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Sam Bankman-Fried (SBF) debacle with FTX (1 Viewer)

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So this is interesting and not sure where else to park this but we got a call from our tax accountant yesterday who said our auditor is now having second thoughts about conducting our 2022 audit AFTER we have signed their engagement letters to conduct our audit. That's highly unusual and we've done nothing different from a business standpoint than we did in prior years, so this caught us completely off guard. Then it hit me - we signed those engagement letters before this FTX thing blew up. Just like post-Bernie Madoff, auditors are terrified right now and going into heavy CYA mode. Have to think this auditor got burned somehow in this FTX saga and got beat up by the SEC over it. As a result, we're collateral damage. And we have F all NOTHING to do with crypto.
 
General Malaise said:
So this is interesting and not sure where else to park this but we got a call from our tax accountant yesterday who said our auditor is now having second thoughts about conducting our 2022 audit AFTER we have signed their engagement letters to conduct our audit. That's highly unusual and we've done nothing different from a business standpoint than we did in prior years, so this caught us completely off guard. Then it hit me - we signed those engagement letters before this FTX thing blew up. Just like post-Bernie Madoff, auditors are terrified right now and going into heavy CYA mode. Have to think this auditor got burned somehow in this FTX saga and got beat up by the SEC over it. As a result, we're collateral damage. And we have F all NOTHING to do with crypto.
Click to expand...
That is odd, not gonna ask who your audit firm is but assume you are 12/31 y/e. I'd be interested in hearing what the firm's basis for having second thoughts is. Not a lot of time to engage another audit firm if 12/31.
 
John123 said:
Interesting take on some of SBF's recent interview comments. Probably a good example of why he shouldn't be giving interviews until the legal process has played out (Note: Some NSFW words in SBF quotes in this article):

nymag.com

Sam Bankman-Fried May Regret Throwing Caroline Ellison Under the Bus

The former FTX CEO cracked on his apology tour and may have handed prosecutors a gift.
nymag.com nymag.com
Click to expand...

You would think you would not have to give someone advice like, 'don't do a Twitter Spaces call in show with Kim Dotcom after you have lost $8 billion', but here we are.
 
massraider said:
GreenNGold said:
I'm surprised this complete fraud is still being given multiple platforms and spoken to like he has any credibility whatsoever.
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Here's a wacky thought:

What if people (media/whomever) don't really feel bad for his victims? With Madoff, his victims were little old Jewish couples. Easy to work up some tears. With FTX, maybe it's a bunch of Martin Shrkeli's with laser eyes avatars?

It would explain maybe pulling punches on SBF, which we are definitely seeing. Two part Good Morning America! :lol:
Click to expand...

For sure. Crypto bros are like the guys betting the don't pass in craps. Do I really care they lost some money. Hell no.

If you had the money on exchanges you were playing with fire already. Mt. Gox should have forced regulations on this industry. This was as high risk as you get and everyone with half a brain cell knew this. Except tom Brady.
 
culdeus said:
massraider said:
GreenNGold said:
I'm surprised this complete fraud is still being given multiple platforms and spoken to like he has any credibility whatsoever.
Click to expand...
Here's a wacky thought:

What if people (media/whomever) don't really feel bad for his victims? With Madoff, his victims were little old Jewish couples. Easy to work up some tears. With FTX, maybe it's a bunch of Martin Shrkeli's with laser eyes avatars?

It would explain maybe pulling punches on SBF, which we are definitely seeing. Two part Good Morning America! :lol:
Click to expand...

For sure. Crypto bros are like the guys betting the don't pass in craps. Do I really care they lost some money. Hell no.

If you had the money on exchanges you were playing with fire already. Mt. Gox should have forced regulations on this industry. This was as high risk as you get and everyone with half a brain cell knew this. Except tom Brady.
Click to expand...
When investors took peoples money and invested it in crypto and in crypto stocks for faster growth, it was bound to fail. Those are the people I feel for. The Bankman-Fried types, I have zero compassion for. The reaction and coverage of this by MSM is beyond offensive.
 
KGB said:
Todem said:
For those keeping score:

Madoff - 64 Billion
FTX - 32ish Billion

Madoff still the biggest ponzi on record….but after all the dust settles with the crypto casinos…..”Crypto” itself will prove to be the biggest destruction of peoples/funds/firms wealth in our history.

More is coming.
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Sorry buddy. I love that you help us in stocks.

But crypto is here to stay. It's been like 20 years. It isn't going anywhere.

Pick a stock and a timeframe. I'll match with a crypto and you will lose.

Apple. I think will get into crypto. Besides that.



And I'll admit, you are smarter than me. You'll kill me in stock picks.

But crypto vs stocks. I'll win
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I have a hard time agreeing with this. The number of valid and trustworthy types of coins in the world of crypto relative to the myriad of coins out there is tiny. There might be maybe 10-15 coins where people can feel reasonably confident in their potential longevity. Over the past few years—the crypto space has been dominated by a large number of s**t coins that were nothing more than pump and dump schemes that were enabled by a lack of/or ambiguous regulatory standards. As an asset class as a whole—I trust equities more than I do crypto. However, I do agree that some crypto currencies will over exceed the performance of the equity markets—but definitely not the entire asset class. I think a lot of the s**t coins will end up going down to 0–and there won’t be many equities where that will be the case.
 
General Malaise said:
So this is interesting and not sure where else to park this but we got a call from our tax accountant yesterday who said our auditor is now having second thoughts about conducting our 2022 audit AFTER we have signed their engagement letters to conduct our audit. That's highly unusual and we've done nothing different from a business standpoint than we did in prior years, so this caught us completely off guard. Then it hit me - we signed those engagement letters before this FTX thing blew up. Just like post-Bernie Madoff, auditors are terrified right now and going into heavy CYA mode. Have to think this auditor got burned somehow in this FTX saga and got beat up by the SEC over it. As a result, we're collateral damage. And we have F all NOTHING to do with crypto.
Click to expand...
The PCOAB (which the SEC oversees is being a real pain these days. I’m guessing it’s more that then FTX itself. They’re getting into some pretty esoteric interpretations and the oversight itself has ramped up across the board.
 
In all seriousness, how can you not find this story morbidly fascinating. SBF had every advantage you could possibly have. He was always going to have a nice, comfortable life no matter what. Then he arranged, somehow, to become incredibly wealthy through what we now know was a scam. Now he's probably looking at spending the rest of his life in prison and he's only 30. My life had barely begun at that point, and his is over. It's both sobering and uncanny to watch somebody self-destruct like this.
 
IvanKaramazov said:
In all seriousness, how can you not find this story morbidly fascinating. SBF had every advantage you could possibly have. He was always going to have a nice, comfortable life no matter what. Then he arranged, somehow, to become incredibly wealthy through what we now know was a scam. Now he's probably looking at spending the rest of his life in prison and he's only 30. My life had barely begun at that point, and his is over. It's both sobering and uncanny to watch somebody self-destruct like this.
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agreed. not sure if he fooled his parents

www.nytimes.com

The Parents in the Middle of FTX’s Collapse

The FTX founder Sam Bankman-Fried’s mother and father, who teach at Stanford Law School, are under scrutiny for their connections to their son’s crypto business.
www.nytimes.com www.nytimes.com
 
IvanKaramazov said:
In all seriousness, how can you not find this story morbidly fascinating. SBF had every advantage you could possibly have. He was always going to have a nice, comfortable life no matter what. Then he arranged, somehow, to become incredibly wealthy through what we now know was a scam. Now he's probably looking at spending the rest of his life in prison and he's only 30. My life had barely begun at that point, and his is over. It's both sobering and uncanny to watch somebody self-destruct like this.
Click to expand...
This is what being spoiled and the privilege of wealth can lead to. It’s clear he was handed everything on a silver spoon and nobody ever told him no. From his actions afterward it really seems like he truly believed that he could just talk his away out of it with no serious repercussions because that’s probably what happened over and over again in his life.
 
That’s rough for the parents. They are likely to blow through all their assets defending him and he’s likely got less than a 10% chance of getting a positive verdict, if that. All you can hope for is your kid(s) to be good people and they probably thought he was being a positive difference for the world. Has to be shattering.
 
IvanKaramazov said:
In all seriousness, how can you not find this story morbidly fascinating. SBF had every advantage you could possibly have. He was always going to have a nice, comfortable life no matter what. Then he arranged, somehow, to become incredibly wealthy through what we now know was a scam. Now he's probably looking at spending the rest of his life in prison and he's only 30. My life had barely begun at that point, and his is over. It's both sobering and uncanny to watch somebody self-destruct like this.
Click to expand...
I wish I had your level of confidence. I mean, the Enron CEO only got 24 years and was released after 12.
 
John123 said:
A draft of SBF's prepared statement for congress, which he will not be making since he was arrested. He takes some responsibility but places a lot of blame on others:

www.forbes.com

Exclusive Transcript: The Full Testimony Bankman-Fried Planned To Give To Congress

Before he was arrested, Forbes obtained a draft of Bankman-Fried's full testimony and is publishing it here, verbatim
www.forbes.com www.forbes.com
Click to expand...
Funny that at the bottom of the statement, he tries to dispel some of the rumors of wild parties and whether he’s Jewish. He lost the game long before those points he wanted to make. Who cares if he is Jewish, cathothic, or anything else anyway?
 
[scooter] said:
IvanKaramazov said:
In all seriousness, how can you not find this story morbidly fascinating. SBF had every advantage you could possibly have. He was always going to have a nice, comfortable life no matter what. Then he arranged, somehow, to become incredibly wealthy through what we now know was a scam. Now he's probably looking at spending the rest of his life in prison and he's only 30. My life had barely begun at that point, and his is over. It's both sobering and uncanny to watch somebody self-destruct like this.
Click to expand...
I wish I had your level of confidence. I mean, the Enron CEO only got 24 years and was released after 12.
Click to expand...
Good point. And to be fair, I think prison sentences tend to be too harsh in this country -- 12 years is a really long time. But still, this is obviously a life-altering event. He's going to be living the life of an ordinary schnook after prison with no particular assets to fall back on. If he had just run his exchange honestly, he'd be a very wealthy man.
 
By the time he gets out of prison btc will be worth a million each. If he can remember his password he will be fine.
 
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...

Good summary - once again it seems he’s operating without an adult overseeing his public comments. Ray is the restructuring dude who was just brought in a month ago to handle the chapter 11 cases. SBF is frustrated they locked him out, claiming he could be helpful, but that’s SOP.
 
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...
he screwed up by trusting John Ray.
 
quick-hands said:
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...
he screwed up by trusting John Ray.
Click to expand...
Not getting this take. The damage is done and was so egregious that any halfway competent person would be finding this stuff. You can't lose many billions and have it quietly go away (exempting the US govt. here). And I get the impression John Ray is mission driven and shoots straight. He sure has so far, and may I add appears to be incredibly impressive.
 
Sand said:
quick-hands said:
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...
he screwed up by trusting John Ray.
Click to expand...
Not getting this take. The damage is done and was so egregious that any halfway competent person would be finding this stuff. You can't lose many billions and have it quietly go away (exempting the US govt. here). And I get the impression John Ray is mission driven and shoots straight. He sure has so far, and may I add appears to be incredibly impressive.
Click to expand...

I expect his comment is sarcasm. Ray was hired after SBF resigned, at which point an immediate Chapter 11 was the only reasonable option.

Due to his arrest, SBF won't be able to deliver his absurd self-serving message to congress today, but Ray will appear and speak - I think he's speaking right now. This is his prepared statement - https://financialservices.house.gov/uploadedfiles/hhrg-117-ba00-wstate-rayj-20221213.pdf
 
So I thought this was interesting.
Here's an interview with a guy who is kind of a hobbyist financial forensic auditor.

Block, a vehement crypto skeptic, has spent the past 18 months doing forensic blockchain research. He uses open-source tools to follow flows of money between crypto companies, repeatedly demonstrating how shadow banks and nefarious scammers inflate the value of worthless assets in order to generate enormous wealth that exists only on paper.
Click to expand...
The similarities to Harry Markopolous are striking. Markopolous was years ahead of everyone in spotting Bernie Madoff for what he was. Markopolous was a pro, this guy an amateur, but it sure seems like these scammers never get caught by people who are getting paid to catch them, but by people who have a passion and determination about spotting scammers.

This guy is not a believer in crypto (understatement)
Crypto hides behind all this complexity, and people hear words like blockchain and get confused. You hear about decentralized networks and mining, and it sounds complicated. But you get right down to it, and it’s just a ledger. It’s just like somebody writing down numbers in a book, and it’s page after page of numbers. That’s all it is.
Click to expand...

This is the money quote:
One thing that is interesting is the psychology of all this. I’ve shared a lot of really damning things over the past year with people online—stuff that, if you were to hear about it, you would think any rational person would think, What am I doing with my money? I need to get it out as quickly as possible. And there were some people who reacted that way. But for every one person who listened, there were at least 10 who didn’t. And it’s just been fascinating to see. But this was almost more fun for me when I was on the losing side—when crypto was booming, and before it was obvious to everybody that this was all a scam. Back then, it was just a minority of us saying, “None of this makes any damn sense, guys.” That was fun. Now it’s kind of sad watching the consequences play out, especially because the people who get hurt the most are the people at the bottom of the food chain.
Click to expand...
 
John123 said:
A draft of SBF's prepared statement for congress, which he will not be making since he was arrested. He takes some responsibility but places a lot of blame on others:

www.forbes.com

Exclusive Transcript: The Full Testimony Bankman-Fried Planned To Give To Congress

Before he was arrested, Forbes obtained a draft of Bankman-Fried's full testimony and is publishing it here, verbatim
www.forbes.com www.forbes.com
Click to expand...
I find it funny/odd/interesting that he closes out the first part of his statement by complaining that they are locking him out of his LinkedIn.
 
Dickies said:
I find it funny/odd/interesting that he closes out the first part of his statement by complaining that they are locking him out of his LinkedIn.
Click to expand...
He has zero idea how serious this is. Whatever the reason--denial, compartmentalization, ignorance--doesn't really matter.

Guy should be growing a beard while speed-learning Spanish, and he's thinking about his LinkedIn profile. Effing dummy.
 
Sam, what accounting system are you using for this multi-billion dollar company? Oh Quickbooks, sign me up! lack of DD on so many.



"At one point, the new FTX boss shocked lawmakers by revealing that Bankman-Fried and his associates used QuickBooks, Intuit’s bookkeeping software for small businesses, to manage its sprawling cryptocurrency empire.

“There’s no recordkeeping whatsoever, there’s an absence of recordkeeping,” Ray said. “They used QuickBooks, a multibillion-dollar company using QuickBooks. Nothing against QuickBooks, it’s a very nice tool, just not for a multibillion-dollar company.”
 
Encyclopedia Brown said:
The charges:

Wire Fraud
Wire Fraud Conspiracy
Securities Fraud
Securities Fraud Conspiracy
Money Laundering
Click to expand...

IMO, it goes down like this: The Feds take time to make their case airtight against SBF and before it goes to trial, they offer him a chance to accept a plea agreement. If he is smart (and heretofore hasn't demonstrated much in that department) or takes the advise of his attorneys, he'll accept the plea. Fighting the Fed is just asking for max punishment.

And it would do him some good to create a substance abuse problem and have his attorneys ask for a minimum security Fed prison that has a rehab program for addicts. If he completes that program while serving prison time he will shave a lot of time off his sentence.

He gets 25-35, completes a rehab program in a white collar prison with other American Greed inmates and gets out in 12. Maybe I'll go visit him if he goes to Sheridan, Oregon. Wouldn't be my first visit of an inmate there who got indicted on wire fraud and bank fraud during the mortgage fiasco.....
 
massraider said:
Dickies said:
I find it funny/odd/interesting that he closes out the first part of his statement by complaining that they are locking him out of his LinkedIn.
Click to expand...
He has zero idea how serious this is. Whatever the reason--denial, compartmentalization, ignorance--doesn't really matter.

Guy should be growing a beard while speed-learning Spanish, and he's thinking about his LinkedIn profile. Effing dummy.
Click to expand...
It has to be some kind of denial plus drug-induced psychosis. Nobody is this stupid or ignorant.
 
Sand said:
quick-hands said:
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...
he screwed up by trusting John Ray.
Click to expand...
Not getting this take. The damage is done and was so egregious that any halfway competent person would be finding this stuff. You can't lose many billions and have it quietly go away (exempting the US govt. here). And I get the impression John Ray is mission driven and shoots straight. He sure has so far, and may I add appears to be incredibly impressive.
Click to expand...
sorry it was a joke based on some guy John Ray being responsible.
 
quick-hands said:
Sand said:
quick-hands said:
Encyclopedia Brown said:
John123 said:
He takes some responsibility but places a lot of blame on others
Click to expand...
He puts most of the blame on others. Whoever this John Ray dude is, Sam heaved him under the bus with both arms.

The statement is filled with false humility, digression, double-talk and mostly a failure to take any real responsibility for his actions.

Saying "I (screwed) up" doesn't mean anything.
Click to expand...
he screwed up by trusting John Ray.
Click to expand...
Not getting this take. The damage is done and was so egregious that any halfway competent person would be finding this stuff. You can't lose many billions and have it quietly go away (exempting the US govt. here). And I get the impression John Ray is mission driven and shoots straight. He sure has so far, and may I add appears to be incredibly impressive.
Click to expand...
sorry it was a joke based on some guy John Ray being responsible.
Click to expand...
I get it now. Sorry, sometimes I'm obtuse and miss the obvious joke.

I'm not an introvert engineer for nothin', ya' know.
 
A lesson here.

This guy and his companies were the darlings of finance and venture capital. There was so much momentum it was tough to stop.

Most importantly, he had the blessings and endorsement / backing from some of the most respected companies in the world.

And when the curtain is pulled back, they all look incompetent.

The lesson I think is simply: Think for yourself. Take in the inputs of "experts" and those respected in the field, but just because everyone's doing something doesn't mean it's a great, or even good idea. This applies to investment and fantasy football and all of life.
 
Joe Bryant said:
A lesson here.

This guy and his companies were the darlings of finance and venture capital. There was so much momentum it was tough to stop.

Most importantly, he had the blessings and endorsement / backing from some of the most respected companies in the world.

And when the curtain is pulled back, they all look incompetent.

The lesson I think is simply: Think for yourself. Take in the inputs of "experts" and those respected in the field, but just because everyone's doing something doesn't mean it's a great, or even good idea. This applies to investment and fantasy football and all of life.
Click to expand...
Yep. Groupthink happens on many scales and in many facets of life.
 
Capella said:
That’s rough for the parents. They are likely to blow through all their assets defending him and he’s likely got less than a 10% chance of getting a positive verdict, if that. All you can hope for is your kid(s) to be good people and they probably thought he was being a positive difference for the world. Has to be shattering.
Click to expand...
I’m not sure about these parents either:

Bankman-Fried’s parents, Joe Bankman and Barbara Fried, were seated in the third row behind members of the press.
They appeared to oscillate between dejection and defiance, at times holding their heads in their hands and clasping their hands. Bankman-Fried’s mother audibly laughed several times when her son was referred to as a “fugitive” and his father occasionally put his fingers in his ears as if to drown out the sound of the proceedings.
Click to expand...
Link
 
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