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It had nothing to do with engineering issues / risk. He was a scammer.
by Geee 3y ago
It had nothing to do with engineering issues / risk. He was a scammer.
- SkyMarshal 3y agoIt had to do with lack of internal controls that safeguard the organization and its custodied assets from both employee mistakes and fraud. That's a part of engineering high-assurance high-integrity systems and SOP at big exchanges, banks, and similar orgs.
- Geee 3y agoThat's true of course, but every control can be turned off. In this case, they wanted to turn every safeguard off.
- sarchertech 3y agoYeah but if you want to scam why would you want to engineer the company you are creating to prevent you from scamming.
- resolutebat 3y agoSBF has just been convicted of committing intentional fraud, not just "lack of internal controls". Was it an oversight to use rand() to generate your deposit insurance figures, or add that switch to allow Alameda unlimited rights to dip into the customer fund kitty?
- deleted 3y ago[deleted]
- vkou 3y agoLack of internal controls will cause some peon that you employ to steal money from you/lose your money. Lack of internal controls isn't the reason for why the CEO and owner of FTX is funneling billions of its customer dollars into a company he owns - Alameda. It's just straight up fraud.
- hef19898 3y agoLoose, or rather non existant, controls also allow you, as senior management to get away with even worse fraud without one of your employees realizing.
- vkou 3y agoHe's not senior management. He's the owner. It doesn't matter what your controls are, if he wants you to eat paste and hand him over the keys to the production database so that he could delete it, you can comply, or he can fire you. You should probably let some other adult, (and the FBI) know if the owner asks you to do that, but you can't physically stop him. It's his company. He has complete power over it. It's not a democracy, there's no checks and balances on the power of an owner-CEO.
- hef19898 3y agoThat's what internal controls are there for to prevent. Especially for owner-CEOs. FTX set up shop somewhere in the carribean just to avoid that kind of oversight and control. I can hardly imagine a bigger red flag than that. That people just accept that founder CEOs are allowed to do everything with their companies, and their companies money, is troubling. Because, as soon as said company is a seperate legal entity, it is the companies assets and not the founders anymore. Maybe even CompSci graduates shoupd get some basics of business, legal and ethics during their studies.
- KajMagnus 3y ago> lack of internal controls that safeguard the organization That's a bit like: "The bank robbers' mistake was a lack of internal control and security advisors who could have safeguarded them from robbing banks"
- rightbyte 3y agoIt sounds silly but you are not a bank robber before any attempted robbery or at least sincere planning of such.
- pphysch 3y agoThere is a very fine line between fraud and financial engineering. Perhaps none at all.
- olalonde 3y agoYes, but he crossed the fine line by like 500 kms.
- jandrese 3y agoThis is it exactly. He was running a confidence game. There are some big parallels with Bernie Madoff in fact. Spinning a story of financial genius out of a lucky break he got early on that had higher than typical returns, but in a market small enough to fly under the radar of the big players. The big difference is that SBF had less sense and let it spin out of control way too fast and hastened his own demise. At least Madoff got to live most of his life before he got sent to jail.
- jojobas 3y agoThat's the thing - he successfully ran a lot of involved arbitrage and other legitimate trading tricks before he decided to run the confidence game. Unlike Madoff, he could have retired before the FTX scam with "buy a jet every year" kind of cash.
- RandomLensman 3y agoIs there actually good visibility on the profits of the earlier trading?
- jojobas 3y agoThere's indication it was in the higher 9 digits.
- jandrese 3y agoHe found a niche in a Japanese exchange that was difficult to break into due to onerous banking regulations. Made a nice little chunk of change but it was a small potatoes thing. The numbers only look big because it was early days of crypto and the inherent inflation was through the roof.
- Zanni 3y agoI don't think SBF was a scammer in the Bernie Madoff sense. I don't think he set out to intentionally scam anyone. I just think he was so arrogant that he thought he could do whatever he wanted. He thinks he's smart and the rest of the world is dumb. He thinks the legal system is just something to "route around." Not because he wants to steal money but because, if there's money in "his" account, does it really matter if it technically belongs to a customer? He seeemed genuinely surprised at the verdict, and he's acted all along as if he were, not exactly innocent but undeserving of all this bother.
- yashg 3y agoAnyone, who gets into building a company in the crypto space is a scammer. Period.
- Freedom2 3y agoThat's a bit spicy. Don't forget we're on the Y Combinator forums, so this may read as an attack against their investment strategy - not even dang can protect us here.
- deleted 3y ago[deleted]
- tim333 3y agoI think that's either untrue, or at least there are different levels of scaminess. I put some money into FTX to short Celsius (another scam) and would have been happy with the service if they hadn't gone and stolen my money. I mean you could argue that any trading of crypto is inherently a scam but there are some consenting adults who chose to do it.
- PopePompus 3y ago"...would have been happy with the service if they hadn't gone and stolen my money." That's a pretty big caveat, though.
- yashg 3y agoI am talking about people who "build" these exchanges and platforms and new protocols and shitcoins. Anyone peddling anything under Web3, DeFi, Blockchain, NFT etc is a scammer. People who think they are trading or investing are the suckers.