This seems to be “not even wrong”—FTX’s business model isn’t and never was in question. The issue is Sam committing fraud and misappropriating customer funds, and there being a total lack of internal controls at FTX that made this possible.
If you say that your business model is to hold depositor funds 1:1 and earn money from fees, but in fact you sometimes earn money via making trades with depositor funds, then you would be misrepresenting your business model.
My current best guess is that WM quite reasonably understood FTX to be a crypto exchange with a legitimate business model earning money from fees—just like the rest of the world also thought. The fact that FTX was making trades with depositor funds was very likely to be a closely kept secret that no one at FTX was likely to disclose to an outsider. Why the hell would they—it’s pretty shady business!
Are you saying WM should have demanded to see proof that FTX’s money was being earned legitimately, even if he didn’t have any reason to believe it might not be? This seems to me like hindsight bias. To give an analogy—have you ever asked an employer of yours for proof that their activities aren’t fraudulent?
Not disagreeing with your overall point, but if my non-EA aligned, low-level crypto trader friend is any indication, then there certainly was reason to believe that SBF was at the very least doing some shady things. In August, I asked this friend for his thoughts on SBF, and this is what he replied:
“He’s obviously super smart but comes across a bit evil while trying to portray the good guy front. His exchange is notorious for liquidating user positions, listing shit coins thats prices trend to zero. He also founded Alameda research (trading / market maker firm) alongside FTX (the exchange). Alameda are one of the biggest crypto trading firms with predatory reputation. There’s also the issue of barely any divide between the exchange and the trading firm so alameda likely sees a lot of exchange data that gives them an edge trading on FTX vs other users.”
The irony is that this friend lost most of his savings because he was a FTX user.
This seems to be “not even wrong”—FTX’s business model isn’t and never was in question. The issue is Sam committing fraud and misappropriating customer funds, and there being a total lack of internal controls at FTX that made this possible.
If you say that your business model is to hold depositor funds 1:1 and earn money from fees, but in fact you sometimes earn money via making trades with depositor funds, then you would be misrepresenting your business model.
Sure, and what is your point?
My current best guess is that WM quite reasonably understood FTX to be a crypto exchange with a legitimate business model earning money from fees—just like the rest of the world also thought. The fact that FTX was making trades with depositor funds was very likely to be a closely kept secret that no one at FTX was likely to disclose to an outsider. Why the hell would they—it’s pretty shady business!
Are you saying WM should have demanded to see proof that FTX’s money was being earned legitimately, even if he didn’t have any reason to believe it might not be? This seems to me like hindsight bias. To give an analogy—have you ever asked an employer of yours for proof that their activities aren’t fraudulent?
Not disagreeing with your overall point, but if my non-EA aligned, low-level crypto trader friend is any indication, then there certainly was reason to believe that SBF was at the very least doing some shady things. In August, I asked this friend for his thoughts on SBF, and this is what he replied:
“He’s obviously super smart but comes across a bit evil while trying to portray the good guy front. His exchange is notorious for liquidating user positions, listing shit coins thats prices trend to zero. He also founded Alameda research (trading / market maker firm) alongside FTX (the exchange). Alameda are one of the biggest crypto trading firms with predatory reputation. There’s also the issue of barely any divide between the exchange and the trading firm so alameda likely sees a lot of exchange data that gives them an edge trading on FTX vs other users.”
The irony is that this friend lost most of his savings because he was a FTX user.