FTX's Sam Bankman-Fried charged with fraud by just about everyone Police in The Bahamas on Monday nabbed Sam Bankman-Fried (SBF), former CEO of failed cryptocurrency exchange FTX and crypto hedge fund Alameda Research, at the request of the US government, based on charges filed by multiple federal agencies. On Tuesday, following that arrest, those charges were made public and are expected to …
your snark is appreciated
Since "Bankman-Fraud" aka "Brain-Fried" is likely to go to prison for his loss of billions of dollars in other people's money by way of alleged fraudulent claims, alleged criminal mismanagement, etc. I would think that EXISTING laws and regs are just fine if the bad actors go to prison for allegedly violating them in such an allegedly gross manner.
Some think he might follow the same fate as Epstein. I have to wonder if "knowing where the skeletons are" has anything to do with THIS...
Note: never trust your life savings to an alleged hippy allegedly running an investment business from a multi-million dollar commune in the Bahamas, despite all of the alleged woke virtue signalling he's allegedly doing to convince you, especially when he (allegedly) visibly shakes like a meth-head in a TV interview and (allegedly) goes into a "Talking 'bout my generation" thought+verbal spin trying to explain things...
I was led to believe that the problem isn't actually crypto as such but rather that it became 'financialized' -- it became another virtual asset to be sliced, diced, leveraged and generally turned into tulip bulbs.Crypto itself may have problems -- I don't like its energy use and lack of underlying value -- but that's a different issue.
SBF and friends made the traditional small trader error of putting their hands in the till. There's apparently a right and a wrong way to do it -- one way its a Ponzi scheme, the other just the normal gyrations of "the market".
the other just the normal gyrations of "the market”. .... martinusher
Yes, indeed, and that be the persistent advancing criminal threat that just keeps on giving increasing stealthy power and expanding credence to what is in effect crypto virtual gold .... Bitcoin ....... for "the market” is rigged and its gyrations are far from normal unless you think it being easily groomed is perfectly healthy and acceptable.
Cross that red line great divide and all manner of wannabe master criminals in flash z00t suits will love you for the opportunity that green light presents to crash and plunder federal reserves and crooked cash stores and equity vaults.
SBF and friends made the traditional small trader error of putting their hands in the till. There's apparently a right and a wrong way to do it
Yes. You have a client account for client funds, and an company accounts for money that the company owns. If you have a billion quid deposited in your client account and you promise the client 1% interest but manage to make 2% by putting half a billion quid in a long term deposit scheme (with removal at short notice in case of emergency if you have a bank run) then you can give the client 1% extra in the client account and bank the other 1% in the company account.
You do not take money for ongoing operations, holidays and other personal expenses from the client account!
You're right: that is some lazy thinking. Not every failure of every set of poor financial practices is a deliberate fraudulent scheme from the get-go. There are many paths to this sort of failure, and the probability that we'd only ever observe one is very low.
The current evidence suggests that SBF and his gang of fellow ex-quant children started out sincerely believing that their companies would accumulate a lot of wealth. Alameda initially did make quite a bit of money (at least on paper) with SBF's Bitcoin-arbitrage trading and similar investment schemes. As more of their ill-conceived investments failed they began raiding customer accounts; at that point it became deliberate fraud. But as I wrote above, the current evidence suggests that initially it was naivety and abysmal accounting and management practices.
For that matter, Ponzi himself likely did not know he was running a scam. He was essentially innumerate and had basically no accounting at all. Witness accounts say he had rooms with piles of cash – not even stacked, just thrown in piles on the floor – and absolutely no idea what came from new deposits and what from his postal-coupon arbitrage scheme. His close associates did know what was going on, but Ponzi, who'd founded the scheme and was its public face, apparently thought things were not only fine but perfectly above-board right up until the crash. Bulgatz has details.
yeah it is not likely that creditors are at fault for making bad investment/loan/etc choices anyway. They simply must want their money.
It's probably a number of private investors and firms that invest in lots of things like that. The world of finance.
Kinda reminds me of an old fashioned "bank run".
-> A ban on crypto would be the most straight-forward way of protecting both investors and the financial system: it would end the uncontrolled creation of cryptoassets and also ensure that cryptoassets never require a bail-out,
All them bailouts. All that so-called quantitive easing. Yeah. Never require a bailout. Bake that into the so-called financial system. All quietly forgotten about...
It did not escape my attention at all. But please don't try to pretend that QE was not a bailout. The idea that crypto so-called assets should not get a bailout while giving a free pass to the mainstream financial system shows how two-faced the financial overlords are.
Agreed about Truss. She nearly collapsed the financial system. We were hours away from it.
process of quantitative tightening
* imagines a thief slowly putting back the sack of gold into his other pocket *
BoE was going to, but got other priorities after Trussonomics
BoE is in bed with WEF. The stunt with shorting the pound and then getting WEF propaganda officers, sorry, journalists to sell the story that Truss crashed the economy around the world by announcing a budget that gives a boost for SMEs and growth, which is against WEF agenda.
They got their way - you can't stand up against the rich - and so they got their man Sunak in, as planned for years.
Of course first thing was getting his pet IR35 changes back in. You can't have little people running their own businesses, getting wealthy and in the future challenging the status quo! Oh no.
Just occurred to me: what if we simply ban /bailouts/? This will also ensure that *nothing* ever requires a bail-out and maybe make people think twice about who they're giving money to.
*hollow laugh*
I so wish we can implement that here in South Africa, virtually every SoE runs to daddy government when they need money for bonuses etc and call it "bailout"... or they made a big oops, and need a bailout...
Just occurred to me: what if we simply ban /bailouts?
Banking is useful. OK, stop laughing at the back there!
Banking does several socially useful things. It gives us a relatively safe place to keep our money, rather than under the mattress. It gives us relatively safe ways to move money around, and manage it.
It also allows liquidity transformation. This is the act of turning lots of people's amounts of short-to-medium-term savings into large blocks of long term money that can be loaned-out in the form or mortgages or loans for business investment.
The risk of this is that panics can cause everyone to try and withdraw their savings at once from a bank, and they can't get the mortgages paid back in the few days they have to meet that demand. Hence we have Central Bank guarantees to stop solvent but illiqid banks from going bust, and allow this socially and economically useful business to continue. It's very hard (to impossible) to get economic growth without investment.
In order to be worthy of being trusted with this bail-out facility, our banks need to be heavily regulated and as boring as possible. Lending sensibly and usefully. Leaving the much riskier loans to the financial markets and investors who hopefully better understand the risks, and can cope with the inevitable losses.
Banking is a racket, I ain't Spartacus, which is tolerated and supported because it can do a number of useful things, some of which you have conveniently highlighted. Such information though does not alter the fundamental fact of it still being a racket.
In other words, it is claimed, FTX secretly funneled billions in people's private funds into Alameda, which then gambled – sorry – invested the money into a wide range of startups and projects as well as covering the org's expenses.
In other words, it is claimed, Government openly funneled billions in people's % of salary into pension funds, which then gambled - sorry - invested the money into a wide range of startups and projects as well as covering the org's expenses.
Difference is that people have no choice but to put money into pension funds.
elsergiovolador,
You don't understand pensions.
In the UK we pay taxes. National insurance (though not exclusively) is there to cover our pensions. It's not an investment. I've paid national insurance for over thirty years in order to pay the pensions of the people already receiving them. My pension will be covered by younger people, some of them not yet born - if I can manage to survive at least another 18 years... This is how governments cover their spending. We're living longer and having fewer children, so this is being corrected in richer countries by allowing more immigration and raising retirement ages.
We then have private pension schemes. Which we aren't forced to pay into. Which are regulated. They invest on the stock market, but they also have significant holdings of safer bonds. They are heavily regulated. In the UK we now opt people into these schemes by default, in order to nudge them into saving more, but nobody is forced to join.
You have literally described a Ponzi scheme.
No I haven't.
From the OED: Ponzi Scheme - a form of fraud in which belief in the success of a non-existent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.Origin
named after Charles Ponzi (died 1949), who carried out such a fraud (1919–20).
I don't pay my taxes as an investment. I do it in order to fund the government. And, of course, becuase they can lock me up if I don't. That funding pays for the stuff the government spends today.
So long as there are still people in the country in twenty years time, I hope that I'll get to draw a pension. The system's been working for the last 110 years. I'm forced to hope it'll continue to work for another forty.
But it's not a Ponzi scheme because it's not a fake investment. Ponzi IIRC claimed that he had a scheme to make money from foreign postal orders. And needed investors' money to make it work. There was no such scheme and he just paid a few people out of the next lot of people's money to "prove" it worked, while keeping the rest.
Government pensions work because the state is a continuously existing entity, expected to outlive its individual citizens. Government pensions are also not a scam, because nobody is lying to you about this. Governments openly admit this is how it works all the time.
Private pensions are a genuine investment where I entrust my money to a heavily regulated company, and they take a profit for holding it in various bonds and shares. It has risks, but hopefully in twenty years I'll have a big chunk of cash to spend on my retirement. Plus a governmetn pension to keep me in cat food and Werther's Originals.
I am guessing the victims of Ponzi schemes were trying to rationalise their spending in the similar way as you do.
Ponzi scheme is how variations of investment scams are called, in which returns are paid to existing investors from funds contributed by new investors, rather than from profit earned. (as in "I've paid national insurance for over thirty years in order to pay the pensions of the people already receiving them. My pension will be covered by younger people, some of them not yet born")
Whether there was a scheme generating some profit or not is irrelevant.
Whether a particular Ponzi scheme calls itself a Ponzi scheme openly (as in "Government openly admit this") is also irrelevant.
elsergiovolador,
Whether there was a scheme generating some profit or not is irrelevant.
Incorrect. A ponzi scheme is a pure fraud, where there's no underlying investment and a few early investors are paid in order to make it look real. If you have a scheme that actually generates profits as well, then it becomes a pyramid scheme or just a normal fraud. A pyramid scheme being where you get the victims to recruit your next victims for you.
The reason that government pensions aren't a ponzi scheme is that the country has an inexhaustible supply of taxpayers. In fact, each group of "investors" in this government "scam" have children who are then the next victims of the scheme. So it can go on for ever. What destroys ponzi and pyramid schemes is that they run out of victims. What makes governments work is that they've got most of the guns and control of an area of land where lots of people live and where lots of economic activity happens, that they can tax.
Now obviously there's a risk, this being a democracy, that the next generation can vote not to pay my pension. The bastards! With their long hair and their terrible music where you can't even hear the words... But there are two things working against that. Firstly, old people tend to vote more than young people, so they're likely to lose if they try. And also, if they vote to get rid of my pension, they're also voting away any hope of getting theirs. And they have to pay mine in order for theirs to happen. Unless we get a really cunning generation of young people who decide to vote to abolish our pensions, then when they get old vote to re-establish the pension scheme so they can get it...
This is also why fiat currencies generally work and crypto coins generally don't. Governments have longevity and the power to force people to pay them tax. Which means they have the ability to make promises of payment far into the future - with a high likelihood that they'll actually make them. Promises that will therefore be believed. The modern British state has a 350 year history of having a national debt which it has never once defaulted on. That gives it quite a good credit history.
The problem across the world is that the ratio of taxpayers per pensioner has been falling as people live longer and have fewer children
Sensible countries saw this coming and made investments for the future. Most english-speaking ones simply pretended this wasn't going to happen and told taxpayers to party on
The result is that GenXers are likely to face a pension eligibility age of 75, simply because there's no way pensions can cover them retiring at 65 - and it's likely to be means-tested too
mmm, weird, as gov have forced my company to enrol me in a personal pension.
look personal pensions are lying.
their sales wankers will make it look like you can retire nicely for X% per month of your income (normally around 10 to 30%) then tell you all these future promises (which are bollocks!).
if you die before retirement, it's all gone you got fucked.
if you live to retirement your then made to "convert the pension pot to an annuity" (another way to take another slice of that pot from you, you got mini-fucked).
Then unless you live for 25+ years, guess what they fucked you good!
In reality due to all the schemes to rip you off, you would need to put 50%+ of income on your pension.
So the moral is unless you are already rich/rather well off, a private pension will do shit all for you.
We then have private pension schemes. Which we aren't forced to pay into.
Under the pensions act 2008 in the UK your employer is required to deduct money from your salary and put it into a private pension scheme. If you don't have a pension scheme they are required to enroll you in one.
You can say that your "not forced" to pay into it, but that's dancing on the head of a needle; your employer is required to deduct the cost from your wages so you don't have any way of opting out, at least in the UK.
Under the pensions act 2008 in the UK your employer is required to deduct money from your salary and put it into a private pension scheme. If you don't have a pension scheme they are required to enroll you in one.
Yes. And if you don't want them to, they are also required by the same law to stop doing it. It is a scheme you are automatically opted in to, but can opt out of, in order to harness people's natural laziness to get them to save.
So no dancing on the head of any pins required. If you don't want it, don't sign up to it.
Also not a ponzi scheme by the way, because private pensions hold actual assets.
"We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto," said SEC chairman Gary Gensler in a statement.
You know, those two elements aren't necessarily contradictory and SBF was well-positioned to know that. Not that FTX wasn't a house of cards, but the crypto sector could, in fact, be so unsafe that it would make putting money into a Ponzi scheme look like a hedge.
/s
Maybe they should just apply the same rules to the crypto sector that already apply to casinos. There's a lot of commonality there:
- it exists outside of the conventional financial system
- it's an out-and-ouit gamble (ok: speculation)
- the house always wins
- organized crime takes a real interest in it
Hmmm.
"FTX isn't an anomaly. Its collapse isn't just a case of one corrupt guy stealing money. It's about an entire industry that refuses to comply with existing regulation, that thinks it's above the law."
Well, duh. The whole point of crypto currencies (would crypto money not be more accurate?) is to avoid the regulatory system. That's also why criminals love it, well, until their proceeds went up in smoke if they hadn't moved to Binance already.
Incidentally, the hearing had a moment of disbelief when it was reveleaved by the current caretaker that they had been doing their accounting (for as much as it existed) on Quickbooks..
Political parties are allowed to accept donations. 99% of the financial damage was done by _illegally_ siphoning investors’ money into other companies owned by the same gang. The interesting bit is where _those_ companies sent the money to. And of course take all their property unless it comes from legal income.
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