If it sounds too good to be true, it probably is.  

Unfortunately, we saw another example in November 2022 as cryptocurrency exchange FTX went bankrupt. The exchange was founded by Sam Bankman-Fried (everyone calls him "SBF"). The elites celebrated him as the next Warren Buffet. Investors large and small got caught up in the hype and shoveled billions into his exchange. Apparently, he's a great guy too! He encourages young people to pursue effective altruism, where you get wealthy and give it all to charity.

Just kidding. It turns out SBF is a terrible guy. FTX was a Ponzi scheme, his effective altruism was a hoax, and his investors lost everything. If you're a regular reader of Main Street Insiders, you're not surprised. Bernie Madoff was arrested within 24 hours of his fraud being discovered. Here’s what SBF is up to:

Chairman @WSBChairman

Not only has the former CEO of FTX, Sam Bankman, not been arrested for stealing billions of dollars, but he is speaking at a @nytimes business summit. The justice system is so broken.

8:32 PM ∙ Nov 23, 2022

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SBF's rise and fall teach us a lot about the elites. They hide their greed behind fake morals, take advantage of Main Streeters to get rich, and always bail each other out. So let's dive into the FTX scandal and what we can learn from it. 

You're The Sucker 

World-famous actor and film director Paul Newman once said, "if you're playing a poker game and you look around the table and can't tell who the sucker is, it's you." 

That's how these Ponzi schemes run by the elites work. First, they get you caught up in the hype and afraid of missing out. Then they take advantage of you. 

Sam Bankman-Fried started FTX in 2019. By 2021, the company was valued at $18 billion and had signed a sponsorship deal with the Mercedes Formula 1 team. SBF was the face of crypto, he was worth $16 billion, and the elites universally celebrated him. He also earned brownie points with the government by advocating for crypto regulations and donating tens of millions of dollars to congressional candidates for the Democratic Party. SBF was supposed to be the "good guy."  

The Inflation CFA @grant_melson

SBF has a better propaganda machine than North Korea

9:01 PM ∙ Nov 24, 2022

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All Ponzi Schemes Come To An End 

The FTX exchange worked just like any other exchange, except it was only for crypto. You could buy Bitcoin, for example, using the FTX platform. Except when you gave FTX your money, they weren't actually giving you any Bitcoin in return. Instead, they promised they would pay you the value of your Bitcoin when you wanted to withdraw your money. Then they took your money and used it illegally in two ways. First, they invested it in Alameda Research, a crypto trading house also founded by SBF and run by this girl: 

Second, SBF took out personal loans against Alameda Research worth over a billion dollars. It was a massive Ponzi scheme that funneled money from crypto investors into SBF's pocket. That's why he donated millions to politicians to keep them off his case. 

Nick Short ‎‎ @PoliticalShort

SBF spent the election season shelling out cash to Democrats: $865K to the DNC, $1M to Chuck Schumer's Senate Majority PAC, and $6M to the House Majority PAC. SBF also contributed $5M to Future Forward PAC, which spent $74M in support of Biden in 2020.

freebeacon.comIll-Gotten Gains: Crypto Kingpin’s Donations Put Democrats in the Hot Seat - Washington Free BeaconThe embattled crypto billionaire Sam Bankman-Fried, who is now under federal investigation and suspected of defrauding his investors, s...

1:30 PM ∙ Nov 17, 2022

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The whole scheme revolved around a cryptocurrency called FTT, which FTX uses to provide liquidity for its platform. If FTX were a country, FTT would be the dollar. Keep in mind FTT is fake. It's like monopoly money. SBF just made it up. It only has value as long as investors trust the FTX platform. But SBF was using it as collateral to back Alameda's leveraged investments. 

Now we need to introduce Binance, the largest crypto exchange, run by Changpeng Zhao, or "CZ." CZ was one of the original investors in FTX. But as FTX got bigger, CZ and SBF had a falling out. It's a long soap opera we don't need to get into here. 

Binance owned a lot of FTT. They realized it was worth nothing, that FTX was a fraud, and they didn't want to be left holding the bag. So CZ publicly announced on Twitter that Binance would sell at its FTT on the open market. The price crashed, triggering a run on the bank, and FTX had to file for bankruptcy. The scandal is ongoing, but investors are expected to lose billions, and billions more are still missing. 

If you’re still confused, this video sums it up perfectly.

Nobody Special @JG_Nuke

I could talk about the FTX collapse for hours on end. But there's no time! Here's the whole awful glorious mess crammed into 99 seconds. #FTX #FTXCRASH #MelonHead

2:08 PM ∙ Nov 11, 2022

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The World Is Full of Ponzi Schemes 

It's a crazy story. How were so many people duped by such an elaborate scheme? Believe it or not, the elites run Ponzi schemes like this all the time. You use a lot of them on a day-to-day basis. 

For example, did you know banks don't have your money? After you put it in your savings account, they lend it out. They assume that only a tiny fraction of people will withdraw their money at any time. So they keep a little percentage in the vault and loan out the rest. A bank's goal is to charge a higher interest rate on their loans than they pay on your savings. 

Banks are regulated by their nation's central bank. The US central bank is called the Federal Reserve. The Fed is supposed to set a reserve requirement. So for example, if the requirement is 10%, the bank can loan out 90% of customer deposits and has to keep the remaining 10% in the vault. But the reserve requirement has been zero since the start of the pandemic! That means banks aren't required to keep ANY of your money in the vault. So if we all went to withdraw our money right now, the bank wouldn't be able to pay it. 

It turns out that the dollar is a lot like FTT. It's just made up! This type of currency is called fiat money. Almost every country in the world uses fiat currency, so there's no way around it. As a result, the Fed has a huge responsibility to manage the money supply responsibly. But instead, they usually use their power to make their elitist friends rich. We'll talk about that more in just a second. 

The Elites Never Pay For Their Ponzi Schemes 

You'd hope that the elites would be punished for their Ponzi schemes. But whose job is it to punish the elites? 

The elites. And as you can imagine, they always protect their own. 

How's that working out for SBF? Despite scamming investors out of billions, he has yet to face any consequences. All those bribes he paid to politicians paid off.

Jordan Schachtel @ dossier.substack.com @JordanSchachtel

FTX had one million users and stole $10 billion in customer funds. One million victims. And the ruling class is trying to let SBF get away with it.

2:41 AM ∙ Nov 24, 2022

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What about the investment banks that sold junk bonds to investors and crashed the economy in 2008? Were they punished? Of course not. In fact, they got a multi-trillion-dollar bailout from the government. While we don't have time to go into depth here, you should read our article about how the Wall Street Cartel got rich off the Great Recession. 

Main Street Insiders

Larry Fink and the Blackrock Boys

It's December 2008. The National Bureau of Economic Research has just announced that the US economy is officially in a recession. Home prices have plummeted. Millions of Main Streeters have lost their jobs. And a handful of Wall Street Firms are poised to thrive…

Read more

6 months ago · Jeff Perlot and Luke Perlot

It happened again in 2020. The Fed printed trillions to bail out the Wall Street Cartel during the COVID recession. Now Main Streeters are paying for it with double-digit inflation.  

The elites have no shame. The elites in Hollywood ignored Harvey Weinstein's sexual abuses for years because he gave to the right causes. Likewise, the elites in Big Pharma lobbied the executive department to push an experimental vaccine so they could rake in record profits. The elites in education pay their bloated salaries by putting poor college kids hundreds of thousands in debt. 

So remember that the Sam Bankman-Fried scandal isn't a one-off story. It's a microcosm of how the system works. 

Hiding Behind Fake Morals

The final and most telling lesson we can learn from the FTX scandal is that the elites cover up their fraudulent schemes with fake morals. 

SBF hid his greed behind a mask of charity. He donated to all the right organizations and supported all the right causes. And it gave him the moral high ground. We're not allowed to criticize him because of how good of a person he supposedly is and the tremendous impact he's having.

For another example, take ESG. Mutual funds and ETFs with ESG mandates charge way higher fees. But they underperform. Usually, investors would just move their money to different funds that charge less and perform better. But the elites then claim you must want dirty air and dirty water. You can hear more about why ESG is a scam to enrich the elites in our podcast interview with Justin Danhof, the Head of Corporate Governance at Strive Asset Management.

Pursuing Excellence Capitalism with Justin Danhof Main Street Insiders 31:37

Listen to Justin Danhof

One of the elites favorite tactics is to call you a racist, a science denier, a conspiracy theorist, or other false names for not buying into their schemes. That leaves Main Streeters with two options: 

1. Buy into their fraudulent Ponzi schemes. The elites will take advantage of you, but at least they won't call you mean names. 

2. Take the red pill and choose to live outside the Matrix. 

We're choosing the second option, and we hope you do the same. That means doing your research and avoiding scams like FTX. And when in doubt, remember that if it's too good to be true, it probably is. 

This is the way, 

God bless and God bless America, 

-Jeff and Luke