They Burned Down Crypto. Now They Want a Comeback

Sam Bankman-Fried thinks he can turn things around while his peers Su Zhu and Kyle Davies paint themselves as victims.

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On Wednesday, Vox published a bombshell interview with former crypto exchange FTX CEO Sam Bankman-Fried, where the 30-year-old crypto trader all but revealed he had, in fact, co-mingled customer funds with those of his hedge fund, Alameda Research. This would be a problem on its own, as it violated FTX’s terms-of-service as well as likely falls afoul of wires or securities laws.

Bankman-Fried’s crime, which “wasn’t quite lending [customer deposits] out” but something “messier,” “more organic” and “reasonable” than that, was compounded after a run on his exchange left up to one million FTX users without access to their funds. Billions of dollars worth of crypto are missing –  and the “messy accounting” at FTX and Alameda are still being sorted.

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He’s now attempting to raise $8 billion in financing to make customers whole. What that will look like is anybody’s guess, (Bankman-Fried did not respond to a request for comment). But the sum is far greater than the company, once valued at $32 billion and now going through Chapter 11 bankruptcy, ever raised. SBF has also resigned as CEO.

That Bankman-Fried thinks he can mount a reversal of fortune shows a deep disconnect with reality. He’s lied repeatedly in public, to customers and to investors – his trust is burned, and he’s likely facing criminal charges. And while he thinks he was once “one of the world’s greatest fundraisers,” his success was built on a charm offensive and misdirection.

FTX counted a number of white glove funds as investors, including Sequoia Capital, Lightspeed Ventures and Coinbase’s angle fund. Apparently no one did any due diligence – Sequoia even committed after finding out SBF was playing League of Legends during the meeting. That level of lax scrutiny won’t happen again.

Of course there are exceptions, Kevin O’Leary, the celebrity investor and paid FTX spokesperson, said he’d be willing to bet again on SBF. And that’s the scary thing: while Bankman-Fried is likely finished, he has peers that are attempting to do the same thing – recoup their reputations, possibly raise money and restart their “hero’s arc” – and just might.

Namely, Terra creator Do Kwon and Three Arrows Capital co-founders Su Zhu and Kylie Davies have recently been doing the media circuit, being tapped as experts to comment on Bankman-Fried’s rise and fall. Zhu and Davies, who nuked billions of dollars, are even reportedly on the market to raise a new crypto-investment fund.

All three are on the run from the law, have been accused of not cooperating with authorities and have ended up in non-extradition countries. The three have seemingly come up with a story that Bankman-Fried had popped the unsustainable LUNA bubble that eventually implicated Three Arrows.

But already there are indications that this attempt to make themselves the victim are thin. Zhu wrongfully called out former FTX employee turned whistleblower Zane Tackett for conspiring against 3AC, getting key details wrong. He also furthered conspiracies that the Democratic Party is conspiring with Bankman-Fried (who was a mega-donor) to evade justice.

The disgraced Terra co-founder made a surprise appearance on the popular podcast Up Only last week, where Do joked how he was the wrong person to take “crisis management” advice from.

Do had appeared next to convicted felon Martin Shkreli, who noted Bankman-Fried and Do will likely go to jail, though not to worry much as it isn’t that bad. Shkreli, aka Pharma Bro, a name he earned after jacking up the price of a life-saving medicine, might be the template for reinvention, having emerged from prison a full-flung “crypto bro.”

It’d be one thing if Do, Davies, Zhu or Bankman-Fried had also served their time after being convicted. And, to be sure, they all deserve a fair trial. But until then, they really ought to disappear.


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Daniel Kuhn

Daniel Kuhn is a deputy managing editor for Consensus Magazine. He owns minor amounts of BTC and ETH.

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