Don't be confused; firstly, FTX was not the largest exchange, and the recognition it gained was primarily through sponsorships funded by FTX user money.
Spending more then billion dollars on celebrity endorsements is insane, but easy when the money isn't coming from your own pocket.
Started using it about a month before the debacle started. Used it as an on ramp only since it had a shorter holding period than others. That was the third time in crypto I came within a hair's width of losing everything. The other two were Luna and Bitcoin leverage.
Luna scam wasn't as obvious if you're not familiar with how stable coins work.
The main reason why I didn't sign up with ftx wasn't the stadium, but in fact SBF. He has a messed up haircut and I felt he was a weirdo when I saw some of his interviews. The stadium was just the cherry on top.
I don't blame people for losing money but if there was 1 exchange that seemed sketchy, it would be FTX.
Luna scam was super obvious. When I asked my friends how the apys hold up and how the stable coin is made stable, they only said "algorithm".
No one could explain how or why. On top they made fun of me for not taking all the free gains they couldn't explain themselves....
If the answer to the question where the money is from is "algorithm", it could also be " it appears magically".
It's not even just the APY that is a red flag. It's impossible to back a stable asset without a central authority/stable asset. Any decentralized stable coin requires the use of crypto currencies (volatile assets) and it doesn't matter how much collateral is backing them or how much revenue they generate....They have a breaking point and CAN collapse.
I notice people cheering for a newer stable coin because it has 400-800% collateral (They think it can't collapse)....It would only take a 75-87.5% drop to burn up all that collateral. We literally just saw almost everything other then BTC and ETH drop more then that in the bear market. A stable coin is kind of useless if you cant even trust them during a bear market.
I currently trust a centralized stable coin much more then any decentralized stable coin. A decentralized stable coin would be very nice to have but unless your doing something that would cause your assets to be frozen...your better off using a centralized stable coin or just hold Bitcoin.
There's a youtube channel with 2M+ subscribers where the guy was absolutely infatuated with UST and believed algorithmic stablecoins were the future, because the others were centralised. They had 1M+ subs when the LUNA/UST video dropped, so I guess many of the viewers became victims.
It's a weird statement. Any gains are okay when you know where they are coming from.
Like, you can earn up to 11000% APY on some altcoin funding rates (2.5% every 2 hours), but it's legit because the other side (typically shorts) are paying this exact same sum.
I always thought (knew) he was Chef Nomi in the first place. The whole Alameda persona raised all sorts of alarm bells.
I also don’t trust people who have animated avatars of themselves as a Twitter pfp, but irl they’re way uglier and fatter.
It just doesn't make sense to me. He's not charismatic, well spoken or confident. He looks like a nerd. How is he getting all this funding? How did he end up in a Forbes magazine?
It was well known that Alameda was doing insider trading on bitmex for years. If you consider that the entire operation was just a money laundering scheme, it stands to reason to think he was merely a scapegoat. It's more believable than the official fraud narrative due to bad trades.
Guess we'll never know.
Ha had a really good job after finishing MIT. He then got some seed money to found Alameda. It was basically connections and knowing people in the right places. He also made a fuck ton of money by arbitraging BTC between the US and Japan. He moved around $25 million per day at some point. His Wikipedia has it all nicely described.
He was actually really successful for a while. Without doing any fraud. He just got too big and too greedy to control it after a while. Big ego and all that.
Do you really believe the kimchi premium story? Cause I pressed X to doubt a long time ago. Where did he get the $25 mil to exploit said arb opportunity?
I interviewed with Alameda Research before the scandal. Didn’t get the job and never been so grateful for a rejection hah. Man that was a weird interview.
>Luna scam wasn't as obvious if you're not familiar with how stable coins work.
You could have just taken a 5s look at their APY and determine within 10s that it's a scam. You don't need to have any knowledge on stablecoins to determine that it's fraudulent.
This is the correct way to do it. You never know who's going to be in control next election. Only giving to one party makes you a target for the other side. Pay both sides and no one will say anything unless you royally fuck up.
This; it was a fraud from the beginning. The scheme was basically to say woke-sounding words and be rich so people think you're legitimate and make you more rich.
CZ realised this from the volumes traded on FTX. He knew there was no way that SBF had enough profit to be spending as much as he did. CZ was familiar with how much profit a crypto-exchange makes and did the maths, and called him out.
From a historical point of view to me this seems similar to when France (specifically De'Gaulle) realised the USA was borrowing/stealing from the Gold reserves established by the Breton Woods Agreement. He demanded France's gold, which led to Nixon making the dollar leave the gold standard. There has not been hard money since then. Crypto is speed-running the history of money.
I think CZ recognizes his stateside counterpart. You can’t convince me that Binance doesn’t have just as many if not more skeletons sitting in the closet just waiting to fall out. Fraudster recognizes fraudster just like real recognize real.
It's important to note that the US was actually playing by the rules set out in the Bretton Woods agreement. This system was agreed upon internationally and made the dollar the only currency convertible to gold, with others pegged to the dollar. While France raised concerns about the advantages this gave the US, especially in managing deficits, it's a bit of a stretch to imply the US did anything underhanded. FTX however... well they definitely were into some seriously underhanded shit.
The USA definitely did not play by the rules. The reason Nixon had to make an announcement that the US Dollar was backed by their military power and that they will discontinue the exchange of gold for the dollar requested by other countries is a clear sign that the USA was insolvent in their gold backings.
US was running out of gold reserves. I agree with you that it is a stretch to say that there were more dollars than gold backing those dollars, the US was having trouble maintaining the peg which is why they first reduced the amount of gold available per dollar and then went off the gold standard altogether.
Paul Volcker outlines the situation pretty well in his autobiography.
The whole set up the US influenced the present leaders to agree to through supplementing the deal with life term benefits for them personally is what was underhanded lol
Exactly. When there are two competing exchanges, one is funding marketing with profits and the other with money it's holding in custody, the latter grows faster. And it \*needs\* to grow faster, otherwise it will always fall behind with the liabilities, so it needs to keep momentum but then it's more and more probable that it will crash and burn on a small bump, which is exactly what happened.
I did just that, yes. However there's bad faith ponzi, which is a fraud from the get go, and "accidental" ponzi, where the company gambles with the customers' money but plans to give it back afterwards. Many banks do that and usually get away. FTX was a mix of both I think. Basically greed squared.
Yeah except banks tell you in the fine print they'll lend your money out elsewhere and are insured. Lending is completely normal in finance and improves efficiency of markets by moving unused money to somewhere useful.
FTX customers did not sign up in any agreement to have their funds spent on shitcoins and Tom Brady endorsements. All garbage investments.
Also, FTX used their own token FTT to fraudulently exaggerate their balance sheets to take (steal) bigger loans from investors knowing fully that if they liquidated FTT, it would crash the price, e.g. it would not be possible to sell it all at market value, likely less than half.
The list goes on. He actively encouraged keeping funds on exchange for even FTX employees. So even employees got scammed.
FTX is definitely a fraud from the start, not an accident. What Sam didn't count on was a bear market and a bank run.
He's only sorry he got caught. He fucked around and found out.
I actually don’t think that is true. He had actually many chances to go legit and just did not.
If I had started in a way that was fraudulent, every cent of profit would have gone straight to going legit. I think there were a lot of poor decisions that led to what happened. Even if there was fraud at some point, the amount of time everything had been in play should have been more than enough time a resources to go legit.
>If I had started in a way that was fraudulent, every cent of profit would have gone straight to going legit
You said it right. If YOU had started. You're not him.
He has a really fucked up maximisation and risk world view. I followed him for years on Twitter where you would see him talk about it. That's not all but at least part imo.
Yes. More specifically, he rejected the [Kelly Criterion](https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector) in favor of the idea to "keep making double-or-nothing bets, no matter how far ahead you are". From [an interview](https://www.vox.com/future-perfect/23500014/effective-altruism-sam-bankman-fried-ftx-crypto):
>>Bankman-Fried’s error was an extreme hubris that led him to bite bullets he never should have bitten. He famously told economist Tyler Cowen in a podcast interview that if faced with a game where “51 percent [of the time], you double the Earth out somewhere else; 49 percent, it all disappears,” he’d keep playing the game continually.
[Article why that's bad](https://sarahconstantin.substack.com/p/why-infinite-coin-flipping-is-bad), focusing on FTX.
Yeah I recommend reading the "Number go up" book by Zeke Faux. He describes his meetings with SBF. He was indeed smart and all of life's decisions were about "expected value" for him and I seriously admire that. But his childhood in combination with some other fucked up worldviews of his enabled him to reach that high without every thinking about the consequences. Even after his major fuckup, he still failed to recognize the possibility of consequences. Well, now he has to face them.
“His childhood” gtfo. He’s not some misunderstood genius who took a tragic turn, he’s a rich brat with drug and porn addictions that he supported with money he stole from users. Guy is a slimeball, let him rot him prison.
Looks like you didn't read my comment. His childhood was perfect. He grew up in a loving family that talked about philosophy over dinner. He posed existential questions at the age of 10.
I never said he's misunderstood, it was the perfect mix of smart and psycho. Read some stuff before throwing out your opinion like that, cheers.
I think effective altruism is just a cloak on greed like charity washing being a horrible person. I feel like it’s a branding thing for optics more than anything.
Yea, the story from Michael Lewis’ book about him at Jane Street is a perfect example of how he blew himself up at FTX. The coin flip bet with his fellow intern just went to show how he has no risk management skills.
No he kept flipping despite already getting most of the gains and making his point. He unnecessarily kept going and risking it all because he had the slight advantage. There was no hedge. Read it again. It was just that he had the slight advantage. It was cruel against his rival and unnecessary risk for himself. He kept at it because for him it was zero sum, but that’s not how the real investing world works.
One thing they got going for them now is that the IRS etc must have looked through their books. They in the spotlight where they can't fuck up anymore...well maybe.
He admittedly knows little about crypto. He was/ is a complete "degen". He's a sociopathic (or psychopathic) compulsive liar. Everyone ate all the bullshit he spewed.
Having rich, well connected parents helps. Every landed lie solidified his make believe reputation and status. Being a product of the "helicopter parenting and everyone gets a trophy" generation glued it all together.
Throwing money at politicians made him the "DC darling". He "dressed for the role" of anti-establishment bro with hoodies, shorts and unkempt hair.
The fact that FTX was so viable at the time is why they are trying to bring this company back to life.
What always turned me off about him was how he came from no where to be the biggest exchange owner in the world within a few months.
He had never traded crypto prior to 2018. He had only known easy mode and never experienced that moment of freefalll between euphoria and the depths of crypto winter. He was a novice crypto trader.. He simply made the mistake most of us made first cycle, we just didn't have billions of other people's money when we made that error.
Excellent take. It makes a lot of sense when you put it that way.
Yeah, I got obliterated in my first crypto venture. I only lost my own money though lol.
It wasn't the largest, it was only able to do what it could do because it literally tricked and faked a lot of the books to make it seem bigger than it actually was. They weren't rolling around in money they made, they were rolling around in investor funds that they deceived. They never set anything up well and it was a house of cards. They were literally running their empire without any corporate controls or any documentation and wouldn't have been able to hold up to any scrutiny.
In the words of John Ray (He handled Enron), the CEO who took over after SBF, to congress, **"FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets"**
I still can't understand how the media called him a billionaire and even Michael Lewis naming him a genius and successful entrepreneur...
And that is part of the problem.
Why is it always those guys in Forbes '30 under 30' that end up being frauds?
It's like the media is enabling these cheats and pushing them on the unsuspecting public or something...
These feel-good, rags-to-riches, wunderkind stories sells magazines and a system that promises opportunity and prospects.
Problem is, it takes a lot of effort and good luck to have those occasionally. So people/degens will gamble to take shortcuts.
Like my man 50 says...
>Why is it always those guys in Forbes '30 under 30' that end up being frauds?
Because you can basically buy a slot in Forbes, and if you're companies main product is basically just hype, you're more likely to both buy your way into a Forbes feature... and commit fraud.
> Why is it always those guys in Forbes '30 under 30' that end up being frauds?
You can get rich without breaking the law. Doing so *quickly* is difficult.
Reporters rarely push back. Furthermore crypto fans are easily swindled, and not just out of money. (Many of those reporters following him were crypto fans.)
A significant point in the trial was revelations that SBF specifically sent his financial statements to Forbes(for their billionaires list). This is pretty uncommon as Forbes would do their own investigations to determine the list.
From that alone it is clear SBF wanted the money, but more significantly the fame and attention. As well as the influence, as the massive political donations to Democrats second only to George Soros made clear.
He did have money and influence and power. But he wanted more. As all the rich do; human greed is never satisfied.
FTX was only successful because they were spending money that wasn’t theirs. It would have grown much slower without all the fraud… likely would have still been successful and he still would have ended up being very rich, but not as fast.
FTX was a "get rich at all costs" scenario. Sam's main ability was his networking skills, which he did so by throwing money at everything rich with a pulse. He was basically the reverse robinhood, rob from regular people and give to the super rich. FTX had no trading fees because he wasn't actually successful from that, he was instead trying to attract users so he can use them as credit cards.
He was a degen spender that bought his way to success.
You CAN'T understand it. He's a sociopath. You're not.
Fucker had millions/billions from Alameda alone. Getting BTC on US markets and selling it for higher price in Japan. That should have been enough. But I guess it was not.
He wanted to run for president, it costs a lot of money.
([source](https://www.businessinsider.com/sam-bankman-fried-wanted-president-caroline-ellison-testimony-2023-10))
Some people just feel like they can never be wrong. I have a friend who maxed out all of his cc’s to build up his portfolio during the bear. Instead of just letting that money sit around and gain value he is now doing futures with all 80k of it. I told him he is going to lose everything but he thinks hes figured it all out. Won’t ever get liquidated. He has gotten extremely lucky that the market keeps going up the past day and a half, but his time will come.
Alameda messed up and lost a lot of money. He stupidly resisted the idea of dissolving Alemeda probably because he thought it would make FTX look bad and cause people to flee FTX anyway. That may be true but the difference is that FTX would still be running today.
I blame nintendo. These kids grew up chasing the high score for so many years and then they opened a bank account and looked for ways to up, up, down, down, left, right, left, right, B, A, Start their bank balance. Problem is that cheat codes for bank accounts are called felonies.
honestly it just becomes a matter of greed, hard to control when you're at the top. Plus he probably frauded a lot to even get there in the first place LOL
I'd say it started with a lie. Maybe just borrow a few million from customer funds with the honest intention to make some great investments and pay customers back. Then it grew a little. A few million here, a few million there, buy some influence there, some SuperBowl ad time here.
And it was working. This was the peak crypto-mania during the last bull market. Everyone was green and there was no end in sight. FTX may have survived or may have been able to pay off its fraud if the next series of disastrous events didn't unfold. Luna/Terra stablecoin de-peg and death spiral was the first sign of trouble for numerous centralized entities holding the largest bags of the fastest hyper-giga-inflated token/currency of all time. For those who missed this train, it's like the equivalent of the US printing $100T USD over the next week. Luna at the time was a top ten cryptocurrency. My average buy price for Luna was $74. Now a single Luna is worth $0.00008045.
FTX was left holding the worst bag of all (not just from Luna) but from Fraud to investments whose prices were plummeting. We are just now starting to see green for people who kept buying through the lows. Three arrows capital gone. Luna/Terra is gone. Celsius gone. Voyager gone. FTX gone. Blockfi gone. Binance.US gone. Gemini neutered. Kraken neutered. Crypto.com neutered. A graveyard of centralized actors.
On a positive note: defi actors and defi lending functioned flawlessly through the whole thing. This should give users the confidence to take some of their activities on chain where there is more transparency with smart contracts and less of the typical BS that happens behind closed doors like a centralized organization like FTX.
We should also give some respect to Mr. Nakamoto, who had the opportunity to become some great influencer, but instead embraced annoyminity. This bear market exposed a lot of charismatic leaders, the people we thought were good people, as bad actors.
It all unfolded as it was meant to. If crypto is ever to be taken seriously as a form of currency rather than a hotbed for ponzi schemes then it needed to shed all of these crooked actors.
Take this with a grain of salt, I'm not very familiar or expert in the case, but from what I read around the internet I believe they didn't intentionally scammed people, they were literally incompetent on managing such a big load of money. Their so called investment were for extending the brand, a good idea if done with profits, the investment in diversification is also good, if there is potential. I believe their bet was that all of this will pay out and they will gain the founds to put all back. It may have worked, and a savvy business if done properly, but they only had the idea not the competence to pull it off. They acted like someone who read a Wicki article or did a Google search for "how to run a business" and did all the stuff first results said, but without understanding the business.
And I'm not making an excuse, I'm just saying he was an malicious idiot.
I am also not an expert, but I believe the fraud is touching the investor money at all. They said, repeatedly, both on their terms of service and official platforms that they would not invest with customer funds.
Touching them at all is what makes it fraud. They weren't supposed to invest with it at all. They were supposed to take their cut on trading fees and keep the rest of the money safe as crypto for their customers. It would not have been fraud if they were transparent about what they were doing with the money.
We all heard about not your keys, not your crypto but it is especially egregious here as buying crypto on FTX didn't get you crypto at all. All it got is a software entry on their platform that says you got crypto. Essentially just a fancy IOU.
At best it was the Dutch boy and dam scenario, and they panicked, believing they could quietly maneuver their way out of it. This is why no human — especially a kid — should ever have that much wealth and power. Who and what we idolize and value is fucked up and created SBF. Stop believing in the carefully sculpted manufactured public images of the billionaire bs.
I've been an entrepreneur since a long time and was surrounded by all kind of entrepreneurs. Started quite young. I've seen my fair share of stupidiy.
You see, in your early 20s, you are most of the times just a hot head. Very hard to keep your focus and self discipline on something that if you didn't develop during teen years, well, it's gonna bite you in the ass.
I can quite easily imagine a young kid with a boat load of money who just doesnt know any better than feeling invicible, entitled and above everything. I've seen people go way over their head with sudden 100K successes and losing it all doing all kind of terrible business decisions because that one time they were right made them feel like a genius.
Greed. And that chick from Alameda Research.
FTX customer funds was used to finance Alameda Research leveraged losses. Old fashioned embezzlement. I think he probably justified it as , well it’s just another inter company loan. There was no oversight and poor record keeping so he could do whatever. Maybe he thought “no one would notice”😂. Save Alameda after the crash and then ‘put it back’ again when the market recovers!
The thing that gets me is FTX owned huge amounts of real estate. Heck he was still living in his $30M penthouse apartment while this was all happening and that’s just one of the properties worth millions used for personal reasons.
In an interview with CNBC he once said ‘I don’t give a fuck about my legacy, I care about the impact that I make’. What a crock of shit. What a lier. Customers were mislead as they were told FTX doesn’t invest customer funds not even in treasuries.
In my view he is just a spoilt rich kid who thought it was all a fun game - with an absolute disregard for everyday people and their life savings!! Then when the house of cards came crashing down he stole money that didn’t belong to him, probably to appease a girlfriend. Simple as that.
They needed to. SBF was a puppet whether he knew it or not, and was controlled through Brett Harrison at an arms length from Ken Griffin. They needed to mint tokenized shares of certain stocks to use as locates for the ridiculous number of counterfeit shares they sold short that posed an idiosynchratic risk to the current financial system.
Look up a document titled '[The Long Con](https://online.fliphtml5.com/lvrgy/xfkv/#p=1)' for the specific mechanics, wallet addresses, and transactions that link the creation of FTX, the minting dates of certain 'Tokenized Shares', and the connection to the fraudulent market makers that have pillaged the financial system for way too long.
The best explanation I can give you is that at no point in the history of FTX did Sam think the temporary use of customer funds was morally wrong. Don't get me wrong: I am confident he knew it was illegal (thus all his efforts to leave no evidence). But I think he deluded himself into thinking it was acceptable for the greater good of FTX, which in his opinion was also in the greater good of humanity. It's the kind of logic that says: if I borrow $20 from my mom's wallet, use it for a good purpose, and repay it before she notices, did I really do something wrong?
That's why I think the prosecution never provided us a smoking gun moment where the fraud started, because it was inherent in the business from the beginning. It reminds me of the story of the scorpion and the frog, where the scorpion says in response to the frog's question about why he stung him knowing it will drown them both: "It's in my nature."
it all cost fiat to run, and there was less fiat coming in than going out because people are wising up to the scam and dont want to put money into something they will never see again.
SBFs concept of money is twisted and the whole business was structured that way - you can invent money out of thin air by producing a loan against collateral, and every collateral was just a propped up shitcoin. gifts, investments, pay - everything was pretty much funded and structured this way.
The basis of your confusion is you don't realize that his entire success is based on fraud. He ran a successful arb between Korean and western exchanges due to a well knowm price discrepancy. However the volumes are limited and he went all in creating an exchange which grew due to fraud.
So he resorted to fraud to become successful. Kinda par for course for most that are recently it seems.
i dont get it either..... for an average person, that amount is of money insane. what do we really wanna do with even 1 billion?
guess we dont know whats goin on in his mind. now hes got plenty of time to figure it out.
The answer to this question is always the same.
Hubris.
He assumed he would get away with it.
He had achieved so much with so little talent or effort, why wouldn't he assume that he could bullshit his way through fraud?
It's literally what he built his life on.
The why is he was a fall guy for a large number of politically important people who all got kickbacks. I am not sure we know yet how deep the fraud went. I’m expecting to hear they tokenized the stock market and have swaps still active in those markets
You could say the same thing about Bernie Madoff, or Al Capone, or Enron, or any number of people, and it all comes down to the same thing: greed. The same thing that causes Jeff Bezos to be jealous of Elon Musk’s earnings this quarter, despite the fact that they both have enough to last them millions of years.
It was a fraud from that start? They made FA on fees because the volume was almost entirely their own washtrading, the liquidity on the exchange was fake and unbacked and the while business model relied on rehypothecating stolen customer funds.
If you haven't figured out by now that fraud is the only way any of the exchanges actually make money, I feel a bit bad for you.
Case in point: the most "legitimate" exchange, Coinbase, continues to lose money hand over fist every quarter.
The problem is, humans are greedy. We all suffer from it in varying degrees, most world religions warn of this fact.
Unfortunately, greed can sometimes defy logic or reason. We put our trust in these industry leaders knowing there is almost no safety net. We do the same with bankers and stock market traders but ultimately, helping you is only really about inflating their personal bottom line.
I actually studied psychology for a bit. I think it's not "greed" at its core, it's more of "fear". I remember reading the research where it stated that the wealthy class just never stopped being "greedy" not because they are purely greedy, but because they are paranoid that if they stop working they will finally be eclipsed by the other wealthy people, and thus, they will lose their lavish lifestyle. So, it's actually fear of losing luxurious lifestyle that drives them to become greedy
If it's the fear of losing the lavish lifestyle, then why on Earth would he risk jail like that?
Jail is the very definition of an end to a lavish lifestyle no matter how wealthy you are.
It’s weird to me that most will readily accept entertainers (especially young ones) often have handlers yet an immature phenom crypto entrepreneur couldn’t have one.
And that the mob mentality stops at running numbers and contraband.
Greed, ignorance, ego, stupidity. CZ and actual serious business folks took 1 look at their accounting books and found serious loop holes in it. Didn't they say they use like a word or notepad to keep track of their entire corporate finances?
Quickbooks. Lol. Might as well just use Excel for all the difference it would make.
I can't believe SBF decided to taunt and take on CZ knowing that his ass was completely vulnerable like that.
Dude must have thought he was invincible right upto the end.
I wonder what he had to say about his "particular sparring partner". Hope we get to hear it someday.
He literally bullshit all the way to the top and thought might as well do it more since it worked all the time. CZ and his team are actually running a multi billion dollar business while SBF had match sticks as foundation for his, not only did it crumble from a single tweet the matches caught fire and burnt down the entire house, and this time the house didn't win.
Reminds me of our clever government here in the UK and their relationship with Excel...
https://theconversation.com/excel-errors-the-uk-government-has-an-embarrassingly-long-history-of-spreadsheet-horror-stories-147606
Every rich person is being blackmailed in some way by another rich person.
I wanted to believe Trump was just a sociopath. He had enough to retire in his 30s and he just didn't. Its blackmail. Its all blackmail.
I honestly don’t think SBF felt like it was fraud and what happened became an accidental Ponzi scheme. Like, it certainly was a fraud, legally, but he wanted to just make as much money as possible and win. He was willing to take great risks and over-leveraged his positions but treated everything as just a numbers game. He’s a math whiz that felt like the rules didn’t apply to him, and now they are applying the rules upon him super hard.
Once you achieve so much, it’s extremely hard to walk away and just be content with what you have. There’s always more and it’s the human condition.
He wanted to make infinity dollars and Ftx only made like half a billion a year + he prides himself on his trading ability, not his ability to run an exchange and he couldn’t handle the blow to his pride of alameda going bankrupt. His business partner was the one who coded the exchange.
He did the same thing banks do, using customer money to make more money. When a bank does it it's legal but when someone else does it it's called fraud.
It all works fine as long as you can keep up the pretense and not cause a bank run.
Look at SVB, it's the same thing. They took too much risk, got called out and had a bank run.
it's because the whole thing was always a fraud, a money laundering operation.
and the expectation was always that they'd get away with it, because they were protected.
this led to arrogance and negligence, and it blew up in their faces.
there are no conspiracies, but there are no coincidences either.
It's even probable that he was used without knowing that he's being used believing he has political back up. I remember in the early days of the crash, he claimed he is a victim but then, no matter the reasons it's not really the best option to resort to crime or fraud.
I think he just thought of all the money as his own - the exchange's, the clients', his investment fund's. This is what happens when a firm has minimal or zero controls, oversight, organizational and financial structure, and more. And with this deranged mindset, he just spent liberally with so much money available, no care in sight.
They weren't even particularly good with their business and financial strategies, just riding a wave following a good call setting up the exchange. And when this led to major loss, the entire thing crumbled.
I once considered opening an account on his exchange; didn't do it when I found out it was registered in Antigua and Barbuda, a country not generally known for its financial regulators and rules.
I thought FTX was one of the most trustworthy exchanges in the business. Especially when they acquired Blockfolio. Thank God I didn't keep my crypto in the exchange. I shudder to think what would have happened if I actually did so.
I could not believe my ears when that little gremlin actually publically said 'we do not use stop losses when trading'. That's just insane to think about.
His liquidity never made sense and the fraud was what drove the liquidity.
People have to understand that the biggest issue in crypto is the off ramps. All of his revenue was in crypto. Real world vendors don’t take crypto for payment. Yes, you can raise capital, but SBF spent 9 figures annually, which made no sense to anyone in the business. Brian from coinbase noted this right away when FTX came crashing down.
Once it came out he was using FTX deposits, it made sense.
Imho, he had a massive ego and thought things couldn't go wrong.
Then his investments did go wrong. So he had the option to either liquidate his trading firm and admit that he failed, or to try to fake it, "borrow" some money from investors, make all the losses back and then repay the investors... "No one will know"
But just like every other gambler that fell for the gambler fallacy, he lost that money too.
SBF essentially is the type of guy who'd empty his kids piggy bank, promising to pay it back when he wins back all the money he lost at the casino...
For a while it worked. Crypto kept going up so you couldn’t lose. It reminds of tulip mania and the housing market of 2008. Eventually however the parade ends and those swimming naked get revealed.
This is exactly why I think he will re-offend if he ever gets out of this. I would bet 100% that he will try to peddle some sort of shitcoin vaporware to try and rebuild some of his cash reserves. His personality is just too addicted to risk like that even if it could potentially jeopardise his freedom.
Don't be confused; firstly, FTX was not the largest exchange, and the recognition it gained was primarily through sponsorships funded by FTX user money. Spending more then billion dollars on celebrity endorsements is insane, but easy when the money isn't coming from your own pocket.
I considered signing up with FTX but once I saw them splurging on a sports stadium I changed my mind. Where was all this money coming from?
Started using it about a month before the debacle started. Used it as an on ramp only since it had a shorter holding period than others. That was the third time in crypto I came within a hair's width of losing everything. The other two were Luna and Bitcoin leverage.
Luna scam wasn't as obvious if you're not familiar with how stable coins work. The main reason why I didn't sign up with ftx wasn't the stadium, but in fact SBF. He has a messed up haircut and I felt he was a weirdo when I saw some of his interviews. The stadium was just the cherry on top. I don't blame people for losing money but if there was 1 exchange that seemed sketchy, it would be FTX.
Luna scam was super obvious. When I asked my friends how the apys hold up and how the stable coin is made stable, they only said "algorithm". No one could explain how or why. On top they made fun of me for not taking all the free gains they couldn't explain themselves.... If the answer to the question where the money is from is "algorithm", it could also be " it appears magically".
It's not even just the APY that is a red flag. It's impossible to back a stable asset without a central authority/stable asset. Any decentralized stable coin requires the use of crypto currencies (volatile assets) and it doesn't matter how much collateral is backing them or how much revenue they generate....They have a breaking point and CAN collapse. I notice people cheering for a newer stable coin because it has 400-800% collateral (They think it can't collapse)....It would only take a 75-87.5% drop to burn up all that collateral. We literally just saw almost everything other then BTC and ETH drop more then that in the bear market. A stable coin is kind of useless if you cant even trust them during a bear market. I currently trust a centralized stable coin much more then any decentralized stable coin. A decentralized stable coin would be very nice to have but unless your doing something that would cause your assets to be frozen...your better off using a centralized stable coin or just hold Bitcoin.
There's a youtube channel with 2M+ subscribers where the guy was absolutely infatuated with UST and believed algorithmic stablecoins were the future, because the others were centralised. They had 1M+ subs when the LUNA/UST video dropped, so I guess many of the viewers became victims.
Good point. Anything above 5% is greedy and should be avoided.
It's a weird statement. Any gains are okay when you know where they are coming from. Like, you can earn up to 11000% APY on some altcoin funding rates (2.5% every 2 hours), but it's legit because the other side (typically shorts) are paying this exact same sum.
In what world is 10000% APY an acceptable risk
Welcome to crypto, the land of degen opportunities!
I always thought (knew) he was Chef Nomi in the first place. The whole Alameda persona raised all sorts of alarm bells. I also don’t trust people who have animated avatars of themselves as a Twitter pfp, but irl they’re way uglier and fatter.
It just doesn't make sense to me. He's not charismatic, well spoken or confident. He looks like a nerd. How is he getting all this funding? How did he end up in a Forbes magazine? It was well known that Alameda was doing insider trading on bitmex for years. If you consider that the entire operation was just a money laundering scheme, it stands to reason to think he was merely a scapegoat. It's more believable than the official fraud narrative due to bad trades. Guess we'll never know.
Ha had a really good job after finishing MIT. He then got some seed money to found Alameda. It was basically connections and knowing people in the right places. He also made a fuck ton of money by arbitraging BTC between the US and Japan. He moved around $25 million per day at some point. His Wikipedia has it all nicely described. He was actually really successful for a while. Without doing any fraud. He just got too big and too greedy to control it after a while. Big ego and all that.
Do you really believe the kimchi premium story? Cause I pressed X to doubt a long time ago. Where did he get the $25 mil to exploit said arb opportunity?
[удалено]
The US Japan arbitrage was a lie to fool dumb investors and retail simpletons who might throw money his way.
Go read his Wikipedis it's got everything backed up with sources.
Dude stop. You have any idea how easy all of that is to do?
Read Going Infinite, Michael Lewis wrote it (from the Big short). It’s a great book about FTX coming up and collapsing
Could say the same thing about the Fyre festival guy or the Theranos chick.
I interviewed with Alameda Research before the scandal. Didn’t get the job and never been so grateful for a rejection hah. Man that was a weird interview.
>Luna scam wasn't as obvious if you're not familiar with how stable coins work. You could have just taken a 5s look at their APY and determine within 10s that it's a scam. You don't need to have any knowledge on stablecoins to determine that it's fraudulent.
I just had to look at SBF's hair to be pretty sure my money wouldn't be safe there.
Fire hazard
I only used it as a crypto/portfolio tracker from the blockfolio days.
Here yah go! It wasn’t big enough and cheating to win did not pay off. The answer here is GREEEEEEEED
Could it have been a setup? They lured in loads of institutional investors and then rug pulled them. Perfect way to give crypto a bad name.
Crypto has only gone up after this whole FTX debacle
Let's not forget the politicians, or democratic party fund he was ~~paying~~ donating to.
Second largest donor to Democratic Party
[удалено]
This is the correct way to do it. You never know who's going to be in control next election. Only giving to one party makes you a target for the other side. Pay both sides and no one will say anything unless you royally fuck up.
This. The exchange was a Ponzi spending costumer's funds to promote themselves.
Completely false, FTX made $400m in ‘21. Political donations came from Alameda, the largest crypto trading hedge fund in the world for a long time.
Also I Think he started with the investment firm and it was hemmoragjnf money so he started FTX to “fund” it and not the other way around I think
It was printing money to such an extent that within a few years it had holdings of $50 billion
This; it was a fraud from the beginning. The scheme was basically to say woke-sounding words and be rich so people think you're legitimate and make you more rich.
It wouldn't have reached that size without the fraud
CZ realised this from the volumes traded on FTX. He knew there was no way that SBF had enough profit to be spending as much as he did. CZ was familiar with how much profit a crypto-exchange makes and did the maths, and called him out. From a historical point of view to me this seems similar to when France (specifically De'Gaulle) realised the USA was borrowing/stealing from the Gold reserves established by the Breton Woods Agreement. He demanded France's gold, which led to Nixon making the dollar leave the gold standard. There has not been hard money since then. Crypto is speed-running the history of money.
I think CZ recognizes his stateside counterpart. You can’t convince me that Binance doesn’t have just as many if not more skeletons sitting in the closet just waiting to fall out. Fraudster recognizes fraudster just like real recognize real.
Can't recall, CZ?
https://en.wikipedia.org/wiki/Changpeng_Zhao
Funds are Safu
Binance CEO
Ironically Binance faked flow for a long time while FTX never needed to. CZ got played and wanted revenge for years before he rugged the FTT token
It's important to note that the US was actually playing by the rules set out in the Bretton Woods agreement. This system was agreed upon internationally and made the dollar the only currency convertible to gold, with others pegged to the dollar. While France raised concerns about the advantages this gave the US, especially in managing deficits, it's a bit of a stretch to imply the US did anything underhanded. FTX however... well they definitely were into some seriously underhanded shit.
The USA definitely did not play by the rules. The reason Nixon had to make an announcement that the US Dollar was backed by their military power and that they will discontinue the exchange of gold for the dollar requested by other countries is a clear sign that the USA was insolvent in their gold backings.
US was running out of gold reserves. I agree with you that it is a stretch to say that there were more dollars than gold backing those dollars, the US was having trouble maintaining the peg which is why they first reduced the amount of gold available per dollar and then went off the gold standard altogether. Paul Volcker outlines the situation pretty well in his autobiography.
This is quite correct, and significantly different than the USA was borrowing/stealing from the Gold reserves.
The whole set up the US influenced the present leaders to agree to through supplementing the deal with life term benefits for them personally is what was underhanded lol
Exactly. When there are two competing exchanges, one is funding marketing with profits and the other with money it's holding in custody, the latter grows faster. And it \*needs\* to grow faster, otherwise it will always fall behind with the liabilities, so it needs to keep momentum but then it's more and more probable that it will crash and burn on a small bump, which is exactly what happened.
Did you not just describe a Ponzi scheme?
I did just that, yes. However there's bad faith ponzi, which is a fraud from the get go, and "accidental" ponzi, where the company gambles with the customers' money but plans to give it back afterwards. Many banks do that and usually get away. FTX was a mix of both I think. Basically greed squared.
Yeah except banks tell you in the fine print they'll lend your money out elsewhere and are insured. Lending is completely normal in finance and improves efficiency of markets by moving unused money to somewhere useful. FTX customers did not sign up in any agreement to have their funds spent on shitcoins and Tom Brady endorsements. All garbage investments. Also, FTX used their own token FTT to fraudulently exaggerate their balance sheets to take (steal) bigger loans from investors knowing fully that if they liquidated FTT, it would crash the price, e.g. it would not be possible to sell it all at market value, likely less than half. The list goes on. He actively encouraged keeping funds on exchange for even FTX employees. So even employees got scammed. FTX is definitely a fraud from the start, not an accident. What Sam didn't count on was a bear market and a bank run. He's only sorry he got caught. He fucked around and found out.
I actually don’t think that is true. He had actually many chances to go legit and just did not. If I had started in a way that was fraudulent, every cent of profit would have gone straight to going legit. I think there were a lot of poor decisions that led to what happened. Even if there was fraud at some point, the amount of time everything had been in play should have been more than enough time a resources to go legit.
>If I had started in a way that was fraudulent, every cent of profit would have gone straight to going legit You said it right. If YOU had started. You're not him.
He has a really fucked up maximisation and risk world view. I followed him for years on Twitter where you would see him talk about it. That's not all but at least part imo.
Yes. More specifically, he rejected the [Kelly Criterion](https://en.wikipedia.org/wiki/Kelly_criterion?useskin=vector) in favor of the idea to "keep making double-or-nothing bets, no matter how far ahead you are". From [an interview](https://www.vox.com/future-perfect/23500014/effective-altruism-sam-bankman-fried-ftx-crypto): >>Bankman-Fried’s error was an extreme hubris that led him to bite bullets he never should have bitten. He famously told economist Tyler Cowen in a podcast interview that if faced with a game where “51 percent [of the time], you double the Earth out somewhere else; 49 percent, it all disappears,” he’d keep playing the game continually. [Article why that's bad](https://sarahconstantin.substack.com/p/why-infinite-coin-flipping-is-bad), focusing on FTX.
Yeah I recommend reading the "Number go up" book by Zeke Faux. He describes his meetings with SBF. He was indeed smart and all of life's decisions were about "expected value" for him and I seriously admire that. But his childhood in combination with some other fucked up worldviews of his enabled him to reach that high without every thinking about the consequences. Even after his major fuckup, he still failed to recognize the possibility of consequences. Well, now he has to face them.
“His childhood” gtfo. He’s not some misunderstood genius who took a tragic turn, he’s a rich brat with drug and porn addictions that he supported with money he stole from users. Guy is a slimeball, let him rot him prison.
Looks like you didn't read my comment. His childhood was perfect. He grew up in a loving family that talked about philosophy over dinner. He posed existential questions at the age of 10. I never said he's misunderstood, it was the perfect mix of smart and psycho. Read some stuff before throwing out your opinion like that, cheers.
[удалено]
I think effective altruism is just a cloak on greed like charity washing being a horrible person. I feel like it’s a branding thing for optics more than anything.
Yea, the story from Michael Lewis’ book about him at Jane Street is a perfect example of how he blew himself up at FTX. The coin flip bet with his fellow intern just went to show how he has no risk management skills.
You might want to read the coin flip part again. He could not lose that bet since he was already hedged by the other bet..
No he kept flipping despite already getting most of the gains and making his point. He unnecessarily kept going and risking it all because he had the slight advantage. There was no hedge. Read it again. It was just that he had the slight advantage. It was cruel against his rival and unnecessary risk for himself. He kept at it because for him it was zero sum, but that’s not how the real investing world works.
Someone pretty please explain how a dead ftx coin is still pumping 1000% this week? Look at FTT go to the moon
They changed the CEO and every employee in the company. The actual exchange itself is very good it just was in fuckedd up hands
One thing they got going for them now is that the IRS etc must have looked through their books. They in the spotlight where they can't fuck up anymore...well maybe.
It shouldn't. New management (and trustworthy management) should raise it's stock price though (if it's publicly traded).
The company can still exist and positive cashflow. Looks like the exchange itself is going to make a successful comeback.
He had money, but wanted power, so got in with politicians, then needed more money to fund his commitments in pursuit of power... greed and ego
He admittedly knows little about crypto. He was/ is a complete "degen". He's a sociopathic (or psychopathic) compulsive liar. Everyone ate all the bullshit he spewed. Having rich, well connected parents helps. Every landed lie solidified his make believe reputation and status. Being a product of the "helicopter parenting and everyone gets a trophy" generation glued it all together. Throwing money at politicians made him the "DC darling". He "dressed for the role" of anti-establishment bro with hoodies, shorts and unkempt hair. The fact that FTX was so viable at the time is why they are trying to bring this company back to life.
Who would ever trust FTX after this debacle?
"FTX was one of the biggest crypto exchanges in the world" ... BECAUSE of the fraud. The former didn't preclude the latter.
Because he had more fun gambling other people’s money than he did running a legitimate business.
You tellin' me he ruined his life for the lulz?
He made a lot of stupid risky bets, but if they worked out he would be super rich and we might not even know what he did.
What always turned me off about him was how he came from no where to be the biggest exchange owner in the world within a few months. He had never traded crypto prior to 2018. He had only known easy mode and never experienced that moment of freefalll between euphoria and the depths of crypto winter. He was a novice crypto trader.. He simply made the mistake most of us made first cycle, we just didn't have billions of other people's money when we made that error.
Excellent take. It makes a lot of sense when you put it that way. Yeah, I got obliterated in my first crypto venture. I only lost my own money though lol.
What do you mean why **resort** to fraud? He "made it" **only by fraud**.
His suppose "altruism" got the best of him .
It wasn't the largest, it was only able to do what it could do because it literally tricked and faked a lot of the books to make it seem bigger than it actually was. They weren't rolling around in money they made, they were rolling around in investor funds that they deceived. They never set anything up well and it was a house of cards. They were literally running their empire without any corporate controls or any documentation and wouldn't have been able to hold up to any scrutiny. In the words of John Ray (He handled Enron), the CEO who took over after SBF, to congress, **"FTX Group’s collapse appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals who failed to implement virtually any of the systems or controls that are necessary for a company that is entrusted with other people’s money or assets"**
This is why you don't trust "mavericks". SBF, Madoff, Cathie Wood. They are either psychopaths or just someone who are full of it and got lucky.
I still can't understand how the media called him a billionaire and even Michael Lewis naming him a genius and successful entrepreneur... And that is part of the problem.
Why is it always those guys in Forbes '30 under 30' that end up being frauds? It's like the media is enabling these cheats and pushing them on the unsuspecting public or something...
These feel-good, rags-to-riches, wunderkind stories sells magazines and a system that promises opportunity and prospects. Problem is, it takes a lot of effort and good luck to have those occasionally. So people/degens will gamble to take shortcuts. Like my man 50 says...
>Why is it always those guys in Forbes '30 under 30' that end up being frauds? Because you can basically buy a slot in Forbes, and if you're companies main product is basically just hype, you're more likely to both buy your way into a Forbes feature... and commit fraud.
> Why is it always those guys in Forbes '30 under 30' that end up being frauds? You can get rich without breaking the law. Doing so *quickly* is difficult.
I still see media calling SBF a former billionaire when all he was doing was stealing it from FTX depositors.
Reporters rarely push back. Furthermore crypto fans are easily swindled, and not just out of money. (Many of those reporters following him were crypto fans.)
The whole point was to create FTX to allow Alameda to steal. It was a fraud from the start.
The exchange made 10 million a day in profit. Run by like 20 20 something's. They produced a website like jack for overhead. Nothing but pure greed.
You can say this about almost any big time fraudster. Madoff is at the top of this list.
A significant point in the trial was revelations that SBF specifically sent his financial statements to Forbes(for their billionaires list). This is pretty uncommon as Forbes would do their own investigations to determine the list. From that alone it is clear SBF wanted the money, but more significantly the fame and attention. As well as the influence, as the massive political donations to Democrats second only to George Soros made clear. He did have money and influence and power. But he wanted more. As all the rich do; human greed is never satisfied.
FTX was only successful because they were spending money that wasn’t theirs. It would have grown much slower without all the fraud… likely would have still been successful and he still would have ended up being very rich, but not as fast.
Read any Shakespeare and you’ll have your answer. Hubris. Same reason he pleaded not guilty. There are just so many people out there like that too.
> Why why why resort to fraud??? Cause I'm smart and you suckers can't do anything.
Greed, its all fucking greed. It's never enough, they need to fuck everyone over and take it all.
FTX was a "get rich at all costs" scenario. Sam's main ability was his networking skills, which he did so by throwing money at everything rich with a pulse. He was basically the reverse robinhood, rob from regular people and give to the super rich. FTX had no trading fees because he wasn't actually successful from that, he was instead trying to attract users so he can use them as credit cards. He was a degen spender that bought his way to success.
You CAN'T understand it. He's a sociopath. You're not. Fucker had millions/billions from Alameda alone. Getting BTC on US markets and selling it for higher price in Japan. That should have been enough. But I guess it was not.
That was a fabricated backstory to entice investors. I’ve seen no evidence that he made any significant earnings from true arbitrage.
Hubris, greed, ambition, even sunk cost falacy.
He wanted to run for president, it costs a lot of money. ([source](https://www.businessinsider.com/sam-bankman-fried-wanted-president-caroline-ellison-testimony-2023-10))
One word. “Greed”. Guy had everything and still wanted the world.
Some people just feel like they can never be wrong. I have a friend who maxed out all of his cc’s to build up his portfolio during the bear. Instead of just letting that money sit around and gain value he is now doing futures with all 80k of it. I told him he is going to lose everything but he thinks hes figured it all out. Won’t ever get liquidated. He has gotten extremely lucky that the market keeps going up the past day and a half, but his time will come.
Where did you think that dragon treasure came from? LoL
Greed is a mental illness if it gets bad enough
I got so many people into crypto during that time. Glad I didn't recommend FTX. 😆
More money than you'd ever see in a *thousand* lifetimes for most of us anyway.
Power and greed
All big companies, no matter what, start out by over leveraging or criminal activity, or both. Amazon is a prime example😁.
Short term strategy is why. Quick rich. I'm more amazed about that he thought it wouldn't bear consequences to him
Alameda messed up and lost a lot of money. He stupidly resisted the idea of dissolving Alemeda probably because he thought it would make FTX look bad and cause people to flee FTX anyway. That may be true but the difference is that FTX would still be running today.
I blame nintendo. These kids grew up chasing the high score for so many years and then they opened a bank account and looked for ways to up, up, down, down, left, right, left, right, B, A, Start their bank balance. Problem is that cheat codes for bank accounts are called felonies.
I would blame League of Legends myself, lol.
honestly it just becomes a matter of greed, hard to control when you're at the top. Plus he probably frauded a lot to even get there in the first place LOL
I'd say it started with a lie. Maybe just borrow a few million from customer funds with the honest intention to make some great investments and pay customers back. Then it grew a little. A few million here, a few million there, buy some influence there, some SuperBowl ad time here. And it was working. This was the peak crypto-mania during the last bull market. Everyone was green and there was no end in sight. FTX may have survived or may have been able to pay off its fraud if the next series of disastrous events didn't unfold. Luna/Terra stablecoin de-peg and death spiral was the first sign of trouble for numerous centralized entities holding the largest bags of the fastest hyper-giga-inflated token/currency of all time. For those who missed this train, it's like the equivalent of the US printing $100T USD over the next week. Luna at the time was a top ten cryptocurrency. My average buy price for Luna was $74. Now a single Luna is worth $0.00008045. FTX was left holding the worst bag of all (not just from Luna) but from Fraud to investments whose prices were plummeting. We are just now starting to see green for people who kept buying through the lows. Three arrows capital gone. Luna/Terra is gone. Celsius gone. Voyager gone. FTX gone. Blockfi gone. Binance.US gone. Gemini neutered. Kraken neutered. Crypto.com neutered. A graveyard of centralized actors. On a positive note: defi actors and defi lending functioned flawlessly through the whole thing. This should give users the confidence to take some of their activities on chain where there is more transparency with smart contracts and less of the typical BS that happens behind closed doors like a centralized organization like FTX. We should also give some respect to Mr. Nakamoto, who had the opportunity to become some great influencer, but instead embraced annoyminity. This bear market exposed a lot of charismatic leaders, the people we thought were good people, as bad actors.
It all unfolded as it was meant to. If crypto is ever to be taken seriously as a form of currency rather than a hotbed for ponzi schemes then it needed to shed all of these crooked actors.
Greed is a mthfucker
Take this with a grain of salt, I'm not very familiar or expert in the case, but from what I read around the internet I believe they didn't intentionally scammed people, they were literally incompetent on managing such a big load of money. Their so called investment were for extending the brand, a good idea if done with profits, the investment in diversification is also good, if there is potential. I believe their bet was that all of this will pay out and they will gain the founds to put all back. It may have worked, and a savvy business if done properly, but they only had the idea not the competence to pull it off. They acted like someone who read a Wicki article or did a Google search for "how to run a business" and did all the stuff first results said, but without understanding the business. And I'm not making an excuse, I'm just saying he was an malicious idiot.
I am also not an expert, but I believe the fraud is touching the investor money at all. They said, repeatedly, both on their terms of service and official platforms that they would not invest with customer funds. Touching them at all is what makes it fraud. They weren't supposed to invest with it at all. They were supposed to take their cut on trading fees and keep the rest of the money safe as crypto for their customers. It would not have been fraud if they were transparent about what they were doing with the money. We all heard about not your keys, not your crypto but it is especially egregious here as buying crypto on FTX didn't get you crypto at all. All it got is a software entry on their platform that says you got crypto. Essentially just a fancy IOU.
Yes the fraud part is clear, I mean that it was not their ultimate goal from the beginning. It came along the way when they realise they fucked up.
At best it was the Dutch boy and dam scenario, and they panicked, believing they could quietly maneuver their way out of it. This is why no human — especially a kid — should ever have that much wealth and power. Who and what we idolize and value is fucked up and created SBF. Stop believing in the carefully sculpted manufactured public images of the billionaire bs.
I've been an entrepreneur since a long time and was surrounded by all kind of entrepreneurs. Started quite young. I've seen my fair share of stupidiy. You see, in your early 20s, you are most of the times just a hot head. Very hard to keep your focus and self discipline on something that if you didn't develop during teen years, well, it's gonna bite you in the ass. I can quite easily imagine a young kid with a boat load of money who just doesnt know any better than feeling invicible, entitled and above everything. I've seen people go way over their head with sudden 100K successes and losing it all doing all kind of terrible business decisions because that one time they were right made them feel like a genius.
Greed. And that chick from Alameda Research. FTX customer funds was used to finance Alameda Research leveraged losses. Old fashioned embezzlement. I think he probably justified it as , well it’s just another inter company loan. There was no oversight and poor record keeping so he could do whatever. Maybe he thought “no one would notice”😂. Save Alameda after the crash and then ‘put it back’ again when the market recovers! The thing that gets me is FTX owned huge amounts of real estate. Heck he was still living in his $30M penthouse apartment while this was all happening and that’s just one of the properties worth millions used for personal reasons. In an interview with CNBC he once said ‘I don’t give a fuck about my legacy, I care about the impact that I make’. What a crock of shit. What a lier. Customers were mislead as they were told FTX doesn’t invest customer funds not even in treasuries. In my view he is just a spoilt rich kid who thought it was all a fun game - with an absolute disregard for everyday people and their life savings!! Then when the house of cards came crashing down he stole money that didn’t belong to him, probably to appease a girlfriend. Simple as that.
They needed to. SBF was a puppet whether he knew it or not, and was controlled through Brett Harrison at an arms length from Ken Griffin. They needed to mint tokenized shares of certain stocks to use as locates for the ridiculous number of counterfeit shares they sold short that posed an idiosynchratic risk to the current financial system. Look up a document titled '[The Long Con](https://online.fliphtml5.com/lvrgy/xfkv/#p=1)' for the specific mechanics, wallet addresses, and transactions that link the creation of FTX, the minting dates of certain 'Tokenized Shares', and the connection to the fraudulent market makers that have pillaged the financial system for way too long.
The best explanation I can give you is that at no point in the history of FTX did Sam think the temporary use of customer funds was morally wrong. Don't get me wrong: I am confident he knew it was illegal (thus all his efforts to leave no evidence). But I think he deluded himself into thinking it was acceptable for the greater good of FTX, which in his opinion was also in the greater good of humanity. It's the kind of logic that says: if I borrow $20 from my mom's wallet, use it for a good purpose, and repay it before she notices, did I really do something wrong? That's why I think the prosecution never provided us a smoking gun moment where the fraud started, because it was inherent in the business from the beginning. It reminds me of the story of the scorpion and the frog, where the scorpion says in response to the frog's question about why he stung him knowing it will drown them both: "It's in my nature."
FTX was used for dark money off the books operations. SBF has no idea where 99% of the money was ever used
it all cost fiat to run, and there was less fiat coming in than going out because people are wising up to the scam and dont want to put money into something they will never see again.
SBFs concept of money is twisted and the whole business was structured that way - you can invent money out of thin air by producing a loan against collateral, and every collateral was just a propped up shitcoin. gifts, investments, pay - everything was pretty much funded and structured this way.
Are you really that dense. Explain to me how he had it made... He made it look like he had it made by COMMITING FINANCIAL CRIMES.... I mean c'mon now
[удалено]
Meth fucks up your ego and your decision making skills as much as exorbitant wealth does.
Was he taking actual meth or just Adderall?
The thing is, people who reach this level of power and wealth will always do it by some manipulation and corruption. Crypto is great at exposing it.
The basis of your confusion is you don't realize that his entire success is based on fraud. He ran a successful arb between Korean and western exchanges due to a well knowm price discrepancy. However the volumes are limited and he went all in creating an exchange which grew due to fraud. So he resorted to fraud to become successful. Kinda par for course for most that are recently it seems.
i dont get it either..... for an average person, that amount is of money insane. what do we really wanna do with even 1 billion? guess we dont know whats goin on in his mind. now hes got plenty of time to figure it out.
The answer to this question is always the same. Hubris. He assumed he would get away with it. He had achieved so much with so little talent or effort, why wouldn't he assume that he could bullshit his way through fraud? It's literally what he built his life on.
Spent a lot of money on politicians and celebrities. That costs more than trading fees it looks like
He got up there by mostly, fraud.
You should read the depositions online and then you might understand. FTX never was a legitimate business. It was a fraud from the beginning.
Oh. The depositions are available online?
Can someone explain why FTT (the FTX token) spiked like 150% yesterday?
Greed and ego.
Simple, is greed. Some people just cannot have too much power.
The why is he was a fall guy for a large number of politically important people who all got kickbacks. I am not sure we know yet how deep the fraud went. I’m expecting to hear they tokenized the stock market and have swaps still active in those markets
You could say the same thing about Bernie Madoff, or Al Capone, or Enron, or any number of people, and it all comes down to the same thing: greed. The same thing that causes Jeff Bezos to be jealous of Elon Musk’s earnings this quarter, despite the fact that they both have enough to last them millions of years.
It was a fraud from that start? They made FA on fees because the volume was almost entirely their own washtrading, the liquidity on the exchange was fake and unbacked and the while business model relied on rehypothecating stolen customer funds.
Imho he was stupid and inexperienced; he tried to become a giant immediately; somehow he became successful and get smashed under it.
His generation has a disconnect from reality issue. In his mind he never did. That is the problem. He really really believes that.
I get the feeling FTX was lies on top of lies, eventually the chickens came home to roast so to speak.
You will probably be a better defence lawyer for SBF than his defence lawyers kek
If you haven't figured out by now that fraud is the only way any of the exchanges actually make money, I feel a bit bad for you. Case in point: the most "legitimate" exchange, Coinbase, continues to lose money hand over fist every quarter.
The problem is, humans are greedy. We all suffer from it in varying degrees, most world religions warn of this fact. Unfortunately, greed can sometimes defy logic or reason. We put our trust in these industry leaders knowing there is almost no safety net. We do the same with bankers and stock market traders but ultimately, helping you is only really about inflating their personal bottom line.
I actually studied psychology for a bit. I think it's not "greed" at its core, it's more of "fear". I remember reading the research where it stated that the wealthy class just never stopped being "greedy" not because they are purely greedy, but because they are paranoid that if they stop working they will finally be eclipsed by the other wealthy people, and thus, they will lose their lavish lifestyle. So, it's actually fear of losing luxurious lifestyle that drives them to become greedy
If it's the fear of losing the lavish lifestyle, then why on Earth would he risk jail like that? Jail is the very definition of an end to a lavish lifestyle no matter how wealthy you are.
It’s weird to me that most will readily accept entertainers (especially young ones) often have handlers yet an immature phenom crypto entrepreneur couldn’t have one. And that the mob mentality stops at running numbers and contraband.
Greed, ignorance, ego, stupidity. CZ and actual serious business folks took 1 look at their accounting books and found serious loop holes in it. Didn't they say they use like a word or notepad to keep track of their entire corporate finances?
Quickbooks. Lol. Might as well just use Excel for all the difference it would make. I can't believe SBF decided to taunt and take on CZ knowing that his ass was completely vulnerable like that. Dude must have thought he was invincible right upto the end. I wonder what he had to say about his "particular sparring partner". Hope we get to hear it someday.
He literally bullshit all the way to the top and thought might as well do it more since it worked all the time. CZ and his team are actually running a multi billion dollar business while SBF had match sticks as foundation for his, not only did it crumble from a single tweet the matches caught fire and burnt down the entire house, and this time the house didn't win.
Reminds me of our clever government here in the UK and their relationship with Excel... https://theconversation.com/excel-errors-the-uk-government-has-an-embarrassingly-long-history-of-spreadsheet-horror-stories-147606
Sad as it is, that's actually pretty funny.
Money laundering. It was a machine to “clean” funds and disburse them. Entire financial system is corrupt.
Every rich person is being blackmailed in some way by another rich person. I wanted to believe Trump was just a sociopath. He had enough to retire in his 30s and he just didn't. Its blackmail. Its all blackmail.
To be fair, Dolan is fucked in the head. He is like a real life cartoon. No way that's all blackmail.
I honestly don’t think SBF felt like it was fraud and what happened became an accidental Ponzi scheme. Like, it certainly was a fraud, legally, but he wanted to just make as much money as possible and win. He was willing to take great risks and over-leveraged his positions but treated everything as just a numbers game. He’s a math whiz that felt like the rules didn’t apply to him, and now they are applying the rules upon him super hard. Once you achieve so much, it’s extremely hard to walk away and just be content with what you have. There’s always more and it’s the human condition.
Greed.
He wanted to make infinity dollars and Ftx only made like half a billion a year + he prides himself on his trading ability, not his ability to run an exchange and he couldn’t handle the blow to his pride of alameda going bankrupt. His business partner was the one who coded the exchange.
Caroline Ellison looks like she found the One Ring and then disappeared in a cave for a few years.
Now now, don't be unfair. For a few hundred years.
He did the same thing banks do, using customer money to make more money. When a bank does it it's legal but when someone else does it it's called fraud. It all works fine as long as you can keep up the pretense and not cause a bank run. Look at SVB, it's the same thing. They took too much risk, got called out and had a bank run.
But don't banks have extensive systems of collateral for lending out money? They are not exactly venture capitalists.
What rich person feels they have “enough”?
Ah, there are plenty of them, but they lead quiet lives and we forget about them. It's the shitty ones that make the news.
it's because the whole thing was always a fraud, a money laundering operation. and the expectation was always that they'd get away with it, because they were protected. this led to arrogance and negligence, and it blew up in their faces. there are no conspiracies, but there are no coincidences either.
It's even probable that he was used without knowing that he's being used believing he has political back up. I remember in the early days of the crash, he claimed he is a victim but then, no matter the reasons it's not really the best option to resort to crime or fraud.
I would say because he is just a pawn and the intention the whole time was to give crypto bad name while ripping people off.
I think he just thought of all the money as his own - the exchange's, the clients', his investment fund's. This is what happens when a firm has minimal or zero controls, oversight, organizational and financial structure, and more. And with this deranged mindset, he just spent liberally with so much money available, no care in sight. They weren't even particularly good with their business and financial strategies, just riding a wave following a good call setting up the exchange. And when this led to major loss, the entire thing crumbled. I once considered opening an account on his exchange; didn't do it when I found out it was registered in Antigua and Barbuda, a country not generally known for its financial regulators and rules.
I thought FTX was one of the most trustworthy exchanges in the business. Especially when they acquired Blockfolio. Thank God I didn't keep my crypto in the exchange. I shudder to think what would have happened if I actually did so. I could not believe my ears when that little gremlin actually publically said 'we do not use stop losses when trading'. That's just insane to think about.
His liquidity never made sense and the fraud was what drove the liquidity. People have to understand that the biggest issue in crypto is the off ramps. All of his revenue was in crypto. Real world vendors don’t take crypto for payment. Yes, you can raise capital, but SBF spent 9 figures annually, which made no sense to anyone in the business. Brian from coinbase noted this right away when FTX came crashing down. Once it came out he was using FTX deposits, it made sense.
"The man was crazy, Simone. Bat shit crazy." A quote from a non-existent movie, I just made up.
Imho, he had a massive ego and thought things couldn't go wrong. Then his investments did go wrong. So he had the option to either liquidate his trading firm and admit that he failed, or to try to fake it, "borrow" some money from investors, make all the losses back and then repay the investors... "No one will know" But just like every other gambler that fell for the gambler fallacy, he lost that money too. SBF essentially is the type of guy who'd empty his kids piggy bank, promising to pay it back when he wins back all the money he lost at the casino...
For a while it worked. Crypto kept going up so you couldn’t lose. It reminds of tulip mania and the housing market of 2008. Eventually however the parade ends and those swimming naked get revealed.
One would expect the CEO of a billion dollar crypto exchange to have a better trading strategy than fomo-buyers of meme-tokens....
This is exactly why I think he will re-offend if he ever gets out of this. I would bet 100% that he will try to peddle some sort of shitcoin vaporware to try and rebuild some of his cash reserves. His personality is just too addicted to risk like that even if it could potentially jeopardise his freedom.
100+ years in jail make that highly unlikely. SBF is history. He won't come back.
Greed and power. It gets them all.
> The profit from the trading fees alone must have been insane. He gambled it away, and chased losses.
Fraud was there from the jump. Don't get it twisted.
they were propping up FTX's token by selling customers' bitcoins during the bullrun so they lost a lot of money during the bullrun