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FTX Owes Money to More Than a Million People, Court Filing Suggests
- vyrotek 4y agoWhen you owe the bank a million, you have a problem. When you owe the bank several billion, the bank has a problem. When the unregulated-bank owes billions to millions of people, I guess the people have a problem?
- ru552 4y agoIf FTX pays anyone back, it will be the institutions that hold their debt.
- rafale 4y agoCelsius argued that depositors were actually lenders. I wonder if FTX will try the same angle. It's gonna be harder to justify because while Celsius was all about yield, FTX was a traditional exchange doing custody on behalf of its clients.
- zoklet-enjoyer 4y agoFTX was giving 8% interest on the first $10k deposited. I definitely considered myself a lender and I gtfo before shtf
- TremendousJudge 4y agoWhat I don't understand is how this kind of stuff doesn't qualify them as a bank
- labster 4y agoCrypto: reimplementing the financial system, poorly.
- trophycase 4y agoFTX is not crypto. If you had a bank that accepted ears of corn and bushels of apples for deposit, and trading between them, you wouldn't blame farmers when that bank stole everyone's deposits.
- Sebguer 4y agoBarely a year ago, you were telling someone they were ridiculous for claiming that FTX might go under if Tether had a major event: https://news.ycombinator.com/item?id=28797080 https://news.ycombinator.com/item?id=28797080
- trophycase 4y agoI said it was ridiculous to claim that Tether collapsing would cause "most major exchanges to go under". Congratulations on totally twisting my words though. "Most major exchanges" don't have much exposure to tether.
- deleted 4y ago[deleted]
- ceejayoz 4y agoIf a whole bunch of banks trading in corn/apples did that, though, things start to be a bit different.
- zoklet-enjoyer 4y agoYeah I would. Why wouldn't you blame the thief?
- andirk 4y ago> FTX is not crypto And a bank is not the ears of corn in the analogy. The thief here is FTX which is like the bank. You don't blame the corn for being stolen. Yes, blame the thief.
- lazide 4y agoWell, first the regulators would need to grow a pair.
- deleted 4y ago[deleted]
- thewataccount 4y agoNot FTX - but I know Coinbase has stated in their earnings report that they will use user deposits to pay debtors back first in the case of bankruptcy. Edit - better explanations below this Also a friendly reminder to everyone not to trust any exchange at all with crypto unless you're actively trading it, keep it in a wallet!
- bonestamp2 4y agoI forgot about that. I don't have much at coinbase, but going to move that over to my ledger where it should be anyway.
- maerF0x0 4y ago> my ledger where it should be anyway. +1 to this. Remember the classic phrase that goes something like "Not your keys, not your crypto"
- Gwypaas 4y agoThey want to do that, pending what the bankruptcy court would decide which they have no power to influence. Like the Kraken ToS. > Ownership. Title to Digital Assets shall at all times remain with you and shall not transfer to Payward, except as provided herein. All interests in Digital Assets we hold for Kraken Accounts are held for customers, are not property of Payward. As the owner of Digital Assets in your Kraken Account, you bear all risk of loss of such Digital Assets. None of the Digital Assets in your Kraken Account are the property of Payward. Payward does not represent or treat assets in your Kraken Account as belonging to Payward. However, a court may disagree with Payward’s treatment of your assets and subject them to claims of Payward’s creditors. https://www.kraken.com/legal https://www.kraken.com/legal Which means that the current fad of "proof of reserves" means absolutely nothing without the liabilities side, both customer accounts and for the company itself.
- thewataccount 4y agoThanks for the correction!
- encryptluks2 4y agoWhat about institutions that owe FTX and Alameda Research money? Didn't FTX and Alameda invest in companies as well.. and will those companies still owe a percentage of those investments in order to liquidate money?
- skinnymuch 4y agoPresumably yeah. Like the Robinhood stake is surely going to be liquidated. Do they own large stakes in many other liquid companies?
- encryptluks2 4y agoYes, they have been investing in various crypto companies for a long time. Their name has frequently been attached as seed investors in numerous startups, specifically in the Solana ecosystem.
- stefan_ 4y agoRead some of the letters to the judge in the Celsius bankruptcy: https://twitter.com/molly0xFFF/status/1550160830762782724 https://twitter.com/molly0xFFF/status/1550160830762782724 I think when massive scams like FTX start airing Super Bowl ads, we all have a problem.
- pjc50 4y agoDoes America even have an Advertising Standards Agency? It seems like you can just air massive frauds to everyone and nobody notices.
- noasaservice 4y agoWell, kind of. The Federal Trade Commission (FTC) does handle fraudulent advertisements and the like.... If they even address your complaint, AND if the complaint comes in your favor, you are still guaranteed nothing. And the "punishments" are at the level of 'just doing business' for most cases. With FTX, its when rich people get hit is when the government gets involved. The rest of us can get stuffed.
- andirk 4y agoThe commercials said "fortune favors the _brave_" where brave almost literally means risky. Take note of every commercial you see and you'll notice that some huge % of them have dead bodies on their balance sheets, poisoned water, coups, criminal behavior. Like how the (unnamed?) main character of Fight Club's job as an insurance adjuster was to figure out if it was cheaper to do a recall or pay off the victims' families. All that said, yeah absolutely no one even glancing at FTX's books before letting them in the room is very 2008-ish.
- splitstud 4y ago
- agumonkey 4y ago> the people have a problem? the people are the problem
- JamesianP 4y agoAt least one bright side. The victims definitely have a case against FTX and gang, but not against me or other taxpayers..
- rodgerd 4y ago> When the unregulated-bank owes billions to millions of people, I guess the people have a problem? That should definitely be the case. The moral risk of anyone else covering this would be catastrophic.
- jeroenhd 4y agoIsn't that the point of dealing with unregulated businesses? To cut through the red tape of protective regulation and responsibility? Huge risk, but potentially huge rewards. The bankruptcy will divide whatever value is still left to be divided. Some of the missing value may be obtained from the malicious people behind the company through lawsuits, and some people may go to jail for knowingly scamming people. In the end, this is not a bank, and the regulations protecting people from scummy banks, even the new legislations written after the 2008 crisis, don't apply. This isn't the first business with millions of customers to go bankrupt. When such a company fails, getting your money back is your problem. Large-scale mismanagement and uneducated customer bases like this is the reason banks and other finance companies are under so much regulatory pressure.
- btilly 4y agoI like how the article acknowledged, ...FTX operated a highly complex corporate structure with dozens of companies... without pointing out that one of the reasons for the complex structure was to make the fraud harder to track down.
- boeingUH60 4y agoAre you sure? FTX was collecting deposits in many countries, so I think they had to have local subsidiaries to enable that...The corporate structure seems orthogonal to their fraud
- btilly 4y agoYes, I'm sure. For example FTX was able to claim, with a vague semblance of honesty, that it had assets to cover liabilities. But in fact what it did was transfer money to other companies that were part of the network, like Alameda, and get back tokens with a book value but no real market value, like Serum. On paper both companies had engaged in a fair transaction. In reality customer money got moved to another company that was then free to do with it what it wanted, all hidden behind the corporate structure. Read https://archive.ph/TOgjK https://archive.ph/TOgjK for Matt Levine explaining exactly how this actually worked.
- basch 4y agoThat relationship only requires two companies, not 130.
- tibbar 4y agoI don't think this is quite right. Matt is saying that the Serum wasn't exchanged for customer money -- it was more or less created out of thin air. He suggests that most of FTX's magical crypto assets like Serum were created for < 1 billion of customer money. He points out that we don't know from the balance sheet where they flushed the $16billion of investments. (It does seem like a lot of it went to Alameda, but not in exchange for Serum. And we still don't know how Alameda lost all the money it lost.)
- memish 4y agoYou might even say "his ambitions exceeded his grasp" https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankman-fried-crypto-bankruptcy.html https://www.nytimes.com/2022/11/14/technology/ftx-sam-bankma...
- anonporridge 4y agoNYT integrity was severely compromised by the piece. They're clearly deeply in bed with this guy and trying to massage the narrative in his favor.
- jmull 4y agoThis is a weird, bad take, that keeps popping up on every FTX-related story. I don't get it. What do you think this story says? I read it and it just can't be characterized the way you are saying.
- dahdum 4y agoJust repeating what others are saying, but to me it's a remarkable puff piece that presents him as a down-to-earth noble guy that maybe made some mistakes. He's worse than Madoff and these sycophant journalists are still eating out of his palm.
- jakelazaroff 4y agoYes it can? It's a remarkably lenient profile of someone who just stole upwards of $10B from retail investors. We're talking about people's life savings. Their tuition money. The down payment for a house. Here are some choice quotes: > Mr. Bankman-Fried did, however, agree with critics in the crypto community who said he had expanded his business interests too quickly across a wide swath of the industry. He said his other commitments had led him to miss signs that FTX was running into trouble. > “Had I been a bit more concentrated on what I was doing, I would have been able to be more thorough,” he said. “That would have allowed me to catch what was going on on the risk side.” He didn't "miss signs". There was nothing to "catch". He stole billions of dollars from his customers. > Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways. How bad a guy can he be? > Mr. Bankman-Fried said he wished “we’d bitten off a lot less.” Bitten off less of his customers' money, he means? > As FTX has crumbled, Mr. Bankman-Fried has been “working constructively with regulators, bankruptcy officials and the company to try to do what’s best for consumers,” he said on Sunday. What a mensch! > He has also found other ways to occupy his time in recent days, playing the video game Storybook Brawl, though less than he usually does, he said. “It helps me unwind a bit,” he said. “It clears my mind.” So happy for him. > Shortly before the interview, Mr. Bankman-Fried had posted a cryptic tweet: the word “What.” Then he had tweeted the letter H. Asked to explain, Mr. Bankman-Fried said he planned to post the letter A and then the letter P. “It’s going to be more than one word,” he said. “I’m making it up as I go.” > So he was planning a series of cryptic tweets? “Something like that.” > But why? “I don’t know,” he said. “I’m improvising. I think it’s time.” What does this even mean? Why include it in the story?
- Taniwha 4y agoBut is it really "money"? I'm pretty sure they just owe them some large numbers, there are plenty of large numbers where those ones came from I'm sure they can make some more
- 2devnull 4y agoI wish there was more focus on the “buying political influence with dark money” angle, and less on “young tech guy gets rich and destroys the economy” angle of the story. As a group of mostly young tech guys and girls, we should be concerned about the narrative society, especially Wall Street and their media outlets, convey about us. Recall when redditors buying GME stock was being blamed for the many ills of capitalism. The whole robbinhood saga. The scapegoat is always a smart, wealthy young technologists. SBF is more of a Soros than an Aaron Swartz. Wall Street loves to blame Silicon Valley, but it’s bs.
- mise_en_place 4y ago
- TacticalCoder 4y agoWhen? After the SBF fraud was exposed?
- oh_sigh 4y agoWhat does that have to do with SBF and others at FTX being Jews?
- ars 4y agoHe was accused of saying "Kanye Was Right" about Jews. That's pretty blatant antisemitism, and you should be ashamed of yourself for trying to imply anything else. I'm flagging your post.
- esotericimpl 4y ago
- gruez 4y ago>As a group of mostly young tech guys and girls, we should be concerned about the narrative society, especially Wall Street and their media outlets, convey about us. Recall when redditors buying GME stock was being blamed for the many ills of capitalism. The whole robbinhood saga. Source? I hate statements like these because it sounds like there's a central blame committee out there handing down blames (or at least some sort of consensus), when in reality in all likelihood it's a hot take by some Bloomberg columnist.
- Mountain_Skies 4y agoCal-Berkeley is removing the FTX logo from their football field. They had a ten year naming rights deal to call it 'FTX Field' and the company paid in crypto. I wonder if Cal got the full amount up front and converted it into cash or not.
- thehappypm 4y agoIt would be astonishing if Cal didn’t liquidate immediately.
- 4ggr0 4y agoThe Mercedes F1 team removed the logos from their cars pretty quickly and suspended the partnership, to give another example.[0] [0] https://www.reuters.com/lifestyle/sports/mercedes-f1-team-suspends-partnership-with-ftx-2022-11-11/ https://www.reuters.com/lifestyle/sports/mercedes-f1-team-su...
- varelse 4y ago
- lencastre 4y agoWhen will someone pull up a site with a search? Assuming there is a KYC database that survived…
- twiddling 4y agohttps://givingpledge.org/pledger?pledgerId=445 https://givingpledge.org/pledger?pledgerId=445 Lol. I guess he won't be giving
- Ptchd 4y agoBailouts are only for the big banks....
- jjtheblunt 4y agoI wonder if bailouts are, one step removed, really for the big investment firms behind the political parties offering the bailouts, presumably invested in who is being bailed out. I have no evidence but I do wonder.
- impetus21 4y agoThey do not I argue-- don't 10X leverage on contracts without a license!
- donatj 4y agoWhen MtGox collapsed I held .01 BTC there worth about $1 at the time, about $170 today. I'd transferred just enough for me to play around with. The sheer number of letters I have gotten in the mail about the bankruptcy from the Japanese government easily cost a pretty penny more than my initial $1 in postage alone. I was honestly a little impressed they managed to hunt me down. I made zero attempts at getting that money back.
- azlyrics 4y agoI really don't understand how NYTimes, Vox, Vice are all seemingly refusing to accurately tear down how evil Sam and associates were for screwing over so many people. The NYTimes was quick to destroy owners of other exchanges (whom I also do not view favorably) but is mysteriously lenient, deflecting criticism, outright censoring themselves. How does this happen? Just what is the relationship with these media outlets, Sam? The party mantra from the Democrats and their supporting media outlets seem to be to remove Sam as much as possible and downplay the role he played in causing havoc. Already a handful of people have committed suicide as a result of this FTX fiasco, Sequoia, WEF, have all deleted their praising words for Sam and playing dumb. I have this feeling that something is going to break. It's going to get really ugly for this country and other entities will fully utilize the chaos to seize whatever they can.
- propogandist 4y ago
- kylecazar 4y agoHe won't be an upcoming speaker for long, I presume.
- RickJWagner 4y agoI'd be mad beyond belief. FTX was playing shell games with the money, had a secret back door to steal with, and gave money away for political contributions. There better be a good long jail time from this.