I can't look at their balance sheet and conclude that they were anything but ignorant of traditional finance. He seemed completely unaware of duration risk, and it seems like they have never talked to an accountant or anyone who has even the slightest clue about what a balance sheet should remotely look like.
SBF worked at Jane Street, but he must have been there in a capacity that insulated him from this sort of knowledge. At large firms such as that there are very specialized roles that juniors typically start within, where the visibility is fairly limited.
You think this is ignorance? I know very little about finance or the technology of finance but this is pretty clearly fraud and criminal behavior.
My only question is was he able to pay for his private jets or residences in FTT? He seemed pretty convincing to a lot of people so it would be interesting to see if everything was paid in his own made up currency.
I presume his walking around money was from loans from banks based on his equity in FTX. This seems to be like the standard thing that the super rich whose wealth is tied up in tech stock do these days.
He was handed billions in USD by VCs. I'm sure he stashed a lot of that in a Vanguard mutual fund while he made a show of operating his perpetual motion machine.
> I can't look at their balance sheet and conclude that they were anything but ignorant of traditional finance. He seemed completely unaware of duration
SBF is notorious for advocating expected-result decision-making with risk entirely disregarded, and essentially saying if you aren’t in the high risk range where the median (rather than expected) result is break even or worse, you are usually being too cautious; he's not ignorant of risk, just deliberately contemptuous towards it being a negative factor in decisions.
Turns out, when you chase Gambler’s Ruin that hard...
They knew this balance sheet was bullshit. They were just trying to cover up the $10 billion "loan" they gave alameda after it blew up in the spring. I agree that alameda made mistakes that traditional funds wouldn't, but the balance sheet isn't one of them.
I think SBF’s public and, AFAICT, honest belief in expected value optimization without regard to risk played a fairly central role in every step of the fraud, and that it constitutes a very specific form of incompetence.
That's an extremely charitable interpretation of the events, in my opinion. Misappropriating custodial funds is not ever acceptable when you are running an exchange, no matter how good your EV looks like.
And I'm not buying into his whole effective altruism thing. What I think is that SBF had a strong desire to make money, ethics be damned, but had a troubled conscience. Effective altruism gave him moral comfort and helped him rationalize his actions.
> That's an extremely charitable interpretation of the events, in my opinion.
Only because you seem to be reading into it a positive moral judgement that I did not, in any way, express.
> Misappropriating custodial funds is not ever acceptable when you are running an exchange, no matter how good your EV looks like.
I didn’t say it was.
> And I'm not buying into his whole effective altruism thing.
SBF doesn’t just advocate that method of decision-making in the context of EA, he advocates fairly consistently for financial and other decision-making.
It seems I read too much in your comment. I can agree with labeling his method of decision-making as incompetent but I believe what happened at FTX goes beyond that and I just hope he doesn't get away with it by playing that card.
SBF worked at Jane Street, but he must have been there in a capacity that insulated him from this sort of knowledge. At large firms such as that there are very specialized roles that juniors typically start within, where the visibility is fairly limited.