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130 companies? What did they for a living? Collect companies each time a new month began?
by chinathrow 4y ago
130 companies? What did they for a living? Collect companies each time a new month began?
- rippercushions 4y agoGaze on the beauty of this chart and despair: https://i.redd.it/078p4g7m6cz91.jpg https://i.redd.it/078p4g7m6cz91.jpg
- LeifCarrotson 4y agoI'm impressed that there actually is a chart.
- kodah 4y agoMy god, it's like the blueprint to a Ponzi scheme
- madamelic 4y agoFrom the Sequoia article on SBF / FTX, it's very likely to be able to trade internationally because each country requires you to have a bank account in that country to be able to access their markets. In the Sequoia article, SBF gained his initial funding for FTX from executing trades from the US to Japan, where BTC was overpriced because no one bothered to arbitrage it because of the setup difficulty. The way he did this was by contacting a friend to open a bank account in Japan and manage the funding over there while he managed the account US side. I am sure some of it is normal corporate shell game but I'd imagine at least 50% of this setup was for regulatory purposes. Even small fintechs will have "shell game like" company structure to please regulatory forces that require having certain things be independent from the consumer platform even if the two companies are working towards the same goal.
- cma 4y agoNo one did it for Japan first probably because they have pretty strong criminal liability stuff for securities violations and other financial crimes and don't play the "no fault settlement" game.
- madamelic 4y agoIt's not illegal to arbitrage but yeah I think what you are pointing at is you have to be regulatory-ily buttoned up for Japan markets vs a more loose market where you don't have to be super careful & can learn as you go. So SBF having been in finance before (Jane Street), he knew where the footsteps were and how to do it vs a fly-by night crypto investor with no finance background.
- paganel 4y agoSupposedly the Japan “subsidiary” (if you can call it that) was set up by a Japanese person and a resident of Japan, who was a contact of SBF through the Effective Altruism thing. I think they knew something was shady, because the account they had opened in Japan was with a small rural Japanese bank. When that “arbitrage” turned out to be really lucrative one of the founders of Skype (Talinn something) gave SBF a $50 million loan. SBF and that Talinn guy knew each other also from that Effective Altruism sect-like thing. All this info was part of a Sequoia congratulatory piece on SBF, they of course had also given him money. The article has since been taken down, it’s still reachable through Web Archive.
- vkou 4y ago> The article has since been taken down, it’s still reachable through Web Archive. I've skimmed through it, and by god, I was surprised Sequoia wasn't crediting the sun rising each morning to SBF.
- cavisne 4y agoThis guy has major Epstein vibes (minus the girls). comes out of nowhere super politically connected, investing in research, with a pretty dubious origin story of how he got rich.
- whimsicalism 4y agoThat's a major reach.
- skeeter2020 4y agoThat sounds to me a lot like a cover story to try and convince people there was actually a value-add. I'm skeptical that the barriers were so high they discouraged anyone from seizing essentially free money, but he solved this with a Japanese friend's bank account.
- tptacek 4y agoWhat do you even need a blueprint for? The guy did an interview with Matt Levine and laid the Ponzi scheme straight out: scammers make boxes that pay fake coins when you store your money in them, they put so much money into the boxes that the fake coins seem valuable, then they rug pull everyone and move on to the next one. That's how he described his own business.
- perihelions 4y ago(Here's the link to that Matt Levine interview: https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm... )
- piva00 4y agoI remember listening to that interview and this part always got me: > Matt: (27:13) > I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good. I seriously cannot understand how after this interview Sam still had any kind of support from VCs and so on. I hope the late 2010s-early 2020s will be remembered as the dot-com era of extremely dumb money...
- lotsofpulp 4y ago> I seriously cannot understand how after this interview Sam still had any kind of support from VCs and so on. Because they thought they could make money by finding a bigger fool, or by finding someone who thought they could find an even bigger fool.
- eternalban 4y ago> Because they thought they could make money by finding a bigger fool $10B "somehow" "gone" is QED that someone did find their marks. More interesting is how none of these guys are seeing the inside of a jail and doing the jailhouse orgies. I wonder if 'defenestration' will become a meme in crypto world too.
- mensetmanusman 4y agoSomeone needs to replace calling cards with crypto-currency in this Office skit: https://youtu.be/lC5lsemxaJo https://youtu.be/lC5lsemxaJo It fits perfectly
- tonetheman 4y agoIt is not "like" a blueprint. It IS a blueprint.
- a-ve 4y agoFinally a worthy opponent to the IKEA corporate structure: https://en.wikipedia.org/wiki/IKEA#Corporate_structure https://en.wikipedia.org/wiki/IKEA#Corporate_structure
- WXLCKNO 4y agoTo be fair ikea corporate structure looks like the mini boss before the real boss compared to this lol.
- WXLCKNO 4y agoIs this just the natural outcome of running a multi billion dollar crypto business? Do you hire so many experts and lawyers that they set this up for you as an ideal structure? Seeing how stupid/greedy SBF was, it makes me wonder if people like him are smart enough to truly understand the need for such structure without having experts in place.
- chewz 4y agoYou need that many companies trading with each other to create value and muddle the waters... Intangible assests and future flows passed from one entity to the other and priced at some unrealistic assumptions create/raise paper value. This is how you blow the ballon...
- rchaud 4y agoSBF would be a nobody without Sequoia and others throwing money at him. I'm more concerned about the judgment of monied people who are so desperate to find their own Adam Neumann, that they forgo common sense and invest based on 'feel'.
- MichaelZuo 4y agoNo wonder their accounting is so messed up.
- dylan604 4y agoIt's almost like they asked GPT3 or Dall-e to create "a corporate structure that is so confusing it will be a liability shield to keep my ass out of jail", and then used whatever came out
- rrrrrrrrrrrryan 4y agoIt actually gives Enron a run for its money: https://www.researchgate.net/profile/Hamid-Ekbia-2/publication/28810197/figure/fig1/AS:276910446792712@1443032003996/Example-of-Enrons-complex-SPE-structures-Redrawn-from-Swartz-and-Watkins-2003.png https://www.researchgate.net/profile/Hamid-Ekbia-2/publicati...
- capableweb 4y agoYou should see the structure of companies like IKEA or others who really have a complicated corporate structure.
- wodenokoto 4y agoIKEA is notorious for having one of the most opaque company structures in the world. Word on the street is that ikea is technically a charity.
- baby-yoda 4y agoThis is a huge oversimplification but my recollection is, there is a design arm of the IKEA structure which is a non-profit. They create and own all of the designs and IP related to products, which a different IKEA subsidiary then licenses and pays royalties on, essentially negating much/all of the margin of the finished good.
- bananapub 4y agoit's not a charity, it's a ultimately held by a pair of Liechtenstein and Dutch foundations, with an elaborate sea of holding companies underneath: https://en.wikipedia.org/wiki/IKEA#Corporate_structure https://en.wikipedia.org/wiki/IKEA#Corporate_structure
- pjc50 4y agoDo you have a chart for our entertainment? (Does the IKEA org chart have the little figures from the assembly instructions, and an Allen key?)
- B4CKlash 4y agoTo be fair, any billion-dollar multinational will have an organizational chart that looks very similar to this. Companies like EY exist, almost purely, to create 'tax effective' structures with hybrid debt instruments and service agreements.
- browningstreet 4y agoTo balance this: I work for a US-based, US-only top N financial institution that's all of <10 corporate entities.
- three_seagrass 4y agoSame, but it's like 20+ entities. Anyone working in the CPG space would be 50+.
- anomaly_ 4y agoBeing US only limits your structure options. Start generating some international revenue and you’ll see how your entity/structure requirements increase.
- skeeter2020 4y agoif you're a creditor, good luck getting any part of what's left over after they pay the accounting firms to unwind this. On second thought, if you're an accounting firm, good luck getting paid if you do any work for them.
- bmitc 4y agoWho sets all this up? This just clarifies my perspective that lawyers live in their own little world, totally disconnected from reality.
- taliesinb 4y agoAmazing! Even includes anagrams: a person called Charis Law who owns a company called Whirl Casa.
- hestefisk 4y agoHeard of invoice carousels? It’s a thing :)
- quadcore 4y agoLaundering money takes some logistic.
- pavlov 4y agoThese days owning a crypto exchange is a shell game where you try to hide the funds and liabilities into a chain of companies located in offshore jurisdictions. Binance does the same but even more extreme — they don’t even tell where their HQ is actually located. Money launderers and tax evaders have long used these tricks. Those people don’t normally get VC capital at $34 billion valuations though. The crypto implosion ought to be a massive lesson to the industry.
- CraigRood 4y agoI'm really skeptical of Binance, whilst I would never accuse them of anything specific, I have no proof. Their structure, governance and business model combined with their refusal to meet basic regulatory requirements makes me feel uneasy.
- tppiotrowski 4y agoAll day I've been seeing reserve audit posts from all the crypto companies. To me this also screams "Please don't make a run on us or we're screwed"
- Scoundreller 4y agoProof of assets is only one half of the solvency equation though. What are the liabilities and who are they to?
- mikeyouse 4y agoEven the assets are questionable — as Tether’s attestation language change shows. They value their assets at what they’re worth “in normal market conditions” which is a flashing red light for bank run vulnerability.
- EVa5I7bHFq9mnYK 4y agoExchange is pretty simple business. Customers deposit coins and fiat, trade between them and pay you commissions. If you don't send any of those coins out, there is no risk, no liquidity crunches, no liabilities whatsoever. This guy took customer coins to gamble, and lost. Story as old as Romeo and Julia.
- dclusin 4y agoIf a hedge fund trades on an exchange in Singapore they will probably want a corporate structure there for trading and tax purposes. Larger trading operations aren’t just clicking sign up on random exchange websites and allowed to start trading billions of dollars. Legal agreements need to be inked, collateral deposited, etc.