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Why wasn’t FTX’s fraud detectable on the blockchain?

news.ycombinator.com

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Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#11

Post by perryizgr8 »

patrogizmo wrote: post #10

I came across this really good summary of FTX's fraud on Reddit the other day: "SBF/Alameda's initial strategy was arbitraging price differences between US and Korea/Japan. The different crypto exchanges in different countries would have different prices for the same coin. In theory this was possible but in practice it was basically impossible. They lost money in Korea due to capital controls, they made some money in…

> Current estimates are at about $10 billion they lost gambling on crypto with customer money.

I just don't understand the scale of it. Ten billion dollars is huge. It takes months if not years, even to lose that much in gambling. Did nobody notice anything off? Was the entire company in on it?

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#12

Post by toomuchtodo »

perryizgr8 wrote: post #11
patrogizmo wrote: post #10

I came across this really good summary of FTX's fraud on Reddit the other day: "SBF/Alameda's initial strategy was arbitraging price differences between US and Korea/Japan. The different crypto exchanges in different countries would have different prices for the same coin. In theory this was possible but in practice it was basically impossible. They lost money in Korea due to capital controls, they made some money in…

> Current estimates are at about $10 billion they lost gambling on crypto with customer money. I just don't understand the scale of it. Ten billion dollars is huge. It takes months if not years, even to lose that much in gambling. Did nobody notice anything off? Was the entire company in on it?

Bernie Madoff ran his scheme for almost 20 years before being caught.

https://en.wikipedia.org/wiki/Madoff_investment_scandal

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#13

Post by landemva »

AustinDev wrote: post #7
hobbitstan wrote: post #4

The entire crypto sector is fraudulent and hidden behind layers of nonsensical theory. What started as a way to anonymously pay for illegal services on the dark net, morphed into a Ponzi scheme aimed at low IQ tech bros.

Remember when decent Marijuana was like 5 BTC for a quarter ounce? I just like to imagine that there is some dealer out there who has a couple thousand btc sitting on an old hard drive.

I know this to be fact. $100M and she was still scrapping for rent money because she didn't know how touch it.

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#14

Post by patrogizmo »

perryizgr8 wrote: post #11
patrogizmo wrote: post #10

I came across this really good summary of FTX's fraud on Reddit the other day: "SBF/Alameda's initial strategy was arbitraging price differences between US and Korea/Japan. The different crypto exchanges in different countries would have different prices for the same coin. In theory this was possible but in practice it was basically impossible. They lost money in Korea due to capital controls, they made some money in…

> Current estimates are at about $10 billion they lost gambling on crypto with customer money. I just don't understand the scale of it. Ten billion dollars is huge. It takes months if not years, even to lose that much in gambling. Did nobody notice anything off? Was the entire company in on it?

The new CEO of FTX just released a declaration: "Never in my career have I seen such a complete failure of corporate controls..."

"In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors"

Sam Bankman-Fried's hedge fund lent billions to... Sam Bankman-Fried (Paper Bird is his entity), so that's at least part of the answer where the money went.

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#15

Post by mrkramer »

hobbitstan wrote: post #4

The entire crypto sector is fraudulent and hidden behind layers of nonsensical theory. What started as a way to anonymously pay for illegal services on the dark net, morphed into a Ponzi scheme aimed at low IQ tech bros.

>What started as a way to anonymously pay for illegal services on the dark net, morphed into a Ponzi scheme aimed at low IQ tech bros.

That was never the point of Bitcoin. Read the whitepaper. Satoshi wanted to decentralize trust in the ecommerce world with the help of transparent P2P decentralized and distributed database called blockchain and he wanted to enable micropayments. There is no mention of buying drugs or any other illicit activities in the whitepaper.

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#19

Post by leet_thow »

hobbitstan wrote: post #4

The entire crypto sector is fraudulent and hidden behind layers of nonsensical theory. What started as a way to anonymously pay for illegal services on the dark net, morphed into a Ponzi scheme aimed at low IQ tech bros.

The ones I've encountered tend to have the zeal of relegioud converts and haughtiness of secret society members. I've read that recently senior managers have been leaving the space incipient stigma of working in the field.

Re: Why wasn’t FTX’s fraud detectable on the blockchain?

#20

Post by i67vw3 »

I had the same question, and the past 2-3 weeks I am still not able to find the answer.

If FTX gave alameda shit tons of FTT and customer funds from FTX reserves by 'transferring' the amount, it should have been visible on the blockchain.

The FTX collapse happened only because of an internal balance sheet leaked to coindesk. Why did coindesk require a balance sheet to write the story? Coindesk probably could have just done it, by looking into the blockchain ledger instead of the balance sheet.

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