Yes, but there are more, worse, bigger frauds than the FTT part of this. FTT was comparatively minor and honest given the rest of what was happening. More a tool than a crime in and of itself...
The bigger fraud was:
1. You put money into FTX and either kept it as USD/EUR/JPY etc or used it to buy Crypto
2. FTX told you they had that money/coins
3. FTX gave that to Alameda who gambled it away on a "if we make money we keep it, if we lose it, that's your problem" basis.
SBF, his parents and other senior people at both companies (plus other legal entities) were all helping themselves to peoples cash basically all the time as far as anyone can tell. Everything from fake expenses to "loans" they would never pay back to pump and dump BS. So it was BOTH a big fraud (using customer deposits to fund speculation) AND 1001 small frauds (taking funds meant to customers but used for speculation and actually using them to buy free houses for people or pay huge unearned bonuses etc).
FTX funds were used to buy them a beachfront property as a vacation home. Apparently they were aware before the bankruptcy that this was not SBFs personal gift. And in fairness they are now offering to return it.
I’ll never understand why they were doing this kind of stuff when they had a good viable business as an exchange and the volume of transactions meant even a small percentage fee would generate massive amounts of profit. Greed is a hell of a drug I guess.
It baffles me too. Alameda made perfect sense when it was making money and providing liquidity. But it's time was over since it had no actual edge in the space except for being first (and there were now 101 other smarter, faster entities competing with it). If he'd just let it die gracefully he'd still be Mr Popular and Respectable...
Clearly illegal, but honestly very impressive. I really don’t think most people are ever capable of running a fraud so large. This guy is like the Einstein of stealing money
I'm not sure it's really that impressive. Once you understand that there was fundamentally never a legitimate business underneath all of the things that would have been impressive look a lot less impressive.
How did he build such a successful exchange? Well, he never had to run it as a profitable business so it was very easy to attract customers.
How did he raise so much venture capital money, well it turns out he didn't have any financials or accounts at all, so it turns out he was simply lying to all of his investors.
How did he get valued at $XBn, well he told them FTX was worth $XBn and when they asked why, he just lied to them.
Well how did he come up with all this money to keep the scam going! Well, he literally just took every penny anyone had ever given him - Alameda investors, VC investors, FTX exchange users, and spent the money on whatever he felt like at the time.
All this would be very impressive if it were an actual business, but if you take the view that it was never actually a business, it was just a Logo in front of SBF lying, it's quite a bit less impressive.
That crazy crypto hedge fund Alameda raking in dollars? Go and find me a trade they've done. The reality is they probably just spent the last 2 years handing Jump 0.3cents a trade on every trade they ever executed, and Jump never figured out that the money couldn't be cashed out.
> That crazy crypto hedge fund Alameda raking in dollars?
Absolutely, they likely made 10's of billions. They were long assets, with huge leverage, that went up massive amounts.
They were still long assets, with huge leverage, when they went down lots. They were the biggest bulls in a bull market, and then the biggest bulls in a bear market. That is how we got to where they are.
17 comments
[ 4.0 ms ] story [ 59.9 ms ] thread1. SBF created FTX
2. FTX created FTT
3. FTX lent FTT to Alameda.
4. Alameda pumped FTT and used it to borrow USD.
5. SBF spent USD.
The bigger fraud was:
1. You put money into FTX and either kept it as USD/EUR/JPY etc or used it to buy Crypto
2. FTX told you they had that money/coins
3. FTX gave that to Alameda who gambled it away on a "if we make money we keep it, if we lose it, that's your problem" basis.
SBF, his parents and other senior people at both companies (plus other legal entities) were all helping themselves to peoples cash basically all the time as far as anyone can tell. Everything from fake expenses to "loans" they would never pay back to pump and dump BS. So it was BOTH a big fraud (using customer deposits to fund speculation) AND 1001 small frauds (taking funds meant to customers but used for speculation and actually using them to buy free houses for people or pay huge unearned bonuses etc).
FTX funds were used to buy them a beachfront property as a vacation home. Apparently they were aware before the bankruptcy that this was not SBFs personal gift. And in fairness they are now offering to return it.
https://finance.yahoo.com/news/sbf-parents-ftx-executives-bo...
All this guy did is do the same thing that has been done countless times in the past, but this time under the guise of "digital money"
How did he build such a successful exchange? Well, he never had to run it as a profitable business so it was very easy to attract customers.
How did he raise so much venture capital money, well it turns out he didn't have any financials or accounts at all, so it turns out he was simply lying to all of his investors.
How did he get valued at $XBn, well he told them FTX was worth $XBn and when they asked why, he just lied to them.
Well how did he come up with all this money to keep the scam going! Well, he literally just took every penny anyone had ever given him - Alameda investors, VC investors, FTX exchange users, and spent the money on whatever he felt like at the time.
All this would be very impressive if it were an actual business, but if you take the view that it was never actually a business, it was just a Logo in front of SBF lying, it's quite a bit less impressive.
That crazy crypto hedge fund Alameda raking in dollars? Go and find me a trade they've done. The reality is they probably just spent the last 2 years handing Jump 0.3cents a trade on every trade they ever executed, and Jump never figured out that the money couldn't be cashed out.
Absolutely, they likely made 10's of billions. They were long assets, with huge leverage, that went up massive amounts.
They were still long assets, with huge leverage, when they went down lots. They were the biggest bulls in a bull market, and then the biggest bulls in a bear market. That is how we got to where they are.