News that former FTX CEO Sam Bankman-Fried was arrested yesterday in the Bahamas and set the technology world on fire.
After the dramatic implosion of FTX’s crypto empire, which resulted in the loss of hundreds of millions of invested capital and billions in paper wealth, many in the larger crypto community were outraged that he was not immediately arrested.
With Bankman-Fried in custody and a pending complaint, it’s clear the former startup executive hadn’t bought political protection, something alleged by humble anonymous Twitter accounts and the man who recently bought social services equal.
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Legal folks will carefully dissect the complaint and comment more capably on the total claims. This morning we take a different angle. The bottom line is that the FTX empire was basically bullshit. It was based on fraud, according to the complaint.
This matters to startups because information about how other companies are doing is scarce and competition is fierce. That means the business results of the leading startups have an outside influence — they become the cultural leaders in their market. If a screaming success turns out to be little more than smoke and mirrors, it means that a major signal in the tech startup market was actually pretty misleading.