News Spotlight – Cryptocurrency Company Crumbles and Files For Bankruptcy

Another crash and burn for minorities who have higher exposure to the instability of investing in digital assets and the history behind it 

By Rina Risper

www.tncp.net

NATIONWIDE– According to Bloomberg, the entire 16 billion dollar fortune of former FTX co-founder Sam Bankman-Fried has been wiped out and is “one of history’s greatest-ever destructions of wealth.”

The Bankman-Fried, the “golden boy” of cryptocurrency, shook the world with the news of the platform’s demise and his.  FTX touted itself as a “built from the ground up platform.”  Its mission was to grow the digital currency ecosystem, offer the United States and international traders a platform that inspired their loyalty, and become a market leading United States regulated cryptocurrency exchange.

FTX sent out a press release informing the world of its collapse. Twitter

They fell far from their mission and will now have to deal with the downfall, which may take time to fully unravel.  In September of  2022, FTX became the exclusive crypto exchange partner for Game Stop.  When the news broke of the bankruptcy, in a tweet, Game Stop stated that they plan to end its relationship and its pilot gift card marketing partnership and they will make refunds to impacted customers.

Unsportsmanlike figures and  deals on the line

The fallout has involved some sports legends like basketball’s Golden State Warriors point guard, Stephen Curry. Last September, the NBA icon signed a partnership with FTX for an equity stake in the company.  Other sports figures involved with FTX are tennis star, Naomi Osaka and baseball’s Shoheit Ohtani.

Tom Brady, Tampa Bay Buccaneers quarterback, had a double whammy with a recent October 2022 divorce from the model, Gisele Bündchen, and now the FTX debacle.  Tom initially announced his decision to retire from the NFL in February 2022 but retracted the statement in April 2022.  The monetary fallout will also be felt by NBA legend Shaquille O’Neal, Boston Red Sox Hall of Famer David Ortiz, and Trevor Lawrence the Jacksonville Jaguars quarterback, and others who may not be able to recover after the bankruptcy’s Notice of Discharge. 

FTX had major sponsorship and business deals in the works with teams and leagues as well. Last December, FTX entered a $10 million international sponsorship with the Golden State Warriors. 

 Lavish spending by FTX involved agreeing to pay $21 million a year for the next 10 years for the American professional esports team Team SoloMid (TSM) to change its name to TSM FTX.  They also penned a 19-year deal to rename the Miami Heat and Miami Dade County for $135 million. Professional baseball umpires wore FTX patches on their uniforms. Mercedes-Benz’s Formula 1 racecars sported the FTX logo. 

 What is the FTX Group?

FTX Group, which includes approximately 130 additional companies, issued a press release that it has filed for Chapter 11 bankruptcy in the United States.  The CEO Sam Bankman-Fried has stepped down from his role but has stated that he will assist during the transition.   This news has shaken up the cryptocurrency world.  It is a shocking downfall for one of the largest and most powerful businesses in the cryptocurrency industry.

Sam Bankman-Fried was 30 years old when he founded the group in May 2019.  John J. Ray III, the lawyer who was over the liquidation process at Enron.  In October of 2001, Enron was embroiled in an accounting scandal.  The United States energy company was formally based in Houston, Texas.  The explosive headlines rocked the financial world, as the media told a story of bankruptcy and the dissolution of one of the largest accountant partnerships in the world. 

Who invests in cryptocurrency?

According to Pew Research Center, Asian, Black, and Hispanic adults are more likely than White adults to say they have ever invested in, traded, or used a cryptocurrency. There are no statistically significant differences in household income.

There is mistrust in BIPOC communities regarding putting money into financial institutions or investing in the stock market and cryptocurrency markets did offer the promise of huge gains.  The generational wealth gap is due to lower wages, discrimination in the labor market, biased appraisals, and the devaluation of housing for non-white families and neighborhoods.

A second factor drawing BIPOC consumers to cryptocurrency may be a lack of trust in traditional financial institutions that are as a result of historical experiences, such as the collapse of the Freedman’s Savings Bank.

What to know about cryptocurrency and scams

The Federal Trade Commission has been warning investors about the risks of cryptocurrency.  Bankman-Fried engaged in affinity fraud.  According to Investopedia, affinity fraud is a type of investment fraud in which the individual targets members of an identifiable group such as race, religion,, or age.  In the case of FTX, the over 70 billion dollar industry of sports was targeted. Sports play a huge role in the sociological impact of the Black community as a whole.  Sports figures are revered, and colleges are supported by whole towns and not just the graduates.  Bars and living rooms are filled every weekend with religious fervor to watch home teams play against other teams.  More money is to be made when rivals play each other, through ticket sales, merchandise sales, lodging, food, travel expenses, etc.

Discrimination in sports

Jackie Robinson became very famous for becoming the first African American who played in the major leagues in 1947.  Before baseball, he was drafted on April 3, 1942, and was assigned to a segregated cavalry unit at Fort Riley, Kansas. In 1944 in Fort Hood, Texas, Robinson was nearly court-martialed after he refused a civilian bus driver’s order to sit in the back of a military bus, as racist segregationist practices in the United States dictated at the time.  Robinson was arrested but he was acquitted on all the charges in The United States v. 2nd Lieutenant Jack R. Robinson, 0-10315861, Cavalry, Company C, 758th Tank Battalion case. Imagine what history would look like if he was imprisoned.

When Robinson broke barriers in the sport of baseball, that did not mean he was not subjected to racial slurs, lesser wages, harassment, and rude comments from the opposing team and some of his teammates.  

Recently, the Supreme Court ruled, the National Collegiate Athletic Association (NCAA) could change its rules and can now allow student-athletes to monetize their name, image, and likeness. Meaning they are now allowed to sign endorsement deals and do commercials.  This rule change means that younger minority players will have more opportunities to make life-changing money but it also opens the door for those who may want to take financial advantage of those who do not have the financial experience or support to invest in this new source of income for a younger population.

Affinity crimes and their future

One of the most popular examples of affinity crimes in American history was financier Bernard Madoff, he targeted affluent Jewish communities.  Bernie Madoff was convicted on charges of securities fraud, false filings with the SEC, and money laundering.  At his sentencing, the judge gave him a maximum of 150 years. He died in prison of kidney failure on April 14, 2021. Bernie Madoff did not say much to those whose lives he ruined.  He apologized for the pain and suffering that he caused.

Bankman-Fried posted in a tweet, “I’m sorry. That’s the biggest thing.  I fucked up, and should have done better.”

 

Also see FTC video and news story in Black Headline News:

BHN Live: The FTC breaks down the growing number of cryptocurrency scams targeting people of color

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