Psst, want to hear a conspiracy theory? I’ve got good news. I have three.
They revolve around the spectacular collapse of crypto exchange trader, FTX and the company’s CEO, Sam Bankman-Fried.
The company has filed for bankruptcy and Bankman-Fried known better by his pally initials, SBF, is currently assisting Bahaman authorities with their inquiries. The FBI cannot be far away.
30,000 investors in Australia alone have been left wondering where their money has gone and whether they’ll ever see it again. FTX had 1.2 million customers worldwide.
Unbelievably, the company website, FTX.com, was still up and running until Thursday, offering new investors a discount on their first trade. Hmm.
As of Wednesday, the website featured a red band, a skull-and-crossbones warning to potential investors not to touch it with the proverbial barge pole. As of Friday morning, the website had gone into the 404-internet graveyard.
SBF was the second largest donor to the Democrats in the US midterms. That’s not a conspiracy theory. That’s a fact. The granddaddy of donors was George Soros. Through his company Soros Fund Management, Soros donated $192m to the Democrats. The next three largest donors gave their money to the Republican Party through its various super PACs. Midwest business power couple Richard and Elizabeth Uihlein donated $105m. Hedge fund manager, Kenneth Griffin $98m and Options trader, Jeffrey Yass $72m. SBF came in fifth with $58m.
SBF and one of his co-executives also donated money to the Republican Party though in notably lower amounts.
SBF slipped into the DMs of a Twitter journalist from Vice earlier this week. Regrets? SBF had a few. Number one on the list was what he described as a lack of accounting rigour. Well, duh. From what we can tell, FTX’s due diligence was a bit like asking Greta Thunberg to take a look at the global energy crisis and asking her to see what she could do to sort things out.
If you’re like me, your email spam folders are fit to burst with pleas urging you to transfer your hard-earned into crypto currency. Bitcoin, Ethereum, Tether, Solano, Cardano, Avalanche — to name but a few. There was money to be made. And not a word to the tax man, OK?
Many people struggle with the concept of digital currency. It is not tangible. The coins don’t exist. You can’t hold them in your hand. They sit in investors’ virtual wallets. Investors can trade, buy and sell from their virtual wallets while new investors have to transfer fiat currency, or ral money, to buy crypto.
They do so through exchanges like FTX. Exchanges have to jump through a long line of regulatory hoops before they can trade. Still, there are obvious regulatory gaps the world’s governments need to address. Suffice to say, crypto is not guaranteed. Fiat currencies go up and down, too but they have the backing of central banks and for the most part a highly regulated banking environment which guarantees investors their money.
The simple fact surrounding any digital or crypto currency is that a fair chunk of it is black money. That is essentially how crypto got its start. Drug money. Mob money. Russian oligarch money. Child pornographers’ money. Ransom money. Mass murder money. The extent of it is impossible to quantify.
But that’s only part of the explanation. Legitimate investors looking for a killing have been drawn to cypto. From the inception of bitcoin in 2009, digital currencies were used mainly to purchase illicit drugs, forged citizenship documents, firearms and all manner of instruments of criminality on dark web sites like Silk Road. In these early days, bitcoin ran along at between a grand and two per coin.
In 2017, bitcoin leapt into five figures but came down again later that year. Then the pandemic struck, and bitcoin hit an all-time high of $US64,374 ($96,286) a coin in October 2021. Nice work if you bought it at $2000. But anyone who has purchased bitcoin since the end of the pandemic has been belted. The current price is just over $24,951 a coin, down 70 per cent in the calendar year to date.
The next most traded cryptocurrency, Ethereum, follows a similar albeit less stratospheric path.
The spikes were in part due to a sense driven by other prominent conspiracies that the world was coming to an end and fiat currencies and the global financial system were headed to the abyss.
The shaky nature of crypto brought on by the collapse of FTX should have left the cooked investors shrieking then about global Armageddon with virtual egg on their faces now. Shamelessly, conspiracists simply move on to the next conspiracy.
The first of the current lot revolves around a crypto fundraising foundation called Aid for Ukraine run by a cryptocurrency exchange, Kuna, and a block chain company, Everstake. The theory goes that a large chunk of that money was sent by the US government via Democrats in Congress as aid money only to be returned to the Democrats via FTX to fund Democrat mid-term campaigning. Presumably the Ukrainian government did this to keep sweet with Grampa Joe, so he’d keep the HIMARS rolling in.
It’s a beautifully designed conspiracy theory, dark and circular as all good conspiracy theories should be. There are just three problems. One, it’s baseless. Two, it’s nonsensical. Why would the Ukrainian government send desperately needed funds back when they needed every cent to fight off the invader on their doorstep? And finally – and this is the killer — FTX was only involved in the Aid for Ukraine program for four weeks before being replaced by other exchanges.
Another dark conspiracy is that SBF and FTX pre-determined the outcome of a clinical trial which put the kybosh on the anti-parasitic medicine, Ivermectin as a Covid treatment. Why, Craig Kelly was right all along. I’ve got a spicy cough. Pass the horse paste.
Ivermectin is a great drug if you’ve got hookworm but in the case of viral respiratory infections, not so much. And this was proven by a double-blind, randomised, placebo-controlled, adaptive platform trial involving 3515 symptomatic Covid-19 positive adults recruited from 12 public health clinics in Brazil.
FTX money was used to part fund the trial but the conspiracists would have us believe that necessarily means 40 highly esteemed physicians who conducted the trial, thousands of patients and now thousands of scientists who have peer reviewed the study were paid off to flip the results against the efficacy of Ivermectin as a Covid. Maybe the New England Journal of Medicine who published the study was involved in some way, too.
Finally, conspiracists leapt on the idea that FTX, SBF and the World Economic Forum were involved in a conspiracy to establish a New World Order. I’ll happily tell you the WEF accepts money from just about anybody, including FTX to pursue their rich guy, back of the envelope musings to promote utopian futures that ironically are bound to lead to dystopian outcomes. The WEF is renowned as a forum for truly bad ideas but once the private jets fly home from Davos, no one except lurid conspiracists take them seriously.
It is lizards from Neptune running the world stuff.
Digital currencies and virtual wallets sitting in the nebula of the block chain are merely the backdrop here. Ponzi schemes have been around since well, since the Italian swindler, Charles Ponzi, pulled one off in the 1920s.
What needs to be investigated is where all the money went, if criminal offences occurred and what steps governments must take to prevent this from happening again.
The industry is crying out for more regulation. Without it, tales of investor woe from the FTX collapse will become commonplace.
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