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> how did they manage to lose so much money? What the article says about market making on FTX is true, but that doesn't bring in billions. The uninformed retai
by mudrockbestgirl 4y ago
> how did they manage to lose so much money?
What the article says about market making on FTX is true, but that doesn't bring in billions. The uninformed retail order flow for the crypto market is not large enough for that. It probably would've been a ~$10M/year business, or something on that order. Great, but who wants a few million? Can't even do political stuff with that. They wanted billions! And the only obvious way to get there is by making huge risky directional bets on shitcoins and other crypto ventures, which is what happened. Instead of building a sound (okay, still shady because you're front-running) business with Alameda, SBF decided to gamble away the money on VC-style bets trying to become a trillionaire.
- siftrics 4y agoYes, but he gambled depositors' money. He defrauded his customers. He stole their deposits. He stated he would not take their deposits, yet he did. He committed fraud. He committed wire fraud. He stole.
- elkos 4y agoAnd that's horrible, but I always miss the initial part of the story. My understanding of crypto and the economics of scale around it is poor, but was FTX was one of the largest exchanges. Doesn't such a thing need huge initial capital investments, sales, etc?
- siftrics 4y agoYes. It did have huge initial capital investments. In fact, in one of the rounds, $420m was raised and SBF personally took $300m for himself. He just funneled it to his own entities. I'm sure investors wouldn't be happy. I would not be surprised if he defrauded them in that situation, too.
- wonnage 4y agoI think the point is they didn't even bother with those shitcoin bets. They didn't lose the money due to poor risk management, they just....took it