- cross-posted to:
- technology@lemmit.online
- cross-posted to:
- technology@lemmit.online
FTX execs blew through $8B — testimony reveals how::Sam Bankman-Fried and other FTX executives spent $8 billion worth of customer funds on real estate, venture capital investments, campaign donations,
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They could’ve been massively rich running the exchange the legit way, but no… it’s always more, more, more… now, now, now.
It was a crypto exchange, I don’t think there is a “legit way” to run one of those.
there absolutely is. just do your job facilitating trades between consenting parties, thats it.
My understanding is the exchange itself wasn’t really their downfall. Their downfall was was using the money deposited with them or invested into their company to gamble on risky trading with an affiliated investment firm. They kind of ran this firm, it was supposed to be separate but really wasn’t. It sounds like at least $10 billion was moved from the exchange to this investment firm, who lost most of it. Didn’t help that the main thing that firm was involved in was… buying crypto of course. In an incestuous ouroboros of fraud.
But yeah I think you’re right, even if they hadn’t engaged in all that fraud, how does an exchange determine how much money in usd and different cryptocurrencies to keep on hand to safely cover all depositors with them when there is such dramatic volatility in all the different cryptocurrency values? Every crypto exchange is probably doomed to a massive dramatic collapse at some point or another just from a volatility standpoint alone. Not to mention the massive underlying issues with many cryptocurrencies like wasting energy, wasting resources, co2 generation. Hard to argue there’s such a thing as a “legit” exchange.
how does an exchange determine how much money in usd and different cryptocurrencies to keep on hand to safely cover all depositors with them when there is such dramatic volatility in all the different cryptocurrency values?
If you move 1 BTC to an exchange, and you keep it in your account on the exchange, the exchange is meant to keep the 1 BTC on behalf of you.
They are not meant to do anything other than keep it.
An exchange is not a bank.
If the exchange takes your tokens (or fiat) and does anything other than what you ask them to do, they’re not legit.
They also had practically no accounting of money going in or out, other than Quickbooks. Their entire platform was coded as a ponzi scheme with explicit cases to skip checking if balances would go negative when withdrawing money for Alameda Research.
Every crypto exchange is probably doomed to a massive dramatic collapse at some point or another just from a volatility standpoint alone.
Properly run, an exchange does not speculate on the underlying asset, it only facilitates trades, and there is zero volatility.
Yeah we’re not talking about fractional reserve banking here
It’s still a bit hazy how Alameda lost so much money. Normally when hedge funds blow up, there are some identifiable bad trades that take down the rest of the fund. We still haven’t been told that story in the Alameda/FTX case.
They offered financial products like perps that can get particularly rekt as a facilitator. pretty sure they lost billions on bad risk parameters. it was well known that you could make money on ftx unlike any other exchange. some people thought it was because thats where the activity was but it’s come to light that its much ddeper than that.
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I always hoped Wolf of Wall Street would have a sequel
Weasel of Cellblock 6
In theaters near you this Thanksgiving day weekend!
Oh that’s one movie I would love to watch.
Michael Lewis: “This is bullshit, Sam was gonna pay it all back. All he did was move money from one account into another, that’s not a crime!”
This is the best summary I could come up with:
Singh, who has already pled guilty to fraud, money laundering and violation of campaign finance laws, said Monday that he learned of the massive hole in Alameda’s books as a result of a coding error that “prevented the correct accounting” of user deposits by around $8 billion.
Bankman-Fried had proposed a term sheet to Singh and Wang one night that laid out hundreds of millions of dollars of onuses to Kives and Bryan Baum, co-founder and managing partner of K5.
Bankman-Fried also believed that endorsement deals and even “unpaid partnerships with celebrities” would help increase FTX’s influence to propel its success, said Singh.
Singh recalled one instance where Bankman-Fried got visibly angry with him and said that people like him were “sowing seeds of doubt in the company decisions” and were “the real insidious problem here.”
Singh’s testimony aligned with Yedidia’s that states in June 2022, the executives learned that Alameda owed $8 billion worth of FTX customer money after Ellison shared a Google Doc displaying the “extremely negative” balance.
A feature called “allow negative” let Alameda trade, borrow and withdraw FTX funds in excess of its balance and collateral amounts, according to Singh.
The original article contains 1,087 words, the summary contains 194 words. Saved 82%. I’m a bot and I’m open source!
fun fact: SBF was one of the largest donators to the democrats during his prime. he bragged about how easy it was to get in the “in crowd” through said donations.
Republicans too. He was an old-school bribe-everybody kind of businessman.
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He was the second largest donator to the democrats behind George Soros
