1. We had a busted accounting system
2. Early on in FTX people had to route dollars via Alameda because banking is hard
3. We accidentally credited those dollars both to Ftx and Alameda
4. Each side thought they had billions to spend / lose (their VC and related spend was WILD), and suddenly, oops!!!!!!
I suspect there's a grain of truth to this, in that steps 1-4 did actually happen to some degree and influenced expenditures/risk taking that the firm couldn't back. Given what's known (for some definition), the upper crew knew about the problem well before the bank run, and knowingly transferred funds from FTX to Alameda. This sort of 'best case' scenario still implies an absurd commingling of exchange and user funds.
It doesn't strike me as plausible that nobody ever questioned the extra billions , and it definitely isn't believable that when Alameda got margin called, they just casually 'sent' some of the double counted billions without taking some time to think "hey, so about these billions".
Also, this doesn't square with Sam constantly claiming that he misjudged whether FTT was good backing - if they didn't commingle/steal customer funds, he wouldn't have cared about FTT collateral!
Like, how hard do you have to try to lose 8 Billion dollars and not know how?
I'd bet on them hoping they could make the money back after losing it, and just digging successively deeper holes. They knew what they were doing, and excuses are all about avoiding decades of well-deserved prison for the amount of people they've fucked over.
If you look at them buying out the binance share + their VC spend, I think that was over over 4bn? Buying out binance alone was 2.5bn iirc, and they had well over a billion in investments between FTX and Alameda. That doesn’t feel like the behavior of someone who knows they’re in a huge hole, but then who knows.
Not trying to apply moral judgment or make excuses, just speculating about what happened fwiw. At the end of the day they stole customer money (a few good friends got super wrecked, I have no loyalty to ftx or anything)
It's fraud, from the beginning.
Don't get me wrong, he should still go to prison.
Sorry, but you're just giving in too much in his bullshit. Especially when FTX terms of service explicitly said that your funds would never be given to FTX Trading, and that they would be kept apart. It's not an accident. Separating the funds was consciously thought of and immediately followed up by "lol no".
Anyway, it's clearly fraud and he should go to prison. And in some ways maybe the callous disregard for bureaucracy and controls (we don't need these, it's a waste) is worse than if he had malicious intent (I'm going to take all this money and run). For the person with malicious intent, there's not much to do other than build rules to constrain future people like that since they won't learn from the punishment of others. For the person with disdain for mechanistic controls and regulation however, we do need to show that it's just not acceptable to bypass that stuff and that society will punish you severely.
Despite the fact that he owns Alameda.