The FTX, Theranos fraud template
The FTX, Theranos fraud template
Our empire of lies seems to have perfected the template for fraud on an industrial scale
Last week brought us another mega-scandal as another celebrated, multi-billion dollar success story turned out to be a massive fraud. As more details emerge about FTX and its young founder, Sam Bankman-Fried, the outlines of the story increasingly resemble another mega-scandal, Theranos. It would appear that our financial-political-media complex has developed a template for industrial scale fraud.
The template includes a genius entrepreneur - a brilliant, magnanimous person who’d pull him/her/itself by the bootstraps to become an instant billionaire. It also includes murky family connections, protection in high places, dirty political dealings, overflowing praise for the venture and its founder, and a rapid ascent to success.
Last October, I published a three-part series analyzing these aspects of Theranos, which remains one of the most fascinating stories I’d come across over the years. Theranos was also demonstrably related to the pandemic we have recently experienced, but the media reports about it universally ignored that aspect of the scandal. The links to the series are below:
Theranos scandal: the REAL story (1/3)
Theranos scandal: the REAL story (2/3)
Theranos scandal: the three encouraging lessons (3/3)
I have summarized the three articles in the following YouTube report:
The FTX scandal will continue to feed the news cycle for years to come as further details emerge and the case goes through courts. But even without waiting for the dust to settle, we should take a few important lessons from all these cases: when Wall Street and the PR industry contrive another story about a genius young entrepreneur and their game-changing unicorn venture, at a very minimum we should remain on guard and look into into their bill of goods with due discernment.
Alex Krainer – @NakedHedgie is the creator of I-System Trend Following and publisher of daily TrendCompass reports, covering over 200 key financial and commodity markets – probably the best trend following daily newsletter on the market today. One month’s test drive is always free of charge – no strings attached!
Alex,
Given the timing of this you can make a very credible argument that this was a Wall St. takedown (a la my Fed v. Davos argument) of a pillar of control over crypto through the use of leverage. If we're in a deflationist mindset here then it makes sense that blowing up these leverage factories is in the strategic interest of those trying to regain control over the financial system and counter the push towards fully digital money.
What I am curious about, will this wretched loaded criminal and companions be caught in Argentina and brought to justice, or not? Any way, he will surely get his 'reward' in this or his next 'life,' probably in one of the many slums the world can be proud of. Now a rich man, then a beggar ... which makes me think, why are there so many so poor off?
Nevertheless the story is a good read and hats off to you Sir.