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Having followed a lot of the SBF discussion since he keeps giving interviews, here's the FAQ-- 1) How did you lose $5ish billion of customer deposits? - They

Having followed a lot of the SBF discussion since he keeps giving interviews, here's the FAQ-- 1) How did you lose $5ish billion of customer deposits? - They were deposited to Alameda, a totally independent hedge fund run by an unrelated party (my ex-girlfriend who lives with me). We credited Alameda without properly debiting Alameda on FTX. 2) Why didn't you track them? - There was a bug in the dashboard. I made a boneheaded mistake. Oopsies. 3) What happened in the days leading up to the collapse? - It was an attack from Binance, they're the bad guys. They cashed out and broke FTX. 4) Wait but they cashed out their assets, how would that effect people who had cash and other assets at FTX? - Well we didn't comingle margin and non-margin customer accounts/assets if that's what you mean. It's more that we had this terms of service that was really complicated. Yes there's a part of the terms of service that says we won't lend out your assets, but there's this other part somewhere that says we will that applies to everyone even though it says it only applies to margin accounts. It's because of complex accounting. This is all actually just really complex and I don't remember all of it.

pclmulqdq 4y ago
It'll be interesting to see if anything blows back on binance here. If politicians see CZ as having blown up the business of one of their big donors, they may be unhappy enough to do something really dumb.
- bnt 4y ago
  Yea, like destroying 100s of thousands of small account owners on Binance. Because the guy looks “Chinese” (but he multiple times publicly stated he is not Chinese).
  - pclmulqdq 4y ago
    To be fair, CZ was born in China and may have some ties to the Chinese government. He really is Canadian, though.
  - devmunchies 4y ago
    He wasn’t raised in China nor does he currently live there, but he was literally born in China and is ethnically Chinese. He doesn’t “look” Chinese, he “is” Chinese.
- AlexandrB 4y ago
  I could see this maybe happening if SBF hadn't already done a media circuit where it was painfully clear he didn't know what he was doing. It would be hard to pin significant blame on Binance at this point. Whatever CZ did or didn't do the perception is that FTX was already doomed.
xg15 4y ago
> This is all actually just really complex and I don't remember all of it. Saving that one for future use.
stouset 4y ago
Having also followed this unfolding drama, I can say this is sadly a reasonably accurate take. I'll add my own opinion which is that he seems to—at least on some level—legitimately believe that all of this is extremely complicated and impossible to understand unless you're someone of his intellectual caliber. It's so complicated, in fact, that even he struggles to keep it all in his head at once. I say this because I otherwise can't come up with any reason why he would continue to give multiple interviews except that the man actually thinks that his ideas were brilliant and sound, but he just made some understandable mistakes and that if people could understand where he's coming from they'd see that he's a sympathetic victim here and not some idiot that was very obviously going to lose everyone's money from the get-go. Of course the reality is that he's some idiot that was very obviously going to lose everyone's money from the get-go. None of this is very complicated to anyone who's ever worked in finance (admittedly not me). And absolutely fundamental basic controls were never put into place. These controls were skipped because SBF was convinced he was doing something extremely novel and complicated and such old-school concepts would only hinder his ability to execute on his brilliant ideas. Except these ideas weren't all that brilliant, they just involved doing things the likes of which you wouldn't even imagine attempting in traditional finance because… gestures wildly at the ongoing FTX debacle.
- zeven7 4y ago
  > These controls were skipped because SBF was convinced he was doing something extremely novel and complicated and such old-school concepts would only hinder his ability to execute on his brilliant ideas. Don't let him sell the story that it was all very complex and he made a bunch of mistakes and he should have done better. They used Snapchat for company messaging so there wound't be records. This wasn't a mistake due to complexity. He knew he was risking customer funds with an extreme Alameda margin position. He just hoped the market would go up and he'd get away with it and come out with tens of billions in profit. His bet, that he illegally made with customer funds, did not pan out, and he ended up without the money to pay everyone back. His terms of service said he would not make such a bet, yet he did it anyway. He took extreme, fraudulent risk with other people's money. He knows that, but he's playing dumb and trying to sell the narrative that it was all a big mistake.
MuffinFlavored 4y ago
> - There was a bug in the dashboard. I made a boneheaded mistake. Oopsies. Will this hold up in court? Can you go to jail for bugs in dashboards?
- guardiangod 4y ago
  The difference is negligence and intentional fraud. SBF is obviously arguing for the former. The law is more lenient to oopsies than Enron.
- mkipper 4y ago
  I don't really know if there's precedence here. Normally, to burn billions of dollars, you need to be an executive in a big, established corporation that has controls in place to avoid that sort of thing from happening. It's much harder to claim negligence if you conveniently found a way to sidestep all of that in some sophisticated manner. FTX is kinda different. With crypto in general, you have relatively new, private companies operating in a space with almost no regulation, getting millions/billions of dollars thrown at them by VCs and customers in a short period of time. It would be possible for a software bug to burn money at an unprecedented rate in a crypto company when compared to a big established bank or something. Even though that is possible, I can't imagine that argument holding up for SBF. I think it'll be tough to buy SBF claim he's a simple startup founder who got in over his head when lawyers present stuff like FTX's corporate structure. But IANAL and all that, so it'll be interesting to see how this plays out.
sushid 4y ago
In a nutshell, he ran FTX like Mt. Gox. He did't know what he was doing but just on a bigger scale than ever.
- mr90210 4y ago
  If you truly believe that he didn’t know what he was doing then he managed to successfully paint the narrative of a naive young entrepreneur. He knew what he was doing.
- zeven7 4y ago
  Mark Karpeles got in over his head, criminally. He lied some, he defrauded some, but most of it seemed to be to try to cover up for previous mistakes, and I think he legitimately just had some bad things happen to him, got in over his head, and made a bunch of mistakes in an early time for Bitcoin. He deserved prison time, and he's paid his debt to society. That's not what SBF did, not even close. All of the FTX executives are from top schools and have top credentials. They knew exactly what they were doing was fraudulent. They just thought they could get away with it.
vkou 4y ago
> Having followed a lot of the SBF discussion since he keeps giving interviews, The better question is, why is anyone still interviewing him? You're far better off interviewing a terrorist than a conman - as dangerous as the former may be, they aren't going to talk you to death... Whereas the raison d'etre for a confidence man talking to you is so he can sell you a self-serving line of bullshit. There's literally nothing that SBF says that isn't aimed at the singular purpose of keeping him out of prison. Until he's testifying under oath in a court of law, there's nothing he could say that's worth listening to. We are generally smart enough to not hand a killer a loaded gun, but can't seem to resist handing a fraud and liar a loudspeaker.
kevan 4y ago
On #4, Coffeezilla got past the smokescreen and got SBF to admit there was "fungibility created during those withdrawals between assets" and that it had always operated this way. [1] https://www.youtube.com/watch?v=4o_jPzBZSIo https://www.youtube.com/watch?v=4o_jPzBZSIo (~15:30 in)
stingrae 4y ago
A key thing seems to be that Alameda couldn't have been a totally independent hedge fund because my understanding is that SBF owned 90% of Alameda.

pclmulqdq 4y ago

It'll be interesting to see if anything blows back on binance here. If politicians see CZ as having blown up the business of one of their big donors, they may be unhappy enough to do something really dumb.

bnt 4y ago
Yea, like destroying 100s of thousands of small account owners on Binance. Because the guy looks “Chinese” (but he multiple times publicly stated he is not Chinese).
- pclmulqdq 4y ago
  To be fair, CZ was born in China and may have some ties to the Chinese government. He really is Canadian, though.
- devmunchies 4y ago
  He wasn’t raised in China nor does he currently live there, but he was literally born in China and is ethnically Chinese. He doesn’t “look” Chinese, he “is” Chinese.
AlexandrB 4y ago
I could see this maybe happening if SBF hadn't already done a media circuit where it was painfully clear he didn't know what he was doing. It would be hard to pin significant blame on Binance at this point. Whatever CZ did or didn't do the perception is that FTX was already doomed.

xg15 4y ago

> This is all actually just really complex and I don't remember all of it. Saving that one for future use.

stouset 4y ago

Having also followed this unfolding drama, I can say this is sadly a reasonably accurate take. I'll add my own opinion which is that he seems to—at least on some level—legitimately believe that all of this is extremely complicated and impossible to understand unless you're someone of his intellectual caliber. It's so complicated, in fact, that even he struggles to keep it all in his head at once. I say this because I otherwise can't come up with any reason why he would continue to give multiple interviews except that the man actually thinks that his ideas were brilliant and sound, but he just made some understandable mistakes and that if people could understand where he's coming from they'd see that he's a sympathetic victim here and not some idiot that was very obviously going to lose everyone's money from the get-go. Of course the reality is that he's some idiot that was very obviously going to lose everyone's money from the get-go. None of this is very complicated to anyone who's ever worked in finance (admittedly not me). And absolutely fundamental basic controls were never put into place. These controls were skipped because SBF was convinced he was doing something extremely novel and complicated and such old-school concepts would only hinder his ability to execute on his brilliant ideas. Except these ideas weren't all that brilliant, they just involved doing things the likes of which you wouldn't even imagine attempting in traditional finance because… gestures wildly at the ongoing FTX debacle.

zeven7 4y ago
> These controls were skipped because SBF was convinced he was doing something extremely novel and complicated and such old-school concepts would only hinder his ability to execute on his brilliant ideas. Don't let him sell the story that it was all very complex and he made a bunch of mistakes and he should have done better. They used Snapchat for company messaging so there wound't be records. This wasn't a mistake due to complexity. He knew he was risking customer funds with an extreme Alameda margin position. He just hoped the market would go up and he'd get away with it and come out with tens of billions in profit. His bet, that he illegally made with customer funds, did not pan out, and he ended up without the money to pay everyone back. His terms of service said he would not make such a bet, yet he did it anyway. He took extreme, fraudulent risk with other people's money. He knows that, but he's playing dumb and trying to sell the narrative that it was all a big mistake.

MuffinFlavored 4y ago

> - There was a bug in the dashboard. I made a boneheaded mistake. Oopsies. Will this hold up in court? Can you go to jail for bugs in dashboards?

guardiangod 4y ago
The difference is negligence and intentional fraud. SBF is obviously arguing for the former. The law is more lenient to oopsies than Enron.
mkipper 4y ago
I don't really know if there's precedence here. Normally, to burn billions of dollars, you need to be an executive in a big, established corporation that has controls in place to avoid that sort of thing from happening. It's much harder to claim negligence if you conveniently found a way to sidestep all of that in some sophisticated manner. FTX is kinda different. With crypto in general, you have relatively new, private companies operating in a space with almost no regulation, getting millions/billions of dollars thrown at them by VCs and customers in a short period of time. It would be possible for a software bug to burn money at an unprecedented rate in a crypto company when compared to a big established bank or something. Even though that is possible, I can't imagine that argument holding up for SBF. I think it'll be tough to buy SBF claim he's a simple startup founder who got in over his head when lawyers present stuff like FTX's corporate structure. But IANAL and all that, so it'll be interesting to see how this plays out.

sushid 4y ago

In a nutshell, he ran FTX like Mt. Gox. He did't know what he was doing but just on a bigger scale than ever.

mr90210 4y ago
If you truly believe that he didn’t know what he was doing then he managed to successfully paint the narrative of a naive young entrepreneur. He knew what he was doing.
zeven7 4y ago
Mark Karpeles got in over his head, criminally. He lied some, he defrauded some, but most of it seemed to be to try to cover up for previous mistakes, and I think he legitimately just had some bad things happen to him, got in over his head, and made a bunch of mistakes in an early time for Bitcoin. He deserved prison time, and he's paid his debt to society. That's not what SBF did, not even close. All of the FTX executives are from top schools and have top credentials. They knew exactly what they were doing was fraudulent. They just thought they could get away with it.

vkou 4y ago

> Having followed a lot of the SBF discussion since he keeps giving interviews, The better question is, why is anyone still interviewing him? You're far better off interviewing a terrorist than a conman - as dangerous as the former may be, they aren't going to talk you to death... Whereas the raison d'etre for a confidence man talking to you is so he can sell you a self-serving line of bullshit. There's literally nothing that SBF says that isn't aimed at the singular purpose of keeping him out of prison. Until he's testifying under oath in a court of law, there's nothing he could say that's worth listening to. We are generally smart enough to not hand a killer a loaded gun, but can't seem to resist handing a fraud and liar a loudspeaker.

kevan 4y ago

On #4, Coffeezilla got past the smokescreen and got SBF to admit there was "fungibility created during those withdrawals between assets" and that it had always operated this way. [1] https://www.youtube.com/watch?v=4o_jPzBZSIo https://www.youtube.com/watch?v=4o_jPzBZSIo (~15:30 in)

stingrae 4y ago

A key thing seems to be that Alameda couldn't have been a totally independent hedge fund because my understanding is that SBF owned 90% of Alameda.