FTX’s ownership of a U.S. bank raises questions
nytimes.com
nytimes.com
Chalopin usually shies away from press, so his personal involvement is odd. His son is also the chief digital officer of the company.
Another curiosity is the old Farmington team is still there, including the presdient, and they still appear to be making agricultural loans, same as they've done for ~150 years.
The Geniome/Moonstone operations appear to be based out of Seattle. Another curiosity not mentioned in this article is that Noah Perlman, COO of Gemini, is on the board of directors along with Chalopin.
"Geniome" is the trademark of a UK based company also owned by Deltec/Chalopin: IFSG. So, Chalopin has an unusal degree of personal involvement here.
Deltec previously invested in a small bank for money laundering purposes, so that could have been what they were going after here, but the amounts seem small. Could have been part of a larger plan which collapsed with FTX.
They're scrubbing employee Linkedin's now.
Looking at the Internet Archive's copy of "moonstonebank.com" from before the crash:
CEO: Ron Oliveira. There's a new CEO now.
Lots of crypto-related material.
Most useful links end at "Request Early Access" or "Contact Us". It doesn't look like they really wanted customers.
> Could have been part of a larger plan which collapsed with FTX.
Unclear. The bank may have been used by FTX in some way. But it looks like tying it into the FTX empire in a way visible to customers didn't happen.
Elon blabbered about making Twitter a bank to avoid bankrupcy.
Incidentally Gary Rever was the one outside director who came on the board with Chalopin during the takeover. Perlman and Olveira joined the following year.
And Deltec is a centerpiece behind the tether (USDT)/Bitfinex scam.
People who actually described the Alameda/FTX ponzi scam for what it was since day one have always said it: Alameda/FTX is just a front set up by tether/Bitfinex, made to precisely hide more market manipulation.
The links are becoming clearer: the top lawyers at respectively both Bitfinex and FTX used to be colleagues who... Worked at a firm convicted of fraud for they stole $50 million out of players in an online poker scam (the operator could see the players' cards and would play against them). FTX was, conveniently, a few streets away from Deltec in the Bahamas.
Everything checks out: countless "little" companies to try to funnel the money out of the US (including small banks which, as is now a fact, shared/exchanged between tether and FTX), the Bahamas, the lawyers...
It's a little gang who all know each other very well.
Now I don't think they thought FTX would fall but they had the setup made so that should it fall, it'd act as a fuse shielding tether/Deltec.
Now Alameda is proven to be a fraud. So, this basically eliminates the possiblity that they paid cash for those Tethers.
Also, Tether admitted to lying in its settlement with the New York Attorney General
https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
Most of the commentary seems to be more conspiratorial (and certainly more fun) than anything.
I mean, Enron was pretty cut and dry. Dog and pony show, cook the books and team up with one of the big public auditors.
This story, within just a few days, had people making all sorts of complex interconnections amongst a whole fleet of co-conspirators.
https://decrypt.co/114708/alameda-research-18-tokens-insider...
Anyways. The article you linked to is titled “Alameda Allegedly Traded These 18 Tokens on Insider Info Through FTX”. The operative word being “allegedly”. Also this is just another thread and has nothing to do with any of the previously mentioned co-conspirators.
That's a bucket shop, a version of financial fraud. This....is not that complicated.
So, the question then is: do you trust a bucket shop to have been recklessly dishonest about whether the trades happening were actual trades, but scrupulously honest about sending $36 billion real dollars to Tether?
https://www.crunchbase.com/organization/alameda-research
https://markets.ft.com/data/funds/tearsheet/summary?s=MT7000...
https://offshoreleaks.icij.org/nodes/55087847
And then a broken link to something on https://eservices.mas.gov.sg
I can't seem to piece together the same narrative as you have from these primary sources.
Maybe there are more primary sources in those links. As soon as I enlist a computer to do this work for me I'll know.
I was not aware that FTX was a bucket shop, ie, never delivered any of the traded assets and was just pure gambling. Do you have a primary source on this?
The allegations that FTX were engaging in fraudulent accounting practices seems pretty strong at this point. The allegations that FTX were misusing customer's commodities seems pretty strong at this point.
The allegations that involve a complex web of many different characters acting as co-conspirators all seem pretty weak at this point.
The better question is: do you trust a complex web of secondary source material?
A bucket shop is a place that says it is executing trades but is not, in fact, executing trades and is instead trading in phony assets. FTX did not have the assets on hand, as it had given them to Alameda. This is the definition of a bucket shop.
The source is FTX, they said they had given away their customer funds and didn't have them. What more do you want?
What FTX has said is basically "we used customer's commodities like a bank would. we lent them out to a trading firm that we also operate and we really hoped that we'd cover these trades". This is fundamentally no different than how banks operate but with a key difference: They didn't seem to make this known to any parties and they seemed to be massively over-leveraged. I have no problem with these activities being illegal. This is not the same thing as a bucket shop.
And I still don't know what any of this has to do with $36 billion worth of Tether, Deltec, Chalopin, Bitfinex, Geniome, Moonstone... and that's just the threads mentioned in this brief discourse we've been having! Every time I ask questions the plot thickens!
So what more do I want? I want sobriety. I want people to ask themselves why they are interested in this story. I want to people to ask themselves why they are writing articles, tweeting, making YouTube videos and posting comments about this story. I want to see primary source material and I want intellectual rigor. I want to see justice served and that is founded on notions of individuals being innocent until proven guilty in a court of law. I want to see no gossip, no speculation, no mentions of how things are convenient, no things appearing a certain way.
This isn't a criminal proceeding. But no one has rebutted Protos despite ample opportunity. And Tether specifically cited FTX as a major customer on multiple occasions. It's hardly a radical claim.
> ""we used customer's commodities like a bank would. we lent them out to a trading firm that we also operate and we really hoped that we'd cover these trades".
FTX wasn't a bank, it was a brokerage. Brokerages do not lend out customer funds in this manner! In a regulated brokerage, the customer owns the securities traded. If the brokerage goes bust, they have the claim to them.
I know it isn't a criminal proceeding but to me that isn't an excuse for a lack of rigor in any discussion. Why not the Kardashians if we want to have a little fun trash talking strangers online?
I'm actually not very interested in the "Protos Papers" because I still have no idea what that has to do with FTX misusing customer commodities! If it is being used to speculate that they were pumping and dumping other coins or some other fraudulent behavior I am still not interested. Why? Because it is speculation! The courts will figure it out! Why are there so many people "doing research" like it's QAnon or something?
I'll get to the meat of it: I see the current media ecosystem as being a conspiracy theory generating machine and as every day goes by more people that I interact with are finding some kind of rabbit hole to get lost in, speaking of things as objective facts when they have never left their living rooms and their only source of information is an array of pixels sitting on their lap or held in the palm of their hands.
Nassau is not very big, it's hardly surprising that two big companies working in finance would be close to each other.
This is a conspiracy !!
FTX and it's executives donated $70 million to politicians as well (in the last 18 months). SBF donated $40MM to Democrats, and a different executive donated $23MM to Republicans.
They were trying to buy all kinds of influence.
Did the GOP directly profit from those donations or did it go to a specific PAC to support the campaign of a specific politician who a had personal connection to FTX Digital Markets co-CEO Salame? There is a report that suggests the latter[0].
[0]https://www.theblock.co/post/160714/crypto-booster-michelle-...
If you believe this is wrong, that is.
The Supreme Court has decided that Congress isn’t allowed to regulate this kind of behavior. The Court has also chipped away at bribery statutes, narrowing them significantly.
Unfortunately, without a constitutional amendment, new justices on the Supreme Court, or a revolution, there’s not a lot that can be done. I support an amendment, but with the current court it’s… we have a long way to go.
Ah never mind, we all know they can’t help it.
They often lose to the politicians that do take the donations. Because they don’t have the money necessary to compete in the election.
So, there’s a survivorship bias. Elected politicians are much more likely to be taking those donations. That’s why the system is so problematic. It drives out honest and honorable politicians, and rewards corrupt ones, which further reinforces the idea that all politicians are corrupt. They’re not, but under this system most elected politicians are.
(Also, despite that I am not much of a fan of the UK political system, I do like that it has extremely low limits on election spending).
I’m absolutely unhappy with the result. We legalized bribery and rank corruption. It’s awful for the system.
What do you think it’s not frowned upon?
I very seldomly read stuff like "FTX bribed both the democrats and the republicans". People write stuff like "this practice of supporting “both sides” is a very common, by-the-book strategy". I mean, "supporting", really? "by-the-book"? That doesn't sound very frowned-upon-y to me. That sounds like y'all think this stuff is as normal as the air we breathe.
Generally the money does not get you anything but an opportunity to pitch stuff to the politician, it's just an expensive way to become golf buddies.
There's a lot of things the politicians can help you with outside of their official duties. A senator chasing after your business partners visa issue is going to get it resolved within a day, without needing to wield any official power. This isn't corruption, corruption would be paying off the person making the visa decisions.
I get that if you come from a country with little actual corruption, this might seem like a distinction without a difference. It really isn't though, real corruption places a price tag on government officials doing (or not doing) their jobs.
They are buying the regulation for themselves and against the people and yes this is very common and the people hate it.
What's weird about him though is he wasn't listed as one of the "close insiders" who allegedly knew about the transfers of customers funds from FTX -> Alameda despite being "co-CEO" and there from the beginning of FTX's creation.
The different executive donated to his girlfriend, who is a Democrat but was running as a Republican. Make of that what you will.
The NYT having SBF speak at one of their conferences would be the paper's moment to shine?
In case anyone doesn't know what I am referring to, here is some background.
https://www.publish0x.com/making-cents/whats-wrong-with-the-...
I won't believe this guy is actually going to prison until they slam the iron bars closed behind him.
As said earlier he has bribed the right big fish. But ignoring angry medium fish can be a problem. Also those might not be bribes. It might be a way to launder money into campaign contributions. Not that you really need that in the US now.
The guy is going to jail. If you want to make a bet on it, I'm willing to do so.
Different story for the average listener, who will be listening to most interactions with an open mind and susceptible to whichever person tends to be more charming or persuasive.
His lawyers probably reckoned he was talking way too much, was too much of a liability and dropped him immediately.
The real question is he keeps receiving positive media coverage? They keep trying to frame him as, just a "dumb kid and his friends" that "accidentally misplaced billions" - when in fact, it is pretty obvious he planned most of it, by how his complex corporate structure was and the constant deleting of evidence every step of the way.
Not to mention how he gave himself over a billion of personal loans and spending millions on bribes towards the end for hopes of political protection when he knew he was running out of rope to hide his scam.
https://www.wsj.com/articles/ftx-sam-bankman-fried-sit-in-th...
https://www.axios.com/2022/11/16/ftx-sam-bankman-fried-incom...
I’m seeing plenty of critical coverage. Are you really not seeing that?
He got a degree from MIT, did a year at Jane Street, but is unable to keep basic financial records??? This doesn't make sense to me, and seems like obvious fraud.
I guess you're suggesting the NYT shouldn't let him speak, to protect us from ourselves? That's a startling position.
They are selecting very few people to speak and rejecting huge amounts of other people.
But the other real thing is how you introduce the speaker. What do you say about the speaker in your materials, whether you promote him as trustworthy or not.
Please don't take this personally, but I generally have no interest in watching random people speak. They know their audience.
On the other hand, if they could secure an interview with Adolf Hitler himself, I would watch. Interest does not mean endorsement.
That does depend on how you introduce him and what questions you ask. It does matter on whether when he says lies about Jews for example in that interview, you let them stand unopposed. If you use positive or euphemisms ridden introduction, then you are endorsing actually. "The next speaker is smart awesome guy who has extensive experience in leading a crypto fund".
> if they could secure an interview with Adolf Hitler himself,
His speeches are no secret. If you invite Hitler, introduce him nicely and he then go about Jewish danger, they you are in fact helping him promote genocide. And that guy would not go for interview where he be in any danger of not dominating tone (he was good at popular politics).
But seriously, why is it that nazi speech is always the most important one? I dont see anyone going "interview with Usama Bin Ladin, lets have Pol Pot speaking, lets have Stalin speaking, we should add communists/anarchists/ISIS into the mix".
And... I have watched a few of Hitler's speeches? And somehow I'm still not a Nazi. Nor have I, to my knowledge, promoted genocide.
Give humans more credit. They're not stupid.
That doesn't matter. Who cares how the public sees him? All that's going to matter is how a jury sees him shortly. And the prosecution will be able to present evidence.
In the meantime, let him keep speaking on the record and admitting to things. And providing a show for those of use who are paying attention.
Besides, I'm not sure how many "average listeners" are going to be tuning into the NYT event. I assume it's mostly people who have been following the story.
I mean something is gonna go down, might as well be there for the popcorn.
I'm not sure what being outraged over his interview is going to achieve Signalling you disagree with what he did? To protect people from his hearing his dangerous words? To punish him?
IMO hearing his rationale, seeing how he convinced people, the lies he tells himself, etc should all be analyzed and publicly scrutinized. It's not like he's promoting some new venture or something.
They aren't suddenly friends with the guy because he gave a virtual interview over Zoom at the same event as them.
You don't need to be constantly publicly showing your outrage to make it clear "x person bad". We get it. We know he's bad. Even without such brave moral heroics.
Netanyahu or SBF?
If, through my actions, you become financially ruined, I may not have kicked, beaten, or raped you, but is the harm comparable? Is it violence?
Violence - behavior involving physical force intended to hurt, damage, or kill someone or something.
I think of violence as the use of force or implied force to limit the agency of another. I'm not sure I'd call this violence but I can see where they're coming from.
Maybe ask for clarification instead of being rude and dismissive, or simply leave your sneering judgement unsaid. You may be find this view uninteresting, but I find your snark exhausting. I could just as easily say, "oh you're snarky, good for you?" Additionally GP added to the conversation, and your snark detracts.
If you steal $10 from a local shop (sorry, $1000 in California now) you'll be in jail before the end of the week. Steal $1,000,000,000 eight times over and you.. get to speak at a NYT conference?
I don't know, I just want some consistency from the justice system. That's not too much to ask for, or expect, really.
Please tell me what reality you live in and how to get there. Hell, just look across this site to see all the advice that ethics are for those who like staying poor.
What we're seeing now is the part of the larger cycle where folks get more and more insistent that they're warped world view is correct (and it wouldn't surprise me if we get more violence than we got on Jan 6th later because of it), since they can't acknowledge that they're wrong and something bad is happening because of it, which will cause more bad things to happen.
It is imperative more people stand up and provide counter-pressure, because otherwise they will win.
Whole point of financial system is risk management, while corner shop owners should not deal with theft risk at all.
This is an extreme form of violence, not physical but definitely psychological, your whole life of work savings was wiped out and taken by this guy.
Holding the view you hold is why white-collar crimes are viewed so leniently compared to what you'd call violent crimes. Just because the effects of it are more abstracted away doesn't make them lesser, people might commit suicide over this. They might never recover the amount of money lost for the rest of their lifetime. It's a perpetual torture for those who got the shortest end of the stick. How is that non-violent?
What is the definition of violence?
> behavior involving physical force intended to hurt, damage, or kill someone or something.
You've already conceded that words can hurt people (Alex Jones), so why are you trying to backpedal that now?
Equating money losses with violence dilutes the term, and has a history of slipping into hurt feelings and blasphemy being tantamount to violence. There are crimes which may rise to the severity of violence. That doesn’t make them violence. Alex Jones incited violent. He, himself, was never violent. SBF perpetuated a massive fraud. He has not been connected with any violence.
I don't see him excusing himself by explaining that regulators aren't real, they're just actors playing a role in an evil New World Order conspiracy to take people's guns away, and if he does, I don't see the NYT Dealbook summit attendees being the sort of people that turn up on their doorsteps as a result. And FTX is far too dead for him to harm people's wallets any further by persuading them to park their money in it.
Is 1 murdered person better or worse than the long term impact of two or even one person becoming destitute enough that their movements have long term impact on another?
That's far more damaging than a delusional rant on some obscure internet radio station.
I find it amusing that there is now a call to apply the same rules for crypto exchanges. Didn't everyone hate traditional finance a few months ago?
Untangling how to charge him, and where, and digging up concrete enough evidence to file an indictment is going to take awhile of course. The post-bankruptcy CEO seems to be finding plenty.
As with a lot of non-violent crime, it takes awhile to arrest someone because there is a lot of paperwork. When the suspect has a lot of cash and lawyers, it takes longer because they need to make sure there isn't an angle they are missing that could get them off.
Bad financial controls is if someone else whoopsie accidentally steals or mishandles the funds. Which at least per a cite provided earlier, he admitted to doing it himself.
To be able to claim a lack of culpability for this requires a degree of plausible ignorance about what the left and right hands were doing. He seems to be working hard to chip away at any sort of plausibility there.
>(1) that the defendant voluntarily and intentionally devised or participated in a scheme to defraud another out of money;
>(2) that the defendant did so with the intent to defraud
https://www.justice.gov/archives/jm/criminal-resource-manual...
Thus far he hasn't admitted to either and so hasn't yet admitted to a crime.
Wire fraud != fraud, theft, or embezzlement.
It’s a specific sub-type of fraud, and your link is pointing to a specific list of elements within a certain jurisdiction.
Even then, that vox conversation cited above combined with what we already know is likely to be enough to prove at least embezzlement.
Here is a link to some elements of the crime for that if you’re interested.
https://www.law.cornell.edu/wex/embezzlement
Based on what we’ve seen so far, unless he somehow can convince a Judge or Jury that he didn’t know what was happening, it would be very implausible someone couldn’t get a sizable conviction somewhere on one or more of those charges. But we won’t know for sure until the situation has been analyzed. But he sure isn’t helping himself.
Which is why I said what I said. He could of course have no defense and sit there mute for the entire trial, but I can’t imagine a Jury would be all that convinced by it, if the prosecution provided even the most basic set of evidence that seems to be lying around all over the place.
Yes. The investigation has to happen before the arrest. With violent crime, it's usually clear what happened; the question is who did it. With white-collar crime, sorting out what happened is complicated. With FTX, it's really complicated. Prosecutors only get one chance; if they take someone to trial on early evidence and lose, they usually can't come back later and try again.
But it doesn't all have to be figured out. Just enough for a long sentence. Known overt acts, such as buying US$300 million of Bahamas real estate with company funds and putting the real estate in a family name, are probably enough for grand theft.
He stole tremendous amounts of people's money. I hope you're as forgiving to him as you are towards to the people who caused the 2008 economic collapse. At least they weren't actively stealing people's money.
Alex Jones isn't dangerous. He's just a weird guy who likes to rant about stuff. Sam Bankman Fried is a thief.
In reality, I have a hard time believing that after watching Kanye West’s recent media tour where he steamrolled his interviewers and used their platforms to repeat his claims over and over again. Even the podcasts where interviewers supposedly pushed back the most (Lex Fridman is often given as an example) barely resulted in Kanye acknowledging the pushback and didn’t stop him from repeating his points over and over on the platform.
The NYTimes event is especially weird because it’s not being held up as a “watch us grill this liar” but rather “come hear talks from this impressive lineup of accomplished people!”
You think people are going to help him make a comeback or convince people to give him more money?
His only counsel now is going to be criminal lawyers. No PR firm or conference interview could save this dude's reputation.
Actually, I am not surprised the NYT did not de-platform him.
That NYTimes takes a stand against deplatforming? At their own summits? Or in their newspaper's opinion pieces?
* TBH my only interest in the whole things is Schadenfreude, like checking out a car crash in the street. The sector is so tiny that even if FTX brings the whole thing down it'll be a largely invisible ripple on a macro scale.
wat
“The chairman of FBH is Jean Chalopin, who, along with being a co-creator of cartoon cop Inspector Gadget in the 1980s, is the chairman of Deltec Bank, which, like FTX, is based in the Bahamas. Deltec’s best-known client is Tether, a crypto company with $65 billion in assets offering a stablecoin that is pegged to the dollar.”
That tells you everything you need to know.
But one of our crew found info on Crunchbase about Alameda Research + Moonstone and we nope-d out of that deal. They said "we don’t have any risk or exposure from Alameda Research" -- but, still -- too close for comfort
Find them. Investigate them.
I would bet none. This looks like an illegal transfer of control. If shown, that gives us the thread with which to finally topple Tether.
“The fact that an offshore hedge fund that was basically a crypto firm was buying a stake in a tiny bank for multiples of its stated book value should have raised massive red flags for the F.D.I.C., state regulators and the Federal Reserve,” said Camden Fine, a bank industry consultant who used to head the Independent Community Bankers of America. “It’s just astonishing that all of this got approved.”
So much for regulators/regulations.
One should wonder at which point we will have to deliberately stop unraveling this thread, before it gets really ugly for everyone... it might not be just crypto-exchanges that are completely rotten.
“Literally, the day it occurred, they called and said, ‘Let me know. I will pay cash,’” Hillier said. “People see opportunity.”
Huh. It’s almost like how rich people buy property is:
1. Create a ponzu scheme or other financial shenanigans 2. Get money from peoples. 3. Spend proles’ money on ridiculous assets and property 4. Declare said scheme bankrupt 5. Step in and buy assets for pennies on dollar.
Ideally, step 4 happens during a financial crisis so that proles can’t get access to borrowed money, thereby reducing competition for assets.
https://www.prnewswire.com/news-releases/fbh-corp-raises-11-...
Why would they post a PR announcement if they knew it was an illegal transaction?
ahaha, i loved Inspector Gadget. but also: what the hell.
Interesting WebAuthn demo still up on their site.
For example https://www.reuters.com/business/finance/us-fed-terminates-e...