Liquidity has value too. Many FTX customers needed immediate liquidity. If you need immediate liquidity the value proposition years later is meaningless for most people because most people can’t get any bridge financing to cover the gap.
Mt. Gox also ran a fractional exchange for a long time until the bottom fell out. The trouble is that you simply can’t run an unannounced fractional exchange.
Isn't the bigger issue with the parent's argument that its comparing apples and oranges?
Like the customers were largely owed _not_ USD and so compared the USD value owed _4 years ago_ to the _current day_ USD value of something else that wasn't owed is just not correct.
---
To do some of the math, assuming all the funds owed were bitcoin then 9 Billion / $17,000 ~= 47 thousand BTC owed.
At current $64k/BTC prices that's roughly $30 Billion. Which while still lower than $75B is much higher than just $9B and doesn't excuse SBF from fraudulently and very publicly claiming that all the money invested as backed 1:1 when it wasn't.
I also don't know how much more FTX's stake would be diluted as well and another commentator talked about nearly half so then it might not cover the "actual" owed value.
A fractional bank is one that doesn't have liquidity to cover all obligations, but has enough non-liquid assets to cover all obligations. They can get the money if all customers withdraw, it just might take them a few days.
A fraudulent bank is one that doesn't have enough liquidity or assets to cover all their obligations. Mt Gox and FTX were perfect examples of this.
The fact that some of their assets went up in the years or decades since is irrelevant. Madoff would probably be in the green now, too, simply thanks to asset inflation.
> That implies the former FTX stake would be worth about $75B before further dilution.
> FTX’s customer shortfall was roughly $8B to $9B.
I think these hindsight analyses are interesting because they're leading a lot of into retroactively playing devil's advocate for SBF.
It is interesting to imagine a world where FTX made a one-time oopsie, broke some laws to cover it up, but then put all the money back and recovered like nothing ever happened.
You have to remember that this was literally their plan, though. They tried that. It didn't work.
If it had worked, they would have had to spend years hiding the facts from auditors and hoping that none of their employees ever leaked the info or tried to claim a whistleblower reward for what they knew.
If they had gotten past all of that, their continued existence would hinge on them not getting into the same position again. I have my doubts about that. Usually when people in these positions get away with their crimes they are only emboldened to continue taking the same or more risks in the future.
Maybe what they hoped is what actually happens. The SEC gives wealthy people and companies a slap on the wrist typically. A fine that means nothing. Government agencies like the IRC or SEC mostly go after smaller players who are mostly less malicious but don’t have the connections or wealth to fight off the bureaucracy. But in FTX’s case they got in trouble before they reached that level of power.
Yeah, and if he had taken all that money, bet it on black, and won in roulette a couple times, he'd have also made a killing. Didn't mean it was the right strategy or a moral decision with people's savings.
> Didn't mean it was the right strategy or a moral decision with people's savings.
That's exactly what the US judging SBF said: those shares were acquired will stolen funds.
Not only that: it's obvious, now that we know that the Amodei behind Anthropic are from that same despicable EA movement as SBF, that these were EA-bros helping each other (with stolen funds).
Like EA's guru who acquired a 15 million pounds mansion in the UK with Alameda/FTX stolen funds "gifted" by SBF. This mansion, AFAIK, hasn't been clawed back yet but I know for a fact that misappropriated funds in the "Hermes" fund in the Bernie Madoff ponzi have been clawed back for more than a decade after the fact.
These things takes time: so hopefully at some point this little EA clique gets this mansion seized.
P.S: as a sidenote it's interesting that they didn't effectively altruistically handed that mansion back when they "learned" (as if they didn't know it) that SBF was scamming users.
P.P.S: the returns promised in the Alameda leaflet, before FTX even existed, were already bullshit. SBF was a scammer from day one.
One hypothetical outcome if FTX had not been shut down when it was might have been "there was never a mass withdrawl of funds from FTX that would trigger an FTX liquidity crisis and Alemeda switched its strategy to 100% HODL, waited until exactly now before selling, thus making all the Alameda investors rich and covering the funds 'invested' by FTX so no harm, no foul".
Amother hypothetical outcome might have been "Alameda continued to make risky, over-leveraged investments, immediately rolling any gains into other over-leversged investments and using FTX's customer's money to cover losses until disaster struck".
I find the second hypothetical a bit more plausible than the first, but I probably just don't understand finance.
They levered into wrong-way bets into the crypto winter while stealing the money for yachts and effective-altruism philanthropy and political donations. This wasn’t a Madoff-type leak and confession. Their risk setting didn’t permit a world in which they didn’t blow up.
I'd argue the money spent for yachts and donations were a drop in the ocean compared to what they burned via Alameda and lack of whatsoever accounting.
Just because this one "investment" (or wager, or gamble, or speculation - whatever term you'd prefer) eventually succeeded* that doesn't set a precedent that we should excuse blatant fraud or encourage even more speculation with other people's money.
*of course, it could still go to zero in the future
Assuming they would not have liquidated it earlier (perhaps via some semi-legal instrument) to cover past or future bad decisions. Crypto certainly isn’t doing well now.
The 7.84% state would probably be significantly diluted over this time frame so 4-5% is probably a more accurate estimate but perhaps high estimate.
If only the role of trustees wasn't to do as they can to make creditors as whole as possible now, without risk, rather than keep playing the same kind of bets that got the bankrupt entity into the hole it was in...
How did they have such a large stake? Is this some sort of social club between the Amodei’s and SBF because they share the same ideology (effective altruism)? Did Anthropic get partially funded by stolen money as a result? If so, that’s just gross and puts me off Anthropic.
Liquidity has value too. Many FTX customers needed immediate liquidity. If you need immediate liquidity the value proposition years later is meaningless for most people because most people can’t get any bridge financing to cover the gap.
Mt. Gox also ran a fractional exchange for a long time until the bottom fell out. The trouble is that you simply can’t run an unannounced fractional exchange.
Isn't the bigger issue with the parent's argument that its comparing apples and oranges?
Like the customers were largely owed _not_ USD and so compared the USD value owed _4 years ago_ to the _current day_ USD value of something else that wasn't owed is just not correct.
---
To do some of the math, assuming all the funds owed were bitcoin then 9 Billion / $17,000 ~= 47 thousand BTC owed.
At current $64k/BTC prices that's roughly $30 Billion. Which while still lower than $75B is much higher than just $9B and doesn't excuse SBF from fraudulently and very publicly claiming that all the money invested as backed 1:1 when it wasn't.
I also don't know how much more FTX's stake would be diluted as well and another commentator talked about nearly half so then it might not cover the "actual" owed value.
A fractional bank is one that doesn't have liquidity to cover all obligations, but has enough non-liquid assets to cover all obligations. They can get the money if all customers withdraw, it just might take them a few days.
A fraudulent bank is one that doesn't have enough liquidity or assets to cover all their obligations. Mt Gox and FTX were perfect examples of this.
The fact that some of their assets went up in the years or decades since is irrelevant. Madoff would probably be in the green now, too, simply thanks to asset inflation.
> That implies the former FTX stake would be worth about $75B before further dilution.
> FTX’s customer shortfall was roughly $8B to $9B.
I think these hindsight analyses are interesting because they're leading a lot of into retroactively playing devil's advocate for SBF.
It is interesting to imagine a world where FTX made a one-time oopsie, broke some laws to cover it up, but then put all the money back and recovered like nothing ever happened.
You have to remember that this was literally their plan, though. They tried that. It didn't work.
If it had worked, they would have had to spend years hiding the facts from auditors and hoping that none of their employees ever leaked the info or tried to claim a whistleblower reward for what they knew.
If they had gotten past all of that, their continued existence would hinge on them not getting into the same position again. I have my doubts about that. Usually when people in these positions get away with their crimes they are only emboldened to continue taking the same or more risks in the future.
Maybe what they hoped is what actually happens. The SEC gives wealthy people and companies a slap on the wrist typically. A fine that means nothing. Government agencies like the IRC or SEC mostly go after smaller players who are mostly less malicious but don’t have the connections or wealth to fight off the bureaucracy. But in FTX’s case they got in trouble before they reached that level of power.
From the SBF trial:
> Jury leave, witness [Ellison] leaves.
> Judge: We can talk about [Anthopic] What about it?
> AUSA: Post-collapse performance is irrelevant.
> SBF's lawyer: It was a $91 million investment now worth $1 billion.
> Judge Kaplan: The crime charged is that he took the money.
https://x.com/innercitypress/status/1712199547915813241
Yeah, and if he had taken all that money, bet it on black, and won in roulette a couple times, he'd have also made a killing. Didn't mean it was the right strategy or a moral decision with people's savings.
> Didn't mean it was the right strategy or a moral decision with people's savings.
That's exactly what the US judging SBF said: those shares were acquired will stolen funds.
Not only that: it's obvious, now that we know that the Amodei behind Anthropic are from that same despicable EA movement as SBF, that these were EA-bros helping each other (with stolen funds).
Like EA's guru who acquired a 15 million pounds mansion in the UK with Alameda/FTX stolen funds "gifted" by SBF. This mansion, AFAIK, hasn't been clawed back yet but I know for a fact that misappropriated funds in the "Hermes" fund in the Bernie Madoff ponzi have been clawed back for more than a decade after the fact.
These things takes time: so hopefully at some point this little EA clique gets this mansion seized.
P.S: as a sidenote it's interesting that they didn't effectively altruistically handed that mansion back when they "learned" (as if they didn't know it) that SBF was scamming users.
P.P.S: the returns promised in the Alameda leaflet, before FTX even existed, were already bullshit. SBF was a scammer from day one.
One hypothetical outcome if FTX had not been shut down when it was might have been "there was never a mass withdrawl of funds from FTX that would trigger an FTX liquidity crisis and Alemeda switched its strategy to 100% HODL, waited until exactly now before selling, thus making all the Alameda investors rich and covering the funds 'invested' by FTX so no harm, no foul".
Amother hypothetical outcome might have been "Alameda continued to make risky, over-leveraged investments, immediately rolling any gains into other over-leversged investments and using FTX's customer's money to cover losses until disaster struck".
I find the second hypothetical a bit more plausible than the first, but I probably just don't understand finance.
If only Sam wasn't caught, then he'd have more than enough to refill what he stole, ironic.
> If only Sam wasn't caught
They levered into wrong-way bets into the crypto winter while stealing the money for yachts and effective-altruism philanthropy and political donations. This wasn’t a Madoff-type leak and confession. Their risk setting didn’t permit a world in which they didn’t blow up.
I'd argue the money spent for yachts and donations were a drop in the ocean compared to what they burned via Alameda and lack of whatsoever accounting.
Nah, he would've spent more and more and more.
Whether that would constitute restitution or furtherance of a Ponzi scheme is open for debate, I guess...
So, if FTX had managed to stay afloat a bit longer, they could have gotten away with it.
Which is a much more interesting statement in the context of certain other crypto organizations than it is about FTX...
Just because this one "investment" (or wager, or gamble, or speculation - whatever term you'd prefer) eventually succeeded* that doesn't set a precedent that we should excuse blatant fraud or encourage even more speculation with other people's money.
*of course, it could still go to zero in the future
Assuming they would not have liquidated it earlier (perhaps via some semi-legal instrument) to cover past or future bad decisions. Crypto certainly isn’t doing well now.
The 7.84% state would probably be significantly diluted over this time frame so 4-5% is probably a more accurate estimate but perhaps high estimate.
> Crypto certainly isn’t doing well now.
This "not doing well" is being three times higher than at the time of FTX collapse.
Trustees, not estate.
If only the role of trustees wasn't to do as they can to make creditors as whole as possible now, without risk, rather than keep playing the same kind of bets that got the bankrupt entity into the hole it was in...
Would have could have, holding it is the main difficulty, not as hard as buying. Millions of stories where if they held NVDA/bitcoin, they’d be rich
How did they have such a large stake? Is this some sort of social club between the Amodei’s and SBF because they share the same ideology (effective altruism)? Did Anthropic get partially funded by stolen money as a result? If so, that’s just gross and puts me off Anthropic.