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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

#71

Post by boopboopbadoop »

malikNF wrote: post #56

To 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…

> 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

Sequoia and their team of analysts, lawyers, etc did not see anything wrong with FTX. You expect individual investors to be able to research and see something wrong?

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#72

Post by pifm_guy »

Is it possible to run a crypto exchange 'honestly'?

Ie. Actually holding all the assets you claim to hold?

I suspect the answer might be no... If you were to set up an honest exchange today, you would be outcompeted by dishonest exchanges who spend all their customer deposits on marketing schemes, referral bonuses, liquidity incentives, etc.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#73

Post by RandomBK »

woah wrote: post #50
braingenious wrote: post #5

This has been some of the funniest few days in recent memory. Even my crypto true-believer HODL maximalist friends are questioning the entire ecosystem and its value. I think it’s funny that so many people have been hypnotized by get-rich-quick schemes and promises of a utopian monetary system while forgetting what the original —actual— value proposition of crypto was: Buying heroin. As a corollary to “not your keys…

Why would this make someone question crypto? FTX was not a blockchain. It was a website run by one guy which (incorrectly) told you that he was holding some crypto for you. FTX could have been an exchange for anything, and it would have been the same outcome, had the CEO gambled with customer deposits like SBF did

Because there's crypto, and then there's "crypto".

While FTX & co. don't match the technical blockchain-based definition of crypto, they are what people think of when they talk about the crypto ecosystem, and are part of the crypto hype chain.

If we filter the crypto market to only the true not-my-keys-not-my-coin crowd, the market wouldn't be anywhere near as large and influential as it is today.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#74

Post by BLKNSLVR »

woah wrote: post #50
braingenious wrote: post #5

This has been some of the funniest few days in recent memory. Even my crypto true-believer HODL maximalist friends are questioning the entire ecosystem and its value. I think it’s funny that so many people have been hypnotized by get-rich-quick schemes and promises of a utopian monetary system while forgetting what the original —actual— value proposition of crypto was: Buying heroin. As a corollary to “not your keys…

Why would this make someone question crypto? FTX was not a blockchain. It was a website run by one guy which (incorrectly) told you that he was holding some crypto for you. FTX could have been an exchange for anything, and it would have been the same outcome, had the CEO gambled with customer deposits like SBF did

Human behaviour.

But also, it's predicting human behaviour, like a trader attempting to get in front of the trade flood. There's going to be pain as a result of further dominoes falling that were propped up against FTX, and this will result in a shark-like media feeding frenzy that will scare off, for years, any (potential) retail traders that weren't already in the game.

You're not wrong, it's just that humans are more emotion driven than logic driven. Logic requires effort and second-order thinking, emotion is passive; involuntary.

There's also the very real distinction between Bitcoin (and Ethereum) and "the rest"; the other fucking thousands of 'projects' that has VC / insider distributions and haven't had the time to decentralise and / spread themselves amongst a large group and still have the ability to be controlled by a central entity.

I'm no Bitcoin maxi, but I'm inching closer, which is not the direction that progress should be taking me, and it's due to fraudsters corrupting the ideals, and seemingly being in The majority as it relates to founding projects and services in the cryptocurrency space.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#75

Post by dandelany »

woah wrote: post #50
braingenious wrote: post #5

This has been some of the funniest few days in recent memory. Even my crypto true-believer HODL maximalist friends are questioning the entire ecosystem and its value. I think it’s funny that so many people have been hypnotized by get-rich-quick schemes and promises of a utopian monetary system while forgetting what the original —actual— value proposition of crypto was: Buying heroin. As a corollary to “not your keys…

Why would this make someone question crypto? FTX was not a blockchain. It was a website run by one guy which (incorrectly) told you that he was holding some crypto for you. FTX could have been an exchange for anything, and it would have been the same outcome, had the CEO gambled with customer deposits like SBF did

Because “believing in crypto” (for most people) doesn’t just mean believing that the math works. It means believing that we can build a sociopolitical ecosystem that allows crypto to be a useful part of our lives in the future. To many, SBF seemed like an important visionary working to make that future happen. The fact that he turned out to be YET ANOTHER scumbag scam artist, fraudulently trading customer deposits like all the rest, will incinerate any goodwill the crypto community was starting to build in the eyes of regulators, politicians and the non-tech-world at large.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#77

Post by [deleted] »

chunky1994 wrote: post #65
anonym29 wrote: post #30

Earlier 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 drug trade is definitely culpable for violence and human misery. Unless you're perhaps talking exclusively about psychedelics (and even that isn't squeaky clean, but production and distribution is less violent due to the origin and effort required in distribution), the users while not directly responsible, are absolutely funding some grotesque stuff behind the scenes that they usually brush under the rug. None of…

[deleted]

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#78

Post by lakecresva »

chrisco255 wrote: post #39
whatever1 wrote: post #12

I am glad that most of HN had called this crypto/NFT/web3.0/ICO BS loong time ago. That contrasts with Mega VCs, celebrities, politicians etc who were praising this tech-glorified Ponzi scheme. Good job to us!

This has happened in tradfi more times than anyone can count. Lehman, Enron, Madoff, etc. Far more scams in tradfi.

Hell yeah. If we can't detect all fraud all the time, we shouldn't bother trying to detect any new forms of fraud that emerge.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#79

Post by formerkrogemp »

ethbr0 wrote: post #25
andirk wrote: post #17

This 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.

It speaks to the fact that in the absence of regulation, you get exactly what happened repeatedly in Eve Online -- people eventually get bored and/or things get tough, and then they decide it's easier to steal money. Banking regulations exist to counterbalance the personal incentive to abuse any authority you have and take off which what you can take. In the absence of regulations, everyone does exactly that... event…

> In the absence of regulations, everyone does exactly that... eventually.

Even with regulation we probably all have our number, our price.

Re: FTX’s SBF had a secret 'back door' to transfer billions off the books

#80

Post by stjohnswarts »

snowwrestler wrote: post #29
andirk wrote: post #17

This 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.

It's basically digital cash but a whole hell of lot easier to move around in quantity. Whether that is use for good or ill is orthogonal. There are lots of people who see the direction most (all?) of the governments of the world are leaning in to fascism and control (or at least surveillance) of all areas of our lives because they think we're all children. It was a nice dream I suppose.
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