If you haven’t closely followed the Sam Bankman-Fried
#FTX
case, here’s your chance to catch up on a scandal that goes far deeper than traditional media has reported.
The Five Revelations of Sam Bankman-Fried
I’m transitioning from 18 months of
BREAKING: At SBF trial,
#FTX
/ Alameda co-founder Gary Wang just testified that Alameda's liquidation engine allowed it to go more than $100m in the negative as early as late 2019, effectively tapping customer funds.
He brought this to Sam Bankman-Fried . . .
1/2
SBF interview is just staggeringly deceitful. He says he was surprised by the size of Alameda's margin losses, neglecting to mention it was FTX exempted them from getting liquidated sooner. He talks about a "run on the bank," neglecting to mention he wasn't running a fucking bank
I’ve been working on this story for two months. It is extremely disturbing, but important.
Bottom line: Russian authoritarianism has created a serious gap in global efforts to combat the sexual exploitation of children.
That gap is called Yandex.
1/10
More evidence that will definitely come up in the Coinbase trial, and seems very bad for SEC. (NAL)
“We went through a 16-month process with the SEC staff trying to register ... we were pretty summarily told in March that that process was over"
The new SEC charges against
@stablekwon
include more detailed new information than I have seen in similar documents.
They clearly lay out the case that
@terra_money
was a calculated fraud - and that Kwon has cashed out ~$100m in stolen
#BTC
.
@CoinDesk
So, I spent some time looking into
@coinbase
's latest acquisition, Neutrino. What I found, just by reading existing reporting, is insanely dark, and could/deserves to become a massive scandal for Coinbase. Thread. /1
@thechosenberg
FWIW this is a long, grand tradition. Lots of houseboats in and around the bay. I think one of the big docksites was featured in Inherent Vice? not sure about that tho
@bigblackjacobin
I love that the "everything is science" people decided to beat their kids because they saw a tiger do it once, almost certainly on TV.
These are terrible facts. But these facts teach us something even bigger.
We live in a world of rising authoritarianism. Its consequences are not limited by borders. Those living in unfree societies pay the highest price.
But none of us is free when any are in chains.
Low-key wild story from late last week, relevant to
#SEC
case against Coinbase.
In appeal of a crypto-focused bank's application for Fed access, a U.S. District Judge wrote it seemed "plausible" that the Fed interfered as part of an anti-crypto agenda.
Reading through this now. For a start:
"As Bankman-Fried’s parents, Bankman and Fried exploited their access and influence within the FTX enterprise to enrich themselves, directly and indirectly, by millions of dollars, and knowingly at the expense of the debtors".
#FTX
The SEC documents against
@stablekwon
confirm what had been widely rumored: that there was a secret bailout in May of 2021. This means every subsequent representation of TerraUSD's stability was an act of fraud.
The likely counterparty, IMO:
Jump.
Sam directed Gary to add all of Alameda's balances of
#FTT
token to the calculation of Alameda's overall losses, effectively initiating the use of FTX equity as collateral for the illicit lending of customer funds. 2/2
This is perhaps the most nihilistic, mechanistic, money brained, and soullessly expressed idea of the creative process I've ever seen.
No wonder he longs for machines to replace you. To him, you are nothing but needless chaos.
everything 'creative' is a remix of things that happened in the past, plus epsilon and times the quality of the feedback loop and the number of iterations.
people think they should maximize epsilon but the trick is to maximize the other two.
Bitcoin book status: 36,000 words, almost 150 pages. Just some edges to tuck and a conclusion to write. I might finish this weekend.
Raise your hand if you're interested in an advance read and willing to put your name to a blurb (assuming you like it).
I'm sorry but crypto bros being like "college is overrated" then spending $3mil to buy a book because they don't have even the faintest understanding of copyright law is absolutely uproariously funny to me
The CEO of Hacking Team said Julian Assange is “a criminal who by all means should be arrested" . . . Edward Snowden “should go to jail, absolutely.”
Most of Hacking Team's leadership is now part of
@coinbase
.
Huge day in court, one highlight:
Caroline testified that when she first started work at Alameda, both she and Sam had "luxury cars" paid for by Alameda.
Sam later had them swapped for a Toyota Corolla and a Honda Civic, explicitly to create an image of modest living.
#FTX
Michael Lewis wrote an entire
#ftx
book sympathetic to SBF and said he considered it a "letter to the jury."
That's unethical, but regardless, I have a letter for the jury as well. It's one sentence long:
*Sam Bankman-Fried's defense firm also represented Ghislaine Maxwell.*
So, uh, yeah, Michael Lewis just compared Sam Bankman-Fried's trial by a jury of his peers to a *lynching.*
"It reminded me of accounts I've read of families packing up their picnic baskets and going to see the lynching ... Their spirits are high, they're enjoying everything,
NGOs focused on helping vulnerable people have been ruthlessly suppressed, along with the rest of civil society, ultimately in service of one man’s avarice.
9/10
According to experts, that has turned Yandex into a sort of training ground for pedophiles who aren’t tech-savvy enough to navigate the dark web.
On Google or Bing, a search for terms associated with child exploitation returns warnings. On Yandex, it returns results.
4/10
If I'm reading it right, the Samourai indictment gives the game away.
Justice claims $2 billion in "illegal transactions" - illegal because Samourai isn't a registered transmitter.
But only $100 million in "criminal proceeds" - that is, actual money laundering.
In other
But Vladimir Putin doesn’t like international nonprofits. And he doesn’t like the West’s vision of the Internet. So his government appears to have prevented Yandex from joining this effort.
3/10
Many victims are also in Russia itself. The same Kremlin policies that have prevented Yandex from joining global efforts to fight child exploitation have made human trafficking – of both children and adult women – rampant in Russia.
8/10
The creeping normalization of pedophilia impacts every society on Earth. But many victims of commercial child exploitation are in unstable and impoverished places including sub-Saharan Africa.
7/10
Most major technology platforms rely on a shared database maintained by a nonprofit to block sexual images of children. These images have proliferated on the clearweb in a soul-crushing way, but it is a problem that major internet companies HAVE combated head-on. 2/10
This is literally *a program created by the law*.
The person in the picture is collecting cans to be turned in for the deposit. They're keeping the city clean and reducing waste, while earning income.
It's a stellar policy that's a win-win-win unless you're an utter psycho.
Those results include sexual images of children. They also include links to forums where pedophiles can learn how to hide from law enforcement.
By spreading this information, Yandex is helping normalize child exploitation by creating the impression that it is widespread.
5/10
I have so many thoughts about SBF in court today. Above all, this man understood *nothing* about finance.
He has become obsessed with the idea of "hedging." Everything would have been fine if they had hedged.
Hedge what? Like $3 billion dollars in *VENTURE INVESTMENTS*.
🤪🤪🤪
@evisdrenova
I think the number we should be paying attention to here is the $2.5, not the $1.8.
You need the domain. But how are you doing hardware for two million dollars regardless
This
#CelsiusNetwork
filing is absolutely bonkers. Analysis incoming, but the long and short: state investigators believe it was a Ponzi scheme as early as 2020.
Remember when Martin Shkreli conned that Bloomberg reporter into leaving her husband of ten years, had sex with her while in prison, lied about his intention to marry her, then ended their "relationship" with a statement that he "wished [her] the best of luck in the future?"
@amdiazart
@Keitsune_
Somehow Storm being okay with just a *little* evil in the pursuit of national self-determination totally scans and makes her character instantly more interesting
The government also submitted a LARGE document of DMs sent to Sam Bankman-Fried's Twitter account in the days after the
#FTX
collapse. They're a tough read.
It's very effective to talk about employees and founders and yes, they would be hurt by an SVB unwind.
But remember that ultimately the vast majority of that money comes from, and would return to, guys who own jets
The real dirty little secret of the cryptocurrency industry is, this is really supposed to be a thing for like 300 assorted academics, freaks, and dorks for another two decades, but because it's directly monetizable, everything got fucked up
This is the god damn
@TheAtlantic
, describing FTX's collapse as a result of panicky customers withdrawing their money, in the year of our Lord two thousand and twenty three.
WHY are elite media consistently running interference for a fraudster? WHY?
Major highlight from
#ftxtrial
today:
AUSA Sassoon led Sam Bankman-Fried to describe efforts to *personally steal* $650 million dollars worth of Robinhood shares.
Gov: "And you transferred those shares to yourself?"
Sam: "I'm not sure what you mean."
The receipts 🧵:
1/5
@Whatapityonyou
Like 79% of my soul is like lol good luck dumbfucks
The other 21% is like this is clearly a major vector for catastrophic community spread and we're all doomed
I'm now on page 71 of Michael Lewis'
#FTX
SBF book and I am still in a world where Bankman-Fried is a world-saving genius who did nothing of note wrong
@thechosenberg
It's increasingly my belief that every truly happy couple's story is some variation on "we met at a naked punk hot tub party now we own a house and have two kids"
Listening to Caroline Ellison talk about how she created a fake balance sheet to Genesis Trading in June of 2022 is like learning the details of your own murder.
(Genesis was a DCG company and its collapse led indirectly to my downsizing at CoinDesk.)
#FTX
Let's clarify one thing: it's perfectly logical to be both overjoyed that Do Kwon's delusional farce collapsed before it got worse, AND deeply saddened and disturbed by the loss and suffering the collapse has caused.
They are, in fact, the same emotion.
I am inclined to go full tinfoil on this one.
There's a very linear sequence of events that led to what looks like a kibosh on what would have been politically sensitive material.
But it's all pretty convenient, including for Barbara Fried.
Crypto Crimes - and cover up? On SBF, just now DOJ wrote to Judge (6 pm on Fri Dec 29) "to provide notice to the Court and the defendant that it does not plan to proceed with a 2d trial" - dropping campaign finance and China bribe counts. Who took the money?
@thechosenberg
Somehow when it's a man in a button-down my "why would you ever post this and not just talk to actual friends about it" response is much stronger. Doing continuing battle with my own sexism, I guess
Michael Lewis' "Going Infinite" is a metatextual work of autofiction in which the unreliable narrator, after a long career as a near-revered financial journalist, is seduced by a sociopath and publicly destroys his career.
Through this lens, it is a work of genius.
#FTX
@lessin
So the workers don't know what's best for workers ... I guess the best people to make decisions on their behalf are enlightened management? Investors maybe?
This is a guy reared on utilitarian ethical philosophy, who presented himself as deeply thoughtful about altruism, and he doesn't have the ethical intuition God gave a llama
Getting rich people to actually pay their taxes - which they avoid at a rate much higher than the rest of us - would have produced three times more revenue than the broken crypto language that just passed the Senate.
You should make your own decisions. For my part, I agree with the advice of
@pierre_rochard
: “Sell your bitcoins on Coinbase, buy a jetpack and GET THE FUCK OUT OF THERE”. /end
Well, looks like the cat's out of the bag, so:
I'm ecstatic to announce that as of today I'm joining
@CoinDesk
as its Chief Insights Columnist.
What the hell does that mean, you are certainly asking? More details and nuance incoming.
It's going to zero, probably today. It's programmed that way.
I genuinely think Jump may have fully screwed the pooch on this one. Worth noting they're not a crypto native firm, and their portfolio is about $40b. We might see a crypto collapse take down a tradfi firm.
People keep asking if I'm back. And I haven't really had an answer.
But yeah, I'm thinking I'm back.
Today I joined
@FortuneMagazine
as a staff writer.