“Sam Bankman-Fried is the new John Pierpont Morgan– he is bailing out cryptocurrency markets the way the original J. P. Morgan did after the crisis of 1907.”
That’s how Anthony ‘The Mooch’ Scaramucci, the frankly hilarious yet short-lived White House Communications Director under Donald Trump described the FTX and Alameda Research head, known online as SBF, in June.
The comparison wasn’t missed by Bloomberg either, who in July wrote:
"Just like other financial barons before (SBF) – John Pierpont Morgan a century ago and Warren Buffett in modern times – he’s exploiting the bad fortune of rivals to expand his empire on the cheap."
Exploiting is a pretty harsh word and to be fair, SBF is far from the only major investor in the crypto space to be buying the dip.
Singapore fund Temasek just joined Sandbox developer Animoca Brands in a US$100mln funding round, while Silicon Valley firm Andreessen Horowitz launched a US$4.5bn crypto fund bank in May.
But where SBF diverges is in his insistence in offering to buy up – sorry help – distressed assets in the space, from big-hitters like Voyager and BlockFi, to lesser known enterprises like Japanese exchange Liquid Group, Canadian exchange Bitvo, and even some Bitcoin miners.
Not to mention his 7.5% stake in Robinhood (NASDAQ:HOOD) after the hybrid trading platform suffered over US$3.7bn in losses throughout 2021 (he’s denied having intentions for an outright acquisition).
Hence why the comparisons between JPM and SBF stick; JPM made his name by reorganising large businesses, turning them profitable and gaining significant control as a result.
His most legendary move was financing the industrial consolidations that formed the United States Steel (NYSE:X), International Harvester, and General Electric (NYSE:NYSE:GE), subsequently being credited with rescuing the entire US monetary system.
JPM and his magnificant 'stash – Source: britannica.com
In comparison, for all of SBF’s offers to bailout collapsing crypto ventures, only a few have had any resounding impact.
He called FTX’s US$70mln Voyager bailout money “down the drain” last month, while other credit line offers have been outright rejected.
Furthermore, SBF has distanced himself from the biggest failure of all, Celsius Network, which even he deemed too toxic to go near.
Does all this make him crypto’s biggest altruist? Or is he simply using a market crash to extend his influence over the digital economy?
If you ask him, his companies “have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion”.
That’s all well and good, but acquiring stakes in major exchanges around the world comes with the added bonus of global operating licences, so the benefits flow both ways if anything.
The fact that we’re comparing two capitalists generations apart should be proof that financial history oft repeats itself, but the comparison skips one crucial element.
Crypto is not the steel industry and centralisation goes against the very core of what crypto is meant to me about.
So one man exerting significant influence over the sector is a contentious prospect to say the least but hey, isn’t that what unfettered free markets are all about?
SBF and JPM: Side by side
| JOHN PIERPONT MORGAN | SAM BANKMAN-FRIED |
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