Skip to content

FTX’s Collapse Validates Gary Gensler’s Crypto Skepticism

Sam Bankman-Fried fooled a lot of people—but not the SEC chairman, whose warnings about risk and lack of regulation were well-founded.

Bankman-Fried (foreground) and Gensler

Bankman-Fried (foreground) and Gensler

Photo illustration: 731; Photos: Bloomberg (1); Getty Images (1)

If you’re looking to apportion blame for the collapse of FTX, there are quite a few worthy candidates. Start with founder Sam Bankman-Fried, who under the banner of “effective altruism”—a 4chan thread of a moral philosophy—spent lavishly to lure investors onto his crypto trading platform and then, either through greed or incompetence, allowed customer funds to be used, and lost, by a hedge fund he also owned, Alameda Research. (So far, Bankman-Fried has seemed to argue that this was an honest mistake stemming from a failure to keep track of customer funds. In other words: an $8 billion oopsie.) Caroline Ellison—chief executive officer of Alameda and Bankman-Fried’s ex-girlfriend—is another worthy candidate, along with other members of Bankman-Fried’s inner circle.

If you were going to cast a wider net, you could also include the celebrities who took Bankman-Fried’s money and used it to promote a business that might be best described as a “shitcoin casino.” The television commercials that painted FTX as the empowering future of finance, starring the likes of Tom Brady and Stephen Curry, were obviously cynical in the moment. Now, with FTX in bankruptcy proceedings and federal criminal investigators circling, taking Bankman-Fried’s money to suggest that normal people should quit their jobs and buy Dogecoin (in the case of the Brady ad) or that they consider crypto speculation as safe (per Curry) looks like a betrayal of trust, maybe even fraud, according to a recent lawsuit. Representatives for Brady and Curry did not respond to a request for comment.