FTX used corporate funds to purchase employee homes, new filing shows • Hacker News Board

Re: FTX used corporate funds to purchase employee homes, new filing shows

#61

Post by foobarian » Thu, Nov 17, 2022, 5:37 PM UTC

bostonsre wrote: post #41

dahdum wrote: post #37

Earlier quoted context omitted.

They are a public company traded on NASDAQ, so there's more visibility than just about anyone else.

That's good to hear. I don't invest in crypto, and it sucks that some unreputable companies are impacting the space, but at least there is a relatively safe haven where people that do invest can avoid scams.

Honestly I think it's unfortunate that crypto turned into such a big investing platform. The whole point of something like BTC was that it would be a currency, not an investment.

When filling a tank from zero, there is inevitably a lot of growth at first. I think this is what happened to BTC and attracted a lot of the wrong kind of usages. I wonder if when the ecosystem reaches an equilibrium it will become better at being what it promised originally.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#62

Post by gruez » Thu, Nov 17, 2022, 5:38 PM UTC

ValentineC wrote: post #56

whymauri wrote: post #49

Earlier quoted context omitted.

Throwback to when HN was praising FTX for running so 'lean' and 'efficiently,' only hiring the bare minimum to be successful.

I couldn't find any such comments, but this one from August 2021 aged really poorly: https://news.ycombinator.com/item?id=28798944

Aged poorly in what sense?

1. "FTX is very well capitalized" - given that August 2021 was in the middle of the crypto bull market, that statement was probably true at the time. Sure, it became poorly capitalized later, but that wouldn't make the comment age poorly, any more than a statement like "the fed has inflation under control" in 2019 would age poorly.

2. "Can you show me even napkin math that shows FTX going under if USDT blows up in a realistic scenario" - FTX blew up for an entirely different reason

Re: FTX used corporate funds to purchase employee homes, new filing shows

#63

Post by selectodude » Thu, Nov 17, 2022, 5:39 PM UTC

bkishan wrote: post #40

bluedevil2k wrote: post #11

Earlier quoted context omitted.

They’re not impossible any more and with this getting so much press and the US government likely looking to make an example of SBF, look to get a very detailed trail of where all the $ went. I mean, do you really think, factoring in that he had no accountants and no compliance at all, that he somehow had some of the best money launderers and embezzlers in the world? I highly doubt it, it was probably as amateur as th…

> the US government likely looking to make an example of SBF. Considering the silence from top officials, I don't think this is going to be true. Don't forget he donated ~$50M to the democrats for the mid-terms and was the second biggest dem donor.

Madoff was a Democratic mega-donor and he went to jail as well.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#64

Post by huevosabio » Thu, Nov 17, 2022, 5:39 PM UTC

moneycantbuy wrote: post #28

how did ftx successfully raise so much vc money recently? do these top vc firms do no due diligence?

I have the same question.

My best guess is that these VCs need to deploy so much capital that they don't really do due diligence, instead they go by "founder vibes" and "vision", a watered down version of "invest in the team, not the product". Sequoia, SoftBank, a16z all seem to be guilty of this.

Anecdotally, Chamath Palihapitiya, in the recent All-in Podcast [0], said that they met with SBF and as a condition to invest they wanted to get rid of dual class voting shares (or something like that) and a board. FTX leadership (not necessarily SBF) replied with "fuck you".

So I guess you have some VCs trying to do the right thing, but if founders can get capital with no strings attach elsewhere, then your ability to deploy that capital is hampered. Essentially, until recently there were was more capital than founders, so founders could just do whatever (and SBF did).

I would expect that this changes a bit with raising interest rates and a tech downturn, but a16z's $350M investment in Adam Neumann's newest Thing makes me think that we are still flush with money ready to be thrown at anyone that has the connections to get a coffee chat in Sand Hill Road.

[0] https://open.spotify.com/episode/3CKYt4mKxndPkEfAvc7SM0?si=e...

Re: FTX used corporate funds to purchase employee homes, new filing shows

#65

Post by twelve40 » Thu, Nov 17, 2022, 5:40 PM UTC

moneycantbuy wrote: post #28

how did ftx successfully raise so much vc money recently? do these top vc firms do no due diligence?

depends on the stage, at some stages you are just pitching the growth (maybe even just the future growth), not the current financials, which may be terrible for any number of reasons.

That, or fraud, of course.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#66

Post by bluedevil2k » Thu, Nov 17, 2022, 5:43 PM UTC

gruez wrote: post #62

ValentineC wrote: post #56

Earlier quoted context omitted.

I couldn't find any such comments, but this one from August 2021 aged really poorly: https://news.ycombinator.com/item?id=28798944

Aged poorly in what sense? 1. "FTX is very well capitalized" - given that August 2021 was in the middle of the crypto bull market, that statement was probably true at the time. Sure, it became poorly capitalized later, but that wouldn't make the comment age poorly, any more than a statement like "the fed has inflation under control" in 2019 would age poorly. 2. "Can you show me even napkin math that shows FTX going u…

It was never well capitalized. They used their own made up token as an asset and assigned a fake inflated valuation to it.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#67

Post by ingenieros » Thu, Nov 17, 2022, 5:43 PM UTC

gruez wrote: post #51

ingenieros wrote: post #45

Earlier quoted context omitted.

Effective altruism at its finest. LOL

What does effective altruism have to do with VCs that invested in FTX and their due diligence? If anything effective altruism is downstream from that.

Sam used the EA card and his generous donations to places like MIT's Media Lab in the same way Epstein did. This not only earned him tons of goodwill from the scientific community, but it also allowed him to rub shoulders with the likes of Tony Blair and Clinton. Who wouldn't want to invest in someone who is helping to make the world better and has all these aforementioned personalities and institutions helping to provide an air of legitimacy to his pursuits? (Also, the guy who coined the term EA sat on the board of his FTX fund and was helping to facilitate deals with people like Elon Musk) https://www.vox.com/future-perfect/23458282/effective-altrui...

Re: FTX used corporate funds to purchase employee homes, new filing shows

#68

Post by gruez » Thu, Nov 17, 2022, 5:45 PM UTC

ilrwbwrkhv wrote: post #9

mac3n wrote: post #6

Not that surprising if they had to live in the Bahamas. Just means that they will lose their homes.

Nah. They have already siphoned enough money through shell companies to buy many houses. International money trails are almost impossible to disentangle.

>Nah. They have already siphoned enough money through shell companies to buy many houses.

Is there any evidence of this? Sure, maybe wearing a t-shirt and flip-flops, driving a Corolla, and sleeping on beanbags is some sort of act to divert attention, but the simpler explanation is that he just fucked up. Not everything has to be a heist.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#69

Post by PragmaticPulp » Thu, Nov 17, 2022, 5:46 PM UTC

moneycantbuy wrote: post #28

how did ftx successfully raise so much vc money recently? do these top vc firms do no due diligence?

The crypto space is full of projects with empty promises of future profits. If you're an investor looking at crypto projects, you're seeing hundreds of crypto pitches every year that are never going anywhere.

Then Alameda comes along showing actual profits from their early trading operations. Someone who as actually figured out how to make money in the crypto world without selling their own tokens (yet). Compared to all of the other dead-end projects these investors get pitched every day, this seems like the golden child. Someone who is actually turning a profit. Investors want to put their money into the golden child's profit machine and get a piece of that action.

SBF was also very successful in turning his early successes into a lot of momentum and social proof. He played investors and influencers against each other by bringing them all on within a short span of time. When this happens, investors go into FOMO / "me too" mode and just throw their money into the momentum, assuming some other investors have probably done the due diligence already.

Re: FTX used corporate funds to purchase employee homes, new filing shows

#70

Post by oldgradstudent » Thu, Nov 17, 2022, 5:47 PM UTC

testplzignore wrote: post #7

I would guess that the accounting firm that did the audit will be going the way of Arthur Andersen after the Enron scandal. And how many of their clients also have "interesting" financials?

Maybe they can share a prison cell with Friehling & Horowitz.