I don't really understand the logic here. If you've received a donation, you can't be forced to return any money, specially if you didn't know it had dubious origins
Yes that is reasonable. What I know is from an account by a relative here in Spain, and it depends on the lawyer. Of cours, infinitessimal amounts compared to the money being talked about here
Maybe it’s a good lesson for non-profits and foundations to vet their major donors better. Before that Epstein was a major donor and the cachet of having donated to so many high profile charities likely allowed him to be a predator longer.
In the case with FTX, it was likely committing fraud, and the money the foundations received was the equivalent of stolen goods.
The line above was a movie-quote, I believe Cassablanca? Where the inspector/regulator comes out of the Casino saying that he's shocked to hear of gambling in the facility, flanked by two call girls.
------
EDIT:
That being said, the level of shock here is warranted.
> “It’s definitely a mess,” says Josh Morrison, who heads 1Day Sooner, a pandemic preparedness research and advocacy organization that received $375,000 from the Future Fund and the FTX Foundation. During the pandemic, 1DaySooner became known for advocating so-called human challenge trials, which deliberately infected volunteers with SARS-CoV-2 to test vaccines.
So FTX allegedly donates a lot of money to various causes. Those scientists begin the trials (expecting the money to pay them back eventually), but... FTX goes bankrupt before it hands those scientists money.
That's... bad. I'm not in the scientific field, but it seems like these groups had reasonable expectation that some money was coming for them... and that money wasn't related to cryptocoins or whatever.
The line above was a movie-quote, I believe Cassablanca? Where the inspector/regulator comes out of the Casino saying that he's shocked to hear of gambling in the facility, flanked by two call girls.
Quick FYI: there are no call-girls and the place is not (nominally) a casino, it's Rick's Café Américain, which Renault calls a cafe and Rick famously calls a gin joint -- in any event, a popular nightspot.
Here's the text of the relevant scene, from IMDB[0]:
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked! Shocked to find that gambling is going on in here.
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
[aloud]
Captain Renault: Everybody out at once.
In Renault's defense, right before all this, he was told by a superior to close the place down and, when a reluctant Renault says he has no excuse to do so, he's told, "Find one." Hence his feigning being "shocked" at the gambling.
(If you have 32 seconds, you can watch this classic scene here: [1]).
BTW, since I just stumbled across this, there's a page showing the sets and a reconstructed floor-plan for Rick's Café Américain, if anyone's interested:
I just got free crypto from a timeshare promotion on oceanfront property in Arizona... FOMO is not my problem :|
As an aside, this post from 2008 does point to all of the carbon being released from the 1st meter of soil/permafrost, which has probably since melted.
And when the crypto prices were going up, it was a safe bet with customer funds. Fraud, sure, but safe fraud, call it removal of unneeded regulations. Now, tho, looks like all that stuff between 2020 and now in crypto was, like the tech stocks, a bubble, and the longer term prices are more likely to be around where they are and stabler than previously, making a safe fraud a busted fraud.
The comments saying the lesson here is that recipients of donations like non-profits and foundations should be vetting their donors better seem unreasonable to me.
If FTX investors, customers, and watchers of the crypto space did not catch what FTX and SBF were doing until the shit hit the fan, what kind of due diligence can we reasonably expect of these recipients that would’ve alerted them to something being wrong here?
And consider that the number of donors for most institutions would be much larger than the number of companies FTX investors would’ve had to keep an eye on.
Anyone in their right might would also assume that depositors would vet the financial institutions holding their (billions of dollars of) capital, but alas here we are.
Also, I think you underestimate the amount of effort it takes to uncover something like this. There was a YouTube video posted to HN a few days ago where Marc Cohodes went over why he believed FTX was a scam a few weeks prior to the news breaking. It provided an interesting glimpse into what's required to do DD on this type of operation. It starts with good intuition, which most people don't have, and then evolves into things like hiring private investigators, or running comprehensive background checks on the officers of the company, or calling people with intimate knowledge of the inner workings, or finding ex-employees, etc. etc. etc.
Now you could say, well a presidential candidate should do all that stuff. And in an ideal world, they would. But Marc Cohodes does this as a full time job and likely makes large sums of money from his vocation. It's unrealistic to expect most people, presidential candidate or otherwise, to be capable of performing that kind of DD.
People really need to understand what a PAC is -- "Presidential candidates" can only accept a few thousand dollars from an individual. Large donors don't give to candidates, they give to PACs.
Of SBF's $40ish million in donations, over $25M went to a specific PAC "Protect our Future PAC"[1]. Of that PAC's spending - over $10M went to support a single cypto-friendly Oregon house candidate in his primary where he lost to a different Democrat. In fact nearly all of SBF's support went to primary campaigns so when people say "he spent $40M supporting Democrats" the vast majority of that funding was in races against other Democrats.
The other thing to know about PACs, is that by law, they are not affiliated with the campaign. The campaigns can't vet the donations to PACs because they aren't donations to the candidate and it would be illegal for them to coordinate with the PAC. This is the 3-card monte allowed by our insane campaign finance regime, but within those bounds, SBFs donations weren't to actual candidates who would vet these donors. The PAC has its own compliance, but there basically are no restrictions on donors as long as they're from the US. That's how random Russian billionaires donated to Trump's PACs in 2016, and the only reason that was frowned upon is because the funds came from a foreign national.[2]
Venture Capitalists are free to invest in whatever they want. That doesn't mean its a good buy, it means that those guys are willing to put down some risky bets (probably because they have hundreds-of-billions or even trillions in assets, and can weather any losses).
> sports teams like Miami Heat or Mercedes F1 actually advertised them
How does that prove any kind of reliability at all? There's no FDIC insurance on any of the deposits. There's no actual regulation or transparency. Its not like VMFXX or SWVXX where there are requirements to publish their assets on a regular basis, or describe asset flows / liquidity requirements.
--------
Still though, the scientists in this discussion were _NOT_ investors. The economy is designed for _investors_ to win (and lose) money as per appropriate risks. Its fine for investors to lose money here, that's the entire point of capitalism. (The investors get the money if they bet right, but they lose their money if they lose).
These scientists who allegedly got funds... its not their job to be trying to figure out which groups to trust or not trust. Maybe scientific donations / 401c type deals need to be more carefully watched in the future?
> How does that prove any kind of reliability at all? There's no FDIC insurance on any of the deposits. There's no actual regulation or transparency. Its not like VMFXX or SWVXX where there are requirements to publish their assets on a regular basis, or describe asset flows / liquidity requirements.
The point is that these companies with way more financial experience, size, and more reasons to investigate failed to find any warning signs, so these non-profits had very little chance, even if they didn't go with the "don't look a gift horse in the mouth" approach. FTX might have let some auditor from an investor putting in $100M take a look at their books but they'd almost surely tell a non-profit with no leverage that's receiving the money to get lost if they asked.
> The point is that these companies with way more financial experience, size, more reasons to investigate failed to find any warning signs
I don't think you get the point of Softbank or even Blackrock.
When you have $10 Trillion in assets like Blackrock, you _DON'T_ sweat a $300 million investment or even a $2 billion investment here or there. It literally doesn't matter. Its not even a rounding error to you, your company, or your investors.
Its barely worth Blackrock's time to seriously look at things like this. That's why we get $Billion sized London Whale mistakes or whatever, because they have so much money to manage the only reasonable way to do it is to hand billions of (management) dollars to executives and give those executives broad leeway to do whatever they want.
-------
This kind of mistake is a "Lol, Executive #455 made an error", and that executive is going to be in the hotseat as other executives make fun of him for his FTX mistake at a place like Blackrock.
I don't understand where you get this idea that VC companies tightly vet their choices. If anything, the bigger the VC firm, the less they vet something at the $million, or even $billion levels.
> Venture Capitalists are free to invest in whatever they want.
That is clearly and demonstrably false. Just because you have investments in Lockheed Martin doesn't mean you are free to invest in Al Qaeda to increase the chances of conflict.
I'm not sure I follow the argument. It seems entirely possible that large firms invested in FTX because they had information that indicated that it would be a lucrative investment and that it would be unwise for non-profits to rely heavily on FTX donations. Those two things seem barely related. Why would the leadership of a non-profit see that Sequoia is investing in FTX and conclude that therefore it's reasonable to reorganize the non-profit to rely heavily on FTX?
I think the underlying message here is regulation failed. You can dance around and shout "crypto" and people will apparently just stop doing due diligence. All these companies - the VCs, the advertisers etc. all relied on "This isn't an actual literal ponzi though right?" and the US regulators were like "LOL IDK". It's kind of the regulators job not to be trusting in VCs and reputation and really do the work.
FTX isn't a US security that was traded on any platform. VCs (and accredited investors) are people rich enough, that the USA / regulators have deemed it "fine" if they lose a lot of money.
Accredited investors are supposed to have over $1M bucks not because it proves that they're smart. Its so that when they inevitably get caught in a Ponzi scheme or whatever, USA doesn't have to rush in and save their money.
Welcome to USA. If you're an accredited investor and/or Venture Capitalist, the training wheels are entirely off. You're on your own.
--------
There's no FDIC insurance or SEC governing FTX's deposits. Its wholly unregulated, and in the Bahamas to boot.
The US legal system needs to start going after VCs that invest in criminal companies. They may not be breaking the law themselves, but they profit off lawbreaking, and they're the ones with the deep pockets. (Isn't this the whole point of RICO?)
FTX took deposits from unaccredited US investors with specific guarantees about what would happen with the money and they filed for bankruptcy in Delaware.
I don't care about the VCs getting their money, I'm happy they go to zero etc- I'm saying the opposite, the VCs gave a false sense of security to regular folk that FTX was legit, but in reality FTX was telling depositors that they were doing all these things to protect them that they weren't.
At minimum, the regulators should say "Hey, you can't tell people their money is safe if it isn't" (siloed customer accounts etc) at best the regulators should say "Hey, you have to make sure regular consumers are safe if you plan to take money from US consumers".
If its not a US corp they aren't going to apply US bankruptcy law, they will apply the bankruptcy law of the jurisdiction the corp is registered in. They went to the US court because it will be a quicker disposition of the case.
They have a US division. Multinationals going bankrupt seems like there will be issues about which group owns what and the various obligations between them.
So the bankruptcy of the US division will have US law, the others will according to their own jurisdictions.
> Multinationals going bankrupt seems like there will be issues about which group owns what and the various obligations between them.
Yes, which will be decided according to the bankruptcy law of the corp's incorporation, not the one it chooses. You are confusing choice of law with venue.
I actually meant that it's really unclear whether FTX-US or FTX-Bahamas (or other subgroups) owns any asset. That's what I meant by "which group owns what".
You're right, I never addressed that. I didn't know that before this whole thing started, and that seems weird to me. But also it makes some sense that otherwise both divisions would need to be in different courts in different countries and that seems even worse. I assume there is a US or Delaware law that lets them follow the law of other jurisdictions in cases like this. Almost like an economic extradition. I assume the Bahamas would send their own lawyer(s)?
But yes, I think I get your point. Thanks for making it, and again for following up.
It's called choice of law. Happens in US courts all of the time, parents enforcing an out-of-state divorce court parental agreement after they moved, two people from Ohio who got into a crash in Indiana... us enforcing in Florida, a commercial contract drafted under new york law, just some examples of where a court would use law from a different jurisdiction.
Bahamas don't need to send their own attorneys if they don't want to... they aren't necessarily a party to the case. Here, FTX is opting to have a US disposition of the Bahamian bankruptcy code, so what would Bahama have to send attorneys for? In this case, its still adversarial between the creditors and FTX, so there will be parties arguing for the correct application of law.
Was accreditation a requirement for investing in FTX? It doesn't seem like it from the accounts of retail investors losing significant amounts of money.
Isn't half the point of "crypto" to have an unregulated financial market? FTX operated out of the Bahamas for a reason. How can regulators fail to regulate a company that's not even based in their jurisdiction. You might have a point with FTX.US though.
That's the antithesis of cryptocurrency. It's just regular plain old fraud and that's what the SEC is supposed to regulate. That's the only reason they exist. FTX is an exchange where you can trade cryptocurrencies for fiat currencies. If it were a decentralized on-chain exchange, how would they have stolen all this money without anyone noticing? That's the very point of public blockchains, if it had been a crypto market everyone could have watched the money disappear. Actually, a proper defi market should be set up so that the creators never even can misappropriate founds even if they wanted to, because they won't have access. Anyone can convince themselves of what the contract does by simply reading it. You don't have to trust some weird guy and his company in the Bahamas, you can verify it. Centralized exchanges like FTX and Binance do not operate this way. The closest you can get is Coinbase since they're public and need to be audited.
The statement wasn't that people using cryptocurrencies can't break the law. It's that blockchains solve this trust problem that exists in traditional finance. Very obviously the regulation we have does not work, you don't have to look at exchanges to understand that. The very same problems exist in banking but most poor folks in developed countries don't notice since even if the funds are lost there is some insurance. You could have such insurance for crypto exchange funds as well, but ultimately the people are always paying the bill when their money gets "lost", whether they understand this or not. Insurance costs money. A better system would be a more transparent one where the money can not simply disappear in the first place.
> I think the underlying message here is regulation failed. You can dance around and shout "crypto" and people will apparently just stop doing due diligence
Regulation failed? The media were complicit into this. Presenting SBF as the second coming of the Christ because he'd give it all to charities / non-profits / help advance science / etc. Regulator people fell for this.
I'm not so sure it's "accredited investors" we need as much as "accredited journalists".
Sure, but saying "this is a scam" is totally different from a pointed question you can relay to a less sophisticated third party(the journo) that, when asked, would "totally annihilate" SBF/FTX.
So where is it? Did they keep the question to themselves, even though they could just tweet it at SBF and have almost 100k followers see it, who could then amplify it?
> If FTX investors, customers, and watchers of the crypto space did not catch what FTX and SBF were doing until the shit hit the fan, what kind of due diligence can we reasonably expect of these recipients that would’ve alerted them to something being wrong here?
About two minutes of googling would have come up with the fact that one of their top executive was linked to the biggest online poker scandal.
Now, granted, that information required two minutes and not 30 seconds to be found because the first few pages of results would be NY Times pieces and their ilk pumping the FTX scam "because altruistic democrats donor".
A lot of people have been, at the very least, turning a very blind eye here.
Now is not the time to say it's "unreasonable" to do two minutes of googling.
Well, first, some of those payments are made over time. A lot never arrived. Secondly, if you spend money, including donating it, right before bankruptcy, those transactions will be undone. Third, if you donate fraudulent money, it too can be repossessed.
"Watchers of the cryptospace" had been critical of FTX since its inception out of seemingly nowhere. SBF is not a crypto guy despite being presented as such in the mainstream. He's a trader and even in trading he's only been in cryptocurrencies five years or so, prior to that is was trading more traditional assets like ETFs.
I agree with you regarding regular people having no clue and no way to vet donors but keep in mind most folks on HN are part of this. The public knows what they get from news pieces they read, written by journalists who also don't have a clue. SBF was treated as the king of crypto by the mainstream for whatever reason. Talked to a lot of politicians too and spoke out in favor of regulation. Probably tried to sacrifice what he didn't care about anyway (actually decentralized chains) in order to present himself has a crypto person regulators can work with, all while committing fraud. Gary Gensler is supposed to have had private meetings with him several times. Curious how the agency who's supposed to regulate these exchanges never actually does and is even completely oblivious to multi billion dollar theft until the whole thing implodes. Meanwhile parties accept huge donations from Bankman-Fried and the SEC goes after smaller crypto projects that aren't even certain to be their jurisdiction.
>SBF was treated as the king of crypto by the mainstream for whatever reason.
I think the reason is getting more and more obvious with every passing day.
His father and mother are professors of Law (and Business) at Stanford. (The mother is also one of two founders of Mind The Gap.) His aunt is a dean of Columbia University's School of Public Health.
His brother was running a lobby group called Guarding Against Pandemics. FTX's head of policy and regulatory strategy was a Commodity Futures Trading Commission commissioner under Obama.
The reason was actually marketing and he was the first to admit it. During the invite only Chicago money trade show he explicitly said he spending all his money on brand awareness and marketing, basketball teams, stadiums, TV ads, the sponsorships were relentless and shaped public opinion that he was trustworthy. He' main spokesperson (and investor) was pretty much the most trusted athlete in the last decade. He knows how to build trust through marketing and politics.
Selling something with no value other than the attention it gets on Twitter and the reputation it gets via reputable investors.
What gets 'reputable investors' to invest in the scheme is the most interesting part of this story, if you at all care about stopping it. Something that has existed long before crypto.
> The best video I've seen is SBF basically admitting it was a ponzi scheme: [link omitted]
> Selling something with no value other than the attention it gets on Twitter and the reputation it gets via reputable investors.
But that is clearly not a Ponzi scheme. A Ponzi scheme involves an obligation to pay people returns on their fake investment. Here, the pitch was "I don't know why people want these things, but they do. Want one?", and that pitch was honest and accurate. There was no pretense that you'd be getting any special returns.
By your standard, all trading in any commodity or stock is a Ponzi scheme, unless you're planning to consume the stuff yourself. Did you buy 300,000 pork bellies? Ponzi scheme. Do you have a bar of gold? Ponzi scheme. Do you have a share of Tesla? Ponzi scheme.
Compare Charles Ponzi, whose investment thesis was "guaranteed returns of 50% in 45 days", who specified the exact trade he was making (buying American stamps in Italy, where they were cheap, and selling them in America, where they weren't), and who never actually performed that trade. A Ponzi scheme is defined by paying off people who have invested in you with funds from other people who have invested in you.
> SBF is not a crypto guy despite being presented as such in the mainstream. He's a trader
I'd say to run a successful trading shop you need to be a good trader. Doesn't matter whether you trade potatoes, pork belly futures, or crypto. Do you think Jump Trading cares (or even necessarily knows) anything about the tokens they successfully trade?
What constitutes a 'good trader' is different for every market. Often (always?) it entails an understanding of that particular market that cannot be translated to other markets.
I love how the crypto community has decided that SBF is "not a crypto guy" now that he's done crimes.
And he's somehow "establishment" because he gave to political parties, and Democrat because we're ignoring the GOP contributions.
SBF was more of a crypto guy than 99% of crypto. And he was way more crypto than he was establishment.
And the problems in crypto that his actions highlighted (centralization, fraud, lack of consumer protections) cannot be waved away with "no true scotsman" arguments.
He's your boy. Own it or the industry will not correct its own deep, ongoing mistakes, currently being made by entities like Binance.
This entire thread is just denial that SBF is in bed with the establishment just because the current establishment happens to be some folks favorite team.
Um, okay. If he was in "bed with the establishment", it didn't do him any good, did it?
I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
Which is what every other industry does when the regulatory hammer comes down.
But so many crypto believers seem to think that crypto is different to all that's come before it, it's really not. It's very sadly humorous how crypto has speedrun the entire history of why financial institutions are regulated.
> Um, okay. If he was in "bed with the establishment", it didn't do him any good, did it?
Yes, it allowed him to steal billions till someone with non zero morals leaked info about it.
> I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
I didn't say that. You are reading too much.
> I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
No one said that. The point is SBF is in bed with the establishment and the establishment deserves some blame.
I thought this entire thread was denial of the fact that cryptobros could be part of the establishment. "No, it's not a Ponzi scheme. We're taking down the old order. Buy my coins."
I'm fine with saying he's establishment. I just don't agree that makes him not a cryptobro
Ditto the "centralization" purity test. No decentralized system can fail ergo if it failed it wasn't decentralized. This doesn't apply to FTX of course which was more centralized than a black hole and never claimed otherwise - but it's another instance I've seen tossed around in the collapse. The truth is nothing in crypto is really decentralized, though, and decentralization isn't in and of itself a useful end. It's a means to an end nobody's discovered yet.
> Ditto the "centralization" purity test. No decentralized system can fail ergo if it failed it wasn't decentralized.
It's a trick: Nothing in crypto is decentralized. Decentralization (ipfs, orbitdb) is dying on the vine because you can make vastly more money in crypto - because it's centralized.
No. The entire purpose of cryptocurrency is to enable holding assets without intermediaries having custody of the assets. Whether or not you think this is valuable is another question, but it is undeniable that this is the technical ability that cryptocurrencies enable.
SBF created a giant custodial casino where one could bet on cryptocurrency prices, and people lost money that they gave him custody over. If they had held it in their own wallets, they would not have lost it. Many people in the cryptocurrency community spoke out against him for a long time.
This is like if SBF had a penchant for kilts, the media was asking “what does this mean for Scotland?”, actual Scottish people were saying “this has nothing to do with Scotland”, and you come in with the comment “nO tRuE ScOtSmAn”
Tell that to the vast majority of crypto holders who cannot master the underlying technology of crypto and therefore rely on the exchanges. Crypto is not contiguous with your highly selective, normative definition. Crypto is everything done by everybody buying, selling and building tech for crypto.
The NYT interview confirmed nothing. People who argue that the NYT piece confirmed anything simply do not understand journalism. That was an interview-based piece that gave SBF a lot of room to talk. The *same* reporter published this piece today, based on Ray's court filing:
> "John Jay Ray III helped manage the aftermath of some of the largest corporate failures in history, including the implosion of the energy trading firm Enron after an accounting fraud scandal in 2001.
> But the corporate dysfunction at FTX, the collapsed cryptocurrency exchange that he took over last week, is the worst he has ever seen.
> In a blistering court filing on Thursday, Mr. Ray described an astonishing level of disarray and said he had never seen “such a complete failure of corporate control.” He listed a series of “unacceptable management practices,” including the use of an unsecured group email to access sensitive data, and said the financial information maintained by FTX was deeply untrustworthy.
> “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he wrote in the filing in the U.S. Bankruptcy Court for the District of Delaware."
The evidence against SBF is damning. The NYT will continue to report that. You can cherrypick their pieces if you want to.
But what you should be doing is looking at the 10,000 ways that crypto made SBF and FTX what they were, through your credulity and greed. The NYT had nothing to do with that.
I think a generalist summation of the situation could be:
Fraudsters will find any way to fraud, no matter the economics or tech.
Enabling a fraudster to build and control something around a fig leaf will result in the same no matter the controls.
Edit: this sounds defeatist on a second reading, but that is not my intent. I’m not saying there’s a futility here. I do think it’s futile to believe we could rid any field of fraudsters and con artists, but I don’t think anyone here has argued we can.
> If FTX investors, customers, and watchers of the crypto space did not catch what FTX and SBF were doing until the shit hit the fan, what kind of due diligence can we reasonably expect of these recipients that would’ve alerted them to something being wrong here?
It's unreasonable to expect researchers vet someone who promises them $500K? In what insane world does this statement make any sense? It's not just common sense, but also necessary for keeping track of conflicts of interest.
It's reasonable to expect some level of vetting, sure. It's unreasonable to expect that vetting to uncover 100% of fraud in 100% of cases. A lot of people spent a lot more than $500k in FTX and none of their vettings came up with anything.
"We don’t think it is right that anyone should lose their jobs over a financial calamity totally unrelated to the excellent work they are doing,”
Yet we are totally OK with exploiting young people aspirations by making them slaves and destroying their careers and mental health. The last thing we need to worry about is the academic cabal crying wolf.
The just-world fallacy is strongly in play with many comments here. Because those foundations and charities are massively affected by this scandal, there MUST be something they did wrong, right? Surely they should have vetted their donors better?
And when making these arguments, we totally forget that people specialising in vetting people, like investment funds, journalists and so on, completely fell for the guy.
If you want charities to implement a standard that would have prevented them from taking money from SBF, congratulations, you now have a process that prevents them from taking money from basically any billionaire.
These foundations and charities were willing participants of SBF's PR campaign, but they're constantly being used for such purposes. Expecting them to unravel his complex, opaque, international fraud before accepting grants is a hard ask. Hell, Gensler's team was meeting with FTX to write regulations while freezing out other crypto companies. SBF had been anointed.
Still, while victims of his fraud, they are certainly lower in standing than almost everyone else.
> we totally forget that people specialising in vetting people, like investment funds, journalists and so on, completely fell for the guy.
This is not an excuse for assuaging due diligence. And to be frank, the guy looked shifty. Even worse, a cursory look at his company would have told you he was shuffling billions of dollars in investments and user deposits without a board of directors. If it quacks like a duck...
It would do a lot of people well to assume that anybody portrayed as a wünderkind or super genius in the media is anything but and cautiously invest their time, money, and attention in them accordingly.
The only mistake these foundations made was committing to spend money they hadn’t yet received. And relying on a single source of funding. Something about eggs and baskets.
Should they have known FTX was about to fail? Maybe, but so should a lot of other people who should have definitely known better. So, it’s hard to fault them for that.
I tend to be skeptical of grants that don’t fork cash up front. A lot of “pledged” or “committed” grants, giveaways are often tax dodges. I may be wrong, I’m not a tax expert, but it seems that tax deductions on pledges are accounted for immediately while the cash flow out is actually delayed. If my understanding is correct, it would make sense to pledge as much as one can in an “up” year.
> it seems that tax deductions on pledges are accounted for immediately while the cash flow out is actually delayed
I have no idea where you would get that idea. There have been some interesting arrangements for sure, but there is no way to get a tax deduction for a pledge that hasn't been given.
He gave the money to a charity he controls. That's different from keeping the money until later. He can do a lot of things with it, but not buy a house. It's not his money anymore.
I understand you can’t buy a house. You could for example donate to build a building at a college and get your kid into college instead ;)
Some donors give with tax benefits in mind and dual intent giving , while some give just to give. In general, you can always ask yourself if a person giving is increasing their net asset value while giving or declining asset value while giving. The mathematics are fairly elementary even when you account for compounding rates
Yes, and you can get benefits from donating. But you said they got tax benefits from promising to donate. They do not. They get tax benefits from donating to a non-profit they control (which I agree isn't good), but the donation happened! It's not their money.
I suspect there's a simpler takeaway than what most comments are suggesting:
Don't spend substantial amounts of money (based on nominally promised funding) before the checks have cleared.
Even in cases where the checks have cleared it is possible that the money will have to be returned. Here's a post by the managing counsel of Open Philanthropy, the other large funder in this space, describing some of the risks: https://forum.effectivealtruism.org/posts/o8B9kCkwteSqZg9zc/...
the article mentioned possible clawbacks, so that one thing. However I don't know if clawbacks will be limited to unspent funds or have the possibility to demand back funds that were already spent.
Another possibility--and I have no idea if this might be the case here--most of the grants here where I work use "drawdowns." Specifically the granting agency awards a grant of $X for whatever you said you were going to do with it in the grant application, but they don't actually give you any money. So you start spending money on the project, and carefully accounting it, and usually every month you sum up everything spent, and issue a drawdown request for the funds spent. The granting agency then cuts you a check and you mark those expenses as reimbursed. This means that if the grnating agency goes belly up, there is a possibility you could be out real funds that you spent and are expecting a reimbursal.
Does it strand legitimate scientists or does it indicate that there is corruption in science? From what I'm hearing, this whole FTX thing reeks of clever, politically connected fraud and money laundering:
> SecureBio’s co-founder, Kevin Esvelt, a biologist at MIT, says the nonprofit is avoiding use of its Future Fund grant money for now, except to pay the salaries of the three newly hired people. “We don’t think it is right that anyone should lose their jobs over a financial calamity totally unrelated to the excellent work they are doing,” Esvelt says.
All this discussion about weather the scientists should vet or not is irrelevant when they have 100% certain proof that the donated money they are spending is stolen, and they are keeping on using it... If you don't want people to lose their jobs, take a loan and find alternative funding, don't keep on using stolen funds for for goodness sake.
> says the nonprofit is avoiding use of its Future Fund grant money for now, except to pay the salaries of the three newly hired people. “We don’t think it is right that anyone should lose their jobs over a financial calamity totally unrelated to the excellent work they are doing,” Esvelt says.
They may be talented, but these are stolen funds that may be clawed back.
Yeah seriously. It’s not their decision to decide “what’s fair”. Every foundation he has given to needs to immediately stop using the funds he gave them as they are possibly (very likely) in possession of stolen money.
Normally nonprofits accept donations from oil monarchies, shady characters like Epstein, etc. in the exchange for providing good PR and increased connections with other influential people. In comparison, SBF and FTX must have seemed rather good, despite being in the crypto space.
I'm going to be really upset if the government uses stories like these as an excuse to bail out FTX, SBF walks free having "raised investment" to cover the $8b loss, and the government is left openly controlling a major crypto exchange.
It doesn't matter how 'noble' the research seems, these funds were clearly raised through criminal activity. It really sucks for the researchers, but the people who earned that money have a fundamental right to decide how it is spent.
Stealing your money and pledging it to goals you may not agree with is a right strictly reserved for governments.
> SecureBio’s co-founder, Kevin Esvelt, a biologist at MIT, says the nonprofit is avoiding use of its Future Fund grant money for now, except to pay the salaries of the three newly hired people.
I think it's actually two people. When FTX imploded I asked not to be paid if this would mean taking FTX money.
(I'm fortunate that I'm able to do this, and I don't fault my coworkers who can't.)
The author of this article comes off as incredibly credulous... Apparently FTX was "brought to its knees by an old-style run on the bank" - what about the massive fraud Bankman-Fried and his management were committing?
It amazes me the length to which some people will go in their mental gymnastics instead of seeing the obvious explanation in from of thel: SBF is a crook, easy, there are bad people, there are evil people, if all evidence points to someone being such a person then...
But noooo you can't think that because well you know.
Meh doesn't even matter anymore, seeing the narrative about most things get more convoluted makes me doubt everything we even know about history, like how can I trust something happened 1000 years ago if I can't trust things that are happening right now it's crazy
It’s a bit mind blowing that anyone who met Sam Bankman-Fried didn’t quickly come to the conclusion that he was a drug-addled kid who thought he was smarter than everyone else. He basically comes across like that on camera and in interviews, so I can’t imagine what it’s like to meet him in person or over a direct video call. The information coming out that he was hopped up on amphetamines, Parkinson’s disease drugs (!), sleeping pills, and various other drugs basically 24/7 is alarming, and it’s crazy that no-one was sounding the bells on this alone, much less the fraud and trading boondoggles. It’s hilarious to think of all these powerful people speaking with a drug addict, much less as if he was a crypto messiah.
Maybe these organizations, the government, politicians, and corporations should be less focused on raising money at all costs. How many SBF, Madoff, Epstein, etc. do we need for these people to learn this?
I'm calling bs on this. I despise the guy (even before his crash, the way he was literally worshipped even here on hn, as though he was some kind of crypo-saint, was embarassing), but let's try and keep the rumor-mongering to a minimum.
I've been junkreading all about ftx and it's silly founder the past couple of days, and nowhere have I read that he shot himself up with drugs. Let's not take tweets or posts by randos with an axe to grind as facts.
It’s fine to be cautious, but you can basically infer this from his own tweets, where he directly admits to active amphetamine use and sleeping pills to sleep. Other evidence comes from former employee descriptions and even screenshots of the Parkinson’s medicine on his desk from some of his streams or interviews at his desk. It’s not hearsay, as far as I can tell.
FTX even had a company psychiatrist/therapist who admitted to prescribing ADHD medications to employees, but tried to play it off as saying the occurrence of ADHD at FTX was supposedly in line with other similar size groups of people. I have never heard of a company, especially of one so small, having a dedicated psychiatrist/therapist.
Well, at least they're only losing their grants. That's future income. When Madoff went down, many Jewish institutions lost their endowments, because they'd been investing with him.[1]
162 comments
[ 3.0 ms ] story [ 243 ms ] threadThe US president, those researchers, and many, many startups are holding what is pretty directly the money of FTX's unsuspecting users.
The recovery will be a long and painful process.
In the case with FTX, it was likely committing fraud, and the money the foundations received was the equivalent of stolen goods.
I was shocked -- SHOCKED! -- to find out there was gambling going on in there.
------
EDIT: That being said, the level of shock here is warranted.
> “It’s definitely a mess,” says Josh Morrison, who heads 1Day Sooner, a pandemic preparedness research and advocacy organization that received $375,000 from the Future Fund and the FTX Foundation. During the pandemic, 1DaySooner became known for advocating so-called human challenge trials, which deliberately infected volunteers with SARS-CoV-2 to test vaccines.
So FTX allegedly donates a lot of money to various causes. Those scientists begin the trials (expecting the money to pay them back eventually), but... FTX goes bankrupt before it hands those scientists money.
That's... bad. I'm not in the scientific field, but it seems like these groups had reasonable expectation that some money was coming for them... and that money wasn't related to cryptocoins or whatever.
https://www.youtube.com/watch?v=SjbPi00k_ME
Quick FYI: there are no call-girls and the place is not (nominally) a casino, it's Rick's Café Américain, which Renault calls a cafe and Rick famously calls a gin joint -- in any event, a popular nightspot.
Here's the text of the relevant scene, from IMDB[0]:
Rick: How can you close me up? On what grounds?
Captain Renault: I'm shocked! Shocked to find that gambling is going on in here.
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
[aloud]
Captain Renault: Everybody out at once.
In Renault's defense, right before all this, he was told by a superior to close the place down and, when a reluctant Renault says he has no excuse to do so, he's told, "Find one." Hence his feigning being "shocked" at the gambling.
(If you have 32 seconds, you can watch this classic scene here: [1]).
[0] https://www.imdb.com/title/tt0034583/quotes/qt0429972
[1] https://www.youtube.com/watch?v=vxnpY0owPkA
http://www.paper-dragon.com/fistsand45s/ricks-cafe-americain...
(Amusingly, in the comments, someone says they're building it in Minecraft).
As an aside, this post from 2008 does point to all of the carbon being released from the 1st meter of soil/permafrost, which has probably since melted.
https://phydeauxpseaks.blogspot.com/2008/08/you-know-that-ol...
Casablanca, it turns out, has a relevant quote for this too[0]:
Captain Renault: What in heaven's name brought you to Casablanca?
Rick: My health. I came to Casablanca for the waters.
Captain Renault: The waters? What waters? We're in the desert.
Rick: I was misinformed.
[0] https://www.imdb.com/title/tt0034583/quotes/qt0429951
I would suck at pop culture trivia :)
This was plain fraud.
Let us not sugarcoat it by saying it was "plain" gambling.
It was gambling BUT with stolen funds.
If FTX investors, customers, and watchers of the crypto space did not catch what FTX and SBF were doing until the shit hit the fan, what kind of due diligence can we reasonably expect of these recipients that would’ve alerted them to something being wrong here?
And consider that the number of donors for most institutions would be much larger than the number of companies FTX investors would’ve had to keep an eye on.
Also, I think you underestimate the amount of effort it takes to uncover something like this. There was a YouTube video posted to HN a few days ago where Marc Cohodes went over why he believed FTX was a scam a few weeks prior to the news breaking. It provided an interesting glimpse into what's required to do DD on this type of operation. It starts with good intuition, which most people don't have, and then evolves into things like hiring private investigators, or running comprehensive background checks on the officers of the company, or calling people with intimate knowledge of the inner workings, or finding ex-employees, etc. etc. etc.
Now you could say, well a presidential candidate should do all that stuff. And in an ideal world, they would. But Marc Cohodes does this as a full time job and likely makes large sums of money from his vocation. It's unrealistic to expect most people, presidential candidate or otherwise, to be capable of performing that kind of DD.
Of SBF's $40ish million in donations, over $25M went to a specific PAC "Protect our Future PAC"[1]. Of that PAC's spending - over $10M went to support a single cypto-friendly Oregon house candidate in his primary where he lost to a different Democrat. In fact nearly all of SBF's support went to primary campaigns so when people say "he spent $40M supporting Democrats" the vast majority of that funding was in races against other Democrats.
The other thing to know about PACs, is that by law, they are not affiliated with the campaign. The campaigns can't vet the donations to PACs because they aren't donations to the candidate and it would be illegal for them to coordinate with the PAC. This is the 3-card monte allowed by our insane campaign finance regime, but within those bounds, SBFs donations weren't to actual candidates who would vet these donors. The PAC has its own compliance, but there basically are no restrictions on donors as long as they're from the US. That's how random Russian billionaires donated to Trump's PACs in 2016, and the only reason that was frowned upon is because the funds came from a foreign national.[2]
[1] - https://www.opensecrets.org/outside-spending/detail?cmte=C00...
[2] - https://www.justice.gov/usao-sdny/pr/lev-parnas-and-igor-fru...
> sports teams like Miami Heat or Mercedes F1 actually advertised them
How does that prove any kind of reliability at all? There's no FDIC insurance on any of the deposits. There's no actual regulation or transparency. Its not like VMFXX or SWVXX where there are requirements to publish their assets on a regular basis, or describe asset flows / liquidity requirements.
--------
Still though, the scientists in this discussion were _NOT_ investors. The economy is designed for _investors_ to win (and lose) money as per appropriate risks. Its fine for investors to lose money here, that's the entire point of capitalism. (The investors get the money if they bet right, but they lose their money if they lose).
These scientists who allegedly got funds... its not their job to be trying to figure out which groups to trust or not trust. Maybe scientific donations / 401c type deals need to be more carefully watched in the future?
The point is that these companies with way more financial experience, size, and more reasons to investigate failed to find any warning signs, so these non-profits had very little chance, even if they didn't go with the "don't look a gift horse in the mouth" approach. FTX might have let some auditor from an investor putting in $100M take a look at their books but they'd almost surely tell a non-profit with no leverage that's receiving the money to get lost if they asked.
I don't think you get the point of Softbank or even Blackrock.
When you have $10 Trillion in assets like Blackrock, you _DON'T_ sweat a $300 million investment or even a $2 billion investment here or there. It literally doesn't matter. Its not even a rounding error to you, your company, or your investors.
Its barely worth Blackrock's time to seriously look at things like this. That's why we get $Billion sized London Whale mistakes or whatever, because they have so much money to manage the only reasonable way to do it is to hand billions of (management) dollars to executives and give those executives broad leeway to do whatever they want.
-------
This kind of mistake is a "Lol, Executive #455 made an error", and that executive is going to be in the hotseat as other executives make fun of him for his FTX mistake at a place like Blackrock.
I don't understand where you get this idea that VC companies tightly vet their choices. If anything, the bigger the VC firm, the less they vet something at the $million, or even $billion levels.
That is clearly and demonstrably false. Just because you have investments in Lockheed Martin doesn't mean you are free to invest in Al Qaeda to increase the chances of conflict.
Also stadium sponsorships. If you're trying to buy credibility by sponsoring spectator sports, well that's a huge red flag right there.
FTX isn't a US security that was traded on any platform. VCs (and accredited investors) are people rich enough, that the USA / regulators have deemed it "fine" if they lose a lot of money.
Accredited investors are supposed to have over $1M bucks not because it proves that they're smart. Its so that when they inevitably get caught in a Ponzi scheme or whatever, USA doesn't have to rush in and save their money.
Welcome to USA. If you're an accredited investor and/or Venture Capitalist, the training wheels are entirely off. You're on your own.
--------
There's no FDIC insurance or SEC governing FTX's deposits. Its wholly unregulated, and in the Bahamas to boot.
I don't care about the VCs getting their money, I'm happy they go to zero etc- I'm saying the opposite, the VCs gave a false sense of security to regular folk that FTX was legit, but in reality FTX was telling depositors that they were doing all these things to protect them that they weren't.
At minimum, the regulators should say "Hey, you can't tell people their money is safe if it isn't" (siloed customer accounts etc) at best the regulators should say "Hey, you have to make sure regular consumers are safe if you plan to take money from US consumers".
> Multinationals going bankrupt seems like there will be issues about which group owns what and the various obligations between them.
Yes, which will be decided according to the bankruptcy law of the corp's incorporation, not the one it chooses. You are confusing choice of law with venue.
But yes, I think I get your point. Thanks for making it, and again for following up.
Bahamas don't need to send their own attorneys if they don't want to... they aren't necessarily a party to the case. Here, FTX is opting to have a US disposition of the Bahamian bankruptcy code, so what would Bahama have to send attorneys for? In this case, its still adversarial between the creditors and FTX, so there will be parties arguing for the correct application of law.
Who were they were trying to reach with their Superbowl ads, VCs? I suspect not.
Hate to be that guy, but most people using crypto have been committing (tax) fraud for years. Knowingly or unknowingly.
Regulation failed? The media were complicit into this. Presenting SBF as the second coming of the Christ because he'd give it all to charities / non-profits / help advance science / etc. Regulator people fell for this.
I'm not so sure it's "accredited investors" we need as much as "accredited journalists".
That said bitfinexed will likely say that everything in crypto is a scam, not just ftx. And I'd agree!
Their main focus is the tether scam though.
So where is it? Did they keep the question to themselves, even though they could just tweet it at SBF and have almost 100k followers see it, who could then amplify it?
> “Two ways,” Mike said. “Gradually and then suddenly.”
If history is any guide, Tether's sketchiness is going to continue to not matter to most crypto investors, until suddenly it matters an awful lot.
No one wanted to listen
About two minutes of googling would have come up with the fact that one of their top executive was linked to the biggest online poker scandal.
Now, granted, that information required two minutes and not 30 seconds to be found because the first few pages of results would be NY Times pieces and their ilk pumping the FTX scam "because altruistic democrats donor".
A lot of people have been, at the very least, turning a very blind eye here.
Now is not the time to say it's "unreasonable" to do two minutes of googling.
They should have liquidated those holdings and put them in something safer.
I agree with you regarding regular people having no clue and no way to vet donors but keep in mind most folks on HN are part of this. The public knows what they get from news pieces they read, written by journalists who also don't have a clue. SBF was treated as the king of crypto by the mainstream for whatever reason. Talked to a lot of politicians too and spoke out in favor of regulation. Probably tried to sacrifice what he didn't care about anyway (actually decentralized chains) in order to present himself has a crypto person regulators can work with, all while committing fraud. Gary Gensler is supposed to have had private meetings with him several times. Curious how the agency who's supposed to regulate these exchanges never actually does and is even completely oblivious to multi billion dollar theft until the whole thing implodes. Meanwhile parties accept huge donations from Bankman-Fried and the SEC goes after smaller crypto projects that aren't even certain to be their jurisdiction.
Crypto has only seriously been around for 10-15 years. This is somewhat like saying “he’s only been a react dev for 5 years”
I think the reason is getting more and more obvious with every passing day.
His father and mother are professors of Law (and Business) at Stanford. (The mother is also one of two founders of Mind The Gap.) His aunt is a dean of Columbia University's School of Public Health.
https://showbizcorner.com/sam-bankman-fried-parents
His brother was running a lobby group called Guarding Against Pandemics. FTX's head of policy and regulatory strategy was a Commodity Futures Trading Commission commissioner under Obama.
https://www.cnbc.com/2022/11/14/former-ftx-ceo-sam-bankman-f...
And that's not the end of it all, there are many more interesting connections.
https://www.youtube.com/watch?time_continue=131&v=C6nAxiym9o...
Selling something with no value other than the attention it gets on Twitter and the reputation it gets via reputable investors.
What gets 'reputable investors' to invest in the scheme is the most interesting part of this story, if you at all care about stopping it. Something that has existed long before crypto.
> Selling something with no value other than the attention it gets on Twitter and the reputation it gets via reputable investors.
But that is clearly not a Ponzi scheme. A Ponzi scheme involves an obligation to pay people returns on their fake investment. Here, the pitch was "I don't know why people want these things, but they do. Want one?", and that pitch was honest and accurate. There was no pretense that you'd be getting any special returns.
By your standard, all trading in any commodity or stock is a Ponzi scheme, unless you're planning to consume the stuff yourself. Did you buy 300,000 pork bellies? Ponzi scheme. Do you have a bar of gold? Ponzi scheme. Do you have a share of Tesla? Ponzi scheme.
Compare Charles Ponzi, whose investment thesis was "guaranteed returns of 50% in 45 days", who specified the exact trade he was making (buying American stamps in Italy, where they were cheap, and selling them in America, where they weren't), and who never actually performed that trade. A Ponzi scheme is defined by paying off people who have invested in you with funds from other people who have invested in you.
/s
I'd say to run a successful trading shop you need to be a good trader. Doesn't matter whether you trade potatoes, pork belly futures, or crypto. Do you think Jump Trading cares (or even necessarily knows) anything about the tokens they successfully trade?
And he's somehow "establishment" because he gave to political parties, and Democrat because we're ignoring the GOP contributions.
SBF was more of a crypto guy than 99% of crypto. And he was way more crypto than he was establishment.
And the problems in crypto that his actions highlighted (centralization, fraud, lack of consumer protections) cannot be waved away with "no true scotsman" arguments.
He's your boy. Own it or the industry will not correct its own deep, ongoing mistakes, currently being made by entities like Binance.
Not sure about that. He was meeting with the chairman of the SEC and was a top donor personally to the Democratic Party.
That screams "establishment".
How many crypto bros can meet with the chairman of the SEC?
Unless you hold that meeting with the chairman of the SEC disqualifies you from being a cryptobro. In which case it's tautologically zero.
And that is out of how many cryptobros in existence?
I'm pretty sure he'll end up meeting the SEC a few times.
I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
Which is what every other industry does when the regulatory hammer comes down.
But so many crypto believers seem to think that crypto is different to all that's come before it, it's really not. It's very sadly humorous how crypto has speedrun the entire history of why financial institutions are regulated.
So much so he began to think he was above it all.
It's an old story that repeats over and over again, long before crypto and long after it.
Yes, it allowed him to steal billions till someone with non zero morals leaked info about it.
> I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
I didn't say that. You are reading too much.
> I love people who portray his willingness to engage with regulators as a form of selling out, as opposed to what it was, knowing that regulation was coming, so engaging to try to influence it to his advantage.
No one said that. The point is SBF is in bed with the establishment and the establishment deserves some blame.
I'm fine with saying he's establishment. I just don't agree that makes him not a cryptobro
And I am fine with saying he's a cryptobro.
> I just don't agree that makes him not a cryptobro
No one said that.
The point is that he is not an ordinary cryptobro. He rose in status in the crypto world due to being in bed with the establishment.
I don't think anyone here but you thinks this is that type of "political" or otherwise meaningful in this conversation.
It's a trick: Nothing in crypto is decentralized. Decentralization (ipfs, orbitdb) is dying on the vine because you can make vastly more money in crypto - because it's centralized.
He was a Ringer that was clearly parachuted in. The NYTimes puff piece absolutely confirmed that.
Sam's not the first and he won't be the last.
I got over the hype back in 2014, once you take the rose colored glasses off guys like Sam are easier to identify.
SBF created a giant custodial casino where one could bet on cryptocurrency prices, and people lost money that they gave him custody over. If they had held it in their own wallets, they would not have lost it. Many people in the cryptocurrency community spoke out against him for a long time. This is like if SBF had a penchant for kilts, the media was asking “what does this mean for Scotland?”, actual Scottish people were saying “this has nothing to do with Scotland”, and you come in with the comment “nO tRuE ScOtSmAn”
https://www.nytimes.com/2022/11/17/business/ftx-bankruptcy.h...
And I quote:
> "John Jay Ray III helped manage the aftermath of some of the largest corporate failures in history, including the implosion of the energy trading firm Enron after an accounting fraud scandal in 2001.
> But the corporate dysfunction at FTX, the collapsed cryptocurrency exchange that he took over last week, is the worst he has ever seen.
> In a blistering court filing on Thursday, Mr. Ray described an astonishing level of disarray and said he had never seen “such a complete failure of corporate control.” He listed a series of “unacceptable management practices,” including the use of an unsecured group email to access sensitive data, and said the financial information maintained by FTX was deeply untrustworthy.
> “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he wrote in the filing in the U.S. Bankruptcy Court for the District of Delaware."
The evidence against SBF is damning. The NYT will continue to report that. You can cherrypick their pieces if you want to.
But what you should be doing is looking at the 10,000 ways that crypto made SBF and FTX what they were, through your credulity and greed. The NYT had nothing to do with that.
Fraudsters will find any way to fraud, no matter the economics or tech.
Enabling a fraudster to build and control something around a fig leaf will result in the same no matter the controls.
Edit: this sounds defeatist on a second reading, but that is not my intent. I’m not saying there’s a futility here. I do think it’s futile to believe we could rid any field of fraudsters and con artists, but I don’t think anyone here has argued we can.
How many times must we tell how many people that crypto is not a normal business, it's inherently dishonest.
I think this is argument is reasonable for individual recipients, but not for the effective altruism community as a whole? I wrote more about this here: https://www.jefftk.com/p/if-professional-investors-missed-th...
Yet we are totally OK with exploiting young people aspirations by making them slaves and destroying their careers and mental health. The last thing we need to worry about is the academic cabal crying wolf.
Still, while victims of his fraud, they are certainly lower in standing than almost everyone else.
This is not an excuse for assuaging due diligence. And to be frank, the guy looked shifty. Even worse, a cursory look at his company would have told you he was shuffling billions of dollars in investments and user deposits without a board of directors. If it quacks like a duck...
It would do a lot of people well to assume that anybody portrayed as a wünderkind or super genius in the media is anything but and cautiously invest their time, money, and attention in them accordingly.
Should they have known FTX was about to fail? Maybe, but so should a lot of other people who should have definitely known better. So, it’s hard to fault them for that.
In several cases they have received the money, but now feel like it is not ok (morally, legally, or both) to spend it.
I have no idea where you would get that idea. There have been some interesting arrangements for sure, but there is no way to get a tax deduction for a pledge that hasn't been given.
https://www.nytimes.com/2018/08/03/business/donor-advised-fu...
Some donors give with tax benefits in mind and dual intent giving , while some give just to give. In general, you can always ask yourself if a person giving is increasing their net asset value while giving or declining asset value while giving. The mathematics are fairly elementary even when you account for compounding rates
Another possibility--and I have no idea if this might be the case here--most of the grants here where I work use "drawdowns." Specifically the granting agency awards a grant of $X for whatever you said you were going to do with it in the grant application, but they don't actually give you any money. So you start spending money on the project, and carefully accounting it, and usually every month you sum up everything spent, and issue a drawdown request for the funds spent. The granting agency then cuts you a check and you mark those expenses as reimbursed. This means that if the grnating agency goes belly up, there is a possibility you could be out real funds that you spent and are expecting a reimbursal.
https://odysee.com/@Chris_Martenson:2/the-deeply-troubling-f...
All this discussion about weather the scientists should vet or not is irrelevant when they have 100% certain proof that the donated money they are spending is stolen, and they are keeping on using it... If you don't want people to lose their jobs, take a loan and find alternative funding, don't keep on using stolen funds for for goodness sake.
They may be talented, but these are stolen funds that may be clawed back.
Stealing your money and pledging it to goals you may not agree with is a right strictly reserved for governments.
I think it's actually two people. When FTX imploded I asked not to be paid if this would mean taking FTX money.
(I'm fortunate that I'm able to do this, and I don't fault my coworkers who can't.)
But noooo you can't think that because well you know.
Meh doesn't even matter anymore, seeing the narrative about most things get more convoluted makes me doubt everything we even know about history, like how can I trust something happened 1000 years ago if I can't trust things that are happening right now it's crazy
Maybe these organizations, the government, politicians, and corporations should be less focused on raising money at all costs. How many SBF, Madoff, Epstein, etc. do we need for these people to learn this?
This describes a lot of people who changed the world. This one, unfortunately, was simply a fraudster.
I've been junkreading all about ftx and it's silly founder the past couple of days, and nowhere have I read that he shot himself up with drugs. Let's not take tweets or posts by randos with an axe to grind as facts.
FTX even had a company psychiatrist/therapist who admitted to prescribing ADHD medications to employees, but tried to play it off as saying the occurrence of ADHD at FTX was supposedly in line with other similar size groups of people. I have never heard of a company, especially of one so small, having a dedicated psychiatrist/therapist.
[1] https://www.investmentnews.com/a-year-later-jewish-charities...