/biz/ - Business & Finance

>>56333929
yes and it is good that that sociopath SBF's lies are being exposed to the public

>when Alameda does well
Das rite it's all me I'm a genius
>when Alameda does poorly
I wasn't even in charge of it, it was the guy who was fucking me in the ass all along

And $wolf you buy from them

>>56333929
whats that twitter account that shows the transcripts? i wanna read all her testimony kek

>>56333929
Women are always a liability. Always. When you don't understand that you end up a lot worse off than Sam Bankman-Fried did. At least he had some very high highs before plummeting. Here's how it works: money and power are amassed by playing the game, whatever game, correctly and carefully. Money and power draw women to you exponentially to the point that a woman entering your life practically becomes an inevitability. Poorly managed women cause you to play the game suboptimally. If you're lucky, you survive, but at that point your whole existence is hanging by a thread.

If you're like most people, the woman builds a feedback loop of destruction in your existence that causes you to move just a little bit differently, almost imperceptibly, and then boom...you lose. And the woman will then feed off your loss and use it to bury you. Women are essentially designed as a balancing mechanisms on humanity. If you cannot regulate women, they will destroy you the same way a virus, a hurricane, an earth quake, or any other natural disaster will. They are the final boss and a man worthy of leading and being followed is the one that places his boot on a woman's throat and pins her there as she shouts "I LOVE YOU!"

Anything less and you're fertilizer.

>>56333950

She'll get away with it simply because she's a woman. She is ugly af though, so they'll still charge her with some lighter shit.

>>56334021
autism capital?

>>56333929
It was her, but Sam is more culpable. Caroline wasn't Tether's biggest customer after all.

>>56334021
>Caroline Ellison, the former head of Sam Bankman-Fried's crypto hedge fund and the government's star witness in the criminal fraud case against the FTX founder, testified Tuesday that she and her ex-boss ran around naked in the former FTX penthouse with friends.

>"He would chase me in the dark around the furnature while his frends hit me with brooms" Ellison said, when Danielle Sassoon, assistant U.S. attorney, asked if she committed a crime. "I mean Sam and I and others were part of a polycule"

>>56334021
>i wanna read all her testimony kek
This. Normies can’t understand the thrill of pinning the weasel. Night spent chasing an over amphetamined Caroline around the bean bag forts. Her squealing and gibbering, pouring sweat and on the verge of seizing. Your friends build up an intoxicating, delerious state with Talmudic chantings at the sidelines, hitting the Caroline-toy with brooms if she tries to escape. Sam would be giggling and laughing as the waves of methamphetamine pleasure seem to harmonize with the droning herbrew verses. He runs through the bean bag maze fat and portly, with his viagra powered penis a driving rod for the weasel. Sweat gushing down his face around his unfocused eyes he laughs and chortles until he gasps “Found you!” . The Mathweasel screeches defensively but Wankman Bankman is upon her in seconds. His penis thrusting blindly into her flank, leg, stomach and ribs unconcerned about anything but the motion. Eventually serendipity finds her mouth and the Cocktube Rodent is placated, suckling contently on Bankman’s dehydrated dick.

>>56334149
Based post

SBF Stuff

I am about halfway through Going Infinite, Michael Lewis’ book about Sam Bankman-Fried, and I am very much enjoying it. Many of the reviews that I have read of the book complain that Lewis does not sufficiently explain that Bankman-Fried is Guilty and Bad, Actually, but that is not the book that he wanted to write or the one I want to read. [1] He wanted to understand and explain Bankman-Fried’s psychology and tell a good story. If you want to read a moral condemnation of crypto theft, you can get that anywhere. You go to Michael Lewis for character and story.

Also, reading those reviews you would think that the book is a defense of Bankman-Fried, but it is actually quite damning. (Less damning than most of what is written about Bankman-Fried these days? Sure.) There is an anecdote (which has been reported before) from the early days of Alameda Research, the crypto trading firm that Bankman-Fried started before his crypto exchange FTX, the firm whose trades with FTX customer money ultimately brought down the whole thing. At some point Alameda lost track of $4 million of investor money, and the rest of the management team was like “huh we should tell our investors that we lost their money,” and Bankman-Fried was like “nah it’s fine, we’ll probably find it again, let’s just tell them it’s still here.” The rest of the management team was horrified and quit in a huff, loudly telling the investors that Bankman-Fried was dishonest and reckless.

tfw the weasel pins you back

>>56336450
And then Alameda eventually did find the money and it was fine. The lesson that Bankman-Fried, and everyone else who stayed at Alameda, seems to have taken from this episode was something like “Bankman-Fried is infallible, and it’s fine if he takes wild risks and does fraud because it always works out in the end.” I wonder how that approach will play out in the second half of the book!

There is another strange anecdote from Bankman-Fried’s even earlier days, as an intern at Jane Street Capital, the proprietary trading firm. [2] Jane Street wants to teach its interns to think in bets, so they are encouraged to bet against each other all the time. To prevent disaster, there is a rule that no intern can lose more than $100 in a day. [3] One morning, another intern, called “Asher” in the book, offers to bet Bankman-Fried on the maximum amount any intern will lose that day. “This cannot settle above one hundred or below zero, right?” confirms Bankman-Fried. And then he buys at 65: If any intern loses more than $65 that day, Bankman-Fried will pay Asher that intern’s losses above $65; if none do, Asher will pay Bankman-Fried the difference between $65 and the maximum loss. If an intern loses $100, the maximum, then Bankman-Fried gets $35. If the biggest loser loses only $50, he pays Asher $15.

>>56336457
Of course Bankman-Fried can easily win this bet by losing $100 himself. That is not optimal, for him, but he can use that fact to manufacture a good trade. He immediately turns to the other interns in the room and offers them $1 to take an even-money coin flip for $98. Somebody (Bankman-Fried or his counterparty) will lose $98 on this bet, so Asher will have to pay him $33 ($98 minus $65). If Bankman-Fried wins, he gets $98 (from winning the coin flip), plus $33 (from Asher), minus $1 (he paid the other intern a premium to do the coin flip), for a net gain of $130. [4] If he loses, he loses $98 (coin flip) plus $1 (payment) but gets back $33 (Asher), for a net loss of $66. [5] That’s a very positive-expected-value bet for him: Bankman-Fried has a 50/50 chance of winning $130 or losing only $66. But it’s also positive-expected-value for his counterparty on the coin flip. Lewis writes:

>To the Jane Street way of thinking, Sam was offering free money. A Jane Street intern had what amounted to a professional obligation to take any bet with a positive expected value. The coin toss itself was a 50-50 proposition, and so the expected value to the person who accepted Sam’s bet was a dollar: (0.5 x $98) - (0.5 x $98) + $1 = $1.

Bankman-Fried easily saw how to manufacture the bad outcome for Asher. This is a key skill in trading, but especially in crypto trading. “Asher was now clearly deeply embarrassed.”

>>56336465
Bankman-Fried finds a taker, wins the coin toss and collects $98 from the other intern. Then he goes again:

>To maximize Asher’s pain, some intern needed to lose one hundred dollars.

>I’ll pay a dollar to anyone who will flip me for ninety-nine dollars, Sam shouted.

>Now he had a machine for creating wagers in which both parties enjoyed positive expected value. That machine was named Asher. Interns were lined up to take the bet. “People get so obsessed with free dollars when you frame it correctly,” said Sam. … “If I’d have spent the rest of the internship flipping that coin, I’d have been satisfied.” And for a while it appeared that he might, as he won the second coin flip too.

>I’ll pay a dollar to anyone who will flip me for ninety-nine fifty, shouted Sam.

>The other interns clearly felt obligated to take the bets, but the mood in the room was shifting in response to Asher’s feelings. … But Sam won the third coin flip too, so to his way of thinking the gambling wasn’t yet over.

>I’ll pay a dollar to anyone who’ll flip me for ninety-nine seventy-five, he shouted.

>It wasn’t until the fourth flip that Sam lost — and by then everyone except Sam was unsettled by Asher’s humiliation.

The point of this story in the book is that Bankman-Fried gets in trouble with his bosses for being mean to Asher, which he thinks is unfair: “What he’d done to Asher was no more than what Jane Street was doing to competitors in financial markets every day.”

>>56336480
But there are two much weirder things in this anecdote.

First: “A Jane Street intern had what amounted to a professional obligation to take any bet with a positive expected value”? Really? I feel like, if you are a trading intern, you are really there to learn two things. One is, sure, take bets with positive expected value and avoid bets with negative expected value.

But the other is about bet sizing. As a Jane Street intern, you have $100 to bet each day, and your quasi-job is to turn that into as much money as possible. Is betting all of it (or even $98) on a single bet with a 1% edge really optimal? [6]

People have thought about this question! Like, this is very much a central thing that traders and trading firms worry about. The standard starting point is the Kelly criterion, which computes a maximum bet size based on your edge and the size of your bankroll. Given the intern’s bankroll of $100, I think Kelly would tell you to put at most $10 on this bet, depending on what exactly you mean by “this bet.” [7] Betting $98 is too much.

I am being imprecise, and for various reasons you might not expect the interns to stick to Kelly in this situation. But when I read about interns lining up to lose their entire bankroll on bets with 1% edge, I think, “huh, that’s aggressive, what are they teaching those interns?” (I suppose the $100 daily loss limit is the real lesson about position sizing: The interns who wipe out today get to come back and play again tomorrow.)

>>56336488
But I also think about a Twitter argument that Bankman-Fried had with Matt Hollerbach in 2020, in which Bankman-Fried scoffed at the Kelly criterion and said that “I, personally, would do more” than the Kelly amount. “Why? Because ultimately my utility function isn’t really logarithmic. It’s closer to linear.” As he tells Lewis, “he had use for ‘infinity dollars’” — he was going to become a trillionaire and use the money to cure disease and align AI and defeat Trump, sure — so he always wanted to maximize returns.

But as Hollerbach pointed out, this misunderstands why trading firms use the Kelly criterion. [8] Jane Street does not go around taking any bet with a positive expected value. The point of Kelly is not about utility curves; it’s not “having $200 is less than twice as pleasant as having $100, so you should be less willing to take big risks for big rewards.” The point of Kelly is about maximizing your chances of surviving and obtaining long-run returns: It’s “if you bet 50% of your bankroll on 1%-edge bets, you’ll be more likely to win each bet than lose it, but if you keep doing that you will probably lose all your money eventually.” Kelly is about sizing your bets so you can keep playing the game and make the most money possible in the long run. Betting more can make you more money in the short run, but if you keep doing it you will end in ruin.

>>56336450
please let hamas finish them off this time

>>56336492
I don’t know what actually happened at Jane Street that day. I assume that the anecdote in Going Infinite comes from Bankman-Fried. “People get so obsessed with free dollars when you frame it correctly,” he says; he is the one framing this story. What I take from this story, and from other anecdotes here about his early trading career, is that Bankman-Fried is good and facile and clever at calculating expected value, and at finding ways to inflict pain on counterparties, but he is … not even bad at trade sizing; he just doesn’t think about it at all. It is not a part of his life. He goes all in on everything. In his model of the world, if you are offered a bet with a 1% edge, you should put all of your money on it, over and over again, until you lose everything. How will that play out in the second half of the book?

Here’s the other weird thing about the anecdote: These bets obviously have negative expected value?

Not for his counterparties, who get paid $1 to take a fair coin flip, but for Bankman-Fried. And not the first one; that one is fine; the math above is right. He pays $1 to play, he gets a fair coin flip, he makes $33 from Asher, fine, good trade. But then he keeps going to eke out a few marginal pennies from Asher. [9] When he wins the first flip, Asher owes him $33, the difference between their $65 strike price and the $98 that the first intern lost. When he wins the second coin flip, Asher owes him an additional one dollar: Their bet is on the maximum loss, not the total loss, so finding another intern to lose $99 increases the payoff by only $1. [10] The second flip is an even-money proposition for Bankman-Fried: He pays $1 to do it and gets an extra $1 from Asher. The third and fourth flips, where he pays $1 to get 50 and then 25 cents from Asher, have negative expected value. The last flip, which he loses, costs him $100.75 and brings in nothing. [11]

>>56336500
Again, I don’t really know what happened. Perhaps I have misunderstood how the bets worked, or perhaps Lewis did, or perhaps Bankman-Fried misremembered, or perhaps he really did get these bets wrong. But isn’t this version of the story revealing? In this story:

- Bankman-Fried found a perfect trade, for him: It was risky but it had a lot of edge, it made him look smart, and it made his counterparty look dumb.
- He did it, it paid off, he looked smart, his counterparty looked dumb, all was right with the world.
- It was so intoxicating to be right that he kept doing the trade.
- He never noticed that the trade stopped being good: The glow of being right persisted long after he became wrong.
- Eventually he lost the bet and everyone was mad at him.

Everything about Sam Bankman-Fried’s life was perfectly optimized for becoming a famous billionaire and an infamous criminal defendant, in that order.

>>56336456
kek my sides

>>56336504
SBF Stuff: Anthropic
Many financial frauds have roughly the same shape. Investors give you money because you tell them you are doing something safe and sensible with it. In fact, you are using the money for some combination of (1) paying your personal expenses and (2) making wild gambles. The gambles do not work out, the money is gone, the investors notice, you go to prison.

What if the gambles do work out? Well! I think a lawyer would tell you that, if you are lying to your investors and using some of their money on personal expenses and putting the rest into wild gambles, and the gambles pay off, that is also fraud. It is arguably just as much fraud: What matters, as a legal and moral matter, is that you were doing wild dumb gambles and lying, not whether your gambling turned out to be lucky. Still, it does feel like there is a practical difference. If investors give you $100 and you do a series of dumb things with it and give them back $150, they probably won’t complain. What you did was illegal, but you don’t go to prison just because you did something illegal. You go to prison because you did something illegal and prosecutors bother to prosecute you, and if all your investors are happy they are less likely to bother.

>>56336511
It is not too hard to find successful startup founders who lied to investors on their path to success, who “faked it til they made it,” and who made it and are now treated as geniuses. Other startup founders also faked it til they made it, but did not make it, and faking it and not making it is just fraud. To some extent, you flip a coin, and if you win the coin flip you get rich and it was not, in retrospect, fraud; if you lose the coin flip you don’t get rich but you do get arrested.

“Pharma Bro” Martin Shkreli is unusual because:

1. He became a public figure for doing a variety of very annoying but non-fraudulent things, so everyone was primed to dislike him.

2. He was also, though more quietly, doing financial fraud: He ran some hedge funds in which he was taking wild gambles with investor money, losing it and lying to the investors.

3. He took one last gamble with his investors’ money, and it worked out great: He made all his money back and then some, and he paid all his investors back with profits.

“All my investors made money” is not technically a legal defense to fraud charges, but it is ordinarily practically sufficient. Shkreli created enough special circumstances that it wasn’t. He spent about six years in prison.

>>56336520
But he’s out now and apparently spending his time watching Sam Bankman-Fried’s criminal trial. Bankman-Fried is on trial for taking billions of dollars from customers of his crypto exchange, FTX, telling them that he was doing something safe and sensible with it, and really using it for some combination of (1) lavish personal and promotional expenses and (2) wild gambles. The gambles did not work out, the money is gone, the investors noticed, and Bankman-Fried is in jail now and facing decades in prison. The issues at trial will be (1) whether Bankman-Fried knew that the customer money was going to wild gambles and (2) whether, in the context of crypto a few years ago, it was reasonable to chuck all the customer money into wild gambles. I don’t think it is impossible for Bankman-Fried to win on those issues, but it will be pretty tough.

>>56336529
Here, though, is a stranger question: What if the gambles did work out, and the money is all there? The Block reported yesterday:

>Artificial intelligence firm Anthropic has reportedly raised fresh funds from Google and other investors that could potentially boost its valuation to as much as $30 billion — and that’s a “good sign” for FTX creditors given Sam Bankman-Fried’s earlier investment, a crypto bankruptcy lawyer said. ...

>In April 2022, Anthropic raised $580 million in its series B funding round led by Sam Bankman-Fried, founder of now-bankrupt FTX.

>The latest new funds and the potential increase in company valuation could “make it possible” for FTX to log a “100% recovery rate” in assets as part of the failed crypto exchange’s bankruptcy proceeding, Kunchou Tsai, managing partner of Taiwan-based Enlighten Law Group, told The Block.

>Tsai, who has helped over 100 clients file their FTX claims, said there should be a lock-up period for Anthropic investors to dispose of their holdings for startup investments like this. “It remains uncertain when the FTX bankruptcy restructuring team would be able to sell off its [stake in Anthropic],” he added. “They might have to wait until Anthropic once goes public unless there are any special occurrences.”

>FTX 2.0 Coalition, a group of FTX creditors, said in a post on X (formerly Twitter) that the potential Anthropic’s increased valuation could put FTX's stake at around $3 billion to $4.5 billion and that “FTX customers now stand to be made whole.”

>>56336534
I would take that with a whole lot of salt — a $30 billion valuation in a fundraising round doesn’t mean that FTX could sell $4.5 billion worth at that price today, and anyway last I checked the hole at FTX was bigger than that — but, uh, maybe?

My assumption is that, even if FTX did manage to sell its Anthropic stake, tomorrow, for enough money to make all of its customers and creditors whole, that wouldn’t change very much about Bankman-Fried’s trial. “We lucked into enough money to pay everyone back” is not a legal defense to fraud, the prosecutors have already bothered to bring a case against him, and people are already primed to dislike him because of all the fraud and the losing of customer money. Still it wouldn’t hurt him. [1] Everyone charged with fraud says that they planned to pay their customers back, but it is helpful if you actually can.

Also this is Bankman-Fried’s whole thing. FTX, and his trading firm Alameda Research, were in some loose sense a mechanism to funnel money from FTX customers into lottery tickets on weird visions of the future. The main weird vision of the future was something like “crypto takes over the financial system, and FTX becomes the most legally compliant and dominant financial firm in crypto”; much of FTX/Alameda’s balance sheet — particularly its huge stash of FTX’s own FTT tokens — was a straightforward, leveraged, risky bet on that outcome. That bet did not work out.

>>56336537
But Bankman-Fried’s background was not in crypto but in the effective altruism movement, and particularly in the corners of effective altruism that worry a lot about existential risks of pandemics and rogue artificial intelligence. So FTX/Alameda had other weird bets that had the flavor of “artificial general intelligence will become incredibly powerful and making it non-evil will be the most important thing in the world,” and FTX chucked $500 million into Anthropic as part of this bet, and maybe it will pay out big? The only way for FTX to make customers whole would be for some improbable bet to pay off, [2] but FTX was in the business of making a lot of different improbable bets so you never know. If you steal all your customers’ money to buy lottery tickets, that’s probably bad, but maybe one of them will win.

>>56336544
SBF Stuff

A simple version of the charges against Sam Bankman-Fried would be something like “people deposited money at his crypto exchange, FTX, and he stole it and gave it to his crypto trading firm, Alameda Research, which squandered it on dumb crypto trades and endorsement deals.”

But this story is not exactly right. There was not money sitting in customer accounts that was then transferred to Alameda accounts and squandered. FTX was a futures exchange; it did not keep money in a box for customers. The money in your FTX account was just money that FTX owed you. Nor did Alameda need to steal the money; FTX was a leveraged futures exchange, and traders like Alameda could, in the ordinary course of business, borrow money from FTX based on their crypto positions. The problem, ultimately, at FTX, was that it owed customers a lot of money, but it couldn’t pay them, because Alameda owed FTX a lot of money, but it couldn’t pay it, because it had squandered the money on dumb crypto trades and endorsement deals.

This distinction seems nitpicky, but it is important. The story in the first paragraph is obviously illegal, but the story in the second paragraph might not be. A story like “we owed a lot of customers money, but our biggest customer owed us money, and the market moved against that customer and it defaulted on its obligations to us, so we couldn’t pay our other customers,” can be legitimate, an embarrassing accident but not fraud. (As I keep saying, it kind of happened in the legitimate regulated market for nickel futures last year.)

>>56336557
Instead, to prove fraud, prosecutors need to prove some lies. The evidence of fraud is not just “people put money at FTX and the money ended up with Alameda, which squandered it”: That could happen legally. The evidence of fraud has to be something more like “people put money at FTX and it ended up with Alameda in ways that FTX said it wouldn’t.” “Alameda owed us money, and defaulted” is not in itself evidence of fraud. But if FTX was going around saying things like “we have made it impossible for Alameda to owe us money and default,” then that turned out to be a lie. And that is fraud.

I have said this before, and I think some people have found it annoying. People want this case to be simple: The money was stolen, all of this stuff about leveraged futures trading is a hand-waving distraction. But I think it is clear, from the trial so far, that the prosecutors know what they have to prove. They are doing what I would: They are trying to prove that Bankman-Fried was going around lying to people about how much customers (including Alameda) could owe to FTX, and how carefully FTX managed the risk of any customer defaulting on its obligations.

>>56336562
For instance, on Friday, they played a recording of Bankman-Fried lying to me about it. He was on Bloomberg’s Odd Lots podcast in August 2021 to talk about crypto market structure; here are the audio and the transcript. (This is not the infamous Odd Lots episode, the one about the box.) One thing we talked about was how FTX handles liquidations. A lot of leveraged crypto exchanges had a problem: They sat between people making bets on crypto, crypto was volatile, and if Bitcoin went up (or down) a lot, people who were long (short) Bitcoin made a lot of money, while people who were short (long) lost a lot of money. For the exchange to pay the people who made money, the people who lost money had to pay up, and they often did not. Bankman-Fried said:

>Clawbacks is sort of like the word that people used for that. And there were exchanges where like each week they say like, congrats, you did good trading, you get paid 86.2% of your PNL this week. You know, the other 13.8 went to bail people out.

>And it just happened week after week after week, there's millions of per day of losses of customers to that, which is not how you want to end up.

>>56336567
He contrasted FTX’s solution to the problem, which was to have a liquidation engine that automatically closed out traders’ positions when they got too close to losing money. The idea was that, with constant monitoring of the position, well calibrated margin requirements, instant liquidation and good risk management, you’d never end up in a situation where a losing trader owed the exchange money: Traders post collateral for their trades, and all losing trades are closed out before the collateral is exhausted. (Back when he was a financial celebrity, Bankman-Fried argued that this sort of automated continuous margining would make markets safer, and pitched it to traditional financial regulators.) Of course this is not absolutely risk-free — sometimes prices move faster than you can liquidate — so it needs to be backstopped; the exchange needs some capital or insurance so that it can pay out customers even if one customer loses too much money too quickly. FTX had that too, an insurance fund to cover losses that its liquidation engine did not prevent.

>>56336571
On Friday, FTX’s former chief technology officer, Gary Wang, who has pleaded guilty and is cooperating with prosecutors, testified about this. Prosecutors played a clip of me asking, essentially, if FTX ever needed that insurance, or if the liquidation engine was good enough to prevent losses. “Do you guys regularly have blowouts that you're not made whole,” I asked. [2] Bankman-Fried replied:

>It's a good question. We don't have big issues. Like we've never had a day, I think, where there's more money that we've lost in blowouts to revenue that we made just from trading fees. And on most days it's effectively $0 costs. So this is not like a big deal for us. I mean, it's a big deal to think about, but like economically, it hasn't been a big cost to us.

Nope! Molly White reported from Wang’s testimony:

>At one point in 2021 a trader was able to exploit a bug in FTX's margin system to take on a huge position in MobileCoin, which ultimately resulted in hundreds of millions of dollars in losses for FTX.

>This more than exhausted the insurance fund, so SBF allegedly told Wang to have Alameda "take on" the loss. According to Wang, SBF said this was because FTX's balance sheets were more public than Alameda's (ie, the loss might be noticed by investors with access to their records).

>>56336578
Bankman-Fried was representing that FTX’s risk engine was more or less infallible; in fact it had had big failures. And those big failures are part of how Alameda ended up squandering customer money: It took losses from other FTX customers, and ultimately imposed them on the rest of the customers. Sort of a delayed, and much worse, form of clawbacks.

This is the fraud that prosecutors are alleging: Not that FTX customer money ended up with Alameda, but that FTX was going around lying about the possibility of that happening. What ultimately brought down FTX, Sam Bankman-Fried has said, was that FTX’s risk system was unable to handle big losses at Alameda. From a Substack post Bankman-Fried wrote in January:

>As Alameda became illiquid, FTX International did as well, because Alameda had a margin position open on FTX; and the run on the bank turned that illiquidity into insolvency.

>Meaning that FTX joined Voyager, Celsius, BlockFi, Genesis, Gemini, and others that experienced collateral damage from the liquidity crunch of their borrowers.

>All of which is to say: no funds were stolen. Alameda lost money due to a market crash it was not adequately hedged for–as Three Arrows and others have this year. And FTX was impacted, as Voyager and others were earlier.

>>56336585
The problem with this is that FTX was advertising — on social media, in regulatory filings, to me on Odd Lots — that its risk management system was unusually good and robust, and it was apparently lying about the facts. “Ah, well, we collapsed like Celsius” is not a defense when you were going around telling people how much better your risk management was than Celsius’s, and lying. [3] As I wrote last December:

>A minimal but still pretty bad form of fraud at FTX would be:

>1. In fact FTX lost its customers’ money through well-intentioned but incompetent bumbling; it just didn’t keep very good track of customer money or risk or anything else.

>2. It lied, constantly, about how carefully it was keeping track of risk and customer money.

>The story of FTX that we have heard over the last month — from Bankman-Fried, from Ray, from everyone else — is that it was a bunch of disorganized children who had no idea what they were doing or where the money was. The story of FTX that we heard — from Bankman-Fried and everyone else — before this month was that FTX were the adults in the room, the hyper-competent, risk-focused, regulation-friendly, sophisticated crypto exchange. If you go around telling that story it really has to be true, or true-ish, or arguably true! If now you go around being like “ah, accounting, risk management, we never really understood those things,” that is not a good defense!

>>56336591
But the main problem was not some inaccurate historical claims on Odd Lots. FTX had its automatic margining and liquidation system, which did not work quite as well as Bankman-Fried claimed, but which for all I know might have worked pretty well. The main problem is that it secretly exempted Alameda from this system. We have talked about this before — it is, I think, the main point of the charges against Bankman-Fried — but Wang, who actually programmed the secret exemptions, testified about it. At the Verge, Elizabeth Lopatto described Wang’s testimony:

>The prosecution grilled Wang on a single, damning column in FTX’s databases. Called “allow_negative,” it allowed Alameda to have a negative balance. Alameda could withdraw money even when its accounts didn’t have any, and it had an enormous line of credit. ...

>Normal customers — the defense objected to “normal” but was overruled — could be automatically liquidated, but not Alameda. Bankman-Fried “told me a few times to make sure that Alameda’s account is never liquidated on FTX,” Wang said. “The code addition was the result of those conversations.” …

>The amount that Alameda was allowed to go negative began to creep up. Around 2019 or 2020, Wang checked the database and discovered that Alameda was negative by about $200 million, which was more than the $150 million FTX made in revenue. That had to mean Alameda was taking customer money.

>>56336599
Seems bad! Bloomberg’s Bob Van Voris, Ava Benny-Morrison and Yueqi Yang report:

>Wang’s description of special treatment for Alameda flies in the face of FTX’s public stance that the exchange treated customers equally, prosecutors allege.

>On Thursday, Matt Huang of crypto venture capital firm Paradigm, an investor in FTX, testified his firm was aware of the relation between Alameda and the exchange but was reassured there was no preferential treatment. Huang said it would have been “a concern” if they had known Alameda was not subject to liquidation rules.

>“It would’ve meant Alameda could trade with leverage on the platform and could incur negative balances that would need to be repaid somehow,” Huang said, adding, “Given crypto prices are volatile, the business could be insolvent. It would also be damaging to the brand and customers’ trust.”

>On Friday, [prosecutor Nicolas] Roos showed jurors a July 2019 tweet in which Bankman-Fried said Alameda was a liquidity provider on FTX and that its account was just like everyone else’s. The prosecutor noted that it was the same day Alameda was given its “allow negative” privilege.

Holy fuck. Buy an ad or go write your gay book blog somewhere else

>>56336609
Also, again, even if everything at FTX was working the way it was supposed to, there was some risk of a customer losing so much money so quickly that FTX would bear the loss. FTX, I said above, had an insurance fund to cover losses that its liquidation engine did not prevent. Except that the insurance fund was also fake? Lopatto:

>But FTX lied about how much money was in the backstop fund, Wang said. In court we saw the code that generated the fake number published on the website: it took the daily trading volume on FTX, multiplied it by a random number, divided it by a billion, and added it to the existing number displayed on the site. It had nothing to do with the actual amount of money in the insurance fund.

When she says “a random number,” she means literally “numpy.random.normal(7500, 3000).” (Molly White tweeted the code snippet that prosecutors displayed.) If you are reassuring customers that their money is safe because you have a fund of cash to cover any losses, and you display the amount of cash in the fund on your website, and the number you display comes from a random number generator, that looks like fraud!

>>56336599
Nigger fuck off we had a front row seat stop with you Jew revisionism. This wasn't SBF being risky it was a Jew being a Jew being protected by Jews.

>>56336613
SBF Stuff

In unrelated news, [3] I want to talk about two risky bets related to Sam Bankman-Fried’s criminal trial.

First, people sometimes ask “why hasn’t Bankman-Fried taken a plea deal?” Here, for instance, is a claim that Bankman-Fried made a risky bet to go to trial rather than cutting a deal with prosecutors:

>“I wonder if it’s his insane views on risk. Like, he might just think the E.V. is there and be committed like that,” one (former) friend said. “He might think a 20 percent chance of zero [time] is better than a 100 percent chance of 20 years.”

But the actual answer is much simpler: Bankman-Fried didn’t take a plea deal because prosecutors never offered him one, and never would. Why would they? They offered plea deals to everyone else in Bankman-Fried’s inner circle, to get those people to cooperate and testify against Bankman-Fried, so they can maximize their (very good!) chances of convicting Bankman-Fried. Why would they give him a deal? What can he offer them? “I will testify against the real villain, my ex-girlfriend Caroline Ellison”? Not compelling. His best chance of getting any sort of deal would have been if, like, $8 billion of customer money had vanished and he knew where it was. “I have buried the money in a secret location and will give it all back to customers if you only give me 20 years,” fine, that’s something to work with. But on the actual facts he just has nothing prosecutors want.

>>56336626
Meanwhile the prosecutors are making their own fairly straightforward bet:

1.If they throw the book at him and go to trial, they will probably win. The evidence seems strong, they have all of his friends testifying against him, and it’s hard for me to imagine a jury saying “ehh this guy lost $8 billion of customer money but it was probably just an accident.”
2. If they cut any sort of deal, they will increase their odds of winning from, like, 99% to 100%, but they will get a lot of criticism for going easy on society’s big crypto villain. It’s not worth it! This case is not just about sending Sam Bankman-Fried to prison; it is about explaining what went wrong at FTX, and about saying, with the full force of the US government, that That Was Bad. A plea deal doesn’t send the right message.
The second bet is: Will Bankman-Fried take the stand and testify in his own defense? Buddy he has posted on Substack in his own defense; of course he will testify. Bankman-Fried will talk to absolutely anyone, with no filter at all, about what happened at the end of FTX. You think he won’t talk to a jury about it?

>>56336634
Isn’t it risky for him to testify? Won’t he be subjected to withering cross-examination from well-prepared prosecutors who will trap him in lies? Well! I mean, sure, probably. But if he does not testify, all the jury will have is (1) the testimony of FTX customers who are like “all our money is gone,” (2) the testimony of all of his closest friends and colleagues testifying “yeah we stole all the money because Sam told us to” and (3) screenshots of FTX computer code that is like “IF you_feel_like_it THEN steal(all.the.money).” His testimony just cannot make things worse! The jury is going to get the prosecutors’ story and it is really, really, really, really bad for Bankman-Fried. He needs to tell his side of the story to have any shot at all. If his testimony has a 10% chance of being compelling and a 90% chance of being disastrous, that is all upside. [4] If he does not testify, that is 100% disastrous.

Also, he has charmed people before. Obviously the context here is different, and it is easier to be charmed by the world’s youngest self-made billionaire than by a criminal defendant in a fraud trial. But I think the bet, in testifying, has to be that Bankman-Fried will sound better and more reasonable in explaining what was going on than the prosecutors will, that they will try to trip him up and fail, that he will come across as a reasonable but unlucky nerd and they will come across as unreasonable bullies. I don’t think that is all that likely, but it is not a crazy bet. And it’s better than nothing.

>>56336643
Binance Fund

In November 2022, after FTX went bankrupt, Binance, the biggest crypto exchange, announced an “industry recovery fund” to do bailouts for crypto. Changpeng “CZ” Zhao, Binance’s founder, tweeted that the fund would “help projects who are otherwise strong, but in a liquidity crisis.” As Bloomberg’s Emily Nicolle writes today, the plan was to “pull together some of the industry’s biggest names and raise at least $1 billion to finance promising startups which, due to forces outside their own control, were strapped for cash.”

At the time, I found this plan puzzling, because I had never heard of a crypto project that was “otherwise strong, but in a liquidity crisis.” I asked: “Has there ever been a pure liquidity problem at a crypto firm?” Crypto project that got hacked and lost all its money? Sure. Crypto project whose founders ran off with all the money? Sure. Crypto project whose money was all in magic beans that turned out to be worthless? Sure.

But crypto project that had lots of good long-term assets that it could not sell or finance quickly, and that was therefore driven into bankruptcy despite having lots of value? I mean? I suppose it is still technically possible that that describes FTX, but only by accident. (It gambled customer money on, among many worse things, a stake in artificial intelligence startup Anthropic that has gone up a lot in value since FTX went bankrupt.) I just kind of do not think that that is how crypto works. Compared to traditional financial assets, crypto is unusually good at being liquid (it all trades on computers around the clock) but unusually bad at being solvent (it often turns out to be worthless). A fund set up to solve liquidity problems in crypto won’t end up doing much.

>>56336649
Today Nicolle reports that Binance’s fund didn’t end up doing much:

>Not much has come of Zhao’s grand plan to rescue crypto. The Industry Recovery Initiative, as it was called, has deployed less than $30 million since its inception, a Bloomberg News analysis of public digital-asset wallets linked to the project indicates. Only one of nine named participants has invested all the funds it committed. The crypto asset sector, meanwhile, remains starved for cash and companies are cutting jobs to stay afloat.

>The quiet unwinding of the IRI is a stark reminder of crypto’s penchant for making bold promises it doesn’t always deliver on. It also echoes the much-diminished stature of Binance, which is facing lawsuits from two major US regulators, and of founders like Zhao, who once crisscrossed the world in private jets and mingled with heads of state and celebrities. Bankman-Fried, who just months before FTX’s implosion had embarked on an industry bailout of his own, is now on trial on fraud charges in New York.

I don’t actually think that Zhao made any bold promises he didn’t deliver on? I think he promised to “help projects who are otherwise strong, but in a liquidity crisis,” and unsurprisingly there weren’t many.

The Jewess cries out in pain as she cheats on you.

>>56336701
I mean did anyone NOT expect organized crypto to not be constructed by Joos, Poos and Venture Capitalist grifters?

>>56336465
why did asher pay him? what a pussy. just say the bet's off

>>56336729
The whole bet thing was set up by the people running Jane Street, they were obligated to do betting as part of their training.

>>56336729
Also the point wasn't to make money off Asher, it was to point out that he was a moron for setting up such a bet where his losing was guaranteed.

>>56336749
just deny you placed the bet. say it was nullified, anything. use that big ashkanazi brain, asher

>>56336776
The whole "bet $100 each day" is supposed to train them on how to weigh and take risks, it's a thing their employer insists that they do.
Lying about it would effectively get you canned, no one wants dishonest traders (except crypto where it's apparently mandatory).

>>56336804
SBF Stuff: More Kelly sorry

We talked a couple of times last week about Sam Bankman-Fried’s formative time as an intern at Jane Street Capital, where he learned to think in bets but maybe went a bit overboard. Michael Lewis’s book about Bankman-Fried, Going Infinite, describes the internship program, in which interns are encouraged to bet with each other but not allowed to lose more than $100 per day.

I expressed some surprise that the interns felt compelled to gamble their entire $100 daily stake on a coin flip with 1% edge. “A Jane Street intern had what amounted to a professional obligation to take any bet with a positive expected value,” writes Lewis, and that seemed odd to me; surely you don’t want to risk your entire bankroll on a barely weighted coin flip. I connected this story to Bankman-Fried’s own repeated claims about his linear utility function and wild risk appetite, and of course to what eventually happened to FTX.

But a few readers emailed to argue that it is optimal, for Jane Street, to train traders to take more risk than is optimal, for them. Jane Street, after all, is not betting its entire bankroll on any one intern, or trader, or trading team. Jane Street has a diversified portfolio of (it hopes) independent positive-expected-value bets created by different traders. If one trader bets her whole bankroll on a trade that is good in expectation, and it blows up and she loses everything, that’s fine for Jane Street: They have lots more traders doing bets like that, and in the long run the good bets will make more than the bad ones lose.

>>56336821
In fact, even the trader who blows herself up will be fine: Jane Street can just say “meh your heart was in the right place” and give her more money to play with. Lewis writes about a trade that Jane Street does on the 2016 election that ends up losing $300 million and being the “single worst trade in Jane Street history”:

>[Bankman-Fried] was struck by what Jane Street did next: not much. There was no big firm-wide formal postmortem. No one was punished, or even questioned. On the one hand, Sam admired the way the firm distinguished process from outcome. A bad outcome, in and of itself, did not suggest anyone had done anything wrong, any more than a good outcome suggested anyone had done anything right.

Bankman-Fried’s interpretation here is that a team put on a trade that had positive expected value, but the coin flip landed the wrong way and it lost money. And his bosses looked at the facts and said “yes, this had positive expected value, so it’s no problem that you lost all this money; your job was to make positive-expected-value bets, not to make money.” [1] And no one got in trouble.

>>56336826
It is optimal for a firm like Jane Street with a lot of traders to encourage each of them to take a lot of positive-expected value risk, because Jane Street has enough of them to benefit from the law of large numbers. With enough independent positive-expected-value bets, it will make money, even if some traders lose money.

But if every Jane Street trader took the optimal amount of risk for her, she would probably put a high premium on not losing everything. She’d size her bets too small for the firm. Jane Street has to, in some sense, train the risk-aversion out of her.

This is analogous to why corporate chief executive officers are often paid with stock options: It encourages them to take the amount of risk that is appropriate for their shareholders. A CEO generally has a huge chunk of her human and financial capital wrapped up in her job, and it is very important to her not to lose it. So she will naturally be conservative, preferring steady mediocrity to risky expected value maximization. But her shareholders are diversified funds who own lots of companies and want each one to maximize expected value. So they adjust her utility function by giving her stock options that pay a ton in the upside case and nothing in the mediocrity case.

>>56336836
And this works great and Jane Street makes a ton of money fairly steadily; it has a big portfolio of positive-expected-value bets, each relatively small relative to its bankroll.

And then some young traders leave Jane Street after just a few years to strike out on their own, and the lesson they take away is “I should bet a huge proportion of my bankroll on every positive-expected-value trade, because that is how I did it at Jane Street and they seemed to like that and we all got rich.” But that is not quite the right lesson! Bankman-Fried’s pathological aggressiveness might have worked really well within the restrictive environment of Jane Street, but it blew him up once he was on his own. [2]

>>56336844
Admittedly the Chinese are making a shit-ton of money evaporate this year, but I don't think there's a connection.

Chinese gov't announced today it's violating it's own debt limits to try and "pour money into infrastructure spending" while it's real estate industry burns to the ground.

>>56336842
just post the archived news article you dumb fuck, stop spamming

>>56336993
its a newsletter, not a news article. And like every other retard here, I do what I want.
So go fuck yourself.

>>56334149
>the woman builds a feedback loop of destruction in your existence
fuck

>>56334149
This is why top elites are gay ped*s and hate women

>>56336456
HA

>>56333929
Alameda being the system that traded users exchange funds is an issue.

Sam leaving Caroline to run the front end while he and the lads used alameda as a prop firm is an issue. It caused an issue at the time because she felt abandoned. Sam felt like he wanted more, but even hookers laughed at him..

Sadly they’re made for each other. There’s nothing anyone can do to ensure he gets punished. He’ll walk away back into his families millions. He fluffed his next really well and has money stored with all the people he paid $20m for 3 hrs a year and with the massive houses he bought for all the press mates.. all he needs to do is ask and he’ll be liquid after the suit.

Affluenza, it affects judges too.

>>56336504
you're leaving out the part where he was used as a patsy for large-scale moneylaundering, arms trading and questionably ethical electioneering as a result of his parents' extremely close ties to Tammany Hall-style political engines and/or intelligence agencies

>>56333929
>jews jewing eachother

kek

It's called the weasels revenge.

Day 5 of posting about nyancatmoney.com 500 times a day until we are over $1 each. This is post 1611. The price has gone up 50% since the last time we posted. Holders have increased by 10.

p.s. we have a meme contest going on for the next two weeks, join the telegram or discord to enter and win.

Day 5 of posting about nyancatmoney.com 500 times a day until we are over $1 each. This is post 1661. The price has gone up 50% since the last time we posted. Holders have increased by 10.

p.s. we have a meme contest going on for the next two weeks, join the telegram or discord to enter and win.

Day 5 of posting about nyancatmoney.com 500 times a day until we are over $1 each. This is post 1661. The price has gone up 50% since the last time we posted. Holders have increased by 10.

p.s. we have a meme contest going on for the next two weeks, join the telegram or discord to enter and win.

Day 5 of posting about nyancatmoney.com 500 times a day until we are over $1 each. This is post 1661. The price has gone up 50% since the last time we posted. Holders have increased by 10.

p.s. we have a meme contest going on for the next two weeks, join the telegram or discord to enter and win.

>>56334149
Evolutionary speaking, women are the balancing factor. When a tribe is too powerful, when everything goes smoothly, when everybody is happy, is when women feel the pull to start their sabotage. Because otherwise, the gene-pool would stagnate. Women are the instigator that keep genes competitive, no matter the cost.

>>56334388
real? kek

>>56336450
He started writing 80% of the book before this happened. He only writes about friends and he’ll never say something that’ll damage his relationships to his contacts.

He’s apart of open society and open philanthropy. He is ostensibly an effective altruist. Now his bias make more sense?

>>56338578
By the way, the fact the you are taking his word on how things played out regarding a whole host of things is referencing is a problem.

What did shrkrelis investors say for example? Contrast that to Sam’s investors.

In the coin toss, what happened to Sam’s money machine if he lost flip one.
To try and say that Sam learnt gambling at Jane street is a problem.

Trying to throw CZ under the bus seems dishonest. And paying for 60 mins coverage reeks. Same as time his book for the trial.

Homie wrote a book he thought people would love on the right to bait them no one bought it. This is for the contrarian progressives.

Congrats on the city apartment and fat girlfriend OP

>>56333929
jews ratting out other jews
very common

>>56338637
>In the coin toss, what happened to Sam’s money machine if he lost flip one.
The point wasn't to win money, the point was to automatically make his adversary lose.
>To try and say that Sam learnt gambling at Jane street is a problem.
Why? It was their culture, except it only works at a certain scale, individual jr investors taking marginally good bets with small fractions of the till, vs betting the whole till big when you ARE the entire operation.

>>56338400
Nice try roastie.