For more, watch On Strike’s latest episode: CRYPTO Crimes – Corporate Fraud, Sam Bankman-Fried & the Rotten Capitalist System!

Last week, Sam Bankman-Fried, the so-called crypto king and the world’s wealthiest person under 30 for a time, was found guilty on all seven counts he was charged with. Bankman-Fried was responsible for the collapse of the cryptocurrency exchange, FTX, and carried out one of the largest financial frauds in the history of capitalism.

If given the maximum sentence, the former billionaire, whose net worth just two years ago was $26 billion, will go to prison for the rest of his life. He will also be facing a second trial in March next year on five additional charges, including bribery.

This is certainly a story about the criminal and sociopathic behavior of Sam Bankman-Fried. And it’s also a story about how digital currency, or cryptocurrency, is not the path to riches that so much of the corporate media made it out to be. But it’s more than that. 

Sam Bankman-Fried was not tried and convicted for being some sort of evil genius who took advantage of some esoteric features of cryptocurrency. The corporate media has really hyped the mystique around cryptocurrency, but one doesn’t need to be an expert on crypto in order to make sense of what happened. 

Really, this is just a good old-fashioned story of corporate greed and conmen, which are both endemic to the capitalist system. And underneath all the glamor and media spectacle around him, Bankman-Fried was just another arrogant, billionaire swindler who thought he could get away with financial crimes on a grand scale because no one would be smart enough to catch him. 

We’ve heard this story many times before. Savings & Loans, Enron, Lehman Brothers, JP Morgan Chase and Jamie Dimon, Goldman Sachs and Lloyd Blankfein, Bernie Madoff, Martin Shkrelli, Robinhood. It is a long list of corporations and wealthy individuals who have swindled millions of people out of billions, and in some cases even hundreds of billions, of dollars. And very few of them were sent to prison.

Despite the high drama surrounding the Bankman-Fried conviction, the bitter truth is that very few of these fraudsters have ever been held accountable by the criminal justice system.

The incentive, and opportunity, to pillage from millions of ordinary people is not about a few rotten apples. While Sam Bankman-fried is unmitigatedly noxious, he’s also just one corrupt individual in a fundamentally rotten, rapacious system. He’s not the first billionaire con artist, and he will not be the last – so long as capitalism lasts.

So What Did Bankman-Fried Actually Do?

To begin with, Bankman-Fried was found guilty of stealing billions of dollars from accounts belonging to customers of his once-high-flying cryptocurrency exchange, FTX, and money-laundering. 

He was found guilty of defrauding lenders to FTX’s sister company, the hedge fund Alameda Research, which held FTX customer funds in a bank account. During his trial, he said he learned in 2020 that FTX customer funds were held by Alameda, but he completely failed to take action to safeguard them. 

Bankman-Fried claims he was an innocent bystander in all this fraud, that it was just happening around him. The courts rejected this fairy tale, and now he faces a hundred and ten years in prison.

Much is being made in the media about cryptocurrency, as it is the magical money of the future. Not surprisingly, corporate media like the The Economist, while condemning Bankman-Fried, also assert that he was just an unfortunate exception in an otherwise promising field of investment, and that Bankman-Fried has unfairly spoiled crypto’s reputation. 

But really, cryptocurrencies like Bitcoin and exchanges like FTX are not independent or more democratic than standard currencies and markets. In fact, bitcoin is less stable than the U.S. dollar, and is also subject to the ups and downs of Wall Street. It’s part of the exact same framework that enables few to accumulate ungodly amounts of wealth without doing anything of value at the expense of millions of ordinary people who are doing the actual work of making things run.  

After FTX declared bankruptcy, it set off a chain reaction in the trillion-dollar cryptocurrency world, exposing the decay that always existed underneath the brave new world of digital currency. As some people have noted, bitcoins should really be called “shitcoins”.

Immediately following the FTX crash in 2021, another cryptocurrency exchange, Gemini, founded by billionaire twins, Cameron and Tyler Winklevoss, froze customer withdrawals in its lending unit, which later filed for bankruptcy, denuding millions of ordinary people of their hard-earned money. 

Just last month, New York’s attorney general, Letitia James, filed a lawsuit against three digital asset firms that were caught up in the collapse of Bankman-Fried’s empire — Gemini Trust owned by the Winklevoss twins, Genesis Global Capital, and Digital Currency Group, the parent company of Genesis. 

An investigation found that Gemini deceived investors about significant risks associated with a lending program it ran jointly with Genesis. The lawsuit alleges that the program, called Gemini Earn, fraudulently marketed itself as a low-risk investment, in which customers could lend crypto assets to Genesis while earning interest payments as high as 8 percent.

The lawsuit also accuses the companies of lying to investors in attempting to hide more than a billion dollars in losses.

James, the New York Attorney General, said “These cryptocurrency companies lied to investors. And it was middle-class investors who suffered as a result.” 

At least 230,000 people lost their money.

Just a few weeks after FTX’s bankruptcy in 2021, another crypto lender, BlockFi, also went bust, being intricately connected with FTX and Alameda.

Other cryptocurrency firms like Coinbase and Binance ended up laying off significant numbers of employees after the FTX crash and plummeting of the value of bitcoin and other digital currencies.

Why Was Bankman-Fried Convicted?

Why exactly did the rich and powerful sacrifice one of their own? Were they burning up with a guilty conscience about the million ordinary people losing their life savings in the crypto nightmare? Hardly.

It was their desire to minimize the fallout for their system which forced the ruling class to hang Bankman-Fried. It’s no accident this comes at a time when the political establishment as a whole, the Democratic and Republican parties, their economy, and all of the institutions of American capitalism have massively lost authority with American working people. 

To be clear, exposing, convicting, and bringing to account a fellow billionaire was never going to be the first option chosen by the billionaire class. For a long while after FTX had declared bankruptcy, Bankman-Fried was still being celebrated in corporate media and toasted in the glitzy gatherings of the super-wealthy. But ultimately the scandal became far too public and too obvious to ignore.

Who Is Sam Bankman-Fried and How Did He Get Away With This for So Long?

Bankman-Fried was an MIT graduate, and a son of two tenured professors at Stanford Law School. He cultivated an image of a tech-nerd genius, wearing t-shirts and shorts, seemingly unconcerned with personal hygiene, and sleeping on bean bag chairs in the office. In a world where billionaires flaunt the most obscene symbols of wealth, a frizzy-haired billionaire driving a regular Toyota sedan began getting a lot of praise for his outward simplicity.

But whether they wear t-shirts or five-thousand-dollar suits, billionaires are still billionaires. Even if they don’t have 18-carat gold faucets, even if they dress simply and look disheveled, they still agree on one thing – that they have the god-given right to screw over the rest of us.

In the case of Bankman-Fried, he was actually anything but modest. In fact, the crypto king’s arrogance was his own worst enemy. He almost single- handedly sank his own case – both in his disdainful public statements and catastrophic courtroom testimony. 

So much for being a boy genius. 

Sam Bankman-Fried wasn’t alone in this. It was also allegedly his parents, and his associates. It was the politicians and celebrities who helped pave the way for him. And most importantly, it was the institutions that for so long looked the other way.

Bankman-Fried has asserted that his parents, Joe Bankman and Barbara Fried, were not involved in the giant robbery, but a lawsuit claims that both Bankman and Fried discussed with their son transferring a $10 million cash gift and a $16.4 million property in the Bahamas to them.

So according to the lawsuit, mom and pop either knew “or ignored bright red flags” that indicated their son and his business partners were quote “orchestrating a vast fraudulent scheme.” end-quote In addition, the lawsuit claims that Fried, who incidentally is a professor of legal ethics (yes, really, professor of legal ethics), also acted as an adviser to her son, especially when it came to political donations. 

Bankman-Fried was publicly and lavishly held aloft by a number of celebrities, such as NFL star Tom Brady, supermodel Gisele Bundchen, and NBA star Steph Curry.

Bankman-Fried paid Tom Brady 55 million dollars for 60 hours of advertising work, and Steph Curry 35 million dollars, similarly, for a few hours of work.” In 2022, “Curb Your Enthusiasm” creator Larry David starred in a Super Bowl commercial for the crypto platform.

FTX spent many millions of dollars on super-star celebrities to sell the cryptocurrency exchange to ordinary people, and now those who collectively lost billions on the scheme are infuriated about it.

Both Democratic and Republican politicians were only too happy to prop up Bankman-Fried, and they lapped up his massive political donations. 

Of the tens of millions of dollars Bankman-Fried gave to political campaigns, $27 million went to Protect Our Future, a Democratic-Party-aligned super-PAC that claims it was “designed to help elect candidates who will be champions for pandemic prevention.” 

The group calls for “effective altruism,” a supposedly philanthropic idea that Bankman-Fried publicly supported — which is every bit as phony as it sounds — and which claims to be premised on the use of reason and data to allocate money. Bankman-Fried liked to talk about how he wanted to make as much money as possible so he could give it away and change the world for the better. Apparently, the purpose of effective altruism is to maximize the amount of positive impact a single person could have on the world. It’s safe to say that Bankman-Fried showed wild success in minimizing his positive impact on the world, while maximizing his own wealth accumulation. At least, until the jig was up.

Who were beneficiaries of this supposed altruism? 

Bankman-Fried contributed the individual maximum of $5,800 to more than a dozen members of Congress, including Senators Debbie Stabenow, a Michigan Democrat, and John Boozman, an Arkansas Republican, who led the Senate committee that has a role in regulating — or should we say deregulating — cryptocurrency. 

Other politicians that received maximum donations from Bankman-Fried include Democratic Senators Kirsten Gillibrand of New York, Maggie Hassan of New Hampshire, and Cory Booker of New Jersey, as well as Republican Senators Lisa Murkowski of Alaska and Susan Collins of Maine.

Altogether, Bankman-Fried donated nearly $40 million each to Democrats and Republicans in the 2022 election cycle alone.

One of Bankman-Fried’s largest campaign donations – a cool $5.2 million – was in 2020 to none other than Presidential candidate Joe Biden and to groups supporting him. Those donations made Bankman-Fried the No. 2 on a Wall Street Journal list of CEOs backing Biden that year.

Robinhood Is Really The Sheriff Of Nottingham

Another recent massive shift of wealth from small investors to large investors has taken place under the umbrella of an online stock-trading app, absurdly but not accidentally mis-named Robinhood. It was founded in 2013 by Vlad Tenev and Baiju Bhatt, and marketed under the progressive heading of democratizing finance. 

Robinhood attracted millions of young and first-time investors with its no-fee, one-click trading, its no account minimums, its easy access to complex investment products, and features like falling confetti and emoji-filled phone notifications that made it feel like some kind of cool game.

Robinhood was also sold seductively on a fake progressive basis — as a kind of playfield-leveling alternative to the brutal rule of billionaires on the traditional Wall Street trading floor. They succeeded in turning into a cultural sensation and Silicon Valley darling, with celebrities like Bill Clinton, Elton John, George Clooney, and Bono publicly praising it, and helping it climb to a lofty $8.3 billion valuation. Tenev and Bhatt became overnight billionaires.

At the core of Robinhood’s business model is something that is at the core of the capitalist system itself. Under capitalism, corporations and their wealthy investors make money when they are able to get billions of working people to buy their products, which of course, have been created by those same billions of working people, while being paid less than the value of their labor. So every corporation, every multimillionaire and billionaire in the world has a powerful incentive to con working people into buying more, by hook or by crook, even when — perhaps especially when — the real value of what’s on offer is highly questionable. 

For all its egalitarian sheen, Robinhood is no different. Robinhood does not charge fees for trading, but the richest investors of Robinhood are still the ones who profit if their customers trade more.

Each time a Robinhood customer trades, Wall Street firms buy or sell the shares and determine what price the customer gets. These firms pay Robinhood for the right to do this, because they then engage in a form of arbitrage by trying to buy or sell the stock for a profit over what they give the Robinhood customer.

This practice is not new, and retail brokers such as E-Trade and Charles Schwab also do it. But Robinhood’s rich investors actually make significantly more money than E-Trade and other companies for each stock share and options contract sent to the professional trading firms — the very OPPOSITE of how this supposedly grassroots system has been marketed.

So Robinhood turned out to be The Sheriff of Nottingham instead — if you remember the villain of the traditional tale — exploiting ordinary people, not sharing the wealth.

Robinhood’s carefully-marketed appeal to ordinary people, especially young investors, was not surprising. This was no Charles Schwab, a multinational corporation and the largest publicly traded U.S. brokerage firm, tenth on the list of largest U.S. banks in the United States, with $7 trillion in client assets. While Charles Schwab’s average customer has a 350,000 dollar portfolio, the average Robinhood customer has invested 4,500 dollars.

Robinhood had over 21 million customers, overwhelmingly small investors, overwhelmingly young and inexperienced investors. Mostly ordinary middle-class or even working-class people. Many handed over their pandemic stimulus checks and savings in search of the hyped-up economic hope.

Robinhood channeled that one-time stimulus money of these young people into the cryptocurrency bubble. 

Cryptocurrency as a whole was also sold aggressively to Black communities. The Black population has been bombarded with marketing and ads featuring celebrities such as LeBron James and Spike Lee. The industry made it clear: If you didn’t get in, you might be missing out on the chance of a lifetime.

When the crypto stocks plunged, many of the ordinary people who put money into crypto—through Robinhood and other platforms—were left with crushing losses.

Robinhood’s assets fell by $38 billion last year: that represents a net transfer of wealth from those 21 million young people to the big investors, who cleverly manipulated the stock market for their own enrichment, and ruthlessly bamboozled ordinary people. 

In an especially dark and tragic outcome in the summer of 2020, Alex Kearns, 20, a college student in Nebraska, killed himself after he logged into Robinhood and saw that his balance had dropped to negative 730,000 dollars.

Bed Bath & Beyond: Pumped and Dumped

Last year’s story around the retail company Bed Bath & Beyond is yet another cautionary tale of how capitalism enables a few people to make a killing as it destroys the lives of many others.

Ryan Cohen, billionaire founder of online pet food company Chewy and CEO of gaming merchandise retailer Gamestop, and Jake Freeman, 20-year-old University of Southern California student manipulated the stocks of Bed Bath & Beyond for their own ends last year, by creating a social media fever based on misleading and exaggerated information. 

This practice is called pump and dump, and it’s a form of securities fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements (the pump), in order to sell the cheaply purchased stock at a higher price (the dump).

Cohen and Freeman bought Bed Bath stocks when they were trading very low, and led an army of small and inexperienced investors, mostly young non-wealthy people, to buy masses of the company’s stocks. 

The stock surged from $5 dollars to more than $480, based on the orchestrated frenzy of social media hype, giving birth to the phrase ‘meme stock’.

Once the buying frenzy peaked, Cohen and Freeman immediately sold all their stock, and the stock nosedived to $11. Cohen made $178 million and Freeman $110, and once again ordinary people got robbed.

There is no investigation into how much the multitude of the small investors, mainly working people, lost. Bed Bath & Beyond ended up laying off 20 percent of its workforce and closing 150 stores. The corporation filed for bankruptcy in April this year.

Capitalism: An Ongoing Global Scam on Working and Poor People

The capitalist system is so riddled with scams, scandals, rip-offs, and rigs by the super-rich on Wall Street that pages and pages would be needed to cover it. 

We cannot forget about how the 2008 Great Recession and subprime mortgage crisis was a giant scam. It was a massive ripoff by many of the world’s biggest financial institutions and their bipartisan political representatives. While a few people were convicted, not one top Wall Street executive actually responsible for this crisis went to prison for having thrown the world economy into a tailspin and shattering hundreds of millions of lives. The millions of American working people whose homes got foreclosed on never got them back. Instead, the billionaires got bailed out through a bipartisan effort under first George W. Bush and then Barack Obama. 

Capitalism is an ongoing global scam on working and poor people, in which working people have most of the wealth taken from them that they produce through their hard work. That’s what profits are.

The ordinary day-to-day functioning of capitalism destroys far more lives than these scandals do, and is rapidly destroying the planet, as well. 

And the so-called criminal justice system isn’t there to defend us, but rather to protect the interests of the billionaires, despite all their crimes. It has no mercy for ordinary people who are preyed upon or act out of desperation.

What Are The Lessons From Bankman-Fried and The Corporate Fraudsters? 

For the working class, there are no shortcuts. For us to change our lives for the better, we need to get organized and fight back, and not allow ourselves to be led down the garden path of some billionaire’s get-rich-quick scheme. Wall Street is a casino, and no matter what they promise us at the card table, at the end of the day, the house takes virtually all the profits. 

Another lesson is that capitalism is a zero-sum game. Meaning that when a billionaire gets rich on the stock market, it inevitably comes at the expense of ordinary people. This is by its nature a sociopathic, parasitic system.

Rather than buying into this house of cards, the working class needs to get organized on a mass scale. We can learn from the heroic general strikes and sit-down strikes of the 1930s, and we can do what they tried but unfortunately failed to do: build a new party for the working class that will fight for our interests not only in elections, but in mass movements and in the workplace. We won’t win against the Wall Street gangsters by playing their game. Instead we need to take what’s ours, and bring the top 500 corporations into democratic public ownership, run by working people – and get rid of the casino once and for all.