People will keep focusing on the individual here but surely they should be questioning the system? In particular the VC's as most of this was actually institutional money.
How on earth did he get £16Billion? Well turns out he went to Stanford same class as Theranos and his Girlfriend whom he made head of the trading arm also went there. She's the daughter of an MIT Econ Professor. It's quite clear FTX only got started because of political connections and back door deals. Sadly this won't be the wake up call that we need to bring back some sort of meritocracy to American society.
A lot of very wealthy people put money into the FTX financing. If there wasn't a major downturn, probably FTX never would have gone under. Us plebeians get a rare view into how business success commonly happens (a network of people force it to happen). Its similar to the epstein scandal, a rare view into another world far removed from the common worker.
Meritocracy isn't a full on illusion, but we also don't have enough data and transparency into modern power structures.
I don't think being an econ professor is quite the position of power you think it is. Source: I have many friends who are professors including econ professors.
The Wikipedia pages of all of these people only relates to their relationship to FTX, they aren't running US fiscal policy.
In a financial services firm I worked for, I had to help this intern (maybe 19, 20 years old). She was well dressed, well spoken etc, but didn't seem too keen on doing any actual work.
Later I found out that she was the kid of a VP who also worked there. Must be nice to have well-connected parents
> Sadly this won't be the wake up call that we need to bring back some sort of meritocracy to American society.
People "investing" into a cryptocoin because "value goes up" weren't being part of a meritocracy what so ever.
There was never any true value to FTT. Hell, there's barely any value to BTC or ETH as it is and its been 14 years of looking for a valid use case. The little value it has is in black market, and perpetuating fraudsters like SBF.
Sitting around with $100,000, doing nothing, and hoping to get $200,000 or more later isn't really a meritocracy at all.
He owns a large stake of FTX, which turned out to be worth zero, and he owns a large state of Alameda Research, which turned out to be worth zero as well.
He has some other assets, but according to reports, he also has a lot of debt.
His real net worth could easily be negative. That is lower than that homeless guy living under the bridge.
Issue isn’t that he got billions in investment. He didn’t raise money from public markets so he stole money from the rich who had the means to actually due diligence but never did. Still blows my mind that he was caught playing league of legends on a pitch call and Sequoia still invested money in him. That was a clear view into his maturity level and seriousness. Would you hire someone who was gaming during the interview? If I was an LP, I would be asking a lot of questions and demanding accountability.
The biggest issue is that he stole money from his customers. Not people who had the means to due real diligence.
> Sadly this won't be the wake up call that we need to bring back some sort of meritocracy to American society.
Genuine question: are we 100% sure that this society was ever meritocratic? How would we measure `meritocracy` so that we can compare year-to-year and decade-to-decade?
> Sadly this won't be the wake up call that we need to bring back some sort of meritocracy to American society.
Please someone define meritocracy and describe how that will save us.
Here is a definition I googled: "a ruling or influential class of educated or skilled people."
SBF seems to fulfill the requirements. He went to MIT and studied physics and was a quant at Jane street (He was literally born on Stanford Campus to two Stanford professors). Logic being that if you score high on tests and go to a good school then you are up for the task. There are even papers that state that the higher your IQ the more moral you are. If you work yourself to death than you have earned the merit (he even claims to have slept in his office). He is even a vegan and a committed altruist. You could not get much better on paper.
All of these criminals have merit. Liz Truss and Boris Johnson all read at Oxford. The supreme court of the US are mostly from Yale and Harvard. Trump went to UPenn. Many of the people scamming us today work really long hours and have gone to really good schools.
The institutional investors should have put some people of their collective choosing on the board. These people should have had (non-racy) financial backgrounds. (The board of Theranos, notoriously, contained `great and good' people, but not with the right backgrounds to scrutinise what was (not) going on.)
Why only the system? In every fraud there are thousands of people working in these same companies and afterwards we only hear "We didn't know anything.". The CEO takes a deal and everyone walks.
Based on an interview with SBF, he made a ton (billions?) early on in the crypto days by arbitraging BTC/USD exchanges (e.g. one exchange was selling BTC at $200 and another was selling BTC at $210, so he took the difference). It's easier to throw £16B at someone who had already built the algo that got them personally to, say, $1B (in a very short amount of time).
How do these magazines write glowing reviews of people like this Sam kid? I understand it is hard to do due diligence on entities that are purposefully opaque etc. But shouldn't these magazines question everything, isn't that the very definition of a journalist's job, before writing reviews (good or bad)? They did the same thing with Holmes. And many more examples.
Or do they just do some light work, like a 12 year old school boy does for his class presentation at the last minute, and turn in their stories and move on to the next story?
A lot of tech coverage is just fawning hagiography rather than societally useful critical journalism, and a lot of people involved in tech seem to prefer it that way judging by their public words and actions - "don't question me - I'm changing the world!" The decline in ad revenues for papers and lack of employment opportunities for serious journalists doesn't help.
Ok, so who wants to work with me on an old-school, question-everything, due-diligence, _real_ journalism newspaper. Just think, we could sell to the entire HN market!
Like a lot of frauds, the ‘crazy Eddie’ fraud is periodized into phases were first they tried to understate income (to avoid taxes) and then later overstate income (to increase the value of a public company) and then had to work harder and harder to hide the fraud until…
Many frauds start out as a legitimate business or idea that simply gets taken too far through some combination of greed, loose morals, and overconfidence. Once the ball gets rolling, money begins pouring in, and a certain amount of power is obtained it becomes difficult to stop the train.
People will do just about anything they can to ensure the money and power continue indefinitely.
This is at the root of many frauds I've seen in recent decades. In other words, most of these frauds are actually Crimes of Opportunity.
Sounds like this is really an argument for transparency. If people could see what what going on with Krueger or SBF's shops, they wouldn't have invested in them.
Insightful quotes from the article I annotated to my hypothes.is :
> People will do just about anything they can to ensure the money and power continue indefinitely.
> When technology moves forward by leaps and bounds, as it did in the first part of the 20th century, people prefer betting on the future more than betting on the past.
From comments on this thread :
> Us plebeians get a rare view into how business success commonly happens (a network of people force it to happen).
So-called smart money strikes again. Thernaos, Nikola, WeWork and now FTX (I'm sure I'm missing many and there are some other less obvious ones like Carvana and Opendoor). Billions and billions of dollars were funneled into these obvious scams all while being cheered on by celebrity hedge funders (likes of Cramer, Mr. Clown...etc.) and yet there are zero consequences for anyone involved.
Based on what I have read, I think Fried should be in prison... but I wouldnt be surprised some of the many he robbed arent trying to find him and take revenge...
I would also nominate financiers who enable him and the other mind games being played on society.
Empowering people good with math is not much different than empowering people good with religious screed. They’re still fallible meat bags.
We keep buying into ephemeral gibberish. When one of these smart people can themselves rewrite immutable laws of reality and literally move planet, I’ll be impressed. Reading a machines manual and making it do is not that impressive.
> One of his closest colleagues said, “There was an odd air of greatness about Ivar. I think he could get people to do anything. They fell for him, they couldn’t resist his peculiar charm and magnetism.”
> Which brings us to Sam Bankman Fried
Sounds actually a lot more like Elon Musk. But I get the comparison - public companies are a lot more regulated and in the open now than back then so it's not a good place for this kind of fraud. Crypto on the other hand is.
Look, I don't get why we're still talking about this. There's no new information and it's just boring. HN is supposed to be about true intellectual curiosity, not just gawking at the latest dumpster fire.
Because crypto.com is melting down right now, and people want to understand why. We have to go back to SBF from last week to understand the fear that is seeping in over crypto.com.
[+] [-] Cymrukicks|3 years ago|reply
[+] [-] ldjkfkdsjnv|3 years ago|reply
Meritocracy isn't a full on illusion, but we also don't have enough data and transparency into modern power structures.
[+] [-] peter422|3 years ago|reply
The Wikipedia pages of all of these people only relates to their relationship to FTX, they aren't running US fiscal policy.
[+] [-] akudha|3 years ago|reply
Later I found out that she was the kid of a VP who also worked there. Must be nice to have well-connected parents
[+] [-] dragontamer|3 years ago|reply
People "investing" into a cryptocoin because "value goes up" weren't being part of a meritocracy what so ever.
There was never any true value to FTT. Hell, there's barely any value to BTC or ETH as it is and its been 14 years of looking for a valid use case. The little value it has is in black market, and perpetuating fraudsters like SBF.
Sitting around with $100,000, doing nothing, and hoping to get $200,000 or more later isn't really a meritocracy at all.
[+] [-] oldgradstudent|3 years ago|reply
He never had $16B. That was just bad reporting.
He owns a large stake of FTX, which turned out to be worth zero, and he owns a large state of Alameda Research, which turned out to be worth zero as well.
He has some other assets, but according to reports, he also has a lot of debt.
His real net worth could easily be negative. That is lower than that homeless guy living under the bridge.
[+] [-] adrr|3 years ago|reply
The biggest issue is that he stole money from his customers. Not people who had the means to due real diligence.
[+] [-] _jayhack_|3 years ago|reply
[+] [-] _jal|3 years ago|reply
You can say this about many, many companies.
> Sadly this won't be the wake up call that we need to bring back some sort of meritocracy
What date range are you pointing to here for these good-ole'-days, when meritocracy was real and class, race and connections didn't matter?
[+] [-] nz|3 years ago|reply
Genuine question: are we 100% sure that this society was ever meritocratic? How would we measure `meritocracy` so that we can compare year-to-year and decade-to-decade?
[+] [-] spicymaki|3 years ago|reply
Please someone define meritocracy and describe how that will save us.
Here is a definition I googled: "a ruling or influential class of educated or skilled people."
SBF seems to fulfill the requirements. He went to MIT and studied physics and was a quant at Jane street (He was literally born on Stanford Campus to two Stanford professors). Logic being that if you score high on tests and go to a good school then you are up for the task. There are even papers that state that the higher your IQ the more moral you are. If you work yourself to death than you have earned the merit (he even claims to have slept in his office). He is even a vegan and a committed altruist. You could not get much better on paper.
All of these criminals have merit. Liz Truss and Boris Johnson all read at Oxford. The supreme court of the US are mostly from Yale and Harvard. Trump went to UPenn. Many of the people scamming us today work really long hours and have gone to really good schools.
[+] [-] vinaygaba|3 years ago|reply
I think this tweet really explains how he was able to raise a ridiculous amount of capital so easily - https://twitter.com/vinaygaba/status/1591822398894247946
[+] [-] parenthesis|3 years ago|reply
[+] [-] jimmydddd|3 years ago|reply
[+] [-] theCrowing|3 years ago|reply
[+] [-] spicyusername|3 years ago|reply
Are you sure we ever had one?
[+] [-] boppo1|3 years ago|reply
Let's go a step up the ladder and blame ZIRP/LIRP for forcing liquidity into a market with nowhere for it to find a real return.
[+] [-] unknown|3 years ago|reply
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[+] [-] misiti3780|3 years ago|reply
[+] [-] waihtis|3 years ago|reply
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[+] [-] chrisgd|3 years ago|reply
[+] [-] mbesto|3 years ago|reply
[+] [-] akudha|3 years ago|reply
Or do they just do some light work, like a 12 year old school boy does for his class presentation at the last minute, and turn in their stories and move on to the next story?
[+] [-] tomdell|3 years ago|reply
[+] [-] bmitc|3 years ago|reply
[+] [-] SV_BubbleTime|3 years ago|reply
You think the media wasn’t going to write glowing reviews?
[+] [-] unknown|3 years ago|reply
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[+] [-] Miserlou57|3 years ago|reply
[+] [-] bongoman37|3 years ago|reply
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[+] [-] PaulHoule|3 years ago|reply
https://pacfe.org/images/meeting/100914/the_crazy_eddie_frau...
Like a lot of frauds, the ‘crazy Eddie’ fraud is periodized into phases were first they tried to understate income (to avoid taxes) and then later overstate income (to increase the value of a public company) and then had to work harder and harder to hide the fraud until…
[+] [-] perihelions|3 years ago|reply
https://en.wikipedia.org/wiki/Ivar_Kreuger#Financial_innovat... ("Financial innovations and financial engineering")
[+] [-] SilasX|3 years ago|reply
[+] [-] gurjeet|3 years ago|reply
https://en.wikipedia.org/wiki/Crime_of_opportunity
[+] [-] lordnacho|3 years ago|reply
[+] [-] csours|3 years ago|reply
1. You have decided to reject rational criticism in favor of cynically taking apparent gains.
2. Your mind has a reduced capacity for rational criticism because of the euphoria of a situation.
I think it's pretty hard to say what's happening in the moment, and after the fact it will always look like #1 to the general public.
[+] [-] udkl|3 years ago|reply
> People will do just about anything they can to ensure the money and power continue indefinitely.
> When technology moves forward by leaps and bounds, as it did in the first part of the 20th century, people prefer betting on the future more than betting on the past.
From comments on this thread : > Us plebeians get a rare view into how business success commonly happens (a network of people force it to happen).
[+] [-] textech|3 years ago|reply
[+] [-] unknown|3 years ago|reply
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[+] [-] mjmsmith|3 years ago|reply
[+] [-] samstave|3 years ago|reply
[+] [-] ahMath8|3 years ago|reply
Empowering people good with math is not much different than empowering people good with religious screed. They’re still fallible meat bags.
We keep buying into ephemeral gibberish. When one of these smart people can themselves rewrite immutable laws of reality and literally move planet, I’ll be impressed. Reading a machines manual and making it do is not that impressive.
[+] [-] mistermann|3 years ago|reply
[+] [-] locallost|3 years ago|reply
> Which brings us to Sam Bankman Fried
Sounds actually a lot more like Elon Musk. But I get the comparison - public companies are a lot more regulated and in the open now than back then so it's not a good place for this kind of fraud. Crypto on the other hand is.
[+] [-] kyleblarson|3 years ago|reply
[+] [-] boppo1|3 years ago|reply
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[+] [-] dragontamer|3 years ago|reply