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Comment by PragmaticPulp | Hacker News Reader

Why would it? FTX wasn’t playing by existing US regulations anyway.

Even the most basic regulations would have squashed FTX’s entire fraud from the start. They weren’t bothering to play by any rules because they knew they could get away with it.

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I think the way to attack this would be on them having US customers.

Yeah, technically they "banned" US customers. They were also doing sponsorships, and advertisement in literal US basketball stadiums.

Clearly they knew they had US customers and were attempting to get them.

>> Clearly they knew they had US customers and were attempting to get them.

And they did, except they got overseas-registered hedge fund subsidiaries, where the managers were US residents (probably living in NY/CT/FL.)

We arent providing SIPC/FDIC backstopping to the customers, since it aint our jurisdiction. We arent bailing them out, so far.

FTX had two exchanges: FTX.us for US customers (with limited features), and FTX.com for the rest of the world.

Regulations didn't stop Enron.

Yes, which is why the US Congress added a whole bunch of new regulations (Sarbanes-Oxley) to prevent future Enrons.

Which require compliance with them. If you work at a company that cares to actually comply they will. I luckily work somewhere where it's taken seriously.

But it's shockingly easy not to and auditors couldn't possibly catch all of the instances of non-compliance

>> But it's shockingly easy not to and auditors couldn't possibly catch all of the instances of non-compliance

Regulations are usually backwards looking. So at least we never get Enron/GlobalCrossing/etc again.

Then another waves of crises happen, and we get new regulations.

So Fannie/Freddie happened in 2004-2007 and we got brightline guidance and application of FAS91 and EITF-9920.

So then AIG/Lehman/Bear happened in 2007/2008 and we got Dodd Frank. Again backwards looking but we end up in a better place.

The regulation stacks upon regulation, but I think this is good.

> The regulation stacks upon regulation, but I think this is good.

The correct way to think about it is scammers versus law makers.

Scammers are both trying to scam and also to blend in.

So it's hard at first to draw lines.

Them the lines burst onto the scene, when scammers become obvious.

So law makers write that up, and scammers have to find something new.

I never look at laws and regulations as prevention just like a 55MPH speed limit sign or "Drug Free School Zone" doesn't prevent people from breaking said regulations.

It just means that GIVEN that there is a law, WHEN it is found to be broken, there are DEFINED rules of accountability and punishment.

The banking, finance, and corporate accounting world and their practices would shock most devs to the core. Most people just assume that certain controls are being enacted with precision. Things like: customer account reconciliation, bank account reconciliation, etc.

Most of the time people just aggregate values and never inspect the detail. They record those aggregates in the GL and move on. I have never seen granular recon. That is why embezzlement is only discovered by accident years later.

  > They record those aggregates in the GL and move on.

 what is gl?

Perhaps general ledger?

general ledger?

The favorite pastime of politicians is creating regulations to make safer an environment where nobody follows regulations.

This is provably wrong and it would take you 2 minutes to find out why.

Yes, there are failures.

But we have minimum wages, no child labor, protection against harassment, seat belts, fraud laws, etc, etc, all thanks to regulation.

Regulation created by politicians.

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