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This 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
by jandrese 3y ago
This 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.
- RandomLensman 3y agoHow does using a random number generator in sizing the insurance fund fit into that view?
- sirclueless 3y agoLike every other decision SBF would prefer you not examine: It fits because the ends justify the means. It's important for the business that the insurance fund is safe. If you look closely you will find that it is unsafe. But if people believe it is safe you won't need the insurance fund, so do whatever you need to to inspire confidence in the insurance fund.
- RandomLensman 3y agoThe safety (or not) of the insurance fund is not related to the need for it. The need would come from a counterparty defaulting - which is generally unrelated.
- Nextgrid 3y agoThat's typical startup shenanigans, not specific to FTX. Lying to customers and embellishing the truth is business as usual. I'm sure they hoped that at one point they'd turn this into a real insurance fund.
- Cheezewheel 3y agoIf that is the case then the standard operating procedures of startups is fraud, not that Sam isn't somehow a deliberate scammer and con artist.
- bambax 3y agoFTX had "infinite money", so the actual insurance fund was that supply of money; having a pretend number on the front page was simpler than actually implementing it; in a sense it was a favor to investors, because it saved on operational costs. (All things SBF may have told himself.)
- smohare 3y ago[dead]