The downfall of the ‘king of crypto’ could reverberate for years: Morning Brief
Wed, November 16, 2022 at 4:00 AM·5 min read
This article first appeared in the Morning Brief. Get the Morning Brief sent directly to your inbox every Monday to Friday by 6:30 a.m. ET. Subscribe
Wednesday, Nov. 16, 2022
Today’s newsletter is by Brian Sozzi, an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Read this and more market news on the go with Yahoo Finance App.
Trust is a vital element in investing — stocks, bonds, you name it. I trusted Walmart when it reported Tuesday that sales increased last quarter. I trusted Walmart CFO John David Rainey when he told me on Yahoo Finance Live about the retailer’s expectations for holiday sales. I trust that when I buy a bond, I will get the principal back with interest at some point in the future.
Unfortunately for crypto, the space now faces a major trust deficiency in the wake of the FTX implosion. The cryptocurrency exchange filed for bankruptcy last week, and its CEO, Sam Bankman-Fried, resigned. SBF, as he’s known, became a crypto billionaire and a star in the industry by the time he was 29. Now, at 30 years old, SBF has lost his fortune and admitted to loaning FTX customer funds to Alameda Research, a trading firm he co-founded.
Cryptocurrency already had a reputation for carrying more risk than traditional investments. But the FTX drama has no doubt sowed even more doubts about digital assets.
“I mean, in fact, in a sense, SBF is like the Jordan Belfort of the crypto era. Instead of ‘The Wolf of Wall Street,’ they’ll make a movie called ‘The King of Crypto,'” Microstrategy founder and bitcoin bull Michael Saylor told me on Yahoo Finance Live this week.
Belfort pleaded guilty to fraud connected with stock market manipulation in 1999 and spent 22 months in prison. He was then portrayed by Leonardo DiCaprio in the 2013 movie “The Wolf of Wall Street.”
SBF has not been charged with a crime, but a criminal case against him is not out of the question. Federal prosecutors in Manhattan are investigating the FTX collapse, the Wall Street Journal reported, citing unnamed sources familiar with the matter. Still, U.S. prosecutors may run into difficulties because FTX is based in the Bahamas, where SBF lives in a house with a group of friends.Story continues
- 1.FAANG Bets That Wiped Out ESG Returns May Do More Harm in 2023
- 2.Exclusive-Evergrande eyes onshore assets as sweetener for offshore debt restructuring -sources
- 3.Indonesia Wants an “OPEC-like” Organization for Nickel
- 4.UPDATE 4-Myanmar frees Suu Kyi’s Australian adviser in prisoner amnesty – state media
- 5.Bankman-Fried says filing for FTX bankruptcy was a mistake – Vox
- A low-key headwind for the mega-cap tech stocks: Morning BriefYahoo Finance·4 min read
- Inflation data raises doubts about whether Fed will ‘stay the course’: Morning BriefYahoo Finance·3 min read
- Sam Bankman-Fried’s FTX is not the Lehman Brothers of crypto: Morning BriefYahoo Finance·4 min read