Crypto News: If SBF isn't lying, crypto is in trouble

Welcome to Bloomberg Crypto, our twice-weekly look at Bitcoin, blockchain and more. If someone forwarded this to you, sign up here. In today's edition, Michael P. Regan reports from Sam Bankman-Fried's media tour:

In Sam Bankman-Fried's telling, it wasn't fraud, theft or other assorted skullduggery that caused the FTX crypto conglomerate to implode. It was just incompetence. That's the outline of the defense he tried to lay out this week in interviews at a New York Times event, on Good Morning America and in New York magazine.

Mind you, he hasn't actually been charged with anything, so he seems to be trying to front-run any potential criminal prosecution and launder his once-heroic reputation. Was he telling the truth? Who knows. Even the captain of the crypto cheerleading squad, Mike Novogratz, channeled his inner Joe Biden to tell Bloomberg TV that SBF was laying on the "malarkey" in the Times interview. But then there was hedge-fund luminary Bill Ackman triggering what the kids would call an "epic ratio" by tweeting: "Call me crazy, but I think @sbf is telling the truth." Hey, it only takes one of 12 jurors, crazy or not, so if SBF were to land someone like Ackman on his, that's the only ratio that matters.

Source: @BillAckman

SBF also seemed to be front-running his exposure in the civil courtroom by revealing he only has $100,000 left to his name. It true, that's enough to cover Alameda's tab at the Bahamas location of Jimmy Buffett's Margaritaville (insert your own "Some people claim that there's a woman to blame" joke here) but unlikely to get any major plaintiff's attorneys too excited.

But you know what? Let's assume that systemic incompetence is the correct diagnosis for this year's crypto dumpster fire, based on whatever "due diligence" the power players did on Do Kwon's Terra project, SBF's FTX and all the dominos lined up behind them.

If that's the case, it's perhaps more damaging to the industry's ambitions than if its problems were caused by premeditating Madoff-like criminals who could be brought to justice.

"Look, I've had a bad month," SBF told the audience providing the sitcom-like laugh track at the Times event. For the VCs, institutions and Wall Street firms who previously had been opening the capital spigots in crypto's direction — not to mention all of FTX's counterparties and customers — it would appear it's been bad for a lot longer than that.

"I actually believe most of the companies are not going to be around."

Larry Fink

CEO, BlackRock Inc.

A titan of traditional finance makes a grim prediction about the crypto industry in the wake of FTX's collapse

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