Are you in the finance function at your startup? I'll guess no, and if you go ask someone there if it feels rigorous they'll laugh.
I mean, know how many employees and roughly how much cash you have, or at least be able to find out inside a week? Don't forget where you put eight billion dollars?
See here:
https://en.wikipedia.org/wiki/Accounting
Look at the "topics" for example. There is a lot to it. To anyone who knows the field, the statement "you should follow accounting rules" is so vague it's meaningless.
We aren’t quibbling over GAAP versus IFRS. Anyone looking at FTX’s lack of accounting and control and seeing even a shade of familiarity at their firm should speak to a lawyer. Start-ups will be start-ups, but if you’re taking outside money and literally can’t say where your bank accounts are, run the hell away.
FTX seems to have been doing actual bad stuff - moving assets between companies that would never be done at arms length. From a practical perspective, it's almost sending money to the founder. If someone sees their company doing that, yeah, talk to someone. But that is not an accounting issue.
The chaos and lack of accounting rigor is.. just not rare or surprising.
"Gish gallop" on wikipedia suggests something quite different.
The second is not an accounting issue, it's a combination of legal and business judgement.
Yes, I am. I'm in engineering but I have to work closely with our accounting team to make sure all the numbers add up and, importantly, that everything is auditable, and I built the systems to do this.
I'll let Matt Levine say it better than I can. What passed for financial tracking at FTX (which was a financial company) is beyond disgusting. FTX had a "hidden, poorly internally labeled ‘fiat@’ account, with a balance of negative $8 billion. The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison."
What does negative $8 billion mean in the context of double entry? Matt says clever sounding things that don't add up sometimes..
I don't mean to be rude, but you seem very unaware what standards are in this space. (Or rather, I should say the financial space, as everything seems to be a shitshow in crypto). You seem to be conflating what, say, some social media platform or todo app startup needs to do for compliance vs. a financial company.
FTX was in the business of handling other people's money, and they can't even say where billions of dollars have gone. If you think this is just normal "startup chaos", please, please, please don't ever work in a financial startup.
Plenty of businesses did business with FTX. The things large enterprise want in a vendor or counterparty are generally not a consideration outside large enterprise. I used to be involved with oil price hedging where our counterparties were small/mid sized oil and gas producers - it didn't even occur to them that they were taking credit risk on us or that they should know if we had a credit rating.
FTX is 3.5 years old, and Alameda is 5 years old.
> What does negative $8 billion mean in the context of double entry?
"We're supposed to have $8 billion in this account but we don't."
Combining various sources of information and reading between the lines, the most likely explanation is that this is the Alameda account that FTX customers were depositing money into, which then got gambled away by Alameda instead of transferred to FTX.
I've never worked at a startup but I strongly question the idea that "Whoops we had customers send $8 billion to the wrong company and gambled it away instead of collecting it" is not out of the ordinary.
Who "lends" customer funds without any documentation to let founders buy multi million dollar property in their own personal names
This isn't messy, move fast break things of a startup, it's fraud
But the bankruptcy ceo claims the lack of controls is unprecedented. It isn't. Even good guys building good companies have a lack of controls in place in the early days.