Drug Driven Sex Ring Behind Crypto Collapse

Drug Driven Sex Ring Behind Crypto Collapse

As crypto exchange FTX’s implosion continues, new claims emerge about the “gang of kids” responsible for the $32 billion disaster — with allegations of amphetamine use and a free-ranging “sexual polycule” made up of 10 people in the luxurious penthouse in the Bahamas served as the headquarters of the doomed operation.

Sam Bankman-Fried, 30, now faces a criminal investigation in the Bahamas and regulatory probes in the US over the collapse of FTX and some 130 related companies, including controversial trading firm Alameda Research.

Attention now turns to the central role of Alameda and its CEO Caroline Ellison, 28 – Mr. Bankman-Fried’s alleged sometimes girlfriend – a Harry Potter obsessed, using amphetamine, Stanford math graduate.

FTX reportedly secretly transferred up to $10 billion in customer funds to Alameda to fund risky cryptocurrency deals prior to the collapse.

According to a bomb report by CoinDeskMs. Ellison and Mr. Bankman-Fried were part of a “cabal of roommates” who ran the crypto empire and “dated” while living in a $40 million penthouse in the exclusive Albany resort in the Bahamas.

Many of the 10 housemates, including Ms Ellison, are former employees of Mr Bankman-Fried of the Jane Street trading firm, while he met others at the Massachusetts Institute of Technology.

Also living in the house were Gary Wang, FTX’s co-founder and chief technology officer, and Nishad Singh, director of engineering. “All 10 are or were previously involved in romantic relationships,” CoinDesk reported.

The site said it spoke to several current and former employees of FTX and Alameda on condition of anonymity. She quoted a source as saying, “The entire operation was run by a gang of kids in the Bahamas.”

“They will do anything for each other,” said another.

The cozy living arrangement was also described in a resurfaced puff piece, which has since been deleted from the website of Sequoia Capital, FTX’s largest outside investor, which had a stake of $425 million at its peak.

“The penthouse on Orchid – Apartment V – is probably the most expensive condo in all of the Bahamas, and it’s the home of Sam Bankman-Fried,” wrote Adam Fisher, a San Francisco-based author.

“He lives there with nine roommates: fellow travelers in the EA [effective altruism] Movement… An intimate crew. It’s just SBF, his family (his mom, dad and brother are all in town) and close friends. A small team dedicated to fixing the world – through the magic of quantitative thinking and the overwhelming power of goodwill. They are all united by the mission.”

Claims that the close friends had romantic connections saw the term “polycule” — a “broad term used to describe all connected partners in the same polyamorous network.” Cosmopolitan – explode on social media.

“Sam Bankman-Fried walked into a polycul that may have destroyed the crypto market,” tweeted tech executive Ed Zitron of the where’s your ed Newsletter.

“‘Stanford polycule’ is an incredibly powerful curse because it’s only two words long,” said journalist Holly Anderson.

Zak Kukoff of VC firm General Catalyst wrote: “[tiktok robot voice] a day in my life as a low-ranking member of a Bahamian polycule.”

The current and former employees told CoinDesk that Mr. Bankman-Fried and his circle of friends ran practically wild, with little oversight and major conflicts of interest that caused alarm among the workers.

The workers also said they were told little about what was happening at the top levels of cryptocurrency firms as they headed towards bankruptcy.

“Gary, Nishad, and Sam control the exchange’s code, matching engine, and funds,” one of them CoinDesk‘s sources said. “If they moved them or entered their own numbers, I’m not sure who would notice.”

Ms. Ellison, a Boston native, has not tweeted since Nov. 9 and has yet to deal with the bankruptcy.

But social media users have been reflecting on her old interviews — including a now-viral July 2020 podcast appearance in which she detailed her childhood obsession Harry Potter Books and their affinity for LARPing – where participants dress up and pose as fictional characters.

“I was pretty obsessed with Harry Potter as a kid,” she said.

“I started, I was three, when the first book came out, my parents read it to me, and when I was five, the second book came out, I refused to wait for my parents to read it, so I read it even .”

In another Viral Interview Speaking of Alamedas Trading, she said she could “absolutely do it without my maths degree.” “They use very little math — they use a lot of elementary school math,” she said.

“Managing risks is very important. We tend not to have things like stop losses, I don’t think that’s necessarily a great risk management tool. I’m trying to think of a good example of a trade where I lost a lot of money… well I don’t know, I probably don’t want to go into too much detail.”

Another clip circulate on the internet features Ms. Ellison joking about being skeptical about yield farming — a risky trading strategy that has become one of Alameda’s biggest moneymakers.

Yield farming involves investing in cryptocurrencies that pay interest-like rewards. Such tokens often have an initial surge in price before crashing.

“It’s essentially like picking up pennies in front of a steamroller,” said independent blockchain analyst Andrew Van Aken The Wall Street Journal last week. “They use dollars or stablecoins to get these very speculative coins.”

Ms Ellison recalled in the interview that there was “a big argument” about “should we even be productive farming”. “And I was like, oh I don’t know, this whole thing seems weird, and are there any risks, and what if these platforms get hacked?” she said.

“And it’s such a big pain, operationally, accounting, all of that. I lost that argument I think. For me it was often just about readjusting my expectations and being open to everything that happened. I think that every week or so something weirder than the week before would happen.

It sparked controversy in April last year after unveiling on Twitter that she used amphetamines.

“Nothing beats regular use of amphetamines to make you realize how stupid many normal, non-drug human experiences are,” she wrote.

“The stupidest thing is this morning I was lying on the couch reading a book. then I decided to go hiking. But from that point, it took me about… half an hour to muster the energy and motivation to actually get off the couch.”

FTX collapsed after suffering the equivalent of a bank run last week as clients attempted to withdraw around $5 billion in funds amid rumors of a liquidity crunch.

Fears only started to mount after that CoinDesk reported that Alameda was heavily invested in FTT, a token issued by FTX.

According to that FinancialTimesFTX had less than $1 billion in cash versus $9 billion in debt before it went bankrupt.

According to Reuters, between $1 billion and $2 billion in client funds have disappeared since FTX collapsed.

Mr Bankman-Fried told Reuters he “disagreed with the characterisation” of the $10 billion in funds transferred. “We didn’t switch secretly,” he said in a text message. “We had confusing internal labeling and misunderstood it.”

Late Friday night after FTX filed for bankruptcy, hundreds of millions of dollars worth of crypto were drained from its digital wallets in a series of “unauthorized transactions,” with the company warning users that it had been “hacked.”

Earlier this week, Mr. Bankman-Fried put the penthouse up for sale in the Bahamas for nearly $40 million

The Albany Club — the most exclusive resort community in the Bahamas, with members like Tiger Woods and Justin Timberlake — has also come under fire.

The neighborhood was designed to cater to “a new breed of global elite,” according to comments made a few years ago by Albany partner Jason Callender.

But over the weekend, Albany Club general manager Damien Michelmore emailed residents with an update that Mr Bankman-Fried’s firm had “filed for bankruptcy” and instructed residents not to speak to the press .

“Out of the respect we show all homeowners and members, we have directed our staff not to speak to the press, and we respectfully ask our members and homeowners not to comment at this time either,” he added.

– with NY Post

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