BITCOIN, Heists, Thefts, Hacks, Scams, and Losses

[Astronuc]

Nov 14 - Fortune - Binance’s CZ says he never shorted FTX’s crypto token—and the decision to stop selling it was ‘very expensive’
https://fortune.com/crypto/2022/11/14/binance-cz-says-did-not-short-ftx-crypto-token-ftt/

Last week, CZ recounted how he had issued a letter of intent to buy FTX in a bid to protect users after SBF explained the situation to him. But Binance quickly walked back the offer on Nov. 9 after it said it took a look at FTX’s books. On Nov. 11, the Wall Street Journal reported that SBF had mishandled customer funds to invest in Alameda Research, a trading firm he also helmed.

Last week, CZ warned that FTX’s collapse could lead to bigger consequences for the larger crypto sector, saying it could have “cascading effects” and comparing it to the 2008 global financial crisis.

Until CZ (Binance) and CoinDesk released information about FTX and Alameda financing (balance sheets), no one knew. Not even those who loaned $100s millions, or deposited cryptocurrency on the exchange.

 

[phinds]

Until CZ (Binance) and CoinDesk released information about FTX and Alameda financing (balance sheets), no one knew.

Well, they DID know it was crypto and for some of us that's really all we NEED to know.

 

[Astronuc]

CNBC - ‘There is no such thing as a free lunch.’ 4 lessons for crypto investors from the FTX collapse
https://www.cnbc.com/2022/11/20/4-lessons-for-cryptocurrency-investors-from-the-ftx-collapse.html

“The FTX collapse provides harsh reminders that ‘there is no such thing as a free lunch’ when trying to make a quick buck in a still fairly new, unregulated financial industry,” said certified financial planner Jon Ulin, CEO of Ulin & Co. Wealth Management in Boca Raton, Florida.

Earlier this month, Fidelity Investments announced plans to launch a commission-free crypto product, allowing investors to buy and sell bitcoin and ether.

The FTX collapse has also renewed interest in cold storage, or taking digital currency offline, making it less susceptible to hacks. However, the move makes assets less liquid and harder to trade quickly.

If based in US, that would be regulated somewhat, but there appears to be need for further regulation, e.g., a legal requirement that companies use certain basic/fundamental accounting practices. It has to be a requirement/mandate, otherwise, it's just optional and the consumer/customer is left to figure it out.

As with any asset class(es), diversification is critical, but there can be times when all asset classes deteriorate/devalue.

Since topping an all-time high of $68,000 in November 2021, the price of bitcoin has plummeted by more than three-quarters, dropping below $17,000 as of Nov. 17.

“The [FTX] collapse should be a lesson that any individual company — be it a crypto exchange or more traditional business — can go bankrupt in times of distress,” said Kevin Brady, a CFP and vice president of Wealthspire Advisors in New York.

Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., in June introduced a bill to create a regulatory structure for digital currency, defining the majority of assets as commodities, such as gold or oil, which are overseen by the Commodity Futures Trading Commission.

and

House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and the ranking Republican, Rep. Patrick McHenry, of North Carolina, on Wednesday announced plans for a bipartisan hearing in December to investigate FTX’s collapse.

Keep detailed records. Possibly daily, or monthly. I get monthly or quarterly statements on various accounts, which is fine for some accounts where they accumulate interest reported monthly or quarterly, but I check daily an account based on equities.

Regardless of where you’re holding digital currency, experts suggest downloading your transaction history periodically.

Gathering reporting documents is one of the most difficult parts of crypto taxes, said Andrew Gordon, tax attorney, CPA and president of Gordon Law Group. And if an exchange closes down, you’ll still need records to file your return, he said.

“Two weeks ago, very few people suspected FTX would be facing this,” Gordon said.

I though cryptocurrency was supposed to eliminate the middle-men, but then exchanges are middle-men, where customers pay a fee. Someone has to maintain a server on which to move digital assets. Otherwise, one has to open one's computer to the internet, which would likely attract hackers.

Certainly there needs to be some regulation of cross-border transactions. I can see though some like offshore accounts to avoid income or capital gains taxes.

 

[Vanadium 50]

but there appears to be need for further regulation

Why?

Seriously. Why have any regulation at all? Willing buyer, willing seller and all that. Sure, these are dodgy, and sure people will try and make a quick buck "investing" in something they don't understand, and sure, the whole enterprise looks more like a casino than a bank. So what?

Do we let grown-ups make bad decisions?

 

[Astronuc]

Why?

Seriously. Why have any regulation at all?

Minimize harm to the individuals and general welfare. Otherwise, it's a Darwinian free-for-all for nefarious actors.

The Commerce Clause refers to Article 1, Section 8, Clause 3 of the U.S. Constitution, which gives Congress the power “to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.”
https://www.law.cornell.edu/wex/commerce_clause

Should there be truth in advertising? Should shady/dodgy entities be allow to take advantage of ill-informed or unsuspecting individuals. Some traders/investors are certainly gamblers looking to make a quick buck, while others are attracted by high rates of return.

But I'm thinking more in terms of requirements (without loopholes) to maintain a certain standard of accounting and financial practices, e.g., a prohibition of using customer funds without there express consent.

 

[artis]

Why?

Seriously. Why have any regulation at all? Willing buyer, willing seller and all that. Sure, these are dodgy, and sure people will try and make a quick buck "investing" in something they don't understand, and sure, the whole enterprise looks more like a casino than a bank. So what?

Do we let grown-ups make bad decisions?

I agree , let grown ups take responsibility for bad trading decisions, but if I invest money in a certain place and then that place takes my money against my will and does whatever with it, then that is a different thing, known commonly as theft, what Sam did was no different to just clearing someone's wallet without them knowing.

Yes sure it was done digitally and in a very abstract way but it's still theft, covering your losses with someone's money against their will or without their consent.
We should call it what it is.

 

[artis]

Well, they DID know it was crypto and for some of us that's really all we NEED to know.

Interestingly I looked up the word "crypto" and it seems it comes from greek "κρυπτός" which translates as "secret, hidden"

 

[Astronuc]

According to Bloomberg, FTX Owes Its 50 Biggest Unsecured Creditors More Than $3 Billion
https://finance.yahoo.com/news/ftx-owes-50-biggest-unsecured-144207143.html
And Reuters
https://finance.yahoo.com/news/collapsed-ftx-owes-nearly-3-090734717.html

Were there any secured creditors? What about depositors?

Bahama homes were purchased with FTX corporate funds
https://finance.yahoo.com/news/bahama-homes-were-purchased-ftx-200915742.html

A new bankruptcy filing, first reported by CNBC, shows that FTX’s corporate funds were used to purchase homes in the Bahamas among other personal items. The details arise less than a week after the now infamous crypto exchange filed for bankruptcy — a decision that founder and former CEO Sam Bankman-Fried said he regrets.

I suspect the regret has to do with the discovery of the internal goings-on at FTX, the lack of liquidity, the high risk/margin, the lack of accounting, and the 'theft' of customer deposits.

https://finance.yahoo.com/news/bahama-homes-were-purchased-ftx-200915742.html

“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” Ray said in the filing.

The document states that corporate funds of the FTX group were used to purchase homes and other personal items for employees and advisers. Ray added that “certain real estate” was recorded in the personal names of employees and advisrrs, and “there does not appear to be documentation for certain of these transactions as loans.”

So, would that be basically embezzlement?

 

[Astronuc]

CNBC - From $32 billion to criminal investigations: How Sam Bankman-Fried’s crypto empire vanished overnight
https://www.cnbc.com/2022/11/15/how-sam-bankman-frieds-ftx-alameda-empire-vanished-overnight.html

The year was 2017, and the ex-Jane Street Capital quant trader noticed something funny when he looked at the page on CoinMarketCap.com listing the price of bitcoin on exchanges around the world. Today, that price is pretty much uniform across the exchanges, but back then, Bankman-Fried previously told CNBC, he would sometimes see a 60% difference in the value of the coin. His immediate instinct, he said, was to get in on the arbitrage trade — buying bitcoin on one exchange, selling it back on another exchange, and then earning a profit equivalent to the price spread.

The arbitrage opportunity was especially compelling in South Korea, where the exchange-listed price of bitcoin was significantly more than in other countries.

Then success

Part of why SBF, as he’s also called, earned street cred for carrying out a relatively straightforward trading strategy had to do with the fact that it wasn’t the easiest thing to execute on crypto rails five years ago. Bitcoin arbitrage involved setting up connections to each one of the trading platforms, as well as building out other complicated infrastructure to abstract away a lot of the operational aspects of making the trade. Bankman-Fried’s Alameda became very good at that, and the money rolled in.

Now infamy

Alameda’s success spurred the launch of crypto exchange FTX in the spring of 2019. FTX’s success begat a $2 billion venture fund that seeded other crypto firms. Bankman-Fried’s personal wealth grew to over $16 billion at its peak in March.

As crypto prices tanked this year, Bankman-Fried boasted that he and his enterprise were immune. But in fact, the sectorwide wipeout hit his operation quite hard. Alameda borrowed money to invest in failing digital asset firms this spring and summer to keep the industry afloat, then reportedly siphoned off FTX customers’ deposits to stave off margin calls and meet immediate debt obligations. A Twitter fight with the CEO of rival exchange Binance pulled the mask off the scheme.

And now the forensic analysis. An investor made mistakes, attempted to cover those mistakes through dubious or criminal actions, and surrounded himself with folks who didn't know or did, but didn't stop him.

Six months ago, a popular U.S. dollar-pegged stablecoin project (the stablecoin known as terraUSD, or UST, and its sister token luna) failed and wiped out ~$60 billion of value, which precipitated the failure of Three Arrow Capital (3AC), which was then followed by failures of crypto brokers and lenders such as Voyager Digital and Celsius had significant exposure to 3AC.

So bitcoins and ether have been declining in value, and that has many tokens to lose significant values. Some investors want there investments back. Some got it, some lost it.

The financial acrobatics between the two firms (FTX and Alameda) somewhat resembles the moves that sank energy firm Enron, . . .

Hence the comparison to Enron. FTX will join Enron in case studies of financial fraud. FTT is described as the 'native' token on FTX. I take that to mean, FTT's value is based on the underlying assets (crypto or digital currency) at FTX supporting FTT. But loans, or transfers, to Alameda, which in turn made loans and other iliquid investments basically removed FTX assets, and FTT depreciated to the point where no one would accept it in place of USD or actual digital currency.

I understand "The cryptocurrency industry’s entire ethos is founded on disintermediation and decentralization, . . . " but it seems the various exchanges undermine that ethos, because they are the middlemen that the crypto financial industry purportedly is seeking to replace.

Correct me if I'm wrong.

 

[Vanadium 50]

@Astronuc , I am not arguing the government doesn't have the power. Under the commerce clause, they can do pretty much anything they think is a good diea. (Wickard v. Filburn. It held that a farmer growing wheat on his own land for his own use was engaged in interstate commerce)

I am instead questioning whether the government should take action. I see two problems - one is whether this will be effective, or whether it will prop up crypto (as we know it) so that it dies slowly instead of dies quickly. Is there any value in that?

The other is whether the people you would protect deserve protection. They are hoping to buy a worthless asset and sell it when it goes up to someone else. They are hoping to be at the money-making top of the pyramid or at least the middle, and not the bottom. Why are we protecting them? More to the point, if the government props this up, are they really doing anything beyond letting the pyramid grow?

 

[Astronuc]

@Astronuc , I am not arguing the government doesn't have the power. Under the commerce clause, they can do pretty much anything they think is a good idea. (Wickard v. Filburn. It held that a farmer growing wheat on his own land for his own use was engaged in interstate commerce)

Yes, there are certainly many instances of misapplication of regulations, and lax or lack of enforcement, loopholes, etc. That's a whole other topic that will surely get into a political discussion.

I am instead questioning whether the government should take action. I see two problems - one is whether this will be effective, or whether it will prop up crypto (as we know it) so that it dies slowly instead of dies quickly. Is there any value in that?

I believe the government should, however, I too am leery of the government. I would be concerned about poorly crafted legislation and resulting public law.

The other is whether the people you would protect deserve protection. They are hoping to buy a worthless asset and sell it when it goes up to someone else. They are hoping to be at the money-making top of the pyramid or at least the middle, and not the bottom. Why are we protecting them? More to the point, if the government props this up, are they really doing anything beyond letting the pyramid grow?

Also, good questions. I think the majority were at the bottom of the pyramid, and many probably lacked the sophistication of what would happen if interest rates (of real money or pseudo-real money) rose in response to inflation (a deflationary period for cryptocurrency apparently and depreciation of 'tokens'), but I think most did not expect someone like SBF to 'take' customer/depositor/investor assets and use them for personal use including propping up a highly leveraged and poorly managed hedge fund.

I think cryptocurrency is a terrible idea, especially based on what we have witnessed in the last two weeks. It's value is effectively derived from the 'real' economy, and it looks like it's designed to make a few people very wealthy (in real money, not cryptocurrency), make many others moderately wealthy (those who get in and get out), and potentially leave many with little or no money.

Surely, many of the folks should have seen the warning signs, or earlier, done their own due diligence, which even veteran investors apparently didn't perform. Clearly, there are people like Warren Buffett and Charlie Munger, who stayed away, or Jamie Dimon (JP Morgan Chase Bank) who criticized cryptocurrencies earlier this year and is also not a participant.

“I’m a major skeptic on crypto tokens … like Bitcoin” Dimon said Wednesday, speaking at a House Financial Services Committee meeting with the leaders of other major banks. “They are decentralized Ponzi schemes, and the notion that it’s good for anybody is unbelievable.”

https://www.barrons.com/articles/bitcoin-cryptos-jamie-dimon-51663840617
https://www.coindesk.com/business/2022/10/13/jamie-dimon-again-slams-crypto-calls-blockchain-real/

But Dimon has apparently "Dimon touted blockchain and said he would welcome a properly regulated stablecoin."
https://markets.businessinsider.com...ockchain-regulation-crime-ponzi-scheme-2022-9

Almost a year ago - https://www.marketwatch.com/story/j...ontinues-throwing-shade-on-crypto-11638193757If it should be left to die, as some financial experts have mentioned, then it probably shouldn't have been allow to start or develop in the first place. Lots of wasted resources, when there are more pressing matters to address.

 

[Vanadium 50]

I would look at it this way. The suckers late investors are into crypto for some amount of moneyt - surely not the $1T in market cap, Perhaps $100B has been already "invested" - total crime is probably $200 B in the US, and I am assuming crypto is a big chunk of this, but not overwhelmingly big.

So, what do we do? Do we use the US government to make them whole? We could - it would cost $1200 for each family of four. I argued above that people who got burned in a get-rich-quick-scheme more or less deserved it. (That's a little harsher than my position, but let's go with it for now), and I don't think a good use of tax money is to subsidize investors who ignored the warning signs.

What is the alternative? Getting money from the people who have it now isn't going to happen. Yes, the government can regulate now, but the ship has already sailed. At best, they can keep this game of musical chairs going long enough that the new "investors" can pay off the old investors and...wait...isn't that how this business got started?

I would argue don't regulate it, and let it crash. Use existing fraud and money-laundering laws as appropriate to prosecute whomever you can. Relegate crypto - at least crypto as we know it - to cautionary tales like Dutch Tulips.

 

[nsaspook]

https://www.science.org/content/article/crypto-company-s-collapse-strands-scientists

Crypto company's collapse strands scientists​

Foundations supported by FTX committed hundreds of millions of dollars to research on climate, biodefense, and AI ethics​

 

[russ_watters]

@Astronuc , I am not arguing the government doesn't have the power. Under the commerce clause, they can do pretty much anything they think is a good idea...

I am instead questioning whether the government should take action. I see two problems - one is whether this will be effective, or whether it will prop up crypto (as we know it) so that it dies slowly instead of dies quickly. Is there any value in that?

The other is whether the people you would protect deserve protection. They are hoping to buy a worthless asset and sell it when it goes up to someone else. They are hoping to be at the money-making top of the pyramid or at least the middle, and not the bottom. Why are we protecting them? More to the point, if the government props this up, are they really doing anything beyond letting the pyramid grow?

So, what do we do? Do we use the US government to make them whole? We could - it would cost $1200 for each family of four. I argued above that people who got burned in a get-rich-quick-scheme more or less deserved it.

It's a tough call for me in terms of how much regulation or if the government should try to shut down the market (if they even could). I think the US government (and most others) have a responsibility to find and prosecute fraud and related crimes. Beyond that? Maybe not much. Ultimately for crypto it may not matter practically if people are victims of fraud or an asset bubble. But I do feel like it is too easy to commit financial crimes.

I'm also not sure "dies slowly" is an issue for regulators or even if an increase in regulation would actually cause it to die slower. Given that there are no significant legitimate uses for cryptocurrency, an increase in regulation might just cause its demise faster.

But ultimately:
20 years ago or so, a buddy's mom had a chest full of supposedly valuable Beanie Babies. I was pretty young then, but even then I thought it was stupid. She didn't get bailed out. A bunch of my friends own crypto today. Are they more deserving of a bailout? No.

Protect against fraud, yes. Bailout, definitely not.

 

[Office_Shredder]

My understanding is that when you sign up to a crypto exchange., you sign an agreement saying they can do whatever they want with the money you deposit and also have naming rights to your first child. So what ftx did may have technically been allowed by their user agreement.

Having regulation to stop that seems obviously good. This isn't different than an online casino app that claims to let you bet on roulette but the app is rigged so you lose every time. You can think the underlying activity of gambling on roulette is dumb, but it's still heavily regulated to make sure consumers get what they are paying for.

 

[russ_watters]

My understanding is that when you sign up to a crypto exchange., you sign an agreement saying they can do whatever they want with the money you deposit and also have naming rights to your first child. So what ftx did may have technically been allowed by their user agreement.

Maybe. Though "allowed by their user agreement" doesn't necessarily equal "legal".

This isn't different than an online casino app that claims to let you bet on roulette but the app is rigged so you lose every time. You can think the underlying activity of gambling on roulette is dumb, but it's still heavily regulated to make sure consumers get what they are paying for.

Right, and a rigged online roulette game would be illegal.

 

[Astronuc]

So, what do we do? Do we use the US government to make them whole? We could - it would cost $1200 for each family of four. I argued above that people who got burned in a get-rich-quick-scheme more or less deserved it. (That's a little harsher than my position, but let's go with it for now), and I don't think a good use of tax money is to subsidize investors who ignored the warning signs.

What is the alternative? Getting money from the people who have it now isn't going to happen. Yes, the government can regulate now, but the ship has already sailed. At best, they can keep this game of musical chairs going long enough that the new "investors" can pay off the old investors and...wait...isn't that how this business got started?

Protect against fraud, yes. Bailout, definitely not.

I more or less agree. Where some bought cryptocurrency on speculation (in hopes of appreciation, but instead experienced depreciation) should not get a bailout. They were basically gambling and lost.

With respect to Russ's point, I would indicate 'protect against fraud and theft'. If folks invested and established a contract of sorts under the 'terms of service', in which it apparently stipulated that customer funds were inviolable, or otherwise secure, then the government should work with liquidators/trustees to seek some kind of restitution, if folks cannot be made whole. Ostensibly, SBF put some amount of funds somewhere out of sight/touch by others. It's complicated because SBF/FTX/Alameda are physically in the Bahamas, and Bahamian regulators and government officials are involved. Not sure what the US government can do, unless they successfully extradite SBF to US, and others, e.g., Caroline Ellison, and who ever else was aware of things going sideways. The backdoor or hidden tunnel between FTX and Alameda needs investigation.

The other story is the hack of funds from the exchange. It shouldn't be so easy to hack a financial institution, which has happened in a number of exchanges in the past several years. A lot of exchanges don't seem to take security seriously enough, until they get exploited/violated.

 

[Rive]

Protect against fraud, yes. Bailout, definitely not.

... Also those small nuances featuring the tracking and freezing fraudulent money...

 

[Vanadium 50]

Crypto company's collapse strands scientists

So did Jeffery Epstein's fall.

 

[Astronuc]

From Temasek to Genesis, here's the direct impact of FTX failure on other corporates​

https://finance.yahoo.com/news/from...tx-failure-on-other-corporates-222025555.html

I was trying to find a link to the interview with Sheila Bair, former Chair FDIC. She offers some sensible commentary.

 

[nsaspook]

This is what Bitcoin is for:
https://www.cnbc.com/2022/11/21/ftx-theft-hackers-start-to-launder-477-million-of-stolen-crypto.html

FTX-owned service being used to launder hundreds of millions ‘hacked’ from FTX, researchers say​

Tom Robinson, co-founder of Elliptic, told CNBC that the hackers were converting the ether into a crypto product called RenBTC which is then being converted into bitcoin via a bridge. This allows one crypto to be converted into another without going through a centralized exchange.

“This is a common tactic in the laundering of crypto thefts,” Robinson said.

Elliptic researchers have documented how RenBridge has been used to launder “hundreds of millions” of dollars in cryptocurrency suspected of being sourced from ransomware attacks or hacks. Some of those hacks have connections to Russian-backed ransomware groups, according to Elliptic.

So far, $74 million has been moved to bitcoin from RenBTC using RenBridge.

 

[Nik_2213]

Remember when some-one unkindly compared crypto / bit-coin boom to 'Wild West' era when a zoo of local banks issued their own scrip ?? Only took one fraud, 'oopsie' or bandito raid to break them...

Nah, 'crypto' is safe, safe, safe...
Until, of course, it isn't...

Due Care, Please ??

 

[Astronuc]

So make all cryptocurrency traceable, so if stolen, it's immediately worthless. But then that would disrupt/undermine some illegitimate business models.

 

[Vanadium 50]

But isn't that kind of the point? Crypto is for buying things you don't want to put on your credit card.

 

[Astronuc]

FTX lawyers tell bankruptcy court the company became SBF's 'personal fiefdom'​

https://finance.yahoo.com/news/ftx-bankruptcy-lawyers-sam-bankman-fried-175341622.html

FTX Bankruptcy Filing: 'No Amounts' Will Be Paid to SBF or His Inner Circle​

https://finance.yahoo.com/news/ftx-bankruptcy-filing-no-amounts-000354922.html

 

[fluidistic]

So make all cryptocurrency traceable, so if stolen, it's immediately worthless. But then that would disrupt/undermine some illegitimate business models.

Such a strategy often operates. Some tokens declared as stolen often get blacklisted by exchanges. Many cryptos have a public blockchain, so it is traceable in some way.

For Bitcoin it's a bit hard. There can be several inputs and output addresses for a transaction. I don't really see a way to make sense of ''that fraudulent bitcoin started here and is currently spreaded there''.

 

[artis]

I agree with @russ_watters and @Vanadium 50 , crypto investors shouldn't get bailed out, much like we don't bail out gamblers when they lose millions in a poker match just because someone's suspected of counting cards.

That being said I still believe theft and fraud should be investigated and punished irrespective of how and where it happens.
That means SBF and his friends should get actual jail sentences because what they did was commit fraud and theft on a large scale.

 

[Rive]

That means SBF and his friends should get actual jail sentences because what they did was commit fraud and theft on a large scale.

They will. (Well, likely.)

If fraud happens on an unregulated market it still remains a fraud. Just no charges for breaking regulations, no supervision from authorities to prevent fraud and no (far less) tracking/securing for the hijacked money.

 

[Astronuc]

John Ray, FTX's new CEO, handled the bankruptcies of Enron and Nortel. But he says the mess he has inherited is "unprecedented."

I listened to the commentary this morning. A transcript should be available later today.
Meanwhile - Wringing its hands over FTX's collapse, Washington hopes to prevent more crypto pain
and from Bloomberg on Yahoo - Bankman-Fried Says Collateral Crashed by $51 Billion as FTX Fell
https://finance.yahoo.com/news/bankman-fried-says-collateral-crashed-002936253.html

I don't think he planned this (except for diverting customer funds to cover his poor decisions), as much as a drunk driver doesn't plan to crash his/her vehicle. But the evidence, e.g., lack of corporate governance (no effective outside/independent board of directors), lack of practice of basic financial and accounting standards (including detailed maintenance of accurate records), lack of outside auditing, points to a gross negligence.

 

[artis]

I don't think he planned this (except for diverting customer funds to cover his poor decisions), as much as a drunk driver doesn't plan to crash his/her vehicle. But the evidence, e.g., lack of corporate governance (no effective outside/independent board of directors), lack of practice of basic financial and accounting standards (including detailed maintenance of accurate records), lack of outside auditing, points to a gross negligence.

Well I agree, I too don't think he planned to crash his own company, I bet he loved that money that he made. We now know all that altruism and driving a cheap toyota and wearing clothes that make him look like an average Joe cheapo was just a facade.
But taking investors money to cover your personal losses and funneling money away from the company to unknown places is still theft and fraud.
Even if FTX did not crash they would still need to investigate and charge him , at least according to theory and good practice.

Also I bet all that million dollar donor money to democrats was also part of his strategy to appeal and possibly buy some friends with benefits in Washington.

I doubt SBF cares about US politics at all, I mean why should he as he lived and worked in Bahamas, most likely he was well informed that if sh*t goes south that's the better place to be at.

 

[Astronuc]

Also I bet all that million dollar donor money to democrats was also part of his strategy to appeal and possibly buy some friends with benefits in Washington.

Members and entities of both parties were beneficiaries of FTX funds.

https://www.opensecrets.org/orgs/ftx-us/recipients?id=D000073694

https://news.bitcoin.com/ftx-execs-...epublicans-heading-into-the-2022-us-midterms/

 

[russ_watters]

Let's avoid the political talk please. People with money use it to influence policy. We all know it/get it. There's no need to discuss it, and PF isn't the place for it.

 

[phinds]

The Economist has had a number of articles about crypto recently. Their take is that the problems are not over. A brief excerpt from one article (bolding is mine):

The events also reveal just how interconnected crypto is, and the vulnerability this brings. When one large project (the Terra-Luna stablecoin system) blew up in the summer, it was enough to bring down a hedge fund and two lending platforms, which was in turn enough to bankrupt one of crypto’s biggest exchanges. This dynamic has been supercharged by the failure of ftx, which already seems to have taken out three smaller exchanges, aax, BlockFi and Liquid, as well as a lending platform, Genesis. Other exchanges faced enormous withdrawals (see chart 2). Given that it took around six months for the fallout of the summer’s blow-up to hit ftx, the stage is now set for more blow-ups.

 

[artis]

The Economist has had a number of articles about crypto recently. Their take is that the problems are not over. A brief excerpt from one article (bolding is mine):

I guess the idea that one can make a currency that would be perfectly stable, decentralized and wide spread is a unattainable fantasy, because money irrespective of it's physical form is a object that is used on a mass scale and that means it is subject to all the influences and short comings of all other items of assigned value used on a mass scale.

So basically the way I see it crypto is re-inventing America just to find out that it has the same problems as the original America, so eventually they will settle the wild west by regulation and law, or it will go bust because even greedy and fraudulent people don't like to lose all the time to even greedier and more fraudulent folks.

 

[Astronuc]

So basically the way I see it crypto is re-inventing America just to find out that it has the same problems as the original America, so eventually they will settle the wild west by regulation and law, or it will go bust because even greedy and fraudulent people don't like to lose all the time to even greedier and more fraudulent folks.

Cryptocurrency is not exclusive to America - it's global/international, and the markets are transnational. It would appear the legal issues are found in each nation, and nations may have different regulations and financial structures.

MSN/NBC - FTX’s regulatory chief had 4 job titles in 2 years. What was he really doing?
https://www.msn.com/en-us/money/com...-2-years-what-was-he-really-doing/ar-AA14qCh4

Apparent conflicts of interest abound at FTX. The Chief Regulatory Officer, FTX, was apparently previously involved in an online gaming/gambling company based in Toronto, CA, which was eventually bought by a company based in Malta. That company was involved in a cheating scandal. A LinkedIn profile, which has apparently disappeared (after the FTX crash) did not include the involvement with online gaming/gambling.