Crypto ‘Summer of Sam’ and Revenge On the SVB Geeks

Ahh, the “sweet smell of success” and the stink of taking a crypto crap. Leave it to another American to rip people off or be fooled.   

FTX investors and ‘sharks’ banking on SiliCON, how did you not see it coming when the ‘Bankman’ Sammy boy bragged last summer? Sure, I could have alerted you. But what’s the fun in that? Sorry, not sorry. Eurythmics say it best:

“Sweet dreams are made of this                                        
Who am I to disagree
I travel the world and the seven seas
Everybody’s looking for something”

SVB entrepreneurs, aren’t you always bragging that you deserve your big wins because you take the big risks?  Well, take it! Sam Bankman-Fried’s FTX ‘cryptic’ platform, or what I saw as ‘Sam’s Café Américain,’ is liken to the gambling casino showcased in the 1941 film Casablanca.

Similar to the film’s clientele, the platform appears to have attracted a makeshift of predatory lenders, borrowers and players or what we call today: START-UPS, VENTURE CAPITALISTS, PRIVATE EQUITY, BANKS and POLITICIANS.

Wait a sec, wasn’t there a man in 2008 who not only MADE OFF with  a lot of people’s money while contributing large sums of cash to the Democratic Party and others in high places? May explain why warnings of MADOFF were ignored just as FTX and SVB.

You know Sammy, MADOFF too reportedly ran a two system operation: stocks and management of assets. Pretending one hand did not know what the other was doing he appears to have found a way to “manage” it. But one fine day, like the crash of the century, it all came tumbling down. Just like the Shit Venture Bank, SVB!

Says David Rubenstein on FTX and venture capital: ‘Every investor makes mistakes.’  Really David? Mistake or ‘time to pay the piper’? Tell us David, when was the last time Caryle made a ‘mistake’?  Oh, right, you say “Caryle is not really a crypto investor.” Then, it’s best you refrain from offering your two crypto cents.

On his own admission, David says, “I just don’t know enough about it. It’s too complicated.” And you’re Carlyle Group’s co-founder? I heard Carlyle was looking for ‘new blood,’ a Goldman Veteran to lead the firm. May also be time for you to step down.   

As to due diligence, it brings to mind my 2018 paper, Virtual Currencies and Financial Disclosure.  What’s the Point? In it I point to Senator John Kennedy from Louisiana and his astute question: “What’s the point of all this over-disclosure if nobody’s reading it…you can extend the disclosure we have now to Bitcoin and you haven’t done anything.”  

SVBs ‘bank run’ by so called techies would be laughable if we weren’t talking about serious money.  Geeks, you really didn’t know there is an inverse relationship between interest rates and long-term bond prices? Come on!

As Kennedy says, “it’s Banking 101.”  The way I see it John, for these blockheads 101 stands only for code as in 010… But to be fair, the FED too dropped the ball. As you note, the ‘stress test’ was on credit risk and not interest risk. I would venture to say that we will continue to see “frictions and a mismatch between new technologies and old regulatory structures.”  

By the way, it sounds like Sammy boy did offer ‘advice.’ “Don’t put in money that you’d be really, really sad to lose into you know crypto right now.”  :(

And yet, the simplistic nature of his remark is quite surprising coming from someone whose parents are said to be Stanford law professors. Interesting combo, law and markets. But chocolate does not always go well with nuts. Still, politics and money go hand-in-hand.

CONnection Between SiliCON and CONgress

David, let’s go back to the summer of SAM, when the Cybersecurity National Action Plan was in full force. You know, after the ‘collapse’ of TerraUSD in May but before the Deputy Attorney General began the chase for the Ruski in October. Right, the ‘one on one’ you had with Sam, before the fall of FTX in November.

~~~

Rubenstein: “Now in our country when you want to have some influence with government very often people make campaign contributions as they’re called and you’ve become a large donor to political candidates. Is it because you want some influence on the policy of crypto or is it you think these candidates are good public servants?”

[Sam, before you answer David’s question let me point something out to David. David, you sure seem to know about connections. Oh, right, “Carlyle built its brand as a private equity heavyweight as Conway and fellow founders David Rubenstein, 73, and Daniel A. D’Aniello, 76, parlayed their government connections into deals, wealth and power.”]

Bankman-Fried: “It’s mostly just looking for good public servants.”

Rubenstein: “Political fundraisers, do they come to you directly? Is it easy to get to you and say we need this money for this candidate? And what type of candidates do you tend to support?”

Bankman-Fried: “If I pulled out my phone here and just looked at my last 10 text messages about half of them are going to be people asking for, politicians asking for contributions.”

Rubenstein: “Do you have a political expert or advisor?”

Bankman-Fried: “Yeah…I’ve got a few people on the ground in D.C. force actually running the operation.”  

Rubenstein: “You get involved in presidential campaigns?”

Bankman-Fried: “The answer is maybe. It totally depends on who is running…”

~~~

Nice chat boys. Well, Sammy boy, looks like the banks are running. So did you fund one party or more? Hear that although your “public donations went largely to Democrats,” you “funneled dark money to Republicans.” That a boy! Talk about ‘hedging your bets.”

Nicely played Sammy boy! And that’s the difference between having a “get out of jail card” or getting the slammer.

Hmm, I wonder if Sammy forgot to send Lisa a check from the islands?  “…abuse our financial system from a tropical island, you can expect to answer for your crimes inside a United States courtroom” states Deputy Attorney General Lisa Monaco.

Well, for those of you Politicians who have no regrets about taking part in deregulating small banks and looking to get reelected next year, time to look for ‘new blood’ to bleed for campaign cash. SAM and SVB, as other small banks appear to be closed for business.

And for those who talk of “Regulating Cryptocurrency Market” as Republican Senator Tim Scott, who appears to side with those who got financially ‘rear ended,’ shame on you. Blaming crypto startups who “did not tell you of the risks” is like blaming Wall Street companies for selling you stocks and not telling you the price goes up and down.

But if you insist on a warning, here’s what Sam said, “Don’t put in money that you’d be really, really sad to lose into you know crypto right now.”

Scott, are you ‘putting your money where your mouth is” as you did with the Railroads? Well looky here, isn’t this the same Scotty boy who received campaign contributions from NORFOLK SOUTHERN  and CSX !!! So let me get this straight. You’re fine with deregulating railroads but not cryptocurrencies? Cryptos not pay you enough?

SVB, Run Baby Run!

Sam warned about putting your $ in crypto. Hey Sammy, what about banks? 🙁

‘Bank run’ of SVB rides on the heels of FTX and Crypto downfall cascade. But not to worry says the FED and Joe, banks are ‘sound.’ Then why the heck call the Big Kahuna of investors aka “Oracle of Omaha?”

Hey big guy, looking to invest or concerned about a Silicon Valley firm you do business with, “Plug and Play Tech Center.” Under Supply Chain & Logistics, we find “BNSF Logistics, …a Berkshire Hathaway…”

The FTC recently announced the Equifax Data Breach Settlement. Who knows, maybe one day as with credit agencies, those who got screwed in crypto and at banks will get a check for a few bucks in the mail. Yippi! “And you can take that to the bank” or not. 🙂

Funny, Ponzi schemes continue to be attributed to a few “bad men” and BANKS. Didn’t you know or read the New York Times 2016 article, Signature Bank Sued Over Connection to Ponzi Scheme. So WTF happened?  Well, it appears that like other money men, it “has been a darling of Wall Street.”

Sammy boy, you’d appreciate this. “Sizzling deposit and loan growth has transformed it from a start-up to one of the biggest American banks, with $33 billion in assets…”

Politicians – someone to ‘watch over’ you, or start-ups and banks? Yep, Politicians “laughed all the way to the bank.” Financial Times reported in 2018, “Democrats get campaign cash from banks ahead of deregulation vote.” No surprise The Hill now highlights which “Democrats defend deregulation vote amid banking blame game.” Tim, Debbie, Josh and Gary were on the banks’ “Dealer List.”  

Recall when the WSJ showcased how the “Low-profile Signature Bank has become one of the nation’s fastest-growing lenders, attracting a fan base ranging from hip-hop mogul Irv “Gotti” Lorenzo to former Congressman Barney Frank.” Frank ‘has been a member of the Board since June 2015’ of Signatureny.com. 

Who said politics and money don’t mix? “The regulatory rollback is overwhelmingly supported by Republicans, but it could not have cleared the Senate without the support of 17 Democrats.”  BUT, still it is no surprise it was signed into law by President Trump.

Why? Look what it reportedly does for Presidents. Find out “How a Small Bank Became a Go-To Lender to the Trump Family.”

Signature Bank in Manhattan “has extended lines of credit to the Trump International Golf Club; lent money to President Trump’s son-in-law, Jared Kushner; and provided Mr. Trump and his business with checking accounts.”

Bastards, Banks and Politicians are no different than a Robber whose got you in a hold up demanding, “your money or your life.” So why would playing with crypto be any different?

“Play it again, Sam”?

Do players truly have a choice? Don’t confuse he who sits on a board and she who puts her money on the table. So what happens when key players cut and run with your money?

Ask ChinaCast Education Corp. They “sued New York’s Signature Bank, Bank of China and HSBC accusing them of letting the company’s former chief executive embezzle $35 million through accounts at the banks.”  Oh, it gets better. Remember when the SEC was alerted to Madoff?

It appears the “the banks ignored warning signs of money laundering and failed to stop transfers of money to a fictitious investment holding company in the British Virgin Islands with no legitimate business purpose.” 

And just like those who sat in Alcatraz, the islands are for these birds. Sam reportedly said of his flocking to the Bahamas, “You do not want to be in a country with a lot of angry people.” No shit Sherlock!

Let me remind you, in this wet dream of quick and dirty schemes,the Crypto Café is open for all to play: Play to win or pay to play.

“Some of them want to use you, Some of them want to get used by you.”

~~~

Sweet Dreams (Are Made of This)

Song by Eurythmics

Source: Musixmatch

Songwriters: Annie Lennox / David Allan Stewart