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Deliberate Blindness: Sam Bankman-Fried’s Enablers

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Deliberate Blindness: Sam Bankman-Fried’s Enablers

There was a time, not so long ago, when it was easy to be seen as brilliant in crypto. All you had to do was find someone with a great idea — preferably someone who didn’t like to pay attention in meetings — and throw a bunch of money at them. If you were really brilliant, you would even work out a deal where they’d eventually give you all of that money back. In business, this is called synergy.

Nowadays, things aren’t so simple. Pesky people want to know what your ‘due diligence’ process is, and ask how you failed to recognize the billions of dollars of fraud happening in the company you owned a big chunk of. Many investors tend to act as though they were caught unawares — but perhaps we must consider that it’s just an act.

If it’s not an act, at the very least it’s a dereliction of responsibility.

If you’re in a position to review financial statements, ask pointed questions about business operations, and understand where the money is flowing, then maybe there were opportunities for you to know and you ignored them. No one wants the money fountain to stop flowing, right?

Perhaps digging into Sam Bankman-Fried’s books would have too much effort. After all, turning a blind eye ensures that, at worst, you endure temporary embarrassment for failing to recognize the fraud. At best, you get to stand next to the money fountain until things play out. You’re already at the top of your field, so who cares if you were sloppy this time?

Investors should do due diligence. Auditors should not agree to narrow scoped audits where they cannot actually assess what they should. Regulators should actively regulate.

It’s in the best interest of investors to maintain the illusion that they have insight, just as it’s vital that regulators keep up the appearance of prowling for bad behavior, and that auditors show they’re dutifully verifying. Acting shocked when things fall apart preserves that veneer.

What the cryptocurrency industry needs from these individuals is an acknowledgement that they have responsibility to follow through. If you’re auditing one of 130 interrelated entities operating globally, it’s likely you don’t have a full picture because it can be removed from your scope. However, your audit will be used by those entities to promote their activities.

If you’re a bank regulator, perhaps you should be aware when the chairman of a bank in the Bahamas — which banks suspicious cryptocurrency companies — buys a bank in the US.

If you’re an investor, perhaps you should realize that funneling money to a thief and fraudster causes harm — not just to you, but to everyone they intend to defraud. You have allowed them to increase the scale of their fraud.

These are not victimless ‘mistakes.’ These entities allowed Bankman-Fried to defraud more than he otherwise could have. It’s okay to be wrong — but it’s bad to pretend that it was impossible to get it right.

Source: ethereum.today

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