New CEO Says FTX Suffered 'Complete Failure of Corporate Controls' (wsj.com) 128
FTX suffered a "complete failure of corporate controls" according to the company's new chief executive who was appointed as part of the crypto exchange's bankruptcy process. From a report: In a filing [PDF] to federal bankruptcy court, John J. Ray, who has helped oversee some of the biggest bankruptcies ever, including Enron's, said despite his 40 years in the business of restructuring companies, he's never seen anything as bad as FTX.
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented."
"Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented."
Government regulations is a COMMIE Thing!!11!!!1 (Score:1, Troll)
Re: Government regulations is a COMMIE Thing!!11!! (Score:2)
If by suffered a complete failure of government controls they mean laundered taxpayer money through rhe Ukraine conflict to enrich establishment politicians, mostly democrats but quite a few Republicans as well, then yes, there was a failure of corporate controls.
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FTX's website looked well polished. Wait, you're saying something that looks nice and roundy can be dangerous as fuck?
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Regulations and enforcement don't make things run smoothly when you have determined conmen avoiding, circumventing, flouting etc. regulations.
yeah, hes right, lets get rid of regulations, and while were at it, the laws of the land too!
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Sarcastically taking any extreme position isn't cute or funny you nutsack. The point isn't to get rid of regulations, it's that they have to be enforced, and that becomes harder with an adversary determined to flout them.
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They were mostly based outside of the US on purpose to avoid regulations. FTX us based exchange is interesting. I don't understand what happened there, but there is a real lack of regulations even within the united states. Also, what the hell were sequoia and Mr wonderful and all the other investors like the Canadian teachers pension fund doing, there were huge red flags that caused A16z and others to pass on investing. I mean if you're too scammy for A16z, I just don't know why anyone would fund them.
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We see this thing with pensions and municipalities every so often when there's a financial scandal. Big example would be the savings and loan snafu. What you get is a big organization that isn't financial hiring some buy to manage the funds. Rather than stick other people's money into a reasonable index fund, the guys think that they can "beat" the market and start taking risky actions. Inevitably it blows up in their faces. There's not much oversight because the larger organization doesn't understand th
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He started the current round of tussle with his archenemy because he was buying politicians to make regulation that favors him against his Chinese competitor.
Three letters (Score:5, Funny)
Looks like the new management is using the first of the three letters.
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How long 'til reorganizing, what do you think?
shows how much of an scam that crypto is! (Score:2)
shows how much of an scam that crypto is.
Government regulations are really going to come down hard on what is left of the crypto system.
No, it doesn't. Calm your tits and keep your wits. (Score:1)
This shows that "crypto" (meaning cryptocurrencies) is a scam about as much that the dotcom bubble imploding showed us how the internet is a scam.
It does show just what a house of cards FTX was and that the CEO apparently wilfully built it that way, on his mommy+daddy's experience as and with lobbyists. And he just ran away with 10 bn dollars.
"This is my company and I'll run it without oversight" says this guy. 'Here, have $500 million, valuing the company at 32 bn' say investors. That makes no sense, yet
Re:No, it doesn't. Calm your tits and keep your wi (Score:4, Insightful)
FTX shows how you can still obscure money moments and company operations even in a world where everyone can see how much you have in your wallet and where you spend your money. Some had previously said things like FTX' collapse were impossible given the transparency at the core of crypto.
web3isgoinggreat! (Score:2)
Re:shows how much of an scam that crypto is! (Score:4, Insightful)
shows how much of an scam that crypto is.
While crypto is a scam, this shows nothing of the sort. What it does show is that irresponsible inexperienced people suck at running companies. The only thing unique here is how the crypto boom propelled this motley crew of non-business people to the market capitalisation that they had. Otherwise their story is very similar to many bankruptcies. The difference being is most companies fail before they get to hold this much money.
Re:shows how much of an scam that crypto is! (Score:5, Insightful)
Sure, they got the money by offering 15% interest, issuing their own "token" which they inflated the value of and borrowed against. Then when it started going bad "someone" mysteriously walked off with a billionish dollars.
Just inexperience, totally not a scam.
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And surprisingly similar to the guy who minted his own coin, arranged to have someone buy one for a dollar, then claimed to be a trillionaire. It's hard to believe anyone who bought into this could have done much research first.
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Did they walk off with a billion, or did the value just vanish? The value in FTX was all imaginary; until you can actually sell the assets the speculative value is still imaginary.
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The value in FTX wasn't all imaginary. They were an exchange, which means people sent them US dollars. The missing money is "customer funds." Naturally you can't find out how many, or what the composition of of it was, but if you were running a Ponzi scheme in the Bahamas would you stash a nest egg of (a) your own bullshit token, (b) Bitcoin or Etherium or (c) the hard currency your wonderful customers sent you?
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I thought they used their other company to artificially inflate the price of their own token, the FTT. Then that value collapsed. If they converted customers XYZCoin into other assets, then it wasn't really an exchange. If they have liquidity problems, then they're NOT an exchange. An exchange should hold the assets, but not invest them, and then the exchange only makes money from transaction fees. Otherwise if they're "investing" the assets then they're suddenly just the same as a bank, even though it
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They did that. Most of their $100 billion or whatever valuation was nonsense, but there was real money put in. Certainly customers gave them real money. They also borrowed against their made-up token, but it's hard to tell how much of that was actual money and how much came from actual outside sources. A lot of big companies apparently put quite a bit of money in though, and I expect their Super Bowl ads and celebrity endorsements netted them some from the average man too.
Apparently what happened is that th
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...if you were running a Ponzi scheme in the Bahamas would you stash a nest egg of (a) your own bullshit token, (b) Bitcoin or Etherium or (c) the hard currency your wonderful customers sent you?
Well, can't say much for the twentysomething nerd pimp many trusted with their funds, but I'm certainly not going to assume he was smart enough for (c), given most were quite punch-drunk on their own dog food. After all, he was a DNC philanthropist worth tens of billions...a month ago.
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That's my point. It's easy to say "lol, nerd pimp." Except that nerd pimp is the son of a couple law professors with four years experience at a real trading firm.
Hell, maybe he donated to the Democrats so super polarized right-wing Americans would get distracted by that. His co-ceo donated to the Republicans. Gotta make sure both sides are watching your left hand while you dip your right in their pocket.
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"offering 15% interest"
TANSTAAFL
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Just inexperience, totally not a scam.
Literally nothing about the article is criticising them for being a scam or being one. Whether it is a scam or not has zero to do with the comments made by the bankruptcy administrator.
We get it, you have a hateboner that causes you to jizz every time you see the word crypto, but try to follow the damn conversation without prematurely running your mouth.
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Market cap also does not mean that they have this much money. Their ability to spend is always much much less. What market capitalization means is that you might be worth that much *if* you can sell all the assets at the same price without it dropping along the way. In reality, as soon as you start cashing out the price will fall.
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I said it once and I'll say it again. The best way to make money in crypto is to start an exchange, then at some point vanish in the night with it.
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Tell that to Jimmy Hoffa.
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Crypto had its phases. Early on, you could do an ICO with a bunch of pre-mined stuff, wait until people bought in, then sold out and walked off. Then came the "pump clubs". Now, it is about pulling the rug and taking what stored value is tucked away in exchanges, and the way they do it can be insanely complex, just for obfuscation's sake (this coin wrapped in this other coin bridged to this blockchain... etc.)
Wonder what the next phase will be. I'm glad that banks didn't add a ton of exchange securities
Re:shows how much of an scam that crypto is! (Score:4, Insightful)
shows how much of an scam that crypto is.
Not really. Like Enron, it simply shows that a hot company with a charismatic leader can convince a lot of people to give him lots of money for a product that he really doesn't understand, and management practices that were negligent to the point of criminality. These guys are cultish Steve Jobs wannabes, but mostly push money from one place to another.
See also: WeWork
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Crypto is fine, it's putting your money overseas to dodge taxes that gets you fucked. The best scams target greedy victims who are willing to break the law to profit.
They had controls? (Score:4, Interesting)
I somehow doubt that. Maybe they had some document somewhere that got determinedly ignored.
Also "unsophisticated and potentially compromised individuals" sounds pretty much like the standard situation for the crypto-scammers.
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I'm not sure about that "unsophisticated" part. That really seems more as if it applies to the "customers".
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They appear to have had no trace of an exit strategy for when things fell apart; that suggests that they did not realize that with their setup things would inevitably fall apart. That's pretty "unsophisticated."
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Indeed. Fanatical belief (i.e. not even realizing there is the possibility of it going differently) in success is quite unsophisticated. Note that this is not a lack of raw intelligence, it is a lack of wisdom and refinement.
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Someone apparently socked away a billion dollars, then swiped another half billion from the corporate corpse. Sounds like a pretty good exit strategy. Even if somene goes to jail for a few years, it's still Lee family level scheming.
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Except that tracing money on the blockchain has gotten really good. Not cheap, but for larger sums entirely worthwhile. The assholes will go to prison and will have to give the money back in addition.
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The 500 mil that was "hacked" looks like it's become Etherium, but there's still a billion or two that seems to be unaccounted for. FTX was an exchange, a lot of customers gave them cash. Bankman-Fried's parents are both lawyers, his brother was a stock trader, he worked himself for four years in finance, and he knew enough to operate in the Bahamas. It's entirely possible some of those US dollars took a little hop over to the Cayman islands, either in his suitcase or someone else's.
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Do you have any idea how much a billion dollars weight? If you do $100 bills, it is about 10 metric tons. Getting them in the first place requires your bank to put in a rather large order for the bills and has to organize rather elaborate and expensive transport _and_ will likely face questions itself on that order already. Cash transfers of this size are nocely traceable, including the physical transport, even if the bills now are stored in some basement.
Also, have you seen how arrogant and half-assed this
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The "controls" that were in place:
Rule #1: Operate out of the Bahamas.
----- end of document ----
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Nice! If all control systems were this simple, I would have an easy job as auditor! Just report them directly to the regulator and be done with it ;-)
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It's modded flamebait because it's flamebait. What he's implying is a unique case, and bitching and moaning how corrupt the Dems are because of it, happens every day on both sides of the aisle. How hard to you have to rack your brain to find a special interest group that shoves sacks of money into every right-leaning politician that will listen?
Don't think those conservative special interest groups ended up costing investors a cool billion while wiping out tens of billions in market value using a nerd pimp running a Bahamian crypto scam that shit the bankruptcy bed mere days after co-funding an American political party's election with George "Sacks" Soros. Tends to make me wonder just how far you had to shove your head up there to refuse to see the difference here.
We wish it was only the usual money-sack Donor Class buying elections that were lef
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Felt I needed to give you something other than facts
You say that like everything you've said in these various posts have been fact based. Since it's pretty obvious you're not after any soft of a constructive conversation, I'm not going to bother dignifying the rest of your drivel with any sort of response. Cheers dude.
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Yeah, I didn't think you had any sort of actual fucking response to my fact-based post.
Par for the course within the Hipocrisy party. Cheers. You earned it.
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Too the moon!
Is that a spelling error or an insider joke like "Hodl!" ?
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Yes.
(It was a spelling error, but after posting, I saw it and laughed out loud, because so many tweets & discord posts are notorious for bad spelling.)
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https://www.politico.com/news/... [politico.com]
just after a billion went missing from FTX...
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You dumb motherfucker. The donations were made last year you illiterate bastard.
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https://en.wikipedia.org/wiki/... [wikipedia.org]
No, the DNC. But I am pretty sure you already knew that.
What I find funny is, he was donating to the exact people who would push for more regulations, while touting how horrible regulation is.
Regulations (Score:5, Insightful)
People always tend to yell about regulations and then we're served a prime example of why they exist in the first place.
to the concentration of control in the hands of a very small group
When you learn about common elements of fraud, this is one of those things that pops up a lot. That isn't to say that small investor groups are all scams, but that small groups do indeed make it easier to do very underhanded things unseen and unnoticed. 17 CFR Chapter II goes to great lengths to describe and outline the regulations required for investment advisors and firms.
F–k regulators. They make everything worse. They don’t protect customers at all
That's from Bankman-Fried in response to Chapter 11 and how he regrets filing such. And he may take this view solely because he's currently sitting in the Bahamas away from the noise currently on-going, but that protection is shielding him from potentially worse outcomes if individual investors started going after him. "Oops, I messed up my books and had unbalanced sheets" isn't a good excuse to investors finding out you were running a Ponzi scheme. He may begin to sober his stance if he finds himself being extradited from the Bahamas, but that greatly depends on how the bankruptcy court wishes to more forward with this filing.
I know everyone bemoans regulations, but every regulation wasn't the fevered dream of some bureaucrat. Every regulation is derived from some real world example that happened and the government wishes for that thing to not happen again. But like everything, they are not perfect the first time around and no one should pretend we have perfect regulations. They are like anything dealing with authority to rule over the people, they must keep up with the state of society. But from the court filing, FTX was exactly what everyone who wishes for complete deregulation could hope for. But like anything that turns its nose up to regulatory power, it becomes a breeding ground for shady behavior. Basic principals for good investment governance and oversight was ignored in the pursuit of fast money.
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... small groups do indeed make it easier to do very underhanded things unseen and unnoticed.
Or not paying attention to proper segregation of duties within a company. I know this sounds buzz-wordy, but not paying attention to segregation of duties opens the door wide for fraud.
Years ago, I worked at a company where a newly-hired financial underlying had the ability to approve purchase orders and payments. If this isn't ringing alarm bells in your head right now, I'll spell it out: A person within the organization had the ability to create a purchase order (ie. authorization for the company to purc
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"Oops, I messed up my books and had unbalanced sheets" isn't a good excuse to investors finding out you were running a Ponzi scheme. He may begin to sober his stance if he finds himself being extradited from the Bahamas, but that greatly depends on how the bankruptcy court wishes to more forward with this filing.
There were upwards of a million investors in FTX. And we're already well aware of some high-profile ones. Kinda doubt the rest of the list is full of pushovers.
He might find himself ironically needing the very protection he intends to run away from. When you lose that much money, you better hope your lawyer is Jason Borne.
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The problem is the regulations are always radically unevenly applied.
Bankman is a perfect example of being born with a silver spoon in hand. He not only had connection to begin with but connections that know EXACTLY how best to exploit regulatory weakness.
For most of us knowing which international jurisdiction to go shopping for a favorable regulatory regime is difficult, to say nothing of having the contacts to set it up a corporation there. Its well out of reach for your average kid from Nebraska; but if
This is an example of utter regulation failure (Score:2, Insightful)
People always tend to yell about regulations and then we're served a prime example of why they exist in the first place.
Oh really? Because from where I sit this company broke MANY regulations, for a long time and nothing happened at all. The previous owner is still free, and will probably never even go to jail.
So what good were regulations? How many piles of regulations must you add before you realize companies will always be able to bribe the regulators to overlook things?
I will not worship your false g
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Because from where I sit this company broke MANY regulations, for a long time and nothing happened at all
And he has clearly stated that he'd still be robbing people blind.
The previous owner is still free
Yes, because people are innocent until proven guilty. And investigation into fraud has been opened by the DoJ. He will have a date in court. That is how our legal system works.
will probably never even go to jail
That's up to the prosecution to determine if restitution, jail, or a combination of both serves the best interest of those robbed. Our criminal system seeks to provide recompense to those who are injured. This isn't punish the person until everyone feels some catha
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An org for patsies (Score:2)
I'd like to offer up a theory that Sam Bankman-fraud is just a patsy for a crime ring who knows how to manipulate "golden image" wunderkinds into creating a farcical company that somehow seemed to gobble up a huge marketshare of a criminally-oriented, unregulated industry in an implausibly fast timeline. I bet billions were siphoned off, and the bank man took the fall.
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Yeah we're talking about a lot of $$ here, I wonder if "regulators" are really his biggest concern
No they are not. To your point, his biggest concern is securing Jason Borne as his lawyer.
Guessing he's sure as shit going to need it.
Surprised? (Score:2)
Is anyone surprised that FTX is a shit show?
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Is anyone surprised that FTX is a shit show?
Yes. Every multi-millionaire that invested in this horseshit.
I heard the list was a million strong, proving that no one should be "surprised".
Moar Regulayshuns! (Score:2, Troll)
It could be worse (Score:2)
It could have formerly been a site for trading Magic the Gathering cards.
Interview with Bankman (Score:2)
Bankman gave an "interview" where he started DM'ing with a reporter [vox.com].
Overall he sounds a bit unhinged and in major denial (he thinks chapter 11 was his big screw-up, and claims he still has a 50-50 shot at saving things). Not to mention the part where he decides it's a good idea to DM a reporter and generally incriminate himself by mentioning the "sketchy" stuff he did and admitting his previous talk about ethics was largely PR.
More regulations aren't necessary (Score:3)
What FTX did was no more or less illegal than what MF Global did. They billed themselves as a neutral trading brokerage and then ran the internal operations partly like a hedge fund wherein they took client assets on the down low and made risky bets with them.
You don't need new regulations for that. You just need to enforce existing federal criminal statutes.
Welcome to Exchanges (Score:2)
Controlling what, exactly (Score:2)
If you say the problem was the lack of controls, the assumption is this was a normal business and if only they had used normal business procedures everything would have been just fine.
I can't see it. The whole sector is trading in goods, the tokens, that are just like the tulips were, in a previous mania. They are of no use for any other purpose than to be sold to people who will buy them in hopes that some greater fool will buy them in turn at a markup.
If a company is in the business of selling these kin
results as expected (Score:2)
it's crypto... come on, scam from day one.
Crypto = circle trading (Score:2)
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I know it was actually Russians, the same Russians in fact that paid you to post this.
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As for Dems, Congress is exempt from insider trading.
You say "as for Dems," but of course Republicans too are making a lot of money from suspicious stock trades. Most notably, Sen. Richard Burr (R-N.C.) liquidated the majority of his stock investments in February 2020 after receiving classified briefings on the COVID-19 pandemic.
There's a bill to ban this: Senate Democrats introduce bill to ban stock trades in Congress [thehill.com]
There is a reason why every Congresscritter is at least a millionaire.
About half are. https://www.thoughtco.com/sala... [thoughtco.com]
Since the base salary for Representatives is $174,000 (and higher for positions like Speaker
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$1 million in assets is not that big a deal anymore. If you started 30 years ago squirreling away the maximum 401K on each paycheck you would accumulate a pretty good nest egg. Of course, if you're in rural Kansas that's a huge salary, but if you're in NYC or Silicon Valley then $174K/year won't go nearly as far. Then assume half of them have their spouse also working. Used to be that the majority of legislators also were lawyers in civilian life, and that comes with an income that dwarfs the $174K.
Mayb
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Yep, remember Austin Powers when Number Two n the 1990's told Doctor Evil from the 1960's that a million dollars isn't really a lot of money anymore? well, the 60's to the 90's to the 20's is the same gap.
Re:Worked as intended (Score:4, Informative)
For anyone thinking this is true, its not. SBF promised a ton of money but never really did that much. Also funded some right leaning PACS.
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Yes, all of congress is pretty guilty of this. The money in politics is a huge corrupting force, its sickening.
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Seriously? You think the entire purpose of FTX was to launder money for Democrats? Do you have evidence of this? Because it sounds extremely conspiratorial.
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Seriously? You think the entire purpose of FTX was to launder money for Democrats? Do you have evidence of this? Because it sounds extremely conspiratorial.
Earn to Give. Sam's stated goal was to give the majority of FTX money to "worthy causes"
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Re: Worked as intended (Score:2)
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So you agree that Republicans are not worthy?
Re:Worked as intended (Score:4, Insightful)
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Take a good long look in the mirror, you're the one who added that bit of nonsense. And referred to the Democrats as "mine". Ask yourself why you jumped to that conclusion.
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Yes, excuse me for reading between the lines, and extrapolating that someone bashing on Dems is probably a Republican. There is a generous helping of stuff like this [slashdot.org] to bolster my assumption.
As for the rest of it, you did notice the part where I said both sides are fucked, right? I've said it countless times before, the only way to start un-fucking politics is to get money out of it. That goes for "my" team as well. OP (through this thread, and many others in this story) is trying to make this whole thi
Re: Worked as intended (Score:2)
The only way to correct politics in the US is to stop identifying with either party and to encourage everyone you know to do the same.
Both parties are just one thing, namely, a way to make sure none of The People never get into political office. Those who are elected have to bow to the party demands, both for messaging and for actual legislation they introduce and support. They are not independent, they have no agency, and are conpletely controlled by what their party tells them to do.
If they don't do thi
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Re:In the wake of one of the biggest financial fra (Score:4, Insightful)
Sitting next to him will be Zelensky, Zuckerberg and U.S. Treasury's Janet Yellen.
Yeah, and Mike Pence will be there too, what does him, Zuck, Zelensky, and Yellen being there have to do with anything? And do you really, honestly, truly believe that they are going to have Bankman present there? Grow up.
Re:In the wake of one of the biggest financial fra (Score:5, Insightful)
In the wake of one of the biggest financial frauds in the modern era being tied to their #2 party donor, Senate Democrats
and Joe Biden react by demanding an investigation...of Elon Musk
He dumped a bunch of money into Democratic primaries this cycle (his biggest expenditure didn't even win the primary). I don't think he got much in the way of influence.
BTW, next week the New York Times in partnership with WEF partner Accenture is supposed to be hosting a live event
with Sam Bankman-Fried. Sitting next to him will be Zelensky, Zuckerberg and U.S. Treasury's Janet Yellen.
https://twitter.com/loffredoje... [twitter.com]
Weird, I thought Rebel News was only BS for Canadians but it looks like their reporters try to mislead Americans as well.
Lets have a closer look at that Tweet:
1) None of those people were going to be "Sitting next to him". There's obviously a substantial online portion if Zelensky is attending since he hasn't left Ukraine since the invasion started.
2) Look at the actual guest list [nytimes.com]. There's 10 people and the band listed, including Mike Pence and Benjamin Netanyahu! Are you also going to make a big deal of Brinkman sitting next to Pence and Bibi as well?
3) Look more closely at the "screenshot" in that Tweet again. Notice how the pictures don't quite line up? The "reporter" clumsily cut and paste the pictures of the guests he wanted to implicate together!!
Oh, and I just figured out Janet Yellen was Jewish, you know how I figured it out? I thought "hmm, why out of all the guests did that Rebel news reporter choose those 3 people to associate with SBF? Well SBF, Zelensky, and Zuckerberg are all Jewish, I bet Yellen must be Jewish as well!"
Not to suggest that the rebel news reporter is subtly playing into antisemitic tropes...
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it looks like their reporters try to mislead Americans as well.
Was just arguing with someone on here yesterday about how social media can help "lead" peoples' thoughts in one direction or another. They literally didn't believe that was a "thing", as in they didn't think people were dumb enough to be "tricked" by social media. Exhibit "A" (Twitter post above) directly proves my point.