The warning story of FTX

fake it till you make it: an aphorism that Sam Bankman-Fried, founder of the collapsed crypto exchange FTX, may have accepted too warmly. At the beginning of the year, SBF-as the 30-year-old is often called in board shorts and disassembled hair-had an estimated paper assets of $ 20 billion. He ends 2022 in a Bahama prison, where he is faced with delivery to the United States because of the allegation of wire fraud, money laundering and violations of laws on the election campaign financing. In a written declaration before a congress committee, SBF admitted that he had "screwed up" it. So you can express it. The public prosecutor expresses it differently: that he is the perpetrator of one of the greatest financial fraud in history. In the end, a jury decides whose explanation is most convincing.

There will be consequences from the collapse of FTX, but it would be a great shame if one of them spoiled America's love affair with entrepreneurial geniuses. It is one of the best properties of US capitalism that an individual has the chance to make money with a great idea. Picture strikers, especially in the area of ​​technology, have an illustrious history: Without Steve Jobs, there would be no Apple, without Jeff Bezos no Amazon and without Bill Gates no Microsoft. Innovation requires courage.

But it is time to lose the pink glasses. Technology that not many understand can also lead to veiling, style instead of substance and fear not to captivate even experienced investors. Combined with an era of low interest rates and the light money - which is now finally over - it is the ideal habitat for fraudsters. Evidence A: Elizabeth Holmes, the founder of Theranos, the once hyped blood test company. She was able to imitate the turtleneck sweaters and mannerisms of Apple's jobs, but her claims about Theranos's technology were lazy. She is now serving an 11-year prison sentence for fraud from investors.

The fact that these investors included champions of the universe like Rupert Murdoch and Larry Ellison von Oracle is shocking, but not surprising: even Isaac Newton fell on the pitch of the Sea Sea Company. FTX also proves to be a warning example of Blue Chip Investors, including Sequoia Capital and at least two pension funds. While the loss of money for risk capital providers is a professional risk, pension funds have nothing to do with investing in such a volatile sector as crypto.

There seems to have been a complete failure of fundamental checks in a start-up that did not have a board and the supposedly $ 32 billion $ swingbook software business. Su Zhu, co -founder of Three Arrows Capital, a hedge fund that collapsed himself, said FTX used FTX after seeing the list of the investors behind it: "I assumed that someone did it there [Due Diligence]." But at a time when even Elon Musk did without Due Diligence before he agreed to make Twitter for 44 billion

also the democratic politicians who received tens of million dollars of FTX donations also asked many questions. Bankman-Fried liked to represent himself as the friendly face of crypto, which regulated supported more than avoided-as a means of suffocating the competition, as it turned out.

Behind the crypto gossip and the recommendations of celebrities from FTX, the prosecutors claim a story that is as old as the time. John Ray, the restructuring expert and new CEO of FTX, calls it a embezzlement of the "old school". Bankman-Fried must be considered innocent until the guilt has been proof. A less dizzying handling of start-ups and their visionary founders should definitely arise. One in which basic questions are asked and proven aphorisms are kept in mind, last but not least: do not believe the hype.