Dori: Is your cryptocurrency part of the new FTX scandal?

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Worse than Enron.

This is what experts call the FTX financial scandal which always erupts before the eyes of cryptocurrency investors.

Business ethics author, founder of The Integrity Institute and Enron whistleblower Lynn Brewer told The Dori Monson Show on Thursday that the FTX case could have an even deeper reach, especially for the millions of customers who have purchased Bitcoin and other cryptocurrencies.

Brewer – who said she was an early crypto investor for $4,000 – said she skimmed over the “pros and cons” of buying.

In a direct interview, Brewer explained how FTX has become a “giant money laundering scheme” that, like Enron, will hurt “the little guy who lost his money.”

FTX was launched in 2019 by Sam Bankman-Fried to support Alameda Research, a company founded in 2017. The companies – operating from the Bahamas – would buy Bitcoin and other cryptocurrencies at a lower price in one part of the world and would sell them. at higher prices elsewhere, leaving the Bankman-Fried team to keep the profits.

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Even though Bitcoin was a trade used on Wall Street, Alameda had no regulatory oversight.

FTX and Alameda, Brewer explained, targeted ordinary investors who wanted to participate in trading the popular new cryptocurrencies. High-profile celebrities, including NFL superstar Tom Brady and Larry David, co-creator of the TV shows “Seinfeld” and “Curb Your Enthusiasm,” were used to publicize the company.

Company officials told potential investors last year that it made $1 billion in annual revenue. With his leveraged or borrowed money, Bankman-Fried is said to have bought millions in offshore real estate. Before the scandal broke, the 30-year-old was worth $23 billion.

Last week, lawyers — including her Stanford Law School professor and father, Joseph — convinced Bankman-Fried to step down. John Ray III has since been appointed as the new CEO. Ray was also part of the team that dealt with the aftermath of Enron’s collapse.

Reports show that because FTX and Alameda were so dependent on each other, both companies were broke when crypto prices started falling earlier this year. The fall created billions of dollars in losses for crypto traders and customers.

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How were there no red flags? Dori wondered.

“There were red flags,” Brewer replied. She pointed to Bankman-Fried’s own public comments about what he saw as weaknesses in the regulations that allowed him to operate.

Meanwhile, Brewer added, with $70 million in contributions, Bankman-Fried’s company was the Democratic Party’s third-largest donor. By comparison, now-bankrupt energy company Enron donated $100 million to Republicans.

Listen to Dori Monson weekday afternoons from noon to 3 p.m. on KIRO Newsradio, 97.3 FM. Subscribe to the podcast here.

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