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haxor@derp.foo

Facing 110 years in prison, Sam Bankman-Fried "can't recall" what he did at FTX (arstechnica.com)

submitted 1 year ago by haxor@derp.foo to c/hackernews@derp.foo

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[–] Ashyr@sh.itjust.works 12 points 1 year ago (2 children)

Was there ever a point he could have just contended himself with a generous salary and lived off the investors foolish investment in crypto?

Or was the entire enterprise criminal from the very beginning?

As a layman looking in it's difficult to tell whether the crime was stealing from investors or just getting them to invest in a meritless system.

[–] player2@lemmy.dbzer0.com 5 points 1 year ago

My understanding was that it was a real and legitimate trading platform had it not been for trading using customer deposits.

I don't know what their business' profit margin was, but I suspect that the amount of money they were making legitimately, such as from trading fees and margin interest, seemed like peanuts compared to their total customer deposits and how quickly the value was increasing as the price of crypto increased.

During the run up, it was almost impossible to lose money investing in crypto, everyone doing it thought they were a trading genius, so it was pretty tempting. I'm sure SBF and others there had been doing it and thought they could be billionaires if only they had the seed money. I think it started slowly at first, borrowing customer money to invest, try to make a good return, and the customer never knows.

If crypto had gone up forever, this plan may have worked. As crypto started going down, they had to invest more and more to try to earn back losses. They had to increase the credit limit of Alameda research multiple times before maxing it out.

I picture that like a gambling addict betting their house in order to win everything back. If they keep doubling their bet, eventually they'll win and be in the green again, right?!

[–] sarge@lemmy.world 4 points 1 year ago

BBC did a pretty decent panorama episode on it a while back.

Seems like they were onto a genuine good thing as a crypto trading paltofrm but either got greedy, stupid or both.