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FTX tapped into customer accounts to fund risky bets, setting up its downfall

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Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#251

Post by skippyboxedhero »

radicaldreamer wrote: post #72
hmahncke wrote: post #66

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.

The people who invest in venture funds need to demand better governance for portfolio companies, otherwise this will continue to happen.

I mentioned this is another reply, so sorry for anyone who reads both.

I would read Mallaby's history of the VC industry to see why this isn't possible. Around 1997 the balance of power shifted heavily in favour of founders (this is when dual-share class) started, and they stopped demanding seats on the board.

Iirc, Sequoia was a firm that held out (along with other old-style funds), they missed out on a lot of companies over the next ten years so ended up racing to the bottom...this is how we got here.

Btw, just on corporate governance...it is the most important factor for a company. A lot of the issues with corporates we have today are due to poor oversight from shareholders (not helped by passive). If corporate governance isn't working, capitalism won't work either.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#252

Post by pmcollins »

skullone wrote: post #145

I checked my FTX account, only had play money in there. But, despite all the people saying "FTX is fine, withdrawls still work, it's all fine" - nope, everything is disabled, withdrawls show $0.10 avaialble to withdrawl (out of a few hundred I had in actual US cash, plus the BTC and doge transactions are all disabled. This is very serious for many people - there are some who had substantial amounts of money, includin…

FTX.us or intl?

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#253

Post by NovemberWhiskey »

lotsofpulp wrote: post #218
tootie wrote: post #192

Earlier quoted context omitted.

If FTX were a real company that Tweet would be enough to be put in handcuffs by the SEC.

SEC only enforces the law via civil means, so they do not do handcuffs. Handcuffs would be FBI territory.

Ehhh, that's misleading. The SEC often files enforcement actions directly with the DOJ and the SEC attorneys are often dual-hatted as SAUSAs.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#254

Post by zizee »

cmeacham98 wrote: post #197
gfd wrote: post #188

Earlier quoted context omitted.

Only tangentially related, but don't put cash in safety deposit boxes. Police can take them under civil forfeiture laws: https://nypost.com/2021/06/12/fbi-aims-to-keep-valuables-86m... https://www.businessinsider.com/fbi-raid-1400-boxes-us-priva...

Civil asset forfeiture is one of those things that feels really unjust in the US, and I'm somewhat surprised there hasn't been a Supreme Court case ruling it unconstitutional per the 4th Amendment. I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?

> I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?

If it were a big shipment of plutonium laced heroin, it seems fair game.

I think the biggest issue with civil asset forfeiture is the conflict of interest where police departments are keeping/using the seized assets. From the outside it looks a lot like the government acting like a gang.

The other big problem is it seems like it is up to the owner to prove the assets "innocence", rather than police proving the assets were the result of illegal activity.

If assets are seized, they need to go to a third party that can store them safely, return the assets to their owners. If found "guilty", the assets should go to some victims of crime fund, or destroyed.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#255

Post by tialaramex »

HideousKojima wrote: post #220
cmeacham98 wrote: post #197

Earlier quoted context omitted.

Civil asset forfeiture is one of those things that feels really unjust in the US, and I'm somewhat surprised there hasn't been a Supreme Court case ruling it unconstitutional per the 4th Amendment. I'd love to hear a steelmanned argument in favor of it, maybe I'm missing something obvious?

The only steelmanned argument for civil asset forfeiture goes back to its origins, when it was used to seize smuggled goods on ships. Since the ship's owner was almost always a wealthy person living in a different country making them almost impossible to go after, and the smuggled goods were missing tax stamps etc. making it clear that they were being illegally smuggled, the government would simply seize the goods. T…

Seems to me in the specific case of wealthy foreigner owns smuggled good a better (more just) arrangement accuses them not the goods, but with the mechanism that if they for some reason don't want to attend court (maybe because they're super guilty?) their goods are seized but the crime still exists.

There are some nuances to work out to ensure cops can't accuse say Vladimir Putin of a crime involving the $8000 they found in your house, and then since Putin doesn't show up they keep your money, but the general idea seems more sound than civil forfeiture.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#256

Post by iudqnolq »

dang wrote: post #242
iudqnolq wrote: post #232

Earlier quoted context omitted.

I think this merits your tradition of moderating less if YC's interests are implicated.

Do you mean because there's some connection between FTX and YC? I certainly don't know of any. Moreover, even if there were, (a) the OP has been on HN's front page for hours and is currently at #4, (b) this story has been heavily discussed on HN, with several major threads in the last few days alone, and (c) asking people not to fulminate doesn't mean they can't make substantive critical points—if anything it helps t…

The connection would be that popular posts in the discussion are criticizing Silicon Valley investor culture.

> Moreover, even if there were ...

Makes sense. You have a much better view of that than me.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#257

Post by chasd00 »

somuchfordonor wrote: post #10

> Alameda’s CEO is Caroline Ellison, a Stanford University graduate who like Mr. Bankman-Fried previously worked for quantitative trading firm Jane Street Capital. Alameda is based in Hong Kong, where FTX was headquartered before relocating to the Bahamas last year. Are the folks at Jane Street making money because they are smart, or because they use that perception to perpetuate some scam? I interact with a lot of H…

I hear what you're saying but consider we're going on two entire generations of brilliant people being spent largely on just putting an ad on your phone and computer. The stock market isn't the only waste of intelligence.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#258

Post by skippyboxedhero »

laluser wrote: post #13

The Twitter thread from SBF is even better where he admits he messed up. And still trying to throw jabs at Binance here and there like it’s their fault they’re here. Unbelievable.

He also attempted to claim that the problem was due to an issue with the "labelling" of funds...this story leaks, we know he has been telling people he lent the money to Alameda, and in these tweets he is now saying that he has a problem expressing what happened...

...I feel bad for him because he obviously believes his own bullshit, but he should have just said nothing rather than lie about what happened and pull the Mr. Magoo act.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#259

Post by achenatx »

eftychis wrote: post #246
kwertyoowiyop wrote: post #182

Earlier quoted context omitted.

In the USA, bank accounts are guaranteed by the government, up to $250K.

Per institution. And there is a lot of consolidation. So I would be careful. It is really easy to be placing money into different banks, but essentially the same one.

there are a variety of caveats, on your side it is per entity.

If you are married it is 500K, if you have a trust it is like 1.25M. 250K for each beneficiary up to 5 (or something like that).

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#260

Post by ww520 »

ricardou wrote: post #185
Animats wrote: post #170

Trading halt announcement at FTX.US.[1] Announcement says withdrawals still up. But Twitter messages indicate withdrawals are not working. FTX Japan shut down by order of Japan Financial Services Agency.[2] FTX.intl processing some withdrawals, according to blockchain.[3] A few lucky people got to exit. Way too much happening to mention here. Just use Google to search "FTX" and limit search to 1 day. Margin calls all…

SBF tweeted[1] not too long ago that FTX.us was safe and was 100% liquid. I suppose that wasn't the case? [1] https://twitter.com/SBF_FTX/status/1590709195892195329?t=tQR...

He doesn’t get it. The entire brand is tarnished. Nothing to salvage.
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