Tag Archives: Sam Bankman Fried

Crypto’s day in court: SBF trial preview

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In the future, everyone will be famous for 15 minutes. — Andy Warhol

Crypto is now dying, largely because of SBF’s FTX/Alameda fraud. The crypto venture capital has now gone to AI. This upcoming trial is a first (& perhaps last) for crypto: a high profile criminal case that exposes the entire industry as a Ponzi scheme.

Bitcoin was founded after the 2008 sub-prime loan banking crisis, on the white paper notion that if you do some fancy math & computer programming, you’ve created digital gold. It was a brave new world in finance back then.

People who believe this anti-materialist nonsense don’t understand where money comes from. Money comes from human labor producing useful commodities. Nothing else. Of course, capitalism allows capitalists to monopolize money and use it as a tool of class warfare to exploit the working class. This is how obscene levels of wealth are accrued with massive inequality.

Crypto posits that a digital token can be minted and that it has value, even though there is nothing behind it. Gold is real, and it has use value. Thus it can be used as a store of monetary value, and has been for millennia. Modern governments issue fiat currency, which since 1971, floats on the value of that nation’s economy. Stronger economies have stronger (more valuable) currencies. Since WW2, the US dollar has been the strongest currency, globally.

But in this era of global competition, China & Russia are increasingly unwilling to allow themselves to be shackled to US dollars for international commerce & exchange, especially with its non-US aligned trading partners. Oil is this most prized commodity, and Russia continues to cut back its production & output available on world markets, which is causing gas prices to rise globally. Furthermore, Putin has convinced the Kingdom of Saudi Arabia & Iran to do the same. That worries US military planners.

Joe Biden has been exhausting US strategic reserves just to keep pump prices below $4.00/gallon. Once gas gets above that, American consumer anger increases, as the price of everything goes up.

This affects crypto mining, blockchain storage, processing, etc, as these activities are energy intensive. When electricity prices reach a certain level, bitcoin is no longer feasible. Interest rates have been increased by a hawkish Federal Reserve to cause a recession and weaken the labor market to control worker wage demands.

This macro-economic shift in ruling class policy (from near 0% interest rates for over a decade) has sent crypto into a death spiral. US intelligence agencies are keeping bitcoin alive because they have a use for it, but otherwise there is very little government support for crypto after the FTX collapse in November 2022. That’s why the SEC is now taking a hard line.

The hedge funds have moved into AI for their speculative urges. This is why the writers & actors strike must be crushed so ruthlessly. Venture capital is waiting to use AI in Hollywood to create its own vision, without having to pay actors. Just scan someone’s body and have them sign their likeness rights away, etc.

It’s the same vague concept for these libertarians & capitalists, whether its crypto or AI. Promote it as freedom & the future. Remain indistinct about rosy ideas such as effective altruism, while keeping the operational details secret. Keep all the money.

Everyone wants to get rich. Everyone wants to be famous & cool. This is how it’s pitched, and when so many people are desperate and see no future, this will resonate with a segment of them. The young people who actually believe in crypto are idealists. They lack seriousness of mind, and tend to look for (and settle on) easy answers. That defines the crypto community which less than a year ago held Sam Bankman-Fried as their boy genius savior.

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Silicon Valley Bank collapses, crypto under intense price pressure

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Two days ago Silvergate Bank was the largest US bank failure since 2008. That has now been surpassed by the shutdown of what was earlier-in-the-week the 16th-largest US bank, Silicon Valley Bank.

Sam Bankman-Fried on Silvergate’s website: “Life as a crypto firm can be divided up into before Silvergate and after Silvergate. It’s hard to overstate how much it revolutionized banking for blockchain companies.”

Satoshi Nakamoto’s bitcoin was put online in 2009, and still today no one knows who this guy is, or where all that Mt Gox bitcoin went. But today there are now two distinct eras in the history of post-Mt Gox crypto– FTX and post-FTX. Silvergate was the key crypto bank for the entire US industry and it just died Wednesday evening, March 8, 2023. It died from a malignant case of FTX.

Now Silicon Valley Bank has been shuttered by California state regulators due to mass discrepancies between what they can prove they have, and what they claim they have, etc. Stablecoin issuer Circle said late Friday that $3.3 billion in cash deposits remained at Silicon Valley Bank. According to Circle, this sum represents ~8% of the total reserves ($40 billion) backing Circle’s stablecoin USDC.

Stablecoins attempt to peg their market value to fiat currency 1:1. This means one US dollar (Euro, etc) ALWAYS equals one stablecoin. Tether is the top stablecoin, while Circle’s USDC is the second-largest stablecoin on the market. Stablecoins are now considered to be fundamental elements of the crypto ecosystem.

But the validity of stablecoins has been seriously called into question, especially since the Terra/Luna collapse in May 2022. Binance is also a big stablecoin issuer, and they have been forced to admit that their BUSD token hasn’t always maintained its 1:1 peg, like it’s supposed to be for people to trust. Where does the money go?

The Federal Reserve has sought to stifle worker wage increase demands by inducing a recession through its policy of raising interest rates. Note that this only increases inflation, which the ruling class is purportedly fighting. The Fed’s fight against “inflation” is actually a corporate-mandated attack on workers’ wages. It’s another example of Orwellian doublespeak in the fake media.

Unfortunately for the Federal Reserve Bank, this raising of interest rates has collapsed the crypto industry which relies on free money. Venture capitalists, hedge funds, blank check companies, and FDIC-banks have thrown trillions dollars into crypto which is now going bankrupt everywhere because it is expensive, wasteful & useless.

Binance CEO Changpeng Zhao, a Canadian citizen living somewhere in the far East, has been avoiding & deflecting accusations contained in investigative reports from Forbes and The Wall Street Journal recently, claiming that Binance’s math is fuzzy and their books don’t balance. CZ’s Twitter responses were more rhetoric about FUD, fake media attacks, etc, providing no evidence to contradict investigator claims.

It’s comparable to when Seymour Hersh published his Nord Stream bombshell, and no one in the US political establishment (or fake media) could mount a serious response to refute his claims. Eventually, most thinking people took that to mean that Seymour Hersh was correct and that the terrorist US government is lying again.

Somehow, all these realities, facts & nuances get lost in translation through the filters of fake news. Big crypto is secretly negotiating their next bailout with US officials. That is how the White House has been “monitoring the situation” in crypto since the Silvergate Bank collapse.

Crypto is one big hustle & dodge that is running out of time & money. Bitcoin is now under intense pressure, as the latest CoinDesk headlines reads, “Bitcoin Regains $20K After $200M in Crypto Liquidations; Some Traders signaling strength for [Circle’s] USD Coin, citing its treasury backing in U.S.-issued bonds.”

These are clear signals to elite Traders to bet that US taxpayers will pay for any crypto-connected bank bailouts, etc. As far as market manipulators go, crypto whale Elon Musk is having to burn through a lot of bitcoin these days to keep its price inflated at $20K. Musk is running out of Tesla stock to sell and companies to destroy. If Elon Musk doesn’t get a big bailout soon, the richest person in the world will go bankrupt.

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Crypto mining report

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Mining bitcoin became less profitable in 2022 as hashrate (the electrical cost of mining bitcoin) increased, while bitcoin tumbled from an all-time high of $69K in November 2021 to under $17K at present. Crypto is being propped-up with everything the US financial system has left. There are a lot of billionaires & multi-millionaires who are VERY upset at the prospect of losing a massive chunk of the portfolio invested in crypto.

In 2022, the stock prices of the five biggest public crypto miners by hashrate: Core Scientific ($CORZ), Riot Blockchain ($RIOT), Bitfarms ($BITF), Iris Energy ($IREN), and CleanSpark ($CLSK) traded down 99%, 85%, 91%, 92% and 79%, according to CoinDesk. What’s going on in the crypto industry is a massive restructuring, with a few big fish eating all the little fish. New rationalizations are needed to reassure venture capitalists in their support for the flagging crypto industry. If investors stop giving crypto money, then it’s lights out– literally.

Miners are hardcore crypto fanatics, so they tried to hold onto the bitcoin they mined, often electing to finance operations with low-interest debt, venture capital, blank check companies, etc. Perhaps pitch the idea on Shark Tank, which coincidentally appeared around the same time as bitcoin. The point is that bitcoin mining companies, who are in the business of mining bitcoin, weren’t making the BIG money in crypto.

Miners were contracted to make money for whales, who financed the mining of bitcoin. For instance, if Elon Musk contracted a massive amount of bitcoin to be mined from various bitcoin mining companies, the bitcoin would be delivered to him while he paid the consortium of miners for the service, presumably in bitcoin. This would support the industry as long as the price of crypto went up and money was cheap from the Federal Reserve.

Elon Musk’s financial Waterloo was his commitment to buy Twitter for $44B last spring. When his bitcoin empire crashed, soon after his takeover announcement, he began to back-off on buying Twitter. By summer, when Twitter shareholders threatened to sue & win in court, Musk was beaten. Elon Musk was heralded as the wealthiest man in the world by Forbes, with a value of $264B as of 2021. So here’s a modern economic question: Why couldn’t Elon Musk just buy Twitter for $44B, and be secure w/ $200+B remaining in personal wealth? Answer: Because his wealth was never real. It was mostly inflated crypto, and you can’t buy a publicly-traded company with bitcoin. Forbes is a central player in this fictitious accounting.

Elon Musk’s choices to finance his Twitter acquisition were to A) liquidate bitcoin; or B) liquidate Tesla. Tesla is WAY overvalued, and Musk knows this better than anyone, so him selling huge shares of his flagship electric car company tells the story there. If bitcoin recovers, Elon Musk is king again. If crypto goes to zero (which it must), then Musk is dust. When the stock value of Tesla collapses, as it must, Elon Musk won’t have any real money left. The more Tesla stock Musk sells, the sooner this will happen.

As poorly as Musk has run Tesla, his short reign as Twitter CEO has been qualitatively worse. Maybe Twitter was worth only a quarter of what Musk paid for it, say $10B. But that’s still an asset, and the second-largest social media platform on the internet. At least manage it decently for awhile, then take it public again, or sell it & eat the loss. That would be a rational business strategy after making a big mistake. But instead, Musk destroyed Twitter through a series of tirades, boneheaded ideas & tantrums. Now, Twitter isn’t worth $2B. These new-age millennial entrepreneurs have trouble producing value in the real world. They always need more money.

Turning to the unending crypto saga of Sam Bankman-Fried, the Securities Commission of the Bahamas has taken custody of FTX deposits valued at more than $3.5B as of November 12, according to a media release published last week. The November 12 date is significant, because the murky, murky $383M FTX hack, live-streamed in this video, happened during the evening of November 11, while SBF was in Bahamian custody. So where is the money?

The government of the Bahamas is in complete control of $3.5B in crypto, which the US government wants for itself. Bankruptcy trials take a long time, and this is largely a jurisdictional battle for the spoils which is to be hashed-out by lawyers, financial officials, opportunists, etc, on both sides until all the money is divvied-up to the right people. This is how governments steal for themselves in the name of their people & democracy.

The crypto community is facing an existential crisis. The vast majority, who have worked to build this industry, in mining, computer programming, sales & promotion, etc, have been shucked & jived by modern-day shysters. Calls in the fake media for regulation are a smokescreen, as crypto will never be regulated by US Congress. A few years back, during the Trump administration, Facebook CEO Mark Zuckerberg was compelled to testify before the US Senate for a regulatory hearing. The most memorable moment was when a crusty septuagenarian senator asked Zuckerberg how Facebook made money? The Facebook CEO smiled to himself & replied, removing as much condescension from his voice as possible, “We sell ads, sir.”

That’s typical of the level of fundamental cluelessness in elite politics. Crypto with its blockchains, decentralized finance, off-shore shell companies, etc, is much more complex than the nuts & bolts of social media. Not only is regulation unwanted by the industry (and Republicans), it’s unthinkable because no one in bourgeois politics has a clue how to deal with this mess. No politician wants to be seen as “impeding the free market,” and no politician wants to get dragged into these crypto scandals any further. You know it’s really bad when you see corrupt politicians insisting there are returning FTX money.

Calls for “regulation” in articles discussing crypto should be always interpreted as “bailout.” Eventually this crypto bubble will burst, and unlike the sub-prime crisis of 2007-08, there are no assets to recoup here. Millions of homes with defaulted mortgages were transferred into bank ownership in the wake of the 2008 financial meltdown. This was done to make bankers & hedge fund investors (who caused the meltdown) whole again. They were too big to fail. But the soon-to-come crypto crash will leave nothing to be recouped, because it’s been a fake asset from the start. US & Bahamian regulators are fighting over custody of $3.5B in fake money, and who winds up with it is beside the point because it’s worthless.

Meanwhile, Sam Bankman-Fried is out on bond, living with his parents who are co-conspirators in the $32B FTX/Alameda swindle. The effectively altruistic boy genius came up with a better way to mine crypto. Instead of having a series of supercomputers mining the crypto by solving complex mathematical equations, SBF just made up his proprietary FTT tokens out of thin air. This saved energy costs, and the expense of contracting crypto miners. This way, SBF made super-profits! Crypto skeptics point to Binance’s native BNB token, and ask if Changpeng Zhao created them by the same process.

Sam Bankman-Fried has surely violated the terms of his bail by moving large amounts of crypto from hidden Alameda wallets after his release on bond last week. SBF denies this, of course, as his parents are there to punish him if he does anything wrong again. The problem with crypto isn’t SBF, per se, it’s capitalism & the flawed idea that you can create value from nothing.

Update: Wed Jan 4, ~8:45AM CST

SBF was allowed to be free on bond, and violate those terms by moving large amounts of crypto out of Alameda wallets to unknown accounts. Unknown to the public that is. The US government knows where the crypto is, because undoubtedly they have been monitoring his computer, but they aren’t revealing anything they know to the public which is normal. SBF is acting as a personal tutor for US intelligence agencies, etc, in how to move crypto. Notice how names are always redacted when his legal team requests it, etc. Since when has such a swindler been allowed such clout in a DOJ prosecution case? Normally, targets of the DOJ receive no mercy, unless they plead guilty– or cut a secret deal. SBF pled not guilty, yesterday, as expected. SBF should now be considered as an agent of the US state. It’s the only way he can save himself.

Final thoughts: Thu 05 Jan 2023 6:43 AM CST

The crypto community is learning the hard way, that BIGGER interests (such as the US-provoked war in Ukraine) override any claims of crypto theft. The most logical explanation for SBF’s ‘not guilty’ plea is that he made a secret deal with US intelligence to save himself. These demoralized libertarians are in WAY over their heads here.

Crypto believers have hyped bitcoin with an impressive amount of enthusiasm & bravado, but never answered any fundamental questions posed to them over the years. They display a staggering level of naivety & ignorance in the fields of economics & politics. And yet, in their collective moment of stunned disbelief over the reality of how quickly dreams can evaporate, they maintain they are correct. The Federal Reserve & US Intelligence are the primary forces keeping crypto alive. Crypto is a money-laundering tool, that’s it’s only use value.

Any talk of SBF being an asset of US intelligence will now be branded as “conspiracy theory” in the fake media.That’s the Big Lie playbook they run on the public. This conspiracy theory is backed by the facts and the events as they are unfolding, which strongly implies that it is correct. US Intelligence always lies & evades to minimize exposure of an asset, especially a big fish like SBF, who is teaching them new & better ways to move crypto. This helps Joe Biden work with Republicans in funneling funds to the neo-Nazis in Kiev in the name of fighting Russian aggression which keeps us safe from terrorism.

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FTX CrApp

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It’s hard to know where to start with all this. For disclosure, I’m a cryptocurrency skeptic because I’m a Trotskyist, which means I’ve read Capital (1867), so I understand where money comes from. In short, money in any currency is the congealed value of human labor. Labor that produces any use value commodity is the source of money’s value. Gold has historically been a store of currency value because it is coveted & useful. The key to this Marxist idea in terms of crypto-currency is “use value.” Bitcoin & any other non-fungible token (NFT), which I will refer to generically as “crypto,” has no use value.

Money is now globalized to the point where Ponzi schemes like crypto-currency can gain a following with libertarian ideologists, followed by a massive boost of liquidity injection from venture capital (VC) in the early days of quantitative easing (QE). After the 2007-08 sub-prime mortgage collapse, venture capital was looking for new industries to invest in (loot), with billion$ in hot money from the US Federal Reserve being handed to them at near-zero percent interest. And if it fails, there’s always another US taxpayer bailout approved by Congress with strong bi-partisan support…

This 2008 economic crash spread to all the big banks, who were all insolvent with massive amounts of bankrupt home loans that were essentially worthless. The housing boom had ended, and industries were wiped-out. These job losses meant that tens of millions of Americans lost their homes because they couldn’t pay the mortgage.

There were no bail-outs for the working people. In the wake of this economic tsunami, BlackRock, etc, scooped-up all the apartment rentals, which today means rising rents for workers & families, due to corporate’s never-ending lust for profits. It was this post-2008 era of hedge fund/bank bailouts & QE that spawned bitcoin.

As discussed, federally-backed bailouts went 99+% to the rich, and their ideological inclination was to invest in nothing productive, because that always leads to increased labor costs which the ruling class abhors as a rule. Crypto promised massive returns with very little labor cost, everything is “mined” by offshore computers, this will free mankind financially, etc… That was the pitch and VC went for it.

Crypto-currency became a scam whose time had come. It’s complex math & computer programming on the internet, so old people (politicians) are at a loss. It’s been heavily promoted on all social media platforms since its inception, and it rules the dark web. It technically slants towards the millennials, and thus has created an ideology around such vague concepts as youth & freedom. It needed this to justify it’s existence. All scams do. SBF has now acknowledged that FTX’s “effective altruism” is woke capitalist BS.

To those who never believed and were highly critical early on, the Mt Gox theft (February 2014) was all the proof anyone ever needed to see what crypto is. Mt Gox was the original crypto exchange, set-up & controlled by its creator(s). It collapsed & vanished overnight with everyone’s bitcoin. It was a major bummer for the crypto fanatics, but no worries as an industry, VC was still with them. The stolen crypto from the 2014 Mt Gox theft still remains unsolved & unexplained.

Crypto fanatics claim blockchain protects them by keeping a perpetually untampered digital record of every crypto transaction. The lesson of Mt Gox is that if you don’t have the keys & access to the core code, with extensive knowledge of computer coding, then it’s not really your crypto. It’s only your crypto until the master key-holder vanishes it forever. Blockchain technology can be digitally shredded with a few key strokes if it’s written into the core code. Do you get to see all the core computer code (and know how to read it?) before you click ‘buy’ on bitcoin or any other NFT? If no, then how do you know?

These questions will instill fear, uncertainty & doubt (FUD) which the crypto community ideologically opposes. Anyone who asks questions which instill FUD are queried with hostility, first as to their industry & technical knowledge, and if/when that fails, these libertarian fanatics commence with personal attacks & calls for censorship. The crypto fanatics have basically invested their lives in this worthless industry that is 100% fake. There are many parallels here to MAGA Trump supporters, and also to CIA/woke Democrats in their fanaticism to false & unjust causes.

This 3-hour video is my favorite new movie. The best part is the hosts didn’t even realize they were making a crypto industry classic until about 40 minutes in! The drama strikes and it’s a fascinating portrait of disbelief & denialism. The guest star, then-FTX employee Zane Tackett, spends the first 40 minutes introducing himself as a computer engineer for FTX who has little-to-no inside access.

Zane has just lost an estimated 60-80% of his life savings, which he had invested in FTX. He had been flying back from Portugal as the news of FTX crashing hit the internet. Upon getting back to America, he invested another $750,000 on the FTX exchange in support of the company he worked for & believed in. Zane’s been trying to help angry customers recover their funds, out of altruism, but also to possibly recover his funds. No luck yet, but Zane remains committed to his work. He’s most frustrated about no information from Sam Bankman-Fried (SBF) & the rest of FTX’s elite inner circle. Nothing on Twitter or Slack…

Then, around 40 minutes into the podcast which up to this point is nothing more than self-grieving industry babble, one of the hosts jumps in with an industry tweet that $383M in crypto has just been liquidated from FTX’s exchanges, of which there are many around the world, when they are supposedly ‘frozen’ in bankruptcy court!

For background, the Biden administration and the puppet government in the Bahamas, where FTX’s headquarters was located, have been fighting a legal battle for jurisdiction. This disagreement apparently went some ways towards resolution during this live-streamed movie. My guess is Bahamian government officials “persuaded” SBF & Co. to pay them off, presently, or else they risked getting shot in the head and hacked up with machetes and left in a ditch, which is known to happen to those who double-cross these people in that part of the world. This murky, murky online theft while in Bahamian police custody was the beginning of what is known in US legal terms as the “extradition process.”

SBF & Co. prefer being tried in Delaware, where they have powerful allies in the Democratic Party, whom he has paid-off repeatedly. This has the potential to be a Jeffery Epstein type scandal, in that everyone with money is implicated and the ruling class needs to do everything they can to maintain silence and not inform the public. That explains why the list of over one million FTX creditors hasn’t been released.

Most small investors usually pay brokers to invest for them. It’s these brokers who invested heavily in crypto who have a liquidity crunch. This is going to require another massive taxpayer bailout, in order to maintain this fictional economy. We are at a point politically where that’s no longer becoming such a feasible option. There simply isn’t enough money available to cover all these big investor losses, and with inflation the way it is, electronically printing more money only makes things worse. It’s actually the root of the problem. On top of this, people are starting to ask uncomfortable questions…

Back to the movie, it took a few minutes for the hosts to piece together what was happening, and how this was happening, and who (most-likely) was doing it. Watch this segment completely and you will understand what happened. Of course, this event has been described in the fake media as a “hack,” but as the hosts point out, it’s much more likely to have been an inside job as you need to be in control of the keys & core code to do this type of theft. Also, multi-signature technology was used to drain the FTX accounts, which points to an inside job. Apparently, outside hackers never use multi-sig. I did not know that.

During this period of piecing together what’s going on, our guest hero Zane Tackett repeatedly excuses himself to “hop on a call,” none of which are answered or returned. As recently as a few days prior, Zane Tackett had been to SBF’s resort compound in the Bahamas, needing special email permission to gain entry, due to heightened security in the wake of the FTX bankruptcy scandal breaking. A siege mentality had ensued at corporate HQ.

Zane Tackett describes a meeting with SBF that clearly indicated him being blown-off by the boss, even though Zane has trouble admitting it to himself. Clearly SBF was planning something else with his inner circle, and Zane Tackett was told nothing at their meeting. That’s an objective account of Zane Tackett’s last meeting with SBF before this podcast movie was made, which coincides with what we know as of this publication.

Before signing-off the podcast, after almost half-an-hour of apocalyptic bad news, Zane Tackett re-calculates his total losses at 85%. From a Marxist perspective, he lost all his money the moment he invested in crypto, and he still has what he paid for. He paid real money for digits and he still owns those digits.

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