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Deliberate Blindness: Sam Bankman-Fried’s Enablers

Deliberate Blindness: Sam Bankman-Fried’s Enablers

Not too long ago, there was a time when it was easy to be someone brilliant at crypto. He just needed to find someone with a great idea, preferably someone who doesn’t like paying attention in meetings. – and throw a lot of them. If you were smart, you would even reach an agreement where all that money would eventually be returned to you. In business, this is called synergy. Things aren’t that simple these days.

Angry people want to know what your “due diligence” process looks like, and they ask how you failed to spot the billion-dollar fraud that was going on at the company you owned a large part of. Investors tend to pretend to be surprised, but we should remember that this is just played.

If it’s not an act, it’s at least negligent liability. If you can review financial statements, ask direct questions about business operations, and understand where the money is going, then there may be opportunities you knew about and ignored. Nobody wants the money source to stop flowing, do they? Digging through Sam Bankman-Fried’s books would be too much of a hassle. Worst case scenario, turning a blind eye will temporarily embarrass you because you didn’t spot the scam.

The best-case scenario is that you can stay on the money-making side until things are sorted out. He’s already at the top of his game, so who cares if he was sloppy this time? Investors must conduct due diligence. Assessors should only accept limited-scope assessments if they can honestly assess what they should. Regulators must actively regulate.

It is in investors’ best interests to maintain the illusion that they know, just as it is essential that regulators appear to be looking for wrongdoing and that auditors show that they are correctly reviewing. Also, it keeps that look. The cryptocurrency industry needs recognition from these folks that they have a must them. If you examine 130 affiliated entities operating worldwide, you don’t see the Hayneedle picture, as it may be removed from your scope. However, these companies will use your exam to promote their activities.

If you are a banking regulator, you should know when the president of a bank in the Bahamas (funding shady cryptocurrency companies) buys a bank in the US. If you’re an investor, you should know that funneling money to a thief and scammer hurts you and everyone they’re trying to scam. You have allowed them to escalate their fraud. These are not victimless “bugs.” These entities allowed Bankman-Fried to cheat more than it otherwise could have done.

It’s okay to be wrong, but it’s terrible to pretend it’s impossible to get right.

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