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Floating other people's money: the FTX story [1]

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Date: 2022-11-18

"The Float Play. By Greg Walker. The "float play" is an advanced bluffing technique in Texas Holdem that is extended over two betting rounds. The principle role of the play is to make your opponent believe you have a stronger hand than theirs via the flop and turn betting rounds, and thus closing down the action and winning the pot on the turn."

Like Charles Ponzi and Bernie Madoff, Sam Bankman-Fried may have thought life crept up on him. And as with every other grift, whether conning a SCOTUS scion to help loan Russian-protected funds with a German bank, or now needing to borrow $8B with a deadline. Eventually the bottom line or front end comes back to bite you. Bankman-Fried fought the float and the law is winning.

All the trust guaranteed by an encrypted energy-sucking technology will get destroyed because someone will ripoff the funds at another point in the capital timeline, also… Genisys is Skynet. Bait and re-Switching.

x “The FTX case is the Lehman Brothers moment for crypto. What the cryptosphere now needs is trust, and to build trust you need clear rules and regulatory clarity.” Via @WIREDUK https://t.co/JzfKu8QZns — WIRED (@WIRED) November 18, 2022

x i think it's great he won't stop talking to literally anyone but his lawyer has to be screaming into a pillow right now — Edward Ongweso Jr (@bigblackjacobin) November 16, 2022

x There were not many Sam Bankman-Fried doubters out there. But there were a few. @KevinTDugan reports on the small, loosely connected group of investors and researchers that saw early signs of a scam at FTX https://t.co/ktfYpdhfWM — Intelligencer (@intelligencer) November 17, 2022

How FTX’s Sister Firm Brought the Crypto Exchange Down Alameda Research was Sam Bankman-Fried’s first company. He built FTX partly to help Alameda’s trading business. Then things got out of control. In late 2017, Sam Bankman-Fried, then 25 years old, co-founded Alameda Research, a small trading firm that marked the beginning of his cryptocurrency empire. Now the relationship between Alameda and his cryptocurrency exchange, FTX — and how the two propped each other up — is coming under scrutiny as prosecutors and regulators investigate the collapse of one of the best-known trading platforms in the crypto universe. Alameda’s need for funds to run its trading business was a big reason Mr. Bankman-Fried created FTX in 2019. But the way the two entities were set up meant that trouble in one unit shook up the other as crypto prices began to drop in the spring. In the end, it brought down both Alameda and FTX, leading to billions of dollars in losses for customers and traders. And although the collapse echoed past calamities on Wall Street, the lack of regulatory oversight — coupled with an ambitious start-up founder flush with venture capital money and few internal controls — meant that there were few parallels. John Jay Ray, III, a prominent restructuring lawyer handling the cleanup of FTX, called the situation “unprecedented” in a U.S. bankruptcy court filing on Thursday. He blasted the company for the “concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals.” Mr. Bankman-Fried co-founded Alameda in Berkeley, Calif. His scrappy team of traders in their 20s worked around the clock, showering in the locker room of the gym of the four-story building where Alameda had its headquarters. He soon moved the firm to Hong Kong, which had been wooing crypto traders and imposed little oversight on the nascent industry. The main way that Alameda made money was straightforward: It bought Bitcoin and other cryptocurrencies in one part of the world and sold them in another, pocketing the difference. www.nytimes.com/...

x The wild theory that the FTX execs were helping launder kickbacks of Ukraine aid to Democrats makes even less sense when you consider that FTX executive Ryan Salame personally spent $23.9 million on the midterms–mostly supporting Republicans.https://t.co/QJeq14PKCA — WarShares (@WarShares) November 17, 2022

Even Austrian Libertarians thought it was hinky (in ethical retrospect).

x I discussed some of the most glaring here - particularly the conflicts of interest, lack of disclosure, and shoddy DD https://t.co/AL0CXJz9VG — Joseph M Solis-Mullen (@solis_mullen) November 17, 2022

Quantitative Easing:

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[1] Url: https://www.dailykos.com/stories/2022/11/18/2136635/-Like-Charles-Ponzi-and-Bernie-Madoff-Sam-Bankman-Fried-may-have-thought-life-crept-up-on-him

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