From Bernie Madoff to Bankman-Fried: Bitcoin maximalists have been validated

1 year ago

Long earlier Bitcoin (BTC), Bernie Madoff sat atop the longest-running, largest fraud successful history. The emergence and real-time autumn of Sam “SBF” Bankman-Fried, erstwhile CEO of crypto speech FTX, were expedited successful comparison. While the similarities are profound, the storyline is not: Create organizations nether mendacious pretenses, make relationships with radical successful authorization positions, defraud clients, past arsenic agelong arsenic possible, and effort not to get caught.

Madoff advisers experienced a “liquidity” occupation successful 2008, astir precocious November into aboriginal December, wherever the money was incapable to conscionable lawsuit redemption requests. On its surface, the fourth-quarter timing of the Madoff illness much than a decennary agone appears eerily akin to FTX’s 2022 implosion. Bitcoiners who clasp their keys volition ne'er acquisition a “liquidity problem,” arsenic their Bitcoin isn’t being utilized to leverage thing else. It is the hardest wealth astir arsenic agelong arsenic it stays successful the custody of its rightful owner.

Even adjacent the collapse, Madoff had planned to wage retired $173 cardinal successful aboriginal bonuses to household and friends. When questioned by his sons connected Dec. 9, 2008, Madoff confessed to the monolithic fraud. The numbers, successful galore instances, are fractions of the fraud FTX is accused of. Bitcoin maximalists proceed to punctual their communities that yield, third-party custodians and humans cannot beryllium trusted. Satoshi Nakamoto’s achromatic paper endures.

Madoff’s sons communicated, astir immediately, with an attorney, who advised them to interaction national authorities. Madoff was arrested connected Dec. 11, 1 time aft national agencies were made alert of the fraud.

On Nov. 8, Binance CEO Changpeng Zhao announced connected Twitter that helium tentatively intended to acquisition FTX, but he rapidly reversed the decision, and a “liquidity” occupation ensued astatine FTX. Bitcoin maximalists either watched idly, shaking their heads successful disbelief — knowing it was a substance of clip — oregon simply went connected with their lives. Many maximalists mightiness precise good person been a portion of Mt. Gox, which held astir 80% of each BTC successful circulation astatine the clip it was breached. The “wake-up call” is an unfortunate initiation ritual for immoderate Bitcoiners. FTX volition mint galore caller Bitcoin maximalists.

In December, SBF was arrested successful the Bahamas. As authors and researchers, we’re assured that correlations volition beryllium instantly identified and explored successful respect to the timing of Madoff’s apprehension connected Dec. 11, 2o08.

As SBF faces extradition to the United States, based upon the “Treaty Between the United States and the Bahamas,” helium faces condemnation presumption that whitethorn reflector Madoff’s, who faced a 150-year situation condemnation for an arsenal of convictions. Those convictions included:

40 years for 2 counts of planetary wealth laundering
20 years for 1 number of securities fraud
20 years for 1 number of message fraud
20 years for 1 number of ligament fraud
20 years for 1 number of mendacious filings with the Securities and Exchange Commission
10 years for 1 number of wealth laundering
Five years for 1 number of concern advisor fraud
Five years for 1 number of mendacious statements
Five years for 1 number of perjury
Five years for 1 number of theft from an worker payment plan

To supply immoderate perspective, the longest sentences for caller fiscal fraud include, successful order:

Shalom Weiss (845 years)
Norman Schmidt (330 years)
Bernie Madoff (150 years)
Frederick Brandau (55 years)
A necktie for 5th spot betwixt Charles Lewis, Eduardo Masferrer, Chalana McFarland and Lance Poulsen, who received 30-year sentences.

Based connected the constricted merchandise documents astatine the clip of publication, SBF whitethorn person his sanction included connected the apical 5 listed supra — adjacent perchance astatine oregon adjacent the top. That would beryllium just considering that, among different allegations, his governmental donations whitethorn person impacted oregon influenced U.S. governmental elections.

Madoff’s captive fig was 61727-054. Note that these oddly hyphenated 8 digits weren’t typical of an relationship number, an SEC filing grounds oregon immoderate secretive fiscal code; the numbers were Madoff’s erstwhile inmate fig astatine Federal Correctional Complex, Butner.

If and/or erstwhile the clip comes, SBF whitethorn beryllium remembered by a akin numeric worth alternatively of a cheeky three-letter moniker (“SBF”). Time volition tell. Remember, Madoff pleaded blameworthy and inactive received 150 years, yet dying portion successful custody.

Bitcoin > bribes

Let’s beryllium clear: Not your keys, not your coins.

Stop giving your hard-earned wealth and Bitcoin to “trusted” 3rd parties. Whether oregon not SBF spends a time successful prison, oregon aggregate lifetimes, the aboriginal of SBF means thing to Bitcoin maximalists. In truth, if SBF walks free, the lawsuit volition lone corroborate a greater Ponzi strategy that Bitcoiners are good alert of.

Bitcoin maximalists proceed to preach, and events specified arsenic the illness of FTX (among galore different exchanges) are dire reminders of Nakamoto’s words that kicked off the instauration of Bitcoin’s achromatic paper: “Commerce connected the Internet has travel to trust astir exclusively connected fiscal institutions serving arsenic trusted 3rd parties. […] While the strategy works good capable for astir transactions, it inactive suffers from the inherent weaknesses of the spot based model.”

There were and proceed to beryllium galore lessons to beryllium learned erstwhile examining the greed, deficiency of empathy and wide corruption humans person witnessed passim history; and arsenic events of this magnitude unfold, astatine the bosom of each nonaccomplishment is spot — oregon a deficiency thereof.

Bitcoin’s proof-of-work exemplary — including but not constricted to however transactions occur, timestamps are recorded, hash rates adjust, the web broadcasts nodes, incentives are rewarded, verification occurs and privateness is encoded — is the solution galore Bitcoiners person travel to instrumentality comfortableness in. The spot lies successful the protocol alternatively than successful individuals. Time and clip again, a breached satellite and unscrupulous actors marque the lawsuit for a trustless system.

No substance however well-regulated, designed oregon engineered aboriginal fiscal systems, exchanges oregon “cryptocurrencies” assertion to be, they each person the aforesaid nonaccomplishment point: quality quality and greed.

Bitcoiners recognize this, and arsenic galore much go alert of fiscal fraud — whether impacted straight oregon indirectly — Bitcoin continues to look arsenic the astir evident solution. SBF whitethorn thatch a caller procreation of “investors” the aforesaid hard acquisition learned by their parents: When thing is excessively bully to beryllium true, it often is.

The nonaccomplishment of FTX is not a surprise, nor are the imaginable connections betwixt SBF and high-ranking officials. The information that punishments whitethorn not acceptable the crime(s) shouldn’t travel arsenic a surprise, either. In truth, maximalists recognize that Bitcoin volition beryllium astir agelong aft the SBF particulate has settled. Bring connected the adjacent Ponzi strategy — Bitcoin maximalists look immune.

Kenneth Minesinger is simply a prof of instrumentality astatine California Baptist University. He obtained his J.D. from Western State University College of Law aft completing his undergraduate vocation astatine California State University astatine San Bernardino.

Dr. Riste Simnjanovski is simply a prof of nationalist medication astatine California Baptist University. He obtained his doctoral grade from the University of La Verne.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

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