>When the prosecution asked Ellison whether she could identify Bankman-Fried for the jury, Ellison stood, squinted and scanned the room. It took almost a minute for her to locate him.
Sounds hilariously awkward, must have felt like an eternity
The "Judging Sam" podcast had some color on this from a reporter who was there. It felt to them like she was a bit overwhelmed at being walked into a packed courtroom with everyone staring at her then being asked to point out a guy who's appearance had changed a lot recently (haircut and suit/tie).
Personally, I can't imagine being very composed in that situation at that age.
Starting to think the whole "put my ex girlfriend in charge of the business where I am committing massive financial fraud" plan had some flaws but I'm a boy genius on magazine covers so that can't be right
The problem of who you prosecute when it's unclear which of a group actually did it is why English common law has "Joint Enterprise". [Whether this is sometimes abused is a different question]
If the Crown can convince the jury that you were one of a group of people with some common criminal purpose (e.g. scare a family into not going to the cops, rob a jewellery store, break someone out of prison) and that some specific crime was committed by someone in the group and that a reasonable person could have foreseen that this might happen in the course of the purpose based on what you knew, then you are guilty of the specific crime under this "Joint Enterprise" doctrine even though the jury weren't convinced, and may never have been shown evidence, that you did it and you claim only to have intended the broader crime, likely with a much lower tariff (e.g. murder usually means a long prison stretch, robbery not so much)
I think the parent was making a coy reference to the TV show Arrested Development, how it has a couple with the confused belief that the state can't prosecute both a husband and wife for the same crime[1].
In any case, in the US, the analogous legal structure for prosecuting such enterprise crimes is generally RICO:
[1] which I always read as those characters getting the wires crossed between double jeopardy (you can't re-prosecute someone for the same criminal act) and marital privilege (you get some level of protection from prosecution when you're married since spouses can't be forced to testify against each other). In the show, their attorney really does suck and they make excuses for him.
My understanding is that RICO is intended to allow them to go after the guy behind the crew, rather than crew members, whereas Joint Enterprise is intended to allow them to convict the whole crew when a crime can't be pinned on specific individual members (e.g. because they wore masks; or they all stay silent and won't rat on who actually did it)
RICO means you can prosecute the godfather when his enforcers beat up store owners that owed him money, Joint Enterprise means you can convict all three armed bank robbers of murder even though you can't prove which of them shot the bank manager in the head when she was too slow opening the safe.
So not a ton that's that surprising as someone who's been following this, but this was something special:
> Ellison testified how colleagues at Alameda set up accounts on the Chinese exchange tied to the identities of Thai prostitutes, hoping they could somehow use those accounts to siphon the money away from the frozen account.
If you have a big red button marked "do not push ever", and everyone goes and pushes the button, perhaps the problem is less the people and more the button.
No, not all cryptocurrencies are decentralized. There's nothing about a blockchain that requires decentralization. It's a key tenet of some of the coins, but not all.
I'm not sure I follow. Having an immutable system of record (verified by crypto) is of value without decentralization and the blockchain is one realization of that.
There’s nothing immutable about a private blockchain.
Suppose Company X buys 100k in hashing power and signs everything accordingly so it all looks fine. How do you know they didn’t instead buy 200k and run two blockchains side by side until they need to pick one months later?
Alternatively, they instead buy 1M in hashing power so they can spend 1 day making a believable 10 days worth of history on 100k hashing power blockchain.
Now you can argue publishing a blockchain makes it immutable, but so does publishing anything else. Don’t want people to see the data? Publish hashes of your database backups.
THat's not how private blockchains work at all. IF you have a private blockchain (usually called an "app chain") people don't "buy hashing power" on it. The entity running the network has 100% of the validators on the network. "Hashing power" doesn't apply because it's not bicoin so would be POS, but the equivalent is owning the validators, which if it's an app chain there isn't (ever afaik) a process by which some other org can buy the ability to run a validator. The controlling entity just decides that.
I was doing the mathematics thing of skipping over the most trivial case.
Set N = 0 dollars of hash power and it becomes really obvious that the person running the network can just arbitrarily create any blockchain they want at any time for ~zero cost. It therefore clearly isn’t an “immutable system of record” because they can change it.
But let’s flip it around what specific benefit are you proposing and how exactly does cryptography enable it differently than a Bank.
Firstly I don't disagree that private chains are generally pointless, so I'm not going to post these supposed specific benefits. I was saying your "hash power" based thought experiment is not valid.
Also the "most trivial case" you're proposing here is a strawman. You demonstrate that your trivial case wouldn't work and everyone who does this knows that it wouldn't work so that's not how it works. Genarally these chains submit a transaction proof to some base chain so they can't go back later and rewrite history unless they could also rewrite history on that base chain.
I am not disagreeing that in the wider context it comes off as a strawman. Which is why I was asking for specific benefits.
However, I was specifically responded to someone who seems to think blockchain = immutable system of record and I was pointing out that private blockchains don’t provide that because the mechanism public PoW chains uses to get immutability isn’t applicable.
I realize there are a lot more than just 1 way people are proposing private blockchains and most of them involve publishing something, but as long as we can agree the blockchain bit is pointless then discussing them is a waste of time.
It's immutable in the sense that you only need to check the node you are interested in to verify it's history hasn't been tampered with. That can be valuable. I'm well aware that someone could create an alternative chain, but it will be different and easily noticeable.
You can’t actually validate a node without knowing the prior state and thus if each account contains enough tokens to preform the relevant transactions.
So, it would be noticeable if every prior node and all its contents were published and people are validating the integrity of those prior nodes. Which is true of literally any public ledger.
The specifics of what get published can make things more convenient as there’s more locations you can send hashes of logs than the full logs, but publishing hashes alone doesn’t do anything without those logs also being public.
You just pointed it out yourself. You can't really modify historical data on a blockchain. So instead you'd need to create separate blockchains with separate histories. That's the value. If you have a centralized but public blockchain you can't really go and swap it out or everyone is going to know.
> You can't really modify historical data on a blockchain.
On a private chain you can easily change the data. Remove the hashing fig leaf and it’s even easier.
On a public one it’s the public nature that prevents changes after publication. So no, being a blockchain doesn’t prevent changes whatsoever. Having a public ledger does.
FTX was supposed to be cryptocurrency-based — you were buying tokens in an immutable blockchain, and yet the real money was tracked in spreadsheets, and the exchange had an infinite money flag for their own accounts.
The winners of the FTX bankruptcy may end up to be those of us who bought up FTX bankruptcy claims for 20 cents on the dollar after it came out that FTX invested $500M in Anthropic back in 2021.
That investment alone could be worth atleast 4x that value now.
Michael Lewis's book is such an embarrassment to him that it may permanently ruin his reputation. It seems he was completely taken in by Sam Bankman-Fried.
> Michael Lewis's book is such an embarrassment to him that it may permanently ruin his reputation. It seems he was completely taken in by Sam Bankman-Fried
I doubt it will have any effect on his reputation at all.
He doesn't say Sam is innocent, heck he doesn't take sides at all.
He just writes about what he say without any judgement.
What specifically about the book do you think will may permanently ruin his reputation.
It gets worse. Lewis is now saying that the jury should read his book, and that either the jury will acquit SBF, or they will "lynch" him. He's evidently convinced that SBF did nothing wrong.
I wasn't aware that reading a hagiography on the main suspect is now a requirement for jury duty. It would seem that the judge might have a thing or two to say about that.
I haven't read the book but was inclined to give Lewis the benefit of the doubt given Matt Levine's take and Lewis' other work, but that Time interview really shifted my opinion. Lewis comes off terrible in that. The folks saying he got taken in by SBF make a lot more sense to me now.
I just finished the Lewis book and he is completely sympathetic to SBF, if you listen to the audiobook which Lewis reads, his tone of voice is borderline apologetic.
The jabs at John Ray are so unfair, how is that guy the bad guy ??
I completely understand the pleasure he feels uncovering all the traces of crime, like a bankruptcy liquidator is often asked to do. Why is Lewis showing him as an incompetent fool that is losing money to greedy lawyer because he refuses to speak the the guy who blew through billions to save the world from a robot AI we could just have unplugged ?
That and the story unfolding around the Blindside. Lewis defended the Tuohy family’s conservatorship over Michael Oher and claimed he must have a brain injury to explain why he wants to recoup money from them.
Also I never read Flash Boys, but my understanding is that much of the anti-HFT/IEX crowd’s rhetoric has aged poorly especially as that industry has matured.
The bit about Alameda being the only account allowed to run a negative balance is in the book. There's a whole section on it. It's kind of waved away, though, as being needed for market-making in the early days when volume was thin. But, of course that was never "fixed."
The book really seems to go out of its way to paint the collapse as a bunch of super smart kids getting in way over their heads rather than fraud.
Meaning, it harps on there being "no adults in the room", how SBF played video games while talking to people and never seemed to be paying attention, how the guy in charge of figuring out what happened to the money after the collapse came off like an amateur archeologist getting everything wrong based on the accounting artifacts because he lacked the imagination to understand the ridiculous way things "really" went down. The list goes on.
I mean obviously this is a court and you're supposed to not lie. But is there not a conflict of interest here? They were together at one point, were business partners.
Why wouldn't she just blast him as hard as possible, as that's her way out. Surely most of this testimony has to be taken with a grain of salt. She is 100% not capable of washing her hands, she knew what she was doing.
She pleaded guilty to multiple crimes. This kind of thing is common: to prosecute the boss you need the testimony of the underlings, even if the underlings are also guilty.
> Surely most of this testimony has to be taken with a grain of salt.
Yes; the prosecution's job will be to weave this into the other facts and bits of testimony they introduce as evidence. The trial will not hinge on one single piece of evidence.
> She is 100% not capable of washing her hands, she knew what she was doing.
She has already pled guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
> Why wouldn't she just blast him as hard as possible, as that's her way out
She pleaded guilty to seven felony counts. I don't think her goal is to "wash her hands" necessarily, the whole point of having her in the prosecution's pocket is to corroborate testimony and tell the truth
> Surely most of this testimony has to be taken with a grain of salt.
This is true for any testimony at any trial, and the defense attorneys will cross examine her and try to discredit her testimony in any way they can. In the end, the jury will need to weigh all the testimony and decide whether the prosecution proved its case beyond a reasonable doubt.
Can we stop with this kind of low-effort snipe on cryptocurrency exchange topics?
Yes, if you run a crypto exchange, you have to interface between crypto and the conventional financial markets. So yes, you at times have to hold money with others in trust and are vulnerable to those counterparty risks. That's not some kind of brilliant "gotcha".
---
Edit: Okay. Since HN now seems to love low-effort "gotchas", maybe I should take some time to show what a meaningful, curious discussion, that actually attempts to engage, would look like.
So: You've heard that crypto is trustless. With that curious hacker mentality, you think you've found a contradiction (that wasn't addressed the 30 times this came up before): hey, why was FTX trusting someone with their crypto assets? Doesn't crypto obviate that?
Yes and no. Like others might have told you in those previous 30 discussions, at the point where you have to move something from the trustless crypto realm to the conventional financial system, the conventional part doesn't have the same trustless guarantees, and you are vulnerable to assets being frozen.
Since the role of a crypto exchange is often to interface between the crypto realm and the conventional, then, in those cases, the crypto can be seized the same way. For example, if your exchange exists to interface between crypto and the Chinese financial system, then anything held on the latter side of it can be seized under the Chinese financial system's rules.
Similarly, if you trust someone with physical cash, you have less protections against them running away with it than if you e.g. paid them via PayPal.
"Okay but then still, doesn't that mean that some subset could still live in the trustless realm of cryptocurrency? Why use an exchange for that part?"
Well, one downside of the trustless crypto realm is that transactions are more expensive -- you incur costs to maintain the trustless guarantee. Depending on your specific use case, you may consider an institution trustworthiness enough, and the alternative expensive enough, to do the trustful way.
So, yes, it is a valid criticism to say, "hey, despite being trustless, it sure sucks that crypto can't also bring down costs to handle all this stuff on cost comparable to conventional."
Of course, there are limits to that to: as long as you have to convert back to the conventional financial system -- which that FTX exchange existed to facilitate -- you still have to trust counterparties in the financial system at some point.
There, mystery solved! Now I have a comment to reword for the next 30 times someone makes this brilliant argument!
If a system is billed as having certain properties, but in practice it repeatedly fails to have those properties, there's a legitimate criticism to be made.
I can understand why it might be frustrating to hear the same criticisms repeatedly but it doesn't make them illegitimate.
The criticism is that cryptoassets do not, in practice, have the censorship resistance they are billed as having. Blaming "tradfi" is passing the buck - cryptoasset promoters signed a check they couldn't cash, and no one made them do that. There are myriad rebuttals you could make, but dismissing it entirely isn't one of them, imho.
This is the libertarian equivalent of claiming that Soviet Russia wasn't real communism. Sure, in both cases, things weren't realized in the way they had been envisioned. If proponents want to be successful in the future, they need to reckon with that and not shirk it.
>The criticism is that cryptoassets do not, in practice, have the censorship resistance they are billed as having.
Correct: when you have assets in the traditional financial system, you don't have censorship resistance, which everyone knew. This is not an argument that the cryptocurrency itself lacks censorship resistance.
>There are myriad rebuttals you could make, but dismissing it entirely isn't one of them, imho.
Which I didn't do. I correctly pointed out that if you interface between systems A and B, you inherit the problems of both A and B. Which everyone already knew, and didn't require the enlightened insight of you and almost_unusual to point out specific instances of. It's just that most people also don't equate this with the argument that "A always has B's problems".
>This is the libertarian equivalent of claiming that Soviet Russia wasn't real communism. Sure, in both cases, things weren't realized in the way they had been envisioned. If proponents want to be successful in the future, they need to reckon with that and not shirk it.
It would be more like saying, "if you're in a libertarian paradise, and then travel to Soviet Russia, your economic freedoms will be infringed. Checkmate libertarians!" No one was arguing that economic freedoms wouldn't be infringed outside of a libertarian country, just like no one claims that if you move assets off a crypto blockchain, they will still have all the properties of blockchain transactions. Whatever the problems of libertarianism/blockchain, this would be a bad argument.
"If you put the wrong numbers in, do the right answers still come out?" No, they don't. And if you don't use the blockchain, you don't get the benefits of the blockchain (or the costs), and vice versa.
It's not a legitimate criticism at all in this case. It's a low-effort hot take by someone who doesn't understand what actually happend and just wants to take a potshot at crypto.
There's plenty of things to criticise about crypto, FTX, alameda, etc, but the fact that to do leveraged finance you have to post collateral with counterparties meaning those counterparties can freeze those assets isn't an inditement of crypto.
The exact some thing happens in conventional finance eg search for all the hedge funds who had prime brokerage funds trapped when Bear Stearns collapsed and had to wait years to get their money back - and that's without any fraud involved.
Maybe so, but needing to bribe an unfriendly government to access your funds is the type of thing cryptoassets were meant to obviate. So you might call capitulating to a government in control of it's nation's financial system, "the antithesis of crypto."
With crypto, 'your funds' are the ones you hold the private keys for. You don't have ownership over those coins, which is a mantra that's repeated ad nauseam (not your keys, not your coins). The idea that this concept is "the antithesis of crypto" seems entirely backwards.
This whole episode can offer some perspective for startups because it shows how the popularity of a startup is not necessarily connected to it's actual merit.
It's not that merit and popularity aren't related, it's just that they aren't the same thing. Also, receiving a lot of investment or having many customers is not the same thing as being a real business.
I kind of have a feeling that if you somehow performed a complete, comprehensive audit of the employees of many billion dollar businesses, tech and traditional, you'd find an enormous variety of stimulants and drugs, some prescribed, many not
> Ultimately, Ellison said, Alameda transferred $100 million in payments to what she understood to be Chinese government officials to unfreeze the account, which could constitute a bribe.
Heeeey, $100 million could constitute a bribe. That's more than I make in a year!
I think you are misunderstanding the sentence. It is not the amount of money which makes it a bribe vs not a bribe.
It is not like $100 million “could” be a bribe while $200 would have definietly been a bribe and two cents would not have been a bribe. What the sentence says is that the specific act, depending on circumstances can be construed a bribe.
One possible defense under the Foreign Corrupt Practices Act is if the payment was made for a lawfull purpose of the local country. For example if it was payment of some legitimate fine or tax that would make it not a bribe.
The same law also has exceptions for “facilitating or expediting payments" made in furtherance of routine governmental action. Altough it is unlikely that this specific instance would count as one.
Sequoia needs to be investigated and those who were involved in perpetuating this fraud need to be imprisoned. They are as culpable in this as anybody else.
Zeke Faux's book(1) on crypto pretty much sums up what most people believe: SBF knowingly ran a Ponzi scheme, or at the very least knowingly stole from investors, but that all of them had a knowing hand in it and bear responsibility.
Michael Lewis's book(2) however is much more sympathetic, painting SBF as a hapless nerd with autism, who meant well but wasn't socially adept enough to knowingly commit a crime; he broke the law for a good cause; altruism.
I think the jury is going to have to wrestle with these two ideas, a crime versus culpability of "super smart kids" that got in over their heads. I think therein lies what will be a hung jury.
1. Number Go Up: Inside Crypto's Wild Rise and Staggering Fall by Zeke Faux
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[ 5.7 ms ] story [ 128 ms ] threadSounds hilariously awkward, must have felt like an eternity
Personally, I can't imagine being very composed in that situation at that age.
If the Crown can convince the jury that you were one of a group of people with some common criminal purpose (e.g. scare a family into not going to the cops, rob a jewellery store, break someone out of prison) and that some specific crime was committed by someone in the group and that a reasonable person could have foreseen that this might happen in the course of the purpose based on what you knew, then you are guilty of the specific crime under this "Joint Enterprise" doctrine even though the jury weren't convinced, and may never have been shown evidence, that you did it and you claim only to have intended the broader crime, likely with a much lower tariff (e.g. murder usually means a long prison stretch, robbery not so much)
In any case, in the US, the analogous legal structure for prosecuting such enterprise crimes is generally RICO:
https://en.wikipedia.org/w/index.php?title=Racketeer_Influen...
[1] which I always read as those characters getting the wires crossed between double jeopardy (you can't re-prosecute someone for the same criminal act) and marital privilege (you get some level of protection from prosecution when you're married since spouses can't be forced to testify against each other). In the show, their attorney really does suck and they make excuses for him.
RICO means you can prosecute the godfather when his enforcers beat up store owners that owed him money, Joint Enterprise means you can convict all three armed bank robbers of murder even though you can't prove which of them shot the bank manager in the head when she was too slow opening the safe.
> Ellison testified how colleagues at Alameda set up accounts on the Chinese exchange tied to the identities of Thai prostitutes, hoping they could somehow use those accounts to siphon the money away from the frozen account.
Suppose Company X buys 100k in hashing power and signs everything accordingly so it all looks fine. How do you know they didn’t instead buy 200k and run two blockchains side by side until they need to pick one months later?
Alternatively, they instead buy 1M in hashing power so they can spend 1 day making a believable 10 days worth of history on 100k hashing power blockchain.
Now you can argue publishing a blockchain makes it immutable, but so does publishing anything else. Don’t want people to see the data? Publish hashes of your database backups.
Set N = 0 dollars of hash power and it becomes really obvious that the person running the network can just arbitrarily create any blockchain they want at any time for ~zero cost. It therefore clearly isn’t an “immutable system of record” because they can change it.
But let’s flip it around what specific benefit are you proposing and how exactly does cryptography enable it differently than a Bank.
Banks carry insurance.
Bitcoin and other public PoW blockchains are decentralized.
> Banks carry insurance.
And???
Also the "most trivial case" you're proposing here is a strawman. You demonstrate that your trivial case wouldn't work and everyone who does this knows that it wouldn't work so that's not how it works. Genarally these chains submit a transaction proof to some base chain so they can't go back later and rewrite history unless they could also rewrite history on that base chain.
Here's a source if you want to read up about how these things actually work https://wiki.polygon.technology/docs/cdk/
However, I was specifically responded to someone who seems to think blockchain = immutable system of record and I was pointing out that private blockchains don’t provide that because the mechanism public PoW chains uses to get immutability isn’t applicable.
I realize there are a lot more than just 1 way people are proposing private blockchains and most of them involve publishing something, but as long as we can agree the blockchain bit is pointless then discussing them is a waste of time.
So, it would be noticeable if every prior node and all its contents were published and people are validating the integrity of those prior nodes. Which is true of literally any public ledger.
The specifics of what get published can make things more convenient as there’s more locations you can send hashes of logs than the full logs, but publishing hashes alone doesn’t do anything without those logs also being public.
On a private chain you can easily change the data. Remove the hashing fig leaf and it’s even easier.
On a public one it’s the public nature that prevents changes after publication. So no, being a blockchain doesn’t prevent changes whatsoever. Having a public ledger does.
This guy has been doing amazing work of live blogging the trial if you want to follow along.
The biggest revelation that I found out that wasn't in Michael Lewis' book is that alameda got preferential trading treatment from FTX the exchange.
Molly White has also been doing great work of doing daily summaries.
https://newsletter.mollywhite.net/p/the-ftx-trial-day-six
The winners of the FTX bankruptcy may end up to be those of us who bought up FTX bankruptcy claims for 20 cents on the dollar after it came out that FTX invested $500M in Anthropic back in 2021.
That investment alone could be worth atleast 4x that value now.
I doubt it will have any effect on his reputation at all.
He doesn't say Sam is innocent, heck he doesn't take sides at all.
He just writes about what he say without any judgement.
What specifically about the book do you think will may permanently ruin his reputation.
If you read a book that presented Elizabeth Holmes or Bernie Madoff in this way, what would be your perspective?
I don’t pretend to have the facts or know for certain of anyone’s sure guilt, but a lot of the evidence is awfully damning.
(For example) Michael Lewis strongly insinuated that SBF took calculated and justifiable risk when losing track of $X00M for months at a time
https://hachyderm.io/@molly0xfff/111212491776903022
https://www.amazon.com/Going-Infinite-Rise-Fall-Tycoon/dp/B0...
Also I never read Flash Boys, but my understanding is that much of the anti-HFT/IEX crowd’s rhetoric has aged poorly especially as that industry has matured.
It should have been, that's been well-known for quite some time
(per sibling commenter's point)
The book really seems to go out of its way to paint the collapse as a bunch of super smart kids getting in way over their heads rather than fraud.
Meaning, it harps on there being "no adults in the room", how SBF played video games while talking to people and never seemed to be paying attention, how the guy in charge of figuring out what happened to the money after the collapse came off like an amateur archeologist getting everything wrong based on the accounting artifacts because he lacked the imagination to understand the ridiculous way things "really" went down. The list goes on.
Why wouldn't she just blast him as hard as possible, as that's her way out. Surely most of this testimony has to be taken with a grain of salt. She is 100% not capable of washing her hands, she knew what she was doing.
Yes; the prosecution's job will be to weave this into the other facts and bits of testimony they introduce as evidence. The trial will not hinge on one single piece of evidence.
> She is 100% not capable of washing her hands, she knew what she was doing.
She has already pled guilty to two counts of wire fraud, two counts of conspiracy to commit wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering.
Just two counts?
Isn’t every transfer a crime ?
Hmm, this will skew the demographics of the FBI crime database
She pleaded guilty to seven felony counts. I don't think her goal is to "wash her hands" necessarily, the whole point of having her in the prosecution's pocket is to corroborate testimony and tell the truth
This is true for any testimony at any trial, and the defense attorneys will cross examine her and try to discredit her testimony in any way they can. In the end, the jury will need to weigh all the testimony and decide whether the prosecution proved its case beyond a reasonable doubt.
The anti-thesis of cryptocurrency.
Yes, if you run a crypto exchange, you have to interface between crypto and the conventional financial markets. So yes, you at times have to hold money with others in trust and are vulnerable to those counterparty risks. That's not some kind of brilliant "gotcha".
---
Edit: Okay. Since HN now seems to love low-effort "gotchas", maybe I should take some time to show what a meaningful, curious discussion, that actually attempts to engage, would look like.
So: You've heard that crypto is trustless. With that curious hacker mentality, you think you've found a contradiction (that wasn't addressed the 30 times this came up before): hey, why was FTX trusting someone with their crypto assets? Doesn't crypto obviate that?
Yes and no. Like others might have told you in those previous 30 discussions, at the point where you have to move something from the trustless crypto realm to the conventional financial system, the conventional part doesn't have the same trustless guarantees, and you are vulnerable to assets being frozen.
Since the role of a crypto exchange is often to interface between the crypto realm and the conventional, then, in those cases, the crypto can be seized the same way. For example, if your exchange exists to interface between crypto and the Chinese financial system, then anything held on the latter side of it can be seized under the Chinese financial system's rules.
Similarly, if you trust someone with physical cash, you have less protections against them running away with it than if you e.g. paid them via PayPal.
"Okay but then still, doesn't that mean that some subset could still live in the trustless realm of cryptocurrency? Why use an exchange for that part?"
Well, one downside of the trustless crypto realm is that transactions are more expensive -- you incur costs to maintain the trustless guarantee. Depending on your specific use case, you may consider an institution trustworthiness enough, and the alternative expensive enough, to do the trustful way.
So, yes, it is a valid criticism to say, "hey, despite being trustless, it sure sucks that crypto can't also bring down costs to handle all this stuff on cost comparable to conventional."
Of course, there are limits to that to: as long as you have to convert back to the conventional financial system -- which that FTX exchange existed to facilitate -- you still have to trust counterparties in the financial system at some point.
There, mystery solved! Now I have a comment to reword for the next 30 times someone makes this brilliant argument!
I can understand why it might be frustrating to hear the same criticisms repeatedly but it doesn't make them illegitimate.
This is the libertarian equivalent of claiming that Soviet Russia wasn't real communism. Sure, in both cases, things weren't realized in the way they had been envisioned. If proponents want to be successful in the future, they need to reckon with that and not shirk it.
Correct: when you have assets in the traditional financial system, you don't have censorship resistance, which everyone knew. This is not an argument that the cryptocurrency itself lacks censorship resistance.
>There are myriad rebuttals you could make, but dismissing it entirely isn't one of them, imho.
Which I didn't do. I correctly pointed out that if you interface between systems A and B, you inherit the problems of both A and B. Which everyone already knew, and didn't require the enlightened insight of you and almost_unusual to point out specific instances of. It's just that most people also don't equate this with the argument that "A always has B's problems".
>This is the libertarian equivalent of claiming that Soviet Russia wasn't real communism. Sure, in both cases, things weren't realized in the way they had been envisioned. If proponents want to be successful in the future, they need to reckon with that and not shirk it.
It would be more like saying, "if you're in a libertarian paradise, and then travel to Soviet Russia, your economic freedoms will be infringed. Checkmate libertarians!" No one was arguing that economic freedoms wouldn't be infringed outside of a libertarian country, just like no one claims that if you move assets off a crypto blockchain, they will still have all the properties of blockchain transactions. Whatever the problems of libertarianism/blockchain, this would be a bad argument.
"If you put the wrong numbers in, do the right answers still come out?" No, they don't. And if you don't use the blockchain, you don't get the benefits of the blockchain (or the costs), and vice versa.
Why do you have to be rude and personal like that? If we can't have a civil discussion, I'm going to get back to work. Take care.
There's plenty of things to criticise about crypto, FTX, alameda, etc, but the fact that to do leveraged finance you have to post collateral with counterparties meaning those counterparties can freeze those assets isn't an inditement of crypto.
The exact some thing happens in conventional finance eg search for all the hedge funds who had prime brokerage funds trapped when Bear Stearns collapsed and had to wait years to get their money back - and that's without any fraud involved.
It's not that merit and popularity aren't related, it's just that they aren't the same thing. Also, receiving a lot of investment or having many customers is not the same thing as being a real business.
Heeeey, $100 million could constitute a bribe. That's more than I make in a year!
It is not like $100 million “could” be a bribe while $200 would have definietly been a bribe and two cents would not have been a bribe. What the sentence says is that the specific act, depending on circumstances can be construed a bribe.
One possible defense under the Foreign Corrupt Practices Act is if the payment was made for a lawfull purpose of the local country. For example if it was payment of some legitimate fine or tax that would make it not a bribe.
The same law also has exceptions for “facilitating or expediting payments" made in furtherance of routine governmental action. Altough it is unlikely that this specific instance would count as one.
Michael Lewis's book(2) however is much more sympathetic, painting SBF as a hapless nerd with autism, who meant well but wasn't socially adept enough to knowingly commit a crime; he broke the law for a good cause; altruism.
I think the jury is going to have to wrestle with these two ideas, a crime versus culpability of "super smart kids" that got in over their heads. I think therein lies what will be a hung jury.
1. Number Go Up: Inside Crypto's Wild Rise and Staggering Fall by Zeke Faux
2. Going Infinite by Michael Lewis