Annotated: Sam Bankman-Fried's “FTX Pre-Mortem Overview” | Hacker News Reader

Annotated: Sam Bankman-Fried's “FTX Pre-Mortem Overview”

mollywhite.net

243 pointsadrian_mrd139 comments

I am truly grateful for people like Molly White, David Gerard, and Amy Castor. As the crypto grift circus expanded and expanded, I just got worn out. There was so much to pay attention to as it metastasized. All those writers have been diligently following it for years with a critical eye, and all of them have taken a lot of heat for it. As the wheels come off, it's great to have their detailed insights.

There needs to be a differentiation between good and bad actors in this drama as opposed to the lazy and inaccurate idea of "the crypto grift".

These recent billion-dollar grifts plaguing crypto have primarily been enabled by actors working steadfastly against all of crypto's core principles: decentralisation, secure your own money, no middle-man.

These players are employing all of the same tactics enabled by the traditional financial system to carry out these scams: centralisation, entrust someone else to secure your money, employ a middle-man.

It's still legitimate to criticise crypto, there are many issues there: projects that fall short of the goal of the decentralisation, someone securing their own money can end just as badly as entrusting someone not worthy of it, etc.

But lumping these recent events, of someone foreign to the crypto community coming in and actually setting out to defraud people outright, by lying to them about what they're doing, and twisting the ideals of crypto into nothingness, aided notably in the FTX case by continual mainstream media hype - this is a scam in an of itself plain and simple. Crypto was used as a buzzword to sucker people in - in the very negative sense of being used. Crypto wasn't the cause here.

How many billions would have been lost of FTX's customers money had SBF and FTX not been endlessly paraded over the mainstream news, and cover-pages of major financial, news and culture publications since it began?

It is those colossal failures of journalism, and/or conflicts of interest, that need to have a light shone on them, investigated and mitigated/regulated better.

Labelling this "the crypto grift", is actually continuing the grift to an unfair even worse conclusion - blaming crypto not for something done by it, but for something done to it.

It's hard at this point for me to not blame crypto-the-technology and crypto-the-culture for the repeated and spectacular failures of crypto-the-industry. It's not like FTX was an isolated incident. It's becoming sort of a scapegoat for crypto enthusiasts because it was such a big deal, but practically everything that has come out of the crypto space since Bitcoin and Ethereum has been a grift to some degree or another.

Something about crypto quickly and irreparably drew the get-rich-quick crowd, and I don't think there's any coming back from that. Where that kind of person gathers, scams abound.

Exactly. I think there was a tipping point. The only question for me is how many times you can shear the same sheep. There have been so many bubbles here and somehow people kept coming back for every shiny new idea. DAO, ICO, NFT, etc. But given the way NFTs never really took off plus the ongoing domino-fall of major crypto names, maybe the brand value of crypto has finally gone so far negative that the space is done. Fingers crossed, anyhow.

> DAO, ICO, NFT

that's a great list to keep in mind, the same people who were foaming at the mouth when these acronyms first popped up would probably be embarrassed now or pretend like they've never heard of these. I'd say "crypto lending" at "8% apy guaranteed" is another one on that list that will be embarrassing to think back to.

> lazy and inaccurate idea of 'the crypto grift'

'Lazy' ideas are also called heuristics, and work.

Do you have any "more than half" sets or classes of examples of not-grift other than a couple of the original company-less chains? I don't mean any given example, I mean where a class of things are all safe, all not-grift.

Bitcoin is possibly not-grift. ETH, possibly not-grift.

Arguably, by-and-large every company-sponsored chain, every token, every NFT, every custodial wallet company, every lender, BnL every everything else, is grift.

When it's that by-and-large universally the case, it's neither lazy nor inaccurate for normals to be taught a simplifying and clarifyingly protective thought: "it's all grift" or "everything since BTC and ETH is grift". Their choices would be much more sound.

It's all grift is how it should be held, so any new project starts facing skepticism rather than hype. The sooner we accept that, the sounder the future of distributed ledger and blockchain based tech.

// I have and use BTC and ETH. I use DLT for work.

This boils down to what is essentially a "guns don't kill people, people kill people" argument.

Yes. Crypto, itself, didn't necessarily carry out any of these frauds or scams. But the defining characteristics of cryptocurrency are inextricably intwined with the fraud people are able to perpetuate with it.

A gun's one and only purpose is to extinguish life. In the same way, Bitcoin's—and every cryptocurrency created since—one and only purpose is to skirt regulation. No one should be surprised by the outcomes of their adoption.

The only problem that even "good" actors in the tokenbro space usually take these principles: decentralisation, secure your own money, no middle-man, and then assign to them positive values from the: centralisation, entrust someone else to secure your money, employ a middle-man.

When confronted on the any viability of any of the "good" principles, they inevitably mix and match "good" and "bad" principles and values as they see fit, just to keep up their narrative. E.g. take a mostly decentralised network which is easily clogged to a standstill and then claim it's a great virtual currency medium. When asked why, they inevitably describe mostly or completely centralised "improvement" to the said network. Decentralised rent seeking, which is not so enticing even in the theoretical description inevitably gets to the point where centralised gatekeepers can can control and ban bad actors and anyone really when they see fit. And so on.

tl;dr the so called "good" actors are mostly two types of people - first type are committed anachists and libertarians who sincerely want to use what they promote and sell. And another type are disingenious liars, who promote libertarian systems to the commoners all the while promising that nothing really would change when commoners would adopt said systems, and would get only incredible benefits. I consider this second type the same as "bad" actors really.

See, this is a fair criticism, and founded.

Note also how similar it is to FTX - it's bad actors pretending to champion principles they are actually working against, whether unwittingly or otherwise.

The part I would disagree on, is where you yourself seem to be uncertain, with a contradictory stance of labelling "bad" actors as "good".

Just because people were unwittingly taking part in a larger grift does not make it a legitimate enterprise. Ever hear of racketeering and receiving stolen property?

I think there are a very small number of people who were interested in crypto from the get-go for what I'd consider good, socially positive reasons. To the extent that those people didn't cash in and are mad about how it turned out, I respect their pain. It's always hard to watch the beautiful dream get corrupted. It would have been a very interesting alternate timeline if those few pure souls were left to innovate quietly on their own for a couple of decades.

But as far as I can tell, the rest of it is at best, IGMFY [1], and at worst just scams. And that's the great, great bulk of it. I get why crypto adherents are going through a there-must-be-a-pony-in-there-somewhere [2] stage. But I would like to suggest that there is in fact no pony. That 99+% of the "crypto community" is composed of suckers, people in on the grift, and people who are simultaneously both.

And I'd also like to suggest that things like FTX are not outliers. They are the absolutely predictable outcome of people saying, "What if we make an end-run around the financial regulatory apparatus and ignore all of the history that drove its creation?" I understand that the anarchocapitalist fantasy is that if we just end government we'll all live in Shangri-La. But the reality of is the sort of warlord despotism you seen in failed states. (Which, as an aside, has given us another meaning for "techincal". [3])

Similarly, the real-world version of financial anarchocapitalism is bubbles, fraud, crime, and grift driving out actual development and investment. That's why every successful marketplace in the world above the size of a street market has significant regulation, be it internal or external. I used to write financial trading software. The people who I worked for were dispositionally cowboys. But every one of them knew that you did not fuck with the exchange and the clearing firm. And maybe the national regulator, but that was a distant concern compared with the people who were running the marketplace and would happily clip your wings if you looked at all like you were pulling something.

[1] https://www.urbandictionary.com/define.php?term=IGMFY

[2] https://quoteinvestigator.com/2013/12/13/pony-somewhere/

[3] https://en.wikipedia.org/wiki/Technical_(vehicle)

Maybe because the fruits of those few well-intentioned founders labours aren't blasted on the news 24/7 like SBF was, doesn't mean they don't exist?

I've seen people in parts of South America where the banking system can be completely unusable, using their phone to send and receive crypto payments cheaply and reliably, enabling them to safely transact with family. I've heard of this also happening in Africa.

Others, workers from Mexico for example, working in the US, are able to remit their small incomes back home for pennies instead of a 15% western union bite out of it.

It does have functions and utility that does work, and they are the same functions envisioned by the OG's.

One, I never said a good side didn't exist. In fact, I was careful to not say that. So easy on the straw men.

Two, I have been hearing vague, anecdotal claims like this for years. It reminds me of how back in the day I would get vague, anecdotal claims for why open mail relays were useful to people. But if you want to claim a meaningful fraction of crypto activity is valuable in ways for which there are no equivalent, you'll have to provide data.

Three, I'm very skeptical that there aren't other good non-crypto ways to solve the nominal problems. Good or better, really. As an example, take M-Pesa. [1] It started around the same time as Bitcoin, but has done vastly more to bank the unbanked in Africa. If you'd like to demonstrate actual superiority for significant use cases, I'm all ears. But I'm coming up on a decade of dealing with vague, handwavey replies about how crypto is akshually good, so I'm really going to insist on specifics here.

[1] https://en.wikipedia.org/wiki/M-Pesa

First page of search results for "remittance" & "crypto" has numerous examples. At random, here's a referenced article covering Africa, South America & Asia: https://thenetworkstate.com/crypto-remittances

I invite you to use the amazing powers we have at our fingertips to find them yourself, and understand why something valued at two pizzas 13 years ago just had its max institutional hold increased from 1% to 2% by the BIS:

https://investing.com/news/cryptocurrency-news/bis-allows-ba...

Thanks for telling me about this exciting new technology called "search", but it turns out that not only am I aware of it, I have been for quite a while. It is not my job to read random search results in hopes of finding some sort of data that demonstrates the value of crypto. I have already researched this a fair bit and have a provisional conclusion that suits me fine. If you would like your claims about it taken seriously, you can do the searching and collection and analysis and provide me with some results. If that doesn't interest you, that's fine by me.

There were two links provided in my post, one with it's own decent links and another from investing.com regarding action by the Bank for International Settlements (the Bank of Banks) - so I'm not sure what you're on about?

Ok. You say you don't understand. I am happy to take you at your word, and don't see and benefit in going further. Thanks for participating.

Ah, reading back, I think you misinterpreted my use of the word "random". It was intended to highlight how easy it was for me to locate a high quality article on the topic that even I hadn't previously seen before.

As such, while it was found randomly - I still read/assess its content for you as being well-referenced, as one would expect in the good spirit of conversation. But no big loss, if it turns out you won't engage in good spirit.

> Others, workers from Mexico for example, working in the US, are able to remit their small incomes back home for pennies instead of a 15% western union bite out of it.

... and ALSO occasionally have the value of explode or implode drastically because it's so volatile and extremely dangerous to use as actual currency.

And anyway, where are you getting that western union takes 15%? For fun, just looked up the fee on western union, to transfer $1000 cash from USA to Mexico as cash, is an $8 fee.

What is "it"? There are thousands of cryptocurrencies, many pegged to fiat. There's no shortage of price-stable options, but this isn't so relevant for this kind of remittance anyway as typically the crypto will only be held briefly each end.

In these situations, someone gets a salary, they immediately send it to a hungry family, who then straightaway pays for essential items with it. Latency is important, sometimes more than cost, as having anything arrive is preferably to being completely without due to a lost transfer.

Unfortunately WU fees of 15% or sometimes more are common in poor regions. It's costly because payment corridors in those regions (which is not as simple as country A - country B) are so unreliable - money literally disappears on the way - that the only way it can be done for small value transfers is to hike up the fees to subsidise the losses.

You might get a reasonable seeming quote for major centres, but actually go through the process and fill in the details for more out of the way locations and you'll find very different prices.

WU and banks all also silently charge another 1-3% on FX rates, this is well-known and uncontroversial - visit wise.com for an accurate overview.

(Wise is actually a pretty good traditional-finance-backed solution to these problems for some regions. They did also trial transfers with a crypto back-end for a while, not sure if anything came of it.)

I also use Molly White's write-ups to loosely follow the everlasting crypto train wreck. This particular one is amazingly concise and easy to read. I hope she keeps it up. There is no way I would have the energy to look up all of this on my own.

Agreed! And I should mention that Molly has a Substack: https://substack.com/profile/6775195-molly-white

I pay her money because I am glad to have her pushing back against the tide of cash funding crypto promotion.

The other two have Patreons that I also support:

https://www.patreon.com/davidgerard/

https://www.patreon.com/amycastor/

Hold on there. If you're getting coverage like this, where someone comes and takes flattering photos of you, that's the kind of thing you get when you or your supports can fund a PR team to wrangle major journalists into covering you. I think she's fine on support.

https://www.washingtonpost.com/technology/2022/05/29/molly-w...

https://www.bostonglobe.com/2022/07/11/business/meet-molly-w...

https://www.protocol.com/fintech/molly-white-web3-crypto-ske...

Doesn't mean the criticisms aren't necessary or good, just speaking to the issue of whether you've found a shoestring operation, barely able to survive.

lol, I don't have a PR team. None of those articles were solicited by me.

Excellent FUD. No actual claims, just casting vague aspersions based on nothing but some absolutely generic photos that are typical of what a newspaper photographer will produce.

As long as we're making unsupported allegations, can you prove that you aren't funded by the crypto industry or otherwise benefiting financially from crypto? Because it seems suspicious that you're going to go out of your way to produce high-quality FUD for free.

Funny how HN is willing to accept that submarines[1] are a thing, but, when it comes to a story with a framing they like, they will robotically defend the notion that these articles were 100% organic content, that some honest, well-meaning journalist decided, with no prompting whatsoever from any interested party, that this person's work merits being covered.

The very fact that they went through the effort and expense to stage some photos for the article means someone is being propagandized. Yes, they do that in other stories -- those are PR-driven too.

>As long as we're making unsupported allegations, can you prove that you aren't funded by the crypto industry or otherwise benefiting financially from crypto?

I didn't provide FUD -- I didn't even dispute the core these that White's ideas are worth listening to! I simply disputed one lesser, ancillary point that I think was over-the-top: that White is somehow short on funding or ability to get her message out.[3] Since you didn't do your research, I even personally made one of the very same criticism[2] as in her annotations.

So tell me, what about my writing made you miss the point this much?

[1] http://paulgraham.com/submarine.html

[2] https://news.ycombinator.com/item?id=34360188

[3] A point which would still be valid even if she weren't the one prompting these stories, by the way.

> takes flattering photos of you

You know, some people just look good? From the photos you linked, the second one even has rather unflattering lighting.

Just look at the photo you linked. The poor woman has no furniture, and you think she can fund a PR team?

I don't like seeing Molly White and David Gerard in the same sentence. Molly White is a legit journalist with the mind of a scientist who cares about truth. David Gerard is a crank who will take any story and spin it to support his "crypto bad" narrative. They both like making fun of crypto, but that's about where the similarities end.

That's quite a take in that White doesn't talk about herself as a journalist but a programmer who does some writing, whereas Gerard has been writing articles and books about this since 2016 and sees himself as a journalist. As do I, for what it's worth.

Anyhow, as somebody who has reading them for years, I think they both have equally negative takes about crypto, although Gerard is certainly more salty about it. I think of him more in the English tradition of journalism, which is much more flavorful then the standard American stuff.

And regardless, Gerard's "'crypto bad' narrative" has been proven much, much more accurate than both pro-crypto partisans and nominally crypto-neutral mainstream journalists, whose naivete has helped a lot of their readers lose a lot of money.

I'm not interested in getting into an identity politics argument about who identifies as a journalist, who identifies as a woman, or who identifies as an attack helicopter. If David Gerard wants to be called a "journalist", that's fine, he's a journalist. But he's also a crank who will spin any story to support his narrative. Even if tomorrow Bitcoin would somehow magically end world hunger, Gerard would find a way to make the argument that it's actually bad for humanity because hunger makes you strive for better things, or whatever.

Oh? In that case, it should be very easy for you to go back into his archives and find some things where his supposedly egregious anti-crypto bias led him to say things that have been proven false.

I think you'll have a hard time doing that, because what you see as bias looks to me like him correctly spotting the BS early on.

Sure! Here's David Gerard from 2 months ago, speculating what will happen with SBF:

> SBF will be able to disappear with total facial reshaping also total arm and leg reshaping and total concrete shoe reshaping

Source: https://www.reddit.com/r/Buttcoin/comments/yubrvg/sucker_voi...

It's been 2 months and SBF still hasn't done total facial reshaping, neither has he done total arm reshaping, nor has he done total leg reshaping. And also he hasn't died ("concrete shoe reshaping").

This dude's a crank.

If the best you can do is point to a joke Reddit comment that you apparently haven't fully understood as a joke, then I think we're done here.

Here's what you asked:

> find some things where his supposedly egregious anti-crypto bias led him to say things that have been proven false.

I showed you an example where his egregious anti-crypto bias led him to say some things that have been proven false. And your response is "it was just a prank bro", and "I think we're done here"? Yeah, doesn't look like you care about evidence that challenges your beliefs. You have that in common with mr Gerard.

I think you are smart enough to have figured this out, but let me spell it out for you explicitly just in case.

You are claiming that he is failing as a journalist because of an anti-crypto bias. I am looking for proof of that. So what I'm talking about is statements made in a journalistic context where he has gotten something important about the crypto world provably wrong because of his supposed bias.

Your best evidence is not, say, taking a citation from his book, or even his blog, and then showing with actual facts that he made an error, and then demonstrating how his anti-crypto bias led him to a conclusion that was not only proven wrong, but that he at the time should have clearly known was wrong about something important to the topic. It's taking a random reddit comment that you apparently can't recognize as a joke and say it hasn't happened yet.

To me this makes you look entirely unserious. I can't even tell that you know what journalism is from your behavior here. So yeah, talking with you further looks like a waste of my time. As crypto proponents have generally been for me since 2015, honestly. So yeah, if you want to think bad things about me, go wild, plenty of crypto adherents do.

> You are claiming that he is failing as a journalist because of an anti-crypto bias. I am looking for proof of that. So what I'm talking about is statements made in a journalistic context where he has gotten something important about the crypto world provably wrong because of his supposed bias.

Ok, here's better evidence for you: in 2016 David Gerard was actively defacing crypto-related Wikipedia articles without any kind of understanding or knowledge about the subject matter. He has since learned a great deal about the subject matter, but my point is that he is a crank and a vandal, not a respectable journalist.

For example, this is what David Gerard said about Ethereum's codebase, in the context of heavily editing the Ethereum wikipedia page: "I believe Ethereum's codebase is based on the Bitcoin codebase (though I don't have a cite), so it's a fork of that (as most altcoins are)." (source: https://www.reddit.com/r/ethereum/comments/4b76i4/who_is_dav...)

The claim that Ethereum is a fork of Bitcoin is false and anyone who googles the subject matter for more than 20 seconds would learn that. Somehow, a major editor of the Ethereum Wikipedia article didn't care to do that.

Here's one of many instances where David Gerard vandalizes the Ethereum Wikipedia article: https://en.wikipedia.org/w/index.php?title=Ethereum&type=rev...

Notice how the addition of the phrase "like any other cryptocurrency" serves no other purpose except to talk down / make fun of Ethereum, and the removal of the phrase "smart contracts" serves no purpose other than to vandalize the article (removing descriptions of the distinguishing features of Ethereum).

> So yeah, talking with you further looks like a waste of my time. As crypto proponents have generally been for me since 2015, honestly. So yeah, if you want to think bad things about me, go wild, plenty of crypto adherents do.

I'm not a crypto proponent. I already told you how much I respect Molly White's work, and despite that you think I must be a crypto proponent? Just because I expressed criticism of another person in the anti-crypto camp? I hope you don't view all of life with such a tribalist attitude.

Once again, I have asked you for evidence of him being a bad journalist, and once again you have provided me with nothing of the sort. You still don't even demonstrate an understanding of what journalism is. I'm done. Have a good day.

I'm not the one who called David Gerard a "journalist" in the first place, you are. Not sure why you think the onus is on me to prove that David Gerard is a "bad journalist" when I never claimed he was a journalist to begin with. I claimed he was a crank (as opposed to a scientist). I've provided plenty of examples of him being a crank, but you don't really care about evidence against your beliefs, so you'll just no-true-scottsman any example provided.

You contrasted him with Molly White, who according to you "is a legit journalist". That looks to me like you claiming that he is not "a legit journalist".

If you no longer want to stand behind that claim (or somehow believe you never made it) and your new point is that you don't like some Reddit comments he made, then godspeed to you and your opinions. You not liking something he says does not constitute "evidence against [my] beliefs", as I entirely believe a lot of internet randos don't like Gerard and/or how he writes.

> You contrasted him with Molly White, who according to you "is a legit journalist". That looks to me like you claiming that he is not "a legit journalist".

Right, David Gerard is not a legit journalist. He's a crank. If you want to claim that he is a journalist of some kind, that's a claim that you are making - not me. I already told you if "journalist" is his preferred pronoun then I'm fine calling him a journalist - he's just not a "legit" one. If you say he's not a journalist at all, that's also fine by me. Again, not a "legit" journalist in that case either.

> As the crypto grift circus expanded

crypto != FTX

Oh? You're saying that FTX was the only bad thing to happen in the crypto space?

This sort of tedious, disingenuous quibbling is exactly why I'm grateful to the people I mentioned. Because instead of having to laboriously find all the failures, I can just tell you that all of this is documented in David's books, Amy's blog, and Molly's projects like https://web3isgoinggreat.com/

The crypto grift isn't limited to FTX, it's nearly everywhere in crypto. My great-uncle (who's constantly trying to find the one big break that'll make him rich) was working on starting a crypto token before everything collapsed. He is in his seventies and knows nothing about tech or finance, but he knew crypto was the place for people who want to make quick cash.

The whole industry has become a haven for grifters. That there are a few sincere projects doesn't change that.

The government made this thing called "accredited investor" which is just code for not one of the poors.

I wish it wasn't necessary for the poors to use crypto to moonshot on various grifts.

Considered from an alternate perspective, the thing that has allowed crypto to become the massive grift that is has is the ability for anyone and everyone to speculate on it without any kind of oversight, regulation, insider trading protection, or guard rails of any kind.

I won't speak specifically to the current reglatory definition of "accredited investor" which is certainly worthy of some criticism, but the "investments" that being one opens you up to are—on the whole—significantly worse than just parking your money in a whole-market index fund. The few opportunities that are actually worth investing in are rare and generally require being on a first-name basis with the right people. Not to mention, of course, knowing a priori who those right people are.

Merely having a bunch of dollars in the bank and wanting outsized returns puts you squarely in the realm of suckers who will be soon parted from their money by both hucksters and well-meaning idiots. Having almost no dollars in the bank puts you at an even worse disadvantage.

Yes I believe the poors ought to be able to drop bands on a well meaning idiot just as easily as the truck stop stripper.

What exactly is the upside of the scenario you're envisioning? Right now it just sounds like you wish the accredited investor rule didn't exist because it makes it harder to scam poor people.

I would use "scam" in the sense of offering unregistered securities. Not in the sense of willful fraud. In that sense yes I think the poors should have as much right to buy into a scam as the accredited investor.

Again, what’s the upside here? The end result of that scenario is that money gets redistributed from poor people to people offering unregistered securities. Why is society better off if we allow this to happen?

Why is society better off when I'm allowed to drop bands on the truck stop stripper instead of buying toys for my kid?

The individual should not be forced at all steps to selflessly act in the benefit of society. There are a non-zero number of scenarios where unregistered securities have paid off to investors. Individuals should not be forced at every step to prove their acts benefit collectively society.

Because society has a demonstrated track record of "actively letting people get scammed en masse" resulting in widespread misery and an enormously disproportionate number of resources needing to be committed to enforcement, and the current status quo—while inarguably suboptimal—is clearly an improvement?

The libertarian ideal is akin to assuming that people are frictionless spheres operating in a vacuum instead of recognizing that a significant amount of laws and regulation are written in metaphorical blood, and simply striking them from the books just invites a return to the conditions that necessitated them in the first place.

> Because society has a demonstrated track record of "actively letting people get scammed en masse" resulting in widespread misery and an enormously disproportionate number of resources needing to be committed to enforcement

Hell, people getting scammed en masse caused a civil war in Albania in 1997. Not even 30 years ago!

https://en.m.wikipedia.org/wiki/Albanian_Civil_War

What are the conditions that "necessitated" that someone with a $1B value mansion as their primary residence and $999,000 in the bank isn't qualified to invest in these securities while someone with $1,000,001 in the bank is?

Picking nits like this not only fails to advance the discussion, but in my opinion makes it worse.

You can do the same thing with literally any rule. Why does one have to be 18 to buy cigarettes, an addictive product that will kill you if you use it long enough? Does something magically happen at age 17.9999 plus epsilon? Of course not.

Regulations often draw arbitrary lines because that's a relatively easy way to improve a situation without getting bogged down in some sort of much more complicated test. E.g., we could mandate each person who wanted to buy cigarettes undergo a deep psychological evaluation looking at their personal history and testing their ability to make truly adult decisions. But that would immediately be seen as unduly burdensome (and nitpicked exactly as you're doing now).

And in any case, you have missed or are ignoring that one can now pass a test to become an accredited investor, no capital requirements at all. So in addition to being tiresome, your point is also out of date.

Presuming drawing arbitrary lines must improve a situation is probably the worst argument I've heard on HN and that's saying something. Also astonishing to call the difference between ~$1B in total wealth and ~$1M in wealth a "nit." I went out of my way to make sure the difference was far from a nit to show the absurdity so hey instead somebody just lied to make it sound practically the same, I love it.

>You can do the same thing with literally any...

I could marry any unwed woman or man who agrees, I could take any job who would have me. I could walk to any forest. I could.... Yes the fact that I could do it with any does not mean I shouldn't question the one I'm examining.

> you have missed or are ignoring that one can now pass a test to become an accredited investor, no capital requirements at all

If I want to be as cheeky as you I could characterize the cost of the licensure and/or exam as a capital requirement. Of course the $150 or whatever for the test, well in your mind the difference between ~$1B and ~$1M of wealth is jus a nit so hey they difference between $150 and $1M is just a nit and practically the same. I really dislike this kind of logic but hey it's the one you're playing so fair is fair.

>your point is also out of date.

.... we were talking about the accredited investors who were originally created in the Securities Act of you guessed it: 1933. Pardon me for doing exactly what they asked and looking at the "metaphorical blood" they insisted regulations were written in, you know the whole reason why "necessitated" was in the past tense because we were looking at history. You know this and this is a simple low effort tiresome deflection.

>can now pass a test

As an aside, not too keen in living in a society where if you have X amount of wealth defined in some way that you get to bypass following the law the same way as the poors who instead take a test to make sure they're worthy.

> Presuming drawing arbitrary lines must improve a situation is probably the worst argument I've heard on HN and

That is not a claim I made. If that's the best you can do, I'm tapping out here.

>"Regulations often draw arbitrary lines because that's a relatively easy way to improve a situation..."

--wpietri

I gotta frame that on my office, it's so bad. I would tap out too to save face after that one. And I absolutely fucking love the example was the literal think of the children meme. Have a good day and thanks for the great laughs.

If you are that determined to misunderstand the point, I am happy to leave you to it. Godspeed, tendentious month-old account. Maybe I'll catch you on your next go-around.

In practice almost anyone can become an "accredited investor" by simply lying on the form. I know people who did this in order to invest in pre-IPO stock offerings. Many financial services companies don't bother to verify investor qualifications. (To be clear I am not recommending that anyone break the law.)

Tether isn't FTX either. And yet, both are scams.

The medium is the message. Crypto enabled this.

Pedo Catholic Priests != Catholic Church

Sam Bankman-Fried is something else. He seems to be incapable of stopping talking, both before and after this saga. He also seems just purely delusional. He's co-conspirators have readily plead guilty. He has a tough hill to climb.

Regarding Sam Trabucco, why do we not hear anything about him in these proceedings? How is it possible that he wasn't involved given he just up and left in just August 2022? Why hasn't he been charged? This seems very strange to me.

https://protos.com/scoop-ex-alameda-exec-sam-trabucco-bought...

"At no point was my client aware that FTX was insolvent, and I have 100s of emails and public statements for you to read if you don't believe me." - what a lawyer would hypothetically say.

Apparently he told CZ it was insolvent in a phone call: https://www.thenationalnews.com/business/2022/11/16/binance-...

Maybe Trabucco is a voluntary witness for the prosecution and they don't want to dilute what he's going to say at the trial?

But why isn't he charged as well? His timing on leaving is quite suspicious, and there seems to be no way in which he wasn't both aware and a participant of what was going on. Plus, his personal purchases seem quite suspect, if the claims in the article are true.

Is Trabucco the Lou Pai[0] of this scandal? How much did he walk away with?

[0] https://en.wikipedia.org/wiki/Lou_Pai

Reading into that guy is something else. Imagine literally owning a 14,000 foot mountain. Absurd.

I've wondered the same thing, he leaves in August 2022 and there has been no update on his legal standing. Presumably he is a witness/cooperating?

> FTX International and Alameda were both legitimately and independently profitable businesses in 2021, each making billions.

From the article. What are your thoughts given this?

> Again, FTX's and Alameda's 2021 tax returns suggest they were massively unprofitable.7

Ah. I missed this point right next to it.

> FTX's and Alameda's 2021 tax returns suggest they were massively unprofitable

The source for that line is this: https://archive.is/LZ2FM

But it is more complicated than that. And unfortunately the "journalists" have done a bad job of documenting the actual sources.

What annotations software is this? All news should be reported this way when source documents are available.

Edit: scrolled to the bottom of the page and found https://github.com/molly/annotate

So it's just the front-end, relying on you to manually write all the HTML. I'd love some software to make generating these (or similar) annotated documents easily. Any ideas?

Yeah I was thinking the same thing. A GUI where the original text material is loaded, then you highlight it and write the annotations. Bonus of each annotation could be tweeted/tooted/whatevered and include open graph screenshots of the annotation.

Also, I'm sure you didn't mean to trivialize the project, but it's more than "just a front end". The design is what's really great about it.

Sounds similar to Ted Nelson's Xanadu project.

Fermat's Library offers something that comes relatively close https://fermatslibrary.com/margins

Slightly tangential: is there software that converts multi-LaTeX PDFs into responsive HTML in a reasonable way? I'd read more of these papers if they were more viewable on a phone-size viewport.

Pandoc?

I assume there's probably a way to modify or configure MD-based SSGs to produce side notes instead of footnotes. Hilariously I think you could use RMD because that has built-in sidenote functionality but it would probably require some manual effort to produce those nice highlights. That said, Molly is also making use of footnotes inside her margin notes, so if that's the goal my suggestions might not work.

This is what my fork of her project does https://github.com/kees-/annotate :)

Well, all it does is generate her identical format from a spec. Like @bradgessler said a gui to coerce annotations to that format from highlighting would be awesome

Cool idea, why don't you have a go at it and share the outcome on HN.

You might find https://web.hypothes.is/ helpful.

Does Hypothesis require a cloud account that syncs your annotations? If so, these products are a non-starter for any corporate environment, which is unfortunate.

Obsidian gets this right. Most software these days doesn't which is a shame.

Agreed this is awesome! The author understands how to use the web: HTML, CSS, and JS (which is unfortunately rare in 2023)

My team recently built NextJS-based site with sets of annotations on the research paper our project is based on (Google Zanzibar):

https://authzed.com/zanzibar

https://github.com/authzed/zanzibar-annotated

Could be easily forked and used for other purposes. Happy to facilitate if we get any requests in the GitHub issues.

This is super cool!

https://kaimerra.com/kaimerra-graffiti

I had worked on a tool for hosting collaborative editing of these kinds of things, but we are currently evaluating whether we should pursue it further.

Just a reminder RE:Making investors whole.

If you defraud investors, but magically a trillion dollars appears in your bank account and you distribute it equally to all investors you defrauded and they somehow walk home with 2X what they invested, YOU HAVE STILL COMMITTED A CRIME. The crime is not owing money to investors, the crime is taking their money and using it as the company's money. It doesn't matter if your bonkers ideas of ownership allows to you make each and every investor a trillion dollars.

Molly published the front end tool (annotate) she used to create the writeup. This would be an amazing VS Code plugin!

https://github.com/molly/annotate

Here's some constructive feedback to make this more trustworthy:

- Include a "View source" link to the source code for this document. Everyone makes mistakes and new information comes to light. You should provide a link to the GitHub source file used to generate this page, so that your readers can see the version history and all changes for the lifetime of the article since publication.

- Include the actual sources. A number of your sources, such as #7, are links to secondary sources, that have dead links to the primary sources. You should copy any primary sources and include them in the repo with your article.

"But Breck, the WSJ, NYTimes, CNN, WaPo, et cetera, don't do anything of those things!"

Yes. Exactly. You can't trust them either.

Thanks for the suggestions! I've implemented both, and I also reached out to the Forbes writer to let him know his link was broken.

Fantastic. The View source link points to: https://github.com/molly/website-v2/blob/master/src/pug/page...

Very cool use of Pug.

And thanks for following up with Forbes!

I've really enjoyed your stuff, but wasn't sure if you really cared about the truth or not. Now I know. Thank you! The world needs more journalists like you!

> Judge Dorsey ultimately overruled objections to their retention by two individual FTX creditors.

I think Molly White defaults to too much credibility in judges and lawyers.

SBF's main argument is that Sullivan & Cromwell misled him into going the Chapter 11 route, which he later learned was more motivated by its ability to make hundreds of millions rather than helping his customers. He made a mistake in trusting them. All entrepreneurs make mistakes in trusting people they should not.

He admits to serious mistakes with Alameda etc, but believes those were recoverable. I would agree—the crypto market is huge and so important—and think as long as all customers get their money back, that it was fixable.

I think S&C has done a terrible job with FTX since taking over since the bankruptcy, so find SBF's argument to have merit.

SBF's main message to entrepreneurs, which I think is a good one: be more transparent, and be careful who you trust.

Source: I think I have $30,000 in my FTX.us account, so if anything I should be biased against SBF/FTX. But I am currently dealing with a dishonest lawyer and incompetent judge in the San Diego Family Law Cartel, so I am biased against the system at the moment.

SBF's main mistake wasn't trusting Sullivan & Cromwell. That is the lie that SBF is trying to tell. While that may have been a "mistake" to declare bankruptcy, it was because it reduced FTX's ability to try to hide the fraud it had been perpetuating.

FTX was already incredibly insolvent at that point because FTX gave Alameda an unlimited line of credit and then used that credit to take loans from Alameda to line their own pockets with what was effectively FTX's customer deposits.

>>then used that credit to take loans from Alameda to line their own pockets with what was effectively FTX's customer deposits.

that's small fraction. most were spent and lost betting the crypto market

S&C basically invented modern white collar crime. It's hard to find outside of libraries, but: https://www.amazon.com/Law-Unto-Itself-Sullivan-Cromwell/dp/... is an exceptional read on their history.

(I still think Crypto is worthless, but the concerns about S&C in this case are likely very legitimate!)

Wow, that book is apparently hard to get. Two copies available, $60 and $240.

Good ol' Archie. https://archive.org/download/alawuntoitselftheuntoldstoryoft...

> the crypto market is … so important

Citation desperately needed.

Crypto is a 24/7 global, resilient payments network. It increases the velocity and transparency of money, which will have a huge impact on global economy.

Also, if you think customers losing a $8B to FTX is bad, wait until you read about retail banks in the USA taking $30B a year from their customers: https://breckyunits.com/the-great-bank-robbery.html

>Crypto is a 24/7 global, resilient payments network.

Man, your mind is gonna be blown when you realise that you can have that _right_ now! All you have to do is move to a first world country*

*like the UK or any country in the EEA. US not included.

I jest, but my point is serious. This is already a reality for anyone living in Europe. It's a political problem (is a 24/7 global payment network important to people in democracies), and incidentally, crypto also faces the same political problem.

"ohhh but it's permissionless" yeah nah no one is taking in magic beans for value

> you have to do is move to a first world country*...US not included.

I know. It's embarrassing. I remember in New Zealand in 2011 had better payments tech than USA in 2023.

> All you have to do is move to a first world country*

If you move to the UK you will have 24/7 payments to all other countries?

When? It's been 13 years.

> Crypto is a 24/7 global, resilient payments network.

Which crypto?

I pay almost all our team with NEAR coin. USA, Europe, Middle East, Africa, Pakistan, India, etc.

No problems.

All of my headaches come from a the very few I can't pay with crypto (Venmo, paypal, etc).

It might be true that FTX customers would be better off with FTX still running with or without SBF. But that does not negate the fact that lending customer money to Almeda is capital F fraud.

> But that does not negate the fact that lending customer money to Almeda is capital F fraud.

I think you are probably right here. If SBF does not have the ability to make customers whole, then I agree.

It’s only fraud if the money is lost?

Or is the fraud doing something that was contractually (legally?) prohibited?

> He made a mistake in trusting them.

Oh, come on. He purports to be a finance wizard, not some startup bro. If S&C turned him over, that's because he was a sucker, not a wizard. Finance wizards don't go into Ch. 11 with their eyes closed.

How in the world would everybody get their money back except via another scam token like FTT?

> No one in their right mind would use the word "solvency" to describe this.

No, you absolutely can. They were balance-sheet insolvent but cash-flow solvent from when they took the money until when people found out.

This is one of the best fiskings I've seen in a long time. Just absolutely brutal.

Can he just gift wrap these statements with a little tag that says "To the prosecutors with love. Merry Xmas, SBF"

I'd love to know what his parents think of what he's doing. They're law professors at Stanford; they have to be aware of how utterly stupid this is, don't they?

His parents were signatories on a beach front house bought with 10m of FTX funds. That’s all you need to know about his parents.

I imagine his parents, in addition to giving him standard "don't do public speeches about the bad things you've done" lawyer advice, probably also wouldn't have recommended he drop out of Jane Street, make large arbitrage bets on crypto, set up a exchange without proper controls and take money out of that to bet on other cryptos. He may or may not be on very good terms with them, but I don't think he's been following their advice on big decisions for a while...

He’s literally living in their basement, he can’t be on that bad of terms with them.

His father is reportedly conflict-averse to the extreme and his mother wrote an article saying free will doesn't exist therefore people aren't responsible for their crimes.

I wonder if those two facts are connected.

Have you spent much time with humanities academics? I would make no such assumptions.

They're lawyers and law professors, not humanities academics.

at least in UK universities law is a humanities discipline. perhaps it is different there

For the most part, American law school professors are actual lawyers with hard experience in their area of expertise. That appears to be the case for Bankman-Fried's parents.

SBF’s lawyers probably struggling to get him to keep quiet. What he keeps saying can and will very much be used against him.

Hooray for diffs, Molly joked about formatting issues (triple space), SBF probably read it and fixed it

SBF also wrote a later post about FTX US's balance sheet: https://sambf.substack.com/p/ftx-us-balance-update-2023-01-1...

Is that post at all accurate or is it even more lies?

One of the reasons that people keep on saying "this kid is insane for continuing to talk" is because they're rightly worried that he would admit to something that he'll go to prison for. In that post, he essentially does so.

What the new CEO did in bankruptcy is he wrapped up the business into 4 silos, one of which (WRS) contains FTX US, LedgerX, FTX NFTs and a load of other stuff. Now what Sam is doing is saying "Hey look! WRS does have enough cash to pay back the FTX US customers!", but if you count all the money that WRS has, what you're saying is that FTX US's customers weren't held as deposits, it's just that the total assets of the company exceeed customer deposits. Which means he's basically saying "Yes, I did do the illegal comingling of your deposits, but in total the company has enough cash to pay you back if, for the purposes of accounting, we split out an arbitrary part of the company and ignore the shortfall in the rest of the company".

Total lies: the current bankruptcy CEO says that balance sheet accounts for hundreds of millions in a company called LedgerX (IIRC, out of memory) which FTX.us acquired with... Money fraudulently siphoned from investors and customers.

So the money used to buy LedgerX (and which LedgerX still partially has) should at some point be seized.

FTX.us is insolvent too.

It confuses customer funds with ftx.us assets so no, it is just more self serving lies.

Balance sheet: =====

  Money I got   100.000
  Money I owe    90.000
  Total         +10.000

See? Totally solvent bruh!

I really love that format and wish there were more content like that!

That's a great summary, putting everything in perspective.

Steal a handful of dollars: get thrown in a dungeon for years and be forgotten by history (or worse).

Steal billions of dollars: get a free home vacation and the chance to explain yourself and sway the public opinion!

The way I see it, Alameda is the real criminal here. They clearly operated with the criminal intent to take the assets, and distribute who knows how.

I think it's perfectly possible that SBF is just dumb, and Alameda exploited his stupidity.

Once everything crashed, Alameda was all too happy to turn state's witness. SBF's best chance at this point is to secure his own plea deal with proof that Alameda is lying to the feds and scapegoating him. I don't see the feds going for this, they hate ever admitting they're wrong, but I suspect that's how it's going to play out.

Except that Alameda was also run by SBF, as laid out in the article.

SBF was a founder and officer of Alameda.

This is where I wish I could post the Scooby-Doo unmasking meme.

"Turns out Sam was the ghost all along!"

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