Long before Bitcoin (BTC), Bernie Madoff sat atop the longest-running, largest fraud in history. The rise and real-time fall of Sam “SBF” Bankman-Frie
Long before Bitcoin (BTC), Bernie Madoff sat atop the longest-running, largest fraud in history. The rise and real-time fall of Sam “SBF” Bankman-Fried, former CEO of crypto exchange FTX, were expedited in comparison. While the similarities are profound, the storyline is not: Create organizations under false pretenses, develop relationships with people in authority positions, defraud clients, survive as long as possible, and try not to get caught.
Madoff advisers experienced a “liquidity” problem in 2008, around late November into early December, where the fund was unable to meet client redemption requests. On its surface, the fourth-quarter timing of the Madoff collapse more than a decade ago appears eerily similar to FTX’s 2022 implosion. Bitcoiners who hold their keys will never experience a “liquidity problem,” as their Bitcoin isn’t being used to leverage anything else. It is the hardest money around as long as it stays in the custody of its rightful owner.
Even near the collapse, Madoff had planned to pay out $173 million in early bonuses to family and friends. When questioned by his sons on Dec. 9, 2008, Madoff confessed to the massive fraud. The numbers, in many instances, are fractions of the fraud FTX is accused of. Bitcoin maximalists continue to remind their communities that yield, third-party custodians and humans cannot be trusted. Satoshi Nakamoto’s white paper endures.
Madoff’s sons communicated, almost immediately, with an attorney, who advised them to contact federal authorities. Madoff was arrested on Dec. 11, one day after federal agencies were made aware of the fraud.
Related: The outcome of SBF’s prosecution could determine how the IRS treats your FTX losses
On Nov. 8, Binance CEO Changpeng Zhao announced on Twitter that he tentatively intended to purchase FTX, but he quickly reversed the decision, and a “liquidity” problem ensued at FTX. Bitcoin maximalists either watched idly, shaking their heads in disbelief — knowing it was a matter of time — or simply went on with their lives. Many maximalists might very well have been a part of Mt. Gox, which held approximately 80% of all BTC in circulation at the time it was breached. The “wake-up call” is an unfortunate initiation ritual for some Bitcoiners. FTX will mint many new Bitcoin maximalists.
In December, SBF was arrested in the Bahamas. As authors and researchers, we’re confident that correlations will be immediately identified and explored in regard to the timing of Madoff’s arrest on Dec. 11, 2o08.
As SBF faces extradition to the United States, based upon the “Treaty Between the United States and the Bahamas,” he faces sentence terms that may mirror Madoff’s, who faced a 150-year prison sentence for an arsenal of convictions. Those convictions included:
- 40 years for two counts of international money laundering
- 20 years for one count of securities fraud
- 20 years for one count of mail fraud
- 20 years for one count of wire fraud
- 20 years for one count of false filings with the Securities and Exchange Commission
- 10 years for one count of money laundering
- Five years for one count of investment adviser fraud
- Five years for one count of false statements
- Five years for one count of perjury
- Five years for one count of theft from an employee benefit plan
To provide some perspective, the longest sentences for recent financial fraud include, in order:
- Shalom Weiss (845 years)
- Norman Schmidt (330 years)
- Bernie Madoff (150 years)
- Frederick Brandau (55 years)
- A tie for fifth place between Charles Lewis, Eduardo Masferrer, Chalana McFarland and Lance Poulsen, who received 30-year sentences.
Based on the limited release documents at the time of publication, SBF may have his name included on the top five listed above — even potentially at or near the top. That would be fair considering that, among other allegations, his political donations may have impacted or influenced U.S. political elections.
Related: It’s time for crypto fans to stop supporting cults of personality
Madoff’s prisoner number was 61727-054. Note that these oddly hyphenated eight digits weren’t representative of an account number, an SEC filing record or some secretive financial code; the numbers were Madoff’s former inmate number at Federal Correctional Complex, Butner.
If and/or when the time comes, SBF may be remembered by a similar numeric value instead of a cheeky three-letter moniker (“SBF”). Time will tell. Remember, Madoff pleaded guilty and still received 150 years, eventually dying while in custody.
Bitcoin > bribes
Let’s be clear: Not your keys, not your coins.
Stop giving your hard-earned money and Bitcoin to “trusted” third parties. Whether or not SBF spends a day in prison, or multiple lifetimes, the future of SBF means nothing to Bitcoin maximalists. In truth, if SBF walks free, the event will only confirm a greater Ponzi scheme that Bitcoiners are well aware of.
Bitcoin maximalists continue to preach, and events such as the…
cointelegraph.com