News that former FTX CEO Sam Bankman-Fried was arrested yesterday in the Bahamas set the technology world alight.

After the dramatic implosion of FTX’s crypto empire, which resulted in the loss of hundreds of millions of invested capital and billions of paper wealth, many in the larger crypto community were incensed that he was not instantly arrested.

Now, with Bankman-Fried in custody and a complaint in hand, it is clear that the former startup executive had not purchased political protection, something alleged by humble anonymous Twitter accounts and the man who recently bought the social service alike.

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Legal folks will carefully dissect the complaint and provide more capable commentary on its aggregate claims. This morning, we’re going to take a different angle. What matters is that the FTX empire was, effectively, bullshit. It was, per the complaint, built on fraud.

This matters for startups because information about how other companies are doing is scarce and competition is intense. That means the leading startups’ business results carry outside influence — they become the cultural leaders in their market. When it turns out a screaming success was no more than smoke and mirrors, it means that a key signal in the tech startup market was actually quite specious.