The statement is misleading. People are making 18% interest on the value of Bitcoin et al. at the value of 2022, which is less than $20k. Now that is $60k, back to the value levels of 2021. Thus, the only reason there is interest is that the cryptocurrencies found gained back their value, and the bankruptcy court gets to consider the values when the bankruptcy started in 2022, not current/before 2022 values.
You are correct. As phrased, this headline and large parts of the article are fake news. The first sentence about "profiting from the money they put into the exchange" is particularly egregious. Nobody was putting money into the exchange when withdrawals were frozen, which is when these marks are from.
The reference amount that's being "repaid" is a low quote from near the bottom of the crash. Nobody signed up for this correlation between (1) crypto price crash and (2) the exchange halting withdrawals. It was a straight-up theft of optionality.
That said, the repayments do exceed expectations. That is newsworthy. I just wish they could report that news factually.
I'm seeing a pattern of misleading headlines wrt this. My guess is that it is PR at work to convince public that FTX was a victimless crime - this is to help SBF avoid his full sentence.
There's definitely a pattern, but I don't want to assume motive. I doubt SBF will get his retrial, but still, it's good PR for a lot of people -- for Effective Altruism, for Stanford, for Sequoia -- whose reputations took a hit here. It's even good PR for the bankruptcy team to say that they got full restitution. And for the journalists, of course, it's a headline that really pops.
But sitting here, we can't really know why we're being lied to. All we can do is take note of the lies, and of who's repeating them.
Or, it's just kinda and interesting story on it's own, no crazy conspiracy theories needed?
When Bernie Madoff or Enron or any of the other major headline-grabbing frauds fell apart, the victims generally got back almost nothing. The fact that FTX is returning all of the user's money, plus interest, is quite unique and newsworthy.
Madoff is kinda like an FTX: on average, everyone has received 72% of their “investment” back. But there was some rule about everyone getting their first $1m or something back 100%.
Where madoff is a bit different is that they were more aggressive in taking money back that people took out. You’re really only getting back what you put in (and obvious losses through time value of money).
And madoff didn’t gamble with the money, he mostly just sat on it.
"That said, the repayments do exceed expectations. That is newsworthy. I just wish they could report that news factually."
So to flip it back on you: repaying the lowball marks, but not the actual full stolen value, is an interesting story on its own. No lies and exaggerations from the media are needed.
Also, where you write:
> "The fact that FTX is returning all of the user's money..."
No. This is not a "fact". This is a lie. You have been misinformed. That's my whole point. Do not call it a fact.
I think it has to do with the incredible and increasing amounts of competition for people's attention. And of course human nature in what titles people click on.
During sentencing, SBF attempted to argue that creditors had experienced "zero harm" as even then it was apparent FTX would be able to pay them back. John Ray himself rebutted that argument: https://www.courtlistener.com/docket/66631292/415/united-sta....
> And even taking into account the potential for achieving anticipated
recovery levels, which is by no means assured, customers still will never be in the same position they would have been had they not crossed paths with Mr. Bankman-Fried and his so-called brand of “altruism.”
The opportunity cost is real and cannot be ignored.
They have made more money than they invested. It is by definition a return on investment, not the return or timescale they envisaged but a return nonetheless i.e >100%.
Effectively they invested $100, that investment dropped to $0 (while funds were locked away during bankruptcy), and now they're worth $119.
The headline is only notable as usually creditors do not get 100% of their initial capital back during a bankruptcy, nevermind over 100%.
In an attempt to stop talking in circles, it seems we primarily disagree on the definition of "to make money" and whether it should consider opportunity cost + time value of money. The CNBC headline doesn't say return, it uses the aforementioned idiom.
IMO it absolutely should in this case, especially since the creditors demonstrated their desire to invest in the opportunity being considered, but I don't really care enough to argue about it over the Internet.
I don't know how bankruptcy documents work, but this is not a filling, it's a general-audience article.
The truth is if you had one Bitcoin in FTX, that was worth 20k. You might have bought for more or less than that. Now it's worth 60k. You didn't get the 20k back immediately (in which case you could have repurchased the Bitcoin immediately and not lose anything).
- If you bought Bitcoin above 20k, you lost money, whereas you wouldn't have otherwise.
- If you would have kept your Bitcoin, you would have 60k now. You didn't get a choice in the matter.
The problem if of course "what is money" — the thing you owned was a Bitcoin, and now you're getting back its value from back then in dollar terms. This value changed meanwhile, shocking! But quite clearly, most people would have had more money now if that hadn't happened.
So while it's possible that some people would have sold lower than 24k (it didn't stay that low very long), most people wouldn't have, and so they lost money, in the commonly accepted undertanding.
Imagine the government seized your house 10 years ago, then paid you back today its price from 10 years ago +20%. Did you not lose money?
Imagine you put up your house as an investment into some crypto exchange and the exchange goes bankrupt because it turns out they're misusing customer funds and defrauding their customers. You'll get your house back when legal proceedings are done. What value that house has before or after is sort of irrelevant except as a way for you to twist the issue to fit your narrative. Nobody made you put up your house in some nonsense crypto exchange. That was you.
Be glad the government is involved at all or you might not be getting anything back.
But what if instead of getting your house back, you're only getting the cash equivalent of what your house was worth THEN, plus some interest. Meanwhile, your house, which you no longer own, has tripled in value.
This is unironically the reason why stock trading is so heavily regulated.
If you looked at Bitcoin, whose entire pitch is that it's a poorly regulated speculative instrument, and thought "I'm going to put my house in this" you are an adult accepting unreasonable levels of risk.
Just because FTX (predictably) was run by a con man who got his whole company shut down DOESN'T MEAN that you're a victim. You gambled money you didn't have on a system you didn't care to understand and you are lucky to even get the money back.
>Be glad the government is involved at all or you might not be getting anything back.
This. I'm constantly surprised that the government helps people in these situations. If they want the government to be involved, they should push for crypto to actually follow all of the laws that apply to traditional financial things, which would eliminate a lot of these scams that end up requiring government intervention in the first place.
>That's the job of a government, and why would people fund it through taxes if it doesn't do its job?
Regulation and protection go hand in hand, if you don't want the regulation, you shouldn't be able to ask for the protection that goes along with it. If you want to gamble your real money by converting it to fake digital tokens, that's fine, but you shouldn't ask the government to use taxpayer money bail you out afterwards. If you want government protection for investments, you should invest in schemes that are regulated by the government instead.
Does it not also have to do with the increased value of some of the other assets FTX bought? I believe SBF invested a large amount in some AI companies.
FTX invested $500M in Anthropic for 8% (at the time) and the bankruptcy estate sold 2/3rds of that for $884M, while it is tidy sum, it doesn't move the needle much in the overall money owed to creditors of $11.2B .
The estate has recovered around $16B of the money, or basically close to half of the assets at the time, the bulk of the money is coming from bitcoin tripling in value, to put it another way if Bitcoin was same prices as 2022, then they would have only recovered ~ $5B or FTX continued operating without being frozen by the courts, they would need come with $33B to make their depositors whole in Bitcoin.
They barely held any bitcoin or ether in their assets 0.1% and 1.2% respectively that customers had bought or deposited on the platform, they did hold a lot of crypto assets though.
There was controversy from creditors over the steep discount, a discount itself is not unusual given the size of the block sale and the fact the tokens are locked for 4 years with monthly vesting. Naturally there was dispute on how much discount is acceptable .
while Solona has grown 10x in price since the bankruptcy, it is not like people who had deposited SOL tokens are now covering for other deposits with just their holdings.
What depositors assets had against their accounts at the time had little correlation to what FTX itself had as assets, the two most popular tokens Bitcoin (0.1%) ETH(1.2%) assets were lot less than what they would have been just storing the customer tokens as is.
It is simpler to talk in bitcoin price given its popularity and use as baseline rather than prices of tokens and assets actually held by FTX itself or by users on FTX.
The article mentions a stake in Anthropic that was sold for $900m, while it owes creditors $11.2b, so nah it wasn't enough to make a dent unless there were MANY other smaller investments that collectively added up to $3b on top of that.
I believe Anthropic was the most acclaimed/highest current value, and they still have about 1/3 of the original 8% investment.
a) I am curious at what discount they sell Anthropic shares right now;
b) I am not sure what is the prognosis for the other shares FTX owns;
[
c) which creditors have preference to which money pot; usually there is a pyramid. Here it talks about consumers. (Specifically those owed less than $50k.)
And there is a separate matter for shareholders who are looking at getting some of the seized by DoJ proceeds. (https://www.reuters.com/legal/crypto-exchange-ftxs-liquidati....)
]
Best way in general is to read the actual pleadings: news is not the best at giving a good idea what the court is actually ordering.
As big of a piece of shit SBF is, he was technically not lying about FTX having the money. It's just that those tweets by CZ triggered a run on the assets at the worst time, which combined with mismanagement/fraud on SFB's part, did not help.
a far cry from zero, and the CZ tweets triggered a run. How many other exchanges have enough assets on hand to cover every depositor at once instantaneously? Even mainstream banks cannot cover everyone (this is what a bank run is and is why central banks exist to provide a backstop in such an event).
Straw man. You said SBF "was technically not lying about FTX having the money." He was. If you ask me to hang on to your $12 and I spend half of it, I don't have the money.
> How many other exchanges have enough assets on hand to cover every depositor at once instantaneously?
All of them. Exchanges and clearinghouses in a proper financial system are fully collateralised.
> this is what a bank run is and is why central banks exist
Banks are leveraged. FTX was not supposed to be levered. It should have been able to survive a "run," because it wasn't supposed to have asset-liability mismatches.
> there are 200+ exchanges. you're saying all of them are fully collateralized?
In crypto? No. Because it's a marketing term there for brokers. FTX was, at the end of the day, a broker. (As is Coinbase and the other "exchanges" for how most people use them.)
In finance? Yes. Most exchanges (all in the U.S.) don't handle settlement; that's done by a clearinghouse, where the counterparty risk lives. They're fully collateralised [1].
I keep seeing this "headline" and it is the very definition of fake news. If you held SOL on FTX they will pay you at the Nov 2022 prices which was under 9 per SOL. It is trading at ~150 now.
Bitcoin was trading at 17k, it is now 62k.
FTX creditors didn't hold US dollars. They held crypto. A good chunk didn't even buy any of the crypto WITH US dollars. Many are in countries that US dollars is not legal tender.
That's putting it a little strong. FTX went bankrupt. You might normally expect to lose a substantial portion of your assets when that happens.
To instead get back everything in dollar terms with a gain is remarkable.
If you sent crypto to FTX legally you no longer owned them. You owned a claim to $X on FTX. It just wasn't analogous to a regulated broker where the client is the legal owner of a security. Iirc the contract with FTX is the creditors sold their stake to FTX.
It is valuable to explain that these creditors underperformed simply holding crypto but calling it "fake news" really misrepresents the situation.
Not really. You owned a claim to the very specific asset you deposited in an exchange, which is how segregated accounts work.
Why US Dollars? FTX.us was domiciled in the US but FTX.com was in Bahamas. Why not some other arbitrary currency? Why not Bahamian dollar? Why not in Bitcoin?
FTX has paid close to 1 billion dollars in fees to army of lawyers, consultants, bankers etc. in what was even at the time an 8 billion dollar bankruptcy. Even if FTX froze in time and did nothing at all, its assets would've recovered completely that 8 billion gap in its funding. It's been a boon to everyone involved and they're taking full advantage.
I have no sympathy for FTX. It was a clear case of theft. However the creditors are getting robbed twice. Once by FTX, once by the bankruptcy proceedings.
>You owned a claim to the very specific asset you deposited in an exchange, which is how segregated accounts work.
The company went bankrupt. Bankrupt. They did not have the assets they purported to have.
FTX owed money to a variety of creditors including to crypto traders who deposited. They gambled on handing over their assets to a largely unregulated entity and it went bust.
If a regulated securties broker goes bankrupt you still own the securities. Brokers need to follow very strict laws to be in that position.
FTX faced no such regulation and if you sent them crypto you no longer owned it. FTX did.
And they went bust. What you're saying makes sense if FTX were a US registered securities broker for listed securities on an exchange.
I think you are not distinguishing between what a bankruptcy vs. theft means. I worked over a decade in investment banking including on large bankruptcy proceedings.
A bank can go bankrupt and your deposits might be in jeopardy, because there is fractional reserve banking and by law they are allowed to hold far less (in the US it would actually be 0%) of your deposits and can deny your request to redeem your assets in full in cash. That is to prevent bank runs.
FTX was an exchange, and while the holding company can go bankrupt the customer assets should be always fully funded in segregated accounts. FTX stole from customers and used the fund to front run their own customer via Alameda research.
Most of FTX customers were outside US and are not US residents. US Dollars in this context holds no significance.
> FTX was an exchange, and while the holding company can go bankrupt the customer assets should be always fully funded in segregated accounts
FTX marketed itself as an exchange. That didn't make it one. Giving it money was legally akin to handing any small business in your town money.
> Most of FTX customers were outside US and are not US residents. US Dollars in this context holds no significance.
FTX was a U.S. company. Even the Bahamas outfit had U.S. dollar bank accounts. FTX's customers were obviously subject to U.S. jurisdiction.
> FTX.us was a registered broker
They owned a FINRA-member broker-dealer. Most FTX customers weren't doing business with its b-d.
> with SEC as an exempt broker
Not what Form D means. ("Exempt broker" isn't a thing under U.S. securities law.)
Also, side note, banks can refuse withdrawals but specifically not to prevent a bank run [1]. A bank restricting withdrawals due to illiquidity is going under FDIC conservatorship.
> FTX faced no such regulation and if you sent them crypto you no longer owned it. FTX did.
This is at best only partially true, you own a claim on the underlying asset.
This is not a matter of regulation, it's a matter of your contractual agreement with FTX.
I don't know how more regulated brokers work, but I also doubt you own the asset outright, you also probably own a claim, which is why if the broker goes bankrupt because of fraud you might not recover it.
Regulation wouldn't have changed anything here: as FTX simply broke the law, which they could have done regardless of regulation & reporting requirements (e.g. WorldCom, Enron, ...).
What they did was not legal, even wrt to what regulation they were subjected to.
No, you're describing a secured claim. No crypto exchange I know of voluntarily gives customers a secured claim. At the moment of bankruptcy, unsecured claims are a claim on the company. Not on any asset.
> don't know how more regulated brokers work
The assets are segregated and customer claims prioritised and guaranteed by the SIPC.
> Regulation wouldn't have changed anything here: as FTX simply broke the law
None of what FTX did would have been remotely plausible if they'd been regulated as a broker-dealer. They'd have failed their FINRA audit on day one.
Not saying what they did is impossible at a regulated b-d. It would just take a lot more thought and work than the shitshow they were running [1].
I’ve been getting legal mails for the entire process since I had like 0.000000000003 cents in a wallet called blockfolio that was acquired by FTX which was pretty funny to follow
While that's true, if you have a good understanding of bankruptcy law, and a reasonable understanding of what assets FTX owned you could make a reasonable guess of how much money the eventual bankruptcy would pay out. Since the administrators publicly published what assets there were quite early on I think it's fair to say $270k always looked like a good deal.
Yeah, SBF was not lying about FTX having the money. It was not totally worthless as many had assumed. it shows how someone can be dishonest in some ways but honest in others. I too thought he was telling the truth. Had FTX not had money, he would have just shut up. I think such a long sentence may have been a miscarriage of justice in this regard.
> Yeah, SBF was not lying about FTX having the money.
Yes, he was.
The reason people are being made whole now is that a couple of years down the line, some of his investments and acquisitions are now worth considerably more than they were at the time of bankruptcy. But at that point t FTX was insolvent and SBF was telling lies all over the place.
It did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine. When FTX ran out of money, every depositor instantly became a creditor. I doubt this is unique to FTX. many exchanges may have some shortfall between deposits and credits.
That's not how actual regulated exchanges work. No crypto "exchange" is actually an exchange, no matter what their marketing materials tell you.
In the US, a regulated exchange is required to hold your securities in segregated accounts, and cannot play fun games with them. Crypto "exchanges" are a joke.
> It did not help that CZ triggered a run on the assets at the worst time; otherwise it likely would have been fine
I find that unlikely. SBF was doing a bunch of risky things with FTX's assets. If he hadn't been found out, he likely would have done more and more risky things, and as Bitcoin's price recovered, he would have used that higher price to justify doing even more risky things.
I doubt there would have been many (if any) times when FTX could have paid out all its depositor obligations.
No, it didn't help, but FTX should not have ever been in a position where a bank run forced them into bankruptcy and froze customer assets.
They're not a lender, they're just an exchange. Regardless of taking on debt to manage settlement, the fact that people did not own the assets in their FTC accounts is insane.
I mean, they shouldn't, that means they're also running insolvent. Not only is that generally illegal, it's been the end of a long line of crypto exchange businesses like Quadriga, and possibly even going back to MtGox (though they were doing it as a cover for theft, rather than mismanagement, IIRC).
And the FTX token that had a run triggered was something like 90% held by FTX - the value they accounted for was based on a tiny circulating pool of them. It was almost the classic "If I print 10m of these, and sell you one for a dollar, I've got tokens worth $10m now, right?"
Miami-Dade County did that: sold their $17m claim (because they owned the stadium that they sold naming rights to FTX) for probably about a third:
> “I’ve never worked on a bankruptcy case that got better. It always gets worse,” said Commissioner Raquel Regalado, a lawyer who now works as a broadcaster. “The idea of just getting out as early as possible seems like a great idea to me. “
Those were some expensive words. And in general, always somewhat expensive words because the hedge fund buyers generally don't work "lose" into their models.
Selling your claim is only a good deal if the hedge funds are drunkenly stupid, you have no other assets/lending sources and are going to die soon or have debt at payday loan rates.
Selling your claim, or a portion of your claim, might also make sense from a risk tolerance / declining marginal utility of money point of view, if it represented a large enough portion of your net worth.
Or put another way - if there were an investment opportunity that that had an 80% chance of 3x-4x returns in the next 2-3 years, I might consider investing 25% or even 50% of my net worth in that opportunity. But I certainly wouldn't invest 95% of my net worth.
I find it weird that you condemn that decision based on perfect hindsight.
> Selling your claim is only a good deal if the hedge funds are drunkenly stupid, you have no other assets/lending sources and are going to die soon or have debt at payday loan rates.
Selling your claim reduces your exposure and eliminates the risk that you'd get even less after the bankruptcy process concludes. It also lets you book the loss now and move on. That's valuable to some people. Consider that people have different motivations and needs than you do.
I fail to see how the decision was anything less than decisive prudence.
Your cited article makes it abundantly clear that the provenance of said $17 million claim was a default clause entitling Miami-Dade County to three years worth of naming-rights fees.
They sold that speculative claim for $5 million cash---effectively recovering that year's otherwise uncollectible receivables---then immediately turned around and locked in a 17-year, $117.4 million agreement with Kaseya[1]; back-of-the-envelope says that's an implied ~$5.4 million (2023 dollars) per year with 3% annual inflation adjustment baked in.
Call me naive, but I imagine that if you're in the business of running a multi-purpose arena with real opex, you've gotta be the dumbest risk manager in South Florida to allocate expensive legal resources in chase of speculative claims when a mutual opportunity to repair a gapping hole in your balance sheet presents itself and you have a willing long-term replacement suitor lined up.
The overarching question is: why should the County have thought the hedge funds are overpaying for the claim and to take the money and run?
Usually when you have several suitors that purely have profit in mind, you're the mark. Doubly so when their cost of capital is higher than your own.
> to allocate expensive legal resources in chase of speculative claims
On a claim this big, the bankruptcy trustee takes care of that for you. They're literally a fiduciary. The cost would be reading whatever gets mailed to you, but at the end of the day, there isn't much control you have over the ultimate outcome.
They don't have to be overpaying. It was a win win. The way I read it the county got more money this way than if they held it.
They they sold the stake ultimately worth 17 million, but they got their rights back, which they resold for 16 million. As long as they sold their stake for 1 million or more, they are in the green.
From a public policy standpoint, you don't want local government authorities taking a quick buck now instead of (on average) more money a few years later.
But to an elected politician that might not even be in office in a few years, money now is worth more at any cost than money later.
A gov agency is best suited to ride these things out because their cost of capital is among the lowest. Generally dumb for a county to sell an asset to a hedge fund: the HF has to pay more in interest than a county does just to pay you money now. There's nothing to do here except wait, nothing to whip in shape and make more profitable.
(Also cities shouldn't own stadiums, that's a gamble on the success of your local sports team and solvency of whomever you sell the naming rights to)
The buyers of these claims often have inside information.
By selling during bankruptcy they gambled that the "experts" were wrong and it turn out not to be the case.
That's why exchanges often suspend shares during bankruptcy: To make it clear that price manipulation and outright corruption is likely.
I have both a claim in FTX and shares in a suspended ("bankrupt") company listed outside the US. I just ride these things out because I don't need the money right now.
> "We are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors."
For what it's worth, the article also points out that Bitcoin has gone up 260% since FTX's failure, so if FTX had not collapsed, somebody hodling their BTC there might have earned 260% instead of 19%.
Yeah, this is not creditors "making money". Anyone who had 1 bitcoin in FTX is not getting their 1 bitcoin back, which is massively more valuable.
Instead, they are getting 119% of the USD value of a bitcoin in late 2022. They are massively losing out. They are effectively getting back 33% of their assets.
aren't a lot of the FTX creditors cash creditors? they're definitely making money.
Dunno what the breakdown between bitcoin and cash creditors are, but the only way to make bitcoin creditors more whole would be to stiff the cash creditors.
And the FTX token creditors are making [DIVIDE BY ZERO]
From what I’ve read there wasn’t really that much bitcoin left by the time they were shuttered, and their own tokens were worthless.
That’s part of the whole issue - SBF was just doing whatever he felt like with customer assets and balances. Plus inventing assets out of thin air.
The profit that people will get has largely been driven by FTX’s investments in AI stuff, which turn out to have done great.
Think about it this way (exaggerated to make a point) - you give SBF $10k to buy Bitcoin on FTX. You expect him to have that amount of BTC locked away somewhere for you. Instead he blows your $10k on houses for himself, giving money to politicians, sponsoring sports grounds and buying stuff for his parents. He’s throws some of it into AI firms.
At the time of bankruptcy all he’s actually holding for you is $200 of BTC. That goes up in value to $460. W00t.
But wait, two years later those few million he threw at AI seemingly for shits and giggles are now worth a few billion, so you can be made whole and even get a little profit.
If your ming vase is stolen should you get it back after it appreciated, or the thief gets the upside and you just get cash as if it were a forced sale at theft time?
Not an exact analogy but I think it at least shows there is a spectrum of situations to consider.
This was covered in some of the coverage much earlier about the bankruptcy proceedings. Essentially it's within the court's power to not only pay the creditors but to pay them interest on their losses if that's possible. That's obviously balanced against the rights of the equity holders to get back any value if there is any equity left. In this specific case the people with equity were: the fraudsters who ran the scam, venture capitalists. No one wants to pay off the fraudsters and the VCs would rather pretend this whole thing didn't happen (because it makes them look like drunken coked up degenerate gamblers on a weekend at Vegas) so everyone agreed the court should be generous with how they calculate the return to customers. Government entitires also have a claim for any fines or taxation or whatever, but they're relatively happy for the retail customers to be protected first too - but they care less about the equity getting wiped out.
My guess would be anything above what the customers get may well go out to government fines rather than returning to the equity holders.
>The Kroll Portal will remain accessible after the Bar Date to amend or file a claim. Absent order from the U.S. Bankruptcy Court for the District of Delaware, any claims filed after the bar date may be disputed.
So it might still be worth filling out the form - who knows.
I dunno. $1? I paid like $200. I just kind of want the picture back. I didn't have a Solana wallet when FTX was crashing and didn't want to go through the hassle of making one. I got all my other stuff off there that was actually worth something
Ah I see, so they didn't recover the actual crypto that was owed, just the estimated USD value at the moment of bankruptcy? By the way, I didn't mean to imply SBF wasn't guilty, simply that he might have been able to cover up the fraud if he had been given a bit more time.
So could FTX, at the time of its bankruptcy, let everybody get the assets they had title to?
Because that was the issue wasn't it? They said they were holding stuff for customers, but didn't. The way I understood it the fraudsters only held a fraction of the Bitcoin they were supposed to hold, for example.
How would the scenario work where bankruptcy wasn't declared? They would have refused to provide assets to customers, the customers would have sued, and the fraud would have come out anyway.
Delaying discovery when you're underwater on your obligations means you're just piling on more crimes. Which is probably what lawyers explained to the chief fraudster. It gets harder and harder to claim an honest mistake.
I see a disturbing trend in your posts: you seem to want to place the blame anywhere but on SBF's shoulders, where it rightfully belongs.
Exchanges shouldn't be like banks. FTX should have had customer assets on hand to return, no matter what. That's how regulated exchanges are supposed to work. But this is crypto-land, where nobody does the right thing.
although I agree because SBF shouldn't have been running the exchange like this at all
the truth is that in the US none of this gets prosecuted while people are making money, or being reimbursed as a remedy at the company's own volition.
very few exceptions, you basically have to piss off a completely different industry, like bragging about raising drug prices instead of silently like everyone else, for prosecutors to search for improper accounting to nail you with.
No, SBF would have continued to take ridiculous risks with customer assets, and eventually it all still would have collapsed.
Don't look at this as validation of SBF's methods. This was luck. And there still isn't enough to make customers whole. For customers who deposited Bitcoin, for example, they're now still a lot worse off than if they'd held onto the coins themselves. Sure, they're getting back the cash value of their Bitcoin from several years ago (plus interest), but if they got the Bitcoins back, they'd have significantly more.
That's not how any of this works. If you steal money from the cash register to bet it all on black in Vegas, you're still going to jail even if you happen to hit and be able to return what you took.
That’s the story he likes to tell and it’s repeated uncritically often enough, but I find it stupendously unlikely to be reality that he converted 5k into 27k playing blackjack of all games. And that that one week was enough to see him through to close 11m at an unspecified future date after having burned 80m getting the company up and running.
I chalk it up more to myth building and would love to see a reporter that dug into that story to know what actually happened.
It's survivor bias. It seems unlikely, but we know FedEx to be a successful company to some reasonable level at this point in time. It stands to reason at some point in the past the company was very close to collapse. If it had collapsed we would never have heard about it.
Why does that in any way tell us anything about the veracity of a vague story with no details? I don’t doubt they were in trouble, just that I doubt that he gambles the last 5k and the extra runway of 1 week somehow got them through to 11M at a later unspecified date. What did they do between that 1 week and the 11M raise? It’s not like they became profitable suddenly and it takes a while to raise 11M and it doesn’t sound like they were just waiting for 1 week for all the wires to come through.
Do you actually believe if paychecks were bouncing, pilots would be paying for fuel with their own money? Myths are kind of cool sometimes but let's stay within the boundaries of reality. I'm sure the blackjack story is highly exaggerated, probably also the story that his professor gave his business plan a failing grade.
> That's not how any of this works. If you steal money from the cash register to bet it all on black in Vegas, you're still going to jail.
But, if the investments hadn't hadn't gone bad and FTX hadn't run out of money, it's probable that no one would have known that he had stolen/borrowed customer money. The same probably goes for Elizabeth Holmes/Theranos and Nick Leeson/Barings Bank - its only when things go wrong that misdeeds are found.
