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The Sam Bankman-Fried empire crumbled. What happened?

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Re: The Sam Bankman-Fried empire crumbled. What happened?

#81

Post by polygamous_bat »

zeroclip wrote: post #53

Very informative and clearly written, kudos to Molly! The irony is that DeFi and blockchain protocols fixes this.

Unfortunately, it does not. Likes of FTX and Binance was created in the first place because on chain transaction is slow and expensive, and people don't like slow and expensive. Just because FTX blew up doesn't mean DeFi is at a better place than it was in the past.

"DeFi fixes this" is like saying "moving back to horse drawn carriages will solve drunk driving fatalities!" Maybe, but no one wants to deal with horse shit.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#82

Post by skippyboxedhero »

schemescape wrote: post #51
dabeeeenster wrote: post #14

https://twitter.com/SBF_FTX/status/1590709172936798208 "5) The full story here is one I'm still fleshing out every detail of, but as a very high level, I fucked up twice. The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower." Amazing

What does “poor internal labeling of bank-related accounts” mean? They didn’t know which of their accounts were fiat vs crypto? Asset vs liability? Something else?

My thoughts exactly. He managed to say precisely nothing in 27 (or whatever it was) tweets apart from the obvious...that he wasn't up to running the company.

WSJ is reporting that money was lent to Alameda based on a conversation that SBF had with an investor (saying that the gap was $10bn) but this isn't what he saying publicly...maybe this is obvious because, if this is true, then it is hard to see how he avoids jail.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#83

Post by dibt »

brk wrote: post #62
zeroclip wrote: post #53

Very informative and clearly written, kudos to Molly! The irony is that DeFi and blockchain protocols fixes this.

Blockchain may fix it, but couldn't we also argue that blockchain created these problems in the first place? I will fully admit I have only casually followed the whole blockchain/crypto scheme, so maybe I'm wildly off on something, and would definitely appreciate informed responses. Without blockchain, there is no "crypto", without crypto, there are no exchanges and related coins, and without those, none of this happ…

>How would blockchain be used to fix this?

All of the things that are being reported on this situation would not have been possible on a DEX.

Decentralized exchanges (DEX) exist on-chain. They incorporate automatic market making (AMM), not a third-party market maker with an association to the exchange. The DEX does not have custody of user funds, and it would be impossible to hide a multi-billion dollar hole in an exchange's balance sheet.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#85

Post by ALittleLight »

jrmg wrote: post #61
dabeeeenster wrote: post #14

https://twitter.com/SBF_FTX/status/1590709172936798208 "5) The full story here is one I'm still fleshing out every detail of, but as a very high level, I fucked up twice. The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower." Amazing

At the end of the thread: NOT ADVICE, OF ANY KIND, IN ANY WAY I WAS NOT VERY CAREFUL WITH MY WORDS HERE, AND DO NOT MEAN ANY OF THEM IN A TECHNICAL OR LEGAL SENSE; I MAY WELL HAVE NOT DESCRIBED THINGS RIGHT though I'm trying to be transparent. I'M NOT A GOOD DEV AND PROBABLY MISDESCRIBED SOMETHING. That’s quite the (ad-hoc) disclaimer…

"In the event anything I've said is used against me in a court of law I didn't mean whatever it is in that way."

Re: The Sam Bankman-Fried empire crumbled. What happened?

#86

Post by mrguyorama »

jrmg wrote: post #61
dabeeeenster wrote: post #14

https://twitter.com/SBF_FTX/status/1590709172936798208 "5) The full story here is one I'm still fleshing out every detail of, but as a very high level, I fucked up twice. The first time, a poor internal labeling of bank-related accounts meant that I was substantially off on my sense of users' margin. I thought it was way lower." Amazing

At the end of the thread: NOT ADVICE, OF ANY KIND, IN ANY WAY I WAS NOT VERY CAREFUL WITH MY WORDS HERE, AND DO NOT MEAN ANY OF THEM IN A TECHNICAL OR LEGAL SENSE; I MAY WELL HAVE NOT DESCRIBED THINGS RIGHT though I'm trying to be transparent. I'M NOT A GOOD DEV AND PROBABLY MISDESCRIBED SOMETHING. That’s quite the (ad-hoc) disclaimer…

Lol I don't think that would hold up in court.

Re: The Sam Bankman-Fried empire crumbled. What happened?

#87

Post by EGreg »

What happened was Binance squeezed a competitor, by dumping their token. Then announced stuff on Twitter that made people suddenly withdraw $6B out of it.

This is an unregualated market — but even if it was regulated, what would the regular do after the fact to make it right for everyone inside an exchange or crypto that went to zero?

Re: The Sam Bankman-Fried empire crumbled. What happened?

#88

Post by cma »

vishnugupta wrote: post #56

Sequoia did a profile on SBF/FTX less than 2 months ago [1], only to mark down their investment to 0 [2] Some of the passage from that article reads so far removed from reality that I can't even know if it's coherent. Really wild stuff. [1] https://www.sequoiacap.com/article/sam-bankman-fried-spotlig... [2] https://twitter.com/sequoia/status/1590522718650499073

They seem to have replaced that page with a disclaimer about the failure. Here was the archived:

https://web.archive.org/web/20221027180943/https://www.sequo...

> Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.

oof

Re: The Sam Bankman-Fried empire crumbled. What happened?

#90

Post by kzzzznot »

dibt wrote: post #83
brk wrote: post #62

Earlier quoted context omitted.

Blockchain may fix it, but couldn't we also argue that blockchain created these problems in the first place? I will fully admit I have only casually followed the whole blockchain/crypto scheme, so maybe I'm wildly off on something, and would definitely appreciate informed responses. Without blockchain, there is no "crypto", without crypto, there are no exchanges and related coins, and without those, none of this happ…

>How would blockchain be used to fix this? All of the things that are being reported on this situation would not have been possible on a DEX. Decentralized exchanges (DEX) exist on-chain. They incorporate automatic market making (AMM), not a third-party market maker with an association to the exchange. The DEX does not have custody of user funds, and it would be impossible to hide a multi-billion dollar hole in an ex…

Do they work in practice?
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