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This says something of culture of hubris that is so easily elevated to leadership positions in America's tech culture. It's nice to see one of these fail-bros g

This says something of culture of hubris that is so easily elevated to leadership positions in America's tech culture. It's nice to see one of these fail-bros get taken down. But two points remain. 1. Had they been able to sustain this Ponzi scheme to IPO, he would be celebrated as a tech-god, as opposed to facing hard time. 2. The VCs aren't required to disclose their sales of crypto. My guess is they made money of this clown, directly at the expense of all the FTC users he fleeced. As long as that keeps happening, this sort of thing will never stop.

IKantRead 3y ago
> My guess is they made money of this clown I've always felt this was probably the case. Take an idiot that needs to feel important, tell him he's a "boy genius" who can do no wrong and is always going to be misunderstood, and you basically have the perfect patsy. Till the end SBF just could not let go of that idea that he was smarter than everyone else, never realizing that this was always just a marketing gimmick. At least Caroline Ellison had the sense to realize that she was living a delusion and quickly did what she could to walk away with minimal harm done to herself. In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees once memory fades enough.
- rchaud 3y ago
  > In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees Like Jordan Belfort of Wolf of Wall Street infamy, or Andy Fastow of Enron. Why shouldn't she get in on the action? American publishers love a comeback story.
- JohnBooty 3y ago
  Take an idiot that needs to feel important, tell him he's a "boy genius" This points to something I've always wondered about SBF: why did anybody think he was a genius? I know very specific reasons people think Musk, Jobs, Gates, Zuck, and others are geniuses even if I don't agree in every case. But... SBF? What did he even allegedly do (or preside over) that seemed smart or unique? It was... a crypto exchange. They had their own coin. Uh. Those are not unique things. I don't get it. But your comment made me think. Maybe it was just an empty bubble of perception. VCs pretended he was a genius so they could use him, and told everybody he was a genius, so everybody thought he was a genius even though nobody could point to why they thought that way.
  - low_tech_love 3y ago
    The crypto crowd needed a genius, and he kinda fit the image, so they went with it. It’s not that different to any other political movement; leaders are made by others, not themselves. It’s natural for us to focus on the person itself as if they are the ones getting all the benefits but all the crypto scammers benefitted from having an “altruistic crypto king” as a media figure.
  - timy2shoes 3y ago
    There was a puff piece from Sequoia[0] that tries to make the case that he is an altruistic genius and it hasn’t really aged well. [0]: https://web.archive.org/web/20221027181005/https://www.sequoiacap.com/article/sam-bankman-fried-spotlight/ https://web.archive.org/web/20221027181005/https://www.sequo... (wayback machine is needed because sequoia has taken it down)
  - spoonjim 3y ago
    He went to MIT and was employed at Jane Street, this doesn’t mean he was a Steve Jobs talent but he is certainly high IQ.
    - fennecbutt 3y ago
      I'd use Steve Wozniak over Steve Jobs when describing talent.
      - rounce 3y ago
        Steve Jobs had a talent for telling stories and getting people to believe them.
        JohnBooty 3y ago
        Yeah even if one thinks negatively of Jobs, comparing SBF to young Jobs is a joke. SBF founded FTX in 2019 when he was ~27 years old. At that point he had gone to MIT and done some arbitage stuff. More than I've accomplished but I mean, I'm not really seeing anything that ticketed this guy for stardom. By age 27, Jobs had founded Apple Computer and was one of the major players in launching the whole personal computing industry.
nvm0n2 3y ago
> in America's tech culture To what extent were SBF and Ellison tech though? This trend of labelling more or less any new company that attracts VC funding as tech is bothersome. It's the mental loophole that allowed Adam Neumann to embezzle huge amounts of investor money too (but he did it "right" so gets away with it), by claiming that WeWork wasn't just an office leasing company but a tech platform. None of these people are engineers of any kind, none of them have developed any kind of new tech. They are just ordinary business types who run a business that happens to employ a few coders.
- mingus88 3y ago
  Crypto is explicitly tech, and a crypto exchange lies at the intersection of finance and tech. It has never been a requirement that leadership of these companies be engineers (much to the dismay of any engineer hired at some of these companies). It is fair to call FTX and WeWork tech companies because they built platforms, powered by the internet and apps to modernize legacy offline industries. That's been the definition of a tech company since the 90's dotcom boom.
  - rounce 3y ago
    What exactly was the tech platform that WeWork built?
  - makingstuffs 3y ago
    I’d argue crypto is a commodity and that the underlying blockchain is the tech. You can make a cryptocurrency without creating any new tech whatsoever. And you can create a blockchain without creating crypto.
    - hazyc 3y ago
      This is why I think it's strange that Coinbase is considered a crypto company. It is/was a Ruby on Rails web app. Almost like calling the CME Group an agriculture company.
  - nvm0n2 3y ago
tim333 3y ago
It wasn't really a ponzi. It was a legit crypto exchange apart from stealing customer funds. Here's a positive CNBC article before it went wrong https://www.cnbc.com/2022/01/31/crypto-exchange-ftx-valued-at-32-billion-amid-bitcoin-price-plunge.html https://www.cnbc.com/2022/01/31/crypto-exchange-ftx-valued-a... But yeah if he hadn't been caught, he'd be doing well now.
- jowea 3y ago
  Even without touching customer funds the FTT token thing seems quite wrong to me. And based the infamous Matt Levine interview, it was at best a legit ponzi exchange, according to what Sam himself says about the things being traded there.
  - tim333 3y ago
    Well yeah the FTT token thing was a bit iffy if not really a ponzi scheme. Exchange tokens go on - you can still get Binance token or Kucoin token if you like and they tend to work as a sort of equity benefiting from income from the exchange. But not exactly equity and kind of subject to manipulation and the like. Where FTX sinned was treating its FTT tokens as an asset on the balance sheet worth billions when they were not worth that. The famous Matt Levine interview was about yield farming which as far as I know SBF didn't actually do but which he provided a striking explanation of. While that is Ponzi like it's a bit of a disservice to call it a Ponzi as it's actually rather more cunning and was the basis of most of the 'distributed finance' boom and bust.
- vkou 3y ago
  FTX wasn't a ponzi, the FTT token they issued was.
  - kopadudl 3y ago
    NFTs are always a ponzi
    - rounce 3y ago
totallyhuman 3y ago
I'm somewhat out of the loop on this whole story -- can you explain how the IPO would have helped? What was his exit plan? My understanding of Ponzi schemes is that they always collapse eventually because everyone will want their money back sooner or later.
- red-iron-pine 3y ago
  big infusion of cash from the IPO might have been able to cover up the deficits, and the inevitable "cleaning things up to do the IPO" work could have bought them time to un-fuck a lot of the riskiest accounts. then the IPO hits, you cash out, take your exit, and drink your mint julip or mojoto in Bermuda while the whole thing burns down 2 years later. whole lotta "not my problem" at that point, and every one would think you're a genius.
  - micah94 3y ago
    See Adam Neumann (WeWork) as an example of how to pull this off.
    - timy2shoes 3y ago
      Or Zymergen: https://en.wikipedia.org/wiki/Zymergen https://en.wikipedia.org/wiki/Zymergen
    - tomaskafka 3y ago
      You need Saudi cash of last instance for this though.
  - quags 3y ago
    IPO and restating earnings might have covered the tracks.
Breza 3y ago
It's wild to think of what would have happened if Alameda had gotten out of crypto and instead put all the stolen customer money in an index fund. The CFTC complaint says they started misusing customer funds in 2019. Stocks have increased a lot since then. FTX would have been able to meet any customer request for withdrawal, Alameda would have presented staggeringly large returns (trading profit / legally invested money), and SBF would still live like a king.

IKantRead 3y ago

> My guess is they made money of this clown I've always felt this was probably the case. Take an idiot that needs to feel important, tell him he's a "boy genius" who can do no wrong and is always going to be misunderstood, and you basically have the perfect patsy. Till the end SBF just could not let go of that idea that he was smarter than everyone else, never realizing that this was always just a marketing gimmick. At least Caroline Ellison had the sense to realize that she was living a delusion and quickly did what she could to walk away with minimal harm done to herself. In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees once memory fades enough.

rchaud 3y ago
> In a few years she'll probably find herself making book deals and getting paid outrageous consulting fees Like Jordan Belfort of Wolf of Wall Street infamy, or Andy Fastow of Enron. Why shouldn't she get in on the action? American publishers love a comeback story.
JohnBooty 3y ago
Take an idiot that needs to feel important, tell him he's a "boy genius" This points to something I've always wondered about SBF: why did anybody think he was a genius? I know very specific reasons people think Musk, Jobs, Gates, Zuck, and others are geniuses even if I don't agree in every case. But... SBF? What did he even allegedly do (or preside over) that seemed smart or unique? It was... a crypto exchange. They had their own coin. Uh. Those are not unique things. I don't get it. But your comment made me think. Maybe it was just an empty bubble of perception. VCs pretended he was a genius so they could use him, and told everybody he was a genius, so everybody thought he was a genius even though nobody could point to why they thought that way.
- low_tech_love 3y ago
  The crypto crowd needed a genius, and he kinda fit the image, so they went with it. It’s not that different to any other political movement; leaders are made by others, not themselves. It’s natural for us to focus on the person itself as if they are the ones getting all the benefits but all the crypto scammers benefitted from having an “altruistic crypto king” as a media figure.
- timy2shoes 3y ago
  There was a puff piece from Sequoia[0] that tries to make the case that he is an altruistic genius and it hasn’t really aged well. [0]: https://web.archive.org/web/20221027181005/https://www.sequoiacap.com/article/sam-bankman-fried-spotlight/ https://web.archive.org/web/20221027181005/https://www.sequo... (wayback machine is needed because sequoia has taken it down)
- spoonjim 3y ago
  He went to MIT and was employed at Jane Street, this doesn’t mean he was a Steve Jobs talent but he is certainly high IQ.
  - fennecbutt 3y ago
    I'd use Steve Wozniak over Steve Jobs when describing talent.
    - rounce 3y ago
      Steve Jobs had a talent for telling stories and getting people to believe them.
      - JohnBooty 3y ago
        Yeah even if one thinks negatively of Jobs, comparing SBF to young Jobs is a joke. SBF founded FTX in 2019 when he was ~27 years old. At that point he had gone to MIT and done some arbitage stuff. More than I've accomplished but I mean, I'm not really seeing anything that ticketed this guy for stardom. By age 27, Jobs had founded Apple Computer and was one of the major players in launching the whole personal computing industry.

nvm0n2 3y ago

> in America's tech culture To what extent were SBF and Ellison tech though? This trend of labelling more or less any new company that attracts VC funding as tech is bothersome. It's the mental loophole that allowed Adam Neumann to embezzle huge amounts of investor money too (but he did it "right" so gets away with it), by claiming that WeWork wasn't just an office leasing company but a tech platform. None of these people are engineers of any kind, none of them have developed any kind of new tech. They are just ordinary business types who run a business that happens to employ a few coders.

mingus88 3y ago
Crypto is explicitly tech, and a crypto exchange lies at the intersection of finance and tech. It has never been a requirement that leadership of these companies be engineers (much to the dismay of any engineer hired at some of these companies). It is fair to call FTX and WeWork tech companies because they built platforms, powered by the internet and apps to modernize legacy offline industries. That's been the definition of a tech company since the 90's dotcom boom.
- rounce 3y ago
  What exactly was the tech platform that WeWork built?
- makingstuffs 3y ago
  I’d argue crypto is a commodity and that the underlying blockchain is the tech. You can make a cryptocurrency without creating any new tech whatsoever. And you can create a blockchain without creating crypto.
  - hazyc 3y ago
    This is why I think it's strange that Coinbase is considered a crypto company. It is/was a Ruby on Rails web app. Almost like calling the CME Group an agriculture company.
- nvm0n2 3y ago

tim333 3y ago

It wasn't really a ponzi. It was a legit crypto exchange apart from stealing customer funds. Here's a positive CNBC article before it went wrong https://www.cnbc.com/2022/01/31/crypto-exchange-ftx-valued-at-32-billion-amid-bitcoin-price-plunge.html https://www.cnbc.com/2022/01/31/crypto-exchange-ftx-valued-a... But yeah if he hadn't been caught, he'd be doing well now.

jowea 3y ago
Even without touching customer funds the FTT token thing seems quite wrong to me. And based the infamous Matt Levine interview, it was at best a legit ponzi exchange, according to what Sam himself says about the things being traded there.
- tim333 3y ago
  Well yeah the FTT token thing was a bit iffy if not really a ponzi scheme. Exchange tokens go on - you can still get Binance token or Kucoin token if you like and they tend to work as a sort of equity benefiting from income from the exchange. But not exactly equity and kind of subject to manipulation and the like. Where FTX sinned was treating its FTT tokens as an asset on the balance sheet worth billions when they were not worth that. The famous Matt Levine interview was about yield farming which as far as I know SBF didn't actually do but which he provided a striking explanation of. While that is Ponzi like it's a bit of a disservice to call it a Ponzi as it's actually rather more cunning and was the basis of most of the 'distributed finance' boom and bust.
vkou 3y ago
FTX wasn't a ponzi, the FTT token they issued was.
- kopadudl 3y ago
  NFTs are always a ponzi
  - rounce 3y ago

totallyhuman 3y ago

I'm somewhat out of the loop on this whole story -- can you explain how the IPO would have helped? What was his exit plan? My understanding of Ponzi schemes is that they always collapse eventually because everyone will want their money back sooner or later.

red-iron-pine 3y ago
big infusion of cash from the IPO might have been able to cover up the deficits, and the inevitable "cleaning things up to do the IPO" work could have bought them time to un-fuck a lot of the riskiest accounts. then the IPO hits, you cash out, take your exit, and drink your mint julip or mojoto in Bermuda while the whole thing burns down 2 years later. whole lotta "not my problem" at that point, and every one would think you're a genius.
- micah94 3y ago
  See Adam Neumann (WeWork) as an example of how to pull this off.
  - timy2shoes 3y ago
    Or Zymergen: https://en.wikipedia.org/wiki/Zymergen https://en.wikipedia.org/wiki/Zymergen
  - tomaskafka 3y ago
    You need Saudi cash of last instance for this though.
- quags 3y ago
  IPO and restating earnings might have covered the tracks.

Breza 3y ago

It's wild to think of what would have happened if Alameda had gotten out of crypto and instead put all the stolen customer money in an index fund. The CFTC complaint says they started misusing customer funds in 2019. Stocks have increased a lot since then. FTX would have been able to meet any customer request for withdrawal, Alameda would have presented staggeringly large returns (trading profit / legally invested money), and SBF would still live like a king.