It's tempting to say he did it or inside job, but things never are as obvious as they seem. Why not just quietly siphon off funds from a cold wallet to his personal wallet? Why use a malicious app at all? This leads me to believe it was not an inside job.
FTX’s SBF had a secret 'back door' to transfer billions off the books
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Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#52Earlier quoted context omitted.
The value proposition was uncensorability, irreversibility, non-inflationary nature, and permissionless nature. It's a tool that can be used for good or evil, just like the personal automobile, which was also abused in early years for malicious ends - just as telephony, the internet, and a number of other technologies were. Criminals are early adopters of new & emerging technologies, that doesn't make those technolog…
> The value proposition was uncensorability, irreversibility, non-inflationary nature, and permissionless nature. This boils down to two things, really: 1. To skirt the law (aka regulatory arbitrage) and 2. Act as a techno-libertarian “sound money” experiment. Ghost guns can be used for good. But it’d be pretty silly to suggest that criminals use them because they’re early adopters. Criminals use them because they’re…
I'd disagree on your first point. A critical component of systems that should skirt the law would be untraceability. A cryptocurrency like Monero or Zcash has this property (or attempts to, at least), and they are much stronger candidates for that use case.
Uncensorability is a desireable property for legal adult content producers, who are locked out of many payment platforms despite operating entirely within the law.
Irreversibility is a desireable property for merchants, who are the ones left holding the back when chargeback fraud occurs.
Permissionless nature is a desireable property for those at risk of discrimination from traditional financial institutions. While rare in the developed world for law-abiding customers, there are plenty of countries where people of certain races, religions, and ethnic groups are denied access to financial resources like a bank account because of such factors.
While these traits may be attractive to criminals, especially ransomware authors, they aren't only attractive to criminals, and all of them find demand in law-abiding users, as detailed above.
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#53This is a story of a corrupt CEO. The main crypto part of it is that FTT was seen as actual money on its balance sheets. This individual stealing people's money sheds light on how regulations exist for a reason, especially when handling billions of USD. Doesn't really speak positively or poorly on cryptocurrency as a technology though.
THE big argument in favor of cryptocurrency as a concept was that it freed people to store and transact value without interference or oversight by governments and institutions. A big argument against cryptocurrency was that those governments and institutions had developed financial oversight for a reason.
in a way crypto claimed you could have faith in "math" while in fact nothing should be trusted blindly, since we didn't write said "math", and regulations are one fairly known way to enforce a higher level of trust
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#54Earlier quoted context omitted.
Crypto has a strong reputation as a haven for money laundering, drug sales... So if any of the Mexican/South American drug cartels lost a lot of money Sam and the other top management of those companies could end up dead.
Serious Q, but what incentive would they have in killing him? Would that get them their money back? Wouldn't they lose more than they could gain?
Anger
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#55Earlier quoted context omitted.
Crypto has a strong reputation as a haven for money laundering, drug sales... So if any of the Mexican/South American drug cartels lost a lot of money Sam and the other top management of those companies could end up dead.
Serious Q, but what incentive would they have in killing him? Would that get them their money back? Wouldn't they lose more than they could gain?
To encourage their other money launderers to stay in line. Criminals can’t rely on things like contracts since they can’t take someone to court so one way to prevent cheating is the threat of violence against the person or their family.
In this case, I’d bet that he’s safe if he ends up in federal custody since being in prison is also effective punishment from this perspective. If not, it’s easy to imagine something happening to him if he tries to hide somewhere since the message “you can’t run far enough” will heard by everyone in that world.
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#56To the ones who are saying this is a failure of crypto currencies.
FTX was a regulated exchange, so your alternative to crypto currencies is then broken as well, the regulators didn't then do their job, this scammer Sam Bankman-Fried was allowed to create fake money out of thin air and the regulators were not able to stop them.
If you can't follow the mantra "not your keys not your crypto currencies" or if you don't have the technical ability to hold your own keys then don't take part in it.
You let someone else hold your crypto currencies, don't take the time to check if the said people holding your money has any validity and then you lose all your money? it unfortunately is your fault for trusting a scammer, you got duped by a scammer, just because someone can run a Superbowl advert, get main stream media to call them an amazing vegan who's such an amazing role models to us all, or hire a few celebrities to say good about their company doesn't make them someone you can trust.
Crypto currencies and block-chains are still a very young and developing industry, its risky, there are thieves like Sam Bankman-Fried and then there are politicians and other special interest groups who will get in to bed with these scammers and try to take your hard earned money from you. Don't be a victim to this kind of scum.
Crypto currencies and blockchains are here to stay.
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#57How could this all happen? Is there no regulation?
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#58This is a story of a corrupt CEO. The main crypto part of it is that FTT was seen as actual money on its balance sheets. This individual stealing people's money sheds light on how regulations exist for a reason, especially when handling billions of USD. Doesn't really speak positively or poorly on cryptocurrency as a technology though.
THE big argument in favor of cryptocurrency as a concept was that it freed people to store and transact value without interference or oversight by governments and institutions. A big argument against cryptocurrency was that those governments and institutions had developed financial oversight for a reason.
FTX did not allow people to “store and transact value without interference”. It was an institution which held user funds. All FTX users who transferred the crypto they bought out to their own wallets were unaffected by this scam. It was the people who’s money was held in FTXs traditional bank accounts who were robbed.
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#59I know there are inherent issues like high energy consumption in the technology. But I believe that blockchain and the decentralization has some value to it. For example where I'm coming from, I can't accept payments via PayPal, it's nothing to do with PayPal but our government is not pushing to meet the requirements to get PayPal to our country. Also we can't hold USD due to government regulations, if we get the tra…
> people who used it to get rich quick by running these Ponzi schemes
The problem with any new currency is that unless an entire government forces it on people, there's no real reason for anyone to use it. Think about it: what use is a currency that no bank will store, no business will accept as payment, and nobody else has ever heard of?
There needs to be some incentive to "get the ball rolling". Bitcoin relied on using an artificially imposed cap on the total coins to force the currency to be deflationary, rewarding early adopters. The earlier you get it, and the more you commit, the more you are rewarded. This gets things moving, hopefully to the point where it becomes a real currency.
The hiccup with this is that it turns any currency utilising this mechanism into a giant Ponzi scheme. It's a inherent trait of deflationary currencies, and no amount of arguing will ever make that not be true. Rewarding the early adopters with the cash deposited by later adopters is the point! It's not some accidental side-effect that can be swept under the rug. It's also the literal textbook definition of a Ponzi scheme.
Other people saw that there was $$$ to be made, so this concept has been copied into virtually all cryptocurrencies. What would be the point of some SV startup of 10 pimply kids making a currency that didn't reward early adopters? Nobody would give a shit, not even their own friends and relatives. But if there's that sweet early-adopter profits to be made? Suddenly billionaires will dump a few million in and profit.
This is just the nature of the entire ecosystem now, and arguments against are either hopeless naive, or a waste of everyone's time.
The only way crypto can ever be legitimised is not "organically", like it is now, but by the actions of large organisations. If a bunch of banks got together to make "Terran Credits" based on a blockchain, without the deflationary aspect, that would work, perhaps used for centuries... but nobody could "get rich quick" off it, so it wouldn't be an exciting web 3.0 opportunity. It would just be... money.
Oh, and of course, the corollary is that if big banks or some governments got together to make "Earth Bux" or whatever, you can bet it would have all the same rules and restrictions around it that there are now around holding gold, USD, or whatever.
Wherever you are, the government will continue to impose their will upon you, one way or another.
Re: FTX’s SBF had a secret 'back door' to transfer billions off the books
#60The psychology of this is fascinating.
Here we have crypto golden child SBF worth billions of dollars. He literally never had to do anything for the rest of his life. Even if he lost billions on Alameda and/or fTX he'd still be completely fine. Instead, he seemingly stole FTX customer assets in a failed attempt to save Alameda, run by his girlfriend.
The upside here was what? More money? How much money do you need? Or is it not about the money but rather he simply values how he's perceived? So instead he's going to be a John McAfee like figure or spend a significant chunk (if not the entirety) of the rest of his life in prison because this will absolutely end in US criminal prosection.
As an aside, crypto-skeptics such as myself will point out using an exchange like this still requires trust (like TradFi). DeFi Andys will say DeFi doesn't. Crypto Andys will still argue crypto's imagined benefits but one of those "benefits" is the irreversibility of transactions, which means in cases like this where assets are stolen, backdoored, hacked (I'm being generous) or whatever, you have no recourse to get them back.