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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

#211

Post by stale2002 »

PragmaticPulp wrote: post #154
gdw2 wrote: post #126

Earlier quoted context omitted.

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

Why would it? FTX wasn’t playing by existing US regulations anyway. Even the most basic regulations would have squashed FTX’s entire fraud from the start. They weren’t bothering to play by any rules because they knew they could get away with it.

I think the way to attack this would be on them having US customers.

Yeah, technically they "banned" US customers. They were also doing sponsorships, and advertisement in literal US basketball stadiums.

Clearly they knew they had US customers and were attempting to get them.

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

#212

Post by dahdum »

memish wrote: post #152
TheAlchemist wrote: post #129

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 t…

What's interesting is how little scrutiny was applied to FTX and they're the one who lost people's money. Tether has been under intense scrutiny for years and is still working just fine. No one has lost their money in Tether despite huge outflow events. There's a lesson in here.

If Tether is a fraud (likely), it appears to be a simple one that's rather difficult to implode. Because of their widespread use in trading and limitations on fiat trading / capital controls around the world, it would be a challenge to start a run they couldn't cover by just honoring redemption requests. If they only held 10% it could happen, but if it's ~70% as often claimed, I don't see it happening.

I'm not sure what could collapse Tether other than Tether itself saying they're broke and refusing to honor redemptions.

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

#213

Post by bhouston »

tootie wrote: post #165
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…

The guy who says regulations are dumb has no idea what he spent his money on or even how many employees he has. This guy is almost worse than Elizabeth Holmes.

I have a feeling he will come out worse that Elizabeth Holmes because it feels like a complete fraud and pilfering of their client's money for their own spoils. While Elizabeth ran a known fraud she didn't quite pilfer the money to completely enrich themselves like the FTX crew did.

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

#214

Post by justincormack »

tfehring wrote: post #194
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 do not believe there is any credible theory that any investor could possibly have been unaware of these issues. I'm not convinced that the issues that caused Binance to back out even existed the last time FTX raised outside capital (March 2022 according to Crunchbase). My understanding is that in March, FTX had a basically normal balance sheet for a crypto exchange, with roughly enough non-FTT assets to balance a…

It appears (although everything is unclear) that the 8bn hole was caused by customer dollar payments for ftx going to alameda as ftx didn’t actually have a bank account. For three years. So unclear it was ever good.

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

#215

Post by jerf »

saurik wrote: post #196
jerf wrote: post #160

Earlier quoted context omitted.

The filing is amazing: https://pacer-documents.s3.amazonaws.com/33/188450/042020648... Don't forget to read this with the "diplomatic/legal/lawyer" mindset. These are not internet comments, these are legal filings. Sentences like "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. From compromised systems inte…

I mean, my experience reading legal filings is that lawyers love to throw in these "zingers", in no small part because it is their job to present the most brutal version of the argument on their side. One of my favorite legal filings ever was "Six Ways Buzzfeed Has Misled the Court (Number Two Will Amaze You) … and a Picture of a Kitten".

Yes, sorry, I didn't mean to say this never happens, just wanted to help orient people as to what they look like and calibrate expectations.

Though I would point out this is nominally not an adversarial filing. In practice, though, if I were FTX's CEO I would certainly be treating it as such, and he clearly is. This is sticky radioactive waste and I would be taking any measures necessary to keep it off of me.

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

#216

Post by Aperocky »

xdavidliu wrote: post #199
encoderer wrote: post #191

Earlier quoted context omitted.

same creative use of mark to market accounting but compared to FTX, Enron was fraud on difficult mode. They had to (attempt to) actually build things like power plants in India. FTX just yeeted tokens to bag holders based on fancy darkmode graphic design and a screwball haircut.

> FTX just yeeted ticker symbols to bag holders based on fancy darkmode graphic design and a screwball haircut. I understand the words in this sentence individually, but not the sentence in its entirety. Can anyone translate?

FTX gave out fancy worthless digital garbage in exchange for real cash from "investors"

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

#218

Post by dymk »

xdavidliu wrote: post #199
encoderer wrote: post #191

Earlier quoted context omitted.

same creative use of mark to market accounting but compared to FTX, Enron was fraud on difficult mode. They had to (attempt to) actually build things like power plants in India. FTX just yeeted tokens to bag holders based on fancy darkmode graphic design and a screwball haircut.

> FTX just yeeted ticker symbols to bag holders based on fancy darkmode graphic design and a screwball haircut. I understand the words in this sentence individually, but not the sentence in its entirety. Can anyone translate?

> yeeted ticker symbols

presented prices for worthless securities

> to bag holders

to now-defrauded clients of the FTX website

> fancy darkmode graphic design

a slick, sort of professional looking website

> and a screwball haircut

and a screwball haircut

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

#219

Post by SauciestGNU »

three_seagrass wrote: post #130
ryandrake wrote: post #112

Earlier quoted context omitted.

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.

If that's how unsophisticated these VC operations are then I think we'll see a lot of them lose their shirts in the coming macroeconomic environment. Which will consequently make future funding rounds all the more difficult.

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

#220

Post by danso »

tootie wrote: post #165
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…

The guy who says regulations are dumb has no idea what he spent his money on or even how many employees he has. This guy is almost worse than Elizabeth Holmes.

At least Holmes had the courtesy to target Henry Kissinger, the DeVos family, and the Murdochs for her swindle.
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