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Comment by ttul | Hacker News Reader

My guess is that either FTX did not furnish them with accurate or truthful information, or the information was correct at the time, but the lack of good governance allowed FTX to pursue some rotten strategies without the knowledge of their investors.

It would not be the first time that otherwise smart people have made a bad call.

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Yeah, we see this time and time again. All those Theranos investors didn't do any diligence because they saw other rich and powerful people throw money at them.

A friend who tried to raise funds from VCs for his start up tech company in SV, tried for multiple years. He was happy to disclose his financials because he had actual customers and revenue. But nobody cared for multiple years. Then one day, well known VC in those circles finally wrote them a check. The moment that happened, all the VCs were throwing money at him. They didn't care about the financials or doing their due diligence, they just did it because some other reputable guy did it. FOMO.

The timing of the big investments back in Oct '21 for their Series B and Jan '22 for Series C makes your guess seem likely.

Seems like most of the actual fraud started after the 3AC/TerraLuna blowup as SBF trying to trade out of the hole he was in.

I’m slightly curious if Sam had a personal relationship with someone at alameda? He took a pretty straightforward way to make money (charge fees running an exchange) and then looks to have dumped money into an absolute black whole of illiquidity and stupidity at alameda which was run by Caroline ? Even if alameda was making smart seed round investments- the liquidity horizons make no sense for an exchange to be part of that!

I can imagine alameda being burnt by 3ac - just wrap things up there if needed?

That seems to be known: "Alameda CEO Caroline Ellison, whose firm played a central role in the company’s collapse – and who, at times, has dated Bankman-Fried" - https://fortune.com/2022/11/11/sam-bankman-fried-crypto-empi...

He lived with the CEO of Alameda and is said to be in a polyamorous relationship with her. He’s also co-CEO.

Yowk! Well - that might explain some of the craziness!

> Seems like most of the actual fraud started after the 3AC/TerraLuna blowup

What makes you say that? I think it was fraud from day one-- starting with the claimed billions of dollars in arb gains.

If they were real-- wheres that money now?

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