Larry Horist | Nov 18, 2022 | 52
The FTX Bankruptcy Could be the Death Knell for Crypto
FTX Bankruptcy the Death Knell for Crypto?
Well, I guess we should have listened to Warren Buffett instead of Sam Bankman-Fried. First off, never trust a guy with a hyphenated name. Second, most of you have never heard of him anyway. Good for you.
For those of you who don’t know, Bankman-Fried is the young, moppy haired, black socks with shorts-wearing crypto billionaire. SBF, as he is known, is of course brilliant and a graduate of MIT, who went on to found FTX, the once popular and now bankrupt crypto exchange.
If you are a Miami Heat fan your arena will have a new name and sponsor shortly. Of more import, if you had money in an account with FTX, you are unlikely to ever see it again. If this is reminiscent to you of the dot com boom and bust, you would be correct.
Editor’s note, I will say I jumped on this bandwagon like I did the dot com one, but this time around I suggested only betting one to three percent of your portfolio in this risk-on asset class, and assuming that you would not get it back. Assume now that you won’t get it back.
But don’t worry about SBF and the other complicit CEOs, they won’t do any hard time. Just like every other previous debacle, it will be written off as just bad decision-making. Just ask the CEO of Lehman Brothers, Bear Stearns, etc. who are probably retired on some coconut island in the Caribbean presently, certainly bad mouthing SBF and others wondering how this could happen.
This will most likely not be a contagion and will stay within the nucleus of crypto.
Don’t expect federal bailouts this time. There is no mercy or public sentiment behind saving people who make stupid decisions. Just like they do with everything else, the press will run with their new favorite expression, “mea culpa.”
As with “existentialism” they knew not the meaning before looking it up for their social media column yesterday. They will say something like, “Sam Bankman-Fried gave the ultimate mea culpa in his Twitter account this week.” Oh well, what would you expect from liberal journalism majors?
SBF is in good company among his techie peers who can commiserate in their ability, or inability, to run a company into the ground. Just because you might be brilliant doesn’t necessarily correlate to you having the ability to run a Fortune 500 company.
Yale School of Management leadership guru Jeffrey Sonnenfeld puts it like this. “It’s not crazy to talk about Theranos, or WeWork, Groupon, MySpace, WebMD, or Napster – so many companies that fall off the cliff because they didn’t have proper governance, they didn’t figure out, how do you get the best of a genius?”
Not too long ago many thought that all you needed for retirement was two things, stock in Tesla and owning Bitcoin. How’s that working out for you? Ouch!
You don’t need to get bogged down in the details of how SBF screwed up. Most wouldn’t understand it anyway, including the likes of Bill Clinton, Tom Brady, Katy Perry, and others who sold out on financial integrity to sign on with FTX.
Tom Brady looked really cool and knowledgeable in those FTX commercials. Hope he’s not planning on paying alimony or child support to Gisele out of his FTX app.
We shouldn’t really be surprised by all of this.
It’s kind of like the NBA, where one named guys like KD, Kyrie, LeBron, etc., and maybe two others are the only names you ever hear. Satoshi Nakamoto, CZ, Vitalik Buterin, and others have the same effect on crypto. An industry or asset class can’t be run/dominated by a handful of individuals.
Oh, by the way, I wonder how El Salvador is doing with Bitcoin being their legal tender. It’s amazing more third-worlders didn’t jump on this as well.
In his Slack account message this week, SBF gave his mea culpa, excuse me, I mean he lamented, “I’m deeply sorry that we got into this place, and for my role in it,” he wrote in the Slack message. “That’s on me, and me alone, and it sucks, and I’m sorry, not that that makes it any better.”
Sorry isn’t a great big eraser. At least he realizes that.