That crosses the line and goes deep into "willful negligence" territory, in my view.
The physical equivalent would be stacking customer assets like dollar bills and gold bars in big piles inside a heavily trafficked room that has no lock.
The term "irresponsible" doesn't quite do justice to it.
Unbelievable.
A lot of people are making the assumption that gross incompetence reigned supreme with FTX, and that does seem like the likeliest explanation, but another potential explanation is deeply devious criminal activity.
They could have preplanned this behavior. If they were ever caught doing anything really bad, they had "plausible deniability" by being so loosy-goosy with security and best practices. Everybody from a rogue employee to hackers could be blamed by them if the shit ever hit the fan and they could have some kind of defense that they were so disorganized that they didn't really know what happened.
You might be able to distinguish this by looking at how SBF's own personal crypto funds were managed. If he knew enough to manage his own crypto in a saner way, then you could probably make a case that dysfunction in FTX was by design because he knew better and didn't do it.
Former FTX US President Reportedly Quit After ‘Protracted Disagreement’ With Bankman-Fried - https://www.coindesk.com/business/2023/04/09/former-ftx-us-p...
> ...
> According to the report, another employee in the exchange’s legal department was “summarily terminated after expressing concerns about Alameda’s lack of corporate controls, capable leadership and risk management.”
> Alameda wasn’t even clear on what its own positions were, “let alone hedging or accounting for them,” Ray's document reads. A June 2022 portfolio summary, which was supposed to show Alameda’s makeup of crypto positions, was reportedly fabricated after employees were allegedly instructed by an unnamed higher-up to “come up with some numbers? Idk.”
> At one point, according to the report, Bankman-Fried told employees:
> “Alameda is unauditable. I don’t mean this in the sense of ‘a major accounting firm would have reservations about auditing it’; I mean this in the sense of ‘we are only able to ballpark what its balances are, let alone something like a comprehensive transaction history.’ We sometimes find $50m of assets lying around that we lost track of; such is life.”
---
I'm not sure "devious" is the right word choice. Criminal activity - yes. I suspect they knew they were criminals to some degree but were grossly incompetent when it came to managing it.
It feels more like a constant stream of lies to support the ongoing fraud rather than devious.
I want that life. No, seriously, let me find even just $5M laying around, just once.
I mean, what do you need to have between your ears to even remotely consider losing, and then finding, 50 millions of someone else's money as normal? Such is life? Where? Other than in government agencies, of course.
And that might be equivalent to a penny to a significant chunk of the global population that doesn't have more than $2-4 to their name
If they were a bank they would realize their growth is beyond their competence and bring in boring big bank security experts with some of the huge profits on the even more massive holdings.. But there were no legal profits on holding all these assets because they promised to be something better than a bank, making its money from risking your assets, so that was just done illegally leaving no above the table accounts for legitimate operation costs. (A friend of SBF with an illegal loan will obviously keep your keys safe.)
How could an honest company that takes negligence seriously compete? It is like the opposite of regulations as barrier to entry. How do you sell things for less than the Mafia's laundering operation?
Of course, but the qualifier I used is "make a case".
Obviously, nobody can ever read SBF's mind, but the government might have enough to prosecute him from this angle if they could prove that he knew better from his behavior with his own holdings, but didn't do things in a certain way for FTX's holdings.
You sound shocked! shocked! to find gross incompetence going on in a place where the accounting system is an Excel spreadsheet manually maintained by the CEO himself, with entries like "Hidden, poorly internally labled fiat@ account" (sic) purportedly worth $8 billion.
Private keys in plaintext in the shared Google Drive that the entire company has access to? That is the least surprising news I've heard today.
Never understood what people saw in SBF.
I don't recall who said it, but it seems to fit.
But I stole it. I didn't make it up.
Nov. 12 — Saturday: FTX hacked for most of its remaining crypto
Y'all be the judge.
This is FTX we're talking about. That line is far far far in the rear-view mirror.
Er, that's the thing that pushed you over the line? Not all the fraud and crime?
Really. At that point one should have the decency to declare your outfit a religion, and stop paying taxes.
Just like the “very easy math” that they all touted that was all that was needed to manage the entire thing
This is a failure of security and risk management. Making a guild or licensing requirements for software engineers may or may not be a good idea, but it wouldn't have addressed this problem.
But even if it would have in the abstract, FTX played fast and loose with so many other rules, I wouldn't expect them to abide by those either.
I know what the real answer is, but I am curious of the response.