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What Happened at Alameda Research

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Re: What Happened at Alameda Research

#361

Post by keneda7 »

ajross wrote: post #331
wikfwikf wrote: post #321

Earlier quoted context omitted.

I justified it, at length, in the above comment by pointing out how little real information there was in the article about what had actually happened to BTX and Alameda. I did not say anything about "new investigative journalism". I said it was not news reporting. The claim that is is entertainment journalism is very simple. This type of piece is written, not to inform, but to entertain. That's why it focusses on col…

I'm still not understanding what part of the article you think is incorrect, and/or what information you wanted it to contain that it didn't. All this meta stuff about "what the article is for" is just confusing me. Again, I read it and liked it. If you don't want me to read this piece, what summary should I be reading?

I'm not the OP but to me the article did everything in its power to muddy the waters. It seems to try get me to feel bad for or even like someone who appears to have committed major crimes and lost billions of peoples money. If you didn't know anything about the situation and read this article you would think Sam did nothing wrong, is blameless, and just had some bad luck.

Not once did the article tackle the question of where did the money go or why is it okay for this persons company to misplace billion of dollars of customer money?

Re: What Happened at Alameda Research

#362

Post by simiones »

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]…

The information about a loan from was taken from the NYT interview [0]:

> Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.

> Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.

[0] https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...

Re: What Happened at Alameda Research

#363

Post by robertlagrant »

prego_xo wrote: post #344
jpm_sd wrote: post #294

Earlier quoted context omitted.

Was that $16B in "real money" (dollars), $16B in "pretend money" (astronomically overvalued cryptocurrency), or some of each?

Considering that "pretend money" is purchased with "real money", this distinction doesn't matter much. I guess it just depends on if you consider property valuable despite not having a green tint and dead political figure on it.

The question being asked is if the pretend money has risen in value subsequent to purchase, then is the amount lost the real money used to purchase it, or the pretend money at peak (or another) valuation.

Re: What Happened at Alameda Research

#364

Post by JamesianP »

simiones wrote: post #223
naijaboiler wrote: post #219

Earlier quoted context omitted.

this is exactly what happended at FTX/Alameda. A bunch of "smart" guys who backstopped and over-extended loans to players, and their losses were magnified with their over-leveraged positions, that was backed up with assets with no values. That's exactly what happens in just about every financial scandal.

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.

I think the "gambling" you referred to was their point, not the accounting games they subsequently played to try and get back into the black.

Re: What Happened at Alameda Research

#365

Post by memish »

chubot wrote: post #356
xdavidliu wrote: post #307

Earlier quoted context omitted.

> 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…

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

It's scary how many engineers are burning their credibility in exchange for some temporary internet points.

Re: What Happened at Alameda Research

#367

Post by JamesianP »

Scoundreller wrote: post #339
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…

An interesting part of Madoff recoveries were through settlements against originators/feeder funds because they « ought » to have known it was a ponzi. Unsure if FTX creditors will be able to do the same. But mostly, Madoff himself didn’t really spend much money. Just did nothing with it. The few pieces of fancy real estate he lived in were actually profitable because he didn’t build some gawdy illiquid palace. But t…

> An interesting part of Madoff recoveries were through settlements against originators/feeder funds because they « ought » to have known it was a ponzi.

Did the judge say that? I would think the logic was that they were effectively getting stolen money as gifts. Like when a scammer gives their victims' money to their own family. Doesn't matter if they were in the dark or even spent it already.

As I understand it, if stolen/scam money is used to buy something it's not the seller's responsibility because money is legal tender. On the other hand, if a stolen item is sold, the issue of knowing where it came from does becomes important.

Re: What Happened at Alameda Research

#368

Post by TrapLord_Rhodo »

matthewdgreen wrote: post #260
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…

I wonder how much of those $16B in customer deposits were actually lightly-traded altcoins that could never have been liquidated at anything close to that value? There is no doubt they defrauded people of a lot of (real!) money, but my guess is a huge chunk of that $16B top-line figure is fantasyland dog-coin nonsense. Whereas the LTCM and Enron investors at least started with real cash.

Dog-coin nonsense has a 24hr trading volume of $669M. There's actually quite a bit of liquidity in crypto since it lends itself to HFT.

BTC for instance has a 24hr TV of $37B, making it one of the most exchanged assets in the world.

Re: What Happened at Alameda Research

#369

Post by simiones »

JamesianP wrote: post #364
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.

I think the "gambling" you referred to was their point, not the accounting games they subsequently played to try and get back into the black.

My point is that the real problem isn't that Alameda was over-leveraged or gambling, it's that SBF stole user funds from FTX to try to rescue Alameda. This is not what (some of) those other companies did.

Re: What Happened at Alameda Research

#370

Post by Scoundreller »

JamesianP wrote: post #367
Scoundreller wrote: post #339

Earlier quoted context omitted.

An interesting part of Madoff recoveries were through settlements against originators/feeder funds because they « ought » to have known it was a ponzi. Unsure if FTX creditors will be able to do the same. But mostly, Madoff himself didn’t really spend much money. Just did nothing with it. The few pieces of fancy real estate he lived in were actually profitable because he didn’t build some gawdy illiquid palace. But t…

> An interesting part of Madoff recoveries were through settlements against originators/feeder funds because they « ought » to have known it was a ponzi. Did the judge say that? I would think the logic was that they were effectively getting stolen money as gifts. Like when a scammer gives their victims' money to their own family. Doesn't matter if they were in the dark or even spent it already. As I understand it, if…

No, but I think they were all settlements, so one needs to read between the lines.

But maybe you’re right and it’s just recoveries of their commissions etc.

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