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

wsj.com

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

#381

Post by ummonk »

tialaramex wrote: post #255
HideousKojima wrote: post #220

Earlier quoted context omitted.

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…

What if they don’t know who it belongs to?

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

#382

Post by breck »

iudqnolq wrote: post #232
dang wrote: post #67

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

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

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

That tradition has gone out the window: https://twitter.com/breckyunits/status/1590858862504316928

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

#383

Post by conanbatt »

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.

I didn't know it was that much - do you have a source for it?

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

#384

Post by hn_throwaway_99 »

chlodwig wrote: post #151

From the article: "FTX Chief Executive Sam Bankman-Fried said in investor meetings this week that Alameda owes FTX about $10 billion, people familiar with the matter said. FTX extended loans to Alameda using money that customers had deposited on the exchange for trading purposes, a decision that Mr. Bankman-Fried described as a poor judgment call, one of the people said." In the FTX International terms of service ( h…

Agreed. I haven't dug into the FTX terms of service, but as you put it, the lack of regulations around crypto should be irrelevant - this is outright fraud/theft. Assuming depositors don't all get their money back (which seems like the obvious outcome), seems like some long jail terms are in order.

I mean, Madoff got 150 years and died in prison after about 10 years. While I don't see the FTX fraud in the same league (Madoff went to great lengths, for example, to generate phony statements over many years) it still sounds like fraud to the tune of billions.

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

#385

Post by kasey_junk »

nostrebored wrote: post #357
NovemberWhiskey wrote: post #249

Earlier quoted context omitted.

> We’re doing zero fractional reserve banking now. No; we're not. In fact, banks are positively awash with reserves by historical standards. https://fred.stlouisfed.org/series/TOTRESNS

The required reserve amount was reduced to zero at the beginning of the pandemic as a way to increase the velocity of money. We are in ZFRB land right now. Bank reserves have obviously dropped year over year since the introduction of this policy, especially as a percentage of M1/M2.

You are describing their reserve requirements at the fed itself. Nothing has changed with their A&L requirements from the variety of banking regulators (including the fed & fdic).

For comparison there were rumors that Credit Suisse was in trouble when r their asset to liability mix got around 1.65. That is they marked their assets to 165% of their liabilities and it was a major issue.

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

#386

Post by selimthegrim »

zhoujianfu wrote: post #326
selimthegrim wrote: post #274

Earlier quoted context omitted.

Did SBF have any cats in the office? That should have been a warning sign.

Are you referencing Tibanne?!

No, just the general concept of a bodega cat but good call!

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

#387

Post by anonporridge »

Bilal_io wrote: post #356
woah wrote: post #317

Earlier quoted context omitted.

This has nothing to do with crypto, it has to do with people sending their money to a con man. If your friend had "his identity tied up in crypto", then why wasn't he holding it himself?

Yup. Not your wallet, not your money.

"Not your keys, not your bitcoin."

Some of use have been yelling this from the rooftops for years, but apparently some people simply must learn the hard way.

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

#388

Post by kasey_junk »

klodolph wrote: post #229
nostrebored wrote: post #210

Earlier quoted context omitted.

You would’ve been correct two years ago. We’re doing zero fractional reserve banking now. Hearing this should convince people that they should get their money out now, but nobody seems to care.

I don’t know about others, but I suspect that if the FDIC ran out of money, congress would figure out a way to fund it even if it meant printing money. I am okay with this.

You don’t need to guess. The FDIC is backstopped but the full faith & credit of the US government.

There is a link prominently on the website: https://www.fdic.gov/consumers/assistance/protection/depacco...

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

#389

Post by sytelus »

cbtacy wrote: post #132
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.

They had no real board. They had no real governance. What's amazing is that large venture funds would put this much money into this kind of company without any board seats.

He simultaneously played League of Legends when pitching to VC on Zoom call. That indicated to VC how serious and responsible he was. They unanimously and immediately signed off funding merely out of awe.

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

#390

Post by joshxyz »

cma wrote: post #322
chironjit wrote: post #294

Earlier quoted context omitted.

This is the correct answer. When you move your tokens into a centralised exchange like FTX, your funds are pooled with everyones deposit. There are always deposits and wihdrawals, and of course maybe you traded your tokens for another before withdrawing. So its hard to parse how much customers deposited vs genuinely withdrew, and so you cant really tell if the exchange is short unless they declare their actual assets…

From the Sequoia puff-piece: > 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 need…

aged like my baby momma's milk good lord
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