Sam crypto

For people who are not interested in finance the word arbitrage is an unknown. The way it is commonly used in the United States is trading between the east coast and west coast stock exchanges. Because of the time delay there is a slight difference in the price of the same stock so arbitragers buy and sell and thus keep the prices very close. Sam Bankman Fried a young trader is in the news because of arbitrage. In 2013 he started right out of MIT working for trading firm Jane Street Capital. While there he discovered a difference in the price of crypto between the US and Japan. He started buying as much as $25 million dollars per day and soon amassed a sizable fund which he used to start his own crypto trading company. He entice rich people to invest with him and was soon in control of billions. He appealed to the altruism of others by giving money to charities and also developed political friends through campaign donations. The question is how did so called sophisticated investment managers get fooled by this guy. The answer is the same thing that happened in 2008 with the mortgage crises. There people were investing in home mortgages bundled in groups of 5,000 or more and no one knew what was in these bundles. They were buying a pig in a poke. The chance to make a fortune blinded their common sense. This sort of thing happens on a regular basis....remember Enron.