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

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

#691
post #646

Earlier quoted context omitted.

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.

> 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.

Let's be honest: we don't know what his life goals are. He said that his goal is to fund charities, but that's a pretty common thing for wealthy people in the U.S. to say because saying so gives you a lot of social status at no cost. Very few people actually proceed with any plans of significant charitable donations.

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

#692

Earlier quoted context omitted.

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 news…

I find all of it so fascinating. I wrote up Wasendorf’s story just now, mostly out of curiosity: https://news.ycombinator.com/item?id=33565992

Stories like that are really interesting to dig into. They all seem to get caught because the world changes (audits happening via internet in Wasendorf’s case, the economy imploding and sinking Alameda’s risky investments, etc) rather than from any particular mistake. The mistake always seems to be that they started cheating in the first place, and then it was just a matter of time.

Of course, we only hear about the ones who were caught. It makes you wonder how many stories like this were swept under the rug — if Alameda had made money instead of losing it, FTX would probably still be online, even though they’d still be committing the same large scale fraud.

Anyway, thanks again for all this, and especially for all the detail you put in. (Your comment pointing out that SBF is firmly under the SEC’s jurisdiction was wonderful.)

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

#693
post #458

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…

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…

Seeing these kids talk puts it even more into perspective. Just watch this video of Caroline Ellison, CEO of Alameda.

https://www.youtube.com/watch?v=aW6SqLXw944

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

#694

"Voluntary Chapter 11" in Delaware. Figures. That gets them out from bankruptcy in the Bahamas, which is much tougher than US law. The Bahamas still has classic tough bankruptcy laws, where there's no debtor-in-possession reorganization. It's straight to liquidation, with a court-appointed receiver in charge. This should be, and may be, converted to a straight liquidation. Chapter 11 can be useful for restarting comp…

Wait, why does a Bahamas based company get to choose the jurisdiction where its bankruptcy proceedings are held? Surely if they are a Bahamas company they are beholden to Bahamas bankruptcy laws?

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

#695
post #667

Earlier quoted context omitted.

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?

The internet is also naturally globally networked, and it's regulated in every jurisdiction.

When a packet hops from one country to another, it's bound by a different set of laws. Same thing with an international financial transaction, crypto or otherwise.

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

#696

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…

Quoted post unavailable.

> What a wonderfully ignorant statement to make.

Can you please make your substantive points without personal attacks or name-calling? Your comment would be fine without this bit.

https://news.ycombinator.com/newsguidelines.html

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

#697

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…

This is pretty clearly not a failure of cryptocurrency. Bitcoin et al. are still chugging along just fine. This is, once again, a failure of a centralized business in which people placed way too much trust. I hope SBF, and other "crypto" company execs, are held accountable for misleading customers about their offerings. Specifically calling it crypto when it's not.

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

#698

"Voluntary Chapter 11" in Delaware. Figures. That gets them out from bankruptcy in the Bahamas, which is much tougher than US law. The Bahamas still has classic tough bankruptcy laws, where there's no debtor-in-possession reorganization. It's straight to liquidation, with a court-appointed receiver in charge. This should be, and may be, converted to a straight liquidation. Chapter 11 can be useful for restarting comp…

Withdrawals halted yet one of the FTX hot wallets had hundreds of thousands of BUSD and USDC going out earlier today.

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

#699

I'm not a luddite (on hacker news lol) and I can clearly see the revolutionary potential of blockchain. But, for the love of God, can we STOP the blind short-term speculation on the promise of extreme wealth. Moderate investment can support development without the kind of hype that ruins lives and sullies public perception of the technology.

> can we STOP the blind short-term speculation on the promise of extreme wealth I first played around with blockchain in 2011 or so and I still don't know what actual utility this technology is supposed to have. 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. Around 2015 a lot of people I thought were smart enough…

>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.

You have always --always-- lived in a high trust society with trustworthy institutions

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

#700

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…

This is pretty clearly not a failure of cryptocurrency. Bitcoin et al. are still chugging along just fine. This is, once again, a failure of a centralized business in which people placed way too much trust. I hope SBF, and other "crypto" company execs, are held accountable for misleading customers about their offerings. Specifically calling it crypto when it's not.

That's what people don't get. FTX' spectacular failure is literally an advertisement for decentralization.
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