertheless, there are some important lessons that the Bitcoin
community rapidly needs to discern and absorb. A political
response is inevitable, and many will try to ensnare Bitcoin in
this mess.