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

[Vanadium 50]

If FTX was so sloppy, and these investors so savvy, why did they invest in it?

 

[jrmichler]

For the same reason that "savvy" investors put almost one billion dollars into Theranos. Because SBF and Elizabeth Holmes both have outstanding people skills, and used those skills to persuade otherwise sophisticated people to invest in their scams without doing due diligence.

I have seen much the same thing on a much smaller scale in several of my jobs.

 

[russ_watters]

Because SBF and Elizabeth Holmes both have outstanding people skills, and used those skills to persuade otherwise sophisticated people to invest in their scams without doing due diligence.

And IMO the tech startup culture encourages risk taking for fear of missing out. Overall it's probably actually a winning strategy.

 

[jrmichler]

A tech startup has a lot in common with a complex engineering project that requires innovation. The path to a finished product is not known until well into the project, so it is necessary to start with the assumption that a path to a successful finish will be found. So risk taking is definitely a winning strategy for a tech startup. One big win pays for several complete losses.

 

[gmax137]

Well, if you're the principal and the startup goes broke, you need new investors for your next idea. If you're the investor in the failed startup, you may have lost your shirt. So, taking risk may be wise for some and not others.

 

[Vanadium 50]

Elizabeth Holme

Has she traded her black turtleneck for an orange jumpsuit yet?

"Too good to check" seems to be a common theme. Will people ever learn?

 

[Nik_2213]

IIRC, her appeal pipe-line has emptied: 'Orange is the new Black' looms...
FWIW, did the psych assessment figure if she was 'Mad' (= delusional ) or merely 'Bad' ??

 

[jrmichler]

Has she traded her black turtleneck for an orange jumpsuit yet?

The judge denied her petition to stay free during her appeal. So she reports to prison on April 27, 2023. Her partner in crime Sunny Balwani has to report a week earlier, on April 20, 2023. Article: https://apnews.com/article/elizabet...d-conviction-46471e11f615b8ce16114c22551477aa

And now, lets get back to bitcoin scams...

 

[Vanadium 50]

Her partner in crime

Not just in crime.

"You have him under some sort of strange sexual spell. I respect that." - Morticia Addams

lets get back to bitcoin scams...

Fair enough. But these do have a lot in common - "I don't understand it, but somehow it will make me zilions!: is not a story that usually ends well.

 

[TeethWhitener]

SMBC from a few days ago reminded me of this thread:
https://www.smbc-comics.com/comic/investment

 

[russ_watters]

And now, lets get back to bitcoin scams...

Bitcoin is up 80% YTD, which is a pretty decent return...

 

[artis]

A funny take on what crypto and NFT's really are by Ben McKenzie and Bill Maher, their interview was longer but sadly this is the longest version I could find online,
For those interested in the full interview I suggest watching the full show, a great and funny take on pressing matters , it was Real time with Bill Maher season 21 episode 11

 

[Astronuc]

Taylor Swift didn't sign $100 million FTX sponsorship because she was the only one to ask about unregistered securities, lawyer says!
https://www.yahoo.com/finance/news/taylor-swift-didnt-sign-100-112618986.html

 

[Vanadium 50]

Haters gonna hate.

 

[artis]

Taylor Swift didn't sign $100 million FTX sponsorship because she was the only one to ask about unregistered securities, lawyer says!
https://www.yahoo.com/finance/news/taylor-swift-didnt-sign-100-112618986.html

From Taylor Swift's song Blank space, the chorus

So it's gonna be forever
Or it's gonna go down in flames
You can tell me when it's over, mm
If the high was worth the pain

So she either saw it coming
Or...

Got a long list of ex-lovers

Maybe SBF was one of those "ex-lovers" and let her in on a secret.

 

[Astronuc]

Maybe SBF was one of those "ex-lovers" and let her in on a secret.

I hope not. TS has apparently had quite a few boyfriends; she certainly could to better than SBF.

 

[jrmichler]

Taylor Swift didn't sign $100 million FTX sponsorship because she was the only one to ask about unregistered securities, lawyer says!
https://www.yahoo.com/finance/news/taylor-swift-didnt-sign-100-112618986.html

Consider that she is the only one out of how many that did not sign on. It's a sad commentary on greed by those who already have more money than they could possibly spend.

 

[BWV]

A funny take on what crypto and NFT's really are by Ben McKenzie and Bill Maher, their interview was longer but sadly this is the longest version I could find online,
For those interested in the full interview I suggest watching the full show, a great and funny take on pressing matters , it was Real time with Bill Maher season 21 episode 11

Great summary of cryptocurrency by Ben McKenzie at the FTX hearing

 

[Vanadium 50]

Before holding up Taylor Swift as an excellent judge of what makes a truly bad idea, remember she was in the movie Cats.

 

[Astronuc]

Ben McKenzie on CNN - My interpretation of McKenzie's comments: Cryptocurrencies are not currencies - they are unregistered, unlicensed securities, but based on a fictional narrative, i.e., they constitute a fraud.

My take - There is real money invested with the hope that crypto will amount to some equity in some investment. It's not clear how many crypto investors successfully recovered real currency when FTX collapsed. I suspect SBF put the real money in some real bank, and in exchange for the real money, SBF/FTX issued an 'unregistered security', which of course is worth less than the real money invested by many others, if there is any worth at all. The worth was built on the expectation that others will pay more in the future for the cryptofunds, or perhaps the crypto will be used to make an investment in a real company that produces real value (real estate, commodity, . . . . )

 

[Vanadium 50]

If they have a half-decent lawyer looking at their prospectus before sending it out, I don't see how this can be fraud. It should say "we hope it will go up, but it might go down - way, way down" in fancy legal talk. Then they're covered.

Their legal position seems much better than Theranos', since they don't have a product, so how can the product not work?

 

[russ_watters]

Thoughts:
Why is Commissioner Gordon investigating crypto?

Oh, he has a book coming out.

But at least he has an economics degree.

Also picturing SBF and TS arguing over who's parents know more about investment banking.

 

[Vanadium 50]

Why is Commissioner Gordon investigating crypto?

Shouldn't this be prefaced with "Riddle me this, Caped Crusader?"

 

[artis]

Ben McKenzie on CNN - My interpretation of McKenzie's comments: Cryptocurrencies are not currencies - they are unregistered, unlicensed securities, but based on a fictional narrative, i.e., they constitute a fraud.

My take - There is real money invested with the hope that crypto will amount to some equity in some investment. It's not clear how many crypto investors successfully recovered real currency when FTX collapsed. I suspect SBF put the real money in some real bank, and in exchange for the real money, SBF/FTX issued an 'unregistered security', which of course is worth less than the real money invested by many others, if there is any worth at all.

I think McKenzie put it best himself - to paraphrase , that the only real "appeal" for crypto apart from that given to it by youngsters , adventure seekers and paid celebrities is the idea of getting away from a government controlled centralized/monitored currency.
So essentially something that a thief would enjoy.

The problem of course is that even crypto is centralized and this is done by the very people who own the exchanges and the servers on which the exchange is done on, but being that there is very little regulation , they can just take your real money that you gave them and do pretty much whatever with it because you agreed to exchange your government backed dollars for nobody's backed virtual numbers.

 

[Office_Shredder]

If they have a half-decent lawyer looking at their prospectus before sending it out, I don't see how this can be fraud. It should say "we hope it will go up, but it might go down - way, way down" in fancy legal talk. Then they're covered.

Their legal position seems much better than Theranos', since they don't have a product, so how can the product not work?

Oh God, a securities lawyer would lose it if a cryptocurrency put out a prospectus that says that.

You can't sell securities to Americans without registering them with the SEC. The SEC has basically made it impossible to register a cryptocurrency as a security because they don't really work like a traditional company. That doesn't get you out of the obligation.

https://www.sec.gov/litigation/complaints/2023/comp-pr2023-78.pdf

Here's a case filed this week against an exchange for selling unregistered securities to Americans. The complaint is not "and they didn't warn anyone they could lose money". In fact, it uses statements about how the price can go up and down as evidence that these are securities. So putting in a disclaimer that the value of the coin goes to zero gives you extra exposure here, not protection.

 

[Vanadium 50]

But is it fraud?

Let's pick on Theranos again. Their stock was a registered security, but their product was fraudulent,.
A crypto fund might be an unregistered security, but I don't see it as necessarily fraudulent.

 

[artis]

I agree with @Vanadium 50 if your making false claims about a product then it's fraud , if you are providing a platform for adventure seekers and wishful thinkers to try out their "get rich quick scheme" by exchanging their hard earned US dollars for virtual numbers stored on a server , numbers that can fluctuate based on multiple variables , none of whom are directly in the control of the exchange itself then that is not fraud all on it's own.

What is fraud and what was fraud in the FTX case was that the owners of the exchange did not just take the US dollars and exhcange them with crypto, but they then used those deposited dollars and funneled them away in dirty deals, personal items, luxury lifestyle etc, and then when the average Joe tried to exchange back his crypto value for his dollar value at the rate whatever it was at the time suddenly he found out there's no money in the bank, ups.
Now that definitely is fraud.

If I lose my money in crypto because it;s value dropped that's one thing but if I lose my money in crypto because the crypto exchange siphoned away that money long time ago so that they have no money to cover their a$$ then that's definitely fraud.

What if the crypto value went up? I deposited 1 million in dollars now my crypto is say worth 10 mil in same dollars, the exchange can't just say - nah we won't give you that much, then that is fraud , if I can't get my money's worth at whatever rate crypto to dollar is at the time then that's fraud 100%
It's basic simple theft

 

[Vanadium 50]

What if the crypto value went up?

I think this point is often missed. If an investor buys crypto believing it will go up, he's buying it from someone who believes it will go down. Two sides to every trade.

When the people selling it are also the people saying it will go up, that should set off alarm bells.

(It'll go up all right - in a puff of smoke.)

 

[artis]

When the people selling it are also the people saying it will go up, that should set off alarm bells.

And that is I believe why Ben McKenzie says its the biggest Ponzi scheme in history , because the sellers claim their product/currency has more value than it actually has but in order for them to extract any value they have to eventually "create" the value and they can only do this by an ever growing number of clients,

So as long as there is a net influx of new buyers the value is kept high and they can then extract real dollars from that non existent smoke and mirrors value of their otherwise badly performing currency.

It's like Amway only worse because in Amway you at least get whatever overhyped product you ordered even if it has false advertising and it's actual qualities don't match the labeled ones.Those ordinary crypto people who lost everything unlike their more cunning and rich overlords would have been better off if they invested all that money into Gwyneth Paltrow's lifestyle brand "goop"

 

[BWV]

Real investing is a positive sum game - both the investor and the investee can benefit. Crypto is not even a zero sum game - it’s negative sum given the environmental impact and opportunity cost of the resources employed in mining

 

[artis]

it’s negative sum given the environmental impact and opportunity cost of the resources employed in mining,

,and the bank accounts for most of those that participate...

 

[nsaspook]

https://arstechnica.com/tech-policy...dealing-arent-fraud-seeks-to-dismiss-charges/
SBF says “dishonesty and unfair dealing” aren’t fraud, seeks to dismiss charges

SBF says US is criminalizing acts of dishonesty
One of the memos supporting Bankman-Fried's motion to dismiss repeatedly paints the FTX founder as being perhaps guilty of lying, but not guilty of violating US laws cited in his indictment.

That memo, for example, concedes that Bankman-Fried and co-conspirators lied on a US bank application to open an account to receive FTX customer deposits after the bank had previously rejected an honest application. But just because the bank "was deprived of the opportunity to conduct 'enhanced due diligence' and executive committee review before opening the account," that doesn't mean that Bankman-Fried committed bank fraud, his lawyers argued. To find him guilty of bank fraud, the US would have to prove that Bankman-Fried either deprived the bank of “moneys, funds, credits, assets, securities” or caused banks to risk suffering "economic harm" from losing the "right to control" access to its bank accounts, lawyers argued.

The same argument, lawyers wrote, applies to allegations that "Bankman-Fried engaged in a scheme to defraud Alameda’s lenders by providing them false and misleading information regarding Alameda’s financial condition" or wire fraud allegations that he "misused FTX customer funds by providing improper loans to Alameda."

"Simply making a false statement, by itself, does not constitute wire fraud unless it is made for the purpose of obtaining money or property from the victim of the fraud," Bankman-Fried's lawyers wrote..

 

[gmax137]

Lol, reminds me of, "what does "is" mean?"

 

[nsaspook]

Lol, reminds me of, "what does "is" mean?"

Since when are crimes illegal? "pound the table"

 

[Vanadium 50]

Somehow this reminds me of "The issue is not whether we broke a few rules, or took a few liberties with our female party guests. We did."



Realistically, what can he say? Some other dud did it? His only real defense is thay his actions do not rise to the level of a crime, or at least not the ones he has been charges with.