“Understanding FTX’s crimes” by FTXwatcher

In the aftermath of SBF's convinction, there have been a few posts trying to make sense of FTX. Some people are trying to figure out what happened, and some people are interested in trying to find clever defenses.

I'm in a much more boring position: I am confident SBF is the fraud the world believes him to be. I hope this post can provide reasoning transparency on why I think this, and perhaps serve as an easy link for others who feel similarly but don't want to get bogged down in a point-by-point.

Posted anonymously as some protection against future employers Googling [1].

I have divided this post into a summary of the major crimes and my basis for believing they occurred, an 'FAQ' dealing with some common misapprehensions I've seen on this forum and elsewhere, and an appendix explaining some crypto exchange basics / jargon for those [...]

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Outline:

(00:56) Crimes

(00:59) Misappropriation of Funds

(01:51) Detail

(14:47) Lying to lenders

(17:21) Lying to FTXs investors

(18:28) Lying to Banks

(19:02) Detail

(21:53) Bribing a Chinese official

(23:55) Falsified revenue

(25:07) Falsified Insurance Fund

(26:20) FAQ

(26:23) Didnt SBF only know about the hole in June 2022?

(30:16) Didnt customers know their funds might be lent out?

(32:37) Werent FTX and Alameda total messes? Intent matters; isnt it possible that this all got lost in the chaos?

(35:13) Isnt FTX going to make all Customers whole? So there wasnt ever a hole?

(35:47) FTX cashed out customers at bankruptcy prices

(36:32) The assets those customers money had bought did well

(37:12) Had FTX stayed afloat, things would be very different

(38:58) Appendix

(39:02) How crypto exchanges work

(39:06) Spot Trading

(40:54) Margin Trading

The original text contained 7 footnotes which were omitted from this narration.

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First published:
April 11th, 2024

Source:
https://forum.effectivealtruism.org/posts/qyN8M6zh6pnh8fmjR/understanding-ftx-s-crimes

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Narrated by TYPE III AUDIO.