There are some similarities between SBF and Madoff that make BTC Maximalist even more sure of their beliefs.
•Bitcoin maximalists have been validated by the parallels between Sam Bankman-Fried and Bernie Madoff.
• Both men highlighted the fact that Bitcoin maximalists are immune to Ponzi schemes.
• Madoff advisers experienced a “liquidity” problem in 2008, around late November into early December, where the fund was unable to meet client redemption requests.
• On its surface, the fourth-quarter timing of the Madoff collapse more than a decade ago appears eerily similar to FTX’s 2022 implosion.
Bitcoin Maximalists
Bitcoin maximalists, or those who believe that Bitcoin is the only cryptocurrency worth investing in, have been gaining traction in recent years. But why? Many points to the 2008 collapse of Bernie Madoff’s infamous Ponzi scheme as validation for their beliefs. This collapse sparked a resurgence in Bitcoin maximalism and made it an attractive investment option for those looking for a safe haven from Ponzi schemes. In this blog post, let’s explore how the parallels between Sam Bankman-Fried and Bernie Madoff allegedly validate Bitcoin maximalists and make it an attractive investment option for those looking for security from Ponzi schemes.
Madoff and Bankman-Fried’s both fell hard
The collapse of Madoff’s investment fund in 2008 was brought on by a “liquidity problem,” where the fund was unable to meet client redemption requests. The timing of this collapse, in the fourth quarter of 2008, is similar to the collapse of FTX in 2022. However, Bitcoiners who hold their own keys are immune to liquidity problems because their Bitcoin is not used to leverage anything else. It is the safest form of money as long as it is kept in the custody of its rightful owner.
Both Madoff and Bankman-Fried created organizations under false pretenses, established relationships with powerful people, defrauded their clients, and attempted to keep the fraud going for as long as possible. In December 2008, Madoff’s sons contacted an attorney and reported the fraud to federal authorities. Madoff was arrested just two days later. In contrast,
Binance CEO Changpeng Zhao announced in November that he intended to purchase FTX, but he quickly reversed the decision, and a “liquidity” problem ensued at FTX. Bitcoin maximalists, who had seen this coming, either watched idly, shaking their heads in disbelief, or simply went on with their lives. Many maximalists might have been a part of Mt. Gox, which held approximately 80% of all BTC in circulation at the time it was breached. The “wake-up call” is an unfortunate initiation ritual for some Bitcoiners. FTX will mint many new Bitcoin maximalists.
The aftermath of both
The aftermath of the FTX scandal may lead to the creation of more Bitcoin maximalists. As SBF faced extradition to the United States, he could face a sentence that mirrors Madoff’s 150-year prison sentence. However, unlike Madoff’s victims, Bitcoiners were not affected by the collapse of FTX and their Bitcoin remains safe as long as it is kept in their own custody.Bitcoiners who hold their keys will never experience a “liquidity problem,” as their Bitcoin isn’t being used to leverage anything else. It is the hardest money around as long as it stays in the custody of its rightful owner.
In 2008, Madoff’s fraudulent investment scheme, which was the largest and longest-running in history, was exposed to the world. Madoff’s advisers had a “liquidity” problem, where the fund could not meet client redemption requests. This was eerily similar to the way FTX collapsed in 2022. Bitcoiners who hold their own keys will never experience a “liquidity problem,” as their Bitcoin isn’t being used to leverage anything else, it is the hardest money around, as long as it stays in the custody of its rightful owner.
At the time of Madoff’s collapse, he had planned to pay out $173 million in early bonuses to family and friends. When questioned by his sons on December 9, 2008, Madoff confessed to the massive fraud. The numbers, in many instances, are fractions of the fraud FTX is accused of. Bitcoin maximalists continue to remind their communities that yield, third-party custodians and humans cannot be trusted. Satoshi Nakamoto’s white paper endures. Madoff’s sons communicated, almost immediately, with an attorney, who advised them to contact federal authorities. Madoff was arrested on Dec. 11, one day after federal agencies were aware of the fraud.
The stakes are high
In December, SBF was arrested in the Bahamas. As authors and researchers, we’re confident that correlations will be immediately identified and explored in regard to the timing of Madoff’s arrest on Dec. 11, 2008. As SBF faces extradition to the United States, based upon the “Treaty Between the United States and the Bahamas,” he faces sentence terms that may mirror Madoff’s, who faced a 150-year prison sentence for an arsenal of convictions. Those convictions included:
40 years for two counts of international money laundering
20 years for one count of securities fraud
20 years for one count of mail fraud
20 years for one count of wire fraud
20 years for one count of false filings with the Securities and Exchange Commission
10 years for one count of money laundering
Five years for one count of investment adviser fraud
Five years for one count of false statements
Five years for one count of perjury
Five years for one count of theft from an employee benefit plan
To provide some perspective, the longest sentences for recent financial fraud include, in order:
Shalom Weiss (845 years)
Norman Schmidt (330 years)
Bernie Madoff (150 years)
Frederick Brandau (55 years)
A tie for fifth place between Charles Lewis, Eduardo Masferrer, Chalana McFarland and Lance Poulsen, who received 30-year sentences.
It doesn’t look to good for Sam
Madoff’s fall and Bankman-Fried’s demise is a prime example of how Ponzi schemes works, and how traditional financial systems are prone to them. While the fall of FTX is a tragedy for those who lost their investments, it has also served as a reminder that Bitcoin maximalists, who hold their own keys and don’t trust third-party custodians, are immune to Ponzi schemes. The resilience and security of Bitcoin, as outlined in Satoshi Nakamoto’s white paper, endures. The story of Bankman-Fried and Madoff should serve as a cautionary tale for those who still doubt the power and potential of Bitcoin. The principles outlined by Satoshi Nakamoto in the Bitcoin whitepaper have been validated once again. As the crypto space continues to evolve, it is crucial that individuals take responsibility for their own investments and stay vigilant against fraud and deception.
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