FTX, Sam

Bankman-Fried, and
Elite Capture

4th February, 2023

Usman W. Chohan, MBA, PhD

Discussion Paper Series:

Notes on the 21st Century

Abstract: The aim of this paper is to contextualize the collapse of FTX in light of elite
capture and elite networks, which promulgated an outsized impression of the
cryptoexchange, only to see it crashing down in November, 2022. The paper is concerned
with four elite categories: (1) celebrities, (2) political campaigns, and (3) mainstream media,
and (4) informal elite networks. It argues that these categories together helped to (1) initially
bolster FTX’s credibility and popularity with various stakeholders, and (2) engage in ex-post
damage control on FTX’s behalf. The findings of the paper suggest that such elite capture (1)
comes at the expense of ordinary retail investors, (2) destroys public value, and (3) violates
the anarchist precepts of cryptocurrencies.

Electronic copy available at: https://ssrn.com/abstract=4350992

 1

Cryptocurrencies have suffered elite capture.

FTX, Sam Bankman-Fried,

and Elite Capture
The aim of this paper is to contextualize the collapse of FTX in light of elite capture and elite
networks, which promulgated an outsized impression of the cryptoexchange, only to see it
crashing down in November, 2022. This leads to the observation that cryptocurrencies
have suffered elite capture. To illustrate the point, the paper examines four elite categories:
(1) celebrities, (2) political campaigns, and (3) mainstream media, and (4) informal elite
networks. These are also depicted in Figure 1. The paper argues that these elite categories
together helped to (1) initially bolster FTX’s credibility and popularity with various
stakeholders, and (2) engage in ex-post damage control on FTX’s behalf. The findings of the
paper suggest that such elite capture comes at the expense of ordinary retail investors,
destroys public value, and violates the anarchist precepts of cryptocurrencies.

Therefore, the investors in cryptocurrencies, and the public at large, should be wary of the
distortions that have been caused in the cryptocurrency markets due to the casting of an
elitist web over the domain. They should also note the violation of cryptocurrency’s
anarchist ethos through an essentially oligarchic mindset, where FTX and other
cryptoexchanges act as oligarchs to profane the thought behind crypto and the blockchain.
They must also bear witness to the fact that, as is being observed in investigations and trials
at the time of this writing, such oligarchic systems precipitously destroy public value, both in
terms of delegitimizing the nascent crypto space, but even more so in terms of the
monetary loss that is caused to largely ordinary retail investors. Although it is Sam
Bankman-Fried (SBF) who is on trial at this juncture, it should be noted that there are
class-action lawsuits and other civil society and public managerial actions that are cognizant
of the elite networks that (1) raised FTX’s profile beyond what it deserved, and (2) now seek
to downplay the damage caused by SBF and FTX.

Electronic copy available at: https://ssrn.com/abstract=4350992

 2

Figure 1: Elite capture of FTX

As Figure 1 demonstrates, FTX’s initial success would not have been possible without an
oligarchic web of agents that help to popularize, whitewash, and gently portray FTX’s
nefarious intent. By way of short background, The FTX Empire consisted above all of a
cryptoexchange (FTX), where cryptocurrencies could be deposited and traded by
consumers; as well as a trading arm known as Alameda Research, which was both
incompetent and inept at trading virtual assets. There were other components as well, to the
extent that the empire can be seen to consist of more than 100 different entities. The FTX
empire was premised on a small cabal that was headed by Sam Bankman-Fried (SBF), and
his deep ties to the American nomenklatura are longstanding and remarkable. The child of
two well-respected professors with the finest academic credentials and a clear penchant for
philanthropy, SBF himself graduated from the top academy (MIT) and worked in
high-finance on Wall Street. Few Americans could muster such credentials. But it wasn’t the
silver spoon at his Bar Mitzvah that enabled SBF to get a headstart in the race of life; he
actively forged deep ties in the economic, media, and political establishment of America
throughout his FTX stint. In other words, it was not just early-life privilege that enabled FTX’s

Electronic copy available at: https://ssrn.com/abstract=4350992

 3

success, but successive later-life rounds of cultivating elites that reinforced FTX’s outreach,
to the public’s detriment. When FTX collapsed in November, 2022, it was because of the
large holes in its balance sheet leading to widespread panic among investors, who made “a
run on the bank” against FTX, and it did not have the funds to pay up. The full story of FTX is
still being determined through investigations and trials, as of this writing, so it would be
premature to deliver any decisive judgements at this juncture. The purpose of the
subsequent sections, therefore, is to draw linkages between elite networks to construct a
sketch of the oligarchic architecture that promoted (and still promotes), and protected (and
still protects, to some extent), SBF and the FTX empire.

(1) Celebrities
FTX had hired numerous celebrities to promote its cryptoexchange, with a view to
popularizing its operations through the reputational capital of famous individuals who could
appeal to the young, less risk-averse demographic cohort. Two examples briefly considered
here are Thomas Edward Patrick Brady, Jr. (Tom Brady), an American Football superstar, and
Lawrence Gene David (Larry David), a famous Hollywood screenwriter and actor. Other
major endorsers of FTX have included the diva Madonna, renowned actress Gwyneth
Paltrow, supermodel Gisele Bundchen, and baseball Hall-of-Famer David Ortiz, among still
others on a long roster.

Tom Brady is an icon in American culture, with his most notable claim to fame being the
trophies accumulated in key tournaments and the comparatively advanced age at which he
has played while maintaining excellent physique and stamina. He has also amassed a
considerable fortune, with an estimated net worth in excess of $250 million , which further
bolsters the surety of his appeal towards those yearning for financial success. He has
therefore served as an appealing icon for both very young and somewhat young (35-45)
American men. Brady appeared in several commercials endorsing FTX, including the “I’m in”
commercial, suggesting through the commercials’ narratives that FTX was a hip,
contemporary, and modern road to success.

Meanwhile, Larry David is a central figure in American comedy, having been a key figure in
the creation of Seinfeld, the renowned series of the 1990s, and having his semi-biographical
mockumentary Curb Your Enthusiasm, which has been nominated for an Emmy award 47
different times. He is a household name and has succeeded in cultivating a following among

Electronic copy available at: https://ssrn.com/abstract=4350992

 4

multiple demographic strands, especially Jewish and non-Jewish White American youth. His
net worth exceeds $400 million, making his fortune easily appreciable to a vast viewership.
Larry David appeared in a SuperBowl commercial for FTX which, it should be noted, is one
of the most coveted slots for American advertising in any single year. The commercial
featured Larry David moving across various eras dismissing what are otherwise crucial and
laudable technological breakthroughs: the indoor toilet, coffee, the walkman, and even the
primitive wheel. He is shown dismissing these innovations as an all-knowing braggart who
believes such things will not work, only to be proven wrong by the march of time. At the end
of the commercial, he is pitched the FTX app to trade cryptocurrency, and he dismisses it,
suggesting to the audience that only aged fools would ignore FTX, while innovative and
avant-garde individuals should embrace the new technology.

In both the cases of Larry David and Tom Brady, a significant media hype was generated
around FTX through powerful marketing signals, and the budget for this came, sadly, from
the funds of customers who would be swindled. Such celebrities, dominant elites in the
fields of sport and entertainment, reached out to a wide audience, beyond that typically
attached to the usual investors in cryptocurrencies. They helped to fuel the hype around
FTX which ultimately led to public value destruction when the cryptoexchange collapsed.
Legal action is being taken against several celebrities, but the effectiveness of such
initiatives may be limited.

(2) mainstream media

SBF was a darling of mainstream print and electronic media, with massive coverage of FTX
and SBF himself that painted him in a messianic light as a true embodiment of the effective
altruism movement. He was variously described as the modern-day JP Morgan, the coolest
young billionaire, and the vanguard of the digital era. Interviews focused not as much on the
substance of FTX’s operations or on the soundness of the exchange, but on how wonderful
SBF was as a person, and what a wizard-like intelligence he had. Even when stories gathered
by reporters (particularly independent ones) raised concerns about FTX’s soundness, the
editorial teams of mainstream talk-shops like Bloomberg refused to entertain them. The
narrative was pitched decisively in favor of FTX’s astounding promises to revolutionize
finance and leave a lasting mark on the space. A lasting mark, it did indeed leave, but not one
worthy of any laurels.

Electronic copy available at: https://ssrn.com/abstract=4350992

 5

Even in late December, when much of the world had realized that all was not well at the helm
of the ship, the mainstream platform New York Times interviewed SBF and diverted the
conversation towards exceedingly innocuous areas, above all whether SBF was sleeping
well and was well-rested. This further enraged the public that had been deceived by FTX,
who saw the New York Times as a squawker and clear abettor of the FTX empire. In a
different seminar with the esteemed Andrew Ross Sorkin, the audience was misdirected to
applaud SBF at the end, when they meant to applaud the end of the session. Further
mainstream coverage has been very docile and measured in portrayals of SBF and FTX,
much to the chagrin of the sinitrés.

(3) political campaigns

The depth of FTX’s intrusion into American political life is perhaps best exemplified by
political donations that it (more precisely, SBF) made to both parties, one overtly and one
somewhat covertly. In the Democrat donor category, SBF was only surpassed by George
Soros. In the past political cycle, SBF siphoned $40 million to campaigns, a slightly larger
portion to Democrats. Investigations (yet not concluded) are suggesting that the methods
of contributing broke campaign finance laws. Key politicians were, in a sense, on FTX’s
bankroll, and returned the favor to FTX in several ways: bringing SBF into discussions on
crypto-regulations (which would unfairly benefit FTX), lax treatment and favorable
word-of-mouth, and in the damage-control phase, relatively mild commentary on the
subject of such a colossal financial collapse.

It is worth noting that FTX contributed to both parties. To the Democrats, it was a more
direct and open finance contribution, while for the Republicans, it was a more subtle set of
transfers through non-profit groups and PACs not required to disclose their sources. Out of
the $40 million, $27m went to the Protect our Future PAC which aligned closely with the
effective altruism mantras that SBF propounded. A further $6m went to the House Majority
PAC, and #2m went to the GMI PAC for crypto-friendly candidates. Beyond that a large
number of PACs received small-scale donations.

Infiltration Into the American political nomenklatura meant that distortionary incentives
were created to protect FTX after the fallout, and promote it while the times were good
(pre-2022). From the point of view of the victims of the FTX collapse, it all points to a
collusion between existing oligarchic structures of power and economic power in the

Electronic copy available at: https://ssrn.com/abstract=4350992

 6

domain of cryptocurrencies. Sadly, cryptocurrencies were meant to be a domain outside the

realm of traditional political intrusion, and yet, one finds the replication of the relationship
between Big Finance and politics, one of a revolving door which lends itself easily to public
value destruction.

(4) informal elite networks

As a vast literature in anthropology indicates, elite networks involve both formal and
informal structures, both of which work to reinforce elite power in systems. The study of
elites’ role in FTX, therefore, cannot be kept limited to the formal networks such as the
mainstream media or Congress. It also involves informal channels of reciprocity and
reinforcement. In the case of SBF, his silver-spoon upbringing meant a great deal, since his
powerful parents carved key niches for him. His own academic attainment also meant a
powerful networking circle at MIT. Furthermore, his short stint at Jane St. and Wall Street in
the wider sense meant that he had an informal network incorporating financial players as
well. The culmination of these stages of his life meant that SBF was able to mobilize power
through informal channels at the same time that FTX infiltrated formal channels.

Not just elites

It should be recognized, however, that the success of FTX was not entirely the product of
elite activities; there was a petite bourgeoisie of YouTube influencers, who had a
Bozo-the-Clown level of understanding of cryptocurrencies, and were either unwitting fools
at best and biased crooks at worst, in promoting FTX and SBF on their channels. Their hype
magnified the popularity of SBF and FTX on social media. Many of them have since deleted
their sycophantic videos and silly tweets, feigning ignorance or insisting upon their
innocence. They are, nevertheless, the petite bourgeoisie that worked hand-in-glove with
the elites to disseminate FTX’s brand to the public.

Conclusion
YOLO capitalism reflects the effort of small-scale retail investors to fight back against
organized financialized power. Yet YOLO capitalism can easily be subverted by the
replication of traditional modes of formal and informal power in the cryptocurrency space.
Mobilizing the powerful mechanisms described in this paper, FTX was able to reproduce

Electronic copy available at: https://ssrn.com/abstract=4350992

 7

what Big Finance had done in the traditional finance space. The complicity of elite cadres,
whether in politics, mainstream press, or celebrity culture, all reinforced FTX’s legitimacy
and augmented its operational resources. All of this, however, came at the detriment of the
public at large, specifically in terms of the retail investor community which suffered
catastrophic losses that are unlikely to be recouped. While they suffer, the elite web has
activated to protect SBF as best as possible. One example is that, in the bail of SBF’s
temporary release during trial, the two people posting the bail have not been named, in the
supposed “public interest.” The mainstream press remains unusually sympathetic to SBF
despite what is known to be a financial collapse. Celebrities involved in it, including
self-styled financial guru Kevin O’Leary, exhibit public sympathy despite themselves having
been defrauded in the process. This is all exemplary of public value destruction, and it
behooves public managers (SEC, Dept. of Justice, and other key institutions) to pursue
justice in this difficult period for cryptocurrencies as an asset class.

At the same time, the problem that cryptocurrencies are meant to solve, one steeped in
anarchism, is violated in the sense of oligarchic structures permeating the crypto landscape.
Scarcely can crypto be thought of as cryptoanarchist if an elite cabal like FTX is stationed at
its centre. This is a philosophical quandary that the proponents of cryptocurrencies must
face with sobriety and with condemnation of how cryptocurrencies have been disfigured
ideologically by FTX and SBF’s elite web.

Electronic copy available at: https://ssrn.com/abstract=4350992

 8

References
1. Andreu Sáez Benito, J. M. (2018). Criptomonedas y el Sistema Monetario Perspectivas y oportunidades.
2. Alatas, V., Banerjee, A., Hanna, R., Olken, B. A., Purnamasari, R., & Wai-Poi, M. (2019, May). Does elite
capture matter? Local elites and targeted welfare programs in Indonesia. In AEA Papers and
Proceedings (Vol. 109, pp. 334-39).
3. Arli, D., van Esch, P., Bakpayev, M., & Laurence, A. (2020). Do consumers really trust cryptocurrencies?.
Marketing Intelligence & Planning, 39(1), 74-90.
4. Armytage, R. (2015). The social lives of the elite: Friendship and power in Pakistan. The Asia Pacific
Journal of Anthropology, 16(5), 448-463.
5. Aspembitova, A. T., Feng, L., & Chew, L. Y. (2021). Behavioral structure of users in cryptocurrency market.
Plos one, 16(1), e0242600.
6. Barbosa, A. C., Oliveira, T. A., & Coelho, V. N. (2018, July). Cryptocurrencies for smart territories: an
exploratory study. In 2018 International Joint Conference on Neural Networks (IJCNN) (pp. 1-8). IEEE.
7. Becker, I, Zubak, C. & Mourtoupalas, N. (2022). FTX’s Bankman-Fried donated about $40M this political
cycle. Here’s who benefited. Washington Post.
https://www.washingtonpost.com/business/2022/12/14/sbf-ftx-political-donations/
8. Bernroider, E. W., Krumay, B., & Walser, R. (2020, October). A Framework to Achieve Cybersecurity
Accountability of Critical Infrastructure Providers–A Design Science Research Approach. In Conference
of the Italian Chapter of AIS (pp. 233-248). Springer, Cham.
9. Caal, W. A. (2020). Digital asset market evolution. J. Corp. L., 46, 909.
10. Chohan, U. W. (2017a). Cryptocurrencies: A brief thematic review. Available at SSRN 3024330.
11. Chohan, U. W. (2017b). A history of bitcoin. Available at SSRN 3047875.
12. Chohan, U. W. (2018). The problems of cryptocurrency thefts and exchange shutdowns. Available at
SSRN 3131702.
13. Chohan, U. W. (2019b). Are cryptocurrencies truly trustless?. In Cryptofinance and Mechanisms of
Exchange (pp. 77-89). Springer, Cham.
14. Chohan, U. W. (2021a). Decentralized finance (DeFi): an emergent alternative financial architecture.
Critical Blockchain Research Initiative (CBRI) Working Papers.
15. Chohan, U. W. (2021b). Public value and the digital economy. Routledge.
16. Chohan, U. W. (2022a). Central Bank Digital Currencies (CBDCs). Available at SSRN.
17. Chohan, U. W. (2022b). Public Value and Citizen-Driven Digital Innovation: A Cryptocurrency Study.
International Journal of Public Administration, 1-10.
18. Chohan, U. W. (2022c). Oversight and regulation of cryptocurrencies: BitLicense. In Cryptofinance: A
New Currency for a New Economy (pp. 105-120).
19. Chohan, U. W. (2022d). Cryptocurrencies and inequality. In Cryptofinance: A New Currency for a New
Economy (pp. 49-62).
20. Chohan, U.W. (2022e). YOLO Capitalism. Critical Blockchain Research Initiative.
21. Chohan, U.W. (2023a). FTX, Sam Bankman-Fried, and the Cryptoexchange Problem. Critical Blockchain
Research Initiative.
22. Chohan, U.W. (2023b). FTX, cryptocurrencies, and anarchism ignored. Critical Blockchain Research
Initiative.
23. Chohan, U.W. (2023c). Cryptocurrencies and parliamentary oversight. Critical Blockchain Research
Initiative.
24. Chohan, U.W. (2023d). FUD and Crypto. Critical Blockchain Research Initiative.
25. Chohan, U.W. (2023e). The False Idols of the digital economy. Critical Blockchain Research Initiative.
26. Chohan, U.W. (2023f). Regulatory and Legal Issues in Cryptocurrencies. In Liebowitz, J. Cryptocurrency
Concepts, Technology, and Applications. Routledge.

Electronic copy available at: https://ssrn.com/abstract=4350992

 9

27. Chohan,U.W., and Kerckhoven, S.V. (2023). Activist Retail Investors and the Future of Financial Markets.
Routledge.
28. Fil, M., & Kristoufek, L. (2020). Pairs trading in cryptocurrency markets. IEEE Access, 8, 172644-172651.
29. Gonzálvez-Gallego, N., & Pérez-Cárceles, M. C. (2021). Does goodness of governance dissuade citizens
from using cryptocurrencies?. Economics & Sociology, 14(1), 11-27.
30. Gonzálvez-Gallego, N., & Pérez-Cárceles, M. C. (2021). Cryptocurrencies and illicit practices: The role of
governance. Economic Analysis and Policy, 72, 203-212.
31. Hairudin, A., Sifat, I. M., Mohamad, A., & Yusof, Y. (2020). Cryptocurrencies: A survey on acceptance,
governance and market dynamics. International Journal of Finance & Economics.
32. Hashimy, L., & Sandner, P. (2020). The impact of financial regulation on the development of distributed
ledger technology (DLT) firms. Frontiers in Blockchain, 3, 21.
33. Jacobs, M. (2021). How Implicit Assumptions on the Nature of Trust Shape the Understanding of the
Blockchain Technology. Philosophy & Technology, 34(3), 573-587.
34. Marthinsen, J., & Gordon, S. (2021). A theory of optimum cryptocurrency scope. Economics of Innovation
and New Technology, 30(2), 183-196.
35. Marshall, P. (2009). Demanding the impossible. PM Press.
36. Nizzoli, L., Tardelli, S., Avvenuti, M., Cresci, S., Tesconi, M., & Ferrara, E. (2020). Charting the landscape of
online cryptocurrency manipulation. IEEE Access, 8, 113230-113245.
37. Nizzoli, L., Avvenuti, M., Tesconi, M., Cresci, S., Di Pietro, R., Quattrociocchi, W., & Gini, F. (2021).
Leveraging Social Media and AI to foster Secure Societies against Online and Offline Threats.
38. Piñeiro-Chousa, J., López-Cabarcos, M. Á., Sevic, A., & González-López, I. (2022). A preliminary
assessment of the performance of DeFi cryptocurrencies in relation to other financial assets, volatility,
and user-generated content. Technological Forecasting and Social Change, 181, 121740.
39. Sai, A. R., Buckley, J., Fitzgerald, B., & Le Gear, A. (2021). Taxonomy of centralization in public blockchain
systems: A systematic literature review. Information Processing & Management, 58(4), 102584.
40. Trisetyarso, A., Suparta, W., Kang, C. H., & Abbas, B. S. (2019, December). Crypto-governance in Stock
Exchanges: Towards Efficient and Self-regulated Trading System. In 2019 International Conference on
contemporary Computing and Informatics (IC3I) (pp. 192-197). IEEE.
41. Xia, P., Wang, H., Zhang, B., Ji, R., Gao, B., Wu, L., ... & Xu, G. (2020). Characterizing cryptocurrency
exchange scams. Computers & Security, 98, 101993.
42. Xia, P., Wang, H., Gao, B., Su, W., Yu, Z., Luo, X., ... & Xu, G. (2021). Trade or Trick? Detecting and
Characterizing Scam Tokens on Uniswap Decentralized Exchange. Proceedings of the ACM on
Measurement and Analysis of Computing Systems, 5(3), 1-26.

Electronic copy available at: https://ssrn.com/abstract=4350992

 10

Also in this series available on SSRN

Electronic copy available at: https://ssrn.com/abstract=4350992