MicroStrategy Chair Michael Saylor called out former FTX CEO Sam Bankman-Fried (SBF) for “committing the sin of sh*tcoinary.”
It has been a month since the FTX run resulted in the platform filing bankruptcy and the firm’s inner workings were laid bare. Much has happened during this time, but the underlying problem remains a $3.1 billion sum owed to over 1 million creditors.
SBF gets called out
Valuetainment YouTube channel Patrick Bet-David asked Saylor during an interview whether he knew about the shenanigans happening at FTX behind closed doors.
Rather than acknowledge direct insight on the matter, Saylor chose to respond by differentiating the Bitcoin and crypto communities, saying SBF is the “poster child of the crypto world.”
“You have the Bitcoin community opposite the crypto community, and there’s been a low-grade boiling guerilla war between the two camps for the past two and a half years.”
Through his positioning as the crypto poster child, SBF made billions of dollars on an unregulated offshore exchange, billions more via the issuance of the FTT “air token,” and bought access to politicians to influence legislation and narrative, according to Saylor.
One such narrative is the war on Bitcoin over its purported energy inefficiency, “but not to fear, we have a staked air token that does the same thing as Bitcoin, and it’s environmentally friendly.”
Tying everything together, Saylor said SBF and others in the crypto world were always guilty of sh*tcoinary or pumping and promoting unregistered securities, which was clear to see (for BTC maximalists) even without insider insight at the exchange.
“There’s something ethically broken about being able to issue your own unregistered security. They call it committing the sin of sh*tcoinary.”
Saylor explains the alleged fraud
Summarizing the allegations against SBF, Saylor said $8 billion of FTT and SRM were created out of thin air. Then, locked tokens were issued and recorded on the balance sheet to the tune of $4 billion to 8 billion, bringing the aggregate collateral to $16 billion.
SBF then took out a loan using this collateral via intercompany transfers with Alameda. This allowed him to extract “real stuff” in dollars, Bitcoin, etc., by pledging “air tokens.”
What’s more, in practice, banks loaning money against collateral will yield around $10 million in loan money for every $1 billion put up as collateral, or 1% of the value of the collateral. But in SBF’s case, he granted himself a hundred times more than any legitimate bank would loan.
“Giving yourself a $10 billion loan means you gave yourself about 100x the collateral value you would have got on a regulated exchange onshore.”