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How could you detect secret preferential treatment? You could only do so after something happened to expose it. From Wikipedia: > According to John J. Ray III

How could you detect secret preferential treatment? You could only do so after something happened to expose it. From Wikipedia: > According to John J. Ray III, Alameda had a “secret exemption” from FTX’s auto-liquidation protocol. This could only become apparent once Alameda was not margin called when it should have been. Which is when something went quite wrong to trigger the need for the margin call.

twawaaay 4y ago
It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). In almost every case those bad deals had red flags all over them if you only care to look. "Crypto" is red flag enough -- anything about it should already be treated with extreme caution. It has always been interesting to me to see people go do a version of a woman falling for a man who mistreated his ex wife. No. If he mistreated his ex wife it is very likely he will do the same to you. It is a matter of character and changing ones character substantially is very difficult because it requires you to have qualities that you are missing if you are a bad person.
- gjvc 4y ago
  It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). This is very true. If you've ever had a "bad boss" at work, chances are that they did not do just one thing, but many things that were bad / against other people's interests.
- danuker 4y ago
  I agree anything crypto-related needs an analysis of what happens in a 99% drop. That is because even Bitcoin crashed 70%+ quite a few times since inception. As such, leverage is reckless. An exchange should not have been exposed to price fluctuations. Only to trading volume (if the fees are proportional to the amount exchanged).
rvba 4y ago
When "boring" companies do real due diligence, the due diligence team is supposed to read the contracts to find such things. Also, the management team of FTX, should in fact inform the ones making the due diligence about such cases...
mrguyorama 4y ago
This is why public companies are required to disclose mountains of paperwork. Forcing them to admit things in a legally culpable way makes it harder to hide shenanigans. Man, it's almost like the regulation has a point or something.

twawaaay 4y ago

It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). In almost every case those bad deals had red flags all over them if you only care to look. "Crypto" is red flag enough -- anything about it should already be treated with extreme caution. It has always been interesting to me to see people go do a version of a woman falling for a man who mistreated his ex wife. No. If he mistreated his ex wife it is very likely he will do the same to you. It is a matter of character and changing ones character substantially is very difficult because it requires you to have qualities that you are missing if you are a bad person.

gjvc 4y ago
It is very rarely that there is only one fishy thing about bad business. Bad businesses are run by bad people and bad people can't really help themselves but be bad in a lot of things they are doing (it is a matter of character). This is very true. If you've ever had a "bad boss" at work, chances are that they did not do just one thing, but many things that were bad / against other people's interests.
danuker 4y ago
I agree anything crypto-related needs an analysis of what happens in a 99% drop. That is because even Bitcoin crashed 70%+ quite a few times since inception. As such, leverage is reckless. An exchange should not have been exposed to price fluctuations. Only to trading volume (if the fees are proportional to the amount exchanged).

rvba 4y ago

When "boring" companies do real due diligence, the due diligence team is supposed to read the contracts to find such things. Also, the management team of FTX, should in fact inform the ones making the due diligence about such cases...

mrguyorama 4y ago

This is why public companies are required to disclose mountains of paperwork. Forcing them to admit things in a legally culpable way makes it harder to hide shenanigans. Man, it's almost like the regulation has a point or something.