Few people in recent history have fallen faster than FTX Trading Ltd founder Sam Bankman Fried, who went from financial genius to federal prisoner when his cryptocurrency exchange failed. Perhaps the most obvious reminder of this for Bankman Fried is the alternative currency he was turned into trading in federal prison: canned mackerel.
From cryptocurrency to canned fish: a new kind of alternative economy
Microeconomics exist everywhere, even in places where legal trading is not permitted. This is true of places like New York’s Metropolitan Detention Center, which currently houses Bankman-Fried. All you need for a microeconomy to thrive is a globally agreed unit of currency that can be exchanged for services. Since the days of Al Capone and Alcatraz federal prison, cigarettes have served as an unofficial alternative currency in the federal prison system.
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However, they were banned for health reasons in 2004, and canned mackerel, or “mac” as they are known at home, became the currency of choice among federal prisoners. Macs can be traded for a variety of services, including but not limited to:
Canned mackerel has even the standard
It may be tempting to think of the MAC trade in federal prison as a business lacking any sophistication or regulation, but you would be wrong. As with cryptocurrencies, the MAC value has its own standard: the US dollar. Its value can rise or fluctuate, but the thing that makes MAX so useful as an alternative currency is its shelf life, global popularity and ease of transfer.
It’s a bitter irony that the same skills Bankman-Fried acquired as a cryptocurrency trader while building his criminal empire would prepare him for life as a federal prisoner. Unfortunately for FTX clients who left the bag when the Bankman-Fried crime was discovered, the bags cannot be used to cover their losses.
The meteoric rise of the cryptocurrency star
Bankman-Fried’s investing career began with an internship at Jane Street Capital in 2013, where he worked with exchange-traded funds (ETFs). He co-founded his own cryptocurrency trading company, Alameda Research, in 2017. Soon after, he discovered a new way to profit from cryptocurrencies by arbitraging Bitcoin between the US and Japanese markets before moving to Hong Kong in 2018.
In 2018, Bankman-Fried founded the FTX exchange and found itself perfectly positioned to capitalize on the surge in cryptocurrency value that occurred during the coronavirus (COVID-19) pandemic. FTX’s value skyrockets and Bankman Fried becomes a billionaire with views on everything from government regulation to “effective altruism.” He even started his own cryptocurrency FTT. No one could have imagined that his star would fall as quickly as it rose.
A difficult fall for FTX and its account holders
It is perhaps more than a coincidence that this is around the same time that Bankman-Fried moved FTX from Hong Kong to the Bahamas and cited the island nation’s “regulatory environment” as the reason. While in the Bahamas, Bankman-Fried and his executives lived a lavish lifestyle while making riskier bets through the Alameda Trading Company, all out of sight of U.S. regulators who would likely expose the scheme before it got out of control.
He even went so far as to surreptitiously use FTX client funds to cover Alameda Trading’s losses. Bankman-Fried’s indiscretions may never have come to light had it not been for a failed deal with Binance, which backed out of its acquisition of FTX once it discovered numerous irregularities in FTX’s handling of customer funds. This led to FTT losing an estimated 80% of its value and a series of horrific events.
Within a few chaotic days in November 2022, Bankman-Fried resigned, lost his billionaire status and FTX went bankrupt. Most of FTX’s clients’ holdings were wiped out with it. Once the SEC intervened, Bankman-Fried could no longer hide the fact that it was illegally using FTX client funds to support Alameda Research.
Mack’s life is trading for Sam Bankman Fried
Bankman-Fried was arrested in the Bahamas in December 2022 and extradited to the United States where a jury convicted him of seven counts of fraud and conspiracy in November 2023. On March 28, 2024, Bankman-Fried will face up to 110 years. years on those charges. It remains to be seen whether he can develop an “arbitrage” plan for the Mac. He would certainly have enough time to do so.
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This article Jailed Crypto Tycoon Sam Bankman Fried Trades New Altcoin in Federal Prison This article originally appeared on Benzinga.com
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