Banking on FTX a Bankrupt Idea From the Start

Sometimes there is no satisfaction in being right.

The sweetheart deal between Miami-Dade County and cryptocurrency giant FTX for name sponsorship of the Miami Heat arena reeked from the start. The Vegas-style wedding felt a lot like throwing the dice at Caesars Palace. We lost big, not withstanding the $20 million we’ve already collected from the bankrupt crypto exchange, whose CEO could end up in an orange jumpsuit before it’s all over.  

The partnership was supposed to be a 19-year marriage worth $135 million that included $2 million annual payments to the Miami Heat. Instead, it lasted less than two years.  The envisioned FTX windfall was supposed to fund the county’s Peace and Prosperity Plan, one of Mayor Daniella Levine Cava’s pivotal initiatives intended to reduce gun violence, among other important goals. The deal was once lauded by Peace and Prosperity Plan sponsor, County Commissioner Keon Hardemon. So, what happens to the initiative now? Miami-Dade is on the hunt for another, more reliable, partner.

Obviously, we’re not the only ones impacted. On Nov. 10, the entire staff of the FTX Future Fund, which reportedly had committed $160 million in grants, publicly quit. In a statement, the five-person team wrote that they “have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.” FTX went belly up the next day after a rush of customer withdrawals earlier that week.

Meanwhile, we are left to ponder how our county government got sucked into doing business with such a high-risk, shady industry in the first place, one marred by scammers, hackers and sheer greed. These bottom feeders have been preying on everyone from low-income minorities to anyone with a get-rich-quick dream. They tell us, “Forget those scummy bankers, give us your money and we’ll make you a millionaire.” Even Miami’s own crypto king, Mayor Frances Suarez, once talked about paying employees their salaries in Bitcoin. Let’s not forget this is a man with presidential ambitions.

Besides FTX leaving Miami-Dade County holding the bag, many others have lost their shirts. We aren’t worried about 30-year-old CEO Sam Bankman-Fried losing 94% of his fortune (estimated at $16 billion) in a single day. We’re concerned for all the little people who gambled big and lost it all.  FTX was valued in January at $32 billion and its downfall is sending the price of major coins plummeting.

Crypto accounts lack guaranteed protections and safeguards.  They are unregulated – part of their allure and their downfall. They’re not legal tender and they’re not always viewed as securities. Customers are treated as unsecured creditors, meaning they may not get a penny back from this current debacle or any other.

Traditional savings and investment accounts aren’t 100% safe if an institution becomes insolvent, either. But most banks and brokerages, as well as 401(k) plans, do provide federally guaranteed protections and other insurance.

IIn July of 2021 Biscayne Times joined Bitcoin Rodney, aka Rodney Burton, aboard the Seafair mega yacht docked by Miami’s Hotel Intercontinental to watch him ply his trade. The event was attended by hundreds of cryptocurrency entrepreneurs who paid as much as $3,500 each to mingle over food and drinks while listening to speakers discuss trading cryptocurrencies like Bitcoin and gaining what was described in marketing materials as the “millionaire mindset.” Among Rodney’s assertions is that he turned a $1,000 loan into a few million dollars by investing in Bitcoin, and that he used $350,000 worth of the cryptocurrency to buy a Lamborghini.

We wonder if Bitcoin Rodney is still singing the same song now.

Emily Cardenas is the executive editor of Biscayne Times and The Miami Times newspapers. She previously worked as a producer at WTXF in Philadelphia and at WSCV, WFOR and WPLG in Miami.