The big cryptocurrency industry scandal, in context

There is a major scandal unfolding in cryptocurrencies right now. And I’m reminded of the lyrics from Jimmy Cliff’s 1972 hit where he sang, “The harder they come, the harder they fall, everybody.” The words are a good description of the current state of cryptocurrencies.

Sam Bankman Fried, aka SBF, was the founder and CEO of FTX and Alameda research, high-profile players in the cryptocurrency world. Sam has become a multi-billionaire with a agenda. He eschewed suits for T-shirts and shorts; he has donated to political candidates and social and environmental causes. He has enlisted a bevy of celebrities, including Tom Brady, Giselle Bundchen, Larry David, Kevin O’Leary (aka Mr. Wonderful), Anthony Scaramucci (aka the Mooch) and more to promote FTX. The company’s branding was on sports and entertainment stadiums. In early 2022, SBF spent millions on one of the most memorable Super Bowl commercials starring Larry David. Ironically, David’s comic “I don’t think, and I’m never wrong about these things” was perfectly correct about FTX.

Today, SBF is at his parents’ home after a federal court judge set bail at a record $250 million. SBF faces a long list of indictments from the Justice Department that could lead to decades behind bars. SBF became one of the richest people in the world before his downfall. The harder they come, the harder they fall, all of them.

Financial scandals are nothing new, but they often push markets to levels that offer attractive value. Time will tell if the latest cryptocurrency debacle gives way to another in a series of explosive rallies since 2010.

Bernie Madoff hit a stock low in 2008.

  • Warren Buffet once said, “Only when the tide is out do you find out who has been swimming naked.”
  • The 2008 global financial crisis revealed Bernie Madoff’s infamous Ponzi scheme in late 2008.
  • In October 2008, the stock market bottomed out.
  • Bernie Madoff died in prison, serving a 150-year sentence.
  • The Madoff scandal has added to the bearish sentiment in the general stock market.

Theranos generated bearish sentiment and caution in the biotech sector.

  • In 2015, Theranos, a biotech company, began to fall apart when a whistleblower raised concerns about the company’s flagship test device, the Edison.
  • The iShares NASDAQ Biotechnology ETF (