Sam Bankman-Fried’s Crypto Empire Collapsed | Hacker News Reader

Sam Bankman-Fried’s Crypto Empire Collapsed

nytimes.com

52 pointspearjuice21 comments

The real extraordinary admission is this:

> Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. [Caroline] Ellison [CEO of Alameda] explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.

> Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.

Alameda borrowed short-term to make long-term illiquid VC investments. Sort of what a bank does, but without FDIC insurance, or a central bank lender of last resort guaranteeing their liquidity.

The short-term loans were (not unpredictably) called back, but Alameda (not unpredictably) had insufficient liquidity to pay them back, so (extraordinarily) FTX commingled their exchange customers' funds with Alameda to pay back the loans.

More discussion: https://twitter.com/WClementeIII/status/1592289824542949376

Unbelievable that 1) they did this, and 2) they admitted it. Someone needs to tell these kids to stop talking publicly and hire lawyers.

How long until we start hearing that Ms. Ellison was a victim of SBF's abuse?

It started already - seems everybody in top management at FTX were part of a polycule - cult much ???.

Can't wait for the movie.

>these kids

Offtopic but 28 and 30 years old are considered kids? English is not my first language so maybe I'm missing something.

Not based on their age but their activities/judgement. It was an oblique reference to the idiom "no adults in the room".

https://idioms.thefreedictionary.com/adults+in+the+room

I would not, but apparently it is popular to refer to them as kids.

I wonder if their characteristics were different, if the popularity of calling them kids would change. If they looked different, if they were working blue collar jobs, etc.

Oh most definitely, especially in the context of making business decisions worth millions.

When it looks like a duck and quacks like a duck?

Objectively, no. But for some reason older people use it relatively for people 15 years younger than them.

This article is coming in for a great deal of criticism on cryptocurrency Twitter. Among many issues with it that stand out to me, the biggest is probably that they do not mention the balance sheet leak that precipitated the final loss of confidence in FTX. They make it sound as though it was kicked off by CZ dumping Binance's FTT stake in retaliation for SBF's actions on Capitol Hill. It's a very curious omission.

It portrays SBF as a charitable entrepreneur who went under and does not mention the words fraud, criminal, substance abuse, friends & family Bahamas KYC racket, hack, stolen funds or wiped servers anywhere... accounting backdoor, pump & dumps, inside jobs, market manipulation, fraudulent creative accounting, ponzi schemes, spending other people's money, political donations, gary gensler, regulatory shitshow, market crash ... no mention of any of that, zilch, nada. https://twitter.com/krugermacro/status/1592288944766750720

I understand that narrative that foreign CZ is the big baddy here is also the narrative being pushed by Michael Lewis' forthcoming book as well.

Skipping over the likely FTX fraud which is the real cause of the downfall:

https://markets.businessinsider.com/news/currencies/big-shor...

I would bet Lewis will substantially revise his book if that was his initial take, but it doesn't bode well that he saw SBF as a Luke Skywalker in the first place.

> He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.”

> Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.”

> So he was planning a series of cryptic tweets? “Something like that.”

> But why? “I don’t know,” he said. “I’m improvising. I think it’s time.”

I’m in disbelief that he not only gave an interview but that he told the interviewer this.

> He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said.

FTX owns Storybook Brawl. So: SBF managed to plant an ad in an NYT story supposedly covering his massive fraud. I’m impressed. This is next level.

https://www.coindesk.com/business/2022/03/22/ftx-us-acquires...

This is a person that clearly doesn’t expect a sentencing judge to be eventually reviewing their contemporaneous public statements.

Absolutely outrageously weak piece. I'm shocked. It's a puff piece. The NYT has really dropped the ball here. Worse than incompetence.

The responses to the journalist online are exceptional:

https://twitter.com/yaffebellany/status/1592353938099302401

https://archive.ph/mxOh5

> FTX is being represented in the investigations and the bankruptcy by the law firm Sullivan & Cromwell

Ah, the Dulles's old firm, nothing spooky going on here at all.

I guess the part about the media always doing hit pieces on tech companies was not always true after all. Maybe crypto is considered finance rather than tech, or maybe being a certain political party donor compensates for the being a tech company part.

All tech firms donate heavily to both political parties. FTX was not an exception. While sbf donated to Democrats, his execs donated similar amounts to republicans

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