The Egregious Arrogance of Sam Bankman-Fried (& his ilk)

On December 13, the House Financial Services Committee held a long-awaited hearing into the collapse of the FTX crypto empire. FTX’s disgraced former CEO Sam Bankman-Fried could not, as he had hoped to, testify there in person because he was sitting, as Inmate 14–372, in a jail in the Bahamas. Instead, the committee heard an interim report from John Ray III, the seasoned bankruptcy lawyer installed by the Chancery Court in Delaware as the CEO of FTX.US and its dozens of affiliates when FTX declared bankruptcy November 11.

In his testimony, Ray said he had never “seen such an utter failure of corporate controls at every level of an organization, from the lack of financial statements to a complete failure of any internal controls or governance.”

Meantime, the Commodity Futures Trading Commission (CFTC), which claims some jurisdiction over the crypto trading sector, noted that more than $8 billion in customer deposits into FTX were missing. Investing bodies including the Silicon Valley darling Sequoia Capital and the Ontario Teachers Pension Plan were also announcing that they had written off investments they had made in FTX of, in many cases, some hundreds of millions of dollars.

I have been trying to pull together several threads of the story of how this all came about. In the account that follows…