FTX was really obvious. I saw it before and lumped it in with the half dozen other scams I see every time I mess with crypto. The people scammed fall into two categories:
1) People who shouldn't have been using crypto at all because they can't handle it.
2) People deliberately misusing other people's money who did actually know better.
I think a large amount of the stolen funds fall into the second category.
The point they're making, I think, is that FTX bought various shitcoins from other people in exchange for USD. Value can disappear, but that's not what happened to the actual dollars they spent.
I'm not positive this whole thing was some kind of planned conspiracy, it just seems like idiocy and fraud catching up with them. I don't think any competent fraudster would get caught in such an embarrassing way.
Some of them do exit. There are many crypto pump-and-dump schemes where the project website is zombified, and the founders are MIA (and are probably sipping cocktails on a beach somewhere).
The big fish though... The FTX founder was described as being a gambling addict: he would take any risk as long as the outcome was statistically favorable. And I think this attitude was pervasive among many of the biggest crypto names. They were't looking for exits, they were looking to go even bigger because they can't help themselves.
"FTX fell apart not because of whatever possible fraud Bankman-Fried may have committed, but because a sell-off in the value of its own fake currency sparked a huge run on the bank, which FTX did not have the funds to meet. As a result, any crypto traders on an unregulated exchange have to be wondering now whether their money is safe."
A run on the bank wouldn't have mattered if there was no fraud. Funds were stolen and used to make losing bets.
Well, FTX is unique in the crypto space in that there has never been a loss of funds anywhere near the magnitude of this debacle.
Odd to me that anyone would look at a company that managed to lose billions of customer and investor dollars under extremely suspicious circumstances, and then react dismissively to credible allegations of fraud by framing it as an attempt to "heap scorn".
> FTX has dealt a catastrophic blow to crypto’s reputation
I've been in crypto since 2013 and people have been insulting crypto and everyone in it as scammers, I'm not sure how another centralized exchange stealing user funds is any diferent than all the past ones.
It's hard at this point for me to not blame crypto-the-technology and crypto-the-culture for the repeated and spectacular failures of crypto-the-industry. It's not like FTX was an isolated incident. It's becoming sort of a scapegoat for crypto enthusiasts because it was such a big deal, but practically everything that has come out of the crypto space since Bitcoin and Ethereum has been a grift to some degree or another.
Something about crypto quickly and irreparably drew the get-rich-quick crowd, and I don't think there's any coming back from that. Where that kind of person gathers, scams abound.
FTX was one of a biggest crypto exchanges (think - stock market), ran by bunch of smooth talking friends/lovers, who were more interested in playing games and Harry Potter than running a company.
They amassed hundreds of millions of dollars in investments, from serious companies (who were impressed by their recklessness) and billions of dollars in deposits from customers. They donated millions to politicians and spent even more on ads (including Super Bowl). They stole those money, and partially pocketed it/moved it to their hedge fund (which they managed on a principle of “you don’t need to know math or finance” and “risk management is dumb”) that lost majority of it and triggered their fall.
They did all of that, while being run with less financial and corporate discipline than a neighborhood dog walking business by a teenager.
I think it's safer to assume they saw the implosion of FTX and figured now was a good time to take the money and run. No crypto exchange deserves the benefit of the doubt in the court of public opinion; everybody is safer if they assume all crypto exchanges are thieving snakes.
At the very least, if you really want to be in on the crypto thing, keep the funny money yourself in your own wallet, and wait a few years/decades for government regulation to catch up before you trust any crypto exchange.
Except that FTX isn't "crypto" it is/was a centralised exchange, a company just like others. So whether you believe crypto itself is a scam or not, this is straight up old-style fraud from a company doing things they shouldn't, so not really the same thing.
Gox was always dodgy as shit, and FTX felt even more dodgy. Especially its bossman having a raging hardon for tradfi regulations.
> His big political donations, sports sponsorships, philanthropic funds. It looked to me like a person who believed in the idealism of crypto was fitting himself into the old world, and all of this lended credence to FTX being trustworthy.
All of that made FTX seem even less trustworthy to me tbh. Much, much less trustworthy.
> It is now clear that what happened at the FTX crypto exchange and the hedge fund Alameda Research involved a variety of conscious and intentional fraud intended to steal money from both users and investors [...] [T]he funds were sent to the intimately linked trading firm Alameda Research, where they were, it seems, simply gambled away. This is, in the simplest terms, theft at a nearly unprecedented scale
Cryptocurrencies are working just fine. FTX users didn't actually own any crypto. This is people giving away their money to a criminal business. The whole point of cryptocurrencies is that you don't need to trust a third party.
Of course one would assume he or his conspirators would do a better job, but maybe not if this busting out was initiated under time pressure.
Once again almost everything in cryptocurrency proves to be a scam.
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