6 ms·

One thing I don't understand is how did none of these employees _immediately_ jump ship once it became apparent that they would start using customer funds. Thes

One thing I don't understand is how did none of these employees _immediately_ jump ship once it became apparent that they would start using customer funds. These aren't dumb people, Ellison worked for Jane Street prior to FTX. Had I been in her position I would have written my resignation letter to Sam in a heartbeat once this became apparent (and probably another letter to the FBI/SEC)

avrionov 3y ago
Millions of dollars. More than they can make anywhere else.
- toss1 3y ago
  Sure, but those millions will do you no good when you relatively inevitably are sitting in jail and have forfeited those sums and more in fines & restitution. These are supposed to be intelligent people, yet they seem to not realize that there are also intelligent people on the investigation/prosecution side, and/or that events (e.g., crash from organic causes or competitors' interference) can make obvious their crimes? Maybe not so intelligent, and certainly not ethical.
  - justapassenger 3y ago
    Given how many scams succeed out in the open, and how little of rich people actually face consequences for running them, I can understand how someone may decide to roll the dice.
    - toss1 3y ago
      Yes, I can certainly understand it for someone who has a poor situation and few prospects But for people who have a good socio-economic background, great education, and ability to make an honest living, it is not only foolish, but reprehensible to decide instead to harm others for a living. Disgusting.
      - prirun 3y ago
        I agree, it's hard for me to understand why someone with good prospects would be dishonest, except that IMO greed knows no bounds. That, and I'm guessing most of these people are psychopaths, if tested (there is a test for it: it's a brain abnormality). You see billionaires' unbounded greed all the time, for example: https://www.wired.com/story/koch-brothers-are-cities-new-obstacle-to-building-broadband/ https://www.wired.com/story/koch-brothers-are-cities-new-obs...
  - SketchySeaBeast 3y ago
    As another user pointed out - Elizabeth Holmes got 11 years. What are the odds that Caroline won't be out before she's 40 and still have millions in the bank?
frozenport 3y ago
Drappi quit within 24 hours of the meeting, he testified Thursday. Binance ultimately did not buy FTX, which declared bankruptcy when Bankman-Fried relinquished control two days after the Alameda all-hands meeting. They did and recorded the whole thing. In a few more days the game was up.
- letmeinhere 3y ago
  I think _fat_santa was referring to the earlier period when the fraud began, but of course this call shows that most of them did not know. Some did and knowingly participated in the fraud. Some knew about this or other shady practices and left the firm, as far back as 2019 IIRC. Lots of different responses, but unfortunately no leakers.
  - zoklet-enjoyer 3y ago
    There eventually was one leak. That's what ended the whole thing. There was a coindesk article with a leaked image of their balance sheet. CZ commented on it and things went downhill from there.
    - letmeinhere 3y ago
      True, but probably not from inside. They were circulating that to raise funds.
etblg 3y ago
They're dumb, and overconfident, and reckless. Short, snide answer, wouldn't normally chalk it up to just that, but I feel like given all we've seen and read from this, that's a fair assessment of this whole debacle.
mvdtnz 3y ago
Did you read the article? The person who recorded the meeting did in fact quit within 24 hours.
- pc86 3y ago
  > In Comments > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that". https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - mvdtnz 3y ago
    I don't agree with that guideline. I think people should be ruthlessly shamed for making comments on articles they haven't read. I will truly never understand the mindset of somebody who would venture into the comment section to discuss something they haven't read.
    - ryanklee 3y ago
      There's more to comment on than just the topics confined to the context of the article. This, for instance.
    - pc86 3y ago
      Is it relevant whether or not you agree with a guideline? This site is provided to its users under the terms its owners decide to put forth. This is one of them. I think it says something about a person when they read that guideline and say "yeah but I don't wanna, so I'm ignoring that one." If you want to change it, lobby YC/dang to do so.
    - jmcqk6 3y ago
      And because you can't understand something, you will break the agreements of the community. I think people who look at collective agreements and ignore them should be ruthlessly shamed for disconnecting from the community and deciding their internal discomfort is the thing that needs to be addressed by the community in that moment. I will never understand the mindset of someone who wants to be a part of community but then doesn't want to follow the agreements of the community. Why are you here? Just to make sure people know that You Don't Approve?
ChrisMarshallNY 3y ago
A lot of times, these folks convince themselves that "they just need a bit more time to hit the big score." Anyone that has spent any time in a casino, knows what I mean. I'm pretty sure that's what Nick Leeson was thinking, as he was taking down Barings Bank. https://en.wikipedia.org/wiki/Nick_Leeson https://en.wikipedia.org/wiki/Nick_Leeson
- preommr 3y ago
  > A lot of times, these folks convince themselves that "they just need a bit more time to hit the big score." Or look no further than SBF himself. “I fucked up big multiple times,” Bankman-Fried wrote. “you know what was maybe my biggest single fuckup?” “The one thing everyone told me to do [...] chapter 11.” Bankman-Fried said that if he hadn’t filed for Chapter 11 bankruptcy, “everything would be ~70% fixed right now,” and “withdrawals would be opening up in a month with customers fully whole[0] [0]https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy https://www.vox.com/future-perfect/23462333/sam-bankman-frie...
  - deleted 3y ago
    [deleted]
lofatdairy 3y ago
If you're wondering why Ellison didn't quit, it's probably a combination of personal conflicts of interest and some hope that they could Martingale their way out of it. It seems like most of the rank and file didn't know/did in fact resign when it was clear that they were working for fraudsters. Funnily enough, Matt Levine gives a decent argument towards their JS background giving them bad instincts as much as it helped build FTX[^1]. [^1]:https://newsletterhunt.com/emails/39708 https://newsletterhunt.com/emails/39708
- didgeoridoo 3y ago
  Man, JavaScript just keeps getting blamed for everything.
  - remotefonts 3y ago
    I think they meant Jane Street, but I can be mistaken. Sorry, I'm German, I have no sense of humour.
  - kridsdale3 3y ago
    I took this at face value before diving in. I assumed "lack of strong typing -> disregard for safety, checks out"
- kdwikzncba 3y ago
  How do you reconcile this > hope that they could Martingale their way out of it with this > their JS background giving them bad instincts Surely, the instincts they got from JS is that you almost surely can't Martingale your way out of it if your trading expected value is negative which, if we don't mention the fraud for a second, seems to be what their biggest problem was.
  - blitzar 3y ago
    > if your trading expected value is negative However, if you take the formula, assign yourself a positive trading edge and a large positive expected value you can justify placing whatever bet you want as a mathematical certainty. The most un-spoken about thing in all this is how exactly they went from +100bn to -8bn in a year.
tjpnz 3y ago
Working for Jane Street doesn't guarantee having a functioning brain.
thelastgallon 3y ago
Caroline wanted a conventional love with an unconventional man: https://www.dailymail.co.uk/news/article-12612105/Sam-Bankman-Fried-Caroline-Ellison-list-pros-cons.html https://www.dailymail.co.uk/news/article-12612105/Sam-Bankma... HER TYPE IS GUYS WHO CONTROL “MOST MAJOR WORLD GOVERNMENTS”: https://www.gawker.com/money/are-these-caroline-ellisons-tumblrs https://www.gawker.com/money/are-these-caroline-ellisons-tum... A good trader should be skilled in mathematical thinking, comfortable with risk, and quick to react and make judgments in uncertain environments. The speaker also discusses the importance of handling emotions when trading and losing money, and notes that they have had to work on developing their emotional resilience: https://www.summarize.tech/www.youtube.com/watch?v=Qd2enI4RvXU https://www.summarize.tech/www.youtube.com/watch?v=Qd2enI4Rv... She had a nice blog on tumblr, which is down. Archived here: https://caroline.milkyeggs.com/ https://caroline.milkyeggs.com/
artursapek 3y ago
The way that the crypto market jumps to sky-high prices makes people like this feel invincible, and above the rules.
doctorpangloss 3y ago
> These aren't dumb people, Ellison worked for Jane Street prior to FTX I guess you'll have to uPdAtE yOuR pRiOrS. In the interest of curiosity, in 2023, is it possible to hire 22 year olds and also maintain a flawless image of excellence? It seems unfair, but true, that the glow fades quickly as a company hires people who don't know anything only because they are still starting their careers.
- pavlov 3y ago
  > “uPdAtE yOuR pRiOrS” LOL. One thing I’ve learned so far halfway through the middling Michael Lewis book is that the lives of people who talk in Bayesian jargon and obsess about Magic: The Gathering don’t make for exciting reading even if you have a world-class author and the best editors. Sometimes a boring person is just a boring person.
  - blitzar 3y ago
    Most peoples lives are incredibly boring.
blindriver 3y ago
She might have thought she could fix it before it became a big problem. At some point it becomes like slowly boiling a frog, where you don't notice how big the problem is, or you rationalize it. Or it could just be the case that she didn't think she would get caught, and frankly she might not have if not for that pesky CZ tanking their FTX tokens.
blitzar 3y ago
> Ellison worked for Jane Street prior to FTX. Had I been in her position I would have How did they come to "start using customer funds"? Prices went down and they lost a lot of money, likely in the region of $20bn-$40bn in the 6 months before they went for the customer funds. They were "buying the dip" and it never came, only the next move down was with even bigger positions and even bigger losses. She knew exactly what she was doing - she might actually be more guilty than SBF. Ellison thought crypto prices would rise again, allowing Alameda to balance things out, but that "did not work out," she responded, before giggling.

avrionov 3y ago

Millions of dollars. More than they can make anywhere else.

toss1 3y ago
Sure, but those millions will do you no good when you relatively inevitably are sitting in jail and have forfeited those sums and more in fines & restitution. These are supposed to be intelligent people, yet they seem to not realize that there are also intelligent people on the investigation/prosecution side, and/or that events (e.g., crash from organic causes or competitors' interference) can make obvious their crimes? Maybe not so intelligent, and certainly not ethical.
- justapassenger 3y ago
  Given how many scams succeed out in the open, and how little of rich people actually face consequences for running them, I can understand how someone may decide to roll the dice.
  - toss1 3y ago
    Yes, I can certainly understand it for someone who has a poor situation and few prospects But for people who have a good socio-economic background, great education, and ability to make an honest living, it is not only foolish, but reprehensible to decide instead to harm others for a living. Disgusting.
    - prirun 3y ago
      I agree, it's hard for me to understand why someone with good prospects would be dishonest, except that IMO greed knows no bounds. That, and I'm guessing most of these people are psychopaths, if tested (there is a test for it: it's a brain abnormality). You see billionaires' unbounded greed all the time, for example: https://www.wired.com/story/koch-brothers-are-cities-new-obstacle-to-building-broadband/ https://www.wired.com/story/koch-brothers-are-cities-new-obs...
- SketchySeaBeast 3y ago
  As another user pointed out - Elizabeth Holmes got 11 years. What are the odds that Caroline won't be out before she's 40 and still have millions in the bank?

frozenport 3y ago

Drappi quit within 24 hours of the meeting, he testified Thursday. Binance ultimately did not buy FTX, which declared bankruptcy when Bankman-Fried relinquished control two days after the Alameda all-hands meeting. They did and recorded the whole thing. In a few more days the game was up.

letmeinhere 3y ago
I think _fat_santa was referring to the earlier period when the fraud began, but of course this call shows that most of them did not know. Some did and knowingly participated in the fraud. Some knew about this or other shady practices and left the firm, as far back as 2019 IIRC. Lots of different responses, but unfortunately no leakers.
- zoklet-enjoyer 3y ago
  There eventually was one leak. That's what ended the whole thing. There was a coindesk article with a leaked image of their balance sheet. CZ commented on it and things went downhill from there.
  - letmeinhere 3y ago
    True, but probably not from inside. They were circulating that to raise funds.

etblg 3y ago

They're dumb, and overconfident, and reckless. Short, snide answer, wouldn't normally chalk it up to just that, but I feel like given all we've seen and read from this, that's a fair assessment of this whole debacle.

mvdtnz 3y ago

Did you read the article? The person who recorded the meeting did in fact quit within 24 hours.

pc86 3y ago
> In Comments > Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that". https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- mvdtnz 3y ago
  I don't agree with that guideline. I think people should be ruthlessly shamed for making comments on articles they haven't read. I will truly never understand the mindset of somebody who would venture into the comment section to discuss something they haven't read.
  - ryanklee 3y ago
    There's more to comment on than just the topics confined to the context of the article. This, for instance.
  - pc86 3y ago
    Is it relevant whether or not you agree with a guideline? This site is provided to its users under the terms its owners decide to put forth. This is one of them. I think it says something about a person when they read that guideline and say "yeah but I don't wanna, so I'm ignoring that one." If you want to change it, lobby YC/dang to do so.
  - jmcqk6 3y ago
    And because you can't understand something, you will break the agreements of the community. I think people who look at collective agreements and ignore them should be ruthlessly shamed for disconnecting from the community and deciding their internal discomfort is the thing that needs to be addressed by the community in that moment. I will never understand the mindset of someone who wants to be a part of community but then doesn't want to follow the agreements of the community. Why are you here? Just to make sure people know that You Don't Approve?

ChrisMarshallNY 3y ago

A lot of times, these folks convince themselves that "they just need a bit more time to hit the big score." Anyone that has spent any time in a casino, knows what I mean. I'm pretty sure that's what Nick Leeson was thinking, as he was taking down Barings Bank. https://en.wikipedia.org/wiki/Nick_Leeson https://en.wikipedia.org/wiki/Nick_Leeson

preommr 3y ago
> A lot of times, these folks convince themselves that "they just need a bit more time to hit the big score." Or look no further than SBF himself. “I fucked up big multiple times,” Bankman-Fried wrote. “you know what was maybe my biggest single fuckup?” “The one thing everyone told me to do [...] chapter 11.” Bankman-Fried said that if he hadn’t filed for Chapter 11 bankruptcy, “everything would be ~70% fixed right now,” and “withdrawals would be opening up in a month with customers fully whole[0] [0]https://www.vox.com/future-perfect/23462333/sam-bankman-fried-ftx-cryptocurrency-effective-altruism-crypto-bahamas-philanthropy https://www.vox.com/future-perfect/23462333/sam-bankman-frie...
- deleted 3y ago
  [deleted]

lofatdairy 3y ago

If you're wondering why Ellison didn't quit, it's probably a combination of personal conflicts of interest and some hope that they could Martingale their way out of it. It seems like most of the rank and file didn't know/did in fact resign when it was clear that they were working for fraudsters. Funnily enough, Matt Levine gives a decent argument towards their JS background giving them bad instincts as much as it helped build FTX[^1]. [^1]:https://newsletterhunt.com/emails/39708 https://newsletterhunt.com/emails/39708

didgeoridoo 3y ago
Man, JavaScript just keeps getting blamed for everything.
- remotefonts 3y ago
  I think they meant Jane Street, but I can be mistaken. Sorry, I'm German, I have no sense of humour.
- kridsdale3 3y ago
  I took this at face value before diving in. I assumed "lack of strong typing -> disregard for safety, checks out"
kdwikzncba 3y ago
How do you reconcile this > hope that they could Martingale their way out of it with this > their JS background giving them bad instincts Surely, the instincts they got from JS is that you almost surely can't Martingale your way out of it if your trading expected value is negative which, if we don't mention the fraud for a second, seems to be what their biggest problem was.
- blitzar 3y ago
  > if your trading expected value is negative However, if you take the formula, assign yourself a positive trading edge and a large positive expected value you can justify placing whatever bet you want as a mathematical certainty. The most un-spoken about thing in all this is how exactly they went from +100bn to -8bn in a year.

tjpnz 3y ago

Working for Jane Street doesn't guarantee having a functioning brain.

thelastgallon 3y ago

Caroline wanted a conventional love with an unconventional man: https://www.dailymail.co.uk/news/article-12612105/Sam-Bankman-Fried-Caroline-Ellison-list-pros-cons.html https://www.dailymail.co.uk/news/article-12612105/Sam-Bankma... HER TYPE IS GUYS WHO CONTROL “MOST MAJOR WORLD GOVERNMENTS”: https://www.gawker.com/money/are-these-caroline-ellisons-tumblrs https://www.gawker.com/money/are-these-caroline-ellisons-tum... A good trader should be skilled in mathematical thinking, comfortable with risk, and quick to react and make judgments in uncertain environments. The speaker also discusses the importance of handling emotions when trading and losing money, and notes that they have had to work on developing their emotional resilience: https://www.summarize.tech/www.youtube.com/watch?v=Qd2enI4RvXU https://www.summarize.tech/www.youtube.com/watch?v=Qd2enI4Rv... She had a nice blog on tumblr, which is down. Archived here: https://caroline.milkyeggs.com/ https://caroline.milkyeggs.com/

artursapek 3y ago

The way that the crypto market jumps to sky-high prices makes people like this feel invincible, and above the rules.

doctorpangloss 3y ago

> These aren't dumb people, Ellison worked for Jane Street prior to FTX I guess you'll have to uPdAtE yOuR pRiOrS. In the interest of curiosity, in 2023, is it possible to hire 22 year olds and also maintain a flawless image of excellence? It seems unfair, but true, that the glow fades quickly as a company hires people who don't know anything only because they are still starting their careers.

pavlov 3y ago
> “uPdAtE yOuR pRiOrS” LOL. One thing I’ve learned so far halfway through the middling Michael Lewis book is that the lives of people who talk in Bayesian jargon and obsess about Magic: The Gathering don’t make for exciting reading even if you have a world-class author and the best editors. Sometimes a boring person is just a boring person.
- blitzar 3y ago
  Most peoples lives are incredibly boring.

blindriver 3y ago

She might have thought she could fix it before it became a big problem. At some point it becomes like slowly boiling a frog, where you don't notice how big the problem is, or you rationalize it. Or it could just be the case that she didn't think she would get caught, and frankly she might not have if not for that pesky CZ tanking their FTX tokens.

blitzar 3y ago

> Ellison worked for Jane Street prior to FTX. Had I been in her position I would have How did they come to "start using customer funds"? Prices went down and they lost a lot of money, likely in the region of $20bn-$40bn in the 6 months before they went for the customer funds. They were "buying the dip" and it never came, only the next move down was with even bigger positions and even bigger losses. She knew exactly what she was doing - she might actually be more guilty than SBF. Ellison thought crypto prices would rise again, allowing Alameda to balance things out, but that "did not work out," she responded, before giggling.