7 ms·

FTX pre-mortem overview

96 points by koolba 4y ago

KVFinn 4y ago
Friends don't let friends blog post on stimulants. Especially while under house arrest.
- bradhe 4y ago
  But don't you know that it’s likely that FTX could have made all customers whole if a concerted effort had been made to raise liquidity?!
- jesuscript 4y ago
  Sure seems like a Adderral high right? Like bro, the feds are building a case against you. Shut the fuck up, and only talk to your lawyers. He’s high as fuck on Adderral right now. The Adderral high can make you feel like the dumbest shit you are doing is the most brilliant thing in the world.
- cmrdporcupine 4y ago
  I mean I made the same joke as others about stimulant high, but, also.. It feels like he's trying to salvage his reputation with people like us, or at least some of the web3-adjacent people who hang out on forums like this; this stuff won't convince lawyers or a jury or people who analyze for fraud. But it might convince people who were/are crypto enthusiasts and looking to see legitimacy restored and reputations untarnished. It's a bit sad.
h2odragon 4y ago
I can almost hear the lawyers: "sir, we're trying to help get you out of this hole. Could you please stop digging"
- ephextom 4y ago
  A theory going around a few weeks ago about his apparent inability to STFU is that his defence will be that he was affected by ADHD meds that impaired his judgement and made him impulsive, and have continued to do so even post collapse. I doubt lawyers could come up with anything better than this, really.
  - KVFinn 4y ago
    >A theory going around a few weeks ago about his apparent "inability" to STFU is that his defence will be that he was affected by ADHD meds that impaired his judgement and made him impulsive, and have continued to do so even post collapse. I doubt lawyers could come up with anything better than this, really. Doesn't seem far fetched honestly. He really reminds me people who took one too many adderall doses and suddenly think everything is a great idea.
  - deleted 4y ago
    [deleted]
  - blockwriter 4y ago
    Does establishing impaired judgement due to ADHD meds require that he demonstrate continued impaired judgement regarding the specifics of the case? Can’t he just buy every old GameCube game that comes to mind on eBay and live bet the Las Vegas Raiders like the rest of us? “My client can’t possibly be guilty. He spent $80 dollars on a complete in box copy of Luigi’s Mansion and didn’t play past the first boss.”
  - RhysU 4y ago
    Do ADHD meds differ from, say, alcohol from a legal perspective? My understanding is that being drunk is never a defense. The meds are something he chooses to consume as an adult so it seems like he should be compared to an unmedicated standard. But IANAL.
- gadders 4y ago
  Someone archive it, quick.
  - h2odragon 4y ago
    https://archive.ph/OAvHl https://archive.ph/OAvHl
- dragonwriter 4y ago
  His first set of lawyers apparently told him that, and they were fired (with a public “F-ck you” tweet) an d he kept Tweeting through it.
seedless-sensat 4y ago
I don't know how this is a "pre"-mortem
- jrochkind1 4y ago
  I mean, he is insisting that FTX and Alameda aren't really dead, and are still solvent... > FTX US remains fully solvent and should be able to return all customers’ funds. FTX International has many billions of dollars of assets, and I am dedicating nearly all of my personal assets to customers.
  - benjaminwootton 4y ago
    His problem here is that the two businesses were deeply co-mingled. If it was a genuinely seperate entity then it would be a much stronger argument.
- dragonwriter 4y ago
  He claims that FTX US is still viable, in part because his “personal” Robinhood shares (that have been seized by DoJ, and are part of a multiparty ownership battle, as a result of the skethcy loans funding the purchase) are available to backstop FTX US customer losses.
brakmic 4y ago
Why is this guy still talking in public?
- unicornmama 4y ago
  Because he will get a fat book and movie deal.
  - jgalt212 4y ago
    He's trying to influence the jury pool.
    - notch656c 4y ago
      My uncle, grandma, etc aint reading this.
      - saaaaaam 4y ago
        No, but they will likely see topline coverage in big media - and then their takeaway of that topline may well be “SBF wrote a blog saying FTX was solvent and administrators could refund customers but haven’t”
        notch656c 4y ago
        You might be right. I've talked to both sides of my family and realized I was in a tech bubble and no one knew who the hell the guy was though. I doubt the average 35+ y/o person outside of tech even knows what FTX or SBF is.
        saaaaaam 4y ago
        I don’t know - here in the U.K. it’s getting fairly significant coverage on BBC, Sky News etc. The Today Programme on Radio 4 (which is the “definitive” establishment news programme) has been covering it quite a lot.
britneybitch 4y ago
If I knew I only had a few weeks/months of freedom left, I'd spend my time doing something other than writing blog posts.
- cmrdporcupine 4y ago
  Looks like he still has his Adderall prescription, despite all of this.
- optimalsolver 4y ago
  League of Legends?
  - shalmanese 4y ago
    Maybe he will finally reach Silver.
deleted 4y ago
[deleted]
ufo 4y ago
SBF also linked to this blog post from https://twitter.com/SBF_FTX https://twitter.com/SBF_FTX, so it appears to be actually him.
notch656c 4y ago
Pretty clear evidence of a lack of remorse (well he has remorse he lost the bet but not for being a fraud) and acceptance of his crimes even during the judicial process. He's gonna go away for a long time.
- Bilal_io 4y ago
  But it would be stupid to admit guilt while his case is still ongoing, regardless of whether he feels remorse or not.
  - notch656c 4y ago
    Agreed. If he just shut his mouth it would be difficult to judge his thoughts. However his-Adderall fueled posts betray him. Doesn't look good when yet again here he expresses wishes to reboot the fraud. It's a pretty clear signal as soon as this guy gets out, if he is in fact a criminal, that he will do as he says.
once_inc 4y ago
Is he still not explaining why alameda's poor hedging would impact client funds on FTX? Because that is where the criminal act happened...
- benjaminwootton 4y ago
  Yes. He can write a million words, but the issue is misusing ringfenced customer funds. I didn’t see that mentioned in the post at all.
  - breck 4y ago
    This is a good point.
rubyfan 4y ago
> Three things combined together to cause the implosion: … Shockingly this list doesn’t include misappropriating customer funds
londons_explore 4y ago
It really does read like a "anyone but me is at fault"...
- smcl 4y ago
  Yep something I keep seeing in his interviews and posts is that he will talk enthusiastically and at length about how some external events caused FTX difficulties, but will ignore or hand-wave some actions that he actually did. The impression I get from them isn't "oh this is a really unlucky guy" though, it is "oh this guy is quite a skilled manipulator". I also liked when he did a Good Morning America interview and looked like a schoolkid who was caught cheating and tried really hard to look like they're sorry: https://twitter.com/sracka_omacka/status/1602469299113066496 https://twitter.com/sracka_omacka/status/1602469299113066496
esotericimpl 4y ago
[dead]
dabeeeenster 4y ago
"FTX US remains fully solvent and should be able to return all customers’ funds. FTX International has many billions of dollars of assets, and I am dedicating nearly all of my personal assets to customers." 'Nearly all'. Amazing.
- peteradio 4y ago
  Well geez wise guy, if he gave up the shirt on his back they wouldn't let him in the bank to give up all his savings.
m00dy 4y ago
I would like to point out an important factor which I think is not only I feel stupid about it. So, firstly, we are talking about the United States, a leading superpower, an essential country for preserving world order; just imagine being an American citizen. It is not that easy to get arrested in another country. You will always feel the privilege of being a first-world country national. Secondly, the US still dominates the financial world. Every transaction in the SWIFT system needs to be confirmed in a very centralized manner. So, you know who is sending money to who, etc. Thirdly, US Army is so big, everywhere from the Middle East to Asia. So, I’m trying to say that the US dominates this planet in many ways… And then SBF shows up and says there is a separate country called The Bahamas. It is a different country, with other company registration and other laws. Therefore, It is all different. I’m sorry, but I don’t take this.
papito 4y ago
"Effective altruism" should go the way of web3.0
- cmrdporcupine 4y ago
  Unfortunately "web3" still seems to have some legs. Though if recruiter-spam on LinkedIn is a measure of anything, those legs are a bit shorter than they were 6 months ago.
jrochkind1 4y ago
I read a bunch of this before realizing it was actually by SBF.
ur-whale 4y ago
For posterity: https://archive.ph/OAvHl https://archive.ph/OAvHl
SilverBirch 4y ago
It's fucking wild that this guy keeps talking, because either we're watching this guy continue to incriminate himself in ways that are going to really hurt him a court of law, or he's actually going to get off lightly in which case his confidence is just disgusting. He genuinely thinks he can just continually say in front of everyone "These assets I just totally invented are worth billions" and no amount of argument affects him. And that he hasn't done anything wrong when we literally have testimony from his employees about exactly how stole the money. "If I just say illiquid enough, it'll all be ok". No. At some point this guy is going to be in a court and have to come up with a coherent answer why he's describing stuff he made up as illiquid billions, and it better be good. He simply doesn't have even a passing relationship with the truth. It just seems that at some point in the years of idiot VCs handing him money and servicing him orally, he started to actually believe he can just make up reality.
- ulrashida 4y ago
  Did you not see his two spreadsheets labelled "JUST AN ESTIMATE" that clearly show he is right? I would love to know the thought process behind his decision to make this post.
  - SilverBirch 4y ago
    Presumably the thought process is something along the lines of "No one is going to look at this, only count the liquid stuff and make the very obvious point we were underwater even at the peak of the market".
- breck 4y ago
  [flagged]
  - SilverBirch 4y ago
    God I wish someone would pay me for my HN comments.
  - smcl 4y ago
    Which claims specifically need a citation?
thesausageking 4y ago
This is really misleading as it ignores the main fraud FTX committed: commingling user funds. Exchanges should never put their users' assets at risk and FTX's T&C said they didn't. If you deposited 1 BTC on their exchange, they were supposed to store that 1 BTC for you. If they had done that, there would be no issues. If users leave, you just give them back what they owned and no one loses money.
- SilverBirch 4y ago
  Yes, the core criminal claims (commingling funds, funnelling money to Alameda through unaccounted margin, using software to hide things from the balance sheet) are just totally unaddressed.
  - notch656c 4y ago
    As long as you don't actually lose the money while doing those things, though, no one really notices and no one outside of prosecutors office even cares. Pragmatically (but not legally) the complaint is he lost the money. His world crashing around him revolves around that. So he has the wrong, but understandable viewpoint that the legal complaint is that he lost the money.
    - thesausageking 4y ago
      Even if you don't lose people money, lying about how you're using it is a crime and you can go to jail for it. Ask Martin Shkreli. He never lost any investors money, but still got 7 years in prison because he lied about what he was doing with their funds and used profits from some investments to cover losses from others.
    - SilverBirch 4y ago
      To be honest you don’t really do those things if you had a legitimate business, he commingled finds because he ran out money. He ran out money because he was making poor risky bets. Over a long enough time horizon his bad trading was going to realise losses, and as we’ve seen, he was going to cover it up. If FTX had 100bn in the bank, he would’ve kept going until the whole 100 was gone trying to chase the losses.
jrochkind1 4y ago
Honestly, I believe he really believes he did nothing wrong, and really feels bad about anyone getting financially ruined. I think he was kind of an idiot, in an environment where lots of people were getting rich behaving in unethical and illegal ways, and getting away with it, while convincing themselves they weren't doing anything wrong. That whole "scene" created it's own version of reality in which they could do whatever they want and make up their own facts and deserved only victory... which sounds kind of familiar for the USA and much of the world in general these days.
- jesuscript 4y ago
  Lack of reality based thinking coupled with adhd stimulants that on initial intake create a euphoria and makes you feel even more grandiose. That's when reality based thinking goes completely out the window. He has no objective capability anymore to be self aware, and it's made worse with prescription drugs. When the feds come knocking on your door asking about several billion dollars going missing, and you let yourself do the talking via blogs and interviews versus your team of lawyers, you have absolutely lost your mind. Certainly don't add adderral or alcohol, or anything to the mix. Go into a small dark room and smoke some weed you junkie crook. Keep quiet, your inner circle already ratted on you. Have some respect for the $250 million your parents scourged up to bail your stupid ass out, reprehensible fuck.
- kuhewa 4y ago
  When you see how people behave in fields like this where the common social contract ethical standards and law hasn't quite caught up to whatever the new constructs are, it doesn't inspire confidence in an innate morality capacity
apozem 4y ago
For fun, I recommend opening the SEC's case against SBF [1] and searching "tweet" and "television." They are building their case every time he opens his mouth. This is why if you ever find yourself in any kind of serious legal matter, take your lawyer's advice and stop talking. It doesn't matter how smart you think you are. Prosecutors will use your words against you. [1]: https://www.sec.gov/litigation/complaints/2022/comp-pr2022-219.pdf https://www.sec.gov/litigation/complaints/2022/comp-pr2022-2...
- breck 4y ago
  I agree that [dishonest] lawyers will twist your words against you. But I disagree with your advice to "stop talking". We need everyone to keep talking. We need to change the justice system. It needs to be more transparent, more honest, better at quickly getting to the truth. I don't necessarily know what the solutions are, but I am going through a court case Pro Se right now and have seen first hand what a cess pool it has become, and it makes me sad for our country, and we need to start fixing it. Keep talking SBF.
  - phphphphp 4y ago
    A justice system will never be about the truth, because the truth does not bring justice: justice is a human attempt at realising what most would call karma. You do a bad thing, we try to make you suffer: the truth doesn't matter, because there's no absolute "good" and "bad" -- it's all perception. Lawyers are not truth seekers, they're playing a game, and to represent oneself in pursuit of the truth is a fools errand. I've served on a jury, I agree the modern model for justice is broken, but the problem is not an absence of truth, it's much more fundamental.
breck 4y ago
I think I had as much as $30,000 in my new FTX.us account (I was loyal to Coinbase, but inept officials in Hawai'i banned crypto and I was kicked off Coinbase and needed another exchange). So I should be angry. But I'm not. At least not yet. Something seems phishy to me. I think SBF might be telling the truth. Or he could be lying. I don't know. I'm 50/50 on this one though. FTX.us was a good product. It was snappy and it worked. Until the lawyers took over. SBF says it was fully solvent and I have not seen any proof that it wasn't. The sheer quantity of "he's guilty" comments on all of social media reads like a well organized PR hit job (similar to this: https://twitter.com/breckyunits/status/1613178467818024962/photo/1 https://twitter.com/breckyunits/status/1613178467818024962/p...). The one lesson I think everyone can take away from this is: as much as you can, #buildInPublic.
- kuhewa 4y ago
  You haven't reached the anger Kübler-Ross grief stage yet
- smcl 4y ago
  The quantity of "he's guilty" comments and tweets are a result of how famously and enormously FTX flamed out and how comically guilty he looks. It's not some unnamed entity (CZ? Binance? The US government?) organising some PR campaign against him. Re your tweet - are you one of those people who believe a covid vaccine caused that player to collapse? You realise athletes have seemingly randomly or spontaneously collapsed many times before Covid 19 was even discovered - often when they weren't even hit, as Hamlin was.
  - breck 4y ago
    > Re your tweet - are you one of those people who believe a covid vaccine caused that player to collapse? No. That would be stupid. I believe there's a chance that it did. At first, 1%. Now, given that they haven't released his vaccine status yet, and as my Tweet shows have paid for an expensive PR campaign to slander anyone who questions whether there has been a cause (a campaign that has clearly had an effect on you), I have updated my probabilities to believe with 20% certainty the vaccine caused his heart attack. What odds do you give it?
kuhewa 4y ago
The sheer schadenfreude generated from the wunderkind that still appears to be under the impression he'll be able to talk his away into a better position.
dgreensp 4y ago
So am I reading this right: If I have $1m of Tesla stock, and I borrow $1m to buy crypto, that’s zero “net borrowing,” because the stock is “liquid” so I can just repay the loan at any time. Then they both go down by 50%. Now I need more “liquidity,” i.e. to borrow more money, which apparently grows on trees.
- sja 4y ago
  Right- looking at this point at the end of the post: > If FTX had been given a few weeks to raise the necessary liquidity, I believe it would have been able to make customers substantially whole It sounds like he's saying "if we just had time to find new bag holders, our customers wouldn't be screwed!"
  - dgreensp 4y ago
    Yup. And even as I read my own comment, I can hear someone saying, “The long-term thesis remains sound!” and “Lots of other funds had similar losses!” and “How were we supposed to know, it was a perfect storm!” Meanwhile building bubbles upon bubbles upon bubbles.
harambae 4y ago
"... summer of 2022, Alameda finally put on substantial hedges, in some combination of BTC, ETH, and QQQ" Did they consider having some hedges that weren't correlated?
deleted 4y ago
[deleted]
ipython 4y ago
Interesting that his balance sheet in this blog entry doesn’t include the $8 billion “poorly labeled fiat@ account” from the earlier sheet floating around in November: https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-...
1vuio0pswjnm7 4y ago
SBF is making no apologies. Last week right after he pleaded not guilty, he filed an objection in the FTX bankruptcy case arguing that the Robinhood shares he purchased with money borrowed from Alameda are his personal assets. Of course as we know Alameda was "borrowing" from FTX (without FTX telling customers). If one accepts that Alameda's cash was comprised in part of FTX's cash then it appears SBF wants to pay for his legal defense with shares he and Zixiao Wang bought using money from FTX customer deposits. https://ia601406.us.archive.org/2/items/gov.uscourts.deb.188450/gov.uscourts.deb.188450.387.0.pdf https://ia601406.us.archive.org/2/items/gov.uscourts.deb.188... What are the chances he changes his plea between now and October. Eventually he will have to apologise. Maybe he'll do so from prison when he is finally denied 24/7 internet access.
- SilasX 4y ago
  >Last week right after he pleaded not guilty, he filed an objection in the FTX bankruptcy case arguing that the Robinhood shares he purchased with money borrowed from Alameda are his personal assets. I don't know if you were referring to the following part of the article, but, in case others are missing the context: >>Nearly all of my assets were and still are utilizable to backstop FTX customers. I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers–or 100%, if the Chapter 11 team would honor my D&O legal expense indemnification. So here he's claiming that he wanted the Robinhood shares to be available to FTX creditors, even as he's previously made a motion to claim them as his own.
  - dragonwriter 4y ago
    > So here he's claiming that he wanted the Robinhood shares to be available to FTX creditors, even as he's previously made a motion to claim them as his own. And his claim to the bankruptcy court was that he needed them to pay for his criminal defense, not to have them available to voluntarily backstop FTX US liabilities. (Also, the idea that the proceeds of the property acquired through the dubious backdoor self-dealing FTX international -> Alameda -> SBF loan should go to backstop FTX US customers is... interesting.)
rippercushions 4y ago
The more I stare at this "balance sheet", the less sense it makes. All the numbers are positive, but "total" is far less than the sum of the balances! What the hell is a "negative coin balance"? How does a "positive coin balance" differ from a "wallet balance"? And where does the assertion about customer margin "postion" (sic) being under US$250M come from? https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F05b65e4e-6d88-443a-bd38-f5282010b785_869x428.png https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_...

96 points by koolba 4y ago

KVFinn 4y ago

Friends don't let friends blog post on stimulants. Especially while under house arrest.

bradhe 4y ago
But don't you know that it’s likely that FTX could have made all customers whole if a concerted effort had been made to raise liquidity?!
jesuscript 4y ago
Sure seems like a Adderral high right? Like bro, the feds are building a case against you. Shut the fuck up, and only talk to your lawyers. He’s high as fuck on Adderral right now. The Adderral high can make you feel like the dumbest shit you are doing is the most brilliant thing in the world.
cmrdporcupine 4y ago
I mean I made the same joke as others about stimulant high, but, also.. It feels like he's trying to salvage his reputation with people like us, or at least some of the web3-adjacent people who hang out on forums like this; this stuff won't convince lawyers or a jury or people who analyze for fraud. But it might convince people who were/are crypto enthusiasts and looking to see legitimacy restored and reputations untarnished. It's a bit sad.

h2odragon 4y ago

I can almost hear the lawyers: "sir, we're trying to help get you out of this hole. Could you please stop digging"

ephextom 4y ago
A theory going around a few weeks ago about his apparent inability to STFU is that his defence will be that he was affected by ADHD meds that impaired his judgement and made him impulsive, and have continued to do so even post collapse. I doubt lawyers could come up with anything better than this, really.
- KVFinn 4y ago
  >A theory going around a few weeks ago about his apparent "inability" to STFU is that his defence will be that he was affected by ADHD meds that impaired his judgement and made him impulsive, and have continued to do so even post collapse. I doubt lawyers could come up with anything better than this, really. Doesn't seem far fetched honestly. He really reminds me people who took one too many adderall doses and suddenly think everything is a great idea.
- deleted 4y ago
  [deleted]
- blockwriter 4y ago
  Does establishing impaired judgement due to ADHD meds require that he demonstrate continued impaired judgement regarding the specifics of the case? Can’t he just buy every old GameCube game that comes to mind on eBay and live bet the Las Vegas Raiders like the rest of us? “My client can’t possibly be guilty. He spent $80 dollars on a complete in box copy of Luigi’s Mansion and didn’t play past the first boss.”
- RhysU 4y ago
  Do ADHD meds differ from, say, alcohol from a legal perspective? My understanding is that being drunk is never a defense. The meds are something he chooses to consume as an adult so it seems like he should be compared to an unmedicated standard. But IANAL.
gadders 4y ago
Someone archive it, quick.
- h2odragon 4y ago
  https://archive.ph/OAvHl https://archive.ph/OAvHl
dragonwriter 4y ago
His first set of lawyers apparently told him that, and they were fired (with a public “F-ck you” tweet) an d he kept Tweeting through it.

seedless-sensat 4y ago

I don't know how this is a "pre"-mortem

jrochkind1 4y ago
I mean, he is insisting that FTX and Alameda aren't really dead, and are still solvent... > FTX US remains fully solvent and should be able to return all customers’ funds. FTX International has many billions of dollars of assets, and I am dedicating nearly all of my personal assets to customers.
- benjaminwootton 4y ago
  His problem here is that the two businesses were deeply co-mingled. If it was a genuinely seperate entity then it would be a much stronger argument.
dragonwriter 4y ago
He claims that FTX US is still viable, in part because his “personal” Robinhood shares (that have been seized by DoJ, and are part of a multiparty ownership battle, as a result of the skethcy loans funding the purchase) are available to backstop FTX US customer losses.

brakmic 4y ago

Why is this guy still talking in public?

unicornmama 4y ago
Because he will get a fat book and movie deal.
- jgalt212 4y ago
  He's trying to influence the jury pool.
  - notch656c 4y ago
    My uncle, grandma, etc aint reading this.
    - saaaaaam 4y ago
      No, but they will likely see topline coverage in big media - and then their takeaway of that topline may well be “SBF wrote a blog saying FTX was solvent and administrators could refund customers but haven’t”
      - notch656c 4y ago
        You might be right. I've talked to both sides of my family and realized I was in a tech bubble and no one knew who the hell the guy was though. I doubt the average 35+ y/o person outside of tech even knows what FTX or SBF is.
        saaaaaam 4y ago
        I don’t know - here in the U.K. it’s getting fairly significant coverage on BBC, Sky News etc. The Today Programme on Radio 4 (which is the “definitive” establishment news programme) has been covering it quite a lot.

britneybitch 4y ago

If I knew I only had a few weeks/months of freedom left, I'd spend my time doing something other than writing blog posts.

cmrdporcupine 4y ago
Looks like he still has his Adderall prescription, despite all of this.
optimalsolver 4y ago
League of Legends?
- shalmanese 4y ago
  Maybe he will finally reach Silver.

deleted 4y ago

[deleted]

ufo 4y ago

SBF also linked to this blog post from https://twitter.com/SBF_FTX https://twitter.com/SBF_FTX, so it appears to be actually him.

notch656c 4y ago

Pretty clear evidence of a lack of remorse (well he has remorse he lost the bet but not for being a fraud) and acceptance of his crimes even during the judicial process. He's gonna go away for a long time.

Bilal_io 4y ago
But it would be stupid to admit guilt while his case is still ongoing, regardless of whether he feels remorse or not.
- notch656c 4y ago
  Agreed. If he just shut his mouth it would be difficult to judge his thoughts. However his-Adderall fueled posts betray him. Doesn't look good when yet again here he expresses wishes to reboot the fraud. It's a pretty clear signal as soon as this guy gets out, if he is in fact a criminal, that he will do as he says.

once_inc 4y ago

Is he still not explaining why alameda's poor hedging would impact client funds on FTX? Because that is where the criminal act happened...

benjaminwootton 4y ago
Yes. He can write a million words, but the issue is misusing ringfenced customer funds. I didn’t see that mentioned in the post at all.
- breck 4y ago
  This is a good point.

rubyfan 4y ago

> Three things combined together to cause the implosion: … Shockingly this list doesn’t include misappropriating customer funds

londons_explore 4y ago

It really does read like a "anyone but me is at fault"...

smcl 4y ago
Yep something I keep seeing in his interviews and posts is that he will talk enthusiastically and at length about how some external events caused FTX difficulties, but will ignore or hand-wave some actions that he actually did. The impression I get from them isn't "oh this is a really unlucky guy" though, it is "oh this guy is quite a skilled manipulator". I also liked when he did a Good Morning America interview and looked like a schoolkid who was caught cheating and tried really hard to look like they're sorry: https://twitter.com/sracka_omacka/status/1602469299113066496 https://twitter.com/sracka_omacka/status/1602469299113066496

esotericimpl 4y ago

[dead]

dabeeeenster 4y ago

"FTX US remains fully solvent and should be able to return all customers’ funds. FTX International has many billions of dollars of assets, and I am dedicating nearly all of my personal assets to customers." 'Nearly all'. Amazing.

peteradio 4y ago
Well geez wise guy, if he gave up the shirt on his back they wouldn't let him in the bank to give up all his savings.

m00dy 4y ago

I would like to point out an important factor which I think is not only I feel stupid about it. So, firstly, we are talking about the United States, a leading superpower, an essential country for preserving world order; just imagine being an American citizen. It is not that easy to get arrested in another country. You will always feel the privilege of being a first-world country national. Secondly, the US still dominates the financial world. Every transaction in the SWIFT system needs to be confirmed in a very centralized manner. So, you know who is sending money to who, etc. Thirdly, US Army is so big, everywhere from the Middle East to Asia. So, I’m trying to say that the US dominates this planet in many ways… And then SBF shows up and says there is a separate country called The Bahamas. It is a different country, with other company registration and other laws. Therefore, It is all different. I’m sorry, but I don’t take this.

papito 4y ago

"Effective altruism" should go the way of web3.0

cmrdporcupine 4y ago
Unfortunately "web3" still seems to have some legs. Though if recruiter-spam on LinkedIn is a measure of anything, those legs are a bit shorter than they were 6 months ago.

jrochkind1 4y ago

I read a bunch of this before realizing it was actually by SBF.

ur-whale 4y ago

For posterity: https://archive.ph/OAvHl https://archive.ph/OAvHl

SilverBirch 4y ago

It's fucking wild that this guy keeps talking, because either we're watching this guy continue to incriminate himself in ways that are going to really hurt him a court of law, or he's actually going to get off lightly in which case his confidence is just disgusting. He genuinely thinks he can just continually say in front of everyone "These assets I just totally invented are worth billions" and no amount of argument affects him. And that he hasn't done anything wrong when we literally have testimony from his employees about exactly how stole the money. "If I just say illiquid enough, it'll all be ok". No. At some point this guy is going to be in a court and have to come up with a coherent answer why he's describing stuff he made up as illiquid billions, and it better be good. He simply doesn't have even a passing relationship with the truth. It just seems that at some point in the years of idiot VCs handing him money and servicing him orally, he started to actually believe he can just make up reality.

ulrashida 4y ago
Did you not see his two spreadsheets labelled "JUST AN ESTIMATE" that clearly show he is right? I would love to know the thought process behind his decision to make this post.
- SilverBirch 4y ago
  Presumably the thought process is something along the lines of "No one is going to look at this, only count the liquid stuff and make the very obvious point we were underwater even at the peak of the market".
breck 4y ago
[flagged]
- SilverBirch 4y ago
  God I wish someone would pay me for my HN comments.
- smcl 4y ago
  Which claims specifically need a citation?

thesausageking 4y ago

This is really misleading as it ignores the main fraud FTX committed: commingling user funds. Exchanges should never put their users' assets at risk and FTX's T&C said they didn't. If you deposited 1 BTC on their exchange, they were supposed to store that 1 BTC for you. If they had done that, there would be no issues. If users leave, you just give them back what they owned and no one loses money.

SilverBirch 4y ago
Yes, the core criminal claims (commingling funds, funnelling money to Alameda through unaccounted margin, using software to hide things from the balance sheet) are just totally unaddressed.
- notch656c 4y ago
  As long as you don't actually lose the money while doing those things, though, no one really notices and no one outside of prosecutors office even cares. Pragmatically (but not legally) the complaint is he lost the money. His world crashing around him revolves around that. So he has the wrong, but understandable viewpoint that the legal complaint is that he lost the money.
  - thesausageking 4y ago
    Even if you don't lose people money, lying about how you're using it is a crime and you can go to jail for it. Ask Martin Shkreli. He never lost any investors money, but still got 7 years in prison because he lied about what he was doing with their funds and used profits from some investments to cover losses from others.
  - SilverBirch 4y ago
    To be honest you don’t really do those things if you had a legitimate business, he commingled finds because he ran out money. He ran out money because he was making poor risky bets. Over a long enough time horizon his bad trading was going to realise losses, and as we’ve seen, he was going to cover it up. If FTX had 100bn in the bank, he would’ve kept going until the whole 100 was gone trying to chase the losses.

jrochkind1 4y ago

Honestly, I believe he really believes he did nothing wrong, and really feels bad about anyone getting financially ruined. I think he was kind of an idiot, in an environment where lots of people were getting rich behaving in unethical and illegal ways, and getting away with it, while convincing themselves they weren't doing anything wrong. That whole "scene" created it's own version of reality in which they could do whatever they want and make up their own facts and deserved only victory... which sounds kind of familiar for the USA and much of the world in general these days.

jesuscript 4y ago
Lack of reality based thinking coupled with adhd stimulants that on initial intake create a euphoria and makes you feel even more grandiose. That's when reality based thinking goes completely out the window. He has no objective capability anymore to be self aware, and it's made worse with prescription drugs. When the feds come knocking on your door asking about several billion dollars going missing, and you let yourself do the talking via blogs and interviews versus your team of lawyers, you have absolutely lost your mind. Certainly don't add adderral or alcohol, or anything to the mix. Go into a small dark room and smoke some weed you junkie crook. Keep quiet, your inner circle already ratted on you. Have some respect for the $250 million your parents scourged up to bail your stupid ass out, reprehensible fuck.
kuhewa 4y ago
When you see how people behave in fields like this where the common social contract ethical standards and law hasn't quite caught up to whatever the new constructs are, it doesn't inspire confidence in an innate morality capacity

apozem 4y ago

For fun, I recommend opening the SEC's case against SBF [1] and searching "tweet" and "television." They are building their case every time he opens his mouth. This is why if you ever find yourself in any kind of serious legal matter, take your lawyer's advice and stop talking. It doesn't matter how smart you think you are. Prosecutors will use your words against you. [1]: https://www.sec.gov/litigation/complaints/2022/comp-pr2022-219.pdf https://www.sec.gov/litigation/complaints/2022/comp-pr2022-2...

breck 4y ago
I agree that [dishonest] lawyers will twist your words against you. But I disagree with your advice to "stop talking". We need everyone to keep talking. We need to change the justice system. It needs to be more transparent, more honest, better at quickly getting to the truth. I don't necessarily know what the solutions are, but I am going through a court case Pro Se right now and have seen first hand what a cess pool it has become, and it makes me sad for our country, and we need to start fixing it. Keep talking SBF.
- phphphphp 4y ago
  A justice system will never be about the truth, because the truth does not bring justice: justice is a human attempt at realising what most would call karma. You do a bad thing, we try to make you suffer: the truth doesn't matter, because there's no absolute "good" and "bad" -- it's all perception. Lawyers are not truth seekers, they're playing a game, and to represent oneself in pursuit of the truth is a fools errand. I've served on a jury, I agree the modern model for justice is broken, but the problem is not an absence of truth, it's much more fundamental.

breck 4y ago

I think I had as much as $30,000 in my new FTX.us account (I was loyal to Coinbase, but inept officials in Hawai'i banned crypto and I was kicked off Coinbase and needed another exchange). So I should be angry. But I'm not. At least not yet. Something seems phishy to me. I think SBF might be telling the truth. Or he could be lying. I don't know. I'm 50/50 on this one though. FTX.us was a good product. It was snappy and it worked. Until the lawyers took over. SBF says it was fully solvent and I have not seen any proof that it wasn't. The sheer quantity of "he's guilty" comments on all of social media reads like a well organized PR hit job (similar to this: https://twitter.com/breckyunits/status/1613178467818024962/photo/1 https://twitter.com/breckyunits/status/1613178467818024962/p...). The one lesson I think everyone can take away from this is: as much as you can, #buildInPublic.

kuhewa 4y ago
You haven't reached the anger Kübler-Ross grief stage yet
smcl 4y ago
The quantity of "he's guilty" comments and tweets are a result of how famously and enormously FTX flamed out and how comically guilty he looks. It's not some unnamed entity (CZ? Binance? The US government?) organising some PR campaign against him. Re your tweet - are you one of those people who believe a covid vaccine caused that player to collapse? You realise athletes have seemingly randomly or spontaneously collapsed many times before Covid 19 was even discovered - often when they weren't even hit, as Hamlin was.
- breck 4y ago
  > Re your tweet - are you one of those people who believe a covid vaccine caused that player to collapse? No. That would be stupid. I believe there's a chance that it did. At first, 1%. Now, given that they haven't released his vaccine status yet, and as my Tweet shows have paid for an expensive PR campaign to slander anyone who questions whether there has been a cause (a campaign that has clearly had an effect on you), I have updated my probabilities to believe with 20% certainty the vaccine caused his heart attack. What odds do you give it?

kuhewa 4y ago

The sheer schadenfreude generated from the wunderkind that still appears to be under the impression he'll be able to talk his away into a better position.

dgreensp 4y ago

So am I reading this right: If I have $1m of Tesla stock, and I borrow $1m to buy crypto, that’s zero “net borrowing,” because the stock is “liquid” so I can just repay the loan at any time. Then they both go down by 50%. Now I need more “liquidity,” i.e. to borrow more money, which apparently grows on trees.

sja 4y ago
Right- looking at this point at the end of the post: > If FTX had been given a few weeks to raise the necessary liquidity, I believe it would have been able to make customers substantially whole It sounds like he's saying "if we just had time to find new bag holders, our customers wouldn't be screwed!"
- dgreensp 4y ago
  Yup. And even as I read my own comment, I can hear someone saying, “The long-term thesis remains sound!” and “Lots of other funds had similar losses!” and “How were we supposed to know, it was a perfect storm!” Meanwhile building bubbles upon bubbles upon bubbles.

harambae 4y ago

"... summer of 2022, Alameda finally put on substantial hedges, in some combination of BTC, ETH, and QQQ" Did they consider having some hedges that weren't correlated?

deleted 4y ago

[deleted]

ipython 4y ago

Interesting that his balance sheet in this blog entry doesn’t include the $8 billion “poorly labeled fiat@ account” from the earlier sheet floating around in November: https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-balance-sheet-was-bad https://www.bloomberg.com/opinion/articles/2022-11-14/ftx-s-...

1vuio0pswjnm7 4y ago

SBF is making no apologies. Last week right after he pleaded not guilty, he filed an objection in the FTX bankruptcy case arguing that the Robinhood shares he purchased with money borrowed from Alameda are his personal assets. Of course as we know Alameda was "borrowing" from FTX (without FTX telling customers). If one accepts that Alameda's cash was comprised in part of FTX's cash then it appears SBF wants to pay for his legal defense with shares he and Zixiao Wang bought using money from FTX customer deposits. https://ia601406.us.archive.org/2/items/gov.uscourts.deb.188450/gov.uscourts.deb.188450.387.0.pdf https://ia601406.us.archive.org/2/items/gov.uscourts.deb.188... What are the chances he changes his plea between now and October. Eventually he will have to apologise. Maybe he'll do so from prison when he is finally denied 24/7 internet access.

SilasX 4y ago
>Last week right after he pleaded not guilty, he filed an objection in the FTX bankruptcy case arguing that the Robinhood shares he purchased with money borrowed from Alameda are his personal assets. I don't know if you were referring to the following part of the article, but, in case others are missing the context: >>Nearly all of my assets were and still are utilizable to backstop FTX customers. I have, for instance, offered to contribute nearly all of my personal shares in Robinhood to customers–or 100%, if the Chapter 11 team would honor my D&O legal expense indemnification. So here he's claiming that he wanted the Robinhood shares to be available to FTX creditors, even as he's previously made a motion to claim them as his own.
- dragonwriter 4y ago
  > So here he's claiming that he wanted the Robinhood shares to be available to FTX creditors, even as he's previously made a motion to claim them as his own. And his claim to the bankruptcy court was that he needed them to pay for his criminal defense, not to have them available to voluntarily backstop FTX US liabilities. (Also, the idea that the proceeds of the property acquired through the dubious backdoor self-dealing FTX international -> Alameda -> SBF loan should go to backstop FTX US customers is... interesting.)

rippercushions 4y ago

The more I stare at this "balance sheet", the less sense it makes. All the numbers are positive, but "total" is far less than the sum of the balances! What the hell is a "negative coin balance"? How does a "positive coin balance" differ from a "wallet balance"? And where does the assertion about customer margin "postion" (sic) being under US$250M come from? https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F05b65e4e-6d88-443a-bd38-f5282010b785_869x428.png https://substackcdn.com/image/fetch/w_1456,c_limit,f_webp,q_...