1. He assumed the blowout would be minimal outside of FTX and/or assumed FTX was shady but not as bad as it turned out
2. He acknowledged the possibility that binance will also get scrutiny but realized FTX was just so bad that letting it fester further will only get him arrested faster too.
3. He’s just another idiot who made money lucky.
Curious which it is.
My point was, even if the whole crypto ecosystem went to zero right now, the effects on the economy at large would be negligible. However, it would be the perfect scapegoat to finally crash the economy with no survivors. The media would not have a problem with just blaming it all on crypto: as you can see here, people are already very eager to do so! No other explanation needed to convince the masses!
It is bound to crash down after the last decades of reckless policies and all-around fuckery going on. So why not do this "cleansing" while blaming it all on an already hated scapegoat? It doesn't matter if it's not real nor realistic, what matters is the narrative, which I'm sure everyone ITT will gladly lap up!
The idea of using market cap as a frame of reference for crypto needs to die. There are much stricter controls about how a company issues more stock (and thus can inflate or deflate the price) than how a cryptocurrency issues more coins. Also, cryptocurrency market caps are denominated as an exchange of <insert your country> fiat, whereas a company's market cap is in the fiat in which the company is actually sourced (e.g. NASDAQ).
You just can't compare the two.
Say with Tether instead, if they invested in junky stuff but none of it went bust and they made way more than investing in t-bills or whatever they promised, then they may not want an audit to reveal they have 3X more than enough to cover outstanding tether, something t-bills couldn't have achieved.
1. Binance is run by criminals and all sorts of people would go to jail if anyone looked at their books.
2. Binance is solvent.
Not saying this is the case, but there's many other reasons for a crypto firm to be shady than their insolvency.
I can imagine that a full audit would uncover dangerous skeletons in the closet that don’t necessarily imply insolvency. At the very least, Binance made no secret of using extremely dubious banking relationships to collect money from its clients.
Audits aren't all-or-nothing, they've already paid an auditing firm to do a custom audit they designed. They could have made that audit much better without going into what you're mentioning.
https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
#1, 5, 10…
Same thing for Ethereum.
This is very far from FTX in my opinion. Billion and billions of dollars of crypto in wallets we can see. And these are just the ones we know of.
The attestations Tether and Binance like to call audits are like printing off your house's appraised value of $1M. Real audits are the sort of thing that reveal you're underwater on its mortgage and leveraged its value to borrow another $1M to buy a pile of Beanie Babies.
Despite the fact that he owns Alameda.
1. We had a busted accounting system
2. Early on in FTX people had to route dollars via Alameda because banking is hard
3. We accidentally credited those dollars both to Ftx and Alameda
4. Each side thought they had billions to spend / lose (their VC and related spend was WILD), and suddenly, oops!!!!!!
I suspect there's a grain of truth to this, in that steps 1-4 did actually happen to some degree and influenced expenditures/risk taking that the firm couldn't back. Given what's known (for some definition), the upper crew knew about the problem well before the bank run, and knowingly transferred funds from FTX to Alameda. This sort of 'best case' scenario still implies an absurd commingling of exchange and user funds.
It doesn't strike me as plausible that nobody ever questioned the extra billions , and it definitely isn't believable that when Alameda got margin called, they just casually 'sent' some of the double counted billions without taking some time to think "hey, so about these billions".
Also, this doesn't square with Sam constantly claiming that he misjudged whether FTT was good backing - if they didn't commingle/steal customer funds, he wouldn't have cared about FTT collateral!
Like, how hard do you have to try to lose 8 Billion dollars and not know how?
I'd bet on them hoping they could make the money back after losing it, and just digging successively deeper holes. They knew what they were doing, and excuses are all about avoiding decades of well-deserved prison for the amount of people they've fucked over.
If you look at them buying out the binance share + their VC spend, I think that was over over 4bn? Buying out binance alone was 2.5bn iirc, and they had well over a billion in investments between FTX and Alameda. That doesn’t feel like the behavior of someone who knows they’re in a huge hole, but then who knows.
Not trying to apply moral judgment or make excuses, just speculating about what happened fwiw. At the end of the day they stole customer money (a few good friends got super wrecked, I have no loyalty to ftx or anything)
It's fraud, from the beginning.
Don't get me wrong, he should still go to prison.
Sorry, but you're just giving in too much in his bullshit. Especially when FTX terms of service explicitly said that your funds would never be given to FTX Trading, and that they would be kept apart. It's not an accident. Separating the funds was consciously thought of and immediately followed up by "lol no".
Anyway, it's clearly fraud and he should go to prison. And in some ways maybe the callous disregard for bureaucracy and controls (we don't need these, it's a waste) is worse than if he had malicious intent (I'm going to take all this money and run). For the person with malicious intent, there's not much to do other than build rules to constrain future people like that since they won't learn from the punishment of others. For the person with disdain for mechanistic controls and regulation however, we do need to show that it's just not acceptable to bypass that stuff and that society will punish you severely.