Crypto’s house of cards is falling down fast

Surprisingly, the price of Bitcoin itself has held up well in the aftermath of the scandal. On Tuesday, the price per coin rose back above $16,000 (£13,000), and has fallen only from $20,000 since FTX started to unravel. It’s hardly a dramatic drop by the standards of digital tokens, although it was already a long way off the $60,000 it hit last year.

Investors may well hold onto their money, so long as they didn’t buy at the peak or through FTX, and have strong nerves. Bitcoin itself may survive this crisis as it has several earlier ones.

The real damage will be done to FTX’s cheerleaders and outriders. Serious questions have to be asked of all the people and institutions who helped create the fiction of Sam Bankman-Fried as the boy wonder of finance.

It emerged this week that the consultancy Bain reportedly contributed to the due diligence work for Tiger Capital on its investment in FTX. Seriously? After all, this is a company, which, according to John Ray, the man drafted in to clear up the mess, didn’t even have the kind of financial records in place you might expect of your local window cleaner, and where three or four billion dollars could be transferred without anyone writing it down.

True, we also don’t have high expectations of Bain anymore. After all, it is only a couple of months since the firm was banned from doing any more work for the British government for three years after it was caught up in a scandal in South Africa (and, just taking a wild guess here, but that probably won’t be lifted early).

Then again, what exactly was Tiger, which used to be one of the most respected hedge funds in the world, doing investing in FTX at all?

Or, come to think of it, the major venture capital funds who backed Bankman-Fried, such as Sequoia or Softbank, institutions that may have scored some big successes when the internet startups were booming, but have since shown that they have very little judgment (Japan’s Softbank was also a big investor in WeWork – perhaps it should rename itself Soft Touch)?

Why were so many charities willing to take the company’s money, which the founder himself admitted was nothing more than whitewashing its reputation?

ProPublica might pride itself on its investigative journalism, but its detective work does not seem to have extended to questioning the big checks it was receiving from FTX, and the same is true of the many other causes it supported, not least the many millions donated to Democratic candidates in the United States.


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