The tech industry’s hype machine always trumpets a fresh new ‘genius’ – and it still hasn’t learned its lesson
to more than 11 years in prison for similar charges. Many pointed out the obvious similarities: each founder was considered a Silicon Valley wunderkind and attracted media acclaim and millions of dollars in investments before a spectacular fall from grace.was yet another indictment of the hype machine that has long fueled the rise of tech superstars and their companies.
“It is like buying a house sight unseen in a hot market – you can get a good deal and you can get a lemon,” he said. “If investors had done proper diligence they would have discovered the issues, but crypto was seen as hot so investors rushed in while they could. Turns out it was a lemon.”Photograph: Justin Lane/EPA-EFE
Investor scrutiny will only increase in the current financial climate, experts say. As the federal reserve raises interest rates and the tech industry at large faces a downward slump, there will be “far fewer cases of fraud”, said Richard Smith, co-founder of the investment analytics platform Finaic.
The severity of the charges brought against Holmes and Bankman-Fried may also underscore a new era in enforcement. Bankman-Fried’s downfall was even more swift and severe than that of Holmes – while it took more than two years after the fall of Theranos for Holmes to be formally charged, Bankman-Fried was charged within a month. His bail was set at $250m , significantly higher than the $500,000 for Holmes.As enforcement tightens up, founders may take note.
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