Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

FTX to file for U.S. bankruptcy, CEO resigns

reuters.com

Post reply on HN
Print view View original

661–670 of 1001 posts

Re: FTX to file for U.S. bankruptcy, CEO resigns

#661

Post by Animats »

sillysaurusx wrote: post #588
Animats wrote: post #515

Earlier quoted context omitted.

U.S. Department of Justice lawyers are already closing in.[1] Using customer funds held in custody is theft. Period. People go to jail for this. This may be the biggest embezzlement of customer funds held in custody in history. Most scams involve misuse of funds invested, not just held in custody. The biggest outright theft of this type seems to have been Peregrine Financial.[2] That was $200 million, far smaller tha…

I just want to say, you have some of the most fantastic coverage of events like this. It feels like having an investigative journalist on payroll. The delay between an Animats comment and this showing up in the news is significant. Thank you! (I remember your comments about the CEO that forged pay stubs being similarly excellent. Someday it might be worth collating them. In the meantime, whenever Animats says CEO Foo…

It's just knowing some basic financial history. Crypto scams are not new kinds of scams. They're mostly scams from the 18th and 19th centuries, with a new paint job. "Extraordinary Popular Delusions and the Madness of Crowds" (1841), has the first time around for most of these bad ideas. Mass market scams first got going when newspapers appeared. At last, you could reach large numbers suckers at low cost. Before newspapers, scamming was a one-on-one in person thing.

We still have both mass-market and one-on-one scams, but now they can both be done remotely. There's not much originality. It's mostly the same old scams of a few standard types, sometimes in new packaging.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#662

Post by JohnPrine »

fwip wrote: post #646
vishnugupta wrote: post #628

Earlier quoted context omitted.

There’s this incredulous passage from Sequoia article that’s been taken down since. Make of it what you will At this point, mid-2019, SBF decided to double down again—and scratch his own itch. He would bet Alameda’s multimillion-dollar trading profits on a new venture: a trading exchange called FTX. It would combine Coinbase’s stolid, regulation-loving approach with the kinds of derivatives being offered by Binance a…

Sounds like he forgot about the principle of diminishing returns. If you have $1B to your name, it's stupid to put it all on red, even if your expected return is positive.

Diminishing returns don't apply for SBF - his life's goal is to fund effective altruist charities, so each billion is as valuable as the last as long as there are good projects to fund.

I don't think people are comprehending how tragic this whole situation is (acknowledging that it's SBF's fault). This collapse put the brakes on a powerful force for good, and lives that would have been saved won't anymore.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#663

Post by aaronbrethorst »

twblalock wrote: post #567
tasubotadas wrote: post #555

Earlier quoted context omitted.

Why does this need to be regulated? We already have banks for that. And it's not like regulation saved them from being able to become insolvent.

Even in 2008, no depositors in FDIC-insured banks lost their money. Some banks died (Washington Mutual comes to mind), but it's not like FTX where the depositors are left with nothing.

I banked with WaMu in 2008. They died. Chase absorbed them. My account balances moved to Chase and were left 100% intact.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#664

Post by everfree »

tsimionescu wrote: post #599
RetpolineDrama wrote: post #546

Earlier quoted context omitted.

>I have never -- never -- encountered a value-producing use case for cryptocurrency that can't be solved by either signed git commits or a SQL database. I've heard a lot of people used it to buy drugs on the internet.

That works for a while - when it's an obscure new thing that the government doesn't know to look for. Afterwards, it becomes a public unchangeable ledger of the entire network of illegal trading.

The IRS currently has a $600k bounty on the ability to de-anonymize Monero transactions, which has so far gone unclaimed. Most crypto drug sales are transacted in Monero nowadays. Not every crypto has public and traceable transactions.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#665

Post by TacticalCoder »

shorthistory wrote: post #423

Can anyone speculate what Bankman-Fried's exit plan was? Was this a fraud that got out of control, or premeditated? If it was premeditated, what was the exit plan? Did he expect to be able to gamble with customer funds indefinitely? Were the Effective Altruism intimations genuine? Why, if Alameda was a market maker, and they therefore presumably have some form of insight into the markets, did they then decide to take…

> Can anyone speculate what Bankman-Fried's exit plan was?

I can speculate based on recently revealed facts.

SBF did grease politicians to the tune of 40 million USD in political donations. Several have described these donations as: "bribes" (I'll let you judge). (as a sidenote I wonder if these politicians are going to give these donations back to the people SBF scammed).

A US congressman, as reported here several times, wrote: "GaryGensler runs to the media while reports to my office allege he was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly. We're looking into this".

It's "allegedly" but it's a fact that a US congressman posted that.

It's also established that a colleague of the SEC's Garry Gensler happens to be the father of... Drumroll... The 28 years old woman CEO of Alameda.

So I'll speculate a TL;DR:

SBF was working hand in hand with corrupt politicians and corrupt officials to kick Binance out of the US through regulatory capture in order to grab Binance's insane market share (easily 10x the size of FTX).

SBF would then have continued the established FTX/Alameda scam through FTT. So he'd have then used FTX to pump the price of FTT (and, because why not, other manipulated shitcoins too) in order to keep pretending traders at Alameda were geniuses.

Alameda would have been fully legit and would have take shitloads of money from various pension funds and investment funds (knowing he already got some: why not think he would have gone for more?).

That's my speculation: why stop at 1/10th the size of Binance when you can donate tens of millions to politicians (which is pocket change when you're making billions) and work with the SEC to get a monopoly on crypto exchanges in the US, all the while pumping the value of your Alameda fund and all the while having covers of magazines and people everywhere (Bloomberg, Sequoia, JP Morgan, etc.) saying how big of a genius you are and how geniuses all people around you are.

The guy is a megalomaniac: no longer than a few weeks ago he was saying that companies worth tens of billions were "potential acquisition targets".

And I think that, had the overall markets not have been crashing hard, he may have succeeded at all that, creating a scam 10x or 100x bigger than the one he actually ran.

But the market crashed and CZ took the opportunity to reveal the FTT scam to get rid of a very dangerous competitor. No matter if Binance is legit or not: SBF was after Binance but Binance was too big for SBF too chew. Binance may be going down too (no clue about that) but Binance was never going to go down alone while letting SBF free to run his SEC-endorsed scam.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#666

Post by WontGetFooled »

stripedfish7 wrote: post #623
lazide wrote: post #611

Earlier quoted context omitted.

Crypto is incompatible with regulation and institutions because it was designed to be, and is consistently a part of the ethos espoused by pretty much all crypto players? Literally, the first sentence in the Bitcoin whitepaper (which arguably kicked off 'crypto' as a thing) is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going thro…

I don't understand your point. My grandfather tries to use only cash which allow 'payments to be sent directly from one party to another without going through a financial institution'.

No post body was provided.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#667

Post by lupire »

everfree wrote: post #597
twblalock wrote: post #528

This has been a wonderful social experiment, enabling people who didn’t live in the 19th century to see what happens when banking and investing is treated like the wild west. Maybe something could have been different this time? In the end it wasn’t, and it proves the necessity of regulation and institutions. There aren’t very many other aspects of our society where we get to have that kind of experiment and find out…

I don't see why crypto is incompatible with regulation and institutions. Crypto is a unit of account, not some magical lawless thing that's doomed to never have a regulation written about it. In fact, places like New York already have pretty strict regulations requiring specific licenses for crypto-related businesses. Crypto crises like these are in general due to regulation not having caught up yet, not because comp…

Crypto is naturally globally networked. What jurisdiction could it be in?

Re: FTX to file for U.S. bankruptcy, CEO resigns

#668

Post by killerstorm »

nwah1 wrote: post #496
nu11ptr wrote: post #488

Earlier quoted context omitted.

Separation of money and state is definitely a worthwhile goal in my opinion. Everything else is more questionable.

The state has a monopoly on the use of force. It can tax, expropriate, conscript, regulate, and otherwise redirect resources however it wants, and it can demand payments in any currency it chooses. The wishful thinking involved in trying to "separate" money and states is absurd. Even under a gold standard, the government can acquire resources from the public at will. The entire goal is nonsense. The root desire there…

People can move from one country to another.

The majority of people on Earth live in countries which are considered corrupt & incompetent and have regular bank crashes. It would be a good thing if we remove control of money from corrupt governments.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#669

Post by adastra22 »

stripedfish7 wrote: post #623
lazide wrote: post #611

Earlier quoted context omitted.

Crypto is incompatible with regulation and institutions because it was designed to be, and is consistently a part of the ethos espoused by pretty much all crypto players? Literally, the first sentence in the Bitcoin whitepaper (which arguably kicked off 'crypto' as a thing) is "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going thro…

I don't understand your point. My grandfather tries to use only cash which allow 'payments to be sent directly from one party to another without going through a financial institution'.

And that is arguably the simplest explanation of what bitcoin is: digital cash.

Re: FTX to file for U.S. bankruptcy, CEO resigns

#670

Post by coffeebeqn »

AYBABTME wrote: post #535
bmitc wrote: post #458

Earlier quoted context omitted.

My thoughts are that FTX was maybe a legitimate business, but then Alameda was his trading baby that just happened to be run by kids, including himself, that have no idea what they're doing and was losing money left and right. Then using FTX customer funds was viewed as just a "let's move these funds over to get our trading back on track and when we do, we'll move them back". That's my honest guess if I'm being gener…

I think they thought they were honest and doing things properly, and didn't realize that their holding of FTT was making them as bad as the other frauds before. I think these ouroboros are complex enough that even main players don't necessarily understand the position they've put themselves in.

Let’s not treat senior management and owners of a company that has gambled away billions of dollars of customers (and investors) money as kids. They should get jail time from what I’ve read so far.

They were either criminally stupid or did this on purpose. It really wasn’t that complex. This isn’t even close to 2008 complexity since this was all happening within one organization With the same owner SBF.

Post reply on HN