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The collapse of FTX and Sam Bankman-Fraud is looking quite spicy for journalism
- LatteLazy 4y agoIf you want good financial journalism, you need to look at what short sellers are saying. That was how WireCard came to light. That is what did for FTX: Binance found the truth, not the NYT or Twitter.
- kasey_junk 4y agoThe problem with that approach is that short sellers are explicitly trying to manipulate the market because they have a vested interest. It is not uncommon for short sellers to oversell a weakness due to this. Sorting out the “good” short sellers from the “bad” is a tough job. One that good financial journalists do as a matter of course.
- LatteLazy 4y agoA short seller who does that faces jail however. Compare that to journalists who have no such downside to sensationalism or "errors" in their facts.
- JumpCrisscross 4y ago> journalists who have no such downside to sensationalism or "errors" in their facts There are multiple libel and defamation cases in play in almost every competent jurisdiction at any given time.
- LatteLazy 4y agoWhich, at worst, is dismissed in bankruptcy court. No amount of liable or defamation can land you in jail. At least not in the US...
- JumpCrisscross 4y ago> is dismissed in bankruptcy court Defamation and libel cases against journalists regularly pay out. (They pay out infrequently against public figures, in part because the threshold is higher and in part because journalists are more careful with them.)
- MichaelCollins 4y agoBankman-Fried was paying journalists to write nice things about him, so surely he was a public figure.
- deleted 4y ago[deleted]
- hef19898 4y agoCoursr manipulation can, and does, so.
- LatteLazy 4y agoWhat is Coursr?
- hef19898 4y agoCourse, typing regularly in three languages had me turn of auto-correct. Sometimes, it backfires...
- LatteLazy 4y agoCourse as in share price etc? I believe... Unless you profit by it, you can say what you want to cause share prices to go up or down and it is not a crime. Is that incorrect?
- kasey_junk 4y agoNotice I specifically said “oversell a weakness”. If what a short seller says is true and then they add their analysis, which presents a dire case, that is largely not seen as illegal market manipulation. Activist funds do this every day.
- JumpCrisscross 4y ago> Binance found the truth, not the NYT or Twitter Coindesk found the truth [1]. Binance reacted to it [2] in a way that made people notice. [1] https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/ https://www.coindesk.com/business/2022/11/02/divisions-in-sa... [2] https://mobile.twitter.com/cz_binance/status/1589283421704290306?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1589283421704290306%7Ctwgr%5Ead5b4e61075085697b2081456a0183fc4b48eb16%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fembedly.forbes.com%2Fwidgets%2Fmedia.html%3Ftype%3Dtext2Fhtmlkey%3Dcfc0fb0733504c77aa4a6ac07caaffc7schema%3Dtwitterurl%3Dhttps3A%2F%2Ftwitter.com%2Fcz_binance%2Fstatus%2F1589283421704290306image%3Dhttps3A%2F%2Fi.embed.ly%2F1%2Fimage3Furl3Dhttps253A252F252Fabs.twimg.com252Ferrors252Flogo46x38.png26key3D8804248494c144f5b4765c41f66c6ed5 https://mobile.twitter.com/cz_binance/status/158928342170429...
- xrd 4y agoThat coin desk article is prescient! How is coindesk funded? Rare to see a journalism entity that is so close to crypto be so critical without having to accept ads from the industry.
- hcrisp 4y agoSure seems like Coindesk benefited from someone leaking FTX financial information. Probably an insider, could be a whistleblower but more likely a disgruntled employee with an axe to grind given the depravity of the industry.
- kar1181 4y agoI'll be shocked if Binance are less than 50% as crooked as FTX.
- ajoseps 4y agoI don't think Binance "found" the truth, they heard things and acted on what they heard, but they weren't the ones that did the initial investigation from my understanding
- wsc981 4y agoMarc Cohodes thought FTX was a scam about a month ago: https://twitter.com/BTC_Archive/status/1591391705680719877?s=20&t=hTAhuv-7AJwZIzZZoosrKA https://twitter.com/BTC_Archive/status/1591391705680719877?s...
- TacticalCoder 4y agoYes, huge props to Marc Cohodes: he was totally correct. But twitter user @Bitfinex'ed (someone who's on a crusade against Tether/Bitfinex since years) described the very scam Alameda and FTX were running before FTX even launched, years ago. @Bitfinex'ed noticed that SBF had ties with tether from day one. He warned about hundreds of millions of frozen funds (by authorities) on FTX right before FTX raised a billion dollar. He was warning people not months but years ago. Anybody who believe this whole Alameda/FTX scam wasn't planned from day one is an useful idiot. The very type of idiot the media is needing right now to sell the "leverage gone wrong for SBF" angle. There are records of SBF describing the very mechanism he was running with Alameda and FTX before he launched FTX.
- TacticalCoder 4y ago> Binance found the truth Binance saw the real game that SBF was planning: regulatory capture of the crypto exchanges market to get rid of Binance. When evidence impossible to deny came up to light, Binance decided to strike Alameda/FTX to death. Funnily enough the regulation the ex-CFTC commissioner working for SBF was working on alongside officials may still pass and so Binance may still be totally screwed. But CZ was not going to go down alone and let SBF pull his incredible feat. CZ wrote stuff like: "Sam isn't a team player", "He's working behind our back to pass legislation that'd prevent us from operate". In other words: SBF wasn't just a scammer like tether/bitfinex/binance/justin sun etc. SBF was also working, not even in the shadows, to get rid of all of these guys. No honor among thieves. So CZ screwed him, very hard.
- LatteLazy 4y agoWhat reg capture was SBF engaged in? Forgive my ignorance, I'm not well versed in this. It made perfect sense to me for Binance to eliminate a rival just for its own sake. But if there is a more specific reason please enlighten me!
- mikkergp 4y agoI wonder what the world would be like if we assumed best intent and genuinely asked what we could do to prevent things like this in the future. I'm not talking about toxic optimism, but also maybe not using hindsight to call people out. Sure there's an important message here, but is this really about better journalism, or about improving the reputation of the person doing the calling out. Maybe we'd just provide more space the scammers and charlatans, I don't know. But lots of people messed up in this thing.
- ceejayoz 4y agoMaybe we need more calling people out. No prominent political pundit is going to see one bit of long-term skepticism after the "Red Wave" stuff of the last couple of weeks. They'll just happily keep going on all the news programs to offer their "expert opinion".
- mikkergp 4y ago> Maybe we need more calling people out. This is all we do and it doesn't really seem to be working. I think the more power someone has, and the more divided our society, the more calling them out elevates them (Trump, Musk, etc)
- ZeroGravitas 4y agoLess concentrated wealth seems an obvious one. Including corporate wealth. It's relatively easy to draw a parallel between fossil fuel corporations and the fawning media they paid for and FTX.
- thr0wawayf00 4y agoNot sure why you're being downvoted, I think this is a fair question to ask. Crypto was founded on the notion that central banks were inherently corrupt and that we needed to establish an alternate financial system free from the power of banks. Well, here we are and look at how it's going. Fraud is everywhere and huge institutions are collapsing. This wasn't supposed to happen, but it does because it turns out that people with incredible amounts of money and power, whether backed by a government or not, are not very good at keeping the system in stasis.
- theknocker 4y ago
- colinmhayes 4y agoFTX was never doing a ponzi. All the threads are about how everyone was ok with SBF ponzi’ing because the money went to a good cause but that’s just not the case. EA proponents thought SBF was just running a normal exchange, if that was true I don’t see what’s morally wrong with supporting him.
- bitcurious 4y agoThe kind of person that risks billions of depositor funds to get obscenely rich might be the same kind that walks back their pledge to do good after getting obscenely rich.
- colinmhayes 4y agoBut no one knew ftx had written the shitty loans until last week. You can speculate that he was risking billions in depositor funds but there wasn’t really any evidence.
- ZetaZero 4y agoThree months ago, FTX was offering 8% interest APY. FTX knew they were in trouble, and needed new deposits to stay afloat. This makes it a ponzi.
- gruez 4y agoBut was that the reason it collapsed? Matt Levine thinks it's something else[1] (tl;dr: bad loans given to alameda research backed by FTT tokens). 8% pretty close to the rates that decentralized lending protocols provided[2]. There might be other issues with the product (eg. inadequate disclosures), but if it does what it's promised (eg. invest your money into decentralized lending protocols and/or yield farming) and the underlying product collapsed that's not really a ponzi any more a ETF composed of junk bonds going under is a ponzi. [1] https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal https://www.bloomberg.com/opinion/articles/2022-11-09/bankma... [2] https://www.gemini.com/earn https://www.gemini.com/earn says that 1inch is providing 8.05% APY right now
- MichaelCollins 4y agoSo if I've got this right, these journalists took "charitable grants" of money to toot their horns for the giver, who's ostensibly charitable acts amounted to giving money to journalists to say how charitable they were? I guess none of them stopped to think "if you guys are so charitable, then why are you giving this money to journalists like me, rather than to charitable causes?"
- deleted 4y ago[deleted]
- factsarelolz 4y ago
- ren_engineer 4y ago"charitable grants" is some nice Newspeak for bribes
- bombcar 4y agoLots of journalists literally think they're a charitable cause. And much of "charity spending" is for puff pieces to increase funding for the charity, after all.
- a_puppy 4y agoNo, you haven't gotten it right. Sam Bankman-Fried donated money to a wide variety of causes, the vast majority of which weren't journalists. If you want to read more about where he donated, here's the article where the quote comes from: https://www.vox.com/future-perfect/2022/8/8/23150496/effective-altruism-sam-bankman-fried-dustin-moskovitz-billionaire-philanthropy-crytocurrency https://www.vox.com/future-perfect/2022/8/8/23150496/effecti...
- creaghpatr 4y agoVery helpful, here's a more accurate way of making the same point: >"if you guys are so charitable, then why are you giving this money to political candidates and PACs, rather than to charitable causes?"
- gerikson 4y agoMaybe instead of blaming journalists for not exposing FTC we should wonder why multiple hedge funds invested millions into the venture without seeming to have caught on either.
- MichaelCollins 4y agoBlame is not a scarce commodity. There's plenty to go around.
- AlexandrB 4y agoI think all these failures point to why regulation exists in the traditional financial system. The information imbalance in a free market is sufficiently large that even large actors that "should know better" can be fooled for years.
- MacsHeadroom 4y agoThese failures point to why trustless public ledgers (blockchains) were invented. Exchanges that run on them (DEXes like Uniswap, Bisq, ShapeShift, etc.) are completely transparent, providing no room for the kind of information asymmetry which is required for frauds like FTX.
- deleted 4y ago[deleted]
- bombcar 4y agoThere's a feedback loop - puff piece gets printed, hedge fund invests, new puff piece about investment is printed, more funds invest, etc, etc. It plays the same way time and time again, another huge example is Theranos.
- jobs_throwaway 4y agoyou vastly overestimate the competency of many hedge funds. Its no surprise at all
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- perryizgr8 4y agoDemocracy dies in darkness. - Journalists, 2022, while actively killing the entire field of journalism It would be hilarious if it weren't so sad.
- whimsicalism 4y agoThe internet and the rise of free, low-quality advertising driven outlets killed most of it by ~2010-2012. My entire family worked in the industry, most of the damage was already done by then. Just look at the number of working journalists over time. We are just in the aftermath, where only behemoths like NYT or outlets willing to be domesticated by billionaires can survive.
- lazyeye 4y agoRemember when the alignment of billionaires and politics used to be a bad thing? Something to be treated with suspicion as the default position?