81–90 of 746 posts
Remarkable that a venture-backed company can loan $10B to the founder's hedge fund without running into some sort of board/corporate sign-off that's required to literally execute the agreement/fund transfer.
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>The first $10,000 USD value in your deposit wallets will earn 8% APY (This is what FTX was offering customers) And now we know the accounts weren't actually covered by real money (or "value" as they called it). So when person X was asking FTX for their money back, FTX would send person X+1's money to cover Sounds like a Ponzi to me
It's only a ponzi scheme if you have no underlying business but transferring money between people. Presumably FTX expected that its risky bets would pay off and that return would then fund the interest promised. Otherwise, would you consider corporate debt a ponzi scheme?
IMO this is key, the interest being paid out to account holders was not profits from any underlying business, it was just paid out from new "customer" deposits.
If a corporation is in debt and paying back interest, it's sustainable as long as the business actually has a plan to grow. If your business is acquiring new users to pay out obscene interest rates to your early adopters, that's a ponzi
(mr ponzi himself didn't mean to scam anyone either way by the way, until he realized his postage-arbitrage plans were going south and he scrambled not to break his promises)
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Arrested by UN? Genuinely curious
Richmond, CA police department. Alameda Research HQ is at 5327 Jacuzzi St Ste 1c, Richmond, CA 94804. Since they were apparently the recipient of the money, and he's apparently the principal beneficiary of all this, that's where to start. Mr. Bankman-Fried may not physically be there, but they have jurisdiction. Once there's an arrest warrant, getting away becomes much more difficult.
With that said, the SEC is already also investigating any potential links between the two entities. I don't think they'd be stupid enough to cross those wires, but you never know.
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Banks are highly regulated in exactly how much of the deposits they can use and what kind of risks they can take with it. This is complicated: https://en.wikipedia.org/wiki/Capital_requirement Also in the US at least banks are FDIC insured, so if the bank is breaking the law and gambling inappropriately consumers are still protected. "How is crypto different than a bank" is a reductive and foolish comparison. There a…
The reason I asked is because it seems to me that people are clutching their pearls and saying this is stealing. But as I see it, the difference between FTX and Chase Bank are that Chase has a lot of rules and regulations, and a good insurance policy. But "at it's heart" SFB is no different than Jamie Dimon. The ethics of what SFB did and what American banks would like to do is exactly the same.
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>The first $10,000 USD value in your deposit wallets will earn 8% APY (This is what FTX was offering customers) And now we know the accounts weren't actually covered by real money (or "value" as they called it). So when person X was asking FTX for their money back, FTX would send person X+1's money to cover Sounds like a Ponzi to me
It's only a ponzi scheme if you have no underlying business but transferring money between people. Presumably FTX expected that its risky bets would pay off and that return would then fund the interest promised. Otherwise, would you consider corporate debt a ponzi scheme?
So did Bernie.
>Otherwise, would you consider corporate debt a ponzi scheme?
Depends on what you count as corporate debt.
I'd have no problem buying the debt of a mature, massive company like Apple or Microsoft, because they have hard assets, steady cashflows, successful products on the market.
The debt of a zombie corporation with a useless product that was only sustainable due to 0% interest rates? No thanks. Is that a ponzi scheme? Probably not the classical definition of one, but it's ponzi-adjecent.
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They used FTT as collateral for loans used on trading activities that boosted FTT value It's not literally a Ponzi, but it's Ponzi adjacent behavior, like what Bill Hwang did.
Bill Hwang lied about his market exposure to the brokers who sold him the equity swaps. It was just garden variety fraud with no ponzi adjacent behavior at all.
All: please don't fulminate*. Perhaps you don't owe embattled billionaires better, but you owe this community better if you're participating in it. HN is a site for curious conversation, so please wait to feel some curiosity before you comment. * https://news.ycombinator.com/newsguidelines.html
Hearby nominated as word of the day. Excellent.
All: please don't fulminate*. Perhaps you don't owe embattled billionaires better, but you owe this community better if you're participating in it. HN is a site for curious conversation, so please wait to feel some curiosity before you comment. * https://news.ycombinator.com/newsguidelines.html
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I see a lot of variations on these arbitrage and secrecy themes. Arbitrage that sticks around for years: those are scams dude. They involve collusion, not intelligence. I understand it might not be illegal collusion, but if either side of the transaction being scammed found out, they would find someone else to work with. Trust me, I know. I've worked in ad tech.
The obvious suspicion, for any company that is both a market maker and doing prop trading, is that they're engaging in some sort of front running. They're probably doing it in a highly obfuscated non-trivial way otherwise they'd get caught quickly, but nevertheless are using their visibility into trillions of dollars worth of order flow to shape their own trading strategy.
Remarkable that a venture-backed company can loan $10B to the founder's hedge fund without running into some sort of board/corporate sign-off that's required to literally execute the agreement/fund transfer.