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Can we discus recovery? The Madoff trustee was able to recover something like 90% of the Madoff Ponzi. Alameda and FTX's real estate purchases have value, as do

Can we discus recovery? The Madoff trustee was able to recover something like 90% of the Madoff Ponzi. Alameda and FTX's real estate purchases have value, as do their VC investments, purchases of bank stock, etc. In other words, it's not all gone. My understanding is that even some of the political contributions can be clawed back. FTX's purchases of IOU's (i.e., crypto) that declined in value are not likely to be recoverable. But Bitcoin still has substantial value. There's at least a billion in loans to insiders that can be clawed back. How much really was lost?

phphphphp 4y ago
I’d be absolutely shocked if more than 25% can be recovered. They spent multi-billions on venture investments that were not just high-risk due to their early stage nature but also inextricably linked to ftx by way of the cryptocurrency market as a whole and thus about as undiversified as humanly possible. There’s a few of their investments that have value and value could be recovered through sales but almost all of them are illiquid and have seen valuations collapse. Also consider that a lot of the players involved are overseas and anonymous* which makes it much more difficult to clawback relative to people onshore (like in the case of madoff).
- deleted 4y ago
  [deleted]
- nullc 4y ago
  If we limit ourselves to depositor funds -- who morally ought to be superior creditors to investors-- I wouldn't be shocked if the recovery percentage was quite a bit larger than that. One thing that made 90% recoveries of Madoff possible were that they first backed out all the fake gains that the customers thought they had but never actually had. This will be harder to do with FTX, but I expect that once all the bogus margin trading on fake assets is backed out we'll find that the losses were far less substantial than the numbers being thrown around.
  - phphphphp 4y ago
    I think that might have been true a year ago but at the time of FTX’s collapse, most market participants were underwater, especially the laypeople. The amount of money in the crypto market is definitely not anywhere near the supposed market cap, but if we look at USDC’s 50bn we can say with reasonable confidence that there’s at least 50bn of USD in the crypto market. If FTX was 10% of the market then 5 billion seems very plausible as a lower bound for the amount of real money value on the exchange (before backing out paper gains). That’s 5bn after people have lost >50% in the last year. There was something like 6bn withdrawn in the days before the collapse and if clawbacks could get most of it, we would at least see 0.40 on the dollar recovered… but I am very very skeptical about that happening, given FTX international was for people outside of US jurisdiction — not impossible to recover but much more difficult. I hope you’re right that it turns out that there’s only, say, 2bn of real money missing, and most people can be made mostly whole… but given the bloodbath of the last year, I fear that there’s probably more real money gone now, rather than less. A lot of people would be absolutely gleeful if you could somehow rollback the last year of trades on FTX.
    - nullc 4y ago
      My wild ass guesstimate before learning about the mobilecoin (the signal integrated crypto) apparent fraud would have been 1-2 billion lost, so I guess I should update that to 3 billion lost-- though there is probably reasonable odds on recovering the mobilecoin funds since there were probably only a few people who could have had access to enough mobilecoin to hit a billion worth even at $67/coin. It's quite possible that I'm just being bubbled/hopeful. I don't personally know anyone who lost money in FTX even though I know a lot of cryptocurrency people and I thought it was obviously sketchy from when I first heard of it, so these are probably influencing my perspective on how big it actually was. > If FTX was 10% of the market I'm dubious about 10%. We know in hindsight that FTX was faking their size in multiple respects (including e.g. faking their valuation by MTMing illiquid coins that they created and never circulated) -- probably every claim we've seen about their size based on their own figures was just lies.
- this_user 4y ago
  People have already looked into this, and the claims on FTX' debt were valued at 5c on the dollar. Alameda has burned through billions, and most of what was left were illiquid shitcoins and other worthless junk. Madoff, at least, was dealing with real assets.
  - panarky 4y ago
    > burned through billions If Alameda lost the billions, then who won the billions? Who was on the other side of those trades?
    - sam345 4y ago
      I'd be surprised if you could claw back actual trades on an open arms-length market assuming that's what the FTX exchange was. In Madoff's case, there were no trades at all. Madoff collected the money from his investors, generated fake statements showing inflated fake balances and profitable trades (that never actually occurred) and then selectively doled out limited cash redemptions until everyone demanded their money back at once and the whole thing came crashing down. In SBF's case, it looks like SBF took money from his customers, and then bought or sold crypto in arms-length transactions on an open exchange. If that's the case it's hard to see how they can get the money back from the other side of the trades where his counterparties were buying or selling on the market in good faith. I think the only hope is that if they can somehow get the assets from his affiliated entities and/or reclaim assets that SBF and/or his companies still have control over whether on the block chain or elsewhere.
    - ericbarrett 4y ago
      Matt Levine has speculated that a bunch of the money was lost via market-making with insufficient controls (margin enforcement etc.). For example, as reported by the Financial Times (via Levine's Dec. 5 newsletter, "Crypto had a Credit Bubble"): [begin quote] In April 2021, a crypto token called MobileCoin — used for payments in the privacy-focused messaging app Signal — suddenly spiked in price from about $6 to almost $70, before crashing back down again almost as quickly. The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Alameda was forced to step in and assume the trader’s position to protect FTX. The trading company’s loss on this deal was at least in the hundreds of millions of dollars, the people said, and as high as $1bn, according to one of the people, wiping out a large share of Alameda’s 2021 trading profits. [end quote] ...So whomever was on the other side of positions like that. Savvy outsider or well-informed insider? Who knows! Maybe it can be reclaimed, or maybe it's long dispersed down a chain of dozens of crypto exchanges, tumblers, offshore fiat accounts, and so forth. I expect we'll learn a lot more over the next few weeks as the federal case ramps up and the bankruptcy executor delivers more findings.
- Panzer04 4y ago
  I'd imagine there's a huge problem in that FTX did not declare bankruptcy until the vast majority of their liquid assets had been removed by the bank run. If they had declared bankruptcy before the run, most people might have gotten out with a 50% haircut. Instead, after the run, those left over will get nothing and those who got out will got 100%.
  - HWR_14 4y ago
    Those who got out will be told they need to give back 50% (assuming you are right that that is how much was left).
    - TedDoesntTalk 4y ago
      Even non-US customers? How?
      - HWR_14 4y ago
        The US has an excellent record of recovering stolen money from most places you would want to live (and reciprocally of helping other countries)
        Scoundreller 4y ago
        Maybe I wouldn’t, but at least a billion people live somewhere happily out of US extra-jurisdiction.
        oblio 4y ago
        Do you have a list with those places? Google isn't helping much.
        Cass 4y ago
        I assume they're referring to the over a billion people living in China. Whether China is a place you'd want to live depends entirely on your personal cirumstances, of course.
leprechaun1066 4y ago
The guy in charge of this for FTX is the same guy in charge of handling getting money back from the Enron collapse. He's currently testifying to congress about the state of things. It doesn't look good.
chollida1 4y ago
Well the Madoff trustee's were able to see who received payouts from Madoff due to KYC rules. This allowed the trustee to go to people, most of whom were completely innocent, to ask the to give back some of the money they redeemed from Madoff. FTX on the other hand has very few KYC docs so the trustees are left with wallet addresses. Not sure how you contact a wallet address to ask for money back.
- coffeebeqn 4y ago
  There was also a lot of paper wealth. You can get back your FTT tokens but they’re completely worthless
  - panarky 4y ago
    This is a distraction. Billions of dollars and euros went into a black box. Then some magic beans invented out of thin air came out of the black box. Now when we open the black box, the billions of dollars and euros are gone. FTT tokens doesn't explain where the fiat went.
    - coffeebeqn 4y ago
      Yes the real dollars went somewhere. I would guess the majority of them were lost from poor trades by Alameda. Combine that with the fact that a lot of those real dollars were converted in to Crypto schemes which are now down 90%. And their insane spend on houses and politics and who knows what else. I’m waiting anxiously to see what the truth is once we get some real data
- kragen 4y ago
  madoff operated from 01960 to 02008 kyc is from 02002
  - LastTrain 4y ago
    His Ponzi scheme started in 1991. Ponzi schemes are exponential, so more than 90% of the volume was after 2002. What's with the leading zeros?
timcavel 4y ago
dragonwriter 4y ago
> FTX's purchases of IOU's (i.e., crypto) Crypto is mostly not IOUs since it doesn’t tie to an obligation by anyone to do anything. (Explicitly redeemable tokens are IOUs, though.)
deleted 4y ago
[deleted]
massysett 4y ago
The problem is opportunity cost. People invested in Madoff to grow their money. So if I invest $100 in Madoff and ten years later they say “we recovered $90, congrats,” yeah that’s better than nothing. But if I had put that into a legitimate investment, maybe I’d have $180. Other folks got money out of Madoff during his scam years, and the trustee says “I’m taking that money back to pay back others.” So much of crypto went to things that now have little economic value. Burnt out computer hardware, enormous electricity, Tom Brady’s endorsement deal. At least with the housing bubble we got some buildings (I live in a bubble neighborhood.) Crypto is like lighting money on fire. The sooner this scam is over, the better.
- totalZero 4y ago
  Shkreli got hard time even though investors didn't lose money due to his fraud. There isn't a performance threshold beyond which fraud ceases to be criminal.
  - aliswe 4y ago
    Was that trial a bit politicized yu think? serious question
    - racingmars 4y ago
      Not particularly. He had gained notoriety due to other behavior (raising drug prices to fund other drug research, his attitude during his Congressional testimony and media appearances, etc.), but it sounds like his fraud [or whatever he was specifically found guilty of] was very cut-and-dry against SEC and other relevant rules.
      - ratsmack 4y ago
        "On December 17, 2015, Shkreli was arrested by the FBI after a federal indictment in the U.S. District Court for the Eastern District of New York was filed, charging him with securities fraud. The charges were filed after an investigation into his tenure at MSMB Capital Management and Retrophin. U.S. Attorney Robert Capers said, "Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company."
smcl 4y ago
Have they not just spunked it into cryptocurrencies?
TacticalCoder 4y ago
> How much really was lost? How much was really "lost"? Now that SBF is charged on six counts of conspiracy, it's safe to say it's safe to not believe anything that person says. I don't believe the "leveraged trades gone wrong" angle. I do believe there's a conspiracy. That's what several, including @Bitfinex'ed (a Twitter user exposing the tether fraud) and Marc Cohodes, said years and months before SBF was exposed for the ponzi boy he was. They don't believe the fraud only stops at SBF / Caroline Ellison. How much is going to be found depends on how far they investigate on the conspiracy. A good place to start looking for a conspiracy to defraud is this: FTX's top lawyer, Dan Friedberg, happened to be colleague with Bitfinex's top lawyer. Indeed, they both worked at a company which defrauded online poker players by cheating on them (using a "god mode" on the server software they were offering). I'd say that's a good start for the "conspiracy" angle: go look at Dan Friedberg's implication in the scheme. And at its relation with his former colleague now at Bitfinex. And seen that the Panamera papers exposed that Bitfinex/iFinex/tether/Deltec were all one and the same gang of criminals, and seen that it's a fact that Moonstone bank, which SBF bought in the US from Deltec's owner (at least partially) maybe, just maybe... That it's time to look into the tether fraud to find the billions?
mewse-hn 4y ago
> FTX's purchases of IOU's (i.e., crypto) that declined in value are not likely to be recoverable. But Bitcoin still has substantial value. This was kind of what Matt Levine focused on in his coverage of FTX - where did the money go? It wasn't just that they invested in crypto assets, they created their own crypto asset, assigned it a huge value, and put it on the balance sheet at an imaginary price. Used those "assets" as collateral to borrow real money. Then they spent real money on Bahamian property, political contributions, charitable contributions, naming an arena, and the KILLER - bailed out Alameda repeatedly using real money.
ETH_start 4y ago
A lot was lost to traders whose profits came out of FTX's losses from market making.
johnnyApplePRNG 4y ago
If this was purposefully orchestrated as the indictment suggests, it's very likely that 100% of every deposit made to FTX could be lost for good. Minus the real estate purchases of course. Crypto transactions are irreversible. All of the money that Alameda Research lost (which they borrowed from FTX investors) to bad bets could have easily been won by SBF et al on the other side of the trade... withdrawn to safety and put in a cold wallet for whenever they all see the light of day again. The majority of the money that Alameda lost to bad bets was propping up shitcoins. SBF could have created an account on FTX under a pseudonym and taken the short side of all of those shitcoin trades, knowing exactly how much financial support they had and how to break them.
1vuio0pswjnm7 4y ago
"How much was really lost?" With respect to culpability for the wire fraud charges, arguably it does not matter. The crime is a devising scheme to defraud. The execution of the scheme does not have to be successful. Even if every FTX customer gets a 100% refund of their deposits, SBF is still going to face prosecution. This is what makes his recent behaviour so childish, immature, juvenile and foolish. The transcript of his proposed testimony before Congress shows that SBF is anything but a "whiz kid". He is clueless. A pawn.1 1. https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rbgv1U_v6edA/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rbgv1U_v... "How much was really lost?" How much what? Fiat money? According to the self-proclaimed crypto experts, the fiat monetary system is to be avoided.2 Why would crypto believers want fiat money. According to a Google "engineer", the highly regulated, democratically-elected government that issues and guarantees fiat currency may seize it in the near future, referring the reader to "snopes.com" as an authoritative source. Not only that, according to the Google stooge, using fiat currency poses a risk of "total surveillance" and is undermining peoples' privacy.2 You cannot make this up. Employee of almost totally unregulated "tech" company, hoovering up the personal data and invading the privacy of hundreds of millions of people for profit, a company with nearly 140,000 employees and billions in the bank that does not even have a basic customer service line, is giving unsolicited advice about privacy. 2. https://apxhard.substack.com/p/why-bitcoin-is-different-from-all https://apxhard.substack.com/p/why-bitcoin-is-different-from...
- dwheeler 4y ago
  How much was really lost won't matter much in terms of prosecuting those who committed any crimes. And while it looks like a huge crime to me, they are still innocent until proven guilty. It does matter to those who appear to have been defrauded. They won't be made whole. There will be opportunity costs, and I can't imagine it all being recovered. But if a significant portion is recovered, it would provide some help to the victims.
SentientAtom 4y ago
They need to freeze the crypto holdings until the next bull run.

phphphphp 4y ago

I’d be absolutely shocked if more than 25% can be recovered. They spent multi-billions on venture investments that were not just high-risk due to their early stage nature but also inextricably linked to ftx by way of the cryptocurrency market as a whole and thus about as undiversified as humanly possible. There’s a few of their investments that have value and value could be recovered through sales but almost all of them are illiquid and have seen valuations collapse. Also consider that a lot of the players involved are overseas and anonymous* which makes it much more difficult to clawback relative to people onshore (like in the case of madoff).

deleted 4y ago
[deleted]
nullc 4y ago
If we limit ourselves to depositor funds -- who morally ought to be superior creditors to investors-- I wouldn't be shocked if the recovery percentage was quite a bit larger than that. One thing that made 90% recoveries of Madoff possible were that they first backed out all the fake gains that the customers thought they had but never actually had. This will be harder to do with FTX, but I expect that once all the bogus margin trading on fake assets is backed out we'll find that the losses were far less substantial than the numbers being thrown around.
- phphphphp 4y ago
  I think that might have been true a year ago but at the time of FTX’s collapse, most market participants were underwater, especially the laypeople. The amount of money in the crypto market is definitely not anywhere near the supposed market cap, but if we look at USDC’s 50bn we can say with reasonable confidence that there’s at least 50bn of USD in the crypto market. If FTX was 10% of the market then 5 billion seems very plausible as a lower bound for the amount of real money value on the exchange (before backing out paper gains). That’s 5bn after people have lost >50% in the last year. There was something like 6bn withdrawn in the days before the collapse and if clawbacks could get most of it, we would at least see 0.40 on the dollar recovered… but I am very very skeptical about that happening, given FTX international was for people outside of US jurisdiction — not impossible to recover but much more difficult. I hope you’re right that it turns out that there’s only, say, 2bn of real money missing, and most people can be made mostly whole… but given the bloodbath of the last year, I fear that there’s probably more real money gone now, rather than less. A lot of people would be absolutely gleeful if you could somehow rollback the last year of trades on FTX.
  - nullc 4y ago
    My wild ass guesstimate before learning about the mobilecoin (the signal integrated crypto) apparent fraud would have been 1-2 billion lost, so I guess I should update that to 3 billion lost-- though there is probably reasonable odds on recovering the mobilecoin funds since there were probably only a few people who could have had access to enough mobilecoin to hit a billion worth even at $67/coin. It's quite possible that I'm just being bubbled/hopeful. I don't personally know anyone who lost money in FTX even though I know a lot of cryptocurrency people and I thought it was obviously sketchy from when I first heard of it, so these are probably influencing my perspective on how big it actually was. > If FTX was 10% of the market I'm dubious about 10%. We know in hindsight that FTX was faking their size in multiple respects (including e.g. faking their valuation by MTMing illiquid coins that they created and never circulated) -- probably every claim we've seen about their size based on their own figures was just lies.
this_user 4y ago
People have already looked into this, and the claims on FTX' debt were valued at 5c on the dollar. Alameda has burned through billions, and most of what was left were illiquid shitcoins and other worthless junk. Madoff, at least, was dealing with real assets.
- panarky 4y ago
  > burned through billions If Alameda lost the billions, then who won the billions? Who was on the other side of those trades?
  - sam345 4y ago
    I'd be surprised if you could claw back actual trades on an open arms-length market assuming that's what the FTX exchange was. In Madoff's case, there were no trades at all. Madoff collected the money from his investors, generated fake statements showing inflated fake balances and profitable trades (that never actually occurred) and then selectively doled out limited cash redemptions until everyone demanded their money back at once and the whole thing came crashing down. In SBF's case, it looks like SBF took money from his customers, and then bought or sold crypto in arms-length transactions on an open exchange. If that's the case it's hard to see how they can get the money back from the other side of the trades where his counterparties were buying or selling on the market in good faith. I think the only hope is that if they can somehow get the assets from his affiliated entities and/or reclaim assets that SBF and/or his companies still have control over whether on the block chain or elsewhere.
  - ericbarrett 4y ago
    Matt Levine has speculated that a bunch of the money was lost via market-making with insufficient controls (margin enforcement etc.). For example, as reported by the Financial Times (via Levine's Dec. 5 newsletter, "Crypto had a Credit Bubble"): [begin quote] In April 2021, a crypto token called MobileCoin — used for payments in the privacy-focused messaging app Signal — suddenly spiked in price from about $6 to almost $70, before crashing back down again almost as quickly. The wild moves came after a trader on FTX had built an unusually large position in the little-known token. Two people familiar with the matter said that when the price rose, the trader used the position to borrow against it on FTX, potentially a scheme to extract dollars from the exchange. Alameda was forced to step in and assume the trader’s position to protect FTX. The trading company’s loss on this deal was at least in the hundreds of millions of dollars, the people said, and as high as $1bn, according to one of the people, wiping out a large share of Alameda’s 2021 trading profits. [end quote] ...So whomever was on the other side of positions like that. Savvy outsider or well-informed insider? Who knows! Maybe it can be reclaimed, or maybe it's long dispersed down a chain of dozens of crypto exchanges, tumblers, offshore fiat accounts, and so forth. I expect we'll learn a lot more over the next few weeks as the federal case ramps up and the bankruptcy executor delivers more findings.
Panzer04 4y ago
I'd imagine there's a huge problem in that FTX did not declare bankruptcy until the vast majority of their liquid assets had been removed by the bank run. If they had declared bankruptcy before the run, most people might have gotten out with a 50% haircut. Instead, after the run, those left over will get nothing and those who got out will got 100%.
- HWR_14 4y ago
  Those who got out will be told they need to give back 50% (assuming you are right that that is how much was left).
  - TedDoesntTalk 4y ago
    Even non-US customers? How?
    - HWR_14 4y ago
      The US has an excellent record of recovering stolen money from most places you would want to live (and reciprocally of helping other countries)
      - Scoundreller 4y ago
        Maybe I wouldn’t, but at least a billion people live somewhere happily out of US extra-jurisdiction.
        oblio 4y ago
        Do you have a list with those places? Google isn't helping much.
        Cass 4y ago
        I assume they're referring to the over a billion people living in China. Whether China is a place you'd want to live depends entirely on your personal cirumstances, of course.

leprechaun1066 4y ago

The guy in charge of this for FTX is the same guy in charge of handling getting money back from the Enron collapse. He's currently testifying to congress about the state of things. It doesn't look good.

chollida1 4y ago

Well the Madoff trustee's were able to see who received payouts from Madoff due to KYC rules. This allowed the trustee to go to people, most of whom were completely innocent, to ask the to give back some of the money they redeemed from Madoff. FTX on the other hand has very few KYC docs so the trustees are left with wallet addresses. Not sure how you contact a wallet address to ask for money back.

coffeebeqn 4y ago
There was also a lot of paper wealth. You can get back your FTT tokens but they’re completely worthless
- panarky 4y ago
  This is a distraction. Billions of dollars and euros went into a black box. Then some magic beans invented out of thin air came out of the black box. Now when we open the black box, the billions of dollars and euros are gone. FTT tokens doesn't explain where the fiat went.
  - coffeebeqn 4y ago
    Yes the real dollars went somewhere. I would guess the majority of them were lost from poor trades by Alameda. Combine that with the fact that a lot of those real dollars were converted in to Crypto schemes which are now down 90%. And their insane spend on houses and politics and who knows what else. I’m waiting anxiously to see what the truth is once we get some real data
kragen 4y ago
madoff operated from 01960 to 02008 kyc is from 02002
- LastTrain 4y ago
  His Ponzi scheme started in 1991. Ponzi schemes are exponential, so more than 90% of the volume was after 2002. What's with the leading zeros?

timcavel 4y ago

dragonwriter 4y ago

> FTX's purchases of IOU's (i.e., crypto) Crypto is mostly not IOUs since it doesn’t tie to an obligation by anyone to do anything. (Explicitly redeemable tokens are IOUs, though.)

deleted 4y ago

[deleted]

massysett 4y ago

The problem is opportunity cost. People invested in Madoff to grow their money. So if I invest $100 in Madoff and ten years later they say “we recovered $90, congrats,” yeah that’s better than nothing. But if I had put that into a legitimate investment, maybe I’d have $180. Other folks got money out of Madoff during his scam years, and the trustee says “I’m taking that money back to pay back others.” So much of crypto went to things that now have little economic value. Burnt out computer hardware, enormous electricity, Tom Brady’s endorsement deal. At least with the housing bubble we got some buildings (I live in a bubble neighborhood.) Crypto is like lighting money on fire. The sooner this scam is over, the better.

totalZero 4y ago
Shkreli got hard time even though investors didn't lose money due to his fraud. There isn't a performance threshold beyond which fraud ceases to be criminal.
- aliswe 4y ago
  Was that trial a bit politicized yu think? serious question
  - racingmars 4y ago
    Not particularly. He had gained notoriety due to other behavior (raising drug prices to fund other drug research, his attitude during his Congressional testimony and media appearances, etc.), but it sounds like his fraud [or whatever he was specifically found guilty of] was very cut-and-dry against SEC and other relevant rules.
    - ratsmack 4y ago
      "On December 17, 2015, Shkreli was arrested by the FBI after a federal indictment in the U.S. District Court for the Eastern District of New York was filed, charging him with securities fraud. The charges were filed after an investigation into his tenure at MSMB Capital Management and Retrophin. U.S. Attorney Robert Capers said, "Shkreli essentially ran his company like a Ponzi scheme where he used each subsequent company to pay off defrauded investors from the prior company."

smcl 4y ago

Have they not just spunked it into cryptocurrencies?

TacticalCoder 4y ago

> How much really was lost? How much was really "lost"? Now that SBF is charged on six counts of conspiracy, it's safe to say it's safe to not believe anything that person says. I don't believe the "leveraged trades gone wrong" angle. I do believe there's a conspiracy. That's what several, including @Bitfinex'ed (a Twitter user exposing the tether fraud) and Marc Cohodes, said years and months before SBF was exposed for the ponzi boy he was. They don't believe the fraud only stops at SBF / Caroline Ellison. How much is going to be found depends on how far they investigate on the conspiracy. A good place to start looking for a conspiracy to defraud is this: FTX's top lawyer, Dan Friedberg, happened to be colleague with Bitfinex's top lawyer. Indeed, they both worked at a company which defrauded online poker players by cheating on them (using a "god mode" on the server software they were offering). I'd say that's a good start for the "conspiracy" angle: go look at Dan Friedberg's implication in the scheme. And at its relation with his former colleague now at Bitfinex. And seen that the Panamera papers exposed that Bitfinex/iFinex/tether/Deltec were all one and the same gang of criminals, and seen that it's a fact that Moonstone bank, which SBF bought in the US from Deltec's owner (at least partially) maybe, just maybe... That it's time to look into the tether fraud to find the billions?

mewse-hn 4y ago

> FTX's purchases of IOU's (i.e., crypto) that declined in value are not likely to be recoverable. But Bitcoin still has substantial value. This was kind of what Matt Levine focused on in his coverage of FTX - where did the money go? It wasn't just that they invested in crypto assets, they created their own crypto asset, assigned it a huge value, and put it on the balance sheet at an imaginary price. Used those "assets" as collateral to borrow real money. Then they spent real money on Bahamian property, political contributions, charitable contributions, naming an arena, and the KILLER - bailed out Alameda repeatedly using real money.

ETH_start 4y ago

A lot was lost to traders whose profits came out of FTX's losses from market making.

johnnyApplePRNG 4y ago

If this was purposefully orchestrated as the indictment suggests, it's very likely that 100% of every deposit made to FTX could be lost for good. Minus the real estate purchases of course. Crypto transactions are irreversible. All of the money that Alameda Research lost (which they borrowed from FTX investors) to bad bets could have easily been won by SBF et al on the other side of the trade... withdrawn to safety and put in a cold wallet for whenever they all see the light of day again. The majority of the money that Alameda lost to bad bets was propping up shitcoins. SBF could have created an account on FTX under a pseudonym and taken the short side of all of those shitcoin trades, knowing exactly how much financial support they had and how to break them.

1vuio0pswjnm7 4y ago

"How much was really lost?" With respect to culpability for the wire fraud charges, arguably it does not matter. The crime is a devising scheme to defraud. The execution of the scheme does not have to be successful. Even if every FTX customer gets a 100% refund of their deposits, SBF is still going to face prosecution. This is what makes his recent behaviour so childish, immature, juvenile and foolish. The transcript of his proposed testimony before Congress shows that SBF is anything but a "whiz kid". He is clueless. A pawn.1 1. https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rbgv1U_v6edA/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/rbgv1U_v... "How much was really lost?" How much what? Fiat money? According to the self-proclaimed crypto experts, the fiat monetary system is to be avoided.2 Why would crypto believers want fiat money. According to a Google "engineer", the highly regulated, democratically-elected government that issues and guarantees fiat currency may seize it in the near future, referring the reader to "snopes.com" as an authoritative source. Not only that, according to the Google stooge, using fiat currency poses a risk of "total surveillance" and is undermining peoples' privacy.2 You cannot make this up. Employee of almost totally unregulated "tech" company, hoovering up the personal data and invading the privacy of hundreds of millions of people for profit, a company with nearly 140,000 employees and billions in the bank that does not even have a basic customer service line, is giving unsolicited advice about privacy. 2. https://apxhard.substack.com/p/why-bitcoin-is-different-from-all https://apxhard.substack.com/p/why-bitcoin-is-different-from...

dwheeler 4y ago
How much was really lost won't matter much in terms of prosecuting those who committed any crimes. And while it looks like a huge crime to me, they are still innocent until proven guilty. It does matter to those who appear to have been defrauded. They won't be made whole. There will be opportunity costs, and I can't imagine it all being recovered. But if a significant portion is recovered, it would provide some help to the victims.

SentientAtom 4y ago

They need to freeze the crypto holdings until the next bull run.