Sure, including ones that should have been apparent without any sophisticated analysis:
For example, FTX was giving people 8%/yr 'yield' just for funds deposited there in spite claiming to not invest customer funds.
The claim that his fund earned >$10/billion over two years on a trivial arb with Korean exchange was also an obvious red flag (and asking people with relevant experience would have got an answer that this not a credible claim).
The heavy involvement with and promotion of extremely illiquid and self-made tokens was also pretty suspect, but not unique to FTX. Looking at my messages, I see that I specifically highlighted 'the ftx website lists something called a "3x leveraged shitcoin index token"'
... or the fact that they offered 100x leverage.
Who knows what more would have been found if any investigation or critical questions were applied.
These specific red flags were clear enough for me-- and other people I know, to yank most of their funds from LedgerX when SBF acquired it.
Any journalist writing about SBF/FTX would have had access to much more information that I did. E.g. I didn't see the videos of him obviously tweaking in interviews, nor the easily visible tweets by Ellison about how boring life is when off amphetamines. But someone spending a half hour googling the involved parties would easily have found these additional red-flags.
> The red flags were clear enough for me-- and other people I know...
This seems glaringly obvious to me as well. A basic scrutiny of how the money is made reveals deep flaws. It should be clear to anyone who has money to invest that there is a reason why one investment vehicle pays 8% versus another which pays 2% (CD's).
I don't believe they should lose their money without recourse, but people shouldn't have zero responsibility for their financial decisions. Some risk and educational foundation must be assumed by the individual. It would be nice if regulators and journalists gave a clear picture, but everyone should remember, they likely have no financial stake on their findings.
It's a hard situation: the relative safety of standard investments contributes to bad judgement when people end up in a red in tooth and claw unregulated market. Similar people used to theme parks going to a national park and falling to their death in a waterfall or being gored by buffalo.
Not that I think the safety rails are bad... if you had to be maximally cynical you'd never even bother taking an investment with only 2% yield, it just wouldn't be worth the meta-risk (the risk you misunderstood the risk!).
Probably one of the worst things about the FTX press puffery is the implication that FTX was more regulated or pro-regulation, ... probably causing people to think it was a part of the relatively safe major markets where the risks are usually reasonable and the asset returns tends to be fair relative to the risk.
I filed complaints with the government over the Gemini earn program because they were heavily marketing to retail users with comparisons to savings accounts while, AFAICT, actually consisting of effectively unsecured investments in ponzi schemes ('yield programs') whos risks weren't meaningfully disclosed. Never heard back, now that it's imploded perhaps I should try FOIA-ing any communication resulting from my complaints.
>The claim that his fund earned >$10/billion over two years on a trivial arb with Korean exchange was also an obvious red flag (and asking people with relevant experience would have got an answer that this not a credible claim).
Source? The numbers seems suspiciously high when you consider that the net worth of SBF (who owned most of SBF and FTX) was only $10.5 billion prior to the collapse. Maybe you got this confused with this?
Wikipedia: "In January 2018, Bankman-Fried organized an arbitrage trade, moving up to $25 million per day, to take advantage of the higher price of bitcoin in Japan compared to the price in America.[9][10][2] The company earned about $20 million from the arbitrage opportunity.[11]"
>The heavy involvement with and promotion of extremely illiquid and self-made tokens was also pretty suspect, but not unique to FTX. Looking at my messages, I see that I specifically highlighted 'the ftx website lists something called a "3x leveraged shitcoin index token"'
>... or the fact that they offered 100x leverage.
Are you making these claims from a "it's impossible to offer this product without being a scam" point of view, or "this product is gambling and shouldn't be allowed"?
>I didn't see the videos of him obviously tweaking in interviews
This seems like the prototypical example of stuff that you only notice after the fact because hindsight is 20/20. Can you imagine writing an article that's like "SBF is pretty sus, look at how much he's tweaking in this video"? Or telling your editor you want to investigate SBF/FTX because he looks like he's tweaking?
>nor the easily visible tweets by Ellison about how boring life is when off amphetamines.
If you read the whole tweet in its entirety, you'd realize that
1. she was talking about prescription amphetamines aka Adderall. it's not like she was smoking meth.
2. she was emphatically not talking about being bored, she was talking about how hard it was to get energy/motivation to do any sort of activity, all of which were symptoms of ADHD (see point 1)
Sure, it's fun to dunk on her and the rest of the FTX/Alameda staff now that the whole thing crashed and burned, but if you wrote a piece on this pre-crash you'd end up getting canceled for doubting/making fun of people's mental disorders.
He changed the explanation that they were given-- originally he was telling people Korean exchanges, later the claim changed to Japan. The replacement wasn't particularly credible either (at least not the scale). You can easily find examples of the earlier story on google using the word kimchi: https://www.google.com/search?q=SBF+kimchi
Of course, newly available disclosures show that they hadn't earned anything from the korean trade at all.
If you look at WP history, you'll see that entire article was recently written ( https://en.wikipedia.org/w/index.php?title=Alameda_Research&...) and the WP article for SBF himself only goes back to April 2021. The red flag examples I gave were actually quoted from my contemporary correspondence (warning other people off), so I know none of it is tainted by hindsight. Tainted by cynicism, perhaps, but I think cynicism is well justified in this space.
In later correspondence I see did cite the SBF wikipedia article on Dec 9 2021 ( https://en.wikipedia.org/w/index.php?title=Sam_Bankman-Fried... ) in a message to someone, "can't say that finding his wikipedia page has made me feel any safer about having funds in ledgerx" and noted that participation in forbes 30 under 30 is a "minor red flag (it's almost excursively paid promotion)", and I noted the text '"sleeps four hours per night" at the age of 29 is almost certainly something LARPing as a superman' and I compared it to other cryptocurrency fantasists like Craig Wright claiming to read 2500 books a year.
> Are you making these claims from a "it's impossible to offer this product without being a scam" point of view
Impossible to offer without having an extraordinary implosion risk, at least, if not being an outright scam. There was no disclosure around the risks or how it would be contained. Scamcoin casino competitors have had high profile "insurance funds" with somewhat transparent management as an explicit mechanism to address the extreme risk of these levered products. (I think they are also obviously too risky to do business with, and these are risks that should have been covered in any article discussing FTX!).
There are ways to create leverage without any implosion risk-- e.g. physically delivered options. But that's a different set of products, and one that sells less well to unsophisticated users in part because the investment risk isn't hidden, because the trades need counterparties instead of being against the house, etc.
> This seems like the prototypical example of stuff that you only notice after the fact because hindsight is 20/20.
I specifically set apart the elements that I didn't know about at the time.
My records show that prior to 2022 on at least a dozen occasions I told people that I communicated with that I thought FTX was fraudulent and that I thought SBF was likely a scammer. Quite explicitly, in fact, in 2021 I wrote: "I don't believe SBF money exists. I think he's a scammer. I'd take a non-trivial bet on it. His claimed origins of his money are more obviously false than madoffs'. maybe he's just a front for iran or something, but whatever the case is he didn't make his money the way he said he did." and "I mean SBF is super redflaggy to begin with. I think he's a scammer, not sure exactly the nature of the scam, but his story of where his sudden wealth came from just doesn't compute."
(I would have been more outspoken in public under my name about these concerns, but dealing with one multi-billion dollar lawsuit from a scammer at a time is enough for me! (and, in fact, said as much to friends in private))
So you don't get to chalk my perspective to hindsight, though it's certainly emboldened now by hindsight. :)
Now-- could I have gone to press with an expose on that? No. But it's enough that someone could refrain from gushing on support, or could have investigated more carefully. (Or as I did, pulling funds away from potentially exposed entities!)
> she was talking about prescription amphetamines aka Adderall.
If you've been around people on Adderall and don't recognize that it can easily compromise judgement and result in mania, then I dunno what to say other than congrats on your good fortune. Cryptocurrency is rife with stimulant abusers, however, many of which are on prescriptions yet engage in obviously unwise, reckless, or at least irritating behavior as a result.
That kind of message from executive staff is a serious red flag, if not directly showing abuse, and least demonstrating a significant lapse in judgement in choosing to make public such an obviously concerning message. Could you imagine how the public would respond to an equivalent tweet being put out by the CEO of Fidelity?
There aren't just two options "write a critical piece on thin indications" or "write a gushing promotion piece". The obvious thing to do when there are weak indications of concern is to just say nothing, or to do serious critical research-- had any been done they would most likely have turned up even more reportable information, or at least more negative indication that supported keeping distance. ... or to at least find some random naysayer to quote saying it's suspicious and they're uncomfortable with it.
For example, FTX was giving people 8%/yr 'yield' just for funds deposited there in spite claiming to not invest customer funds.
The claim that his fund earned >$10/billion over two years on a trivial arb with Korean exchange was also an obvious red flag (and asking people with relevant experience would have got an answer that this not a credible claim).
The heavy involvement with and promotion of extremely illiquid and self-made tokens was also pretty suspect, but not unique to FTX. Looking at my messages, I see that I specifically highlighted 'the ftx website lists something called a "3x leveraged shitcoin index token"'
... or the fact that they offered 100x leverage.
Who knows what more would have been found if any investigation or critical questions were applied.
These specific red flags were clear enough for me-- and other people I know, to yank most of their funds from LedgerX when SBF acquired it.
Any journalist writing about SBF/FTX would have had access to much more information that I did. E.g. I didn't see the videos of him obviously tweaking in interviews, nor the easily visible tweets by Ellison about how boring life is when off amphetamines. But someone spending a half hour googling the involved parties would easily have found these additional red-flags.