LONDON: There is one particular detail in the FTX saga that I can’t stop thinking about. It’s not the salacious stories about polyamorous relationships at the cryptocurrency exchange, the criminal charges against Sam Bankman-Fried or the senior lieutenants now co-operating with the authorities, although all these things are compelling.
The bit that stays with me is that Bankman-Fried’s father, Joseph Bankman, facilitated at least one introduction for a former student to his son’s crypto trading business.
What confuses me is not that Bankman promoted his son’s company – it’s that anyone took him up on it.
Bankman is a legal academic and a leading scholar of tax law. Taking advice from him about the viability of a cryptocurrency business would be like taking counsel from him about how best to fix your plumbing.
FTX debtors are now suing Bankman and his wife, Barbara Fried, quoting statements in which Bankman described FTX and Alameda as “a family business”.
There are many successful family businesses: Lachlan Murdoch has just taken control of one – a global media empire. But the crucial and, I would have thought, obvious, difference is that his father Rupert Murdoch was involved in the family business first.
If a trading firm needs to use one of its founder’s fathers as an impromptu extra member of staff, that, to me at least, suggests the business is not well-run or particularly successful. At the point you can sponsor a sports team to the tune of US$135 million, you really ought not to be relying on your parents to make introductions for you.