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

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

#101

Post by xdavidliu »

_fat_santa wrote: post #20
foobarian wrote: post #16

This whole mess makes me wonder, what if they did everything right, with proper accounting and compliance practices etc.? Would we have ended up with a successful crypto business that would advance the whole field forward? Perhaps Coinbase is an example of that, though maybe not as well known due to less drama?

My impression is Coinbase is the thing that FTX was claiming to be, a well run exchange. Looking back, them purchasing the naming rights to Miami's stadium and all the A list celebrities prompting it just added this fake layer of trust. It's very easy to see the celebrity endorsements, puff pieces and the companies name plastered over a stadium as endorsements of how solid the business is, after all, a bunch of kids…

ironically, I first heard about FTX and SBF in a hackernews thread about Coinbase layoffs.

https://news.ycombinator.com/item?id=31738029

Some gems:

"Yeah. FTX people clearly know a lot more about market making and how exchanges work. Makes coinbase look like amateurs.

... I agree and am in general a big fan of FTX and the guys that work there. The CEO, Sam Bankman-Fried one of these HFT guys from Jane Street and his net worth shot up from 0 to $24 billion in just a few years. He kept things super lean and focused. But in the last few months it looks like he's hired a PR team and is all over the place: podcasts, obviously planted news stories, etc. He even hired a head of fashion and luxury partnerships and even has an ad out in Vogue ...

This is the case for most market makers in whatever markets they're in. A crash usually produces a huge trading windfall, and then the subsequent "recession" leaves people with little money to invest/gamble with. FTX's traders are veterans of the industry, and they understand the need to be lean when order flow is light, and the need to make as much as possible when it's hot. Coinbase just watched the best two years of trading pass in front of their eyes, and failed to monetize it even to 10% of its potential. If they're lucky, they will get another opportunity to do things right in 5 years. But the trading graveyard is filled with people/companies like Coinbase who did really well for a year because they lucked into a good position, but who should have done 10x better. But then the real players see the opportunity, and run the Coinbases of the world off"

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

#102

Post by lordnacho »

HDThoreaun wrote: post #19
foobarian wrote: post #16

This whole mess makes me wonder, what if they did everything right, with proper accounting and compliance practices etc.? Would we have ended up with a successful crypto business that would advance the whole field forward? Perhaps Coinbase is an example of that, though maybe not as well known due to less drama?

It's really hard to separate FTX's success from alameda. One theory now is that Alameda had recently been losing money hand over fist providing liquidity to FTX. Would FTX have anywhere near the volume without easy Alameda liquidity allowing traders to make tons of money?

Once the snowball is rolling, any particular market maker becomes a lot less important. They come for retail, and retail comes because there's market makers.

Perhaps as a kick starter Alameda was important, but I doubt they were needed after the usual suspects came on.

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

#104

Post by jerf »

tqi wrote: post #97
jerf wrote: post #54

Earlier quoted context omitted.

That's one theory. Of course, given the depth of financial depravity on display here and the incredible thinness of the financial defense, one must also entertain the theory that they did do the due diligence, they were aware of how dangerous this was, and they invested anyhow for other reasons. And that those reasons are probably not good. There have been many cases where companies go to great lengths to do accounti…

Agree that while "they got swept up in the moment" is a reasonable theory (Hanlon's razor and what not), it also seem very plausible that they knew it was risky but not how risky, and felt like there was still a positive expected value because they would be able sell their coins early (I saw a tweet about how a16z is still up 5x on it's crypto investments because of this[1]). [1] https://twitter.com/mims/status/15929…

I suspect that's the most plausible, least "evil" theory. Although that still leaves them knowingly gambling that bigger fools, who they intend to take advantage of, will come along later, so I personally wouldn't consider that "good". But I also won't deny it's a dog-eat-dog world at that level and everyone playing at that level is already aware and taking that into account. In that case it just turns out they were the dogs eaten instead of the victors.

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

#105

Post by HDThoreaun »

lordnacho wrote: post #102
HDThoreaun wrote: post #19

Earlier quoted context omitted.

It's really hard to separate FTX's success from alameda. One theory now is that Alameda had recently been losing money hand over fist providing liquidity to FTX. Would FTX have anywhere near the volume without easy Alameda liquidity allowing traders to make tons of money?

Once the snowball is rolling, any particular market maker becomes a lot less important. They come for retail, and retail comes because there's market makers. Perhaps as a kick starter Alameda was important, but I doubt they were needed after the usual suspects came on.

Sure, if all the market makers are in to profit. If alameda was providing quotes that consistently lose money only to FTX then retail and other flow would generally tend to migrate there since the spreads are better than other exchanges.

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

#106

Post by jaywalk »

hungryforcodes wrote: post #95
jaywalk wrote: post #89

Earlier quoted context omitted.

Money laundering.

Money laundering -- whatever. Simple greed explains it.

It could be simple greed by incredibly simple-minded VCs or it could be something worse. Somebody asked what the something worse could be, and I replied.

We are learning more and more about all of this each day. There was massive fraud going on within FTX, and I don't think it's terribly far-fetched to believe that it wasn't contained within the company.

Simple greed explains it -- whatever.

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

#107

Post by gruez »

pessimizer wrote: post #93
gruez wrote: post #83

Earlier quoted context omitted.

How does this relate to effective altruism as a whole? SBF does these things... therefore this kind of behavior is endemic in the effective altruism community?

That its community idealized and gathered around a man with no moral center who thought their entire movement was both a joke and a way to avoid scrutiny for his ongoing frauds. That, at the least, gives an indication that its intellectual underpinnings are not solid.

>That its community idealized and gathered around a man with no moral center

You make it sound like SBF was the prophet/leader of effective altruism, but I don't think that's the case. The wikipedia article certainly doesn't paint him as some sort of leader, and only gives a passing mention to SBF.

https://en.wikipedia.org/wiki/Effective_altruism

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

#108

Post by vkou »

dahdum wrote: post #87
moneycantbuy wrote: post #28

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

They weren't investing on fundamentals, the books didn't matter. His close association and largesse with regulators, media, and politicians along with his cloak of EA made regulatory capture and the promise of monopoly-like profits possible. VC's aren't stupid, even if they thought it was 80% likely he was an outright fraud, it's still worth the bet for a 20% chance at 50-100x returns.

It's strange to see EA credited as both the reason for why this went on for so long with no oversight, and then damned in a 'ding dong the witch is dead' manner after it fell apart.

When a confidence man and thief loudly and proudly shouts out a religious affiliation as his guiding star, we generally don't go ahead and condemn the religion for his behavior. (Doing so is a great way to get canceled. At most, we blame him for not being religious enough.)

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

#109

Post by xdavidliu »

bluedevil2k wrote: post #10
55555 wrote: post #4

The new CEO of FTX states that FTX had no accounting department. lol. > “The Debtors do not have an accounting department,” Ray wrote, stating he expected it would be “some time” before reliable financial statements could be prepared.

This shouldn’t be surprising at all after seeing their balance sheet with round numbers like $5,000,000,000 in assets and $12,000,000,000 in liabilities. It looked like SBF made it in Excel while his LoL game was loading.

I don't think someone who splurged on Miami Heat stadiums and Tom Brady ads would lower himself to buying a gaming pc that has loading times

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

#110

Post by Auracle »

foobarian wrote: post #61
bostonsre wrote: post #41

Earlier quoted context omitted.

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…

I honestly think the use case of a deflationary store of value makes more sense now than ever. Inflation is bad, it seems somewhat likely the stock market might tumble even more at some point relatively soon, etc.

It would be a great way to park your money to ride out bad economic times if it wasn’t for the fact that people seemingly tie it to the overall economic attitude for no good reason.

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