Celsius argued that depositors were actually lenders. I wonder if FTX will try the same angle. It's gonna be harder to justify because while Celsius was all about yield, FTX was a traditional exchange doing custody on behalf of its clients.
FTX is not crypto. If you had a bank that accepted ears of corn and bushels of apples for deposit, and trading between them, you wouldn't blame farmers when that bank stole everyone's deposits.
And a bank is not the ears of corn in the analogy. The thief here is FTX which is like the bank. You don't blame the corn for being stolen. Yes, blame the thief.
I said it was ridiculous to claim that Tether collapsing would cause "most major exchanges to go under". Congratulations on totally twisting my words though. "Most major exchanges" don't have much exposure to tether.
Certainly that's true of the overall sector. But crypto as a technology has some advantages and some disadvantages, same for traditional banking. People were arguing even before the crash that FTX was combining disadvantages of both.
Not FTX - but I know Coinbase has stated in their earnings report that they will use user deposits to pay debtors back first in the case of bankruptcy.
Edit - better explanations below this
Also a friendly reminder to everyone not to trust any exchange at all with crypto unless you're actively trading it, keep it in a wallet!
They want to do that, pending what the bankruptcy court would decide which they have no power to influence.
Like the Kraken ToS.
> Ownership. Title to Digital Assets shall at all times remain with you and shall not transfer to Payward, except as provided herein. All interests in Digital Assets we hold for Kraken Accounts are held for customers, are not property of Payward. As the owner of Digital Assets in your Kraken Account, you bear all risk of loss of such Digital Assets. None of the Digital Assets in your Kraken Account are the property of Payward. Payward does not represent or treat assets in your Kraken Account as belonging to Payward. However, a court may disagree with Payward’s treatment of your assets and subject them to claims of Payward’s creditors.
Which means that the current fad of "proof of reserves" means absolutely nothing without the liabilities side, both customer accounts and for the company itself.
What about institutions that owe FTX and Alameda Research money? Didn't FTX and Alameda invest in companies as well.. and will those companies still owe a percentage of those investments in order to liquidate money?
Yes, they have been investing in various crypto companies for a long time. Their name has frequently been attached as seed investors in numerous startups, specifically in the Solana ecosystem.
The Federal Trade Commission (FTC) does handle fraudulent advertisements and the like.... If they even address your complaint, AND if the complaint comes in your favor, you are still guaranteed nothing.
And the "punishments" are at the level of 'just doing business' for most cases.
With FTX, its when rich people get hit is when the government gets involved. The rest of us can get stuffed.
The commercials said "fortune favors the _brave_" where brave almost literally means risky.
Take note of every commercial you see and you'll notice that some huge % of them have dead bodies on their balance sheets, poisoned water, coups, criminal behavior. Like how the (unnamed?) main character of Fight Club's job as an insurance adjuster was to figure out if it was cheaper to do a recall or pay off the victims' families.
All that said, yeah absolutely no one even glancing at FTX's books before letting them in the room is very 2008-ish.
Isn't that the point of dealing with unregulated businesses? To cut through the red tape of protective regulation and responsibility? Huge risk, but potentially huge rewards.
The bankruptcy will divide whatever value is still left to be divided. Some of the missing value may be obtained from the malicious people behind the company through lawsuits, and some people may go to jail for knowingly scamming people.
In the end, this is not a bank, and the regulations protecting people from scummy banks, even the new legislations written after the 2008 crisis, don't apply.
This isn't the first business with millions of customers to go bankrupt. When such a company fails, getting your money back is your problem. Large-scale mismanagement and uneducated customer bases like this is the reason banks and other finance companies are under so much regulatory pressure.
I like how the article acknowledged, ...FTX operated a highly complex corporate structure with dozens of companies... without pointing out that one of the reasons for the complex structure was to make the fraud harder to track down.
Are you sure? FTX was collecting deposits in many countries, so I think they had to have local subsidiaries to enable that...The corporate structure seems orthogonal to their fraud
For example FTX was able to claim, with a vague semblance of honesty, that it had assets to cover liabilities. But in fact what it did was transfer money to other companies that were part of the network, like Alameda, and get back tokens with a book value but no real market value, like Serum. On paper both companies had engaged in a fair transaction. In reality customer money got moved to another company that was then free to do with it what it wanted, all hidden behind the corporate structure.
I don't think this is quite right. Matt is saying that the Serum wasn't exchanged for customer money -- it was more or less created out of thin air. He suggests that most of FTX's magical crypto assets like Serum were created for < 1 billion of customer money. He points out that we don't know from the balance sheet where they flushed the $16billion of investments. (It does seem like a lot of it went to Alameda, but not in exchange for Serum. And we still don't know how Alameda lost all the money it lost.)
Since they used Serum’s diluted market cap to justify it as an increase in assets, and focused on having more assets than liabilities, it implies they took this higher total asset balance to shoulder liabilities that their existing assets did not cover.
Since every dollar they received in customer deposits appeared both in assets and liabilities, the only way they ended up with liabilities that their (non-Serum, non-FTT) assets did not cover, is by exchanging the dollars with something that lost value.
> Since every dollar they received in customer deposits appeared both in assets and liabilities, the only way they ended up with liabilities that their (non-Serum, non-FTT) assets did not cover, is by exchanging the dollars with something that lost value.
That's the way it ought to work in the absence of fraud or theft. But as Matt says, the reason this balance sheet is so insane is that there's no evidence this happened. Only a very small amount of customer dollars could have been used to generate Serum. FTX invented several cryptocurrencies which, at a 10x inflated valuation, obscure the fact that they completely lost $16 billion of assets.
In fact, it seems that SBF used a backdoor in his own software to secretly transfer customer funds to Alameda. There's no evidence that any sort of internal accounting actually balanced the books in the way you suggest, which is what's so insane about this whole story.
It doesn’t matter how thoroughly you do your double entry accounting if you can’t trust the statement (or there is no statement) you reconcile against. Or no one ever tries to reconcile shit.
How does it go again?
“ The government are very keen on amassing statistics. They collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But you must never forget that every one of these figures comes in the first instance from the village watchman, who just puts down what he damn pleases.”
Step 2 is for Alameda to deposit on FTX, and then withdraw 95% of its notional value in USD or say BTC/ETH. Then on FTX they have a negative balance on this matched by a positive balance in FTT or other Sam coins. The USD or BTC/ETH withdrawn comes from someone on platform who has clicked "lend" on their positive balance of same in exchange of some yield.
To be fair, any user could do that, deposit shitcoin, withdraw non-shit, up to 100% of the funds where people had clicked "lend" and that without any fraud. If the value of the shitcoin collapsed their account just got zeroed and FTX took the corresponding loss on their books.
The list of shitcoins allowed in this genius scheme is still up:
There was a breakdown recently that I can't find that showed that FTX's corporate structure was at least an order of magnitude more complex than Lehman Bro's at the time of it's collapse.
Note that for LB, like most normal companies, it has subsidiaries where it makes sense to operate under different tax laws, etc. So they have a Japanese company, and Australian company... For FTX there is no such rhyme or reason. Most of the entities outside of DE are in Antigua, Seychelles, Cayman Islands, Switzerland. I don't know enough about finance to understand if this is a red flag, but given the circumstances the intent behind such a structure is certainly suspiscious.
>>corporate structure seems orthogonal to their fraud
>FTX's corporate structure was at least an order of magnitude more complex than Lehman Bro's at the time of it's collapse.
Okay, but what does corporate structure complexity have to do with fraud? It seems like you're trying to argue something along the lines of "lehman brothers was complex and collapsed due to fraud. FTX is even more complex than lehman brothers, therefore it's even more fraud then lehman!", but we didn't even establish how complexity has to do with fraud.
It feels like certain terms (eg. "ponzi scheme", "money laundering", "shell companies") get thrown around any time there's any sort of financial malfeasance, without regard to their specific meaning. For the money laundering claim, do we have any reason to believe that SBF is trying to launder money (ie. trying to conceal the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source[1])? Is he secretly also a darknet drug dealer or something? I guess you could argue the embezzle angle, but the guy isn't exactly known for a lavish lifestyle. He does use company funds to fund his charities/PACs and buy expensive properties (I think there was a group penthouse in Bermuda that's for sale now), but that's all in the open.
> Yes it’s a glaring example of fraud and dodgy deals/assets, since you seem unable to accept that the obvious fraudsters are in in fact up to no good.
Did I claim that they weren't engaging in fraud, or that the deal wasn't dodgy? My objection was with "money laundering". Even with the loosest possible interpretation, there needs to be some sort of obfuscation involved. The facts seem to point towards something very straightforward (ie. Alemeda Research borrowing money from FTX), which suggests that no obfuscation was attempted. All of this confirms my prior comment:
>It feels like certain terms (eg. "ponzi scheme", "money laundering", "shell companies") get thrown around any time there's any sort of financial malfeasance, without regard to their specific meaning.
Was there malfeasance at Alameda Research/FTX? Hell yes. Was there money laundering? No.
If you read the article is not just about money laundering, shell companies and complex corporate structures are fraud adjacent, something you seemed surprised by, that is why I gave you the link.
> Alemeda Research borrowing money from FTX
A company can't 'borrow' customer funds from another company. Companies also shouldn't try to price the assets they hold as security or swap securities on customers. There are so many examples of fraud here.
Except in this case there's a far simpler explanation floating around:
1. Alameda Research experienced some losses and needed capital injection
2. In a transaction that was probably not at arms-length and possibly fraudulent, they borrowed money from FTX by putting FTT and other tokens as collateral
3. The tokens taken as collateral crashed in value, which caused FTX to be unable to meet their liabilities
Obviously all their planning did not account for issue #3 either way. But perhaps their concern was simply having actions like #2 exposed, and more generally the value of their company (which goes hand-in-hand with the value of their various tokens) exposed. In that infamous interview, the guy talked about manipulating the prices of crypto using a small float as one tactic.
>Obviously all their planning did not account for issue #3 either way. But perhaps their concern was simply having actions like #2 exposed, and more generally the value of their company (which goes hand-in-hand with the value of their various tokens) exposed.
So let me get this straight: They were concerned with "actions like #2 exposed", so they set up a super complicated corporate structure, and apparently... didn't make use of it? Once the leaked balance sheet came out on coindesk everybody pretty much immediately figured it out, and not because there was great internet sleuths, it was just that obvious.
>There is no possibility where this isn't fraudulent.
It's called being conservative in your statements.
>Also how did they even lose so much in the first place?
Bad investments
>Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.
>Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments
I think you're missing the point here. I'm not saying it isn't fraud, I'm just saying that in this case, the complexity doesn't have anything to do with it.
Why go for the conspiracy angle when "did dumb things with money" perfectly explains it? I'm not saying it can't possibly be some conspiracy going on, just that absent any evidence you seem pretty happy to jump on the conspiracy bandwagon.
Alameda got called by their creditors on their loans because cz of binance have been slowly liquidating FTX position for the past year and half.
Market paniced when alameda attempted to buy all remaining FTX from Binance, at $22. Probably because Alameda has loans that would be liquidated under that price.
You're right that it is just an implication on my part (and thanks for the sister comment of yours for finding the diagram!). Comparing it to LB is just a little bit flippant. But you have to admit, LB was a 100 year old company that provided actual value in an incredibly complex and entrenched market. FTX was only a few years old and basically managed electronic trading cards for electronic trading card enthusiasts, yet has ~100 different entities in the corporate chart? Something is a bit off.
> Okay, but what does corporate structure complexity have to do with fraud?
Their point is that we can't look at those diagrams and determine if LB was more complex than FTX, because we suspect that those diagrams weren't drawn with the same granularity. So it's possible (perhaps even likely) that LB was more complex than FTX, and this would be apparent if we were to compare diagrams drawn with the same granularity.
The potential relation to fraud is that financial complexity can be used to obfuscate cash flows and a great many other things and hide malfeasance. Even if things like corporate officers and beneficial ownership info is easy to retrieve, having a Byzantine structure of entities can make it really hard to see the ‘one hand washing the other’ stuff, especially for outsiders.
And corporate officers and beneficial ownership info is rarely easy to get when this is done offshore, like many of these were.
It seems to me that your comment concerns the connection between financial complexity and fraud (it's easier to conceal fraud when you have complex structures).
My comment didn't concern that topic at all. My comment concerned "can we judge if A is more complex than B based on these 2 pictures". I said that we can't know if A is more complex than B, or if B is more complex than A, based on these 2 pictures.
Your comment doesn't even mention the pictures. Nor does it attempt to draw any kind of conclusion about the comparison between A and B. Nor does it provide a general framework for drawing comparisons. So I don't see how it relates to what I said at all.
I saw those plots and I think there is a false comparison. No way the Lehman plot is at the same level of granularity as the FTX plot. My firm is mid-sized European insurer. We have a chart with low hundreds of entities. Most arise from compliance purposes. Many from acquisitions that have not been definitively integrated. Some follow from certain reinsurance deals. We have many funds in the market, some entities are related to ESG-activities, some are caretakers entities for certain customers. I get it though. In M&A of small firms I have seen ten people work in a firm with twenty entities and have raised questions. But it’s the story that counts. In larger companies you have notaries on retainer just to keep the legal structure follow the organizational reality.
It's also extremely common for totally legit purposes as well.
I have some money in fundrise(RE investing crowdfunding), and they have a number of subsidiaries for various reasons invisible to the end user until tax time.
Sorry to be contrary but... Is that actually true in this case? It seems to me that the fraud was very very simple no? The CEO "lent" money from this business (which was really client money) to another business he controlled. That's not exactly complex or novel. I don't even think there was deception within the company was there, he just told people to do it and they did. It isn't like he played a careful, decade long shell game like Enron. This was the digital equivalent of someone putting their hand in the till...
Apparently (per The Break Down podcast) SBF had a back door to the PMS that let him transfer assets without any compliance or accounting blocks or alerts. So he just did it. That's how simple this was. He didn't hide the transfers to Alameda. He just did it...
I still find structures like this dumb, though thet are sometimes required by stupid governments.
Everyone is making a big fuss over the complex corporate structure, and while suspicious, it's also not totally out of the norm. If you've ever seen real-estate syndication deals (another activity with many investors over varying classes), those regularly have a web of dozens of entities just to wrap around a single property.
Yes it can? It's a remarkably lenient profile of someone who just stole upwards of $10B from retail investors. We're talking about people's life savings. Their tuition money. The down payment for a house.
Here are some choice quotes:
> Mr. Bankman-Fried did, however, agree with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry. He said his other commitments had led him to miss signs that FTX was running into trouble.
> “Had I been a bit more concentrated on what I was doing, I would have been able to be more thorough,” he said. “That would have allowed me to catch what was going on on the risk side.”
He didn't "miss signs". There was nothing to "catch". He stole billions of dollars from his customers.
> Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways.
How bad a guy can he be?
> Mr. Bankman-Fried said he wished “we’d bitten off a lot less.”
Bitten off less of his customers' money, he means?
> As FTX has crumbled, Mr. Bankman-Fried has been “working constructively with regulators, bankruptcy officials and the company to try to do what’s best for consumers,” he said on Sunday.
What a mensch!
> He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.”
So happy for him.
> Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”
> So he was planning a series of cryptic tweets? “Something like that.”
> But why? “I don’t know,” he said. “I’m improvising. I think it’s time.”
What does this even mean? Why include it in the story?
Like Musk's buyout of twitter, Ye's attempt on Parler, SBF has joined the ranks of avant garde performance artists. Or that's how I'm rationalizing all the popcorn I've been eating, anyway.
The parts you're critiquing are literally quotes of things he said to the interviewer. I think you're expecting too much of a routine story. The reporter got direct access to SBF which is not easy to do and got him on record speaking to his mistakes which he, unsurprisingly, gave roundabout non-incriminating answers. The rest of the piece is mostly outlining the facts and timeline around the collapse. A journalist isn't going to pass judgment like you want. Certainly not on a case that is still open.
Okay, but printing those quotes without context is a choice. When biggest financial fraudster since Bernie Madoff tries to give a roundabout non-incriminating answer, the thing to do is print it and also say that what actually happened is FTX "loaned" customer assets to a hedge fund — also operated by himself! — in return for essentially nothing. Not take him at his word that $10B missing was just a whoopsie that happened because he wasn't paying close attention.
As for the case being open… I mean, what is the point of a newspaper if they're just going to reprint whatever the authorities say happened? What about the absolutely bonkers balance sheet that FTX released, for example? Matt Levine did a good job breaking it down [1], because that's the job of a journalist: to make otherwise-inaccessible information available to laypeople.
There's tons of context in the article. It lists everything they did wrong. That Bloomberg piece is very much an opinion column and says so at the top.
It's simply untrue that there is context. Let's just take one example:
> Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange, Mr. Bankman-Fried said. “It was substantially larger than I had thought it was,” he said. “And in fact the downside risk was very significant.” He said the size of the position was in the billions of dollars but declined to provide further details.
We know the size of the positions! The Financial Times reported on Friday (as news) that FTX held $900M in assets against $9B in liabilities [1]. And that was before the balance sheet was released!
Why is it important to run this quote? Why allow him to spin the story like this? Why let him present it as a mistake? Why not include actual numbers? These are all choices the NYT is making that frame SBF in a positive light.
It's later in the article as is a link to additional details reported by the WSJ and specific accusations on which FTX directors had personal knowledge.
"the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
"The meeting was previously reported by The Wall Street Journal. Mr. Singh did not respond to a request for comment, and Mr. Wang could not be reached. According to a person familiar with FTX’s finances, the exchange lent as much as $10 billion to Alameda."
> "Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways."
Not "Bankman-Fried CLAIMS his circle of colleagues were bound by a commitment to effective altruism" The article isn't reporting the claim Bankman-Fried makes about himself. As written, the journalist is the one making this claim. That's far over the line. This man stole billions of dollars and the New York Times is asserting that he's an altruist.
It’s fairly well established that SBF had strong ties in the EA community long before FTX. The infamous now-deleted profile by sequoia goes into this in more detail.
I think it’s reasonable to conclude that SBFs interest in EA was legitimate, irrespective of him defrauding his customers. Even if that isn’t the case, interest in the subject of EA still accurately describes his circle of colleagues.
It would be fine to say that Bankman-Fried associated with or publicly endorsed the EA movement, those are both accurate statements of fact. The NYTimes is going further, saying he was actually "bound to a commitment", elevating Bankman-Fried's claim of sincere altruistic motive to a fact.
I don't think professional journalists make this sort of mistake by accident, and if they did, it shouldn't have gotten past the editors.
In the snippet you quoted, it said his circle of colleagues were bound to that commitment, which is an accurate summary. SBFs connections to the EA community seem to be pretty foundational to his success.
There is no mistake here. You’re seemingly very upset by your own misinterpretation of this section of the article.
Beyond what it says in that snippet, SBF did publicly pledge to give away the vast majority of his wealth. He was outspoken about his belief in Effective Altruism.
You can certainly argue he scamming the others in the EA community with a false pledge and commitment to EA principles? But this aspect of the article was completely accurate.
Or from a more cynical perspective he was extremely effective and altruistic. He robbed millions of people with spare capital and redistributed hundreds of millions to EA causes.
> What does this even mean? Why include it in the story?
I mean... it's an interview... with the guy at the center of all of it.
How is it not newsworthy to put him on the record? Where's the lack of integrity in that?
Anyone on SBF's side would try to get him to shut completely up. Instead the NYTs has made him feel comfortable and got him talking. He's going to hang himself with his words. They will be quote from this, using it against him at trial and sentencing, because there will be plenty of private communications counter to this, which shows a conscious effort to deceive.
???? How do you interview a man who just more or less stole tens of billions of dollars from customers, lied about it repeatedly, is trying to cover up evidence of that, and is arrogantly tweeting while still not being arrested, and not once mention any of that?
This garbage reads like "a day in the life of a silicon valley CEO" or something. The dude just perpetrated one of the largest financial frauds in the history of the world. Bernie Madoff level, and this is all the NYT has to say. Totally disgusting to defend the NYT here.
Dude said before Congress that they never trade or leverage using customer funds. That was a complete and utter lie.
He "testified to Congress and met with regulators" hugely downplays his attempts at regulatory capture via donations and attempted backroom deals (Gary Gensler is implicated in this too). Including the alleged prid pro quo.
It mentions his "effective altruism" and "philanthropy" but doesn't mention who his donations are to, or the fact that half of it was just a guise and actually he spent millions on housing in the Bahamas or in New York.
> the dude just perpetrated one of the largest financial frauds in the history of the world. Bernie Madoff level, and this is all the NYT has to say. Totally disgusting to defend the NYT here.
What charges have been filed?
What has he been convicted of?
Comparing him to Madoff is disingenuous. Prior to Madoff being charged, the media was the same... they're not going to print words like "perpetrated one of the largest financial frauds in the world" without charges. The only thing that screams is "defamation lawsuit". To be clear, I have no boat in this race. But calling the NYT out for not making statements that they do not (yet) have the ability to prove is entirely problematic.
None to very little. This can then be reflected in the article. Or maybe you don’t publish because all answers are some version of ‘no comment’. The downside is that you don’t publish the article, the upside is keeping your journalistic integrity.
"In less than a week, the cryptocurrency billionaire Sam Bankman-Fried went from industry leader to industry villain, lost most of his fortune, saw his $32 billion company plunge into bankruptcy and became the target of investigations by the Securities and Exchange Commission and the Justice Department."
That's the first paragraph. Literally calls him a "villain" and says he's the target of multiple investigations.
You are not going to see any media claim that he defrauded investors, committed a crime, stole, when there are no charges filed (yet), let alone convictions. Implying that the NYT is trying to puff him up by avoiding a defamation suit is reaching.
Completely untrue, they do this stuff all the time. Usually they just interview people in the industry and quote them, or temper with words like alleged. But it’s common.
I also think it's weird. There's like 8 other NYT articles about FTX this week and I believe all of them mention fraud and/or criminal investigations and/or potential theft of customer funds. Maybe this profile is bad but if NYT as a whole is trying to rescue this guy they're doing a very bad job of it.
Just repeating what others are saying, but to me it's a remarkable puff piece that presents him as a down-to-earth noble guy that maybe made some mistakes.
He's worse than Madoff and these sycophant journalists are still eating out of his palm.
I can't help but wonder if the NYTimes article was intentionally designed to be 99% puff piece disguising the 1% of extremely damning information, just to get them direct access to the FTX team so they could get something juicy. Journalists can be sneaky like that sometimes.
The 1% of damning info was Caroline's reported admission that Alameda borrowed short-term to make long-term illiquid VC investments, and when those loans got called and Alameda couldn't pay, FTX commingled its customer funds with Alameda to pay them.
That was a new bit of info, that NYTimes just casually snuck into the middle of the puff piece without further commentary, but it's quite damning and kinda insane. While all the rubes are complaining about the article being too gentle, the financial crimes prosecutors are adding it to their case files.
It's hilarious that SBF is tweeting without the slightest apparent concern of jail nor the fact that he stole $B of deposits by international customers, many of which may have connections to organized crime.
The closest comparable person I can think of was Madoff, and he had the leverage that at least most of his customer's money wasn't actually destroyed so his cooperation worth a lot. I honestly don't know that SBF has anything to bargain to the legal system or his angry, often crime involved, customers as it appears he destroyed basically all of their money. I'm not saying he should be terrified, but personally I would feel very terrified I were in that position.
I think his best outcome at this point is some form of plea that incudes witness protection program in exchange for un-"hacking" the remaining $600M.
Well, being able to pull off this kind of massive fraud pretty much requires steely eyed indifference to your own mortality and/or consequences anyway.
Most mortals start sweating bullets if they steal a candybar, or at most a car.
It's not a particularly good story, but I wish people would stop with the conspiratorial thinking. There is no evidence that the NYT is "in bed" with the guy or trying to help him -- and no reason to believe it would be in their interest to do that for him.
Why would they want to help him? Do you think he is bribing them with his worthless imaginary money? How does the NYT benefit from defending someone who has destroyed his own reputation and lost billions of dollars of customer money?
Is it possible the entire thing was a Madoff-style fraud from the beginning? Yes, but that is not the only possibility. No charges have been filed, and all the people who think he should be thrown in jail never mention what laws they think he broke. It's not illegal to be an incompetent failure, and fraud has a specific definition that requires intent and does not cover all instances of simply lying.
If the NYT had written an article accusing the guy of crimes, they wouldn't have a basis for doing so. Not yet, anyway. Maybe actual criminal lawbreaking will be discovered, but right now, there is no proof. Should newspapers be accusing people of crimes without proof?
People need to put down the pitchforks and torches and wait for the full truth to come out. It's going to take a while.
This such a sad partisan take. Why would the NYT want to help a disgraced person they have no need to be loyal to? It’s not because he’s a Democrat.
It’s because he’s any one that isn’t an excessive right wing mega spender (which includes very few names). That spans a lot of people in both parties. Aka centrist capitalists.
The Times should be deeply embarrassed by that article.
SBF is equal parts Bernie Madoff and Elizabeth Holmes but the Times is trying to paint him as an unlucky entrepreneur, down on his luck. The author doesn't even seem to understand that he stole billions from his customers to try and paper over losses from his trading.
The sudden collapse of the cryptocurrency exchange has left the crypto industry stunned.
Crackdown Begins: Regulators are moving to freeze parts of FTX’s business, while other divisions file for insolvency or prepare to halt operations. Here’s what’s next for the company. https://www.nytimes.com/2022/11/11/business/dealbook/ftx-sbf...
Sports Sponsorships: From the naming rights for an N.B.A. arena to patches on M.L.B. umpires’ uniforms, FTX’s collapse puts sponsorship deals worth hundreds of millions of dollars in doubt. https://www.nytimes.com/2022/11/10/business/ftx-sports-spons...
Tons of comments, here and elsewhere, that say that NYT should be really embarrassed by this piece. I thought the same after reading snippets posted by others, but after reading the full piece end-to-end, I disagree.
I think the article is a fairly straightforward account of what happened. I think there are places that it could have emphasized the fact that "borrowing customer funds" is accurately called theft, but it didn't come across to me as a "puff piece" that people are calling it.
For example, I thought this paragraph was pretty informative and actually extremely damning to the people involved - what is described here is clear theft, plain and simple:
> Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
With that one statement I don't see in any way how SBF, Ellison, Singh and Wang avoid lengthy prison terms.
But is it really "money"? I'm pretty sure they just owe them some large numbers, there are plenty of large numbers where those ones came from I'm sure they can make some more
I wish there was more focus on the “buying political influence with dark money” angle, and less on “young tech guy gets rich and destroys the economy” angle of the story.
As a group of mostly young tech guys and girls, we should be concerned about the narrative society, especially Wall Street and their media outlets, convey about us. Recall when redditors buying GME stock was being blamed for the many ills of capitalism. The whole robbinhood saga. The scapegoat is always a smart, wealthy young technologists.
SBF is more of a Soros than an Aaron Swartz. Wall Street loves to blame Silicon Valley, but it’s bs.
He was accused of saying "Kanye Was Right" about Jews. That's pretty blatant antisemitism, and you should be ashamed of yourself for trying to imply anything else.
>As a group of mostly young tech guys and girls, we should be concerned about the narrative society, especially Wall Street and their media outlets, convey about us. Recall when redditors buying GME stock was being blamed for the many ills of capitalism. The whole robbinhood saga.
Source? I hate statements like these because it sounds like there's a central blame committee out there handing down blames (or at least some sort of consensus), when in reality in all likelihood it's a hot take by some Bloomberg columnist.
I can see exactly zero sources linked in the sidebar that addresses my comment. Also, keep in mind that my contention wasn't that such articles didn't exist. They exist, just like the ragebait articles about "how millennials are killing the diamond industry" exist. My point was that such articles are just that: ragebait hot takes designed to get clicks. They're not reflective of general sentiment. Referencing this articles as evidence that there's some sort of concerted PR campaign against "us" is foolish.
They did this whole piece about him donating to effective altruism, but they didn't even mention that he's a top political donor, let alone investigate it.
FTX’s Collapse Casts a Pall on a Philanthropy Movement
Sam Bankman-Fried, the chief executive of the embattled cryptocurrency exchange, was a proponent and donor of the “effective altruism” movement.
You can't mention that he's the #2 political donor without mentioning that those donations went to the Democratic party and that the #1 political donor is George Soros. Any kind of negative reporting against either is absolutely forbidden.
You also get into the possibility that there was a cycle of money that went: US Taxpayer Dollars -> Ukraine -> FTX -> Democratic Party -> Further Money to Ukraine. That's influence buying of the absolute ugliest sort and the NY Times is unlikely to even hint at it.
> A while ago I became convinced that our duty was to do the most we could for the long run aggregate utility of the world.
> In the end, it’s the work my friends and colleagues at foundations do that matters the most. A more just world would shine a brighter light on them. In this world, I’m honored to be able to support their work.
the page is titled “Pledge Letter”... but where’s the pledge? what am i looking at here?
But NYT is soooooo often faulted for being a source of Democratic Party propaganda, enough so that they announced they were replacing editors within the last several months.
So they can be a mouth piece for the Republican Party? The problem is being beholden to either party. Which isn’t how any major paper or news agency/channel is.
Quite a shallow perspective: we'd have to critically think and discern, analyze the various narratives of each article, to see what narratives/talking points are being pushed by different sources, and which are being avoided being spoken of.
Your response is akin to only citing studies funded by arguably bad actors with monetary ties to the pharmaceutical industry and the status quo establishment (captured by big pharma lobbying), while simply avoiding and immediately/automatically dismissing the 93 Ivermectin studies that in total show an average 83% rate of prophylaxis; as a preventative-proactive medication, if the protocol is providing an adequate dose, early enough, and for long enough - those 3 variables of which in all studies showing no efficacy for Ivermectin against COVID aren't using the best practices determined by frontline doctors who experimented to determine the correct, minimum protocol(s).
In fact "highly reported on" is a necessary tactic in order to try to capture and flood the search engines with articles, using the same keywords, in order to add noise and make it difficult for people to find contradicting narratives to the ones the establishment who's captured these systems wants you to see.
Isn't buying political influence with money what most people with absurd amounts of money do? I don't like it one bit either, but it's hardly unique to SBF.
With SBF, there seems to be this attempt at drawing guilt-by-association because of his donations to the Democratic Party. I don't think this makes a lot of sense.
For an example on the other end of the parliamentary spectrum, say, if Musk's future Twitter profits (good luck with that) were to come from the savings from firing half of the company's employees, and he then donated those to the Republican Party, it would be absurd to blame the Republican Party for the loss of jobs that it indirectly benefited from.
Obviously firing employees is not equivalent to fraud, and donating illicit profits could be part of a scheme to launder them. But unless a causal link can be proven, it all looks like speculation to me.
That makes a good case for smaller, more decentralized governments with less power. That would increase the lobbying costs.
The US is just insane if you think about it; if a lobbyist manages to get 1 beneficial law passed in the US, that law will affect over 300 million people! Think of the profit opportunity on a per-law basis... They only need to work a handful of politicians to get such results. It's too easy.
Cal-Berkeley is removing the FTX logo from their football field. They had a ten year naming rights deal to call it 'FTX Field' and the company paid in crypto. I wonder if Cal got the full amount up front and converted it into cash or not.
I wonder if bailouts are, one step removed, really for the big investment firms behind the political parties offering the bailouts, presumably invested in who is being bailed out.
When MtGox collapsed I held .01 BTC there worth about $1 at the time, about $170 today. I'd transferred just enough for me to play around with.
The sheer number of letters I have gotten in the mail about the bankruptcy from the Japanese government easily cost a pretty penny more than my initial $1 in postage alone. I was honestly a little impressed they managed to hunt me down.
I really don't understand how NYTimes, Vox, Vice are all seemingly refusing to accurately tear down how evil Sam and associates were for screwing over so many people.
The NYTimes was quick to destroy owners of other exchanges (whom I also do not view favorably) but is mysteriously lenient, deflecting criticism, outright censoring themselves.
How does this happen? Just what is the relationship with these media outlets, Sam?
The party mantra from the Democrats and their supporting media outlets seem to be to remove Sam as much as possible and downplay the role he played in causing havoc.
Already a handful of people have committed suicide as a result of this FTX fiasco, Sequoia, WEF, have all deleted their praising words for Sam and playing dumb.
I have this feeling that something is going to break. It's going to get really ugly for this country and other entities will fully utilize the chaos to seize whatever they can.
I'd be mad beyond belief. FTX was playing shell games with the money, had a secret back door to steal with, and gave money away for political contributions.
188 comments
[ 6.5 ms ] story [ 244 ms ] threadWhen you owe the bank several billion, the bank has a problem.
When the unregulated-bank owes billions to millions of people, I guess the people have a problem?
And a bank is not the ears of corn in the analogy. The thief here is FTX which is like the bank. You don't blame the corn for being stolen. Yes, blame the thief.
Edit - better explanations below this
Also a friendly reminder to everyone not to trust any exchange at all with crypto unless you're actively trading it, keep it in a wallet!
+1 to this. Remember the classic phrase that goes something like "Not your keys, not your crypto"
Like the Kraken ToS.
> Ownership. Title to Digital Assets shall at all times remain with you and shall not transfer to Payward, except as provided herein. All interests in Digital Assets we hold for Kraken Accounts are held for customers, are not property of Payward. As the owner of Digital Assets in your Kraken Account, you bear all risk of loss of such Digital Assets. None of the Digital Assets in your Kraken Account are the property of Payward. Payward does not represent or treat assets in your Kraken Account as belonging to Payward. However, a court may disagree with Payward’s treatment of your assets and subject them to claims of Payward’s creditors.
https://www.kraken.com/legal
Which means that the current fad of "proof of reserves" means absolutely nothing without the liabilities side, both customer accounts and for the company itself.
https://twitter.com/molly0xFFF/status/1550160830762782724
I think when massive scams like FTX start airing Super Bowl ads, we all have a problem.
The Federal Trade Commission (FTC) does handle fraudulent advertisements and the like.... If they even address your complaint, AND if the complaint comes in your favor, you are still guaranteed nothing.
And the "punishments" are at the level of 'just doing business' for most cases.
With FTX, its when rich people get hit is when the government gets involved. The rest of us can get stuffed.
Take note of every commercial you see and you'll notice that some huge % of them have dead bodies on their balance sheets, poisoned water, coups, criminal behavior. Like how the (unnamed?) main character of Fight Club's job as an insurance adjuster was to figure out if it was cheaper to do a recall or pay off the victims' families.
All that said, yeah absolutely no one even glancing at FTX's books before letting them in the room is very 2008-ish.
the people are the problem
That should definitely be the case. The moral risk of anyone else covering this would be catastrophic.
The bankruptcy will divide whatever value is still left to be divided. Some of the missing value may be obtained from the malicious people behind the company through lawsuits, and some people may go to jail for knowingly scamming people.
In the end, this is not a bank, and the regulations protecting people from scummy banks, even the new legislations written after the 2008 crisis, don't apply.
This isn't the first business with millions of customers to go bankrupt. When such a company fails, getting your money back is your problem. Large-scale mismanagement and uneducated customer bases like this is the reason banks and other finance companies are under so much regulatory pressure.
For example FTX was able to claim, with a vague semblance of honesty, that it had assets to cover liabilities. But in fact what it did was transfer money to other companies that were part of the network, like Alameda, and get back tokens with a book value but no real market value, like Serum. On paper both companies had engaged in a fair transaction. In reality customer money got moved to another company that was then free to do with it what it wanted, all hidden behind the corporate structure.
Read https://archive.ph/TOgjK for Matt Levine explaining exactly how this actually worked.
Since every dollar they received in customer deposits appeared both in assets and liabilities, the only way they ended up with liabilities that their (non-Serum, non-FTT) assets did not cover, is by exchanging the dollars with something that lost value.
That's the way it ought to work in the absence of fraud or theft. But as Matt says, the reason this balance sheet is so insane is that there's no evidence this happened. Only a very small amount of customer dollars could have been used to generate Serum. FTX invented several cryptocurrencies which, at a 10x inflated valuation, obscure the fact that they completely lost $16 billion of assets.
In fact, it seems that SBF used a backdoor in his own software to secretly transfer customer funds to Alameda. There's no evidence that any sort of internal accounting actually balanced the books in the way you suggest, which is what's so insane about this whole story.
How does it go again?
“ The government are very keen on amassing statistics. They collect them, add them, raise them to the nth power, take the cube root and prepare wonderful diagrams. But you must never forget that every one of these figures comes in the first instance from the village watchman, who just puts down what he damn pleases.”
- Josiah Stamp
Step 2 is for Alameda to deposit on FTX, and then withdraw 95% of its notional value in USD or say BTC/ETH. Then on FTX they have a negative balance on this matched by a positive balance in FTT or other Sam coins. The USD or BTC/ETH withdrawn comes from someone on platform who has clicked "lend" on their positive balance of same in exchange of some yield.
To be fair, any user could do that, deposit shitcoin, withdraw non-shit, up to 100% of the funds where people had clicked "lend" and that without any fraud. If the value of the shitcoin collapsed their account just got zeroed and FTX took the corresponding loss on their books.
The list of shitcoins allowed in this genius scheme is still up:
https://help.ftx.com/hc/en-us/articles/360031149632-Non-USD-...
EDIT: here's the diagrams (thanks HN!)
https://www.manchesteropenhive.com/view/9781526100580/figure...
https://i.redd.it/078p4g7m6cz91.jpg
Note that for LB, like most normal companies, it has subsidiaries where it makes sense to operate under different tax laws, etc. So they have a Japanese company, and Australian company... For FTX there is no such rhyme or reason. Most of the entities outside of DE are in Antigua, Seychelles, Cayman Islands, Switzerland. I don't know enough about finance to understand if this is a red flag, but given the circumstances the intent behind such a structure is certainly suspiscious.
>FTX's corporate structure was at least an order of magnitude more complex than Lehman Bro's at the time of it's collapse.
Okay, but what does corporate structure complexity have to do with fraud? It seems like you're trying to argue something along the lines of "lehman brothers was complex and collapsed due to fraud. FTX is even more complex than lehman brothers, therefore it's even more fraud then lehman!", but we didn't even establish how complexity has to do with fraud.
[1] https://en.wikipedia.org/wiki/Money_laundering
Shell companies are most often used for fraud or tax evasion, there really are no good reasons to have such a complex web of companies.
Did I claim that they weren't engaging in fraud, or that the deal wasn't dodgy? My objection was with "money laundering". Even with the loosest possible interpretation, there needs to be some sort of obfuscation involved. The facts seem to point towards something very straightforward (ie. Alemeda Research borrowing money from FTX), which suggests that no obfuscation was attempted. All of this confirms my prior comment:
>It feels like certain terms (eg. "ponzi scheme", "money laundering", "shell companies") get thrown around any time there's any sort of financial malfeasance, without regard to their specific meaning.
Was there malfeasance at Alameda Research/FTX? Hell yes. Was there money laundering? No.
> Alemeda Research borrowing money from FTX
A company can't 'borrow' customer funds from another company. Companies also shouldn't try to price the assets they hold as security or swap securities on customers. There are so many examples of fraud here.
Broadly speaking, inexplicable complexity in finance means fraud.
1. Alameda Research experienced some losses and needed capital injection
2. In a transaction that was probably not at arms-length and possibly fraudulent, they borrowed money from FTX by putting FTT and other tokens as collateral
3. The tokens taken as collateral crashed in value, which caused FTX to be unable to meet their liabilities
So let me get this straight: They were concerned with "actions like #2 exposed", so they set up a super complicated corporate structure, and apparently... didn't make use of it? Once the leaked balance sheet came out on coindesk everybody pretty much immediately figured it out, and not because there was great internet sleuths, it was just that obvious.
They used user funds to cover their losses. There is no possibility where this isn't fraudulent.
Also how did they even lose so much in the first place?
That one's easy, they bought a bunch of tokens that turned out to be worthless. (E.g. allegedly they were buying Luna the whole way down).
It's called being conservative in your statements.
>Also how did they even lose so much in the first place?
Bad investments
>Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.
>Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments
https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...
Were the losses real or were they "diverted" to someone else? This, herein, lies the problem. We as outsiders cannot tell the difference.
Afterall, "Fraud and Stupidity look an awful lot alike" [1] Playing the dope is pretty common con scheme.
[1] https://www.bankinfosecurity.com/fraud-stupidity-look-lot-al...
Market paniced when alameda attempted to buy all remaining FTX from Binance, at $22. Probably because Alameda has loans that would be liquidated under that price.
A Bank run materializes, and the rest is history.
Their point is that we can't look at those diagrams and determine if LB was more complex than FTX, because we suspect that those diagrams weren't drawn with the same granularity. So it's possible (perhaps even likely) that LB was more complex than FTX, and this would be apparent if we were to compare diagrams drawn with the same granularity.
And corporate officers and beneficial ownership info is rarely easy to get when this is done offshore, like many of these were.
It seems to me that your comment concerns the connection between financial complexity and fraud (it's easier to conceal fraud when you have complex structures).
My comment didn't concern that topic at all. My comment concerned "can we judge if A is more complex than B based on these 2 pictures". I said that we can't know if A is more complex than B, or if B is more complex than A, based on these 2 pictures.
Your comment doesn't even mention the pictures. Nor does it attempt to draw any kind of conclusion about the comparison between A and B. Nor does it provide a general framework for drawing comparisons. So I don't see how it relates to what I said at all.
Which I figured was because you couldn’t see the connection, otherwise you would have quoted another section?
Less so for FTX.
All are tax havens and, afaik, provide a level of corporate veils that are not readily available elsewhere.
I have some money in fundrise(RE investing crowdfunding), and they have a number of subsidiaries for various reasons invisible to the end user until tax time.
Tracing the actual on the ground transactions and seeing where each dollar went, and figuring out the mechanisms used to actually lift said dollars?
That’s what this discussion is about, and it’s not as clearly understood right now.
We need the answers for the documentaries!
I still find structures like this dumb, though thet are sometimes required by stupid governments.
https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...
I don't get it. What do you think this story says? I read it and it just can't be characterized the way you are saying.
Here are some choice quotes:
> Mr. Bankman-Fried did, however, agree with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry. He said his other commitments had led him to miss signs that FTX was running into trouble.
> “Had I been a bit more concentrated on what I was doing, I would have been able to be more thorough,” he said. “That would have allowed me to catch what was going on on the risk side.”
He didn't "miss signs". There was nothing to "catch". He stole billions of dollars from his customers.
> Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways.
How bad a guy can he be?
> Mr. Bankman-Fried said he wished “we’d bitten off a lot less.”
Bitten off less of his customers' money, he means?
> As FTX has crumbled, Mr. Bankman-Fried has been “working constructively with regulators, bankruptcy officials and the company to try to do what’s best for consumers,” he said on Sunday.
What a mensch!
> He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.”
So happy for him.
> Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”
> So he was planning a series of cryptic tweets? “Something like that.”
> But why? “I don’t know,” he said. “I’m improvising. I think it’s time.”
What does this even mean? Why include it in the story?
See how nuts that sounds? "Oh, Mr. Madoff missed some signs" that his scheme was insolvent.
Yeah, NYTimes deserves at least some of the criticism on this piece.
As for the case being open… I mean, what is the point of a newspaper if they're just going to reprint whatever the authorities say happened? What about the absolutely bonkers balance sheet that FTX released, for example? Matt Levine did a good job breaking it down [1], because that's the job of a journalist: to make otherwise-inaccessible information available to laypeople.
[1] https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-...
> Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange, Mr. Bankman-Fried said. “It was substantially larger than I had thought it was,” he said. “And in fact the downside risk was very significant.” He said the size of the position was in the billions of dollars but declined to provide further details.
We know the size of the positions! The Financial Times reported on Friday (as news) that FTX held $900M in assets against $9B in liabilities [1]. And that was before the balance sheet was released!
Why is it important to run this quote? Why allow him to spin the story like this? Why let him present it as a mistake? Why not include actual numbers? These are all choices the NYT is making that frame SBF in a positive light.
[1] https://www.ft.com/content/f05fe9f8-ca0a-48d5-8ef2-7a4d813af...
"the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
"The meeting was previously reported by The Wall Street Journal. Mr. Singh did not respond to a request for comment, and Mr. Wang could not be reached. According to a person familiar with FTX’s finances, the exchange lent as much as $10 billion to Alameda."
I'm just calling for some critical thinking here! I get it, everyone's angry. But you don't have to let it turn your brain off.
> "Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways."
Not "Bankman-Fried CLAIMS his circle of colleagues were bound by a commitment to effective altruism" The article isn't reporting the claim Bankman-Fried makes about himself. As written, the journalist is the one making this claim. That's far over the line. This man stole billions of dollars and the New York Times is asserting that he's an altruist.
I think it’s reasonable to conclude that SBFs interest in EA was legitimate, irrespective of him defrauding his customers. Even if that isn’t the case, interest in the subject of EA still accurately describes his circle of colleagues.
I don't think professional journalists make this sort of mistake by accident, and if they did, it shouldn't have gotten past the editors.
There is no mistake here. You’re seemingly very upset by your own misinterpretation of this section of the article.
Beyond what it says in that snippet, SBF did publicly pledge to give away the vast majority of his wealth. He was outspoken about his belief in Effective Altruism.
You can certainly argue he scamming the others in the EA community with a false pledge and commitment to EA principles? But this aspect of the article was completely accurate.
I mean... it's an interview... with the guy at the center of all of it.
How is it not newsworthy to put him on the record? Where's the lack of integrity in that?
Anyone on SBF's side would try to get him to shut completely up. Instead the NYTs has made him feel comfortable and got him talking. He's going to hang himself with his words. They will be quote from this, using it against him at trial and sentencing, because there will be plenty of private communications counter to this, which shows a conscious effort to deceive.
Getting mad at the NYT over FTX is just weird.
This garbage reads like "a day in the life of a silicon valley CEO" or something. The dude just perpetrated one of the largest financial frauds in the history of the world. Bernie Madoff level, and this is all the NYT has to say. Totally disgusting to defend the NYT here.
Dude said before Congress that they never trade or leverage using customer funds. That was a complete and utter lie.
He "testified to Congress and met with regulators" hugely downplays his attempts at regulatory capture via donations and attempted backroom deals (Gary Gensler is implicated in this too). Including the alleged prid pro quo.
It mentions his "effective altruism" and "philanthropy" but doesn't mention who his donations are to, or the fact that half of it was just a guise and actually he spent millions on housing in the Bahamas or in New York.
What charges have been filed?
What has he been convicted of?
Comparing him to Madoff is disingenuous. Prior to Madoff being charged, the media was the same... they're not going to print words like "perpetrated one of the largest financial frauds in the world" without charges. The only thing that screams is "defamation lawsuit". To be clear, I have no boat in this race. But calling the NYT out for not making statements that they do not (yet) have the ability to prove is entirely problematic.
Word count NYT's puff piece on SBF:
"Fraud": 0 "Enron": 0 "Crime": 0 "Illiquid": 0 "Stolen": 0 "Hidden": 0 "Criminal": 0 "Back door": 0 "He's getting sleep": 1
Source: https://twitter.com/TrungTPhan/status/1592349684471037955
That's the first paragraph. Literally calls him a "villain" and says he's the target of multiple investigations.
He's worse than Madoff and these sycophant journalists are still eating out of his palm.
The 1% of damning info was Caroline's reported admission that Alameda borrowed short-term to make long-term illiquid VC investments, and when those loans got called and Alameda couldn't pay, FTX commingled its customer funds with Alameda to pay them.
That was a new bit of info, that NYTimes just casually snuck into the middle of the puff piece without further commentary, but it's quite damning and kinda insane. While all the rubes are complaining about the article being too gentle, the financial crimes prosecutors are adding it to their case files.
https://twitter.com/WClementeIII/status/1592289824542949376
The closest comparable person I can think of was Madoff, and he had the leverage that at least most of his customer's money wasn't actually destroyed so his cooperation worth a lot. I honestly don't know that SBF has anything to bargain to the legal system or his angry, often crime involved, customers as it appears he destroyed basically all of their money. I'm not saying he should be terrified, but personally I would feel very terrified I were in that position.
I think his best outcome at this point is some form of plea that incudes witness protection program in exchange for un-"hacking" the remaining $600M.
Most mortals start sweating bullets if they steal a candybar, or at most a car.
Why would they want to help him? Do you think he is bribing them with his worthless imaginary money? How does the NYT benefit from defending someone who has destroyed his own reputation and lost billions of dollars of customer money?
Is it possible the entire thing was a Madoff-style fraud from the beginning? Yes, but that is not the only possibility. No charges have been filed, and all the people who think he should be thrown in jail never mention what laws they think he broke. It's not illegal to be an incompetent failure, and fraud has a specific definition that requires intent and does not cover all instances of simply lying.
If the NYT had written an article accusing the guy of crimes, they wouldn't have a basis for doing so. Not yet, anyway. Maybe actual criminal lawbreaking will be discovered, but right now, there is no proof. Should newspapers be accusing people of crimes without proof?
People need to put down the pitchforks and torches and wait for the full truth to come out. It's going to take a while.
Oh let me think. Because they like democrats and he donated to democrats?
It’s because he’s any one that isn’t an excessive right wing mega spender (which includes very few names). That spans a lot of people in both parties. Aka centrist capitalists.
SBF is equal parts Bernie Madoff and Elizabeth Holmes but the Times is trying to paint him as an unlucky entrepreneur, down on his luck. The author doesn't even seem to understand that he stole billions from his customers to try and paper over losses from his trading.
From their "Here’s What to Know" page https://www.nytimes.com/2022/11/10/technology/ftx-binance-cr...
The Aftermath of FTX’s Downfall
The sudden collapse of the cryptocurrency exchange has left the crypto industry stunned. Crackdown Begins: Regulators are moving to freeze parts of FTX’s business, while other divisions file for insolvency or prepare to halt operations. Here’s what’s next for the company. https://www.nytimes.com/2022/11/11/business/dealbook/ftx-sbf...
Investors Under Scrutiny: Venture capital firms and investment funds showered nearly $2 billion on FTX with few strings attached. Now, they are facing questions, too. https://www.nytimes.com/2022/11/11/technology/ftx-investors-...
‘Effective Altruism’: The fall of FTX dealt a significant blow to the philanthropy movement that is deeply tied to the company’s founder, Sam Bankman-Fried. https://www.nytimes.com/2022/11/13/business/ftx-effective-al...
Sports Sponsorships: From the naming rights for an N.B.A. arena to patches on M.L.B. umpires’ uniforms, FTX’s collapse puts sponsorship deals worth hundreds of millions of dollars in doubt. https://www.nytimes.com/2022/11/10/business/ftx-sports-spons...
https://archive.ph/B2t1F
I think the article is a fairly straightforward account of what happened. I think there are places that it could have emphasized the fact that "borrowing customer funds" is accurately called theft, but it didn't come across to me as a "puff piece" that people are calling it.
For example, I thought this paragraph was pretty informative and actually extremely damning to the people involved - what is described here is clear theft, plain and simple:
> Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
With that one statement I don't see in any way how SBF, Ellison, Singh and Wang avoid lengthy prison terms.
As a group of mostly young tech guys and girls, we should be concerned about the narrative society, especially Wall Street and their media outlets, convey about us. Recall when redditors buying GME stock was being blamed for the many ills of capitalism. The whole robbinhood saga. The scapegoat is always a smart, wealthy young technologists.
SBF is more of a Soros than an Aaron Swartz. Wall Street loves to blame Silicon Valley, but it’s bs.
I'm flagging your post.
Source? I hate statements like these because it sounds like there's a central blame committee out there handing down blames (or at least some sort of consensus), when in reality in all likelihood it's a hot take by some Bloomberg columnist.
FTX’s Collapse Casts a Pall on a Philanthropy Movement
Sam Bankman-Fried, the chief executive of the embattled cryptocurrency exchange, was a proponent and donor of the “effective altruism” movement.
https://www.nytimes.com/2022/11/13/business/ftx-effective-al...
You also get into the possibility that there was a cycle of money that went: US Taxpayer Dollars -> Ukraine -> FTX -> Democratic Party -> Further Money to Ukraine. That's influence buying of the absolute ugliest sort and the NY Times is unlikely to even hint at it.
> A while ago I became convinced that our duty was to do the most we could for the long run aggregate utility of the world.
> In the end, it’s the work my friends and colleagues at foundations do that matters the most. A more just world would shine a brighter light on them. In this world, I’m honored to be able to support their work.
the page is titled “Pledge Letter”... but where’s the pledge? what am i looking at here?
Perhaps what you notice is NOT coincidence?
Just a few recent examples in the news:
https://www.axios.com/2022/11/15/ftz-crypto-bankman-fried-de... https://fortune.com/crypto/2022/11/15/politicians-sam-bankma...
https://fortune.com/crypto/2022/11/15/politicians-sam-bankma...
https://cointelegraph.com/news/sbf-has-been-a-significant-do...
https://nypost.com/2022/11/14/sam-bankman-fried-broke-crypto...
Your response is akin to only citing studies funded by arguably bad actors with monetary ties to the pharmaceutical industry and the status quo establishment (captured by big pharma lobbying), while simply avoiding and immediately/automatically dismissing the 93 Ivermectin studies that in total show an average 83% rate of prophylaxis; as a preventative-proactive medication, if the protocol is providing an adequate dose, early enough, and for long enough - those 3 variables of which in all studies showing no efficacy for Ivermectin against COVID aren't using the best practices determined by frontline doctors who experimented to determine the correct, minimum protocol(s).
In fact "highly reported on" is a necessary tactic in order to try to capture and flood the search engines with articles, using the same keywords, in order to add noise and make it difficult for people to find contradicting narratives to the ones the establishment who's captured these systems wants you to see.
With SBF, there seems to be this attempt at drawing guilt-by-association because of his donations to the Democratic Party. I don't think this makes a lot of sense.
For an example on the other end of the parliamentary spectrum, say, if Musk's future Twitter profits (good luck with that) were to come from the savings from firing half of the company's employees, and he then donated those to the Republican Party, it would be absurd to blame the Republican Party for the loss of jobs that it indirectly benefited from.
Obviously firing employees is not equivalent to fraud, and donating illicit profits could be part of a scheme to launder them. But unless a causal link can be proven, it all looks like speculation to me.
And it seems like the ROI on politicians is amazing.
The US is just insane if you think about it; if a lobbyist manages to get 1 beneficial law passed in the US, that law will affect over 300 million people! Think of the profit opportunity on a per-law basis... They only need to work a handful of politicians to get such results. It's too easy.
Centralization can result in amazing efficiencies and higher standards, or amazingly large graft and powerful and effective despotism.
[0] https://www.reuters.com/lifestyle/sports/mercedes-f1-team-su...
Assuming there is a KYC database that survived…
Lol. I guess he won't be giving
I have no evidence but I do wonder.
The sheer number of letters I have gotten in the mail about the bankruptcy from the Japanese government easily cost a pretty penny more than my initial $1 in postage alone. I was honestly a little impressed they managed to hunt me down.
I made zero attempts at getting that money back.
The NYTimes was quick to destroy owners of other exchanges (whom I also do not view favorably) but is mysteriously lenient, deflecting criticism, outright censoring themselves.
How does this happen? Just what is the relationship with these media outlets, Sam?
The party mantra from the Democrats and their supporting media outlets seem to be to remove Sam as much as possible and downplay the role he played in causing havoc.
Already a handful of people have committed suicide as a result of this FTX fiasco, Sequoia, WEF, have all deleted their praising words for Sam and playing dumb.
I have this feeling that something is going to break. It's going to get really ugly for this country and other entities will fully utilize the chaos to seize whatever they can.
There better be a good long jail time from this.