Sam Bankman-Fried. The Biggest Con Artist of All Time

Sam Bankman-Fried (SBF) is the co-founder of FTX and Alameda Research. Before he was revealed as the biggest con artist of all time, he had a net worth of $26.5 billion at the age of 30.

Lesson 1: Study Fraud

• You must study fraud because all successful businesspeople and politicians have broken the rules to some degree. But most of the time it goes unnoticed. Fraud cases are deeply investigated and the research is made public, so you can learn what the elites really do – not the politically correct fluff they write in books. Studying fraud also shows you how not to go too far (don't break the law).

"Do you think the path from poverty to wealth is always pure and honorable? I have done many things that a righteous man would condemn. Yet here I am, with no regrets." – Xaro, Game of Thrones S2E6

Lesson 2: Break the Rules

• "[Sam Bankman-Fried] consistently displayed a flagrant disregard for legal structures and safeguards, a belief that rules do not apply to him, and an inclination to see the ends as justifying the means." – an alleged former employee of SBF

Lesson 3: Gain Attention by Any Means

• FTX spent $200 million for a 10 year deal to have TSM, the video gaming team, be called TSM FTX. They paid hundreds of millions on sponsorship deals.
• Croghan, the COO of Alameda Research, once told SBF to cut his hair. SBF replied: "I think it's important for people to think I look crazy." 

Lesson 4: Have Extreme Self-Confidence

• Sam left Jane Street, a prestigious wall street firm, after 3.5 years just because he thought there could be bigger opportunities out there.
• Alameda Research (likely) ran out of money in 2018 and started pitching investors. The pitch didn't work and Sam had the idea to start FTX because you can't raise money for a crypto fund (Alameda Research), but you can raise money for a crypto startup (FTX). Then you take that money (that investors gave you for the startup) and trade it in your crypto fund.

Lesson 5: Be a Business, Investment, and Political Strategist

• SBF wanted to get into startups, investments, politics, and charity.
• Sam moved the FTX headquarters to the Bahamas after Binance got banned in various countries, so FTX couldn't be banned.
• Sam hired Mark Wetjen, a former commisioner for the CFTC. He was Sam's connection to US politics and regulation.
• Sam became the 6th largest political donor in the 2 years before the US election. Estimated $40 million in donations. Other FTX executives donated too, estimated at a total of $30 million.
• Sam tried to get the DCCPA passed by speaking in congress. Many say that it would have given FTX a legal monopoly in the US.
• He made a crypto investment fund and a crypto exchange, which gave him insider information to trade on and the ability to commingle funds (both are illegal).
• FTX made an exchange token, FTT, that was mostly owned by FTX and Alameda Research. It was essentially fake money that they printed out of thin air. They couldn't sell their FTT or else it would crash the token price. Instead, they used it as collateral and took out loans against it (essentially trading monopoly money for real money). They also used FTT to claim that they had way more in assets than they really did.
• After Terra Luna collapsed, lots of other crypto companies were on the verge of bankruptcy. Sam offered to give loans to or acquire many crypto companies. This is like a Henry Singleton/Li Ka-shing investment strategy – buy up all the competition when the prices are low. It also helped Sam's reputation – he was called the 'crypto savior' and 'JP Morgan of crypto'.
• Binance's CEO, Changpeng Zhao, started the downfall of FTX by announcing on Twitter that Binance would sell its FTT tokens. This news causes a "bank run" on FTX and many customers removed their funds (fiat currency and cryptocurrency). 
• Alameda Research was given trading privileges at FTX, like exemption from auto liquidation. That means Alameda could borrow more money from FTX than any other client.
• The SEC claims that Alameda Research was using FTX customer funds to trade. Alameda Research could take an unlimited amount of money from the FTX bank account.
• When caught, Sam feigned ignorance and said that they (the FTX/Alameda Research executives) were just 'kids'. He did a ton of media appearances but it didn't work – he got arrested.
• In August 2023, Sam was jailed after being on house arrest at his parents' house in Palo Alto since December 2022. Why? He tried to message Ryan Miller and other former FTX employees on email and Signal (which is potential witness tampering).

Lesson 6: Don't Make Enemies. Be Diplomatic.

• The founder of Binance, Changpeng Zhao, arguably played a big part in the downfall of FTX because he hated SBF. SBF said something about CZ being untrustworthy because he's a foreigner in 2017 and CZ never forgot it.

"The truly vindictive are as patient as saints." – Katherine Oppenheimer, Oppenheimer (2023)