Unchained The Chopping Block: Why Lenders Didn't Liquidate Alameda When It Was Underwater - Ep. 421
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Nov 16, 2022 Explore the shocking collapse of FTX and the questionable actions of its leader, Sam Bankman-Fried. Delve into allegations of fraud, financial mismanagement, and the media's role in shaping public perception. The conversation also tackles the moral dilemmas of effective altruism in the crypto world, revealing a stark contrast between philanthropic intentions and personal extravagance. Lastly, consider the potential impact of this debacle on the future of the cryptocurrency industry and the pressing need for greater accountability.
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Unconventional Fundraising
- Sam Bankman-Fried used an unconventional fundraising method for Serum, involving an Excel spreadsheet and escalating price lots.
- This pressured VCs into quick decisions without due diligence, highlighting his belief in their ineptitude.
Centralized Lending's Failure
- Sam Bankman-Fried convinced lenders to value tokens based on fully diluted valuations, despite illiquidity.
- Centralized lenders failed at risk management by not liquidating underwater loans, contributing to the crisis.
Alameda's Internal Chaos
- Haseeb Qureshi recounts that Alameda Research, SBF's trading firm, was poorly managed with few controls.
- It was known for high turnover due to low pay and a chaotic environment, despite its prestigious reputation.