Bitcoin, Blockchain, Battlestar Galactica

Discussion in 'Politics & Current Events' started by Cascarino's Pizzeria, Feb 5, 2019.

  1. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    And I just came across an article that explains the most recent twist in this. The last loans taken out by the miners were backed by the mining rigs themselves, because that's all these guys have left as collateral. And now the loans are defaulting and they are handing the crypto trading firms their near-valueless specialized computers.

    https://www.law.com/dailybusinessre...ruggle-to-repay-debt/?slreturn=20221101135341
     
  2. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    SBF has been doing a lot of interviews in the last few days. And it's no use listening to them for information about Alameda because it's all lies and obfuscation.

    But there's still information in there about SBF. And one thing is clear - he thinks he's a motherfraking genius. He's sure he can talk his way out of this mess. He literally said that his lawyers told him to shut up, but he won't because "they don't understand the broader context". His first lawyer already left, supposedly his current one (a Stanford friend of his father's) quit too. He also says that he could still save FTX and give everyone back their money. I don't know if he actually believes that or if he's trying to sway his eventual jury. Either way it's bogus because it's based on his FXX coin having value and it doesn't.
     
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  3. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    LOCK HIM UP!
     
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  4. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    SBF's self-incrimination tour continues. In recent audio discussion he admitted that when people bought Bitcoin through FTX, no actual trade took place, nor was there some store of Bitcoin in FTX (or Alameda) the account holder had a piece of. When you wanted to withdraw your coins, maybe FTX had the cash to go buy some and maybe they didn't. It was pretty clear they were doing this, but admitting it is something new. Some of this also took place in Celsius, and it probably exists in all exchanges.

    In old-timey talk he is admitting to being a "bucket shop", which in the late 19th and early 20th century were places to buy stocks and bonds but the shop never actually bought them. It is very illegal. Does SBF have some ace in the hole that he thinks will keep him from getting arrested? He's acting like it.
     
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  5. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    This Financial Times article shows one of the ways FTX and Alameda lost so much money. One guy was dealing in the small-time token mobilCoin. He was able to gather a large amount, pumped the token so the price went up 10 times what it was, took out a hard money loan from FTX based on the short-lived value of the coin, and walked away. FTX / Alameda lost somewhere in the high hundred millions to a billion dollars on that trade alone.
     
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  6. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Namibia
    Your hit on the key to it all dear @spejic !

    In all these staking & derivative style transactions that FTX offered, there is no economic value. It's a zero sum game where a counter party has to have the other side of it. Alameda's role was to provide liquidity to FTX - SBF says this himself - that is how they got the ponzi train rolling. i.e Alameda had the losing side of many of these trades.

    But as we know, FTX doesn't enforce margin calls and require Alameda to pay in its losses with fresh cash. Rather, as left and right hand, they just stole the client money. This all works, so long as not too many clients try to withdraw their winnngs.

    SBF alludes to this in the latest Bloomberg piece. $8bn is 'missing' because it was essentially fictional.
     
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  7. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Namibia
    Coppola has a good take on how the internal accounting worked.

     
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  8. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    Still mostly Greek but this sounds about right:

     
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  9. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    Some of it was real. People did put in real money. How much of it was real - I'm not sure. We'll find out somewhere along the line in the bankruptcy.
     
  10. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Namibia
    Yes - that is Coppola's argument that it was always a scam ponzi

    You put in your money which is basically stolen, but you are credited in your trading account with your gains, which you can withdraw - but it isn't your money you are withdrawing - they just pay you with capital from other investors.

    This is what the Bloomberg interview gets at - 8bn of client existed in the spreadsheet, as a fictitious entry

    This type of ponzi can exist for a long time, provided liquidity stays high, so that the insolvency is not revealed.
     
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  11. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Namibia
    Yep

    I think the similarity with Enron is to some extent that FTX traded with itself to rig the game. This is the problem with the lack of proper audit on these exchanges.
     
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  12. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    He has a PR team running things now. Acting awshucks clueless about the scam. Guess it's his only hope.
     
  13. mbar

    mbar Member+

    Apr 30, 1999
    Los Angeles, CA
    Club:
    Los Angeles Galaxy
    Nat'l Team:
    United States
    #763 mbar, Dec 4, 2022
    Last edited: Dec 4, 2022
    So, was FTX never audited by an independent public accounting firm? I guess if it wasn’t publicly traded there would be no requirement from the SEC. And if they didn’t need audited financials for any debt covenants or to raise money then they wouldn’t need them for that either. It just seems remarkable that businesses can get into the “billions” in revenue or assets without one.

    I perform audits for businesses with as little as 1-2 million in revenue/assets from time to time.

    just seems like some of the problems of this fraud (the non liquidity of ftx assets, the sketchy valuation of these assets, the related party relationships, the non existing internal controls ) are really basic things that any auditor would have seen.

    edit to add this link:

    https://www.coindesk.com/layer2/202...estors-and-accountants-missed-in-ftxs-audits/

    Interesting to see that they did have audits and used smallish regional firms and not national or international ones. There is no way Armanino was equipped to properly audit FTX. This will be an interesting aspect to follow for me.
     
  14. superdave

    superdave Member+

    Jul 14, 1999
    VB, VA
    Club:
    DC United
    Nat'l Team:
    United States
    Auditing your books is just giving in to The Man.
     
  15. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    Trump Auditing & Steaks, LLC
     
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  16. spejic

    spejic Cautionary example

    Mar 1, 1999
    San Rafael, CA
    Club:
    San Jose Earthquakes
    From what little we've seen of internal record keeping, any auditing was just in name only. Many of the spending decisions were purposefully never recorded, having been done on self-erasing chats. It's an open question if they did things like payroll taxes. I'm sure a lot of criminality will come out from the bankruptcy. Slowly.
     
  17. chaski

    chaski Moderator
    Staff Member

    Mar 20, 2000
    redacted
    Club:
    Lisburn Distillery FC
    Nat'l Team:
    Surinam
    That’s another Conversation.
     
  18. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    This goes into S-BS's possible legal exposure:

    At least $8 billion in customer funds are missing, reportedly used to backstop billions in losses at Alameda Research, the hedge fund he also founded. Both of his companies are now bankrupt with billions of dollars worth of debt on the books. The CEO tapped to take over, John Ray III, said that "in his 40 years of legal and restructuring experience," he had never seen "such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here." This is the same Ray who presided over Enron's liquidation in the 2000s.

    In America, it is not a crime to be a lousy or careless CEO with poor judgement. During his recent press tour from a remote location in the Bahamas, Bankman-Fried really leaned into his own ineptitude, largely blaming FTX's collapse on poor risk management.

    At least a dozen times in a conversation with Andrew Ross Sorkin, he appeared to deflect blame to Caroline Ellison, his counterpart (and one-time girlfriend) at Alameda. He says didn't know how extremely leveraged Alameda was, and that he just didn't know about a lot of things going on at his vast empire.

    Bankman-Fried admitted he had a "bad month," but denied committing fraud at his crypto exchange.

    https://www.cnbc.com/amp/2022/12/05...d-face-years-in-prison-over-ftx-meltdown.html
     
  19. ChrisSSBB

    ChrisSSBB Member+

    Jun 22, 2005
    DE
    Nat'l Team:
    United States
  20. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
  21. The Jitty Slitter

    The Jitty Slitter Moderator
    Staff Member

    Bayern München
    Germany
    Jul 23, 2004
    Club:
    FC Sankt Pauli
    Nat'l Team:
    Namibia
    In the real world, organisations that are custodians of client moneys or selling financial products are subject to quite strict audit regulations and oversight. That is one of the reasons these guys are offshore

    It's also why FTX was not properly banked - i.e. no proper bank would risk doing business with them. The paying of FTX deposits into Alameda already exposes Alameda bank to potential sanctions
     
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  22. russ

    russ Member+

    Feb 26, 1999
    Canton,NY
    Club:
    Liverpool FC
    Nat'l Team:
    United States
  23. Cascarino's Pizzeria

    Apr 29, 2001
    New Jersey, USA
    Yep. Like trying to sell dog poop milkshakes at this point.
     
  24. ChrisSSBB

    ChrisSSBB Member+

    Jun 22, 2005
    DE
    Nat'l Team:
    United States
    He bought 29,000 bitcoins in an auction that US seized from Silk Road back in 2014. Not sure how much he paid for them but certainly well less than $1000/ each. I think it was last year he predicted bitcoin at $10,000 which didn’t come to pass either.
     
  25. ChrisSSBB

    ChrisSSBB Member+

    Jun 22, 2005
    DE
    Nat'l Team:
    United States
    Bitcoin needs more kidnappings and cyberattacks where ransoms are demanded in bitcoin.
     

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