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FTX tapped into customer accounts to fund risky bets, setting up its downfall

wsj.com

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Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#491

Post by abhimanyue1998 »

LeafGuild wrote: post #446
legutierr wrote: post #306

Earlier quoted context omitted.

This is the whole idea behind DeFi. All trading is done autonomously on-chain, and owners retain custody throughout.

That's a marketing line, it's not true. Nobody actually has any custody of anything in crypto. The value of the tokens is completely and totally dependent on a consensus of crypto miners doing their job within the parameters of the system, assuming you want them to maintain a price and trading volume that's favorable to the token holders. If the majority of miners suddenly go bust due to outside circumstances, or the…

that is true, but the whole ethos of DeFi is to make the process of mining as decentralised as possible. Have many validators, separated across the globe etc. Obviously, there are still chances that all the miners conspire and kill the system, but the chances of that are decreased with increased decentralisation in the mining and validation process.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#492

Post by pm90 »

encryptluks2 wrote: post #339
wslh wrote: post #288

Earlier quoted context omitted.

How many years could Sam Bankman-Fried get in jail? It is also interesting to read on his Wikipedia profile [1] about "Bankman-Fried is a supporter of effective altruism and claims to pursue earning to give as an altruistic career. He is a member of Giving What We Can and has claimed that he plans to donate the great majority of his wealth to effective charities over the course of his life.". Having direct access to…

Or people that are unethical use charities as a front to do illegal things without remorse

They may do unethical or immoral things but generally they don’t do illegal things. If they do, they’re targets for prosecution.

We’ve got this imperfect system of laws which we use to govern the way we live. Its flawed but it isn’t a free for all either.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#493

Post by donavanm »

somuchfordonor wrote: post #46
markisus wrote: post #14

Earlier quoted context omitted.

But you actually can make money honestly by finding mispricings in the market. Eg Buffet, or Burry during the housing crisis. You can also make money through arbitrage or other brief financial blips that occur in the market. These things aren't really scams in the normal sense.

> honestly by finding mispricings in the market. Eg Buffet, or Burry during the housing crisis. Like who wants to be on the other side of a Jane Street transaction? Absolutely fucking nobody. If you're talking about "mispricings" during the "housing crisis," my dude, nobody wanted to sell their house to these dumb fucks! They were going to starve, they had no choice! How does that not seem like a scam of some sort to…

> If you're talking about "mispricings" during the "housing crisis," my dude, nobody wanted to sell their house to these dumb fucks! They were going to starve, they had no choice!

This seems like a pretty gross misunderstanding of all of the very basic finance here. It was NEVER “their house.” A lender let them live their while they payed off a long term contract. They lost it when they could no longer make basic payments OR sort out deferment or other basic accommodations to the existing contract.

> How does that not seem like a scam of some sort to you?

The “scam” that caught your average homeowner wasnt foreclosure. It was the moment someone convinced them could have free money by signing a mortgage at 20x their annual income, 100% ltv, and a 5% adjustable rate. And when they tried to take money off the table with a HELOC they doubled down in to the unsustainable fantasy. They were already blown out and just didnt understand it yet.

Your burys et al werent part of that. they were there to sink the bigger fish who were trading this monopoly money around.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#494

Post by 1ark »

Animats wrote: post #170

Trading halt announcement at FTX.US.[1] Announcement says withdrawals still up. But Twitter messages indicate withdrawals are not working. FTX Japan shut down by order of Japan Financial Services Agency.[2] FTX.intl processing some withdrawals, according to blockchain.[3] A few lucky people got to exit. Way too much happening to mention here. Just use Google to search "FTX" and limit search to 1 day. Margin calls all…

[2] https://archive.ph/d6uzR

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#495

Post by __s »

bko wrote: post #430
jefftk wrote: post #421

Earlier quoted context omitted.

Very few utilitarians or affective altruists (including me) consider that ethical.

> To maximize your expected value, you must aim for it and then march blindly forth, acting as if the fabulously lucky SBF of the future can reach into the other, parallel, universes and compensate the failson SBFs for their losses. It sounds crazy, or perhaps even selfish—but it’s not. It’s math. It follows from the principle of risk-neutrality. [0] I think he figured in a million realities, the expected value is ne…

Seems like they should at least consider Kelly Criterion

https://news.ycombinator.com/item?id=30265797

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#497

Post by rossjudson »

Jerry2 wrote: post #469
eloff wrote: post #453

Earlier quoted context omitted.

Why won't he be thrown in jail? This looks pretty open and shut. The courts will confiscate his assets and jail him. This is quite similar to what happened to Bernie Madoff.

> Why won't he be thrown in jail? He's the second biggest donor to the Democratic Party. He has a lot of political cover.

What's the latest over there in election denial news?

Seriously.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#498

Post by rdtwo »

AustinDev wrote: post #120
SQueeeeeL wrote: post #71

Earlier quoted context omitted.

They only should go to jail if the US had that actual ideology. Remember, every decision made by the state is political, these people not getting punished is everything working exactly as intended

No idea why you're being downvoted. It is a fact that he donated ~40M to politicians this election cycle.[1] If I had to guess the donations were part of a hedge to avoid accountability for this scam he ran. [1] https://www.opensecrets.org/elections-overview/biggest-donor...

Yeah not sure how well politicians stay bought though. Probably a poor hedge like his other hedges

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#499

Post by 2muchcoffeeman »

astrange wrote: post #489
siftrics wrote: post #354

Earlier quoted context omitted.

This is not true at all. If you are the only person in the world with the private key to your coins, you are the only person who can move them. Period. FTX is a centralized entity that custodies funds. It has nothing to do with a blockchain, which could have completely prevented this. There are many examples of decentralized exchanges (DEXs) for which it is mathematically impossible to loan out depositor's funds with…

When that guy hacked the DAO and Ethereum reversed the transaction, did he keep the coins or not?

They forked the blockchain right? So the person still has them on the old chain.

Re: FTX tapped into customer accounts to fund risky bets, setting up its downfall

#500

Post by vanattab »

colechristensen wrote: post #466
phas0ruk wrote: post #278

Earlier quoted context omitted.

FTX is a centralised exchange, it is not routing all customer trades on chain. It’s not a blockchain failure, it’s just a lack of client asset segregation by a traditional centralised trading house.

It is a blockchain failure in that blockchains in general cannot actually support transactions like this. There's too much volume and there are fees. It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US. There is no…

>It is also a regulatory failure, there are reasons this kind of dipping into customer funds is quite illegal in the US. FTX should not have been reachable by US citizens (funding should have been impossible) _or_ FTX should have been sanctioned _by_ the US

I wonder if Sam being the 2nd biggest funder of Democrats has anything to due with this...

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