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The question that has never been answered is how SBF made money in the first place. The arbitrage story doesn’t check out. Making as much money as claimed with

The question that has never been answered is how SBF made money in the first place. The arbitrage story doesn’t check out. Making as much money as claimed with arbitrage requires massive scale. At any rate, the author is absolutely correct that the ftx collapse was due to Sam and friends cashing out rather than a bank run. However, it’s becoming increasingly clear that the regulatory complex prefers the latter story as it protects the political actors complicit in receiving stolen funds.

fasthands9 4y ago
Yeah. I'm surprised we haven't seen any more looks at the Japanese arbitrage story. I admit (as a non-crypto person) I had just assumed it was real until last week. My totally unfounded hypothesis is that Sam made several million betting directionally on crypto and maybe even made a million on this Japanese temporary arbitrage. While most crypto betters are pretty isolated Sam knew with his connections he would be able to get in front of investors and he knew in order to get money he needed to say something that sounded more sophisticated.
- siftrics 4y ago
  It is well documented that he directly stole depositor's funds.
  - fasthands9 4y ago
    I'm well aware of that. I'm talking about how he initially made money in crypto. The article above links to the piece below but its unclear to me now how much of this is true and how much of this was exaggerated by SBF's own story telling to raise money. This all took place before FTX. https://vegaxholdings.medium.com/kimchi-premium-crypto-arbitrage-techniques-b780a45b6e76 https://vegaxholdings.medium.com/kimchi-premium-crypto-arbit...
  - elkos 4y ago
    While this seem to be the case. How he created his initial assets to create Allameda and FTX? Did he and his colleagues stole funds at the get go?
    - deleted 4y ago
      [deleted]
- paganel 4y ago
  Maybe it's just a coincidence, but at first I had heard about SBF making $50 million out of that Japanese arbitrage thing, and then, a few days later, of him receiving the same sum of $50 million as an investment from a guy named Tallinn (actually a loan, according to this Times article [1]). So most probably he didn't make $50 million from the arbitrage alone. He did make some money out of it, but not that exact sum. Which also reminds me that he didn't make the money in his name, he had used a EA person based in Japan who actually opened up an account with a small Japanese agricultural bank or something like that. So the money was in that person's name. There's no way for that Japanese person to have transferred $50 million to SBF without automatically triggering countless money laundering alarms. And "transfer" is the wrong word, that person had to donate those $50 million to SBF (or to FTX?) in order to make them be SBF's (FTX's?) money. [1] https://www.thetimes.co.uk/article/sam-bankman-fried-the-nerd-king-who-lost-16bn-in-one-click-wgm2rd82j https://www.thetimes.co.uk/article/sam-bankman-fried-the-ner...
1vuio0pswjnm7 4y ago
Who were the political actors. Another misdirection is calling this a "bankruptcy". It is a liquidation. The only assets FTX had was other people's money. "The question that has never been answered is how SBF made money in the first place." It is the same issue we see with every "tech" company. The so-called "tech" is worthless. How much would anyone pay for the FTX software. That is why "tech" companies must conduct surveillance and sell ad services. They do not produce anything of value. If the "value" of whatever is being sold by the "tech" company1 can go to zero,2 then it is questionable that it had any value to begin with. 1. If they are are in fact selling anything. Many sell nothing. They just take money from VC and try to grow. 2. For example, so-called "cryto" tokens.
- simple-thoughts 4y ago
  > The only assets FTX had was other people's money. Not true- which is why this is fraud rather than a “bank run”. FTX claimed to be holding other peoples money in 1:1 custody when in fact it was being funneled to politicians, ngos, private jets, luxury apartments, dogecoin gambling, and likely more that will hopefully be uncovered over time. Whether or not you personally value crypto tokens doesn’t matter here; the fact is that people deposited those tokens into ftx expecting trusted custody when in fact those tokens were sold for a variety of purposes. You can argue whether you feel crypto tokens are worthless but either way trust was violated. Very different from a bank run where you know that the bank is not promising 1:1 custody.
  - 1vuio0pswjnm7 4y ago
    FTX is not a bank. Thus, by definition, what happened cannot be called a "bank run". While I now understand what was meant by "political actors", I do not understand what were these other assets, besides other peoples' money. Until someone is convicted, "fraud" should be in quotes.

fasthands9 4y ago

Yeah. I'm surprised we haven't seen any more looks at the Japanese arbitrage story. I admit (as a non-crypto person) I had just assumed it was real until last week. My totally unfounded hypothesis is that Sam made several million betting directionally on crypto and maybe even made a million on this Japanese temporary arbitrage. While most crypto betters are pretty isolated Sam knew with his connections he would be able to get in front of investors and he knew in order to get money he needed to say something that sounded more sophisticated.

siftrics 4y ago
It is well documented that he directly stole depositor's funds.
- fasthands9 4y ago
  I'm well aware of that. I'm talking about how he initially made money in crypto. The article above links to the piece below but its unclear to me now how much of this is true and how much of this was exaggerated by SBF's own story telling to raise money. This all took place before FTX. https://vegaxholdings.medium.com/kimchi-premium-crypto-arbitrage-techniques-b780a45b6e76 https://vegaxholdings.medium.com/kimchi-premium-crypto-arbit...
- elkos 4y ago
  While this seem to be the case. How he created his initial assets to create Allameda and FTX? Did he and his colleagues stole funds at the get go?
  - deleted 4y ago
    [deleted]
paganel 4y ago
Maybe it's just a coincidence, but at first I had heard about SBF making $50 million out of that Japanese arbitrage thing, and then, a few days later, of him receiving the same sum of $50 million as an investment from a guy named Tallinn (actually a loan, according to this Times article [1]). So most probably he didn't make $50 million from the arbitrage alone. He did make some money out of it, but not that exact sum. Which also reminds me that he didn't make the money in his name, he had used a EA person based in Japan who actually opened up an account with a small Japanese agricultural bank or something like that. So the money was in that person's name. There's no way for that Japanese person to have transferred $50 million to SBF without automatically triggering countless money laundering alarms. And "transfer" is the wrong word, that person had to donate those $50 million to SBF (or to FTX?) in order to make them be SBF's (FTX's?) money. [1] https://www.thetimes.co.uk/article/sam-bankman-fried-the-nerd-king-who-lost-16bn-in-one-click-wgm2rd82j https://www.thetimes.co.uk/article/sam-bankman-fried-the-ner...

1vuio0pswjnm7 4y ago

Who were the political actors. Another misdirection is calling this a "bankruptcy". It is a liquidation. The only assets FTX had was other people's money. "The question that has never been answered is how SBF made money in the first place." It is the same issue we see with every "tech" company. The so-called "tech" is worthless. How much would anyone pay for the FTX software. That is why "tech" companies must conduct surveillance and sell ad services. They do not produce anything of value. If the "value" of whatever is being sold by the "tech" company1 can go to zero,2 then it is questionable that it had any value to begin with. 1. If they are are in fact selling anything. Many sell nothing. They just take money from VC and try to grow. 2. For example, so-called "cryto" tokens.

simple-thoughts 4y ago
> The only assets FTX had was other people's money. Not true- which is why this is fraud rather than a “bank run”. FTX claimed to be holding other peoples money in 1:1 custody when in fact it was being funneled to politicians, ngos, private jets, luxury apartments, dogecoin gambling, and likely more that will hopefully be uncovered over time. Whether or not you personally value crypto tokens doesn’t matter here; the fact is that people deposited those tokens into ftx expecting trusted custody when in fact those tokens were sold for a variety of purposes. You can argue whether you feel crypto tokens are worthless but either way trust was violated. Very different from a bank run where you know that the bank is not promising 1:1 custody.
- 1vuio0pswjnm7 4y ago
  FTX is not a bank. Thus, by definition, what happened cannot be called a "bank run". While I now understand what was meant by "political actors", I do not understand what were these other assets, besides other peoples' money. Until someone is convicted, "fraud" should be in quotes.