FTX’s Sam Bankman-Fried cashed out $300M during funding spree • Hacker News Board

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#161

Post by hgsgm » Sat, Nov 19, 2022, 12:14 AM UTC

abhv wrote: post #108

slibhb wrote: post #73

Earlier quoted context omitted.

It's an indictment of EA because many prominent EA people were associated with FTX/Sam. That shows poor judgement and, on some level, EA is about smart people making judgements about long-term good. How can we trust them to make those judgements when they decide to hitch their wagon to FTX?

(1) Any theory that encourages people to suspect working directly on important local causes that are meaningful to them, but instead, seek out the highest paying jobs in order to donate to EA causes is just hiding a special kind of ponzi scheme ("get more people in to fund the good work of the current people"). (2) EA creates an excuse to act outrageously evil "for the good of the longterm"

No post body was provided.

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#162

Post by aswanson » Sat, Nov 19, 2022, 12:30 AM UTC

georgex7 wrote: post #114

slibhb wrote: post #73

Earlier quoted context omitted.

It's an indictment of EA because many prominent EA people were associated with FTX/Sam. That shows poor judgement and, on some level, EA is about smart people making judgements about long-term good. How can we trust them to make those judgements when they decide to hitch their wagon to FTX?

Prominent investors, politicians, athletes, etc were associated with FTX/Sam. Should we lose faith in Sequoia, etc, etc, etc?

Yes. The most recent information indicates they have made a wrong judgement. Your faith in them should be updated accordingly.

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#163

Post by nieve » Sat, Nov 19, 2022, 12:43 AM UTC

slap_shot wrote: post #5

> the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals. The most fascinating part of this whole story to me is just how few checks and balances there were in this company. Even without a board, did major investors not get his quarterly financials? If the leaked balance sheet was any indication of their level financial engineering cap…

There was a board, but "FTX’s board, though, had only three directors as of earlier this year: Mr. Bankman-Fried, an FTX employee and an Antigua lawyer who specializes in gaming."

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#164

Post by tedmiston » Sat, Nov 19, 2022, 12:50 AM UTC

Arainach wrote: post #151

tedmiston wrote: post #137

Earlier quoted context omitted.

> So, USA makes some effort to stop ripoffs of unwitting "unaccredited" investors within the USA. The problem is that it's a dubious premise to begin with to assume that someone's knowledge or competence is tied to their salary or net worth. It's just baseless gatekeeping.

It's not baseless. Those who are least able to tolerate loss and have the least time to do due diligence are precisely those most attracted to get rich quick schemes and most susceptible to deceptive practices.

There is nothing in the premise correlated to the amount of the investment.

Suppose I have a net worth of $900k and want to invest $10k each into friends and family rounds of 5–10 startups. The Accredited Investor law in the U.S. makes that impossible today.

What if my net worth was $1M before the pandemic and is now ~30% below that threshold? Suddenly, I'm no longer accredited?! That makes no sense. The boundaries chosen are indeed arbitrary and baseless, designed to restrict access to opportunities for those in the case I describe.

Salary is also an arbitrary rule. One could make $200k/year, spend it all, and still qualify. But if someone makes $175k, lives minimally, and saves 50%+ of that, they are "unaccredited" and are blocked from accessing such opportunities. This also makes no sense.

Irrespective of my salary or net worth, I have enough experience in the tech industry to evaluate and do due diligence on small deals like that. But technicalities like this in the Accredited Investor rule block me from being able to access them.

Risk assessment is a personal choice. The Accredited Investor rule does more harm than good in this country today with its arbitrary pegs blocking access to good opportunities for those that are capable of vetting them.

Guardrails are for highways and bowling alleys. One can go blow their entire net worth on shitcoins and penny stocks and the Accredited Investor rule could care less. There are good and bad investment opportunities everywhere, but this rule is blatantly random and asymmetric.

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#165

Post by gruez » Sat, Nov 19, 2022, 12:51 AM UTC

jancsika wrote: post #157

gruez wrote: post #126

Earlier quoted context omitted.

1. The underlying logic behind earning to give is sound. You flying over to Africa or whatever to do charitable activities (digging a well?) is obviously going to be less impactful than you working at some high paid white collar job and then donating the money to pay some local laborers to do the same job. 2. Contrary to what you think, there's nothing about effective altruism that requires/wants you to donate to eff…

> 1. The underlying logic behind earning to give is sound. You flying over to Africa or whatever to do charitable activities (digging a well?) is obviously going to be less impactful than you working at some high paid white collar job and then donating the money to pay some local laborers to do the same job. It isn't obvious, and I'm skeptical both by cases like this and by the lack of domain expertise of a white-col…

>It isn't obvious, and I'm skeptical both by cases like this and by the lack of domain expertise of a white-collar worker to be able to judge the veracity of charitable activities.

I don't get what you're arguing here. The white collar worker lacks the expertise to "judge the veracity of charitable activities" therefore we should...

* fly over to africa so hey can dig a well and find out first hand whether it's actually doing good? Leaving aside the massive amounts of resources needed for this endeavor, there's no evidence that the same unqualified white collar worker would be qualified to judge what's happening on the ground

* not practice effective altruism, and donate to whichever feels the cutest and/or is in vogue?

* when we're 18, choose a random field and hope 18 year old self is qualified to figure out which field would do the most good?

>I mean, maybe if we had flush teams of water quality experts in every state with the time and expertise to judge whether water supplies are safe. But as it is, a team from Virginia Tech had to high tail it to Flint during their water crisis based on the reports they heard about lead levels there.

I'm baffled as to why you think sending a team from virginia tech was the best course of action here. Google maps says that such a trip would take over 8 hours. Assuming the "team" had at least 2 people, then that's at least 32 man-hours for such an excursion. At median college graduate wages that translates to $880 in travel time alone. They couldn't have crowdsourced water collection and had it delivered via courier (maybe $20/package) to their campus?

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#166

Post by [deleted] » Sat, Nov 19, 2022, 12:52 AM UTC

sillysaurusx wrote: post #31

> Three months earlier, in July 2021, Mr. Bankman-Fried bought out the roughly 15% stake owned by Binance, FTX’s first outside investor. Binance CEO Changpeng Zhao tweeted this month that the amount totaled $2.1 billion, paid in a combination of FTT, FTX’s in-house cryptocurrency, and BUSD, Binance’s stablecoin, whose value is pegged to the U.S. dollar. Hmm. Binance triggered FTX's downfall by dumping FTT, causing th…

[deleted]

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#167

Post by slibhb » Sat, Nov 19, 2022, 12:53 AM UTC

gruez wrote: post #116

slibhb wrote: post #104

Earlier quoted context omitted.

I wasn't talking about charities specifically, I was referring to stuff like this: https://forum.effectivealtruism.org/posts/xafpj3on76uRDoBja/... At least one of the people involved (MacAskill) is a big name in EA circles.

What's the argument here? That The people involved should have seen it coming, and their failure to seen it coming reflects badly on them? I think the arguments from my previous comment still apply. People in general don't do thorough due diligence on who they work with. As long as there isn't anything obviously bad about a person, it seems fairly reasonable to cooperate with someone who shares your goal and is willi…

The argument is really simple. To restate:

Why should I trust my (or other people's) ability to act to maximize long term good when I (or other people) aren't smart enough to avoid landmines like FTX?

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#168

Post by autotune » Sat, Nov 19, 2022, 1:00 AM UTC

jliptzin wrote: post #86

Dump your life savings into a crypto exchange based in the Bahamas, sure. But god forbid you invest $20k in a startup without being an “accredited investor”

I just got into an argument with someone else on here because they think a crypto scam "audited in Gibraltar" somehow doesn't make it any less legitimate. People didn't make sound financial decisions before this collapse and the cycle will likely repeat in some other form, if not the exact same with a different name, after.

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#169

Post by kieselguhr_kid » Sat, Nov 19, 2022, 1:04 AM UTC

luckylion wrote: post #78

kieselguhr_kid wrote: post #44

Earlier quoted context omitted.

The idea behind the lack of regulation is that the impact is contained to the investors. It's obvious that in sufficiently large cases, that's not true. If these actors are able to do damage to entire sectors, they should have to do some minimum stuff: keep track of their money, have board meetings, submit to audits, etc.

And they will ... it's just that they'll provide false numbers to audits, their board will be them and their friends, and they'll keep track of their money as it makes its way into their pockets. I guess we need more blockchain! But what business will have 100% of their relationships, contracts and transactions publicly visible?

Have you worked with a reputable outside auditor? You don't just provide numbers and illustrate your methodology for obtaining them, you have to essentially reconstruct your entire revenue and finance system with them, provide ongoing random samplings, demonstrate the consistency of any calculations, and many, many other steps that I don't have time to illustrate. Companies couldn't just provide a false number, they'd have to construct a parallel revenue and finance system with false data. Do some companies still cheat and get away with it even after audits? Of course. But it's a major deterrent to this kind of behavior and a reputable auditor would have caught many of FTX's illegal activities much earlier.

Re: FTX’s Sam Bankman-Fried cashed out $300M during funding spree

#170

Post by gruez » Sat, Nov 19, 2022, 1:04 AM UTC

slibhb wrote: post #167

gruez wrote: post #116

Earlier quoted context omitted.

What's the argument here? That The people involved should have seen it coming, and their failure to seen it coming reflects badly on them? I think the arguments from my previous comment still apply. People in general don't do thorough due diligence on who they work with. As long as there isn't anything obviously bad about a person, it seems fairly reasonable to cooperate with someone who shares your goal and is willi…

The argument is really simple. To restate: Why should I trust my (or other people's) ability to act to maximize long term good when I (or other people) aren't smart enough to avoid landmines like FTX?

1. Why should you trust Newton's works (eg. theory of gravity or calculus) when he isn't smart enough to avoid landmines like the south sea bubble[1]?

2. My previous comment asserts that SBF/FTX was reasonably clean prior to the collapse. If someone seemed reasonably clean, but then it turned out that he was a Bad Person or whatever, should everyone associated with that person be chastised for not being "smart enough to avoid landmines"?

[1] https://en.wikipedia.org/wiki/Isaac_Newton#Knighthood