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

#121

Post by wmf » Thu, Nov 17, 2022, 6:43 PM UTC

zamalek wrote: post #72

_fat_santa wrote: post #20

Earlier quoted context omitted.

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…

> Coinbase is taking the tack of just focus on the fundamentals of the business and build trust that way People who use Coinbase are called normies by the larger cryptocurrency community, as though relying on competency is a bad thing. It's this bizarre communal masochism. But then they complain when it all goes wrong? I don't get it.

Coinbase doesn't offer shorting or leverage that true degens need.

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

#122

Post by tqi » Thu, Nov 17, 2022, 6:44 PM UTC

jerf wrote: post #104

tqi wrote: post #97

Earlier quoted context omitted.

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…

Oh to be clear, I think that line of reasoning (if that is in fact how they felt) is morally questionable at best.

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

#123

Post by skinnymuch » Thu, Nov 17, 2022, 6:45 PM UTC

vkou wrote: post #108

dahdum wrote: post #87

Earlier quoted context omitted.

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…

In this case this tiny religion embraced him, so yes many would blame that to a degree as well.

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

#124

Post by rabuse » Thu, Nov 17, 2022, 6:47 PM UTC

twblalock wrote: post #44

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?

Even a well-run exchange would not make the magic beans worth anything.

Coinbase makes money on every cash to crypto transaction. The price is irrelevant with that revenue. They also generate revenue from trading fees, which does though, but I seem to recall they make the most from purchases.

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

#125

Post by zeven7 » Thu, Nov 17, 2022, 6:47 PM UTC

xdavidliu wrote: post #101

_fat_santa wrote: post #20

Earlier quoted context omitted.

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…

Thanks for linking that thread. Looking through the comments is a trip.

As it turns out doing things the right way like Coinbase looks "boring" sometimes, while fraud might look more exciting.

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

#126

Post by gdw2 » Thu, Nov 17, 2022, 6:48 PM UTC

boh wrote: post #114

In a separate article Ray also said: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” And this is the same man who oversaw the liquidation of Enron. "Ray said he had found at FTX international, FTX US and Bankman-Fried’s Alameda Research trading company “compromised systems integrity”, “faulty regulatory o…

I wonder if this could result in another round of costly SOX-like regulations?

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

#127

Post by ZoF » Thu, Nov 17, 2022, 6:49 PM UTC

lordnacho wrote: post #91

moneycantbuy wrote: post #28

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

I've had one of the mentioned firms invest in a place I was a partner at, and it surprises the hell out of me. I remember the investment guy would tell the rest of us "on Wednesday, wear a shirt and tie, X big name is coming" and that's what we'd do. And millions of questions about the strategy, though didn't know much about those details. Current theory is there's some sort of investment U shape curve. Either people…

No post body was provided.

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

#128

Post by skinnymuch » Thu, Nov 17, 2022, 6:50 PM UTC

gruez wrote: post #107

pessimizer wrote: post #93

Earlier quoted context omitted.

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

Using Wikipedia as a barometer doesn’t always works. In this case it probably wouldn’t work even if SBF was much bigger than he was with EA.

There’s a middle ground. He wasn’t a prophet but he wasn’t nobody either. He was a leading non-academic figure/celeb of EA that didn’t get too much pushback.

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

#129

Post by TheAlchemist » Thu, Nov 17, 2022, 6:50 PM UTC

How can anybody be surprised ?

The 2 biggest players - Tether and Binance are much worse and still very well alive. Both are several times bigger (on paper) than FTX.

Binance is already banned in most countries and without headquarters. Do anybody believes they have a proper gouvernance ?

Tether was proved to lie about it réserves several times, recently started publishing attestations about reserves - attestations that are obviously false - the numbers don’t really add up.

For all we know, both could disappear tomorrow with all the money and nobody would be able to say where and how it’s gone !

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

#130

Post by three_seagrass » Thu, Nov 17, 2022, 6:50 PM UTC

ryandrake wrote: post #112

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…

I wonder if those other reasons simply were the guy's background and pedigree. Silicon Valley is no different than Wall Street in its obsession with having the "right" educational background, having the "right" parents, having the "right" connections and so on. So many doors in corporate hiring can be bypassed with "Went to MIT" and "Stanford parents" and I wonder if they can also be bypassed by founders looking for…

That's at least one strong reason - VCs look at the person as much as the business.

Crypto was filled with sleazy car-salesman "investor" types at the time Alameda Research was looking for funding. So when in came someone with a Jane Street background and not a single flashy Ferrari in their driveway, the dam broke on VCs finally being able to pour money into the crypto space on a decent looking founder.