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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsSam Bankman-Fried (FTX) ACCIDENTLY ADMITS FRAUD in interview: co-mingling of funds
FTX - an online-savings-bank for cryptocurrency
Alameda Research - an online-investment-bank for cryptocurrency
FTX was the second-largest cryptocurrency-bank in the world, until they suddenly went bankrupt. Billions of dollars of customer-money simply disappeared overnight and somehow nobody at FTX, including CEO Sam Bankman-Fried, knows how.
The accusation:
FTX invested in Alameda Research, using money from customer-bank-accounts who never had agreed that their money would be invested. Alameda Research then lost the money, which means that FTX lost the money, which means that those customers lost their money.
Plus, there was lots of other shady shit going on, such as auto-deleting internal company-messages, misusing FTX funds for private purposes, secret backdoors that allowed FTX to move around their finances in ways that wouldn't show up in their own accounting... and a bank without an accounting-department.
Oh, and the CEOs of FTX and Alameda Research were in a sexual relationship.
Oh, and during bankruptcy, FTX got hacked and cryptocurrency worth $400 million got stolen.
Even though his lawyers must be urging him not to, Sam Bankman-Fried is running around giving interviews... in which he basically says that he had no idea what was going on at FTX, that he doesn't have the data right before him, that he can only guess, that he only vaguely remembers, and then he runs out the clock by talking about unrelated financial stuff.
9:50 interview begins
13:30 Q: "After bankrupty was declared, is there still 1:1 backing of customer-funds who never agreed to have their money invested?"
15:20 A: "When the collapse happened and people were withdrawing their money first-come-first-serve in a panic from FTX, there was fungibility between funds that were invested and funds that weren't invested."
17:20 A: "We did that (mingling of funds during the collapse) because we wanted to treat all customers equally." (Even though there were different kinds of customers who had signed different kinds of Terms of Service and were entitled to different levels of liability and security for their bank-accounts.)
17:55 A: "Please stop monopolizing the time, please stop grandstanding, you have to respond to what I'm saying."
18:10 THE MONEY-SHOT A: "To answer your question: I made a decision there, I just, we processed withdrawals as we normally do. Until we couldn't anymore, at which point we shut them off. And it was the case that like, at that point, there was a bit of liquidity-hold. That's what happened. You wanna judge that process and think that like we should have been spending ressources frantically trying to code up a new withdrawal-process, um, I disagree with you, but I understand where you are coming from."
1. Sam Bankman-Fried admitted that, during the collapse-phase of FTX, FTX co-mingled funds, allowing people to withdraw first-come-first-serve no matter the individual status of their bank-accounts.
2. Sam Bankman-Fried admitted that they did it this way because this is how withdrawals were normally processed at FTX.
3. Sam Bankman-Fried admitted that separating bank-accounts with different levels of liability and security from each other would have required coding a new withdrawal process.
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Sam Bankman-Fried (FTX) ACCIDENTLY ADMITS FRAUD in interview: co-mingling of funds (Original Post)
DetlefK
Dec 2022
OP
Old Crank
(3,615 posts)1. These white collar crooks
Need to get 5 years for every $10,000 stolen. First 5 lots served consecutively.
NNadir
(33,539 posts)2. Good idea. n/t
Trenzalore
(2,331 posts)4. I'm mystified why he isn't in custody.
Old Crank
(3,615 posts)5. I believe he is in the Bahamas
Would have to be extradited.
Zeitghost
(3,867 posts)7. He's lined pockets
Of important people/campaigns. That usually buys you some time at a minimum. It's not right of course, but...
lindysalsagal
(20,721 posts)6. Sorry, but the idea of banks is that you trust the people and
Regulations and practices that maintain the value of your money. Cripto was always a casino bet. The house always wins.