Alameda took 1B hit in mobileCoin trade to prop up FTX(ft.com)
ft.com
Alameda took 1B hit in mobileCoin trade to prop up FTX
https://www.ft.com/content/5e9dc424-aef4-4981-a4d7-e3c40e1e6085
167 comments
Here's a personal anecdote which may have served as a warning to their collapse. I bought ~1000 mobile coins when they were a couple dollars, sold most of them at $60 and bought BTC, however it was at precisely that time FTX refused to let me withdraw them.
They claimed it was because my country was introducing new legislation to regulate cryptocurrencies and it was to prepare for the new rules. They however jumped the gun and just blocked my country the moment it was announced, which was a couple months before the new rules were actually set to go into effect.
I tried logging in from other countries with a VPN, but my account was already flagged, and their customer support said I had to show a valid passport or government issued ID from another country to prove I was not in the country where I was, which was obviously not possible. I was never able to withdraw my BTC.
I suspect this was the start and they were already short funds (which may already be a known fact now, I just haven't been following too closely), and they were just looking for excuses to take whatever they could from their users.
They claimed it was because my country was introducing new legislation to regulate cryptocurrencies and it was to prepare for the new rules. They however jumped the gun and just blocked my country the moment it was announced, which was a couple months before the new rules were actually set to go into effect.
I tried logging in from other countries with a VPN, but my account was already flagged, and their customer support said I had to show a valid passport or government issued ID from another country to prove I was not in the country where I was, which was obviously not possible. I was never able to withdraw my BTC.
I suspect this was the start and they were already short funds (which may already be a known fact now, I just haven't been following too closely), and they were just looking for excuses to take whatever they could from their users.
Thieves.
Sounds right, but there is also point 5
5. Trader who borrowed ("cashed out") is now being margin called by lawyers who are managing the FTX bankruptcy.
6. Investigation of whether this was an insider deal to funnel away money from FTX, because no legitimate margin desk, CVA or MVA process would allow such a thing.
5. Trader who borrowed ("cashed out") is now being margin called by lawyers who are managing the FTX bankruptcy.
6. Investigation of whether this was an insider deal to funnel away money from FTX, because no legitimate margin desk, CVA or MVA process would allow such a thing.
I mean, it wasn't even FTX who bought the bankrupt position, but Alameda. (since Alameda was the backstop provider)
Bankrupt positions were usually sold for 1% under market price to backstops, so if mobile coin traded at 60 dollars and trader goes bankrupt, Alameda bought the position for 59.4 dollars per mobile coin (what a sweet deal!). The trade is done for trader. I am not convinced that if you go bankrupt, because you bought some GME at $120, you can go after the counter party who sold you GME at that price. (You can try, but it's some bad faith stuff).
This trade underlines again why the commodities exchange act is so vital to the whole country, and shows just how crappy FTX liquidation model is. [1]
Also, I really like trade because it's smart and funny.
[1] CME Group CEO Terrence Duffy said it too! Here: https://youtu.be/V4SWraem1e0?t=2963
Bankrupt positions were usually sold for 1% under market price to backstops, so if mobile coin traded at 60 dollars and trader goes bankrupt, Alameda bought the position for 59.4 dollars per mobile coin (what a sweet deal!). The trade is done for trader. I am not convinced that if you go bankrupt, because you bought some GME at $120, you can go after the counter party who sold you GME at that price. (You can try, but it's some bad faith stuff).
This trade underlines again why the commodities exchange act is so vital to the whole country, and shows just how crappy FTX liquidation model is. [1]
Also, I really like trade because it's smart and funny.
[1] CME Group CEO Terrence Duffy said it too! Here: https://youtu.be/V4SWraem1e0?t=2963
Would you even need to take anonymization steps for this as another commenter has suggested (fake/stolen KYC and anonymized collateral)?
It seems to me that whomever was making these trades knew (suspected/or had actual inside operational information-but possibly from prior trades) that Alameda would buy the position and he would not be liable for the subsequent deflation of price.
If you knew that Alameda were going to backstop at 1% under the market price, this seems like an obvious trade to make. But how would you know that Alameda were going to do that without inside information?
It seems to me that whomever was making these trades knew (suspected/or had actual inside operational information-but possibly from prior trades) that Alameda would buy the position and he would not be liable for the subsequent deflation of price.
If you knew that Alameda were going to backstop at 1% under the market price, this seems like an obvious trade to make. But how would you know that Alameda were going to do that without inside information?
1) No, no need for fake KYC. It's a fair trade.
2) The information that backstop providers buy the position once your margin fraction is >= 1.5% is public info from documentation [1][2].
3) It is an obvious trade and theoretically still possible on exchanges which have backstop providers and/or "insurance funds" to prevent clawbacks. (It depends on their risk model whether they allow you to open such a position in the first place, though. I don't know about their models at all!)
But just because it is obvious, it doesn't mean it is easy to pull off. Most people fail at the first step, which is that you have initial margin to open a position and then actually move the price in your favour. Then you have people, who will try to bet against you, hunt your stops etc.
[1] Backstops: https://help.ftx.com/hc/en-us/articles/360024479392-Backstop...
[2] Cashing out: https://youtu.be/0ms7u__Gbys?t=87
2) The information that backstop providers buy the position once your margin fraction is >= 1.5% is public info from documentation [1][2].
3) It is an obvious trade and theoretically still possible on exchanges which have backstop providers and/or "insurance funds" to prevent clawbacks. (It depends on their risk model whether they allow you to open such a position in the first place, though. I don't know about their models at all!)
But just because it is obvious, it doesn't mean it is easy to pull off. Most people fail at the first step, which is that you have initial margin to open a position and then actually move the price in your favour. Then you have people, who will try to bet against you, hunt your stops etc.
[1] Backstops: https://help.ftx.com/hc/en-us/articles/360024479392-Backstop...
[2] Cashing out: https://youtu.be/0ms7u__Gbys?t=87
Also, it's supposed to say "<= 1.5%". Sorry!
Oh, btw. This trade is similar to the mango trade as described by Matt Levine.
https://www.bloomberg.com/opinion/articles/2022-10-12/defi-d...
Also a very funny trade!
https://www.bloomberg.com/opinion/articles/2022-10-12/defi-d...
Also a very funny trade!
Just a guess for possible other steps:
-1. They acquired fake/stolen KYC credential
0 . Their collateral was anonymized
7. The investigation fails to uncover who it was.
-1. They acquired fake/stolen KYC credential
0 . Their collateral was anonymized
7. The investigation fails to uncover who it was.
Can't read the article but how did they cash out? Use the mobilecoin as collateral to buy btc and transfer the btc out?
Example: take $6 in mobile coin and pump to 60, then borrow $30 using the $60 as collateral and buy $30 worth of bitcoin and finally transfer that bitcoin out. You then have a 5x return ignoring cost to pump?
Example: take $6 in mobile coin and pump to 60, then borrow $30 using the $60 as collateral and buy $30 worth of bitcoin and finally transfer that bitcoin out. You then have a 5x return ignoring cost to pump?
[deleted]
He could even pay them back and keep 5:6ths of the loot free and clear.
How would that work? He would still be liable for the full amount and the cost of servicing the margin loan. Or are you suggesting the bankruptcy proceedings will settle for a lower figure?
Depending on how the margin was setup, the thinking is that the trader could surrender the (now valued at $10 coins).
I find the collapse, the PR, puff-pieces, SBF chatting away
during NYT DealBook summit, celebrities white-washing to be incredible to watch. I am wondering how large the impact is on investors: Why is Bill Ackman talking about how cool Helium is within the last month? It does seem like a (last?) gasp for reassurance and hence liquidity for the larger/st investors involved in cryptocurrency/web3 madness. How much money is being lost that desperation is required to pump the ponzi still...
> I find the collapse, the PR, puff-pieces, SBF chatting away during NYT DealBook summit, celebrities white-washing to be incredible to watch.
What I find way more incredible is that we've got someone who committed many crimes: wire fraud, running ponzis, pumping and dumping shitcoins which were considered for some as securities, funneling money out of the US to the Bahamas using tens if not hundreds of companies, naming his company "Alameda Research" to dodge banking restrictions, lying up until the very last moment when things blew up that everything fine, lying about US customers deposits being FDIC insured, bribing people (several people came out and said SBF downright offered them $1m to paint FTX in a positive light), using the stolen money to buy properties in the Bahamas to the tune of $300m, etc.
And yet... This is resumed by many with: *"Cryptos are all ponzis".
What's the reasoning? Everybody in crypto is a fraudster so investors and depositors all deserve to be wiped out by a scammer? And he should walk free?
While the guy who wrote "tornado cash" is in jail?
While Aaron Swartz got sentenced for putting online research papers (paid with taxpayers money btw)?
Is that what you're saying? That's it's all a gigantic fraud so it's on par for the course and SBF is not worse than the guy who bought two DOGE and three SHIBA INU coin?
What I find way more incredible is that we've got someone who committed many crimes: wire fraud, running ponzis, pumping and dumping shitcoins which were considered for some as securities, funneling money out of the US to the Bahamas using tens if not hundreds of companies, naming his company "Alameda Research" to dodge banking restrictions, lying up until the very last moment when things blew up that everything fine, lying about US customers deposits being FDIC insured, bribing people (several people came out and said SBF downright offered them $1m to paint FTX in a positive light), using the stolen money to buy properties in the Bahamas to the tune of $300m, etc.
And yet... This is resumed by many with: *"Cryptos are all ponzis".
What's the reasoning? Everybody in crypto is a fraudster so investors and depositors all deserve to be wiped out by a scammer? And he should walk free?
While the guy who wrote "tornado cash" is in jail?
While Aaron Swartz got sentenced for putting online research papers (paid with taxpayers money btw)?
Is that what you're saying? That's it's all a gigantic fraud so it's on par for the course and SBF is not worse than the guy who bought two DOGE and three SHIBA INU coin?
These statements can all be simultaneously true:
1. It is foolish to walk down a dark alley flashing wads of cash;
2. Anyone who robs another person who is walking down a dark alley flashing wads of cash deserves to be punished harshly;
3. If there's a pawn shop at the end of the alley that is knowingly selling guns to robbers, fencing the goods they rob from citizens, and enticing citizens to walk down the alley, they also deserve to be punished harshly;
4. If citizens are regularly being robbed, we should look for structural ways to create safety, such as lighting alleyways, reinstating bicycle patrols for police, &c.
The fact that it's foolish to invest in these ponzi schemes and outright robberies in no way dilutes the blame that these fraudsters deserve, along with the industry that has sprung up around them to profit from that fraud. And none of that invalidates the notion that regulations and enforcement seem like an awfully good idea.
1. It is foolish to walk down a dark alley flashing wads of cash;
2. Anyone who robs another person who is walking down a dark alley flashing wads of cash deserves to be punished harshly;
3. If there's a pawn shop at the end of the alley that is knowingly selling guns to robbers, fencing the goods they rob from citizens, and enticing citizens to walk down the alley, they also deserve to be punished harshly;
4. If citizens are regularly being robbed, we should look for structural ways to create safety, such as lighting alleyways, reinstating bicycle patrols for police, &c.
The fact that it's foolish to invest in these ponzi schemes and outright robberies in no way dilutes the blame that these fraudsters deserve, along with the industry that has sprung up around them to profit from that fraud. And none of that invalidates the notion that regulations and enforcement seem like an awfully good idea.
Total hunch here, but:
Based on everything reported, it seems very likely he will go to prison, or at least stand trial, for everything that has happened. It's not clear why it's taking so long, there might be jurisdictional/logistical issues with the fact that he's in the Bahamas.
The Dealbook interviews and news stories don't seem to be helping him... if anything they generate more outrage and provide more contradictions in his story. He's trying to pitch himself as incompetent rather than criminal, but by constantly talking about the case I think he's undercutting himself.
If I was an investigator, I wouldn't interrupt someone when they're incriminating themselves.
Based on everything reported, it seems very likely he will go to prison, or at least stand trial, for everything that has happened. It's not clear why it's taking so long, there might be jurisdictional/logistical issues with the fact that he's in the Bahamas.
The Dealbook interviews and news stories don't seem to be helping him... if anything they generate more outrage and provide more contradictions in his story. He's trying to pitch himself as incompetent rather than criminal, but by constantly talking about the case I think he's undercutting himself.
If I was an investigator, I wouldn't interrupt someone when they're incriminating themselves.
> It's not clear why it's taking so long
Investigations like this take time. The old saying is the wheels of justice grind slowly, but they grind exceedingly fine.
The new CEO can't even make sense of what happened, and he has access to all internal information. It's going to take a long time to sort out what exactly happened.
Once he is indicted, I'm sure SBF will be well defended. A smart prosecutor will take their time in order to build an iron clad case. If he gets off on a technicality you run the risk of not being able to prosecute again due to double jeopardy. If you want a conviction, you really need your ducks in a row ahead of time.
> but by constantly talking about the case I think he's undercutting himself
Absolutely. The FBI doesn't usually announce investigations, as that puts the person being investigated on notice. Let him talk freely, it's all potential evidence to be used against him later.
Once the FBI announces an investigation, it often means that they have more than enough evidence and are mostly ready to prosecute. By announcing it, they hope to pull in little more information from those in the know, who might not have come forward.
These frauds seem to take place at the speed of light, while it takes forever for justice to show up. But it will show up. The slow speed of investigations is a feature of justice, not a bug.
Investigations like this take time. The old saying is the wheels of justice grind slowly, but they grind exceedingly fine.
The new CEO can't even make sense of what happened, and he has access to all internal information. It's going to take a long time to sort out what exactly happened.
Once he is indicted, I'm sure SBF will be well defended. A smart prosecutor will take their time in order to build an iron clad case. If he gets off on a technicality you run the risk of not being able to prosecute again due to double jeopardy. If you want a conviction, you really need your ducks in a row ahead of time.
> but by constantly talking about the case I think he's undercutting himself
Absolutely. The FBI doesn't usually announce investigations, as that puts the person being investigated on notice. Let him talk freely, it's all potential evidence to be used against him later.
Once the FBI announces an investigation, it often means that they have more than enough evidence and are mostly ready to prosecute. By announcing it, they hope to pull in little more information from those in the know, who might not have come forward.
These frauds seem to take place at the speed of light, while it takes forever for justice to show up. But it will show up. The slow speed of investigations is a feature of justice, not a bug.
There's another, newer, saying as well - American's confidence in the US Criminal Justice System is now at 14% [1]. Okay that's not a saying, but it says much more than any saying. That's the lowest level ever, and by an extremely wide margin. It's seemingly approaching zero. And some would say we're divided on everything. Nonsense!
And that is what makes this case so interesting to many, myself among them. It's essentially a very visible test of "our" cynicism, and the integrity of the criminal justice system. SBF has all the right family connections, "donated" to all the right people, and even pulled a reverse Robin Hood - stealing from the poor to give to the rich, all the while also being arguably the most visible advocate for their interests (within his domain).
It will be interesting to follow.
[1] - https://news.gallup.com/poll/394283/confidence-institutions-...
And that is what makes this case so interesting to many, myself among them. It's essentially a very visible test of "our" cynicism, and the integrity of the criminal justice system. SBF has all the right family connections, "donated" to all the right people, and even pulled a reverse Robin Hood - stealing from the poor to give to the rich, all the while also being arguably the most visible advocate for their interests (within his domain).
It will be interesting to follow.
[1] - https://news.gallup.com/poll/394283/confidence-institutions-...
Not disagreeing that many things are wrong and need fixing in the digital age.
But lately it seem people being divided often has little to do with the underlying facts and basis in reality. A lot of it is perception. Someone recently told me that your opinions say less about you and more about the kind of media you consume. Disagreement, cynicism and conspiracy theories are a sign of the times.
For example, my Red friends to say the Dems are helping SBF because he was their #2 donor. Well SBF was also one of the biggest donors to the Republicans as well. [1] But that doesn't stop some people from believing its a big liberal conspiracy. It's not that their facts are wrong, it's that they only have half the facts and are drawing the wrong (and often biased) conclusions. But I digress.
I'm not as cynical in our justice system as you are. I take comfort in the fact that Elizabeth Holmes is going to prison for 10 years. Like SBF she had all the right connections, was a media darling, compared to Steve Jobs etc. Cynical people thought that she was going to walk, but the conviction proves otherwise.
I don't believe justice in this country is in as bad of a state as many believe. I think it takes a long time, and the younger generations are raised to expect immediate gratification, so they are frustrated at the "lack" of anything happening. I firmly believe SBF is going to prison for a long time. I'll revisit this prediction in 5 years to see if I'm right.
[1] https://decrypt.co/116005/sbf-hid-republican-donations-media...
For example, my Red friends to say the Dems are helping SBF because he was their #2 donor. Well SBF was also one of the biggest donors to the Republicans as well. [1] But that doesn't stop some people from believing its a big liberal conspiracy. It's not that their facts are wrong, it's that they only have half the facts and are drawing the wrong (and often biased) conclusions. But I digress.
I'm not as cynical in our justice system as you are. I take comfort in the fact that Elizabeth Holmes is going to prison for 10 years. Like SBF she had all the right connections, was a media darling, compared to Steve Jobs etc. Cynical people thought that she was going to walk, but the conviction proves otherwise.
I don't believe justice in this country is in as bad of a state as many believe. I think it takes a long time, and the younger generations are raised to expect immediate gratification, so they are frustrated at the "lack" of anything happening. I firmly believe SBF is going to prison for a long time. I'll revisit this prediction in 5 years to see if I'm right.
[1] https://decrypt.co/116005/sbf-hid-republican-donations-media...
This guy's out there doing who-knows-what in the Bahama's. He should be shipped back to the US and brought into custody. As context Bernie was in jail within a few days.
Getting him back to US requires extradition which will take time and evidence. Alternatively they can try to lure him here (hey bro come visit me in US we got billions to invest) and arrest him after he lands. Also, I believe the government of the Bahamas is keeping close tabs on him, there's a non-zero chance they might arrest him first.
A big difference between SBF and Madoff is that Madoff admitted to his sons that there was ongoing fraud that was about to unravel. He asked them for a week to get things in order. His sons, not wanting to be accessories to the crime their father just confessed to, immediately went to the feds and told them what was going on. They arrested Bernie the next morning. [1]
[1] https://www.youtube.com/watch?v=-duaB887gMQ
A big difference between SBF and Madoff is that Madoff admitted to his sons that there was ongoing fraud that was about to unravel. He asked them for a week to get things in order. His sons, not wanting to be accessories to the crime their father just confessed to, immediately went to the feds and told them what was going on. They arrested Bernie the next morning. [1]
[1] https://www.youtube.com/watch?v=-duaB887gMQ
> It's not clear why it's taking so long
At this point I think the DOJ is just sitting in stunned silence, quietly hoovering up all the data they can and waiting for him to finish adding more evidence to that pile. This will be a blockbuster of a legal case and I expect they're working to get everything lined up before they open fire.
I would predict SBF will spend the rest of his life in a US prison, but OTOH many people reading the statutes had good arguments why Elizabeth Holmes was going to get what amounted to a life sentence, but look what actually happened.
At this point I think the DOJ is just sitting in stunned silence, quietly hoovering up all the data they can and waiting for him to finish adding more evidence to that pile. This will be a blockbuster of a legal case and I expect they're working to get everything lined up before they open fire.
I would predict SBF will spend the rest of his life in a US prison, but OTOH many people reading the statutes had good arguments why Elizabeth Holmes was going to get what amounted to a life sentence, but look what actually happened.
> It's not clear why it's taking so long,
How much money did he steal?
Answer that. Not prove he wasn't in legal compliance in tricky TOS people signed without reading. Not prove that it wasn't all honest inept code. Not even prove that it turns out an unnamed hacker was not behind it all.
The prosecutor is going into a US court and say he stole how much money in the US?
Keep in mind that the CEO who unraveled Enron among other things has said it's going to take months to figure out how much money still in valid investments owned by FTX and is legitimately not stolen.
(I'm using stole, but lawyers probably would have a different set of terms)
How much money did he steal?
Answer that. Not prove he wasn't in legal compliance in tricky TOS people signed without reading. Not prove that it wasn't all honest inept code. Not even prove that it turns out an unnamed hacker was not behind it all.
The prosecutor is going into a US court and say he stole how much money in the US?
Keep in mind that the CEO who unraveled Enron among other things has said it's going to take months to figure out how much money still in valid investments owned by FTX and is legitimately not stolen.
(I'm using stole, but lawyers probably would have a different set of terms)
This is a good reason for why it's taking so long -- It seems from a lot of reporting that there was theft/fraud, but prosecutors probably want extremely solid evidence (including some details on where the money went) before arresting, or attempting extradition.
I don't see anyone arguing that he should get leniency. It's more in the opposite direction: given how common scams are in this space _and_ how basically every time the response is some combination of “yeah, everyone knew that [but didn't say anything]” or “yes, but this new venture is totally different” it seems reasonable to question whether anything in the field is what it's actually being portrayed as. At the very least it seems like a good argument that there needs to be some big improvements in self-regulation and things like real, public audit reports.
You seem to repeatedly raise the idea that we can't or shouldn't use the FTX fraud and collapse to criticize the rest of the crypto space, or that doing so somehow excuses SBF. You are wrong on both counts.
all the crimes sbf committed are "traditional" fraud and not dependent on there being crypto involved.
we should still scrutinize and perform due diligence on all businesses, though, including crypto businesses.
we should still scrutinize and perform due diligence on all businesses, though, including crypto businesses.
Well, it's him doing them in the crypto space that has enabled the proliferation.
> Everybody in crypto is a fraudster so investors and depositors all deserve to be wiped out by a scammer?
Nobody deserves to be wiped out. But anyone wiped out in crypto is on their own. They chose to sidestep centuries of knowledge on financial regulation. If they want their money, they need to pay for lawyers.
> and he should walk free?
The wheels of justice grind slowly but fine. The day after any fraud, HN is filled with conclusions that the fraudster will walk free. (Holmes until the day of her sentencing.)
SBF is almost certain to be charged. It just won’t happen this week.
Nobody deserves to be wiped out. But anyone wiped out in crypto is on their own. They chose to sidestep centuries of knowledge on financial regulation. If they want their money, they need to pay for lawyers.
> and he should walk free?
The wheels of justice grind slowly but fine. The day after any fraud, HN is filled with conclusions that the fraudster will walk free. (Holmes until the day of her sentencing.)
SBF is almost certain to be charged. It just won’t happen this week.
> The wheels of justice grind slowly but fine. The day after any fraud, HN is filled with conclusions that the fraudster will walk free. (Holmes until the day of her sentencing.)
This is part of the problem, is it not? There are tiers of justice. Law and order types shriek about how none of us are safe because presumptively innocent people who shoplift or jump turnstiles are not kept in cages before their trial. Meanwhile, you can steal billions of dollars or forge medical data and you're not only walking free, but invited to speak at glamorous conferences.
This is part of the problem, is it not? There are tiers of justice. Law and order types shriek about how none of us are safe because presumptively innocent people who shoplift or jump turnstiles are not kept in cages before their trial. Meanwhile, you can steal billions of dollars or forge medical data and you're not only walking free, but invited to speak at glamorous conferences.
> because presumptively innocent people who shoplift or jump turnstiles are not kept in cages before their trial.
But they are, and therein lie the hypocrisy. If you're wealthy, then you get the opportunity to turn yourself in after weeks or months to get your affairs in order, while regular people who allegedly commit minor crimes get a gun pointed at them, roughed up, arrested, and shoved in a cell for who knows how long until they are finally informed that they have a bench warrant out on them for something that happened in 2017.
But they are, and therein lie the hypocrisy. If you're wealthy, then you get the opportunity to turn yourself in after weeks or months to get your affairs in order, while regular people who allegedly commit minor crimes get a gun pointed at them, roughed up, arrested, and shoved in a cell for who knows how long until they are finally informed that they have a bench warrant out on them for something that happened in 2017.
> until they are finally informed that they have a bench warrant out on them for something that happened in 2017
If you’re wealthy and ignore warrants until a traffic stop, this happens to you too.
If you’re wealthy and ignore warrants until a traffic stop, this happens to you too.
IANAL and this isn't legal advice, but the example warrants I found issue by a state government only command the officer of the state it happens in to perform the arrest. I'm not certain an officer out of state from the offense would be commanded to serve the warrant, rather than just have the option. And the rich often perform their shenanigans somewhere else so they don't shit where they eat.
See an example arrest warrant http://www.georgetowncriminaldefenselawyer.com/wp-content/up...
See an example arrest warrant http://www.georgetowncriminaldefenselawyer.com/wp-content/up...
[deleted]
> you can steal billions of dollars or forge medical data and you're not only walking free, but invited to speak at glamorous conferences
Plenty of felons speak at conferences? And again, you’re asking for instantaneous indictment. That’s not how competent legal systems work.
Plenty of felons speak at conferences? And again, you’re asking for instantaneous indictment. That’s not how competent legal systems work.
The indictment I'm asking for is no more instantaneous than is standard for low-level arrestees.
Low level arrestees don't get indicted, generally; indictments aren't required in most states even for felonies (unlike the federal system) and some states have entirely abolished indictment and criminal grand juries, so indictments tend to only happen for federal and a fraction of state felonies, biased toward more major felonies in the states that use the system.
And when someone is accused of minor low-level offenses, prosecutors aren't worried about losing the ability to prosecute potentially multiple major crimes, and to lose access to any restitution and criminal forefeiture actions associated with them, by premature prosecution of lesser included offenses blocking the more major ones under double jeopardy rules.
And when someone is accused of minor low-level offenses, prosecutors aren't worried about losing the ability to prosecute potentially multiple major crimes, and to lose access to any restitution and criminal forefeiture actions associated with them, by premature prosecution of lesser included offenses blocking the more major ones under double jeopardy rules.
The whole premise of crypto is that it's unregulated, so yes it should 100% be assumed that you're probably going to get swindled.
There was a story about how Sequoia (or a different VC) gave FTX millions while SBF was playing games during the call with them. I mean, if nothing else, if you can't expect the tiniest ounce of professionalism from a company you're investing in, I find it hard to feel bad for you when you're scammed out of that investment.
There was a story about how Sequoia (or a different VC) gave FTX millions while SBF was playing games during the call with them. I mean, if nothing else, if you can't expect the tiniest ounce of professionalism from a company you're investing in, I find it hard to feel bad for you when you're scammed out of that investment.
I think most people have roughly zero sympathy for institutional investors that give good money to garbage companies, but what's outrageous here is that be stole customer funds.
I'm certain each party felt they could swindle the other. Hence the lack of professionalism from one party, and the apathy towards the behavior from the other.
When one has a king-high full house, they should call every raise. But that but no one knows if that's the winning hand until everyone shows their cards.
When one has a king-high full house, they should call every raise. But that but no one knows if that's the winning hand until everyone shows their cards.
>I'm certain each party felt they could swindle the other.
There's a reason trader turrets handsets and boxes have high resistance non latching push to talk switches. Because both sides of every deal think the other sides just that in the most regulated markets and otc / "self reg" alike.
There's a reason trader turrets handsets and boxes have high resistance non latching push to talk switches. Because both sides of every deal think the other sides just that in the most regulated markets and otc / "self reg" alike.
People who invested into crypto don't deserve justice. Government warned them and now they're on their own.
Everyone in crypto is a fraudster so investors and depositors all deserve to be wiped out. But the scammers also deserve to go to prison for wire fraud and related crimes. Both things can be true. There is no contradiction in the reasoning.
Alexey Pertsev is in jail for allegedly operating an illegal money transfer business in violation of AML/KYC laws. If he had merely developed the Tornado Cash code without actually using it then he wouldn't be in jail.
I agree that the Aaron Swartz case was a travesty of justice.
Alexey Pertsev is in jail for allegedly operating an illegal money transfer business in violation of AML/KYC laws. If he had merely developed the Tornado Cash code without actually using it then he wouldn't be in jail.
I agree that the Aaron Swartz case was a travesty of justice.
This is a storyboard for a John Oliver episode
It looks like some of these larger cases take a while to prosecute. Not saying there's no favoritism here, but FYI the Enron scandal unfolded in late 2001 and the current and former CEO Lay and Skilling's trial started more than four (4!) years later in early 2006.
That's very quick.
My memory is a little hazy, but the fast prosecution was motivated by covering up structural inefficiencies in CA energy trading created knowingly against considerable objections by politicians, that Enron abused, and not the a priori fraud of propping up their stock for dozens of quarters to be able to trade so massively in the first place.
Edit : to clarify, politicians created structural inefficiency in the California grid, in the name of deregulation, specifically Govenor Pete Wilson and California Legislature AB 1890 of 1996.
My memory is a little hazy, but the fast prosecution was motivated by covering up structural inefficiencies in CA energy trading created knowingly against considerable objections by politicians, that Enron abused, and not the a priori fraud of propping up their stock for dozens of quarters to be able to trade so massively in the first place.
Edit : to clarify, politicians created structural inefficiency in the California grid, in the name of deregulation, specifically Govenor Pete Wilson and California Legislature AB 1890 of 1996.
FTX advertised direct to consumers through Fortune cookies via openfortune.
I know because I saved one on my desk and I'm looking at it.
The crypto fortune cookies were the biggest red flag I've ever seen in my life.
I know because I saved one on my desk and I'm looking at it.
The crypto fortune cookies were the biggest red flag I've ever seen in my life.
They were also being promoted by the World Economic Forum whose page described them as a partner [1], while SBF was rubbing shoulders with individuals like Clinton/Blair and receiving lavish praises throughout the corporate media and becoming one of the biggest political players there is.
[1] - https://web.archive.org/web/20220613111008/https://www.wefor...
[1] - https://web.archive.org/web/20220613111008/https://www.wefor...
OK, maybe not all ponzis, some maybe less ponzi than others, or maybe even not at all. Are you saying that 1 individual was problematic, blatantly told Matt Levine he is involved in ponzi schemes, ran one of the largest such, began absorbing smaller ponzis, and that because of this 1 individual saying the industry is all ponzis is a stretch? I agree with that, sure, absolutism is hard to prove. But, the evidence of what has happened and what exists at the largest scale in the industry is a huge fraud -- it is a decent assumptive base.
The interesting thing is that FTX had almost no retail customers in the US[1], yet most of the coverage has been US-focused, due to the VC investors and US political donations. It really was just investors (in the company itself) that got hit the hardest. It just goes to show how easy it is to buy media coverage. If the media talked about things that affected their readers rather than their owners, the FTX news cycle wouldn't have lasted one day before everybody moved on.
[1]: https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/...
[1]: https://cdn.i-scmp.com/sites/default/files/d8/images/canvas/...
> The interesting thing is that FTX had almost no retail customers in the US[1]
This is only true if you believe the massive amounts of customers in the Cayman Islands, Virgin Islands, etc were not just US persons' shell companies.
This is only true if you believe the massive amounts of customers in the Cayman Islands, Virgin Islands, etc were not just US persons' shell companies.
Is it common for retail investors in the US to create shell companies in the Cayman Islands etc? Is that a service offered at low cost that everybody uses to get around so regulatory hurdle, like using a VPN to get around simple geofencing on streaming platforms?
It's very common for investment firms and other tax-dodging entities, very uncommon for the everyday wealthy person. Much of the privacy benefit to Caymen shell corps is readily available in Delaware or e.g. Montana, so only more exotic tax schemes require international companies.
> Much of the privacy benefit to Caymen shell corps is readily available in Delaware or e.g. Montana, so only more exotic tax schemes require international companies.
FTX.com was unavailable to US persons or companies, so being legally based in Delaware/Montana/etc wouldnt have helped.
FTX.com was unavailable to US persons or companies, so being legally based in Delaware/Montana/etc wouldnt have helped.
It’s around $4-5k USD to set up a exempted company and get a bank account for said company in the Caymans, with annual costs being in the $2-3k USD range. Can be cheaper or more expensive, depending on the service provider. Not uncommon for more savvy investors.
Yes. Sub $10k pa for nominee management of companies. Used to have Mossack Fonseca as a customer.
Those wouldn't be retail customers in the US though, they'd be customers in the Cayman Islands...
They aren't "in the Cayman Islands" any more than a VPN user is in the country of their VPN server though. In this case, setting up a shell company in the Caribbean was a convenient way to get around US regulation (or taxes, or both).
FTX was transacting with a user in the Cayman's not the us.
[deleted]
It's pretty hard to feel bad for tax dodging fat cats getting bitten by a con man though.
Who cares if you feel bad for them? Who even asked? Crime isn't supposed to be legal when you victimize other unsympathetic criminals.
[deleted]
This is kind of a weird argument. There's no reason US reporters or commenters shouldn't write about things that happen in other countries, if they find it interesting. The FTX scandal is fascinating for lots of reasons.
(I've also seen coverage about how it affected the Bahamas.)
(I've also seen coverage about how it affected the Bahamas.)
As I post on many threads, I have barely heard a single story about retail losing money on FTX, whereas I personally knew a handful who lost money with LUNA. I assume institutions are holding the vast majority of the bags here.
common joke amongst ct natives is that left curves got rekt in luna, while right curves got rekt in ftx. interesting to see it commonly admitted by corresponding market participants
Fascinatingly cryptic comment. My best guesses don’t map to anything intelligible. Connecticut natives? Left curve of the what exactly?
CT = Crypto Twitter, and it's referencing the midwit meme [1] [2].
[1] https://knowyourmeme.com/memes/iq-bell-curve-midwit
[2] https://twitter.com/notfrydoteth/status/1590386451027746817
[1] https://knowyourmeme.com/memes/iq-bell-curve-midwit
[2] https://twitter.com/notfrydoteth/status/1590386451027746817
Not sure if you are being sarcastic but I will post my guesses:
ct => crypto traders
left and right => each person political leaning tendency
ct => crypto traders
left and right => each person political leaning tendency
Think it's left/right of the bell curve (as in the meme), i.e. dumb money (retail) vs. smart money (industry).
That does make sense, but I’m oddly reluctant to give up on the mental image of a Connecticut locker room where crypto investment preferences are revealed by the individual curve direction.
What are "ct natives", "left curves" and "right curves"?
I interpreted left/right to be corresponding curves of wealth distribution.
So FTX was just a bunch of institutional traders trading against each other? Sounds a lot like a dark pool.
> So FTX was just a bunch of institutional traders trading against each other? Sounds a lot like a dark pool.
A dark pool has nothing to do with who trades in it. As GME made famous, alot of GME retail orders got sent to dark pools to trade on.
What distinguishes a dark pool from a lit exchange is that orders are hidden and often trade at the midpoint(half penny) and not on the penny.
Who is on the exchange has nothing to do with dark vs lit.
A dark pool has nothing to do with who trades in it. As GME made famous, alot of GME retail orders got sent to dark pools to trade on.
What distinguishes a dark pool from a lit exchange is that orders are hidden and often trade at the midpoint(half penny) and not on the penny.
Who is on the exchange has nothing to do with dark vs lit.
This is what has befuddled me.
I still wager the main con was more similar to classic VC frauds where you pump up your user numbers and trade volume in order to get more investment dollars (which you can then spend on anything). Advertising on sports arenas and stuff gave them a lot of plausibility as the "big player" to people (like me) who dont trade crypto at all.
I still wager the main con was more similar to classic VC frauds where you pump up your user numbers and trade volume in order to get more investment dollars (which you can then spend on anything). Advertising on sports arenas and stuff gave them a lot of plausibility as the "big player" to people (like me) who dont trade crypto at all.
[deleted]
Yeah, I wonder if the investors bought the media coverage in addition to paying for it (intentionally or not.)
I believe it is more "give the people what they want." This story is getting clicks because the numbers are so big it has everybody daydreaming about having lived through this from the inside. People want details to fill in the cracks of their fantasies.
This is like Nightcrawler, and the press is satisfying the bloodlust of its readers who like The Social Network like drama and Big Shortesque scandals.
We arent living in the right reality if Adam McKay/Charles Randolph/Michael Lewis and Aaron Sorkin/David Fincher/Ben Mezrich dont have dueling FTX movies coming out on opposite streaming services the same week. (Probably Apple and Disney, who then happen to announce a merger, because of course thats how the world works now.)
This is like Nightcrawler, and the press is satisfying the bloodlust of its readers who like The Social Network like drama and Big Shortesque scandals.
We arent living in the right reality if Adam McKay/Charles Randolph/Michael Lewis and Aaron Sorkin/David Fincher/Ben Mezrich dont have dueling FTX movies coming out on opposite streaming services the same week. (Probably Apple and Disney, who then happen to announce a merger, because of course thats how the world works now.)
The Apple-Disney merger is a rumor of genuine vintage.
It was first rumored around 1996-97 when Apple was in enormous trouble. Potential acquirers according to the rumor mill included Oracle, Sun and Disney. (Somehow the “Network Computer” was a cornerstone of these speculations, but I forget what Disney had to do with any of it.)
After Jobs firmly established himself at Apple, the Pixar-Disney connection ensured this speculation regularly resurfaced. Sometime around 2007 Apple passed Disney in market cap and the rumor flipped from a merger of equals to “Apple buys Disney”.
It was first rumored around 1996-97 when Apple was in enormous trouble. Potential acquirers according to the rumor mill included Oracle, Sun and Disney. (Somehow the “Network Computer” was a cornerstone of these speculations, but I forget what Disney had to do with any of it.)
After Jobs firmly established himself at Apple, the Pixar-Disney connection ensured this speculation regularly resurfaced. Sometime around 2007 Apple passed Disney in market cap and the rumor flipped from a merger of equals to “Apple buys Disney”.
That was a silly tangent. My point was, the press isnt being forced upon society by puppetmasters who lost money in FTX.
Thats a silly silly conspiracy theory.
The story is just generating clicks with the home investor crowd, who has no skin in the game.
The story is just generating clicks with the home investor crowd, who has no skin in the game.
[deleted]
All media is super US focused.
“World news” is code word for “non-US news” since US is the default, which makes sense.
“World news” is code word for “non-US news” since US is the default, which makes sense.
In every country, world news very explicitly means news about what's happening outside that country.
Good point. Also Cathy Wood suddenly buying more $COIN and $GBTC seems like similar forces at play. Many are caught off guard and seem to have lost big on paper
They are all trying to frontrun the next boom cycle in hopes of having good returns for 2023. Their returns for 2022 are garbage. Can you imagine giving ARK 1% of your wealth as payment for them losing 60% of your wealth? Their hope is that the fed cuts rates in early 2023, and that causes a ton of money on the sidelines to come back into the market into speculative assets.
Indeed, the compound growth required for BTC to reach Wood's $1M target by 2030 from where it is now, seems incredibly unlikely...
Cathie Wood is another version of SBF. She has repeatedly said stuff that is obviously false. Even worse, she has actually demonstrated that her staff also have no idea what they are doing.
It isn't possible to go full-FTX with a long-only fund...but there is further downside.
It isn't possible to go full-FTX with a long-only fund...but there is further downside.
I didn't know she ended up picking up McAfee's torch. Hopefully she skipped the pledge.
Yeah, she didn't really pick up the torch with the same flare https://twitter.com/dergigi/status/1597721460784582657
I don’t understand the criticism of the Dealbook interview. I want to hear SBF side and found that he’s definitely hanging himself with his public statements. If the media were to “deplatform” him that would be an incredible disservice. I thought ARS asked fair questions.
Sure, he can mint himself enough rope, but the opportunity can give weight to a narrative that is desired, whatever it may be.
My new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air. Now that those have been unmasked and everyone's asking hard questions around liquidity or pulling their coins into their own wallets, the major players are over leveraged to the gills (because you can't make "real money" on customer money without risky bets). The only way out is to get BTC's price back to the good ol days and keep the Ponzi going.
> My new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air.
I don't think this is a conspiracy theory...
At the very least, we know that some of largest institutions were regularly pumping up assets for solvency reasons.
I don't think this is a conspiracy theory...
At the very least, we know that some of largest institutions were regularly pumping up assets for solvency reasons.
That’s why in “legacy” (stocks/bonds/futures) risk/portfolio management side not only is there a market quote next to your position, but also #of trading days at x% of avg. daily volume to exit…and as a supervisor/risk manager you’re going to assign a lot of risk to that illiquid position (regardless of where the “price” is)
> My new conspiracy theory is all of the smaller coins were an easy way to extend the Ponzi scheme by inventing valuation out of thin air.
That's exactly what happened. I invent $GRBG coin, reserve 1 billion of them, and sell 1 to my friend for $1. Boom, $1 billion "market cap".
Then you wash trade between each other, raising the price enough so the suckers start to notice, and then cash out at the top.
That's exactly what happened. I invent $GRBG coin, reserve 1 billion of them, and sell 1 to my friend for $1. Boom, $1 billion "market cap".
Then you wash trade between each other, raising the price enough so the suckers start to notice, and then cash out at the top.
The Ponzi can keep going for a while. The Fed Balance Sheet is still within 95% of its all time high.
These huge asset price moves are more a function of investor preferences and people trying to get in front of the Fed rather than there being a lot less money around. The (real) Art Market, for example, still seems quite healthy.
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
These huge asset price moves are more a function of investor preferences and people trying to get in front of the Fed rather than there being a lot less money around. The (real) Art Market, for example, still seems quite healthy.
https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
I suspect the strange news/media outfall is because nobody quite knows yet WHO is at fault and since the money lost is from larger investors, they themselves are perhaps worried that they are at fault somehow, so there's really no "narrative" at play.
Something similar happened during the implosion of the mortgage crisis; it wasn't clear how the contagion had spread until later.
Something similar happened during the implosion of the mortgage crisis; it wasn't clear how the contagion had spread until later.
I personally think all of crypto is a scam but bitcoin, anyone who plays with alt-coins is just trying to get rich quick... You could say the same for bitcoiners, but it I think it's different.
What makes bitcoin different other than it being older than the rest of the pack?
Bitcoin is the only currency that's leaderless, decentralized, belongs to no company or some 30 years-old "CEO", and is contributed to much like the Linux kernel. You could compare it to TCP/IP versus proprietary protocols du jour.
Or just Google "what sets bitcoin apart to other cryptos".
https://bitcoinmagazine.com/culture/what-makes-bitcoin-diffe...
Or just Google "what sets bitcoin apart to other cryptos".
https://bitcoinmagazine.com/culture/what-makes-bitcoin-diffe...
[deleted]
Ah yes, mobilecoin. I haven't heard much about it since the Signal announcement. I hoped Signal reversed their decision but apparently not: https://support.signal.org/hc/en-us/articles/360057625692-In...
The FTX trade happened in April 2021 and it looks like it was because the value of mobilecoin spiked and someone in FTX bet on it at a high price before it dropped.
https://imgur.com/a/dgeaIzK
I don’t think this was some FTX investment directly to mobilecoin itself (they were buying coins, not loans/investment that would expose them to FTXs recent drop). Despite the headline making it seem that way. In the year plus since the Apr 2021 price spike mobilecoin price is pretty stable.
So I’m not sure why Signal should drop them other than because of the general volatility in crypto.
https://imgur.com/a/dgeaIzK
I don’t think this was some FTX investment directly to mobilecoin itself (they were buying coins, not loans/investment that would expose them to FTXs recent drop). Despite the headline making it seem that way. In the year plus since the Apr 2021 price spike mobilecoin price is pretty stable.
So I’m not sure why Signal should drop them other than because of the general volatility in crypto.
> So I’m not sure why Signal should drop them other than because of the general volatility in crypto.
The affiliation to a cryptoscheme casts the entirety of Signal in a disreputable light. Not least because it gets Signal tangled up in stories like this one.
The affiliation to a cryptoscheme casts the entirety of Signal in a disreputable light. Not least because it gets Signal tangled up in stories like this one.
They should act to avoid guilt by association?
No one said anything about legal guilt. It's generally good practice not to associate with fraudsters if you care about your reputation though.
“Guilt by association” doesn’t imply legal guilt? It’s a common euphemism and it fits exactly what you’re describing.
Signal has often valued being technically correct over pandering to media narratives for marketing reasons.
Signal has often valued being technically correct over pandering to media narratives for marketing reasons.
Rage against it all you want, people are judged by the company they keep. Ideally not in court rooms, but in everyday life? Abso-fucking-lutely. You don't have to like it but that's how life works.
Whats "technically correct"? You think making a money sending feature using a currency that has random 1000% swings from fraudsters is "technically correct"? It's fucking useless garbage is what it is. Good thing their users didn't buy into the fraud seeing how this scam has no volume (ironically enabling this scam).
"Association" hardly seems like the correct term for marketing a fringe cryptocurrency to unsophisticated users/retail investors.
Moxie was a technical advisor for mobilecoin, helping people send money privately sounds like a noble pursuit to me. At least it has a real world use case + legitimate real world userbase/implementation. Most crypto companies don't have that.
I don't think a messenger should provide a way to transfer money. It is one reason I hate Facebook Messenger. I liked Signal more before then because of its focus on messaging.
> Ah yes, mobilecoin. I haven't heard much about it since the Signal announcement. I hoped Signal reversed their decision but apparently not: https://support.signal.org/hc/en-us/articles/360057625692-In...
Yeah, I remember that; I highly respect Moxie too but his web3 analysis seemed to exclude using an alt with no proven history in Signal for payments [0]. His involvement was being an advisor and perhaps even its former CTO, whih would explain a lot.
I wonder if Meredith will intervene considering they are openly talking about how Signal needs to be able to carry it's costs moving forward [1] and I'm guessing the mobilecoin deal came with some stake under Moxie in it's foundation?
0: https://www.coindesk.com/tech/2021/04/09/signal-founder-may-...
1: https://fortune.com/2022/11/29/signal-president-meredith-whi...
Yeah, I remember that; I highly respect Moxie too but his web3 analysis seemed to exclude using an alt with no proven history in Signal for payments [0]. His involvement was being an advisor and perhaps even its former CTO, whih would explain a lot.
I wonder if Meredith will intervene considering they are openly talking about how Signal needs to be able to carry it's costs moving forward [1] and I'm guessing the mobilecoin deal came with some stake under Moxie in it's foundation?
0: https://www.coindesk.com/tech/2021/04/09/signal-founder-may-...
1: https://fortune.com/2022/11/29/signal-president-meredith-whi...
Come on. Mobilecoin was just a straight up method of transferring value from the non-profit into the pockets of private parties. It couldn't be more clear short of them saying it outright.
A purely premined purely centralized "cryptocurrency" with no selling point except that all signal users would be forced onto it which, once it was launched, made someone a billion dollars and then it was abandoned and forgotten. (The almost unusable demo grade integration in signal continues to exist, if you look really hard for it.)
A purely premined purely centralized "cryptocurrency" with no selling point except that all signal users would be forced onto it which, once it was launched, made someone a billion dollars and then it was abandoned and forgotten. (The almost unusable demo grade integration in signal continues to exist, if you look really hard for it.)
> Come on. Mobilecoin was just a straight up method of transferring value from the non-profit into the pockets of private parties. It couldn't be more clear short of them saying it outright.
Matt seems to have said the same thing:
>"Signal sold out their user base by creating and marketing a cryptocurrency based solely on their ability to sell the future tokens to a captive audience,” said Bitcoin Core developer Matt Corallo, who also used to contribute to Signal’s open-source software.
But here is the thing; we've both have enough time in BTC to have seen some variation of this already; I was and remain a big proponent of Mycelium and I couldn't have done what I did with my startup without them, but there was no way in hell I was going buy their token and instead donated directly to the team. Nor would I purchase any of the exchange coins, I'm looking at SBF and CZ; so a level of due diligence is required so with the aftermath of the ICO-mania back in 2017 firmly in mind I think this should be a precursor.
I don't deny that Mobilecoin may have been in done in bad faith, but ultimately the consumer has to bear some responsibility; I was at hackathon at a major tech University, where the 1st-3rd prize was some small sum of cash and getting 1st round of interviews at some local tech companies and some recognition in media, but the rest were pointless things like Rokus or whatever.
I wasn't selected as a mentor for that event, I just crashed the event in the last 5 hours as I got out of work early, but after encountering a team from Stanford that created a proof of concept used to solve a major issue and creating transparency in donations for charities and non-profits using a blockchain to track, monitor and distribute the funds with real time tagging (like how we used to embed messages on mainchain).
Long story short is I managed to get them a pitch and demo with the guys from Tron and they won $10k worth of it, far exceeding the formal prizes, and I told them to split it 50/50 between them and to to keep most of it in BTC for obvious reasons. I hope they listened because Tron ended up being kind of a joke as were mos ERC tokens. I ope they listened but if they kept it in Tron they lost 66% since ATH and they only have themselves to blame.
Matt seems to have said the same thing:
>"Signal sold out their user base by creating and marketing a cryptocurrency based solely on their ability to sell the future tokens to a captive audience,” said Bitcoin Core developer Matt Corallo, who also used to contribute to Signal’s open-source software.
But here is the thing; we've both have enough time in BTC to have seen some variation of this already; I was and remain a big proponent of Mycelium and I couldn't have done what I did with my startup without them, but there was no way in hell I was going buy their token and instead donated directly to the team. Nor would I purchase any of the exchange coins, I'm looking at SBF and CZ; so a level of due diligence is required so with the aftermath of the ICO-mania back in 2017 firmly in mind I think this should be a precursor.
I don't deny that Mobilecoin may have been in done in bad faith, but ultimately the consumer has to bear some responsibility; I was at hackathon at a major tech University, where the 1st-3rd prize was some small sum of cash and getting 1st round of interviews at some local tech companies and some recognition in media, but the rest were pointless things like Rokus or whatever.
I wasn't selected as a mentor for that event, I just crashed the event in the last 5 hours as I got out of work early, but after encountering a team from Stanford that created a proof of concept used to solve a major issue and creating transparency in donations for charities and non-profits using a blockchain to track, monitor and distribute the funds with real time tagging (like how we used to embed messages on mainchain).
Long story short is I managed to get them a pitch and demo with the guys from Tron and they won $10k worth of it, far exceeding the formal prizes, and I told them to split it 50/50 between them and to to keep most of it in BTC for obvious reasons. I hope they listened because Tron ended up being kind of a joke as were mos ERC tokens. I ope they listened but if they kept it in Tron they lost 66% since ATH and they only have themselves to blame.
I try to be really conservative with the "but ultimately the consumer has to bear some responsibility" because it's essentially always true: harms that were truly mitigable or unpredictable are quite rare.
No matter how careful and smart and conservative a person is-- sometimes they're just having a blonde moment and will fall for whatever. I agree that people do need to be responsible and avoid traps but I think their responsibility in no way diminishes the perps responsibility.
Putting responsibility on the victims is also complicated by the victim pools being heterogeneous. I have a lot less sympathy for some pre-mine recipient who deposited $10 million dollars of eth on FTX to get the 5% "yield" (and probably should have recognized that the yield was a ponzi red flag) and gamble a bit on ICO tokens with 20x leverage than I do for Joe-Sixpack who saw the superbowl commercials and decided to finally buy a half Bitcoin. The first was careless with their funds, greedily ignoring red flags... the second just made the mistake of being lulled into a false sense of security-- most things with a superbowl ad are okay (or at least Joe Sixpack will soon hear about their problems if they're not).
No matter how careful and smart and conservative a person is-- sometimes they're just having a blonde moment and will fall for whatever. I agree that people do need to be responsible and avoid traps but I think their responsibility in no way diminishes the perps responsibility.
Putting responsibility on the victims is also complicated by the victim pools being heterogeneous. I have a lot less sympathy for some pre-mine recipient who deposited $10 million dollars of eth on FTX to get the 5% "yield" (and probably should have recognized that the yield was a ponzi red flag) and gamble a bit on ICO tokens with 20x leverage than I do for Joe-Sixpack who saw the superbowl commercials and decided to finally buy a half Bitcoin. The first was careless with their funds, greedily ignoring red flags... the second just made the mistake of being lulled into a false sense of security-- most things with a superbowl ad are okay (or at least Joe Sixpack will soon hear about their problems if they're not).
>No matter how careful and smart and conservative a person is-- sometimes they're just having a blonde moment and will fall for whatever. I agree that people do need to be responsible and avoid traps but I think their responsibility in no way diminishes the perps responsibility.
You're way more forgiving than I am, G.
I have seen and have reluctantly been in charge of people's financial affairs and the only sure way for them to have any level of operational security is when something is at stake and they subsequently lose some of it to learn why to do so--it is well understood that our human minds are hard-wired for risk aversion and optimized for limiting losses, so it makes sense that is why people an be so careless wen this is done for them in 90% of situations.
With that said, I agree greater efforts should be made for securely storing and handling funds, I just fail to see how more regulation (FTX was regulated and licensed) will achieve this. Rather I prefer to see a technological solution to key storage, but tat doesn't solve the ability to see a yield farm operation for the scam that it is.
You're way more forgiving than I am, G.
I have seen and have reluctantly been in charge of people's financial affairs and the only sure way for them to have any level of operational security is when something is at stake and they subsequently lose some of it to learn why to do so--it is well understood that our human minds are hard-wired for risk aversion and optimized for limiting losses, so it makes sense that is why people an be so careless wen this is done for them in 90% of situations.
With that said, I agree greater efforts should be made for securely storing and handling funds, I just fail to see how more regulation (FTX was regulated and licensed) will achieve this. Rather I prefer to see a technological solution to key storage, but tat doesn't solve the ability to see a yield farm operation for the scam that it is.
> his web3 analysis seemed to exclude using an alt with no proven history in Signal for payments
I never suggested that nor do I think that. I just don't like the feature.
I never suggested that nor do I think that. I just don't like the feature.
I just don't understand how you can expose yourself to such risk if you are supposed to be this super smart MIT graduate.
I don't understand much about finance but if I had the CEO responsibility I would make damn sure I am not exposed like that.
I just don't believe that it was an unfortunate event and SBF is innocent. How can you be so oblivious and I also think the top investors should be held accountable, they had to know the risk.
Like with a terrorism charge you have the one committing the act and you also have the ones that aided and abeded. The enablers.
I don't understand much about finance but if I had the CEO responsibility I would make damn sure I am not exposed like that.
I just don't believe that it was an unfortunate event and SBF is innocent. How can you be so oblivious and I also think the top investors should be held accountable, they had to know the risk.
Like with a terrorism charge you have the one committing the act and you also have the ones that aided and abeded. The enablers.
> I just don't understand how you can expose yourself to such risk if you are supposed to be this super smart MIT graduate.
SBF publicly stated (well before the collapse) that he operated his life under a complete disregard of risk in pursuit of optimized expected value with no risk premium.
While this is probably a rationalization, and he might well have actually been something of a risk junkie, even taken at face value its not surprising how he ended up exposed to massive risk that most people would have seen aa unwarranted even given the large potential rewards if it all worked out.
SBF publicly stated (well before the collapse) that he operated his life under a complete disregard of risk in pursuit of optimized expected value with no risk premium.
While this is probably a rationalization, and he might well have actually been something of a risk junkie, even taken at face value its not surprising how he ended up exposed to massive risk that most people would have seen aa unwarranted even given the large potential rewards if it all worked out.
YOLO
// Not being cute. If you believe you are young enough and clever enough to have time and energy to hit reset and try again on a Game Over, then it's an actually valid point of view -- if you cannot go less than zero. Given extreme rewards even with unlimited downside, if the downside is actually limited by bankrupt at zero, that caps the downside so taking the risk makes a lot of sense if you believe you can start again "near the top" (having developed non monetary resources and techniques to build wealth fast).
// Not being cute. If you believe you are young enough and clever enough to have time and energy to hit reset and try again on a Game Over, then it's an actually valid point of view -- if you cannot go less than zero. Given extreme rewards even with unlimited downside, if the downside is actually limited by bankrupt at zero, that caps the downside so taking the risk makes a lot of sense if you believe you can start again "near the top" (having developed non monetary resources and techniques to build wealth fast).
It's not even completely crazy. You start a startup at age 25, shoot for the moon, it fails after 5 years, and then you start another startup. The part he did wrong is the criming which will prevent him from trying again.
It’s fine if you have automated margin calls every 30 seconds and you can blow out somebody’s position quickly enough not to lose money. Which is what FTX allegedly had set up… for every trader except Alameda.
The issue here was the risk-management system didn't work for this trader.
What it sounds like, although it isn't totally clear, is that this guy worked out how to exploit their margin call system by running up an illiquid coin using FTX money, cashing out, and leaving FTX holding the bag.
What it sounds like, although it isn't totally clear, is that this guy worked out how to exploit their margin call system by running up an illiquid coin using FTX money, cashing out, and leaving FTX holding the bag.
No it's not really. It would not have been possible to sell the shit coin collateral for the amount loaned against it at any point. By the time FTX had liquidated half the collateral the coins liquidity would be gone and the rest of the coins would be worthless. There was no point in time where these loans were solvent, they were just pumped so they looked solvent on paper.
Yeah, true. They probably shouldn’t have been accepting illiquid shitcoins as collateral at any valuation above zero.
They could calculate margin based on the liquidation value of collateral given the current state of the order book instead of mark-to-market value but I don't know if they did that.
But the entire order book could be wash trades that disappear as soon as the loan is made
Really the question in my mind is whether it’s: negligence, gross negligence, or fraud…
Probably a mix of all three.
Accepting highly volatile assets as collateral seems obviously very risky for a lender/exchange.
I wonder if SBF has a good knowledge of banking history. No doubt, there are examples in the past of banks making similar mistakes.
I wonder if SBF has a good knowledge of banking history. No doubt, there are examples in the past of banks making similar mistakes.
It depends when you asked. Prior to FTX’s fall he was a genius that knew everything. Now he has adopted some sort of Lennie from Of Mice and Men act that would have made John Malkovich blush. He doesn’t know anything- the balance sheet, how to code, the trades, where any of the money is…
He's a classic confidence man and probably a narcissist. He probably thought he was the smartest man in the room because he surrounded himself with yes men. I don't doubt that he knew what he was doing was unethical and probably illegal, but since everyone else in the world was dumber than him they would never know. Then reality came crashing in all at once and you're seeing these interviews where he claims it was all a big misunderstanding and you should feel bad for him because the big mean market was so unfair to him. Absolute horseshit. Dude flagrantly played with fire and got burned.
> Prior to FTX’s fall he was a genius that knew everything
To folks who bought into crypto. The rest of us has been calling the whole space a scam from the start. I don’t think I’ve had a better track record in calling shorts in my life.
To folks who bought into crypto. The rest of us has been calling the whole space a scam from the start. I don’t think I’ve had a better track record in calling shorts in my life.
> I wonder if SBF has a good knowledge of banking history.
Famously, SBF said he "would never read a book"[1]. So I suspect his knowledge of banking history is spotty, at best.
[1] https://lithub.com/crypto-nerd-sam-bankman-fried-who-just-lo...
More from that interview:
> “I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that,” explains SBF. “I think, if you wrote a book, you fucked up, and it should have been a six-paragraph blog post.”
Famously, SBF said he "would never read a book"[1]. So I suspect his knowledge of banking history is spotty, at best.
[1] https://lithub.com/crypto-nerd-sam-bankman-fried-who-just-lo...
More from that interview:
> “I’m very skeptical of books. I don’t want to say no book is ever worth reading, but I actually do believe something pretty close to that,” explains SBF. “I think, if you wrote a book, you fucked up, and it should have been a six-paragraph blog post.”
It wasn't a mistake, it was deliberate fraud.
Legally I think they are better going after the embezzlement angle instead of fraud.
It is a fact that FTX funds were used to buy a house that his parents had in their name and that they used. SBF can say that the house purchase was an "accident" but most jurors understand that you don't just "accidently" have a house in your name that you live in.
It is a fact that FTX funds were used to buy a house that his parents had in their name and that they used. SBF can say that the house purchase was an "accident" but most jurors understand that you don't just "accidently" have a house in your name that you live in.
The embezzlement portion seems relatively small compared to the overall claimed of losses. Stuff like the property will be recovered too.
But the billion dollars transferred into the pockets of this mobileCoin trader on the other hand...
But the billion dollars transferred into the pockets of this mobileCoin trader on the other hand...
I am not sure if it is embezzlement because the shareholders gave him carte blanche. They had no directors (it was only SBF and one of his cronies), they had no-one overseeing anything, all of the transactions were approved by the company (btw, any transfers outside the company can now be clawed back in bankruptcy anyway).
I think the stuff going on with Alameda is a bit more spicy because he, and others, made several very explicit lies about that relationship. The stuff with the houses was unbelievable but the finger should really point at the shareholders who allowed it to happen.
I think the stuff going on with Alameda is a bit more spicy because he, and others, made several very explicit lies about that relationship. The stuff with the houses was unbelievable but the finger should really point at the shareholders who allowed it to happen.
> Legally I think they are better going after the embezzlement angle instead of fraud.
Legally, they aren’t mutually exclusive, and a part of what is probably making the criminal side take longer than people like is investigating the wide array of crimes that appear to have been committed and deciding how best to charge them.
Legally, they aren’t mutually exclusive, and a part of what is probably making the criminal side take longer than people like is investigating the wide array of crimes that appear to have been committed and deciding how best to charge them.
Maybe a prosecutor/IRS will offer his parents a deferred prosecution deal to spill the info about that house in their name. Either way the parents may lose their lawyering bar cards.
At the very best it's gross negligence on a scale never before seen.
When does gross negligence become fraud? Does it require intent? Do they need to show intent? Basically show he knew what he was doing even though he plays dumb?
When does gross negligence become fraud? Does it require intent? Do they need to show intent? Basically show he knew what he was doing even though he plays dumb?
Probably at the part where you start buying 300m dollar homes with company money.
Extending loans and perks (jets etc.) to executives is pretty standard stuff. Yeah it looks bad, especially when you're gut is telling you this guy is a crook. So SBF lived well like all executives do, that's not a smoking gun or a litmus test for fraud.
I'm sure if they can prove fraud, then this kind of stuff is icing that gets him a harsher sentence.
I'm sure if they can prove fraud, then this kind of stuff is icing that gets him a harsher sentence.
>Extending loans and perks (jets etc.) to executives is pretty standard stuff.
Maybe we should change that?
Maybe we should change that?
There's nothing wrong with offering incentives to lure top talent. It's the cost of doing business.
At the lowest level things like discount healthcare benefits and 401k matching are the simplest incentives that get paid for by the employer. The cost of doing business and attracting talent.
Microsoft was famous for having stocked break-rooms, unlimited cola and caffeine for programmers who slept in their offices. Googlers get free meals, and Mountain View campus has free rides to/from work. All paid for on company dime.
At the mid-management level you get company cars. Some of these people drive over a 1000 miles a month as part of the job, the wear and tear on their personal car is a burden. So the company offers a car as part of the compensation package. They get to use the car for personal business as well, that's a perk. Should that be taken away?
At the executive level things like company jets become a necessity, simply as a travel time saver. Time is money as they say. They can get more done during the day if they have faster travel and accommodations. I worked for a CTO who on average got around 1,000 emails a day and usually stayed up past 10pm to answer them. He says the thing people don't understand is that when he wakes up in the morning, his mail box is already full as the European division has already been running for several hours. Pressing business to address. And so spending company $$$ on things like jets and helicopters to get more productive free time from your execs is money well spent.
Some companies have formal retreats and where they send team members to "team build". As long as it can be justified, and the company is profitable, and the shareholders are OK with it, then why can't the company spend it's money as it sees fit (within limits of the law of course)?
I agree that the perks and compensation can get egregious. Also, this kind of stuff is ripe for abuse, which is why a company needs good governance. There was no governance at FTX, no corporate controls at all. Which is why the situation was so ugly.
But as far as perks goes, these are great tools to lure talent, and get the most out of them. Let's not throw the baby out with the bathwater.
If FTX was profitable, and the shareholders were OK with it, there's nothing wrong with offering paid for housing as a perk (even if it is a bit unorthodox, other than at a casino). If FTX was a con all along, then it was a crime, which changes the equation significantly.
At the lowest level things like discount healthcare benefits and 401k matching are the simplest incentives that get paid for by the employer. The cost of doing business and attracting talent.
Microsoft was famous for having stocked break-rooms, unlimited cola and caffeine for programmers who slept in their offices. Googlers get free meals, and Mountain View campus has free rides to/from work. All paid for on company dime.
At the mid-management level you get company cars. Some of these people drive over a 1000 miles a month as part of the job, the wear and tear on their personal car is a burden. So the company offers a car as part of the compensation package. They get to use the car for personal business as well, that's a perk. Should that be taken away?
At the executive level things like company jets become a necessity, simply as a travel time saver. Time is money as they say. They can get more done during the day if they have faster travel and accommodations. I worked for a CTO who on average got around 1,000 emails a day and usually stayed up past 10pm to answer them. He says the thing people don't understand is that when he wakes up in the morning, his mail box is already full as the European division has already been running for several hours. Pressing business to address. And so spending company $$$ on things like jets and helicopters to get more productive free time from your execs is money well spent.
Some companies have formal retreats and where they send team members to "team build". As long as it can be justified, and the company is profitable, and the shareholders are OK with it, then why can't the company spend it's money as it sees fit (within limits of the law of course)?
I agree that the perks and compensation can get egregious. Also, this kind of stuff is ripe for abuse, which is why a company needs good governance. There was no governance at FTX, no corporate controls at all. Which is why the situation was so ugly.
But as far as perks goes, these are great tools to lure talent, and get the most out of them. Let's not throw the baby out with the bathwater.
If FTX was profitable, and the shareholders were OK with it, there's nothing wrong with offering paid for housing as a perk (even if it is a bit unorthodox, other than at a casino). If FTX was a con all along, then it was a crime, which changes the equation significantly.
[deleted]
When they're both your own company, one didn't "take a hit" to prop up the other, you simply committed more fraud in order to try to hide the problem.
The article states:
>"FTX lent to traders so they could make big bets on crypto with just a small initial outlay, known as trading on margin. If the traders made losses, FTX would automatically sell the cash or margin they had put up, thereby protecting the exchange."
Can someone say what is meant by "sell the cash" here? I'm guessing this is not literal. Cash is an asset, what wouldn't they just deposit the cash in their account?
>"FTX lent to traders so they could make big bets on crypto with just a small initial outlay, known as trading on margin. If the traders made losses, FTX would automatically sell the cash or margin they had put up, thereby protecting the exchange."
Can someone say what is meant by "sell the cash" here? I'm guessing this is not literal. Cash is an asset, what wouldn't they just deposit the cash in their account?
The article is short on details of the trade, mostly filler on already reported FTX downfall and other downfalls.
Very weird, the information is not sourced at all and this is FT, not a random website.
>Two people familiar with the matter said...
who are they? Current/former employees/someone who knows that trader? Is this from some of the bankruptcy proceedings filed docs?
>Two people familiar with the matter said...
who are they? Current/former employees/someone who knows that trader? Is this from some of the bankruptcy proceedings filed docs?
generally this is used to protect the identity of sources
At this point I think we should stop pretending they were separate entities...
[deleted]
Is this right? Crazy if true.