While I agree these contradictions are worth exploring, I don’t think (1) directly contradicts the incompetence hypothesis. Seeing the article:
Meanwhile, at a meeting with Alameda employees on Wednesday, Ms. Ellison explained what had caused the collapse, according to a person familiar with the matter. Her voice shaking, she apologized, saying she had let the group down. Over recent months, she said, Alameda had taken out loans and used the money to make venture capital investments, among other expenditures.
Around the time the crypto market crashed this spring, Ms. Ellison explained, lenders moved to recall those loans, the person familiar with the meeting said. But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
I read this as completely coherent with what SBF said: “each step was in isolation rational and reasonable, and then when I finally added it all up last week it wasn’t”.
As for (2), I don’t think it’s a big update on the fraud hypothesis. A backdoor can mean having admin access to a server, which I think gives a more parsimonious explanation.
It’s worth pointing out that if SBF was malicious and fraudulent, this whole interview could have just been an attempt to save faces, which is why we shouldn’t update strongly either way. We should wait till more external evidence arrives.
But the funds that Alameda had spent were no longer easily available, so the company used FTX customer funds to make the payments. Besides her and Mr. Bankman-Fried, she said, two other people knew about the arrangement: Mr. Singh and Mr. Wang.
Keeping this arrangement from the rest of Alameda / FTX, including legal and compliance, strongly implies they knew it was fraudulent.
Agree with your point on (2) that it could technically mean admin DB access.
Yeah, you’re right. If these were just decisions that seemed individually rational, I don’t see why so few of them were aware that these decisions were made. It’s definitely suspicious.
To conceal the transfers of customer funds to Alameda, Wang, a former Google software developer, built a backdoor in FTX’s book-keeping software, the people said.
Bankman-Fried often told employees tasked with monitoring the company’s financials that the book-keeping system was “the ultimate source of truth” about the company’s accounts, two of the people said. But the backdoor, known only to his most trusted lieutenants, allowed Alameda to withdraw crypto deposits without triggering internal red flags, they said.
This also sounds more like an explicit backdoor built into a system, but not totally conclusive.
The backdoor cannot possibly be something like admin access to a server in this case. It had to be something that allowed SBF et al to move money out of FTX accounts without anyone else knowing that it was gone. So the account would have, say, $0 of assets while still displaying $8B of assets to any other employee. His talk about “folders” is nonsensical. Wherever the “folders” were held, when Alameda’s loans got called in, those “folders” would have been empty, until they were filled from FTX’s “folders”—which then would have been empty themselves.
They had software displaying completely fake figures.
I don’t think so: the “backdoor” refers to the internal accounting system. My reading is that this refers to SBF being able to alter the software to make it display fake figures (whether or not that’s true), and I think that could be accomplished by something like admin access.
While I agree these contradictions are worth exploring, I don’t think (1) directly contradicts the incompetence hypothesis. Seeing the article:
I read this as completely coherent with what SBF said: “each step was in isolation rational and reasonable, and then when I finally added it all up last week it wasn’t”.
As for (2), I don’t think it’s a big update on the fraud hypothesis. A backdoor can mean having admin access to a server, which I think gives a more parsimonious explanation.
It’s worth pointing out that if SBF was malicious and fraudulent, this whole interview could have just been an attempt to save faces, which is why we shouldn’t update strongly either way. We should wait till more external evidence arrives.
Keeping this arrangement from the rest of Alameda / FTX, including legal and compliance, strongly implies they knew it was fraudulent.
Agree with your point on (2) that it could technically mean admin DB access.
Yeah, you’re right. If these were just decisions that seemed individually rational, I don’t see why so few of them were aware that these decisions were made. It’s definitely suspicious.
From Reuters:
This also sounds more like an explicit backdoor built into a system, but not totally conclusive.
The backdoor cannot possibly be something like admin access to a server in this case. It had to be something that allowed SBF et al to move money out of FTX accounts without anyone else knowing that it was gone. So the account would have, say, $0 of assets while still displaying $8B of assets to any other employee. His talk about “folders” is nonsensical. Wherever the “folders” were held, when Alameda’s loans got called in, those “folders” would have been empty, until they were filled from FTX’s “folders”—which then would have been empty themselves.
They had software displaying completely fake figures.
I don’t think so: the “backdoor” refers to the internal accounting system. My reading is that this refers to SBF being able to alter the software to make it display fake figures (whether or not that’s true), and I think that could be accomplished by something like admin access.
So, SBF gave himself a billion dollars:
But hasn’t declared bankruptcy himself yet? Did he pay that back?
Who knows but...I presume definitely not? I mean no way was it an actual “loan.”