The fall of Sam Bankman-Fried is crypto’s Enron moment
spectatorworld.com
spectatorworld.com
Reading as others, apparently as ignorant as me, ask questions about crypto, etc. the in-crowd seem to get it, seem to understand it. I find that generally the case with anything monetary/financial though: the people that do this complex stuff seem to understand it but seem unable to explain it in a way that someone as simple as me can understand.
In order to play the crypto game you have to learn this absurd set of rules. And there's something about crypto though where the proponents almost revel in other's ignorance. I've had a hard time deciding whether the proponents really understand it (and all of its nuances) or if pretending you understand it in fact part of the game.
But it's not complicated at all.
Buy some crypto. Convince more people after you to buy it too - price goes up. If more people are selling than are buying, price goes down. Time your exit.
In the end, everyone loses - because there's always going to be more money going out (to pay the electricity bills and suchlike) than there is coming in.
If you're lucky, you might be able to get more money out than you put in. But it's pure luck in gambling on the timing, it's not about being smarter than other people.
1. If bitcoin didn't have transaction fees and you have unrolled every bitcoin transaction ever made, everyone would have the same amount of money they started with. This is called a zero sum game.
2. But it does have transaction fees so if you did the same in the real world then the miners would be ahead and everyone else would lose. This is called a negative sum game or a scam.
3. If you were to do the same to, say, every Intel stock, then you'd be ahead because of the dividends paid.
I'm sure there are many such examples.
Plus, gold actually does have some industrial uses so its value is actually somewhat greater than zero even if people one day woke up and didn't think it looked good for jewelry :P
Another way to view it, is as a digital economy running on a different set of technologies. You don't need to "invest" or "time the market" or anything, you just buy ETH to use it as a gas token.
Buy some ETH, an amount you are OK to write to zero like you would a hamburger or movie ticket purchase. Move the ETH off a CEX into your own self custody wallet to understand what it means to hold an asset with nothing but a private key. Convert it to stable coins with DEX like Uniswap, to avoid thinking about price. Send them to and fro, use DeFi, buy a ENS domain. It might cost you $10-50 total but you will probably come out of the experience with a better understanding of crypto, and you might also start to see traditional banking infrastructure differently, maybe slower or less verifiable or less secure or too centralized or too hard to build programmable interfaces on top of.
Along those lines, it always seemed like an Emperor's New Clothes kind of scam to me ("These are the finest hashes!"). There was always this dialog in my head when the crypto bros would extol it's virtues that went something like "Wait, it's just a hash, right? But what if they're on to something? Nah, they're not onto something... but they seem to be making money... but it seems like a ponzi scheme where the people who got in early can cash out, but the people who jump in later lose money... c'mon, how is it not a ponzi?"
> I don't understand crypto (didn't understand derivatives either)
Never invest in something you don't understand. That seems to have worked out for you as you didn't get caught up in it.
You are projecting your insecurity - don't focus on the assholes. Most people actually being productive in the blockchain space want you to learn. You are right to think there are lots of marketers/sellers who don't understand what is going on. Listen to the engineers who are talking about the details on discord and on their blogs, not the idiots on Twitter trying pump their bags.
> In order to play the crypto game you have to learn this absurd set of rules.
This is true - people who are playing the crypto game are trying to invent new rules for how society should operate. This is why some things that happen in the crypto world seem incredibly stupid or useless. People are working with different fundamental assumptions.
Crypto requires a constant influx of new investment to continue making that number go up.
The FOMO narrative gets pushed hard for this reason. As long as regular investors are convinced they have to invest in crypto or else they'll miss out, the money continues to flow into crypto.
The problem with these collapses is that it breaks the narrative and makes people wake up to the reality of the game. That's one of the reasons the crypto industry is moving hard and fast to distance themselves from FTX and SBF.
And oh, was it pushed hard by FTX. The infamous "Don't be like Larry" Super Bowl commercial [1] was from FTX.
The FTX bankruptcy has somewhere upwards of a million creditors.
It's mostly just speculation, which becomes a "greater fool" thing - you're only going to win if you time it right, there's enough pumping happening for you to profit, and get out before the next crash.
People who try timing it will always fail. I tried trading and timing, and if I compare that to just holding bitcoin and no timing or no altcoin trading, I would have ended up with more.
I'm not the only one it seems due to the famous HODL.
Same as with the stock market, just buy and hold for a long time. Hard to beat that strategy.
But I disagree with the last bit. Holding is a terrible strategy with crypto now, because there's no economy to buffer it, and there are so many scams that drop the price of basically all the cryptocurrency market when they collapse. There are still more after FTX to go.
There was a time when speculating and holding for enough time could make ridiculous amounts of money. But at this point the only way to win is not to play (or be one of the scammers and do a rug-pull, but please don't).
There are two sides to crypto. There is the technology side (blockchains, cryptography, consensus) and there is the finance side, the financial products on the blockchain. If you're an engineer you'll easily understand the technology side but there's no way around spending a significant amount of time learning about (traditional) finance to understand how exchanges, derivatives, market making, monetary policy, loans, leverage, and so on work. All of the same ideas apply to crypto.
This "absurd set of rules" mostly applies to the technology side, not the finance side. If you strip out all the marketing, the financial products you find on the blockchain are no different from the products you find in traditional financial institutions, with maybe a few exceptions like AMMs or stablecoins.
My experience has been that the people who understand crypto and who are successful are NOT the people who understand technology, but mostly the people who come from a finance background and can pattern-match their experience to crypto.
absolutely not speaking of anyone on HN (where people seem more learned and aware) but most of those who 'seem to understand it' on Twitter / Reddit etc. are just folks who have put in their money after reading fancy terms and want to 'pump' a given coin. So that they can validate their investments to themselves.
This is just my personal opinion so there's that. I have been wrong about lots of things, could be about this as well :)
I don't understand some of the more complicated concepts like DeFi and flash loans. I mean I could explain some of it but I didn't actually understand it.
That being said, I decided to learn more and got some of that knowledge from Twitter. It's a terrible place to learn because the education is laced with propaganda and it's very difficult to tease out. Something about it makes you put down guards that you otherwise have.
I stopped using Twitter for other reasons and something really interesting happened. It felt like I was coming out of hypnosis. My optimism towards crypto began to fade - probably because outside of crypto circles the general sentiment is that it's a scam.
A broken clock is right 2x a day and it's important to remember you're likely no smarter or dumber because you bought or avoided crypto.
Crypto is indeed very complex. You have everything from AMMs to no-loss lotteries to Arweave perpetual endowments. I spend 10 hours a day in crypto finance and don't understand all of the nuances, so I can see how it might be intimidating. The best way to learn IMO is send a few dollars to Polygon to play with different protocols like Uniswap, Aave, PoolTogether, things like that.
Which is why it will never succeed in its current form.
I'm making the point that it's extremely complicated and not to worry about knowing everything.
One can imagine that a "crypto finance" mortgage would look similar to a traditional mortgage in that credit checks and property assessments are needed, however when on-chain it could be done with more transparency (and having just gone through the process I can tell you it is NOT transparent) - the biggest benefit would be borrowing money from a real pool of user capital as opposed to a bank, so real people can earn 7% APY on their money backed by a basket of home loans, with a very transparent middleman. Does that make sense?
Both opponents and propontents can be so sure about themselves, either that it's obvious it's all a scam or obvious it has value and huge amounts in the future.
The fact of the matter is that nobody can tell at this moment (I'm sure plenty of you will claim they do).
If you cannot see the potential value yourself, I would advise to stay away from it.
And if there will be something in the future where you can see the potential value, and is high risk/high potential return, you could invest 1% of your portfolio into that one. Worst case you lose 1%, best case you gain 100%. The latter is how it went with crypto, but it could have just as easily turned the other way.
I guess investing in startups is the same, although you need a shitload of money to get into that game.
Bitcoin has a value that rises and falls on a (spectacularly) speculative basis. Apart from the complications of buying/selling/holding Bitcoin, it is no different to trading in something else with perceived value that has active buyers and sellers and which has questionable intrinsic value.
However, there are numerous other schemes, derivatives, exchanges, faux lookalikes, messiahs, manipulators and fakes that make for those absurd rules.
Source: am an asshole.
And behind "normal currency" I hide a lot of things that I don't know about. Does it has to be stable? Does it have to follow a real currency like the USD?
Transaction cost: about $0.75 on Ethereum or $0.01 on Polygon at the moment - no size limits. Zelle is free up to ~$1,000 per day.
Settlement: 12 Seconds on Ethereum or 2 Seconds on Polygon, "instant" on Zelle. However many transfers on Zelle use ACH under the hood, so it may take 3-5 days to settle with your bank. If the recipient isn't enrolled in Zelle it may take 14 days for them to register to receive funds.
I'll note that I regularly move USD around as part of my job and have always found USDC to be a superior experience than bank transfers - especially because I can use smart contracts and custody tooling to set custom transaction policies on required approvers, whitelisted recipients, etc.
There's one giant benefit of using cryptocurrency and a few smaller niches. It is a currency of last resort to guard against hyperinflation or currency controls or for drugs. You should really only be using it if you can't turn your money into dollars but can earn cryptocurrency another way.
Check out an example like https://mission.org/hidden-in-plain-sight/bitcoin-a-lifeline... . In this case its easier to earn crypto as payment for doing work online than it is to be paid in USD.
The smaller niches include things like flash loans
Flash loans are actually new thing in the world but still pretty dangerous. You can get a massive massive loan (Think $1 billion) without putting anything down as long as you pay it back in the same transaction you get it. Ethereum can guarantee the loan and repayment succeeds so the borrower really can loan $1 billion. Of course this only works as long as whatever tool the loan contract is using to check that the borrower can repay $1 billion works. If not then the money is going to be stolen...
As for goal, there isn't one. Its whatever folks want it to be and a large number think ponzis are the goal...
As for normal currency, it does not need to be stable. See Venezuela as recent example. It typically can't follow a real currency like USD exactly. In fact trying to keep an exchange rate between a strong currency and something else the same almost always ends horrifically like https://en.wikipedia.org/wiki/Black_Wednesday
They mostly aren't suited to this. A desirable property in a normal currency is relative stability (generally with small, managed levels of inflation to encourage useful investment). But in order to bootstrap a cryptocurrency you need to get people interested in using it to establish a value, so you set up the currency in a way that disproportionately rewards early adopters and encourages speculation, to pull people in. This in turn makes it a lot less stable and you see where this is going
> What would be the benefit of using a cryptocurrency?
For those who are true-believers, the idea is that you have currency which is free from government manipulation, free from authority, is unstoppable, uncensorable, irreversible, may be anonymous etc etc.
For those of us who are not, most of those are actually negatives. Plus an honest evaluation of the largest cryptocurrencies often shows they don't fulfil these pipedreams anyway. Bitcoin, for instance, can be censored if wallet addresses are known and the government manages to get 'miners' onboard with a blacklist. Exchanges can refuse to accept deposited funds unless they come from known, KYC/AML compliant organisations. And given that mining BTC is a huge, expensive, energy and equipment intensive operation, there are not actually all that many firms, so collusion is a definite possibility, and with about half the hash power they could collude to block transactions.
> Is the goal to be used at a large scale globally or would it at best remain niche?
There are as many aims as there are users. Some want complete freedom from government monetary interference, implying large scale use. Some want to revolutionise the finance sector and disenfranchise the established banks. Some are basically addicted to gambling. Some want to get rich, and see it as an easy way, or the only way. Some just want to facilitate 'dark' transactions (contraband of various forms).
> Does it has to be stable?
No, but there are so-called stablecoins which attempt to peg their value to normal currencies, specifically the US dollar. Some attempt to do this algorithmically - see Terra/Luna/UST and the chaos from that collapse earlier in the year. Most algortihmic stable coins are vulnerable to some sort of bank-run scenario.
Others attempt to do it by having their stablecoins backed 1:1 with the normal currency they are pegged to, the largest of these is "Tether" also known as USDT. They used to claim there was a dollar in a bank-account for every token issued, but they refused audit for years and eventually dropped the claim. They have various redemption barriers ($100k minimum payout, for example) to stop any sort of run from happening, and there are strong feelings in crypto communities and sceptic communities that they are playing fast and loose, and have perhaps backed a lot of their tokens retrospectively (create token, use it to buy an asset, now that token is backed) or purely manipulatively (giving out billions to friendly exchanges to use to prop up BTC prices without getting any more backing than an IOU).
> Does it have to follow a real currency like the USD?
That seems to be the gold standard here! Though stablecoins against other currencies probably exist, and I believe I heard about gold and silver backed stablecoins at some point. The problem with all of the backed ones is "Hey, I have this massive bank account, just sitting there backing my coin, surely nobody would notice if <shenanigans>"
Just reading the thread here though reminded me of one: is crypto traceable by the feds or not? I've seen people very confidently declare both.
Other protocols, such as zcash, specifically obfuscate the inputs and outputs using cryptography, in ways that I'm not specifically sure how to explain, but are supposed to work.
In some ways to me this is unsurprising in a way different from the ponzi nature of crypto. I can't explain Ed25519 either, and I'd also get bogged down reading a paper explaining it. I can get my head around the basics of btc and pre-proof-of-stake ethereum though, this[1] 3Blue1Brown video went a long way.
Definitely not going to disagree that lots of tokens are ponzis, and lots of the tech and promises are imaginary vaporware. But there are some real pieces of tech in the mix too.
[0] https://blockstream.info/block/00000000000000000003590ca79f7...
In general it is considerably easier to unmask people using crypto than other methods because perfect security is hard (criminals are dumb).
Tornado Cash previously broke that trail using asset pools, but that has been sanctioned now.
It's all shit man, all the hype is to lure in more sucker bagholders. Who will keep driving the price up.
I have not been involved for a long time though, as the original feelings I got from those early days and the community back then seems to have changed completely. Now its all bullshit shell games and scams.
Do you also consider projects like Monero to be scams?
But yes, cryto industry is much more centralized than before. Centralization without regulation is the root of all evils.
We don't need deep tech understanding of Cryto to know that centralization without regulation is problematic. History of finance has proven it again and again and again.
Those who trusted FTX are either dumb or greedy. Perhaps both.
As a crypto adopter, the best we can do is:
1. Stay away from unregulated centralized company like FTX, Binance, Tether, etc. 2. Stay dicentralized.
It's not that complicated - you get a record in a globally distributed trustless database that say you own something, and as new records are added to the database stuff gets moved around.
People who just held BTC in their own wallets over all of these waves, didn't lose custody of the keys or sell, did marvellously well. Internationally, BTC remains useful to countries with unstable currencies; not because ordinary people are all interested in holding it for its own sake, but because it enables banking and payment services outside of the traditional system, which means that in some parts of the world you can go to "a guy in the market with some phones" and he can set you up with options for exchanging currency, getting remittances, etc. Often USD is used on one side of the trade rather than a native crypto asset; it's crypto being used as a pragmatic tool rather than a manifest ideology.
In contrast, people who really try to trade the market actively either have an "angle" for getting an information advantage(e.g. they possess some data or influence, in the way that SBF did), or they are most likely gambling with leveraged bets and getting sliced to pieces by highly optimized trading bots.
If you take a position in crypto as a simpleton(which is my standpoint, and shouldn't be taken as gospel investment advice), it's better to move slowly, accept absurdly high volatility and just aim to survive; do not use products that "give you some help with that"; assume the tech is sharp-edged, use official wallets, and keep careful track of the keys. Many people who work on crypto don't actually own a lot of it.
You might want to start reading Matt Levine’s excellent Bloomberg column, he has a knack for simplifying things. He also published an excellent primer on crypto.
Maybe CZ did outplay SBF, but aside from the optics it doesn't seem anywhere that salacious. As was summed up earlier today in an NPR segment on this story "airlines don't compete on safety." In other words, it is in the interest of every exchange that the exchange industry is on the whole viewed as being comprised of trustworthy actors. Crashing FTX doesn't seem an optimal move given the already precarious state of the crypto industry these days.
Speaking of optics, the author also made a nonsensical analogy "more opaque than a dog with glaucoma" when describing the inner workings of FTX. Quite certain they meant cataracts – the clouding of the lens of the eye – not glaucoma, which is damage to the optic nerve.
Obviously removing a top competitor that’s doing straight up robbery is something that should always be done. We are talking about awful actions.
"I’m meeting in-person with regulators and working with the teams to do what we can for customers." https://twitter.com/SBF_FTX/status/1592604699693580289
"So what can I try to do? Raise liquidity, make customers whole, and restart." https://twitter.com/SBF_FTX/status/1592710177152995328
"“People can say all the mean things they want about me online,” he said. “In the end, what’s going to matter to me is what I’ve done and what I can do.”
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.”"
..uh.. huh --
https://cryptopotato.com/despite-ftx-bankruptcy-kevin-oleary...
Could you explain what you meant by this?
Massive amounts of Selegiline, probably.
I’m over a decade sober, but fyi this is available to you if you just buy some meth or bath salts!
From the balance sheets circulating, there are still a lot of assets there. Some of it is fantasy but some of it is real but various levels of liquidity.
Im sure FTX, Sam and everyone associated is looking at how they can turn an $8 billion hole into a $3 billion hole.
I don’t think he or FTX are coming back because the reputation is destroyed, but I don’t see this ending in an $8 billion total loss.
I am tempted to put my money where my mouth is and buy some FTT for a somewhat positive announcement soon, but maybe that’s just degenerate gambling!
1. His tweet thread made me throw up in my mouth a bit. Blaming it on "liquidity" is laughable. Liquidity problems would be like "I own a lot of real estate and it would take me a long time to sell". Alameda's problem was a huge chunk of its balance sheet was FTT - it was fundamentally impossible to ever liquidate those tokens without guaranteeing to tank the price of FTT. Never mind the whole issue that customer funds were never legally his to loan to Alameda in the first place, regardless of crypto regulations or lack thereof. What happened to customer funds was simply theft.
2. I'm not a psychologist, so I don't necessarily want to misuse the term "sociopath", but I have seen this trait in some people that is closely linked to a lack of conscience. That is, I would have never been able to do what SBF and gang did by stealing customer funds to prop up Alameda. And it's not because I'm some wonderfully moral person, it's because I would have become physically ill with guilt and lack of sleep. This is also why I'll never be able to run a large company or handle billions of assets - it would just be too much stress for me. There is a fine line between needing to have a healthy detachment from consequences you may cause, and being a sociopath. The more I hear from SBF just the more I'm convinced he's not on the "healthy detachment" side of things.
The government is doing the opposite that it should be doing.
Provided he told all the right people to get out while the getting was good, he's got good reason to be confident. I bet he knows about a lot of skeletons in closets too, although people tend to wind up not killing themselves in prison when they try to use that kind of leverage against the mob, so he'd be well advised to take his flailing about the wrists with a sauteed lettuce leaf if it came to that.
Is this supposed to be implying something specific?
https://www.msn.com/en-us/news/politics/democrats-took-his-s...
> “So, I think I’ve paid it back,” Gallego said.
I don't think he has the same definition of "paid it back" as most people do.
https://fortune.com/crypto/2022/11/15/politicians-sam-bankma...
There seems to be an attempt to sell a narrative which blames Binance for this. That's bogus. We know now that FTX was so looted and so broke it was doomed. The only question was what would pop the bubble.
This is straight theft of customer assets, like Madoff. As with Madoff, once there was a downturn, it all came apart.
Instead, we had this:
https://www.bloomberg.com/graphics/2018-recovering-madoff-mo...
https://en.wikipedia.org/wiki/Recovery_of_funds_from_the_Mad...
So some future Irving Picard will have the task of getting people some of their money back. I wouldn't want that job.
Also enron was also just speculators losing money
The balance sheet showed billions of dollars in assets for coins that had tens of millions in liquidity. There's an 8 billion dollar hole in the balance sheet. It's pretty clear they used customer deposits to pay back lenders. Why would CZ buy a company that's nearly an Enron level fraud, and due for a criminal investigation. https://www.visualcapitalist.com/ftx-leaked-balance-sheet-vi...
SBF describes coins like a ponzi with no shame https://www.youtube.com/watch?v=C6nAxiym9oc
This was Alameda CEO https://www.youtube.com/shorts/qvURq4jaUcA
https://twitter.com/carolinecapital/status/13790363463003054...
Meanwhile, after 1 - 2bn in customer funds are missing. Everyone is asking Sam to say what happened. Sam proceeds to troll by writing the words "What happened" one letter at a time, with an Elizabeth Holmes-like legal disclaimer that he's not going to recall any of the details.
Just offering that just a few minutes into that video, I saw everything I hate about many youtubers' style, generally. I can't describe it, but there it is.
I listen to Odd Lots. Generally, that podcast keeps things thoughtfully presented. I remember that episode and it reinforced distrust of crypto.
I honestly trust him as much as Matt Levine when it comes to Crypto. Which is saying a lot as Matt Levine is arguably the best financial reporter of a generation
>https://twitter.com/carolinecapital/status/13790363463003054...
I have to admit the tweet is pure cringe, but I can't see anything wrong with the youtube. Most of the answers seem reasonable if you don't try to interpret in the worst possible light and factor in that there's zero context provided.
It was a scam from the start that would turn crypto into political party money - forever.
It's actually a surprise they didn't succeed
Centralized exchanges are NOT crypto. They often don't even use crypto - just fabricated records in their databases with no crypto backing whatsoever, like FTX.
These comparisons make for good clickbait, but in reality they're meaningless.
The truth is, these sorts of things happen in cryptocurrency every bear market, and in more mature markets as well but just to a less extreme degree. The only reason it feels huge in cryptocurrency is because the news has been covering it non stop, celebrities were endorsing things and commercials were on TV. In reality the magnitude of this collapse, logarithmically, is smaller than all previous bitcoin and related market collapses. In absolute terms it's big, and it is a big deal just like any financial happenings are a big deal, but itst being made bigger than it is because there's money to be made manipulating emotions.
[1] Happened in 1994: 'the biggest fraud inquiry in Europe since the Second World War... Elf became a private bank for executives who spent £200 million on political favours, mistresses, jewellery, fine art, villas and apartments', £200 million, how quaint https://en.wikipedia.org/wiki/Elf_Aquitaine#Fraud_scandal_(1...
Edit: fixed formatting.
He'll be fine.
This is incorrect, he's an actual physical resident of the Bahamas, where FTX is also domiciled.
In most other countries, this would land people in jail, but in the US it's so utterly brazen that you can find the details online. See https://www.opensecrets.org/
Don't forget that the very phrase "Banana Republic" is a result of US corporations that had bought the US govt and gotten them to oust governments in 3rd world countries for the benefit of those US corporations.
You can absolutely use money to influence politicians in the US, but that's likely true of wherever you live too. New Zealand is a very not-corrupt country according to the corruption index, but I seem to recall Peter Thiel had no trouble purchasing citizenship in contravention of their laws - I'm sure money had nothing to do with that though.
Oh yes, that's why I consider them the worst. They're so corrupt they legalised it and have conned organisations like Transparency International into believing that in the US, paying off politicians isn't corruption. That's the funniest part... they call it speech.
But the same "speech" in any other country is considered corruption and bribery.
You were able to point to the NZ example with Peter Thiel precisely because corruption is so rare there and there was a massive outcry about his case.
The Transparency International index is based off of a survey of residents asking questions about perceived corruption. Paying off politicians, even if it were done as legal campaign contributions, would contribute to perceived corruption.
I know about the Peter Thiel example not because there was a massive outcry, I have basically no exposure to New Zealand news, but because I read about Peter Thiel and came across the story that way. I have no doubt that all I'd have to do to find an unending stream of money influencing New Zealand politicians is go to Google and search for it. But, I don't need to, because I already know that money is a corrupting influence worldwide - not just in the US.
That's very convenient for the US, and why it managed to avoid being #1 on the list.
In India a small businessman gets annoyed that he has to pay a $20 bribe to have an operating license issued, but it works. He will tell Transparency Intlt that bribery is rampant. In the US there is no bribe a small business owner can pay to make his business work because the multinational billion dollar corporation with offices on Wall Street, D.C, and every other major city has paid off the legislators and had them introduce laws that introduce a barrier to entry that no small business could ever scale. The US small business owner will honestly tell Transparency Intl that he's never had to bribe anyone.
opensecrets.org
My answer is that in those two countries, bribing legislators is illegal, while enforcement is poor.
In the US, it's all been made legal, so happens on a massive scale right out in the open.
In India a small businessman gets annoyed that he has to pay a $20 bribe to have an operating license issued, but it works. In the US there is no bribe he can pay to make his business work because the multinational billion dollar corporation with offices on Wall Street, D.C, and every other major city has paid off the legislators and had them introduce laws that introduce a barrier to entry that no small business could ever scale.
opensecrets.org
Sure there is.
The scenario where he escape with a suitcase of gold to a country without extradition.
Or another scenario would be if he had serious blackmail on several key govt officials.
The Alameda CEO, though, was last spotted in Hong Kong, which offers many more possibilities.
Many printed out bitcoins fit in an envelope.
> A friend who is deeply involved in this industry told me of the clashing egos. “CZ helped SBF create FTX, let him grow it, and then when it got too big, he destroyed it.”
The situation was entirely the creation of FTX - CZ just amplified the alarm that was already ringing when Alameda's balance sheet issues came to light.
Tl/Dr; SBF ran both an exchange and a hedge fund as allegedly separate companies. His hedge fund made several highly speculative investments during the crypto bull run. They then started bailing out companies in the summer when the tera/Luna stable coin crashed. Along this time falling crypto prices were causing Alameda to get margin called. Eventually SBF took user funds from the exchange to meet the hedge funds margin calls. At that point it became a zombie company. Depending on what you read SBF had less than a billion dollars of assets to 10 billion of liabilities.
The scope of SBF's fraud is being actively uncovered by the community as we speak. It'll be a while before we know the full picture.
Painting this as crypto bro trader war trivializes it and reduces SBF's responsibility. SBF built a house of cards on top of fraud and eventually some wind knocked it down. The responsibility lies with him and his leadership team.
I've never met the guy but I used FTX this month and it was solid. I'm hoping they pull through. We need more last mile providers. Instant crypto banking is >> than the molasses fiat banking we currently have.
(Obviously if you were talking shit about him publicly before the fall then I respect that and please carry on)
https://www.bloomberg.com/news/articles/2022-11-10/ftx-com-a...
So, that's basically where things sit right now.
Based on what? Don't get me wrong, laws that have enabled companies to do awful things without repercussions definitely need improvement... but continuing to allow such corruption, just because it is a crypto exchange, only hurts the cause not helps it. These billionaires need to be held accountable at all levels. Holding SBF accountable will only help instill my confidence that things are improving... but when a bank gets caught doing it and is given a free pass, then I will certainly continue to have doubts that things have improved much.
From August 2022:
Crypto firm FTX gets warning from FDIC to stop ‘misleading’ consumers about deposit protection
https://www.cnbc.com/2022/08/19/crypto-firm-ftx-receives-cea...
At least you recognize the fact his exchange is actually a bank in disguise. Plenty of people did not make that connection and they absolutely deserve to be angry that some asshole donated their deposits to some US political party and god knows what else.
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So not only do these exchanges inflate the cryptocurrency supply, they're also prone to overleveraging themselves in their attempts to "efficiently allocate" customer funds, exposing them to risk without them even realizing it, often losing everything in the process and crashing the entire cryptocurrency economy when that inflated money supply disappears into thin air.
Don't forget that U.S. banks steal 4 FTX's worth of customer funds per year: https://breckyunits.com/the-great-bank-robbery.html