The fact that SBF has in the past publicly described running a Ponzi and not really recognized it as one indicates it may even be possible that the FTX guys didn’t even understand they were running a scam.
But just because they did not realize they were doing so does not make the scam they were running any less of one.
I think they were just… extremely incompetent.
Their balance sheet with „semi liquid“ (whatever that means!) assets and trying to apply arithmetic operations on an excel cell called „Hidden, poorly internally labeled ‘fiat@’ account“ pretty much reflects this.
Malice is, “I knew how businesses are supposed to be run, but I accidentally on purpose chose to run my business in a way where nobody could exercise oversight, and while nobody was exercising oversight, I engaged in a pattern of trades and deals that enriched me at the expense of people who trusted me.”
SBF is a grown-ass adult. He knows that when people trust you with their money, you have a moral obligation to handle it competently, or hire people who know how to handle it competently.
He and his backers know how to run a business such that the shenanigans he actually pulled would get flagged. He chose not to do so, and his backers chose to look the other way. And then he coïncidentally used the lack of oversight or standard controls to steal billions of dollars from his customers.
Believe whatever you like, but don’t expect the rest of the world to nod along in agreement.
Let’s say I make a car. Cars are supposed to have brakes, lights, airbags, crumple zones, and so on, I don’t do any of that, manage to sell my cars for much less than my competition, and I get rich. Then thousands of people who buy my cars are injured or killed.
Alice argues that this is incompetence on my part. Bob says it’s malice, because I went out of my way not to hire anyone who knows anything about making cars or safety or regulations, and my entire business model is doing things those people would have flagged.
Chuck then says, “You know that thousands of people die every year in cars that have all those safety features.” What point is Chuck making? That if even one person dies in a car with safety features, they can be safely ignored by an entrepreneur who doesn’t want to deal with building them into cars?
I’m honestly bewildered. Yes, malfeasance sometimes happens when there are controls in place. People falsify reports, or game derivatives to make risky trades that would normally be flagged. But having no controls at all is not justified by the existence of rogue employees.
I’m tempted to claim you’re supporting my argument. Nick Leeson was convicted of crimes and went to jail. I suggest that FTX’s “rogue trader” was SBF himself, the person responsible for choosing not to have any controls over the business.
If you are arguing that FTX is to be treated like Barings Bank, I suggest you’re arguing that SBF was malicious, and ought to do jail time.
I definitely think SBF should do jail-time. The read I got from his Twitter interview, after the fact, was that he went into this with the goal of personal riches and glory and ultimately failed, not that he went in with the intention of making people poorer. Do you agree there's a difference? In short, I think:
Incompetence + Selfishness != Malice
If the bar is "primarily intending to hurt other people", then I would agree this wouldn't qualify. If the bar is "primarily intending to enrich oneself, knowing that enrichment comes exclusively from hurting other people", we hit that one.
That's not incompetence. I know what I call it, and it starts with "alleged".
SBF is the son of two Stanford law professors, graduated from MIT, and worked four years at Jane Street.
It seems like the limit of credulity to think he was an unwitting dufus that just accidentally ran one of the biggest ponzis in history.
It's like if "Theranos' scam will leave deep scars in USD".
That said there’s any number of debates you could have:
Was FTX a deliberate ponzi?
Was FTX a ponzi but they were too naive to understand that?
Was it a ponzi within a ponzi? (I.e. has all of crypto been a single giant ponzi with nested levels all along?)
Regardless of what anyone thinks, you only get confirmation either way after the fact.
It'll either:
1) Stagnate. You'll need to wait a really long time for answer.
2) Crash or trend to zero. This would mean momentum is exhausted and money is leaving the table - it's always been a Ponzi in this case.
3) Continue until it finds a utility or it genuinely becomes a store of value. I doubt this outcome very much (I actually think it's impossible due to inherent features of bitcoin), but what do I know? I'm just one person on the internet. Not a Ponzi in this case.