Well Known Short Seller Claims SBF Is a Fraud Weeks Ago

Yep Epstein and him have CIA written all over them.

Tens of millions of dollars to political campaigns?

Those were not his primary complaints. Yes, he took some shots at his appearance, but let’s be honest. The financial and VC world has a stick up it’s butt, but this nobody (Sam Bankman-Fried) shows up to interviews and meetings in a three day old t-shirt and shorts and can’t keep his leg still and talks like he’s been up for 24 hours straight on Red Bull. It’s strange. Why does that work for him, who has nothing to explain it away, and no one else? Where did he come from? Where did he get all his money? Why were major VC funds fawning over him?

The short seller also mentions that this is only “3%” of what he has and is working with an investigative journalist to blow this up. And that was weeks ago, and they were probably working on it before that.

It’s not about credentials. It’s that you have 20 year olds out of nowhere suddenly managing tens of billions of dollars. Like the guy says, it doesn’t make any sense.

In interviews, FTX never gave reasons of why they moved to the Bahamas from Hong Kong. He really doesn’t ever explain anything.

As an entrepreneur in finance for 10 years, I think the guy's perspective is actually pretty understandable. When you've been in finance for a while and have learned how many footguns and ways to go to jail there are to get major regulatory projects licensed and functional, you start to think of projects like "launch a bond offering and get it rated" or "launch an exchange" as so incredibly complex as to be impossible. There's a certain cynicism that comes up in the industry where people think something just can't be done because they know it's so complex to do right.

Now I actually think that although this take is realistic, it is actually overly cynical and actually underestimates the possibility of disruption in finance. In actuality, not knowing the complexity allows a young entrepreneur to develop a simplistic plan and pitch it with conviction to VCs who also don't know any better. The mistake experienced people are making is that their experience tells them it is only reasonable to do a thing "correctly" or "scalably" when in fact the incorrect, illegal, unscalable way wins you valuable proof points. And with enough proof points and follow-on VC rounds the simplistic plan can mature enough to actually become functional.

In the specific case of SBF and FTX, I do think the critic's seemingly superficial cynicism was actually both well-founded and ultimately correct. Launching an exchange functionally, legally and scalably was in fact too much for the inexperienced leadership of the business. They tried really hard to make a business model that worked and scaled fast. But in doing so, they ended up with effectively designing a circular reference (trading their own token) which made a lot of money for a while, but ended up crashing their business. I think they were well-intentioned, but it is true that more experienced leadership would not have tried the self-referential growth strategies FTX/Alameda engaged in. And in retrospect the critic's spidey sense was right; the pace of growth of FTX was bizarrely unsustainable and likely pointed to an underlying system that didn't make sense.

Marc Identified several indicia of fraud: 1) He acknowledged SBF and the CTO, Gary Wang, are worth billions, however the money materialized out of nowhere.

This is highly irregular and a potential indicator of a scam on the backs of retail investors.

2) He noted the chief regulatory officer of FTX, Dan Friedberg, was the general counsel for a poker site that defrauded its players.

A big red flag for anyone thinking of interacting with FTX in any way.

3) SBF has a record of deploying capital poorly (making losing investments and falling for scams) and he provided no good rationale for making these bad bets

A clear sign he isn't a good businessman and it creates even more skepticism that FTX could be viable.

4) He sees through their obvious attempts to paint a rosy picture of SBF and FTX with their very vague but positive marketing, but no ability to explain concretely what is positive about FTX, what their business model is (why the founders are getting so rich!)

These things are "smelly". They are like "code smells". On their own, they don't necessarily indicate anything, but taken together they could be an indication of much deeper problems with the codebase.

Marc was saying that the microscope needed to be put on FTX, SBF, and Gary Wang ASAP, because things stunk to high heaven. He was saying questions needed to be answered and the fact they were seemingly purposely being evaded was a big red flag to him.

I agree, this video is a nothing-burger. There are much better people who have been detailed in both their criticisms of SBF and the types of things he has been just exposed of doing for years. Crypto Critics' Corner and Molly White are the first two off the top of my head.

Molly White's most recent article on the collapse was posted on HN just yesterday.

https://news.ycombinator.com/item?id=33547102

Ok, what about the observation that FTX’s regulatory relations person was guilty of orchestrating and covering up a notorious online poker cheating scandal? There are recordings of him doing this btw. And that he further lied about this history and left it out of his LinkedIn. That alone is enough of a red flag to make you run in the other direction.

3 is SBF's equivalent of Madoff's split-strike conversion. A strategy that can make a little bit of money that a fraudster uses to claim to be making a lot of money. And just like Madoff nobody questioned it until it all came crashing down.

Hilarious and Ouch.

Easy heuristic: every billionaire in crypto except Satoshi is a fraudster. Maybe it's overfitted maybe not but historically you'd be correct 100% of the time.

If it's politics the odds are they're wrong. Anything else the odds are in their favor.

all crypto is rife with red flags.

The safer bet given the history of exchanges, scam coins, and NFT is that they are crooked. This is why Coinbase sent out an email this morning pleading with people not to withdraw because they aren't crooked.

SBF had the reputation of being the most honest person in crypto.

I see this logic all over the place(parents did X, so kids raised by parents will be super Xers). But it completely misses one of the key elements - the parents doing X may have done X because they believed in it, whereas the kid might do X simply because it's the family business. So the motivation is entirely missing, and it's seen as a birthright rather than a calling.

Maybe his parents became compliance officers because they are assiduously moral law and order types. That's not necessarily a trait that gets passed down to your offspring.