Confidence Games II
A confidence game is any swindle in which the swindler, after gaining the confidence of the victim, robs the victim by cheating at a gambling game, appropriating funds entrusted for investment, or the like. On the day of the midterm election, FTX went bust. It is a crypto currency exchange that was running a confidence game: People thought they had invested into cryptos, but the owner, Sam Bankman-Fried (SBF), took the money and spent it on other things, such as electing Democrats and investing in research which discredited ivermectin. It appears that Democrats may have also been laundering money through Ukraine and FTX. This has led to several other crypto exchanges going bust as the house of cards collapses. The confidence games are ending.
They crypto exchange FTX has gone bust, with their crypto coin, the FTT going from $22 on the 8th of November and crashing down to $2.2 the next day, and $1.4 as of yesterday, Sunday November the 20th.[1]
According to Forbes,[2]
“No one is set to lose more from FTX’s implosion than Sam Bankman-Fried, the crypto wunderkind who founded the exchange and then drove it into the ground this week. His net worth, once as high as $26.5 billion, has plummeted to less than a billion dollars–one of the fastest falls from the billionaires ranks ever. FTX users and employees may be in for big losses too, with Bankman-Fried now trying to cobble together emergency funding to cover a shortfall of up to $8 billion as customers demand their money back. ‘I can't make any promises,’ he tweeted Thursday. ‘But I'm going to try.’”
So, where did the money go?
SBF was the second largest donor to Democrats in the midterms. Marco Quiroz-Gutierrez, writing for Fortune and published on Yahoo News, notes,[3]
“The founder and former CEO of FTX donated nearly $40 million to Democrats this election cycle, trailing only George Soros, who gave away about $128 million, according to OpenSecrets, a D.C.-based nonprofit.”
SBF’s mother, Barbara Fried, is the founder of Mind the Gap which donated $140 million dollars to the Democratic Party.
Via the New York Post,[4]
“The scope of Bankman-Fried’s financing of US politics and related influence was staggering. His mother, Stanford Law professor Barbara Fried, additionally raised $140 million through her pro-Democratic Mind The Gap PAC and Gabriel Bankman-Fried managed the nonprofit Guarding Against Pandemics .”
Mrs. Fried and her husband, Joseph Bankman, are professors at Stanford Law School. They are “experts” on tax law.[5][6]
SBF invested into research that discredited ivermectin and allowed for people to argue that covid vaccines and vaccine mandates were necessary.
Stever Robinson, publishing in the Maine Wire, writes,[7}
“Samuel Bankman-Fried’s bankrupt and scandal-plagued cryptocurrency empire gave $18.25 million to early COVID-19 researchers whose findings cast doubt on the benefits of ivermectin and hydroxychloroquine for patients with COVID-19.”
US tax money being send to Ukraine may have even been laundered through FTX to fund the Democrats.
Maajid Nawaz posted an article on his website Radical. He argues,[8]
“Are you seeing it yet? It’s actually quite simple: FTX was a Globalist money laundering scam.
US Democrats sent American federal tax funds to the Ukrainian government in the name of aid. These funds then went from the Ukrainian government to FTX in the name of building a post-conflict digital economy (the Great Reset). FTX then sent back a sizeable portion of those funds as campaign donations to the Democratic party’s mid-term elections, so that their friends in the Democratic party could get reelected to government and continue to siphon off US federal tax funds to Ukraine in order to continue enriching themselves through war, and so on.”
Mr. Maajid Nawaz’s article should be read in its entirety.
The FTX collapse is leading to implosion of other crypto exchanges. Bitcoin is even below $16,000.
Ari Levy and MacKenzie Sigalos, writing for CNBC, note,[9]
“Crypto venture firm Multicoin Capital told investors in a letter on Thursday that FTX’s collapse and the price declines across the industry has pushed the fund down by 55% this month, and added that the market is poised to get worse before it rebounds.
‘We expect to see contagion fallout from FTX/Alameda over the next few weeks,’ the letter said. ‘Many trading firms will be wiped out and shut down, which will put pressure on liquidity and volume throughout the crypto ecosystem. We have seen several announcements already on this front, but expect to see more.’”
The “Protos Staff” at Protos.com write,[10]
“As of November 5, when Binance chief Changpeng Zhao (CZ) announcedthat the company will divest from its FTX investment by dumping FTT tokens, the crypto market collapsed.
Indeed, bitcoin has taken a 25% dive and many altcoins fared even worse with FTX-backed Solana spiraling 65%. The question now on everyone’s mind: is more pain in store for crypto markets?
[…]
The Grayscale Bitcoin Trust (GBTC) is selling bitcoin for as low as $9,000 — or a 45% discount to the currency’s spot price. Meanwhile, crypto trader and lender Genesis Global Trading (also owned by Grayscale Trust owner, Digital Currency Group) has reportedly taken out a $1 billion emergency loan in recent days. It also announced that it will be halting redemptions.
Grayscale has issued a statement saying that its activities with regard to Genesis don’t affect the various Grayscale Trusts as these assets are held at Coinbase and can’t be lent out.
Genesis, which is basically a large bitcoin and crypto trading firm, may have had assets held at FTX but this isn’t clear according to its annual report. It registered $69 million in liabilities and $154 million in assets for 2020 and there are no filings yet for the succeeding year.”
It appears that FTX was using one of their subsidiaries, Alameda Research, to front run cryptos that FTX was selling. Alameda would buy low and then sell the cryptos into the hype created by FTX.
Via Zerohedge,[11]
“In the latest episode in this relentless scandal-drama, the WSJ reports that the trading arm of Sam Bankman-Fried's empire, Alameda Research, was quietly amassing stakes in various cryptos ahead of announcements that FTX would be listing them for trade, a practice that is patently illegal.
Citing analysis of public blockchain data from analytics firm Argus, the Wall Street Journal reported that on the days FTX said it would be listing "new" tokens between 2021 and March of this year, Alameda had already amassed roughly $60 million worth of tokens ahead of time, arguably to sell into the burst of customer demand and make a huge risk-free profit.”
What about the government? The Securities and Exchange Commission? Should they not have seen this fraud? Does this mean that there need to be more regulations?
Once again, quoting the article by Mr. Maajid Nawaz,
“At this point Radicals may well be wondering how FTX and Sam Bankman-Fried managed to get away with such brazen conflicts. As always, the answer lies in regulatory capture.
The man responsible for regulating FTX, the Chair of the Securities and Exchange Commission (SEC) Gary Gensler is former Campaign Finance Chair for none other than Hillary Clinton.
You will remember from above that FTX was funding those same Democrats, Hillary Clinton’s party.”
How much of the market is exposed to FTX? How much of the market is just legal fraud that is protected by regulatory capture? The market will keep going up so long as people are confident that it will go up.
A confidence game is any swindle in which the swindler, after gaining the confidence of the victim, robs the victim by cheating at a gambling game, appropriating funds entrusted for investment, or the like. On the day of the midterm election, FTX went bust. It is a crypto currency exchange that was running a confidence game: People thought they had invested into cryptos, but the owner, Sam Bankman-Fried (SBF), took the money and spent it on other things, such as electing Democrats and investing in research which discredited ivermectin. It appears that Democrats may have also been laundering money through Ukraine and FTX. This has led to several other crypto exchanges going bust as the house of cards collapses. The confidence games are ending.
End Note: The Federal Reserve (Fed) had been the source of confidence in the market since the end of the 2008 Financial Crisis. As the lender of last resort, they had been printing money to fund the Federal government and to keep interest rates low, pumping up stocks, bonds, and everything. As the Fed has been raising rates by not printing money since March 2022, the market has been cooling. The Fed will either let the market and Federal government collapse as they lose their source of money or the Fed will pivot and print more money. Considering that central banks have all been buying gold at a record pace since 2008, confidence in the dollar and all forms of unbacked credit ($₿¥€£) may be ending. FTX is the canary in the coal mine.[12][13][14]
“I think we are actually at a point of encouraging risk-taking, and that should give us pause. Investors really do understand now that we will be there to prevent serious losses. It is not that it is easy for them to make money but that they have every incentive to take more risk, and they are doing so. Meanwhile, we look like we are blowing a fixed-income duration bubble right across the credit spectrum that will result in big losses when rates come up down the road. You can almost say that that is our strategy.” -Jerome Powell, Chairman of the Federal Reserve, then member of the Board of Governors, Oct 2012 Federal Open Market Committee Meeting.
[1]https://coinmarketcap.com/currencies/ftx-token/
[3]https://www.yahoo.com/video/politicians-regifting-sam-bankman-fried-202958638.html
[5]https://law.stanford.edu/directory/barbara-fried/ “Barbara H. Fried’s scholarly interests lie at the intersection of law, economics, and philosophy. She has written extensively on questions of distributive justice, in the areas of tax policy, property theory and political theory. She is also the author of a path-breaking intellectual biography of Robert Hale, one of the leading legal realists. Professor Fried is a three-time winner of the John Bingham Hurlbut Award for Excellence in Teaching. She regularly teaches the Legal Studies Workshop at Stanford Law School, an interdisciplinary student-faculty workshop designed for law students interested in pursuing academic careers, as well as contracts, modern American legal thought, tax, and advanced seminars in law and moral/political theory. She has twice been a visiting professor of law at New York University Law School.
Before joining the Stanford Law School faculty in 1987, Professor Fried practiced as an associate with the New York City law firm of Paul, Weiss, Rifkind, Wharton & Garrison, and served as a law clerk to Judge J. Edward Lumbard of the U.S. Court of Appeals for the Second Circuit.”
[6]https://law.stanford.edu/directory/joseph-bankman/ “A leading scholar in the field of tax law, Joseph Bankman is the author of two widely used casebooks on the subject. His writings on tax policy cover topics such as progressivity, consumption tax and the role of tax in the structure of Silicon Valley start-ups. He has gained wide attention for his work on how government might control the use of tax shelters and has testified before Congress and other legislative bodies on tax compliance problems posed by the cash economy. He has written and spoken extensively on how we might use technology to simplify filing. He also worked with the State of California to create ReadyReturn—a completed tax return prepared by the state that is available to low-income and middle-income taxpayers.
Professor Bankman is a clinical psychologist as well as a lawyer. He teaches mental health law and writes on the intersection of law and psychology. He has developed a course on anxiety psychoeducation that has been taught at Stanford and Yale Law Schools, and written on how insights from social psychology might be used in the effort to reduce tax evasion.”
[8]https://maajidnawaz.substack.com/p/how-the-collapse-of-sam-bankman-frieds
[10]https://protos.com/grayscale-and-microstrategy-struggles-hint-at-hard-times-for-crypto/
[11]https://www.zerohedge.com/markets/alameda-front-ran-tokens-ftx-listed-them-their-exchange
[12]https://www.hamiltonmobley.com/blog/printing-money-lowers-interest-rates