The comeuppance of Sam Bankman-Fried is giving this year's other big crypto losers a chance to deflect.
Photographer: Ting Shen/BloombergWelcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today’s edition, on crypto finger-pointing in the wake of Sam Bankman-Fried fall:
Crypto Crocodile Tears
It’s said that love covers a multitude of sins. In crypto, it turns out that the downfall of its most well-connected billionaire actually does a much better job.
The erasure of almost $1.5 trillion in digital-asset market value this year served to unite crypto investors against those who were at the center of the biggest blowups, with others committing to be more proactive in publicly calling out what they consider to be signs of potentially fraudulent behavior. Now, the collapse of Sam Bankman-Fried’s FTX empire is giving those accused of wrongdoing a chance to join in themselves.
The founders of CelsiusThree Arrows Capital, hounded into months of near-total silence by traders angry at the damage wrought to their savings when those platforms failed over summer, have become more talkative in the shadow of Bankman-Fried. It’s time for their side of the story, they say, but only now that there’s a bigger target for investors to focus most of their anger on.
Kyle Davies, who had been silent since Three Arrows began its liquidation process in July, returned to Twitter with his views on FTX two days after the latter filed for bankruptcy on Nov. 11. His co-founder Su Zhu similarly started to repost allegations against FTX and Alameda as the exchange collapsed, telling Bloomberg’s Ben Bartenstein that the saga would set the industry back by several years. Meanwhile Terra’s Do Kwon published a long Twitter thread in defense of his project, coincidentally right after Bankman-Fried began doing the same about FTX’s demise.
For some, a criminal past almost enhances their position on the crypto coolness scale. Within hours of being released from prison, convicted fraudster Martin Shkreli was welcomed with open arms by many in the digital-asset community, speaking on an hours-long Twitter Space about his NFT bets. As the scale of FTX’s liquidity woes became apparent, Shkreli and Kwon both appeared on a Twitch stream to unpack the company’s demise, with Shkreli jokingly advising Kwon that jail’s “not that bad,” after all.
Not everyone is keen to see the slate wiped clean. In a labeled as a “hot take,” Circle CEO Jeremy Allaire said the industry should stop giving airtime to bad actors, even with Bankman-Fried set to speak publicly about FTX on Wednesday. One can see his point, if regulators are ever going to come round to the conclusion that crypto should be allowed to flourish.
“The speculators and hucksters are frankly just boring at this point,” Allaire said on Monday. “Time to move on.” Or, to dust off another well-worn saying: Silence is golden.
Charting it out
Cratering With the Coin
The dollar amounts received by crypto ATMs have fallen this year along with Bitcoin's price
Source: Chainalysis
Hearing them out
What we’re reading (and writing)
- Crypto’s Brutal Slump Has Finally Caught Up With Bitcoin ATMs
- ‘No Cooperation’: How Sam Bankman-Fried Tried to Cling to FTX (New York Times)
- FTX Received Some Customer Deposits Via Bank Accounts Held by Alameda
- The Race to Save Sam Bankman-Fried’s Other Crypto Exchange (Wired)
- FTX US Donated $1 Million to a Super-PAC Aligned With Mitch McConnell in October
- Matt Levine’s Money Stuff: FTX Had Plans for Its Robinhood Stock (Bloomberg Opinion)
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— With assistance by Suvashree Ghosh
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