https://www.youtube.com/watch?v=/4q_kUe1Vhwo
The clamor for regulation as well as the crypto liquidity and contagion problems following the collapse of FTX suggest that its Founder Sam Bankman-Fried was likely a “pawn” and “useful idiot,” according to Mark Yusko, CEO, Founder, and Chief Investment Officer at Morgan Creek Capital Management.
“They are just pawns in a very large, very elaborate system that was designed to do money laundering,” he said. “It is certainly possible that there was an intent by someone to have this be an example set so that regulators could come in and punish the industry.”
Yusko pointed out how crypto and DeFI pose a threat to traditional finance, and how Bitcoin is a challenge to fiat currency and Central Banks. He contends that the FTX collapse and contagion, which has adversely impacted market liquidity and market sentiment, and creates an opening for regulators to impose tough restrictions, could be by design.
“[Blockchain technology] replaces trust with truth,” he said. “Who are the arbiters of trust today? Financial institutions, third-party middle people, a $7 trillion industry. They would like to not be disrupted by DeFi and digital assets. It is possible that some group of incumbents might have tried to lobby for regulation to delay, obfuscate or change the course of this [tech] disruption.”
Yusko suggested that the FTX collapse did not end with Bankman-Fried or his associate Caroline Ellison, the former CEO of FTX’s sister company Alameda Research. He implied that there could be more powerful entities conspiring to take down the crypto industry.
“This debacle is a fraud perpetrated by, I believe, someone above the useful idiots,” he said. “Those two are not playing 10D chess.”
Yusko spoke with Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News.
FTX and Money Laundering
Sam Bankman-Fried, also known as SBF, was engaged in “money laundering” for the benefit of U.S. politicians, said Yusko.
“Politicians [got the funds],” Yusko explained. “Very large sums of money went to political candidates. There is evidence of [SBF] saying that he was going to give $1 billion in the next election.”
In March, FTX partnered with the Ukrainian government to allow digital assets to be sent to Ukraine’s armed forces in their fight against Russia.
Yusko claimed that this may have been part of SBF’s “money laundering” operation, with the help of Ukrainian President Volodymyr Zelenskyy.
“Money was going straight from Ukraine and Zelenskyy to FTX,” he said. “That money [vanished through] personal loans to SBF, and massive donations to the Democratic Party.”
FTX also made questionable investments in companies like Farmington State Bank, which used to be the U.S.’s 26th smallest bank. The bank’s deposits grew from $10 million to $84 million following FTX’s investment.
Referring to the Farmington State Bank investment, Yusko said, “If you and I pulled out our phones and we went to Wikipedia, and we typed in ‘money laundering,’ that’s the picture that would show up. Not that particular bank, but that is exactly how you do money laundering.”
Crypto Regulation
On Wednesday, U.S. Secretary Treasury Janet Yellen claimed that the crypto industry requires more regulation, and called the FTX collapse “a Lehman moment,” referring to the 2008 financial crisis.
However, Yusko said that although U.S. lawmakers would attempt to impose “onerous” regulation on crypto, it “won’t work.”
“U.S. crypto volume is 20ish percent, maybe a little higher,” he explained. “Most of it is a global industry. Most of the nodes are outside of the U.S. for Bitcoin, etc.”
He added that the U.S. risks becoming uncompetitive in the crypto space if it imposes too much regulation.
“If we become overly onerous regulatorily, [crypto] will just pop up in other jurisdictions,” he said. “So, ultimately, [the crypto industry] will win.”
To get more details and find out what Yusko thinks the extent of the financial contagion wrought by FTX will be, watch the video above.
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