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Comment by the_snooze | Hacker News Reader

I think the practical business/technical goals are almost irrelevant. It's not that SBF had a brilliant business model in mind. It's that he fit the "look" of a founder that those VCs expected. He was one of them, with the right pedigree and right connections. It's affinity fraud [1].

[1] https://en.wikipedia.org/wiki/Affinity_fraud

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I agree

-Dresses like a slob

-Went to MIT

-Is from the Valley

-Has ties to Stanford

-Upper class background

Their VC brains didn’t stand a chance of sniffing this out.

The real victims here are all the heroic MIT geniuses with unkempt hair who won't get their shot now.

Why won't they get their shot now? I doubt VCs will change their MO over this.

If Adam Neumann can get another shot, the unkempt MIT geniuses will be fine.

Truly devastating. Those poor geniuses will need to buy a comb xD

So long as they have rich parents, a dick, and white skin they'll have plenty of opportunities

And probably an insane network from the parents' side.

> Dresses like a slob

The anti-Adam Neumann. Brilliant strategy.

> -Dresses like a slob

https://www.instagram.com/p/CzCos0dxuJG/?img_index=2

Sketch Artist turned him into Tyler Durden....

Very much fake. https://www.theguardian.com/business/2023/oct/31/sam-bankman...

To be fair, FTX had decent traction and Alameda had been successful in the past. I think it's easy to say "pass" on SBF now that we know he's a crook, but there are genuine legitimate exchanges out there that are worth plenty. Coinbase, in the middle of a bear, has a market cap of $20B (it was valued at more than $80B in early 2021).

SBF was just a thief and a gambler, and an incompetent one, at that. I still think Sequoia does have some responsibility here, but I suppose my point is only that hindsight is always 20/20.

>To be fair, FTX had decent traction and Alameda had been successful in the past.

No, they weren't successful. When you leverage up and make (paper) money and later those same investments are wiped out and destroy the comany, you don't get to say you were "successful".

Early Alameda strategy was BTC arbitrage in Asian markets (which is very above-board). They were definitely successful. Once that well dried up (arbitrage is usually an "early bird gets the worm" game), they started gambling on shitcoins, which is where the troubles began.

I've heard their success was a lie and they couldn't have possibly made the money they claimed to have made.

They were definitely not successful. Anyone looking at BTC prices between NA and Korea saw the arbitrage opportunity. The fact that it sat there so obviously for so long was a testament to how impossible it was to profit from it. In fact, the whole reason for the pivot to an exchange from a pure arbitrage play was due to their lack of success.

The BTC arbitrage in Asian markets was absolutely NOT very above board. He lied to get Japanese bank accounts opened and to keep them open. Transferring the BTC into Korea was against the law there. He just figured out how to do it for quite a while without getting caught.

Yes, it made money. Yes, he claimed it was legit, but it wasn't--it was money laundering illegal gains. It just sounds so much better when you call it "arbitrage".

This was all covered in the case.

Do you have a link handy for where I can read that part?

This is such a wrong take.

In 2020, FTX was known to offer collateral on huge loans vis FTT, their stabelcoin. Parties backed off bc of this.

The interplay b/t Alameda and FTX was known and parties wouldn’t trade or do broker agreements bc of it.

within crypto, the growth of FTX, although concerning, was frequently discussed as likely inorganic.

The VC and SEC buy-in to FTX was uniquely inept.

> It's not that SBF had a brilliant business model in mind

They had the largest crypto exchange right? That's a competitive market. Seems like something was going right.

I expect growth of a crypto exchange is a lot easier when you can steal client deposits to fuel additional growth.

You have it backwards. The deposits were used to fuel a separate trading business. All exchanges use customer deposits to grow their business.

No. That is incorrect. A brokerage / exchange may not use customer assets for their own benefit. They are not a bank -- they are custodians. If they are doing that, they are committing a crime.

https://www.law.cornell.edu/cfr/text/17/240.15c3-3

I believe Binance was bigger than FTX. That being said, it’s hard to tell how big any of these organizations really are because they do not release audited financial statements.

Crazy thing is that the people who bring about massive change or revolutionary new ideas don't often fit the mould.

At this point, your 'quirky technologist' definitely IS the mold.

He was a quirky cryptobro league player. There are millions of them.

If you look at recent Nobel Prize winners in sciences, many are not weirdos, just smart and without relying on nonsensical gimmicks. Jennifer Doudna, Emmanuelle Charpentier, others, all examples of just smart and persistent and focused.

Feels very cargo culty. SBF superficially matched peoples idea of a revolutionary genius without any of the actual substance.

Unfortunately the people in power do not care for revolutionary change. They want change that makes them money, not change that fundamentally restructures society. Change that fundamentally restructures society does not need permission from anyone. When the tech is here it will speak for itself, in spite of any of the major resource allocators being blind to those who bring it -- because a part of that change is those resource allocators being made irrelevant. They have held back the human race with their ego, blindness, and total lack of vision.

They will spend $200m+ on a clown like this but ignore countless people with real innovations.

Fraud scales better it seems.

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