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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

#221

Post by TuringNYC »

stale2002 wrote: post #211
PragmaticPulp wrote: post #154

Earlier quoted context omitted.

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.

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

And they did, except they got overseas-registered hedge fund subsidiaries, where the managers were US residents (probably living in NY/CT/FL.)

We arent providing SIPC/FDIC backstopping to the customers, since it aint our jurisdiction. We arent bailing them out, so far.

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

#222

Post by datavirtue »

alfalfasprout wrote: post #203
muglug wrote: post #169

Earlier quoted context omitted.

Yes, which is why the US Congress added a whole bunch of new regulations (Sarbanes-Oxley) to prevent future Enrons.

Which require compliance with them. If you work at a company that cares to actually comply they will. I luckily work somewhere where it's taken seriously. But it's shockingly easy not to and auditors couldn't possibly catch all of the instances of non-compliance

The banking, finance, and corporate accounting world and their practices would shock most devs to the core. Most people just assume that certain controls are being enacted with precision. Things like: customer account reconciliation, bank account reconciliation, etc.

Most of the time people just aggregate values and never inspect the detail. They record those aggregates in the GL and move on. I have never seen granular recon. That is why embezzlement is only discovered by accident years later.

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

#223

Post by marcosdumay »

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.

The favorite pastime of politicians is creating regulations to make safer an environment where nobody follows regulations.

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

#224

Post by TuringNYC »

alfalfasprout wrote: post #203
muglug wrote: post #169

Earlier quoted context omitted.

Yes, which is why the US Congress added a whole bunch of new regulations (Sarbanes-Oxley) to prevent future Enrons.

Which require compliance with them. If you work at a company that cares to actually comply they will. I luckily work somewhere where it's taken seriously. But it's shockingly easy not to and auditors couldn't possibly catch all of the instances of non-compliance

>> But it's shockingly easy not to and auditors couldn't possibly catch all of the instances of non-compliance

Regulations are usually backwards looking. So at least we never get Enron/GlobalCrossing/etc again.

Then another waves of crises happen, and we get new regulations.

So Fannie/Freddie happened in 2004-2007 and we got brightline guidance and application of FAS91 and EITF-9920.

So then AIG/Lehman/Bear happened in 2007/2008 and we got Dodd Frank. Again backwards looking but we end up in a better place.

The regulation stacks upon regulation, but I think this is good.

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

#225

Post by jandrese »

camjohnson26 wrote: post #176
PragmaticPulp wrote: post #157

Earlier quoted context omitted.

FTX is younger than Tether and it was actually subject to scrutiny. Tether has also been subject to scrutiny and was found, at the time, to be lying about their reserves and backing. And this was before they printed a lot more! It doesn’t make sense to write them off as having withstood the test of time when they literally failed to stand up to the first legal scrutiny that got access to their books.

The lesson learned is that frauds can go on for a long time. It took decades and a once in a generation market crash to expose Bernie Madoff. Enron spent years running their sketchy accounting. Wirecard was only finally exposed after the German government essentially lobbied on their behalf against the journalists trying to expose the fraud.

These frauds can continue so long as they can continue to grow or at least maintain a steady state. Since they promise higher returns than can be achieved through honest means the liabilities grow faster than assets over time, but so long as nobody tries to realize their gains it's fine.

FTX only came down because they pissed off the Binance guy who dumped his position all at once and exposed the fraud. I'm dubious Tether could survive a similar attack. I also think that at least some people investing in these are completely aware of the situation and are ok with it because it means they can beat the market so long as they get out before the whole thing suddenly collapses. Basically playing financial chicken.

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

#226

Post by nullc »

tootie wrote: post #170
itsoktocry wrote: post #111

Earlier quoted context omitted.

Dead simple: Many VC's aren't very smart and/or ethical. How many major Silicon Valley scandals are VCs involved in? 100%. And for the most part they get a pass. This end of the era of easy money is going to reveal that many of the "geniuses of our time" are nothing of the like.

The stuff that Sequoia said about him is almost unreal. They talked like he was going to be the greatest entrepreneur in human history. All because he exploited a momentary arbitrage in Japanese Bitcoin exchanges. Then they gave him shitloads of money and acceded to not getting board seats. I honestly wonder if they were that trusting or they just wanted to maintain deniability.

> All because he exploited a momentary arbitrage in Japanese Bitcoin exchanges.

Originally the story was korean exchanges; he changed to saying Japanese, presumably after too many people pointed out the korean story was impossible. (The Japanese story was also more or less impossible, they could have made a bit of money maybe even millions but not the $10+bn he claimed)

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

#227

Post by mchaver »

_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…

> a bunch of kids

I don't think we should refer to them as kids. It seems to absolve them of responsibility. Kids are given leniency when they do wrong. The FTX/Alameda people are adults that graduated from one of the highest ranked universities in the world. They are foolish, but not kids.

Part of me wonders if there is media narrative that wants them to be referred to as kids because powerful people don't want them to be punished as harshly.

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

#228

Post by realist20222 »

SoftTalker wrote: post #189
gdw2 wrote: post #126

Earlier quoted context omitted.

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

Serious prison time for the executives involved would probably be more effective.

>> Serious prison time for the executives involved would probably be more effective.

Top executives, especially well-connected ones never get prison time. Instead, you usually have Indian/Chinese scapegoats or someone equally disliked.

The entire flash crash was blamed on a lone indian man living with his parents: https://www.bbc.com/news/explainers-51265169 Nevermind Citadel, 2Sigma, Jane Street, Goldman Sachs

The 2008 scandal fell upon an Arab man: https://en.wikipedia.org/wiki/Kareem_Serageldin He is notable for being the only banker in the United States to be sentenced to jail time as a result of the financial crisis of 2007–2008, a conviction resulting from mismarking bond prices to hide losses.[1][2]

If I were this guy, i'd be really really worried about now:

https://timesofindia.indiatimes.com/business/cryptocurrency/...

Side note: If you work for a shady company, and you're the only colored guy on the exec team, you are probably there for a reason, and the reason isnt good.

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

#229

Post by sobkas »

discodave wrote: post #168
foepys wrote: post #148

Earlier quoted context omitted.

Do they actually exchange them for money or are they just creating them? There has never been a reputable audit of Tether.

Tether's 'market cap' is like 60 billion or whatever, I think most of that was just created out of thin air, but I think some of it was exchanged for real dollars, like a few percent, maybe a couple of billion dollars. In which case, when the fraud comes crashing down, they will have stolen hundreds of millions, to maybe a couple of billion dollars. Imagine if somebody stole a piece of art worth hundreds of millions…

> Tether's 'market cap' is like 60 billion or whatever, I think most of that was just created out of thin air, but I think some of it was exchanged for real dollars, like a few percent, maybe a couple of billion dollars. In which case, when the fraud comes crashing down, they will have stolen hundreds of millions, to maybe a couple of billion dollars.

> Imagine if somebody stole a piece of art worth hundreds of millions of dollars...

Buy some bs art for peanuts, get bs appraisal that it's worth millions, donate it to some bs gallery and reap tax deductions. Art was turned into a tax evasion scheme, and it compromised any value it ever had.

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

#230

Post by nullc »

HDThoreaun wrote: post #159
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.

SBF got tons of pushback in the EA community. He gave jobs to some of the actual thought leaders so they tried to give him some credit, but there are tons and tons of posts on the EA forum about how Sam's extreme focus on long termism made EA too easy to meme on, and even more posts about how his political shenanigans were likely to cause major issues for the movement.

Links would be helpful.
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