MARC COHODES made a name for himself in the crypto sphere after correctly foreseeing the collapse of FTX.
But he was a well-known face in the financial world long before that after gaining a reputation as a short-selling genius who could sniff out fraud in trading businesses.
So, what is the story behind Marc Cohodes and what exactly did he think of FTX?
Who is Marc Cohodes?
Marc Cohodes was born in June 1960 and grew up in Chicago. He was raised by his mother after his dad was kicked out of the house for being an alcoholic.
Cohodes describes himself as having been born with “the stock market bug” and says he even started making money in the markets while he was in high school.
“I made a lot of money at the time playing gold stock options in Homestake Mining and ASA Limited,” he said in an interview in 2002.
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“For a 16-year-old I had something like $40,000, which was a ton back in 1976.
“I saw a company that I thought would be a huge winner called Data Access Systems and put half of what I had into it. What was worse is that I told my friends and others about Data Access Systems and it turned out to be a total fraud.
“I was so pissed off that I vowed that this would never happen again.”
In 1978 he started studying for a bachelor’s degree in finance at Babson College in Wellesley, Massachusetts and upon graduation in 1982, he joined Northern Trust.
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It was here that he learnt about short selling; the process of borrowing a security to sell in the open market with the aim of then buying it back in the future for less money.
While short selling was the tactic upon which Cohodes would build his career upon, he did not enjoy his time at Northern Trust, describing himself as permanently feeling on the outside of what he referred to as “groupthink”. He warned the firm “didn’t like people who were outliers”.
In 1985, the financier joined the hedge fund Rocker Partners – later incorporated as Copper River Management – which was set up by David Rocker and specialised in short selling.
In a career which lasted almost three decades, Cohodes built a reputation for uncovering fraud and short-selling companies who were being less than honest about their product or services.
In what turned out to be one of the largest securities fraud cases in European history, one of Cohodes’s most notorious shorts came in the 1990s against Lernout & Hauspie.
The financier went after the firm after discovering that its products malfunctioned and its figures were over-inflated. Lernout & Hauspie ended up going bankrupt and its founders were jailed.
In 2007, Cohodes, fully assumed managerial duties of Copper River Management after its founder retired.
But just one year later, during the 2008-9 financial crash, Copper River Management’s $2billion fund was shut down by Goldman Sachs. Much of the hedge fund’s money was in Lehman Brothers and was last upon its collapse.
Cohodes subsequently retired to a farm outside of San Francisco, California and kept his head down for a number of years before he started trading independently.
He is now well known for giving his insight on the state of the market and being outspoken with his views on investments on social media. Among his commentary includes his opinions on firms in the crypto sector. He was among the few to predict the downfall of FTX.
What was Marc Cohodes’s FTX prediction?
Months before the collapse of FTX in November 2022, Marc Cohodes made clear that he did not believe all was well at Sam Bankman-Fried‘s crypto exchange.
“In my view, nothing ever added up,” he told Forbes last year.
“I think SBF will make Bernie Madoff look like Jesus Christ.”
He warned those with money in the exchange to get out long before FTX filed for bankruptcy.
Cohodes was skeptical of the astronomical rise of SBF and the exchange, and also how they appeared to get the funds for investing.
He warned that those at the top of FTX were “basically interns” who had been prematurely elevated to their positions.
Cohodes added that he did not blame crypto for the collapse: “The media wants to make it a crypto story, but it’s not.
“This is a worldwide money laundering story through these two networks with a crypto wrapper.”
What is Marc Cohodes’s net worth?
Marc Cohodes’s exact net worth remains unknown. He lost a significant proportion of his money in the 2008 financial crisis but a number of deals since then have helped recover that money.
In an interview in 2018, Cohodes said that he did not like to brag about his fortune.
He said: “I’m not a country club guy, I do not wear fancy clothes.
“I have plenty of money but it’s not like I have a yacht or a private plane.
“I’m just a guy going after these companies, exposing the frauds who run them.”
