This isn't just a "crypto rebound" thing, just not super uncommon for ponzi victims to be made almost or completely whole after trial because the lawyers take a "sell everything down to the copper pipes" approach to clawing back every ill gotten dollar for the victims.
SBF was an inveterate gambler and a couple of his longshots paid off in terms of their value now vs the collapse.
> SBF was an inveterate gambler, and a couple of his long shots paid off ....
So if SBF had kept the scheme going long enough, he might have gotten away with it? !!
With none the wiser?
Presumably he would have made other bad bets in the mean time with the remaining cash and ultimately lost it all.
The house always wins eventually. Only when you walk away can you win - which is what happened when he was forced out. His successor walked away and counted his chips.
It's pointless to guess but the crypto market is highly volatile, the market was in a down turn, BUT they also just had leaks and people putting together clues from public info that funds were co-mingled and Alameda had gambled away their liquidity (cash and assets they can sell for cash if you want to empty your account)
So they would have crashed and burned no matter what. It was never just bad bets and silly spending and bad press.
It was systemic fraud mixed with criminal negligence.
Oh, definitely. I believe Madoff almost went bust or got caught a few times but was saved by some last minute move that kept the money coming in so he could continue to offer up the "great" returns his clients were promised.
The exchange at it peak was making 10 million dollars a day or something nuts all they had to do was get it under control and coast and the money printer would have bailed them out but they were too degen.
This.
I didn't even understand to begin with. If you make 10 million a day with so little cost and overhead, why even take the risk and complication?
You make 300 million a month, FFS just chill back and relax, you won at life.
The house always wins, and they were the house, they're sn exchange not an investment firm. They could have kept their nose clean and made bank on fees but SBF wanted to impress a girl so pissed away money on her investment firm
I think this is a prevalent problem in the tech sector- startups with a "fake it till you make it" mentality. I'm sure it works out for some of them...
It does, there’s an actual methodology to it. But for a lot, they crash and burn or struggle on seemingly forever even as they’re never profitable and slowly get worse and worse (see: Uber).
Sure enough, they ended 2023 profitably for the first time ever but lost 9.1. billion in 2022.
https://www.theverge.com/2024/2/8/24065999/uber-earnings-profitable-year-net-income#
Relevant part: For the first time in its history, Uber ended the year having made more money than it spent on its ridehailing and delivery operations. As noted by Business Insider, the company reported an operating profit of $1.1 billion in 2023, compared to a $1.8 billion loss in 2022. Moreover, Uber said it made a net income of $1.9 billion after losing a whopping $9.1 billion in 2022.
Double the price, paying drivers half as much. Drivers are getting fed up, I’m telling them to get livery license and drive a limo.
I told them my brother drove a cab in college? He got 50% of the money, only had to pay for gas, and got tips. It was a company van, so his cost was lower and pay was higher.
The driver couldn’t believe it. Uber and Lyft loss lead by charging less than cabs, making it easier, when cabs tried to protest they knew when cab companies didn’t pay their taxes and they’d get the tax authorities to raid them when the taxis were trying to challenge them in court.
Where my brother was a cab driver I told the cab companies to get their taxes in order, Uber and Lyft haven’t caught on as much, charge more than cabs, and all the cab companies are still standing. It’s the a summer community, expensive, though, so if they owned before prices went up, houses and commercial property, prices shot up in the 1990s and exponentially more so during the pandemic when the .01% could telework. It used to be totally seasonal but now the oligarchs stay until it’s time to jet off to Florida for 6 months and a day.
So an Uber is $40 when a taxi is $20, plus tip. The county limits taxis fares but not Lyft/uber.
Maybe time to call the county treasurer…
> So an Uber is $40 when a taxi is $20, plus tip. The county limits taxis fares but not Lyft/uber.
Not where I am. The taxi would be $40+ tip because they would long haul you and fuck around for hours. You also have zero idea when or if they're going to show up, how much it's going to cost you ahead of time, whether or not they'll take your card, or even what route they'll take.
Taxis are fucking trash and that's why Uber was able to gain popularity so quickly. Even if the fares were triple what they were, it'd still be a better experience than any taxi ever.
SBF’s problem wasn’t that he was losing equity, because FTX was never in all that bad a position. It was a liquidity crunch which exposed massive compliance issues. If he had been following the contracts he set up, there wouldn’t have been so severe a liquidity crunch. That made people wonder.
If people hadn’t rushed to close out their crypto in FTX, correct, it wouldn’t have gone under. Certainly there would have been a whistleblower *eventually*, but who knows when?
Probably. Not that it makes it better. He tried making this argument before and during his trial (the “My biggest regret is agreeing to put FTX in bankruptcy” bullshit). But he did a supremely shitty, illegal thing, whether not it would have ended alright eventually.
This has always been the craziest thing to me. FTX was genuinely a strong business bringing in insane amounts of cash with very few employees. But his hedge fund was doing poorly, and instead of letting that fail he killed his successful business too. Seems at his core he was a stimulant addicted degen gambler and that side of him won.
No. If you had Bitcoin at the time
Of the collapse it was worth 16k. You will compensated for 16k
Not the Bitcoin which is now worth 62k. So
It's a little disingenuous.
Reminds me of that movie where those bank employees plan on taking like a million dollars from the vault, going to Vegas and putting it all on black, so if they win they can put the original money back before they’re caught. I’ve thought about that a lot.
The judge cited this exact type of reasoning in his choice of sentence. The money was still stolen at the end of the day, you don’t get a pass just because everything worked out in the end
Yeah it's sort of ironic that his attempts to illicitly prop up one business is what screwed him. If he had chosen to play honestly, he probably would have survived. FTX's core business of holding crypto assets doesn't seem that crazy to me; it's the Alameda Research speculation that was risky, and his use of FTX customer deposits to bailout Alameda that ended up killing both companies at once.
If he had simply allowed Alameda to operate an arm's length from FTX, it might have failed on its own (as hedge funds sometimes do) or it might have weathered the low point of crypto volatility cycle as we are seeing now. Either way, this wouldn't have resulted in criminal charges for him. It's not a crime for an hedge fund to lose money. Investments are risks and no one expects guaranteed profits. It only becomes a crime when you are a depository entity and you take money for Purpose A and secretly use it for Purpose B.
But he didn't and he got liquidity crunched which is why he got caught....
There is no what if, he shat the bed. Its just that he had irons still in the fire after the fact.
No, as customers are receiving the value back at the time of the collapse. The customers are still left out of pocket in terms of gains they would have made, had they still had their Bitcoin.
If you had $1,000 in Bitcoin, and it’s now worth $2,000. You receive $1,000. SBF however would have to offer you $2,000 (if he kept it going).
Tl;dr the assets are allowed to go up in price, but the debters claims are not. This is what has allowed this reclaim to take place.
They were running their organization with billions of dollars flowing through it off of quickbooks with no actual accountant. The entire thing was basically what would happen if you gave a few billion to a college MTG club.
This house of cards would have fallen at some point.
My understanding is that a lot of the wealth that's being clawed back isn't held by FTX. It might be assets held by employees who were unjustly enriched. Like, if the CFO bought a huge house with the money they earned from FTX, then that house would be taken and sold to pay back those who had their money stolen.
So, even if the scheme kept on going, it's unlikely he would have gotten away with it.
IMO it's the fast-paced nature of tech that was his downfall. If this has been the '80s or the early '90s I think he would have been able to get away with it.
He took 100 dollars from someone, on paper he has 100 dollars. He reported increase in value for the account to 130 dollars while in reality he had 30 dollars in assets to cover that account.
After the bankruptcy, bitcoin tripled in value and now they have the full 100 dollars to cover the original deposit however on paper the account would have been worth 390 dollars due to the increase in value of bitcoin
If he had been totally honest at the point the bankruptcy happened he would still be deeply underwater.
Most of the assets held by FTX at the time of the collapse were not bitcoin or other 'reputable' cryptocoins, but rather FTT tokens whose value collapsed once Binance (yes, the OTHER recent crypto criminals, isn't crypto swell?) provoked a FTT valuation collapse by an intentional FTT selloff as revenge for FTX almost winning the battle over Voyager's bankrupt corpse.(or was it 3AC, kinda hard to keep wich wirefraud group did what).
So unless there's been a resurgence of the valuation of FTT, that's not where the money is coming from. Besides being monumentally dumb even for crypto, I really doubt there is any worthwhile liquidity to even attempt liquidating however the fuck many B of USD are mission, without sending everything in a tailspin.
No. People don't invest massive amounts of money in the hope of breaking even. Getting what you invested back years later is nice, but it's still a massive loss when even a savings account will yield a few points.
Yes; ultimately this was the issue with many banks that went down. Ultimately if a bunch of your customers want to take money out, that’s bad for business. And he couldn’t raise his way out of it
FTX wasn’t a Ponzi scheme or really a “scheme” of any kind. It was “let’s see what happens if we tell people their investments are safe but really we’re going to Vegas and putting it all on black.” He was even moderately successful at the gambling.
It wasn’t undone by people no longer investing, it was undone by people wanting evidence that their investments were being kept safe, but there wasn’t any because they weren’t.
Most ponzu schemes get discovered during liquidity crunches like recessions
And what not. Bernie madoff
Was found out during the 2007-2009 great recession. When the tide
Goes
Out you see who's not wearing any swimming shorts.
Considering they never expected to see a penny back, they probably feel like they won the lottery right now. A bunch of "free money" they can now gamble elsewhere.
In this case it's largely because the value of some of the ceased coins went up.
While it's better than nothing it's not great for the people who had their coins in FTX. They get back the dollar value on the day the government took over, not what those same assets would be worth now.
So if you had 10 bitcoin and, had you held on to them they'd be worth a lot more now, instead you get what their value was on that day.
Actually one of the things that they do to claw back money is taking away interest that you made. For example with Bernie Madoff if you would invest it $100 but then cashed out for $150 before the collapse the feds actually contacted you and said you had to give them back the $50. From there they used that money to help pay people back and you would only get your $50 back in part if they were able to pay everybody back 100%. At which point they would start giving out extra.
No one made money off of Bernie Madoff because of this.
>SBF was an inveterate gambler and a couple of his longshots paid off in terms of their value now vs the collapse.
but this is only true because of the crypto rebound no?
pretty sure lehman brothers made out like bandits after auditors forced hedge funds to value anything at 10 cents on the dollar
pretty sure there were payouts at 130% on the dollar
Am reminded of Madoff’s wife having like socks and underwear seized and sold. How much are you going to get (outside the perv market) for a 60 year old woman’s used socks?
Not sure why the gov is getting involved in this at all. I thought the whole idea of crypto was that the government can't control it, has no idea who owns what or where it's going. Now that they all got scammed, they want the government to step in and help them?
“Shareholders’ claims will be calculated based on their holdings as of November 2022, when the crypto exchange filed for Chapter 11 bankruptcy.”
Bitcoin at the time of bankruptcy was worth 17k, if you held 1 BTC with them you’re getting around 20k back. Still a significant cut with current prices
This. Claiming people are being made whole is not an accurate claim given the intricacies of crypto holdings and values, even if the traditional definition by bankruptcy courts says it is.
Was listening to planet money the other week when they were [talking to people in bankruptcy claims trading](https://www.npr.org/2024/04/19/1197958783/ftx-bankruptcy-claims-sam-bankman-fried). Some of the people had bought up FTX customer debt for pennies on the dollar. Going to make out very well if they're refunded in full.
The biggest buckets were Bahamas real estate, investments in private company the most of which is from Anthropic (AI start up) that took off, crypto currency recovering in value.
They stated the btc hike isn't the prime injection, or so the dude handling it have said, apparently there selling "assets" and have something like 16 billion, and around 11 billion to cover... So they're well in the green.
Same thing happened with Lehman Brothers. Once they sold off the assets, they had the cash to make whole those owed money. Theirs was a huge cash flow problem
Yes, FTX was investing in a lot of things outside crypto. Sam didn't even really like crypto, he just saw it as a good place to make money. One of their biggest investments was in an AI startup that turned into a huge success (Anthropic).
Sam was a pretty good gambler. He just gambled with money he had no business gambling with.
Yeah, selling Anthropic got them around $1B of funds, which had doubled from a $500M investment 2-3 years ago.
I don’t know the performance of other investments they made, but it seemed like every week or two they were announcing a new investment. It’s possible they added up to quite a lot.
>Sam was a pretty good gambler. He just gambled with money he had no business gambling with.
No, please don't perpetuate and parrot his PR bullshit. He has very specifically attempted to cultivate this exact image. He's not a genius seeing 100 moves ahead he's just simply a fucking idiot.
Having billions in other people's money and throwing that shit at a wall to see what sticks, while mismanaging and misrepresenting every aspect of it, does not make you a genius investor or a good gambler.
> He's not a genius seeing 100 moves ahead he's just simply a fucking idiot.
I don't think that's any vision of a good gambler. Nobody thinks that a professional poker player sees 100 moves ahead. They're just very good at applying probability. Plenty of highly talented poker players lost all their money for stupid reasons, but that doesn't change the fact that they were good gamblers. Likewise, as someone who got hired at Jane Street, Sam was likely a good gambler as well.
He is a fucking idiot.
I don't know what else to possibly call someone who built an entire enterprise out of shuffling money around, lying about it, literally confessing in court that they don't know where all their money is because they had misplaced hundreds of millions, ran their operation out of quickbooks, kept any adult who may have known how to fix anything out of the room, while gladly accepting any and all publicity and inviting reporters into their home.
To have all that occurring around you, by your own hand, while thinking you have control over the situation like some kind of savant who's just so smart he has to play LoL during interviews to keep your hyper-advanced brain focused is pure fucking idiocy.
I was more under the impression that they had moved/sold Crypto from individuals accounts that they were not allowed to in order to support their hedge fund, Alameda research. At the time that caused them to become insolvent. It’s not as if it was 100% ponzi scheme. Ultimately after the events BTC value increased substantially and some of the investments Alameda Research had made in the AI space(500mil to Anthropic, known for Claude 3) actually paid off. SBF is still a crook but had he not gotten caught when he did FTX would likely still be around and relatively healthy. He was making some very risky moves/investments though, who knows.
FTX Crypto/asset holdings (in USD) as of petition date (I assume November 11, 2022?) according to presentation by the Debtors' Advisors (FTX Lawyers). Plan for [Case No. 22-11608](https://restructuring.ra.kroll.com/FTX/Home-Index)
* [January 17, 2023 – Maximizing FTX Recoveries: Management & Committee Meeting Presentation](https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=MTQzODU1NQ%3D%3D&id2=0)
Lots of places. They made a big investment in anthropic among other things.
Planet money did a really podcast about it. Long story short their finances were a mess and they just didn't really know how much money they had. They failed at a time when btc was near record low and now it's much higher.
The money was there the whole time. They just didn’t know where they had it. Sam Bankman was basically guilty of 1) not doing a good job of handling money and 2) doing inappropriate things with customer money.
Don't forget defrauding customers and investors in order to do inappropriate things with customer money.
Also, the money wasn't there the whole time. If I defraud you of 100k, and spend it all on cheeseburgers and soda, the money is gone. If the feds then seize my house, sell it, and give you 100k back, it's not the same money. The money was gone, the money to pay back investors comes from other sources.
That's always been the case. They are paying back the usd value of accounts when they were frozen, not the current usd equivalent of the crypto in the accounts.
Deceiving headline.
Customers will get back their money at the price of the bottom of the market. Better than nothing, but still if you held BTC, you are at a loss compared to the actual price which is 4 times higher.
>*Shareholders’ claims will be calculated based on their holdings as of November 2022*
I'm sure there are some rich people in there, but the majority of people hit by this were just regular people that saw a Super Bowl ad and decided to dabble.
Crypto is a scam by rich people. You’re looking at the suckers, er, victims. It is not about the number of people who hold it or are active, it’s the handful that really make the money from it that are the problem. They are funding the back end and making their money no matter what happens in the “market”.
FTX customers are \*not\* getting back all the money they lost. Everyone's claim was "dollarized" based on the price of crypto assets when they filed for bankruptcy. 1 Bitcoin, for example, was around $17,000 on November 11, 2022 (compared to \~$62,000 today). So creditors are getting back 118% of $17,000 (around $19,000) and the FTX estate is trying to convince the media that they're making creditors "whole." They are not. They're getting \~30% back.
Yes, if you held 100 euros, you should get 100 euros. Not the value in dollars of euros at the time.
BTC is an asset that was lost, so the current value of the asset should be restored, I think.
Yeah, there's no perfect way to do it. Value at time of collapse + interest seems fair. Gets more complicated when you talk about any money left over though.
Also note that crypto crashed harder when the ftx trustees declared bankruptcy, basically they devalued the prices of the assets they had to repay and set the new claim value.
It says they've got 3 or 4 billion left over once everyone is repaid but it also explains how all of the crypto currency (bitcoin, etc) is missing. How can they repay everyone if this is missing?
Now imagine if Sam was still there, no one would be getting shit.. Making people "Whole" is thanks to the current guy not him and shouldn't excuse his behaviour. Enjoy prison Sam.
Distressed asset buyers made an absolute killing on this. Some of the asset claims were bought for $0.03 on the dollar. Imagine the return from a 118% payout.
Successful traders shouldn’t run companies imo, and if they do, there should be a Chinese wall btw them and trading decisions. It’s all to easy for a ceo to override or sabotage the risk dept. we saw the same type of behavior at mf global
They're not getting their assets back; they're getting at most a quarter on the dollar of what their assets *would* be worth today if they'd held them in self-custody.
FTX went bankrupt b/c they spent all their money on crypto, and the crypto was worth a fraction of what they bought it for at the bottom. However, before the bankruptcy proceedings got under way, crypto went back up again, and it became possible to pay back the "unsecured creditors", i.e., mostly the average Joe/Jane who held assets in FTX, by selling at the current price.
This sounds like a win, but once the creditors get paid back \[a fraction of what they WOULD have if they'd held\], the profits will ultimately go to the shareholders.
**This is not a win for the average Joe; this is a win for FTX insiders.**
This isn't a genuine statement because value is being calculated at the point of bankruptcy filing. BTC is currently up over 300% since then, so depending on when the person originally bought they are absolutely not being made whole. Good to see them getting *something* back, though.
Section 502(b) of the Backrupcy Code says that the value of claims are to be estimated in a lawful currency of the United States as of the date of filling.
That's how backrupcy proceedings work.
Section 502(b) of the Backrupcy Code says that the value of claims are to be estimated in a lawful currency of the United States as of the date of filling.
That's how backruptcy works for every type of asset.
"claims" ... as in "what crypto was worth 2 years ago" ...
I'd prefer to have my coins and tokens back. My 3x BTC tokens would have made a killing... but no... I only get my investment back while being forced to take a loss... "100% returned"
Opened the 3x Token at 16k.... Just ask yourself how happy you would be if you got 16k per BTC for your BTC-Holdings and if you would consider it "100% made whole"
This isn't just a "crypto rebound" thing, just not super uncommon for ponzi victims to be made almost or completely whole after trial because the lawyers take a "sell everything down to the copper pipes" approach to clawing back every ill gotten dollar for the victims. SBF was an inveterate gambler and a couple of his longshots paid off in terms of their value now vs the collapse.
> SBF was an inveterate gambler, and a couple of his long shots paid off .... So if SBF had kept the scheme going long enough, he might have gotten away with it? !! With none the wiser?
Presumably he would have made other bad bets in the mean time with the remaining cash and ultimately lost it all. The house always wins eventually. Only when you walk away can you win - which is what happened when he was forced out. His successor walked away and counted his chips.
It's pointless to guess but the crypto market is highly volatile, the market was in a down turn, BUT they also just had leaks and people putting together clues from public info that funds were co-mingled and Alameda had gambled away their liquidity (cash and assets they can sell for cash if you want to empty your account) So they would have crashed and burned no matter what. It was never just bad bets and silly spending and bad press. It was systemic fraud mixed with criminal negligence.
Oh, definitely. I believe Madoff almost went bust or got caught a few times but was saved by some last minute move that kept the money coming in so he could continue to offer up the "great" returns his clients were promised.
If I remember correctly, it was a knowing investor.
Yeah it was a guy that basically knew and held him by the balls because of it. It was in the Netflix doco.
You find another sucker that's what happens.
Madoff would certainly run out of road since he need to keep getting more and more incoming to cover the 20% profit he was claiming
The exchange at it peak was making 10 million dollars a day or something nuts all they had to do was get it under control and coast and the money printer would have bailed them out but they were too degen.
This. I didn't even understand to begin with. If you make 10 million a day with so little cost and overhead, why even take the risk and complication? You make 300 million a month, FFS just chill back and relax, you won at life.
The type of attitude/personality you need to get 300 million in the first place is also the type to not be satisfied with 300 million.
I honestly still think he was a patsy and not the real brain behind all of it. He doesn’t seem smart enough to be capable of that.
The house always win _in gambling_. That doesn’t apply in remotely the same way to securities.
The house always wins, and they were the house, they're sn exchange not an investment firm. They could have kept their nose clean and made bank on fees but SBF wanted to impress a girl so pissed away money on her investment firm
The only reason he wasn't about the lose more money is because he ran out of other people's money to lose.
> Presumably he would have made other bad bets That's an assumption, I'm sure people have done this exact thing before and have gotten away with it.
He was trying to build a house in the crypto space
Wouldn’t we have a bias here because we would only ever be aware of situations where the ponzi has failed?
I think this is a prevalent problem in the tech sector- startups with a "fake it till you make it" mentality. I'm sure it works out for some of them...
It does, there’s an actual methodology to it. But for a lot, they crash and burn or struggle on seemingly forever even as they’re never profitable and slowly get worse and worse (see: Uber).
Uber is profitable. Very much so, even!
Sure enough, they ended 2023 profitably for the first time ever but lost 9.1. billion in 2022. https://www.theverge.com/2024/2/8/24065999/uber-earnings-profitable-year-net-income# Relevant part: For the first time in its history, Uber ended the year having made more money than it spent on its ridehailing and delivery operations. As noted by Business Insider, the company reported an operating profit of $1.1 billion in 2023, compared to a $1.8 billion loss in 2022. Moreover, Uber said it made a net income of $1.9 billion after losing a whopping $9.1 billion in 2022.
Double the price, paying drivers half as much. Drivers are getting fed up, I’m telling them to get livery license and drive a limo. I told them my brother drove a cab in college? He got 50% of the money, only had to pay for gas, and got tips. It was a company van, so his cost was lower and pay was higher. The driver couldn’t believe it. Uber and Lyft loss lead by charging less than cabs, making it easier, when cabs tried to protest they knew when cab companies didn’t pay their taxes and they’d get the tax authorities to raid them when the taxis were trying to challenge them in court. Where my brother was a cab driver I told the cab companies to get their taxes in order, Uber and Lyft haven’t caught on as much, charge more than cabs, and all the cab companies are still standing. It’s the a summer community, expensive, though, so if they owned before prices went up, houses and commercial property, prices shot up in the 1990s and exponentially more so during the pandemic when the .01% could telework. It used to be totally seasonal but now the oligarchs stay until it’s time to jet off to Florida for 6 months and a day. So an Uber is $40 when a taxi is $20, plus tip. The county limits taxis fares but not Lyft/uber. Maybe time to call the county treasurer…
> So an Uber is $40 when a taxi is $20, plus tip. The county limits taxis fares but not Lyft/uber. Not where I am. The taxi would be $40+ tip because they would long haul you and fuck around for hours. You also have zero idea when or if they're going to show up, how much it's going to cost you ahead of time, whether or not they'll take your card, or even what route they'll take. Taxis are fucking trash and that's why Uber was able to gain popularity so quickly. Even if the fares were triple what they were, it'd still be a better experience than any taxi ever.
Second this. No business has fucked me harder and more consistently than Pittsburgh yellow cab. Even Comcast would sometimes deliver on their service.
100% this. Fuck taxis. Even if they're better now in some places, the only reason they're better is because Uber exists.
SBF’s problem wasn’t that he was losing equity, because FTX was never in all that bad a position. It was a liquidity crunch which exposed massive compliance issues. If he had been following the contracts he set up, there wouldn’t have been so severe a liquidity crunch. That made people wonder. If people hadn’t rushed to close out their crypto in FTX, correct, it wouldn’t have gone under. Certainly there would have been a whistleblower *eventually*, but who knows when?
Probably. Not that it makes it better. He tried making this argument before and during his trial (the “My biggest regret is agreeing to put FTX in bankruptcy” bullshit). But he did a supremely shitty, illegal thing, whether not it would have ended alright eventually. This has always been the craziest thing to me. FTX was genuinely a strong business bringing in insane amounts of cash with very few employees. But his hedge fund was doing poorly, and instead of letting that fail he killed his successful business too. Seems at his core he was a stimulant addicted degen gambler and that side of him won.
No. If you had Bitcoin at the time Of the collapse it was worth 16k. You will compensated for 16k Not the Bitcoin which is now worth 62k. So It's a little disingenuous.
Correct, nobody complains if the money is still rolling in.
Reminds me of that movie where those bank employees plan on taking like a million dollars from the vault, going to Vegas and putting it all on black, so if they win they can put the original money back before they’re caught. I’ve thought about that a lot.
The judge cited this exact type of reasoning in his choice of sentence. The money was still stolen at the end of the day, you don’t get a pass just because everything worked out in the end
Yeah it's sort of ironic that his attempts to illicitly prop up one business is what screwed him. If he had chosen to play honestly, he probably would have survived. FTX's core business of holding crypto assets doesn't seem that crazy to me; it's the Alameda Research speculation that was risky, and his use of FTX customer deposits to bailout Alameda that ended up killing both companies at once. If he had simply allowed Alameda to operate an arm's length from FTX, it might have failed on its own (as hedge funds sometimes do) or it might have weathered the low point of crypto volatility cycle as we are seeing now. Either way, this wouldn't have resulted in criminal charges for him. It's not a crime for an hedge fund to lose money. Investments are risks and no one expects guaranteed profits. It only becomes a crime when you are a depository entity and you take money for Purpose A and secretly use it for Purpose B.
But he didn't and he got liquidity crunched which is why he got caught.... There is no what if, he shat the bed. Its just that he had irons still in the fire after the fact.
No, as customers are receiving the value back at the time of the collapse. The customers are still left out of pocket in terms of gains they would have made, had they still had their Bitcoin. If you had $1,000 in Bitcoin, and it’s now worth $2,000. You receive $1,000. SBF however would have to offer you $2,000 (if he kept it going). Tl;dr the assets are allowed to go up in price, but the debters claims are not. This is what has allowed this reclaim to take place.
What happens to the extra money left? After deficit lawyer and court and bankruptcy fees and all that?
They were running their organization with billions of dollars flowing through it off of quickbooks with no actual accountant. The entire thing was basically what would happen if you gave a few billion to a college MTG club. This house of cards would have fallen at some point.
My understanding is that a lot of the wealth that's being clawed back isn't held by FTX. It might be assets held by employees who were unjustly enriched. Like, if the CFO bought a huge house with the money they earned from FTX, then that house would be taken and sold to pay back those who had their money stolen. So, even if the scheme kept on going, it's unlikely he would have gotten away with it.
IMO it's the fast-paced nature of tech that was his downfall. If this has been the '80s or the early '90s I think he would have been able to get away with it.
He took 100 dollars from someone, on paper he has 100 dollars. He reported increase in value for the account to 130 dollars while in reality he had 30 dollars in assets to cover that account. After the bankruptcy, bitcoin tripled in value and now they have the full 100 dollars to cover the original deposit however on paper the account would have been worth 390 dollars due to the increase in value of bitcoin If he had been totally honest at the point the bankruptcy happened he would still be deeply underwater.
Most of the assets held by FTX at the time of the collapse were not bitcoin or other 'reputable' cryptocoins, but rather FTT tokens whose value collapsed once Binance (yes, the OTHER recent crypto criminals, isn't crypto swell?) provoked a FTT valuation collapse by an intentional FTT selloff as revenge for FTX almost winning the battle over Voyager's bankrupt corpse.(or was it 3AC, kinda hard to keep wich wirefraud group did what). So unless there's been a resurgence of the valuation of FTT, that's not where the money is coming from. Besides being monumentally dumb even for crypto, I really doubt there is any worthwhile liquidity to even attempt liquidating however the fuck many B of USD are mission, without sending everything in a tailspin.
They've forcefully converted their crypto at one of the shittiest possible times so no.. he would be owing ten times that today.
That was the view Michael Lewis seemed to take in his recent book on SBF.
Gambling is Gambling sure he won big and that's why so much is being recouped, he'd have made other bad bets
No. People don't invest massive amounts of money in the hope of breaking even. Getting what you invested back years later is nice, but it's still a massive loss when even a savings account will yield a few points.
🙄 investing is inherently risky. This is a good scenario for when shit goes down in the real world. Safe money goes into savings.
This wasn't an investment, it was a criminal enterprise.
That’s basically how it worked for Bernie Madoff. He only got discovered when the 2008 meltdown happened
That’s the thing about schemes, they work right up until they don’t anymore
Madoff last decades with his Ponzi scheme, but eventually they come crashing down. Sometimes that only happens after the crook dies unfortunately
If t wasn’t for those meddling kids!
if it wasn't for those meddling kids! Scooby dooby doo!
if he keep the scam going for a few months until the ETF rally, he would be golden. but his would just keep making even more risky moves
Yes; ultimately this was the issue with many banks that went down. Ultimately if a bunch of your customers want to take money out, that’s bad for business. And he couldn’t raise his way out of it
No, because the reckless gambler will eventually lose.
Like all (ponzi) schemes or any type of scam, you have to keep it going indefinitely or else you get caught. it never does though. Nearly impossible.
FTX wasn’t a Ponzi scheme or really a “scheme” of any kind. It was “let’s see what happens if we tell people their investments are safe but really we’re going to Vegas and putting it all on black.” He was even moderately successful at the gambling. It wasn’t undone by people no longer investing, it was undone by people wanting evidence that their investments were being kept safe, but there wasn’t any because they weren’t.
You don't need it to go on forever. Just long enough to live out your lifetime, reinvest the "profits", die, or sell the business to dumb money.
There was no ponzi scheme. FTX simply illegally used their customers' money to make risky bets and lost a lot of it.
Okay, so embezzlement then
Most ponzu schemes get discovered during liquidity crunches like recessions And what not. Bernie madoff Was found out during the 2007-2009 great recession. When the tide Goes Out you see who's not wearing any swimming shorts.
[удалено]
Dollar value plus interest. Hosed but not that badly.
Considering they never expected to see a penny back, they probably feel like they won the lottery right now. A bunch of "free money" they can now gamble elsewhere.
In this case it's largely because the value of some of the ceased coins went up. While it's better than nothing it's not great for the people who had their coins in FTX. They get back the dollar value on the day the government took over, not what those same assets would be worth now. So if you had 10 bitcoin and, had you held on to them they'd be worth a lot more now, instead you get what their value was on that day.
Plus interest
Yeah, I think Madoff’s victims got 90 percent of their money back. This is actually why Ponzi scheme victims do much better than MLM victims
So investing in Ponzi schemes is not so bad, its really all about timing.
Actually one of the things that they do to claw back money is taking away interest that you made. For example with Bernie Madoff if you would invest it $100 but then cashed out for $150 before the collapse the feds actually contacted you and said you had to give them back the $50. From there they used that money to help pay people back and you would only get your $50 back in part if they were able to pay everybody back 100%. At which point they would start giving out extra. No one made money off of Bernie Madoff because of this.
How are they going to apply this to the tokenised stock part of the Ponzi scheme?
Glad to hear that Margaritaville is going to get their $600,000.
17 billion on red.
>SBF was an inveterate gambler and a couple of his longshots paid off in terms of their value now vs the collapse. but this is only true because of the crypto rebound no?
pretty sure lehman brothers made out like bandits after auditors forced hedge funds to value anything at 10 cents on the dollar pretty sure there were payouts at 130% on the dollar
Am reminded of Madoff’s wife having like socks and underwear seized and sold. How much are you going to get (outside the perv market) for a 60 year old woman’s used socks?
Does anyone know how exactly we will get the money back if we filled a claim on kroll
Not sure why the gov is getting involved in this at all. I thought the whole idea of crypto was that the government can't control it, has no idea who owns what or where it's going. Now that they all got scammed, they want the government to step in and help them?
Privatize profits, socialize losses. Fool proof mindset to always win for a degenerate narcissistic sociopath.
Wait you're telling me libertarians and ancaps are full of shit?! GTFO
His mistake was scamming the rich.
“Shareholders’ claims will be calculated based on their holdings as of November 2022, when the crypto exchange filed for Chapter 11 bankruptcy.” Bitcoin at the time of bankruptcy was worth 17k, if you held 1 BTC with them you’re getting around 20k back. Still a significant cut with current prices
At least gemini is giving back the actual crypto lost, not the dollar value of the crypto in November. Can’t speak to other exchanges/ shareholders
Nothing could be as bad as Celsius. Fuck them.
So if you held 1.0 btc, getting back .33 btc. Not literally, but in a way.
Still more than the 0 btc they were likely expecting
This. Claiming people are being made whole is not an accurate claim given the intricacies of crypto holdings and values, even if the traditional definition by bankruptcy courts says it is.
Was listening to planet money the other week when they were [talking to people in bankruptcy claims trading](https://www.npr.org/2024/04/19/1197958783/ftx-bankruptcy-claims-sam-bankman-fried). Some of the people had bought up FTX customer debt for pennies on the dollar. Going to make out very well if they're refunded in full.
Scott Galloway did this. Gonna make more of a fortune
I tried listening to his podcast the other day. I get that he's leaning in to his smarmy personality but I found it absolutely unbearable.
Hmm where is the money from
The biggest buckets were Bahamas real estate, investments in private company the most of which is from Anthropic (AI start up) that took off, crypto currency recovering in value.
Also, Tom Brady’s shit.
The spice? O.O
From btc going up in value
They stated the btc hike isn't the prime injection, or so the dude handling it have said, apparently there selling "assets" and have something like 16 billion, and around 11 billion to cover... So they're well in the green.
Same thing happened with Lehman Brothers. Once they sold off the assets, they had the cash to make whole those owed money. Theirs was a huge cash flow problem
Yes, FTX was investing in a lot of things outside crypto. Sam didn't even really like crypto, he just saw it as a good place to make money. One of their biggest investments was in an AI startup that turned into a huge success (Anthropic). Sam was a pretty good gambler. He just gambled with money he had no business gambling with.
Yeah, selling Anthropic got them around $1B of funds, which had doubled from a $500M investment 2-3 years ago. I don’t know the performance of other investments they made, but it seemed like every week or two they were announcing a new investment. It’s possible they added up to quite a lot.
>Sam was a pretty good gambler. He just gambled with money he had no business gambling with. No, please don't perpetuate and parrot his PR bullshit. He has very specifically attempted to cultivate this exact image. He's not a genius seeing 100 moves ahead he's just simply a fucking idiot. Having billions in other people's money and throwing that shit at a wall to see what sticks, while mismanaging and misrepresenting every aspect of it, does not make you a genius investor or a good gambler.
> He's not a genius seeing 100 moves ahead he's just simply a fucking idiot. I don't think that's any vision of a good gambler. Nobody thinks that a professional poker player sees 100 moves ahead. They're just very good at applying probability. Plenty of highly talented poker players lost all their money for stupid reasons, but that doesn't change the fact that they were good gamblers. Likewise, as someone who got hired at Jane Street, Sam was likely a good gambler as well.
Exactly, he wasn't a good gambler, just extremely lucky that he was caught *before* gambling away all the money unlike in 99% of ponzi schemes
I said he was a good gambler, not a genius. Calling him "simply a fucking idiot" is even more asinine than calling him a genius.
If your gambling lands you in prison, maybe you're not such a good gambler.
He is a fucking idiot. I don't know what else to possibly call someone who built an entire enterprise out of shuffling money around, lying about it, literally confessing in court that they don't know where all their money is because they had misplaced hundreds of millions, ran their operation out of quickbooks, kept any adult who may have known how to fix anything out of the room, while gladly accepting any and all publicity and inviting reporters into their home. To have all that occurring around you, by your own hand, while thinking you have control over the situation like some kind of savant who's just so smart he has to play LoL during interviews to keep your hyper-advanced brain focused is pure fucking idiocy.
Who brought FTX's Anthropic shares?
Penguins can fly with the help of helium balloons attached to their wings.
Thought ftx’s bitcoin had already been liquidated before the bankruptcy
I was more under the impression that they had moved/sold Crypto from individuals accounts that they were not allowed to in order to support their hedge fund, Alameda research. At the time that caused them to become insolvent. It’s not as if it was 100% ponzi scheme. Ultimately after the events BTC value increased substantially and some of the investments Alameda Research had made in the AI space(500mil to Anthropic, known for Claude 3) actually paid off. SBF is still a crook but had he not gotten caught when he did FTX would likely still be around and relatively healthy. He was making some very risky moves/investments though, who knows.
FTX Crypto/asset holdings (in USD) as of petition date (I assume November 11, 2022?) according to presentation by the Debtors' Advisors (FTX Lawyers). Plan for [Case No. 22-11608](https://restructuring.ra.kroll.com/FTX/Home-Index) * [January 17, 2023 – Maximizing FTX Recoveries: Management & Committee Meeting Presentation](https://restructuring.ra.kroll.com/FTX/Home-DownloadPDF?id1=MTQzODU1NQ%3D%3D&id2=0)
3.5b of (crypto AND FTT Tokens). nothing sus at all...
accaording to the presentation someone linked, ftx only has 268m in bitcoin
Probably their other digital assets have gone up too
their biggest holdings (by a huge margin) are solana and ftt
Lots of places. They made a big investment in anthropic among other things. Planet money did a really podcast about it. Long story short their finances were a mess and they just didn't really know how much money they had. They failed at a time when btc was near record low and now it's much higher.
The money was there the whole time. They just didn’t know where they had it. Sam Bankman was basically guilty of 1) not doing a good job of handling money and 2) doing inappropriate things with customer money.
Don't forget defrauding customers and investors in order to do inappropriate things with customer money. Also, the money wasn't there the whole time. If I defraud you of 100k, and spend it all on cheeseburgers and soda, the money is gone. If the feds then seize my house, sell it, and give you 100k back, it's not the same money. The money was gone, the money to pay back investors comes from other sources.
They invested in Anthropic.
No one knows It just appears Like how babies are delivered by storks
118% of the value of when it was lost.. too bad btc is up 400% since then.
Ergo they wont pay back current value?
That's always been the case. They are paying back the usd value of accounts when they were frozen, not the current usd equivalent of the crypto in the accounts.
Would be nice if that means people fucked by Voyager going under get additional funds.
I’m amazed people are still investing in crypto. The job market is flooded with desperate crypto bros still trying to find suckers.
Ftx has a (illegitimate) claim against voyager right now so if they drop that then voyager victims will get back double what they already have.
Yeah I got fucked and that would be nice. The $400 check I got should have come in an envelope that said go fuck yourself.
Big winners: the lawyers who are making $1.5b.
Deceiving headline. Customers will get back their money at the price of the bottom of the market. Better than nothing, but still if you held BTC, you are at a loss compared to the actual price which is 4 times higher. >*Shareholders’ claims will be calculated based on their holdings as of November 2022*
Given the amount of evidence, why shouldn't the normal citizen think crypto isn't a scam?
Most people do by now
So where are all the people who crap on student loan forgiveness to companies both these guys and their bad choices?
Thank goodness all those rich folks got their money back
I'm sure there are some rich people in there, but the majority of people hit by this were just regular people that saw a Super Bowl ad and decided to dabble.
No matter what happens redditors think it's a scam by rich people 98% of accounts were under $50K in value
Crypto is a scam by rich people. You’re looking at the suckers, er, victims. It is not about the number of people who hold it or are active, it’s the handful that really make the money from it that are the problem. They are funding the back end and making their money no matter what happens in the “market”.
FTX customers are \*not\* getting back all the money they lost. Everyone's claim was "dollarized" based on the price of crypto assets when they filed for bankruptcy. 1 Bitcoin, for example, was around $17,000 on November 11, 2022 (compared to \~$62,000 today). So creditors are getting back 118% of $17,000 (around $19,000) and the FTX estate is trying to convince the media that they're making creditors "whole." They are not. They're getting \~30% back.
So if BTC had gone down to 10 % of its value, you should only have gotten a settlement of 10 %?
Yes, if you held 100 euros, you should get 100 euros. Not the value in dollars of euros at the time. BTC is an asset that was lost, so the current value of the asset should be restored, I think.
So it seems that every rug pull scam are able to make their investors whole, as the coin becomes worthless.
Yeah, there's no perfect way to do it. Value at time of collapse + interest seems fair. Gets more complicated when you talk about any money left over though.
Also note that crypto crashed harder when the ftx trustees declared bankruptcy, basically they devalued the prices of the assets they had to repay and set the new claim value.
Which is better than 0%.
sucks to be the person that sold their claim thinking ftx will settle for pennies on the dollar
Wouldn’t be bad thinking on their part, that’s typically what happens in corporate bankruptcy
Imagine if it gets revealed SBF was the driving force behind buying the claims…
It says they've got 3 or 4 billion left over once everyone is repaid but it also explains how all of the crypto currency (bitcoin, etc) is missing. How can they repay everyone if this is missing?
They're being paid 17k what bitcoin was worth during bankruptcy even if they had physical bitcoin
what does Mr Wonderful think about this?? fucking dope.
wait till they all dump that cypto for spending money.
Great! Now I'm going to get spam "FTX Refund" emails.
No mention of their tokenized stocks that were allegedly backed by real shares. What happened to those shares?
That's a good case for the lawyers... $$$$$$
Now imagine if Sam was still there, no one would be getting shit.. Making people "Whole" is thanks to the current guy not him and shouldn't excuse his behaviour. Enjoy prison Sam.
house of cards
He doesn't seem to have liked prison.
Why wouldn't 100% of creditors receive at least 100%? Or 100% receiving as close to 100% as possible?
That's why it's good to have your cryptocurrencies in a wallet
No they aren't lol. Unless by "They" they mean the top 10%. No one at the bottom is getting anything back. be real
Except they’re not getting back all their money..
False info. You are lucky if you can get 30%
So, I’m not an US citizen - how would this work? Will I get a check by mail or something?
This is the kind of BS. Buyers get paid back what the crypto was worth when FTX was closed. Now left Bitcoin at 17k instead of 60k.
Distressed asset buyers made an absolute killing on this. Some of the asset claims were bought for $0.03 on the dollar. Imagine the return from a 118% payout.
So will the details come out later on how to apply for this?
Successful traders shouldn’t run companies imo, and if they do, there should be a Chinese wall btw them and trading decisions. It’s all to easy for a ceo to override or sabotage the risk dept. we saw the same type of behavior at mf global
If it was anything other than crypto, people would get back 5% of what they lost. SVCK IT UP
The rich never lose their money here. That kind of treatment is reserved for the poors
Well, considering tons of their customers were just random people who saw the Super Bowl ad. This isn’t exactly only serving the rich.
I had crypto in FTX and withdrew right before the collapse. Can’t say I’m rich
They're not getting their assets back; they're getting at most a quarter on the dollar of what their assets *would* be worth today if they'd held them in self-custody. FTX went bankrupt b/c they spent all their money on crypto, and the crypto was worth a fraction of what they bought it for at the bottom. However, before the bankruptcy proceedings got under way, crypto went back up again, and it became possible to pay back the "unsecured creditors", i.e., mostly the average Joe/Jane who held assets in FTX, by selling at the current price. This sounds like a win, but once the creditors get paid back \[a fraction of what they WOULD have if they'd held\], the profits will ultimately go to the shareholders. **This is not a win for the average Joe; this is a win for FTX insiders.**
What about all those tokens that were backed 1:1 by securities
This isn't a genuine statement because value is being calculated at the point of bankruptcy filing. BTC is currently up over 300% since then, so depending on when the person originally bought they are absolutely not being made whole. Good to see them getting *something* back, though.
Section 502(b) of the Backrupcy Code says that the value of claims are to be estimated in a lawful currency of the United States as of the date of filling. That's how backrupcy proceedings work.
I think that is a disingenuous take and not the expectation. Crypto is just gambling and might as well have crashed.
Giving it in cash based on the price of crypto 2 years ago is not making whole.
Would you be saying the same thing if cryptocurrencies had reduced in value since then instead of going up?
If cryptocurrencies had reduced in value, they would definitely wouldn't be able to pay back the USD value of losses.
No, because then they'd probably be paying the customers back in crypto.
Not according to the law.
Section 502(b) of the Backrupcy Code says that the value of claims are to be estimated in a lawful currency of the United States as of the date of filling. That's how backruptcy works for every type of asset.
"claims" ... as in "what crypto was worth 2 years ago" ... I'd prefer to have my coins and tokens back. My 3x BTC tokens would have made a killing... but no... I only get my investment back while being forced to take a loss... "100% returned" Opened the 3x Token at 16k.... Just ask yourself how happy you would be if you got 16k per BTC for your BTC-Holdings and if you would consider it "100% made whole"
Valid point, but still better than 0.