21 ms·

What Happened at Alameda Research

475 points by amadeuspagel 4y ago

voxadam 4y ago
Archive: https://archive.ph/kkpuz https://archive.ph/kkpuz
- Abecid 4y ago
  Nice the site is down now for some reason
gillesjacobs 4y ago
I like how OP opens smugly by calling the NYT article a fluff piece, then proceeds to immediately cite anonymous Twitter anecdotes as better sources. He's right about the specific NYT article not including much pertinent information, but they're a serious journalistic publication and have verification standards for sources.
- wikfwikf 4y ago
  But the author makes it very clear in the second par "our claims only remain tentative at best". Isn't it much more useful to write something which actually tries to answer the question of what happened, albeit with appropriate caveats, than something which doesn't advance the understanding of the reader at all?
  - TotoHorner 4y ago
    The New York Times piece is even worse, since it paints a misleading picture of SBF and his cronies losing all the money accidentally rather than malice (far more likely).
    - nl 4y ago
      Actually it's almost the opposite. This piece speculates very strongly about SBF's stimulant usage degradating his cognitive abilities. Eg: > If the above observations about SBF’s personality and competence are even half true, that would go a great deal toward explaining Alameda’s losses. The entire article goes into much further depth. But it doesn't even speculate about malice.
      - blitzar 4y ago
        "their systems became unprofitable" - "Alameda & FTX jointly continued to lose large amounts of money" - "uncompetitive market-making strategies, risky lending practices" - "erratic behavior and unprofitable gambling". > losing all the money accidentally rather than malice (far more likely) They sound an awful lot like trading / accidental losses than malice to me.
        oldgradstudent 4y ago
        Alameda was a hedge fund. It could lose all of its money and it would be totally fine. The moment they touched customer funds it became fraud and theft. This was not accidental. Losing it in trading might have been, but it was trading with stolen funds.
        nl 4y ago
        I agree with that. I don't think this was malice though - just extreme stupidity (and hopefully criminal). I think they thought they could trade their way out of it. That's different to malice which goes to motivations.
        anonymoushn 4y ago
        Alameda just non-maliciously gave their own account special privileges on their own exchange, non-maliciously front-ran customer orders, non-maliciously traded on material nonpublic information (their own exchange listings), non-maliciously used their ownership of their exchange to strike trades that caused them $400mm of losses in one of their multiple KCG-style algorithmic meltdowns, non-maliciously stole billions of dollars from their exchange's customers, non-maliciously lied about Bahamas residents being senior to all other creditors so they could withdraw hundreds of millions of dollars again, non-maliciously "hacked" their exchange wallets to steal additional hundreds of millions of dollars from their creditors, and non-maliciously prematurely unlocked hundreds of millions of dollars of FTT and sent it to binance to dump.
    - andromeduck 4y ago
      The guy is Bronxe 2/3 in league - there's nothing to degrade.
  - rkagerer 4y ago
    There's so much rampant speculation in this article... for me it lost a degree of credibility around the point he fixated on the drug aspect. Despite all the disclaimers. Yes, it paints one picture of how the losses could have added up, but I'm looking forward to more exhaustively investigated reports grounded in more than heresay and gossip.
    - andromeduck 4y ago
      We have photographic evidence. What more do you need? This isn't a criminal court.
      - HDThoreaun 4y ago
        That picture could've been literally anything as far as I could tell
        andromeduck 4y ago
        https://twitter.com/autismcapital/status/1592237980458323969?s=46&t=lKiusoeb_7UDuTzsThNEjg https://twitter.com/autismcapital/status/1592237980458323969...
    - TheOtherHobbes 4y ago
      Completely unrealistic. You'll never find rampant drug abuse in the financial industry. Certainly not on Wall St.
      - williamcotton 4y ago
        Is it more fun to read and talk about the story if it covers existing tropes about rampant drug abuse in the financial industry or more fun to read and talk the story without those tropes? Is it more fun if the shared story has a clear villain or more fun if the shared story has a diffusive, complex relationship between good and bad between not only the characters but also the readers?
    - anonymoushn 4y ago
  - naijaboiler 4y ago
    despite being tentative, I would guess its the best explanation of what happened. Their handing out margins, and market-making approach with Alameda left them potentially liable to losing lots of money really fast.
- why_only_15 4y ago
  the anonymous Twitter anecdotes are clearly far better than what the NYT people can come up with because Twitter is where all of these people spend their time.
- dereg 4y ago
  > they're a serious journalistic publication and have verification standards for sources It goes both ways. It seems like they didn't do much verification of Sam's claims.
- TotoHorner 4y ago
  > He's right about the specific NYT article not including much pertinent information, but they're a serious journalistic publication and have verification standards for sources. Ok? Regardless, this piece does a significantly better job than the NY Times and the "serious journalistic publication". The times articles actually misleads readers into thinking that the FTX downfall was moreso from bad timing & outside attacks then from SBF fraudulently stealing user funds. > immediately cite anonymous Twitter anecdotes as better sources The Twitter accounts directly quoted have many followers and a long history of tweets that are easily searchable. If you're referring to the Autism Capital tweet, that's a tweet of a photograph which you can look at yourself. It's clearly a stimulant that says EMSAM on it. Name the specific tweets in the piece that you find incredulous rather than an ad hominem.
- renewiltord 4y ago
  Interesting, this displays a classic problem with the NYT: they end up searching for their lost keys under the streetlamp since that's where the light is. If they report on an organization that has $1 million in verified assets, but the organization is suspected to have $999 million in assets and $2 billion in liabilities, they will report the organization as solvent because they have verification standards for sources and are a serious journalistic publication. Therefore, they can only publish about the $1 million in verified assets. The organization could therefore be widely suspected to be insolvent, but reported by the NYT as solvent. In fact, that's what happened this time. Perhaps this is why the NYT's Judith Miller has such prominent roles in journalism.
- ZephyrBlu 4y ago
  If you had been following this whole saga at all you would know that Twitter anons have been a way better source of information than anyone else. The on-chain anaylsis, digging and commentary done by people on Twitter has been insanely insightful.
  - SilverBirch 4y ago
    Twitter might provide more information than the NYT, but there's a reason NYT doesn't publish it - because the NYT wants to be reliable. They want their claims to actually stand up to scrutiny and be an accurate portrayal of the events we know happened. Whereas big chunks of this article are just pure speculation. The whole section about how Alameda might have had a rogue algo are just made up out of whole cloth. Is it true? Who knows, there's certainly no evidence for it, but let's stick it down as $1Bn of loss anyway. This article is very little more than just a gossip rag version of the NYT article.
    - listenallyall 4y ago
      There was a time, not that long ago, when what you say is true. Unfortunately NYTimes gave up caring about accuracy and reliability a while ago.
    - ZephyrBlu 4y ago
      > This article is very little more than just a gossip rag version of the NYT article This characterization is so far from the contents of the article I have to assume this comment is in bad faith or you're extremely biased towards the NYT. The article is 90% discussing facts/quotes from various sources and 10% speculation on what actually happened by people who are very familiar with crypto markets. The NYT piece on the other hand contains almost no facts (90% narrative) and throws a pity party for SBF. It's a complete joke. NYT piece: https://archive.ph/413e0 https://archive.ph/413e0. E: the author of this piece even states on Twitter that it's mostly a compilation of known information. Nowhere near gossip or speculation. https://twitter.com/0xfbifemboy/status/1592387837126905857 https://twitter.com/0xfbifemboy/status/1592387837126905857
- TedShiller 4y ago
  - blitzar 4y ago
    Yeah it was in the basement of a pizza place right?
  - EdwardDiego 4y ago
    Heard of it. Repeatedly. Never seen any, you know, proof.
    - petchyindee 4y ago
      Both the New York Times and the Washington Post have by now admitted the legitimacy of the Hunter Biden laptop story (of course they waited for the election to be over before doing so). If you haven't seen any proof, it's because you haven't looked.
      - EdwardDiego 4y ago
        The legitimacy of _which_ story about his laptop? Was it really filled with child porn? There were so many stories. Please feel free to share links to the NYT or WaPo acknowledging all this truth. I feel very remiss in having missed it.
        PubliusMI 4y ago
    - AustinDev 4y ago
      If you know how to torrent you can download an image of his iPhone or iPad taken from that same laptop.
      - EdwardDiego 4y ago
        Why would I need to torrent it? And how do I know it's legitimate? I had assumed that the big news about its contents would break any day now. All I've ever seen is people talking about what people told them that they totally saw on it.
- lawrenceyan 4y ago
  The person who wrote this post is pretty well known in the crypto space. Not saying that what was written here is guaranteed to be accurate, but it's likely to be much closer to reality than what the New York Times put out. To be clear, I enjoyed Levine's commentary on the situation so it's not just because I dislike mainstream publications.
  - trompetenaccoun 4y ago
    Never heard of them, I've been in the crypto space for many years. Their social media looks like it's run by a teenager and I'm not not being facetious, it literally reads like a 14 year old boy runs the account. The person also writes so many tweets they'd hardly have time for serious work. Over 90% are jokes, memes and rumors. https://nitter.cz/0xfbifemboy https://nitter.cz/0xfbifemboy Not sure how this stuff makes it to the top on HN.
    - lawrenceyan 4y ago
      It's how you say, the "lingua franca"? I myself greatly enjoy it and am happy to see it become more widespread, but that's mostly because I grew up immersed in the culture.
    - wil421 4y ago
      Yikes he posted a screenshot of your comment on Twitter. I agree with you about the tone and despise reading meme filled articles or tweets.
      - hytdstd 4y ago
        I'm confused, I don't see any memes in the article. Were they deleted?
        deleted 4y ago
        [deleted]
      - lawrenceyan 4y ago
- wweeeebb 4y ago
  The NYT article was biased. Have you read it? Read the author's other articles and the sharp shift in tone. He is strictly apologetic towards the FTX ponzi scheme, the author's behavior is to the level which one could call morally compromised. He has a history of badmouthing other exchanges (e.g. Kraken) while singing the praises of FTX. Appeals to authority are weak compared to facts laid bare. The fact is that the NYT author has made clear biases against other exchanges and overly forgiving of a single exchange guilty of customer theft, which is papered over in his article. This is unusual compared to all other reporting of FTX amongst mainstream jouranlists. There were no articles attempting to humanize Bernie Madoff, this article hides the fact that SBF ran a ponzi scheme, imagine the same with Madoff, it would be shocking. This is shocking. Imagine having the Bernie Madoff subheading, "he had expanded too fast and failed to see warning signs". This is the scale of ludicrousness here. The facts aren't subjective or unclear in any way, FTX didn't have customer deposits, which they claimed to have up even until the very end. When it comes to journalism, this is an unforgivable failure.
- anonu 4y ago
  Agreed. This article is a fun read at best.
- bigbacaloa 4y ago
  Agreed. I'm sure that the NYT checks that its twitter sources have the little blue check mark before publication.
- shawabawa3 4y ago
  The NYT article is a shockingly bad puff piece. It doesn't once mention fraud. Doesn't call out that Alameda borrowing funds from FTX deposits is insanely illegal Makes it sound like poor SBF got unlucky and it wasn't his fault he recklessly gambled $8+B of customer deposits
  - spaceman_2020 4y ago
    Given both SBF and Caroline's family connections, I'm not surprised that the MSM is going to treat them with kid gloves.
    - headsoup 4y ago
      Let me guess, the article doesn't even mention those connections?
- petchyindee 4y ago
  Where were the verification standards of the NYT when they advocated for the Iraq War, for example? Trust in mainstream media is at an all-time low, and for good reason. These appeals to authority seem out of touch to me.
- anonymoushn 4y ago
  The piece is well informed and aggregates a variety of sources only a few of which are not completely credible. the NYT literally refuses to use the word "fraud" or hint at criminality after Sam stole ten billion dollars from customers.
  - hoffs 4y ago
    Because actual journalists have standards to abide
    - jasmer 4y ago
      ? Stealing $10B is fraud. So when $10B goes missing, due to what we know is 'bad behaviour' at minimum, and all the other 'smoke' around this story - we should use that word in proper context. This is literally one of the biggest fraud cases in history. By their own 'standards' they are compelled to use the word in proper context.
      - thehappypm 4y ago
        I don’t think it’s up to their standard yet. Of course the whole world believes it’s a big case of fraud but they may need to wait until there is more clarity on that.
      - danaris 4y ago
        While I'm sympathetic to this position, I can also easily see an argument from the NYT's side that "fraud" is a specific criminal allegation, and as such using it in an article like this could open them up to libel or defamation suits.
        enraged_camel 4y ago
        I mean, they can always call it "alleged fraud", right? They use that kind of language to describe all sorts of alleged crimes.
        4y ago
- jasmer 4y ago
  It's a 'puff piece' because they essentially take his words almost at face value, almost as if they are supporting his argument and don't dig more cynically into the underbelly of the issue. There are a lot of really crazy things happening with this story they don't touch upon. It's worse than a 'puff piece' to the point I suggest there is background manipulation going on. This is 'reputation laundering'. There is a huge amount of money here, and a ton of very, very powerful people involved. I suggest that within a few weeks this will be known to be truly a criminal enterprise and this NYT article will not age well.
kristianov 4y ago
Two words: Ponzi Scheme.
- Cthulhu_ 4y ago
  And worse: pretty much everyone was aware of it, but thought that because they were aware of it and everyone else is a schmuck, they could benefit from it. Some did, but only if they liquidated their holdings last year. NFTs this year was a microcosm of exactly that. Loads of people jumped on the bandwagon, buying up NFTs as they were released, but the whole thing collapsed again when it turned out the resale market just wasn't there. Except for the first movers.
  - Gigachad 4y ago
    NFTs were like all cryptos. _Everyone_ knew they were bullshit but expected there would be one more greedy idiot to pass the bag to.
    - highwaylights 4y ago
      Unsure why this is downvoted. "lol at you spending all your money on magic beans, not like my magic beans which are very shiny and special."
  - gasull 4y ago
    NFT art was likely a bubble, not a Ponzi. Many investments are bubbles, but not Ponzis.
    - deleted 4y ago
      [deleted]
    - TheOtherHobbes 4y ago
      NFT art was a scam intended to create a bubble. The art market itself is a bubble. Famous art is primarily used for investment, tax avoidance, and sometimes money laundering. Occasionally someone will hang it on a wall and look at it, but it's more likely to end up in storage. NFTs were designed as a microcosm of the art investment market, sold on the promise of increasing resale value - like the real thing. Of course that didn't happen. But some artists made a lot of money, some dealers made even more, and some people made significant savings on their tax bills.
flanked-evergl 4y ago
Before or after they were bribing politicians for favourable regulation for FTX at the detriment of their competitors who were not fraudulent? https://prospect.org/power/sam-bankman-frieds-multimillion-dollar-game/ https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) seeks to grant the CFTC “exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset that is offered, solicited, traded, executed, or otherwise dealt in interstate commerce, including market activities relating to ancillary assets.” Perhaps in anticipation of such a move, FTX has stocked up its ranks with former CFTC officials. Former CFTC commissioner and acting chair Mark Wetjen is FTX’s head of policy and regulatory strategy. Ryne Miller, who was legal counsel to Gensler when he led the CFTC, is FTX’s general counsel. The Tech Transparency Project has also identified 14 other cases of CFTC alumni revolving into the crypto industry. Vote these people out.
- SkyMarshal 4y ago
  Well FTX's competitors are not necessarily not fraudulent, especially their primary competitor Binance.
  - Semaphor 4y ago
    What fraud does Binance do besides evading U.S. regulations? note: This is an actual question.
    - perlgeek 4y ago
      If the story goes like FTX, we'll only know after it's too late. Not being incorporated anywhere (which is the last thing I heard about the matter) is an extremely bright red flag, so that's some evidence (in the Bayesian sense) that something is off.
    - xiphias2 4y ago
PeterStuer 4y ago
I find it curious Musk was able to snif out SBF as a bullshit artist in his 30 min. Meeting with him, whereas countless polititions and regulators aparently did not have a clue despite years of meetings and other contacts.
- TotoHorner 4y ago
  The politicians and regulators wanted SBF's money. Musk didn't need it.
- mudrockbestgirl 4y ago
  What a bunch of BS. It's obviously easy to say that in hindsight. There are a million reasons for why he did not take the investment, but in none of the published conversation was anything about him thinking SBF is lying. In fact, knowing Elon, if he had really said that at some point before FTX collapsed, he sure would have published it by now to prove how smart he is.
  - highwaylights 4y ago
    bingo.
  - memish 4y ago
    He was skeptical even though SBF wanted to give him money, not the other way around. And people Elon knew were pushing for SBF. Elon ended up ghosting him anyway. Look at the chat logs that were revealed in court. Michael Grimes [IBanker at Morgan Stanley]: Do you have 5 minutes to connect on possible meeting tomorrow I believe you will want to take? Elon: Will call in about half an hour Michael: Sam Bankman Fried is why I'm calling https://twitter.com/sbf_ftx/status/1514588820641128452 https://twitter.com/sbf_ftx/status/1514588820641128452 https://www.vox.com/platform/amp/recode/2021/3/20/22335209/sam-bank.man-fried-joe-biden-ftx-cryptocurrency-effective-altruism https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s... https://ftx.us https://ftx.us Elon: ?? Elon: I'm backlogged with a mountain of critical work matters. ls this urgent? Michael: Wants 1-Sb. Serious about partner w/you. Same security you own Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network. Elon: ["disliked" "Could do $5bn ..."] Elon: So long as I don't have to have a laborious blockchain debate Elon: Strange that Orlando declined Elon: Please let him know that I would like to talk and understand why he declined Elon: Does Sam actually have $3B liquid? Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign. https://danluu.com/elon-twitter-texts/#62 https://danluu.com/elon-twitter-texts/#62 Will MacAskill [co-creator of effective altruism movement, Oxford professor, Chair of board for Global Priorities Institute at Oxford]: Hey - I saw your poll on twitter about Twitter and free speech. I'm not sure if this is what's on your mind, but my collaborator Sam Bankman-Fried (https://www.forbes.com/profile/sam-bankman-fried/?sh=4de9866a4449 https://www.forbes.com/profile/sam-bankman-fried/?sh=4de9866...) has for a while been potentially interested in purchasing it and then making it better for the world. If you want to talk with him about a possible joint effort in that direction, his number is [redacted] and he's on Signal. Elon: Does he have huge amounts of money? Will: Depends on how you define "huge"! He's worth $24B, and his early employees (with shared values) bump that to $30B. I asked about how much he could in principle contribute and he said: "~$1-3b would be easy-$3-8b I could do ~$8-15b is maybe possible but would require financing" Will: If you were interested to discuss the idea I asked and he said he'd be down to meet you in Austin Will: He's based in the Bahamas normally. And I might visit Austin next week, if you'd be around? Will: That's a start Will: Would you like me to intro you two via text? Elon: You vouch for him? https://danluu.com/elon-twitter-texts/#12 https://danluu.com/elon-twitter-texts/#12
lzooz 4y ago
- bitcharmer 4y ago
  There's an interview with her where you'd think they're talking to some cringy teenager and not a CEO of a multi-billion dollar company. https://youtu.be/8yqmf9sbaZw https://youtu.be/8yqmf9sbaZw
- highwaylights 4y ago
  Not planning to, but this still really saddens me. You can have grievances about what happened here (and I'm sure many do), but the overtly sexual attacks on Caroline Ellison should disgust us all. This isn't a defence of anyone's actions. If crimes have been committed, they should be investigated and prosecuted. If no crime has been committed, maybe regulation should be introduced - or maybe people should learn a valuable lesson about what happens when you go out of your way to engage in investments that derive their gains from dodging consumer protection regulations. In any case, the attacks on Caroline Ellison reflect really badly on the worst stereotypes of Crypto Bros as a whole - even though I'm certain it's a tiny minority of people involved in them.
  - lzooz 4y ago
    What the fuck is a "sexual attack"
    - highwaylights 4y ago
      Maybe I'm misunderstanding your Google Images reference, but the content of the discussions on Reddit since this all kicked off have followed enough of a theme that I can take a guess at what some of those people have photoshopped up for the web masses. Probably easier to ask outright, why shouldn't I do a Google Images search for Caroline Ellison?
      - lzooz 4y ago
        Because those pictures can produce some darn explosive puking.
choeger 4y ago
A $3M monthly AWS bill. that's a nugget here. What that means is that amazon, Microsoft, and google are essentially selling shovels during a gold rush. On a subscription basis. In a form that makes it tedious and costly to actually figure out how many shovels your business has, what they do and who uses them regularly. Essentially, when there's a digital market hype, the big cloud providers collect their share on the revenue. Brilliant.
- systemicdanna 4y ago
  That doesn’t sound like a valid criticism of cloud service providers. Or shovel sellers.
  - rippercushions 4y ago
    It sounds more like an admiring compliment. Although for cloud providers, the costs of things like hackers stealing credentials and using them to mine shitcoins are also considerable.
  - kgwgk 4y ago
    It doesn’t sound as a criticism at all.
- Dunedan 4y ago
  Google not so much, as they still accumulate losses with GCP. [1] [1]: https://www.computerweekly.com/news/252523200/Google-results-show-bigger-GCP-operating-loss https://www.computerweekly.com/news/252523200/Google-results...
- nicpottier 4y ago
  Yearly, not monthly.
- Kiro 4y ago
  That's like saying people selling food during the actual gold rush were brilliantly capitalising on it and equivalent to the ones selling shovels.
- 4y ago
lordnacho 4y ago
Makes some sense. When stuff is messy, you can do financially stupid things. I've sat on desks that lost money from not realizing some very simple things like having options with upcoming dividends. If SBF really was on drugs and playing League of Legends badly, perhaps he also didn't know what was happening in his shop. But... you have all this money. Hire an adult? Almost anyone who's had a trading desk job would tell you to clean up. You don't need to have much experience to do this part, just get one of your friends that you must know from the business? Also, WTF would this say about Ontario Teachers' Pension Fund or Sequioa if the whole team was on drugs, playing games all day, and having no idea what their balance sheet looks like? I actually got Ontario into a fund I was at, and we'd have lost the investment if we hadn't behaved like adults. This is causing me some cognitive dissonance, because I don't think of the investors as the kind of people who'd even smile if they found me in the office playing a video game, let alone addled on drugs. Also about the market making strats not working anymore, I don't see why they'd even need it. Once the exchange is jump started and you have WM/Jump/JS on board, there's MMs on the platform and it feeds itself. Just keep marketing running. Hand out some FTT or something to retail. Do silly advertisements. Just turn off the algo that doesn't work.
- wikfwikf 4y ago
  The Ontario Teachers' investment is outrageous. They are charging middle-class people (by definition) good money from their retirement savings to make reasonable investing decisions and do due diligence.
  - thablackbull 4y ago
    OTPP has quite a solid reputation and this particular investment was a miniscule speculative bet. You can see the performance over time here [1]. [1] https://www.otpp.com/en-ca/investments/our-advantage/our-performance-and-track-record/ https://www.otpp.com/en-ca/investments/our-advantage/our-per...
    - wikfwikf 4y ago
      It's not about performance or risk management, it's about due diligence. They should not be giving any amount of money to an organization with such poor internal checks of their finances.
ZeroGravitas 4y ago
I liked the chapter in Nate Sivers' Signal and the Noise when he talks about how hard it is to know if you're a good professional poker player. Been a while since I read it but feel like even after a couple of years of winning games and tracking his own performance, he had enough stats knowledge to realise that he didn't actually know if he was good or just lucky. The noise swamped the signal. This feels relevant to many of these trading things where people start to believe their own BS. If you've flipped a coin and it's came up heads 10 times in a row, why wouldn't you bet everything on it happening again? You're really good at getting heads when you flip. Humans aren't really built for that kind of thing.
- bambax 4y ago
  In Midnight Run (1988) when Marvin finds the Duke and Jack in the sandstone of Red Rock Country he exclaims "Am I lucky or am I just good?": https://www.youtube.com/watch?v=Gokkl2br7G8&t=152s https://www.youtube.com/watch?v=Gokkl2br7G8&t=152s Later in the movie, when Marvin decides to ask for more money and takes a Polaroid of the Duke in the bathroom of the motel, he comments to himself: "I amaze myself... I'm always thinking." The thing is, the character of Marvin is quite dumb, not a nice person and above all someone who never grasps the full picture -- but at the same time he has good instincts and is, in fact, a fairly good hunter. It's a dangerous combination.
  - deleted 4y ago
    [deleted]
- blitzar 4y ago
  In crypto as in wall street bets. If your sample is "a bull market when every single week the price is higher than the previous" - then the signal and the noise confirm; if you lose money on monday buy the dip with your client funds - because you cant possibly lose.
- pge 4y ago
  The same is very true in VC investing. Because any individual partner does not make that many bets per year, and the time frame to exit is long, it is very difficult to distinguish skill from luck (including being in a long-term bull market like the last decade).
esoterica 4y ago
> In a podcast from 2019, SBF brags about making predictions on the timescale of 1-2 seconds > While this might have been considered highly competitive in 2019-era crypto markets, it is a far cry from the microsecond-level precision of market making in traditional finance. The author is confusing tick-to-trade with prediction horizon. The "microseconds" market makers talk about is how long it takes to react to incoming market data and send out a trade message. The 2 seconds SBF is talking about is how far ahead in the future you want to predict price changes over. Doesn't really inspire a lot of confidence in the rest of the analysis if this is the level of domain knowledge the author has.
- lordnacho 4y ago
  You're right about the technical aspect, but the rest of the critique is more about business level stuff like knowing what you have. I don't think you can say the whole piece lacks credibility because he got this thing mixed up.
zhxshen 4y ago
rkagerer 4y ago
One thing that stuck out at me in the NYT puff-piece was: Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange ... He said the size of the position was in the billions of dollars but declined to provide further details. Did FTX use their pool of customer deposits to extend leverage to margin traders?
- shawabawa3 4y ago
  Alameda went underwater on loans and they transferred customer funds from FTX to bail them out
- anonymoushn 4y ago
  The NYT is just lying. The people who controlled both FTX and Alameda stole funds from FTX (which FTX customers have claims against) and gave them to Alameda
moffkalast 4y ago
They couldn't find the nucular wessels.
remoroid 4y ago
For even more context of how bad SBF was at League of Legends, a large part of their player-base is children and teens. You would not expect a normal functioning 30 year old man to lose to 12 year olds after years of playing with the frequency he did.
- rxyz 4y ago
  I don't think League is a popular game in that demographic. I see it as a old man/woman game now, like counter strike
  - remoroid 4y ago
    Do you have any data to back that up? Do you not understand that the lowest ranked players on the server are going to disproportionately include children that are bad?
    - pezezin 4y ago
      https://www.statista.com/statistics/1018224/league-of-legends-fans-by-age-usa/ https://www.statista.com/statistics/1018224/league-of-legend... https://theglobalgaming.com/lol/average-age-player https://theglobalgaming.com/lol/average-age-player According to that data, most players are between 18 and 34 years old, with children and teens being only 12% of the demographics.
      - remoroid 4y ago
        That is impossible to believe. Teens AND children only add up to 12%. No lol. The average age of league of legends pro is 22. None of them starting playing the game after 18. It makes no sense. Then I already pointed out that the rank SBF was in is populated with the worst players, which is more likely to be children that dont have a fully developed brain.
- thinkingemote 4y ago
  From what I understand (only seen a game, not played it), League of Legends is more similar to Starcraft where it's about strategy, knowledge and timing than the necessary very fast reaction times of teenagers found in a first player shooter. You would expect even retired people to be good at the game if they played enough. Regardless, playing video games, doing drugs, looking dishevelled and being over weight are all visible signs of some kind of internal disorder. Most people don't wear their disorder visibly, they either learn to hide it or it doesn't reveal itself physically. In this episode it's like the signs are treated as a good sign - of creativity.
SilverBirch 4y ago
This article spends quite a bit of time talking about SBF's risk appetite and how it might be drug related. I think that's missing a fairly obvious piece of logic. In order to decide to go into crypto trading you need to have an extremely high tolerance for risk. The crypto industry is self-selected for risk in the first place, you don't need complex explanations of why they use lots of leverage on highly volatile assets, that's literally the reason why they're there. If SBF had a low appetite for risk he wouldn't have entered crypto or started a start up, he would have stayed in trad-fi getting paid massive sums of money for some fairly basic quant work. It's not that Sam has a high risk appetite, it's that in order to get into the position Sam was in you need a high risk appetite. And that obviously poses a big problem for people who want to use a crypto exchange - because they can only find exchanges run by people with a massive risk appetite making it likely to blow up in your face.
- wikfwikf 4y ago
  I think there's a huge difference with someone who has a huge appetite for risk, and someone who is taking risks, essentially without oversight, while on dopamine-replacing drugs. Many people who work in conventional finance are well aware of how brain chemistry changes (caused by illness, medication, illicit drugs, or emotional and life changes) can push someone from being in control while pursuing risky but profitable strategies to being a degenerate gambling addict.
  - MichaelCollins 4y ago
    Putting so much blame on the drugs seems like a way of casting Bankman-Fried as an addict/victim. In reality he's a thief and has been from the start of this scheme. He has a sociopathic disregard for others and cynically covers that with cheap talk of being an altruist.
    - disqard 4y ago
      Another HN commenter wrote that "EA is charity for sociopaths" https://news.ycombinator.com/item?id=33578131 https://news.ycombinator.com/item?id=33578131
croes 4y ago
It is always a good start when the author praises himself and insults others in the first paragraph. /s
KVFinn 4y ago
The extensive use of stimulants is alarming, though heavily speculative. What does the league of legends article say? That part seemed crazy speculative. I'm bottom quartile at FPS and fighting games but I enjoy them and play a lot. Dota 2 as well. And I've been top 1 percent at other games. Even higher for a bit in Auto Chess. I hope this isn't evidence of brain damage...
- martynr 4y ago
  FWIW: as a bona fide user of various anti-parkinsonian medications for their intended purpose, I can say with a degree of confidence that the speculation on cognitive impact (and impairment) is very plausible - and that the article is factually correct on the side effects in a Parkinson’s context. God knows what they would do to a brain with a “normal” dopamine level. It’s also worth noting (and quite frankly pretty harsh when you eventually realise) that the affected brain has massive difficulty recognising its own altered cognition and perceives its distorted interpretations and consequent chains of response as perfectly natural and justified. Not drawing any specific conclusions on the particular assertions in the article, but IMHO the interpretation is certainly plausible given the apparent drugs involved.
  - 55555 4y ago
    There was a VERY interesting article on HN recently about the risk-taking/compulsive side effects of dopamine drugs.
    - jwozn 4y ago
      Got a link? Would be interested in reading this.
      - martynr 4y ago
        Seems to be this: https://knowingneurons.com/dopamine-makes-people-impulsive/ https://knowingneurons.com/dopamine-makes-people-impulsive/ Original HN threads here: https://hn.algolia.com/?q=dopamine+impulsive https://hn.algolia.com/?q=dopamine+impulsive
zozbot234 4y ago
So, is this the real 1) What 2) H post?
H8crilA 4y ago
> When loans were recalled in early 2022, an emergency decision was made to use FTX users’ deposits to repay creditors. Just so you know, this is a clear and obvious prison sentence in normal finance. Also FTX itself was trading with customer deposits instead of just keeping them like an exchange is supposed to do, which is also prison in normal finance. Matt Levine wrote a good piece on this debacle, and will probably write more. It is simply breathtaking, every paragraph evokes a massive "wat".
- onlyrealcuzzo 4y ago
  FTX supposedly collected 0.1% commission on $100B+ volume per day. Why couldn't they just get a loan to cover their losses?
  - vgatherps 4y ago
    Neither of these numbers are correct, they imply 100M of profit a day. Volume is heavily weighted towards the highest tiers which on ftx were paying 0.015% to take and receiving 0.01% to make (given, alameda would receive no rebate). They've also never claimed to do 100B+ a day. They published stats about their volume as well as some other exchanges here: https://ftx.com/volume-monitor https://ftx.com/volume-monitor. It's stale since the collapse but they're claiming 16bn, and usually were claiming 5-10bn a day in the last month. Give some fudge factor for various traders at various tiers and this backs out to 1m a day order of magnitude. Not covering a multi billion dollar hole with that anytime soon.
    - onlyrealcuzzo 4y ago
      Okay - so even 0.01% on $10Bn = $1M per day = $365M per year, and - at the time - growing. One would think they should've been able to get a loan (if those numbers were real).
      - HDThoreaun 4y ago
        365 million against 10 billion isn't so great
Avado 4y ago
[dead]
halukakin 4y ago
"FTX periodically uses a portion of its profits to buy back FTT tokens. This makes FTT kind of like stock in FTX: The higher FTX’s profits are, the higher the price of FTT will be." I think this is an interesting alternative to equity vesting. Not all countries have laws that make equity vesting possible. Also this could work if you are a US company and hiring from all abroad. You can give tokens to your employers abroad, keep the token valuable as long as the company is profitable. What do you think?
- deleted 4y ago
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- hn_20591249 4y ago
  It could work, but the moment FTX started allowing FTT to be put down as collateral on multi-hundred million dollar liabilities, the entire house of cards fell apart.
- pjc50 4y ago
  > Not all countries have laws that make equity vesting possible. However, if tokens are securities, that doesn't mean you can legally sell/give them tokens either.
TrackerFF 4y ago
AFAIK, BTC and ETH have been classified as commodities - would FTX have to adhere to Commodity Exchange Act?
- anonymoushn 4y ago
  Do all companies in the world have to adhere to US law?
  - AustinDev 4y ago
    Companies run by US citizens and that deal in US dollars certainly do.
    - deleted 4y ago
      [deleted]
jamesholden 4y ago
DebtDeflation 4y ago
> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these situations are obviously somewhat different, but if what we're starting to hear is correct, FTX may be one of, if not the, biggest financial frauds/scandals in history. The media doesn't seem to be treating it as such.
- jjallen 4y ago
  This is a great point. I guess I am skeptical that everything will be lost, but even if it's only half it will still be an absolutely enormous bankruptcy and loss. If all of the actual cash, the real liquid assets were withdrawn leaving only illiquid, relatively valueless crypto tokens, and those tokens are sold down over the coming months then the percentage losses as a percentage of the max or total value they managed will be very high indeed. Sorry for the run-on sentence.
  - anonymoushn 4y ago
    The secondary market for claims against FTX is pricing those claims at about 5c
- gadders 4y ago
  I can't think of any possible reason. https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-biden-democratic-party-second-biggest-donor/ https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-bid...
  - nova22033 4y ago
    Ryan Salame, the co-CEO, donated heavily to the GOP.
    - 4y ago
lvl102 4y ago
Coinbase has to be the biggest winner here. Despite some odd stories about Armstrong past couple of years, they appear to act like “adults”. BTC and ETH are not going away for awhile.
- HDThoreaun 4y ago
  Everyone in the crypto sphere is a gigantic loser. The overall market cap may never recover and there is surely going to be much lower volume because of this. Maybe the biggest winner is traditional equity holders since all the crypto exiters will probably park their money in stocks.
  - lvl102 4y ago
    I am convinced BTC and ETH are both here for the long haul or at least until Fidelity dumps them. That’s when I will know the game is over. Just get ready for the next shitcoin era in about two years. My guess is Elon will roll out crypto tied to Twitter when he’s ready to cash out.
tromp 4y ago
> Having several years’ worth of experience at a trading firm does not make you a geniusーthe top tier of such firms hires well over a hundred new employees every year. Renaissance Technologies hires less than a dozen new employees per year...
spaceman_2020 4y ago
Going through all their shenanigans, any legal activity on the exchange was rare. Extremely criminal behavior. SBF would buy tokens from his personal account, Alameda would then buy the same tokens, and then FTX would list those tokens after Alameda bought them. Criminal beyond measure and it's absurd that all of these big name funds did not do even ten minutes of due diligence. The Ontario Teacher's Pension Fund was "investing" in trash like this without even looking at their corporate governance. How do you treat a pension fund like that?
- jojobas 4y ago
  Fraud upon fraud upon embezzlement upon fraud fraud.
- AustinDev 4y ago
  When do we find out the fund’s partners bought the tokens before FTX listed them? That’s what I’m waiting for it’s the only way the lack of DD makes any sense.
- mckirk 4y ago
  I'm not actually sure that particular move is criminal. Morally reprehensible, most certainly, but my understanding was that, since crypto isn't regulated like a security by the SEC or anyone else, you are free to pump&dump all you want without having to fear legal consequences.
deleted 4y ago
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eternalban 4y ago
> This is, frankly, just absurd and incomprehensible. It makes absolutely no senseーwhat is he doing? I struggle to imagine the state of his mind at the moment. Apparently working on his defense. Temporary loss of mental faculties due to drug use, along with this "it wasn't anything other than Sam on drugs" & (yes there it is again) "incompetence" article. Country club prison it is to be then, after all. I've seen tweets that question the origin story of first windfall of SBF. Has anyone actually vetted that initial "arb" that was the pretext for Forbes et al to introduce us to SBF the virtuous genius? These tweets claimed surprise that it could have been done without substantial unmentioned support. I would start digging there.
zone411 4y ago
This looks like a plausible scenario about what happened at Alameda that matches with what I read earlier (especially the effect of Luna's collapse): https://twitter.com/AutismCapital/status/1592406121368543233/photo/1 https://twitter.com/AutismCapital/status/1592406121368543233...
terminal_d 4y ago
Who is the author of this piece?
NDizzle 4y ago
It’s a bipartisan, top to bottom rug pull exposing the corruption everywhere. Fucking nothing will happen. Here is the turtle’s cut, for example. Out in the open. https://docquery.fec.gov/cgi-bin/fecimg/?202210159536655878 https://docquery.fec.gov/cgi-bin/fecimg/?202210159536655878
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jrochkind1 4y ago
A side issue, but I found it distracting that the text consistently refers to Caroline Ellison by her first name alone, rather than last name or both names or initials like all other people discussed (and like is generally done for public figures covered in news articles etc). But I'm not in the "community", I don't read a lot of this inside baseball stuff. Is this the way she is usually referred to? It looks like her twitter name, in tweets quoted here, was just her first name too? And she's referred to by just her first name in the "insider's account" quoted at the end too. What's up with that?
- aliqot 4y ago
  she went by other names like "Fake Charity Girl"
- smcl 4y ago
  It opens by using their full names, but goes on to refer to them as sbf, caroline and trabucco in the rest of the piece. I guess it's like "zuck" and "pg" etc, I don't think it was meant in a bad way.
- joenot443 4y ago
  Sometimes peoples' first name ends up being what they're known as by the general public, usually because using just the last name might be ambiguous. Nobody called him "West" before the name change, it was always "Kanye". Similarly, one might not immediately know who "Winfrey" is, but everyone knows "Oprah". Presumably, since Larry Ellison is also a figure in the high-net-worth tech world, one might unintentionally mislead the reader by just using Caroline's last name, so in this case I see people just using her first. I don't think there's much more to it than that.
  - jrochkind1 4y ago
    I mean in that first-name-celebrity sense, it actually is kind of bombastic, rather than denigrating. Is another read. It still seems weird to me. The celebrity first-name-ism is sort of an attempt to claim a global fame, as well as a sort of artificial familiarity. I refused to call them "Hillary" or "Bernie" either, they aren't my friends, they are public figures. It seems notable and weird and interesting to me in this case (as well as distracting as a reader who wasn't expecting it), but I'm not certain or making assumptions about what's behind it, I'm curious.
mola 4y ago
This is really low quality 'reporting'. Those tangents about how bad SBF blog is compared to Carroline's. Wtf? He calls out NYT research, but he bases his "research" on random anonymous forum msgs... The world really is dumbing down...
qsi 4y ago
As often is the case, Matt Levine has an amazingly detailed, horrific and informative rundown of it all at https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-... The FTX "balance sheet" (which was a spreadsheet) had a cell called "hidden, poorly internally labled ‘fiat@’ account”. Another key bit from Levine: "If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison." And that's not all. This is fraud on a truly epic scale... Read the whole thing. Edited to add that the HIDDEN POORLY INTERNALLY LABELED Account had a value of negative $8 billion.
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hiidrew 4y ago
This is a great summary of what I've read so far. I haven't read any of Levine's coverage but this is certainly a better breakdown than the NYT piece.
1letterunixname 4y ago
Not to be confused with IBM Research Almaden. https://research.ibm.com/labs/almaden/ https://research.ibm.com/labs/almaden/
fxtentacle 4y ago
I didn't know before that they were all so much into drugs.
gedy 4y ago
Maybe a silver lining to all this is the vaporizing of some of the money printed into existence over past decade.
funstuff007 4y ago
I'm starting to feel there is little daylight between Colonel Kurtz and SBF.
IdPreferNotTo 4y ago
we should have death penalty with pretty low threshold for white collar crime
pmfgpmfg 4y ago

475 points by amadeuspagel 4y ago

voxadam 4y ago

Archive: https://archive.ph/kkpuz https://archive.ph/kkpuz

Abecid 4y ago
Nice the site is down now for some reason

gillesjacobs 4y ago

I like how OP opens smugly by calling the NYT article a fluff piece, then proceeds to immediately cite anonymous Twitter anecdotes as better sources. He's right about the specific NYT article not including much pertinent information, but they're a serious journalistic publication and have verification standards for sources.

wikfwikf 4y ago
But the author makes it very clear in the second par "our claims only remain tentative at best". Isn't it much more useful to write something which actually tries to answer the question of what happened, albeit with appropriate caveats, than something which doesn't advance the understanding of the reader at all?
- TotoHorner 4y ago
  The New York Times piece is even worse, since it paints a misleading picture of SBF and his cronies losing all the money accidentally rather than malice (far more likely).
  - nl 4y ago
    Actually it's almost the opposite. This piece speculates very strongly about SBF's stimulant usage degradating his cognitive abilities. Eg: > If the above observations about SBF’s personality and competence are even half true, that would go a great deal toward explaining Alameda’s losses. The entire article goes into much further depth. But it doesn't even speculate about malice.
    - blitzar 4y ago
      "their systems became unprofitable" - "Alameda & FTX jointly continued to lose large amounts of money" - "uncompetitive market-making strategies, risky lending practices" - "erratic behavior and unprofitable gambling". > losing all the money accidentally rather than malice (far more likely) They sound an awful lot like trading / accidental losses than malice to me.
      - oldgradstudent 4y ago
        Alameda was a hedge fund. It could lose all of its money and it would be totally fine. The moment they touched customer funds it became fraud and theft. This was not accidental. Losing it in trading might have been, but it was trading with stolen funds.
        nl 4y ago
        I agree with that. I don't think this was malice though - just extreme stupidity (and hopefully criminal). I think they thought they could trade their way out of it. That's different to malice which goes to motivations.
        anonymoushn 4y ago
        Alameda just non-maliciously gave their own account special privileges on their own exchange, non-maliciously front-ran customer orders, non-maliciously traded on material nonpublic information (their own exchange listings), non-maliciously used their ownership of their exchange to strike trades that caused them $400mm of losses in one of their multiple KCG-style algorithmic meltdowns, non-maliciously stole billions of dollars from their exchange's customers, non-maliciously lied about Bahamas residents being senior to all other creditors so they could withdraw hundreds of millions of dollars again, non-maliciously "hacked" their exchange wallets to steal additional hundreds of millions of dollars from their creditors, and non-maliciously prematurely unlocked hundreds of millions of dollars of FTT and sent it to binance to dump.
  - andromeduck 4y ago
    The guy is Bronxe 2/3 in league - there's nothing to degrade.
- rkagerer 4y ago
  There's so much rampant speculation in this article... for me it lost a degree of credibility around the point he fixated on the drug aspect. Despite all the disclaimers. Yes, it paints one picture of how the losses could have added up, but I'm looking forward to more exhaustively investigated reports grounded in more than heresay and gossip.
  - andromeduck 4y ago
    We have photographic evidence. What more do you need? This isn't a criminal court.
    - HDThoreaun 4y ago
      That picture could've been literally anything as far as I could tell
      - andromeduck 4y ago
        https://twitter.com/autismcapital/status/1592237980458323969?s=46&t=lKiusoeb_7UDuTzsThNEjg https://twitter.com/autismcapital/status/1592237980458323969...
  - TheOtherHobbes 4y ago
    Completely unrealistic. You'll never find rampant drug abuse in the financial industry. Certainly not on Wall St.
    - williamcotton 4y ago
      Is it more fun to read and talk about the story if it covers existing tropes about rampant drug abuse in the financial industry or more fun to read and talk the story without those tropes? Is it more fun if the shared story has a clear villain or more fun if the shared story has a diffusive, complex relationship between good and bad between not only the characters but also the readers?
  - anonymoushn 4y ago
- naijaboiler 4y ago
  despite being tentative, I would guess its the best explanation of what happened. Their handing out margins, and market-making approach with Alameda left them potentially liable to losing lots of money really fast.
why_only_15 4y ago
the anonymous Twitter anecdotes are clearly far better than what the NYT people can come up with because Twitter is where all of these people spend their time.
dereg 4y ago
> they're a serious journalistic publication and have verification standards for sources It goes both ways. It seems like they didn't do much verification of Sam's claims.
TotoHorner 4y ago
> He's right about the specific NYT article not including much pertinent information, but they're a serious journalistic publication and have verification standards for sources. Ok? Regardless, this piece does a significantly better job than the NY Times and the "serious journalistic publication". The times articles actually misleads readers into thinking that the FTX downfall was moreso from bad timing & outside attacks then from SBF fraudulently stealing user funds. > immediately cite anonymous Twitter anecdotes as better sources The Twitter accounts directly quoted have many followers and a long history of tweets that are easily searchable. If you're referring to the Autism Capital tweet, that's a tweet of a photograph which you can look at yourself. It's clearly a stimulant that says EMSAM on it. Name the specific tweets in the piece that you find incredulous rather than an ad hominem.
renewiltord 4y ago
Interesting, this displays a classic problem with the NYT: they end up searching for their lost keys under the streetlamp since that's where the light is. If they report on an organization that has $1 million in verified assets, but the organization is suspected to have $999 million in assets and $2 billion in liabilities, they will report the organization as solvent because they have verification standards for sources and are a serious journalistic publication. Therefore, they can only publish about the $1 million in verified assets. The organization could therefore be widely suspected to be insolvent, but reported by the NYT as solvent. In fact, that's what happened this time. Perhaps this is why the NYT's Judith Miller has such prominent roles in journalism.
ZephyrBlu 4y ago
If you had been following this whole saga at all you would know that Twitter anons have been a way better source of information than anyone else. The on-chain anaylsis, digging and commentary done by people on Twitter has been insanely insightful.
- SilverBirch 4y ago
  Twitter might provide more information than the NYT, but there's a reason NYT doesn't publish it - because the NYT wants to be reliable. They want their claims to actually stand up to scrutiny and be an accurate portrayal of the events we know happened. Whereas big chunks of this article are just pure speculation. The whole section about how Alameda might have had a rogue algo are just made up out of whole cloth. Is it true? Who knows, there's certainly no evidence for it, but let's stick it down as $1Bn of loss anyway. This article is very little more than just a gossip rag version of the NYT article.
  - listenallyall 4y ago
    There was a time, not that long ago, when what you say is true. Unfortunately NYTimes gave up caring about accuracy and reliability a while ago.
  - ZephyrBlu 4y ago
    > This article is very little more than just a gossip rag version of the NYT article This characterization is so far from the contents of the article I have to assume this comment is in bad faith or you're extremely biased towards the NYT. The article is 90% discussing facts/quotes from various sources and 10% speculation on what actually happened by people who are very familiar with crypto markets. The NYT piece on the other hand contains almost no facts (90% narrative) and throws a pity party for SBF. It's a complete joke. NYT piece: https://archive.ph/413e0 https://archive.ph/413e0. E: the author of this piece even states on Twitter that it's mostly a compilation of known information. Nowhere near gossip or speculation. https://twitter.com/0xfbifemboy/status/1592387837126905857 https://twitter.com/0xfbifemboy/status/1592387837126905857
TedShiller 4y ago
- blitzar 4y ago
  Yeah it was in the basement of a pizza place right?
- EdwardDiego 4y ago
  Heard of it. Repeatedly. Never seen any, you know, proof.
  - petchyindee 4y ago
    Both the New York Times and the Washington Post have by now admitted the legitimacy of the Hunter Biden laptop story (of course they waited for the election to be over before doing so). If you haven't seen any proof, it's because you haven't looked.
    - EdwardDiego 4y ago
      The legitimacy of _which_ story about his laptop? Was it really filled with child porn? There were so many stories. Please feel free to share links to the NYT or WaPo acknowledging all this truth. I feel very remiss in having missed it.
      - PubliusMI 4y ago
  - AustinDev 4y ago
    If you know how to torrent you can download an image of his iPhone or iPad taken from that same laptop.
    - EdwardDiego 4y ago
      Why would I need to torrent it? And how do I know it's legitimate? I had assumed that the big news about its contents would break any day now. All I've ever seen is people talking about what people told them that they totally saw on it.
lawrenceyan 4y ago
The person who wrote this post is pretty well known in the crypto space. Not saying that what was written here is guaranteed to be accurate, but it's likely to be much closer to reality than what the New York Times put out. To be clear, I enjoyed Levine's commentary on the situation so it's not just because I dislike mainstream publications.
- trompetenaccoun 4y ago
  Never heard of them, I've been in the crypto space for many years. Their social media looks like it's run by a teenager and I'm not not being facetious, it literally reads like a 14 year old boy runs the account. The person also writes so many tweets they'd hardly have time for serious work. Over 90% are jokes, memes and rumors. https://nitter.cz/0xfbifemboy https://nitter.cz/0xfbifemboy Not sure how this stuff makes it to the top on HN.
  - lawrenceyan 4y ago
    It's how you say, the "lingua franca"? I myself greatly enjoy it and am happy to see it become more widespread, but that's mostly because I grew up immersed in the culture.
  - wil421 4y ago
    Yikes he posted a screenshot of your comment on Twitter. I agree with you about the tone and despise reading meme filled articles or tweets.
    - hytdstd 4y ago
      I'm confused, I don't see any memes in the article. Were they deleted?
      - deleted 4y ago
        [deleted]
    - lawrenceyan 4y ago
wweeeebb 4y ago
The NYT article was biased. Have you read it? Read the author's other articles and the sharp shift in tone. He is strictly apologetic towards the FTX ponzi scheme, the author's behavior is to the level which one could call morally compromised. He has a history of badmouthing other exchanges (e.g. Kraken) while singing the praises of FTX. Appeals to authority are weak compared to facts laid bare. The fact is that the NYT author has made clear biases against other exchanges and overly forgiving of a single exchange guilty of customer theft, which is papered over in his article. This is unusual compared to all other reporting of FTX amongst mainstream jouranlists. There were no articles attempting to humanize Bernie Madoff, this article hides the fact that SBF ran a ponzi scheme, imagine the same with Madoff, it would be shocking. This is shocking. Imagine having the Bernie Madoff subheading, "he had expanded too fast and failed to see warning signs". This is the scale of ludicrousness here. The facts aren't subjective or unclear in any way, FTX didn't have customer deposits, which they claimed to have up even until the very end. When it comes to journalism, this is an unforgivable failure.
anonu 4y ago
Agreed. This article is a fun read at best.
bigbacaloa 4y ago
Agreed. I'm sure that the NYT checks that its twitter sources have the little blue check mark before publication.
shawabawa3 4y ago
The NYT article is a shockingly bad puff piece. It doesn't once mention fraud. Doesn't call out that Alameda borrowing funds from FTX deposits is insanely illegal Makes it sound like poor SBF got unlucky and it wasn't his fault he recklessly gambled $8+B of customer deposits
- spaceman_2020 4y ago
  Given both SBF and Caroline's family connections, I'm not surprised that the MSM is going to treat them with kid gloves.
  - headsoup 4y ago
    Let me guess, the article doesn't even mention those connections?
petchyindee 4y ago
Where were the verification standards of the NYT when they advocated for the Iraq War, for example? Trust in mainstream media is at an all-time low, and for good reason. These appeals to authority seem out of touch to me.
anonymoushn 4y ago
The piece is well informed and aggregates a variety of sources only a few of which are not completely credible. the NYT literally refuses to use the word "fraud" or hint at criminality after Sam stole ten billion dollars from customers.
- hoffs 4y ago
  Because actual journalists have standards to abide
  - jasmer 4y ago
    ? Stealing $10B is fraud. So when $10B goes missing, due to what we know is 'bad behaviour' at minimum, and all the other 'smoke' around this story - we should use that word in proper context. This is literally one of the biggest fraud cases in history. By their own 'standards' they are compelled to use the word in proper context.
    - thehappypm 4y ago
      I don’t think it’s up to their standard yet. Of course the whole world believes it’s a big case of fraud but they may need to wait until there is more clarity on that.
    - danaris 4y ago
      While I'm sympathetic to this position, I can also easily see an argument from the NYT's side that "fraud" is a specific criminal allegation, and as such using it in an article like this could open them up to libel or defamation suits.
      - enraged_camel 4y ago
        I mean, they can always call it "alleged fraud", right? They use that kind of language to describe all sorts of alleged crimes.
        4y ago
jasmer 4y ago
It's a 'puff piece' because they essentially take his words almost at face value, almost as if they are supporting his argument and don't dig more cynically into the underbelly of the issue. There are a lot of really crazy things happening with this story they don't touch upon. It's worse than a 'puff piece' to the point I suggest there is background manipulation going on. This is 'reputation laundering'. There is a huge amount of money here, and a ton of very, very powerful people involved. I suggest that within a few weeks this will be known to be truly a criminal enterprise and this NYT article will not age well.

kristianov 4y ago

Two words: Ponzi Scheme.

Cthulhu_ 4y ago
And worse: pretty much everyone was aware of it, but thought that because they were aware of it and everyone else is a schmuck, they could benefit from it. Some did, but only if they liquidated their holdings last year. NFTs this year was a microcosm of exactly that. Loads of people jumped on the bandwagon, buying up NFTs as they were released, but the whole thing collapsed again when it turned out the resale market just wasn't there. Except for the first movers.
- Gigachad 4y ago
  NFTs were like all cryptos. _Everyone_ knew they were bullshit but expected there would be one more greedy idiot to pass the bag to.
  - highwaylights 4y ago
    Unsure why this is downvoted. "lol at you spending all your money on magic beans, not like my magic beans which are very shiny and special."
- gasull 4y ago
  NFT art was likely a bubble, not a Ponzi. Many investments are bubbles, but not Ponzis.
  - deleted 4y ago
    [deleted]
  - TheOtherHobbes 4y ago
    NFT art was a scam intended to create a bubble. The art market itself is a bubble. Famous art is primarily used for investment, tax avoidance, and sometimes money laundering. Occasionally someone will hang it on a wall and look at it, but it's more likely to end up in storage. NFTs were designed as a microcosm of the art investment market, sold on the promise of increasing resale value - like the real thing. Of course that didn't happen. But some artists made a lot of money, some dealers made even more, and some people made significant savings on their tax bills.

flanked-evergl 4y ago

Before or after they were bribing politicians for favourable regulation for FTX at the detriment of their competitors who were not fraudulent? https://prospect.org/power/sam-bankman-frieds-multimillion-dollar-game/ https://prospect.org/power/sam-bankman-frieds-multimillion-d... > Crypto’s supporters in Congress are determined to ignore the massive gap in capacity between the two agencies; in fact, they likely understand that its incapacity is part of its appeal to FTX. A bill proposed by Sens. Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) seeks to grant the CFTC “exclusive jurisdiction over any agreement, contract, or transaction involving a contract of sale of a digital asset that is offered, solicited, traded, executed, or otherwise dealt in interstate commerce, including market activities relating to ancillary assets.” Perhaps in anticipation of such a move, FTX has stocked up its ranks with former CFTC officials. Former CFTC commissioner and acting chair Mark Wetjen is FTX’s head of policy and regulatory strategy. Ryne Miller, who was legal counsel to Gensler when he led the CFTC, is FTX’s general counsel. The Tech Transparency Project has also identified 14 other cases of CFTC alumni revolving into the crypto industry. Vote these people out.

SkyMarshal 4y ago
Well FTX's competitors are not necessarily not fraudulent, especially their primary competitor Binance.
- Semaphor 4y ago
  What fraud does Binance do besides evading U.S. regulations? note: This is an actual question.
  - perlgeek 4y ago
    If the story goes like FTX, we'll only know after it's too late. Not being incorporated anywhere (which is the last thing I heard about the matter) is an extremely bright red flag, so that's some evidence (in the Bayesian sense) that something is off.
  - xiphias2 4y ago

PeterStuer 4y ago

I find it curious Musk was able to snif out SBF as a bullshit artist in his 30 min. Meeting with him, whereas countless polititions and regulators aparently did not have a clue despite years of meetings and other contacts.

TotoHorner 4y ago
The politicians and regulators wanted SBF's money. Musk didn't need it.
mudrockbestgirl 4y ago
What a bunch of BS. It's obviously easy to say that in hindsight. There are a million reasons for why he did not take the investment, but in none of the published conversation was anything about him thinking SBF is lying. In fact, knowing Elon, if he had really said that at some point before FTX collapsed, he sure would have published it by now to prove how smart he is.
- highwaylights 4y ago
  bingo.
- memish 4y ago
  He was skeptical even though SBF wanted to give him money, not the other way around. And people Elon knew were pushing for SBF. Elon ended up ghosting him anyway. Look at the chat logs that were revealed in court. Michael Grimes [IBanker at Morgan Stanley]: Do you have 5 minutes to connect on possible meeting tomorrow I believe you will want to take? Elon: Will call in about half an hour Michael: Sam Bankman Fried is why I'm calling https://twitter.com/sbf_ftx/status/1514588820641128452 https://twitter.com/sbf_ftx/status/1514588820641128452 https://www.vox.com/platform/amp/recode/2021/3/20/22335209/sam-bank.man-fried-joe-biden-ftx-cryptocurrency-effective-altruism https://www.vox.com/platform/amp/recode/2021/3/20/22335209/s... https://ftx.us https://ftx.us Elon: ?? Elon: I'm backlogged with a mountain of critical work matters. ls this urgent? Michael: Wants 1-Sb. Serious about partner w/you. Same security you own Michael: Not urgent unless you want him to fly tomorrow. He has a window tomorrow then he's wed-Friday booked Michael: Could do $5bn if everything vision lock. Would do the engineering for social media blockchain integration. Founded FTX crypto exchange. Believes in your mission. Major Democratic donor. So thought it was potentially worth an hour tomorrow a la the Orlando meeting and he said he could shake hands on 5 if you like him and I think you will. Can talk when you have more time not urgent but if tomorrow works it could get us $5bn equity in an hour Elon: Blockchain twitter isn't possible, as the bandwidth and latency requirements cannot be supported by a peer to peer network, unless those "peers" are absolutely gigantic, thus defeating the purpose of a decentralized network. Elon: ["disliked" "Could do $5bn ..."] Elon: So long as I don't have to have a laborious blockchain debate Elon: Strange that Orlando declined Elon: Please let him know that I would like to talk and understand why he declined Elon: Does Sam actually have $3B liquid? Michael: I think Sam has it yes. He actually said up to 10 at one point but in writing he said up to 5. He's into you. And he specifically said the blockchain piece is only if you liked it and not gonna push it. Orlando referred Sams interest to us and will be texting you to speak to say why he (Orlando) declined. We agree orlando needs to call you and explain given everything he said to us and you. Will make that happen We can push Sam to next week but I do believe you will like him. Ultra Genius and doer builder like your formula. Built FTX from scratch after MIT physics. Second to Bloomberg in donations to Biden campaign. https://danluu.com/elon-twitter-texts/#62 https://danluu.com/elon-twitter-texts/#62 Will MacAskill [co-creator of effective altruism movement, Oxford professor, Chair of board for Global Priorities Institute at Oxford]: Hey - I saw your poll on twitter about Twitter and free speech. I'm not sure if this is what's on your mind, but my collaborator Sam Bankman-Fried (https://www.forbes.com/profile/sam-bankman-fried/?sh=4de9866a4449 https://www.forbes.com/profile/sam-bankman-fried/?sh=4de9866...) has for a while been potentially interested in purchasing it and then making it better for the world. If you want to talk with him about a possible joint effort in that direction, his number is [redacted] and he's on Signal. Elon: Does he have huge amounts of money? Will: Depends on how you define "huge"! He's worth $24B, and his early employees (with shared values) bump that to $30B. I asked about how much he could in principle contribute and he said: "~$1-3b would be easy-$3-8b I could do ~$8-15b is maybe possible but would require financing" Will: If you were interested to discuss the idea I asked and he said he'd be down to meet you in Austin Will: He's based in the Bahamas normally. And I might visit Austin next week, if you'd be around? Will: That's a start Will: Would you like me to intro you two via text? Elon: You vouch for him? https://danluu.com/elon-twitter-texts/#12 https://danluu.com/elon-twitter-texts/#12

lzooz 4y ago

bitcharmer 4y ago
There's an interview with her where you'd think they're talking to some cringy teenager and not a CEO of a multi-billion dollar company. https://youtu.be/8yqmf9sbaZw https://youtu.be/8yqmf9sbaZw
highwaylights 4y ago
Not planning to, but this still really saddens me. You can have grievances about what happened here (and I'm sure many do), but the overtly sexual attacks on Caroline Ellison should disgust us all. This isn't a defence of anyone's actions. If crimes have been committed, they should be investigated and prosecuted. If no crime has been committed, maybe regulation should be introduced - or maybe people should learn a valuable lesson about what happens when you go out of your way to engage in investments that derive their gains from dodging consumer protection regulations. In any case, the attacks on Caroline Ellison reflect really badly on the worst stereotypes of Crypto Bros as a whole - even though I'm certain it's a tiny minority of people involved in them.
- lzooz 4y ago
  What the fuck is a "sexual attack"
  - highwaylights 4y ago
    Maybe I'm misunderstanding your Google Images reference, but the content of the discussions on Reddit since this all kicked off have followed enough of a theme that I can take a guess at what some of those people have photoshopped up for the web masses. Probably easier to ask outright, why shouldn't I do a Google Images search for Caroline Ellison?
    - lzooz 4y ago
      Because those pictures can produce some darn explosive puking.

choeger 4y ago

A $3M monthly AWS bill. that's a nugget here. What that means is that amazon, Microsoft, and google are essentially selling shovels during a gold rush. On a subscription basis. In a form that makes it tedious and costly to actually figure out how many shovels your business has, what they do and who uses them regularly. Essentially, when there's a digital market hype, the big cloud providers collect their share on the revenue. Brilliant.

systemicdanna 4y ago
That doesn’t sound like a valid criticism of cloud service providers. Or shovel sellers.
- rippercushions 4y ago
  It sounds more like an admiring compliment. Although for cloud providers, the costs of things like hackers stealing credentials and using them to mine shitcoins are also considerable.
- kgwgk 4y ago
  It doesn’t sound as a criticism at all.
Dunedan 4y ago
Google not so much, as they still accumulate losses with GCP. [1] [1]: https://www.computerweekly.com/news/252523200/Google-results-show-bigger-GCP-operating-loss https://www.computerweekly.com/news/252523200/Google-results...
nicpottier 4y ago
Yearly, not monthly.
Kiro 4y ago
That's like saying people selling food during the actual gold rush were brilliantly capitalising on it and equivalent to the ones selling shovels.
4y ago

lordnacho 4y ago

Makes some sense. When stuff is messy, you can do financially stupid things. I've sat on desks that lost money from not realizing some very simple things like having options with upcoming dividends. If SBF really was on drugs and playing League of Legends badly, perhaps he also didn't know what was happening in his shop. But... you have all this money. Hire an adult? Almost anyone who's had a trading desk job would tell you to clean up. You don't need to have much experience to do this part, just get one of your friends that you must know from the business? Also, WTF would this say about Ontario Teachers' Pension Fund or Sequioa if the whole team was on drugs, playing games all day, and having no idea what their balance sheet looks like? I actually got Ontario into a fund I was at, and we'd have lost the investment if we hadn't behaved like adults. This is causing me some cognitive dissonance, because I don't think of the investors as the kind of people who'd even smile if they found me in the office playing a video game, let alone addled on drugs. Also about the market making strats not working anymore, I don't see why they'd even need it. Once the exchange is jump started and you have WM/Jump/JS on board, there's MMs on the platform and it feeds itself. Just keep marketing running. Hand out some FTT or something to retail. Do silly advertisements. Just turn off the algo that doesn't work.

wikfwikf 4y ago
The Ontario Teachers' investment is outrageous. They are charging middle-class people (by definition) good money from their retirement savings to make reasonable investing decisions and do due diligence.
- thablackbull 4y ago
  OTPP has quite a solid reputation and this particular investment was a miniscule speculative bet. You can see the performance over time here [1]. [1] https://www.otpp.com/en-ca/investments/our-advantage/our-performance-and-track-record/ https://www.otpp.com/en-ca/investments/our-advantage/our-per...
  - wikfwikf 4y ago
    It's not about performance or risk management, it's about due diligence. They should not be giving any amount of money to an organization with such poor internal checks of their finances.

ZeroGravitas 4y ago

I liked the chapter in Nate Sivers' Signal and the Noise when he talks about how hard it is to know if you're a good professional poker player. Been a while since I read it but feel like even after a couple of years of winning games and tracking his own performance, he had enough stats knowledge to realise that he didn't actually know if he was good or just lucky. The noise swamped the signal. This feels relevant to many of these trading things where people start to believe their own BS. If you've flipped a coin and it's came up heads 10 times in a row, why wouldn't you bet everything on it happening again? You're really good at getting heads when you flip. Humans aren't really built for that kind of thing.

bambax 4y ago
In Midnight Run (1988) when Marvin finds the Duke and Jack in the sandstone of Red Rock Country he exclaims "Am I lucky or am I just good?": https://www.youtube.com/watch?v=Gokkl2br7G8&t=152s https://www.youtube.com/watch?v=Gokkl2br7G8&t=152s Later in the movie, when Marvin decides to ask for more money and takes a Polaroid of the Duke in the bathroom of the motel, he comments to himself: "I amaze myself... I'm always thinking." The thing is, the character of Marvin is quite dumb, not a nice person and above all someone who never grasps the full picture -- but at the same time he has good instincts and is, in fact, a fairly good hunter. It's a dangerous combination.
- deleted 4y ago
  [deleted]
blitzar 4y ago
In crypto as in wall street bets. If your sample is "a bull market when every single week the price is higher than the previous" - then the signal and the noise confirm; if you lose money on monday buy the dip with your client funds - because you cant possibly lose.
pge 4y ago
The same is very true in VC investing. Because any individual partner does not make that many bets per year, and the time frame to exit is long, it is very difficult to distinguish skill from luck (including being in a long-term bull market like the last decade).

esoterica 4y ago

> In a podcast from 2019, SBF brags about making predictions on the timescale of 1-2 seconds > While this might have been considered highly competitive in 2019-era crypto markets, it is a far cry from the microsecond-level precision of market making in traditional finance. The author is confusing tick-to-trade with prediction horizon. The "microseconds" market makers talk about is how long it takes to react to incoming market data and send out a trade message. The 2 seconds SBF is talking about is how far ahead in the future you want to predict price changes over. Doesn't really inspire a lot of confidence in the rest of the analysis if this is the level of domain knowledge the author has.

lordnacho 4y ago
You're right about the technical aspect, but the rest of the critique is more about business level stuff like knowing what you have. I don't think you can say the whole piece lacks credibility because he got this thing mixed up.

zhxshen 4y ago

rkagerer 4y ago

One thing that stuck out at me in the NYT puff-piece was: Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange ... He said the size of the position was in the billions of dollars but declined to provide further details. Did FTX use their pool of customer deposits to extend leverage to margin traders?

shawabawa3 4y ago
Alameda went underwater on loans and they transferred customer funds from FTX to bail them out
anonymoushn 4y ago
The NYT is just lying. The people who controlled both FTX and Alameda stole funds from FTX (which FTX customers have claims against) and gave them to Alameda

moffkalast 4y ago

They couldn't find the nucular wessels.

remoroid 4y ago

For even more context of how bad SBF was at League of Legends, a large part of their player-base is children and teens. You would not expect a normal functioning 30 year old man to lose to 12 year olds after years of playing with the frequency he did.

rxyz 4y ago
I don't think League is a popular game in that demographic. I see it as a old man/woman game now, like counter strike
- remoroid 4y ago
  Do you have any data to back that up? Do you not understand that the lowest ranked players on the server are going to disproportionately include children that are bad?
  - pezezin 4y ago
    https://www.statista.com/statistics/1018224/league-of-legends-fans-by-age-usa/ https://www.statista.com/statistics/1018224/league-of-legend... https://theglobalgaming.com/lol/average-age-player https://theglobalgaming.com/lol/average-age-player According to that data, most players are between 18 and 34 years old, with children and teens being only 12% of the demographics.
    - remoroid 4y ago
      That is impossible to believe. Teens AND children only add up to 12%. No lol. The average age of league of legends pro is 22. None of them starting playing the game after 18. It makes no sense. Then I already pointed out that the rank SBF was in is populated with the worst players, which is more likely to be children that dont have a fully developed brain.
thinkingemote 4y ago
From what I understand (only seen a game, not played it), League of Legends is more similar to Starcraft where it's about strategy, knowledge and timing than the necessary very fast reaction times of teenagers found in a first player shooter. You would expect even retired people to be good at the game if they played enough. Regardless, playing video games, doing drugs, looking dishevelled and being over weight are all visible signs of some kind of internal disorder. Most people don't wear their disorder visibly, they either learn to hide it or it doesn't reveal itself physically. In this episode it's like the signs are treated as a good sign - of creativity.

SilverBirch 4y ago

This article spends quite a bit of time talking about SBF's risk appetite and how it might be drug related. I think that's missing a fairly obvious piece of logic. In order to decide to go into crypto trading you need to have an extremely high tolerance for risk. The crypto industry is self-selected for risk in the first place, you don't need complex explanations of why they use lots of leverage on highly volatile assets, that's literally the reason why they're there. If SBF had a low appetite for risk he wouldn't have entered crypto or started a start up, he would have stayed in trad-fi getting paid massive sums of money for some fairly basic quant work. It's not that Sam has a high risk appetite, it's that in order to get into the position Sam was in you need a high risk appetite. And that obviously poses a big problem for people who want to use a crypto exchange - because they can only find exchanges run by people with a massive risk appetite making it likely to blow up in your face.

wikfwikf 4y ago
I think there's a huge difference with someone who has a huge appetite for risk, and someone who is taking risks, essentially without oversight, while on dopamine-replacing drugs. Many people who work in conventional finance are well aware of how brain chemistry changes (caused by illness, medication, illicit drugs, or emotional and life changes) can push someone from being in control while pursuing risky but profitable strategies to being a degenerate gambling addict.
- MichaelCollins 4y ago
  Putting so much blame on the drugs seems like a way of casting Bankman-Fried as an addict/victim. In reality he's a thief and has been from the start of this scheme. He has a sociopathic disregard for others and cynically covers that with cheap talk of being an altruist.
  - disqard 4y ago
    Another HN commenter wrote that "EA is charity for sociopaths" https://news.ycombinator.com/item?id=33578131 https://news.ycombinator.com/item?id=33578131

croes 4y ago

It is always a good start when the author praises himself and insults others in the first paragraph. /s

KVFinn 4y ago

The extensive use of stimulants is alarming, though heavily speculative. What does the league of legends article say? That part seemed crazy speculative. I'm bottom quartile at FPS and fighting games but I enjoy them and play a lot. Dota 2 as well. And I've been top 1 percent at other games. Even higher for a bit in Auto Chess. I hope this isn't evidence of brain damage...

martynr 4y ago
FWIW: as a bona fide user of various anti-parkinsonian medications for their intended purpose, I can say with a degree of confidence that the speculation on cognitive impact (and impairment) is very plausible - and that the article is factually correct on the side effects in a Parkinson’s context. God knows what they would do to a brain with a “normal” dopamine level. It’s also worth noting (and quite frankly pretty harsh when you eventually realise) that the affected brain has massive difficulty recognising its own altered cognition and perceives its distorted interpretations and consequent chains of response as perfectly natural and justified. Not drawing any specific conclusions on the particular assertions in the article, but IMHO the interpretation is certainly plausible given the apparent drugs involved.
- 55555 4y ago
  There was a VERY interesting article on HN recently about the risk-taking/compulsive side effects of dopamine drugs.
  - jwozn 4y ago
    Got a link? Would be interested in reading this.
    - martynr 4y ago
      Seems to be this: https://knowingneurons.com/dopamine-makes-people-impulsive/ https://knowingneurons.com/dopamine-makes-people-impulsive/ Original HN threads here: https://hn.algolia.com/?q=dopamine+impulsive https://hn.algolia.com/?q=dopamine+impulsive

zozbot234 4y ago

So, is this the real 1) What 2) H post?

H8crilA 4y ago

> When loans were recalled in early 2022, an emergency decision was made to use FTX users’ deposits to repay creditors. Just so you know, this is a clear and obvious prison sentence in normal finance. Also FTX itself was trading with customer deposits instead of just keeping them like an exchange is supposed to do, which is also prison in normal finance. Matt Levine wrote a good piece on this debacle, and will probably write more. It is simply breathtaking, every paragraph evokes a massive "wat".

onlyrealcuzzo 4y ago
FTX supposedly collected 0.1% commission on $100B+ volume per day. Why couldn't they just get a loan to cover their losses?
- vgatherps 4y ago
  Neither of these numbers are correct, they imply 100M of profit a day. Volume is heavily weighted towards the highest tiers which on ftx were paying 0.015% to take and receiving 0.01% to make (given, alameda would receive no rebate). They've also never claimed to do 100B+ a day. They published stats about their volume as well as some other exchanges here: https://ftx.com/volume-monitor https://ftx.com/volume-monitor. It's stale since the collapse but they're claiming 16bn, and usually were claiming 5-10bn a day in the last month. Give some fudge factor for various traders at various tiers and this backs out to 1m a day order of magnitude. Not covering a multi billion dollar hole with that anytime soon.
  - onlyrealcuzzo 4y ago
    Okay - so even 0.01% on $10Bn = $1M per day = $365M per year, and - at the time - growing. One would think they should've been able to get a loan (if those numbers were real).
    - HDThoreaun 4y ago
      365 million against 10 billion isn't so great

Avado 4y ago

[dead]

halukakin 4y ago

"FTX periodically uses a portion of its profits to buy back FTT tokens. This makes FTT kind of like stock in FTX: The higher FTX’s profits are, the higher the price of FTT will be." I think this is an interesting alternative to equity vesting. Not all countries have laws that make equity vesting possible. Also this could work if you are a US company and hiring from all abroad. You can give tokens to your employers abroad, keep the token valuable as long as the company is profitable. What do you think?

deleted 4y ago
[deleted]
hn_20591249 4y ago
It could work, but the moment FTX started allowing FTT to be put down as collateral on multi-hundred million dollar liabilities, the entire house of cards fell apart.
pjc50 4y ago
> Not all countries have laws that make equity vesting possible. However, if tokens are securities, that doesn't mean you can legally sell/give them tokens either.

TrackerFF 4y ago

AFAIK, BTC and ETH have been classified as commodities - would FTX have to adhere to Commodity Exchange Act?

anonymoushn 4y ago
Do all companies in the world have to adhere to US law?
- AustinDev 4y ago
  Companies run by US citizens and that deal in US dollars certainly do.
  - deleted 4y ago
    [deleted]

jamesholden 4y ago

DebtDeflation 4y ago

> Most news accounts seem to portray the scale of the bankruptcy as relatively small. This is a key point. They lost $16B in customer deposits. LTCM lost $4.6B in investor funds. Enron lost $11B in shareholder capital. Interestingly, while Madoff is widely quoted as having lost $65B, that was almost all fabricated paper wealth, actual losses were around $18B and $14.4B of that was recovered and returned. All of these situations are obviously somewhat different, but if what we're starting to hear is correct, FTX may be one of, if not the, biggest financial frauds/scandals in history. The media doesn't seem to be treating it as such.

jjallen 4y ago
This is a great point. I guess I am skeptical that everything will be lost, but even if it's only half it will still be an absolutely enormous bankruptcy and loss. If all of the actual cash, the real liquid assets were withdrawn leaving only illiquid, relatively valueless crypto tokens, and those tokens are sold down over the coming months then the percentage losses as a percentage of the max or total value they managed will be very high indeed. Sorry for the run-on sentence.
- anonymoushn 4y ago
  The secondary market for claims against FTX is pricing those claims at about 5c
gadders 4y ago
I can't think of any possible reason. https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-biden-democratic-party-second-biggest-donor/ https://fortune.com/2022/11/10/sam-bankman-fried-ftx-joe-bid...
- nova22033 4y ago
  Ryan Salame, the co-CEO, donated heavily to the GOP.
  - 4y ago

lvl102 4y ago

Coinbase has to be the biggest winner here. Despite some odd stories about Armstrong past couple of years, they appear to act like “adults”. BTC and ETH are not going away for awhile.

HDThoreaun 4y ago
Everyone in the crypto sphere is a gigantic loser. The overall market cap may never recover and there is surely going to be much lower volume because of this. Maybe the biggest winner is traditional equity holders since all the crypto exiters will probably park their money in stocks.
- lvl102 4y ago
  I am convinced BTC and ETH are both here for the long haul or at least until Fidelity dumps them. That’s when I will know the game is over. Just get ready for the next shitcoin era in about two years. My guess is Elon will roll out crypto tied to Twitter when he’s ready to cash out.

tromp 4y ago

> Having several years’ worth of experience at a trading firm does not make you a geniusーthe top tier of such firms hires well over a hundred new employees every year. Renaissance Technologies hires less than a dozen new employees per year...

spaceman_2020 4y ago

Going through all their shenanigans, any legal activity on the exchange was rare. Extremely criminal behavior. SBF would buy tokens from his personal account, Alameda would then buy the same tokens, and then FTX would list those tokens after Alameda bought them. Criminal beyond measure and it's absurd that all of these big name funds did not do even ten minutes of due diligence. The Ontario Teacher's Pension Fund was "investing" in trash like this without even looking at their corporate governance. How do you treat a pension fund like that?

jojobas 4y ago
Fraud upon fraud upon embezzlement upon fraud fraud.
AustinDev 4y ago
When do we find out the fund’s partners bought the tokens before FTX listed them? That’s what I’m waiting for it’s the only way the lack of DD makes any sense.
mckirk 4y ago
I'm not actually sure that particular move is criminal. Morally reprehensible, most certainly, but my understanding was that, since crypto isn't regulated like a security by the SEC or anyone else, you are free to pump&dump all you want without having to fear legal consequences.

deleted 4y ago

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eternalban 4y ago

> This is, frankly, just absurd and incomprehensible. It makes absolutely no senseーwhat is he doing? I struggle to imagine the state of his mind at the moment. Apparently working on his defense. Temporary loss of mental faculties due to drug use, along with this "it wasn't anything other than Sam on drugs" & (yes there it is again) "incompetence" article. Country club prison it is to be then, after all. I've seen tweets that question the origin story of first windfall of SBF. Has anyone actually vetted that initial "arb" that was the pretext for Forbes et al to introduce us to SBF the virtuous genius? These tweets claimed surprise that it could have been done without substantial unmentioned support. I would start digging there.

zone411 4y ago

This looks like a plausible scenario about what happened at Alameda that matches with what I read earlier (especially the effect of Luna's collapse): https://twitter.com/AutismCapital/status/1592406121368543233/photo/1 https://twitter.com/AutismCapital/status/1592406121368543233...

terminal_d 4y ago

Who is the author of this piece?

NDizzle 4y ago

It’s a bipartisan, top to bottom rug pull exposing the corruption everywhere. Fucking nothing will happen. Here is the turtle’s cut, for example. Out in the open. https://docquery.fec.gov/cgi-bin/fecimg/?202210159536655878 https://docquery.fec.gov/cgi-bin/fecimg/?202210159536655878

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jrochkind1 4y ago

A side issue, but I found it distracting that the text consistently refers to Caroline Ellison by her first name alone, rather than last name or both names or initials like all other people discussed (and like is generally done for public figures covered in news articles etc). But I'm not in the "community", I don't read a lot of this inside baseball stuff. Is this the way she is usually referred to? It looks like her twitter name, in tweets quoted here, was just her first name too? And she's referred to by just her first name in the "insider's account" quoted at the end too. What's up with that?

aliqot 4y ago
she went by other names like "Fake Charity Girl"
smcl 4y ago
It opens by using their full names, but goes on to refer to them as sbf, caroline and trabucco in the rest of the piece. I guess it's like "zuck" and "pg" etc, I don't think it was meant in a bad way.
joenot443 4y ago
Sometimes peoples' first name ends up being what they're known as by the general public, usually because using just the last name might be ambiguous. Nobody called him "West" before the name change, it was always "Kanye". Similarly, one might not immediately know who "Winfrey" is, but everyone knows "Oprah". Presumably, since Larry Ellison is also a figure in the high-net-worth tech world, one might unintentionally mislead the reader by just using Caroline's last name, so in this case I see people just using her first. I don't think there's much more to it than that.
- jrochkind1 4y ago
  I mean in that first-name-celebrity sense, it actually is kind of bombastic, rather than denigrating. Is another read. It still seems weird to me. The celebrity first-name-ism is sort of an attempt to claim a global fame, as well as a sort of artificial familiarity. I refused to call them "Hillary" or "Bernie" either, they aren't my friends, they are public figures. It seems notable and weird and interesting to me in this case (as well as distracting as a reader who wasn't expecting it), but I'm not certain or making assumptions about what's behind it, I'm curious.

mola 4y ago

This is really low quality 'reporting'. Those tangents about how bad SBF blog is compared to Carroline's. Wtf? He calls out NYT research, but he bases his "research" on random anonymous forum msgs... The world really is dumbing down...

qsi 4y ago

As often is the case, Matt Levine has an amazingly detailed, horrific and informative rundown of it all at https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-... The FTX "balance sheet" (which was a spreadsheet) had a cell called "hidden, poorly internally labled ‘fiat@’ account”. Another key bit from Levine: "If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying “just what do you think you’re doing Dave?” You cannot apply ordinary arithmetic to numbers in a cell labeled “HIDDEN POORLY INTERNALLY LABELED ACCOUNT.” The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison." And that's not all. This is fraud on a truly epic scale... Read the whole thing. Edited to add that the HIDDEN POORLY INTERNALLY LABELED Account had a value of negative $8 billion.

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hiidrew 4y ago

This is a great summary of what I've read so far. I haven't read any of Levine's coverage but this is certainly a better breakdown than the NYT piece.

1letterunixname 4y ago

Not to be confused with IBM Research Almaden. https://research.ibm.com/labs/almaden/ https://research.ibm.com/labs/almaden/

fxtentacle 4y ago

I didn't know before that they were all so much into drugs.

gedy 4y ago

Maybe a silver lining to all this is the vaporizing of some of the money printed into existence over past decade.

funstuff007 4y ago

I'm starting to feel there is little daylight between Colonel Kurtz and SBF.

IdPreferNotTo 4y ago

we should have death penalty with pretty low threshold for white collar crime

pmfgpmfg 4y ago