8 ms·

Telling it like it is

113 points by rmason 4y ago

dereg 4y ago
I have no respect for Duffy’s story. He criticizes VCs for being naive, cheerleading SBF and staying silent. Now what does it mean that the CME CEO was not naive, (purportedly) roasted SBF in private, and then stayed silent? This is not bravery. Its cowardice in the form of ex-post bluster.
- sjfidsfkds 4y ago
  Duffy did testify against FTX’s proposal in Congress back in May: https://www.cmegroup.com/content/dam/cmegroup/media-room/speeches-and-comment-letters/2022/terry-duffy-testimony-to-house-agriculture-committee.pdf https://www.cmegroup.com/content/dam/cmegroup/media-room/spe... It’s pretty strongly worded: > FTX’s Proposal is glaringly deficient and poses significant risk to market stability and market participants. Granted, he didn’t publicly call the guy a fraud. Avoiding libel lawsuits is probably a good habit for a risk manager.
  - otterley 4y ago
    It's not slander[1] if it's true. Moreover, calling someone a "fraud" is likely to be viewed by a court as a statement of opinion, not of fact, and so it's likely non-actionable under U.S. common law. [1] Libel is written defamation; slander is oral.
    - gnicholas 4y ago
      You're right that a court might find you to be expressing an opinion if you call someone a fraud, but you'll spend a lot of money on your legal defense to find this out. Calling a deep-pocketed person a fraud is buying an expensive lawsuit. Also, the more memorable mnemonic (at least IMO) is "slander is spoken, libel is not".
      - ithkuil 4y ago
        The quote is: "Slander is spoken. In print, it's libel"
        dr_dshiv 4y ago
        Spoken slander, literate libel
        gnicholas 4y ago
        You seem to be quoting Spider-Man (if my quick google search is on point); I was quoting my law school professor. Is Spider-Man well-known as the source of this mnemonic? I’m pretty sure lawyers were saying it for decades before the books/movies came out, but I could be wrong.
        ithkuil 4y ago
        Well, memes tend to plant in our collective heads, so I guess yes? Chances are that more people have seen spider man than met your law professor, but yes I'm not arguing that your law professor is a more authoritative source of law related stuff, just saying that I did remember the quote I quoted, for what is worth.
  - TacticalCoder 4y ago
    > It’s pretty strongly worded: He also says it is important for marketstakeholders and the CFTC to investigate the clear conflict of interest (between FTX and Alameda). And he ends saying that even though he is for innovation, he says that innovation which is found to increase risk unacceptably or fails to protect consumer is against the law. Pretty good read IMO.
  - darawk 4y ago
    That's a red herring though. FTX's proposal was good - it was just contrary to CME's profit interests.
    - graeme 4y ago
      Given everything we know of FTX, I would be shocked it they managed to produce a proposed commodites trading regulation which is: 1. Radically different from the current one, and 2. Good Not impossible it’s true but I’d say the onus is to prove that, given the source and given the current system functions well enough
      - darawk 4y ago
        Many of the TradFi HFT firms were in support of FTX's proposal. The people that ran FTX were generally reasonably competent at finance (ex Jane Street), but extremely cavalier about risk with other people's money, and extremely poor at operational management. This is not a defense of them in any sense, other than to say that they were perfectly capable of being scumbags while also producing a good alternative to CME's futures products. You can read about all of the people that thought FTX's proposal was good here: https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-had-fidelity-fortress-big-finance-sold-on-derivatives-plan https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-...
        graeme 4y ago
        > Many of the TradFi HFT firms were in support of FTX's proposal. I read all the quotes. None appear to be Tradfi HFT firms. They instead appear to be a variety of VCs and individuals FTX paid money to or who had a crypto interest. For example the Fidelity quote is not “Fidelity, the firm”. It is from “ Fidelity Digital Assets President Tom Jessop”
        darawk 4y ago
        Then you didn't read very carefully: > Several letters noted the fact that the derivatives market had become concentrated in a dwindling number of players, and argued that it would be safer to trust middleman-free operations such as Bankman-Fried’s. “In the traditional intermediated model, a dependence on a limited number of clearing organizations creates a systematic concentration of risk,” Richard J. McDonald, chief regulatory counsel for Susquehanna International Group, wrote “The CFTC has an opportunity to minimize market risk by enabling platforms, such as FTX, to provide direct access to trading on margin without required intermediation.” Susquehana is a very well respected tradfi quant firm: https://sig.com/ https://sig.com/ > FTX’s plan would “protect and empower” US investors, permitting retail investors access to products “previously available only to the small subset of well-resourced and powerful investors able to connect to the complex, traditional market infrastructure,” Peter L. Briger, CEO of investment manager Fortress Investment Group, wrote to the CFTC Fortress Investment Group is a very well respected tradfi firm. They're all right there. And this isn't even a complete list. If you search around, plenty of other traditional quant/HFT firms strongly supported the move. Basically the only two entities that opposed it were CME and Binance.
  - dereg 4y ago
    [deleted - misconstrued statement]
    - graeme 4y ago
      He meant SBF’s net worth was near zero or negative. Most people, even rich people, do not carry much cash in their pockets…
    - xwolfi 4y ago
      Dude he meant that the net worth was all a mirage, and that anyone had more money in their pocket than SBF pretended he had in his entire net worth (because he stole it). He called him a fraud right there and all you can say is that he should have shown more respect to poor little guy SBF, him the meanie "tradfi"?
  - deleted 4y ago
    [deleted]
- googlryas 4y ago
  He stayed silent, by meeting with government regulators and lawmakers, and guaranteeing he was going to sue them if they made SBFs proposed changes? Does it only count if he puts out a really mean tweet in your book?
  - blitzar 4y ago
    > Does it only count if he puts out a really mean tweet in your book? With a meme of pepe sbf or higher value pepe.
- gumby 4y ago
  He criticized her too: look at the tweet embedded in his post of her with SBF and some other guy I don't know, garlanded with a bunch of crypto keyword hashtags.
stingraycharles 4y ago
While I agree with the idea that journalists in general were not nearly critical enough, it’s a bit much to say that no one ever asked questions and/or was critical. I vividly remember the interview in which Matt Levine participated, and he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF). To make this all about “telling it like it is like we do on the trading floor” is trying to force an angle that is simply not there. The better point hidden in the article is that journalists don’t really grasp the material they’re covering, and as such are incapable of asking critical questions.
- 3np 4y ago
  > he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF). That's not how I recall it. Levine asked SBF to describe yield farming and SBF went on his (in)famous thing about boxes, practically calling them out as pyramid schemes (but without mentioning any specific names). At no point was FTX referred to as a ponzi scheme.
  - the_mitsuhiko 4y ago
    Alameda was yield farming though and SBF was running that thing for a while too.
  - fasthands9 4y ago
    Agreed. Levine even said after the interview that he came away more confident in SBF because it sounded to him that SBF's business model was selling people shovels to dig for gold. Even if the gold was fake and worthless. What actually happened was FTX was reliant on these "assets" to get loans even though they were just an exchange that should have just been passing them off to counterparties.
  - VintageCool 4y ago
    After the SBF thing about boxes-- > Matt: (27:13) > I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good. > Joe Weisenthal: (27:27) > At no point did any of this require any sort of like economic case, it’s just like other people put money in the box. And so I'm going to too, and then it's more valuable. So they're gonna put more money in, and at no point in the cycle, did it seem to like, describe any sort of like economic purpose? https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...
renewiltord 4y ago
- slivanes 4y ago
  Please update link.
  - bundze 4y ago
    It seems to be satire.
    - renewiltord 4y ago
      Though honestly it appears it was dumb of me since he was actually documented saying this.
jatins 4y ago
Why are entire paragraphs repeated twice in that post?
- maxbond 4y ago
  Presumably an error introduced by copy paste during the editing process.
deleted 4y ago
[deleted]
0xbadc0de5 4y ago
"Every politician that got money from SBF or FTX ought to cut a check and give it all back to the penny. It wasn’t SBFs to give. He stole it from his customers." This, right here. If someone sells you a stolen car, that car is not yours as it was not the thief's to sell. The police will eventually come take it away and they will be right in doing so.
- retconn 4y ago
  Exactly, precisely, it's theft not fraud. You can't accuse any of the cockamamie nonsense this inflated and instrumental child concocted of being as sophisticated as fraud. For that you have to look at his sponsors and their patronage.
  - CPLX 4y ago
    Fraud is theft by deception.
- aetherson 4y ago
  SBF was the second largest individual donor to the Democrats in 2022, giving about $40M this election cycle. I presume that the vast majority of that money is gone, spent. I don't realistically know how people could give it back.
  - freyr 4y ago
    The same way money is often repaid: take it from future income. The Democratic committees raised $853M in the 2022 election cycle, compared to $805M for the Republicans. If they had to deduct $50M next cycle to account for the illegitimate funds, it wouldn’t ruin them.
    - pavlov 4y ago
      This sometimes does happen. Elizabeth Warren gave back money she got from the Sackler family (owners of Purdue Pharma and primary operators of the opioid crisis). The Sacklers donated mostly to Republicans, but AFAIK none of them returned the money.
MisterBastahrd 4y ago
Rambling, pointless article is rambling and pointless. The author has a clear ideological axe to grind and if you read his other articles, he makes the same arguments over and over again ad nauseum as if he's a broken jukebox that gets kicked every time he writes another article.
- robertlagrant 4y ago
  This is just ad hominem.
  - bambax 4y ago
    I disagree. This article is extremely poorly written and is in fact rambling; it's hard to understand where it's going and what its point is. The only (mildly) useful part is the extract from the interview with Terry Duffy.
- smcl 4y ago
  This happens after events like this - people show up after the fact saying they told you so. There's usually news clips, articles or even tweets where they loudly and clearly claim "I am saying that X is going to happen". And they're often getting laughed at or being described as hysterical, so I don't begrudge people if they want to get a bit of revenge and indulge in a bit of schadenfreude at their erstwhile tormentors' expense. But to try to claim credit with "my friend privately said X would happen" is a fairly bizarre brag, I don't think second-hand dubious clout is worth much. In any case, a good number of people have been loudly pleading with the world to be not just skeptical of FTX, but of all of these insanely valued crypto companies - they're often dismissed as haters.
- xdavidliu 4y ago
  DH0. Name-calling. DH1. Ad Hominem. DH2. Responding to Tone. DH3. Contradiction. DH4. Counterargument. DH5. Refutation. DH6. Refuting the Central Point. http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html I see my parent as a mixture of DH 0, 1, and 2. No chance of sniffing 3 or above.
nonrandomstring 4y ago
Part of a good con is that group dynamics engender silence. The more people with dirty hands in on it, the less likely anyone will break ranks. The thing gains a momentum of its own. Afterwards, at the trial, everyone says; "My only crime was I didn't stop it or speak out". Very few of us are really denied that chance, except soldiers risking desertion. Justice must account for the genuine ability to walk away, versus bad faith. On the matter of Blutkitt, in his excruciating account of "Ordinary Men", C. R. Browning notes that even the members of Battalion 101 had a genuine (no bullet in the back) chance to walk away. Do today's white-collar bandits and digital fraudsters have a realistic chance to turn their backs on wrongdoing they encounter? Of course. But at the cost of losing a network of rich and influential friends. Are there examples in tech of people taking a courageous stance? Definitely. Roger McNamee is one random example who must have burned a few bridges when writing "Zucked: Waking Up to the Facebook Catastrophe".
- gsatic 4y ago
  Ya right. Its like trying to take "a courageous stand" against a contagious virus. A large well organized group is required to keep such things in check. There is no dearth of people (esp in the US) who will take stands and call out bs. But that's not enough.
  - nonrandomstring 4y ago
    > It's like trying to take "a courageous stand" against a contagious virus. Indeed. The past two years may have much to teach us about the kind of measures, and unpleasant sacrifices of the economy, needed to neutralise such problems.
LatteLazy 4y ago
The key issue here is the lack or transparency. People guessed SBF was a fraud, they were right, but it was still just a guess. The same people guessed USDT was a fraud when it de-pegged by 2.5% last week, they were wrong because it was just a guess. Other people guessed the opposite in both cases with inverse results. What we need isn't to argue over who the best guessers are. Or form teams of guessers. It is to stop guessing and actually verify some things for once...
- ceejayoz 4y ago
  > The same people guessed USDT was a fraud when it de-pegged by 2.5% last week, they were wrong… No, they’re not.
  - LatteLazy 4y ago
    Thank you for guessing randomly.
    - ceejayoz 4y ago
      No, this has been conclusively proven. Their website used to say "Our reserve holdings are published daily and subject to frequent professional audits", for years. This was a lie, intentional deception for financial benefit. They're still promising they'll get around to it eventually (https://www.pymnts.com/cryptocurrency/2022/tether-audit-promised-for-5-years-still-months-away-cto-says/ https://www.pymnts.com/cryptocurrency/2022/tether-audit-prom...). 2016: https://archive.ph/mVPmL https://archive.ph/mVPmL 2018: https://archive.ph/9UMhd https://archive.ph/9UMhd They got caught moving money around to temporarily pad their bank balances to "verify" their cash reserves. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’ > On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account. Both of these are clear-cut fraud.
KptMarchewa 4y ago
The failure there isn't journalistic, but regulatory. Journalists don't have the privilege of looking deeply inside books and how company conducts it's business, but auditors have.
- cafard 4y ago
  No, but there are cases where they might have taken a closer and more critical look. I haven't followed this story closely, but in the lead-up to the 2008 crash, the press seemed to me unduly easy on the zero-principal mortgage loans.
- headsoup 4y ago
  That's ridiculous. There have been twitter/substance/etc folk long calling out all the shenanigans and diving into the data, figures and relationships that any reasonable journalist would have had an easy time of it. I don't know why investigative journalism suddenly seems so 'hard' these days, but I'd assume it involves just following the money for the most part...
- throw_m239339 4y ago
  > The failure there isn't journalistic, It absolutely is a media failure. It exposed how corrupt some outlets are, in insidious ways. The media built a positive image of SBF and FTX without ever doing serious investigative job because he was giving to the right people... and still, when FTX scam scramble, instead of apologizing the same media continued to be lenient toward the fraudster trying to spin the scammer as some idealist who just made bad bets, when he was already deep into his scam. > Journalists don't have the privilege of looking deeply inside books and how company conducts it's business, but auditors have. Many people in Crypto and finance had already figured out FTX business model was some sort of scam, the media and their glowing reviews of SBF weren't interested in hearing them, because SBF was being too generous about donations...
itronitron 4y ago
I listened to the linked podcast with Terry Duffy speaking. Does anyone know what the specific 'innovation' of SBF is to which Duffy is referring?
- pointsnfigures1 4y ago
  probably on the run clearing
  - pointsnfigures1 4y ago
    https://www.youtube.com/watch?v=tNLn2xYzvao https://www.youtube.com/watch?v=tNLn2xYzvao worth a watch
headsoup 4y ago
Wait until it comes to Tether's turn. The ability for those guys to skirt any serious investigation or attention is truly magical. It's not even a complex multi-layered obfuscated fraud, it's practically out in the open, yet will still be a "how could we have known?!" Situation once it collapses (i.e. wealth transfer complete)
- throw_m239339 4y ago
  Tether has a very different reputation in the eye of the mainstream media who couldn't say enough good things about SBF "effective altruism". Turns out it's easier to be altruistic when you just scam investors and clients.
- gruez 4y ago
  > The ability for those guys to skirt any serious investigation or attention is truly magical. >yet will still be a "how could we have known?!" Situation once it collapses (i.e. wealth transfer complete) "Tether is a scam" accusations are well known and has been around for years. As a quick reference, the "Bitfinexed" account (on twitter) has been around since 2017. It's certainly not comparable to FTX which seemingly imploded out of nowhere.
  - headsoup 4y ago
    Going by Bitfinex'ed, FTX was a money laundering front for Tether/Bitfinex, replacing Reginald Fowler. Also supposed (though it appears purely speculation) is that FTX was killed because it was about to create its own stablecoin.
blitzar 4y ago
Many people are now saying they "knew right away it was all a con" - probably including the person standing in the corner the day SBF was born. Not so many of them were saying it at the time. The faster they took to twitter to tell everyone how they sniffed out a rat when they were offering to give him billions or were being offered billions - the less likely it is they "knew all along".
- WeylandYutani 4y ago
  Dutch regulators and central bank officials have been calling it a con for years. And the Netherlands wrote the book on conjuring money out of thin air. Ever wondered why all these crypto companies are in the Bahamas or Virgin Islands and not on the Zuidas in Amsterdam? The weather? But you just can't beat the zeitgeist.
- oh_my_goodness 4y ago
  On HN, what happens when people point out "this is a con?" Downvotes, flags, warnings from the moderator, and (last but most) absurdist pushback from other commenters. At the time, lots of people said something at the time. Later on, yeah, "nobody said anything at the time."
  - Balgair 4y ago
    This Onion headline says it best: https://www.theonion.com/man-who-lost-everything-in-crypto-just-wishes-several-t-1848764551 https://www.theonion.com/man-who-lost-everything-in-crypto-j... Anyone that's in crypto still is asking to loose it all. I don't know why, maybe it's getting their jimmies rustled, but I know that all the signs have been blaring for years now.
    - oh_my_goodness 4y ago
      There's no way anybody could have known!
      - pointsnfigures1 4y ago
cpcallen 4y ago
This article mentions "on-the-run clearing" and links to another discussing SBF's plan to clear every thirty seconds, but I don't really understand the proposal discussed. I gather that, on traditional stock exchanges, a lot of trading happens during the day, and then after trading finishes all the people who made trades have to deliver on what they promised. Clearly this is not how retail crypto exchanges work: for those, one has to deliver into one's account with the exchange before one can trade, and, at least from the user's perspective, trades clear immediately, and the user can the request the traded assets be delivered from the exchange back to their accounts elsewhere. What was SBF's proposal, then? Bringing the existing retail crypto model to … non-retail crypto trading? That doesn't seem very risky; if anything, it seems to considerably reduce the risk that a counterparty fail to deliver, because the exchange already has the asset. Obviously there's the risk (as we have seen play out numerous times now) of the exchange itself failing to deliver, but I don't get the sense that that or anything like it is what Terry Duffy or Jeffrey Carter were concerned about. ELI5 what's the big deal about "on-the-run clearing"?
- itsoktocry 4y ago
  >because the exchange already has the asset. Has the FTX fiasco not yet revealed to you that the exchange doesn't always have the asset?
- csours 4y ago
  As I understand it on-the-run clearing is about demanding collateral for leveraged trade. Matt Levine has written about it better than I ever could.
  - misja111 4y ago
    Traditional clearing does that as well, this is the so called 'margin call'. What's different in on-the-run clearing is that the check happens every 30 seconds, while traditional clearing typically happens between trading days.
- misja111 4y ago
  > ELI5 what's the big deal about "on-the-run clearing"? I only found an article about it from the author himself: https://jeffreycarter.substack.com/p/on-the-run-clearing https://jeffreycarter.substack.com/p/on-the-run-clearing I read it but I still don't understand what's so wrong with it.
gruez 4y ago
>This is why when SBF wanted to do on-the-run clearing every thirty seconds the traditional exchanges recoiled. Of course, the innovators thought they had found an Achilles heel they could exploit to take the big corporate guys down, but they hadn’t. The big corporates had explored these sorts of ideas long ago. >Sometimes when there is a process or an idea that isn’t being used, the reason it isn’t being used is that it sucks. Well? What was the reason? Invoking chesterton's fence is very patronizing to the reader.
- gopher_space 4y ago
  I dipped into a few other articles and the author frequently makes broad statements without supporting arguments. I think this is supposed to be a casual conversation between people who share a point of view.
deleted 4y ago
[deleted]
WeylandYutani 4y ago
Unfortunately this is HN were people want to believe in "hard science" and rationality. But if you want to understand crypto you're better off studying history, sociology and psychology.
balsam 4y ago
The current title is not informative. Perhaps an exception should be made for the “no editorializing” rule? It used to have “SBF” for context. That said, here is Matt Levine’s article on why tradfi’s approach to clearing and settlement is different from that of cryptoland: https://www.bloomberg.com/opinion/articles/2022-06-01/crypto-clearing-and-credit https://www.bloomberg.com/opinion/articles/2022-06-01/crypto...
bergenty 4y ago
I have a hard time following along with the rest of it when you start by calling Ron Desantis honest.

113 points by rmason 4y ago

I have no respect for Duffy’s story. He criticizes VCs for being naive, cheerleading SBF and staying silent. Now what does it mean that the CME CEO was not naive, (purportedly) roasted SBF in private, and then stayed silent? This is not bravery. Its cowardice in the form of ex-post bluster.

sjfidsfkds 4y ago
Duffy did testify against FTX’s proposal in Congress back in May: https://www.cmegroup.com/content/dam/cmegroup/media-room/speeches-and-comment-letters/2022/terry-duffy-testimony-to-house-agriculture-committee.pdf https://www.cmegroup.com/content/dam/cmegroup/media-room/spe... It’s pretty strongly worded: > FTX’s Proposal is glaringly deficient and poses significant risk to market stability and market participants. Granted, he didn’t publicly call the guy a fraud. Avoiding libel lawsuits is probably a good habit for a risk manager.
- otterley 4y ago
  It's not slander[1] if it's true. Moreover, calling someone a "fraud" is likely to be viewed by a court as a statement of opinion, not of fact, and so it's likely non-actionable under U.S. common law. [1] Libel is written defamation; slander is oral.
  - gnicholas 4y ago
    You're right that a court might find you to be expressing an opinion if you call someone a fraud, but you'll spend a lot of money on your legal defense to find this out. Calling a deep-pocketed person a fraud is buying an expensive lawsuit. Also, the more memorable mnemonic (at least IMO) is "slander is spoken, libel is not".
    - ithkuil 4y ago
      The quote is: "Slander is spoken. In print, it's libel"
      - dr_dshiv 4y ago
        Spoken slander, literate libel
      - gnicholas 4y ago
        You seem to be quoting Spider-Man (if my quick google search is on point); I was quoting my law school professor. Is Spider-Man well-known as the source of this mnemonic? I’m pretty sure lawyers were saying it for decades before the books/movies came out, but I could be wrong.
        ithkuil 4y ago
        Well, memes tend to plant in our collective heads, so I guess yes? Chances are that more people have seen spider man than met your law professor, but yes I'm not arguing that your law professor is a more authoritative source of law related stuff, just saying that I did remember the quote I quoted, for what is worth.
- TacticalCoder 4y ago
  > It’s pretty strongly worded: He also says it is important for marketstakeholders and the CFTC to investigate the clear conflict of interest (between FTX and Alameda). And he ends saying that even though he is for innovation, he says that innovation which is found to increase risk unacceptably or fails to protect consumer is against the law. Pretty good read IMO.
- darawk 4y ago
  That's a red herring though. FTX's proposal was good - it was just contrary to CME's profit interests.
  - graeme 4y ago
    Given everything we know of FTX, I would be shocked it they managed to produce a proposed commodites trading regulation which is: 1. Radically different from the current one, and 2. Good Not impossible it’s true but I’d say the onus is to prove that, given the source and given the current system functions well enough
    - darawk 4y ago
      Many of the TradFi HFT firms were in support of FTX's proposal. The people that ran FTX were generally reasonably competent at finance (ex Jane Street), but extremely cavalier about risk with other people's money, and extremely poor at operational management. This is not a defense of them in any sense, other than to say that they were perfectly capable of being scumbags while also producing a good alternative to CME's futures products. You can read about all of the people that thought FTX's proposal was good here: https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-had-fidelity-fortress-big-finance-sold-on-derivatives-plan https://www.bloomberg.com/news/articles/2022-11-15/ftx-once-...
      - graeme 4y ago
        > Many of the TradFi HFT firms were in support of FTX's proposal. I read all the quotes. None appear to be Tradfi HFT firms. They instead appear to be a variety of VCs and individuals FTX paid money to or who had a crypto interest. For example the Fidelity quote is not “Fidelity, the firm”. It is from “ Fidelity Digital Assets President Tom Jessop”
        darawk 4y ago
        Then you didn't read very carefully: > Several letters noted the fact that the derivatives market had become concentrated in a dwindling number of players, and argued that it would be safer to trust middleman-free operations such as Bankman-Fried’s. “In the traditional intermediated model, a dependence on a limited number of clearing organizations creates a systematic concentration of risk,” Richard J. McDonald, chief regulatory counsel for Susquehanna International Group, wrote “The CFTC has an opportunity to minimize market risk by enabling platforms, such as FTX, to provide direct access to trading on margin without required intermediation.” Susquehana is a very well respected tradfi quant firm: https://sig.com/ https://sig.com/ > FTX’s plan would “protect and empower” US investors, permitting retail investors access to products “previously available only to the small subset of well-resourced and powerful investors able to connect to the complex, traditional market infrastructure,” Peter L. Briger, CEO of investment manager Fortress Investment Group, wrote to the CFTC Fortress Investment Group is a very well respected tradfi firm. They're all right there. And this isn't even a complete list. If you search around, plenty of other traditional quant/HFT firms strongly supported the move. Basically the only two entities that opposed it were CME and Binance.
- dereg 4y ago
  [deleted - misconstrued statement]
  - graeme 4y ago
    He meant SBF’s net worth was near zero or negative. Most people, even rich people, do not carry much cash in their pockets…
  - xwolfi 4y ago
    Dude he meant that the net worth was all a mirage, and that anyone had more money in their pocket than SBF pretended he had in his entire net worth (because he stole it). He called him a fraud right there and all you can say is that he should have shown more respect to poor little guy SBF, him the meanie "tradfi"?
- deleted 4y ago
  [deleted]
googlryas 4y ago
He stayed silent, by meeting with government regulators and lawmakers, and guaranteeing he was going to sue them if they made SBFs proposed changes? Does it only count if he puts out a really mean tweet in your book?
- blitzar 4y ago
  > Does it only count if he puts out a really mean tweet in your book? With a meme of pepe sbf or higher value pepe.
gumby 4y ago
He criticized her too: look at the tweet embedded in his post of her with SBF and some other guy I don't know, garlanded with a bunch of crypto keyword hashtags.

stingraycharles 4y ago

While I agree with the idea that journalists in general were not nearly critical enough, it’s a bit much to say that no one ever asked questions and/or was critical. I vividly remember the interview in which Matt Levine participated, and he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF). To make this all about “telling it like it is like we do on the trading floor” is trying to force an angle that is simply not there. The better point hidden in the article is that journalists don’t really grasp the material they’re covering, and as such are incapable of asking critical questions.

3np 4y ago
> he basically called SBF out on running a Ponzi scheme and being OK with it (which was then, surprisingly enough, acknowledged by SBF). That's not how I recall it. Levine asked SBF to describe yield farming and SBF went on his (in)famous thing about boxes, practically calling them out as pyramid schemes (but without mentioning any specific names). At no point was FTX referred to as a ponzi scheme.
- the_mitsuhiko 4y ago
  Alameda was yield farming though and SBF was running that thing for a while too.
- fasthands9 4y ago
  Agreed. Levine even said after the interview that he came away more confident in SBF because it sounded to him that SBF's business model was selling people shovels to dig for gold. Even if the gold was fake and worthless. What actually happened was FTX was reliant on these "assets" to get loans even though they were just an exchange that should have just been passing them off to counterparties.
- VintageCool 4y ago
  After the SBF thing about boxes-- > Matt: (27:13) > I think of myself as like a fairly cynical person. And that was so much more cynical than how I would've described farming. You're just like, well, I'm in the Ponzi business and it's pretty good. > Joe Weisenthal: (27:27) > At no point did any of this require any sort of like economic case, it’s just like other people put money in the box. And so I'm going to too, and then it's more valuable. So they're gonna put more money in, and at no point in the cycle, did it seem to like, describe any sort of like economic purpose? https://www.bloomberg.com/news/articles/2022-04-25/sam-bankman-fried-described-yield-farming-and-left-matt-levine-stunned https://www.bloomberg.com/news/articles/2022-04-25/sam-bankm...

renewiltord 4y ago

slivanes 4y ago
Please update link.
- bundze 4y ago
  It seems to be satire.
  - renewiltord 4y ago
    Though honestly it appears it was dumb of me since he was actually documented saying this.

jatins 4y ago

Why are entire paragraphs repeated twice in that post?

maxbond 4y ago
Presumably an error introduced by copy paste during the editing process.

deleted 4y ago

[deleted]

0xbadc0de5 4y ago

"Every politician that got money from SBF or FTX ought to cut a check and give it all back to the penny. It wasn’t SBFs to give. He stole it from his customers." This, right here. If someone sells you a stolen car, that car is not yours as it was not the thief's to sell. The police will eventually come take it away and they will be right in doing so.

retconn 4y ago
Exactly, precisely, it's theft not fraud. You can't accuse any of the cockamamie nonsense this inflated and instrumental child concocted of being as sophisticated as fraud. For that you have to look at his sponsors and their patronage.
- CPLX 4y ago
  Fraud is theft by deception.
aetherson 4y ago
SBF was the second largest individual donor to the Democrats in 2022, giving about $40M this election cycle. I presume that the vast majority of that money is gone, spent. I don't realistically know how people could give it back.
- freyr 4y ago
  The same way money is often repaid: take it from future income. The Democratic committees raised $853M in the 2022 election cycle, compared to $805M for the Republicans. If they had to deduct $50M next cycle to account for the illegitimate funds, it wouldn’t ruin them.
  - pavlov 4y ago
    This sometimes does happen. Elizabeth Warren gave back money she got from the Sackler family (owners of Purdue Pharma and primary operators of the opioid crisis). The Sacklers donated mostly to Republicans, but AFAIK none of them returned the money.

MisterBastahrd 4y ago

Rambling, pointless article is rambling and pointless. The author has a clear ideological axe to grind and if you read his other articles, he makes the same arguments over and over again ad nauseum as if he's a broken jukebox that gets kicked every time he writes another article.

robertlagrant 4y ago
This is just ad hominem.
- bambax 4y ago
  I disagree. This article is extremely poorly written and is in fact rambling; it's hard to understand where it's going and what its point is. The only (mildly) useful part is the extract from the interview with Terry Duffy.
smcl 4y ago
This happens after events like this - people show up after the fact saying they told you so. There's usually news clips, articles or even tweets where they loudly and clearly claim "I am saying that X is going to happen". And they're often getting laughed at or being described as hysterical, so I don't begrudge people if they want to get a bit of revenge and indulge in a bit of schadenfreude at their erstwhile tormentors' expense. But to try to claim credit with "my friend privately said X would happen" is a fairly bizarre brag, I don't think second-hand dubious clout is worth much. In any case, a good number of people have been loudly pleading with the world to be not just skeptical of FTX, but of all of these insanely valued crypto companies - they're often dismissed as haters.
xdavidliu 4y ago
DH0. Name-calling. DH1. Ad Hominem. DH2. Responding to Tone. DH3. Contradiction. DH4. Counterargument. DH5. Refutation. DH6. Refuting the Central Point. http://www.paulgraham.com/disagree.html http://www.paulgraham.com/disagree.html I see my parent as a mixture of DH 0, 1, and 2. No chance of sniffing 3 or above.

nonrandomstring 4y ago

Part of a good con is that group dynamics engender silence. The more people with dirty hands in on it, the less likely anyone will break ranks. The thing gains a momentum of its own. Afterwards, at the trial, everyone says; "My only crime was I didn't stop it or speak out". Very few of us are really denied that chance, except soldiers risking desertion. Justice must account for the genuine ability to walk away, versus bad faith. On the matter of Blutkitt, in his excruciating account of "Ordinary Men", C. R. Browning notes that even the members of Battalion 101 had a genuine (no bullet in the back) chance to walk away. Do today's white-collar bandits and digital fraudsters have a realistic chance to turn their backs on wrongdoing they encounter? Of course. But at the cost of losing a network of rich and influential friends. Are there examples in tech of people taking a courageous stance? Definitely. Roger McNamee is one random example who must have burned a few bridges when writing "Zucked: Waking Up to the Facebook Catastrophe".

gsatic 4y ago
Ya right. Its like trying to take "a courageous stand" against a contagious virus. A large well organized group is required to keep such things in check. There is no dearth of people (esp in the US) who will take stands and call out bs. But that's not enough.
- nonrandomstring 4y ago
  > It's like trying to take "a courageous stand" against a contagious virus. Indeed. The past two years may have much to teach us about the kind of measures, and unpleasant sacrifices of the economy, needed to neutralise such problems.

LatteLazy 4y ago

The key issue here is the lack or transparency. People guessed SBF was a fraud, they were right, but it was still just a guess. The same people guessed USDT was a fraud when it de-pegged by 2.5% last week, they were wrong because it was just a guess. Other people guessed the opposite in both cases with inverse results. What we need isn't to argue over who the best guessers are. Or form teams of guessers. It is to stop guessing and actually verify some things for once...

ceejayoz 4y ago
> The same people guessed USDT was a fraud when it de-pegged by 2.5% last week, they were wrong… No, they’re not.
- LatteLazy 4y ago
  Thank you for guessing randomly.
  - ceejayoz 4y ago
    No, this has been conclusively proven. Their website used to say "Our reserve holdings are published daily and subject to frequent professional audits", for years. This was a lie, intentional deception for financial benefit. They're still promising they'll get around to it eventually (https://www.pymnts.com/cryptocurrency/2022/tether-audit-promised-for-5-years-still-months-away-cto-says/ https://www.pymnts.com/cryptocurrency/2022/tether-audit-prom...). 2016: https://archive.ph/mVPmL https://archive.ph/mVPmL 2018: https://archive.ph/9UMhd https://archive.ph/9UMhd They got caught moving money around to temporarily pad their bank balances to "verify" their cash reserves. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > In the face of persistent questions about whether the company actually held sufficient funds, Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’ > On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account. Both of these are clear-cut fraud.

KptMarchewa 4y ago

The failure there isn't journalistic, but regulatory. Journalists don't have the privilege of looking deeply inside books and how company conducts it's business, but auditors have.

cafard 4y ago
No, but there are cases where they might have taken a closer and more critical look. I haven't followed this story closely, but in the lead-up to the 2008 crash, the press seemed to me unduly easy on the zero-principal mortgage loans.
headsoup 4y ago
That's ridiculous. There have been twitter/substance/etc folk long calling out all the shenanigans and diving into the data, figures and relationships that any reasonable journalist would have had an easy time of it. I don't know why investigative journalism suddenly seems so 'hard' these days, but I'd assume it involves just following the money for the most part...
throw_m239339 4y ago
> The failure there isn't journalistic, It absolutely is a media failure. It exposed how corrupt some outlets are, in insidious ways. The media built a positive image of SBF and FTX without ever doing serious investigative job because he was giving to the right people... and still, when FTX scam scramble, instead of apologizing the same media continued to be lenient toward the fraudster trying to spin the scammer as some idealist who just made bad bets, when he was already deep into his scam. > Journalists don't have the privilege of looking deeply inside books and how company conducts it's business, but auditors have. Many people in Crypto and finance had already figured out FTX business model was some sort of scam, the media and their glowing reviews of SBF weren't interested in hearing them, because SBF was being too generous about donations...

itronitron 4y ago

I listened to the linked podcast with Terry Duffy speaking. Does anyone know what the specific 'innovation' of SBF is to which Duffy is referring?

pointsnfigures1 4y ago
probably on the run clearing
- pointsnfigures1 4y ago
  https://www.youtube.com/watch?v=tNLn2xYzvao https://www.youtube.com/watch?v=tNLn2xYzvao worth a watch

headsoup 4y ago

Wait until it comes to Tether's turn. The ability for those guys to skirt any serious investigation or attention is truly magical. It's not even a complex multi-layered obfuscated fraud, it's practically out in the open, yet will still be a "how could we have known?!" Situation once it collapses (i.e. wealth transfer complete)

throw_m239339 4y ago
Tether has a very different reputation in the eye of the mainstream media who couldn't say enough good things about SBF "effective altruism". Turns out it's easier to be altruistic when you just scam investors and clients.
gruez 4y ago
> The ability for those guys to skirt any serious investigation or attention is truly magical. >yet will still be a "how could we have known?!" Situation once it collapses (i.e. wealth transfer complete) "Tether is a scam" accusations are well known and has been around for years. As a quick reference, the "Bitfinexed" account (on twitter) has been around since 2017. It's certainly not comparable to FTX which seemingly imploded out of nowhere.
- headsoup 4y ago
  Going by Bitfinex'ed, FTX was a money laundering front for Tether/Bitfinex, replacing Reginald Fowler. Also supposed (though it appears purely speculation) is that FTX was killed because it was about to create its own stablecoin.

blitzar 4y ago

Many people are now saying they "knew right away it was all a con" - probably including the person standing in the corner the day SBF was born. Not so many of them were saying it at the time. The faster they took to twitter to tell everyone how they sniffed out a rat when they were offering to give him billions or were being offered billions - the less likely it is they "knew all along".

WeylandYutani 4y ago
Dutch regulators and central bank officials have been calling it a con for years. And the Netherlands wrote the book on conjuring money out of thin air. Ever wondered why all these crypto companies are in the Bahamas or Virgin Islands and not on the Zuidas in Amsterdam? The weather? But you just can't beat the zeitgeist.
oh_my_goodness 4y ago
On HN, what happens when people point out "this is a con?" Downvotes, flags, warnings from the moderator, and (last but most) absurdist pushback from other commenters. At the time, lots of people said something at the time. Later on, yeah, "nobody said anything at the time."
- Balgair 4y ago
  This Onion headline says it best: https://www.theonion.com/man-who-lost-everything-in-crypto-just-wishes-several-t-1848764551 https://www.theonion.com/man-who-lost-everything-in-crypto-j... Anyone that's in crypto still is asking to loose it all. I don't know why, maybe it's getting their jimmies rustled, but I know that all the signs have been blaring for years now.
  - oh_my_goodness 4y ago
    There's no way anybody could have known!
    - pointsnfigures1 4y ago

cpcallen 4y ago

This article mentions "on-the-run clearing" and links to another discussing SBF's plan to clear every thirty seconds, but I don't really understand the proposal discussed. I gather that, on traditional stock exchanges, a lot of trading happens during the day, and then after trading finishes all the people who made trades have to deliver on what they promised. Clearly this is not how retail crypto exchanges work: for those, one has to deliver into one's account with the exchange before one can trade, and, at least from the user's perspective, trades clear immediately, and the user can the request the traded assets be delivered from the exchange back to their accounts elsewhere. What was SBF's proposal, then? Bringing the existing retail crypto model to … non-retail crypto trading? That doesn't seem very risky; if anything, it seems to considerably reduce the risk that a counterparty fail to deliver, because the exchange already has the asset. Obviously there's the risk (as we have seen play out numerous times now) of the exchange itself failing to deliver, but I don't get the sense that that or anything like it is what Terry Duffy or Jeffrey Carter were concerned about. ELI5 what's the big deal about "on-the-run clearing"?

itsoktocry 4y ago
>because the exchange already has the asset. Has the FTX fiasco not yet revealed to you that the exchange doesn't always have the asset?
csours 4y ago
As I understand it on-the-run clearing is about demanding collateral for leveraged trade. Matt Levine has written about it better than I ever could.
- misja111 4y ago
  Traditional clearing does that as well, this is the so called 'margin call'. What's different in on-the-run clearing is that the check happens every 30 seconds, while traditional clearing typically happens between trading days.
misja111 4y ago
> ELI5 what's the big deal about "on-the-run clearing"? I only found an article about it from the author himself: https://jeffreycarter.substack.com/p/on-the-run-clearing https://jeffreycarter.substack.com/p/on-the-run-clearing I read it but I still don't understand what's so wrong with it.

gruez 4y ago

>This is why when SBF wanted to do on-the-run clearing every thirty seconds the traditional exchanges recoiled. Of course, the innovators thought they had found an Achilles heel they could exploit to take the big corporate guys down, but they hadn’t. The big corporates had explored these sorts of ideas long ago. >Sometimes when there is a process or an idea that isn’t being used, the reason it isn’t being used is that it sucks. Well? What was the reason? Invoking chesterton's fence is very patronizing to the reader.

gopher_space 4y ago
I dipped into a few other articles and the author frequently makes broad statements without supporting arguments. I think this is supposed to be a casual conversation between people who share a point of view.

deleted 4y ago

[deleted]

WeylandYutani 4y ago

Unfortunately this is HN were people want to believe in "hard science" and rationality. But if you want to understand crypto you're better off studying history, sociology and psychology.

balsam 4y ago

The current title is not informative. Perhaps an exception should be made for the “no editorializing” rule? It used to have “SBF” for context. That said, here is Matt Levine’s article on why tradfi’s approach to clearing and settlement is different from that of cryptoland: https://www.bloomberg.com/opinion/articles/2022-06-01/crypto-clearing-and-credit https://www.bloomberg.com/opinion/articles/2022-06-01/crypto...

bergenty 4y ago

I have a hard time following along with the rest of it when you start by calling Ron Desantis honest.