back to article FTX disarray declared 'unprecedented' by exec who cleaned up after Enron

John Ray III, CEO of FTX Trading Ltd, who succeeded disgraced founder Sam Bankman-Fried following the collapse of the once notionally valued $32 billion cryptocurrency exchange, told a Delaware bankruptcy court on Thursday that the company is a disaster unlike anything he has ever seen. And Ray oversaw the 2001 dissolution of …

  1. Benegesserict Cumbersomberbatch Silver badge

    New name for them

    "...control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals..."

    So that would be... Bitcoin investors?

    1. msknight

      Re: New name for them

      Please... don't... I'm already lining up another mug of coffee after reading the headline as.. "cleaned up after Elon."

      Somebody close the door. Oh, too late, Elon already did.

    2. Anonymous Coward
      Anonymous Coward

      "control in the hands of a very small group"

      That's what "decentralized finance" actually means.

  2. gecho
    Facepalm

    LOL'd at this one

    "For example, employees of the FTX Group submitted payment requests through an on-line 'chat' platform where a disparate group of supervisors approved disbursements by responding with personalized emojis."

    1. Ozan
      WTF?

      Re: LOL'd at this one

      Web 2.0 startup at its core.

      1. bombastic bob Silver badge
        Trollface

        Re: LOL'd at this one

        But... but... but... their ESG score was STELLAR! I mean, VEGAN! Contribute to DEMOCRATS! Climate Change!

        And I'm sitting here rolling on the floor laughing over just how comical this all would look if Brain-Fried actually said that...

        (while constantly jittering like he did in a video being interviewed by some liberal media guy, like he was strung out on speed)

        I hear Brain-Fried is scheduled to make a speech in NYC on 11/30 or thereabouts. I hope he shows up!! "Inspector Zenigata" will be there with a nice new shiny pair of bracelets for him...

    2. Triggerfish

      Re: LOL'd at this one

      Is there a make it rain emoji?

      1. Strahd Ivarius Silver badge

        Re: LOL'd at this one

        it is not the eggplant, or perhaps the cucumber?

        (⌐■_■)

    3. Richard Jones 1

      Re: LOL'd at this one

      Are you suggesting M. Mouse, D. Duck, and sundry others were not real and fit and proper financial controllers? Perhaps you were right after all.

      1. Danny 14

        Re: LOL'd at this one

        I wouldnt say that. M Mouse makes a fortune.

      2. Anonymous Coward
        Anonymous Coward

        Re: LOL'd at this one

        "Are you suggesting M. Mouse, D. Duck, and sundry others were not real and fit and proper financial controllers?"

        How did Uncle Scrooge McD make his fortune...

      3. SCP

        Re: LOL'd at this one

        Maybe not even that reputable; more like M.Mouse4328640.

    4. bombastic bob Silver badge
      Trollface

      Re: LOL'd at this one

      now they are gonna need a "handcuff" emoji to represent where most (if not all) of them are headed...

  3. Sparkus

    The most honest statements re FTX

    may have come from the guys old girlfriend and her hidden, but 'found' Tumbler account.

    1. Sorry that handle is already taken. Silver badge

      Re: The most honest statements re FTX

      She's quite a piece of work

    2. Michael Wojcik Silver badge

      Re: The most honest statements re FTX

      This is what you get when you provide sophomores with vast amounts of resources and no supervision.

      Ellison, like SBF, loves espousing (and probably to some extent holding, though she seems to have a rather low level of commitment to them) radical opinions. She's not big on considering their actual ramifications or complexities. It's the intellectual equivalent of adrenaline addiction: craving the rush that comes from being controversial.

      That's not a good personality trait for a business leader, or for that matter any other sort of leader.

  4. sev.monster Silver badge

    I really don't get it.

    The whole point of crypto was to be decentralized, with the power put back into the hands of the people. It made perfect sense on paper.

    And then cryptobros deposit their bytes into some other person's wallet, with that person calling themselves a "bank," with no guarantee to the safety of the transferred assets or any real fiduciary controls in place at all, other than "trust me, bro." Or, even worse, said cryptobros never actually possessed their private keys in the first place, instead leaving it in the hands of someone else, with again the same lack of controls and same guarantee.

    If you want fiscal security and confidence in your deposit, just use a fucking bank. A real one, guaranteed by federal law and the FDIC, or your local equivalent. I don't understand why people continue to gleefully misuse and misunderstand this technology, which only serves to further drive regulatory boards the world over to clamp down even harder on crypto.

    I used to be all about the freedumbs and decentralization but god damn can people not be trusted to take care of themselves without some sort of oversight.

    Petulant children. Disgustingly rich petulant children. Trusting their riches to other petulant children.

    1. ChoHag Silver badge

      The whole point

      > I don't understand why people continue to gleefully misuse and misunderstand this technology

      $$$.

      Also databases are complicated* even without storing them in a blockchain, and let's not get started on security. These people have a real website (domain name! dot-com! a page with legal-looking stuff on it! javascript!) so they've probably got it covered*.

      [*] This is not true.

      1. FIA Silver badge

        Re: The whole point

        [*] This is not true.

        It is, but the fact most people don't think it is common.

        A complex database, well designed, will perform far better than a badly designed one, by several orders of magnetiude.

        Good database design is an skill bordering on art though, and most developers don't have it.

    2. Anonymous Coward
      Anonymous Coward

      Where has all the money gone !!!???

      "I really don't get it.

      The whole point of crypto was to be decentralized, with the power put back into the hands of the people. It made perfect sense on paper."

      You are correct .... you really don't get it !!!

      It does not make sense, perfect or otherwise, on paper, lead, gold, papyrus, chalk on slate or Fairy dust mixed with water writ on unicorn skin.

      All the 'guff' about decentralisation was a diversion from the 'slight of hand' that made the people at the top rich out of the marks who fed the machine with 'Real money'.

      Crypto-Currency is just a modern day 'Get rich quick scheme' ..... AKA Scam !!!

      1. Michael Wojcik Silver badge

        Re: Where has all the money gone !!!???

        It makes sense if you set aside economics, history, and everything we know about human beings.

    3. Anonymous Coward
      Anonymous Coward

      can people not be trusted to take care of themselves without some sort of oversight.

      ....

      Nope. Not one bit. :(

      A small scattering of us can manage to tie our shoelaces without help.... on a good day.

    4. ecofeco Silver badge

      ...but god damn can people not be trusted to take care of themselves without some sort of oversight.

      No. Many of us with years, decades, of experience knew this already and said so.

      But we were dismissed.

  5. Snake Silver badge

    Re: "unprecedented"

    I don't understand that comment, there's plenty of experience there.

    It's called a "con", people. Finance your personal lifestyle off investor's backs. Plenty of precedence there. Does he need a flashlight to see?

    1. Anonymous Coward
      Anonymous Coward

      Re: "unprecedented"

      Bitcon: Bitten by the con.

    2. lglethal Silver badge
      Go

      Re: "unprecedented"

      I'm guessing he's talking about the blatantness of it. Most firms at least try to hide the dodginess, or at least maintain one set of books which looks roughly correct, (even if it's a complete work of fiction!).

      It seems like this one was a complete sh&t show, and almost seems deliberately run that way, to make life extra hard for when the whole bubble burst. That's probably what makes it so unprecedented...

      How are the extradition treaties between the Bahamas and the US?

      1. Ian Johnston Silver badge

        Re: "unprecedented"

        First Google result for "Bahamas US Extradition"

    3. Jon 37

      Re: "unprecedented"

      He cannot write that in court documents unless he has evidence. So he's assuming incompetence until he can prove deliberate fraud

      1. Anonymous Coward
        Anonymous Coward

        Re: "unprecedented"

        Hey, he's worked on Enron's $#1tshow and he's saying it's worse

      2. Danny 14

        Re: "unprecedented"

        which is the irony. Become a master criminal by running a successful company so badly that even though you make money, so did everyone else. have no accounting, no business plan. Then claim incompetence so your assets arent totally taken away. That being said if he has loads of offshore accounts everywhere then good luck finding them all.

        1. Strahd Ivarius Silver badge

          Re: "unprecedented"

          time to put back in use an offshore island, the one near San Francisco...

        2. bombastic bob Silver badge
          Facepalm

          Re: "unprecedented"

          Become a master criminal by running a successful company so badly that even though you make money, so did everyone else. have no accounting, no business plan. Then claim incompetence so your assets arent totally taken away. That being said if he has loads of offshore accounts everywhere then good luck finding them all.

          Reminds me of "The Producers". When it is completely bankrupt, everyone loses their investment, but YOU keep everything you milked out of the company, even though it was a complete failure, YOU win.

          and now a chorus of "Springtime for Hitler" sung by a strung-out out-of-time speed-freak hippy named Brain-Fried, who lives in a poly-amorous commune, and his finance officer, also part of the commune, that cannot even do BASIC MATH. Yeah that show is GUARANTEED to fail (for the investors and customers) !!! [I hear the company bought the Bahamas commune for them, for $40M]

          (yeah that's 'unprecedented' alright!)

          They're gonna put THIS one right at the front of the "Dumb Crook" file!!!

    4. druck Silver badge
      FAIL

      Re: "unprecedented"

      This wont be unprecedented for long, I'd be very surprised if any of the crypto exchanges are any better (i.e. less dodgy) than FTX,

  6. Anonymous Coward
    Anonymous Coward

    Next chapter

    Which?

    (a) The whole bitcon scam is exposed for what it is, politicians now call for its abolition, banks refuse to touch it, and ransomware runs aground without a currency.

    (b) The FTX scandal set the bar for bad behavior, the remaining bitcon artists shine in comparison, are praised by politicians looking to save their own bitcon investments, are given opportunity for shiny media interviews where they dissect what went wrong and explain how the new standards they lobby for will prevent a recurrence, and bitcon rises again from the ashes.

    1. NeilPost Silver badge

      Re: Next chapter

      I wonder how this is going down in CAR and El Salvador ??

      https://www.theverge.com/2022/4/29/23048142/bitcoin-adopted-official-currency-central-african-republic-car-why

      1. Androgynous Cupboard Silver badge
    2. MiguelC Silver badge
      Pint

      Re: "The FTX scandal sets the bar for bad behavior"

      Hold my Beer!

    3. Kurgan

      Re: Next chapter

      I really hope for option A, but it will be option B.

      1. Michael Wojcik Silver badge

        Re: Next chapter

        ASX, for one, has thrown in the towel on its much-ballyhooed Blockchain project.

        I expect we'll see most central banks walking quietly away from cryptocurrency, at least for a while. Managers for institutional investors either were burned or saw their compatriots burned; they'll be reluctant to argue for significant positions in the cryptocurrency / DeFi space for a bit.

        Some celebrities may take notice of the SEC investigations and class-action suits coming down on their peers who were too eager to promote cryptocurrency investments, and similarly decide to stay out of it.

        Pro-cryptocurrency politicians I expect will learn nothing, and in fact will double down. The Backlash Effect is particularly strong for the sort of people who are inclined to go into politics (i.e. ideologues).

    4. Munchausen's proxy
      Pint

      Re: Next chapter

      "(a) The whole bitcon scam is exposed for what it is, politicians now call for its abolition, banks refuse to touch it, and "

      Bank banks might refuse to touch it. Investment banks love that shit.

    5. bombastic bob Silver badge
      Devil

      Re: Next chapter

      Bitcoin is kinda like Tulip bulbs being speculated on, and THEN actually being used as currency. Reference to this:

      https://www.investopedia.com/terms/d/dutch_tulip_bulb_market_bubble.asp

      (They fell short of actually using them as currency as I understand it)

      I avoid it because a) I cannot afford to lose an investment and b) it is SO volatlle and has 2 major drawbacks: it increases in value slowly, and drops in value RAPIDLY.

      But some people invest, and some make money, and probably MORE people LOSE money. My bombastic opinion.

  7. Potemkine! Silver badge

    And this company was valued at $32 billion. Theranos was valued at $10 billion. The system is corrupt, but nobody cares as long as the big sharks are able to exploit gullible ordinary people.

    It's now official that FTX boss was a con-artist. The shitcoin "industry" produced many more that will fall in the coming months too.

    Now this huge scam begins to collapse, some try to create the next one: the "Metaverse". Same BS, same gullible people, same sharks, same future disaster.

    == Bring us Dabbsy back! ==

    1. Filippo Silver badge

      > And this company was valued at $32 billion.

      I believe that's the main lesson to be learned, right there.

      The efficient functioning of capitalism is based on the market being able to make educated guesses on the future performance of companies. They don't have to be great guesses, but they do have to at least make sense.

      In this case, the market valuation was completely and utterly bonkers. In the light of Ray's assessment, FTX was actually a dumpster fire and had always been a dumpster fire.

      Now, I get that retail investors will be taken in by shiny and won't do any due diligence before investing. But, equity funds? Real banks? Insurance companies? Those guys really ought to notice when a company's governance is either a mess, or deliberately opaque to hide the fact that it's a mess.

      Which means that the only reason they invest is speculation - i.e., they don't really believe the company is worth that, but they hope they'll be able to sell at a higher price before the crash.

      Which, don't get me wrong, makes a lot of sense if you can pull it off; nobody is in this for altruism.

      However, it is not efficient market functioning. Quite the opposite. Total value decreases as the algorithm allocates massive resources to utterly useless work.

      I really hope that, one day, some genius in the field of economics figures out how to prevent this, without also breaking the good bits that really work.

      In the mean time, though, I'd settle for some decent regulation of the whole mess, and for certain people to stop believing in markets and hating regulation as if they were in some kind of cult.

      1. Zolko Silver badge

        I believe that's the main lesson to be learned, right there

        I'm not sure. If we summerize this whole affair, we get:

        - a new Internet scheme coming from nowhere – at least not identifiable – allows exchange of tokens that resembles payment schemes

        - this scheme bypasses and is completely out of control of the big banks and Wall-Street financial milieu

        - those Wall-Street financial milieu is actually bankrupt as could be witnessed in 2008

        - if that particular Internet payment scheme succeeded, all the Wall-Street banking sector would be useless and would stop being "Too Big To Fail", since a replacement would exist

        - an unknown teenager gang sets-up a fraudulent "investment" broker valued at 32 billion by those very Wall-Street banks and financial sector under the very nose of all supervisors who don't see anything wrong with it

        - said broker goes bust as would be expected by anyone with half a brain

        - said Internet payment scheme gets bed publicity

        So .... a thing that the government and Wall-Street bankers – who are for all intents and purposes the same people – can't technically control gets "unexpectedly" bad propaganda which will lead to FUD about said Internet payment scheme that said bankers cannot otherwise control and/or destroy.

        Hum ... stinks of a con-job by Wall-Street to me.

        1. Filippo Silver badge

          First of all, like 99%+ of conspiracy theories, you are assuming that every single one of literally hundreds if not thousands of people are going to maintain a viciously complicated coverup perfectly. That's just not gonna happen.

          Secondly, but more interestingly, you are misunderstanding what "Too Big To Fail" means. A company is not "Too Big To Fail" because there's no replacement. There are plenty of investment banks, insurance companies, and such. They wouldn't all fail even in an extreme event, and those that survive would be happy to pick up all the new customers.

          A company is "Too Big To Fail" because it has too much debt (or otherwise has too many other entities depending on it). Then, if it fails, lots of other companies (who would otherwise be healthy) suddenly find their credits vanish into a poof of bankruptcy. If the original company was small, they can refinance and take a relatively small hit. If it was huge, though, lots of people will want to refinance at the same time. Which will drive costs way up. Some of these businesses may fail because of this, leaving other companies in the same situation, in a chain reaction that can easily kill tons of businesses that don't even do finance, they do real stuff, and would otherwise actually be healthy and doing fine.

          Please note, because this is the point, that the above scenario does not talk about payment schemes. Payment schemes have nothing to do with it at all. You could be paying cash, electronic, crypto, barter, whatever, it doesn't matter; the way debt is moved is just a technicality. If everyone used bitcoin, you would still have fat too-big-to-fail investment banks. They'd even be the same investment banks. The moment someone needs a loan to finance their brilliant new great idea, the ball starts rolling, it doesn't matter whether they get dollars or bitcoins.

          Wait, I can hear it already... "But you can't create bitcoins arbitrarily out of nothing, so you can never have excessive debt!": nope, that won't work. The second someone says "I'll give you x btc next month", which you can't prevent people from doing, you have debt. Everything else - excessive leverage, nasty derivatives, the whole shebang - can, and will be, built on top of that. Already has been, in fact. Hence: FTX.

          Just face it - there's nothing revolutionary in crypto. It's just a way to make payments without having to trust anyone. That's clever, but executing payments is not really a big problem, hasn't been in a while. The really big problems in finance have nothing to do with it, so a clever way of executing payments won't do anything to solve them.

          1. jmch Silver badge

            Quite right. The real problem is fractional reserve banking, ie allowing loans to be made (and debt to be created) without having the corresponding deposits to back up that loan. Which basically mans that retail banks, not only central banks, are allowed to make money up out of thin air.

            But really the worst thing is that banks abuse of too-big-to-fail status (or the cynical might say they engineer themselves into that position) exactly so they can privatise profits and dump losses on the government.

            1. David Hicklin Bronze badge

              >> fractional reserve banking, ie allowing loans to be made (and debt to be created) without having the corresponding deposits to back up that loan

              Now I could be *very* wrong here but is that not what we had in the 1970's / early 1980's ? Loans and mortgages were bloody hard to come by in those days until they relaxed the financial market rules , and triggered the explosive economic boom (and busts) that followed.

              Besides, they have to borrow the money to lend it out first, and if they relied on deposits to back it all up then there would be very little lending going on

              1. jmch Silver badge

                " Loans and mortgages were bloody hard to come by in those days until they relaxed the financial market rules "

                Yes, that's exactly the point. Back then it was much more difficult to get a loan but you also did not have so many foreclosures, bankruptcies and bailouts. Too easy credit leads to increased boom-and-bust cycles, especially when people see the easy credit as 'free money' without ever thinking how to pay it back

                1. Anonymous Coward
                  Anonymous Coward

                  this is what happens when you put a crooked used car seller in charge of the USA...

          2. Zolko Silver badge

            First of all, like 99%+ of conspiracy debunkers, you are assuming that a conspiracy is a unique evil scheme drawn up by wannabee dictators. No, a conspiracy is only a plan amongst many others made by people who have heavy interest in some event. In this case, the event is the failure of crypto-money, and I bet that the banskters have many plans to try to prevent that success. Let's call it "not putting all your eggs in the same basket ". No sane person, and certainly not Wall-Street banksters, would bet their future on a moron like this SBF (or whatever he is called), they certainly have many other conspiracies in their portfolio.

            Secondly, you haven't learned your lessons from 2008 :

            There are plenty of investment banks, insurance companies, and such. They wouldn't all fail even in an extreme event

            this is false as could be seen in 2008, but also in 2012 in Chyprus (I think). Every bank and payment scheme becomes unavailable putting ALL the economy at risk, even those that have nothing to do with it. If an alternative payment system exists, banks can be let to fail without the healthy part of the society being affected, all the while "investors " loosing their money. But if Visa and MasterCard are unavailable, people won't have any food in 1 week and begin rioting and finally overthrow the bankster government.

            THIS is what "Too Big To Fail " means. Not debt.

            1. sgp

              "Chyprus (I think)"

              I don't think you think.

              1. Benegesserict Cumbersomberbatch Silver badge

                FYI Chypre is how you spell Cyprus in French.

                It's just unfamiliarity with English.

                Hands Up if you're a monoglot Anglophone.

            2. Filippo Silver badge

              > Every bank and payment scheme becomes unavailable

              Pardon the french, but wtf are you saying? I've been happily using my cc and bank account and everything else throughout every financial crisis in the last four decades. I have not had any interruption at all. I'm pretty sure I'm not the only one.

          3. Anonymous Coward
            Anonymous Coward

            'Too Big To Fail' usually means the political fallout would be disadvantageous to the politicians involved.

          4. Anonymous Coward
            Anonymous Coward

            " It's just a way to make payments without having to trust anyone. "

            And there is the problem right there. No currency works unless people trust it's value and the mechanisms for exchanging it for goods and services. A true currency has no inherent value except as a token to be exchanged for something else. Ignoring every other aspect of crypto coins, the fact that people just expect their crypto coins to gain value against "real" currencies and just hold on until they cash out into real currencies make it useless as a currency. Currencies need to circulate in the economy, not behave like investment assets. (Although I worry about anyone who seriously regards a crypto currency as any form of asset.)

            1. blackcat Silver badge

              The only people guaranteed to make money from bitcoin were the people making and selling the mining hardware.

              1. Anonymous Coward
                Anonymous Coward

                "The only people guaranteed to make money from bitcoin were the people making and selling the mining hardware"

                Back in my school days we learned about the California Gold Rush. I remember my teacher commenting that tons of people set out to become rich by mining gold, but that the only people who actually got rich were the ones selling picks and shovels.

      2. Paul Smith

        not efficient market functioning

        Efficiency is a relative term, not an absolute one. Ponzi schemes are remarkable efficient ways to make money right up until the moment they fail.

        1. AndrueC Silver badge
          Joke

          Re: not efficient market functioning

          It's a ponzi!

      3. TimMaher Silver badge
        Pint

        Re:- “some kind of cult”

        I misread that and spilt my beer. Must get a fresh one.

    2. drankinatty

      Credit default-swaps anyone? A rose by any other name...

      You can't see it, you can't touch it, you can't look to verify it's actually there, it's not something that is certificated -- other than trusting some string of 0's and 1's actually means what they tell you it means.

      You see 2+ years of hype, TV ads, celebrity spoke-persons claiming the next great gold-rush is here -- and it's vapor-ware. And the whales cached in on all the money they were able to get out of the little fish -- again.

      Seems more like a financial disaster version of Groundhog-Day. Something tells me this is but the first domino to fall in the meltdown of crypto currency, and it is a sad thing indeed to watch.

      1. Greybearded old scrote Silver badge

        Your 2nd paragraph applies to almost all money. Those banknotes are in the minority.

    3. LybsterRoy Silver badge

      Those are two good examples but there are more out there - Tesla, Twitter are an easy two to name.

      Maybe if someone (anyone) could sort the stock markets out so they a) stopped giving these enormous valuations and b) reacted to changes rationally we could get some sanity back. On the other hand being sane is so last century!

      1. imanidiot Silver badge

        Give it a few years

        The next stock market crash is likely going to put the 30s to shame and give the system a very good (re)booting. Things are going to get ugly.

      2. Anonymous Coward
        Anonymous Coward

        One could argue that the stock markets do react rationally... eventually.

      3. John Brown (no body) Silver badge

        "sort the stock markets out"

        There are no Stock Markets, as such. There are large numbers of people who come together and collectively become a stock market. That means it's not an organisation that can be controlled, rather you need to apply crowd psychology to the masses.

    4. General Purpose

      That $32bn claim, though .... it wasn't simple market capitalisation, oh no. They raised $400m in funding and multiplied it up by a factor of 80, stuck that in a press release and got the coverage. It's hard not to see the FT and other mainstream press as part of the problem.

  8. Neil Barnes Silver badge

    If everyone in the country gave me a Euro

    I'd be a multimillionaire, and nobody would really notice a difference.

    And I wouldn't have to mess around inventing a fake 'currency', either.

    1. Brewster's Angle Grinder Silver badge
      Trollface

      Re: If everyone in the country gave me a Euro

      Meh, who wants to be a millionaire. It's billionaire or bust...

      1. Michael Wojcik Silver badge

        Re: If everyone in the country gave me a Euro

        Lots of people in the middle class in the US are millionaires, technically speaking. My wife and I are, at least the last time I checked our retirement accounts. Of course those have lost a lot of value over the past year, but given the breadth of our portfolios and bias toward low risk, either they'll be back up by the time we reach retirement, or most people will be in a similarly depressed position so we'll still be comparatively wealthy. We have mortgaged real estate but thanks to a hot local market it's worth quite a bit more than what we owe (not that liquidating it would be anything other than a last resort; we live here because we like it).

        But we're solidly professional-middle-class in terms of possessions, liquidity, etc.

        Being a millionaire is not, in itself, particularly exciting.

        1. Brewster's Angle Grinder Silver badge

          Re: If everyone in the country gave me a Euro

          Yeah, there are plenty of people who own property in London worth more than 6 figures. In reg standard units, a million squids is just 4 x Boris Johnson after dinner speeches.

          1. Neil Barnes Silver badge

            Re: If everyone in the country gave me a Euro

            Yep, a modest house and a reasonable pension and you're a millionaire in theory, if not in practice. You've got it, but you can't easily (or sensibly) spend it.

  9. Kkkevsta

    Duh??

    When your teenage son asks if he can have the car keys and a bottle of whisky you have to know there may not be a happy ending to the night.

    So why is everyone so surprised that giving billions of dollars to a frat house crew ended badly? The surprise would hsve been if it didn't!

    1. Michael Wojcik Silver badge

      Re: Duh??

      Bankman-Fried and Ellison were former quants (they worked for Jane Street). Not really the same cultural position as stereotypical frat boys, whose damage radius tends to be rather smaller.

      They were also vigorous promoters of Effective Altruism (not necessarily vigorous practitioners of it), but the EA community is good at rationalizing its bad actors. You just update the posterior probability that an EA proponent is actually a greedy, self-serving bastard.

  10. Missing Semicolon Silver badge
    Facepalm

    Finally?

    Is this the final rug-pull? Finally?

    1. vtcodger Silver badge

      Re: Finally?

      "Is this the final rug-pull?"

      Given that there seemingly never was any rug there to pull, No. Besides, in a rug-pull, some miscreant walks off with your money. In this case, your money has apparently been vaporized.

      Bitcoin is trading at about $16,700 this morning. About a third of its "value" a year ago, but four times what it fetched four years ago. So, it looks like it'll take more than the public transformation of a few big players into housemice to discourage crypto fanatics.

      re the FTX debacle, here's an amusing quote attributed to Matt Levine. https://fortune.com/crypto/2022/11/15/ftxs-balance-sheet-from-hell/

      If you try to calculate the equity of a balance sheet with an entry for HIDDEN POORLY INTERNALLY LABELED ACCOUNT, Microsoft Clippy will appear before you in the flesh, bloodshot and staggering, with a knife in his little paper-clip hand, saying, ‘Just what do you think you’re doing, Dave?’ You cannot apply ordinary arithmetic to numbers in a cell labeled ‘HIDDEN POORLY INTERNALLY LABELED ACCOUNT.’ The result of adding or subtracting those numbers with ordinary numbers is not a number; it is prison.”

      1. Anonymous Coward
        Anonymous Coward

        The rug is probably there, wait for the dust to settle

        I expect that the details will paint a different picture once the forensic accountants sink their teeth into FTX's corpse. But these losses weren't accidents or mere incompetence. They were deliberately moving both customer funds and what was effectively their own companies stock around to prop up their valuation and cover the mounting losses in customer accounts.

        While they didn't steal ALL of it and run for the door, the whole exercise existed to both fund the out of control frat party that the FTX employees were running and provide cover as most of them lined their own pockets with what turned out to be plies of other peoples money. It doesn't stop being embezzlement if you charge the company card instead of stealing from the cash box.

        And it's been clear for a while that FTX basically existed to be embezzled from.

  11. Anonymous Coward
    Anonymous Coward

    "Nor did it maintain centralized control of its cash"

    Ah, the beauty of a decentralised blockchain with its shared immutable ledger for recording transactions

    But they could have gone with OneCoin's *centralised* blockchain... oh, sorry, that didn't work too well as it was just a Ponzi scheme and they never seemed to have explained how their concept of a 'centralised blockchain' worked

  12. Greybearded old scrote Silver badge
    FAIL

    Inevitable

    Riley Quinn says that, "fintech" is a euphemism for "unregulated bank." (Can't find the original, but Cory Doctorow frequently quotes him.)

    Hey, they wanted to get away from all those inconvenient rules and regs. They got what they asked for.

    1. Michael Wojcik Silver badge

      Re: Inevitable

      Just the latest version of wildcat banking, though without even the feeble state regulation.

  13. trevorde Silver badge

    What a time to be alive!

    Two dumpster fires to watch: Twitter *and* FTX

    1. John Brown (no body) Silver badge

      Re: What a time to be alive!

      Shame they're so far away otherwise I might be able turn my heating down and bask in the warm glow :-)

  14. Trigun

    I hope that they not only manage to extradite Sam Bankman-Fried, but they get the rest of the core group as well.

    This little venture of theirs has done enormous damage and it's going to sink lots of companies, putting many people out of work. For the ones that survive, they are going to have large holes to fill in their balance sheets and let's not even talk about the pension schemes which had invested.

    Also, there will probably be suicides related to this, as some will find their lives and futures wiped out. This is something which gets forgotten sometimes. You can blame them to a degree for their foolishness, but some of this is on the con merchants who peddle these dodgy crypto "investments", hiding the level of risk as they do so.

    If I knew that I was part of this, I would be finding somewhere which doesn't extradite to anywhere and where hit men can't find me. Perhaps Pluto.

    Or maybe the insanely large political donations that FTX made in recent years will help them.

  15. LybsterRoy Silver badge

    Those comments remind me of a small charity set up by three people with no business experience. Fortunately they were only handling a few tens of pounds.

  16. chivo243 Silver badge
    Terminator

    www. = Wild Wild West

    Come on in, anything goes, as long as the Sheriff ain't lookin...

  17. flayman Bronze badge

    'F*** regulators they make everything worse' Oh, but I want bankruptcy protection please. A$$hole.

  18. Mike 137 Silver badge

    Mr. Bankman-Fried

    He probably will be when they catch up with him.

  19. Anonymous Coward
    Anonymous Coward

    Where are the family, friends or advisors?

    Surely Sam has got at least 1 person in his corner telling him to stop fucking tweeting?

  20. Jonathon Green
    Trollface

    Much blockchain, very crypto!

    “…employees of the FTX Group submitted payment requests through an on-line 'chat' platform where a disparate group of supervisors approved disbursements by responding with personalized emojis."

    I’m assuming those “personalised emojis” are actually NFTs which are correctly recorded as company assets so that they can be sold off and the value realised used to compensate creditors… :-)

    1. 43300 Silver badge

      Re: Much blockchain, very crypto!

      "I’m assuming those “personalised emojis” are actually NFTs which are correctly recorded as company assets so that they can be sold off and the value realised used to compensate creditors… :-)"

      Perhaps Microsoft would be interested? Putting loads more emojis in Teams seems to be one of their core interests these days (as opposed to boring things like fixing bugs in their software).

  21. DrXym

    "Uncertainty about who is an employee"

    I have Rust on my job profile which attracts a lot of oddball cryptocurrency / NFT operations that don't have an office and employ people remotely.

    Lucky for me I'm not stupid enough to apply for these positions, some of which are super-shady. But it does make me wonder what the terms of employment are when nobody works in the same country and the "employer" might be some shell company in a tax haven. It's not exactly like these companies are operating within the law or ethically the rest of the time either so who's to say you are an employee in law or just some contractor? I've had some doozy emails - one crowd wants to scan people's eyeballs in exchange for crypto coins. Another had a 10 page screed by the owner who wanted to justify why he wants to insult his LGBT staff under the guise of free speech.

    As for why Rust attracts these types - it's apparently because Ethereum has good support for it.

    1. TimMaher Silver badge
      Joke

      Re: "rust”

      I have a lot of problems with Rust; mostly about borrowing values.

    2. Anonymous Coward
      Anonymous Coward

      Re: "Uncertainty about who is an employee"

      A friend has a senior role in Binance, and you're right it is complicated - I think he has an employment contract, but it's with some sort of DAO and so entirely unenforceable. Salary is good and he's prepared for it all to go wrong in a heartbeat.

      And yes I have made my opinion of his industry known, assertively, over beers. He's of the view he's making shovels in the gold rush, and that the regulatory hoops he's having to jump through is a sign things are improving.

      The eyeball one was Worldcoin. I remember that at the time - spent an idle half hour pondering on how fucked things can get.

      1. DrXym

        Re: "Uncertainty about who is an employee"

        Yeah you're right about the eyeball one. As soon as I got a contact I looked them up and it's like some weird dystopian vision where everyone on earth gets free coins, but of course they immediately started ripping off poverty stricken villages who hadn't a clue what was going on. Good luck for anyone working for that insane company.

        The second one was for Kraken and a bonkers "Kraken Culture Explained" manifesto that I read researching that one. Basically saying everyone working there had to be an ardent libertarian crypto pushing cultist and it was just fine to say anything you like not matter if it caused offense. No surprise then that the CEO basically wrote that screed to justify why he was saying dickish things in public.

  22. Howard Sway Silver badge

    the accounting business that supposedly vetted the company's numbers

    Ah yes, the one that has an office in the metaverse. It is apparently "located at coordinates (18, 144) in Decentraland" and has "a gallery space for client NFTs" which gives some idea of how large, sophisticated and exciting the metaverse must really be.

    I can picture the party one night in one of the Bahamas mansions, one of them trying out a new headset. "Hey dudes, there's this like accountants firm here, maybe we should use one, let them sort out that money stuff we all got bored with". "Yeah, great idea dude, we should use the metaverse one, so we're the first metaversecrypto exchange. Man, it's so cool being so cutting edge. Can't wait to tell everyone about it tomorrow in the 17 newspaper interviews I'll be doing about how amazing and modern I am. "

    1. GruntyMcPugh Silver badge

      Re: the accounting business that supposedly vetted the company's numbers

      I bet Musk is going to buy Decentraland (69, 420) and move all the Twitter workers there.

      1. Strahd Ivarius Silver badge
        Facepalm

        Re: the accounting business that supposedly vetted the company's numbers

        not sure there are still workers to be moved...

        1. AbominableCodeman
          Joke

          Re: the accounting business that supposedly vetted the company's numbers

          I've done quite some impressive work on NPC AI in my time. I'm sure someone could populate a busy looking metaoffice with more convincing simulacrums of humans than some of the real fleshbags I've met in suits over the years.

    2. Anonymous Coward
      Anonymous Coward

      Re: the accounting business that supposedly vetted the company's numbers

      Not that the one they chose isn't one of the shadiest sounding I have heard of, but big names like D&T have been caught with their fingers in the cookie jar over bogus audits and conflicts of interest. "Independent" auditors that only do millions in business with the companies they are auditing through other "business divisions" can make your numbers add up to anything for the right sized stack of bills.

      Not looking too deeply, or looking the other way, seems to have become an industry standard.

  23. Gob Smacked

    No one that sees there is *no* bitcoin mentioned here

    This is all about "crypto" - the casino clown world that copied the code of a good thing and ran with it.

    The good thing is still 99.99% up for 13 years now and counting, silently growing and hardening in the background.

    1. Anonymous Coward
      Anonymous Coward

      Re: No one that sees there is *no* bitcoin mentioned here

      It's not all sunshine and roses for BTC, but I agree that these exchange issues aren't due to the cryptocurrencies themselves. The big ones have had a few blips but are remarkably secure. The gimmicky shitcoins and mystery meat "Tokens" on the other hand, that's a different story.

      These exchange failures are a simple failure of blind trust. It's the basic law of crypto, if you aren't the sole controller of the keys, you aren't in control. An exchange wallet was never your wallet. It's an IOU on a cocktail napkin.

  24. tyrfing

    Has anyone mentioned Robert Maxwell yet?

    Certainly Bernie Madoff has been.

    1. John Brown (no body) Silver badge

      I think I may have mentioned something about how Musk should avoid trips on his superyacht a few days ago :-)

  25. John Brown (no body) Silver badge

    Delaware

    For some odd reason, I remember a section Geography lessons at school where we studies the origins of US State names , eg English, French, Native etc. That, and possibly a film or two about Indians as we used to call the First Nations, are about the only time the State od Delaware has impinged on my consciousness untill all these stories I see in El Reg about shady companies, patent trolls and similar dodgy dealings. So, is it just me or is Delaware only "famous" for being the US own internal version of the Cayman Islands except without the beaches?

    1. bombastic bob Silver badge
      Unhappy

      Re: Delaware

      Close. And Joe Biden is FROM THERE...

    2. Anonymous Coward
      Anonymous Coward

      Re: Delaware

      The state of Delaware has three sources of funding:

      - Tolls on I-95 (no DE people drive on it, just people going between DC/BAL/PHI and NYC)

      - Taxes on the DuPont corporation

      - Corporate filing fees

      It’s a nice little place to be.

    3. Irony Deficient

      Re: Delaware

      So, is it just me or is Delaware only “famous” for being the US own internal version of the Cayman Islands except without the beaches?

      It is best known as a financial center — more than half of all US publicly traded corporations are incorporated in Delaware, even if they otherwise have no connection to the state, because of its business-friendly corporate law. DuPont was founded there in 1802 and always headquarted there, and at one time was the largest chemical manufacturer on Earth. (They merged with Dow in 2017, and were spun off again in 2019, still in Delaware.)

      Delaware has beaches, and months of hot weather, but since I’m not a sunbather myself, I can’t comment on how they compare to beaches elsewhere.

  26. martinusher Silver badge

    ,,and the difference betwen Enron and FTX is...

    Enron was conceived and run by professionals while FTX seems to have been set up and run by amateurs.

    The phenomena we're seeing goes by various names -- "hand in the till" is an old one, "control fraud" is a more modern on. They refer to using a company as a personal piggy bank. It can be done legally, of course, but that implies some finesse and the acceptance of some limits.

  27. Benegesserict Cumbersomberbatch Silver badge

    The headlines write themselves

    Bank Man Brain Fried By Bankman-Fried Brain Freeze.

  28. Anonymous Coward
    Anonymous Coward

    Dieing in an american prison is the best he can hope for. The worst would be a mexican cartel gang kidnapping him from the bahamas and bringing him back to mexico to have a conversation with some people about where their hundreds of millions of dollars have gone :D

    I'm rooting for the latter because it would be pretty funny and perhaps a little lesson pour encourager les autres

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