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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

#551

Post by imgabe »

wslh wrote: post #288
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…

How many years could Sam Bankman-Fried get in jail? It is also interesting to read on his Wikipedia profile [1] about "Bankman-Fried is a supporter of effective altruism and claims to pursue earning to give as an altruistic career. He is a member of Giving What We Can and has claimed that he plans to donate the great majority of his wealth to effective charities over the course of his life.". Having direct access to…

Almost always, the louder people are about the good they do, the worse they really are.

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

#552

Post by jbm »

stoplying1 wrote: post #490
kypro wrote: post #484

Earlier quoted context omitted.

Yes, this is exactly the point that needs to be made. A few weeks ago I think it was quite easy to argue that it was riskier not to have it on an exchange because when it's not on an exchange you can't convert it back into USD when significant market moving events take place. But more importantly a lot of these people chose to keep their crypto with FTX specifically because it was seen as the safest pair of hands. If…

Uhm, yeah, people made the wrong bet because they fell for another hyped up tech company. But let's put a fine point on it -- that specifically fell in with a rent-seeking company capitalizing on a decentralizaed space with a centralized platform and then surprise-pikachu'd when they did the same thing as every one before them. > because when it's not on an exchange you can't convert it back into USD when significant…

> Go watch YT for a few hours and I'm sure youll be on to your next get rich scheme.

I laughed, hard. Bravo to you.

To be charitable, some people may only be able to afford a normal lifestyle though a successful "get-rich quick" scheme. Think insane markets like Toronto and Vancouver that are flooded with laundered money; how are you going to make enough money for a home without making a YOLO-style bet on something you don't understand (but is portrayed to work for rich people)?

I think far less people would be taken by these scams if their basic needs were more easily paid for.

(Disclaimer: I own zero Crypto, have never owned any Crypto)

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

#553

Post by WoodenChair »

What I'd like is a tool on Hacker News, that would allow me to click on a username in a thread and do a quick search for a term related to the thread. For example, I'd like to know how many people in this thread who are posting against SBF praised him in threads from months ago. I think the whole story with him is a testament to what's wrong with tech culture and the media more largely. It's almost Elizabeth Holmes-esque but with a different personality angle.

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

#554

Post by tptacek »

IG_Semmelweiss wrote: post #550
memish wrote: post #538

Earlier quoted context omitted.

This is crazy. He was funneling customer funds to politicians too? $40m worth and was planning up to $1b. "SBF was planning to spend up to one billion dollars to help influence 2024 presidential election campaigns. His real plan is to bankroll the candidate running against former president Donald Trump. In 2020, SBF donated $5.2 million to the Joe Biden presidential campaign. According to Open Secrets, a platform fol…

this doesn't get talked about much. There should be a tracker for companies that come out of nowhere and buy themselves into the top 10 of any major politician contributors list. So much money, so fast, should be a red flag for astute investors.

It's also a red flag about the savviness of the donors, since the races we're talking about here are extremely overcapitalized. SBF had a good shot at buying influence at the House level, but even in most Senate races the campaigns are probably already at a point of diminishing returns on dollars raised without any of this guy's goofy crypto money. Not that the campaigns won't assiduously take his calls! They'll take the money! Even the Biden campaign, which does not in the final analysis give even 1/15th of a fuck about an additional 5MM, will have someone set up some phone calls to get that money.

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

#555

Post by cuteboy19 »

astrange wrote: post #486
wslh wrote: post #288

Earlier quoted context omitted.

How many years could Sam Bankman-Fried get in jail? It is also interesting to read on his Wikipedia profile [1] about "Bankman-Fried is a supporter of effective altruism and claims to pursue earning to give as an altruistic career. He is a member of Giving What We Can and has claimed that he plans to donate the great majority of his wealth to effective charities over the course of his life.". Having direct access to…

Giving away other people’s money is both effective and altruistic, it seems to me.

Eventually, you run out of other people's money.

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

#556

Post by gmd63 »

forgingahead wrote: post #506
eloff wrote: post #454

Earlier quoted context omitted.

It's easy to be altruistic when it's not your money!

Like any politician railing about higher taxes and "eating the rich" - it's always never about their own money!

That's quite a stretch to compare, as taxes are derived from rules for the economy that everyone collectively votes on. Everyone benefits from collective projects run by the government to some degree, and a tiered tax system also counteracts the snowballing effect of how it becomes easier to make money the more you accumulate.

Here, we have a guy who is taking money for a specific purpose under circumstances that he completely lied about. And he used that money to attempt to enrich his company at catastrophic risk to the customers.

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

#557

Post by choppaface »

dang wrote: post #128
7e wrote: post #88

Earlier quoted context omitted.

Sorry, no. If I can’t protest here, where can I protest? Is this supposed to be a safe space for billionaires? It’s my community, too. Don’t censor me in the name of curiosities. This isn’t Iran.

This is one of those times when it's helpful to know what you're optimizing for. On HN we have the luxury of a single principle that we're optimizing for: intellectual curiosity. (See https://news.ycombinator.com/newsguidelines.html plus lots of past explanations: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor... ) This makes it easier to answer questions that would otherwise feel like hard tradeoffs. I…

this is one of those times, dang, where you're fanning the flames for your own entertainment.

Please see the HN Guidelines: https://news.ycombinator.com/newsguidelines.html

"Please don't use Hacker News for political or ideological battle. It tramples curiosity."

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

#558

Post by choppaface »

dang wrote: post #155
tinktank wrote: post #149

Scam after scam after scam. Welcome to crypto, folks.

Maybe so, but please don't post unsubstantive comments to Hacker News. We're trying for a different sort of forum. https://news.ycombinator.com/newsguidelines.html

You can contact people directly instead of trying to shame in public. What you're doing here dang is flamebait

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

#559

Post by stephen_g »

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…

Banks don't actually even 'lend out' customer deposits. That's a very common misconception.

In modern bank operations, incoming fund transfers (which involve deposits) do provide liquidity that help allow the bank to be able to lend, but banks are actually levering up capital (paid-up share capital, retained earnings, etc.) to lend. The primary limit on how much they are able to lend (by Basel III regulations) is a multiple of this capital, nothing to do with the amount of deposits. Delinquent loans are therefore a loss recorded against this capital, which is shareholder equity - not customer deposits. The real problem for the bank is if more loans become delinquent than the capital they have, and they can't sell collateral for enough to cover it. Then they become insolvent. The Basel III rules increased the capital adequacy limits to try and lower the chances of banks failing after what happened in the GFC.

Bank runs are a liquidity problem because the bank's assets aren't all liquid enough to transfer out all the deposits the bank holds, but they can borrow bank reserves from other banks or the central bank in an emergency.

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

#560

Post by datalopers »

woah wrote: post #317
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…

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?

> nothing to do with crypto, it has to do with people sending their money to a con man

You've just described 99% of crypto though.

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