Albert Einstein famously said that the definition of insanity was to do “the same thing over and over and expecting different results.” Well, the ex-CEO of the now-bankrupt FTX exchange, Sam Bankman-Fried (SBF), believes that resorting back to Ponzinomics – an operational model inspired by the mechanics of a Ponzi scheme – remains a viable way forward for the defunct crypto exchange. You have to be particularly tone-deaf to double down on the very thing that created the original mess. As a refresher, FTX maintained a secretive symbiotic relationship with Sam Bankman-Fried’s crypto trading firm, Alameda Research. The arrangement entailed commingled bank accounts, allowing Alameda the facility of “borrowing” FTX client funds by simply posting collateral in the form of illiquid coins such as the FTT token. For the uninitiated, the FTT token is FTX’s in-house coin that offers a number of rewards to its holders. FTX maintained FTT’s value by periodically using a part of its fee-based revenue to purchase and then burn a proportion of the native token, thereby ensuring that Alameda’s collateral did not lose value. This shrewd arrangement, however, came to a crashing halt once Alameda’s outsized exposure to the FTT token became public knowledge, prompting Binance to start dumping its FTT holdings. Amid the chaos, Alameda’s then-CEO, Caroline Ellison, gave away the firm’s floor price on FTT, inviting further speculative attacks. All the while, customers rushed to take their funds off FTX, creating a full-blown bank run. This eventually resulted in FTX filing for bankruptcy and Sam Bankman-Fried’s unceremonious exit from his apex position at the head of the crumbling multi-billion-dollar crypto empire.
— Ran Neuner (@cryptomanran) December 9, 2022 This brings us to the crux of the matter. A delusional fan recently tweeted that FTX should “issue a new FTT token. Distribute the token to creditors/depositors. Accrue 100% of profits to token holders. It will be the biggest exchange in the world and users will be made more than whole.”
— SBF (@SBF_FTX) December 9, 2022 To this suggestion of revving up Ponzi scheme 2.0, Sam Bankman-Fried replied that it would be a “productive” path for parties to explore, essentially hammering home the point that the ex-CEO of FTX, after having triggered one of the biggest bankruptcies in corporate America’s history, seems to have learned virtually nothing and is willing to double-down on “shitcoinery,” as stated by MicroStrategy’s Michael Saylor, to save his skin. We are speechless at the sheer audacity and the callousness with which SBF still views his deliberate steps that have now caused untold misery to thousands of his clients. FTX’s new CEO, John J. Ray III, a veteran lawyer who oversaw Enron’s bankruptcy, certainly has his hands full in trying to not only locate the misplaced funds of the exchange’s clients but also curtail the damage from Sam Bankman-Fried’s characteristically delusional musings.
