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Comment by dvt | Hacker News Reader

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.

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>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.

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