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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#351

Post by scottyah »

matthewdgreen wrote: post #327
tommica wrote: post #306

Earlier quoted context omitted.

But those coins were most likely purchased with real money?

Yes, but how much real money is the question. I'm not doubting that real money was lost, just wondering if $16B of actual customer dollars ever flowed into the exchange.

Exactly, I always wondered what the real numbers looked like. It's so easy to mint 100 coins, get a friend to buy one at $100, and say you "have" $9,900.

I wouldn't be surprised if the number of actual dollars was less than $100 million.

Re: What Happened at Alameda Research

#352

Post by SilasX »

ghufran_syed wrote: post #346
SilasX wrote: post #226

Earlier quoted context omitted.

I was replying to this: > A bunch of PhD traders lost their wealth That is, the only reason the losses were limited to them was because of special intervention. Otherwise, it would have caused losses for many others.

right, but if a counter-party ends up losing money because of incorrect assessment of credit or liquidity risk, isn’t that their own responsibility? It’s like when someone can’t pay the mortgage loan a bank lent them - the borrower isn’t performing under the terms of the contract, but part of the payments that borrowers make to the lender is to account for that credit risk - what matters is if the lender has accurate…

Yes, I understand how financial contracts work. But like I said in my original comment[1], at the top of this subthread, that provides vital context for the point I'm making, this was big enough to have the potential to cascade, i.e. be such a big loss -- against such a formerly-safe capital buffer -- as to spill over to other financial institutions, bankrupt them, then spill over to their counterparties etc, and eventually to the broader markets that are many degrees removed.

The kind of situation they were worrying about and rushed to prevent in 2008, IOW.

You are correct, in a trivial sense, that maybe the entire market should have just not trusted anyone else, except perhaps under extreme constraints, which would have amounted to almost no financial intermediation and thus almost no financial industry whatsoever. But even the most hardcore "you should have vetted your counterparty" finger-waggers aren't willing to go that far.

[1] https://news.ycombinator.com/item?id=33608638

Re: What Happened at Alameda Research

#353

Post by jasmer »

SilverBirch wrote: post #286
jasmer wrote: post #220

Earlier quoted context omitted.

The NYT is not supposed to 'stick with what they can prove'. That's definitely not the bar they have or else they wouldn't be able to publish much. Journalists should be a bit cynical, dig for info. The NYT has more resources than anyone, and should be able to ask around, do some actual blockchain work, interview others. This story looks like one of the biggest frauds in history, likely because it is, it's the job of…

It's pretty insane to me that you think the NYT would ever deliberately print accusations they couldn't prove. I also think you're massively overstating the role of the NY Times, yes they have resources but they have to cover massive breadth. The NY Times isn't really going to be an expert in every topic, and there are real expert reporters out there who are going to dig in to this for specialist information. In this…

"NYT would ever deliberately print accusations they couldn't prove."

That statement implies a misrepresentation of what I said, and a misunderstanding of what journalists do.

Journalist investigate, source, and provide clarity.

This is one of the biggest frauds in history, it's the job of the NYT to investigate the issue, and show us what's up. If there's likely fraud, they should be spelling that out.

They've already admitted to using deposits to make risky bets at Alameda, which is fraud. There should have been a lot more questions about that alone. Just to start.

Instead, it was a light nothingburger puff piece.

There are better sourced artifacts on Twitter - this very article provides more valuable information that the NYT.

"basically getting SBF to admit he was running a ponzi in an interview - an admission that made absolutely no difference because everyone kind of knew it was all a scam anyway"

To suggest that the people with collectively billions in FTX 'knew it was a ponzi/fraud' and willingly lost all of their money is absurd.

Re: What Happened at Alameda Research

#354

Post by shawabawa3 »

JumpCrisscross wrote: post #272
simiones wrote: post #223

Earlier quoted context omitted.

FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS) and loaned them out to Alameda to gamble with. That is entirely different from being over-leveraged and having your debts default.

> FTX took customer deposits (which were supposed to be held in custody and untouched, according to their TOS) and loaned them out to Alameda to gamble with This is what I initially suspected. But we can see FTX's balance sheet [1]. There is no loan to Alameda. "FTX shot its customer money into some still-unexplained reaches of the astral plane" is the best explanation we have for billions of missing dollars [2]. [1]…

That balance sheet is a total joke and of course it doesn't include an extremely illegal loan explicitly written on it

Re: What Happened at Alameda Research

#355

Post by Ntrails »

DebtDeflation wrote: post #120

> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these…

> if what we're starting to hear is correct, FTX may be one of, if not the, biggest financial frauds/scandals in history. The media doesn't seem to be treating it as such.

I think the media treats anything to do with crypto as much more buyer beware than eg Enron

Re: What Happened at Alameda Research

#356

Post by chubot »

xdavidliu wrote: post #307
memish wrote: post #284

Earlier quoted context omitted.

He was skeptical even though SBF wanted to give him money , not the other way around. And people Elon knew were pushing for SBF. Elon ended up ghosting him anyway. Look at the chat logs that were revealed in court. Michael Grimes [IBanker at Morgan Stanley]: Do you have 5 minutes to connect on possible meeting tomorrow I believe you will want to take? Elon: Will call in about half an hour Michael: Sam Bankman Fried i…

> Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network. Anyone able to evaluate this comment? Is this another "poorly batched 1000 RPCs slowing down home timeline" remark?

It's true, and the RPC comment is also very plausible

It's definitely not as ridiculous as what lots of experienced engineers are oddly saying

e.g. simply open up Twitter in Chrome's devtools and look at the networking tab -- I get 148 requests that finish in 6.3 seconds

That is very plausibly "1000 poorly batched RPCs" that makes Twitter slow in other countries -- if it's 6 seconds for me, it's easily 20, 30, or 60 seconds for others

It will be shocking to me if some executive attention on latency can't halve it, in short order. The problem with latency is that no one team is in charge of it -- every team is incentivized to use as much latency budget as possible to ship their feature.

Larry Page harped on at this at Google for a decade, until he kind of gave up / moved on, and Google became nearly as slow as every other website.

So Elon is absolutely doing the right thing with respect to latency -- he's not wrong, and he's not micro-managing.

----

Yes Elon is not infallible -- he made flatly wrong claims about self-driving for years, despite experts in the field telling him otherwise, to his financial benefit. And Tesla is being rightly investigated for those claims (years too late, probably)

It doesn't mean that Twitter isn't slow as hell for extremely basic reasons

Re: What Happened at Alameda Research

#357

Post by shawabawa3 »

elie222 wrote: post #287
DebtDeflation wrote: post #120

> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these…

They haven’t lost 16b though. Unclear if we have accurate info from Sam but the situation is more like 9b in liabilities with 70% of that in liquid and illiquid assets. People getting back that much is highly optimistic but the 16b doesn’t seem accurate at all. FTX already paid users out $5b btw

> 9b in liabilities with 70% of that in liquid and illiquid assets

They have $9B in liabilities, and realistically they have about $1B in realisable assets. On the balance sheet Sam has included about $7B worth of Serum and FTT, both of which vastly exceed their circulating market cap and are also effectively worthless as the businesses they represent have lost all credibility and/or are insolvent (Serum is a decentralised exchange created by FTX)

Re: What Happened at Alameda Research

#358

Post by NickC25 »

Stranger43 wrote: post #237
NickC25 wrote: post #205

Earlier quoted context omitted.

>but this is kind of hard to do when government work is not seen as something of particularly high status, Super easy to solve for - pay them more. With the amount of money the government has (the DoD has a nearly 2 trillion dollar yearly budget), it should be relatively trivial to be able to outspend the private sector. I hate paying taxes, but if those taxes go towards paying an extremely competent professional who…

But is it easier to outspend the private contractors(staffed full of former generals) that end up rewarded contracts based on their ability to network with government officials? The pentagon budget is a chronic scandal and a pretty good example of exactly how the private-public partnerships is creating a system where everyone benefits from the government being seen as inefficient.

>But is it easier to outspend the private contractors(staffed full of former generals) that end up rewarded contracts based on their ability to network with government officials?

Sure. You know, you can also prevent that from happening, right? Any former high ranking military official gets a pretty nice pension and benefits. those alone are more than enough to last a lifetime.

You want to go work at a defense contractor after retiring from the military? Fine, give up your benefits, give up your pension, give up your VA healthcare rights, give up your security clearance.

Using taxpayer money to fund the retirement of a former general who then takes their knowledge and relationships (again, both paid for by taxes) to the private sector to enrich themselves seems highly unethical and a massive conflict of interest. You're essentially bankrolling the development of someone who is going to eventually sell that knowledge to people who profit off of ripping off the very institutions you (as a solider) swore to protect and defend.

Re: What Happened at Alameda Research

#359

Post by zucker42 »

helsinkiandrew wrote: post #240
kristianov wrote: post #4

Two words: Ponzi Scheme.

This was nothing like a Ponzi scheme - the money was lost due to bad trades, poor collateral, bad accounting/compliance with probably a little bit of criminality thrown in at the end. Although they were trading crypto it was more like an old fashioned/real money collapse.

There's a slide deck floating around[1] purported to be from Alameda research in 2018. That deck claims they offer 15% fixed returns to investors. If that slide deck is genuine, it seems possible that the unaccounted for money at Alameda Research went to paying for redemptions by early investors. Given how bad the accounting at FTX/Alameda seems to be, it seems possible to me that Alameda investors were paid back at high APYs even as the underlying strategies performed poorly, and the people at the top might not be aware that they were heading towards insolvency. If this is the case, it would be close to a pure Ponzi.

Now I don't really know how likely this is because there's very little public information about Alameda. It's also possible that Alameda bought Doge and Shiba which proceeded to crash 10x.

[1] https://www.theblock.co/post/186187/alameda-promised-high-re...

Re: What Happened at Alameda Research

#360

Post by keneda7 »

SilverBirch wrote: post #177
wikfwikf wrote: post #74

Earlier quoted context omitted.

The NYT article is headlined "How Sam Bankman-Friedʼs Crypto Empire Collapsed". The parts of the article which actually answer this question are, in their totality, as follows: > Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange, Par 6. Common knowledge, finance-splained and followed by equivocation and hand-waving from SBF. > On Nov. 6, Mr. Zhao ann…

I think you're misunderstanding what the NYT article is, it's not a piece of deep investigative journalism, it's an interview with SBF with context attached.

I am generally curious what your position is here? You seem to be arguing the NYT article is not a fluff piece but then with this comment you admit its not investigative journalism but rather a fluff piece? I don't understand.
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