One thing I don't understand is how did none of these employees _immediately_ jump ship once it became apparent that they would start using customer funds. These aren't dumb people, Ellison worked for Jane Street prior to FTX. Had I been in her position I would have written my resignation letter to Sam in a heartbeat once this became apparent (and probably another letter to the FBI/SEC)
A good trader should be skilled in mathematical thinking, comfortable with risk, and quick to react and make judgments in uncertain environments. The speaker also discusses the importance of handling emotions when trading and losing money, and notes that they have had to work on developing their emotional resilience: https://www.summarize.tech/www.youtube.com/watch?v=Qd2enI4Rv...
> A lot of times, these folks convince themselves that "they just need a bit more time to hit the big score."
Or look no further than SBF himself.
“I fucked up big multiple times,” Bankman-Fried wrote. “you know what was maybe my biggest single fuckup?” “The one thing everyone told me to do [...] chapter 11.” Bankman-Fried said that if he hadn’t filed for Chapter 11 bankruptcy, “everything would be ~70% fixed right now,” and “withdrawals would be opening up in a month with customers fully whole[0]
> These aren't dumb people, Ellison worked for Jane Street prior to FTX
I guess you'll have to uPdAtE yOuR pRiOrS.
In the interest of curiosity, in 2023, is it possible to hire 22 year olds and also maintain a flawless image of excellence? It seems unfair, but true, that the glow fades quickly as a company hires people who don't know anything only because they are still starting their careers.
LOL. One thing I’ve learned so far halfway through the middling Michael Lewis book is that the lives of people who talk in Bayesian jargon and obsess about Magic: The Gathering don’t make for exciting reading even if you have a world-class author and the best editors. Sometimes a boring person is just a boring person.
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that".
I don't agree with that guideline. I think people should be ruthlessly shamed for making comments on articles they haven't read. I will truly never understand the mindset of somebody who would venture into the comment section to discuss something they haven't read.
Is it relevant whether or not you agree with a guideline? This site is provided to its users under the terms its owners decide to put forth. This is one of them. I think it says something about a person when they read that guideline and say "yeah but I don't wanna, so I'm ignoring that one."
And because you can't understand something, you will break the agreements of the community. I think people who look at collective agreements and ignore them should be ruthlessly shamed for disconnecting from the community and deciding their internal discomfort is the thing that needs to be addressed by the community in that moment.
I will never understand the mindset of someone who wants to be a part of community but then doesn't want to follow the agreements of the community. Why are you here? Just to make sure people know that You Don't Approve?
You're entitled to your opinion. Personally I think guidelines like "be kind" and "avoid generic tangents" are far more important. Your comment is completely focused on targeting me. I was trying to have a conversation about what's in the article under discussion.
You weren't trying to have a conversion. By your own admission, you were trying to "ruthlessly shame". If you think you can have conversations with people you are ruthlessly shaming, perhaps this interaction can demonstrate that those are radically different things.
You could, and should in the future, easily rephrase your comment to "In the article it says the person recording did quit within 24 hours." This way you preserve the essence of your comment without violating community rules. This would also be kind, extending the benefit of the doubt to others, and avoid tangents, like this one, about the basic rules.
Drappi quit within 24 hours of the meeting, he testified Thursday. Binance ultimately did not buy FTX, which declared bankruptcy when Bankman-Fried relinquished control two days after the Alameda all-hands meeting.
They did and recorded the whole thing. In a few more days the game was up.
I think _fat_santa was referring to the earlier period when the fraud began, but of course this call shows that most of them did not know.
Some did and knowingly participated in the fraud. Some knew about this or other shady practices and left the firm, as far back as 2019 IIRC. Lots of different responses, but unfortunately no leakers.
There eventually was one leak. That's what ended the whole thing. There was a coindesk article with a leaked image of their balance sheet. CZ commented on it and things went downhill from there.
If you're wondering why Ellison didn't quit, it's probably a combination of personal conflicts of interest and some hope that they could Martingale their way out of it. It seems like most of the rank and file didn't know/did in fact resign when it was clear that they were working for fraudsters.
Funnily enough, Matt Levine gives a decent argument towards their JS background giving them bad instincts as much as it helped build FTX[^1].
> hope that they could Martingale their way out of it
with this
> their JS background giving them bad instincts
Surely, the instincts they got from JS is that you almost surely can't Martingale your way out of it if your trading expected value is negative which, if we don't mention the fraud for a second, seems to be what their biggest problem was.
However, if you take the formula, assign yourself a positive trading edge and a large positive expected value you can justify placing whatever bet you want as a mathematical certainty.
The most un-spoken about thing in all this is how exactly they went from +100bn to -8bn in a year.
I think that assumes that SBF and/or Ellison (I'm a bit less convinced Ellison thought they could trade their way out of the hole) saw negative expected value.
I'm more inclined to believe that SBF, who's personal philosophy was a highschool-level understanding of Utilitarianism, completely misevaluated the EV Alameda + FTX's operation[^1], and that he took the wrong lesson away from JS -- that you can bet it all on something with +EV and if it doesn't work out, better luck next time.
There's his interview with Tyler Cohen that's somewhat particularly telling[^2]:
>And in fact it seems like Bankman-Fried, maybe more than anybody else I’ve ever heard of, really did think that way. In March 2022, Tyler Cowen asked him:
>>COWEN: Should a Benthamite be risk-neutral with regard to social welfare?
>>BANKMAN-FRIED: Yes, that I feel very strongly about.
>>COWEN: Okay, but let’s say there’s a game: 51 percent, you double the Earth out somewhere else; 49 percent, it all disappears. Would you play that game? And would you keep on playing that, double or nothing?
>And Bankman-Fried said yes! And Cowen went on:
>>COWEN: Then you keep on playing the game. So, what’s the chance we’re left with anything? Don’t I just St. Petersburg paradox you into nonexistence?
>>BANKMAN-FRIED: Well, not necessarily. Maybe you St. Petersburg paradox into an enormously valuable existence. That’s the other option.
>That’s insane! You keep flipping a slightly weighted coin. Every time it comes up heads, the population of humans in the universe doubles. If it comes up tails
once, every human in the universe is dead forever. How many times would you flip? Bankman-Fried’s answer was … as many times as it takes to kill everyone? Okay! Great! Nice utilitarianism you’ve got there.
So, while I don't disagree that if you gave SBF or Ellison or anyone at Alameda a trade w/ obvious -EV that they'd take it. But I also think that what we see as clearly -EV was not being calculated as such at Alameda+FTX. I'm most inclined to believe that they saw it as either making trillions and saving the world or _not risking enough_ and not saving the world.
[^1]: I don't know, maybe by factoring in a chance they solve AI extinction (lmao) by earning a trillion dollars and funding the right research groups, overestimating the chance that their bets pay off due to early success, or betting that using customer funds to fuel mass adoption which is key to making both operations profitable.
Short, snide answer, wouldn't normally chalk it up to just that, but I feel like given all we've seen and read from this, that's a fair assessment of this whole debacle.
She might have thought she could fix it before it became a big problem. At some point it becomes like slowly boiling a frog, where you don't notice how big the problem is, or you rationalize it. Or it could just be the case that she didn't think she would get caught, and frankly she might not have if not for that pesky CZ tanking their FTX tokens.
Sure, but those millions will do you no good when you relatively inevitably are sitting in jail and have forfeited those sums and more in fines & restitution.
These are supposed to be intelligent people, yet they seem to not realize that there are also intelligent people on the investigation/prosecution side, and/or that events (e.g., crash from organic causes or competitors' interference) can make obvious their crimes?
Maybe not so intelligent, and certainly not ethical.
Given how many scams succeed out in the open, and how little of rich people actually face consequences for running them, I can understand how someone may decide to roll the dice.
Yes, I can certainly understand it for someone who has a poor situation and few prospects
But for people who have a good socio-economic background, great education, and ability to make an honest living, it is not only foolish, but reprehensible to decide instead to harm others for a living. Disgusting.
I agree, it's hard for me to understand why someone with good prospects would be dishonest, except that IMO greed knows no bounds. That, and I'm guessing most of these people are psychopaths, if tested (there is a test for it: it's a brain abnormality).
You see billionaires' unbounded greed all the time, for example:
As another user pointed out - Elizabeth Holmes got 11 years. What are the odds that Caroline won't be out before she's 40 and still have millions in the bank?
> Ellison worked for Jane Street prior to FTX. Had I been in her position I would have
How did they come to "start using customer funds"? Prices went down and they lost a lot of money, likely in the region of $20bn-$40bn in the 6 months before they went for the customer funds.
They were "buying the dip" and it never came, only the next move down was with even bigger positions and even bigger losses.
She knew exactly what she was doing - she might actually be more guilty than SBF.
Ellison thought crypto prices would rise again, allowing Alameda to balance things out, but that "did not work out," she responded, before giggling.
