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October 2 - October 4, 2023
curious ability to disagree with Sam without making a big deal about
Crypto lived on Twitter, and Musk was Twitter’s loudest voice.
Inside of three years, Sam would deploy roughly $5 billion on a portfolio of three hundred separate investments—which worked out to a new investment decision roughly every three days.
“I think Sam’s too trusting,” said Ramnik. “He’s too trusting too early.”
The truth was that grown-ups bored him. All they did was slow him down.
he was willing to spend hundreds of millions more to influence public policy.
His political spending was distributed sloppily into three buckets. The first, and smallest,
It was the other two buckets—the money that had little to do with his own narrow financial interests—that were opaque.
Crypto money was harder to give away than it should have been,
politicians were far more complex devices than their tribal identities might suggest. “He’s a polio survivor,” said Sam. “And we think he’s interested.”
he would be seen to have backed the winner. If he said he was for Eric, he’d get the credit for whichever Eric won. “I’m for Eric!”
future is vast,” said Sam. “You can try to put a number on it but obviously anything that flows through to that is going to have a vast multiplier.”
He didn’t think the later years of his own life contained much expected value. To do their bit to save the species, he figured they had maybe ten or at most fifteen years. As it would turn out, they had five weeks.
Between the start of the boom in 2017 and June of 2022, crypto had re-created the institutions of traditional finance, without the rules and regulations and investor protections that exist in traditional finance.
The whole edifice relied on a fantastic amount of trust.
at least $8 billion belonging
to crypto traders, and meant to be safe and sound inside FTX, had wound
up instead inside Alameda...
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“there was a button on FTX. Alameda could take whatever risk it wanted to.”
Dubai was tiny, Houston with sheikhs.
listed $14.6 billion of assets and $8 billion of liabilities that were supposedly inside of Alameda Research as of June 30, 2022. What the CoinDesk piece wanted to highlight was that more than a third of the assets were FTT, the token FTX had issued three years earlier.
CZ still held the roughly $500 million worth of FTT that he had taken back in mid-2021
There had been $15 billion in customer deposits on the exchange. Or there was meant to be that amount, held in either fiat currency or bitcoin and ether.
Within twenty seconds of Caroline’s tweet came a rush to sell FTT by speculators who had borrowed money to buy it.
Where did the customer deposits go?
At that time, Alameda had “borrowed” from FTX to repay its lenders.
You are saying that I should say that you know nothing about something I know nothing about.
That afternoon, roughly $450 million in crypto vanished from the wallets inside FTX.
the Bahamas, fraud required intent,
On Twitter, in the blink of an eye, a rumor became a fact, the fact became a story, and the story became an explanation.
The price of FTT shouldn’t have any effect on the value of the exchange, any more than the price of Apple stock should have on Apple’s iPhone sales.
two bips [0.02 percent] on two hundred fifty billion dollars a month,”
FTX was a futures exchange, and so it lent money to its customers to make bets. At any given moment, it would not be expected to have all of its customers’ money immediately on hand.
enough alcohol to sink a pirate ship.
More than $10 billion that was meant to be custodied by FTX somehow had ended up inside Sam’s private trading fund.
to whom it owed $8.7 billion. Nearly half of those losses, or $4 billion, were concentrated in these fifty accounts.
Instead, FTX had simply loaned Alameda all of the high-frequency traders’ deposits . . . for free!
It had exempted Alameda from the risk rules that governed all the other traders.
Sam’s private trading firm was allowed to lose, in effect, infinity dollars before its trades were liquidated.
The bulk of the customers’ money inside of Alameda that should have been inside FTX—$8.8 billion of it, to be exact—resided in an account that Alameda had labeled fiat@.
They’d been listed on a dashboard of FTX’s customer deposits
but remained inside Alameda’s bank accounts. Sam also claimed that, right up until at least June 2022, this fact, which
whereupon Gary discovered that it was just a bug in the software. The real number in the fiat@ account hadn’t changed: it was still $8.8 billion.
nearly $9 billion more had entered Sam’s World than had exited it.
polycule, as his club of effective altruists was now being called in the New York Post.
you want shampoo, you buy shampoo. You don’t tweet about shampoo. Financial products are different. Why do you trade on Robinhood? Because your friends trade on Robinhood. It’s a conscious decision.”
“Investing is a social network.
(He really was easy to steal from.)
Barbara stopped arguing with Sam about what he could say to Congress, and started arguing with him about what he should wear to jail. She
wanted him to put on long pants. Sam insisted on remaining in his cargo shorts.
