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Comment by notyourday | Hacker News Reader

> ? It was public that FTX money came from running a crypto exchange, but that FTX's CEO (SBF) secretly diverted customer funds to his hedge fund (Alameda) doesn't seem like something people would have discovered in due diligence.

I'm guessing algebra is difficult for journalists.

> Major investors, with lots of money on the line, also didn't catch this.

Major investors had all the incentives to keep the scam going as they stood to make big money from the scam.

Journalists should have the incentives to expose the scams, except they were not in this ( and probably some other ) case because they were either getting money from the scam or were trying to be the best cheerleaders possible in hope of getting money from the scam.

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> Journalists should have the incentives to expose the scams

I agree. But the incentives are gone. A huge portion of the investigative journalism industry died when hard copy newspapers died. A lot of those journalists now work for private industry doing competitive intelligence. They need to pay their mortgage just like software developers do. Very few people pay for hard core journalism now (ads by their nature mainly pay for clickbait, and even then the 'journalist' sees very little of the income)

> I'm guessing algebra is difficult for journalists.

Not sure what you're saying here? The amount of money the FTX Foundation was distributing was plausible given FTX's fees and volume.

> Major investors had all the incentives to keep the scam going.

That ignores new investors buying in, who I don't think had those incentives?

> Not sure what you're saying here? The amount of money the FTX Foundation was plausible given FTX's fees and volume.

Only if FTX and its founder found a way to create print money out of the thin air.

> That ignores new investors buying in, who I don't think had those incentives?

New investors are definitely not major investors and even those investors simply want to find an even greater fool.

Two weeks ago I overheard a bartender in a dive bar where beer and a shot goes for $6 telling the regular drunk about all the mad money he is making at FTX. Here's a thing: there's not a single non-scam that would allow a bartender in a dive bar that sells $6 beer and a shot to make gobs of money "investing" or "trading"

> Only if FTX and its founder found a way to create print money out of the thin air.

It looks like FTX volume was something like $7B/day in July [1].

FTX fee structure [2] was complex, but assuming they got at least 0.04% seems reasonable? In which case they were making ~$3M/day ($7B * 0.04%) or ~$1B/year in fees.

[1] https://web.archive.org/web/20220725151202/https://www.coing...

[2] https://help.ftx.com/hc/en-us/articles/360024479432-Fees

As I said, algebra is difficult for journalists looking to cheerlead in hopes of getting spoils:

https://ir.nasdaq.com/news-releases/news-release-details/nas...

It sounds like you think there's a bit of simple math that would have shown all of this was deeply suspicious? Could you be more specific?

Yes, compare the earnings of NASDAQ with the "earnings" of FTX. Google the "founder". Watch the shit he talks about. Ask yourself - if he has that much time to be a clown what are the odds of him actually running a company that is worth that much money without a team?

> compare the earnings of NASDAQ with the "earnings" of FTX

Yes? Everyone knew that volume in crypto was too high and likely irrational. But that wasn't much indication that FTX was behaving fraudulently: they seemed to be just doing the straightforward work of helping match buyers and sellers and taking a cut.

> if he has that much time to be a clown what are the odds of him actually running a company

Lots of CEOs seem to do things like this; again that's not a strong signal. Also doesn't have anything to do with algebra.

> without a team?

FTX had several hundred employees

> Yes? Everyone knew that volume in crypto was too high and likely irrationa

No, everyone knows that the exchange volume in crypto is high and fraudulent. Irrational behavior is not acknowledging it.

> Lots of CEOs seem to do things like this; again that's not a strong signal. Also doesn't have anything to do with algebra.

They do not. There's 24 hours in a day. Excluding 5 hours the CEO "slept", two hours that CEO spent eating and waking up that leaves 17 hours total. Every single activity one engages in subtracts available time for running the company.

> FTX had several hundred employees

FTX "leadership" lived in a single Penthouse in Bahamas, having sex with each other. Fish rots from the head. In this case anyone who did not want to ignore it saw that the head of the fish was rotten.

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