Jailed cryptocurrency tycoon Sam Bankman-Fried is negotiating a new altcoin in a federal prison
Benzinga - Few people in modern history have fallen faster than FTX Trading Ltd. founder Sam Bankman-Fried, who went from financial genius to federal prisoner when his cryptocurrency exchange failed. Perhaps the most obvious reminder of this for Bankman-Fried is the alternative currency he has been forced to trade in the federal penitentiary: canned mackerel.
From cryptocurrencies to canned fish: a new type of alternative economy
Microeconomies exist everywhere, even in places where legal tender is not allowed. This is true at places like New York's Metropolitan Detention Center, which currently houses Bankman-Fried. All that is needed for a microeconomy to flourish is a universally agreed upon monetary unit that can be exchanged for services. Since the days of Al Capone and Alcatraz Federal Penitentiary, cigarettes have served as an unofficial alternative currency in the federal prison system.
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However, they were banned for health reasons in 2004 and canned mackerel, or "macks," as they are known inland, became the currency of choice among federal prisoners. Macks can be redeemed for a variety of services, including but not limited to:
- Haircuts
- Laundry services
- Preparation of legal briefs by prison lawyers.
- Shoe shine and shoe repair.
Canned mackerel even has a benchmark
It might be tempting to think that the mack trade inside federal prisons lacks sophistication or regulation, but you would be wrong. As with cryptocurrencies, the value of macks even has its own reference point: the US dollar. Their value may rise or fluctuate, but what makes macks so useful as an alternative currency is their shelf life, universal popularity, and ease of transport.
It's a bitter irony that the same skills Bankman-Fried acquired as a cryptocurrency trader while building his criminal empire would prepare him for life as a federal prisoner. Unfortunately for FTX clients who were left holding the bag when Bankman-Fried's criminality was discovered, the macks cannot be used to cover his losses.
The meteoric rise of a cryptocurrency superstar
Bankman-Fried's investing career began with an internship at Jane Street Capital in 2013, where she worked with exchange-traded funds (ETFs). He then co-founded his own cryptocurrency trading company, Alameda Research, in 2017. Shortly after, he discovered a new way to profit from cryptocurrencies by arbitraging Bitcoin between the US and Japanese markets before moving to Hong Kong in 2018. .
In 2018, Bankman-Fried founded the FTX exchange and found himself in the perfect position to take advantage of the surge in cryptocurrency value that occurred during the COVID-19 pandemic. FTX's value shot through the roof, and Bankman-Fried became a billionaire espousing views on everything from government regulation to "effective altruism." He even started his own cryptocurrency FTT. No one could have imagined that his star would fall as quickly as it rose.
A hard fall for FTX and its account holders
It is perhaps more than incidental that this is around the same time Bankman-Fried moved FTX from Hong Kong to the Bahamas, citing the island nation's "regulatory environment" as a reason. While in the Bahamas, Bankman-Fried and his executives lived a luxurious lifestyle while he made increasingly risky bets through Alameda Trading, all out of sight of US regulators who would likely have discovered this scheme before that got out of control.
He even surreptitiously used FTX client funds to cover Alameda Trading's losses. Bankman-Fried's indiscretions may never have come to light if not for a failed deal with Binance, which backed out of a deal to acquire FTX once it discovered numerous irregularities in the company's handling of customer funds. part of FTX. This led to the FTT losing approximately 80% of its value and a shocking chain of events.
Over the course of a few chaotic days in November 2022, Bankman-Fried resigned, lost his billionaire status, and FTX went bankrupt. Most of FTX's client holdings disappeared along with it. Once the Securities and Exchange Commission became involved, Bankman-Fried could no longer hide the fact that he was illegally using FTX client funds to prop up Alameda Research.
A Lifetime of Mack Trading by Sam Bankman-Fried
Bankman-Fried was arrested in the Bahamas in December 2022 and extradited to the United States, where a jury found him guilty of seven counts of fraud and conspiracy in November 2023. On March 28, 2024, Bankman-Fried will face a sentence of up to 110 years in those aspects. It remains to be seen whether he will be able to develop an "refereeing" system for the "macks." He will surely have enough time to do it.
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