FTX benefited from venture capitalists’ suspension of disbelief

Interviews given by Sam Bankman-Fried in recent days suggest that FTX’s failure is tied to pure incompetence. PHOTO: NYTIMES
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NEW YORK – The narrative that emerged in the days after the collapse of FTX, the US$32.5 billion (S$44 billion) exchange at the centre of Mr Sam Bankman-Fried’s crypto trading empire, was that it had to be the result of some highly sophisticated and nefarious scheme that only came to light following a series of unfortunate events. After all, some of the smartest minds in the financial world were sucked in: Sequoia Capital, Tiger Global Management and the Ontario Teachers’ Pension Plan, to name a few.

And that is what the venture capital (VC) and pension funds that seeded FTX surely want you to believe. That they were unwitting victims in an unfortunate and complex saga nobody could have foreseen. Do not fall for it. While we still do not yet know all the facts, they should not go blameless. Without their continual funding, stamp of approval and lack of questions, FTX never would have grown as big as it did. Their carelessness means FTX customers are out billions of dollars they are unlikely to ever recover.

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