Hacker News Reader

Comment by Dalewyn | Hacker News Reader

Yes, it was fraud. That is besides the point.

See from your citation, emphasis mine: "AUSA Roos: He is the eldest son. He kept money on FTX not to loan it out to the defendant but for family's security. One more - a couple in the later stages of their life, late 60s, they invested with life savings. They were depressed, they had to go back to work"

Savings should be handled appropriately as savings, not investments or "savings". SBF stole money, but there is a point to be made that people might also need better education on handling their own money.

View on HN

What? It's completely not beside the point. This was fraud - he stole peoples' money. That 60s couple could have played it "safe" and kept their life savings in a regular bank account, and the owner of their bank could still have attempted to steal their money. That would also be fraud, and they would have gone to jail. This crime is nothing to do with whether bitcoin is a risky investment.

What do you mean by "handled appropriately as savings"? Cash is riskier than stocks over the long term. Investing is the safe way to handle your life savings.

Yes it is fraud, and yes it is besides the point. If people are investing their life savings they would have lost that money one way or another eventually. It's unfortunate the loss was caused by a fraudster, but if it wasn't SBF it would have been someone else.

I am not saying this is an either-or, I am saying that fraudsters like SBF should be thrown in jail and left to rot and people should be taught better how to handle their money.

Yes deposits made with banks still carry risks, but you know what? Most banks are backed by the government (or at least they are in the US, I assume similar setups exist in other countries), meaning depositors generally will not lose their deposits even if the bank loses money. The failure of Silicon Valley Bank is a recent demonstration of those safeguards for peoples' savings at work.

Savings are, literally, savings. You should not be spending your savings, much less your life savings, on something as frivolous as investments which are all fundamentally gambling. Investment monies should come from your spending money, money you don't mind losing. If you are investing your savings, you are investing wrong and you need help from a proper, good accountant.

You know you can hold USDC on crypto networks? The value is stable at $1, so its not an investment, just a way to park your funds. I'm certain FTX had lots of users holding UDSC. Someone could have had their savings in USDC on FTX.

Please never give financial advice to anyone. I thought Dave Ramsey was bad!

You could at least explain why it's a good idea to throw away your savings in investments, rather than a snarky remark.

Generally, most people do not want to lose their savings. For the poorer people, losing their savings might be straight up unaffordable and something to be avoided at all costs.

Deposits made with banks are understood to be very low risk, that is you can always withdraw what you deposited (eg: your savings) short of the entire sky falling. The trade off of course being that your deposits won't spontaneously grow beyond a small interest dividend.

Investments, meanwhile, can just as likely lose you money as well as gain; high-risk high-reward. Whether it's stocks, business ventures, cars, real estate, precious metals, barrels of oil, collectors' items, or whatever, investing is at its core just gambling on future prospects with no guaranteed returns.

If you invest, you should do so only spending money which you are okay losing. Most people are not okay with losing their savings, hence why I'm saying people who invest by spending their savings are hoisting their own petards and ruining their lives sooner or later regardless if a fraudster is involved or not.

This video is good, it shows how you are more likely to lose more money with cash than stocks over longer periods.

https://www.youtube.com/watch?v=oeob9z27-gA

That's fine, investing will on average yield bigger returns (higher rewards) compared to saving. Nobody would invest if this wasn't the case. Investing in and of itself is a good thing.

What you are all seemingly misunderstanding is that I am saying you should not invest money that you don't want or can't afford to lose.

Yes, money deposited in savings might not (and probably will not) keep pace with inflation, but you are guaranteed that you will be able to always take out as much as you deposited. If you deposit $50,000.00 you will always be able to withdraw $50,000.00. Yes, inflation might have reduced the purchasing power of that money to $30,000.00 or whatever when it's withdrawn, but that is not the point: You can always withdraw the $50,000.00 that you deposited.

Meanwhile, if your investments go south you lose money. If you invest $50,000.00 into stocks or crypto or whatever, you aren't guaranteed you can get back at least $50,000.00. It could be $100,000.00, it could be $10,000.00, or it could even be $0.00, but in any case you aren't guaranteed a floor of $50,000.00 in returns. You can (and will) both gain and lose money in investments.

This is why I am saying people should not be using their savings (or even life savings?!) for investing. This is ostensibly money you do not want or cannot afford to lose, this is not money you should be spending on investments.

Invest with money you are okay losing, otherwise you will regret it.

In the UK normal employees are automatically enrolled to invest in their pension (life savings for retirement) and this will be at least partly in the stock market. It is normal and sensible.

In fact I wouldn't be surprised if you could lose your financial advisor's license for suggesting everyone keep their life savings as cash - it's such bad financial advice.

If you keep your life savings as cash you are optimising for the 99th percentile of bad outcomes for the global economy, and losing out massively in every other likelihood.

>it could even be $0.00

It is unlikely that the value of the S&P500 will be zero in our lifetimes. If it is, your 50,000 US dollars won't be worth much.

It's normal and sensible to invest money you are okay with potentially never seeing again, yes. I don't think we are even disagreeing, just probably not on the same page what "savings" exactly is.

I consider savings as monies that shouldn't "just" go away (like investments failing), monies that are expected to always be there for when their time comes. That sort of money should be handled with the worst case scenarios accounted for, you presumably depend on that money (either now or in the future) for your life.

>It is unlikely that the value of the S&P500 will be zero in our lifetimes. If it is, your 50,000 US dollars won't be worth much.

Never say never, the Great Depression was bad enough it took a second world war for everyone to get out of the funk.

You are victim-blaming. Many customers thought they were "savings accounts" that were completely distinct from the investment arm; they were deceived. SBF stole money from his "savings accounts" arm to fund his investment arm.

It wasn't FDIC insured, was it? For example, you can buy crypto with Robinhood, but any uninvested cash is stored in partner banks which are FDIC insured. Even if the CEO of Robinhood wanted to commit fraud, would they be able to? How do FDIC protections work exactly? (genuine question here!)

So was part of it a process failure? Like even when SBF wants to commit fraud in his situation, where should regulations have stopped him?

Pretty sure if the money is withdrawn from the account and sent to say Almeada Research it's not longer FDIC insured because it's not money in an FDIC account.

Not that I'm saying the money was every within an FDIC [1] insured account.

Depends on the kind of fraud that Robinhood wanted to do. CEO/CFO definitely have the ability to arbitrarily transfer money amount to accounts they personally control.

FDIC only protects against bank failure, it doesn't save you from somebody credential stuffing your bank to authorize a wire transfer.

[1]: https://www.fdic.gov/resources/deposit-insurance/brochures/d...

>You are victim-blaming.

Yup, I absolutely am. People who spend their savings (let alone life savings) on investments will end up ruining their lives sooner or later because they are ignorantly misunderstanding what "saving" and "investing" are and what government bank notes and cryptocurrency are.

If you invest money that you do not want or cannot afford to lose, you need help from a proper, good accountant to set you straight.

Here's a free life lesson: sometimes there are things that victims could have done, or could do in the future, to avoid harm.

Talking about those things is not bad.

Would you complain about victim blaming when a kid burns themselves on a hot pan and their parents tell them "well then don't do it again"?

Reply on news.ycombinator.com