This is the profile of Sequoia Capital that really sums up Sam Bankman-Fried.
The investment powerhouse published a flattering article (now deleted) on its website that traces the story of the Bankman-Fried founder. It showed how Sequoia partners became amazed when FTX’s former CEO told them on a call that the exchange would become a super app, with comments in the chat stating “I love this founder.” All this while Bankman-Fried was playing League of Legends.
The profile showed how Bankman-Fried was able to convince anyone that he was a crazy genius with crazy hair who drove a Toyota Corolla and slept on a beanbag. In doing so, he gained star power within the industry, culminating with a visit to the White House and an event in which he shared the stage with former presidents and prime ministers.
Yet, behind the curtain, everything was window dressing.
“Man, all the bullshit I said,” he said Kelsey Piper, Vox reporter about posts about X, referencing his previous comments on ethics. “That’s not true, not really.”
During this conversation, Bankman-Fried revealed his true intentions, completely unaware that the person on the other side intended to post anything. He explained that he was good at talking about ethics because he had to say the right things to be liked. Another comment read “Fuck the regulators” – something the judge mentioned during his conviction.
Former Alameda co-CEO Caroline Ellison added to this when she claimed that Bankman-Fried let her hair grow long in a deliberate ploy. “He said that since Jane Street, he believed he got higher bonuses because of his hair and that it was an important part of FTX’s narrative and image,” Ellison testified.
All this finally caught up with him in a blow on March 28. Bankman-Fried was sentenced to 24.25 years in prison and ordered to forfeit $11.02 billion, meaning he will be held liable if FTX customers are not made whole.
At the same time, FTX’s bankruptcy proceedings are moving forward quickly. The estate has been offloading its assets quickly, with high demand for its large locked solana reserve making things easier. It is already looking at a 100% dollar recovery, with the possibility that figure could be higher when including interest payments and the possibility of additional recoveries. It seems like everyone involved in the process is trying to wrap things up as quickly as possible.
The idea of FTX 2.0 has also been largely abandoned. While this is officially due to a lack of concrete buyers, it seems more likely that this is an unnecessary risk, given the estimated recovery. Again, everything is done to get things done and dusted.
This means that, within a few years, there will be no rebooted FTX. The exchange will be long dead and Bankman-Fried will be quietly locked away in a medium security prison. The SBF and FTX saga will live on in memes on “Crypto Twitter” and elsewhere, but the world will have moved on.
Contents
On the block
A look at a selection of stories that caught my attention this week.
Strong Demand for FTX’s Locked SOL
As mentioned, FTX domain-locked solana sales have found favor with investors. I spoke to several people who had invested in or received details about potential investments related to locked tokens. It appears that a few funds are taking a significant portion of the allocation, notably Galaxy Trading. However, some investors reported that their prices were reduced by 13% at the close of trading.
Hong Kong gets into the Bitcoin ETF game
Venture Smart Financial Holdings Ltd., a Hong Kong-based financial services company, has submitted its application for a Bitcoin spot exchange-traded fund and aims to launch the ETF as early as May, writes Timmy Shen. Brian Chan, VSFG Group’s head of investments and product, told The Block on Thursday that the team was hoping for a May launch “if everything goes well.”
Crypto companies increasingly criticized by regulators
The Justice Department has filed charges against crypto exchange KuCoin and two of its founders, alleging they violated anti-money laundering laws. The indictment says KuCoin deliberately avoided U.S. AML and KYC regulations by “falsely representing that it had no U.S. customers when, in reality, KuCoin had a substantial U.S. customer base.” The government claims KuCoin allowed its platform to be used to launder more than $9 billion. The founders are still at large.
As for Ripple Labs, the Securities and Exchange Commission wants to fine it $1.95 billion and has asked a New York court to assess the “seriousness” of the company’s misconduct. The SEC’s proposed final ruling concerns direct sales to institutional investors. The SEC claims Ripple received nearly $1 billion from “its illegal sales of XRP.”
FTX bankruptcy lawyers under fire
Not only are FTX bankruptcy lawyers dealing with the complex mess left by its collapse, they must also do so while avoiding scrutiny of their own dealings with FTX before its collapse.
Matthew Gold, a partner at Kleinberg Kaplan, says this is a fairly unique situation because such challenges against a debtor’s attorney are typically heard early in the case. “At FTX, because the bankruptcy judge denied the appointment of an examiner and the appeal of that decision took time, the result is that the examiner begins his work more than a year and a half after the start of the affair. This is very unusual,” he said.
Currently, the law firm is facing a class-action lawsuit, an internal investigation into its potential conflicts of interest, and an article written by two law professors that makes a number of similar claims. The law firm claims that all these parties are just repeating the words of former FTX CEO Sam Bankman-Fried.
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