(Bloomberg Opinion) --
If the 31-year-old's culpability for the “pyramid of deceit” behind FTX's collapse seemed so obvious, it's partly because he was prosecutorial gold. You didn't have to know what a blockchain was to comprehend his former lieutenants saying that the $8 billion of missing customer funds happened on his watch and with his knowledge. Nor did you have to grasp GAAP accounting to see that the frizzy-haired wunderkind's own testimony contradicted his communications and electronic records. Bankman-Fried had no filter, though his lawyers might wish he had.
Having lost a lot of people a ton of money, Bankman-Fried's lack of empathy and remorse played a big role in this trial. And that matters when committing corporate crimes: If you don't care about other people, especially your customers, it becomes very easy to exploit them. Or, as Dan Davies put it on social media, to take a $10 billion account labeled “Not My Money” and re-label it “My Money.” There was a dangerous mindlessness to Bankman-Fried, once worth more than $15 billion, who openly played video games while giving interviews or holding meetings.
“One camp of people in my group is saying forget it, the value of crypto is zero, there's nothing behind it,” Bjoern Jesch, the global chief investment officer of $900 billion German asset manager DWS Group, said in an interview with Bloomberg News. “And there's this other group of people saying like, hmm, I mean at least there's a price of $35,000 for Bitcoin. Someone is paying $35,000.”
There are other parts to the story of FTX that explain the incentives beyond the individual. The crypto sub-culture, for example, and its overlap with the aggressive quantitative trading culture where Bankman-Fried cut his teeth. Few in crypto-land seemed to blink an eye at the huge amounts of leverage offered by FTX, its lack of a chief financial officer or paucity of experience among its senior managers. The exchange's raciest growth happened offshore while US regulators focused their attention on TradFi (where everything from public-transit tickets to expenses are scrutinized these days). FTX, along with other market players, even invented its own token, FTT, and used it as cash — Bankman-Fried's view that “money is fungible anyway” is pure crypto babble, but plenty of people bought into it until the inevitable painful contact with reality.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Lionel Laurent is a Bloomberg Opinion columnist writing about the future of money and the future of Europe. Previously, he was a reporter for Reuters and Forbes.
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