Post summary (feel free to suggest edits!): Linkpost to an article by Rohit Krishnan, a former hedge fund manager. Haydn highlights key excerpts, including one claiming that “This isn’t Enron, where you had extremely smart folk hide beautifully constructed fictions in their publicly released financial statements. This is Dumb Enron, where someone “trust me bro”-ed their way to a $32 Billion valuation.”
They mention that “the list of investors in FTX [was] a who’s who of the investing world” and while “VCs don’t really do forensic accounting” there were still plenty of red flags they should have checked. Eg. basics like if FTX had an accountant, management team, back office, board, lent money to the CEO, or how intertwined FTX and Alameda were. The author has had investments 1/10th the size of what some major investors had in FTX, and still required a company audit, with most of these questions taking “half an hour max”.
(If you’d like to see more summaries of top EA and LW forum posts, check out the Weekly Summaries series.)
Post summary (feel free to suggest edits!):
Linkpost to an article by Rohit Krishnan, a former hedge fund manager. Haydn highlights key excerpts, including one claiming that “This isn’t Enron, where you had extremely smart folk hide beautifully constructed fictions in their publicly released financial statements. This is Dumb Enron, where someone “trust me bro”-ed their way to a $32 Billion valuation.”
They mention that “the list of investors in FTX [was] a who’s who of the investing world” and while “VCs don’t really do forensic accounting” there were still plenty of red flags they should have checked. Eg. basics like if FTX had an accountant, management team, back office, board, lent money to the CEO, or how intertwined FTX and Alameda were. The author has had investments 1/10th the size of what some major investors had in FTX, and still required a company audit, with most of these questions taking “half an hour max”.
(If you’d like to see more summaries of top EA and LW forum posts, check out the Weekly Summaries series.)