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This is the correct answer. When you move your tokens into a centralised exchange like FTX, your funds are pooled with everyones deposit. There are always depo

This is the correct answer. When you move your tokens into a centralised exchange like FTX, your funds are pooled with everyones deposit. There are always deposits and wihdrawals, and of course maybe you traded your tokens for another before withdrawing. So its hard to parse how much customers deposited vs genuinely withdrew, and so you cant really tell if the exchange is short unless they declare their actual assets and liabilities.

cma 4y ago
From the Sequoia puff-piece: > Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.
- joshxyz 4y ago
  aged like my baby momma's milk good lord
- muxator 4y ago
  I'd like to read this in context; do you know where this declararion could be found? Who is speaking? Thanks!
  - deleted 4y ago
    [deleted]
  - datalopers 4y ago
    Sequoia deleted it. You can find a cached version though at https://webcache.googleusercontent.com/search?q=cache:pizI33lYOGAJ:https://www.sequoiacap.com/article/sam-bankman-fried-spotlight/ https://webcache.googleusercontent.com/search?q=cache:pizI33...
    - dylan604 4y ago
      Another case of someone forgetting that the internet is written not just ink but permanent marker.
      - Taikonerd 4y ago
        I still get sketched out that companies feel so free to "unpublish" content that they later decided was embarrassing. Traces of "Nineteen Eighty-Four"...
        dylan604 4y ago
        To be fair, if something has been deemed offensive by the everyone on the interwebs, do you leave the offensive thing there to thumb your nose at them or just remove it to at least stop the bleeding?
        Taikonerd 4y ago
        Fair question, but in this case it wasn't so much "offensive" as "embarrassing to the author." i.e. they're hyping up this guy who later turned out to be not as smart as he thought.
    - sam345 4y ago
      Thanks. great article. also never want to get a letter like that "your investment is marked to zero". got to love this quote from article "“Everything was rickety—there was no avoiding the ricketiness. Obviously, the line between rickety and shady is a little unclear at times, but the places that seemed like they were going to steal customer funds outright, we didn’t touch,” Singh says. “Even the best players in the space were having big problems.”
- jjulius 4y ago
  Hahahahahahahaha holy fuck. Disclaimer: I don't usually drop comments like this that don't contribute to anything, but... lmao wow.
  - chironjit 4y ago
    Its really worse than this.. This guy really LARPed the white-knight / sheriff-of-the-crypto-wild-west for years. He's the last guy anyone would have thought would pull such blatantly shady stuff like this. Before this all came out, more people in the space would have seen him in positive light than they would have seen CZ (the CEO of Binance).
- easytiger 4y ago
  Everyone should read that article. The delusion is insane
  - tartoran 4y ago
    I listened on it and was definitely good and very eye opening. The delusion does seem surreal
    - dougSF70 4y ago
      Somewhat related, the bull run of the last decade has made it possible to run a fund and only have a 10% hit rate (absolute winners), compared to a 52% hit rate for hedge funds in the public markets. The net effect in VC must have been a sense of a "can't lose" attitude. Added to the fact that there is a herd mentality when a firm that is hot is raising money, the due diligence boils down to "other big VCs are investing and we don't want to miss out". In other words Group Think, but it doesn't matter provided the public markets are sending newly minted IPO stocks to the moon. Perhaps more turbulent public markets will enforce more stringent due diligence...
  - foobiekr 4y ago
    agreed. sequoia used to be the single most famous tier-1 vc and they're actually worse than the broken a16z at this point.
- deevolution 4y ago
  > "I know who I'd rather trust my money with: SBF, hands down." This quote is complety antithetical to everything crypto is actually trying to achieve; which is a trustless financial system, a system that would be void of these sorts of melt downs. Don't trust; verify.
  - imtringued 4y ago
    That works just fine but the vast majority of cryptocurrencies just copied the flawed design of conventional fiat currencies and they fail in exactly the same ways. While everything is dumping, RAI goes up.
- user_named 4y ago
  If a single individual controlled all customer assets then that is the issue. No institutional checks and balances.
throwaway5959 4y ago
That’s insane.
- cmckn 4y ago
  It’s the only way any popular token has met trading demand; the vast majority of transactions have to happen off-chain, or the thing would fall over. (but yeah it’s wild)
  - TedDoesntTalk 4y ago
    Brokerage houses and market makers do the same.
    - ralph84 4y ago
      Ownership of publicly-traded stocks basically never changes. Cede and Company owns all of the stock.
    - throwaway5959 4y ago
      With a lot more regulation, right?
JeremyNT 4y ago
And of course, the only reason "normal people" have "invested" in cryptocurrency is the presence of centralized exchanges like this. These centralized exchanges are an inevitability and a requirement for crypto to function in the real world. You can't run a ponzi scheme without fresh blood, nor can you pump and dump shitcoins unless normal people can easily and quickly trade them.

cma 4y ago

From the Sequoia puff-piece: > Something of the sort must happen eventually, as the current system, with its layers upon layers of intermediaries, is antiquated and prone to crashing—the global financial crisis of 2008 was just the latest in a long line of failures that occurred because banks didn’t actually know what was on their balance sheets. Crypto is money that can audit itself, no accountant or bookkeeper needed, and thus a financial system with the blockchain built in can, in theory, cut out most of the financial middlemen, to the advantage of all. Of course, that’s the pitch of every crypto company out there. The FTX competitive advantage? Ethical behavior. SBF is a Peter Singer–inspired utilitarian in a sea of Robert Nozick–inspired libertarians. He’s an ethical maximalist in an industry that’s overwhelmingly populated with ethical minimalists. I’m a Nozick man myself, but I know who I’d rather trust my money with: SBF, hands-down. And if he does end up saving the world as a side effect of being my banker, all the better.

joshxyz 4y ago
aged like my baby momma's milk good lord
muxator 4y ago
I'd like to read this in context; do you know where this declararion could be found? Who is speaking? Thanks!
- deleted 4y ago
  [deleted]
- datalopers 4y ago
  Sequoia deleted it. You can find a cached version though at https://webcache.googleusercontent.com/search?q=cache:pizI33lYOGAJ:https://www.sequoiacap.com/article/sam-bankman-fried-spotlight/ https://webcache.googleusercontent.com/search?q=cache:pizI33...
  - dylan604 4y ago
    Another case of someone forgetting that the internet is written not just ink but permanent marker.
    - Taikonerd 4y ago
      I still get sketched out that companies feel so free to "unpublish" content that they later decided was embarrassing. Traces of "Nineteen Eighty-Four"...
      - dylan604 4y ago
        To be fair, if something has been deemed offensive by the everyone on the interwebs, do you leave the offensive thing there to thumb your nose at them or just remove it to at least stop the bleeding?
        Taikonerd 4y ago
        Fair question, but in this case it wasn't so much "offensive" as "embarrassing to the author." i.e. they're hyping up this guy who later turned out to be not as smart as he thought.
  - sam345 4y ago
    Thanks. great article. also never want to get a letter like that "your investment is marked to zero". got to love this quote from article "“Everything was rickety—there was no avoiding the ricketiness. Obviously, the line between rickety and shady is a little unclear at times, but the places that seemed like they were going to steal customer funds outright, we didn’t touch,” Singh says. “Even the best players in the space were having big problems.”
jjulius 4y ago
Hahahahahahahaha holy fuck. Disclaimer: I don't usually drop comments like this that don't contribute to anything, but... lmao wow.
- chironjit 4y ago
  Its really worse than this.. This guy really LARPed the white-knight / sheriff-of-the-crypto-wild-west for years. He's the last guy anyone would have thought would pull such blatantly shady stuff like this. Before this all came out, more people in the space would have seen him in positive light than they would have seen CZ (the CEO of Binance).
easytiger 4y ago
Everyone should read that article. The delusion is insane
- tartoran 4y ago
  I listened on it and was definitely good and very eye opening. The delusion does seem surreal
  - dougSF70 4y ago
    Somewhat related, the bull run of the last decade has made it possible to run a fund and only have a 10% hit rate (absolute winners), compared to a 52% hit rate for hedge funds in the public markets. The net effect in VC must have been a sense of a "can't lose" attitude. Added to the fact that there is a herd mentality when a firm that is hot is raising money, the due diligence boils down to "other big VCs are investing and we don't want to miss out". In other words Group Think, but it doesn't matter provided the public markets are sending newly minted IPO stocks to the moon. Perhaps more turbulent public markets will enforce more stringent due diligence...
- foobiekr 4y ago
  agreed. sequoia used to be the single most famous tier-1 vc and they're actually worse than the broken a16z at this point.
deevolution 4y ago
> "I know who I'd rather trust my money with: SBF, hands down." This quote is complety antithetical to everything crypto is actually trying to achieve; which is a trustless financial system, a system that would be void of these sorts of melt downs. Don't trust; verify.
- imtringued 4y ago
  That works just fine but the vast majority of cryptocurrencies just copied the flawed design of conventional fiat currencies and they fail in exactly the same ways. While everything is dumping, RAI goes up.
user_named 4y ago
If a single individual controlled all customer assets then that is the issue. No institutional checks and balances.

throwaway5959 4y ago

That’s insane.

cmckn 4y ago
It’s the only way any popular token has met trading demand; the vast majority of transactions have to happen off-chain, or the thing would fall over. (but yeah it’s wild)
- TedDoesntTalk 4y ago
  Brokerage houses and market makers do the same.
  - ralph84 4y ago
    Ownership of publicly-traded stocks basically never changes. Cede and Company owns all of the stock.
  - throwaway5959 4y ago
    With a lot more regulation, right?

JeremyNT 4y ago

And of course, the only reason "normal people" have "invested" in cryptocurrency is the presence of centralized exchanges like this. These centralized exchanges are an inevitability and a requirement for crypto to function in the real world. You can't run a ponzi scheme without fresh blood, nor can you pump and dump shitcoins unless normal people can easily and quickly trade them.