Why did FTX collapse?
Forget about wash trades. Forget about creating token value out of thin air. Those are the operational reasons.
The reason FTX collapsed is because it’s leaders, Sam Bankman-Fried and Carolyn Ellison were young punks from the new Ivy League, who felt that the rules of humanity did not apply to them.
Amphetamines are for demigods like them, they reasoned. The rest of the chumps can’t handle such drugs.
Bankman-Fried graduated from MIT. Ellison graduated from Stanford.
Their parents were connected into the power structure.
It must be a heady experience to have so many people swoon before you as you casually let them know that you graduated from such an elite institution.
Why should we be surprised that Fried and Ellison engaged in wash trades?
Why should we be surprised that they created a token out of thin air, and then artificially pumped up its value?
Why should we be surprised that there were no accounting controls?
Why should we be surprised that they threw investors money around so carelessly?
Why should we be surprised that they used customer funds for purposes that are frowned upon?
Rules don’t apply to them.
They are demigods
In the Kim Jong-un society that we have created people who graduate from MIT, Stanford, Harvard, and the rest of the Ivy League are fucking geniuses.
Of course they can do amphetamines and work without being compromised.
Of course they don’t need any accounting controls.
They walk on water
At least they believe they can.
And quite frankly, so do many other people.
Sequoia Capital had no problem doling over $210 million of other people’s hard earned money.
They – and many others – did so, because they looked at Fried and Ellison, and said to themselves: Why, they are the elites. They are the princes of the city. They can do no wrong.
But, as we have learned since the FTX collapse, they are sorry.
They are truly sorry.
Sorry won’t do it, Bub.
Nor will your half assed explanations of why FTX collapsed.
FTX collapsed for the same reason that Titanic foundered: Unbridled arrogance.
This ship can’t sink, Fried and Ellison proclaimed to the world.
But it did sink.
And now it’s dragging everybody down with it in its wake.
Do you want to do something about it?
Do you want to prevent this in the future?
You have to reform the culture. You have to get off this superstar culture kick.
SEC regulations won’t cut the mustard.
It’s the individual that counts not the institution.
You have to stop voting for people who come from these elite institutions. Many of them don’t have the right stuff.
They don’t have the right stuff because they sit back on their asses, do drugs and get by on their connections.
Just like Fried and Ellison.
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