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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

#361

Post by someguydave »

Goronmon wrote: post #238
xdavidliu wrote: post #101

Earlier quoted context omitted.

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…

At least one person seemed to know what they were talking about. Unfortunately the comment was flagged, which is interesting. https://news.ycombinator.com/item?id=31738560 > Very different approach to Bryan Armstrong, who’s more of a Bitcoin “believer” The fact that you think this goes to show just how little you know about this ecosystem. And Bankman is the worst type of con-artist, he is going to use his billion(s)…

Sadly, reading that guy's posts, he is also clearly a lunatic. I guess it takes one to know one.

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

#362

Post by Regnore »

spaceman_2020 wrote: post #277
MichaelCollins wrote: post #144

Earlier quoted context omitted.

Tim Draper still supports Elizabeth Holmes: https://fortune.com/2022/01/05/venture-capital-tim-draper-el... I don't know how. Maybe he's just fucking stupid, or too prideful to admit he was wrong.

I'm not entirely familiar with Theranos, but as far as I know, she only defrauded VCs - entities that are designed to take on risk (which can include Theranos-like fraud). FTX defrauded average people, many of whom were lured by the big name ads, the friendships with Tom Brady, the marquee investors list. Supporting that is deeply immoral.

Holmes defrauded many average people who thought they were getting medical tests with accurate results when in fact they were not.

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

#363

Post by skippyboxedhero »

jerf wrote: post #215
saurik wrote: post #196

Earlier quoted context omitted.

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.

This guy is FTX's CEO. The reason he is saying this is because the former CEO and employees appear to have stolen large amounts of money from the company.

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

#364

Post by otterley »

jerf wrote: post #160
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 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…

One of my favorites is "McDonald's is best known for its world-famous burgers, fries, and broken ice cream machines. The problem is so widespread that even the McDonald's communications team has tweeted about the issue."

https://www.scribd.com/document/562063724/Kytch-v-McDonald-s...

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

#365

Post by skippyboxedhero »

adam_arthur wrote: post #340
solresol wrote: post #333

Earlier quoted context omitted.

He's a specialist in bankruptcy and liquidation administration. Essentially the debtors have appointed him to take over and identify what can be sold or salvaged. He gets paid out of whatever funds he can find.

Ah yeah, that makes sense. I’m surprised the debtors assumed control of the company that quickly though. Figured it would take some time to play out

It starts when bankruptcy is filed.

Ofc, if I lend $100m to a company that you control, and you start siphoning that money into your bank account...then you aren't going to declare bankruptcy until the stealing is finished. So there are provisions to claw back money even ex-post (i.e. time doesn't matter) when someone has committed a crime...but the idea is that bankruptcies are wrapped up quickly because the longer it goes on the more value is lost by everyone (apart from lawyers)...speedy liquidation is also a central component of a well-functioning capitalist economy.

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

#367

Post by skippyboxedhero »

justincormack wrote: post #214
tfehring wrote: post #194

Earlier quoted context omitted.

> 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.

This alone is quite incredible. FTX, as a business, never actually existed. It was all just a smoke screen for his hedge fund.

Employees were stealing from the company, there were no internal controls...the rules for VC are...different. If you were on a Board and this happened on your watch, you would never work on another Board again. If you did this in PE, fired. If you invested in such a public company, very likely fired or irreparable damage to your reputation.

Sequoia are a huge fund, they are one of the doyens of the industry...it isn't even that they failed, they didn't even put in place the mechanism to try to protect their investor's money. It is unbelivable.

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

#368

Post by dragonwriter »

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".

> 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.

This is filed by FTX’s new CEO, who took over when SBF was convinced/forced to hand over the reins.

He puts this in not to be brutal (which isn't the job), but to frame (with more detail throughout) why it will take unusual time to do basic tasks like identifying FTX's assets, liabilities, major creditors, and employees to the bankruptcy court.

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

#369

Post by boppo1 »

SauciestGNU wrote: post #219
three_seagrass wrote: post #130

Earlier quoted context omitted.

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.

Unless the Fed blinks.

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

#370

Post by skippyboxedhero »

mikeyouse wrote: post #341
reddog wrote: post #259

Earlier quoted context omitted.

No, the Enron scandal was much, much bigger. In 2000 Enron had a market cap of over $60 billion and was "reporting" $100 billion in revenue. It ended up losing it's sharholders $74 billion and all 20,000 employees their jobs. At the time it's bankrupcy was the largest in history. The scandal also drove Enron's accounting firm, Aurthur Anderson, out of business costing all 85,000 their employess their jobs.

Right. All of these "bigger than Enron" or "bigger than Madoff" claims are so dumb. Much of the money lost on FTX was in the form of magic bean tokens that people pretended were worth billions of dollars - they weren't actually worth billions of dollars.

Right, but the money lost was USD deposits.

Madoff was magic beans, he just invented $50bn of money that he said he made for investors. SBF was depositing customer money into his hedge fund directly (FTX didn't even have a bank account).

So this is a relatively big fraud because it was USD value multiple billions, likely near $10bn. This was money stolen directly from customers. The $1bn that SBF took directly out of the company into his personal bank account (which shortly thereafter went into the bank account of the DNC) was a small part of the fraud.

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