David Schwartz, the chief technology officer of Ripple Labs and a co-creator of XRP LEDGER and , has taken to Twitter to somewhat defend founder Sam Bankman-Fried’s reputation of being called a Ponzi creator.
As CoinGape earlier reported today, SBF announced that he had filed for FTX and Alameda Research bankruptcy, upon failing to meet a $9 Billion hole in their financial records.
Read More:FTX Exchange Files For Bankruptcy
Twitter Debates Over FTX’s Ponzi Link
Following this, Twitter is abuzz with SBF orchestrating a large-scale Ponzi scheme through its FTX.com and therefore comparing him with the likes of Bernie Madoff. Ripple’s CTO however believes that there are “huge apparent differences” between the two, but then again, he admits that FTX ended up being a Ponzi later on.
David’s Take on SBF vs Madoff
According to Schwartz, appears to have started FTX as a legitimate cryptocurrency business before it gradually turned into a pyramid scheme, in contrast to Bernie Madoff who intentionally started with a Ponzi scheme in the hopes of later replacing it with a legitimate business, but instead created the largest Ponzi in history worth nearly $65 billion.
He believes that when Alameda Research started to lose money, FTX gradually started to become a Ponzi scheme. Another possibility is that the founder of FTX wanted the company to increase its profitability.
He further went on to state,
His scheme ran off the rails either when Alameda starting losing money or he just wanted Alameda to make more money. He put huge, entirely inappropriate risk on FTX, at first possibly to make it more profitable, eventually in an attempt to keep it afloat.
I'm seeing SBF compared to Madoff. There are huge apparent differences, at least now. Madoff started off a Ponzi and maybe he hoped to replace it with legitimate profits at some future point. SBF seems to have started off legitimate then gradually replaced it with a Ponzi. 1/6
— David "JoelKatz" Schwartz (@JoelKatz) November 12, 2022
Another key difference between the two Ponzies is that whereas Sam Bankman-Fried lent customers money that he was not permitted to do, Madoff made consumers lose money from the get-go.
Read More:This Famous Billionaire Investor Defends FTX’s SBF, Deletes Tweet Instantly
SBF’s Net Worth Today
At its peak, SBF had a net worth of over $16 billion. But crypto’s once-shining star, lost 98% of his wealth in a single day, following the demise of FTX.
- ripple (XRP)
