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You're conflating FTX.us (which is regulated) and operates in the USA, and FTX global (where all this chicanery happened) and is located in the Bahamas. With t
by dvt 4y ago
You're conflating FTX.us (which is regulated) and operates in the USA, and FTX global (where all this chicanery happened) and is located in the Bahamas.
With that said, the SEC is already also investigating any potential links between the two entities. I don't think they'd be stupid enough to cross those wires, but you never know.
- TylerE 4y agoIf years of following crypto has taught me anything, it's the answer to "They couldn't possibly be that stupid, could they?" is always yes.
- Animats 4y agoNo, see Molly White's blog and the WSJ parent article. What seems to have happened is that 1) FTX.intl loaned money to Alameda Research in the US in exchange for some token, 2) Alameda Research, which is a crypto trading firm, speculated with that money and lost, 3) the collateral from Alameda to FTX turned out to have little value, and so 4) FTX.intl goes down. Bear in mind that Mr. Bankman-Fried heads all three organizations. Whether FTX.us is also involved is not yet clear. But it will be. The SEC and CFTC are descending, with hard questions. Molly White: "This suggests to me that a) they are in a really bad spot, and b) they want as few people sniffing around in their books as possible." Right. That was probably the real goal of a merger with Binance. In bankruptcy, all the dirty laundry comes out. Being acquired by Binance offered hope of keeping any criminal activity hidden. That hope is now gone.
- Emma_Goldman 4y agoThanks - this is the most succinct summary of the financial nexus leading to FTX's spiral into insolvency that I've seen, and squares with my own understanding. What we don't know is how the chain of cause and effect played out over a timeline. How did Alameda lose $10bn? How long has FTX been insolvent? Surely they have been staring down the end of a barrel for a good while?
- dvt 4y agoI fully understand the purported chain of events. But, again: the US does not have jurisdiction over FTX. So why would he "get arrested" in California for embezzlement? He didn't break any US laws. The FTX/Alameda deal was likely done via SAFT[1], which is both legal and popular. [1] https://www.investopedia.com/terms/s/simple-agreement-future-tokens-saft.asp https://www.investopedia.com/terms/s/simple-agreement-future...
- cmeacham98 4y agoDoes FTX international have any US investors? This would be a theft of their funds too, right?
- nemothekid 4y agoIt does, but those investors were breaking FTX ToS by using the site (you had to use a VPN to access it). I'm not sure if the SEC has standing for American investors that pretended to not be American.
- cmeacham98 4y agoSorry, I mean investors in the company itself, not crypto traders.
- dvt 4y agoSequoia marked their $150M investment into FTX down to $0 in a letter to LPs[1]. [1] https://twitter.com/sequoia/status/1590522718650499073/photo/1 https://twitter.com/sequoia/status/1590522718650499073/photo...
- Animats 4y agoThe US has jurisdiction over Mr. Bankman-Fried, who is an American citizen born in California. The US has jurisdiction over Alameda Research, which is a US company operating in California and appears to have been the beneficiary of the scam. That's plenty of jurisdiction.