4 ms·

Not trying to defend SBF or FTX but honestly wasn't that impressed with this critic either. His criticism seems to break down to: 1) Look at him, he's ugly 2

by anm89 4y ago

Not trying to defend SBF or FTX but honestly wasn't that impressed with this critic either. His criticism seems to break down to: 1) Look at him, he's ugly 2) He doesn't have the proper lineage of insider mentors to be allowed to be a billionaire 3) We don't have the full story on the original arbitrage mixed in with some political pandering 4) The compliance officer was sketchy 4 seems to be the only valid point. 3 is worth further research but not really anything in itself. The other 2 reflect more poorly on this guy than SBF. Overall, I don't think this guy really had anything, I think he just didn't like the smell and ended up getting lucky on the timing. But he 100% did not call out any meaningful elements of what ended up happening in any detail.

propter_hoc 4y ago
As an entrepreneur in finance for 10 years, I think the guy's perspective is actually pretty understandable. When you've been in finance for a while and have learned how many footguns and ways to go to jail there are to get major regulatory projects licensed and functional, you start to think of projects like "launch a bond offering and get it rated" or "launch an exchange" as so incredibly complex as to be impossible. There's a certain cynicism that comes up in the industry where people think something just can't be done because they know it's so complex to do right. Now I actually think that although this take is realistic, it is actually overly cynical and actually underestimates the possibility of disruption in finance. In actuality, not knowing the complexity allows a young entrepreneur to develop a simplistic plan and pitch it with conviction to VCs who also don't know any better. The mistake experienced people are making is that their experience tells them it is only reasonable to do a thing "correctly" or "scalably" when in fact the incorrect, illegal, unscalable way wins you valuable proof points. And with enough proof points and follow-on VC rounds the simplistic plan can mature enough to actually become functional. In the specific case of SBF and FTX, I do think the critic's seemingly superficial cynicism was actually both well-founded and ultimately correct. Launching an exchange functionally, legally and scalably was in fact too much for the inexperienced leadership of the business. They tried really hard to make a business model that worked and scaled fast. But in doing so, they ended up with effectively designing a circular reference (trading their own token) which made a lot of money for a while, but ended up crashing their business. I think they were well-intentioned, but it is true that more experienced leadership would not have tried the self-referential growth strategies FTX/Alameda engaged in. And in retrospect the critic's spidey sense was right; the pace of growth of FTX was bizarrely unsustainable and likely pointed to an underlying system that didn't make sense.
bmitc 4y ago
Those were not his primary complaints. Yes, he took some shots at his appearance, but let’s be honest. The financial and VC world has a stick up it’s butt, but this nobody (Sam Bankman-Fried) shows up to interviews and meetings in a three day old t-shirt and shorts and can’t keep his leg still and talks like he’s been up for 24 hours straight on Red Bull. It’s strange. Why does that work for him, who has nothing to explain it away, and no one else? Where did he come from? Where did he get all his money? Why were major VC funds fawning over him? The short seller also mentions that this is only “3%” of what he has and is working with an investigative journalist to blow this up. And that was weeks ago, and they were probably working on it before that. It’s not about credentials. It’s that you have 20 year olds out of nowhere suddenly managing tens of billions of dollars. Like the guy says, it doesn’t make any sense. In interviews, FTX never gave reasons of why they moved to the Bahamas from Hong Kong. He really doesn’t ever explain anything.
- totalZero 4y ago
  > Why does that work for him It works for him the same way it works for Neil Gershenfeld. Be palatably erratic, assume the mad scientist role, make your credentials known, and people will eventually start to treat you as though you are brilliant. That schtick hits more than one of Cialdini's six principles of persuasion. (NB this is not a comparison of Gershenfeld and Bankman-Fried, just an observation of what seems like one shared attribute.)
- anm89 4y ago
  > only “3%” of what he has Ok, sure, when he's ready to present that let's discuss it. Until then it's nothing. But what's the point of doing an interview and saying "I've got good info but I'm not going to share it until later"
  - bmitc 4y ago
    I think most of his points stand. The questions should be answerable. However, you’re right that we’re taking it at face value that he has more that he supposedly wants to publish later. It isn’t clear he has more, but certainly there are huge amount of questions surrounding FTX and Alameda that are not answerable, even prior to this whole debacle. I think one searches for darker answers because the likely answer, that everyone was duped by these people in normal ways and there’s not some deeper connection, is a far more disturbing prospect.
dottrap 4y ago
I agree, this video is a nothing-burger. There are much better people who have been detailed in both their criticisms of SBF and the types of things he has been just exposed of doing for years. Crypto Critics' Corner and Molly White are the first two off the top of my head. Molly White's most recent article on the collapse was posted on HN just yesterday. https://news.ycombinator.com/item?id=33547102 https://news.ycombinator.com/item?id=33547102
- aaron695 4y ago
jmmoses 4y ago
Marc Identified several indicia of fraud: 1) He acknowledged SBF and the CTO, Gary Wang, are worth billions, however the money materialized out of nowhere. This is highly irregular and a potential indicator of a scam on the backs of retail investors. 2) He noted the chief regulatory officer of FTX, Dan Friedberg, was the general counsel for a poker site that defrauded its players. A big red flag for anyone thinking of interacting with FTX in any way. 3) SBF has a record of deploying capital poorly (making losing investments and falling for scams) and he provided no good rationale for making these bad bets A clear sign he isn't a good businessman and it creates even more skepticism that FTX could be viable. 4) He sees through their obvious attempts to paint a rosy picture of SBF and FTX with their very vague but positive marketing, but no ability to explain concretely what is positive about FTX, what their business model is (why the founders are getting so rich!) These things are "smelly". They are like "code smells". On their own, they don't necessarily indicate anything, but taken together they could be an indication of much deeper problems with the codebase. Marc was saying that the microscope needed to be put on FTX, SBF, and Gary Wang ASAP, because things stunk to high heaven. He was saying questions needed to be answered and the fact they were seemingly purposely being evaded was a big red flag to him.
- anm89 4y ago
  >1 He simply said he doesn't know where it came from. That doesn't mean it didn't come from anywhere. If he'd actually taken the time to flesh any of this out then it could have been useful but as it stands, it wasn't
ralph84 4y ago
3 is SBF's equivalent of Madoff's split-strike conversion. A strategy that can make a little bit of money that a fraudster uses to claim to be making a lot of money. And just like Madoff nobody questioned it until it all came crashing down.
eigenvalue 4y ago
Ok, what about the observation that FTX’s regulatory relations person was guilty of orchestrating and covering up a notorious online poker cheating scandal? There are recordings of him doing this btw. And that he further lied about this history and left it out of his LinkedIn. That alone is enough of a red flag to make you run in the other direction.
- anm89 4y ago
  That's point 4 which I admit is the one valid point.

by anm89 4y ago

propter_hoc 4y ago

As an entrepreneur in finance for 10 years, I think the guy's perspective is actually pretty understandable. When you've been in finance for a while and have learned how many footguns and ways to go to jail there are to get major regulatory projects licensed and functional, you start to think of projects like "launch a bond offering and get it rated" or "launch an exchange" as so incredibly complex as to be impossible. There's a certain cynicism that comes up in the industry where people think something just can't be done because they know it's so complex to do right. Now I actually think that although this take is realistic, it is actually overly cynical and actually underestimates the possibility of disruption in finance. In actuality, not knowing the complexity allows a young entrepreneur to develop a simplistic plan and pitch it with conviction to VCs who also don't know any better. The mistake experienced people are making is that their experience tells them it is only reasonable to do a thing "correctly" or "scalably" when in fact the incorrect, illegal, unscalable way wins you valuable proof points. And with enough proof points and follow-on VC rounds the simplistic plan can mature enough to actually become functional. In the specific case of SBF and FTX, I do think the critic's seemingly superficial cynicism was actually both well-founded and ultimately correct. Launching an exchange functionally, legally and scalably was in fact too much for the inexperienced leadership of the business. They tried really hard to make a business model that worked and scaled fast. But in doing so, they ended up with effectively designing a circular reference (trading their own token) which made a lot of money for a while, but ended up crashing their business. I think they were well-intentioned, but it is true that more experienced leadership would not have tried the self-referential growth strategies FTX/Alameda engaged in. And in retrospect the critic's spidey sense was right; the pace of growth of FTX was bizarrely unsustainable and likely pointed to an underlying system that didn't make sense.

bmitc 4y ago

Those were not his primary complaints. Yes, he took some shots at his appearance, but let’s be honest. The financial and VC world has a stick up it’s butt, but this nobody (Sam Bankman-Fried) shows up to interviews and meetings in a three day old t-shirt and shorts and can’t keep his leg still and talks like he’s been up for 24 hours straight on Red Bull. It’s strange. Why does that work for him, who has nothing to explain it away, and no one else? Where did he come from? Where did he get all his money? Why were major VC funds fawning over him? The short seller also mentions that this is only “3%” of what he has and is working with an investigative journalist to blow this up. And that was weeks ago, and they were probably working on it before that. It’s not about credentials. It’s that you have 20 year olds out of nowhere suddenly managing tens of billions of dollars. Like the guy says, it doesn’t make any sense. In interviews, FTX never gave reasons of why they moved to the Bahamas from Hong Kong. He really doesn’t ever explain anything.

totalZero 4y ago
> Why does that work for him It works for him the same way it works for Neil Gershenfeld. Be palatably erratic, assume the mad scientist role, make your credentials known, and people will eventually start to treat you as though you are brilliant. That schtick hits more than one of Cialdini's six principles of persuasion. (NB this is not a comparison of Gershenfeld and Bankman-Fried, just an observation of what seems like one shared attribute.)
anm89 4y ago
> only “3%” of what he has Ok, sure, when he's ready to present that let's discuss it. Until then it's nothing. But what's the point of doing an interview and saying "I've got good info but I'm not going to share it until later"
- bmitc 4y ago
  I think most of his points stand. The questions should be answerable. However, you’re right that we’re taking it at face value that he has more that he supposedly wants to publish later. It isn’t clear he has more, but certainly there are huge amount of questions surrounding FTX and Alameda that are not answerable, even prior to this whole debacle. I think one searches for darker answers because the likely answer, that everyone was duped by these people in normal ways and there’s not some deeper connection, is a far more disturbing prospect.

dottrap 4y ago

I agree, this video is a nothing-burger. There are much better people who have been detailed in both their criticisms of SBF and the types of things he has been just exposed of doing for years. Crypto Critics' Corner and Molly White are the first two off the top of my head. Molly White's most recent article on the collapse was posted on HN just yesterday. https://news.ycombinator.com/item?id=33547102 https://news.ycombinator.com/item?id=33547102

aaron695 4y ago

jmmoses 4y ago

Marc Identified several indicia of fraud: 1) He acknowledged SBF and the CTO, Gary Wang, are worth billions, however the money materialized out of nowhere. This is highly irregular and a potential indicator of a scam on the backs of retail investors. 2) He noted the chief regulatory officer of FTX, Dan Friedberg, was the general counsel for a poker site that defrauded its players. A big red flag for anyone thinking of interacting with FTX in any way. 3) SBF has a record of deploying capital poorly (making losing investments and falling for scams) and he provided no good rationale for making these bad bets A clear sign he isn't a good businessman and it creates even more skepticism that FTX could be viable. 4) He sees through their obvious attempts to paint a rosy picture of SBF and FTX with their very vague but positive marketing, but no ability to explain concretely what is positive about FTX, what their business model is (why the founders are getting so rich!) These things are "smelly". They are like "code smells". On their own, they don't necessarily indicate anything, but taken together they could be an indication of much deeper problems with the codebase. Marc was saying that the microscope needed to be put on FTX, SBF, and Gary Wang ASAP, because things stunk to high heaven. He was saying questions needed to be answered and the fact they were seemingly purposely being evaded was a big red flag to him.

anm89 4y ago
>1 He simply said he doesn't know where it came from. That doesn't mean it didn't come from anywhere. If he'd actually taken the time to flesh any of this out then it could have been useful but as it stands, it wasn't

ralph84 4y ago

3 is SBF's equivalent of Madoff's split-strike conversion. A strategy that can make a little bit of money that a fraudster uses to claim to be making a lot of money. And just like Madoff nobody questioned it until it all came crashing down.

eigenvalue 4y ago

Ok, what about the observation that FTX’s regulatory relations person was guilty of orchestrating and covering up a notorious online poker cheating scandal? There are recordings of him doing this btw. And that he further lied about this history and left it out of his LinkedIn. That alone is enough of a red flag to make you run in the other direction.

anm89 4y ago
That's point 4 which I admit is the one valid point.