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> 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.

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.”

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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.

> We sometimes find $50m of assets lying around that we lost track of; such is life.

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.

I've found a $100 bill I misplaced before, and to me that represents a higher percentage of my net wealth than $5M would to most billionaires

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

"such is life" = I refuse to take any action to improve this situation

While I agree with most of this, keeping a small number of things secure for yourself is far easier than doing it for thousands/millions of accounts in an automated way. That's true of almost everything in software. For instance, just because I know how to use a password manager doesn't mean it's easy to get my whole family using a password manager. They were clearly dysfunctional and there may be some of this at play but Occam's Razor says it was just easier to store less securely.

I think that is what is so hilarious about the situation. The US is forever creating situations where companies want to be first in and fastest scaling at any cost, offering free everything to begin.

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?

> While I agree with most of this, keeping a small number of things secure for yourself is far easier than doing it for thousands/millions of accounts in an automated way.

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.

It is not plausible that he didn't know better. No jury would believe that claim.