9 ms·

I often joke that crypto has been run by gold bugs who were forced to "smoke the whole pack" on fiat currencies. So a lot of crypto is a nihilistic homage to fe

I often joke that crypto has been run by gold bugs who were forced to "smoke the whole pack" on fiat currencies. So a lot of crypto is a nihilistic homage to federal reserve systems. In that way, "DeFi" feels the same about the finance industry. It was no secret that SBF hated traditional finance. And so I assume he refused to learn anything from it. But what he ended up creating was almost a hilarious parody of the financial system. That's at least how I can square the circle about how someone who could criticize Lehman Brothers for letting themselves get overleveraged on shady asset classes could literally have negative 8 billion dollars in "Hidden, poorly internally labeled ‘fiat@’ account" and then publicly go to Twitter to say they have a "liquidity problem".

chc4 4y ago
SBF (and like half the people at Alameda) worked at Jane Street or other big name financial firms. They weren't ignorant of traditional finance.
- factsarelolz 4y ago
  Both SBF and the other person were glorified interns and got position based upon their parents network.
  - whimsicalism 4y ago
    Doubt it, unless you have evidence otherwise. Jane St (unlike customer-facing finance firms, like Goldman Sachs) does not really engage in this style of nepotism hiring that I know of. More likely is that the child of prominent academics might actually be more intelligent than average themselves and certainly provided more opportunity to flourish.
    - factsarelolz 4y ago
      Could you detail SBF's experience that would have opened doors to him at Jane St without nepotism? I ask because I can't find any evidence to show how he was able to get into that position. Thanks for the guidance and I look forward to your reply.
      - whimsicalism 4y ago
        He went to MIT and interned there. I'm confused as to what you are asking - Jane St certainly hires plenty of people out of college not for nepotism reasons. The fact that he did not have a prior job before college is not evidence he was hired for nepotism. Let me guess - he also got into MIT through nepotism as well.
        stefan_ 4y ago
        His parents are professors at Stanford. So yeah, of course he did.
        whimsicalism 4y ago
        Gotcha and thanks for being upfront about your reasoning. I'll let others decide on whether they find that reasoning convincing!
        hutzlibu 4y ago
        You "got" a different poster, though.
        eddsh1994 4y ago
        What was his GPA at MIT? Did his parents jobs get his exams marked higher?
        whimsicalism 4y ago
        Can't tell if you are being earnest but as someone who majored in CS at a HYPSM, I can tell you there is literally no chance that this occured. I know kids who definitely got in because of parents money, but it certainly did not impact their grading.
        NtochkaNzvanova 4y ago
        I would exclude MIT from that list, but the rest of those schools basically have a huge reputation for grade inflation -- i.e., once you get in, you won't be given a bad GPA because you're paying so much. Grading people legitimately based on competence would piss of the parents/donors too much. Curious to hear your take on this.
    - asdfqweqe12 4y ago
      Youre all over this thread defending Jane Street. > Jane St (unlike customer-facing finance firms, like Goldman Sachs) does not really engage in this style of nepotism hiring that I know of. Wow i'm sold.
      - whimsicalism 4y ago
        Because it's a comment thread I find interesting, I made 4 or so comments related to Jane St, 2 of which are replying to people replying to me. I promise you I have no affiliations with JS whatsoever, just think that there is lots of sloppy reasoning going on in this thread.
        hnfong 4y ago
        > I promise you I have no affiliations with JS whatsoever Makes your claim unconvincing though. At least if you had worked there you might be in a position to make a claim either way.
        whimsicalism 4y ago
        Well I went to a major feeder school and know a lot of people hired by JS. The class of people hired by firms like Goldman Sachs is obviously nepotistic in nature and very different from the class that JS hires. A substantial portion of the GS mix is athletes & what I would call traditional Northeast elites, Jane St hired mostly out of the top physics, CS & applied math classes I was in. Beyond that, having parents who are prominent professors is nothing special at these schools and definitely would not give you pull at these institutions. Finally, Jane St has no incentive to engage in this sort of hiring because they are not customer/client facing.
      - naijaboiler 4y ago
        Hahahah its the funniest thing I ever read. Some people are so doggedly invested in the believing myth of meritocracy. Yeah right a private firms hiring is totally meritocratic.
      - unmole 4y ago
- billsnow 4y ago
  He was there for only three years, and at least ignorant about the finer points.
  - psychlops 4y ago
    His point, I believe, it that it's traditional finance using crypto to do their usual thing. Pump and dump.
    - billsnow 4y ago
      That’s not what traditional finance does…
      - psychlops 4y ago
        Where do you suppose the term comes from?
        billsnow 4y ago
        Ok fine that’s not what jane street does.
        psychlops 4y ago
        Fair enough, I know very little about Jane Street other than where they are located and that I'd never qualify to work there.
        ericd 4y ago
        (They're not located on Jane St)
        deleted 4y ago
        [deleted]
- deleted 4y ago
  [deleted]
- spamizbad 4y ago
  Makes me wonder what’s going on at Jane Street. How sure are we they’re above board?
  - typon 4y ago
    This is what I have been thinking. This whole thing has soured in my mind: Jane Street, Effective Altruism. Crypto, VCs, Silicon Valley culture in general I already assumed are scummy.
    - ilrwbwrkhv 4y ago
      You got it. That is the correct line to follow. Sequoia in particular must be heavily investigated.
    - neilparikh 4y ago
      > Effective Altruism The practical version of Effective Altruism for most people is essentially "if you're well off, you should donate a chunk of your income to buying anti-malaria bed nets/deworming medicine/direct cash transfers for the global poor". I don't see how that could "sour" in your mind, seems like a fairly unreservedly good thing. I want to point out that there are real people [1] being helped by Effective Altruism right now. Telling them "sorry, can't help you any more, some rich asshole in the US just committed a scam, and he claimed he wanted to help you too" just seems incredibly petty and cruel to me. [1] - This is also a group that traditionally doesn't receive much attention either.
      - freejazz 4y ago
        This is why so many people find EA annoying. People donated to malaria causes well before EA was a thing, but of course now, without EA, there's nothing.
        hestefisk 4y ago
        I find it very annoying. Why I’ rely on the benevolence of a few rich people when you can do the same much more effectively with proper taxation and wealth redistribution.
- mediaman 4y ago
  I can't look at their balance sheet and conclude that they were anything but ignorant of traditional finance. He seemed completely unaware of duration risk, and it seems like they have never talked to an accountant or anyone who has even the slightest clue about what a balance sheet should remotely look like. SBF worked at Jane Street, but he must have been there in a capacity that insulated him from this sort of knowledge. At large firms such as that there are very specialized roles that juniors typically start within, where the visibility is fairly limited.
  - HDThoreaun 4y ago
    They knew this balance sheet was bullshit. They were just trying to cover up the $10 billion "loan" they gave alameda after it blew up in the spring. I agree that alameda made mistakes that traditional funds wouldn't, but the balance sheet isn't one of them.
  - tick_tock_tick 4y ago
    Or he thought he could get away with it and grow fast enough where it wouldn't burn him.
  - deleted 4y ago
    [deleted]
  - lancesells 4y ago
    You think this is ignorance? I know very little about finance or the technology of finance but this is pretty clearly fraud and criminal behavior. My only question is was he able to pay for his private jets or residences in FTT? He seemed pretty convincing to a lot of people so it would be interesting to see if everything was paid in his own made up currency.
    - monetus 4y ago
      I don't think ignorance and fraud are mutually exclusive. I think he has put both on display to a pretty significant degree, personally.
    - 4y ago
- bogomipz 4y ago
  Perhaps not ignorant but maybe inexperienced for the roles and responsibilities they assumed at their new company? This is from a piece about Caroline Ellison the CEO at Alameda: >"Before joining Alameda as a trader in March 2018, Ellison spent 19 months as a junior trader at Jane Street after graduating from Stanford University with a bachelor's degree in mathematics in 2016. In a podcast two years ago, Ellison explained that Jane Street was her first job out of college. A diehard mathematician and Harry Potter fan born of two economists, Ellison she hadn't wanted to go into trading but "just didn't really know what to do" with her life. > "She was persuaded to join Alameda by SBF, who also previously worked for Jane Street. When she quit Jane Street, Ellison said she felt bad for staying such a short amount of time. However, this feeling quickly dissipated when she arrived at Alameda and discovered that she had "kind of more trading experience than a lot of Alameda traders," anyway."[1] And similarly for Constance Wang the FTX CEO/COO: >"Constance Wang joined FTX as chief operating officer in the Bahamas in 2019. Initially, she was chief operating officer (COO) of FTX's crypto derivatives exchange. In January 2022 she was promoted as CEO of FTX digital markets, with responsibility for the Bahamas HQ. An org chart published by the Information puts her one level below Sam Bankman-Fried. >This looks like a big job. All the more so because Wang is only a few years into her career. Before she joined FTX, most of her time had been spent at Credit Suisse in Singapore. >Wang wasn't an MD at Credit Suisse. She wasn't even a director or associate director. She was an analyst and she worked at the bank for two years, first in KYC in the private bank and then in APAC risk and controls. It was her first job out of university. "Admittedly, Wang didn't go straight from Credit Suisse to FTX - there was an eight-month detour to Huobi Global, a crypto exchange in Singapore first. However, the fact that this was sufficient to land her a job in her late 20s running 'institutional clients servicing and operational procedure,' at a fund with $1bn of revenues last year, looks slightly questionable."[2] [1] https://www.efinancialcareers.com/news/2022/11/caroline-ellison-alameda-research-ftx-sam-bankman-fried https://www.efinancialcareers.com/news/2022/11/caroline-elli... [2] https://www.efinancialcareers.com/news/2022/11/constance-wang-ftx-credit-suisse https://www.efinancialcareers.com/news/2022/11/constance-wan...
  - jnwatson 4y ago
    You can’t make this stuff up. This would make an amazingly funny movie.
- MrMan 4y ago
  prop trading firm and a sell side firm or an exchange are not structured the same way. its like calling zebra and deer and giraffes the same animal.
- jjtheblunt 4y ago
  do you mean they were knowingly manipulative of those who actually were ignorant of traditional finance, as a business plan of sorts?
- saberdancer 4y ago
  Did you read comments Caroline made on her blog/tumblr? Not sure of the timeline but she was asking why not double down on a 50/50 bet every time (if you lose) - you can earn "infinite" money but lose only your bet. I am not sure working somewhere means you are an expert in it. It's incredible these people managed to create a company size of FTX.
  - jsemrau 4y ago
    > read comments Caroline made on her blog/tumblr? Isn't that the Martingale strategy? > It's incredible these people managed to create a company size of FTX. Didn't they got hundreds of millions in play money from their network (school friends). This worked while everything was going up and new cash was coming in.
    - DebtDeflation 4y ago
      >This worked while everything was going up "Never confuse being long in a bull market with genius." --John Bogle
  - jonasdegendt 4y ago
    Rookie mistake! The trick is to double your betting amount every time you lose the 50/50, until you win, and then return back to your regular bet. That’s how you turn a profit. (/s)
    - throwaway777845 4y ago
  - gruez 4y ago
    >Not sure of the timeline but she was asking why not double down on a 50/50 bet every time (if you lose) - you can earn "infinite" money but lose only your bet. I'm pretty sure you're referring to this tweet https://twitter.com/0xHonky/status/1591630071915483136 https://twitter.com/0xHonky/status/1591630071915483136 In which case she wasn't the person asking the question. Somebody else was asking it, and she was unequivocally saying that it wouldn't work.
- jsemrau 4y ago
  Being an entry level staffer is not the same as running a n-Billion dollar business. The higher you rise, the more important the role of governance, compliance, and risk management becomes. If you shortcut this you will miss an important part of "job experience"
- JumpCrisscross 4y ago
  > worked at Jane Street or other big name financial firms. They weren't ignorant of traditional finance I was an options market maker. That taught me a lot about options but little about finance. The latter comes from curiosity and initiative, up to and including reading history books. Given SBF was post book or whatever, the ignorance isn’t surprising.
- deleted 4y ago
  [deleted]
elevenoh 4y ago
zeroclip 4y ago
> In that way, "DeFi" feels the same about the finance industry. How? DeFi protocols are behaving predictably and not pausing user withdrawals or hiding billion dollar black holes in their balances.
- this_user 4y ago
  Yeah, the predictably get exploited, and lose everyone's money.
- astrange 4y ago
  Sometimes they do. https://twitter.com/web3isgreat/status/1538546864542429184 https://twitter.com/web3isgreat/status/1538546864542429184 https://twitter.com/web3isgreat/status/1539113641336872961 https://twitter.com/web3isgreat/status/1539113641336872961 https://twitter.com/web3isgreat/status/1587956557274353667 https://twitter.com/web3isgreat/status/1587956557274353667 Remember, programs are proofs of themselves, but that doesn't mean they provably do what you thought they did.
  - zeroclip 4y ago
    Depends where you look. Solend and Uniswap have different risks, to use comparison AAPL and some new hot unknown tech stock have different risks. Uniswap does not have code to pause withdrawals, does not have a DAO or governance structure to change the contract. Risk profile in Uniswap and established DeFi protocol is more transparent than FTX. You cannot verify and audit a CEX, you have to trust they are doing things right, or trust the third parties who audit them. If you are skeptical of Binance or Tether audits then you understand the want for open source DeFi.
deleted 4y ago
[deleted]
jmyeet 4y ago
> I often joke that crypto has been run by gold bugs You're not wrong. Crypto is the natural evolution of the gold bug. Gold bugs funamentally don't understand the finance system. The gold standard was never about fully backing your currency with a global commodity (fun fact: the US dollar was never 100% backed by gold reserves). A gold standard is actually just a peg, a promise by the government to exchange dollars for gold (and vice versa) at a fixed rate. And you don't technically need any gold for that. Yet gold bugs harp on about gold reserves and that's the least important part of the gold standard. Either way you have a trust issue. FDR famously performed a sovereign debt devaluation, for example. Likewise, my experience with crypto people is they too (generally, not always) don't understand why the TradFi system is the way it is. Worse, they seem to use wilful ignorance of that as a badge of honor (while muttering something about "disruption"). So gold bugs who (rationally or irrationally) hate TradFi find a natural home with similarly minded Crypto Andys.
- excite1997 4y ago
  I think you're debating a strawman, though. Sure, there are delusional / ignorant goldbugs who make stupid arguments, but you can find that in pretty much any domain. There are also reasonable people, including heterodox economists, who understand the history of currencies and monetary systems, and still advocate for a return to pegged currencies or for precious metals as a part of a diversified portfolio. You don't have to agree with them, but ad hominems are probably unnecessary. I mean, it's not even that fringe is you consider that Central Banks sure hoard a lot of gold specifically because they see it as useful in certain (bad) economic scenarios.
- notch656a 4y ago
  Most gold bugs I've interacted with are more interested in replicating commodity money (i.e. gold coins for trade) than gold standard (i.e. dollars backed by gold). Gold standard is dumb for reasons you say. Commodity money is by design supposed to be 100% backed, as the gold is actually inside the money and the face value is the weight gold inside it.
  - lazide 4y ago
sergiotapia 4y ago
codehalo 4y ago
>It was no secret that SBF hated traditional finance. That is quite odd. FTX was the very definition of traditional finance (with or without whatever regulations you may think is required). Maybe he was bullshitting you too? Crypto is now infested with Wall Streeters and VCs trying to convert it into some grotesque form of the old system they are familiar with and failing catastrophically. In a few years decentralized DEXs will all but replace the centralized exchanges.
- anonporridge 4y ago
  This is the great thing about this whole event. It's a grotesque level of criminal fraud, but unlike when that happens in traditional finance, there will be no bailout. These fraudsters will get wiped out and there is no one to appeal to who can save them.
  - AnimalMuppet 4y ago
    These fraudsters and others will get wiped out. That's the bummer about this whole event. You may feel that the others were too greedy and naive, and therefore deserve what they get. Perhaps. But they're still getting wiped out, and they didn't participate in the fraud. (Unless you consider all of crypto to be a fraud...)
    - anonporridge 4y ago
      Sometimes, the best way to train children to avoid putting their hand in the fire is not to be overbearing and make certain they never get burned, but to let them make that mistake and get burned a little so they viscerally understand the consequences of doing such a dangerous thing. If you never let them get a little burned, then they might get terribly burned when you're not around to pull them out. Losing tons of money is not the end of the world, even if it can feel like it. It might just mean you have to swallow your pride and go work at Walmart or McDonalds for a while to build yourself back up. Millions of people live that life every day. Stay humble. Stack sats.
      - 4y ago
fredgrott 4y ago
here is the problem in the a nutshell, SBF hired fraud scammers, several bad actors from poker scams where part of SBFs crew...indicating that something other than skill level was the factor in hiring.
kuwoze 4y ago
let me square it for you: he is a fraud
- fhsm 4y ago
  I hope the years ahead and the investigations that fill them produce a picture of a cartoonish mustache twirling villain. It would, as you’ve pointed out, make it so easy to understand. I expect something more nuanced and layered filled with self deception and good intentions might emerge. The sort of thing which reminds us that risk is not just that if gleefully explored possibility but also the sort of risk to be managed and mitigated … a dull retrograde conservatism rendered gauche by decades of SV VC survivorship bias. Time may tell.
  - kuwoze 4y ago
    The HN rules stipulate I should give constructive feedback so let me give you some. Please write less pompously and more to the point.
hahaxdxd123 4y ago
What does the expression "smoke the whole pack" mean? I Googled but there are no real results. Thanks!
- ZeroGravitas 4y ago
  I assume this is a reference to catching a child smoking a cigarette, and to punish them, and put them off doing it again, the parent forces them to smoke the whole pack of cigarettes one after another. This (in theory) makes them feel sick and develop an aversion to the cigarettes.
- jdminhbg 4y ago
  A father catches his young son sneaking a cigarette. To teach him a lesson, he says, "You want to be a smoker, huh? Well go ahead, smoke this whole pack!" He makes him smoke all of them, the boy gets horribly sick from it, and never wants to smoke again. Essentially it's a metaphor for forcing someone to go all-in on something they wanted just a little taste of.
- chasd00 4y ago
  I think it refers to the old punishment for a kid caught smoking. You catch a kid smoking a cigarette and then sit there and force them to smoke one after another until the whole pack is done. They get really really sick. So the analogy is take something you like and then force it on you 24x7x365 until you hate every moment of it.
jmull 4y ago
> It was no secret that SBF hated traditional finance. To point out: that’s part of the narrative SBF was selling. I wouldn’t take it literally. There’s a certain kind of person who can/will say anything, and seem sincere, just to get you to part with your money.
olalonde 4y ago
> It was no secret that SBF hated traditional finance. Uh? The guy worked in traditional finance for a few years and was pushing for more regulations on cryptocurrency. His parents were compliance lawyers. He donated tons of money to the democratic party to push for regulations. He ran a centralized exchange. This does not exactly scream DeFi... He was just an opportunist who saw crypto as a means to get rich quick and apparently, getting rich from trading fees was not quick enough for him. There are a lot of "gold bugs" types in crypto but they mostly self-custody BTC and stay away from shitcoins and day trading.
- oldgradstudent 4y ago
  > The guy worked in traditional finance for a few years and was pushing for more regulations on cryptocurrency. He was definitely not pushing for bank supervisors examining the books of Crypto exchanges. FTX could not withstand a bank supervisor momentarily glancing at their books from a distance.

chc4 4y ago

SBF (and like half the people at Alameda) worked at Jane Street or other big name financial firms. They weren't ignorant of traditional finance.

factsarelolz 4y ago
Both SBF and the other person were glorified interns and got position based upon their parents network.
- whimsicalism 4y ago
  Doubt it, unless you have evidence otherwise. Jane St (unlike customer-facing finance firms, like Goldman Sachs) does not really engage in this style of nepotism hiring that I know of. More likely is that the child of prominent academics might actually be more intelligent than average themselves and certainly provided more opportunity to flourish.
  - factsarelolz 4y ago
    Could you detail SBF's experience that would have opened doors to him at Jane St without nepotism? I ask because I can't find any evidence to show how he was able to get into that position. Thanks for the guidance and I look forward to your reply.
    - whimsicalism 4y ago
      He went to MIT and interned there. I'm confused as to what you are asking - Jane St certainly hires plenty of people out of college not for nepotism reasons. The fact that he did not have a prior job before college is not evidence he was hired for nepotism. Let me guess - he also got into MIT through nepotism as well.
      - stefan_ 4y ago
        His parents are professors at Stanford. So yeah, of course he did.
        whimsicalism 4y ago
        Gotcha and thanks for being upfront about your reasoning. I'll let others decide on whether they find that reasoning convincing!
        hutzlibu 4y ago
        You "got" a different poster, though.
        eddsh1994 4y ago
        What was his GPA at MIT? Did his parents jobs get his exams marked higher?
        whimsicalism 4y ago
        Can't tell if you are being earnest but as someone who majored in CS at a HYPSM, I can tell you there is literally no chance that this occured. I know kids who definitely got in because of parents money, but it certainly did not impact their grading.
        NtochkaNzvanova 4y ago
        I would exclude MIT from that list, but the rest of those schools basically have a huge reputation for grade inflation -- i.e., once you get in, you won't be given a bad GPA because you're paying so much. Grading people legitimately based on competence would piss of the parents/donors too much. Curious to hear your take on this.
  - asdfqweqe12 4y ago
    Youre all over this thread defending Jane Street. > Jane St (unlike customer-facing finance firms, like Goldman Sachs) does not really engage in this style of nepotism hiring that I know of. Wow i'm sold.
    - whimsicalism 4y ago
      Because it's a comment thread I find interesting, I made 4 or so comments related to Jane St, 2 of which are replying to people replying to me. I promise you I have no affiliations with JS whatsoever, just think that there is lots of sloppy reasoning going on in this thread.
      - hnfong 4y ago
        > I promise you I have no affiliations with JS whatsoever Makes your claim unconvincing though. At least if you had worked there you might be in a position to make a claim either way.
        whimsicalism 4y ago
        Well I went to a major feeder school and know a lot of people hired by JS. The class of people hired by firms like Goldman Sachs is obviously nepotistic in nature and very different from the class that JS hires. A substantial portion of the GS mix is athletes & what I would call traditional Northeast elites, Jane St hired mostly out of the top physics, CS & applied math classes I was in. Beyond that, having parents who are prominent professors is nothing special at these schools and definitely would not give you pull at these institutions. Finally, Jane St has no incentive to engage in this sort of hiring because they are not customer/client facing.
    - naijaboiler 4y ago
      Hahahah its the funniest thing I ever read. Some people are so doggedly invested in the believing myth of meritocracy. Yeah right a private firms hiring is totally meritocratic.
    - unmole 4y ago
billsnow 4y ago
He was there for only three years, and at least ignorant about the finer points.
- psychlops 4y ago
  His point, I believe, it that it's traditional finance using crypto to do their usual thing. Pump and dump.
  - billsnow 4y ago
    That’s not what traditional finance does…
    - psychlops 4y ago
      Where do you suppose the term comes from?
      - billsnow 4y ago
        Ok fine that’s not what jane street does.
        psychlops 4y ago
        Fair enough, I know very little about Jane Street other than where they are located and that I'd never qualify to work there.
        ericd 4y ago
        (They're not located on Jane St)
        deleted 4y ago
        [deleted]
deleted 4y ago
[deleted]
spamizbad 4y ago
Makes me wonder what’s going on at Jane Street. How sure are we they’re above board?
- typon 4y ago
  This is what I have been thinking. This whole thing has soured in my mind: Jane Street, Effective Altruism. Crypto, VCs, Silicon Valley culture in general I already assumed are scummy.
  - ilrwbwrkhv 4y ago
    You got it. That is the correct line to follow. Sequoia in particular must be heavily investigated.
  - neilparikh 4y ago
    > Effective Altruism The practical version of Effective Altruism for most people is essentially "if you're well off, you should donate a chunk of your income to buying anti-malaria bed nets/deworming medicine/direct cash transfers for the global poor". I don't see how that could "sour" in your mind, seems like a fairly unreservedly good thing. I want to point out that there are real people [1] being helped by Effective Altruism right now. Telling them "sorry, can't help you any more, some rich asshole in the US just committed a scam, and he claimed he wanted to help you too" just seems incredibly petty and cruel to me. [1] - This is also a group that traditionally doesn't receive much attention either.
    - freejazz 4y ago
      This is why so many people find EA annoying. People donated to malaria causes well before EA was a thing, but of course now, without EA, there's nothing.
      - hestefisk 4y ago
        I find it very annoying. Why I’ rely on the benevolence of a few rich people when you can do the same much more effectively with proper taxation and wealth redistribution.
mediaman 4y ago
I can't look at their balance sheet and conclude that they were anything but ignorant of traditional finance. He seemed completely unaware of duration risk, and it seems like they have never talked to an accountant or anyone who has even the slightest clue about what a balance sheet should remotely look like. SBF worked at Jane Street, but he must have been there in a capacity that insulated him from this sort of knowledge. At large firms such as that there are very specialized roles that juniors typically start within, where the visibility is fairly limited.
- HDThoreaun 4y ago
  They knew this balance sheet was bullshit. They were just trying to cover up the $10 billion "loan" they gave alameda after it blew up in the spring. I agree that alameda made mistakes that traditional funds wouldn't, but the balance sheet isn't one of them.
- tick_tock_tick 4y ago
  Or he thought he could get away with it and grow fast enough where it wouldn't burn him.
- deleted 4y ago
  [deleted]
- lancesells 4y ago
  You think this is ignorance? I know very little about finance or the technology of finance but this is pretty clearly fraud and criminal behavior. My only question is was he able to pay for his private jets or residences in FTT? He seemed pretty convincing to a lot of people so it would be interesting to see if everything was paid in his own made up currency.
  - monetus 4y ago
    I don't think ignorance and fraud are mutually exclusive. I think he has put both on display to a pretty significant degree, personally.
  - 4y ago
bogomipz 4y ago
Perhaps not ignorant but maybe inexperienced for the roles and responsibilities they assumed at their new company? This is from a piece about Caroline Ellison the CEO at Alameda: >"Before joining Alameda as a trader in March 2018, Ellison spent 19 months as a junior trader at Jane Street after graduating from Stanford University with a bachelor's degree in mathematics in 2016. In a podcast two years ago, Ellison explained that Jane Street was her first job out of college. A diehard mathematician and Harry Potter fan born of two economists, Ellison she hadn't wanted to go into trading but "just didn't really know what to do" with her life. > "She was persuaded to join Alameda by SBF, who also previously worked for Jane Street. When she quit Jane Street, Ellison said she felt bad for staying such a short amount of time. However, this feeling quickly dissipated when she arrived at Alameda and discovered that she had "kind of more trading experience than a lot of Alameda traders," anyway."[1] And similarly for Constance Wang the FTX CEO/COO: >"Constance Wang joined FTX as chief operating officer in the Bahamas in 2019. Initially, she was chief operating officer (COO) of FTX's crypto derivatives exchange. In January 2022 she was promoted as CEO of FTX digital markets, with responsibility for the Bahamas HQ. An org chart published by the Information puts her one level below Sam Bankman-Fried. >This looks like a big job. All the more so because Wang is only a few years into her career. Before she joined FTX, most of her time had been spent at Credit Suisse in Singapore. >Wang wasn't an MD at Credit Suisse. She wasn't even a director or associate director. She was an analyst and she worked at the bank for two years, first in KYC in the private bank and then in APAC risk and controls. It was her first job out of university. "Admittedly, Wang didn't go straight from Credit Suisse to FTX - there was an eight-month detour to Huobi Global, a crypto exchange in Singapore first. However, the fact that this was sufficient to land her a job in her late 20s running 'institutional clients servicing and operational procedure,' at a fund with $1bn of revenues last year, looks slightly questionable."[2] [1] https://www.efinancialcareers.com/news/2022/11/caroline-ellison-alameda-research-ftx-sam-bankman-fried https://www.efinancialcareers.com/news/2022/11/caroline-elli... [2] https://www.efinancialcareers.com/news/2022/11/constance-wang-ftx-credit-suisse https://www.efinancialcareers.com/news/2022/11/constance-wan...
- jnwatson 4y ago
  You can’t make this stuff up. This would make an amazingly funny movie.
MrMan 4y ago
prop trading firm and a sell side firm or an exchange are not structured the same way. its like calling zebra and deer and giraffes the same animal.
jjtheblunt 4y ago
do you mean they were knowingly manipulative of those who actually were ignorant of traditional finance, as a business plan of sorts?
saberdancer 4y ago
Did you read comments Caroline made on her blog/tumblr? Not sure of the timeline but she was asking why not double down on a 50/50 bet every time (if you lose) - you can earn "infinite" money but lose only your bet. I am not sure working somewhere means you are an expert in it. It's incredible these people managed to create a company size of FTX.
- jsemrau 4y ago
  > read comments Caroline made on her blog/tumblr? Isn't that the Martingale strategy? > It's incredible these people managed to create a company size of FTX. Didn't they got hundreds of millions in play money from their network (school friends). This worked while everything was going up and new cash was coming in.
  - DebtDeflation 4y ago
    >This worked while everything was going up "Never confuse being long in a bull market with genius." --John Bogle
- jonasdegendt 4y ago
  Rookie mistake! The trick is to double your betting amount every time you lose the 50/50, until you win, and then return back to your regular bet. That’s how you turn a profit. (/s)
  - throwaway777845 4y ago
- gruez 4y ago
  >Not sure of the timeline but she was asking why not double down on a 50/50 bet every time (if you lose) - you can earn "infinite" money but lose only your bet. I'm pretty sure you're referring to this tweet https://twitter.com/0xHonky/status/1591630071915483136 https://twitter.com/0xHonky/status/1591630071915483136 In which case she wasn't the person asking the question. Somebody else was asking it, and she was unequivocally saying that it wouldn't work.
jsemrau 4y ago
Being an entry level staffer is not the same as running a n-Billion dollar business. The higher you rise, the more important the role of governance, compliance, and risk management becomes. If you shortcut this you will miss an important part of "job experience"
JumpCrisscross 4y ago
> worked at Jane Street or other big name financial firms. They weren't ignorant of traditional finance I was an options market maker. That taught me a lot about options but little about finance. The latter comes from curiosity and initiative, up to and including reading history books. Given SBF was post book or whatever, the ignorance isn’t surprising.
deleted 4y ago
[deleted]

elevenoh 4y ago

zeroclip 4y ago

> In that way, "DeFi" feels the same about the finance industry. How? DeFi protocols are behaving predictably and not pausing user withdrawals or hiding billion dollar black holes in their balances.

this_user 4y ago
Yeah, the predictably get exploited, and lose everyone's money.
astrange 4y ago
Sometimes they do. https://twitter.com/web3isgreat/status/1538546864542429184 https://twitter.com/web3isgreat/status/1538546864542429184 https://twitter.com/web3isgreat/status/1539113641336872961 https://twitter.com/web3isgreat/status/1539113641336872961 https://twitter.com/web3isgreat/status/1587956557274353667 https://twitter.com/web3isgreat/status/1587956557274353667 Remember, programs are proofs of themselves, but that doesn't mean they provably do what you thought they did.
- zeroclip 4y ago
  Depends where you look. Solend and Uniswap have different risks, to use comparison AAPL and some new hot unknown tech stock have different risks. Uniswap does not have code to pause withdrawals, does not have a DAO or governance structure to change the contract. Risk profile in Uniswap and established DeFi protocol is more transparent than FTX. You cannot verify and audit a CEX, you have to trust they are doing things right, or trust the third parties who audit them. If you are skeptical of Binance or Tether audits then you understand the want for open source DeFi.

deleted 4y ago

[deleted]

jmyeet 4y ago

> I often joke that crypto has been run by gold bugs You're not wrong. Crypto is the natural evolution of the gold bug. Gold bugs funamentally don't understand the finance system. The gold standard was never about fully backing your currency with a global commodity (fun fact: the US dollar was never 100% backed by gold reserves). A gold standard is actually just a peg, a promise by the government to exchange dollars for gold (and vice versa) at a fixed rate. And you don't technically need any gold for that. Yet gold bugs harp on about gold reserves and that's the least important part of the gold standard. Either way you have a trust issue. FDR famously performed a sovereign debt devaluation, for example. Likewise, my experience with crypto people is they too (generally, not always) don't understand why the TradFi system is the way it is. Worse, they seem to use wilful ignorance of that as a badge of honor (while muttering something about "disruption"). So gold bugs who (rationally or irrationally) hate TradFi find a natural home with similarly minded Crypto Andys.

excite1997 4y ago
I think you're debating a strawman, though. Sure, there are delusional / ignorant goldbugs who make stupid arguments, but you can find that in pretty much any domain. There are also reasonable people, including heterodox economists, who understand the history of currencies and monetary systems, and still advocate for a return to pegged currencies or for precious metals as a part of a diversified portfolio. You don't have to agree with them, but ad hominems are probably unnecessary. I mean, it's not even that fringe is you consider that Central Banks sure hoard a lot of gold specifically because they see it as useful in certain (bad) economic scenarios.
notch656a 4y ago
Most gold bugs I've interacted with are more interested in replicating commodity money (i.e. gold coins for trade) than gold standard (i.e. dollars backed by gold). Gold standard is dumb for reasons you say. Commodity money is by design supposed to be 100% backed, as the gold is actually inside the money and the face value is the weight gold inside it.
- lazide 4y ago

sergiotapia 4y ago

codehalo 4y ago

>It was no secret that SBF hated traditional finance. That is quite odd. FTX was the very definition of traditional finance (with or without whatever regulations you may think is required). Maybe he was bullshitting you too? Crypto is now infested with Wall Streeters and VCs trying to convert it into some grotesque form of the old system they are familiar with and failing catastrophically. In a few years decentralized DEXs will all but replace the centralized exchanges.

anonporridge 4y ago
This is the great thing about this whole event. It's a grotesque level of criminal fraud, but unlike when that happens in traditional finance, there will be no bailout. These fraudsters will get wiped out and there is no one to appeal to who can save them.
- AnimalMuppet 4y ago
  These fraudsters and others will get wiped out. That's the bummer about this whole event. You may feel that the others were too greedy and naive, and therefore deserve what they get. Perhaps. But they're still getting wiped out, and they didn't participate in the fraud. (Unless you consider all of crypto to be a fraud...)
  - anonporridge 4y ago
    Sometimes, the best way to train children to avoid putting their hand in the fire is not to be overbearing and make certain they never get burned, but to let them make that mistake and get burned a little so they viscerally understand the consequences of doing such a dangerous thing. If you never let them get a little burned, then they might get terribly burned when you're not around to pull them out. Losing tons of money is not the end of the world, even if it can feel like it. It might just mean you have to swallow your pride and go work at Walmart or McDonalds for a while to build yourself back up. Millions of people live that life every day. Stay humble. Stack sats.
    - 4y ago

fredgrott 4y ago

here is the problem in the a nutshell, SBF hired fraud scammers, several bad actors from poker scams where part of SBFs crew...indicating that something other than skill level was the factor in hiring.

kuwoze 4y ago

let me square it for you: he is a fraud

fhsm 4y ago
I hope the years ahead and the investigations that fill them produce a picture of a cartoonish mustache twirling villain. It would, as you’ve pointed out, make it so easy to understand. I expect something more nuanced and layered filled with self deception and good intentions might emerge. The sort of thing which reminds us that risk is not just that if gleefully explored possibility but also the sort of risk to be managed and mitigated … a dull retrograde conservatism rendered gauche by decades of SV VC survivorship bias. Time may tell.
- kuwoze 4y ago
  The HN rules stipulate I should give constructive feedback so let me give you some. Please write less pompously and more to the point.

hahaxdxd123 4y ago

What does the expression "smoke the whole pack" mean? I Googled but there are no real results. Thanks!

ZeroGravitas 4y ago
I assume this is a reference to catching a child smoking a cigarette, and to punish them, and put them off doing it again, the parent forces them to smoke the whole pack of cigarettes one after another. This (in theory) makes them feel sick and develop an aversion to the cigarettes.
jdminhbg 4y ago
A father catches his young son sneaking a cigarette. To teach him a lesson, he says, "You want to be a smoker, huh? Well go ahead, smoke this whole pack!" He makes him smoke all of them, the boy gets horribly sick from it, and never wants to smoke again. Essentially it's a metaphor for forcing someone to go all-in on something they wanted just a little taste of.
chasd00 4y ago
I think it refers to the old punishment for a kid caught smoking. You catch a kid smoking a cigarette and then sit there and force them to smoke one after another until the whole pack is done. They get really really sick. So the analogy is take something you like and then force it on you 24x7x365 until you hate every moment of it.

jmull 4y ago

> It was no secret that SBF hated traditional finance. To point out: that’s part of the narrative SBF was selling. I wouldn’t take it literally. There’s a certain kind of person who can/will say anything, and seem sincere, just to get you to part with your money.

olalonde 4y ago

> It was no secret that SBF hated traditional finance. Uh? The guy worked in traditional finance for a few years and was pushing for more regulations on cryptocurrency. His parents were compliance lawyers. He donated tons of money to the democratic party to push for regulations. He ran a centralized exchange. This does not exactly scream DeFi... He was just an opportunist who saw crypto as a means to get rich quick and apparently, getting rich from trading fees was not quick enough for him. There are a lot of "gold bugs" types in crypto but they mostly self-custody BTC and stay away from shitcoins and day trading.

oldgradstudent 4y ago
> The guy worked in traditional finance for a few years and was pushing for more regulations on cryptocurrency. He was definitely not pushing for bank supervisors examining the books of Crypto exchanges. FTX could not withstand a bank supervisor momentarily glancing at their books from a distance.