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So I’ve been watching the NYT dealbook interview and want to add some clarity that I think is missing here. Let me add a disclaimer that I don’t condone SBF at

So I’ve been watching the NYT dealbook interview and want to add some clarity that I think is missing here. Let me add a disclaimer that I don’t condone SBF at all. I just want to use his words to provide clarity. Everything below is paraphrasing. Q: Did you co-mingle funds? A: I did not mean to. Q: It says in the TOS that you would not do that. How is it ok then? A: It says elsewhere in the TOS that customers can take margin positions, so in some cases the co-mingling was to be expected. Q: How did then such a large amount of money get co-mingled then, because it seems that a much larger amount of customer funds were affected than just the accounts trading on margin? A: In the early days, we did not have a bank account, so when customers wanted to trade on our platform, they deposited money to alameda who then credited the money to us. I don’t know for sure, but it seems that the money that was credited wasn’t always put in the right account (ie safe money, per the TOS) So as I’ve understood so far, it seems SBF is claiming there was just incompetence and mismanagement. A lot of regulation in finance is to prevent people from being able to do this. Anyways, to those who have said, “stealing money that I traded for magic beans is still stealing”, I think it’s a little more complicated than that.

pjc50 4y ago
Margin trading is still not supposed to be co-mingled (or allowed if you're running a regulated brokerage). There's supposed to be a separate bank account labelled "client money" which has the client money in. https://www.handbook.fca.org.uk/handbook/CASS/5/5.html https://www.handbook.fca.org.uk/handbook/CASS/5/5.html You could argue that anyone sending their money to a company of a different name to the one they expected, in an offshore jurisdiction, "deserved" what they got, but I don't agree with that. SBF is clearly trying to claim incompetence rather than criminal intent, but that should not save him from a gazillion wire fraud charges.
NhanH 4y ago
Q: Did you kill those people? A: I did not mean to. I just loaded the gun, closed my eyes, pointed to the crowd and pulled the trigger. If you are a trading exchange without a bank account, something is seriously wrong and you don't have an exchange. Choosing to take on customer money in any capacity is just straightforward trying to do something shady. Yeah it is a little more complicated than normal to do illegal bullshit and fleece retail investors, that's the whole point of regulations and is not really an explanation for anything.
nigerian1981 4y ago
How does incompetence and mismanagement explain SBF, his parents and senior executives buying properties worth nearly $300M in the Bahamas with FTX funds as has been reported by multiple news outlets?
system16 4y ago
Playing dumb and framing himself as just a kid who was out of his element appears to be his team's strategy to try and minimize his personal consequences in all of this. He is a highly educated individual that was literally born on Stanford's campus to professors. I'm not sure many will buy his Steve Urkel "Did I do that??" defence.
mrobins 4y ago
To quote the article: > Bankman-Fried has decided to “confuse, evade, distort.” Even if you believe he's smart enough to build a massive exchange that takes in billions of dollars of customer money but is too incompetent to institute the most basic safeguards that seems fraudulent (and criminally negligent) to me. Also, all the "incompetence" seemed to benefit him and FTX senior leadership. Funny how things shake out like that sometimes...

pjc50 4y ago

Margin trading is still not supposed to be co-mingled (or allowed if you're running a regulated brokerage). There's supposed to be a separate bank account labelled "client money" which has the client money in. https://www.handbook.fca.org.uk/handbook/CASS/5/5.html https://www.handbook.fca.org.uk/handbook/CASS/5/5.html You could argue that anyone sending their money to a company of a different name to the one they expected, in an offshore jurisdiction, "deserved" what they got, but I don't agree with that. SBF is clearly trying to claim incompetence rather than criminal intent, but that should not save him from a gazillion wire fraud charges.

NhanH 4y ago

Q: Did you kill those people? A: I did not mean to. I just loaded the gun, closed my eyes, pointed to the crowd and pulled the trigger. If you are a trading exchange without a bank account, something is seriously wrong and you don't have an exchange. Choosing to take on customer money in any capacity is just straightforward trying to do something shady. Yeah it is a little more complicated than normal to do illegal bullshit and fleece retail investors, that's the whole point of regulations and is not really an explanation for anything.

nigerian1981 4y ago

How does incompetence and mismanagement explain SBF, his parents and senior executives buying properties worth nearly $300M in the Bahamas with FTX funds as has been reported by multiple news outlets?

system16 4y ago

Playing dumb and framing himself as just a kid who was out of his element appears to be his team's strategy to try and minimize his personal consequences in all of this. He is a highly educated individual that was literally born on Stanford's campus to professors. I'm not sure many will buy his Steve Urkel "Did I do that??" defence.

mrobins 4y ago

To quote the article: > Bankman-Fried has decided to “confuse, evade, distort.” Even if you believe he's smart enough to build a massive exchange that takes in billions of dollars of customer money but is too incompetent to institute the most basic safeguards that seems fraudulent (and criminally negligent) to me. Also, all the "incompetence" seemed to benefit him and FTX senior leadership. Funny how things shake out like that sometimes...