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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

#371

Post by kreeben »

phas0ruk wrote: post #278
Digory wrote: post #235

Earlier quoted context omitted.

So if the chain is supposed to enable "trustless" finance, what enabled Alameda to take anything? Seems Alameda and its clients should be screwed, but FTX's holders should be relatively easy to identify and restore. But everyone seems to say that's not the case. So what broke down here? Why isn't the ledger ledgering?

FTX is a centralised exchange, it is not routing all customer trades on chain. It’s not a blockchain failure, it’s just a lack of client asset segregation by a traditional centralised trading house.

Nothing that a regular Ethereum based crypto exchange wouldn't solve. If that's already been done, hear me out:

a decentralized decentralized decentralized exchange!

That's bullet proof folks!

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

#372

Post by Panzer04 »

nemothekid wrote: post #205
radicaldreamer wrote: post #72

Earlier quoted context omitted.

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

Sequioa, who invested in FTX quite loudly, reported to their LPs that they only lost 150MM in their fund that had 7.5B in realized gains. Going off their letter they took 5B and turned it into 12.5B for a return of 150%[0]. After this spectacular blowup barely put a dent in their returns, why would LPs demand anything? Sequioa will just tell them "hey it's the name of the game, there are some losers who go bankrupt a…

Once you've invested, may as well talk it up so you can pass the hot potato more easily.

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

#373

Post by leet_thow »

siftrics wrote: post #361
leet_thow wrote: post #241

Where does did all that money go? Is it part of a zero sum game and in someone else's hands now, did it evaporate, or a combination of the two?

Literally ~$50 million went straight to the Democratic Party as direct campaign donations. He stated he intended to give up to $1 billion to democrats. Millions more went to various other people in power who will now decide the fate of SBF. Sources: https://www.cnbc.com/2022/10/14/sam-bankman-fried-backtracks... His Wikipedia page.

Interesting. I was reading his bio and noticed the do-gooder activities he and his family are involved with. Funny how they end up defrauding people in the long run.

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

#374

Post by fnordpiglet »

Telemakhos wrote: post #348
qeternity wrote: post #308

Earlier quoted context omitted.

Did Corzine actually go to jail? This didn't sound right to me and a quick search suggests no.

He did not go to jail, which prompted a satiric call to "Free the Honorable Jon Corzine." His LinkedIn page describes him as running "an opportunistic macro hedge fund."

Yes you’re right he didn’t. He ended up paying a $5mm civil fine and was barred from futures business. I misremembered, my bad.

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

#375

Post by siftrics »

stouset wrote: post #365
siftrics wrote: post #354

Earlier quoted context omitted.

This is not true at all. If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period. FTX is a centralized entity that custodies funds. It has nothing to do with a blockchain, which could have completely prevented this. There are many examples of decentralized exchanges (DEXs) for which it is mathematically impossible to loan out depositor's funds with…

> If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period. Right up to the moment you lose your laptop in a fire, forget the password to your wallet, accidentally run malware on your personal computer, etc. Or if you die and haven't gone through the complication of setting up a way for your heirs to gain control of your accounts. Yes, you can take…

Totally valid criticism.

But blaming blockchain for the failures of centralized finance, which we've seen time and time again throughout all of history, is literally intentional deception.

If a politician or lawmaker or business person blames blockchain for this, it is FRAUD. Full stop.

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

#376

Post by joe_the_user »

mccorrinall wrote: post #320
joe_the_user wrote: post #282

Earlier quoted context omitted.

Maybe you're thinking of Etherium or other smart-contract systems, Etherium is a system where things like that happen automatically. With Bitcoin, the only thing you have is a secure (but static) ledger of who (which wallet/id) has what bitcoins. Any transfers have to be "manually" and just recorded by the blockchain. Of course, the automatic processes in Etherium produce a bunch of other weird effects.

Where does this Etherium-meme(?) come from? I’ve seen several people writing Etherium and Monaro instead of Ethereum and Monero on mailing lists, but never understood what it means and where it comes from.

Maybe 'cause they're phonetically similar?

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

#377

Post by ummonk »

zizee wrote: post #254
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?

> 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 li…

Gold is legal. So is cash - in fact it’s legal tender for all debts public or private. By contrast, plutonium laced heroin is definitely not legal without the appropriate licenses from multiple regulatory agencies.

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

#378

Post by gus_massa »

ChadNauseam wrote: post #270
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?

No civil asset forfeiture: cop pulls a drug dealer over, the drug dealer bribes the cop and is on his way. With civil asset forfeiture: cop pulls a drug dealer over, the drug dealer offers to bribe the cop, the cop laughs and takes all his stuff anyway, books him, and the police department buys a martini machine. Kind of a weak case, but that was the best steelman I could think of.

It sounds like a good idea until a cop acuse you of been a drug dealer without evidence, take all your money, and then you realize why you need a constitution and a independent court system.

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

#379

Post by siftrics »

leet_thow wrote: post #373
siftrics wrote: post #361

Earlier quoted context omitted.

Literally ~$50 million went straight to the Democratic Party as direct campaign donations. He stated he intended to give up to $1 billion to democrats. Millions more went to various other people in power who will now decide the fate of SBF. Sources: https://www.cnbc.com/2022/10/14/sam-bankman-fried-backtracks... His Wikipedia page.

Interesting. I was reading his bio and noticed the do-gooder activities he and his family are involved with. Funny how they end up defrauding people in the long run.

"Motivated largely by his own awareness of the discreditable nature of his secret behavior, the covert deviant develops a presentation of self that is respectable to a fault. His whole lifestyle becomes an incarnation of what is proper and orthodox."--Laud Humphreys

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

#380

Post by bombcar »

JamesianP wrote: post #248
iamthirsty wrote: post #230

Earlier quoted context omitted.

While you're correct[0], still the FDIC is guaranteeing it up to $250k. [0]: https://www.federalreserve.gov/monetarypolicy/reservereq.htm

It may be that what the FDIC promises to do is not in sync with what it can actually afford to do.

The FDIC is backstopped by the government itself, but the amounts of insurance it has on hand are why it jumps down bank throats quickly.
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